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Why is finding a job harder than ever? · The Financial Exchange Show

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Speaker 2: Kicking off the second hour of the Financial Exchange. And
1:16
we've got stocks in the green today with the Dow
1:20
Jones up two hundred and eight points, the S and
1:23
P five hundred up seventeen points at the moment, and
1:27
the Nasdaq up fifty two So about a quarter to
1:30
a half percent gain for your major US indices ten
1:34
your US Treasury up two basis points to three point
1:36
eight percent. Right now, we've got Oil West Texas Intermedia
1:40
down a dollar fifty eight a barrel, this on the
1:42
back of a report that the Saudi Arabian government is
1:47
set to increase production over the next year in order
1:51
to try to regate market share. So you've got oil
1:54
continuing its recent slide. Gold today up four dollars and
1:58
twenty cents nounce to eighty eight and ninety cents. And
2:03
talking about gas prices, TRIPAA national average for gas prices
2:07
at three twenty two a gallon right on the nose.
2:09
That's up seven tenths of a cent from yesterday. Uh,
2:12
and still kind of bouncing around that low three twenty
2:15
range without any clear direction, like anything else catching your
2:19
eye as we get started this hour.
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Speaker 3: No, I'm just rather enjoying paying under three bucks a
2:24
gallon for gas here and there.
2:26
Speaker 4: It is, Uh, it is nice.
2:28
Speaker 2: I've been finding a few stations in like the two
2:31
eighty five to ninety one range over the last couple
2:36
of weeks, and so it's uh, it is a nice
2:38
fist d Yeah, I do agree with that.
2:41
Speaker 3: Between that he sending my kid to kindergarten, man, I'm
2:44
just flush with cash.
2:46
Speaker 4: Sounds wonderful, sounds great, very happy for you. Congrats.
2:50
Speaker 1: Uh.
2:50
Speaker 2: Let's talk a little bit about this piece from Market
2:52
wall Watch. Finding a job now is harder than any
2:54
time since the pandemic. Is that a bad omen for
2:57
the economy? Your thoughts, Michael, It's.
3:01
Speaker 5: Not a good open for the economy.
3:03
Speaker 3: I don't know that it means it's going to be
3:04
a travesty, but it's certainly if you wanted to see
3:10
a good job market, which you know generally gives people
3:14
a lot of optimism, then this is not the direction
3:16
you want to be going. For some context, best way
3:19
that I can use to measure this would be the
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number of job openings as reported by the Bureau of
3:25
Labor Statistics that peaked at an all time high back
3:28
in March of twenty twenty two at just over twelve
3:31
million job openings out there where.
3:34
Speaker 2: Now let's remember, let's remember yep, there was a lot
3:38
of talk from people all over the place that that
3:41
was too many job openings. It was too tight, too
3:44
hot at that point. Yes, okay, so it was too
3:46
tight at that point. Ye, twelve million openings.
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Speaker 3: Now we're down to seven point seven million job openings, which,
3:52
by the way, is still a number that is larger
3:56
than any job openings number that we had ever seen
3:59
prior to the pandemic. And the answer is that it
4:03
is way too cool of a job market. Now, there's
4:05
been population growth, the labor market has certainly grown since
4:08
twenty eighteen, but the number of job openings is down
4:14
again substantially from March of twenty twenty two. But nothing
4:17
about it would indicate that we are at levels that
4:20
others would have previously described as a tremendously weak labor market.
4:24
Speaker 5: Right in.
4:27
Speaker 3: When did you graduate college, Chuck, Let's start there May
4:30
of two thousand and nine.
4:31
Speaker 4: Correct, nailed it right on the nose.
4:33
Speaker 3: In May of two thousand and nine, there were two
4:35
point five million job openings. By May of twenty ten,
4:40
that it increased to just shy of three million job
4:43
opening So we are a far cry away from what
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I think most would describe as an incredibly weak labor market.
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But nonetheless, it has been a pretty dramatic shift from
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where we were a couple of years ago, when you
4:54
could demand a signing bonus and all sorts of other
4:57
benefits by signing on that dotted line.
