The article U.S. Businesses add 200,000 jobs, ADP Survey shows published in “The New York Times” on September 2015 suggests that Americans have increased their spending behaviors. The report indicates that job placements increased by 200, 000 in the month of September and 180,000 in the preceding year. Another observation made in the report is that American residents are spending more on luxurious goods such as homes and cars. “The entire labor market shows an upward trend, with domestic strength offsetting foreign weakness,” the report states. Therefore, there are two main ideas that can be derived from this report; increased employment and increase in spending power.
Employment creates positive effects on the economy since labor is a factor of production (Atinkson 78). Increased labor absorption indicates that the region has the capabilityof bringing more national output. The region will gain with a better balance of trade and it will be able to sustain its residents. Similarly, the government will benefit from increased tax revenue because it has an array of taxation inputs from income and products. This shows that the government will reduce borrowing that burdens the nation with debts that adversely affects the economy. Although this survey covered the private sector only, the government predicts a 206,000 jobs increase in the public sector. The unemployment rate has remained at 5.1% for the second consecutive month. This means that the government can concentrate on development as the public basics will be sorted via their personal income; that is, health, food, housing among others.
Employment has not been experienced in all sectors as indicated by the ADP report. At least 15,000 jobs have been lost in the manufacturing industry.Global oil prices have reducedimpacting the American economy with unemployment effects. These particular industries have resorted to shedding of jobs but they do not affect the national employment rate has the curve has continuously rose. This means most people have migrated to construction, retail, transportation, online, and other utilities companies due to the rising demand. As observed earlier, there is increased consumer spending and saving culture. This is attributed to the huge amount of money at people’s disposal; hence, they are able to meet their financial obligations (Atinkson 92). The effect is spread all over as consumers are able to purchase an array of goods which benefits other businesses. Money revolves around businesses in the market place leading to a healthier economy.
Reduction in unemployment rate also affects the housing price rates and their demand. First, the demand for houses goes up simultaneously with their prices. Purchasing homes is an advantageous move as the houses act as an asset that can be used as collateral in securing a loan.This increases the disposable income leading to increased investment and saving culture which is a positive impact to the economy. Demand in households also improves on the quality as homeowners scramble to improve the status of their houses to meet the consumer expectations. According to the article, steady job gains are bolstering consumer confidence and have lifted the housing market. The increased demand for houses affects the construction industry, which means that more jobs are on offer. Therefore, high employment rate is instrumental to the American economy that will create a self-sustaining cycle.
- Frank Manjoo authored the article Uber’s Business Model Could Change your Work, which appeared on The New York Times on January 28, 2015. Uber is a profession that is based on technological platform which relies on the labor market trends and influences how people do their jobs. According to Manjoo, drivers who employ the use of Uber operate contrary to the traditional taxis due to their technological empowerment and flexibility nature of their work. The application aids the driver to locate a customer and serve them to their satisfaction. This technology has the ability to assign specific tasks to people just when they are needed based on the supply and demand law. In the case of taxi drivers, they are able to acquire customers without waiting for them because Uber will just update them. Similarly, when customers are not available, the app will assign the driver a different task. For business owners, Uber is an answered prayer since it predicts the dynamics of demand and supply, worker’s performance, and customer satisfaction.
Rietveld, Piet, and Frankassert that technological change has many facets as it includes creation of new products, quality improvement and efficiency gains for existing products (67). Transportation is an important player in the market that triggers economic growth. Reducing the time taken and other logistics of taking one person or product from one point to the other creates positivity to the economy. Uber is currently shifting the usual full time jobs into the on-demand business model. This means that the worker only works when a job arises rather than sitting idle waiting for a customer. Most of the retail jobs depend on the purchases made by the customer. At times, these purchases are unpredictable which makes the retailer waste much of his or her time expecting a customer. Uber is meant to mitigate such shortcomings by updating the worker of the business proceedings. Manjoo states that these services are not only used in the transport industry but also daily chores such as grocery shopping and even medicine services. Uberization resembles the services offered by the Amazon.Com the online shopping site. Traditionally, booksellers had to sit all day in the bookshop waiting for customers to purchase their products. Conversely, they collect order online and disseminating them to customer which makes it quicker, cheaper, and less in-store business. In addition, on-demand economy reduces the wastage created through unnecessary employment; for example, market trends and business optimization personnel.
