I had a conversation yesterday with a reader, whom I’ll call John, of this column and apparently many other newspapers. I often get nice comments, but those are usually from friends and acquaintances. John and I had some trouble connecting over the past couple of weeks, but I wanted to hear what he had to say since I got the message he was pretty upset with me. I now could ignore him and forget about it, but I am sure he represents thousands in greater Kansas City and millions in our country. So this is to John and all those who feel like he does.
You cut me pretty badly when you called me a Con Man and said that I lie about our economy and my various observations and conclusions. I would like to respond to those points you made that I can remember.
First, you said our true unemployment rate is probably 13 to 14 percent rather than the official Bureau of Labor Statistics number. I do not disagree, especially if you look at certain socioeconomic statuses. But the Bureau counts only those who actively sought work in the past four weeks. If you have not, you are counted as being not in the labor force currently.
From its household survey, the BLS also estimates the number who are Marginally Attached to the workforce and a subset of that group called Discouraged Workers. The latter folks are people not looking currently because they believe there is no job in their line of work, they have been unsuccessful in their efforts, they lack necessary skills, training, or experience, employers think they are too old or too young, or they face another type of discrimination.
October statistics show 92 million Americans (of all ages) not in the labor force. There are 6 million currently seeking work (the unemployed) and 2 million others Marginally Attached. I was surprised that only 770,000 of the Marginally Attached are Discouraged Workers—I thought it would be much higher.
Second, you disagree that the economy has been growing again since June, 2009. A recession is two or more quarters of less economic output. You can question the data, but the total reported value of goods and services we produce in the United States began rising instead of falling during that month and quarter. It is still growing in value, even after subtracting inflation.
Third, the oil companies do earn Billions in profits and it is ludicrous to think our world economy will crash if oil sells for less than $75 per barrel. In the past year, the biggest oil company by revenue was Shell. In the past year, they booked a profit of $16.1B from $438B in sales. Both of those are huge numbers. But that is only 3.67 percent margin of profit. Well over 2,500 public companies had a higher profit margin. Public Storage netted a 51 percent profit, over half of its $2.1B in sales. I don’t see anyone protesting against high storage rates.
According to Sageworks (Inc.com/sageworks, August 6, 2014), the highest industry net profit margins are being earned by Accounting, Tax Preparation, Bookkeeping, and Payroll Services (19.8) and Legal Services (17.8). Third is Oil and Gas Extraction. But if you bring the oil all the way to the gas tank, your margins are much, much less. As I mentioned, per unit a plastic bottle of water is much more expensive than gasoline.
I am sure there are many other points I have made that anger you. If I am a Con Man, I am so good that I have fooled myself. I am a true believer in the creed of Larry Kudlow, economist and media contributor, that free market capitalism is the best path to prosperity. Is this a perfect world? Absolutely not and it will never be. Are there great things happening all around you and me? Absolutely, right along with the unfair and tragic.
I choose to dwell on the positive because I believe that my life works better when I do so. Even though Thanksgiving was last week, I am still extremely grateful to our great God for His blessings upon all mankind, but particularly those of us fortunate to be here in our land at this time. I commend this approach to you too, John. Thanks for sharing your comments with me.
Past performance is no guarantee of future results. Advice is intended to be general in nature.
(Company statistics from Worden Brothers, Inc., TeleChart 2000, 2014.)