The Real Unemployment Rate

I’ve been watching the unemployment figures for quite some time now, and I can’t believe how the average American is being misled.

To be truthful, you have to be naive to believe the 7.7% rate. Yet, no one really challenges it. Allow me to take a shot at it.

According to the Bureau of Labor Statistics (BLS), the seasonally adjusted official unemployment rate for February fell to an alleged four-year national low. All America watched as the White House and drive-by media congratulated itself.

Meanwhile, the Republicans quickly pointed to the U6 rate that stood at 14.3%, as the real unemployment rate.

Unfortunately, I believe both are wrong. Allow me to explain.

The BLS looks at six categories, from U-1 to U-6. Typically, the government states the unemployment rate from U-3. This rate includes people who have been unemployed but have actively looked for work during the last month. Excluded from this rate, are people who work part-time (as defined by the government as someone who worked one hour or more).

The U-6 number contains data from the U-3 rate, including part-time workers and the unemployed who have unsuccessfully looked for work in the last month. Already, you can see a huge difference.

Unfortunately, Washington has found a way to skew the numbers by not counting a very important group of people in the calculation. The worker who is on disability. They have found a way to make them invisible, and the sad part is how the number in this category is increasing.

Why should they be counted? Because they are unemployed and unable to work. Simple. Yet, because they are part of the workforce, they are not counted. And, because they are getting disability insurance instead of unemployment insurance, they're not counted. Yet, they are still unable to work. By not counting them, they have become invisible, and thereby skewing the numbers in favor of the administration.

Under Bill Clinton, welfare changed as we know it. Its intent was to push people off the welfare rolls and into jobs. He also pushed individual states to assume a much larger share of the cost of welfare. However, like all big social programs, it worked against what it was suppose to do.

Let me explain.

Each person on welfare cost the individual state. This added burden to the state financially, while it removed it from the federal government.

The states found a way around this added burden. Each person on welfare cost the state, but if you moved the person to disability, the entire financial costs moved to the Federal government. Why? Because Social Security disability insurance is fully funded by the federal government.

That means neither the U-3 or U-6 number can be fully trusted.. They’re bogus numbers.

In February the number of Americans as ‘not in the workforce’ was 89,304,000, a record high. The economic trend monitoring site InvestmentWatch concluded that the actual American unemployment is around 30%!

I’ll be the first to say that it is not possible to be exact in calculating the number since the population is not a certainty at 310,000,000. It could be more or less. Not enough data is available. However, the 7.6% rate is as bogus as it can be, and the 14.3% is only halfway to being true. My 'gut' says around 25%.

It is possible to be informed enough to realize when something smells fishy. That we can do. Look around you, a 7.6% unemployment is unrealistic. If you don't think so, you must be blind. Too many are suffering, without work or unable to find work. The average income per family has dropped.  And, we’re not even taking into consideration the college graduates who are graduating. Add them to the mix. 

People, this not a recovery, at best, it is a reversion.

It’s time to cultivate a healthy skepticism of what our government is telling us. It’s time to stop listening to the rhetoric; it’s time to get informed. The federal government will be releasing its unemployment rate for the month of March. Unfortunately, stay tune, Washington has more BS to fling at you at that time..

The Truth About Markup

If you're using a markup rate that you found or heard of, you are probably leaving precious hard-earned money on the table!


The truth is, many contractors have no clue on what their markup should be. They either use a guess, or some "number" they read or heard about.


Markup is derived from carefully calculating your costs and the amount of money you want to earn as profit at the end of the business year.


Costs must include all your field expenses and your overhead amounts. In your overhead, you MUST have a reasonable salary for yourself. If you haven't ever included it, then you are shortchanging yourself.

If you never realized this before, realize it now. Overhead is a 'burden.' It doesn't make a profit and should be lean and mean, but still does the job of administering your field operations.


Working for the draw

Too many contractors work for a draw. What I mean is this. If you have any money left over after paying all of your bills whatever is left is your salary. This is the wrong approach!

What you need to do is include a reasonable salary for yourself in your overhead amount. This is commonly called "Owners Salary." If you often work out in the field, taking the spot of a hired worker, then you would cover your salary in the estimate to do the work for the amount of time you would be working on the project. The difference of time when you are working in your office doing estimating or administrative duties, would be covered in your reasonable salary in overhead.

If you are not including your own reasonable salary somewhere, field or overhead, your markup is shortchanging you!

Making a Profit

As a business owner you have an obligation to make a profit. Profit is not a dirty thing. You need profit to grow your business, market your services, carry you through difficult times, and take care of your customers.

What is the right profit amount? I hear this often from contractors. Years ago, many in the industry thought making 10 or 12% was a good thing. I suspect that if you can make more, go for it. As long as you make it legally and morally correct there is nothing stating how much you can make. The truth is, right now we are in a difficult economic time for some, therefor, making whatever you can is probably the best answer.

This is an important subject that as a business owner you must get a proper handle on. This is a business skill you must learn and master.

The bottom-line is ... your markup must cover your expenses, provide you a reasonable salary and make you a profit.

