- One out of three working-age men is doing “diddly-squat”
- Real men and “real” taxpaying, IRS-reporting jobs
- Yellen’s boneheaded scheme to increase tax revenue
- The market licks its wounds
- Marijuana’s outlook in N.Y. (with Cuomo out of the way)
- Booze rationing in the Keystone State.
“Almost one-third of all working-age men in America aren’t doing diddly-squat,” says an article at Yahoo Finance, written by the outlet’s editor-in-chief Andy Serwer (who frankly sounds a bit judgy).
[Also, we’re pretty sure there’s a double negative embedded in that sentence: If you are not doing diddly-squat, doesn’t that mean you are doing something?]
Back to our topic today, The 5 has long noted the disparity between the official unemployment numbers and the labor force participation rate — the percentage of working-age adults who are either working or actively looking for jobs. According to the St. Louis Fed, that number clocked in at 61.7% in August.
Meaning nearly 40% of American workers officially between the ages of 15 and 64 are sitting on the labor sidelines (for whatever reason). And of that percentage, about 30 million are men.
“They don’t have a job, and they aren’t looking for one either,” Serwer clarifies.
“What I want to get at is how they’re living without holding a ‘real’ job,” he says, “and by that I mean doing work where one reports income to the IRS, pays taxes and Social Security, etc.” (Emphasis ours.)
Reporting income to the IRS and paying taxes is relevant to our discussion today. So hold that thought.
“How do they live? What are they doing for money?” Serwer asks. “To me, this is one of the great mysteries of our time.” A “vexing” mystery at that, he says, expressed in this confounding chart that tracks the labor force participation rate among men post-World War II to the present…
Source: U.S. Bureau of Labor Statistics
“In fact, the participation rate for men peaked at 87.4% in October 1949 and has been dropping steadily ever since,” he says. “It now stands at 67.7%.”
Back to the one out of three men who is not participating in the traditional workforce, Serwer outlines seven ways these men are surviving…
… while kicking a virtual hornet’s nest in the process! At the time of writing, the article has generated 1,435 comments online (and counting).
Here’s a sample…
- “Just because you’re not employed doesn’t mean you’re not earning a living and contributing.”
- “Clearly ageism is a reason for some of us not working… Today’s U.S. corporate culture is generally toxic and unhealthy.”
- “Working under the table is still working. The point is most of the folks have some source of income.”
That last comment, in fact, encompasses one way Serwer says men are making a living.
“Working for cash, aka the under-the-table economy… is very tough to measure,” he says.
“A study by the Federal Reserve of St. Louis estimates that the average size of the ‘informal economy’ in developed countries is 13% of GDP,” Serwer notes. “GDP in the U.S. this year is about $22 trillion. So 13% of that is $2.86 trillion.” (We’re not even tackling cash made illegally today; drug trafficking alone accounts for about 1% of the U.S. GDP by some estimates.)
“Even if half that money is paid out to women, that still leaves, say, $1 trillion dollars being made by men in this country off the books,” he says. “That’s a big chunk of change.”
This “under-the-table” economy might help explain a strange phenomenon. Covering the same time period as our chart above, Serwer notes: “The line on this GDP chart is inversely correlated with the line on the labor participation graph.
Source: U.S. Bureau of Labor Statistics
“And I think there is a relationship between the two,” he says. “Which is to say, the wealthier our nation has become over the decades, the less men are working.” His conclusion? “Fact is there is just a ton of money sloshing around in our country. And men seem to be able to get their hands on it….”
As reductionist as Mr. Serwer’s conclusion might be, for our purposes today, we posit that “ton of money sloshing around” — some of it most certainly untaxed — might lead to even more untaxed dollars. Thanks to a boneheaded government scheme…
“The Treasury Department outlined a proposal in its recent budget request for a regime requiring banks and other financial institutions to report inflows and outflows in consumer accounts with more than $600,” says an article at American Banker.
“The goal is to crack down on tax evasion by high earners and narrow the so-called tax gap between what Americans pay and what they owe.” Riiiight. And, at least theoretically, offset the infrastructure and American Rescue Plan spending-paloozas.
In a letter to the House Ways and Means Committee last week, about a dozen financial industry associations expressed their concerns: “The IRS has a continued track record of data breaches and continues to deal with the fallout of identity theft and filing of false tax returns.
“Adding an entirely new set of data without first ensuring the security of existing IRS records will only compound the IRS’ systemic problem and expose even more customer data.”
[We halfway suspect the real reason financial institutions are pushing back against the federal government is because of staffing shortages — not to mention expenses — as much as anything else… but whatever. If it’s ultimately in service to Americans’ privacy, we’re on board.]
“There’s already a fair amount of reluctance to do business with banks,” says Dan Stipano of Davis Polk & Wardwell. “This will probably be another factor that people will weigh in their willingness to open bank accounts.