Uber has its downfalls as discussed by economists in the article based on their observations. One of the disadvantages of the on-demand economy is that the work life will be unpredictable, poor pay, and job insecurity. The start-up business model means that the worker is aggressive when there is demand and sluggish when there is a downfall. In this business model, the application does not locate jobs when there is no demand and the business person may be reluctant to formulating ways that will aid in achieving competitive advantage (Rietveld, Piet, and Frank 57). Significantly, Uber deludes the possibility of job security because it deals strongly with the supply and demand laws. For instance, Uber drivers operate under contractual terms and fail to enjoy the usual security and benefits associated with the traditional jobs. Lastly, Manjoo raises an eyebrow due to the lack of agency when working under Uber. This means that the employee does not deal with a human but a computerized program. However, technological driven professions are eliciting numerous merits and Uber is among the platforms required to bolster economic growth.
- The “Wall Street Journal” published an article that read The Big Jobs Miss on Oct. 2, 2015 that highlights the U.S.A. Federal ReserveRecovery Policy. According to the article, the labor market is an integral tool for enhancing an economic recovery to any nation. The absorption and the turnover of labor forcedetermines how an economy jilts back to rejuvenation. According to this article, employers created 142,000 new jobs where only 118,000 were in the private economy during the month of September.This implies that the absorption rate faced a downward trend as compared to the monthly average of 198,000. The labor participation rate went down to at least 62.4% where at least 350,000 citizens left the labor force in September. The main question remains why the labor participation rate is decreasing despite the looming job opportunities predicted by the Federal Reserve. The Federal Reserve System is concerned with supervision and regulation of financial institutions, researches the economic trends, and provides financial services (Boivin, Jean, and Marc 445). Therefore, issues of labor force participation are part of the Federal Reserve responsibilities.
Boivin, Jean, and Marc state that changes in the labor participation rate reflect a number of factors that include demographic, cultural, institutional trends, and business structural cycle (446). He cyclical economic factors are determined by the policy makers due to the implications for the trajectory of the economy. For example, the changes in monetary policies such as increasing the lending rates and insurance covers may reduce labor participation interest. The historical behavior of the labor force participation rate is characterized by gradual trend shifts and weak association with the economy’s cyclical fluctuations.The Federal Reserve blames the job miss to the slowing growth abroad and the global financial turmoil. However, the article suggests that this could have been avoided if the Federal Reserve could have not bought bonds and raised the interest rates. The problem is that it could have raised the rates moderately over a period of time other than hitting people with huge figures that has adverse impacts. A decrease in labor participation may also be as a result of the emerging market trends. People are now shifting from the office employment to other methods of work such as online marketing. The reduction can also be attributed to the exit of the aging population while the absorption of the younger generation is generally low (Boivin, Jean, and Marc 450).This reduces the predicted output that the Fed thought would enhance an economic recovery by September 2015.
The article The Big Jobs Miss blames the Federal Reserve Policy for focusing entirely on development and overlooking the economic growth. Re-affirming its position, the article states that spending more on building roads and bridges does not help without considering tax and regulatory reforms. Most of the job creation has been left to the private sector and the article believes for this to be possible, it is important to consider a favorable economic atmosphere. The labor participation rate is facing a downward trend which the article believes is set to cause negative consequences to the U.S.A economy.
- According to the Financial Times’ article, Global banking recruiters return to campus,authored by Della Bradshaw, most of the employers in London, Hong Kong, and New York are targeting fresh graduates for their labor force. MBA graduates who land a job with the Wall Street investment are expected to receive an increased starting salary for the first time in a period of five years. The article states that basic salaries for such students were approximately $110,000 in 2014 but they are expected to receive an increment of $15,000 and $50,000 bonus. The increased demand of financial services has created a need for improved services from the financial institutions. As found out in the previous articles, unemployment has decreased and most people are targeting financial security. In the same vein, people are interested in saving and investment in order to achieve better living standards. This is where the financial institutions particularly banks come in.
Banks play a central role in ensuring there is an efficient monetary flow from one point to the other. Due to the increased demand of their services, they have gone back into recruiting budding employees who are young and enthusiastic. Fresh graduates have set their own objectives, which they intend to meet in their early ages (Crotty 564). This translates into undivided dedication in their places of work in order to achieve both individual and organizational goals. As a result, the organization benefits from this devotion as it offers better services to the customer.Bradshaw confirms that about 30% of all MBA graduates from Stern will join investment banking while 7% of the rest will join private equity, venture capital, and other financial services firms. The most looked at employers are firms such as Goldman Sachs and Morgan Stanley since brand names play huge role in securing these graduates. In Chicago, the same situation is experienced as approximately 40% of the Chicago Booth students take their first jobs in banks. However, students are still interested in wealth management, real estate financing, private equity and venture capital, as well as smaller and regional banks.
