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Thread: The REAL Unemployment Rate

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    Thumbs down The REAL Unemployment Rate

    According to Austan Goolsbee, former Professor of Economics at the University of Chicago ( now Obama's chief economic advisor ) unemployment is underreported. At the U. of C., Goolsbee continually criticized the Dept. of Labor numbers on employment. Especially when G.W. Bush's Dept. of Labor announced increases in employment starting in 2003. The methods used by the Dept. of Labor to measure
    employment and unemployment have NOT changed since Goolsbee's critiques. Only his job description has been revised.

    January's release of December's jobs numbers was disappointing as another 85,000 jobs were lost after an increase was widely expected. Next month's numbers will be even worse because they will include a Dept. of Labor assumption that a lot of companies went out of business. This is called the "birth/death" model used by the Dept. of Labor. Last year it caused 356,000 jobs to be subtracted from the January '09 numbers. BUT the same model will add jobs that don't otherwise exist in the spring. Confused yet ? Not to worry. Any mistakes from April 2009 to March 2010 will be corrected in 2011. For example, on Feb. 4, the Dept. of Labor is due to make a "benchmark" revision that will subtract 840,000 jobs the government thought existed but really do not. That will correct any errors up to March, 2009.

    The "unemployment " rate is at 10%. But the "underemployment" rate is at 17.3%.This figure is called "U-6" by the Dept of Labor and adds up all the people who want a full time job but can't find one. But U-6 doesn't count people who have left the labor force because they have given up looking for work. There were 660,000 such people who left the labor force in December.

    If you add up EVERYBODY with "challenged employment"; those receiving unemployment benefits; those underemployed and the discouraged, the REAL unemployment rate is well over 20 %. And there are NO signs that it will significantly decline anytime soon. Especially if states and cities make the necessary job cuts to balance their budgets.

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    Default Re: The REAL Unemployment Rate

    As a former professional unable to find a job, it's scary. The government keeps pushing to go back to school, but they don't tell you why. The real reason is so many more people will take out student loans and the government will make money when people can't pay them. Also, they are lying about jobs in demand. They keep saying nurses and teachers have a shortage, but this is a lie. Many teachers and nurses are losing jobs, or being cut to part time (I know because I checked into getting a teaching certificate). Employers know they can be picky and they are. Even low level minimum wage jobs are getting hundreds of applications.

    Btw, it's the fault of both parties.

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by Kellydancer View Post
    As a former professional unable to find a job, it's scary. The government keeps pushing to go back to school, but they don't tell you why. The real reason is so many more people will take out student loans and the government will make money when people can't pay them. Also, they are lying about jobs in demand. They keep saying nurses and teachers have a shortage, but this is a lie. Many teachers and nurses are losing jobs, or being cut to part time (I know because I checked into getting a teaching certificate). Employers know they can be picky and they are. Even low level minimum wage jobs are getting hundreds of applications.

    Btw, it's the fault of both parties.
    I agree. BOTH parties helped to create this mess but it's OBAMA's mess now. It's HIS responsibility to turn it around and he doesn't have a clue how to do it. His "Stimulus" package did NOTHING except save public sector jobs when that is part of the peoblem. The Dems have controlled Congress since January 2007.

    As Melonie explained in another thread, staying in school is NOT necessarily the answer. In fact for many people it is actually counterproductive as the debt they pile on is never negated by a higher income further down the line.

    Btw, for every job opening there are an average of 6.4 applicants.

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by Kellydancer View Post
    As a former professional unable to find a job, it's scary. The government keeps pushing to go back to school, but they don't tell you why. The real reason is so many more people will take out student loans and the government will make money when people can't pay them. Also, they are lying about jobs in demand. They keep saying nurses and teachers have a shortage, but this is a lie. Many teachers and nurses are losing jobs, or being cut to part time (I know because I checked into getting a teaching certificate). Employers know they can be picky and they are. Even low level minimum wage jobs are getting hundreds of applications.

