$38 Breakfast Reveals Why Restaurant Chains Are Dying

[00:00:00]The cost for breakfast for two now runs $38 before the tip for a waffle that came out of a package and went through a microwave. That's not your imagination, and it's not just inflation. Private equity companies bought up a bunch of chain restaurants. They stripped the real estate, swapped the kitchens for heat and eat trucks, and the TGI Fridays went from 600 restaurants to 79. Check this out to see exactly how bad this is getting.

[00:00:31]>> Unemployment just hit its best number in a year, 4.2%.

[00:00:36]If you only read the headline, you would think the job market is finally healing.

[00:00:41]So, here is the thing worth sitting with for a second. Why does that number feel wrong to almost everyone actually living inside this economy? It feels wrong because it is hiding a kind of magic trick, and once you see the trick, you cannot unsee it. Last month, 720,000 Americans did not get hired. They did something else. They walked off the field entirely and vanished from the count. That is not doom talk, that is arithmetic. And by the end of this, you are going to know exactly which side of a very quiet sorting line your own household is standing on. Let me show you the trick because it is simpler than they want it to look. The unemployment rate is a fraction. On top, the number of people out of work and actively looking. On the bottom, the whole labor force. Everybody working plus everybody looking. Here's the part almost nobody says out loud. The moment a person stops looking for work, they no longer count as unemployed at all. They drop out of the top of that fraction and out of the bottom of it, too. They simply disappear from the math. So, the rate can fall two ways. People can get jobs, or people can give up. Last month, it was mostly the second one. And this is sitting right there in the government's own report.

[00:01:59]The headlines just led with the pretty number instead. Here is the proof they buried. The labor force participation rate, which is just the share of working-age adults who are either employed or actively looking for a job, fell to 61.5% in June. Outside of the COVID shutdown, that is the lowest it has been in exactly 50 years, since 1976.

[00:02:23]Meanwhile, the economy added just 57,000 jobs, far below what was expected. And the two prior months were quietly revised down by 74,000 combined. As one bank economist put it, the rate fell because both the number of unemployed and the size of the whole labor force pulled back. And that might be retirements, or it might be job seekers simply giving up. And it is not only older folks heading for the porch early. Participation among prime-age workers, people 25 to 54, the very heart of the workforce, dropped to 83.3%, the biggest fall of any group. One economist called that possibly a statistical quirk, but said it is worth watching very closely. Now, here is where it gets personal, because those 720,000 people did not all leave through the same door. This is the part I really want you to hear, because the sort is already happening around you, and most people cannot see it yet. There are roughly five doors out of the official workforce. Some people retired early, deciding they were done. Some left to become caregivers because child care or elder care cost more than the paycheck they were bringing home. Some got discouraged, sent out the applications, heard nothing back, and quietly stopped.

[00:03:43]Some were pushed out by technology. And some, and this is the door almost nobody expected, did not stop working at all.

[00:03:51]They started working for themselves.

[00:03:54]Immigration also slowed sharply, and immigrant workers tend to be younger.

[00:03:58]So, when fewer of them arrive, the workforce gets older and smaller at the same time. Look hard at the door most people walk right past. In June alone, more than half a million Americans, about 531,000, filed the paperwork to start a new business. And that number has been climbing for three straight months. Now, be honest about what that is and what it is not. Filing for a business tax ID is not the same as building a company with employees. Only about 30,000 of those June filings are projected to become real businesses with a payroll within a year. Plenty of the rest are side hustles, one-person operations, people going independent. But that is exactly the point of the sort. Some of the people leaving the traditional 9-to-5 are not collapsing at all. They are quietly rebuilding their income on their own terms, off the corporate payroll where the government finds it easiest to count a job. And some were pushed, not pulled. We covered the white-collar layoff wave in an earlier video, and this is where a lot of those people went afterward. Hey everyone, real quick. If you want to change your entire mindset when it comes to money, and you want to go from losing to winning, from uh failing to success when it comes to wealth, link's down below for the Money Mindset Mastery Program. It has helped so many people. We've gotten rave reviews about it. Now it's time for you to jump in and crush it. Money Mindset Mastery, link's down below. Now let's get back to this video. The firm that tracks corporate layoffs counted almost 46,000 announced job cuts in June. And the technology sector led all of them, with artificial intelligence named as the reason for roughly a third of the cuts that month. When your job gets automated at 52, and nobody is racing to hire a 52-year-old to do the thing the software now does. You do not always show up as unemployed. Sometimes you just stop looking, and the rate ticks down, and someone on television calls it good news. So, let me be fair, because the honest version of this matters more than the scary version. This is not 1929. Layoffs by historical standards are still relatively low. Wages grew about 3 and 1/2% over the year. And economists will rightly tell you that one month of this household survey data is noisy. That the unusually big drop in restaurant and hotel jobs looks strange, and that some of it could get revised away. All true.

