The new American Dream is not the same as the old one. There are a lot more service jobs and fewer in the manufacturing sector. But that may be changing and investors should know how to play that.
Those of us who have at least 60 years behind us remember when America was the ultimate meritocracy. The 1950s and 60s were the “anyone can make it big in America” decades. America’s political leadership had the same ideals too.
My father started working in a local printer’s mailroom right out of high school. After serving in World War II, he got his job back at the printer. Forty-two years later, he retired at the ripe old age of 60, as vice president of the company. He started at the bottom and worked his way up. It’s a classic example of what the American Dream was.
We’ve certainly moved away from that model. Some note that upward mobility is becoming much more difficult. They see the American Dream dying.
Is it? It certainly has stumbled, as we’ll see below. There is light at the end of the tunnel, but, first, the bad news.
Statistics don’t lie
Jon Talton, a columnist for The Seattle Times, has compiled some sobering facts regarding the decline of the American Dream. Here are a few of his findings:
• Worker productivity has increased nearly 23% since 2000, but hourly wages rose a pitiful 0.5% in that period.
• Productivity is up by 80% since 1973, but pay is only up by 11%.
• People at the bottom of the wage scale are earning less now than similar workers in 1979.
• Employees in the middle of the wage scale are getting 6% more than in 1979, but all that increase happened in the 1990s.
• High earners, meanwhile, are making 37% more than they did in the 1970s and the much-talked-about folks in the top 1% have enjoyed a 131% increase in earnings.
According to Forbes magazine’s annual survey of the best countries for business, the U.S. ranked 12th last year, after finishing second in 2009 and 10th in 2011. We’re losing ground.
Last year, in a poll done by the Pew Research Center, Michael Dimock summed it up this way: “There are people struggling. And what you’re seeing especially right now are people who feel like they played the game the right way. They did what they were supposed to do. The rules they thought they could play by (and be OK) have changed on them somehow.”
That sums up the new American Dream. It’s not the same as the old one. There are a lot more service jobs and fewer in the manufacturing sector.
Does “only in America” still apply?
Now for the good news: That may be changing. America’s abundant, low-cost energy supply is drawing ex-pat manufacturing companies back to the U.S. Companies from Europe and Asia are building new plants here as well.
These all create new manufacturing jobs. And for every new manufacturing job created, many downstream jobs are created too.
The manufacturing sector is creating many new jobs — a direct result of America’s newly emerged energy businesses, which are responsible (directly or indirectly) for more new jobs than any other sector.
The shale oil and gas boom is responsible for the creation of more than 1 million jobs, according to Chris Lafakis, an economist at Moody’s Analytics.
“Jobs directly in the oil and gas extraction business pay an average of just under $150,000 a year, almost exactly three times the national average,” Lafakis says.
A quick search on the Internet turned up 163,787 openings on indeed.com, a job-search website. (Of course, not every job in the energy field pays six figures.)
Invest in the American Dream
Looking at companies with many open positions will yield opportunities for investors, too. Companies looking to fill jobs are growing; it’s an often-overlooked metric of how well a company is performing.
Investors, after you’ve checked your normal company metrics, visit the Careers page on the company’s website. If it’s not hiring at all, chances are its growth may be slowing.
Devon Energy Corp (NYSE:DVN) has numerous jobs listed on its website. Devon’s shares, like those of many oil and natural gas companies, have been on a roller coaster for the past year. The stock is up 6.1% since the beginning of the year.
Working in Devon’s favor: oil and natural gas prices have been on the upswing. Geopolitical events in the Middle East have sent oil prices to 14-month highs.
The current heat wave covering much of the U.S. has resulted in record-setting temperatures in America’s Southwest. Utility operators are running natural gas-powered generators to try and keep up with the nation’s A/C demand.
Range Resources Corp. (NYSE:RRC) is another big player in both oil and natural gas. The company has plenty of job openings in nearly every area it operates in. It’s a great company to invest in, as well. Its shares are up 29.8% over the last year.
The American Dream is alive and well. And it’s getting better every day.
The information contained in this article should not be construed as investment advice or as a solicitation to buy or sell any stock. Nothing published by Physician’s Money Digest should be considered personalized investment advice. Physician’s Money Digest, its writers and editors, and Intellisphere LLC and its employees are not responsible for errors and/or omissions.