I hate to tell you this, but the true unemployment figure is really 17.5%. Your elected officials don’t want you to know this.

Minimum wage is $7.25/hour. Small business owners have trouble justifying that much to an inexperienced person. As a result many jobs that high school kids might have gotten are going to Seniors who need the extra money because they cannot live on the little retirement funds they have. The older worker may not be as fast or as strong, but he is quicker to adapt to work environment and is usually more courteous. The unemployment rate for teens is more than 25% according to the NY Times.

And a lot of kids refuse to do menial work. They have been raised in a society that gave trophies to the kids who finished last just so they would “feel good”. Out in the real world you get fired for finishing last.

Thousands of companies both large and small are downsizing. That means there is a huge pool of experienced labor that wants to work. Hiring a new person at $9.00 to 12.00 per hour is many time more efficient than an inexperienced one at $7.50. There are many articles today pointing out that the minimum wage is keeping new workers out of the workforce.

Productive capacity is considered full at 82%. Today it is 68%. Companies have machinery that is sitting idle. There are no orders to justify hiring a new person to run it. Companies don’t make a profit building idle inventory.

The buying bubble has burst and the consumers in other developed countries have slowed their purchasing just as the American consumer has. This can be seen in the price of company’s stock. It goes down because the profit margins are shrinking. Some go out of business.

Don’t know what profit is? It is profit that makes and keeps each job. The more profit the machines produce the company will buy and people they will hire. Helping your company make a profit keeps your job. Companies are reducing the sales price of their products to break even so they can keep the doors open.

And that is the nub. If the price of labor is high in relation to the price of the product the labor market will remain weak for a long, long time.

Don’t expect wage increases because the company is not able to increase the price of its products due to the slowing world economy and saving (not spending) by American consumers.

Productivity and profit will increase as fewer workers will produce the same amount of goods as before.

For the next few years employees who are the best producers will keep their jobs.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2009 Williamsburg Investment Co. All rights reserved.