Issue 3 Volume 1
Friday June 17, 2011
The above photo shows economic disparity currently in Edmonton. While many people are currently unemployed or underemployed, seeing a Ferrari on Edmonton streets is rare. This one is down Walterdale Hill. Edmonton has no dedicated Ferrari dealership, and this car was likely purchased in Calgary or Vancouver. However, if you've noticed, there are many more Ferrari's where there used to not be. This would indicate two things. First is that there is becoming an increasing disparity between the wealthy people and the rest-of-us. Second is that people are having a difficult time utilizing their credit for responsible purchases. In this day in age, you can finance anything, even a sandwich. Unfortunately, just because something exists, doesn't mean that it should be used.
The car appears to be a 360 Modena Spyder. The 360 Modena was the successor to the popular mid-engined and mid-priced (hah) bread and butter F355 model, as seen in Golden Eye. Its successors have been very popular, which include the F430 and the 458 Italia. The car is built on Ferrari's 'RMR V8' platform. The 3.6L V8 revs high and shares formula 1 technology, making 400hp, with performance figures of 0-60 in 4.2 seconds and a 1/4 mile in 12.8 seconds. Funny enough, that's slower than my Mustang GT 5.0, but you buy a Ferrari for more reasons than its straight line performance. I think that reason has to do with being a pretentious prick who needs validation by way of his car. I would cite Ferrari's visceral experience, but I believe you can get that from a Mustang as well.
UNEMPLOYMENT
INTRODUCTION
When Edmonton says they are expecting a labor shortage as early as 2012, it baffles many who are either not currently working in their field, or are not working at all, and perhaps haven't for a long time. Examining why this is, it isn't something that is specific to our locale. Let's go back in time.
2008, I was a burgeoning, young Economic graduate. That fall I took a trip to Winnipeg to learn how to be a financial consultant at Investors Group's head office. Between breaks in the classroom on how we could get people to contribute more to their retirement, we'd stand under these state of the art speakers that looked like alien-mind-sucking devices, but were meant such that the volume of the television would only be funnelled to a certain area to keep the rest of the office quiet. It looked pretty funny with 8 people huddled under a strange shower-head looking dealy so we could watch, on the plasma screen on the adjacent wall, how the market was collapsing right in front of us. Later, that collapse would be felt, and felt hard. I had to leave my job at IG because I simply could not make enough commission to pay my student debt. People could not be convinced to contribute money to investments; in fact they were pulling their money either because they had lost faith in the market, or they needed it for something else because they had fallen on hard times. At Axe Music I scraped by paycheck to paycheck, but we were told that our business would still be fine; people only wanted to sit around and drink, and play guitar when there was a recession. Eventually I thought I had found a career position at another financial institution (unnamed) where I was consistently asked to try to extract more money from individuals in financial trouble by getting them to invest or by putting them in even more debt, while being paid a used car shy a year north of the poverty line. This by a company that made a record profit that year of $988 million. I left because I thought the economy was good enough that something better would be easy to find.
And I would have spent 43 weeks on EI, if it wasn't for the decision to go back to school last January, and the job I currently work at Budget (who I must give certain props to my cousin for helping me get) where I humbly wash and service rental vehicles. In spite of that, I'm not in the most dire-est of straits, but at 28, I'm feeling a little behind of where I should have been. And I'm not the only one.
THE STATISTICS
Currently, Statistics Canada shows that about 2.8 Million people in Canada are on EI, and where previously the national unemployment rate was around 5%, and as low in Alberta as 0.7% during one quarter in the last decade, this is a staggering 8.4%. At an average wage of $45,000, benefits are calculated out to be around $800 to $900 a month on average. That totals to $2.52 billion in benefits being paid out for temporary aid to the unemployed, where usually these individuals would be paying, on average, 554 million to income tax. While our government provides a fantastic assistance to those in need, it can't do it forever.
WHY?
What most people want to know is, "why is this happening?" Mainly, while faith has returned to the markets, it has not been enough to stimulate the proper kind of business. The TSX may be up, but it may only be certain markets that are up. This fares well for you, say, if you're in the oil industry, but does not fare well for you, say, if you are a project manager with a business degree. Think about it: companies will try to recover their lost potential earnings for earlier quarters by focusing strictly on manufacturing and selling to gain market share back. Expansion starts happening when you have additional money over budget, not when you run a deficit or not on budget. That is when anyone can get a job doing just about anything. We aren't at that stage yet.
There is another answer to 'why' this is happening. Some companies realize the opportunity for expansion is now. Canada has held interest rates low to avoid drowning overextended consumers into bankruptcy. This has led us to be economically more powerful than some other struggling nations. Take our dollar over the US dollar, and our financial sector over theirs. TD bank has recently expanded to 700 branches in the US market. They'll be hiring local Americans to field these new branches. That means Canadian brain power jobs, like for accountants, analysts, consultants, advisers, heck even tellers, will have to wait. Any of their extra money is all going to expand into foreign markets.