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Speaker 2: I think part of this is also just that we
5:03
do compare things to how they were recently. And we've
5:06
talked about this with gas prices. Look when gas was
5:09
two dollars a gallon and it goes up to three,
5:10
You're sitting there and you're like, oh, I can't believe
5:12
gas is three a gallon, Like this is awful.
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Speaker 4: Wamp wamp womp wamp.
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Speaker 2: Gas comes down from four to fifty to three, and
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you're like, okay, like not not too shabby. Likewise, in
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the job market, hey, if you have a job market
5:27
like two thousand and nine twenty ten, and you get
5:30
to the point where you have, you know, this level
5:32
of job openings or the ratio of openings to unemployed
5:36
which right now is similar to twenty seventeen levels. Remember
5:39
twenty seventeen, twenty eighteen, we were sitting here saying, hey,
5:42
the economy's cranking like things are pretty good right now.
5:47
On the other hand, you go from a labor market
5:49
that was, you know, so hot in twenty twenty two
5:52
that I mean again, this was when Walmart was saying, hey,
5:55
come be a truck driver for us. We'll pay you
5:57
one hundred and fifty thousand dollars a year. You've got
6:01
you know, big tech companies offering huge comp packages for
6:05
full remote work.
6:06
Speaker 4: Do whatever you want.
6:08
Speaker 2: You know, work underwater, you know, work you know, while
6:11
you're making ice cream, and hey, don't even work and
6:13
we'll still pay like it was nuts. So you're coming
6:17
from that, and it feels different when you get back
6:20
to the same point. So I think two things make
6:24
me nervous. The first is, Okay, we're back to you
6:26
know again, what looks like a twenty seventeen twenty eighteen
6:29
job market, which is a fine place to be, But
6:33
there also were indications that that job market is continuing
6:36
to weaken, and you don't want to end up back
6:38
in the twenty thirteen twenty fourteen market, right, because things
6:42
got pretty loose by that point.
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Speaker 3: May I just bring up something from a quote from
6:46
this article that is just kind of silly to point
6:49
in here, quote, how bad is the jobs market? Even
6:52
job recruiters have struggled to keep their own jobs, never
6:55
mind fine to work for others.
6:57
Speaker 5: Guys.
6:57
Speaker 3: The first people that get laid off in a week
6:59
job market job recruiters. If you work for a big
7:02
tech company that says we are going to slash our
7:05
hiring plans over the next few years, where would you
7:08
fire people first? The people whose job is to find
7:11
new employees.
7:12
Speaker 4: Right, why do you need them?
7:14
Speaker 5: So this is phrased as some big surprise.
7:19
Speaker 3: Every cycle that the labor market weekends, the first people
7:22
to lose their jobs are job recruiters. So don't don't
7:24
look at this as though it's a shocking news that
7:27
job recruiters are having a tough time finding work. Of
7:29
course they're having a tough time finding work. We're in
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a weakening job market.
7:33
Speaker 2: Yeah, that's like, Hey, we're in a recession, and advertisers,
7:37
you know, can't you know, sell any ads, No kidding,
7:41
because there's no one to buy the stuff, you know,
7:43
So yeah, it's Look, we're in a situation where in
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the next couple of months we need to see some
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stability showing up in terms of job openings numbers, and
7:54
the unemployment rate needs to show that last month wasn't
7:58
a fluke and that it, you know, isn't gonna rise
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much beyond four point two four point three percent. You
8:04
start getting into a place where, you know, job openings
8:07
are still declining by you know, three to four hundred
8:10
thousand a month for the next few months, and the
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unemployment rate starts rising to four and a half or
8:15
four point six, we've got some problems. Like those are
8:18
the mental you know, marks that I have in the sand,
8:21
where hey, we get down to you know, under seven
8:24
million jobs while you have you know, north of seven
8:27
million people unemployed. Okay, that ratio starts to look a
8:30
little dodgy and unemployment gets up to four and a
8:32
half or four point six. Yeah, we've got the potential
8:35
for some ugly stuff there if those happen.
8:38
Speaker 4: So those are the numbers that I have in my head.