    Btw, it's the fault of both parties.
    Are you only looking for jobs in your area, or are you looking all over the country?

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    Default Re: The REAL Unemployment Rate

    Around the country, but for the most part I have to stay in this area for awhile (family issues). I live near another state so I try that one as well as the one I currently live in.

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    Default Re: The REAL Unemployment Rate

    I'm not really surprised that a fifth of Americans are lazy. Are you?

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by Kellydancer View Post
    Around the country, but for the most part I have to stay in this area for awhile (family issues). I live near another state so I try that one as well as the one I currently live in.
    Have you ever considered starting your own business or buying a franchise? I've always thought about doing that if I lost my job and had trouble finding another one.

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    Default Re: The REAL Unemployment Rate

    I owned a business that is now defunct (an entertainment agency). I'm starting a marketing/website design business but that's extremely competitive now as well.

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    Default Re: The REAL Unemployment Rate

    That sounds like a good business. I hope it goes well for you.

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    Default Re: The REAL Unemployment Rate

    I'm not really surprised that a fifth of Americans are lazy. Are you?
    Are you referring to government workers ?

    (snip)"Tuesday, January 12, 2010
    Federal Workers Earn More Than Twice The Average American

    Check this out from Casey's Daily Dispatch:

    "As you probably expected, the loss of employment has occurred entirely in the private sector, as Uncle Sam grows more bloated each day. If you happen to be in the private sector, it also might not psych you up too much to know that the average pay per federal worker in 2009 was reportedly $75,419, while per capita average annual income across the U.S. is only about $36,000.""(snip)


    If you were actually referring to the 'recently' unemployed, then an argument needs to be made that many of these people are actually playing it 'smart' rather than lazy. The base of such an argument is our old friend 'moral hazard' i.e. that the the equivalent cash value of unemployment benefits plus food stamp benefits plus gov't extension of cobra insurance benefits plus local property tax exemptions plus a potential cornucopia of other benefit eligibility at the very least equals the amount of 'after tax' income available to them should they accept a replacement job at now prevailing pay rates. Put simply, if given the choice of maintaining the same standard of living by sitting home and collecting benefits for over a year, or working your butt off at a new job while achieving the exact same standard of living, is choosing the former strictly a matter of 'laziness' ?


    His "Stimulus" package did NOTHING except save public sector jobs when that is part of the peoblem
    Actually, stimulus money increased the 'generosity' of the benefits discussed above ... which added to the 'moral hazard'.


    And in regard to the effectiveness of stimulus spending, check this out ...



    (snip)"The 400-page stimulus law contains so many provisions - tax cuts, unemployment benefits, food stamps, state aid, military spending - economists agree that it's nearly impossible to determine what worked best and replicate it. It's also impossible to quantify exactly what effect the stimulus has had on job creation, although Obama points to estimates that credit the recovery program for creating or saving 1.6 million jobs.

    It is also becoming more difficult to obtain an accurate count of stimulus jobs. Those who receive stimulus money can now credit jobs to the program even if they were never in jeopardy of being lost, according to new rules outlined by the White House's Office of Management and Budget. (snip)

    ~
    Last edited by Melonie; 01-13-2010 at 04:33 AM.

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    Default Re: The REAL Unemployment Rate

    It isn't "laziness." Are people lining up for work at factories that are overseas? Bankrupt construction companies? Guest worker controlled technology companies? Illegal immigrant controlled agriculture? Gone out of business retail? (Hell, even Walmart is closing stores these days.)

    We are in the midst of structural change and the american people are getting smacked in the face hard.

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by Melonie View Post
    Are you referring to government workers ?

