9 Responses to “May 27, 2022”

1. stusclues says:

   May 28, 2022 at 10:57 am

   “I’ve mentioned in the past – but can’t find it – that the increase in capital’s share of GDP relative to labour is thought to have boosted stock market returns considerably since 1970. If this reverses, that will be a stiff headwind indeed for the next few decades of equity market returns.”

   Capital’s increased share of GDP is at least partly due to falling labour force participation rates over the past two decades, e.g. from ~67% in 2000 to ~62% today in the USA. With the Boomers retiring out and the leading edge of GenX starting too (me included), only immigration is going to slow this trend. It’ll be interesting to see how much further erosion in participation rates is to come (1/3 of us already don’t do any paid work. truly amazing) but this phenomenon begets the growing (not fast enough IMO) interest in wealth taxes vs income taxes.

2. jiHymas says:

   May 29, 2022 at 10:41 am

   Capital’s increased share of GDP is at least partly due to falling labour force participation rates over the past two decades, e.g. from ~67% in 2000 to ~62% today in the USA.

   I’m not sure how much I buy that. If the declining labour supply were a driving factor, surely one would expect an increase in real hourly wages over the period, which is something that we have not seen at the low-end of the spectruM or in general.

   I think the driving force has been the increasing scalability of production due to computerization – a handful of programmers can keep millions entertained for a year – aided by government policies that have kept the real minimum wages flat, at best. ‘Right-to-work’ laws in the States and globalization also play important roles.

3. ratchetrick says:

   May 30, 2022 at 7:14 am

   I think any analysis of the labour situation would be incomplete without consideration of the all new “work from home” employment category. Covid created this concept out of necessity, but over this era, employees latched on to the incredible benefits of not needing to commute and spend their day in a job venue. Automobile costs, food & clothing, commuting time being wasted daily…all essentially erased by working “at home”. Sadly for the economic pundhits, workers have aggressively succeeded in making this concept a permanent fixture. Soooo….jobs that cannot “work from home”, such as the food service, have suddenly gone from not desirable, to the absolute bottom of the food chain (no pun intended). As for the housing market, staffers lucky enough to have locked in their pyjama wearing six figure careers suddenly have only one priority… the “home” part of work from home. The house can be anywhere, as long as there’s internet available. What’s the most demanded feature in a house right now? Proximity to services? Nope a pool? Nope … a desirable in home venue to establish an office. So for those who want to analyze gdp, baby boomer retirement trends, and so on … all very relevant, no question….but, if anyone believes that the “McJob” based workplace will ever be anything but the most desperate of last resource employment….or if anyone believes demand for a house will be significantly reduced by superficial mega interest rate hikes, I think they’ll be in for a surprise. All these strategies ever accomplish is clearing out that sector of market participants that shouldn’t have been there in the first place. In the meantime, get out of bed, grab a latte, log on…and start earning that big salary! Just keeping it real.

4. stusclues says:

   May 30, 2022 at 7:57 am

   “I think any analysis of the labour situation would be incomplete without consideration of the all new “work from home” employment category.”

   While this is an interesting discussion in itself, in the context of how this thread kicked-off (i.e. the OECD article showing labour’s decreasing share of the private sector’s pre-tax revenue), “where” labour contributes its share doesn’t seem that relevant. To the extent that the private sector needs to share more or less of the spoils to accommodate work from home, that would be relevant but it seems remote that it would make much difference.

   I agree with James that scalability of production has a decent impact. So too does the inexorable march forward of technology in general. To the degree to which some technological change has been adopted specifically in anticipation of an aging workforce (telegraphed for decades in US/Canada/Europe/etc and in-play in places like Japan), the declining workforce participation rate would have some influence also (at least the portion due to unreplaced retirements).

   It is interesting to imagine where we would be right now in the US/Canada if the workforce was NOT declining. Labour power would be much weaker to say the least.

