Broker Check

March 12, 2018

| March 29, 2018
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Last week, Barron’s reported, “Across the nation, in industries as varied as trucking, construction, retailing, fast food, oil drilling, technology, and manufacturing, it’s becoming increasingly difficult to find good help. With the economy in its ninth year of growth and another baby boomer retiring every nine seconds, the labor crunch is about to get much worse…This, of course, is how a labor market works: Production rises, workers get scarce, and employers raise wages to attract employees.”


Currently, the population of the United States is growing faster than the U.S. workforce, reported Barron’s. It’s a state of affairs that occurred twice during the last century (1948 through 1967 and 1991 through 1999) and was accompanied by labor shortages both times. This time, Baby Boomers’ retirements may exacerbate the situation. Some estimates suggest the current labor shortage could last through 2050.


Despite low unemployment and high demand for workers, wage growth slowed in February.


There is a wild card in play, however. Many Americans prefer to participate in the workforce through the Gig economy. Gig workers have temporary jobs or freelance rather than working for an employer. MBO Partners reported, “Independents are the nearly 41 million adult Americans of all ages, skill, and income levels – consultants, freelancers, contractors, temporary, or on-call workers – who work independently to build businesses, develop their careers, pursue passions, and/or to supplement their incomes.”


The government has yet to figure out how to measure the Gig economy. When it does, a clearer employment and wage picture may emerge.


Key points for the week


  • Stocks rose, more than making up for last week’s losses.
  • S employers added 313,000 new jobs.
  • A surge of people seeking work helped keep wage growth in check.


IRS Provides Temporary Relief for Maryland Health Savings Accounts & High-Deductible Health Plans.


Eligible individuals may deduct contributions to Health Savings Accounts (HSAs) if they're covered under a High Deductible Health Plan (HDHP) (among other requirements). In general, an HDHP may not provide benefits for any year until the minimum deductible for that year is met. However, an HDHP may provide preventive care benefits without a deductible, or with a deductible below the required minimum annual deductible.


In a recent Notice, the IRS clarified that a health plan that provides benefits for male sterilization or male contraceptives before satisfying the required minimum annual deductible isn't an HDHP, regardless of whether such coverage is required by state law. This is because male contraceptives aren't preventive care under the Social Security Act and have not been defined as such by IRS guidance. However, for periods before 2020, individuals whose plans offer male contraceptives without a deductible, or with a deductible below the required minimum annual deductible, will continue to be eligible individuals for HSA purposes. Notice 2018-12, 2018-12 IRB.


Economic Analysis


The U.S. employment report, released on Friday, portrayed an economy that continues to grow at a healthy pace. Employers added 313,000 jobs in February, easily surpassing expectations of 200,000. The chart above shows how broad the recovery has been. Nearly every sector saw increased hiring in February.


Such a strong number could have stoked fears about inflation. But, wages increased only 0.1 percent last month and are up a healthy 2.6 percent over the last year. Instead, workers entered or reentered the labor force in large numbers, suggesting there is a pool of potential workers that can keep wage inflation at a moderate pace. While no report is perfect, this one contained lots of good news for investors.





It’s Not Just for Millennials!


While the emergence of the Gig economy often is attributed to Millennials, MBO Partners’ 2017 survey found the full-time Gig workforce is a generational mash-up. It includes:


  • 38 percent Millennials (ages 21 to 37)
  • 27 percent Gen Xers (ages 38 to 52)
  • 35 percent Baby Boomers (ages 53 to 72) and Matures (ages 72 and older)


Full-time independents work at least 15 hours per week and average 35 hours per week.


While the term ‘Gig economy’ may conjure images of ride-sharing drivers and homeowners who rent to vacationers, it includes a much broader swath of careers and many people who earn six figures. So, what do Gig economy jobs look like? According to and Forbes, some of the top gigs include:


  • Deep learning professionals.Facilitating machines learning by developing neural networks similar to those of the human brain.
  • Robotics designers and programmers.Responsible for building and designing mechanical elements and machinery to streamline operations.
  • Ethical hackers.‘White hats’ help companies evaluate systems for security vulnerabilities.
  • Virtual reality freelancers.They develop algorithms and have 3D modeling and scanning skills.
  • Social media marketers.Understand platform algorithms and create engaging content to help companies develop their brands and market their products on a platform.
  • Multimedia artists.Employ technology to create designs and special effects for digital media.
  • Broadcast and sound engineering technicians.Sound is a vital part of radio programs, television broadcasts, concerts, and movies.
  • Carpenters.Demand for carpenters is expected to grow by 6 percent through 2024.
  • Delivery truck drivers.This may change with the debut of self-driving delivery trucks.


If you’re a risk taker looking for a flexible career or a retiree looking to supplement your income, a job in the Gig economy may be just the ticket.


What are we reading?

Below are some articles we paid particularly close attention to this week. We encourage our readers to follow the links.


How 65 Became the Default Retirement Age. Most Americans associate retirement with age 65. This is partly due to when retirees become eligible for Medicare and also because this was the original full retirement age created under the Social Security Act back in 1935. Most people don’t know that this was an arbitrary age, but modeled after Germany.

Business Affected by Winter Storms Get Extra Time to File Extensions.  The IRS announced Tuesday that businesses affected by winter storms Quinn and Skylar. The extension of time is until March 20th.


Story of the week

Will the free-falling Chinese space station crash into Lower Michigan?

Sometimes a witty observer does a better job of keeping risk in perspective than financial experts. Apparently, an out-of-control Chinese space station will come crashing back to earth around April 3, give or take a couple weeks. The station is believed to contain highly toxic chemicals, and there is a moderate probability it will crash into Lower Michigan. While the story isn’t all that funny, commenters provided a few excellent examples of how to keep a healthy perspective and opine on the issues of the day. Two of those comments are:


“Yet more Chinese materials that flow into our country without a tariff.”


“And water quality in Flint remains unchanged.”


Weekly Focus – Think About It 


“You don’t concentrate on risks. You concentrate on results. No risk is too great to prevent the necessary job from getting done.”


~ Chuck Yeager, retired United States Air Force officer, flying ace, and test pilot



"An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive business advantage."



                       ~ Jack Welch General Electric CEO

"Procrastination is caused by our perception that doing a certain task will cause us pain.  We tend to avoid events which are unpleasant, complex, lengthy, or uninteresting, regardless of their priority."


~ John C. Maxwell, Author and Leadership Coach



Links & Disclaimers

RJFS and SPC do not offer or provide legal or tax advice. Tax services and analysis are provided by the related firm, S&M through a separate engagement letter with clients. Portions of this newsletter were prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with RJFS, SPC or S&M.  The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  This information is not intended as a solicitation of an offer to buy, hold or sell any security referred to herein.  There is no assurance any of the trends mentioned will continue in the future.  Any opinions are those of the author and not necessarily those of RJFS.  Any expression of opinion is as of this date and is subject to change without notice.

Opinions expressed are not intended as investment advice or to predict future performance.  Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.  Past performance does not guarantee future results.  Investing involves risk, including loss of principal.  Consult your financial professional before making any investment decision.  Stock investing involves risk including loss of principal.  The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.  Please note direct investment in any index is not possible.


Links are being provided for information purposes only.  RJFS, SPC and S&M are not affiliated with and do not endorse, authorize or sponsor any of the listed websites or their respective sponsors, and they are not responsible for the content of any website, or the collection or use of information regarding any website's users and/or members.





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