[Commentary] © 2004-15 Philip Hyde, The Timesizing Wire, Box 117 Cambridge MA 02238 USA (617) 623-8080 - *Asterisk means "outside this website" - HOMEPAGE
Downsizing - the beat(ing) goes on...
(and we don't mean case-by-case firings for just cause based on individual performance reviews)
Wake up, America! While you passively accept them or reward them with stock purchases,
mass jobcuts flatten wages, funnel income ever more tightly & strangle consumer spending.
Below are all examples that made the Wall Street Journal &/or the New York Times &/or the Boston Globe Jan/1999 to Feb/2004 and megadownsizings Feb-Dec/2004, and occasional noteworthy downsizings Dec/2004-present.
Downsizings since 2004 appear in the downsizing section under doomdujour our homepage archives.
Already hip to the dumbness of downsizing? Savor
the simplest, most human, sustainable and market-oriented alternative, timesizing.
4/04/2015 CEOs still regard downsizing as a normal strategy. This page only logs occasional noteworthy downsizings 2005-present - more noteworthy downsizings in that period appear in the downsizing section under doomdujour in our homepage archives -
- And here's a list of dates in March 2015 alone when our homepage archives has logged significant downsizings so you don't think the pace of downsizing has let up - March 29-30, 27, 18, 17, 15-16, 12, 7, 4, 2.
6/26/2014 CEOs still regard downsizing as a normal strategy (scan down prior to 12/08/2004 for inclusion of all megadownsizings in major newspapers and prior to 2/10/2004 for inclusion of all downsizings in major newspapers) -
- Robot Domination: Chinese Factories Expand Automation, Lay Off Workers, by Acsilyn Miyazaki, ChinaTopix.com
QINGDAO, China - Chinese home appliance manufacturers are expanding their production of industrial robots, a move that would result to sizeable furloughs.
Haier Group CEO Zhang Ruimin recently attracted public attention after his announcement that the leading Chinese home appliance manufacturer plans to lay off around 10,000 workers this year. This is on top of the 16,000 workers it laid off last year.
According to the National Business Daily, furloughs have likewise been taking place in other home appliance manufacturers following the introduction of robots into the workplace and their increasing adoption as efficiency and productivity boosters.
Midea, an air conditioning equipment maker, has been widely using robots in its assembly line since 2010. The company had set up a team to design robots in 2012. As a result, Midea said automation has cut their labor cost by US$1.28 million in 2013.
Skyworth, a Shenzhen-based manufacturer, also told National Business Daily about its intended employee reduction plan. The company said it aims to integrate the use of robots, replacing 1,000 workers with a single automated manufacturing line.
Skyworth said that robot usage has been first introduced in 2012 in power product factories. In the same year, Skyworth was able to shed off 11 percent of its workforce. The company also reported that its production efficiency was strengthened by 31 percent.
The report went on to say that the integration of robotics in Chinese factories came after the country made its mark as the biggest market of industrial robots in the world. The growth of industrial robots in the country has been forecast to reach an annual rate of 35 percent, the report added.
GaoGong Industry Institute Chairman Zhang Xiaofei said the increasing adoption of industrial robots followed the rise in labor costs and manpower shortage. He said automation would greatly help manufacturing firms that are facing increasing labor expenses, and would be a great solution for companies that experience difficulty in managing younger workers.
2/12/2014 CEOs still regard downsizing as a normal strategy (scan down prior to 12/08/2004 for inclusion of all megadownsizings in major newspapers and prior to 2/10/2004 for inclusion of all downsizings in major newspapers) -
- Barclays defends bonuses amid [up to 12,000] layoffs, AP via Boston Globe, B8.
Investment banking bedevils Barclays, Wall Street Journal, C1 target article.
[And bankers themselves were the ones that pushed to repeal Glass-Steagall and unseparate banking and brokerage/investment.]
12/24/2013 CEOs still regard downsizing as a normal strategy (scan down prior to 12/08/2004 for inclusion of all megadownsizings in major newspapers and prior to 2/10/2004 for inclusion of all downsizings in major newspapers) -
- Snail mail's retreat in Canada, editorial, New York Times, A20.
...up to 8,000 job cuts...
12/20/2012 CEOs still regard downsizing as a normal strategy (scan down prior to 12/08/2004 for inclusion of all megadownsizings in major newspapers and prior to 2/10/2004 for inclusion of all downsizings in major newspapers) -
- Brooks Automation to cut 600 jobs, 29 in Mass., by Chris Reidy, Boston Globe, B6.
...Brooks recently acquired Crossing Automation Inc...
12/05/2012 CEOs still regard downsizing as a normal strategy (scan down prior to 12/08/2004 for inclusion of all megadownsizings in major newspapers and prior to 2/10/2004 for inclusion of all downsizings in major newspapers) -
- FedEx workers to get buyout offers, AP via Boston Globe, B6.
...should reduce "fixed headcount by several thousand people."..
12/30/2011 CEOs still regard downsizing as a normal strategy (scan down prior to 12/08/2004 for inclusion of all megadownsizings in major newspapers and prior to 2/10/2004 for inclusion of all downsizings in major newspapers) -
- No Sears, Kmart stores closing yet, by D.C. Denison (the Globe's "undertaker"), Boston Globe, B6.
...The company said it was closing.\.100 to 120 store[s. So far] 41 of the stores to be closed are Sears; 38 are Kmarts... Only two...are in New England: a Sears in Nashua NH and one in Keane NH... The company did not...say how many employees will lose jobs, though a typical store employs 40 to 80 people.
[= average of 60 people per store, across conservatively 100 stores, gives us 6,000 lost jobs.]
7/23/2011 statewide downsizing of government employees (scan down prior to 12/08/2004 for inclusion of all megadownsizings in major newspapers and prior to 2/10/2004 for inclusion of all downsizings in major newspapers) -
4/15/2011 economywide downsizing in US via outsourcing to China -
- Drown ideology in beer, editorial, Boston Globe, A10.
ST. PAUL, Minn. - It wasn't the shuttered state parks that prompted Minnesota’s governor and legislature to resolve a budget impasse.
Nor was it the 22,000 furloughed state employees or the disruptions in services for the needy and the disabled. In the end, it was all about the beer.
[Nope, there was no end in sight at the time, so this was layoffs, not furloughs; downsizing, not timesizing -
(and it only ended thanks to alcohol? - America is done for!) ]
The Minnesota state government shut down July 1, after Democratic Governor Mark Dayton and Republican legislative leaders failed to reach a budget deal. And for days, there was no end in sight. But on July 12, the Minneapolis Star Tribune reported that hundreds of bars would no longer be able to serve alcohol because state permits were set to expire. With no one on hand to issue new permits, there’d be no beer. The 10,000 places that sell liquor in the state were starting to see a depletion in stock, as inventories cannot be resupplied without a distributor tax stamp. The state had stopped issuing those.
And then, the unthinkable: Brewing giant MillerCoors was told to pull 39 of its brand labels from all shops, bars, and restaurants because it did not process its registration paperwork in time. The registration was set to expire on July 13.
Suddenly, Dayton and GOP lawmakers were willing to make compromises. The final budget deal, not much different from where the parties were before the shutdown, was negotiated less than 36 hours later, on July 15.
Coincidence? Maybe members of Congress, facing a much larger budget problem, should take a breath and have a beer. And thank their lucky stars that they can still have one.
- A Cautionary Tale Of Outsourcing To China: There Is No Recourse, You Could Lose Everything, by Richard McCormack, Manufacturing & Technology News via Second Line of Defense via sldinfo.com
Thousands of American companies that have moved production to China to take advantage of cheap labor might want to consider a case study that is unfolding for a "U.S." [our quotes] manufacturing company. Fellowes Inc., one of the world’s largest makers of office and personal paper shredders, is witnessing the destruction of its business, as its large Chinese manufacturing plant has been shut down by its joint venture manufacturing partner.
The company’s Chinese joint venture firm has barred 1,600 employees from entering the plant, stolen all of its proprietary manufacturing production equipment and forced the venture into bankruptcy. The contracts Fellowes signed with its Chinese production company meant nothing. For Fellowes, there is no such thing as rule of law in China.
The Itasca, Ill.-based company has lost $168 million worth of business and is no longer able to produce personal shredders for the world market. It has taken its case to Chinese courts, to no avail. It has pleaded with members of Congress and federal agencies, with no results.
Fellowes entered into the joint venture in China in 2006 with a company called Shinri to build a factory in southern China to manufacture inexpensive shredders. Shinri is part of a large holding company called New United Group owned by the Zhou family. Fellowes and Shinri produced shredders bearing Fellowes’ brand and incorporated Fellowes’ proprietary product and process technology. The shredders were produced exclusively for sale to Fellowes and its subsidiaries. Under the agreement, Fellowes owned the tooling and intellectual property used to manufacture the shredders in the factory. The joint venture manufacturing facility had 120 Chinese suppliers.
“For over three years, this engagement resulted in a very productive relationship, with Shinri manufacturing and shipping our goods to Fellowes’ locations throughout the world,” says James Fellowes, a third-generation chairman and CEO of Fellowes Inc. “Shinri enjoyed a 100 percent-plus return on investment for each of the years and this return on investment was always paid on time.”
But in 2009 everything changed when the leadership of the Chinese company shifted to another Zhou brother. Over the next year, the Chinese company “gradually attempted to usurp control [of our operations] in direct violation of the joint venture agreement,” Fellowes told a recent hearing of the House Foreign Affairs subcommittee on Asia and the Pacific. “Shinri methodically imposed unreasonable requirements on Fellowes in an effort to extort more profit and ultimately control the global shredder business in direct violation of our contract.”
Shinri insisted that Fellowes assign its 100 percent-owned tools to the joint venture. It required that Fellowes assign 100 percent of its engineering capability and its 100-percent owned Chinese sales division to the joint venture. It told Fellowes it must increase its prices immediately by 40 percent. It told Fellowes that it had to unilaterally contribute over $10 million to the joint venture and if it didn’t “then Shinri would close down our operation as the legal representative of the joint venture,” says James Fellowes. “When Fellowes refused these illegal demands Shinri proceeded to destroy our business.”
Starting on August 7, 2010, Shinri started to obstruct shipments of shredders from the factory, forcing the joint venture to stop production. “It placed security guards and trucks at the gates to prevent the entrance of our people, the shipment of our goods and the transfer of our wholly owned assets,” says Fellowes. “They expelled Fellowes’ appointed management personnel at the facility and they illegally detained Fellowes’ injection molded tools. This ultimately led to the bankruptcy of the joint venture.”
James Fellowes immediately flew to Changzhou to meet with Chinese government officials. “They sympathized with our plight but they were either unable or unwilling to force our Chinese partners to open our factory or facilitate a purchase of the joint venture by Fellowes. The cumulative impact of these actions is an economic loss totaling over $100 million to Fellowes.”
Fellowes has recently learned that Shinri is planning to compete directly against it in the shredder business using Fellowes’ custom molding tools “that represent the embodiment of Fellowes’ engineering investment and intellectual property,” says the company CEO.
The court in China has gotten involved: It has initiated proceedings to liquidate the joint venture and auction the assets “to satisfy the debts of the joint venture” — suppliers who are demanding that unpaid invoices be paid, according to Fellowes. “The sale of Fellowes’ tooling and our finished goods inventory to anyone other than Fellowes would be a direct violation of our intellectual property rights. The immediate release of our tools is of great concern for us today. We have been restricted from these tools for eight months and that has greatly hampered our ability to recover.”
Fellowes wants to bring these tools back to the United States so that it can re-establish a manufacturing operation in Illinois. It is “working around the clock to retool our products and bring up new factories,” says Fellowes. “We hope the U.S. government will act to protect the rights of American companies like ours.”
After James Fellowes’ testimony, subcommittee chairman Don Manzullo (R-Ill.) said that he has been involved in Chinese trade issues for a decade, and there is a growing number of similar cases involving American companies. “I see China going backwards,” Manzullo said. “I have never in my life in any Congress seen so many complaints over outrageous stealing of intellectual property and making a folly over the rule of law. They are going in the opposite direction based upon the complaints coming in.”