Bradshaw gives a similar scenario about London in regards to their recent employment pattern. In 2007, at least 46% of the MBA students joined the financial sector compared to 28% in 2015. The article suggests that this fall has been experienced due to the low absorption rate by the banks in London. This has minimized the number of students taking up finance related MBA in campus. In spite of this low employment rate, banks are still targeting graduates as their major source of employees. Supply and demand is influencing what students are will to study and the type of jobs they want to join (Crotty 567). For example, technological related professions, consultation services, and healthcare may offer more opportunities as compared to the finance sector. This will automatically switch the demand curve as most of the students will opt to join courses that they believe will be of advantage to them. In China, the situation takes a twist as most of the employers are interested with the indigenous people to offer them placements. It is quite clear that the banks in this country are targeting Chinese speakers in order to increase their market share in the country.Therefore, Chinese studentswho study Master’s degree in any financial related course are better placed to get a job in Hong Kong as compared to other students. Previously, most of the workers in financial institutions have been from India as most of the private equity firms in Hong Kong are from India. The new strategy of targeting university graduates is becoming popular all over the globe as most of the employers need to increase diversity in the organization. Mixing experience with enthusiasm will work well for financial institutions; hence, this is a positive strategy.
- Is Your Financial Adviser Making Money Off Your Bad Investments? This article by Lily Batchelder and Jared Bernstein appeared on the ‘New York Times” on Sept. 29, 2015.The article expository explains the newly proposed bill that aims at regulating the conflict of interest when it comes to saving for retirement. Most of the Americans work hard in order to acquire savings that they will reap after their retirement. This is a common behavior that every employee is entitled to as they have a dream of having a better life during their old age. However, there has been a bone of contention as to who reaps these benefits between the financial institution and the beneficiary. Batchelder and Bernstein argue that the financial advisors who offer their consultation services to the clients “often misguide” them for their own benefits. In most cases, clients will look for financial advisors who will help them choose the best institution to get a cover from. These advisors always recommend their clients to choose institutions that have zero or low interests. The consumer jets out satisfied with the advice and does not hesitate joining the proposed financial institution. What they always fail to understand is that there is a catch that this article tries to explain.
The conflict of interest appears right from these financial advisors because they recommend their clients to firms that are paying them (Atkinson 213). Therefore, they do not offer honest advice but are interested in the reward from the financial institutions. Batchelder and Bernstein assert that these advisers who claim to be providing quality guidance lose their businesses to conflicted advisers who claim their services are cheaper or at “no fee” where as they are compensated by the firms they recommend their clients. The retirement saver remains at the cross road as he or she is used by the adviser at the expense of their finances. 75% of the people who receive these advices believe that the advisors act at the best interest of their clients. This means that a very large population of Americans is duped by the unscrupulous advisors.
When a client is recommended to the financial institution by their advisors,they risk losing their savings to the institution. Obviously, these “free of charge” advisors are meant to benefit once the client joins the institution they recommended. The article states that on average the conflicted advisors shave about one percent a year, which may translate to a 25% reduction of the entire savings. It is estimated that families are losing at least $17 billion as a result of these conflicted advices. This is why the government has raised a red flag and introduced an administrative proposal aimed at regulating conflict of interest among advisors. The bill suggests that the advisors should disclose how they acquire their side payments to their clients. This will be an important move aimed at saving families their money; however, disclosing information will not be enough as the conflicted advisors will look at other ways to convince their clients. Therefore, the bill should look for better way to curb the unscrupulous advises that are making families lose their hard earned money.
Atkinson, Anthony B., and Joseph E. Stiglitz. Lectures on public economics.Princeton University Press, 2015.
Boivin, Jean, and Marc P. Giannoni. “Has monetary policy become more effective?.” The Review of Economics and Statistics 88.3 (2006): 445-462.
Crotty, James. “Structural causes of the global financial crisis: a critical assessment of the ‘new financial architecture’.” Cambridge Journal of Economics 33.4 (2009): 563-580.
Rietveld, Piet, and Frank Bruinsma. Is transport infrastructure effective?: transport infrastructure and accessibility: impacts on the space economy. Springer Science & Business Media, 2012.