The Argument About the Lack of Skilled Workers

Repeatedly, the argument that we have a lack of skilled workers for positions has been used to demand that we allow immigrants into the nation to fill the positions. Clink the link to see just a few of the recent stories on this topic.

https://www.bing.com/news/search?q=lack+of+skilled+workers+in+america&FORM=HDRSC6

We have also seen businesses, through the Chamber of Commerce pursue some sort of relief through the government and universities to help with the shortage of “skilled” workers.

Frankly, this is not exactly true.  What he have is a shortage of skilled workers at the salaries that are being offered.  There is a big difference between the two.

It’s amazing that so many who bemoan the lack of rising salaries for workers are the very same people that are attempting to short circuit how free markets work.  Or that if left to their own accord, the free markets would address the imbalance.

Instead, we keep altering the supply by opening the gates of immigrants, rather than halting that process, and telling businesses that if they need qualified candidates, then to either A) Train them in house or B) Raise your salaries.

Were we to see this argument for minimum wage jobs at Wal-Mart, for instance, we’d all accept the proper answer to get more applicants:  Raise Wages and/or Iincrease benefits.

So why are we unwilling to have that very same approach applied at higher levels?

Chambers of Commerce have gotten a sympathetic ear from local, state and federal governments.  Governments, more than anything, like to solve problems.  Real or imagined, their responsibility or not, they want to solve it.

Here in Johns Creek, Georgia, I have heard this tale of lack of workers.  The city is contemplating the redevelopment of a large area of privately owned property into an area that will attract Millennials to live, work, and play.

In other words, they cannot afford to live here, the pay is not enough to attract them here, and since they are not here, there is no where to play.

The businesses that are making this claim can work to solve the problem on their own.  Raise their wages.  That is how it has worked in the past.  That is how the problem is resolved for the future.

Taxpayers should not be the ones footing the bill to train more employees for positions in an effort to hold down wages.  Nor should they be on the hook for providing affordable housing  or transportation to get to and from the jobs.

If the businesses had a shortage of any other resources, they would pay more to get the supply, importing it at a cost from where they can find it.  That is the cost of doing business.

Competition for employees is positive for everyone.  Companies have an  incentive to find, hire, and pay for the best they can afford.  Workers have the potential to advance where they work.

Until we get the government out of providing skilled workers, companies will try to take the easy path.  It’s your job to tell your governments at the local, state, and federal level that this is not the taxpayer’s responsibility.

We need to get back to a healthy economic foundation.  Getting government out of the equation at all levels is the first step in the right direction.

An Open Demand to the Congress of These United States

Whereas the United States Congress is negotiating and voting on the Trans-Pacific Partnership in secret,

And whereas the citizens of the United States will be subject to such laws if it passes,

And whereas the same citizens cannot offer their opinions on the passage of such unseen legislation,

The American Public opposes passage of this law and strongly urges all Representatives and Senators to oppose the Trans-Pacific Partnership.

Furthermore, we demand that the text of the proposed bill be made public immediately.

Buy Back Mania- The Top Sixteen Dow Companies Buying Back Their Own Stock

Apples are apples as they say.  At least sometimes apples are apples. But all is not always as it appears.  Much has and is being made about price earnings ratios, stock buybacks, corporate leverage and more.

These metrics all have an impact on the value of a share of stock.  Anyone who who has followed what I have been saying over the last 9 years knows the value I have placed on the single most important number of a company’s performance-The Bottom Line.

While the bottom lines have been less than stellar for some time now for many of the Dow 30 companies, the Earnings Per Share numbers have been spectacular.  Why?  Stock Buybacks.

Just how many shares have companies been buying back?  Here is a table of buy backs over the last 5 years.  The numbers are staggering for a few of these because several of these companies are borrowing large sums of money to do so.  The question we need to ask is where the dollars are going to come from when these sums need to be paid back?  Are they going to be issuing shares?  Earnings(which are falling)? Or both?

Travelers -28%
Home Depot -23%
Pfizer -23%
IBM -22%
Visa -18%
American Express -16%
Exxon-Mobil -16%
Goldman Sachs -14%
MMM -13%
Intel -13%
United Health -13%
Nike -11%
Apple -11%
Disney -11%
McDonalds -11%
Cisco -10%

Travelers tops the list, on track to have purchased back a whopping 28% of its shares by the end of 2015.  Sixteen of the Dow 30 will have repurchased 10% or more of its shares by the end of the year.

The heavy share buybacks is one of the reasons that prices have continued rising.  Investors see the EPS increase(even if bottom line profits do not) and buy more shares.  The companies, seeing that investors are liking the EPS growth, buy back more shares and keep the game going.

