A race to the bottom: Inflation, Recession, and the Job Market

 Prelude - yes, I decided to dust off the old blog, actually the ORIGINAL blog,  for this article because I've turned some of the others off. I've gotten too busy to maintain all the separate sites so I decided I'll just post content here if I want to share something off of social media. (It can't get banned here lol).

Race to the Bottom

I'm not an economist.  I don't have a masters in sociology or anything else related to the human condition, but I do live here amongst the rest of us and I listen to the news pretty much daily and as I hear and read these articles on multiple subjects I can't help but feel like they're connected. I find myself wondering if the economic analysts and the jobs analysts and the market analysts ever just get together and have a drink and share ideas. Because some of this is just too common sense not to be related.

Worker Strikes

We're undergoing quite a few strikes across the country right now. Writers guild, actors guild, healthcare workers, union auto workers, and probably a dozen more I don't know about. They all have one thing in common; they're about money. Everyone wants more money. I'm neither agreeing nor disagreeing with their stance. I'm merely pointing it out. Most of them feel undervalued in one way or another and that value is normally equated somehow to a financial figure. I don't need to dive much deeper than that for most of these organizations to make my point.

Jobs Market

The news today in one podcast mentioned how we added 336,000 jobs in September, which blew away the expected number of 170,000. So we DOUBLED the number of jobs they expected to be filled in September. Keep that in mind and consider the next paragraph.

Unemployment is high

Unemployment is at it's highest since Feb 2022 - so almost two years. But the same report says that unemployment is low and stable, resting around 3.5% right now. Ok... where are all these workers?

Entire job fields are suffering

So if unemployment is low/high/stable (still can't make sense of that one) and we're adding 336,000 jobs a month - why is almost every major critical field suffering from not being able to hire?

Doctors - overworked and under staffed.

Nurses - overworked and understaffed.

Veterinarians - none available despite tremendous salary increases in recent years.
Veterinary Technicians - same argument. Not enough to go around.

I listened to a podcast today where a college is coming under fire for not being able to accept enough students. More students want to go, but there's not enough professionals to instruct them, so classes are fewer and far between because they can't instruct them - which means less of them coming into the job market in 4 years - which means even less instructors in 5 years - which means even less coming into the... you get the idea right?

People aren't taking jobs:

It doesn't matter if its fast food, fine dining, retail shelf stocking, manufacturing, or neurosurgery. People are simply NOT taking the jobs they normally would. It's not 100% a lazy entitlement attitude, though I firmly believe that exists in higher percentages than any other period in our history. It's math. The reason they're not taking the job is math.

Employers have increased wages maybe 10% to attract employees. That's great...except that anyone that's ever gone grocery shopping knows that inflation is leaving that figure in the dust. 

Do I really need to be the one to explain this?

Let's do this barney-style.

Let's base it on coca-cola - a simple drink people purchase.

Three years ago it was $5 for a 12-pack.

Last year it was about $6.50 for a 12-pack.

Today it's $8.00 for a 12-pack.

These are walmart prices - not bougie higher-end markets.

So in 2021 coke was one price. Then it jumped 33 percent in a year. Then it jumped another 19 percent this year (so far).

But let's use actual normal inflation numbers for food:

Source

If you wanted to match that with a given hourly wage - and I'm a normal employee somewhere that used to make $11 an hour but now you're offering me $15 an hour, how does that breakdown for my grocery bill? And let's further assume I used to have a grocery bill of $100 a week in 2020. (That's about what ours was a couple years ago).

My weekly grocery cost in 2020: $100 = $5,200 a year.

My weekly grocery cost in 2021: $103.94 = $5404.88 a year.

My weekly grocery cost in 2022: $114.28 = $5,942.56 a year.

My weekly grocery cost in 2023: $120.43 = $6,262.36 a year.

Now, let's factor in just rent increases. That's one that a huge percentage of people are dealing with.

NC inflation for rental prices jumped 20% in 2022 over 2021. In 2023, the total jumps to 32% higher than 2021.

Median rent is currently $1,183 per month in NC in October 2023, so let's roll that back to get good numbers. I'm going to use $1,200 to have an even number to work with.

2021 median rent: $806.40/month = $9653.28 a year.

