Recession in the USA: Poor and "poor" guys
 

With ongoing talks on unions, entitlements, outsourcing etc., I thought these might be of interest



The New York Times, 16 Jan 2008

Blue-Collar Jobs Disappear, Taking Families' Way of Life Along

By Erik Eckholm

Jackson, Ohio - After 30 years at a factory making truck parts, Jeffrey
Evans was earning $14.55 an hour in what he called "one of the better-paying
jobs in the area."

Wearing a Harley-Davidson cap, a bittersweet reminder of crushed dreams, he
recently described how astonished and betrayed he felt when the plant was
shut down in August after a labor dispute. Despite sporadic construction
work, Mr. Evans has seen his income reduced by half.

So he was astonished yet again to find himself, at age 49, selling off his
cherished Harley and most of his apartment furniture and moving in with his
mother.

Middle-aged men moving in with parents, wives taking two jobs, veteran
workers taking overnight shifts at half their former pay, families moving
West - these are signs of the turmoil and stresses emerging in the little
towns and backwoods mobile homes of southeast Ohio, where dozens of
factories and several coal mines have closed over the last decade, and small
businesses are giving way to big-box retailers and fast-food outlets.

Here, where the northern swells of the Appalachians lap the southern fringe
of the Rust Belt, thousands of people who long had tough but sustainable
lives are being wrenched into the working poor.

The region presents an acute example of trends affecting many parts of Ohio,
Michigan and other pockets of the Midwest.

Slammed by the continued decline in the automobile and steel businesses,
Ohio never recovered from the recession of 2001-2, and blue-collar families
who had made it partway up the economic ladder find themselves slipping
back, with chaotic effects on families and dreams.

Throughout the state, the percentage of families living below the poverty
line - just over $20,000 for a family of four last year - rose slightly from
14 percent in 2005 to 16 percent in 2007, one study found. But equally
striking is the rise in younger working families struggling above that line.
The numbers are more dismal in the southeastern Appalachian part of the
state, where 32 percent of families lived below the poverty line in 2007,
according to the study, and 56 percent lived with incomes less than $40,000
for a family of four.

"These younger workers should be the backbone of the economy," said Shiloh
Turner, study director for the Health Foundation of Greater Cincinnati,
which conducted the surveys. But in parts of Ohio, Ms. Turner said, half or
more "are barely making ends meet."

One consequence is an upending of the traditional pattern, in which
middle-aged children take in an elderly parent. As $15-an-hour factory jobs
are replaced by $7- or $8-an-hour retail jobs, more men in their 30s and 40s
are moving in with their parents or grandparents, said Cheryl Thiessen, the
director of Jackson/Vinton Community Action, which runs medical, fuel and
other aid programs in Jackson and Vinton Counties.

Other unemployed or low-wage workers, some with families, find themselves
staying with one relative after another, Ms. Thiessen said, serially wearing
out their welcome.

"A lot of major employers have left, and the town is drying up," Ms.
Thiessen said of Jackson. "We're starting to lose small shops, too -
Hallmark, the jewelry and shoe stores, the movie theater and most of the
grocery stores."

Shari Joos, 45, a married mother of four boys in nearby Wellston, said, "If
you don't work at Wal-Mart, the only job you can get around here is in fast
food."

Between her husband's factory job and her intermittent work, they made
$30,000 a year in the best of times, Mrs. Joos said. Since last fall, when
her husband was laid off by the Merillat cabinet factory, which downsized to
one shift a day from three, keeping anywhere near that income required Mrs.
Joos to take a second job. She works at a school cafeteria each weekday from
9:30 a.m. to 1 p.m and then drives to Wal-Mart, where she relaxes in her car
before starting her 2-to-10 p.m. shift at the deli counter.

Her 20-year-old son went to college for two years, earning an associate
degree in information science, but cannot find any jobs nearby. He still
works at McDonald's and lives at home as he ponders whether to move to a
distant city, as most local college graduates must. Her 22-year-old son
works at Burger King and lives with his grandparents - "that was his way of
moving out," Mrs. Joos said.

In late December her husband landed a new job, driving a fork lift at a
Wal-Mart distribution center, a shift that ends at 2:30 a.m. It pays a
little less than he used to make and is an hour's drive away, so gasoline
soaks up a painful share of his wages.

"We never see each other," Mrs. Joos, 45, said on a recent morning as she
packed a roast beef and cheese sandwich for her evening meal. "We never even
think of taking a vacation."

Luckily they had paid off their mobile home and an addition they built.

