Sept 1. Labor Day. Guns and Butter

–Just a few quick notes about labor and the markets.  I saw a note where Marc Faber cited a report from the US military that 71% of the US population that is eligible for military service would fail to qualify.  That’s ALMOST HALF.  (Just kidding, but I couldn’t believe that figure and thought he was misquoting).  So I looked it up and there are several stories in the press about this report, the one I will quote from is on the WSJ site from June 27, 2014.  “… the Defense Department estimates 71% of the roughly 34 million 17- to 24-year-olds in the U.S. would fail to qualify to enlist in the military if they tried, a figure that doesn’t even include those turned away for tattoos or other cosmetic issues.”  “The military deems many youngsters ineligible due to obesity, lack of a high-school diploma, felony convictions and prescription-drug use for attention-deficit hyperactivity disorder.”  “The quality of people willing to serve has been declining rapidly,” said Gen. Batschelet.
–Think about that for a second with respect to the US labor pool, and some businesses complaining about not being able to find skilled applicants.  I have tremendous respect for the US military but to say that 71% aren’t qualified is mind boggling.  Where does that 71% go?  Goldman?  What are the implications for wage growth?  Sure, skilled labor can get wage gains, but the Fed has absolutely no influence on this 71%.  Also, think about social services and the percentage of actual taxpayers that have to support those programs.
–And here’s another interesting story which points up some contrasts in the low wage service businesses.  The sentiment which is spurred on by our political leadership, is that everyone deserves a raise in these jobs, and that labor must start winning back its fair share from capital.  Perhaps there’s some truth to that.  I recall a clip from Bill Maher saying there is NO dignity in working at a fast food restaurant.  But take a look at this story:  Here’s a quote:  “We practice this philosophy by giving each promising cook and server a clear path to owning his or her own store. Right now, 45 former minimum-wage employees own Hwy 55 franchises. And up until very recently, we exclusively franchised with long-term employees.”  The minimum wage job isn’t supposed to be an end unto itself, any more than being a runner on the floor of the CBOT, which I personally did.  Want to see a job where you take a lot of sh-t and don’t make any money?   Run a few grain orders…and hand an order with the wrong contract month to Sheldon in the beans.  That guy took a good minute out of his day just to yell at me at the top of his lungs.
–And just for JC

Alex Manzara

Posted on September 1, 2014 at 8:41 am by alexmanzara · Permalink
In: Eurodollar Options

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