In a normal pattern of recovery from recession; the central bank increases interest rates and therefore lower our currency value comparatively. It hurts for a while, but it starts export positions moving again, and brings money from foreign markets to our domestic businesses. That leads to jobs, and leads to stability in the economy, which leads to upswing. The problem is that so many people spent so much credit-wise, specifically personal loans, lines of credit and mortgages, that the Bank of Canada can't do this. It'd bankrupt nearly half the nation who's net worth is in the negative.
WHEN WILL IT END AND WHY
Analysts predict soon. Alan Mullaly of Ford says his Economic staff says that the second half of this year will note an upswing. I have a job now, so that must mean things are improving. Right? Right? Ultimately I think people were tricked by the fact that the TSX recovered so quickly, only assisted by the low domestic interest rates. Typically it takes 5 years for people to notice things are finally better, and it's been three. So we're on the upswing, but it means a long way to go. Slowly companies will find themselves in better positions to hire as they make up ground. As well, Canada's changes to mortgage rules mean people can stop overextending themselves, and it also sparked the real-estate market to get a little hotter as people tried to get in before the rule changes. The first sign to an improving economy is better real estate. Think of the biggest purchase you can make...every domestically-effecting purchase you make filters into the economic cycle and goes back to you. So if you, say, are an accountant, and buy a new house, that money goes to domestic laborers, aggregate manufacturers, etc, who pay it out to their individuals and as well expand internally. Maybe these individuals spend it on new furniture for their living rooms, and a local furniture chain starts doing more business than expected and needs to hire a new accountant. Because you're so good, you can upsell yourself. Bam, you've got a new job, and maybe some entry level bugger who has no experience and can't find one gets your old one, and then he/she can afford to buy a house. Know what I'm saying?
WE'RE NOT THERE YET
Again, expect two years to begin earning a competitive salary again; one where you can keep up with your bills.
STORIES
You've heard my story. What about others?
Jamie indicated that she hadn't had an interview in six months after incurring large student debt after many years of postsecondary education. Some insight she shared was the feeling she was overqualified. It makes sense: some companies do not want to hire you because they know you'll leave as soon as you find something better, thus you can't even find an entry level position just to make ends-meet.
Jen had a great quote for me, "Getting my degree instead of working during the boom was probably a bad idea...I'm in debt and too smart." That sounds like something a lot of students of the last few postsecondary graduating years can attest to. Jen did not want to take time after her last position, indicating she wanted to find a job as quick as possible. Not wanting to ride the EI train, she is on her second week of benefits, stating that she hasn't had any callbacks after aggressively seeking positions in just about any line of work. "I'm a toxic blend of over and under qualified." she states. Most recent graduates from the last few years have enough education to fill requirements of a lot of postings, but don't have the 5 years of necessary experience.
Tim indicated he recently spent 7 months on EI after being laid off due to his company's global downsizing. In 2008 I saw him promoting his company at a career fair. I wonder what kind of sick feeling it must have been to be promoting a hiring company, to getting laid off due to downsizing yourself. At that time we both felt like we were on the verge of becoming fantastic young executives who play golf and have nice houses and musclecars. I believe we both have decent houses and musclecars, and that's what our EI contributions are going to keep the bills up on.
Jessica had no quote for me, but blogs frequently at http://prematurenostalgia.blogspot.com/ about her current employment status, and the results. These are comical quips about saving $40 using coupons alone.
WHERE DO WE GO FROM HERE
Like Jen indicated, going to school during the rough patch is probably a better idea, then you come out with the ability to gain jobs and experience immediately. I didn't have trouble finding a smaller sized entry level position as soon as I went back to being a student. There were suddenly many more opportunities when I was going to get the government to pay my way. There have also been several more opportunities recently, it seems to me.
There will be recessions in the future. If we keep on the same path they're sure to be much worse. Excessive use of credit has seemed to have made this recession much worse. In other words, save, and spend, but reasonably. Purchase what you can afford in cash, or to pay off in a short term. You wouldn't walk into a store and see a shirt, and think about how the payments on that shirt would work into your budget? We need to stop doing that with smaller and smaller things. 35 years ago it was ONLY houses that you financed. Then about 25 years ago it started to be cars. Then 20 years ago it started to be living room sets. And 15 electronics, and 10 began the reward credit card phase, and now you literally finance everything. You buy your groceries on a credit card to get the reward points. You are effectively financing your groceries. First of all, financing things doesn't give you anything you can sell off if things get really bad. It forces you to pay bills for things you can't afford when the going gets tough. It forces the government to keep interest rates low and prolong the recovery period.
I wish everyone out there prosperity, health and happiness.
GOOD LUCK
LETTERS TO THE EDITOR
PAGE ART
Includes the unemployed storm trooper poster 'sucks when your job gets blow'd up' and the joke about "jobless men keep going: try wall street: they pay bonuses" of course poking fun at the wal street exec bonuses post bailout for the US. There's plenty of money to go around, just not to us.
NEXT ISSUE
-Are Canadians aware of the real issues? Vancouver riots explored.
-Bad Teacher: The dean that stole was always part of the problem.
-Sonic Boom Backlash: Are we getting spoiled or is modern rock just bad?
-New Music from Matt Good
-New cover art and more from On The Streets
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