If you would like an invaluable resource, check out my book on markup. It has sold over 10,000 copies and will easily guide you through the process. It is also a down loadable product that will pay for itself quickly. Click on "How to Calculate Your Money-Making Markup!"

Stop Doing This or Go Broke!

This is serious ...

As a friend, and hopefully your mentor, I hope you're not doing this.

I know times are hard, jobs are difficult to get and few and far in between.

But ...

Dropping your price to get the work, isn't worth it!

Let me explain.

I've been overwhelmed by contractors coming to me in desperate situations. What I'm seeing is desperation, pure and simple.

Understand this ...

Bad decisions will cost you money, cost you time and eat into your profits. In the worst case, one bad decision can totally kill off your business. That means, taking work for nothing is a losing proposition!

If you want to lose money, stay home and watch Opray, you'll lose less money!

Every single contractor who has come to me, when I look at their financial, has taken work below costs and ... volume doesn't make it up. It just makes it worse!

When you are in some kind of pain – physical or emotional or financial— any kind of discomfort – you tend to act on things you believe will alleviate that pain. And your belief that something will help grows stronger the longer the pain goes on. After a while, anything with a remote chance can look like a winner. Wishful thinking starts to seem quite grounded, and grasping at straws feels like anything but.

In other words, you make BAD decisions!

It’s to decide in favor of something we think will bring gains today or tomorrow than for a strategy which may take weeks, months, or longer, to materialize. This means a fortune-changing strategy, which will help us, can get sacrificed to something mediocre we think will help us with a short-term remedy.

So, why did they do it? Grasp for straws? Settle for failure?

Here is what I found.

• They didn't know their numbers.
• They didn't have a strategy.
• They didn't market.

They short-changed their chances for success, because they didn't know. In other words, they allowed themselves, through desperation, to become the victim.

Listen, the economy is tough, and it will be tough for a long time. As a matter of fact, it will never go back to the way it was. That is a thing of the past. You need to adapt.

How you can get started.

1. Take the time and calculate your markup. Even better, calculate three. A low one which I like to call my last chance or worst case. The one you think is right and an optimistic one. Then calculate the results of each one if they were used. Which result do you like? Run with that one. If someone wants you to do it for less, walk away.

2. Develop a strategy. You know times are tough, how will you compete? What will you do? Lay out a plan and work the plan.

3. Learn how to market your construction services. Get your business out in front of your prospective customers. Don't wait for them to come to you.

Every contractor whom I am working with who is doing the above with me is getting work and making money. It's not easy and there is not a ton of it out there, but they are getting their share. Taking work for nothing, leaving money on the table just to get a job with high hopes, is a poor strategy.

I hope this will help some of you to start making a better decision on getting your work at the right price.

A Contractor's Thought About the Future of Our Industry

The results are in. Last week Washington announced that the unemployment rate dropped to 9% and that industry had created 36,000 new jobs. If you listened to the media, miracles have been spun and the future is bright and rosy, or is it?


The truth is, the math doesn’t add up. If 36,000 new jobs had been created and 600,000 fewer people were off the unemployment line, what happened to the unmentioned 564,000 people? It appears that Washington and the media isn’t going to talk about them. I guess they’re invisible.

And this is only the beginning.

Look around you, things have changed and our world is different. The two biggest sectors of industry that employed people, Manufacturing and Construction have been silently shuttered. Over 43,000 manufacturing plants have been shut down since NAFTA took hold in 1994. That means jobs that we no longer have and jobs that have left this country.

The unemployment rate in the construction industry now exceeds 20%. Unfortunately, that number only counts that collecting unemployment. However, what about the self-employed contractors who can’t collect because they are ineligible, don’t have work or customers to support their basic needs and are slowly devouring their life’s savings?

When you look at it in this manner, you might be wondering, how worse can it get?

Here’s a thought or two to chew on.

Real estate is dead. Waiting for it to return would be like waiting for typewriters to replace the IPad. Furthermore, if it does, we could be looking at 20 to 30 years down the road. It also brings another burden to bear. So many people have their money tied up in real estate, they will be caught short and forced to live where they are and not move up like in the past.

That means repairs, remodeling and renovation will be more attractive than new construction.

Let me explain.

In case you hadn’t noticed costs are escalating. This is in part to the reckless spending in Washington, bailouts and stimulus and of course, quantitative easing. All this has contributed to the devaluing of our dollar, and that means rising costs (inflation). Higher construction costs make staying where you are and repairing, remodeling, renovating, or renting, more attractive.

To further add to this is rising fuel costs. People will be caught between an axe and a grindstone if they live too far from work. This will start a trend to live closer to work and a need to cut down on travel costs. Younger workers and families who can’t afford to buy will be renters. I believe we will see an up- trend in communities of homes and apartments built closer to work hubs.

The truth is things will not get better until Washington does some serious cutting and focuses on re-building our manufacturing base. Without manufacturing at reasonable and competitive wages without all the messy government regulations, our nation cannot start producing the products that made this country great to begin with.

Lets be realistic, this being a nation of consumers isn’t working.