8:40
Speaker 2: But again, we'll have to see how it all evolves,
8:43
because the economy is always changing, it's never static, it's
8:48
never just well, this is what it is now.
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Speaker 4: It's always moving.
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Speaker 2: I mean two years ago, would you have thought we
8:54
would be, you know, having this conversation now, No, because everyone,
8:57
like everyone was hiring Willy Nilly. Yeah, I've never even
9:00
met WILLI nillion people were hiring him. So things can
9:04
change rather quickly, especially in the labor market.
9:08
Speaker 3: I try and do my best with these articles, Chuck,
9:11
to not just let my inner old man out, because.
9:16
Speaker 4: Every article I let him out, Michael let him out.
9:19
Speaker 5: It's not that bad of a job market.
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Speaker 3: Like, I'm not trying to dissuade you or make you
9:24
feel bad if you are having a tough time finding
9:26
a job. I get how discouraging it is to sit
9:29
there and have a giant, expensive, shiny degree that you
9:34
just paid tens, if not hundreds of thousands of dollars
9:37
for and are not getting the nibble. But when I
9:41
see articles like this, you know, talking about the state
9:44
of the labor market and how difficult it is, I
9:47
would just implore you to go take some lessons from
9:51
those who got laid off in two thousand and eight
9:54
through throughwenty ten and needed to completely redefine themselves of
10:00
their working career in the decade that followed, and a
10:03
lot of people did, Yeah, it can get worse than this,
10:07
and we hope it doesn't.
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Speaker 2: Mich Let's talk a little bit about Boeing. Thomas Black,
10:43
who's an opinion writer for Bloomberg, has a piece today.
10:46
It's titled Boeing needs to take a que from UPS
10:49
and pay its strikers, And basically it makes the point Boeing,
10:53
you have no leverage in these negotiations. Every month that
10:57
you go is going to worsen your bottom and top lines,
11:02
and you are not in a position to really demand anything.
11:05
So you need to pay your workers and get them
11:07
back to making planes. Otherwise you're gonna be in a
11:10
whole heap of trouble.
11:12
Speaker 3: Yeah, well, I don't disagree with that piece of argument.
11:16
I'm not sure about the comparison to make to UPS.
11:20
So he does make the contrast here, and UPS did
11:24
relent during their thread of a strike. They agreed to
11:27
pay their drivers forty nine dollars an hour by the
11:30
end of the contract, a really solid health insurance as
11:33
well as pension benefits. That comes to about one hundred
11:36
and seventy thousand dollars a year in terms of total
11:39
driver compensation package. If you make that comparison to FedEx,
11:42
for example, drivers of the ground unit there make around
11:45
twenty to twenty five dollars an hour and have no benefits.
11:48
In fact, I will also just bring up from a
11:53
shareholder perspective that FedEx over the last five years has
11:56
returned about eighty five percent in price return to shareholders,
12:00
whereas UPS has returned twelve. I'm not saying that that
12:03
has directly to do with the compensation packages being offered
12:07
to one versus the other, but I'm not sure that
12:11
UPS is the shining example that Thomas is trying to
12:15
convey in terms of, hey, here's the way to turn
12:18
around your company.
12:20
Speaker 2: I think the big question is, Look, you're trying to
12:24
turn around this culture, and every week that your employees
12:29
are not working is a week that their skills are
12:32
atrophying rather than improving.
12:35
Speaker 4: I think that that's a valid point.
12:36
Speaker 2: As far as another unique wrinkle that Boeing does have
12:40
that takes away some of its leverage in negotiating here, yeah,
12:44
one hundred percent.
12:45
Speaker 3: I really do feel pretty strongly that Boeing has very
12:49
little in the way of leverage to argue this here.
12:52
They don't have a new plane that they're rolling out
12:55
in the next six months that they get to decide
12:57
where to manufacture. They are way behind on orders. They
13:04
really have no legitimate I guess threat to those Seattle
13:11
area Boeing workers to say, if you don't sign, this
13:14
is what we're going to I can't think of anything.
