Tag Archives: U.S. economic crisis

December 5, 2014 · 10:35 PM

Slammed

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It’s been one month since the midterm elections, and a lot of people are still smarting from the results. But several folks saw this coming. As expected, the Republican Party has retained control of the House of Representatives and taken the Senate. But, few anticipated the GOP would garner such high numbers. Moreover, Republicans have attained most of the state governorships. Here in Texas, the GOP has won every major state-level office for the fifth consecutive election cycle. A Democrat hasn’t won a state-wide office since 1994, when Garry Mauro won reelection as State Treasurer. By the time the current crop of officeholders finish their respective terms, Democrats will have been shut out of state-level offices for two decades.

Texas Democrats had hoped this year would be theirs; that they would recapture at least one office, preferably the governorship, but at least maybe attorney general or state treasurer. But they didn’t. They lost – in the worst way. As usual, most voting-eligible Texans failed to turn up at the voting booths this year. In fact, Texas had the lowest rate of voter turnout than any state in the union – roughly 4.75 million people, or 28.5% of the vote-eligible population. In the Dallas – Fort Worth metropolitan area, some local officials blamed the damp, cold weather for the dismal response. Really? I recall an election in India several years ago where some people were being carried in on their deathbeds – literally! – to cast a ballot. Overall this year’s midterm produced the worst voter turnout since 1942. That particular year was understandable: the U.S. had just entered World War II, when many young men had already joined the fight overseas. Men were much more likely to vote than women back then, plus there were a slew of voter restriction laws – especially in the Southeast – to keep poor and non-White voters from casting ballots. But that was then; things have changed considerably in 70 years. I don’t just find the low voter response appalling. I find it disgusting. What happened?

After the 2007 – 2008 financial downturn – a period in which the U.S. came as close to a completed and total economic collapse – people felt their elected officials simply weren’t responding to their needs. President Obama and the Democrats inexplicably focused their energy on passing a healthcare bill and reforming the immigration system. The latter was labeled an attempt to appeal to Hispanics; once again, assuming Hispanics only care about immigration in the same way women only care about abortion and gays and lesbians only care about same-sex marriage. Sweeping assumptions like that are an insult and always dangerous. It’s bad enough, though, the Republican Party was determined from the moment Obama won the 2008 presidential elections to obstruct his agenda. Every conservative lout from Dick Cheney to Mitch McConnell stated publicly and emphatically they wanted to make Obama a “one-term president.” Fortunately, they failed. But they and the Democrats have failed miserably over just about everything, mainly the economy.

My gripe with Obama is his overt willingness to compromise. His first major capitulation to the Republicans came in December 2010, as the Bush-era tax cuts were due to expire. The GOP literally threatened to withhold votes on extending benefits for the long-term unemployed, if tax cuts for the wealthiest citizens and largest corporations weren’t kept in place. Obama bowed to them; declaring openly that he didn’t want “the hostages” to be harmed. In December 2010, the Democrats still held majorities in both houses of Congress, and the President could have very well issued an executive order extending the benefits in question. But he backed down. And that’s when I began to lose respect for him – in the same way I’d long lost respect for most elected officials.

In 1934, when President Franklin D. Roosevelt realized just how bad the Great Depression really was, he made the bold – and shocking – decision to raise taxes on the wealthiest citizens and largest corporations (the same ones who benefited from hefty Republican-spawned tax breaks the previous decade) to stimulate the economy. He convinced these people that such hikes would benefit them, too, in that more Americans would be able to enter the workforce and pay their own taxes, plus have money left over to buy goods produced by a variety of industries. It made sense. The policy worked to some extent, but the 1929 collapse had been so bad, the positive effects weren’t immediate. Thus, economists and the politicians who think they know so much have been debating the logic of this move ever since.

The Democrats failed on another front regarding the economy. U.S. Attorney General Eric Holder never indicted anyone in connection with the recent financial calamity. Anyone with at least half a brain knows it didn’t happen by chance. It wasn’t the inevitable result of market ups and downs. Major banking entities such as Citigroup and Fannie Mae were key players in the debacle. Both helped to create the massive housing bubble at the turn of the century, replete with outrageous features such as zero-down purchases and mortgage-backed securities. As the crisis worsened towards the end of 2008, Citigroup managed to convince the federal government to give it a life-saving multi-billion-dollar loan. But it also began laying off people at its various offices across the globe. Fannie Mae, along with Freddie Mac, also received a multi-billion-dollar, taxpayer-funded bailout; this one in 2009. Yet that investment didn’t become profitable for taxpayers until this year. The average American worker hasn’t seen a lot of positive returns on their “investments” to save the “too-big-to-fail” banks. Those lounging in the economic ivory tower certainly have. For example, Lloyd Blankfein, CEO of Goldman Sachs, received a $16.2 million compensation package for 2011, despite a serious drop in corporate profits. The following year Blankfein urged Americans to consider a later retirement age.

