Tomorrow I will be officially appointed as a representative of MetLife. Shortly thereafter my paper work will reflect my title, Financial Advisor.
I have decided to use today to produce a few graphs to give people a material framework for understanding the national economy. In other words I will show you some pictures that will help you make sense of what is going on out there. All of this data comes from the 2002 Economic Census, so it is a bit out of date but still useful for understanding the foundations of our economy in terms of real numbers of dollars.
I broke the rules in producing these graphs in a few ways.
1) I added State and Federal taxes into one lump sum to represent tax revenues in 2003 as a way of showing the money going into Public Administration as a national business to be compared to other categories of business.
2) I added all of the numbers from a slew of Construction business categories together to produce a solid national construction business statistic.
3) The "Material Product Producing" categories and "Public Administration" category do not post operating expenses the same way that all other business categories do. So I had to produce some estimates where possible to get a visual on what is going on.
The blue "Operating Profits" represents how much money is pulled into that industry after taking out all operating expenses. The red "Non-Payroll" represents how much money is spent on operations outside of payroll and the green "Payroll" is how much money is paid to employees in that particular sector.
Before I talk about the blue, and green let's talk about what they might mean. Money that is clear and free in a business (the blue) can be used to grow the business by buying things and places that make the business run better or pay the investors dividends. Payroll (the green) gives us a sense of how much money is being used in that industry to pay employed people. Unemployed people make money too, the government collects this data in one category called nonemployer business, it will show up on our pie chart. Non-payroll (the red) expenses are very hard to estimate and they are not reported the same way in the good producing, or government industries the way they are in other industries.
Right off the bat we see Wholesale, Retail, Manufacturing, Government and Construction pump the largest amount of revenues through our economy. That seems to make sense to me. Everyone must eat, buy clothes, and have a manufactured roof over their constructed home.
The next tower we see does not make a lot of sense. Non-employer business revenues are approaching three quarters of a trillion dollars in a business category where we openly admit the people working in these businesses are not employees. There are no payroll numbers for this category because land preparation for farming and many lumberjack type jobs apparently don't pay in a way that can be easily understood by us urbanites.
One example would be the fishing industry in Alaska. The seasons dictate the hours and the availability of work, so it would be hard to call someone a full time employee if the fishing seasoned limited them to working only five months out of the year. Similarly this makes health benefits and other employer/employee issues hard to control when the people may change drastically from year to year.
Sadly this means that our national statistics admits a huge percentage of our economy is not very easy to measure in terms of benefits to working people.
A few very interesting points after that would be that the Management Services Industry brings in less money than it pays in payroll. This is very strange. I have no idea how this makes any sense at all. This is the kind of thing that would make a good project for the next post. Honestly, how many hundreds of millions does an industry have to lose before they stop doing what they are doing. Strangely these Management Services companies are still paying the official employees even though they don't make enough money to pay them.
Another strange data point I noticed is that Transportation operating expenses (the red in transportation) is only a few billion dollars. We are told on the news that the price of gas is reflected in all of the goods we buy on the shelves. If the operating profits in Retail and Wholesale are over 2 trillion dollars each why does a few billion dollar industry like Trucking get scapegoated for price inflation at the checkout counter?
By simply glancing at these graphs I have learned a few things.
1) Lawyers (Scientific & technical services workers), Doctors (Health Care workers) and Managers in commerce and government have plenty of payroll to dip into, maybe they should pick up some of the dragging economy.
2) Arts and Education (Education Services) may be under appreciated in our economy, maybe that is why we are not the "America the Beautiful" that we once were.
3) Mining and Utilities companies make a lot of money without paying much.
4) The government admits through census data that a large percentage of people are working but for Nonemployers and are stuck in situations with ill defined healthcare situations.
5) I have no idea where the money in Wholesale and Retail trade could be going. If I were a pessimist I would say it is leaving our country and being invested abroad. If I were an optimist I would say this makes up a large percentage of our stock market and retirement fund growth. I'm a realist so it's probably a lot of both.
The below pie chart enables you to compare the amount of money in payroll in the industries above.
I thought you ought to know that.
-David Caro-Greene
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