“We have communities in the United States with large unbanked and underbanked populations, which is due at least in part to a concern that their personal records are going to be turned over to the government,” he says.
Or as Sen. Mike Crapo (R-Idaho) sees it: “The proposal, which is sold under the guise of trying to close the tax gap… pulls almost all taxpayers into a surveillance dragnet.”
To our point, will it also help push even more working-age men out of “real” taxpaying, IRS-reporting jobs and further underground? Further reducing the tax base and revenue? It is the federal government we’re talking about… Sounds about right!
The major U.S. stock indexes are rebounding from yesterday’s losses with the Dow up 50 points to 34,020. The same goes for the tech-heavy Nasdaq: up 50 points… to 14,765. As for the S&P 500 Index, it’s up a scant five points to 4,360.
Checking commodities, oil is up 0.25% to $70.47 for a barrel of WTI. And gold’s up 0.75% to $1,777 per ounce; silver’s also in the green, up 1.5% to $22.50. And Bitcoin? It’s down 2% at the time of writing to $42,685.
The big economic number of the day is housing starts — increasing almost 4% from July to August, a bit more than expected. And the number of permits? Also on the upswing: up 6%. Hidden in those numbers is multifamily housing construction jumped 21.6% during the dog days of summer.
Regardless of federal legalization, our pot stock authority Ray Blanco says: “American cannabis companies are becoming profitable anyway.
“Dozens of publicly traded U.S. operators have already reported their second-quarter results,” he says. “The majority are showing strong quarter-over-quarter growth, with double-digit figures being the norm.
“Year over year, many if not most companies that have reported are showing triple-digit growth. “‘Record quarter’ has been a common refrain for pot stock earnings reports.
“And that’s all without federal legalization,” Ray says. “But plans are in the hopper as the market waits for that big catalyst.
“Those plans include insurers who are eager to enter the pot space,” he continues. “A lack of insurance has been a problem for cannabusinesses, and insurers haven’t written many policies.
“But with the specter of legalization and a market that’s projected to hit $41 billion by 2026, insurers are looking ahead to brisk business.
“Cannabis and its derived compounds — along with psychedelic substances — are becoming a red-hot research field,” says Ray. Even the feds are getting in on the action…
“This has the U.S. Drug Enforcement Administration scrambling to increase legal production of these substances for research purposes.
“Although they are still federally restricted in the U.S., there is a carve-out for biomedical research,” he says. “If researchers find a medical application for cannabis or psychedelics, they can go through the FDA development track and bring it to market legally under federal law.
“But for that to happen, there needs to be enough stuff to study,” Ray notes. “The DEA plans to increase its manufacturing of psilocybin by 2,900%. The DEA also wants to grow more pot, increasing production to 4,400 pounds for the year.
“The DEA growing marijuana… this would have sounded crazy not too many years ago,” Ray says.
“While things aren’t moving as fast at the federal level as cannabis investors would like, there is still serious progress being made at the state level.”
A key state Ray has been watching closely over the last few years — New York — seems to be on its way to full legalization.
“New York state might move forward soon with former Gov. Cuomo’s fall from grace,” Ray says. “Cannabis entrepreneur Bruce Linton believes the former governor was a blockade for reform measures allowing adult use in the fourth-most populous state.
“With Cuomo out of the picture, stalling might be over,” he says. “The new governor, Kathy Hochul, has declared legalization a priority. She ordered a special session to, among other things, approve her new marijuana regulator nominees.”
Ray’s takeaway? “Even without federal action, business is booming. Cannabis companies are turning profitable and pot is turning into a real, moneymaking business.”
The Pennsylvania Liquor Control Board (PLCB) has limited sales of 42 products to two bottles per customer, per day.
The list of booze consists of 14 bourbons, two whiskeys, 17 Champagnes, three tequilas and six cognacs. For your average liquor store customer, a two-per-day restriction is not the end of the world. But for Pennsylvania bar and restaurant owners, rationing adds to a supply-chain nightmare.
The Philadelphia Inquirer notes: “Alcohol shortages have been vexing liquor store and bar owners in parts of the country for months, as bars reopen amid…
- “a rise in in-home drinking
- coupled with shortages of glass and aluminum
- and a lack of truck drivers and warehouse workers.”
Teddy Sourias of Craft Concepts Group — which operates six Center City Philly bars — says the PLCB’s rationing might cut back on hoarding he’s noticed over the past year. “Some places are over-ordering bottles, which leaves us with none to purchase,” he says. “I’d rather have a chance to buy some rather than none.”
Of course, once rationing comes into play, an underground market emerges. (Well, not emerges, but you get the point.) Andrea Billick, a buyer at Super Buy Rite in West Deptford, New Jersey, says a customer travelled from NYC and paid cash for every bottle of Moët & Chandon Nectar Impérial Rosé. Not surprisingly, it’s on the PLCB’s list…
We’ll have more of The 5 tomorrow. Until then, take care.
The 5 Min. Forecast