“You can look at history of these things,” he told CBS News, “and Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career. … So there will be things that, you know, the retirement age has to be changed, maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised. But in general, entitlements have to be slowed down and contained.”

How thoughtful. In February of 2009, two months after I earned my college degree, the engineering company where I worked held their annuals employee reviews. Due to budget crunches, my then-manager told me, they couldn’t afford significant salary increases. So, while my living expenses continued to rise, my salary essentially remained flat. I was laid off the following year.

People like Blankfein are part of the current problem of wealth inequality in America. That the Obama Administration neglected to prosecute the scoundrels responsible for all those business closings and job losses – again, this didn’t happen by accident – is reprehensible. If I rob a convenience store of a hundred bucks and get caught, I’d be sure to serve some serious prison time. Hedge-fund managers who manipulated the stock market seem immune to the most egregious of financial indiscretions.

Still, the economy has rebounded since Obama first took office. The unemployment rate, which reached a high of 9.9% in April 2010, now stands at 5.8%. GDP growth stood at negative 5.4% in the first quarter of 2009 and is now at 3.9%. The national deficit was $1.4 trillion in 2009 and now is $564 billion. That all brings up yet another complaint. Why didn’t the Democrats highlight those facts? In his 2012 reelection bid, Obama proclaimed, “Bin Laden is dead, and GM is alive.”

It was simple, yet effective. For many of us, though, the economy really hasn’t recovered. Wages remain stagnant, and jobs are tenuous. We’ve become a contract society.

Moreover, I don’t really blame many people for not voting. I understand the frustration with the hollow words and obstinacy of some candidates. Wendy Davis, for example, began her campaign for Texas governor by attacking her opponent, Greg Abbott, instead of highlighting her own accomplishments. I think it was about 6 months into the campaign before she ran a more positive ad; one telling her life story. Voters really get put off by such animosity from the start. Criticizing the opposition is a dubious tactic. It’s almost as if the individual is hiding something nefarious about their own past. That’s essentially how George W. Bush won his two presidential terms: he had no redeeming qualities, so his campaign team attacked the other guys. And some voters fell for it.

I don’t know what the immediate future holds for this country. With Republicans now in control of the U.S. Congress, I foresee further adolescent bickering between people who are otherwise educated business professionals. I don’t envision economic improvements or tax relief for us regular folks. It’s depressing. That Mars One venture is looking more and more attractive.

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September 1, 2014 · 10:39 PM

Laborious

Finally – some good news!

Finally – some good news!

A few years ago – about a year after I got laid off from an engineering company and while I struggled to find even a temporary job while trying to launch my freelance writing career – I told a close friend of mine via email that, when the economy improves, people will start switching jobs without giving much, if any, notice to their employers.

“True,” he replied.

It’s starting to happen. The recent economic crisis – the worst in this nation’s history since the Great Depression – almost completely destroyed our financial stability. Multiple factors were responsible for it: broad-based tax cuts for the wealthiest citizens and largest corporations; further deregulation of banking and housing; and the wars in Afghanistan and Iraq. Between December 2007 (when the recession officially commenced) and June 2009 (when it officially ended), the U.S. economy shed roughly 8.7 million jobs. Employers began to add jobs in 2010. Only recently, however, have we regained all those lost jobs.

There’s no real cause for celebration. The after effects of such a prolonged economic debacle are as varied as the causes. People lost accumulated personal wealth; state and local economies suffered decreased tax revenue; and home values dropped. Wages, however, remain stagnant, despite increased productivity. People have always worked too damn hard for their money. Of course, everyone feels they’re overworked and underpaid. But now, we have statistical proof. But, according to Ben Bernanke, chairman of the U.S. Federal Reserve System, the “Great Recession” actually was worse than the Great Depression. In a statement filed on August 22 with the U.S. Court of Federal Claims, as part of a response to a lawsuit over the 2008 bailout of insurance giant American International Group (AIG), Bernanke said:

“September and October of 2008 was the worst financial crisis in global history, including the Great Depression.” Of the 13 “most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two.”

When asked why he thought it was critical for the U.S. government to rescue AIG, Bernanke replied:

“AIG’s demise would be a catastrophe” and “could have resulted in a 1930s-style global financial and economic meltdown, with catastrophic implications for production, income, and jobs.”