   “but, if anyone believes that the “McJob” based workplace will ever be anything but the most desperate of last resource employment”

   Time will tell but I think this is very overdramatic. COVID definitely brought forward in-time those jobs that can be done at home. Those will stay. However, pajama-based jobs will continue to pale in comparison to those in shared workplaces for many reasons: job necessity, supervision, team building, mentoring, etc.

5. ratchetrick says:

   May 30, 2022 at 8:53 am

   stusclues . . . I so wish you were right in your perspective. And you may be; what do I know? I can only speak from experience, and although it may sound a touch pesimistic at times (not purposely being overdramatic lol) . . . the reality in modern society is one of an increasingly lazy work ethic. Technology is vital, no question . . . but it’s often used as a “crutch”, more than the tool it should be used for. So too is “work from home” in many, not all, but many cases. Team building? mentoring? Please look at the job market for what it is: the average entry level to middle aged “professional” for the most part has no interest in these things. Trust me . . . it’s for the most part, just fluff. The first priority is comfort, the second is salary, the third is promotion & job security. The actual job function? Most who are willing to speak honestly would say, “who cares?” . . . unless they’re on an incentive, or stock option based pay scheme. This is the “me” generation . . . people would rather lay out $30 or $40 for a Big Mac meal delivered to their door, than actually go out to buy it for $6. Sorry, but laziness abounds in every aspect of the employment market, and all it really means in the end, is that the consumer takes the total hit. “Service” has become a non reality. How about this: when was the last time you had a transaction that got messed up, and the supplier admitted an error? Not for a few years, right? Why? Because it’s easier for them to just say, “covid”, or “supply chain issues” . . . no one has screwed up even once since Covid. So get prepared to be an abused consumer . . . for a long time.

   Sorry about the rant; I know this is a pref investing forum . . . but looking at reality through rose coloured glasses is just not a realistic perspective.

6. stusclues says:

   May 30, 2022 at 9:39 am

   “Team building? mentoring? Please look at the job market for what it is: the average entry level to middle aged “professional” for the most part has no interest in these things.”

   Respectfully, I couldn’t disagree more. For the vast majority, paid work is a reality that consumes a large part/majority of adult life (longer lives at last, happily, having some impact here). Meaning, purpose, connection, friendship, achievement, satisfaction, etc. are sought in some combination by most IMO. Otherwise, it is a long, sad life.

7. ratchetrick says:

   May 30, 2022 at 12:15 pm

   Ah yea, the one guy out there who probably hasn’t been in the corporate world long enough yet to experience corporate politics, supervisors taking credit for your work, being left behind in promotion decisions, having co-workers defect to competing companies, being ousted in corporate downsizings, and so on. I absolutely love your optimism, stusclues! If only you knew how many more people relate to my little summary, vs yours . . . you would start to understand the meaninglessness of devoting yourself as an employee, to a career. Maybe you’ll be the one that does it all without being sideswiped, and if you are, I congratulate you in advance. The only thing I’d add would be that “self employment” is a far more creative and rewarding path to follow, . . . if one wants to avoid a “long, sad life”!

8. stusclues says:

   May 30, 2022 at 12:30 pm

   “Ah yea, the one guy out there who probably hasn’t been in the corporate world long enough …”

   I’m retired (without a pension or inheritance) after 35 years of experiencing all of it in spades, including self employment. I think your poll would line up well with Pierre Poilievre support numbers.

9. ratchetrick says:

   May 30, 2022 at 1:45 pm

   “Meaning, purpose, connection, friendship, achievement, satisfaction, etc.”

   That indicates you were never employed in any kind of competitive sales/marketing kind of environment.

   “Retired without a pension”, . . . removes the “cash for life” government employee, or banking/financial services bureaucracy type options.

   You say you’ve experienced it all in spades . . . yet, your attitude about the current business situation appears to be hugely positive.

   The only possible explanation is that you’re a very forgiving, optimistic person, with a perpetually positive outlook on life! Good thing you mentioned the 35 years of experience . . . because without that, “naive” would’ve been the obvious conclusion!

   Great chat . . . thx!