amassafortune (30.29)

Employment Improving - Kind Of

February 03, 2012 – Comments (1) | RELATED TICKERS: ADP , PAYX

The employment picture improved in 2011, but the net gain for employees still leaves most middle class families with little room to expand spending.

As reported Jan 31, 2012 by the BLS, year-over-year compensation rose 2.0%, wages and salaries increased by 1.4%, and the cost of benefits increased by 3.2%. 

From the employers' perspective, they paid 5.2% more for compensation plus benefits. The devil in the details is that health insurance premiums increased by 9% in 2011. The difference was either borne by employees, or was made up by decreased health coverage or higher deductibles.  

Take-home pay did not keep up with inflation. 

Health insurance was not offset by wage increases. 

The expanded money supply is having its desired effect of encouraging inflation in an environment that would naturally lean toward deflation without intervention. 

Fate sometimes throws a bone to the hard-working folks, though. The very warm winter in the midwest is putting many dollars into the pockets of homeowners rather than utilities. Fewer dead batteries, lower snow removal costs for homeowners and businesses, fewer weather-related call-offs and supplier delays, and almost no frozen pipes. This is one reason oil is down, despite most commodities rising due to money supply expansion.

All-in-all, it's a very slow recovery, but one in which total labor costs are coming back in line with worldwide labor competition. The cheap U.S. dollar is keeping a floor under demand for exports.

Speaking of floors, in my book the S&P floor is now probably about 900 due to the money supply expansion vs. the 666 low of March, 2009. If we graph the market against gold we still get a very alarming market snapshot. 

The media is really playing up the +243K jobs number today, but we need a little over 200K per month just to tread water due to population growth. The birth/death business creation model adjustment was revised down by 1.2 million, but let's just keep with the glass half-full perspective. 

It took a bunch of debt, and the CBO says we'll go negative by another 1.1 trillion in 2012, but the ISM has us growing at 4 points above contraction. 

Comments? Is anyone soaring above stall speed? The numbers indicate the average worker has slightly higher gross pay, lower take-home pay (maybe not after the payroll tax decrease), and a lower standard of living due to inflation.