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The Terrifying Reality of Long-Term Unemployment

theatlantic.com

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Re: The Terrifying Reality of Long-Term Unemployment

#221

Post by kalid »

nostromo wrote: post #186
enraged_camel wrote: post #127

Earlier quoted context omitted.

>>There is another side of this that the article doesn't touch on: home ownership. Oh boy. There's so much I can say about this topic, and none of it is positive. Basically, the way our culture mindlessly promotes home ownership is insane. Absolutely insane! Every time I hear people complaining about "throwing away money" by renting, and how they would rather put that money into a house, I want to hold them by the sh…

A few things you're not accounting for: * Leverage. (The most you can leverage a stock investment is 2x. For homes people can leverage their money up to an insane 20x, for example: by buying a 500k home with 25k down. The proper comparison is not to compare buying a 500k home vs 500k worth of stocks; it's buying 25k or 50k worth of stocks vs a 500k home.) * Mortgage deduction. (Imagine if you could invest 500k in the…

You can effectively leverage 100x with stock options. You can by deep in the money LEAPs (long-term options, expiring 18 months-2 years out) and effectively have the risk profile of the stock itself. You can then sell and roll those over to longer-term expiring options every 6 months or so.

Re: The Terrifying Reality of Long-Term Unemployment

#222

Post by RestlessMind »

jdietrich wrote: post #157
enraged_camel wrote: post #127

Earlier quoted context omitted.

>>There is another side of this that the article doesn't touch on: home ownership. Oh boy. There's so much I can say about this topic, and none of it is positive. Basically, the way our culture mindlessly promotes home ownership is insane. Absolutely insane! Every time I hear people complaining about "throwing away money" by renting, and how they would rather put that money into a house, I want to hold them by the sh…

It's a very simple mathematical error - people compare the cost of a mortgage payment with the cost of a month's rent, failing to take into account that only a tiny fraction of the mortgage payment actually becomes equity. If they actually sit down and work it out, most people are astonished at how much flexibility they sacrifice for that small slice of equity.

But the interest is tax-deductible. So you should also include tax savings in your cost-benefit analysis.

Re: The Terrifying Reality of Long-Term Unemployment

#223

Post by solarmist »

pchivers wrote: post #170
jdietrich wrote: post #157

Earlier quoted context omitted.

It's a very simple mathematical error - people compare the cost of a mortgage payment with the cost of a month's rent, failing to take into account that only a tiny fraction of the mortgage payment actually becomes equity. If they actually sit down and work it out, most people are astonished at how much flexibility they sacrifice for that small slice of equity.

>failing to take into account that only a tiny fraction of the mortgage payment actually becomes equity. What percentage of a mortgage payment actually gets converted into equity? (coming from a genuinely curious person who has never owned a house)

There are lots of calculators that will show you, but for a $100,000 loan at 5% you only get about $1450 in equity the first year and only another 1550 the second year, but you pay about $4950 in interest the first year and $4900 in interest the second.

Unless you make lots of extra payments you gather equity very slowly. The break even interest vs equity per year point is at the half way point.

Re: The Terrifying Reality of Long-Term Unemployment

#224

Post by jngreenlee »

enraged_camel wrote: post #127
cletus wrote: post #84

This doesn't surprise me at all. One thing I've come to learn in life is the importance of social proof. Social proof takes many form. It's why MIT and Stanford CS grads have tech companies come to their campuses and throw money at them (these institutions don't have a monopoly on good engineers). It's why if you have Google/Facebook/Twitter on your CV you are pretty much guaranteed a job. It's why academic staff who…

>>There is another side of this that the article doesn't touch on: home ownership. Oh boy. There's so much I can say about this topic, and none of it is positive. Basically, the way our culture mindlessly promotes home ownership is insane. Absolutely insane! Every time I hear people complaining about "throwing away money" by renting, and how they would rather put that money into a house, I want to hold them by the sh…

Addition to the other factors to consider put forth by nostromo:

-Mobility. When you need to exit a house and relocate, you can do so without waiting for a lease to expire. If you are in the right market, you can rent the first home out while you migrate, then sell it once the dust has settled.

Re: The Terrifying Reality of Long-Term Unemployment

#225

Post by kevinskii »

UK-AL wrote: post #143
rprospero wrote: post #109

Earlier quoted context omitted.

Companies will eventually be punished for acting irrationally, but, in the short term, they can be rewarded quite handsomely. This reminds me of an old trick I've heard used on multiple occasions. We've all read the Hack News posts about how no amount of programming can compensate for a poor personality. Image that you're looking at an applicant and their former employer tells you: "He was a good coder, but he had a…

How common is this sort of stuff?

I think not common, at least not in the US. The risk of liability is too great. My company has a strict no-comment policy, and won't affirm anything beyond dates of employment and job title. This seems to be the norm for corporations.

Smaller business who don't have their own HR and legal departments protecting them may be a bit more forthcoming, but probably not much.

Re: The Terrifying Reality of Long-Term Unemployment

#226

Post by droithomme »

ameister14 wrote: post #156
droithomme wrote: post #108

Earlier quoted context omitted.

