It seems that you cannot trust anything much anymore.
Take unemployment, for example.
The rate of unemployment used to be a pretty good measure of our economic health.
An unemployment rate under 5% saw the champagne flow – well, in some quarters – as this usually meant that interest rates were on the rise.
Something between 5% and 6% was okay – in fact, often smiled upon by the dismal science.
So, today’s 5.7% unemployment rate – as measured by the ABS labour force numbers – for much of the past 25-odd years, would have meant the economy was in quite hardy health.
But over the past decade, the increasing growth of part-time employment means that judging the economy’s fitness requires much more than just taking the unemployment pulse rate.
For mine, hours worked is in many ways the best measure of our economic health.
Part-time employment can mean anything from one hour a week to 34 hours, and equally, full-time employment includes anything from 35 hours and above.
Remember, those 35+ hours are now measured across all jobs and not just one job.
So, you can be working in five different places, for 8 hours each a week, and be counted as full-time employed by the Bureau.
Bloody joke, hey.
Further still, 25 years ago there were five full-time jobs for every one part-time job.
Today, that ratio – with the above statistical skulduggery included – is two to one.
And little old me thinks – when you measure full-time as someone who works 40 hours a week for the same company and with the appropriate benefits – that proportion is closer to 50-50.
So, our chart this week shows the annual change in the hours worked across the country.
It is trend data, and my economic chums tell me that when it comes to employment, trend is your friend.
Yes, that’s pretty witty for an economist, if you ask me.
It shows…well, you get the picture.
Importantly, hours worked can not only show the shift from full-time to part-time, it can also detect changes within each employment category.
Essentially, we are seeing two forces at work here – more part-time work and less high paying jobs.
As we pointed out last week, gone are many of the $100,000+ new permanent positions.
They are being replaced with, say, two new $25,000 casual or part-time jobs.
Yes, more jobs are being created, but the economic impact has halved.
Increasing automation, robotics and digital disruption will accelerate this trend, driving further deflation.
But in addition, we are seeing a lot more new jobs in services – the baton change – that much loved turn of phrase within the hallowed halls of the RBA – but these jobs, on average, pay about $60,000 per year.
These service occupations are replacing the $135,000 resource and professional-related jobs that were much more prevalent about five to ten years back.
At present, we have a cyclical (and pump-primed) housing boom – of mainly unneeded, inner city, high-rise boxes – which is keeping things afloat, not only job-wise, but economically, too.
The average annual wage in construction is about $85,000.
So, when the construction upswing stops, our next thing will be to create more government jobs and start a lot more publically funded infrastructure.
We already need to borrow to pay for this stuff, but with interest rates so low, why not borrow some more!
Hey, better still, let’s drop interest rates further.
I could say something about giving our road workers spoons instead of shovels, but maybe not.
So Michael, what does this mean for housing?
We will see the growing need for the Double C – more Compact and Compromised housing.
These changes in work structure are already impacting, and will continue to impact on the way we live and also where we live.
Being close to work will become increasingly paramount.
If you are working several different shifts and for several different employers, you want to live close to where you work most of the time.
Travel times and their costs matter.
We will also be earning less and to help make ends meet, many more of us will take in a tenant or live with other family members to help make the coin go further.
Housing that facilitates sharing is already in demand.
This demand will grow, and we believe, rapidly.
Also, if we are working at different times and the nine to five work day, plus the Monday to Friday working week, is going the way of the dodo, then flexible rooms/spaces (with their owners using the latest IKEA catalogue to help kit them out) will grow in popularity, too.
So, in summary, Compact because it looks like we may not be able to continue to afford all the traditional spaces that once made up our homes.
Many will also want to live closer to the things that matter – like work – so we will have to fit in more homes within certain geographic confines.
Compromised – because we will need more money to be able to continue paying for our homes.
Either house values fall or household income rises.
Sharing our homes will need to increase in order to cover mortgages.
Let’s finish with our mantra – it’s increasingly about what type of property you buy/hold and not just where it is or when you buy.