    (snip)"Tuesday, January 12, 2010
    Federal Workers Earn More Than Twice The Average American

    Check this out from Casey's Daily Dispatch:

    "As you probably expected, the loss of employment has occurred entirely in the private sector, as Uncle Sam grows more bloated each day. If you happen to be in the private sector, it also might not psych you up too much to know that the average pay per federal worker in 2009 was reportedly $75,419, while per capita average annual income across the U.S. is only about $36,000.""(snip)


    If you were actually referring to the 'recently' unemployed, then an argument needs to be made that many of these people are actually playing it 'smart' rather than lazy. The base of such an argument is our old friend 'moral hazard' i.e. that the the equivalent cash value of unemployment benefits plus food stamp benefits plus gov't extension of cobra insurance benefits plus local property tax exemptions plus a potential cornucopia of other benefit eligibility at the very least equals the amount of 'after tax' income available to them should they accept a replacement job at now prevailing pay rates. Put simply, if given the choice of maintaining the same standard of living by sitting home and collecting benefits for over a year, or working your butt off at a new job while achieving the exact same standard of living, is choosing the former strictly a matter of 'laziness' ?


    As always, you're making stuff up with no basis, based on your ideology.

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    Default Re: The REAL Unemployment Rate

    Doug Casey, who runs one of the best regarded investor advisory services in the world, does not 'make things up'. Granted that the sources of data used for his analysis are NOT the 'official gov't statistics'. While Doug's immediate 'output' is geared for paid subscribers, he does post slightly 'dated' output for free consumption. A recent post of interest to this thread is ...



    ... which includes an extremely applicable chart of ADP based job loss data being a far more accurate source than the 'official gov't statistics'.

    (snip)"Bud considers ADP (Automatic Data Processing, Inc.) more reliable than most sources on unemployment, because ADP processes a huge quantity of the payrolls and is able to use those data to estimate the number of jobs being lost or created.

    Here’s Bud’s summary take this morning on the new unemployment report …

    Unemployment rate 10%, unchanged.

    Average Hourly Earnings 0.2%, unchanged.

    Average Weekly Hours 33.2, unchanged.

    Headline: 85,000 jobs lost, worse than expectations, which were for -30,000 to -33,000

    U-6 unemployment 17.3%, up a tick. (U-6 includes marginally attached plus those employed part-time for economic reasons.)

    Average Duration Weeks 29.1, up from 28.6, a terrible number.

    Overall it was a disappointment and a decline of 86,000 jobs (with revisions of -1,000) when the country needs a net gain of 100,000 new jobs just to keep up with population growth. This is not yet a recovery.

    And there was some jiggering of the numbers by the Bureau of Labor Statistics (BLS). For instance, the only way they kept the total unemployed to 10% was by adjustments that show the work force as declining. That is just fewer people looking for jobs, not fewer mouths to feed.

    A little more digging shows that the BLS is still cooking the books with tweaks based on the fantasy assumption that a large number of small businesses are not being counted, so they add a bogus 59,000 new businesses into the model. The BLS will revise some of that adjustment out in February, and it should be awful, but only "one time." (See for more.)

    The household survey is more volatile and generally not as widely quoted, but it was dreadful at a loss of 589,000.

    Bottom line: The hoped-for fast recovery is not happening. In my view, we are still in a recession with continuing negative employment, even if not at the rate of decline that was so disastrous a year ago."(snip)


    I also found this reference to federal worker pay rates in Doug Casey's free archives ... The original analysis / article is also probably available on USAToday, but I'm not going to spend further time attempting to defend my factually accurate point against your unfounded attempt to paint the point as politically oriented fiction.



    (snip)"Today the always useful Daily Crux pointed to an article in USA Today on the stunning increase in salaries for U.S. federal government workers. Some relevant quotes…

    The number of federal workers earning six-figure salaries has exploded during the recession, according to a USA TODAY analysis of federal salary data.

    Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession's first 18 months — and that's before overtime pay and bonuses are counted.

    Federal workers are enjoying an extraordinary boom time — in pay and hiring — during a recession that has cost 7.3 million jobs in the private sector.

    The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.

    When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.


    Outraged? You should be."(snip)
    Last edited by Melonie; 01-13-2010 at 10:46 AM.

