Can the Average Joe Get a Job?

September is an exciting time for business. Back-to-school sales promise a boost in revenue, and tech companies are busy unveiling their newest gadgets for the upcoming holiday season. But none of this means anything if people are out of a job with no money to spend. Let's look at a few macroeconomic indicators and companies to see whether the average Joe is ready to spend some money this fall.

Are consumers comfortable?
"Severe economic discontent" is the phrase of the week -- and all of last month. The Bloomberg Consumer Comfort Index measures consumers' opinions of the American economy, their personal finances, and the general buying atmosphere.

Personal finances continues to pull the index lower, even as Americans consider the U.S. economy and buying climate to have improved slightly since last week. It's no surprise that all indicators remain solidly in the red, considering consumers haven't responded with net positive sentiments since 2007.

Jobless claims
If Joe's not workin', Joe's not buyin'. Jobless claims for this week fell to 365,000, a four-week low that tells an opposing story to the Consumer Comfort Index. New claims fell by 12,000, but continuing claims are still hovering around 3.32 million.

The ADP Employment Report reveals that most of the new jobs came in the retail and service sectors -- industries known for their fickle temperament. Joes finding themselves employed in these sectors most likely aren't getting paid much and could be laid off when sales cool off again before the Christmas rush. Average hourly earnings growth dropped to 0.1% last month, compared with 0.3% growth in July.

US Initial Claims for Unemployment Insurance Chart

US Initial Claims for Unemployment Insurance data by YCharts.

Productivity and costs
As we've seen with the Great Recession, economic recovery is not synonymous with job growth. A recent report from the Bureau of Labor Statistics reveals one potential reason why: In the last year, labor productivity has increased by 2.2%. Simply put, 98 workers can now do what it took 100 workers to do in 2011. So who (or what) is doing the work of those two employees?

Amazon.com (Nasdaq: AMZN  ) , a company already lauded for its logistics, bought Kiva Systems earlier this year to add robotic arms to its shipping centers. Amazon expects to improve its productivity by 300% to 400% in the coming years. The company will also add Walgreen (NYSE: WAG  ) and Staples (Nasdaq: SPLS  ) to its list of customers, since these corporations employ Kiva robots in their warehouses.

While Amazon might not be doling out jobs, it is creating a more efficient business that will make goods cheaper for the average consumer. Some companies, however, are struggling with efficiency and laying off employees around the nation.

In July, struggling Best Buy (NYSE: BBY  ) laid off 2,800 workers in a restructuring effort to save its big-box retail model. The electronics company has also closed 50 stores in an effort to cut costs by $800 million.

RadioShack (NYSE: RSH  ) began layoffs at its corporate headquarters this month, where it previously employed around 1,200 employees. Both RadioShack and Best Buy are direct competitors with Amazon, but their physical-store model might not make it through the recession. Take a gander at each company's sales per employee to see just how badly Amazon trounces its electronics opponents:

Company

Employees

2011 Sales

Sales/Employee

Amazon 56,200 $48 billion $855,872
Best Buy 167,000 $50 billion $297,886
RadioShack 34,000 $4.4 billion $128,765

Source: retailsails.com.

While these numbers aren't directly correlated with each company's efficiency, it gives investors an insider perspective on how a larger workforce is not a guaranteed ticket to more sales.

Keep an eye on Joe
In summary: Joe has a temporary job and is feeling better about the economy, but he's concerned with his financial position and isn't going on a shopping spree anytime soon. Companies recognize the value of Joe, either as a value-adding employee or as a buyer of their more efficient goods. Understanding where Joe fits into the economic recovery adds nuance to any investor's stock decisions, so be sure to keep track of his progress and make your picks accordingly.

If you think Amazon employing robots is innovative, this online retail company is just getting started. And speaking of Joe, Motley Fool Analyst Joe Magyer has prepared a special premium report outlining how Amazon can offer Joe the cheapest goods on the market and whether its business model is built to last. It comes with a full year of free updates and is available for a limited time only, so grab your copy today.

Fool contributor Justin Loiseau has no material interest in any companies mentioned in this article, but he did buy a bicycle pump on Amazon.com last month. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.