There have been plenty of Chinese officials who have gone to law schools in the United States, Manzullo noted. “They know the rule of law. They are just not interested in enforcement because they don’t have the same principles of private property that we do. It’s an entirely different culture.”
Manzullo said another company in his district, Aqua-Aerobic Systems Inc., a wastewater treatment firm, had a similar experience in China. That company was in the process of installing a wastewater treatment plant in China “and somebody there locally stole everything, even wiped out their website,” Manzullo said.
“At one time, we had a working relationship with the Chinese embassy” in Washington, D.C. Manzullo said. “We no longer do. We have written five letters to the ambassador of China. Each time, he has refused to answer those letters. Before, with prior ambassadors, we have asked them to come into the office. With the case of Aqua-Aerobics, we showed them the evidence and the Chinese government became actively involved in that litigation with our Commerce Department. The litigation ended up favoring the American company. . . If the ambassador from China wants to just blow off members of Congress, which he has been doing over the last several months, that to me is no indication of a breath of fresh air going through that country.”
[And here are a couple of apt comments on this article, with commentors' general terms (eg: "corporation") made more specific (eg: Fellowes Inc. or James Fellowes) -]
From Bob Lichtenfels (4/27):
Look closely at what has happened here:
* Chairman and CEO James Fellowes has thrown his employees under the bus by outsourcing their jobs and well-being.
* His employees and their families suffer and I mean suffer. In some cases, suicide may occur.
* Fellowes Inc. makes more money. The board, CEO James Fellowes, and upper ranks are presented as a great "American" success story and they get more money.
* Fellowes Inc. gets in trouble and needs help.
* James Fellowes goes back to the people he threw under the bus and asks their government, which is funded by their tax money, for help by saying, "We hope the U.S. government will act to protect the rights of 'American companies' like ours."
From David Hunt (4/25):
I hope this article proves a bucket of icewater in the faces of $$-eyed CEOs thinking how profitable it will be to outsource to China.
From Phil Hyde (4/28):
Message to James Fellowes and all other outsourcing CEOs:
Wake up and smell the coffee. If you're manufacturing in China, you're no longer a company of American employees or...an American company. You're a company of Chinese employees or...a Chinese company - with some American executives. You made your bed. Now LIE IN IT. And don't come whining to us/US. Insofar as you still have any claim to being American, you are functioning as what biologists call "dumb parasites" - the kind that harm or kill their host.
3/07-08-09/2010 economywide downsizing -
- The source of Obama's trouble - Democrats don't seem to grasp the scale of the jobs crisis, op ed by Bob Herbert, 3/09 NYT, A23.
The Obama administration and Democrats in general are in trouble because they are not urgently and effectively addressing the issue that most Americans want them to: the frightening economic insecurity that has put a chokehold on millions of American families.
The economy shed 36,000 jobs last month, and that was trumpeted in the press as good news. Well, after your house has burned down I suppose it's good news that the flames may finally be flickering out. But once you realize that it will take 11 million or more new jobs to get us back to where we were when the recession began, you begin to understand that we're not really making any headway at all...
[America is doomed because the Republicans are even less likely to address this top priority. Americans have nowhere to turn - unless they take back their time and their government with immediate worksharing and long-term timesizing.]
It's also widely known by now that the official employment statistics drastically understate the problem. Once we take off the statistical rose-colored glasses, we're left with the awful reality of millions upon millions of Americans who have lost - or are losing - their jobs, their homes, their small businesses, and their hopes for a brighter future.
Instead of focusing with unwavering intensity on this increasingly tragic situation, making it their top domestic priority, President Obama and the Democrats on Capitol Hill have spent astonishing amounts of time and energy, and most of their political capital, on an obsessive quest to pass a health care bill.
Health care reform is important. But what the public has wanted and still badly needs above all else from Mr. Obama and the Democrats are bold efforts to put people back to work. A major employment rebound is the only real way to alleviate the deep economic anxiety that has gripped so many Americans. Unaddressed, that anxiety inevitably evolves into dread and then anger.
But while the nation is desperate for jobs, jobs, jobs, the Democrats have spent most of the Obama era chanting health care, health care, health care.
The talk inside the Beltway, that super-incestuous, egomaniacal, reality-free zone, is that President Obama and the Democrats have a messaging or public relations problem. We're being told - and even worse, Mr. Obama and the Democrats are being told - that their narrative is not getting through. In other words, the wonderfulness of all that they've done is somehow not being recognized by the slow-to-catch-on masses.
That's just silly. People are upset because they are mired in economic distress and are losing faith that their elected representatives are looking out for their best interests. They've watched with increasing anger as their government has been hijacked by the economic elite. They know that the big banks that were bailed out by taxpayers can borrow money at an interest rate of near zero while at the same time charging credit-card holders usurious rates of 20 to 30 percent.
They know that the financial fat cats are fighting the creation of a truly independent Consumer Financial Protection Agency. They know that while ordinary Americans are kept out of the corridors of power, the elites with their lobbyists and lawyers and campaign contributions have a voice in every important decision that is made.
It's not the message that's a problem for Mr. Obama and the Democrats, it's the all-too-clear reality. People know that the government that is supposed to be looking out for ordinary people - for working people and the poor - is not doing nearly enough about an employment crisis that is lowering standards of living and hollowing out the American dream.
This is not just a short-term crisis. There are many communities across the country in which the effective jobless rate is higher than 50 percent. Many state and local governments are grappling with disastrous revenue shortfalls that are forcing cuts in services and layoffs, and threatening the viability of even a modest national economic recovery.
A University of Michigan survey of consumer sentiment in February found that 60 percent of American consumers expect to receive no income gains at all in the year ahead, the worst finding in that category in the history of the surveys.
The Republican Party has nothing in the way of solutions to Americans' economic plight. It is committed only to the demented policy of trying to ensure that President Obama and the Democrats fail.
But the fact that the Republicans are pathetic and destructive is no reason for the Democrats to shirk their obligation to fight powerfully and relentlessly for the economic well-being of all Americans. There are now six people in the employment market for every available job. There is a staggering backlog of discouraged workers who would show up tomorrow if there were a job to be had.
The many millions of new jobs needed to make a real dent in the employment crisis are not going to materialize by themselves. Mr. Obama and the Democrats don't seem to understand that.
2/21-22/2010 massive economywide downsizing (scan down prior to 12/08/2004 for inclusion of all MEGA corporate downsizings in major newspapers, and prior to 2/10/2004 for inclusion of ALL corporate downsizings in major newspapers) -
- The New Poor - Millions of unemployed face years without jobs - Economists fear recovery will leave more behind than in past recessions [later toned down to:] - Despite Signs of Recovery, Chronic Joblessness Rises, by Peter S. Goodman, 8/21 New York Times, A1, via nytimes.com
The New Poor - Trading Down - Articles in this series will examine the struggle to recover from the widespread strains of the Great Recession.
“There are no bad jobs now. Any job is a good job,” said Jean Eisen, who became unemployed more than two years ago. (photo caption)
BUENA PARK, Calif. — Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.
Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.
Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.
Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.
Here in Southern California, Jean Eisen has been without work since she lost her job selling beauty salon equipment more than two years ago. In the several months she has endured with neither a paycheck nor an unemployment check, she has relied on local food banks for her groceries.
She has learned to live without the prescription medications she is supposed to take for high blood pressure and cholesterol. She has become effusively religious — an unexpected turn for this onetime standup comic with X-rated material — finding in Christianity her only form of health insurance.
“I pray for healing,” says Ms. Eisen, 57. “When you’ve got nothing, you’ve got to go with what you know.”
Warm, outgoing and prone to the positive, Ms. Eisen has worked much of her life. Now, she is one of 6.3 million Americans who have been unemployed for six months or longer, the largest number since the government began keeping track in 1948. That is more than double the toll in the next-worst period, in the early 1980s.
Men have suffered the largest numbers of job losses in this recession. But Ms. Eisen has the unfortunate distinction of being among a group — women from 45 to 64 years of age — whose long-term unemployment rate has grown rapidly.
In 1983, after a deep recession, women in that range made up only 7 percent of those who had been out of work for six months or longer, according to the Labor Department. Last year, they made up 14 percent.
Twice, Ms. Eisen exhausted her unemployment benefits before her check was restored by a federal extension. Last week, her check ran out again. She and her husband now settle their bills with only his $1,595 monthly disability check. The rent on their apartment is $1,380.
“We’re looking at the very real possibility of being homeless,” she said.
Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces — some embedded in the modern-day economy, others unique to this wrenching recession — might make it especially difficult for those out of work to find their way back to their middle-class lives.
Labor experts say the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people officially jobless, even a vigorous recovery is likely to leave an enormous number out of work for years.
Some labor experts note that severe economic downturns are generally followed by powerful expansions, suggesting that aggressive hiring will soon resume. But doubts remain about whether such hiring can last long enough to absorb anywhere close to the millions of unemployed.
A New Scarcity of Jobs
Some labor experts say the basic functioning of the American economy has changed in ways that make jobs scarce — particularly for older, less-educated people like Ms. Eisen, who has only a high school diploma.
Large companies are increasingly owned by institutional investors who crave swift profits, a feat often achieved by cutting payroll. The declining influence of unions has made it easier for employers to shift work to part-time and temporary employees. Factory work and even white-collar jobs have moved in recent years to low-cost countries in Asia and Latin America. Automation has helped manufacturing cut 5.6 million jobs since 2000 — the sort of jobs that once provided lower-skilled workers with middle-class paychecks.
“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”
During periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year, according to an analysis of Labor Department data by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a research firm. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.
“The pace of job growth has been getting weaker in each expansion,” Mr. Achuthan said. “There is no indication that this pattern is about to change.”
Before 1990, it took an average of 21 months for the economy to regain the jobs shed during a recession, according to an analysis of Labor Department data by the National Employment Law Project and the Economic Policy Institute, a labor-oriented research group in Washington.
After the recessions in 1990 and in 2001, 31 and 46 months passed before employment returned to its previous peaks. The economy was growing, but companies remained conservative in their hiring.
Some 34 million people were hired into new and existing private-sector jobs in 2000, at the tail end of an expansion, according to Labor Department data. A year later, in the midst of recession, hiring had fallen off to 31.6 million. And as late as 2003, with the economy again growing, hiring in the private sector continued to slip, to 29.8 million.
It was a jobless recovery: Business was picking up, but it simply did not translate into more work. This time, hiring may be especially subdued, labor economists say.
Traditionally, three sectors have led the way out of recession: automobiles, home building and banking. But auto companies have been shrinking because strapped households have less buying power. Home building is limited by fears about a glut of foreclosed properties. Banking is expanding, but this seems largely a function of government support that is being withdrawn.
At the same time, the continued bite of the financial crisis has crimped the flow of money to small businesses and new ventures, which tend to be major sources of new jobs.
All of which helps explain why Ms. Eisen — who has never before struggled to find work — feels a familiar pain each time she scans job listings on her computer: There are positions in health care, most requiring experience she lacks. Office jobs demand familiarity with software she has never used. Jobs at fast food restaurants are mostly secured by young people and immigrants.
If, as Mr. Sinai expects, the economy again expands without adding many jobs, millions of people like Ms. Eisen will be dependent on an unemployment insurance already being severely tested.
“The system was ill prepared for the reality of long-term unemployment,” said Maurice Emsellem, a policy director for the National Employment Law Project. “Now, you add a severe recession, and you have created a crisis of historic proportions.”
Some poverty experts say the broader social safety net is not up to cushioning the impact of the worst downturn since the Great Depression. Social services are less extensive than during the last period of double-digit unemployment, in the early 1980s.
On average, only two-thirds of unemployed people received state-provided unemployment checks last year, according to the Labor Department. The rest either exhausted their benefits, fell short of requirements or did not apply.
“You have very large sets of people who have no social protections,” said Randy Albelda, an economist at the University of Massachusetts in Boston. “They are landing in this netherworld.”
When Ms. Eisen and her husband, Jeff, applied for food stamps, they were turned away for having too much monthly income. The cutoff was $1,570 a month — $25 less than her husband’s disability check.
Reforms in the mid-1990s imposed time limits on cash assistance for poor single mothers, a change predicated on the assumption that women would trade welfare checks for paychecks.
