Let’s start by examining the positive side of the general unemployment story. Look at the employment data and you’ll see a picture that has marginally improved over the past several months. (Mind you, we’re starting from a horrible base, so it’s hard to get much worse and you could argue we have nowhere to go but up.) A trend is not defined by a single data point, but it must start with a single data point…and it appears that the data points related to employment are ticking up.
Today we have an example of such an uptick – McDonalds, during an employment event this month, hired 24% more workers than originally intended (62,000 vs. 50,000). Not only is McDonalds hiring, but they have determined that there’s an economic justification to hiring more people than originally planned.
Now for the negative side of the story:
1. What is a job at McDonalds? It’s a low-wage/low-skill job that adds little long-term value to an individual, family or economy. It’s a job that many don’t plan to remain at for long – a certain level of constant hiring is required to simply offset attrition. A job at McDonalds can be a relatively unsecure position since many positions are part-time and are easily fire-able; and since the value-added per employee is low, the opportunity cost of firing an employee is generally lower than more specialized industries.
2. What does growth at McDonalds imply? Since I assume McDonalds is targeted at individuals and families looking to eat out at rock-bottom prices, growth in McDonalds revenues and hiring requirements may indicate that its target market is growing. I haven’t run the numbers, but my gut tells me that Americans have scaled back their entertainment and food budgets – good for McDonalds, bad for economy.
3. What does 62,000 really mean? Out of 1 million applicants, McDonalds hired 62,000. This implies a 93.8% rejection rate…for a job at McDonalds. 1 million people, who incidentally comprise 7.4% of the entire pool of unemployed Americans, decided that a job at McDonalds was something they should pursue. My first job (when I was 14, by the way…) was at McDonalds and I can tell you that I definitely prefer what I do today. I’m sure many of those 1 million applicants felt the same way before they became unemployed. The fact that such a significant portion of the unemployed is now willing to do anything to support their families shows that the state of the American economy remains dire.
A job is not a job is not a job. But there comes a time when career aspirations, creativity and stimulation take a back seat to the hard realities of a 21st century economic depression. According to a recent Gallup Poll, 29 percent of Americans think the economy is in a depression, 26 percent think it is in a recession, and 16 percent think it is “slowing down”. In other words, 7 of every 10 Americans think the economy is in the toilet.
Bottom line: People need to eat and are willing to do anything it takes.
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Rita
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Plan B Economics