13:15
Allow you to strike and not pay you is the
13:18
only possible outcome here, and that almost undoubtedly hurts Boeing
13:23
more than it hurts I don't meant to minimize the
13:26
impact of those workers who aren't getting paid, but hurts
13:29
Boeing a heck of a lot. More So, I agree
13:32
with the overall conclusion where I diverged was is UPS
13:36
really the best shining example to compare to here? Their
13:40
drivers certainly do get paid a whole lot more, but
13:43
I don't know. In my mind, I'm not sure that
13:46
that has led to better delivery service. And when I
13:48
think of best in class, where am I going to
13:51
send a package? I don't see a huge differentiation between
13:53
UPS and FedEx in my view, Micha.
13:56
Speaker 2: Let's talk a little bit about open Ai, because it
14:00
was around this time last year that we had all
14:02
of the Palace intrigue about Hey, we went through four
14:05
CEOs in three days, and two of them were the
14:07
same person. And now we've got another shake up at
14:12
the top. Sam Altman, who is the CEO, still there,
14:15
but he has indicated that he wants open Ai to
14:20
become a for profit company. They're going through a restructuring
14:24
from their current setup, which has been kind of messy
14:27
where there's like a nonprofit parent and then a for
14:31
profit entity underneath, and this is kind of unwinding that
14:34
and flipping it on its head, where hey, you'd have
14:36
a for profit entity with a nonprofit that's spun out
14:39
from it instead, And we can talk about that and
14:43
what that means in a little bit but the more
14:46
interesting thing to me is you've got more upper and
14:51
upper echelon C suite people that are leaving, including Miramadi
14:58
who is again the chief technical officer for them. You've
15:03
got a couple other people that have left recently, Ilias Askever,
15:07
who was another co founder, John Shulman who was another
15:12
co founder, and another co founder, Greg Brockman, took a
15:15
leap of absence through the end of the year. So
15:17
it's it's pretty much. Oh and by the way, Elon Musk,
15:20
who was another co founder and one of the first
15:22
investors in the company, is suing open ai as well.
15:26
It raises the question, if open ai is really progressing
15:33
to such, you know, interesting things, and has such a
15:36
big road ahead of it, why are all of the
15:40
top people other than Altman leaving.
15:44
Speaker 3: I mean, the obvious answer would be moral objections. Hey,
15:48
we started this project with a long term goal of
15:50
forever being a non for profit. That is what I
15:54
was buying into. And now once there's billions of dollars
15:57
being dangled in your face, you're changing your tune and
16:00
say no, we need to switch over to a for profit.
16:03
That's that's the simplest that's the simplest explanation to all
16:07
of that.
16:09
Speaker 5: The other explanation would be.
16:13
Speaker 3: We don't see this going terribly well, and I'm getting
16:15
out of here while I can still save my reputation.
16:19
Speaker 5: Yeah, I don't know what you want to grab.
16:20
Speaker 2: Honestly, it's kind of one of those two because in
16:24
addition to Muradi yesterday, by the way, Bob McGrew who's
16:28
the chief research officer of the firm, Ann Barrett Zof
16:32
who was the vice president of research there, they both
16:36
resigned yesterday as well. So you've got again kind of
16:40
a talent exodus here. And it's not to say that
16:42
the open aye is you know in trouble that this
16:46
means bad things for them. We've seen companies that lose
16:48
good talent, and the mark of great companies is that
16:52
they find replacements for that talent and they continue on.
16:56
But it is something whenever you see an exoding of
17:00
this magnitude from the C suite and founders in a
17:03
short period of time, you do kind of look at
17:06
it and one option is, yeah, this company isn't what
17:09
we thought it was in terms of the overall moral
17:11
mission and what we thought we were building. It's one possibility.
17:14
The other one is, hey, the growth, like there's something
17:20
wrong in the future that hasn't yet been realized. I
17:22
need to get out before it hits the fan. And
17:25
again you don't know which one it is until later,
17:29
and you might not ever know, I mean they. It
17:31
could be that both of these things are problems now
17:34
and turn into minor issues down the road, but we'll see.
17:39
Speaker 4: So that's kind of where we stand.