As experienced men in this corner of Ohio have found themselves working for
lower wages, others feel they must move.

"I'm ain't going to work for no $8 an hour!" said Lindsey Webb, 52, who,
like Mr. Evans, was one of hundreds laid off when Meridian Automotive
Systems closed its local plant. On a recent night, Mr. Webb was helping out
in a trailer in front of the old factory, a vigil by the United Steelworkers
Union to remind the company of its obligations to former workers.

Mr. Webb, who worked at the plant for 33 years, made more than $16 an hour
doing machine maintenance. Now he is thinking of moving to Arizona, taking
along his elderly father, whom he helps care for.

Darrel McKenzie, 44, was also a maintenance man at Meridian and grossed more
than $60,000 a year. Now he has restarted at the bottom as a union
pipe-fitting apprentice and expects to make $20,000 this year. His family
just "does less," Mr. McKenzie said.

Mr. Evans said that moving back into the home where he grew up, after
decades of independence, was a stinging reminder that "I lost everything I
worked for all my life."

His mother, Shirley Sheline, 73, had worked 28 years at the same auto parts
plant, and shares his dismay. "Can you believe it, a grown man forced to
move back with his mother," she said.

Seeing his desperation last year, she added a room to her house with a
separate door.

"I don't know what I'd have done without my mom," Mr. Evans said. "At least
I can help her, or if I get back on my feet, she can rent it out."

By contrast, selling his Harley, which he would have paid off this year, was
pure torture. He had owned a Harley since he was 20, and weekend cruising
with pals was his favorite recreation.

"The buyer said he wanted to take it away in the back of a trailer," Mr.
Evans recalled, "and I said, 'That won't happen.' "

"Instead I drove it to his house, threw him the keys, came home and got
drunk."

ww.nytimes.com/2008/01/16/us/16ohio.html

-------------------------------------------------
The Sydney Morning Herald, January 18, 2008

Wall St execs collect $US 33 billion in bonuses

The Wall Street gurus who presided over the subprime mortgage crisis
currently shredding global sharemarkets have awarded themselves bonuses
totalling $US33.2 billion (A$38 billion).

In a concession to the crisis - which has forced America's largest banks to
write off billions in bad investments and raise billions more to shore up
their capital reserves - the bonuses were down nearly 5 per cent on the
previous year.

The average bonus of $US180,420 (A$206,088) in 2007 dipped 4.7 per cent from
the previous year, New York state Comptroller Thomas DiNapoli said in a
statement today.

The securities industry rewarded $US33.2 billion in bonuses to its New York
City employees, two per cent less than the record $US33.9 billion (A$38.7
billion) in 2006, he said.

The numbers are taken from the seven largest financial firms headquartered
in New York City, which are tracked by the comptroller's office. The firms
are Citigroup, Merrill Lynch, JPMorgan Chase, Goldman Sachs, Bear Stearns,
Morgan Stanley and Lehman Brothers.

All except Goldman Sachs, which largely avoided the risky loans, have been
battered by the financial crisis.

While the seven firms earned $US39 billion (A$45 billion) in profits during
the first half of 2007, a 41 per cent gain over the prior year, they lost
$US28 billion ($32 billion) in the third and fourth financial quarters,
DiNapoli said.

Total pretax profits for the seven firms totalled $US11 billion (A$12.6
billion) in 2007, less than one-fifth of the $US60 billion (A$68.5 billion)
record set in 2006, the comptroller said.

Employee compensation, which includes bonuses, consumed 61 per cent of the
firms' revenues in 2007, up from 45 per cent 2006. DiNapoli said this
reflected the firms' efforts to keep high-performing employees.

Those working in mergers and acquisitions and in equities should be rewarded
with bigger bonuses but employees in the fixed-income units that handle
mortgages will be "dramatically lower", the comptroller said.

Compensation experts say those high-performing units will basically
subsidise whatever bonuses are left to give to flagging parts of the banks'
business. Because of the dismal performance of the Wall Street investment
houses, Morgan Stanley chief executive John Mack and Bear Stearns chairman
James Cayne gave up their huge annual bonuses.

Last year, they were paid about $US40 million (A$45.7 million) in
compensation.

AP

http://business.smh.com.au/wall-st-e...0118-1mq1.html

I say that the politicans have a lot to do with this.....some of you college educated people <wink, wink, nudge, nudge> can say more about that. The outsourcing of jobs to other countries has made owners in manufacturing rich today. There are no labor unions in some of these countries. Some of them still damn near have slavery going on. The politicians hold stock or have huge vested interest in these companies. Who do you think gives them all that money for their campaigns, etc.?

