Joblessness, Making Do, Then Making Way

True economic recovery requires far more gainfully employed American workers, and today's job data is disheartening. Whatever the stock market's bull case has been over the last several years, it hasn't been supported by meaningful economic recovery for many Americans.

Here's one glimmer of hope, though: makers. Granted, the shadow economy can include negative elements such as drug dealing and fewer tax collections, but it also includes regular people making things and selling to one another. One study supposes that the total shadow economy represents $2 trillion.

Many may make things out of necessity and to help scrape by. Part timers are likely finding things to do, supplementing income, saving money, and using extra hours for shadow productivity. They may also launch their creativity, entrepreneurship, and eventually create investable opportunities.

This spirit may save our economic skin.

Lacking jobs and lacking soul
August data reported 169,000 new jobs, missing expectations. The unemployment rate has dipped to 7.3% from 7.4%. Part-time jobs in retail and hospitality generally don't pay big money, and those frequently part-time gigs made up much of the gain.

The U.S. Labor Department has revised the previously announced job gains down 74,000 for June and July. Many people have been looking for jobs and have simply given up. The labor force participation rate, which dropped to 63.2%, has fallen to its lowest level in three and a half decades.

Also, Challenger reported that August layoffs jumped: more than 50,000 jobs were cut, a 34% increase from July and a 57% increase from this time last year.

Back to the future
In my previous column, I made the case for businesses bringing manufacturing jobs back to the U.S. as the right, responsible thing to do in a sagging American economy.

There's another part of this "Made in America" theme, though, and what for many started out as moneymaking (or money-saving) activities could eventually hurt many of the companies that have stymied our job market, and perhaps even save the day.

Late last year, I reviewed Wired editor-in-chief Chris Anderson's book "Makers: The New Industrial Revolution". Anderson points out that for all that the virtual world of "bits" transformed our economy more than a decade ago, now it's on the cusp of yet another transformation: merging digital bits and real-world, customized production.

If you want it done right, do it yourself
Our mass-production world, with many companies focused on super cheap production to boost profitability, leaves underserved market niches.

Take the recent lululemon controversy regarding its "formula" that shirks yoga attire over a size 12. This sparked a conversation with quite a few of friends on social media about a pretty general frustration for people: the inability to find well-fitted clothes for many people, whether heavy, thin, petite, tall, and so forth; the high-production "norm" doesn't serve many shoppers.

In some cases people actually can and do make their own custom clothes. That combines function, creativity, and a way to avoid conformity shopping, not to mention retail markups.

Platforms like Etsy and Zazzle allow handcrafters and artists to sell their jewelry, pottery, visual arts, clothing, and other creations directly to shoppers. eBay's PayPal has been a longtime enabler of person-to-person business transactions like these. It's been a solid and vibrant part of the company's business, but it's also one been one of the most forward looking for many decades.

Dressed for three-dimensional disruption
Public companies' innovations are understandably of far more interest to investors. Along these lines, 3-D printing can bring the maker revolution to an even larger scale.

Speaking of attire, just this morning Stratasys (NASDAQ: SSYS  ) made a fascinating announcement: the Verlan Dress debuted for New York's Fashion Week. This 3-D printed dress was designed in a NewSkins workshop by students at Pratt's DHARC studying under Francis Bitonti, and printed with the company's MakerBot Replicators. The MakerBot Flexible Filament, a product that creates items so pliable that they can be form-fitted, will make its public debut soon.

The summer acquisition of MakerBot means Stratasys is vying for the consumer market against rival 3D Systems (NYSE: DDD  ) . MakerBot is also bringing 3-D scanning for desktops to make 3-D models.

One Wall Street analyst has claimed that the 3-D printing market will triple by 2018. Technologies that scale will, of course, more frequently reach consumers, and the smaller makers. This is a good example of sparking future economic upside.

Choose wisely to make money
Although Stratasys trades at a nosebleed 42 times earnings, investors who truly believe that there's big growth over the long haul might be willing to consider this premium-priced stock. Granted, its not yet profitable, but it has a positive attribute in that it has no debt on its balance sheet.

3D Systems trades at 40 times forward earnings, about the same as Stratasys. It's actually profitable, and has a negligible amount of debt on its balance sheet.

Some investors may look for other ways to play a possibly big growth area that is still in a speculative arena and trading at nosebleed valuations. In another nod to preparing their long-term portfolios for disruption, though, investors may want to avoid companies that frustrate or even anger consumers.