Yet as jobs have become harder to get, so has welfare: as of 2006, 44 states cut off anyone with a household income totaling 75 percent of the poverty level — then limited to $1,383 a month for a family of three — according to an analysis by Ms. Albelda.
“We have a work-based safety net without any work,” said Timothy M. Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin, Madison. “People with more education and skills will probably figure something out once the economy picks up. It’s the ones with less education and skills: that’s the new poor.”
Here in Orange County, the expanse of suburbia stretching south from Los Angeles, long-term unemployment reaches even those who once had six-figure salaries. A center of the national mortgage industry, the area prospered in the real estate boom and suffered with the bust.
Until she was laid off two years ago, Janine Booth, 41, brought home roughly $10,000 a month in commissions from her job selling electronics to retailers. A single mother of three, she has been living lately on $2,000 a month in child support and about $450 a week in unemployment insurance — a stream of checks that ran out last week.
For Ms. Booth, work has been a constant since her teenage years, when she cleaned houses under pressure from her mother to earn pocket money. Today, Ms. Booth pays her $1,500 monthly mortgage with help from her mother, who is herself living off savings after being laid off.
“I don’t want to take money from her,” Ms. Booth said. “I just want to find a job.”
Ms. Booth, with a résumé full of well-paid sales jobs, seems the sort of person who would have little difficulty getting work. Yet two years of looking have yielded little but anxiety.
She sends out dozens of résumés a week and rarely hears back. She responds to online ads, only to learn they are seeking operators for telephone sex lines or people willing to send mysterious packages from their homes.
She spends weekdays in a classroom in Anaheim, in a state-financed training program that is supposed to land her a job in medical administration. Even if she does find a job, she will be lucky if it pays $15 an hour.
“What is going to happen?” she asked plaintively. “I worry about my kids. I just don’t want them to think I’m a failure.”
On a recent weekend, she was running errands with her 18-year-old son when they stopped at an A.T.M. and he saw her checking account balance: $50.
“He says, ‘Is that all you have?’ ” she recalled. “ ‘Are we going to be O.K.?’ ”
Yes, she replied — and not only for his benefit.
“I have to keep telling myself it’s going to be O.K.,” she said. “Otherwise, I’d go into a deep depression.”
Last week, she made up fliers advertising her eagerness to clean houses — the same activity that provided her with spending money in high school, and now the only way she sees fit to provide for her kids. She plans to place the fliers on porches in some other neighborhood.
“I don’t want to clean my neighbors’ houses,” she said. “I know I’m going to come out of this. There’s no way I’m going to be homeless and poverty-stricken. But I am scared. I have a lot of sleepless nights.”
For the Eisens, poverty is already here. In the two years Ms. Eisen has been without work, they have exhausted their savings of about $24,000. Their credit card balances have grown to $15,000.
“I don’t know how we’re still indoors,” she said.
Her 1994 Dodge Caravan broke down in January, leaving her to ask for rides to an employment center.
She does not have the money to move to a cheaper apartment.
“You have to have money for first and last month’s rent, and to open utility accounts,” she said.
What she has is personality and presence — two traits that used to seem enough. She narrates her life in a stream of self-deprecating wisecracks, her punch lines tinged with desperation.
“See that,” she said, spotting a man dressed as the Statue of Liberty. Standing on a sidewalk, he waved at passing cars with a sign advertising a tax preparation business. “That will be me next week. Do you think this guy ever thought he’d be doing this?”
And yet, she would gladly do this. She would do nearly anything.
“There are no bad jobs now,” she says. “Any job is a good job.”
She has applied everywhere she can think of — at offices, at gas stations. Nothing.
“I’m being seen as a person who is no longer viable,” she said. “I’m chalking it up to my age and my weight. Blame it on your most prominent insecurity.”
Two Incomes, Then None
Ms. Eisen grew up poor, in Flatbush in Brooklyn. Her father was in maintenance. Her mother worked part time at a company that made window blinds.
She married Jeff when she was 19, and they soon moved to California, where he had grown up. He worked in sales for a chemical company. They rented an apartment in Buena Park, a growing spread of houses filling out former orange groves. She stayed home and took care of their daughter.
“I never asked him how much he earned,” Ms. Eisen said. “I was of the mentality that the husband took care of everything. But we never wanted.”
By the early 1980s, gas and rent strained their finances. So she took a job as a quality assurance clerk at a factory that made aircraft parts. It paid $13.50 an hour and had health insurance.
When the company moved to Mexico in the early 1990s, Ms. Eisen quickly found a job at a travel agency. When online booking killed that business, she got the job at the beauty salon equipment company. It paid $13.25 an hour, with an annual bonus — enough for presents under the Christmas tree.
But six years ago, her husband took a fall at work and then succumbed to various ailments — diabetes, liver disease, high blood pressure — leaving him confined to the couch. Not until 2008 did he secure his disability check.
And now they find themselves in this desert of joblessness, her paycheck replaced by a $702 unemployment check every other week. She received 14 weeks of benefits after she lost her job, and then a seven-week extension.
For most of October through December 2008, she received nothing, as she waited for another extension. The checks came again, then ran out in September 2009. They were restored by an extension right before Christmas.
Their daughter has back problems and is living on disability checks, making the church their ultimate safety net.
“I never thought I’d be in the position where I had to go to a food bank,” Ms. Eisen said. But there she is, standing in the parking lot of the Calvary Chapel church, chatting with a half-dozen women, all waiting to enter the Bread of Life Food Pantry.
When her name is called, she steps into a windowless alcove, where a smiling woman hands her three bags of groceries: carrots, potatoes, bread, cheese and a hunk of frozen meat.
“Haven’t we got a lot to be thankful for?” Ms. Eisen asks.
For one thing, no pinto beans.
“I’ve got 10 bags of pinto beans,” she says. “And I have no clue how to cook a pinto bean.”
Local job listings are just as mysterious. On a bulletin board at the county-financed ProPath Business and Career Services Center, many are written in jargon hinting of accounting or computers.
“Nothing I’m qualified for,” Ms. Eisen says. “When you can’t define what it is, that’s a pretty good indication.”
Her counselor has a couple of possibilities — a cashier at a supermarket and a night desk job at a motel.
“I’ll e-mail them,” Ms. Eisen promises. “I’ll tell them what a shining example of humanity I am.”
A version of this article appeared in print on February 21, 2010, on page A1 of the New York edition.
1/07/2010 economywide downsizing -
- [Here's an article that illustrates just how primitive, varied and unreliable are our techniques for gathering the most important and basic data in our economy -]
Job losses continue, ADP surveys suggest, by Justin Lahart, Wall Street Journal (WSJ), A2.
Figures released Wednesday suggest the U.S. economy continued to shed jobs last month, but some economists doubted their accuracy.
[Before we 'go off' on last month's figures, let's note, from another article, that "The private-sector has shed jobs for 23 months in a row." from "Private sector sheds 84,000 jobs in December, ADP says," by Rex Nutting, MarketWatch.com.]
Payroll company Automatic Data Processing Inc. and forecasters Macroeconomic Advisers reported that their surveys indicate 84,000 private-sector jobs were lost in December. If the government job count is unchanged, that implies Friday's Labor Department report could be more negative than most forecasters expect. Economists surveyed by Dow Jones Newswires estimated that 10,000 jobs were lost in December, about the same as November's 11,000-job drop.
The ADP report, which is based on the roughly 430,000 businesses for which the company processes payrolls, has been off the mark recently. Last month, for example, it reported that private-sector payrolls fell by 169,000 in November; two days later, the Labor Department reported the economy lost 18,000 private-sector jobs. ADP figures for November were revised upward Wednesday.
Macroeconomic Advisers' Joel Prakken conceded that the economic model behind the ADP report may lag behind the official figures. But he said it may be that the government's figures are less accurate, and eventual revisions will make the ADP numbers look better.
[Who has the most incentive to rosy up the figures? Here they are, side by side:
Nov.2009: ADP 169,000; Challenger 50,349; LaborDept 18,000
Dec.2009: ADP 84,000; Challenger 45,094; LaborDept 85,000
So the Labor Dept. has probably been undercounting.]
Meanwhile, the Institute for Supply Management said its nonmanufacturing index, based mainly on commentary from service-sector companies, rose to 50.1 in December, up from 48.7 in November. A number above 50 represents economic expansion in the nonmanufacturing sector.
Write to Justin Lahart at email@example.com
7/28/2009 economywide downsizing -
- Joblessness: Friend or foe to markets?
WSJ, C1 pointer to C12.
Help wanted for market recovery - Are markets taking too rosy a view of unemployment?, by Richard Barley, WSJ, target article C12.
Joblessness is usually seen as a lagging rather than a leading economic indicator.
[Well yeah if you've ignored the previous 30 years of downsizing. How in the world did this fallacy arise and take root in mainstream economics? It can only have come from the same kind of disconnected thinking that gave us the title and pre-title to this article. Unemployment GOOD for markets?? Well, I guess if you can imagine "jobless recoveries" you can imagine buyerless markets. These are the same people who hold up overpopulated and ecodisastrous China as The Future, cuz they believe big population means big markets, never mind lack of spending power. It all stems from money-insulated and -insolated investors who believe that any amount of investing power is good for an economy, no matter what percentage of total money supply it reaches. 100%? Nothing circulating? No consumer base? GREAT! So these are the bozos that have been rewarding downsizing companies for decades by driving up their stock prices. They have bought all the bull about lean and mean and rightsizing and unlimited CEO 'compensation.' Because, they, the investors, are the base and foundation of the economy, so give them the whole thing if you can, as quickly as you can. Result? depression. But they own the media and live in gated communities so they can spin it as 'recovery just around the corner' till the cows come home.]
In the last two U.S. downturns, firms continued shedding jobs for months after the recession was officially over.
[Does Richard Barley think of maybe questioning the "officially" part? No-o-o.]
Typically, companies only start hiring in earnest once a recovery is clearly under way.
[ie: when investors are launched on their next New Economy bubble where they stop thinking of returns for awhile?]
But this time, unemployment may play a bigger role in determining the timing and shape of recovery.
[Because investors have put off reality for so long, there's just a buildup of an unprecedented number of crises.]
Markets are betting the old orthodoxy still holds sway.
[But then they've got such an elephantiasis of the money supply, they literally have NO ALTERNATIVE if they want to put it somewhere other than the mattress.]
Unemployment has climbed quickly. The U.S. rate hit 9.5% in June. That is higher than at any point since 1983 and, up from 5.6% a year earlier, represents one of the steepest annual increases on record. In the euro zone, May's 9.5% rate was the highest in 10 years. The Organization for Economic Cooperation and Development forecasts rates of 10% in the U.S. and more than 12% in the euro zone in 2010.
[Our current jerry-built economic design has a serious problem with balancing the peacetime centripetal forces on money, and no recent wars have been big enough to alter the general peacetime phenomenon of an accelerating concentration of the money supply in the topmost brackets - they just ain't killing enough advanced-economy population to get the magic wartime (erstwhile plaguetime) labor shortage that alone disciplines the super-rich and spreads out the peacetime black hole of income and wealth to the people who actually need and want to spend most of it. Well, plagues used to work this way too, but our meds got too good. Now our weapons have got too good. Brilliant. Our weapons are enabling the destruction of too few Americans, and our CEOs are enabling the market-demanded creation of too few jobs, despite all their rhetoric about "technology creates more jobs than it destroys." At a time when we should all be living in heaven, these status-laddering robominded number crunchers are holding everyone down in hell. Growth by downsizing? You buy that long enough and you get what we got = The End of Prosperity. Unless... We quit struggling to fill a prehistoric 40-hour workweek and just share the vanishing yet-unautomated employment however short a workweek it takes.]
But that hasn't stopped equity markets rallying strongly, amid growing hopes of an economic recovery this year. That is partly because job losses and other cost cuts have provided a cushion for corporate profits.
[Never mind après next quarter, le DELUGE!]
According to Deutsche Bank's calculations, 82% of the S&P 500 companies to report so far have beaten second-quarter earnings expectations. The snag is that only 50% have beaten sales targets.
[They manage to have ignored past performance history in favor of manipulable expectations, but somehow they haven't quite managed to ignore sales targets - yet.]