Obviously, too-big-to-fail truly has become too big to fail! The Great Depression was exacerbated by the fact the Federal Reserve System didn’t take command of the banks. Billionaire financier Andrew Mellon was the U.S. Treasury Secretary during the Hoover Administration and – like a typical conservative Republican – believed the nation’s banks had gotten themselves into trouble and needed to get themselves out of it, even if that meant they failed and took their customers’ money with them. Which they did, of course, in very large numbers. At the time, though, we didn’t have a Federal Deposit Insurance Corporation (FDIC) to safeguard people’s financial assets. The federal government’s lackadaisical attitude at the onset of the Great Depression forced Republicans to lose both houses of Congress during the 1930 midterm elections and shoved Hoover out of the White House two years later. That same kind of ineptitude is probably what caused them to lose both houses of Congress in 2006.

Yet, as the economy continues to recover and employers continue adding jobs, I see my aforementioned prediction materializing. During sluggish markets, employers can afford to be picky on who they hire and can freeze wages and salaries at will. It’s almost cruel and inhumane the way some can behave. And, what’s the average worker to do? With children, mortgages, car payments and other debts, they’re often stuck. They have little power.

But, from January to June of this year, more than 14 million people quit their jobs. I would like to think they left for better jobs. And, I’d like to believe they gave little notice to their employers. After all, companies don’t have to give employees any real notice when they plan to let someone go; albeit, quite often, people can feel it. In 2009, there were approximately seven people for every job opening. As of June 2014, the ratio had dropped to 2-to-1. Overall, the number of unemployed has dropped by 5 million, while the number of new jobs has grown by 2.5 million. Now, there’s talk of a problem we haven’t seen in a while: labor shortage. Companies are starting to feel one of the adverse effects of an improving economy; there aren’t enough people, or at least not enough qualified people, to fill certain positions. Thus, it’s employees and jobseekers who can be picky.

And, that’s a good thing. It’s really the way it should be. Only once in my life have I had the pleasure of quitting a job I hate; in January 1989, I left a retail position, which I’d held for nearly three years. I just walked into the place and gave my immediate supervisor a typewritten note announcing my resignation. But, I’ve known a few people who, in recent years, essentially gave their boss the middle finger and walked out of a company. They recounted their experiences with glee. We spend a great deal of time at work; often more than with our own families. Work gives people personal value and a sense of accomplishment, and everyone who makes an effort to complete a job should be respected. Whether that person answers the phones in a call center; digs ditches for sewer lines; programs a voice mail system; or rings up items at a cash register, they should be considered important. They pay taxes and insurance and they put the rest of their money back into the economy as consumers.

Last week, an executive in the company where I’m working as a contract technical writer staged an impromptu meeting to announce a major organizational change. After presenting a variety of business details, he said something that I’d never heard from someone at his level: “Family is more important than work.” He emphasized that everyone needs to place greater value on their loved ones than on their careers; noting that he hadn’t done that and almost paid the price for it. I’ve heard some executives tell people on an individual basis the same thing – but never in such a large setting. He’s right. A company won’t collapse because you can’t make it to a business conference. You won’t necessarily recall that training seminar. But, you most likely will remember a child’s sports event. And, you’ll cherish it forever.

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May 1, 2014 · 11:11 PM

My Time in a Locked Box

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Up until mid-March, I had a temporary position at a lock-box facility with a major financial institution. I won’t name the company or the staffing firm that found me the job, but I will emphasize that it was one of the worst places I’ve ever worked. I took the position as a filler job amidst my freelance writing gigs. In a way, I’m glad I did, though, because it gave me a clearer view of just how bad things are in the U.S. right now. If our elected officials could experience such drudgery, matters would change in no time.

A lock-box is an intermediary between a company and the bank that handles their accounts. You might notice a post office box listed as the mailing address on bills for telephone and water utilities. That box number simply steers the payments to a separate facility where they’re processed on behalf of the bank. It’s beneficial for the bank from a time efficiency standpoint. But, they’re also breeding grounds for fraud. The workers – many of them contract or temporary – handle countless personal checks and documents with sensitive information that can then be purloined or photocopied.

The place where I worked handles immigration applications on behalf of the U.S. Department of Homeland Security. My specific job was to analyze packets of applications and ensure they contained the proper documentation. Security procedures are tight. Every employee – even temporaries – must wear a slave tag, or what they call “badges.” The badge bears the individual’s picture; tiny image that make driver’s license photos look like glamour shots. The badges also have digital codes that would trigger doors to open. To enter the actual location where the documentation was handled, associates had to swipe their badges and then apply an index fingertip to a scanner beneath the electronic locks. For some reason, the lock always had trouble identifying my fingertip. No, I wasn’t using my middle finger – although seems more appropriate now. But, I’d often stand in front of that stupid lock pressing my finger down like a rogue political leader reaching for a nuke button.

