The President who should have access to some of the “best and brightest” minds in the country and therefore the world, loves to talk about a V shaped recovery. We know he says he is a cheerleader but other countries around the world have opened up, what is there situation? V shaped or something else?
In an article by Nathan Vanderklippe of the Globe and Mail, he looked at China. The city of JinJiang is about 2 million in population with over 5,000 companies in the shoe business or 1 out every 3 workers, the city calls itself China’s Shoe Capital. With the virus shutdowns and the tariff war with the US, things are changing and factories shutting down or changing location to other countries.
In China, the National Bureau of Statistics reported an unemployment rate of 6%, but economists do not believe that number, they believe the number is closer to 20 to 70 million people are jobless which means a number closer to 30%.
The affect on workers is salaries for temporary workers have fallen and job postings attract 3 to 5 times as many applications.
Finance Minister Liu Kim said China would use a co-ordinated response to boost the country’s economy including the issuance of special treasury bonds and cuts to taxes and fees.
China’s weak social safety net means people will be driven to find work and people are accepting lower and lower pay.
Linking to dividend paying stocks, one expects a consistently profitable company to pay its employees reasonable wages and salaries because they can. However with the growing unemployment one can see the reason why Amazon decreased its additional pay to employees for working through the higher volumes of packages. There are more people willing to come to work at less money, why continue the pay when the government says open up or go back to normal? Profitable companies always will wrestle with the concept of earning more money and not paying enough? What is enough?
There are more questions than answers, till the next time – to raising questions.