Absolutely correct. The proposed scenario suggesting that the long term unemployed consists of competent, skilled and psychologically capable people who have spent 8 hrs a day working hard preparing and customizing resumes and going on interviews, but have not had a single offer after more than six months of doing this on a daily basis is complete fiction. Perhaps there is a single person who falls into this category…

I'm sorry, but you don't know what you're talking about. Usually, what happens is, they spend the time looking for jobs they are qualified for and want, and don't get. Then they spend some of their time looking for jobs they are overqualified for as well, and usually don't get. That's 6 months. I've done it. I was unemployed for about a year; during that time I went on about a dozen interviews, did volunteer work, to…

Perhaps part of the problem is poor math, logic and research skills.

http://www.bls.gov/news.release/empsit.nr0.htm

> Nonfarm payroll employment edged up in March, and the unemployment rate was little changed at 7.6 percent, the U.S. Bureau of Labor Statistics reported today.

> In March, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 4.6 million. These individuals accounted for 39.6 percent of the unemployed.

One must wonder if 39.6 percent of 7.6 percent is 10 percent, or is it 3 percent.

A three percent incompetence rate is lower than ten percent. It's also almost identical to the 3.1% of the population who are under correctional supervision: either in prison or on parole. (http://usgovinfo.about.com/cs/censusstatistic/a/aainjail.htm)

With a full 3% of the population actually in the correctional system, it is not hard to imagine that there is also 3% of the population incapable of contributing meaningfully to a job. Half of Detroit residents are functionally illiterate. (http://www.huffingtonpost.com/2011/05/07/detroit-illiteracy-...) 36% of Washington DC residents are functionally illiterate. (http://voices.yahoo.com/more-than-one-third-washington-dc-re...) Nationally, 21% of adults are functionally illiterate. To think that the vast numbers of illiterate adults who are also unemployed are ready and capable of holding down a job in a meaningful sense is a complete fantasy.

Re: The Terrifying Reality of Long-Term Unemployment

#227

Post by sokoloff »

jonnathanson wrote: post #218
larrys wrote: post #135

Earlier quoted context omitted.

"I would absolutely without a second's doubt invent fictitious employment and get a friend to back up any reference check " I've also heard people who will simply pick a company that went out of business where references or verification aren't even possible.

This is a dangerous game. Some HR managers and hiring managers won't have the time or the know-how to fact check that sort of thing. Others will. The expected value of the dice roll isn't worth the risk.

I'm not saying to do it, but the EV is almost certainly positive if the prospects for long-term unemployed are significantly negative. Suppose you get "caught" the first time? Just do it again, and you'll likely find a job sooner than if you played it straight.

Re: The Terrifying Reality of Long-Term Unemployment

#228

Post by jngreenlee »

nostromo wrote: post #186
enraged_camel wrote: post #127

Earlier quoted context omitted.

>>There is another side of this that the article doesn't touch on: home ownership. Oh boy. There's so much I can say about this topic, and none of it is positive. Basically, the way our culture mindlessly promotes home ownership is insane. Absolutely insane! Every time I hear people complaining about "throwing away money" by renting, and how they would rather put that money into a house, I want to hold them by the sh…

A few things you're not accounting for: * Leverage. (The most you can leverage a stock investment is 2x. For homes people can leverage their money up to an insane 20x, for example: by buying a 500k home with 25k down. The proper comparison is not to compare buying a 500k home vs 500k worth of stocks; it's buying 25k or 50k worth of stocks vs a 500k home.) * Mortgage deduction. (Imagine if you could invest 500k in the…

+i for the inflation comment. This is a big driver for my current investment approach. The opportunity to pick up a large, real asset at rates below the inflation I personally experience (US gov't published inflation rate is lower than mine), in market with significant appreciation due to positive population metrics (Austin TX)

Note that you should always spread risk in your portfolio, but housing at nominally negative rates should have youngers investing if they can. Buy something small and close to the city core.

Re: The Terrifying Reality of Long-Term Unemployment

#229

Post by jngreenlee »

jdietrich wrote: post #157
enraged_camel wrote: post #127

Earlier quoted context omitted.

>>There is another side of this that the article doesn't touch on: home ownership. Oh boy. There's so much I can say about this topic, and none of it is positive. Basically, the way our culture mindlessly promotes home ownership is insane. Absolutely insane! Every time I hear people complaining about "throwing away money" by renting, and how they would rather put that money into a house, I want to hold them by the sh…

It's a very simple mathematical error - people compare the cost of a mortgage payment with the cost of a month's rent, failing to take into account that only a tiny fraction of the mortgage payment actually becomes equity. If they actually sit down and work it out, most people are astonished at how much flexibility they sacrifice for that small slice of equity.

Here's a fun calculator (not by me) that takes all these things into account. It's great fun!

http://michaelbluejay.com/house/rentvsbuy.html

The author offers a reward if you find an error.

Re: The Terrifying Reality of Long-Term Unemployment

#230

Post by jarek »

tptacek wrote: post #103
jarek wrote: post #90

Earlier quoted context omitted.

Ah yes, and here we have the "tptacek shitting on a comment using big words and smart-sounding phrases" comment. ;)

Which of the words I used were "big"? You're right: I'm definitely pooping on the comment. Can't claim the high ground there at all.

I'll respond as I myself hate when people leave me hanging after I respond to their snark... "factoid" (arguably used incorrectly), "authoritative", "verifiably false premise".

It could be written more simply. You're not wrong, of course, but I've seen you take-down posts like that a couple of times now, so a comment seemed fair. (I realize it's not far off from how you normally write, but the effect is different in a take-down post.) IMHO of course.

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