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by eagle2 View Post
    As always, you're making stuff up with no basis, based on your ideology.
    What exactly do you claim is "made up" ? That extended unemployment benefits prolong unemployment ? Well no less than Larry Summers and other "Liberal" economists have repeatedly argued the same thing.

    For the last time, the best antidote to inaccurate facts is more accurate facts. Wtf are yours ? 9 times out of 10 when you read something from Melonie ( or me ) that you don't like, you do one of two things: 1. post nothing in response because you don't have any facts to repond with or 2. you hop up and down chanting: "ideology ! ideology ! ideology ! ". Like you're immune from any ideological bias. Like the taint of "ideology" somehow prevents 2 + 2 from equaling 4.

    The numbers are what they are.
    Why they are what they are; where they are going to be in the future ; what policies will affect them in what way and similar type questions and issues can be influenced by "ideology".

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    Default Re: The REAL Unemployment Rate

    That the unemployed are just sitting home and collecting benefits instead of going out to try and find jobs. I read about employers getting hundreds of resumes, even thousands of resumes for a single job opening. Millions of people have lost their homes after their benefits have run out. Millions more are worried about the same thing happening to them. Everyone I know that was/is unemployed has been very actively searching for a job. It's very blatantly obvious that there are far more people looking for jobs than there are jobs available. To say that the unemployed are unemployed because they prefer to sit at home collecting benefits rather than working is ridiculous.

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by eagle2 View Post
    That the unemployed are just sitting home and collecting benefits instead of going out to try and find jobs. I read about employers getting hundreds of resumes, even thousands of resumes for a single job opening. Millions of people have lost their homes after their benefits have run out. Millions more are worried about the same thing happening to them. Everyone I know that was/is unemployed has been very actively searching for a job. It's very blatantly obvious that there are far more people looking for jobs than there are jobs available. To say that the unemployed are unemployed because they prefer to sit at home collecting benefits rather than working is ridiculous.
    I hope you're sitting down because for the most part, I agree with you. There are something like 6.4 applicants for EVERY posted job opening. In many areas of the country, the options for unemployed people are very limited indeed. There just are NO jobs because there are no employers. They have to move; do something else or start their own business. If they can't do at least one of the three and their unemployment runs out, then what ?

    The real nitty gritty is when unemployed folks refuse to take a lower paying job than what they previously had; when they insist on looking for and getting a job like they had before.
    Last edited by Eric Stoner; 01-18-2010 at 08:44 AM.

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    Default Re: The REAL Unemployment Rate

    The real nitty gritty is when unemployed folks refuse to take a lower paying job than what they previously had; when they insist on looking for and getting a job like they had before.

    In many areas of the country, the options for unemployed people are very limited indeed. There just are NO jobs because there are no employers

    ^^^ and this is precisely what previous posts / discussions have covered under the heading of 'moral hazard'. When an unemployed person is faced with the following choices ...

    A. accept a replacement job in the same area that pays 70%-60%-50% of their former job, and pay normal living expenses out of that reduced income, or

    B. pack up and move to a different state / country where better employment opportunities DO exist ... taking a loss on owned real estate, saying permanent goodbye to friends and family, etc., or

    C. refuse the low paying local replacement job, continue to collect unemployment benefit checks for ~72 weeks, continue to collect former employer's 'cobra' buydown benefits for ~72 weeks, continue to receive subsidized utility benefits / property tax relief benefits / subsidized rent benefits / food stamp benefits etc. while 'hoping' that a replacement job that pays 80%-90%-100% of their former job materializes before the ~72 weeks are up ( or 'hoping' that the ~72 weeks of benefit coverage will be extended yet again ).

    In the 1930's, when such comparatively 'generous' unemployment and social welfare benefits did not exist, people were simply not able to continue to 'camp out' for months on end in a location where there simply wasn't any economic opportunity. As a result, in the 1930's, people were 'forced' to relocate ... sometimes across the country ... in order to obtain work where their skills / labor was actually needed. This is certainly not the case today, as exemplified by locations such as Detroit.

