THIS IS MY 130TH BLOG ON UNDERSTANDING MONEY
TOOLS
March, 2018
I love to write about things that have impacted or affected
my existence on earth. I try to
give the few readers of my blogs some accurate facts or insider information
about industries I have been involved in that you won’t find in very many
places.
In the last blog we talked about inaccurate figures in the
government reporting inflation. I
did not give you answers. Think of
a few. At the end of this blog I
will give you the rationale reason.
Today, I will write about employment in the US. How did I pick this topic? For one, most statistics I read are
incomplete and therefore inconclusive as to how they may affect our business
planning and investments. Another
reason for this topic was my heated debate on the employment topic with a
friend last week.
Let’s start with the general and go more specific. According to government numbers we have
325.7 million people in the United States as of 2017. The Bureau of Labor Statistics gives a figure of 157,833,000
people who are employed. Now, here
is where my discussion became interesting. I mentioned that President Trump said on television that
unemployment remained close to full employment at around 4.1%, however there
were 100 million Americans working age who aren’t working. (Granted there is a certain percentage
of these people who are not able to work because of physical or mental
disabilities, or other issues like stay at home moms.) I gave a retort to my friend that the
figure I am acquainted with is about 95 million, less than Trump’s. I won’t spend much more time on the
discussion, but the friend said it was totally impossible. Admittedly, I am not the smartest
person on earth but don’t like to be referred to as an idiot! Later I looked up this disputed fact
and the Bureau of Labor Statistics gives the figure of 94,610,000….so I was off
by a few people! The US is not in
full production.
As we are on this topic, I delved further into employment
facts from the government and thought I would include these as a point of
interest. There are a lot of
full-time government workers; 22 million for the Feds and at least another 7.5
million in state and local governments.
That is a one in 5 ratio to all employed. Alaska has the greatest number of government workers and
Wyoming second at 25.8% and 25.5% respectively. I guess they hire quite a few to watch over the bears! So, one in every five people is
supported by a government agency.
In the number of employed the government estimates 28
million workers are part-time. One
in every ten school teachers holds a second job.
Now, this is where I have some fun with our employment
figures. I, as one human being,
have been counted as two to nine employees for the past 20 or 30 years. How? As an example, in my case, which is not that dissimilar from
many, currently hold two employment positions. One is as an employee at a real estate company that places
me on development projects on an “as needed” basis. We are employees, not outside contractors. I also work part time for another
company. This company has 25
employees on the roster, however there are only 2 to 7 employees working at any
given time. Most retailers do this
as they are not inclined to pay benefits.
A few years back I was part of 2 retail stores I started. I was noted as a full time employee at
both, and had my real estate license with a brokerage firm and an employee with
that firm. Get the picture?
Let me proceed further with this picture of our US
employment being exaggerated. Our
Target Store in town employs about 105 employees. At any given time the store only uses about 25
employees. Target’s Human Resource
Department watches employee hours quite carefully so they won’t qualify for
benefits. The employees get to work
anywhere from 8 to about 25 hours per week and several people work a second or
third job to make ends meet.
Here is another specific example. I was discussing this situation with a friend 3 years ago
and he related another story. One
of his closest friends owned 450 fast food franchise stores. To protect against liabilities this
individual had each store set up as a separate corporation/partnership (a
Limited Liability Corporation, LLC).
The man who owned these 450 stores was also listed as an employee of
each. So, in the stats one
individual just turned into 450 employees. We also discussed his workers; no full time except for
perhaps a manager. If employees
needed a 40 hour work week they were permitted to work 20 hours at one store
and then another 20 hours at another store owned by this man. In this case you worked for two
corporations. No benefits paid to
employees.
Are there illegals still working in the US, even with ICE
and other government crackdowns?
Certainly. Here is how it
works. Let’s take the real estate
industry, again which I am very familiar with. Some of the best drywallers/sheetrock workers are from a
country south of our border. The
same goes for any kind of exterior stone work, concrete work and roofing. A developer of a subdivision will line
up his subcontractors for various work.
Illegals know that to comply with government regulations they need to
supply the construction company with two forms of identification, one having a
photo, the other being something like a Social Security Card or Passport. This worker first goes and finds a
place in the city that will provide false documents with a phony name. This process only takes a few minutes
and costs about $30. The worker
gives these to the contracting company and this meets the I-9 Form regulation
which the employer retains on file.
Many of these workers work on a “piece-meal” basis. As a for instance, if you are a
dry-waller you get “X” amount of money for each piece hung. This worker gets paid on a 1099 Form. When the worker gets paid he takes the
check, goes to one of the many “cash checking” operations around town, provides
the false name and ID’s, and takes his money, less there percentage for cashing
the check.
Going back to the friend on the employment figures, let me
touch upon one more thing. My
friend wanted another dig at me (by the way we were on our second or third
drink at this point). He once was
on a town council, and therefore knew everything. He pointed out that I was a fairly large real estate
developer and all developers were crooks!
Not true. In the real world
this is what happens. Few
developers are crooked and certainly don’t want to give cities, towns and
councilman money they don’t deserve.
Many of the towns and cities in the US are broke. Here are three examples that I
personally know of or have been involved in:
- A
town where I was developing land was broke. The mayor came to us and asked if we would buy more water
rights for water taps, even though we were already approved and the taps not
needed. We paid the town $750,000
just for “good will”, and to move forward.
- A
friend desiring to develop a family farm in the suburbs of Chicago. After everything passing city council
and the mayor, an individual, and lawyer, on the council demanded that his law
firm review the proposed bonds for a second time. Review fee was established at $1 million; ridiculous and my
friend pulled his project.
- In
the Milwaukee area a friend and developer’s 40 acre subdivision approved and
then disapproved by the city. It
took my friend so long to fight this that it caused personal bankruptcy. (The re-zoning of land, real estate
taxes, legal fees, bank loans, etc. were the reason for his bankruptcy.) The city lawyer said that if he wanted
approval to proceed he and the city should receive a 25% interest in the
project. That happened and now the
project is completed.
Bottom line.
Are the developers crooked, or are the forced to make “bribe” payments
to town, mayors and councilmen?
Answer to the above inflation statements made in Blog
129. Many government and insurance
payments are “indexed” to inflation.
If the government included high inflation industries it would further
bankrupt this country. This includes Social Security which is tied to, or “indexed”,
to inflation.
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