Current trends: broken families, pensions, red tape
I had dinner with my sister-in-law last night and I always enjoy our discussions as she gives me a view of what's happening through her politician eyes.
She was saying that the unemployment rate was probably 50% higher than reported as people have just stopped looking or they've fallen off the list of what qualifies to be counted. In rural communities it is higher, reported at 19% but in reality is maybe 30%, and people can't sell their homes so the men have been leaving to find work while the women stay behind and look after the family. The natural gas fracking industry has jobs so lots of men are leaving home to go work. She said it was very grim, depressing and lots of people having a very hard time.
Meanwhile levels of government services keep going down and down and down as every year there is a bigger chunk of the budget being directed to pensions. She said the increased pension costs were coming straight out of services, but it is compounded by the federal government's budget woes in that what they get in federal funding is also being cut yet they are still being left to manage and abide by federal laws that simply make things more costly to manage. Federal red tape needs to be cut as it is costly and the federal government simply isn't paying for it anymore and what the federal government wants isn't a priority at the local level and is seen as a hindrance to business development. Additionally, pensions are more protected by law, so expect more service cuts.
She also talked about how retirees are moving to maximize the spending power in their pensions. I guess once you retire you aren't tied to where you live by the job anymore so there is a lot more freedom to move around, so pensioners are looking for states with better cost of living, cheaper housing and lower taxes, but she said it tends to be the pensioners with tighter incomes that are moving.
So, I picked up a few things to think about. What will happen to federal laws as the federal government tries to down load them to the state level? I always knew pensioners were cashing out of more expensive places and moving to cheaper places, but I didn't see it as the pensioners with tighter incomes as she sees it and maybe she is seeing this because where she is the cost of living is lower and taxes are more favourable. And then it is pretty sad how the recession is causing families to be broken up.
My reading has included predictions of a lot more hardship coming as municipal and state governments across the country make cuts and increase layoffs and certainly the with the lack of choices due to increasing pension costs that can't be cut, this isn't a maybe but is already happening and is going to get worse.
So, I guess my last post I talked about being in year 1 of this demographic jump in pensioners, but what I didn't see is how it is completely tied and coupled with government jobs, each jump in these pensioners results in a cut in government workers, so that's a potenitally double hit to the markets as I tend to think the government works have more money for investments as government jobs tend to be better paying. I can see cuts going across many businesses as well as their pension obligations increase.
The black box called government certainly isn't working any magic.