The lululemon example is just the tip of the iceberg. Over time, if consumers find other options that they find more palatable, or even better suite their needs, they'll defect. Honestly, if someone forced me to choose between lululemon, trading at 28 times earnings, and a 3-D printing company, I'd go for the latter for the great possibility for real long-term growth.

Some of the best, most innovative companies (and later, investing opportunities) came from nerds and creatives (often the same people) fiddling around in spaces like garages. Apple is one of the prime examples in tech history.

The job market stinks. Many Americans are truly suffering. It's hard to see upside when you worry about the hungry, the cold, and the dejected. However, one area may turn making do into making way, and can make a better future.

With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it may be here. Read all about the biggest industry disrupters since the personal computer in "3 Stocks to Own for the New Industrial Revolution". Just click here to learn more.

Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.


Read/Post Comments (8) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 10, 2013, at 2:01 PM, craigrow wrote:

    How is SSYS 42x earnings if they're not profitable?

  • Report this Comment On September 10, 2013, at 3:39 PM, TMFLomax wrote:

    Hi craigrow,

    Stratasys is expected to be profitable for the year, and also for 2014. Thus, it does trade at approx 40 times forward earnings -- based on earnings expected in fiscal year ended Dec. 2014.

    Best,

    Alyce

  • Report this Comment On September 10, 2013, at 5:56 PM, DJDynamicNC wrote:

    At a time of record corporate profits, it's interesting that the conversation isn't "how can we invest those profits for the betterment of human beings" but instead is "how can human beings work even harder to try to survive."

    A company that creates wealth for its owners but not its employees (the people actually doing the work) and the society from which it benefits is a parasite. We must look for ways (or more accurately, must implement some of the ways that have already proven successful) for ensuring that the wealth created by society is enjoyed by society.

  • Report this Comment On September 11, 2013, at 8:35 AM, PanchoAlmeja wrote:

    Although I understand your premise, I can't see how you can put the proposed principle to practice. How can you make sure that the wealth created by society is enjoyed by society without diminishing productivity or innovation?

    Some business leaders understand their role and resposibility towards their society, others dont or dont care. Yet, other than boycott their products, there is really nothing effective we can do about it.

  • Report this Comment On September 11, 2013, at 8:39 AM, TMFLomax wrote:

    Oh I agree, DJDynamicNC. I've definitely been railing against the fact that many companies are hoarding their cash, cutting jobs or not creating them. I also don't think this is creating value for their OWNERS either (i.e., their shareholders) in many cases -- it is creating value for their managements. Most stakeholders are cut out of the equation -- shareholders, employees, and society.

    I think at least there are people out there who are trying to do things regardless, without being entirely reliant on some "big company" to provide all the jobs (we're seeing a lot of how big=bad a lot of the time in our marketplace/society). I am sure some entrepreneurs are forming great ideas that will be borne out later.

    It does stink that some of the DIY stuff starts out of pure need though. What is the old saying, "Necessity is the mother of invention" -- which when you think of it, is harsh until you realize the "invention" part.

    Best,

    Alyce

  • Report this Comment On September 12, 2013, at 2:19 PM, Mathman6577 wrote:

    The "best of the best" that treat their employees well are usually good investments too (think Google, Apple, etc.). The ones that don't (including those that lay off staff on a regular basis and work them to the bone ) are not good investments. Check out the Glassdoor rankings.

  • Report this Comment On September 13, 2013, at 10:01 AM, TMFLomax wrote:

    Mathman6577, totally agree. Lack of benefits, lack of an excitement or feeling a reward to do one's job really well, an insecure atmosphere, etc. are not going to help the businesses succeed.

    Intellectual capital is an intangible but it is important in my book. I believe there was a recent study that high levels of stress actually lower IQ levels. Makes sense to me. Being worried or even downright scared about the future doesn't leave much room for other more positive things. Even though you DO occasionally come across the entrepreneurs who start with nothing. I'm pretty sure that's the mindset that can show meritocracy and the temperament to fight circumstance, but it is very hard and scary I think to go that route.

    Best,

    Alyce

  • Report this Comment On September 13, 2013, at 10:02 AM, TMFLomax wrote:

    (Also, I do worry that in a country that supposedly believes in meritocracy, it is not always truly encouraged, incentivized, etc.)

    That was just a PS. I often hit send too soon.

    Alyce

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