The Motley Fool owns shares of Amazon.com, Best Buy, Staples, and RadioShack. Motley Fool newsletter services have recommended buying shares of Amazon.com and Staples. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (4) | Recommend This Article (12)

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  • Report this Comment On September 07, 2012, at 4:18 PM, watchman247 wrote:

    Yes Joe can get a job. How do we know this? We see people less qualified than the average Joe working at places like restaurants, call centers, cleaning services and lawn maintenance companies every day.

    The problem is that Joe is very proud and often lazy. He won't keep a job he feels is "beneath" him and when he does, he refuses to live below his means.

    Joe needs to man up and grow up.

  • Report this Comment On September 07, 2012, at 6:56 PM, xetn wrote:

    "watchman247":

    This would not be the case if there were not unemployment benefits that pay people Not to work.

    Here is another view of the unemployment problem:

    http://www.economicpolicyjournal.com/2012/09/labor-force-par...

  • Report this Comment On September 07, 2012, at 10:51 PM, PeakOilBill wrote:

    The multi-nationals moved the low skilled manufacturing jobs to low wage countries. Can you see any politician saying, "Unemployment is so high because they moved all the jobs that the dumb people did to China?" They would move more if they could, but most service jobs can't be moved to China or Bangladesh.

    Peak oil will change all that that sooner than many people think. In a new research report, Saudi Arabia is projected to end all oil exports by 2030. It is in The Telegraph by Ambrose Pritchard in the finance section. If you are under 50, you might want to read it.

    I'm very far from gifted, but even I can figure out that once peak oil becomes obvious, exporting countries will realize that they can amass most of the world's wealth by producing less oil. When every producer is pumping full out, any production cut by any oil exporter will drive up the price, FAST. Would you do the world a favor by producing as much oil as you could, and thus help keep the price DOWN, while you run out of oil faster? Hell no you wouldn't. I would sell oil by the liter. (Not really, I just play a greedy capitalist from my little living room across from Clearwood Jr. High School in Slidell, LA.) Get ready for hell folks. It's coming during the next decade, well before 2030.

    Peak oil would have screwed us THIS decade, until horizontal drilling enabled more efficient draining of thin oil bearing rock strata. Thin is the key word. Those deposits will play out a lot quicker than most traditional oil fields, some of which, are hundreds of feet thick. A lot of oil remains in old fields. Pray that horizontal drilling can get a lot of what is stuck down there out. With normal vertical wells, it often cost more to drill the well, than the oil you can get out is worth. Or you use more oil than you get.

    Natural gas drilling can get the average Joe a job. I wonder if they will ever drill off the coast of California where huge amounts of gas is bubbling up out of the sea floor? You think there might be some gas down there? Maybe even some oil too? Watch how much gas they find in the Russian Arctic. Check out the size of their Arctic continental shelf on Google Earth. Nearly half the size of the USA ! And the ice is melting. Putin will stay in there until he dies, to steal some of that amount of money.

  • Report this Comment On September 08, 2012, at 7:34 AM, hudsondusters wrote:

    xetn, without denying the incentive effects of unemployment benefits, my wife was let go in June by the government contractor she worked for (previously Lockheed Martin), when it lost a contract with the FAA relating to runway safety (yeah, the government is downsiz...er, reorganizing, runway safety; have fun flying libertarians). She collected unemployment benefits for 2 months, and now has a new job as an airport planning consultant. Isn't it great? Now she is in the private sector. Of course, her new employer's customers are government or quasi-government entities, but whatever, I am getting sidetracked.

    Anyway, point is, unemployment benefits didn't keep her from seeking work. In NY they max out at 405 a week. In surrounding states it's more like 600 (NJ, Ct, Mass) or close to it. In Rhode Island more like 650. now there's a place to get laid off. Plus you have to pay taxes on it. And because she had planned a trip overseas to take our daughter to see her parents and grandparents in Riga before she was laid off, she had to forego benefits that week (you can't claim if you aren't there to work that week). Trust me, every dime of that went back into the economy(less whatever taxes we paid, but I assume those went back somewhere too, even if the government will just give that inefficiently to someone else, maybe for runway safety, rather than me spending it more efficiently, maybe on another dogfishead IPA at Buffalo Wild Wings).

    Just one anecdote, but my wife got pretty antsy just lazing about with our 3 year old watching spongebob and eating bonbons.

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