Prepper Recon

Obama Care and the Coming Unemployment Crisis

This post is a supplemental post to our previous post Financial Collapse – Threat Assessment Part 3: Obama Care. Please take time to read it if you have not  already done so. We are going to look a little closer at the numbers and how decisions by major  restaurant chains will affect unemployment and the broader economy in the future.

In our previous Obama Care post, we spoke of the decision by Darden Restaurants to cut most full time positions to 28 hours per week maximum. As it now stands, the provision in Obama Care that will force employers to provide health care for employees only applies to employees who work an average of 30 hours or more. This part of Obama Care goes into effect in 2014 and will be mandatory for all businesses with 50 of more employees.

The decision by Darden which includes several restaurant chains like Olive Garden, Red Lobster, Bahama Breeze, Capitol Grille and Longhorn Steak House is out more than a year in advance of the Obama Care provision. It is also being considered by White Castle, a fast food restaurant chain. I expect several other restaurants to follow Darden’s lead.  Not only restaurants, it seems logical to think department stores like Target and Wal-Mart as well as most large hotel chains will look at similar cost saving moves.

Let’s look at the numbers.

Part of the sorcery in employment numbers can be found in the definitions. When you see employment number released by the Bureau of Labor Statistics on the first Friday of every month, this number is the U3 number.  U3 includes people who are completely unemployed and are still looking for work. Once people give up looking for work, they become “discouraged workers”. At this point they fall into the U4 and above categories for one year. After one year of not looking for work, they become “marginally attached to the labor force” and are then only included in the U5 and U6 numbers. U6, our final category includes everyone in the previous categories plus those who are working part time because they cannot find full time work. This number is probably the best indicator of the state of the economy. Each consecutive number gets lager as it includes a broader definition of unemployed. You can view all of the U1 to U6 numbers and the definitions on the BLS website.

Currently, the U3 number is 7.8%. That number does not look quite as scary as the U6 number which is 14.7%. Remember, 70% of our GDP is consumer spending. If we are honest with ourselves and admit unemployment is 14.7%, fear and panic will cause people to cut their spending. This will trigger a deeper recession than what we are currently experiencing. By reporting the U3 number instead, the sheeple get their monthly dose of hopium to make them feel better. This false sense of security facilitates the can kicking and delays our day of reckoning.

Let’s look at the following chart from the BLS to estimate the impact of Obama Care on employment numbers if we only count the food service industry.

As we can see, the food service industry accounts for about 9% of total employment. The total US labor force is approximately 155 million workers. That comes out to 13.95 million service industry jobs. We’ll call it 14 million to make the math quicker. If all of these jobs went from 40 hours a week to 28 hours a week to avoid the Obama Care employer mandate, that is a total loss of 12 hours per job. Ironically, this will make 168 million available hours for new part time jobs. At 28 hours, that is a total of 6 million new jobs. That will reduce the U3 unemployment number by nearly 4%. All else being equal the reported number would be 3.8%. Obama would be heralded by the liberal media as a messiah like never before. The rest of the people in touch with reality would realize that the U6 number grew by the same percent. It would skyrocket to 18.7%. The 14 million who lost the 12 hours per week coupled with those 6 million who took the new 28 hour positions will barely scrape by. Nearly all of the total 20 million of these two groups will depend on the government to supply their health care due to no fault of their own. Add these  to the masses that are already dependent on the government and we will soon see how fast a socialist government  can run up debt and self destruct.

If other industries pick up on this idea to avoid Obama Care, the results will be much worse. This is a best case scenario. The worst case scenario has no limits.This election is about defeating Obama Care and hopefully buying ourselves a few more years to wake up more of our fellow Americans. If we don’t vote for Romney, the collapse will be here sooner than many of us will be able to prepare for. Even if you are hunkered down and ready for TEOTWAWKI, every day there are new brothers and sisters waking up and joining the prepper movement. Think of them when you cast your vote. A few more years can make a huge differences in the amount of preppers who survive to help us rebuild. Dr Paul is retiring this year, but his ideas are not. If you have not read ” The Revolution” by Ron Paul, I encourage you to pick up a copy and pass it on when you are done. If we can bite the bullet and choose the lesser of two evils this time around, perhaps we will have a better choice in 2016.

Happy Prepping!