Employment in the New Economy

[frankq]

We've all talked endlessly about the lack of jobs. Unfortunately, IMO, the days of 4% unemployment are over for the next 25 years. Why? Lets have a look....

1. The events of 2008 forces companies to refocus on productivity while employees were forced to do more for the same pay or less or risk job loss. As workers increase production, less are needed.

2. Many businesses have already located outside of the U.S. Outsourcing will continue in low skilled factory jobs, customer service jobs, etc. while the few high tech manufacturing businesses will remain, like aerospace and chip manufacturing as examples. Technology is replacing people in many areas. CAFTA will just add to the problem.

3. Companies are continuing to invest in machines instead of people. Machinery doesn't take breaks, doesn't need healthcare, a 401K, etc. More and more manufacturers will invest in production machinery that can produce faster and reduce unit costs.

4, Immigration policy will be the last nail in the coffin. Politicians are more concerned about creating a loyal constituency then putting Americans to work. These people (legal and illegal) have been successfully taking manufacturing jobs for lower wages for many years. It's a case of demand outstripping supply for these jobs. If the demand can't be controlled through enforcement of current immigration law, and it appears the government is not interested in doing that, employment will continue to suffer.

[frankq]

Say what you want, but full employment in the new economy is going to be redefined as 7% unemployment. Many, many jobs will not return. Pining for bygone days is fruitless. Unfortunately, many Boomers will remain in the workforce longer than they anticipated because their 401K's, which were substituted for real pensions, didn't meet expectations. That means fewer jobs for the newcomers out of school. IMO, there will not be much relief in sight until we see significant retirement/die off of the boomers. (Not to be morbid, but it is what it is)

Since we can't change the rules of the game, going forward, how are you positioning yourselves and your portfolios? Where do you think we will be in 2-3 years? What sectors do you, as investors, like or dislike? Where are our best shots for growth? Where (what sectors) do you think hiring will be improving?

[blackliver]

Ag. Good corn & bean prices put money in the farmers pocket. He in turn spends it on new equipment and technology. Everybody gots to eat. Never seen a farmer hoard money.

[frankq]

Aug 28, 2011 10:07:40 GMT -5 blackliver said:

Ag. Good corn & bean prices put money in the farmers pocket. He in turn spends it on new equipment and technology. Everybody gots to eat. Never seen a farmer hoard money.

Good point, but what if the gov really pulls the plug on ethanol (corn) subsidies?

[blackliver]

Using corn for ethanol is a joke. Subsidized commodites is the goverments way of controlling food prices. If left to an actually free market, large corporations would take over and become even more controlling than big oil. Cheap food is the only thing seperating us from 3rd world countries.

[verrip1]

I've transitioned toward the distribution phase just at the right time. I always expected to work longer, but that just wasn't in the cards. So adapting wasn't so tough, because I had a plan and was in the midst of implementing it. I'm not going to be buying any private islands to live on, but I have what it takes to enjoy life my way.

As regards unemployment, my concern there is the impact on my son, who is doing well, but there are the uncertainties. It's hard to convince a 27 year old to build a stand alone emergency fund as well at making Roth contributions, but he does have it started (OK, so I helped him a little - sue me). No dependents yet, so he's got flexibility now that he won't have later.

[usaone]

Aug 28, 2011 10:07:40 GMT -5 blackliver said:

Ag. Good corn & bean prices put money in the farmers pocket. He in turn spends it on new equipment and technology. Everybody gots to eat. Never seen a farmer hoard money.

If you have a good education you will have a job.

Good post Q.

[lifewasgood]

Ag land with water rights. Water will become the next gold very soon. I recently purchased a piece of land with irrigation water and before the purchase had a farmer already signed up to lease it.

[Aman A.K.A. Ahamburger]

I still going with Ag, Oil/NG, Infrastructural, IT, Healthcare, Manufacturing.

I don't agree with your assessment that jobs are going to continue outwards. There is lots of evidence to prove otherwise. I have been posting it on the American Renaissance thread, but I will post the new entry below here. They are some good ones.

All those machines your talking about need people to fix them. That's where IT comes in, along with all the office IT, ect, ect. There are 10,000 baby boomers retiring a month, that stared this year. That will cause growth in healthcare, there is no doubt it.

There are gas lines exploding all over, bridges crumbling, and now, real talk about an infrastructure bank to start off the rebuilding of America.

Ag, Nat gas/oil are all necessities.

Then there is the service industry that will pick up along with the other industries. Plus all theses people need things so that's a good place for stocks, PG, JNJ, ect.

Here are the articles that outline what I believe is going on as wages rise for the rest of the world.

A Low-Tech Approach Shows A High-Tech Industry Is Alive And Well
Despite predictions of doom and gloom from the pundits earlier this decade, U.S. manufacturing is in fact alive and well, and gaining momentum against overseas competitors as evidenced by the popularity of the NTMA purchasing fair.
www.mbtmag.com/Content.aspx?id=3236

Manufacturers are in better shape today than they were over the last few years and are seeing a rise in orders. Two reasons for this improvement are an increase in orders from overseas, and U.S. OEMs reconsidering their move to overseas suppliers. Because of favorable exchange rates, the desire for shorter supply lines, quality issues from sourcing in Asia and other factors, large domestic and foreign manufacturers are turning to U.S. small and medium sized manufacturers for their sourcing needs.

More U.S. Manufacturers Reshore Assembly
www.assemblymag.com/Articles/Web_Exclusive/BNP_GUID_9-5-2006_A_10000000000001095194

Small Manufacturers Rethink 'Made In China
www.smartmoney.com/small-business/small-business/small-manufacturers-rethink-made-in-china-1312406724427/?link=sm_newsticker

U.S. welcomes revitalization of manufacturing
www.thetandd.com/news/opinion/article_ba163c92-c630-11e0-a112-001cc4c03286.html

US Solar Industry Was Net Global Exporter by $1.9B in 2010, According to GTM Research and SEIA
www.greentechmedia.com/articles/read/us-solar-industry-was-net-global-exporter-in-2010/

Reborn in the USA
www.charlotteobserver.com/2011/08/29/2563987/reborn-in-the-usa.html

The state-of-the-art operation represents a $5 million investment and will eventually hire 175 people. Production begins in December, with a workforce sprinkled with former Cochrane Furniture employees.