2022 median rent: $960.00/month = $11,200.00 a year.

2023 median rent: $1200/month = $14,400 a year.

That's just two simple figures - groceries and rent. Literally only putting food in your face and a roof over your head. That's not counting heating it, cooling it, cooking in it, water, etc. Just two things every single one of us have to deal with in some form or fashion.

So, these two costs alone change as follows for rent and groceries.

• 2021 - $15,058.13 per year.
• 2022 - $17,142.56 per year.
• 2023 - $20,662.36 per year.

Let's say I made $11/hour in 2020 and you've now raised me to $15 an hour in 2023. I work 40 hours a week at a regular job, no fancy vacations, but assume I get about 1 week off a year and we can't factor in overtime because that's unknowable.

In 2021: my total salary would be $22,400 per year gross, so about $17,054 take home pay.

I literally have a total of $166.36 a week to survive on for clothes, gas, medical costs, etc.

In 2023: you're bumping up my pay, so now at $15/hour it would be $30,600 per year gross, so about $23,256 a year in take home pay.

I literally have a total of $216.14 a week to survive on for clothes, gas, medical costs, etc.

Between 2021 and 2023, the cost to survive in America for a normal person paying a normal rent and a fairly small grocery bill for a family, has jumped 27%. That's literally only factoring TWO parts of life. Let's not even TALK about car payments, loan interest, etc.

So a pay boost from $11 to $15 for every employee out there, isn't actually a raise. It's literally EXACTLY level with the cost of living (using only 2 points of reference).

In laymen's terms, a $4/hour raise is literally, at the VERY BEST, allowing me to bring home close to what I brought home three years ago. It's absolutely ZERO points above the cost of living, and if you factored in everything else, it's probably less.

That's just math -feel free to do it yourself. I spelled it all out so you can check my numbers.

How do businesses solve it?

Solving it for businesses is simple. You want to know why Gatorade is now $3 a bottle instead of $1.79? One reason is they have to give employees more money. They raised prices and passed the cost on to you.

Coke has jumped 50% in three years.

Batteries, smokes, jeans, rubbermaid, dishes, you name it and the cost has gone up.

Let's say businesses on average jump prices about...oh I dunno... 27% to match the cost of that raise they just gave employees. 

Guess what?

Next year, the cost of living for your employees, just jumped a matching 27%, which means in order to bring home the same thing they did in 2023, you're going to have to give them a raise from $15/hour to $19.05/hour just for them to bring home the same money and survive.

It's a literal war between commerce and workers.

Companies have to raise prices to meet demands of, among other things, recruiting employees. Employees have to demand more because all the things they buy are going up because of the rise in demands to meet their salary requirements. No one is getting rich. Everyone is skating by at best. Prices still keep going up because ONE side has to give in first or the system will never stop growing out of control.

How to workers solve it?

They stop taking the jobs. They're finding work... somewhere they're finding work. They're bunking up with four people in a two bedroom apartment somewhere to make ends meet, but they're not dying in the streets in droves or wandering into FEMA homeless encampments, so they're doing it somehow. How long they can sustain it remains to be seen, but they're managing to do it.

But now they can't take that job at $15 an hour because it takes $19 an hour just to keep the lights on. Forget about saving for the future, or putting a down payment on a new car. That's not in their future at the moment.

Colleges are turning out less doctors, veterinarians, police, fire fighters, engineers, and more. The demand for those jobs is steadily going up. You think you've got it tough hiring employees for $19 an hour and figuring out how to pay for it? My wife owned a veterinary practice.... built it from the ground up herself over 17 years. We tried for THREE years to hire veterinarians. You know why? This will blow your mind...

Veteran doctors, herself included, were making around $85K-$90K per year gross. New grads - and I mean ALL of them - are demanding $125K to even show up to an interview. Let that sink in for a moment. Imagine having to hire someone at $125K when the doctor you work beside that's been a doctor for 30 years is making $85K. 

Imagine having to hire 4 more police officers at $55K a year (plus their related law-enforcement retirement costs) when the ones you work with that have been there for 15 years are making $44K.

You can't do it. To attract police officers currently requires about a 50% increase in what's being offered. Veterinarians is about the same 40-50% pay increase to get them in the door - and these are NEW people, fresh off the boat, no experience at all.

