October 30th, 2021
America’s workforce turned its back on working

Dear Rebel Investor,

It was beastly hot.

But I didn’t mind.

The AC in my car was cranking, so I couldn’t have cared less about the heat.

Then the frosty air that was keeping me cool suddenly turned into a desert wind.

Crap!

The next day I called a Ford dealer to get my AC fixed.

We’re slammed right now,” the mechanic said. “I can’t get you in for two weeks.”

I got a similar story from two other Ford dealers.

A friend of mine halfway across the country is going through a similar saga.

He said he had to wait 10 days for an appointment to get some exhaust work done on his car.

Having to wait for days or weeks to make an appointment with a mechanic appears to be a nationwide trend.

So what’s going on?

Is there a rash of auto breakdowns overloading mechanics across America?

 

No…

As is the case with virtually every kind of business, a shortage of employees is gumming up the works

This is really true of the service industry and blue-collar trades.

From restaurant servers to mechanics to delivery drivers, we’re in a manpower shortage for the ages.

I’ve never seen anything like it.

What the hell’s behind it all?

Sure, Covid-19 threw a lot of people out of work.

And the $4 trillion the US government’s given out in pandemic relief enticed a lot of would-be workers to stay at home.

But that government stimulus money only amounted to – at most – a few thousand dollars per person.

By now it’s long gone.

So how are all these people still sitting at home surviving? Where are they getting their money?

I’ve spent a lot of time ruminating over this mystery.

That’s inspired me to dig a little deeper.

And what I’ve found is…

Over one-third of Americans don’t work

According to the U.S. Bureau of Labor Statistics, the country’s labor participation rate was 61.6% as of September 2021.That means over one-third of working age American adults are unemployed.

In December 2019, the labor participation rate was 63.3%.

So we’ve lost nearly 2% of our labor force in a mere 20 months.

No surprise, the pandemic played a huge role in that drop.

labor-force-participation-rate

 

But as you can see in this chart, the trend for fewer Americans working predates the pandemic by two decades.

In the case of American men, this trend started much earlier.

In fact, the job participation rate for men peaked at 87.4%… in 1949!

labor-force-participation-rate-men

 

It’s been eroding ever since and now stands at 67.7%.

That’s 30 million men!

What gives? How can they pay their bills?

How people who aren’t working survive in America

One answer – mom and dad.

The trend to live with your parents seems to be especially strong with single men.

According to the Pew Research Center, a third of all the single men in America live with a parent.

Obviously, living down in your parent’s basement makes it a lot easier to stay out of work.

Then there’s the issue of retirement.

It’s no secret that more and more people are reaching retirement age. So they’re partially living off pensions, Social Security and 401ks.

Others are collecting disability insurance.

And of course some are working under the table.

Obviously, that’s a very hard group to track.

But you can bet that the underground “cash” economy’s definitely putting a dent in the American workforce.

 In fact, a study by the Federal Reserve of St. Louis says the “informal” economy of a first world country like the U.S. is 13% of GDP.

 Since the U.S. has a GDP of $22 trillion, that equates to about $2.86 trillion being earned off the books.

 Not exactly chicken feed...

 So we’ve got sponging off your parents… 

Pensions… 

401ks… 

Disability payments… 

Social Security checks… Working under the table…

Chances are you’ve heard or read about these factors being major drivers of our labor shortage.

Here’s one I haven’t heard much about –

More people are entering the field of retail investing

Since the Covid-19 pandemic, the number of retail investors has increased dramatically.

In fact, they now account for nearly as much volume on the U.S. stock market as mutual and hedge funds… combined.

According to a Charles Schwab survey, 15% of current retail investors began investing in 2020. 

We have the pandemic and its lockdowns to thank for that surge.

And what a surge!

According to JMP Securities, the brokerage industry averaged over 10 million new clients in 2020.

They picked an excellent time to jump into the markets, as the Dow 30 has skyrocketed 75% since the March 2020 lows.

All the other indices are up dramatically as well.

Clearly, many new investors have made a lot of money from all that.

Maybe even enough to make investing a full-time job.

Perhaps you’re one of them.

If so, congratulations!

We’re here to serve rebel investors like you.

And if you’ve yet to make the kind of money you just know you can make from the markets, we’re here for you, too.

So please avail yourself to all the reports, educational resources, and back issues of our newsletters you’ll find at our website.

Do so and I promise you’ll be a much smarter investor.

That’s it until next time.

Yours for financial success,

Doug Fogel
Contributing Editor, Dear Retail

P.S. I’d be remiss if I didn’t update you on the saga of my car.

Yes, I was finally able to get an appointment to repair the AC (after a one-week wait).

And while it was fixed, I was warned it might not stay fixed.

The reason – Ford’s diagnostics equipment indicated that my car’s HVAC control panel should be replaced.

I was also warned that the control panel is on backorder…

… and that could be months before any come in.

The reason?

I think you can guess.

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