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Something Like a Warning

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The Congressional Budget Office (CBO) has released their projections for the next 10 years and you can tell they were written by economists. There is plenty of good news and bad news in the report, and the details become very hard to read. Deficits will go down, and the economy will grow – but interest on the debt already incurred is going to turn into a very large and crippling bill.

To make these projections, they start with current policy and trends and simply extrapolate forward. None of it is written in stone, and some of it is clearly a warning to create new policies. Let’s run down what we have in front of us and what has to be done.

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Head Count or Overhead?

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What are you worth as an employee? A good check for anyone working is to add up what it takes to keep them employed and what their net value is to the company. A strong positive value means job security, something pretty valuable these days. But to do it right, what you cost the company is a lot more than just your salary. There are benefits, like health care and retirement plans, yes. The total cost is far more than even that and it can roughly be called the “overhead per employee”.

By the simplest calculation that’s more than 42% above what you take home, and it could be much more than that. And this overhead is one of the biggest barriers to increasing employment, reducing hours, and generally creating a better quality of life for working people in the US. Not to mention it puts us at a competitive disadvantage when it comes to creating high quality jobs.

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What Do You Expect?

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Another week, another crippling cold. It is January, after all, and numbing cold is only to be expected. But expectations are the key to surviving Winter, especially one as brutal as this one. As long as you expect it will be deadly cold, the few days spent actually above freezing turn into a blessing. And there is always the greatest expectation of all – that this can’t last forever and some day it will be Spring.

Expectations are also the key to understanding predictions and the sinking feeling of disappointment when they don’t come true. Barataria has come under some fire for insisting that predictions are the key to a worthy blog’s identity, so it’s only natural that we should deal with three stories of expectations gone horribly wrong in today’s news.

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Exit the Eurocrisis – Slowly

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Now that the Eurozone Crisis is over, we can all breathe a little easier. Right? While it’s good to not be loping along from one crisis to the next, the aftermath of the flood that lasted from 2008-2012 in drips and drops is still being mopped up. The hits are just being absorbed by the banks and growth is going to be sub-par through 2014, meaning that the lingering unemployment problem is not going away.

There are two parts left to this clean-up – what comes next and what can we learn? They are both important and will dominate 2014 in Europe and the developed world.

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A Persistent Lie

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There’s a persistent lie making its way through popular media- and often twisted through social media. Like any good lie it starts with a kernel of truth but gradually becomes a clear and open lie.

The truth – the labor force participation rate is at a 40 year low, down to 63% from a high over 67%.
The lie – that this is the result of people giving up looking for work, a sign that the “recovery” is weak (which can be blamed on President Obama).

We’ve discussed this before, but it’s important to confront the lie as clearly as possible. Yes, the labor force is shrinking – but this has been due to retirement of Baby Boomers for the last two year. And yes, the trend will continue. More importantly, this is an opportunity that will help us when the dust finally settles on the working careers of the Baby Boom.

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