Wednesday, August 25, 2010

Americans these days are concerned, or downright fearful, of what the future may hold. With the current economic situation and all of the unrest around the world, we have a reason to be concerned. This is not 1950 any more. We do not have a lot of confidence in our leaders, our economy, or even that we will have a job tomorrow. The era of "buy what you want, when you want it" is over.

Most people aren't buying big ticket items any more. Existing home sales are way down. Car sales are down. People are not eating out as much. Everyone is trying to find ways to save money.

For businesses, that means not hiring any new employees or in some cases, laying off. For the working class, that means eating more Mac and Cheese instead of grilling steaks every weekend. We try to find less expensive ways to entertain ourselves. The big problem with this is that it is a vicious cycle that just feeds into itself. Say you own a moderately priced, sit down restaurant and you have 12 employees, 3 cooks/chefs, 6 servers, 2 busboys and a hostess. You have owned this business for several years and have always managed a reasonable profit. Suddenly, the banks are not issuing small business loans and you need a new grill. You have the choice of doing without the equipment, buying it from your own salary, or getting it fixed as best you can. You decided to get it fixed and hope you have enough profit in the next couple of months to be able to buy a new one. Then one or two of the major employers in your community begin to lay off portions of their work force. Those people will have a hard time finding new jobs in the current economy so they will stop eating out. Your business drops off. You change your server scheduling because you don't need all of the wait-staff standing around getting paid with nothing to do. They all get fewer hours and fewer tips. So their personal spending is affected which affects other businesses. Your business slows to the point where you have no choice but to lay off 2 of the servers and 1 of the cooks. So now you have 9 employees. During the busiest prime time rush, your service is slower because you have less help. This causes customers to not come to your restaurant as often. Less business means you either have to raise prices or lose money. Raising prices causes fewer customers, who are also trying to save money, but losing money means that you cannot afford to upkeep equipment, buy quality ingredients, or pay a decent wage. You have no choice but to close your doors. Now there are 9 more people out of work.

All of these things are inter-dependent with every other business in the community. If even 1 business goes under, it effects everyone. And this is happening all over the country. And small communities are being hit the hardest. They are the ones who can least afford for a business to close it's doors.

People are scared that if the economy doesn't get better, all of the jobs in the US with the exception of teachers, public safety(police and firemen) and union jobs (which are protected by the big wigs in Washington) will simply go away. The jobless numbers that we hear about on the news are ONLY the new unemployment claims, not those who have been unable to find a job for the last 18 months.

But even so, you think 10% isn't a bad unemployment number. But think of it this way. That is 1 out of every 10 people you know has just gotten laid off. You know 30 people? 3 of them got laid off this month. And the next month, 3 more get pink slips, and so on. Eventually, most of the people you know will be without a job. Some, maybe half, will be able to find a job of some sort, but it will probably not be for the same pay they were getting before and it probably will not be in their chosen career. It is just a job to keep the bills paid. And it will take them longer to get that job because employers do not want to hire over-qualified people for entry level positions. And there is a lot of competition for every job opening.

Is it any wonder people are nervous? According to the US Department of Labor, 14.6 Million people in the US, and 6.6 Million of those have been unemployed for more than 27 weeks. Don't believe me? Here is the press release from the DoL dated Aug 6, 2010. .

Does anyone honestly think that 14.6 million jobs will miraculously appear in the US so these people can go to work? Not very likely.

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