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I will never forget my first paycheck. Washing dishes at the college cafeteria for two weeks earned me about $150. I also worked as a cashier, waiter and customer service representative.

Like many other students, I held those jobs to help cover some of my college expenses. Unfortunately, these kinds of low-wage jobs are becoming a career for many Americans.

That’s the conclusion of a recent study by the National Employment Law Project (NELP). It shows that, since 2008, jobs in lower-wage occupations grew 2.7 times faster than mid-wage and higher-wage occupations.

In other words, most of the jobs created during the “economic recovery” are in low-income areas, such as retail and fast-food services.

It seems we’re becoming a nation of burger-flippers. This trend will have a huge impact on your financial health, especially if you’re looking for investment income.

Zero Interest Rates Forever

You see, there’s a big debate among economists over what’s causing our country’s persistently high unemployment.

Some think employees simply don’t have the skills required by employers. The fact that low-skilled jobs have accounted for most of the jobs growth suggests some of the unemployment may be structural. People end up taking a job at McDonalds or Wal-Mart because they don’t have the necessary skills for a higher-wage position.

Others think it all comes down to weak demand in the economy. Federal Reserve Chief Ben Bernanke is in this camp. In a recent speech, he said he sees “little evidence of substantial structural change in recent years.”

He believes one of the solutions to unemployment is “a stronger economic recovery driven by monetary support.” And he recently said the Fed will keep interest rates near zero to stimulate the economy until there’s a “substantial improvement” in the labor market.

And that’s the problem: Money-printing and zero interest rates won’t give people the skills they need to get jobs. As a result, the zero interest rate policy is likely to last much longer than anyone thinks, as the Fed tries to solve a problem they can’t fix.

For example, according to Deloitte, a professional services organization, more than 600,000 manufacturing jobs went unfilled last year due to a skills shortage. And a recent survey from the Society for Human Resource Management shows that employers are even having a tough time finding people that have basic grammar and spelling skills. Will a 0% interest rate really help those people find a job?

Of course, the weak state of the economy is making things worse. But it’s hard to deny that our dumbed-down education system is finally taking its toll on the economy. Many American workers have simply failed to adjust to the new demands of the global market.

The truth is, zero interest rates will not help create jobs. But instead of accepting that reality, the Fed just keeps printing money and punishing savers through zero rates and inflation.

Traditional Sources of Income: R.I.P.

Zero interest rates are here to stay. So forget about traditional sources of income, such as Treasuries and money market accounts. It will take a very long time before they pay any significant income.

That’s why you need to find alternate ways to get income. Stocks that pay stable and increasing dividends are a much better option than Treasuries that pay a fixed, low income. The giant chipmaker Intel (NASDAQ:INTC), for example, is a much safer source of income than Treasury bonds or money market accounts.

Intel has Consistently Increased its Dividends

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Trading at a single-digit P/E ratio, the stock is very cheap. It’s trading at a huge discount to both the overall market and its historic average valuation.

Intel currently pays a dividend yield of 4%. And it has increased the payouts every year since 2003. More importantly, its payouts account for just 21% of its cash from operations, so there’s a lot of room for growth.

Over the last five years, the company has grown its dividends at a compound annual growth rate of 14.6%. At that pace, it will nearly double its dividend in the next five years. So, if you’re a long-term investor, you could be collecting a yield of 8% by 2017. And, if you buy Intel before November 5, you can start collecting dividends this December.

The Fed will likely keep interest rates at zero for much longer than anyone thinks. As a result, you won’t get any significant yield from traditional sources of income for a very long time. If you’re looking for income, it’s time to focus on companies that pay stable and increasing dividends, such as Intel.


Evaldo Albuquerque
Senior Analyst

P.S. Even as tough economic conditions persist in the U.S., emerging markets around the globe are experiencing incredible growth. In his Global Growth Strategist service, my colleague, Jeff Opdyke, is looking at U.S. companies that are tapping into these fast-growing overseas markets to bring their investors triple-digit – or more – growth. To see which company Jeff says is ready for a historic rise in value, click here for his latest video.

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