For the moment, earnings are only being held up by costs shrinking fast alongside revenue.
[So this is a stylish "faux recovery"?]
For a true recovery, sales need to start growing, too.
[Naw, really? Who says?!]
Rising unemployment may make that harder to achieve.
[Now whyever would anyone think that? Unemployment doesn't matter - it's all about INFLATION - OH NO-O-O!]
First, the flip side of better-than-expected corporate profits is real financial and consumer pain.
[This is not a necessary correlation - this is the dark side of immediate and temporary/unsustainable short-term corporate profits based on a total disregard for one's short-term and long-term markets.]
U.S. credit-card bad debt, for example, is rising faster than unemployment.
[But "debt is goood." Clinton had "too small a national debt as a percentage of GDP"! Now we've "corrected" that - things are PERFECT!]
Annualized write-offs of securitized credit-card debt hit a record 10.8% in June, according to Moody's. The agency expects that to rise to 12% to 13% in mid-2010.
["Eat, drink and be merry..."]
In Europe, Fitch's U.K. credit-card charge-off index hit a record high of 9% in April. Historically, investors have assumed a one-percentage-point increase in unemployment leads to a one-percentage-point increase in bad credit-card debt.
[Whoa, a mention of history - but only in the context of Europe, so, forgiveable.]
But the pace of job losses and scale of debt levels mean nobody is confident [that] previous correlations will hold. Similarly, rising unemployment could hit house prices again, causing further turmoil for mortgage-backed securities.
[As if they aren't good enough at generating enough of their own toxic and NINJA turmoil.]
Meanwhile, high joblessness also is likely to weigh on consumer sentiment.
[Oh who cares about that?! - "quirky consumers!"]
Nearly 60% of U.S. consumers expect high unemployment to persist over the next several years, the University of Michigan reported Friday. That could shape behavior.
[Yes, blame the victims! Those d*mn consumers - it's just their negativity that is prolonging this downturn - never mind their whining about joblessness and wagelessness and moneylessness and creditline topout.]
Federal Reserve Chairman Ben Bernanke warned last week that unemployment could weigh on consumer spending.
[Ah jess luuuv that maayaan! He is seCH a genius. Think of the years of eddykayshun and fraud he hadda go through to come up with brilliant insights lak thet!]
That leaves the risk of a nasty feedback loop: Continued downward pressure on sales provides further impetus for companies to cut jobs, leading to more losses on consumer debt -- and more economic pain.
["Risk"? We'd say it was a Sure Thing.]
Write to Richard Barley at firstname.lastname@example.org
7/23/2009 economywide downsizing -
- Job cuts outpace GDP fall - Break from historical pattern suggests unemployment could weigh on recovery, by Jon Hilsenrath & Deborah Solomon, WSJ, A3.
[This article exemplifies the tendency of contemporary economists to regard employment as a sidecar to the main economy - an annex - an optional add-on or extra - whereas employment is actually the basis and foundation of all the rest of the economic system including money itself, which symbolizes the average value of an average citizen's average accountable time unit.]
WASHINGTON - The job market is doing even worse than the overall economy
[as if the job market isn't the root and trunk of the overall economy!],
prompting concern inside and outside the government that deeper-than-expected joblessness could persist once the recession ends.
[I.e., "deeper than" spinnable as ignorable? Note the fantasy that a recession can really end without full employment, that such a contradiction or oxymoron as a "jobless recovery" can ever be anything more than superficial cheerleading rather than deep-structure sustainability.]
Breaking from historical patterns, the unemployment rate -- currently at 9.5% -- is one to 1.5 percentage points higher than would be expected under one economic rule of thumb, says Lawrence Summers, President Barack Obama's top economic adviser.
[And what "one economic rule of thumb" would that be, pray tell? Bad writing. These 'journalists' do not tell us until much later (below) - look for "Okun's Law" in bold print.]
Since the recession began in December 2007, the economy has lost 6.5 million jobs, 4.7% of total employment. The unemployment rate has jumped five percentage points, while the economy [ie: the GDP] has contracted by roughly 2.5%.
[This is merely an indication of how distorted and rosily biassed our main economic indicator (GDP) still is.]
In recent days, Mr. Summers, White House budget director Peter Orszag and Fed Chairman Ben Bernanke have all talked publicly about the unusual disconnect between growth and employment. Stubborn unemployment could be a political problem for Mr. Obama, who pushed hard for a $787 billion stimulus plan this year and has already been criticized by Republicans for failing to stem the rise in the joblessness.
[You cannot increase employment by transfering money to the richest. They spend the tiniest percentage of their income of any of the brackets.]
Though today's disparity between [spindoctored but unfounded] growth and jobs is especially stark, a jobless recovery wouldn't be new [or real]: The past two recessions were marked by firms reluctant to resume hiring right away after demand recovered ["demand" for what and from whom?]. The current disconnect could reflect an unanticipated surge in productivity -- companies finding ways to increase output with fewer workers.
[Such output would be unmarketable without a parallel surge in employment and wages]
That could set up the economy to 'grow' rapidly in future years [our quotes]. Rising productivity is the linchpin of economic growth and rising living standards.
[No-o-o. rising marketable productivity is the linchpin of economic growth and rising employment and wages are the linchpin of rising living standards.]
But there are darker scenarios. Struggling workers, whose wages also are being squeezed, could drag a fragile economy back into deep recession.
[This language is getting close to "blaming the victims."]
"Final demand and production have shown tentative signs of stabilization," Mr. Bernanke told lawmakers this week as part of the Fed chairman's semiannual report to Congress.
[What if "final demand" b2b is not supported by initial demand c2b? - as the next statement suggests -]
"The labor market, however, has continued to weaken."
Job insecurity could lead consumers to further pull back spending, he said, calling it "an important risk to the outlook."
["Could" lead? - we'd say "certainly will lead" - it's a given!]
The latest data imply productivity is pushing higher.
["Imply"?? And again, productivity is meaningless unless it's marketable productivity.]
Macroeconomic Advisers, a St. Louis forecaster, estimates productivity grew at a rapid 5% annual rate in the second quarter. While painful for workers who lose jobs, advances in productivity could help get the economy on steadier footing.
[Not when management uses advances in productivity to downsize the markets for that same productivity, instead of timesizing the markets, which maintains or upsizes them and gives employees more time to shop.]
When productivity rose in the 1990s -- thanks partly to technological advances -- the economy boomed, lifting wages.
[Where's the evidence to back up these assertions? Real wages have been falling since the late 1970s, and there is no evidence that productivity lifts wages, except CEOs' "wages." Quite the contrary, the evidence is all on the side of productivity followed by downsizing (instead of timesizing) depressing wages by worsening the general labor surplus.]
Some companies are reaping gains as they clamp down on labor costs.
[Think about it. This is an inherently temporary, market-weakening and company-shrinking strategy to "reap gains."]
While corporate profits are down from a year ago, many of the biggest companies reporting income figures for the second quarter are ahead of expectations because they have cut costs so aggressively.
[Or because they have set such low expectations!]
Caterpillar Inc. this week raised its profit forecast for the year, crediting cost-cutting efforts. The company's second-quarter profits were $371 million, down from $1.106 billion a year earlier, but it said it squeezed operating costs by $4.5 billion from a year earlier. Layoffs and early retirements have reduced its work force this year by 17,100,
[- reduced its workforce AND its customers' customers, because its workforce IS its customers' customers.]
15% of the total, and it is instituting "rolling layoffs" in which it has been furloughing workers a few weeks at a time.
[Furloughing workers a few weeks at a time is one way of timesizing, not downsizing, and when companies like Caterpillar switch exclusively to that, this recession will bottom out and not a moment before that - except in the imaginations of our concentrated media ownership.]
"When the economy turns around and demand picks up, we're much better suited to ramp back up because we're not looking at bringing on many new people and getting them up to speed," says Jim Dugan, a Caterpillar spokesman.
[Economies don't "turn around and demand pick up" UNTIL plenty of companies bring on many new people and get them up to speed.]
Kellogg Co. said in May that net income for its first quarter rose 1.3% as cost-cutting offset falling revenue.
[Cost cutting is like governments that sell off public assets - you can only sweeten your accounts once that way, then those assets are gone.]
International Business Machines Corp. said second-quarter profit rose 12% despite falling revenue. The secret: It is cutting costs by $3.5 billion this year.
[Keep pouring that profit into the pockets of the top executives and investors who were already spending all they cared to before they got the last $10 million and next quarter you'll have an even harder time cooking the books to pull profit out of the shrinking hat.]
For now, administration officials are taking a wait-and-see approach, and they insist they have no plans to push new measures to counteract job losses.
[Thank God if all they can think of is transfering billions to the topmost brackets and tightening the strangulation of spending. They should be stepping through the Timesizing program, starting at Phase One.]
Officials say the $787 billion economic-stimulus package will have a bigger impact over the next six months.
[No it won't.]
The "two-year program that we put in place was one that had gathering and increasing force over time," Mr. Summers said in an interview.
The disparity between the job market and economic growth has other important implications. For Fed officials, it implies that there will be little upward pressure on prices and wages -- in other words, little inflationary pressure -- giving officials reason to hold off on raising interest rates any time soon.
[No upward wages for the "bottom" 90% of the population? No increased spending and demand and no recovery!]
Employers' unusual behavior seems to have intensified as the economy has stabilized.
[It hasn't stabilized at the deep structure level where downsizing is still common.]
When the government releases its estimate of second-quarter gross domestic product [GDP] next week, economists expect it will show a contraction of less than 2% at an inflation-adjusted annual rate. During the same three months, employers cut payrolls at an annual rate of more than 4%, eliminating 1.3 million more jobs.
[At last we get the figures. Bad writing.]
That kind of disconnect violates an economic rule of thumb called Okun's Law, after the late economist Arthur Okun, which holds that every two-percentage-point drop in the economic[GDP]-growth rate corresponds with a one-percentage-point rise in the unemployment [UE] rate.
[Fine except is it clear that the rise in UE leads and causes the growth drop?]
In most downturns since World War II, businesses were slow to reduce their work forces in response to inventory buildups or slowing sales. In the recessions of the early 1990s and the early 2000s, though, businesses moved more quickly to cut early in the downturn and were slow to rehire.
[Thereby deepening and prolonging the downturns and making them cumulative and making it ever more difficult to define and claim a recovery was occurring.]
"You certainly have the impression that businesses in general have learned to slash payrolls and employment faster than in the past," said Paul Volcker, the former Fed chairman and an economic adviser to Mr. Obama. "There's been a steep decline in business activity without the conventional impact on profits.
[That's because our brand of capitalism has turned seriously suicidal - we incentivate growth and we incentivate failure - Chainsaw Dunlap destroyed companies such as Sunbeam - all the way to the bank.]
Somehow, companies have managed to keep productivity higher than you might have thought given economic activity."
[Again, productivity is meaningless unless it's marketable, and it's always billed as "very hard to quantify" anyway - conveniently enough for CEOs and directors desperate to seem worth the huge salaries and bonuses they keep voting one another.]
Write to Jon Hilsenrath at email@example.com and Deborah Solomon at firstname.lastname@example.org
6/04/2009 economywide downsizing -
4/12/2009 economywide downsizing -
- Steel maker plans deep layoffs in Spain, by David Jolly, NYT, B6.
AcelorMittal, the world's largest steel maker, said Wednesday that the Spanish government had granted it permission to lay off a major part of its work force in Spain, another sign of retrenchment in a country that already has the highest jobless rate in Europe...18.1% in April, and nearly double Europe's average of 9.2%..\..
The government approved a business plan giving the company the flexibility to temporarily lay off as many of its 12,000 Spanish employees as it needs to reduce European capacity in line with falling demand for steel.
The layoffs would run until the end of the year and could be extended to June 1, 2010, if economic conditions warrant.
[Unemployment insurance -]
All laid-off workers will receive at least 90% of the gross salaries, with part of that amount paid by the government.
The company did not say how many employees it intended to idle, but it said it could cut the total hours worked at maximum, by 40% at its Spanish plants....