How effective is this game?  Let’s see if you can pick the right answer to the following question:

For the years 2013, 2014, and 2015, how many of these years saw the DOW 30 companies actually earn more dollars than the previous year?

And for bonus points- Which year was the best?

If you answered All, you are far off the mark.  In fact, only one of those years will see the Dow 30 earn more dollars in total.

Which year was the best? That is going to be 2014.

The year 2015 is on track to post a 7.9% drop in total earnings.

How does one hide such abysmal performances?

That’s right!  Stock Buy Backs.

And the games continue.

The High Cost of Traffic: Dollar$ and Sense

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We have all felt it and dealt with it.  Some of us deal with it every day of the work week, weekends included:  Traffic.

Traffic also has a cost that can be estimated in dollars, and hopefully that will lead to some common sense.

Wherever you reside, chances are you know when you need to leave by to avoid the brunt of traffic.  But sometimes, you haven’t a choice, and you are stuck with the slow crawl towards your destination.

In my case that destination is through one primary intersection both coming and going.  And sometimes it can take 15 minutes or more to travel the final three miles.  That is not the way coming home should ever feel.

Searching high and low on the internet, you will not find much of substance in dealing with traffic.  We know the familiar things that are often offered to resolve it.  Time(as in it will be years before we can do something), Technology( as in if we install cameras along the entire route and we upgrade all the traffic signals). and Mass Transit( because buses which serve people who generally do not own cars, and drivers keep on driving), I found one thing missing: cost analysis.

I did find two stories of interest to me.  One was a story detailing from the Texas Transportation Institute the cost of traffic delays.  The story dates back to 2011, which makes me think that despite the high toll it takes on us, we have more or less resigned ourselves to suffer with traffic.

Here are some of the findings from the CBS Moneywatch Story:

1) Commuters in large urban areas spend roughly 40% more on average or $1,166 per    year twiddling their thumbs in traffic. And remember, these are 2011 dollars.

2)  The cost of wasted time and fuel?  $16 per hour for cars and $106 per hour for commercial trucks.

That is quite a sum of money over the cost of the year.  And if those numbers are valid, then could I build an estimate of what just one intersection (State Bridge and Georgia 141 in Johns Creek, GA) costs drivers just during rush hours (the three peak hours in the morning and the evenings)?

The intersection of State Bridge and 141 is a major intersection.  It just might be the busiest intersection in the Metro Atlanta area that is not limited access and is controlled by a traffic light.  I have diligently searched the Georgia DOT Traffic Server for a busier one, but I have yet to find it. I encourage you to check it out and see what you can learn about your traffic as well.  You can find it here:

http://trafficserver.transmetric.com/gdot-prod/gdot_report.html

The data for most survey locations is only collected once a year, so be sure to look back at previous years to confirm that the data you are using seems reasonable.  And the data does not reflect intersections, so the method I chose to calculate the intersection volumes was calculated by taking the volumes from the mornings and evening rush hours and adding them together.  For 141 I took the two measurement locations North and South of the intersection, and determined the average of the two.  For State Bridge Road, I used the location East of 141 as the West location is not current.

Morning Rush Hour:

The volume North-South on 141 totals 10,436 vehicles between 7:00 a.m and 9:59 a.m.

The volume East-West on State Bridge totals 9,320 vehicles between 7:00 a.m and 9:59 a.m.

Evening Rush Hour:

The volume North-South on 141 totals 11,763 vehicles between 4:00 p.m and 6:59 p.m.

The volume East-West on State Bridge totals 9,320 vehicles between 4:00 p.m and 6:59 p.m.

The total going through the intersection then is approximately 19,756 in the morning period and 21,664 in the evening period for a total of 41,420 vehicles.

And if you were wondering just how many for the entire day?  It’s likely averaging over 101,000 vehicles per day.

Costs:

Below is a table which will give you an idea of just how much this traffic is costing us depending on just how much time you feel it is taking you extra to travel through the intersection.  A backup heading northbound on 141 at the Chattahoochee River could indeed take you more or less 15 minutes.

Note that even two minutes per day has a significant cost.