[00:06:30]But, participation has been grinding lower for a while now. So, this is not a one-month blip.

[00:06:36]The chief economist at May Federal said it was shocking to watch 720,000 people stop looking for work entirely.

[00:06:43]While adding fairly that it is still a better job market than a year ago, just one where opportunities are limited.

[00:06:50]And restaurant industry economists are now openly describing what they call a K-shaped economy.

[00:06:56]Where the top half of earners is doing fine, and the bottom half is quietly buckling, and a single average number hides the whole split.

[00:07:05]Even the honest, broader measure of unemployment, the one economists call U6, which adds in discouraged workers and people stuck part-time who want full-time, even that fell last month to 7.29% because the people who left are not counted in any of these rates at all.

[00:07:23]When even the honest number is being flattered by the exits, you are not looking at a healthy job market. You are looking at a shrinking one wearing a healthy mask.

[00:07:33]So, here is the identity question, and I want you to actually answer it for your own household. When you look around your own life, who has quietly stopped counting?

[00:07:43]The nephew who moved back home and stopped mentioning applications. The neighbor who took early retirement a few years sooner than the plan.

[00:07:50]The friend who now just says they are doing their own thing.

[00:07:53]The cousin selling things online.

[00:07:56]Not one of them shows up in that 4.2%.

[00:07:59]Right now there are 6 million people who are outside the labor force and say they actually want a job.

[00:08:06]And the official rate treats every single one of them as if they do not exist.

[00:08:11]Of those 6 million, about 477,000 are what the government formally labels discouraged, meaning they want work but have stopped believing they will find it.

[00:08:22]Another 1.8 million are hanging on the edge, having looked in the past year but not the past month.

[00:08:28]And 4.7 million more are working part-time only because they cannot get the full-time hours they need.

[00:08:35]So the real question was never what the unemployment rate is. It is which side of the line your household is on.

[00:08:44]Besides still holding the steady paycheck or the side that has already, by choice or by force, walked off the field.

[00:08:52]And this is why the sort is not just a talking point. It is the one economic story that follows you all the way into old age.

[00:09:00]Because of a different set of numbers that cannot be fake. Social Security runs on a simple ratio.

[00:09:07]The number of workers paying in for every retiree drawing out. In 1960, that was five workers for every retiree.

[00:09:15]Today, it is 2.9. It is heading for 2.2.

[00:09:20]And the government's own trustees just moved the date up, warning that the main Social Security trust fund, the one that pays retirees, is now projected to run dry in 2032.

[00:09:32]At which point the law would only allow it to pay about 78% of promised benefits. That is a 22% cut automatic unless Congress acts.

[00:09:43]And that warning got worse fast. This year's projected shortfall is the largest in nearly half a century. 16% bigger than just the year before in a single year, almost entirely because of demographics. Fewer babies, less immigration, which is to say fewer workers. Every person who walks off the field early is one fewer person paying into a system that already does not have enough of them.

[00:10:10]The quiet exit today is the benefit cut tomorrow.

[00:10:14]So, watch the numbers they do not lead with. Watch the participation rate, not the unemployment rate. Watch how many people say they want a job but are not counted as looking for one.

[00:10:25]Watch business formations to see how many are exiting into something instead of into nothing.

[00:10:31]The next jobs report lands in early August. And when they publish 4.1% next month and call it good news, you will already know what to ask. Who's missing?

[00:10:41]Thank you for watching. Economic Ninja is out.