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by Eric Stoner View Post
    I hope you're sitting down because for the most part, I agree with you. There are something like 6.4 applicants for EVERY posted job opening. In many areas of the country, the options for unemployed people are very limited indeed. There just are NO jobs because there are no employers.
    It is difficult to become an employer. Only 15% of small businesses are able to move from single person sole proprietor stage into actually hiring an extra person beyond himself. There is actually a disincentive to hiring employees due to extra insurance and tax costs, so some business owners say "the heck with it, I'm just going to do this myself."

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    Default Re: The REAL Unemployment Rate

    It is not congruent thinking to say people refuse lower paying jobs so they can accept even lower yielding unemployment insurance/food stamps. It may work for a short time period between equal jobs but people quickly realize it is nothing for long term.

    The jobs simply are not out there. There are two sides to the coin - there is no lack of demand for work - there is a lack of supply of work. (Supply side economics meets globalism.)

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    Default Re: The REAL Unemployment Rate

    For those who say to take anything, it's more difficult than that. Even those jobs are getting competitive and they generally don't hire "overqualified". I know, I've applied for all of them and exactly one offered me a job: a seasonal part time job paying minimum wage and requiring to lift 50 pounds (which I can't do). As for the comments about relocating, that isn't feasible for everyone. I live In Illinois, that has high unemployment and a major city here (Chicago). Chicago is one of the business hubs in the world and there just aren't that many jobs. If it's bad here, I imagine it's far worse in other states. Jobs that used to pay $40,000 a few years ago are offering $25,000. It's bad. I am starting a business like I mentioned, but many can't.

    Btw, for those who think unemployed just want handouts are misguided. In Illinois it's almost impossible to receive most welfare programs unless you have kids.

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    Default Re: The REAL Unemployment Rate

    It is not congruent thinking to say people refuse lower paying jobs so they can accept even lower yielding unemployment insurance/food stamps. It may work for a short time period between equal jobs but people quickly realize it is nothing for long term.
    Partially in agreement if 'long term' is defined as one week longer than unemployment benefits last. Partially in disagreement because when one adds up the 'equivalent cash value' of $400+ a week unemployment insurance checks, plus food stamps, plus 'cobra' insurance buydowns / medicaid eligibility, plus utility bill subsidies, plus rent subsidies etc. and finds that accepting the lower paying replacement job and having to pay full price for food, having to pay realistic health insurance premiums / copays with the new employer's coverage, having to pay full price for utility bills and rent etc. probably results in very few actual additional after-tax dollars remaining to spend. This of course varies depending on the 'generosity' of individual state programs.


    There are two sides to the coin - there is no lack of demand for work - there is a lack of supply of work. (Supply side economics meets globalism.)
    to be more precise, there is a lack of demand for US unskilled work that is priced at levels 4 times higher than the exchange rate adjusted cost of unskilled labor in China or Vietnam. There is a lack of demand for US skilled work that is priced at levels 2-3 times higher than the exchange rated adjusted cost of skilled labor in India or South Korea. American labor has simply priced itself out of the globally competitive market ... such that increasingly the only American jobs that will remain secure are those that are geographically or legally protected against global competition, or those that are subsidized by the US gov't / taxpayer.

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by Melonie View Post
    ^^^ and this is precisely what previous posts / discussions have covered under the heading of 'moral hazard'. When an unemployed person is faced with the following choices ...

    A. accept a replacement job in the same area that pays 70%-60%-50% of their former job, and pay normal living expenses out of that reduced income, or

    B. pack up and move to a different state / country where better employment opportunities DO exist ... taking a loss on owned real estate, saying permanent goodbye to friends and family, etc., or

    C. refuse the low paying local replacement job, continue to collect unemployment benefit checks for ~72 weeks, continue to collect former employer's 'cobra' buydown benefits for ~72 weeks, continue to receive subsidized utility benefits / property tax relief benefits / subsidized rent benefits / food stamp benefits etc. while 'hoping' that a replacement job that pays 80%-90%-100% of their former job materializes before the ~72 weeks are up ( or 'hoping' that the ~72 weeks of benefit coverage will be extended yet again ).