17:41
Speaker 3: Taking a look at markets still in positive territory across
17:45
the board. NASDAK now though only up about one fifth
17:48
of one percent, whereas the Dow up closer to half
17:51
a percent.
18:05
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Speaker 2: Mike, just a little bit of news being broken today.
18:39
Super micro computer you remember them about a month.
18:43
Speaker 4: Or so ago.
18:45
Speaker 2: A short sellar Hindenberg Research alleges that there were accounting
18:50
issues there. Today, the DOJ has reportedly opened a probe
18:55
into the company, and so super micro Computer shares down
18:58
another twelve nowteen percent today to three ninety seven a share.
19:04
Speaker 4: At the moment, this was a company that was worth.
19:07
Speaker 2: North of twelve hundred a share and hit a fifty
19:11
two week high of twelve twenty nine a share back
19:14
in March of this year. So it's been a very
19:16
tough six month period for owners of super micro Computer,
19:21
and that pain unfortunately for those shareholders continuing today.
19:26
Speaker 3: Yeah, not not great. You'll see where We'll see where
19:30
it goes. But I guess the only lesson here is
19:34
you can't possibly know what's going on behind closed doors.
19:37
And even some of the best run and most hyped
19:40
companies out there, and some of the seemingly best high
19:45
flyer names out there throughout history have turned out in
19:49
very limited cases, but some cases be running firms that
19:54
it may be doing things that would be conceived as
19:57
untoward or outright illegal. In some cases, raising the full
20:01
retirement age to sixty nine on Social Security would apparently
20:06
not save the program. Check the Congressional Budget Office ransom
20:10
numbers in terms of what they deemed to be a
20:14
policy solution that has been out there, and the general
20:17
policy solution that they outlined here was gradually increasing the
20:21
full retirement age from age sixty seven up to age
20:25
sixty nine, delaying the maximum benefit retirement age from seventy
20:30
to seventy two, while keeping the early filing age at
20:34
age sixty two. And the general conclusion here was that
20:38
Social Security is so screwed up at this point and
20:40
underfunded that even those dramatic measures would do nothing to
20:45
slow down the pace at which this program is going
20:46
to run out of money in twenty thirty four.
20:49
Speaker 2: Good good, how I was being sarcastic. It's not good
20:54
now quite no. So here's the thing. You can't fix
20:58
it by pulling just one lever in this magnitude like.
21:03
Speaker 5: You might have been able to twenty years ago.
21:06
Speaker 2: Sure, but no one actually wants to do anything with this.
21:09
And again, it's going to be really interesting in twenty
21:14
thirty two the race to lose control of Congress and
21:18
the presidency because no one wants to be responsible for
21:21
actually what is going to happen. It's gonna be wild
21:25
to watch. But the problem is that, look, we need
21:29
to do something here, and that something can be very simple.
21:35
It doesn't have to be overly complicated. You can pull
21:37
a few different levers, and the best way to ensure
21:40
that no one gets screwed disproportionately is to pull all
21:46
of those levers just a little bit. You change a
21:49
little bit as far as the retirement age, not too much.
21:53
You change a little bit as far as how you tax,
21:57
how you collect funds for Social Security. You don't have
22:00
to raise the Social Security tax rate. You can expand
22:05
the tax base on which it's collected, which yes, does
22:08
raise you know, that tax rate on higher income earners,
22:12
but it doesn't affect you know, the bottom eighty to
22:15
ninety percent of income earners in the country today. And
22:19
then you probably make some kind of adjustment to benefits
22:23
as well. And this way everyone gets penalized in some
22:26
certain way. And maybe you say, look, we're gonna have
22:29
this phase in over a fifteen to twenty year period.
22:31
Speaker 4: In that way, no one.
22:32
Speaker 2: Above age fifty is impacted since they're closer to retirement
22:36
and won't have time to adjust their planning.
22:38
Speaker 4: Chuck.
22:38
Speaker 3: That is a well thought out and appropriately expressed opinion
22:43
on ways to solve social security do you think anything
22:45
like that will actually happen.