Doctors? Ha! I've got a doctor friend, relatively young... she didn't even consider taking a job (fresh out of college) unless it paid over $300K a year on DAY ONE of their employment. (And they got it by the way... people lining up to pay it... because they desperately need doctors.)

We're literally in a race to the bottom

I look at this from the outside and wonder if anyone else sees this? The only solution I see is for the government to get out of the way, let the inevitable recession happen, let free-market economy fall through the floor and eventually re-stabilize at something probably similar to 2017-2017 levels, and start again. 

Colleges will fail for a bit as they realize that on one is willing to pay $46,000 a year for a basic education. Professor's salaries will drop accordingly. Police forces will continue to decline until costs drop to where they can afford to take that job for a price the department can pay. That back and forth will go on across all industries as each market settles back into its equilibrium and then settles against each other's new pricing realities.

Am I wrong?

Discuss...

Transitioning the blog

If you've been a follower here on Jordan Life (formerly Scooby Central) you'll notice there's been less and less posting lately. That's because I've kind of become re-invigorated to work on my old website, carolinaregion.com. There's no much new code out there that I can finally do more on my own host than I can here on Google's hosted blogs.

Im not deleting this blog and will probably go back to co-publishing in both locations, but the old way I used to co-publish doesn't work as well with the new blog structures, so for now I'm mainly posting on Carolina Region.

Come visit me at http://carolinaregion.com

Getting my Groove Back…

Yes it’s been awhile since I’ve done serious blogging, and after the week I’ve had I’m trying to get my groove back and find a rhythm that works well for me personally and for the business. My classic mistake is over-exerting myself mentally then burning out on a concept; reason #247 while I may never be an accomplished author.

 

My life underwent a massive change when I moved out here to marry Amy and for a long time I looked at it, thought about it, and planned to ramp it back up, get back into selling computer services to everyone I could find, expanding my company portfolio with tons of new clientele, and making money hand over fist to support my family and all the dreams I always had.

As the lingering effect of green grass, pine trees, and warm soft clay worked its way into my psyche I found myself not really wanting to get back to that quite as much as I had thought I did. Rather than running my hands over a keyboard all day and wincing when I shoved a splinter into my finger in the woodshop like I did so many times in the beginning I now find myself running my hands over the textured surface of pine acacia, and oak, deftly feeling for the right use for that particular piece of wood more than I do at the keyboard, my hands hardened and immune to the small sneaky splinters. Callouses wrap my fingers and joints and the strength in my hands from turning over hardened clay earth to plant seeds and working even harder wood into comfortable furniture  has made my grip crushing where it was once dexterous. My dexterity is visibly less, but I wouldn’t go back to the other way I don’t think.  I don’t think it’s possible to have both really. You’re either one or the other and I’m finding I’m happier out here like this.

The company has slowed down measurably. With Tim on the east and me on the west we’ve both drifted off in little ways to our own things. We’re still working together on projects but not really on the day-to-day stuff we used to deal with. Computers are more a side-line to the project work we’re doing than they are a main source of income. The real work now is sweaty and exhausting and fulfilling. I’ve been wiring up Best Buy stores on contract from their corporate office and earn more in a week than I used to in a month, so it’s ok when I have a month of no work ahead. Now I have plenty of time to plant the rose garden before my next project is due to start. After that one is done I’ll use the down-time to build some more furniture to sell at the market on the weekends. Every Friday is now a reminder to cut the grass rather than to spend 4 hours doing payroll.

This isn’t to say I’m no longer doing computer work. Quite the contrary actually; having the time between jobs to do research into my markets gives me more time to learn and improve my skills, to focus on more finite aspects of IT rather than broad-spectrum wholesale coverage of the entire market. I’d rather get paid more for the things I do VERY well than I would hassle and negotiate rates for stuff that anyone can do with a little college education. Anyone can fix a PC, really, with a little intelligence. Building structured networks that exceed TIA/EIA standards is another matter altogether and doing it better than the next guy is just icing on the cake. After 5 years of sub-contracting for one of our vendors I finally landed a wiring project that includes structured cable infrastructure for the FBI. You really can’t beat that can you? I can talk about all the Blockbusters and Best Buy’s I’ve installed all day long (and those are good clients) but that’s nothing compared to saying I just wired up the new FBI field office. What’s your competition going to say to that? Nothing. They just walk away and shake their head. You don’t get those kinds of contracts without extreme attention to detail and serving out your time doing scut-work to earn it. Finally… maybe… I’m past the scut-work stage… (And if you’re in my market and thinking that maybe we bid the job, nope. I didn’t compete with anyone on the bid. They came to me and said “You come highly recommended. Can you wire our new law enforcement center?” Sure thing. Yessir. Be glad to!