[ArcelorMittal - and Spain - should quit screwing around with unemployment insurance and other corporate and government backbends and just institute fluctuating adjustment of the workweek against under-employment - aka timesizing. Hold the private sector's feet to the fire to employ and finance their own markets on a sustainable, ongoing, fluctuating-workweek basis = 'timesizing.' Arcelor is already practicing primitive timesizing in the Ukraine (see 6/04/2009 #2).]
- The ripple effect of 400 layoffs - Following the ripples between an Etobicoke factory and a 70-year-old woman in Trinidad, THE TORONTO STAR, A1.
[Click *here for The Ripple Effect: Interactive Graphic - Trickle-down economics: The economic turbulence created when Owens-Illinois closed.]
Stephen Harris delivers flowers for 20 florists in the Hamilton area and has felt the effects of the closure of a glass container plant in Etobicoke. [photo caption]
How does an economy crash? It takes more than plant closures and company layoffs, even dozens of them. It is the secondary fallout from those closures - usually unseen, often far away - that wreak true havoc.
A factory closes its doors in Etobicoke, a 70-year-old woman shortens her grocery list in Trinidad.
A machinist loses his job in Oakville. A Mississauga hairstylist loses a colouring session. A restaurateur loses a weekly dinner, a travel agent loses a yearly booking, a charity loses a monthly donation.
On Sept. 30, the world's largest manufacturer of glass containers, Owens-Illinois Inc., closed its plant on Kipling Ave. in Toronto. About 400 employees lost their jobs.
They made more than $20 per hour preparing Owens-Illinois containers to be filled with food, juice and alcohol. Many have only high school diplomas; many are immigrants. In a city in which manufacturing jobs have become endangered, their futures are uncertain.
But they are not the only victims of the shutdown. The Kipling plant did business with the makers of boxes and machines, with electrical contractors and trucking companies. Its employees spent on restaurant dinners and after-work drinks, vacations and gifts, homes and cars.
The closure of the plant was not the butterfly wing-flap that caused calamitous damage to a seemingly unconnected firm.
Yet, in ways big and small, obvious and imperceptible, it affected dozens of recession-battered companies: multinationals like Ford, from which laid-off Amey Liddell was planning to buy a new sedan; local manufacturers like Oakville's Northpoint Industries, which annually sold the plant about $300,000 worth of packaging equipment; stores like Jean's Flower Shop, which lost about $150 when six laid-off workers bought a single funeral bouquet together instead of each purchasing their own.
The struggles of Jean's Flower Shop hurt Stephen Harris, whose company delivers its bouquets. The struggles of Steve's Delivery hurt its six employees. Their struggles affect the golf courses they play, the airlines they fly, the contractors they hire.
"If we start cutting ... it's like a chain reaction," says Jorge Gonzalez, a former forklift operator at the Owens-Illinois plant.
This is the ripple effect: the layoff-to-cutback, cutback-to-layoff cycle that connects unwitting strangers as it produces and sustains a recession.
- A look inside ... the ripple effect, by Daniel Dale and Brett Popplewell, THE TORONTO STAR, A8-9.
Owens-Illinois Inc., the world's largest manufacturer of glass containers, shut down its plant on Kipling Ave. on Sept. 30, 2008, throwing about 400 employees out of work. Those employees now are struggling to make do with less money in their pockets, in turn affecting other businesses such as restaurants, car dealers, hair salons and delivery services. Some have even had to stop sending money to relatives in their native lands [oh horror! - their native lands may have to 'find their own feet' and stand on their own feet in the ecological age - parasitizing other economies does not sound like a sustainable strategy]. [photo caption]
How does an economy crash? It takes more than plant closures and company layoffs, even dozens of them. It is the secondary fallout from those closures — usually unseen, often far away — that wreak true havoc. A look inside ...
When the Owens-Illinois plant on Kipling Ave. shut down last September, Oakville's Northpoint Industries lost about $350,000 in annual revenue.
Northpoint, a 22-employee manufacturer of automatic packaging equipment, was also hurt by the closure of two other Owens-Illinois plants in Canada last year. It eliminated its afternoon shift in December, laying off seven employees.
"I think of that as seven families," says vice-president operations John Ingleson.
With business down between 25 per cent and 30 per cent, Northpoint cannot afford to fill vacant positions, says founder and vice-president manufacturing Steve Constantin, 43.
The loss of business also means that Constantin, a married father of three, has cut his personal spending.
"I'm just like anybody else. I'm trying to protect everything I have ... and your employees are going through the same thing, so it's not like you want to be flaunting things or doing things or enjoying yourself and going places while they're suffering or you're making cutbacks."
The trucks of Hamilton's Fluke Transportation Group made between 10 to 15 deliveries per day from the Owens-Illinois plant to bottling companies across the GTA.
When Fluke executives learned of the pending shutdown, they sought new customers to minimize the damage. Six months after the plant ceased operating, Fluke vice-president Kevin Hagen said business was still down about 4 per cent. He later said the company had managed to replace the lost business.
"There certainly is a ripple-down effect," says Hagen. "When our customers go down, we go down."
The company did not lay off any of its 140 drivers, but reduced spending in other ways. Plans to hire new drivers and buy new trucks have been postponed.
"We're trying to hang on and be responsible in whatever way we can," Hagen says.
"That means three-year-old trucks which might have been turned in for new trucks by now are being driven on into their fourth year."
THE MUSKET RESTAURANT
In the 30 years he has operated The Musket Restaurant, Helmut Enser has never seen his business this bad.
"We're still here, but sometimes the people, they are not," says the German-born restaurateur.
At lunchtime on St. Patrick's Day – traditionally a busy day for bars – there were only four people in the German-themed pub and eatery. A short walk from the plant, it had been well used by Owens-Illinois employees.
"I had to cut back on my staff's hours by about 20 per cent," says Enser, 67, as his wife serves a meal prepared by his son to one of the customers. "With a big business like Owens-Illinois gone, you feel it very fast. All of a sudden you're down."
With revenue also down 20 per cent, Enser orders less food. His 17 servers, cooks and other staff take home fewer tips.
December was the slowest month he can remember. It did not help that The Musket lost one more piece of business that month – the annual Owens-Illinois Christmas party.
BUNS MASTER BAKERY AND DELI
Every weekday, about 15 Owens-Illinois employees walked a block to Buns Master for lunch. "Even if they each spent $5, so $75 a day, that added up over a week," says owner Shafiq Jamani, 29.
With sales down 30 per cent, Jamani has reduced his monthly purchasing of food supplies from $30,000 to $18,000, hurting his suppliers. And he eliminated eight to 10 hours from the weekly schedules of four employees. He and wife Shama, who works with him, have also begun "penny-pinching" in their personal lives.
"Retail is totally different now. Growing up, I worked for my father and my uncle. They were able to buy a house, afford a mortgage, buy a Honda Accord (with) cash. Now we're buying on finance. If we're buying a mattress, we're financing."
He loves his job. But he has reconsidered the long-term ambitions he held when he bought the store in 2005, now contemplating a "three-to-five-year game plan to build up the business and then sell.
"I would like to renovate ... but I don't have the cash to do it."
Danijela Cabraja, 29, was laid off from Owens-Illinois last June. Her husband, 36-year old John Muzzatti, received a pink slip from the plant three months later.
"My husband and I were talking about having kids. That was put on hold," she says.
So too were basement renovation plans, a spring trip to Croatia and countless smaller purchases. All told, Cabraja and Muzzatti figure they have withheld more than $10,000 they would normally have poured into the economy – money they used to spend at businesses like Jack Astor's, their favourite restaurant, Ren's Pets Depot, where they bought treats for their bulldog, and Home Depot, where Muzzatti acquired supplies for the now-postponed renovation.
When a former colleague's daughter died last month, Cabraja, Muzzatti and four other former workers from the plant jointly bought a $100 bouquet of roses and carnations from Jean's Flower Shop in Hamilton. In better times, they would have made separate purchases.
"We would normally have spent $250 for everybody," says Cabraja.
Every month for 10 years, Jorge Gonzalez sent $400 home to his mother in El Salvador. It allowed the 65-year-old widow to buy food, medicine, clothes, electricity, water and anything else she needed to survive.
After his September layoff, Gonzalez had to halve his remittance.
"She's having a tough time," Gonzalez, 44, says of his mother. But so is he.
With a 2-year-old son and a 10-year-old daughter, Gonzalez has been forced to cut back on his grocery bills, toys for his children and insurance on his car.
If he does not find work soon, he will have to make further reductions. But he is concerned his cutbacks are hurting others.
"If we start cutting ... it's like a chain reaction," he says. "For maybe every 1,000 people who cut their cell phone maybe someone will lose their job for that. That's not good."
When Gonzalez was working, he dined every week with friends and colleagues at Astoria Shish Kebob House on Danforth Ave. No longer.
After Dynese Rothwell was laid off from Cooper Automotive and then lost a subsequent job at Ajax Precision Manufacturing, she decided to find work outside the auto industry. "I wanted something with more stability."
In 2007, she was hired by Owens-Illinois.
That job gone, Rothwell, 41, no longer visits her dentist: without benefits, she cannot afford him. She gets her hair cut at the Young and Beauty Spa every two months rather than every three weeks.
She no longer plans to buy a Honda sedan at a local dealership. And because she will not be able to make her annual trip to Trinidad, from which she emigrated in 1988, she will deprive Mississauga Travel of a regular customer.
She plans to attend college to train as a worker for a social agency, but her outlook is gloomy.
"You need something to look forward to and you realize you have nothing. There aren't many avenues for you right now."
Her stress is compounded by her worries about her mother and sister in her native Trinidad, whom she supported with $100 weekly remittances. Those have stopped.
Dynese Rothwell's 70-year-old mother Grace lives in the central Trinidad town of Couva. She supports a 43-year-old daughter, who is unable to work for health reasons.
The $100 she received weekly from Rothwell helped pay for food and other essentials.
"She's understanding. She understands I can't afford it anymore," says Rothwell, who immigrated to Canada in 1988. "But it makes things more difficult for her."
Rothwell describes her mother, who does not work, as poor. With Rothwell out of work, she is substantially poorer.
Samuels suffered a minor stroke last year. She has high blood pressure.
Rothwell worries that she will not be able to help her sister if her mother falls seriously ill.
"I'm hoping and praying nothing happens. It's a little bit overwhelming."
THE RIPPLES CONTINUE
ASTORIA SHISH KEBOB HOUSE
Managers at Astoria Shish Kebob House on Danforth Ave. say fewer regulars are sitting down for meals. Regulars like Jorge Gonzalez.
The downward trend is "nothing dramatic," says director of operations Peter Keris. The restaurant has not cut employees' hours. But it has refrained from hiring staff for the summer, its busiest period, and now buys less pork from supplier J&W Foods of Scarborough.
Steve Trougakos, part-owner of J&W Foods, says revenue is flat – but that this is only because the company managed to find new restaurant clients in the past year.
"Otherwise, we'd be down. Our old customers are down about 10 per cent, that's for sure. Astoria is one of them. A lot of restaurants are feeling the pinch. We would be too if we hadn't expanded."
Declining sales to restaurant customers like Astoria, however, have forced the company to buy less meat from supplier Olymel of Montreal, which ships pork to J&W Foods direct from its Cornwall slaughterhouse.
JEAN'S FLOWER SHOP
"Funeral business is not down, particularly," owner Bill Dalton says with a chuckle, "because people are still going to die in a recession."
But fewer people are buying flowers for birthdays and anniversaries, "things that are maybe not a necessity." Overall business is down 10 per cent, forcing him to begin to consider reducing employees' hours.
"If it stays like this much longer," he says, "we're going to have to make some serious changes."
Dalton acquired the shop about 40 years ago from his mother, the Jean of its name. Four of his 14 employees have worked there more than 25 years.
"A big family," says Dalton.
But one facing difficult new pressures in a city in deepening economic trouble.
U.S. Steel Canada, formerly Stelco, announced a "temporary" closure of its Hamilton mill in early March.
"When the announcement came," Dalton says, "everybody started saying, 'Oh, jeez, what's going to happen to me?' That's when we really noticed that our day-to-day business wasn't there."
Which meant less business for the company that delivers its bouquets.
The transmission in one of Stephen Harris's delivery vans broke in early March. He will not get it fixed, and he will not rush to buy another van.