Cars per Day 41,420 41,420 41,420 41,420
Minutes Wasted 2 5 10 15
Minutes Wasted per Day 82840 207100 414200 621300
Hours Wasted per Day 1380.66667 3451.66667 6903.333333 10355
Cost per Hour $16 $16 $16 $16
Daily $22,091 $55,227 $110,453 $165,680
Weekly $110,453 $276,133 $552,267 $828,400
Annually $5,743,573 $14,358,933 $28,717,867 $43,076,800

These are rather large sums of money that we are wasting each workday.  Even if you disagree with the $16 amount, hopefully you are worthy of minimum wage:

Cars per Day 41,420 41,420 41,420 41,420
Minutes Wasted 2 5 10 15
Minutes Wasted per Day 82840 207100 414200 621300
Hours Wasted per Day 1380.66667 3451.66667 6903.333333 10355
Cost per Hour $7 $7 $7 $7
Daily $10,010 $25,025 $50,049 $75,074
Weekly $50,049 $125,123 $250,246 $375,369
Annually $2,602,557 $6,506,392 $13,012,783 $19,519,175

There may be some different ways to calculate this cost.  The State of Michigan has a Construction Congestion Analysis Spreadsheet to calculate the cost of delays for traffic due to construction. Perhaps it could be adopted for our purposes.

http://michigan.gov/mdot/0,4616,7-151-9625_54944-227053–,00.html

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Common Sense:

As the costs are rather staggering when computed, it really only makes sense to begin tackling these problems today, and not waiting another 2, 3 or even 5 years.  These are real dollars coming out of our pockets today.  We have not even tacked on the emotional costs of getting to your child’s swim meet or ball game.  Some things do not have a price tag.

Governments, however, look at this slightly different.  If they have to pay for it what is the return on THEIR investment?

I believe that answer is simple.  Less congestion equates to higher property values, higher levels of commerce and a safer and happier community.

Higher property values and higher levels of commerce leads to higher tax revenues.

Recently, the City of Johns Creek announced that it had received an improved rating for the Johns Creek Fire Department, which will safe the citizens close to 20% in future insurance premiums.  They could have chosen to have a Fire Department that was rated slightly lower at a lower cost and saved some dollars.  They chose not to for many reasons.

This was a solid investment on behalf of the citizens of Johns Creek to this point.  And that is the sort of investment I want to see dealing with the traffic issues.  The return on investment is even higher than what we saw with the Fire Department.  And this is just one intersection.

As everyone here knows, we have several others as well.

You have a responsibility as well.  You need to realize that this is a worthwhile investment and contact your officials and encourage them to act now, not later.

The money you save will be your own. Let’s work to saving the green and getting the green.

These are my opinions.  I want to hear yours.

Leave me a note and I will be happy to respond.

 

 

 

May 2015 NFP Number Estimate

My estimate is 123k in NFP jobs for the month of May.

For the we are losing 1/10th of a percent on the rate of annual jobs growth at this time.  If that trend continued in May(and there is no reason to think not), this is where we should be.

Stay tuned.

Update:

The jobs number came in at  a whopping 280k for May 2015.  Frankly, we should already be seeing these job numbers fall sharply.  The place where the dollars come from that should fuel job growth-profits…well, they are just not there.

I do recognize that the jobs numbers reported today are not of the same substance as they were ten years ago.  The shift from full to part time jobs is real, but there is no adjustment to the NFP release.

March and April 2015 jobs were also revised higher, opposite of what one might expect with the negative GDP data for the first quarter of 2015, as well as nearly every other bit of economic data.

With the economy down, profits down, consumption down(should I go on?) does it make sense that hiring is accelerating?

I do not think so.

 

$15 Minimum Wage to Have Maximum Impact

In a race to the bottom, major cities are showing that they too can destroy economies, and that they can do it even faster than the Central Banks.

As these cities begin to lose their commercial base, what steps are they going to do to step in and halt the slide?  Will they ask their neighboring communities to level the playing field by raising pay rates?

Will they ask the state to forbid businesses from relocating?  Will they outlaw automation?

If these cities believe that they have had a hard time since the last recession, they have not seen anything yet.

The first thing to disappear will be jobs at marginal businesses, and there are thousands of marginal businesses in every city.

Those storefronts will go dark, dragging down Commercial Real estate in it’s wake.

More people will be applying for assistance as they have no jobs and no prospects.

New businesses will refuse to open new locations in the $15 corridors.

For many reasons this is a great opportunity.  if you believe in freedom, then you should choose NOT to shop in the $15 Zone.  Why?  Because the businesses are going to try, if they can to pass this increase on to you.  Yes you.

The bottom line is that the $15 Zones created are an effort by cities to tell you that you are not paying enough for the goods and services that you purchase within their limits.

It is doomed to failure.  And you cannot forced us to support it unless the wages are forced up across the nation entirely where we simply cannot afford it.  And that will be the next call for action, as these cities begin to die an agonizing death as business spirals down.