22:46
Speaker 2: No, here's what will happen is in twenty thirty two,
22:50
Congress will get together and say, well, we're just gonna
22:52
change the law so that Social Security can pay out
22:54
one hundred percent of its benefits and we're not going
22:57
to figure out how to pay for it, but we're
22:59
just gonna re right it that way and will run
23:01
larger deficits to cover it.
23:02
Speaker 4: And that's probably where we're going.
23:04
Speaker 5: Yeah, that sucks.
23:07
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24:09
Speaker 3: I probably shouldn't just say that sucks. That sucks, because
24:13
the solution that, in my view as well, is probably
24:16
the most likely, is to just completely ignore the actual
24:22
finances of this program that has been not collecting enough
24:25
revenue to pay seniors out for quite some time now,
24:30
and simply just write a check and mortgage your future
24:33
in order to do so. And I agree that's the
24:36
dumbest possible outcome. It increases deficits unsustainably. Even further, it's
24:41
probably the most likely because what's been proven time and
24:44
time again is that people vote for handouts that's what
24:50
they vote on. It's why both president candidates right now
24:53
are running on that entire premise. It's not that the
24:55
Social Security Trust Fund was stolen from. No, politicians have
24:58
been stealing from the Trust Fund. And Barack Obama did
25:01
impose a payroll tax holiday in twenty eleven and twenty
25:04
twelve where people didn't have to pay as much in
25:07
Donald Trump did the same in August of twenty twenty
25:10
for certain employers. So those have happened, and we can
25:13
talk about whether or not that was a good idea
25:15
with hindsight. So those things have occurred, But this isn't
25:20
you know, Look, is there social security disability abuse going on?
25:24
Speaker 5: Certainly?
25:24
Speaker 3: Is there social security abuse in different ways going on.
25:27
Sure is somebody out there stealing from the trust Fund
25:31
over the last few decades in order to make this
25:33
all fall apart. No, it was built on a premise
25:36
that no longer exists. We don't have a growing population,
25:40
and there are so many ways in which you could
25:43
sustainably fix the problem. But voters don't seem to care
25:48
about deficit reduction and fiscal responsibility in the same ways
25:54
that they seemed to at least in the nineties and
25:58
two thousands for that too.
26:01
Speaker 2: I guess the other thing that you could add as
26:03
something that potentially helps to fix the situation if you
26:05
want to, you know, throw one more thing on the
26:08
puzzle that definitely won't happen. It is figure out a
26:12
way to increase legal immigration in the demographics of people
26:16
in their twenties and thirties, because that gets you more
26:19
people paying in during their working years and then able
26:23
to you know, you're able to collect more money without
26:26
those payouts happening for a longer period of time.
26:30
Speaker 4: The odds we've kind of done that happening.
26:32
Speaker 3: We've kind of done that over the last year or
26:34
so in terms of issuing somewhere permits with immigration. But yeah,
26:38
the odds, not nearly on a large scale basis. You know,
26:41
take what's happened over the last few years and put
26:43
that on steroids, like, come on, it's.
26:46
Speaker 4: Not gonna happen exactly.
26:49
Speaker 2: Let's see, do you want to talk about money market
26:51
funds or McDonald's.
26:52
Speaker 3: Uh, McDonald's sounds far more interesting. Was We're closed in
26:55
on noon and Mike gets hungrier and hungrier.
26:58
Speaker 2: It's titled the End of the Cheap Burger and it's
27:03
basically making the case that look, fast food burger prices,
27:07
they're up sixteen percent from five years ago. According to
27:10
technomics Ignite Menu. I guess that's the company that studies
27:15
these things. The average price of a fast food restaurant
27:18
burger is now eight dollars and forty one cents uh.
27:21
And even at McDonald's right now, the average price of
27:24
a big Mac with no fries, no drink, just the
27:26
sandwich five dollars and twenty nine cents. That's a twenty
27:29
one percent increase from five years ago as well. And
27:34
the case that they are making there is, look, the
27:39
price of the cost of raising a cattle herd now
27:42
is meaningfully higher than it used to be, and as such,
27:47
it's tough to grow that herd to the size that
27:49
you need in order to get burger prices down. And
27:52
so what's going to change in the near future in
27:55
order to get burger prices down. We're not seeing it
27:57
from kind of the the ultimate supply and demand side,
28:00
which is how many cows are you gonna have out there?