Business
 

Since I an self employed I'll tell you the purpose of a business is to make money.

The question to ask is "Why must a manufacturing business move off shore to make money?"

Another question "Coal? You can't move coal off shore, why did that shut down?"

Tax laws and enviro-whackos would be a good place to start.

And now we are thinking, again, of giving tax prebates to people who don't pay taxes. The IRS has become another welfare agency funded by people who who work hard and pay into the system.

Bingo! What makes it worse with the econazis is that most of their followers are completely misinformed about the "scientific facts" in which they claim expertise.

And not outsourcing would have put them out of business.

Pete mentioned environmentalists and taxes. Add labor costs that are excessive and completely non-competitive, regulations that are often idiocy for a given business (but which it must comply with), plus regulations that are put into effect and then "pre-dated" requiring companies to pay fines, etc. for non-compliance before the regulations existed (yes, this has happened in the United States. Cost the paper industry millions of dollars).

The fact is that for many businesses, it is either manufacture overseas or go out of business. There are no other choices.

I watched one of my Uncles try to keep his textile firm in the USA. It failed, and took his home, his livlihood (and those of hundreds of employees), his retirement, etc. with it. IF he'd taken the recommendation to move their manufacturing to Venezuala in the early 70s, he'd likely be a wealthy man. And be employing hundreds of US citizens as well as hundreds in Venezuala.

The less the government has to do with business, the better. They just fuck it up.

Got to agree with Pete and GH.

The jobs go overseas for a number of reasons, environmental, legal and cost.

The sooner those people realize that they are living in an area called the Rust Belt for a reason, get their kids educated in something with a future, and move to an area where there are actually jobs being created (mostly non-union, right to work states), the sooner they will recover. The jobs they cited are auto industry or home construction related, both of which are in the tank right now. Wait till the Dem's energy bill kicks in and kills the rest of the US auto industry. If there is a Dem Congress and POTUS, look for new environmental laws to finish off the rest of the US industrial base. We are already sitting on vast quantities of $90 per barrel oil on public land and refusing to drill for it because of a few misguided idiots.

I grew up on a tobacco farm. My father was a laborer who had a high school diploma. His Dad barely got through 8th Grade. I got a few scholarships and went to college for my degree before joining the Army. I was lucky, got some breaks, and made a career out of it. These people could do the same, or get some training in a medical or IT field. I think they share a good bit of the responsibility for thier problems.

I don't like the executive compensation, but if that is what it takes to keep competent leadership, the alternative is to pay very little and let Uncle Wally run the place into the ground through poor management.

TR

The IT field is one I would not recommend anyone in this country to get into. The last 5 years have seen incomes stagnate or go down as jobs are moved overseas. If the jobs don't go overseas, companies bring the labor force here and lower the income.

When people in this country have to reclass to a new field they are almost always told to go IT, you'll make tons of money. So now we have a huge influx of people that have degrees and certifications and no experience. When the average company looks at people for their IT department they look at what they can hire them for. Experience is taking a backseat to labor costs.

I recently was up for a position with a major international resturaunt chain as the SharePoint administrator, a position that would normally pay 70k in the door. I lost it to a guy fresh out of the school I work at for 45k. How do I know this?

I taught the class he learned it in.

Hmm, since much if not most of the outsourcing has been done by public companies with millions of shareholders, that makes pretty much everyone with a 401k or IRA an owner, doesn't it?

Questions:
Is there a point where we outsource manufacturing to other countries that it cause problems of national security for the United States?

I have an answer but will let others speak first.

That point has already been passed.

TR

Add to this the foreign national professionals who come to work over here on H1B visas for a fraction of the prevailing wage.

Ok, I concede that.
Better question, anyone notice the race to make this worse?

It is not only outsourcing of manufacturing (and I agree with TR) but we have already outsourced some of our military functions from within the DOD to contractors such as Blackwater, and the list goes on. You cannot name one major military piece of equipment that does not have non-US parts or technology in it. Hell Bill, I bet on bad winter days you folks have outsourced the killing of rodents to Snowy Owls that come down from Canada:D

I am disturbed by all of this vitriol towards executive pay at companies with which the complainers have no relationship. If you are a shareholder and you want to complain, fine. If you bought a CDO or some other security and you think you were misled somehow, fine. Otherwise, it is none of your damn business.

Why don't we just kill all of the rich folks and take their money?

Damn!

Now why didn't I think of that?

Where do they live and when will they be there with the money?:D

TR