"I'm not hard-pressed to replace it," he says, "because of how things are going."
Harris, 60, and his six employees deliver flowers for 20 shops in and around Hamilton. He is paid per delivery; when Jean's Flower Shop suffers, so does his.
Since December, he says, business is down 20 per cent from the same period last year.
His 10-year-old company once had four drivers on the road daily. Because he now needs only three, sometimes two, he has eliminated eight to nine shifts per week and laid off one part-time employee.
His three remaining part-timers are Stelco pensioners working so they can "take an extra holiday, or pay for their golf." They will not experience hardship, he says, if he makes further cutbacks. And the positions of his three full-timers are secure.
But his seasonal business will get worse before it gets better.
"After Mother's Day," Harris says, "it really falls off."
4/11/2009 economywide downsizing -
- Layoffs have ripple effect on economy, by Doug Schorpp, Quad-City Times via qctimes.com.
Locally, companies like Deere & Co., Alcoa, HNI and Sears Manufacturing combined have laid off hundreds of workers.
“It definitely has a ripple effect in any economy,” said Greg Rivara, a spokesman for the Illinois Department of Employment Security. “When one segment of the economy falters, it will affect others, whether it be a supplier or the restaurant that the workers used to patronize when times were better.
“It is important for a community to recognize, everything is tied together and does affect the other. It can be a challenge to stay positive.”
Mike Whalen remains optimistic despite obvious downtrends in his industry. He is the founder and president of Heart of America Restaurants & Inns, a group of more than 30 restaurants and hotels in the Midwest, including The Machine Shed, Johnny’s Italian Steakhouse, Thunder Bay Grille and Gramma’s Kitchen in the Quad-Cities.
“January was the worst month I have seen in the hotel business,” he said. “I think we were down 25 to 26 percent, but now it is coming back. When you are down 26 percent in January, for a hotel, that is catastrophic. That is just plain ugly.
“The national restaurant figures are down. The quick-casual (restaurant) industry is hit the most. McDonald’s and other fast-food places have done better. But as people are told we are not going to have the next Great Depression, we will see this area come out of it.”
“For the people who lost jobs, my heart goes out to them,” Whalen said.
“I think I will appreciate things —when the economy gets better — more than I have in the past.”
[Don't hold your breath.]
Layoffs hit home
Skip McGill, president of United Steelworkers Local 105, is right in the thick of things these days, monitoring layoffs at some of the companies his bargaining unit represents, including Alcoa Davenport Works.
He feels for the people out of work and really can identify with their plight. His wife, Sue McGill, was laid off in November from her job as an office manager at a doctor’s office.
He said her medical office merged with another one and thus, did not need two office managers....
1/23/2009 economywide downsizing -
- The ripple effect of layoffs - Company layoffs keep piling up. With so many people out of work, it can have a huge ripple effect. Sadie Babits has the story of one man who is dealing with the effects of unemployment in Portland, Ore.
by Sadie Babits, 1/22 American Public Media [Radio] via marketplace.publicradio.org.
KAI RYSSDAL: Earnings reports are tricky to parse even in the best of times -- forget about when everybody's feeling stressed.
Google is today's case in point. The search engine that would rule the world reported better than expected profits today. But expectations were pretty low. In fact, today's the first time Google's profits actually fell from a year earlier. Still made money. Just not as much.
Today the Commerce Department reported the number of people filing for first-time unemployment benefits has risen to a 26-year high. That's 589,000 new people signing up for state assistance, either online or in-person, in just a single week.
Layoffs don't affect just those who lose their jobs, though. From Portland, Ore., Sadie Babits has this story about the ripple effects of so many people being out of work.
SADIE BABITS: David Bunker has had a string of bad luck lately. Last October, he lost his job as a sales manager at a title insurance company in Portland. This week on his way to a job fair, he got rear-ended. His car was totaled.
DAVID BUNKER: Being unemployed, it's opened up a whole, I guess, set of challenges that I haven't faced before.
Finding fulltime work has become a fulltime job. And Bunker is competing with some 174,000 other unemployed Oregonians.
BUNKER: I mean, I've been through quite a few recessions, and I've never experienced this many professional people out of work.
At 44, David Bunker is tightening his belt. He and he wife have cut the extras out of the household budget. Gym membership? Gone. . . . Vacations? Postponed. . . . Cell phone service? Reduced.
BUNKER: Really keeping an eye on the gas I'm spending driving around. Renegotiating terms on credit cards and/or loans that I have.
And he's nixed one of his favorite things -- going out for sushi.
BUNKER: Definitely sushi is out of the question now because it's an expensive item.
Restaurants are feeling the ripple effect of the David Bunkers of the world who are now eating at home.
SOUND OF MIO SUSHI RESTAURANT: Hello! Two?
This is Mio Sushi in Portland's Hollywood district. Jay Park is a waiter here. He says regulars aren't coming in.
JAY PARK: Customers that usually come twice a week, they started coming once a week. Sometimes they don't come at all.
Mio Sushi hasn't laid anyone off yet, but according to Oregon's state economist, when someone like David Bunker loses his job, there's usually at least one other person who also gets laid off. We find those people in a visit to a regional employment office.
The place is packed just minutes after the doors open. Amy Vander Vliet is the regional economist here. She says the latest state unemployment rate -- 9 percent for December -- is the highest rate since the mid-1980s.
AMY VANDER VLIET: And the unemployment rate tends to be a lagging indicator. So we're in for higher unemployment in the months to come because I don't think we've hit bottom yet.
In fact, computer-chip maker Intel announced this week it's closing a plant in suburban Portland. Another 1,000 people will be looking for work.
For Marketplace, I'm Sadie Babits in Portland.
Second comment on above Marketplace [NPR] segment, By Yuppie Scum.
I was so distraught when I heard Sadie Babits' story about that poor, poor man in Oregon. I mean, NO SUSHI? Postponing a vacation? A less expensive cell phone plan? OH THE HORROR! How can I get this man's address? I'd like to start a SUSHI fund in his honor. How could we let this kind of poverty continue in the wealthiest nation on Earth?
[Certainly has a point. But then, the end of empire starts from pretty luxurious heights. Maybe Sadie Babits' next story will relate more closely to millions more Americans who are belt-tightening at subsistence levels.]
3/08(sat.)/2008 2 economywide downsizing articles -
- Sharp drop in jobs adds to grim economic picture - Fed offers new low-cost loans for banks as credit tightens and stocks fall - Even the usual optimists on Wall Street concede that there's big trouble, by Edmund Andrews, NYT, front page & A9.
WASHINGTON, D.C. - The worst fears of consumers [=consumer base], investors [=investment crowsnest] and Washington officials [=puppetshow - again we ignore employees and job seekers = the employment basement] were confirmed on Friday, as deepening paralysis on Wall Street collided [ah, paralysis, being stationery, can't "collide" with anything, Ed] with stark new evidence of falling employment and a likely recession.
In a report that was far worse than most analysts [=cheerleaders] expected, the Labor Dept. estimated that the nation lost 63,000 jobs in February. It was the second consecutive monthly decline, and the third straight drop for private-sector jobs....
- End to the good times (such as they were), by David Leonhardt, NYT, front page.
If history is a reliable guide [and what else do we have?!], the recession of 2008 is now unavoidable.
The dismal jobs report released Friday showed overall employment to be lower than it was three months ago. Every time such a slump has occurred since the early 1970s, a recession has followed - or already been under way.
And if the good times have really ended, they were never really than good to begin with. Most American households are still not earning as much annually as they did in 1999, once inflation is taken into account. Since the Census Bureau began keeping records in the 1960s, a prolonged expansion has never ended without household income having set a new record.
[But unlike previously, every one of those records since 1970 was based on the wage-stagnation-motivated, spreading, further-wage-depressing, child-neglecting phenomenon of the two-income family with both parents working.]
For months, policy-makers [WHAT policy making do they do? - they only have ONE policy = interest rate cuts - how much "making" can that take???] and Wall Street economists [what do these cubicle-fillers get paid for???] have been predicting [=praying, there's nothing of scientific prediction here], and hoping, that the aggressive [ooh, sooo macho! but still floppy] series of interest rate cuts by the Federal Reserve would keep the economy growing, despite the housing bust. But the prospect seemed to diminish almost by the hour on Friday:
8:01 a.m. - Fed announced yet another measure to unlock the credit markets...
8:30 - Labor Dept. released the poor jobs report... Even the one 'good' news in the report was a mirage. Unemployment fell to 4.8% from 4.9 in Jan., but only because more people stopped looking for work and thus were not counted as unemployed by the government.\.
8:31 - economists at JPMorgan Chase reversed last week's assessment that the economy was still growing and said a recession appeared to have started earlier this year...
9:30 - markets opened and stocks fell, recovered and fell again - S&P500 closed down 0.8%....
Over the last year, the number of officially unemployed has risen by 100,000, but even that comes with a caveat: there are also 600,000 more people who are working part time because they could not find "full-time" work [our quotes], according to the Labor Dept....
[So shorter hours is happening anyway, but in the worst, wage-zeroing, market-weakening way instead of the best, wage-raising, market-strengthening way.]
3/26/2006 1 economywide downsizing article -
- The interview - Parsing the pink slip and its consequences, by Anna Mundow, interviewing Louis Uchitelle, Boston Globe.
As recently as 1989, the Oxford English Dictionary defined "layoff" as "a spell of relaxation; a period during which a workman is temporarily dismissed or allowed to leave his work." Millions of laid-off Americans know better. In "The Disposable American: Layoffs and Their Consequences" (Knopf, $25.95), Louis Ouchitelle estimates that since the early 1980s, at least 30 million people have been laid off in the United States.
Uchitelle, who writes about economics for The New York Times, traces the erosion of job security and the effects of layoffs on workers, companies, communities, the economy, and ultimately, on our democracy....
Q. How did layoffs become a fact of life?
[And cyclically - last big wave was in the 1920s.]
When we started to face foreign competition [in the 1970s] there was resistance to layoffs even among management.... Among workers, bargaining power declined even before global competition set in....
[Because the postwar babyboomers were growing up, entering the job market, and replacing the labor kill-off of World War II and restoring the labor surplus of the Depression - thus killing the heightened bargaining power of the wartime and postwar labor shortage - or rather, labor balance, but perceived by ever-whiny employers as a shortage.]
We can't avoid layoffs, we can't deny the global economy.
[We can certainly avoid layoffs by cutting hours instead of jobs, and we have denied the "global economy" many times in the past with tariffs, and are still doing it in various ways, such as our massive zea maize (corn) subsidies. And no advanced economy today got where it is under so-called "free trade."]
But we've taken it too far.
[Implying that we have actively taken it this far, and can take it less far - thus contradicting his two previous statements of powerlessness.]
Q. Are layoffs really a "debilitating condition" and a "festering national crisis"?
A. Layoffs are a statement to the laid-off that they have no value. That's damaging to mental health, and in that sense it's a debilitating national condition.
Q. Don't layoffs make companies more competitive?
A. There's growing evidence that the most efficient and competitive companies are the ones that avoid layoffs. Southwest Airlines is the outstanding example, virtually the only airline that is profitable and one of the very few that haven't had layoffs....
[And Nucor Steel and Lincoln Electric....]
Layoffs destroy the sense of teamwork, community, and identity with the company that generates success.
[Not to mention loyalty.]
Q. How did "The Disposable American" turn into such a human story?
A. I felt drawn to the people who had this experience and who couldn't solve what was happening. I could see it going on all around me. Economists kept citing data showing that things weren't that bad. But new studies show that job tenure is declining, so finally the data are catching up with the phenomenon.
[In other words, the phenomenon is finally getting so cumulatively bad that not even the cleverest econometricians can hide it with their carefully designed and selective statistical "data," so designed and selected why? because guess who supports their university employers and guess who they like to identify with?]
Our justification is that the world has changed and all you have to do is change with it. But it turns out that the good jobs are not out there, that the number of job openings is less than the number of qualified workers....
Q. Is there a way back to job security?
A. I wrote about what has happened for 8 chapters. Then I had to write "Solutions." But there really is no way back.
[And here we see the time blindness of English-speaking economists and talking heads. They've completely forgotten our long history of workweek reduction alias worksharing alias workspreading alias wage-spreading alias investing-money-to-spending-money conversion alias consumer-base-strengthening alias monetary-circulation-acceleration alias economic dynamization.]