Construction also is a big factor is solving the unemployment problem. Unfortunately, government is broke. Trillions have been foolishly spent on the shovel ready jobs that produced very little of anything. That means that a prime opportunity to jumpstart the economy with public works projects have passed, and we’re left paying the tab. What really amazes me is that no one is screaming and wanting to know where all that money went.

At the present pace that Washington is working on solving our financial mess, we could be looking at 50 years or more. However, we the people with our voting rights can change that quickly. Every American needs to take a hard look at their incumbent and not be afraid to vote them out for those who promise tough reforms on the tough issues. Never mind how much pork they brought home, the pig is dead because they’ve skinned it alive already.

Without the working middle class that pays taxes and buy products, and can’t do so if they do not have their jobs in manufacturing and construction, nothing changes.

The result?

We will have no choice but to live within our means. It is being forced upon us. The options you have today will be gone tomorrow. A lot more is going to change and you better be prepared to change with it, or it will feel like a steam roller running over you.

Now is the time to take a deep breath and realize what is happening around you. Change is upon you and if you ignore that change and fail to adapt yourself to it, you will get left behind. And yes, I am doing the same for myself that I am recommending right now to you.

The way I see construction changing is simple. People will still have to spend some money, and they will be selective. I can almost guarantee you that where they live and work will be a priority. That means repairing, remodeling, and renovating in both the residential and commercial sectors will produce a demand. That demand won’t be overwhelming, which means the smart and astute will get what work there is. They will have to market and control their costs. Waiting for your phone to start ringing off the hook with work means you’ll be waiting a long time. Working for nothing or too cheap, means you’ll be broke.

All of us have to pay our debts, live within our means and force our elected officials to do the right thing. Keynesian economics and its big government approach as the solution to our problem is the problem!

We are a great nation filled with great people who have brought huge leaps in progress to the world with our free thinking, products, innovations and ideas.

Some say that the whole idea of America being the leader of the world is over and that free enterprise is dead.

I say hogwash to that.

Our Founding Fathers knew they were embarking on a daring experiment. They laid the groundwork and gave us the map to follow. Somewhere, we’ve gotten off the path, and we need to get back on it.

What a novel idea they had, free men free to be innovative, creative and enterprising. To be whatever they wanted to be, to go as far as they wanted. No wonder it worked so well.

The truth is no other country has ever done a better job of reigning supreme over the world than America.

It is said that if a great nation doesn’t rule, then an un-great one will.

Some say it will be China. However, they can’t walk the talk. Think about it. Are they as innovative as us? Are they as technologically advanced as us? The answer is no. Their GDP is only one-third the size of ours. At their present pace of growth, it will take them 20 to 30 years to catch us.

Unfortunately though,

The problem is that our present government will do its best to screw things up, but we have no one to blame but ourselves. Americans have to be far more intelligent and less emotional when it comes to the voting booth. We need to get back to our roots, our constitution and the fundamentals that our Founding Fathers established for us to be the great nation of free men and woman whom they envisioned.

In the future we must be careful how we cast our vote. We must understand the issues that confront us, the problems that besiege us, and the actions that must be taken, no matter how difficult, in order to free us from them. We must elect those who will do our bidding and not use our vote for their own selfish means, self-centered goals and financial goals. It's time that they got paid what they are worth, and that means they are getting paid too much!

The greatest strength of our country is its people. We are innovative; free thinking, hard-working and industrious. Our most powerful asset is our ideas.

When you set ideas free, you set business free and everyone benefits. Government can’t do that. Reality is, we need government to get out of the way!

I believe that we can get back to doing that, set our ideas and innovation into motion and this is the key to latch onto: Ideas and innovation set free today will become the breakthroughs of tomorrow.

Right now the economy is a roller coaster ride, putting your stomach in the uncomfortable feeling of being stuck in your throat. It’s hard to think about anything, let alone getting ahead. Especially when you have so much pressure squeezing you from all sides, and you have no clue what tomorrow will bring you.

It’s almost a flight or fight decision.

It must be similar to what the cave man felt when a mastodon showed up at the cave door.

Like the cave man, it’s important to keep a clear head and not let your emotions take over. You need to examine the situation, plan, take action and keep a clear head. Because …

It’s not the size of the mastodon that is the problem …
It’s the size of the opening to the cave.

You see, there might not be such as big as a problem for you that you perceived at first. Instead of being reactive, maybe you just need to be “active” and build a smaller opening to your cave.

America’s future and your own, depends on what you do today. I can not emphasize this enough.

The time for panic is over; the need for despair behind us no matter what the future brings us. Now is the time to sharpen your business saw, clean your tools, mend your fences, learn how to market your construction services, and slash the fat out of your operating expenses.

The time to get started is now.

Our free ideas, free market, and free enterprise are still the best way to turn this country around and get it back on track. The sooner we start working on it and demanding our politicians work on doing the right things for us, the quicker we can get back to work.

Let’s put our house in order and notify our government to stop trying to transform our America into something that we neither want nor will not work.

We don’t care about the rest of the world; it is time for the rest of the world to lift itself up to our standards. You politicians have had your chance, now do it our way. We’re ready to get back to being number one again, and we know what works. Its American innovation, entrepreneurship, leadership and ideas, now step aside because we’ve got work to do.