    In the 1930's, when such comparatively 'generous' unemployment and social welfare benefits did not exist, people were simply not able to continue to 'camp out' for months on end in a location where there simply wasn't any economic opportunity. As a result, in the 1930's, people were 'forced' to relocate ... sometimes across the country ... in order to obtain work where their skills / labor was actually needed. This is certainly not the case today, as exemplified by locations such as Detroit.
    There is high unemployment everywhere. I don't know of any place in this country where one can just pack up and move to, and easily find a job.

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by Melonie View Post
    Partially in agreement if 'long term' is defined as one week longer than unemployment benefits last. Partially in disagreement because when one adds up the 'equivalent cash value' of $400+ a week unemployment insurance checks, plus food stamps, plus 'cobra' insurance buydowns / medicaid eligibility, plus utility bill subsidies, plus rent subsidies etc. and finds that accepting the lower paying replacement job and having to pay full price for food, having to pay realistic health insurance premiums / copays with the new employer's coverage, having to pay full price for utility bills and rent etc. probably results in very few actual additional after-tax dollars remaining to spend. This of course varies depending on the 'generosity' of individual state programs.




    to be more precise, there is a lack of demand for US unskilled work that is priced at levels 4 times higher than the exchange rate adjusted cost of unskilled labor in China or Vietnam. There is a lack of demand for US skilled work that is priced at levels 2-3 times higher than the exchange rated adjusted cost of skilled labor in India or South Korea. American labor has simply priced itself out of the globally competitive market ... such that increasingly the only American jobs that will remain secure are those that are geographically or legally protected against global competition, or those that are subsidized by the US gov't / taxpayer.
    Again, you're making things up based on your ideology, rather than what happens in the real world. There are plenty of businesses that are able to pay decent wages to American workers. The problem with the economy is the lack of demand for products from these businesses, and any other business. People aren't spending money. Drastically cutting wages, as you seem be in favor of, would only make things much worse. People would even have less money to spend and demand for products would go down even more.

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by Kellydancer View Post
    I live In Illinois, that has high unemployment and a major city here (Chicago). Chicago is one of the business hubs in the world and there just aren't that many jobs. If it's bad here, I imagine it's far worse in other states. Jobs that used to pay $40,000 a few years ago are offering $25,000. It's bad. I am starting a business like I mentioned, but many can't.
    By the way, Chicago used to have a good number of rich floor traders that could spread the wealth around and create other jobs. Those floors have been supplanted by computerized trading, so the finance industry in Chicago is suffering too. Add increasing regulation of futures exchanges, which will drive volume to other international exchanges with less onerous regulation.

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    Default Re: The REAL Unemployment Rate

    Quote Originally Posted by eagle2 View Post
    Have you ever considered starting your own business or buying a franchise? I've always thought about doing that if I lost my job and had trouble finding another one.
    A franchise costs a lot of $$$, unless it's the "home-based" types. But the home-based franchises will involve a lot of hustle to get clients, and with all that hustle you'll be wondering if it was even worth it to go with a franchise rather than doing it yourself and not have to pay initial franchise fees + continuing royalties.
    Franchises are no guarantee to profit, even if it's a good location. For example, the local Dairy Queen near my house went belly up, and I would consider it had a good location. A Papa John's can cost between $114,000 to $528,000 to start. Seattle's Best Coffee will run from $300,000 to $480,000. Massage Envy a few hundred G's as well. Most people would have to mortgage their house to come up with that type of capital. If the business goes down, then the house is lost as well. Then you're really screwed . A lot of real estate brokerage franchisees failed over past few years, such as Remax, HelpUSell, etc.. I foresee I huge decline in food franchises when food prices soar and people try to save money by eating at home or growing their own veggies in their back yard. There are way too many restaurants; everywhere you turn you can't help but bump into a Burger King, McDonald's, or Pizza Hut.

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