...If we recognized that when you count disguised layoffs, 7-8% of the...workforce is being laid off, that would upset us.... If we moved back \from\ our society of individualism...toward a communal society we might then find uses for government that would make fuller employment a reality. That's the best I can do.
[Well, Uchitelle has already done better than that. He's unwittingly suggested a use for government that is pretty basic; namely, counting the whole problem to wake ourselves up instead of disguising it; in other words, redefining unemployment to include the whole problem of non-self-support (which would include welfare, disability, homelessness, prisons, forced retirement, forced self-employment with or without clients, and possibly, deaths within six months of forced retirement). And then, here are some other uses for government that could realize fuller employment. Government could let this more meaningful unemployment rate control the workweek, in the sense that, as long as unemployment is too high or rising, the workweek could be reduced by, say, an hour a year. And simultaneously or prior to this, government could encourage automatic overtime-to-training&hiring conversion throughout the grassroots of the economy and up&down the corporate hierarchies. These are the two essential ingredients for replacing downsizing, aka layoffs, with timesizing.]
Q. You say that "democracy itself is in jeopardy." How?
A. If we have income inequality, if class differences are greater than ever, isn't that anti-democratic? Layoffs contribute to that.
[Lame response. Income inequality is the unactionable term for income concentration. Talk about classes and class warfare is hackneyed and easily dismissed. Let's talk about unlimited concentration of value, whether market-demanded working hours per person, income per person, wealth per person, or credit per person. Let's talk about the possibility that the concentration of money can get so intense that it slows the circulation of money, because the wealthy have far far more than they can possibly spend. And let's devote some research to proving or disproving this possibility.
[And let's talk about how money therefore changes from spending money to investing money as it gets distributed up the income brackets. And the possibility that this can go so far as to vacuum the spending power out of the markets for the productivity in which the huge new concentration of investment money would like to invest - but can't because that productivity is - surprise! - encountering weakening markets. And therefore the possibility that the unlimited concentration of money can go beyond a point where it ceases to be constructive or even neutral, and starts to become destructive ... SELF-destructive.
[And let's talk about the tendency of the wealthy to gather to themselves all the important decision-making power in society, and their concurrent tendency to insulate and isolate themselves from any negative consequences of any of their decisions, for example, by surrounding themselves with yes-men. And thence the possibility that very little negative, or course-changing, feedback can get through to them. And therefore that as there is less and less of a vital system function, feedback, the whole system loses adaptability ... and survivability.]
Q. Why is there not more public outrage at enormous CEO salaries?
A.You've got me there.
[Two suggestions. The whacky American "rugged individualism" that wants to identify with Bill Gates even when they're sleeping on the street. And ... the concentration of media ownership means there's a lot of outrage that just never gets reported. Protests at the Republican - and Democratic - political conventions in summer/2004 for example....]
3/23/2006 1 downsizing of 13,000 jobcuts made it into La Presse of Montreal -
3/01/2006 2 downsizings, totaling 3000 +? lost jobs , in WSJ &/or NYT -
- GM wants to rid itself of 13,000 employees, La Presse, 1>7.
The automaker is offering severance packages of up to US$140,000.
2/2/2006 2 downsizings, totaling 1,020 lost jobs , in WSJ &/or NYT -
- Cable & Wireless PLC, WSJ, D4.
...unveiled a recovery plan for its struggling UK operation that includes cutting as much as half of the unit's workforce.
[Their first mistake = cutting employees and associated markets instead of working hours per employee.]
The UK fixed-line telecom company...plans to reduce significantly the number of customers it serves in the UK as part of a realigning of the business to focus on large corporate customers and public institutions.
[Their second mistake = cutting customers directly. With recovery plans like this, who needs suicide plans? Every other lazy corporation is focusing on large customers too - competition there is gaining intensity, while small markets are becoming totally unserved. And public institutions? They require tax revenues to grow - and meanwhile all these moronic CEOs are trying to avoid paying taxes. This "recovery" plan is actually a recession plan.]
C&W...expects to cut its UK headcount from 5500 to 3500 or even 2500 within the next 4-5 years and plans to reduce its customer base to about 3,000 large customers from 30,000 at the end of February....
[So, cuts of up to 5500-2500= 3000 jobs - which in turn will have a recochet effect on their large customers and make them smaller.]
CEO John Pluthero....
[Pluto, god of death. This aptly named CEO is making a hero of Pluto, and the planet of that name has recently been demoted from planet status.]
- [unspecified cuts]
British American Tobacco PLC, WSJ, D4.
...closed two factories last year.
1/31/2006 [From here up throughout 2006, as we did throughout 2004 below, we are going to try to select one or two big downsizings per month to merely give a hint of the continuing devastation of the global economy and particularly the American part of it under the constant battering from the suicidal policies, currently dear to business schools and CEOs, in terms of downsizing, outsourcing, contract evasion and pension looting, with never the obvious connection made with the deactivation of consumers and the weakening of the consumer base, and with the whole banquet table of Jimmy Jones-style koolaid rationalized and dignified with ridiculous overcitation of Schumpeter's phrase, "creative destruction," which has since been extended into "crisis management" and "disaster capitalism" in which destruction is quietly but actively fostered and exploited for further unlimited concentration of income and wealth, regardless of system-destabilizing and -shrinking effects.]
- Job cuts and falling ad sales send Tribune profit down 38%, Bloomberg via NYT, C6.
The Tribune Co., publisher of The Los Angeles Times and The Chicago Tribune...cut 900 jobs and is closing a plant as advertisers defect to the Internet and newsprint costs rise. Sales of both newspaper and broadcast ads declined....
- Paramount cuts 120 jobs after merger, by David Halbfinger, NYT, C6.
Paramount Pictures, the unit of Viacom Inc. that agreed to acquire DreamWorks SKG for $1.6B, [has] completed the deal and [is] laying off about 120 workers. The largest cuts will be in Paramount's domestic distribution staff. The largest cuts will be in Paramount's domestic distribution staff.
25 mid-level Paramount workers in several departments were dismissed on Wed.; another 95 or so are expected to be let go next week, out of a total of 2,000 Paramount employees....
2 downsizings, totaling 8,205 lost jobs , in WSJ &/or NYT -
- Kraft plans to cut jobs and plants - Dining out hurts company growth, by Melanie Warner, NYT, C1.
Americans are spending more at restaurants and less at the supermarket. Now Kraft Foods, the world's second-largest food company, is paying the price.
Kraft...announced a second revamping yesterday, one that would eliminate 8,000 jobs, or 8% of the workforce, and close 20 plants. The overhaul comes on top of 5,500 layoffs and 19 plant closures that were announced two years ago....
[Well, here are 8,000 people and their dependents who will slow down their spending now in both restaurants and supermarkets.]
- Time Inc. to cut 100 more jobs as it focuses on web business, by Katharine Seelye, NYT, C7.
Time Inc., after eliminating 105 jobs just before Christmas, is moving to cut about 100 more, including up to 10 at its flagship, Time Magazine.
Both editorial and business-side employees are being cut at several of the company's domestic magazines. About 40 business-side employees were notified yesterday that they were losing their jobs, as were 26 editorial employees who are not in the Newspaper Guild.
About three dozen other editorial employees who are protected by the Guild are being offered buyouts ad will have until Feb. 13 to decide whether to accept them. If not enough Guild-protected people take the buyouts, there will be layoffs, executives said. The company employs about 13,400 people....
Two of the titles most affected will be Time and Money magazines. But there will be cuts across the board, including at other Time Inc. brand names like Fortune, Sports Illustrated, and Real Simple....
12/10/2005 1 overview:
- The jobs recovery looks good, until a closer look is taken, NYT, B3.
A substantial rebound... But the economy did better after previous recessions (graph captions)
10/21/2005 3 downsizings, totalling 3400 +? jobcuts, made it into a regional paper today:
- Ford posts $284m US loss, has announced 2750 layoffs, plans 'significant' plant closings (Ottawa Citizen.E2)
- Imperial Tobacco to snuff out Ontario plants - 650 jobs lost as Montreal company moves cigarette production to Mexico from Guelph (555) & Aylmer (80), & Montreal QC (Ottawa Citizen.E2)
- Sears Canada slips into the red - first qtrly loss in over 3 years on costs to fire unspecified # of employees & pay for stock-based compensation (Ottawa Citizen.E2)
9/06/2005 1 downsizing of 10,000 jobcuts made it into t (NY Times):
- Volkswagen/Germany will cut 10,000 jobs (t.C1) - hey, what happened to VW's timesizing? - in 1994, they avoided 30,000 layoffs & saved their HQ town of Wolfsburg (& a lot of good customers!) by cutting their workweek from 35 to 28.8 hrs & spreading the reduced amount of work among all their employees - now VW is acting more like GM which promoted the decline of its HQ town, Flint, Michigan, & US automaking in general, by downsizing 74,000 employees in the early 90s, instead of timesizing & keeping all these employees - & consumers - going
9/02/2005 1 downsizing of 35 jobcuts, made it into t (NY Times):
- 35 news staff cuts in NYC by Newsday (t.C5)
6/28/2005 2 downsizings, totalling 7700 potential, unspecified actual, jobcuts made it into u (USA Today):
- 7700 jobcuts threatened as autoparts supplier Lear plans to move 5 N.American & Euro plants to cheap-labor countries (u.1B) - never mind effect on diminished consumer base
- unspecified jobcuts & high unemployment protested by 10,000s of S.Africans in Johannesburg (u.5A)
6/27/2005 1 downsizing of unspecified jobcuts made it into a regional paper:
- 1196 US employers reported 'mass layoffs' (over 50 people) last month nationwide, mostly in film & video production & temporary services (arizona republic.D1)
5/24/2005 1 downsizing of 4000 threatened jobcuts made it into regional papers:
- 4000 (20%) threatened jobcuts by BBC in London trigger strikes by 3 unions (vancouver sun.A11, boston globe.A8)
5/19/2005 1 downsizing of unspecified jobcuts made it into the Toronto Globe&Mail:
- unspecified cuts as Connors Bros. Income Fund moves food pkg plant fm Athens AL to Augusta GA (toronto globe.B13) - more dysfunctional owners making more dysfunctional economic decisions
5/14/2005 2 downsizings, totalling 472 actual, 26000 potential, jobcuts that made it into j (WSJ) or t (NYT):
- 472 jobcuts by Alaska Airlines as ramp services outsourced to Menzies Aviation Grp (t.B4)
- Pentagon urges closing of bases, cutting 26,000 jobs - 180 sites listed - opposition is intense (t.front page)
5/13/2005 1 downsizing of 150 jobcuts made it into t (NYT):
- 150 jobcuts as DSM, Dutch maker of drug ingredients outsources Belvidere NJ plant to Scotland (t.C3)
5/12/2005 1 downsizing of 2500 jobcuts made it into t (NYT):
- 10% workforce cut (2500 jobs) as National Australia Bank cuts costs (& mkt share) 'to regain mkt share', instead of just trimming 10% of its workweek (48 minutes a day for everyone, including top executives), re-investing overtime savings in overtime-targeted training & hiring, & keeping everyone together working, earning & banking 90% as much as before (t.C6)
3/23/2005 3 downsizings, totalling 4400 jobcuts that made it into j (WSJ) or t (NYT):
- 12% workforce cut (2100 jobs) as Bank of Ireland counters decline in profits from lending & meets growing competition by trimming employee-consumers, instead of just trimming 12% of its workweek (55 minutes a day for everyone, including top executives), re-investing overtime savings in overtime-targeted training & hiring, & keeping everyone together working, earning & buying 90% as many wireless services as before (t.C4)
- 2000 jobcuts by Alcoa (t.C4)
- 300 cuts when Pfizer cuts Holland Mich. plant in late 2006 (t.C4)
12/08/2004 1 megadownsizing, totaling 4,440 lost jobs in NY Times (t) -
11/24/2004 1 megadownsizing, totaling another 7000 lost jobs in NY Times (t) and Wall St Journal (j) -
10% workforce cut (7000 jobs) as Cingular Wireless trims costs (& consumers) after buyout, instead of just trimming 10% of its workweek (58 minutes a day for everyone, including top executives), re-investing overtime savings in overtime-targeted training & hiring, & keeping everyone together working, earning & buying 90% as many wireless services as before (t.C1>8, j.C16)
- Colgate to cut jobs and use savings to spur sales, by Eric Dash, NYT C1.