Now that I spent most of a month getting that contract, I’ve been extremely bored this week, so I’m revamping the company website, my own blog, my other website.. you feel a theme developing here? I’ve completely redesigned carolinaregion.com, and I’m working on a new layout for twistednetworx.com that will focus more on three or four core areas of IT rather than trying to land every client that comes to our site. I’m back into web design again, strictly as a solo-practice and very selective about the clients I take on. I’m only taking one web site at a time now and only then if I feel I have the time to give it that it deserves. Otherwise, they can just wait for me to get some free time or they can find another developer who needs the work. I put more time into my code now, but there’s no other projects vying for my time so its easier to be more in-depth with the client that way. I should have done that years ago instead of just walking away from web design for about 5 years. The newer technologies are making it easy enough that my 63 year old mother now admins for two different web sites as an editor and author.

I’ve gotten back into WordPress authoring hard core, though still coding with Joomla when it makes more sense to do so. I’ve even had the time to work with a friend of mine on coding my own custom flavor of Sugar CRM as a product I can sell in his vertical market… all things I never would have had the time to learn or improve upon when I had six employees, 400 customers, and no free time because the phone never stopped ringing.

 

Between work and more work I’m playing in my shop and yard a lot lately. I’ve finally purchased my first riding mower ever in my life so I’m still in that “enjoying it” phase of cutting the grass each week, so much to the point that my mower gets washed and waxed more than my truck does! I’ve been gardening like crazy as well.  A neighbor offered me part of his hay-field for a garden this year and I took him up on the idea with fervor. After two weekends and about a hundred hours I now have over 500 plants in the ground and I’m growing everything in sight. I even had the time to work on a raised herb-garden for Amy (that’s the one in the picture). I finally put in the rose garden I’ve always wanted, and probably went a little overboard, but my wife likes roses and I like giving them to her… so now she has roses growing from the moment she steps out of the truck, all the way around the back of the house, and right up to the back steps! Yeah, ok, maybe I do overdo it a little, but I enjoy it thus far so leave me be.

 

On the more serious side of life Amy has been working herself to the bone. There’s nothing she can do about it; its just the way the job goes, but it’s wearing on her. She needs a break, but we need the business to stay busy because we need the income, so it’s a catch-22. I look very much forward to when some of my projects close out this year so she can financially relax a little and maybe even take a day off if she feels like it!

 

Some of you also have heard about little Piper, our Catahoula puppy. She’s been sick for a few days now. Amy spend the night sleeping on the couch last night with Piper on the floor in front of her. I spent the night on the floor in front of the dog, completely unable to sleep because I was really afraid she was going to stop breathing and I didn’t want Amy to wake up to that alone… We carried her to the small-animal vet today (My thanks to Mt. Pleasant Animal Hospital for being kind on the bill!) and she’s doing better. She’s gonna be on an IV here at home for a few days and then on oral antibiotics until she’s completely better. We still don’t know 100% what was wrong with her. The hospital suspects Parvo even though the test came back negative. Apparently if you catch it early enough it doesn’t always show up. Personally I can’t imagine catching it any LATER than we did… in 24 hours she went from frolicking in the yard to not being able to move her muscles enough to drag herself off her pillow. I don’t think she’d have survived the day without the great folks who took care of her today. It would have broken my wife’s heart to lose that dog… this is the first pet we’ve had in the house that’s really “hers” in the truest sense of the word. I’ve got Bonnie and Jordan has Biscoe and Piper is completely in-love with momma-Amy.

And speaking of Piper and Amy, I’ve been on here way too long so I’m gonna go in the house and goof off with my family a little. Happy trails all. Comment if ya like. You know my narcissistic personality craves the attention of comments!

Peace!