The real unemployment rate

Today, the U.S. Bureau of Labor Statistics reported that the U.S. economy lost a paltry 11,000 jobs. With all the fanfare, you would have thought that there was some reason to celebrate. Far from it.

Sure, we're no longer losing jobs at the same pace as at the beginning of the Great Recession, but one in ten people in the labor force is still out of work. Of the 165 million people in the labor pool, that's 16.5 million people that are out of work that are looking for a job and just can't find one. But it's a lot worse than that... The Bureau of Labor Statistics doesn't count people who are employed in part-time jobs to make ends meet or people who are considered to be "discoraged job seekers" and have stopped looking for work altogether - presumably because any family of four can eat off of the $800 subsidy paid twice a month. Yeah, that is, if you like to feed your kids ramen noodles three times a day.

The reality is that our economy, and our labor market, is in shambles. The real unemployment rate is closer to 17.5% when you factor in all the people that have stopped looking or have taken on part-time work just to make a few extra bucks. That's another 12 million people that can't find suitable full-time work. At a "full-employment" rate of 5% unemployment, our economy would have about 8 million unemployed people. There's nearly 20 million more people unemployed than there was when our economy was at full employment a couple years ago. That's freightening.

So, what's one to do if they can't find full-time work or refuses to don the orange apron at Home Depot or the blue apron at Wal-Mart for 25 hours a week and no benefits? Well, many people have turned to eBay to sell there stuff. In the last year, the number of online auctions on eBay has more than doubled. The average daily auction volume in August, 2008 was 15 million auctions. In November, 2009 it was close to 35 million. eBay is as popular as ever because it's a great place for people to make some extra cash. People are selling their stuff in droves.

The unemployed and underemployed are also turning to direct selling and Multi-Level marketing companies in droves. Amway, Tupperware and Avon have all experienced record growth in the ranks of their agents/salespeople. When times are tough, Americans become ultra resourceful. Door to door selling is even making a comeback. Who would've thought? I guess if people aren't at a job, then they're at home, so why not...

Speaking of resourceful, people are also getting into the hospitality business. I recently counted the number of short-term rooms for rent posted on Craigslist. These are rooms for rent by the day - not by the month or by the year. These are people looking to make a few extra bucks by providing lodging services to travelers. I found that on a typical weekday there are more than 1,000 new ads posted for short-term rooms for rent. This is more than double the number from just a year ago. Craigslist lacks essential security features to make it a fully functioning lodiging classifieds site, yet people are willing to take the risk to make a few extra bucks by renting out their extra space to travelers.

Americans possess an unprecendented amount of unused space in their homes. Resourceful people all around the country are learning that they can monetize their unused living space by getting into the hospitality/lodging business. People are running make-shift B&Bs as a way to avoid foreclosure. Not a bad idea if you ask me...

Mint.com posted a humorous video that discusses the real unemployment rate on YouTube.

Russ Hearl
Head Sherpa & Co-Founder
Sherpa Travel Exchange, LLC
601 Van Ness Ave, Suite E-208
San Francisco, CA 94102

415-997-9925 Google Voice
russ.hearl@staysherpa.com
www.sherpatravelexchange.com

Stay Smart. Stay Sherpa.

Becoming a hotel operator in your own home

We partied like it was 1999.

Problem is, we partied hard for five long years from 2003-2008. Our party favors consisted of copious amounts of low interest adjustable rate mortgages, McMansions, Cadillac Escalades and $25k limit credit cards. We visited Home Depot more times than many of us care to admit as we pursued yet another home makeover project idea inspired by one of the 45 TV shows depicting the transformation of a modest 3 bedroom home into a castle fit for a king.

Like any good party, the after effects are usually just as memorable as the party itself, if not more so. Today, large swaths of the American population are suffering from a massive credit hangover that has been made even worse by rising unemployment/underemployment, rising monthly mortgage payments, and foreclosures.

In late August, the Mortgage Bankers Association reported that the number of Americans who are in serious delinquency on their mortgage rose to a record 9.24% during the previous quarter. They also reported that 9.24% of homeowners were at some stage of the foreclosure process. In a country of roughly 65 million homeowners, that means nearly 6 million homeowners are in the process of losing their home or coming pretty darn close to it. This doesn't even address the 13% of American homeowners that are at least one payment behind and risk foreclosure.

The "American Dream" of home ownership has turned into a nightmare for many well-intentioned, hard working people. The great thing about this country is that, at the core of our DNA, is an entrepreneurial spirit. It's this spirit that has lead America through and out of several recessions and has driven GDP growth for our country and countless countries beyond our borders. We pull ourselves up by the bootstraps and do something to make our situation better. We don't expect a corporate bail-out, we just put our nose to the grindstone and come up with solutions.

Case in point, consider the emerging trend of home monetization. I know, you're probably asking yourself, "what the hell is home monetization?" Good question, because I pretty much just made it up.

Actually, it's pretty simple, homeowners facing foreclosure, layoffs or unemployment are realizing that they can run a hotel business out of their own homes. Forget about stuffing envelopes to make extra money or hawking some Amway products to earn a few extra bucks, these enterprising homeowners are recognizing that the most valuable asset they will probably ever own is their home, and it is woefully under-utilized and, unfortunately, is depreciating in value in many markets across the country. Instead of whining and complaining, many Americans are mad as hell and just don't want to take it anymore. Okay, maybe they're not mad as hell - but I assure you they're not willing to take "it" anymore... whatever "it" might be.

On September 3, in an article entitled "The Reluctant Landlords," The Wall Street Journal reported an increase in the number of Americans who are opting to rent out their homes or extra bedrooms within their homes to make some extra cash. In effect, many of these homeowners are becoming not just landlords, but part-time hotel operators. Renting your extra living space in your home to lodgers is not exactly a new idea, but it's one that many homeowners and tenants have discovered on their own.

Driven by financial necessity, unemployment, opportunism or a myriad of other reasons, many homeowners are deciding to get into the hotel business rather than finding a full-time roommate to bridge their gap between their income and monthly expenses.

We've all been spammed by countless work-from-home schemes that promise yachts, endless riches and beautiful women - if only we are to stuff a bunch of envelopes in the comfort of our own living rooms. Most people know that which sounds too good be be true probably is.

Running a hotel out of your home to deal with the financial crisis is perhaps the only legitimate home-based business. After all, you're using your home to propel you into your own service business, even if only for a 3-4 nights a month. We've been hearing reports of homeowners charging $100-150 a night to take in lodgers in their extra bedrooms and making an extra $750 in income each month. I talked to one of my neighbors who made $1,000 this week by hosting a business traveler on assignment for a 2 week project with a major consulting firm here in San Francisco.

These stories were the impetus for my home based lodging concept. Home based lodging is home monetization for the masses. It's giving regular homeowners the ability to compete with hotels by tapping into their entrepreneurial spirit and using their assets (their homes) to make extra money. However, before you can scale this concept for mass adoption you have to give homeowners a marketplace to find travelers and, perhaps most importantly, make sure that the traveler isn't some psychopath, criminal, sex offender, or all three.

We're working on addressing these issues with Sherpa Travel Exchange. Stay tuned and let the home based lodging revolution begin!

Hotel industry - you're about to get a whole bunch of new competitors!

Good Luck,

Russ

Russ Hearl

Head Sherpa & Co-Founder

Sherpa Travel Exchange, LLC

601 Van Ness Ave, Suite E-208

San Francisco, CA 94102

415-601-6244 mobile

russ.hearl@staysherpa.com