Margin notes

Sometimes, when I actually think about what is going on in Washington, the general level of economic cluelessness practiced there, in the media, and in general, I feel like shaking the collective by the shoulders and yelling: "Don't you get it!!!"

Where are the jobs being lost in this economy? The answer isn't any of the following, even if these might be the sectors on the losing end: manufacturing, financial companies, farming, software companies, adult males (who are being hit disproportionately hard, BTW), etc.

The answer is the same no matter the economic conditions, no matter where we are in the business cycle. The answer is simple: jobs are lost on the margins. The marginal companies; those that are barely making it.

If a company has more costs in materials, energy, rent, wages, benefits and taxes than income coming in, then it has to do something. It can get a loan, but banks are reluctant to offer little floater loans right now. It can try to increase sales, but people aren't increasing their purchases at the moment. It can cut costs, but most companies will have maxed-out their costs as a necessary part of doing business in good times and bad. In the end, the easiest, and often only, way is to cut payroll.

In addition, those companies which might, in a slightly-better and more-certain economy, be adding jobs will not do so in this climate.

Also, for some companies, there isn't enough payroll to cut, not enough income to generate. Perhaps, if they could just increase net income by 3%, they might not go under; but that 3% never materializes, and month after month it becomes harder to meet payroll. Companies like that don't just hemorrhage a few jobs, but all of them as they pack up shop and end operations.

Drip by drip, job by job, this is how unemployment grows. Company after company, from mom-and-pop restaurants or repair shops to Microsoft and Ford decide this isn't the time to hire, and maybe the time to fire.

So, the question is: what is the government doing to help those companies on the knife edge? Those that might go under entirely or will lay-off people to get that little bit of extra net income which lets them survive another month?

The answer, pretty clearly, is absolutely nothing.