The job was monotonous and dull. I get bored easily anyway, so it was difficult for me to stay interested. But, I noticed a number of things. Most of the associates were female and / or non-White. Yet, the bulk of the supervisors and managers were composed of the usual suspects: older White males. None of that really surprised me. Women, non-Whites, the disabled and immigrants now hold the bulk of temporary and part-time jobs in the U.S. These groups have always resided at the lower rungs of the American work force. But, the 2007 – 08 financial crisis intensified those numbers. But, gender and race only tell part of the story.

Between 2007 and 2009, the American labor force lost 8.4 million jobs, or 6.1% of all employment. Since then, most of the newly-created jobs have been temporary or contract. Last year the U.S. added 2.8 million temporary or contract employees to the national payroll. After the previous two recessions, American companies increased employment by adding temporary workers. In fact, an increase in temporary and contract work generally signifies overall economic improvement. But, this recession is something new; most of the good-paying jobs that delineated the American middle class have been replaced with low-wage positions. Temporary jobs aren’t a sign of better times ahead; they’re a sign of the new (pathetically, dismal) normal.

In early 1990, I had a temporary position at a lock-box facility in Dallas. Back then, as now, the bulk of the workforce was female and non-White, while most of the managers and supervisors were White males. My immediate supervisor, however, was a Panamanian-born woman who once made an employee remove 37 seconds from her time card because she said the latter had been late that much when returning from break. Her manager was an older White male who had a quirky Napoleonic complex, but whom I liked much better. He didn’t work well under pressure; something that made observing him the highlight of the day. But, that was almost a quarter-century ago. And, from a workforce standpoint, not much has changed.

When I told my parents the paltry pay rate I earned at this last job, they were shocked. It was the same amount my father had earned as a contract employee of a printing shop in the early 1990s. He had worked for the company for nearly 30 years before he got laid off in 1989; he was then, rehired as a contractor.

The issue of salaries and pay rates has been staring the slow economic recovery square in its ugly face. Mid-wage jobs – those averaging between $13 and $22 hourly –made up about 60% of the jobs lost during the recession. But, those same mid-wage jobs comprised about 27% of the jobs created since 2010. However, lower-paying jobs have dominated the job recovery – roughly 58%. Nearly 40%, or 1.7 million of the jobs gained during the recovery, are in three of the lowest-paying categories: food services, retail and employment services (e.g. office clerks, customer service representatives). All of this has not only decimated the American middle class, but has pushed the U.S. below Canada regarding middle class affluence.

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Graph courtesy U.S. Bureau of Labor Statistics.

A few other things bothered me about the facility where I worked. Because of the number of documents that arrive on a daily basis, the amount of paper is overwhelming. Should a fire break out, I thought, it could be catastrophic – and mainly because of one simple device: cell phones. People aren’t allowed to bring cell phones into the main production area. The reason is obvious: most cell phones now have camera features, and it would be easy for someone to snap a picture of classified documents. Therefore, anyone who enters the production area has to leave their cell phone in their vehicle, in a designated locker in the same building, or with security. But, along with the odd juxtaposition of desks, I also noticed fire exits weren’t clearly marked. People would be safe in the building should a tornado descend upon the property. But, if a fire erupted, I’m certain many people would head towards their lockers to grab their cell phones. Such a scenario reminds me of the 1911 Triangle Shirtwaist Factory fire in which 146 people (mostly women and immigrants) perished.

I arrived home from work one Friday to find a voice mail message on my cell phone from the staffing agency, telling me to call them immediately. The lock-box firm had pulled the job from me. The unit manager had accused me of being consistently late. His idea of “late” apparently is one or two minutes past the hour. I pointed that out to the staffing agency; emphasizing, though, that I made up the one, two or three minutes I arrived late. Moreover, I said, I’d already attained a 100% accuracy rate on the job. None of that seemed to matter. The agency was in a bind; they couldn’t refute whatever chicken-shit opinion the manager had of me.

It’s no great personal loss. I won’t exactly be seeking therapy because of it. Some things just aren’t worth the trouble. As this May Day comes to a close, it’s important to remember that people usually work too damn hard for their money. As the wealth gap in the U.S. widens, I don’t know how much longer this, or any truly democratic society, can deem itself civilized.

Image courtesy Compare Business Products.

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Stupid-Go-Round

Christopher Weyant 112812

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December 1, 2012 · 7:48 PM