JOBS? How About Cash Dividends and Stock BuyBacks Instead?

 

As stocks ramp higher with each trading session, and the economic data continues to impress, I am still left to wonder where the heck all these jobs are going to come from to knock the jobless rate down to 4-5%.  I see a world that is increasingly dependent on technology  and more efficient.  Essentially we need less workers to do more.

Those toll collectors on the highways are gone....  replaced by electronic tags on your windshield.

Token booths in the subway?  Quickly becoming a thing of the past.

How about all the printing that goes into the making of books?  Kindle, Nook, IPAD is replacing all of that, affecting many jobs.

Newspapers?  Who needs newspapers?  You are looking at printers, delivery men, how about the shops that sell those newspapers?  They are all gone.

Technology is replacing jobs everyday, with many great jobs being sent to India and other oversea destinations, there is a great chance we will never see a job recovery in this country.  7-8% will become the norm.

Look no further than recent corporate news from the most profitable bank in the United States to confirm this.  JP Morgan Chase is buying back its own stock, they are increasing their dividends... essentially lining the pockets of the rich.  They have cash to burn but its not being used to hire more employees.  Actually its quite the opposite.  They announce their big dividend raise, share buyback and one week later they are firing their workers and shrinking their workforce.   If the largest companies in the country are reducing their workforce while increasing payouts to the elite, how can we ever expect a job recovery.  Corporations are sitting on piles of cash, but see no need to hire workers.  They are content paying it out to shareholders.

How about AAPL?  $100 billion in cash and they are giving it back to shareholders in the form of a quarterly dividend and a stock buyback.  Let's think about who benefits from stock buybacks and dividend payouts?  Is it the guy whose been out of work the last 3 years?  Or the middle class guy who has cut back on his 401k contributions so he can afford soaring gas prices?  How about the single mother who is working two jobs just to get food on the table for her kids?  You think she owns any AAPL or JPM stock?  Of course not.   Dividends and Stock Buybacks benefit the rich.  We could see some trickle down from the dividends and buybacks, but I'm not so sure of that.

The bottom line is this.  Since the 2008/2009 financial crisis companies are lean machines.  Not only are they thriving on a smaller workforce, their stock prices are higher so obviously investors think they are doing a good job.  Jobs will never come back as strong as the printers that be think.   We are screwed and to think all the trillions of dollars our gov't will have wasted trying to revive a dying jobs market.  With that money just think how much higher they could have ramped stocks.......

 

Profile photo of uranium-pinto-beansKnown to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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