Tuesday, June 12, 2018

Don't go lighting your cigars with $20 bills just yet

This morning while making my rounds I saw this on the front window of a Domino's Pizza store:




How can they pay "UP TO" $15 an hour "OR MORE"?  Which one is it?  I think I'd go for the "MORE".

The official US unemployment rate recently dropped to 3.9%, the lowest since the Pilgrims beached their boat in Massachusetts, before it was Massachusetts.  Historically the stats people say 4% is considered "full employment"....anyone who doesn't have a job now just doesn't want to work.

Here in my area of the northern DFW Metroplex (Plano, Frisco, McKinney, etc) they say the unemployment rate is somewhere down in the 2% range.  Pizza delivery drivers can get $15 an hour, and McDonald's is begging for help, even offering starting pay of $12+.

Yesterday I was talking with my steel fabrication vendor and he said it was just he and his son....they can't hire and keep help, and they pay very well!  My electrician has been trying to hire for 2 years with no luck.  Construction material prices are continuing to climb.  We try to buy 300 yards of concrete and can't get anyone's attention at the concrete plant....they're shipping tens of thousands of yards daily to commercial construction sites.  We're small fry!  Any materials with a petroleum base have gone up dramatically along with the recent increase in crude prices.  Talk of import tariffs isn't helping, either.

It wasn't long ago that the cost of living in my area was below the national average.  Now, according to one report I saw recently, the CoL in my immediate area has surpassed the national average.  Property tax bills are hitting homeowners hard after a few years in the doldrums.  Standard and Poor's Case Shiller home price index actually says our area's home prices today are OVER valued.

Where am I going with this?  "Make hay while the sun shines" as they say, but be cautious.  Make all you can while you can, as these good times will eventually go flat just as other overheated good times have in the past.  Just recognize where we are in the economic cycle and don't let yourself think this is the "new normal".  Remember what happened to those who got fat and sassy back in the run-up to 2008?

Let's all enjoy our good fortune today and be grateful, but not let it go to our head.  Been there, done that.

S


9 comments:

  1. I saw a KFC sign saying hiring managers for up to $37,000. I'm in the wrong line of work I guess. Of course that's just to get people to apply; chances are they'll offer less than that and hope you'll take it.

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  2. Now that I'm in the furniture manufacturing sector I can really see all of this. We're having to pay a premium to get and keep skilled labor, and we're banking on there being a market for our high end custom furniture. It's kind of scary!

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  3. There is some insane inflation going on since 2014, when I started keeping track of a few things I want to purchase. Airplane I want has gone from $95K to $ 425K, Condo I want has gone from $ 320K to $ 1.5 million. Thankfully I can be happy where I am in life.

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    1. You've heard the old saying, "All things in moderation"? That's good advice when it comes to food, liquor, personal spending....and the economy. If you don't like the bust, if you're not prepared for the bust, then don't wish for a blazing hot economy. Have we already forgotten the lesson of the run-up to the 2008 implosion? When things get too hot, smart people milk it for all they can, but personally prepare themselves for the inevitable bust to follow. That was my point with this post.

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  5. $15/hr. may sound like a lot, because it's so much higher than minimum wage. But if you work 40 hrs/week, 52 weeks/year, you could still not afford the rent on the average 2-bedroom house/apartment without paying more than 30% of your income here in Florida.

    In Florida, you'd need to make $20.68/hr. And you can probably guess how many single parents make that kind of money.

    Agree with you on not becoming fat and sassy. I remember 2008, and I'm old enough to remember how during the "great economy" during Reagan, when all these jobs were created, my husband and I had FIVE of those jobs, just to stay above water...

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    1. I agree in principle that our minimum wage is not enough to support anyone. But if those unskilled workers who make $8 or $10 are given raises to $15, then those making $15 will want more, too, saying their skills warrant it. And then those making $20 will want more claiming they have more talent than those previously making $15, and so on. Inflation will quickly eat up the raises and probably more, too. The key is to train people and give them the talents to produce more, making their raise non-inflationary. And it seems to me NOW is the time to get that training while employers are willing to hire and train people hoping to get new people on board. Get it while you can, people.

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    2. Agree with you on that; it's not a simple problem. Anyone who needs to think about this problem should consider that the extreme increases in executives' pay over the last few decades didn't seem to increase inflation. And yes, of course there are a lot less executives than grunt workers.

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