Keynesian economists are concerned about the decline in US government jobs over the past few years. They want the government to increase spending and hire more workers to make up for job losses in the private sector, but Shedlock puts the recent loss of government jobs into perspective.
The percentage growth of men in the labour force closely tracks population growth. The percentage growth of women in the workforce has skyrocketed. More women working allows for much higher household debt levels than ever before.
But the ability of households to take on more debt has peaked. Everyone (male or female) is working (or looking for work), whether they want to or not. Women actually overtook men in the work force back in 1990.
The unfortunate—and deflationary—facts: everyone needs to work to pay off accumulated debts and meet living expenses, but the jobs are not there; the US cannot afford and does not need all of the existing government jobs. Demographics are no longer favorable. Indeed, there are too few jobs, too much student debt and too few workers supporting too many retirees on Social Security.
Much pain awaits the US. Promises made to public worker pension funds cannot possibly be delivered. The US can no longer afford to be world’s policeman. Medicare and Social Security problems must be addressed as well; upcoming generations are likely to see a drop in standard of living vs. the baby boomers. This has never happened in US history.
Republicans refuse to address the income side of the balance sheet, and Democrats refuse to address the spending side. Neither party is willing to tackle military spending. How long the market lets these can-kicking exercises continue is anyone’s guess, but the longer it goes on, the more pain there will be.
The culmination will be a currency crisis at some point down the road. Timing is very problematic. Japan proves debt-to-GDP ratios may go on much longer than anyone thinks possible
To read Mike Shedlock article: Percentage Growth in Government Jobs vs Private Jobs vs Population Growth; Facts and Consequences
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