28:03
Speaker 5: I'll just throw it out there.
28:05
Speaker 3: Five years from now, the idea of a five dollars
28:07
burger is going to be that that's an incredibly cheap burger.
28:10
We just haven't gotten used to prices yet. And quite honestly,
28:13
five dollars is a relatively cheap price.
28:15
Speaker 5: For a for a burger.
28:17
Speaker 1: Yeah, but no fries.
28:18
Speaker 5: Come on, I hear you.
28:20
Speaker 3: I thought where the story was going is everyone's paying
28:22
for like, you know, five guys and in and out
28:25
Burger and these places that have traditionally shakeshack charge a
28:28
little bit more. But the fact matter is even McDonald's
28:30
has had to raise prices by twenty percent in order
28:32
to maintain profits. And so guess what, they're not going
28:35
back down and we're going to have to get used
28:37
to it.
28:39
Speaker 4: Wampamp.
28:39
Speaker 1: Yeah.
28:40
Speaker 2: Sorry with that, let's take a quick break and when
28:43
we come back, we'll do a little bit of stack Roulette.
28:47
Speaker 1: Find daily interviews and full shows of the Financial Exchange
28:50
on our YouTube page. Like us on YouTube and get
28:53
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28:56
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29:01
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29:04
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29:13
Speaker 4: All right, Mike, what do you have for me for
29:15
Stack Roulette.
29:15
Speaker 3: I want to talk a little bit about childcare. There's
29:20
a plan from the Harris campaign which does not seem
29:24
fully thought out yet. But she's made a statement that quote,
29:29
no working family should pay more than seven percent of
29:33
their income. It says in childcare. I'm guessing she meant
29:37
on childcare. And I say, this is not terribly well
29:43
thought out. I mean, it's more than we've gotten from
29:46
anybody else on the ideas of what we should do
29:48
with childcare. But I just don't really understand what that's
29:52
intended to mean, why it's seven percent.
29:55
Speaker 5: And what you would do with that information.
29:58
Speaker 3: I suppose one of the logical if you were going
30:00
to say, yeah, it's law that you aren't you know,
30:04
if you spend more than seven percent of your income
30:07
on childcare, then I suppose you could be issued a
30:10
tax credit or refundable tax credit if you put those
30:13
items on your tax return. But effectively, what we're saying
30:17
here if you go that route, is that, hey, we
30:20
want childcare to be an income based solution, kind of
30:26
the way that we deal with other things like I
30:29
guess college education and FAFSA and things.
30:31
Speaker 5: Along those lines.
30:32
Speaker 3: Although this would be a little bit more direct and
30:34
just brings up a host of other questions such as, Okay, well,
30:38
what if I forego working in order to raise my
30:41
own kids at home and not pay for, you know,
30:44
three thousand dollars a month in childcare? What is the
30:47
solution for that person? And I mean more generally, I
30:52
think the question is do we as society think that, yeah,
30:57
people who make a bunch more money should be forced
31:00
by the government to pay more for childcare, whereas people
31:03
that make less money don't pay as much for childcare.
31:07
That seems to be what's on the table here. Like
31:09
I said, I don't think it's a really hashed out
31:12
policy statement in terms of what they would actually do.
31:14
But if you're going to say, hey, it's capped at
31:17
seven percent, then the logical answer to me seems to be, Okay,
31:21
no matter how many kids you have, no matter this, that,
31:23
or the other, you'll be issued a tax credit for
31:26
against your adjusted gross income for any childcare expenses that
31:30
are over seven percent.
31:33
Speaker 2: We really have not come up with, and again this
31:36
has been a problem for when we talk about childcare
31:42
and the cost of it. Remember, there are really only
31:44
like two or three generations that have ever had to
31:47
deal with this, Like in nineteen ten, you had like
31:49
a four year old and it was okay, like put
31:51
them out in the field and they're working at that
31:52
point on your farm, Like, this is kind of a
31:55
new thing that we're dealing with. And so so it
32:00
is clear that unlike other parts of the economy where
32:05
you've been able to, you know, have costs rise more slowly,
32:10
mostly on the good side, but even some stuff on
32:12
the services side of things, this is an area where
32:17
costs have gone up much more quickly than these other,
32:19
you know, parts of the economy for two reasons. The
32:22
first is generally you don't have any efficiencies that you
32:25
can get to because you need.
32:27
Speaker 4: A certain amount of labor.
32:28
Speaker 2: And part of it, we've been increasing the amount of
32:30
labor needed at a state level in many states because
32:35
you know, we've realized, hey, it's not great to have
32:38
you know, fifteen two year olds with one supervisor. That's
32:41
probably not a great recipe for success. So you've actually
32:46
seen some decreases in efficiency on that side of things.
32:49
And then coupled with the fact that hey, you've got
32:52
increase insurance cost increase operating costs like that, those areas
32:56
have driven up the cost too, So it's getting to
32:59
the point where where it's untenable for a lot of
33:01
families to be able to afford to do this. But
33:05
it's also untenable for families to say, hey, one of us,
33:09
you know, one spouse is going to drop out of
33:11
the workforce and not work in order to raise our
33:14
kids because they need that second income in order to survive.
33:18
So it's a it's a problem that doesn't have a
33:23
great top down solution, I think, quite honestly, I'm not.
33:27
Speaker 3: The market based solution is for higher and higher prices
33:31
because you don't have a you don't have a situation
33:35
where you can make it more efficient. You don't have
33:37
a situation where you can outsource any part of the
33:40
product to a area of the country or the world
33:43
with less costly labor. Artificial intelligence doesn't get you anywhere
33:47
on childcare, and so you are left in a position
33:49
where the market based solution is for very expensive childcare.
33:53
And I guess the question, the only real question to
33:57
that is that is that a outcome that the American
34:01
public is comfortable with or is it something that they
34:04
want the government to subsidize. Those are really the only
34:07
two policy outcomes that I can think of.
34:10
Speaker 2: I don't know that subsidizing ends up necessarily being the
34:14
ant like it's.
34:16
Speaker 4: I don't have a good answer.
34:18
Speaker 5: There is one.
34:19
Speaker 3: If you want to make childcare cheaper, it has to
34:22
get subsidized because the market will not make it cheaper. Yeah,
34:28
I can't think of any again, I mean, yes, are
34:30
there ways you can make the market cheaper? Sure, allow
34:33
childcare facilities to care for, you know, five six month
34:38
olds instead of the current three regulation. You have one
34:42
or two infant deaths, and that's going to go in
34:44
the other direction pretty quickly. So that's what I mean
34:47
by the market solution is not going to result in
34:50
anything other than continued high prices.
34:52
Speaker 2: Can we talk about something a little bit more uplifting
34:55
to end on?
34:55
Speaker 4: Yeah?
34:56
Speaker 5: Please?
34:56
Speaker 2: Got I want to talk about the Bridgerton Ball, which
35:00
an event that was supposed to be happening in Michigan
35:04
and it is really good, going off similar vibes to
35:08
the Willy Walkee experience that was like all AI generated
35:11
and turned out to be like one very sad umpa
35:13
lumpa with like a chocolate bar back.
35:17
Speaker 4: Into the spring.
35:18
Speaker 2: And this apparently they rescheduled the original dates that they
35:23
were going to be having this, and it turned out
35:26
it was because they wouldn't pay the original.
35:28
Speaker 4: Venue the full amount that they owed them. That came
35:31
out later.
35:32
Speaker 2: And then when people did show up, they had like
35:35
a single violin person there. They had no weight staff
35:37
to clear tables or anything. And they promised, you know,
35:41
a bunch of dancers that they were going to have
35:43
there to help you know, people dance, and they had
35:46
hired one stripper.
35:48
Speaker 4: Not great. We're done for the day on the Financial Exchange.
35:51
Speaker 2: We will see you tomorrow to wrap up the week.