Colgate-Palmolive, the consumer products company, said yesterday that it would close about a third of its factories and cut more than 4,400 jobs over the next four years as part of a major restructuring to effort to increase profit margins.
[Each American CEO is in a competition to cut the national consumer base by cutting his own workforce = the illusion of short-term smart and longer term aggregate suicide.]
The company plans to use the savings for advertising and product development as it seeks more robust growth in an industry that has been battered by rising raw material costs and increasingly tough competition.
[How stupid can you get!? Trying for more robust growth by destroying jobs and wages and fueling the weakening of your domestic consumer base and your own best corporate markets (your own employees)?!]
Colgate [is beginning] more than 100 initiatives...including the centralization of its back-office and purchasing operations and a 12% reduction of its 37,000 jobs [which comes to exactly 4,440 sacrificed jobs, and consumers]....
[No alternative? Nonsense! The alternative is drop the melodramatic self-mutilation and just trim 12% of the corporate workweek (58 minutes a day for everyone, including top executives), re-invest overtime savings in overtime-targeted training & hiring, and keep everyone together working, earning and buying 88% as much Colgate toothpaste and Palmolive soap and detergents as before. As Lincoln Electric says, "Everyone sacrifice together, starting at the top." Whereas the current corporate "wisdom" is basically Jimmy Jones' style "Suicide, everyone else first."]
10/08/2004 1 megadownsizing, totaling 7000 lost jobs in Wall St Journal (j) -
12% more workforce cut (7000 jobs lost) as AT&T retreats from consumer market, instead of just cutting 12% of its workweek (to five 7-hour days for everyone, including executives), re-investing overtime savings in overtime-targeted training&hiring and keeping everyone together working, earning and buying 88% as many phone services as before (j.A1>2)
9/03/2004 1 megadownsizing, totaling 1000 lost jobs in NY Times (t) -
1000 US jobcuts as VF Jeanswear moves to production from Texas to Mexico by Dec.31, closing 2 plants & shrinking 2 others (t.C3)
8/12/2004 1 megadownsizing, totaling 3300 lost jobs in Wall St Journal (j) -
3300 jobcuts as Sears Roebuck & Co. of Hoffman Estates IL 'gains efficiency' (j.B6) - is it efficiency when it involves cutting your own best markets? does the 'efficiency' of current mgmt practice require suicide?
8/09/2004 1 economywide downsizing story, uncounted in roll-ups, in (j) Wall St. Journal &/or (t) NY Times - missing earlier and later dates are handled entirely on current homepage or archive pages) -
- Thanks to oil [& Cheney-Bush policy], economy faces headwinds in political season - Weak jobs data may be linked to run-up in petroleum [ya THINK?!] - Stimulus [what stimulus?] is losing steam - Dilemma for pResident Bush [our soubriquet] - Weakness in consumer spending may now be ricocheting into job growth [or more likely, weakness in job growth may now be hitting consumer spending], by Greg Ip of AP & Jackie Calmes of WSJ with Mary Kissel, Greg Hitt & Michael Williams, WSJ with text via MLive.com (MI) via Ken Ellis, A1>4.
Is the oil curse striking again?
Oil shocks have accompanied every American recession over the past three
decades. Now, this summer's sharp rise in fuel prices appears to be
hampering the current expansion, as shown by Friday's weak jobs report.
Oil shocks helped cost two recent American presidents re-election: Jimmy
Carter in 1980 and George H.W. Bush in 1992. The 2004 fuel jolt may threaten
Mr. Bush's son's bid for a second term as well.
Less than a week ago, George W. Bush was saying, "When it comes to creating
jobs for America's workers, we've turned the corner, and we're not turning
back." But the news that employers added just 32,000 jobs in July - the
lowest total this year and a sharp deceleration from the spring - presents
the White House with a dilemma: whether to acknowledge trouble (and imply
the pResident's economic measures to date haven't worked so well), or insist
the expansion remains on track (and risk appearing out of touch with
With polls showing voters more confident of Democratic challenger John
Kerry's economic stewardship, Bush aides are honing a series of economic
campaign proposals, discussing everything from simplifying the tax code to
adding more tax incentives to expand access to health insurance. Just a few
weeks from the Republican convention, pResident Bush is close to making
final decisions on a second-term agenda that will stress economic
initiatives under the theme of an "ownership era," according to one adviser.
For Mr. Bush, who argues passionately that the economy is strong, being put
on the defensive now must seem a cruel irony: Economic data released after
the fact showed that the economy in 1992 had begun its long boom when the
voters, not sensing that yet, booted his father from office.
Oil shocks also make life difficult for the Federal Reserve, which has been
planning a slow, steady step-up in short-term interest rates over the coming
months. When Fed policymakers meet tomorrow, they are thought likely to
stick to plans to raise the short-term rate for the second time this summer.
But they will also debate whether to continue that course through the fall.
Oil prices, which briefly hit an all-time high (not adjusted for inflation)
of $44.73 early Friday, may be doing the job of curbing consumer demand for
them. But they could also lead to higher inflation if workers win
compensating wage gains.
Few forecasters suggest the U.S. is tipping back into recession. There have
been plenty of upbeat numbers to offset the recent weak data. Auto sales
rose smartly in July. Consumer confidence numbers remain high. And some
measures suggest the job picture isn't so bleak. While Friday's labor-market
report showed weak job creation in July, it also showed a modest gain in
factory payrolls, a longer work week, decent pay gains and a drop in the
unemployment rate to 5.5% - the lowest level in nearly three years.
Still, economists and some investors aren't nearly as bullish as they were
when the summer began. A month ago, Macroeconomic Advisers LLC was
projecting growth in the current quarter of 5%. Now, the widely
followed St. Louis forecasting firm is estimating just 3.6%. After
the Dow Jones Industrial Averaged plunged 147.7 points to 9815.33 on Friday,
the blue-chip indicator is down 7% from its high this year, a poor
performance this early in an expansion.
High oil prices aren't the only thing weighing on the market and the
broader economy. Another factor is the fading effect of the stimulus
policies that were designed to counteract the 2001 recession and sluggish
recovery. Some economists believe consumers needed the steroids of repeated
tax cuts and successive rounds of mortgage-refinancing to sustain their
remarkable spending binge from late 2001 through the spring. With that
stimulus now wearing off and Treasury and the Fed in no position to
administer more, consumers may finally be retrenching partly in response to
the high debt levels they've taken on in recent years.
This year's surge in oil prices isn't as dire as the shocks of the 1970s.
In constant 2004 dollars, today's price is still some 40% below the
record price hit in 1981. And the U.S. is more fuel-efficient than it wasback then. However, the doubling of petroleum prices since early 2002 still
represents one of the largest sustained increases since 1979 and has
significantly crimped disposable income for consumers.
Average hourly wages advanced a respectable 0.3% in July from June.
But adjusting for the most recent 3.3% inflation rate - a figure
boosted largely by current energy prices - purchasing power has fallen 1.3
percent from a year earlier, the biggest such drop since 1991.
This appears to be a leading factor in recent sluggish retail sales,
especially among stores serving less-affluent consumers. "For the low- to
middle-income consumer, higher gasoline prices take a larger percentage of
their disposable income," notes George Mahoney, executive vice president at
Family Dollar Stores Inc. The Matthews, N.C., chain reported sales rose just
1.4% in the four weeks ended July 31 from a year earlier, at stores
open at least a year. "We see the impact not on the basic consumables -
household chemicals, paper products, food," Mr. Mahoney adds, "but on the
more discretionary items, such as ... giftwear, sheets, towels, pillows."
As energy costs rise, "you feel kind of helpless," says Michael Nagy, who
works for the San Diego Regional Chamber of Commerce. Mr. Nagy drives about
130 miles in his daily commute and now spends some $60 a week to fill up his
tank. To compensate for the added fuel expense, he and his wife eat out
less, scrimp on home heating or air conditioning, and search for
grocery-store sales. The 32-year-old Mr. Nagy also wants to trade in his V-6
Chevrolet Malibu for "something that gets 30 miles to a gallon."
Weakness in consumer spending may now be ricocheting into job growth. The
retail and hospitality industries were two principal job losers in July.
Both are sensitive to consumer discretionary spending. Retailers shed a net
19,000 jobs (including 2,600 at gasoline stations), while employment in
leisure and hospitality fell by 2,000.
Indeed, there are troubling signs that the business caution about investing
and hiring that restrained the economy from 2001 to mid-2003 might be
returning. Software companies reported a sudden falloff in orders in late
June. And the growth in capital-equipment orders appears to have eased.
The new softness in the labor market risks creating a vicious circle of
weakening growth. The economy's "only tailwind was significant employment
growth," says George Magnus, an economist at UBS AG. "Without it, we're
facing an uphill task."
Oil remains the leading risk to the U.S. economic outlook. And barring a
sudden easing of geopolitical worries, significant short-term relief seems
Earlier oil-price run-ups were primarily caused by a withdrawal of supply,
or fear of one. This time around, most of the increase results from strong
demand, especially in fast-growing China.
[Ah, some things in China ain't growin' so fast any more - "Chinese auto-finance effort receives approval to begin - Falloff in loans is one reason car sales in China have been stagnating," 8/06/2004 WSJ, C6.]
World oil consumption is expected
to grow by 3.2% this year, or 2.5 million barrels a day, according to
the International Energy Agency. Growth was generally around 2% or
less for most of the prior decade.
Of course, a strong global economy is mainly good for the U.S., giving
exporters a much-needed boost. And manufacturers added 10,000 jobs in July.
But the strong global demand for oil has left the petroleum industry withalmost no spare capacity to cushion any disruptions in supply, which has
been growing far more slowly than demand. The world's oil producers are thus
operating with a tiny margin of spare pumping capacity of just one million
barrels, in a market of 80 million barrels a day.
That, in turn, means, any supply problems could send prices skyrocketing.
Last week's jump was driven by concerns that Russia's OAO Yukos will be
forced to suspend production - a situation that shifts almost daily as
Moscow pursues the oil giant's unpaid back taxes and prosecutes its former
chief, Mikhail Khodorkovsky. Oil prices jumped again Friday on news of a
refinery fire in Texas, before retreating.
Another force driving oil prices higher is turmoil in the Middle East. That
factor means prices could fall just as sharply as they rose, if fears of
instability were calmed. But it also risks raising the political damage to
pResident Bush. To the extent voters connect the dots, they may combine two
of the American public's main concerns about Mr. Bush - an uncertain
economy and instability in Iraq - into one big one.
Mr. Kerry, touting his energy plan in Missouri Friday, did his best to link
the two. "We are at war, a war on terror, where much of the focus of that
war is in the Middle East," he said. "Guess what else is in the Middle
East," he added. "Oil." Kerry campaign advisers assert that the "terror
premium" has added as much as $15 to a barrel of oil, higher than many
private estimates. "Instability and danger in the Middle East are driving up
the price of oil," Mr. Kerry said in another recent speech. "Higher premiums
weaken our economy and risk our security," he added. "But it doesn't have to
be this way."
As a short-term response to high oil prices, Mr. Kerry has called on the
White House to suspend daily additions of about 100,000 barrels a day to the
Strategic Petroleum Reserve, a reservoir set up after the 1970s oil shocks
to protect against future supply disruptions. Some White House advisers
favor such a move. Mr. Bush has steadfastly refused those suggestions,
saying that the reserve must be filled to guard against emergency
Yet the fresh signs of a slowing pace of expansion require some kind of
White House response. The bad job news in particular poses acute risks to
Mr. Bush's re-election, since job concerns eclipse other economic issues in
voters' minds. Moreover, the states with the worst job markets are the very
battleground states, mostly in the Midwestern industrial belt, that he and
Mr. Kerry are fighting over most intensely. "It's not what we would have
hoped for this close to the election," says Republican strategist Jeff Bell.
And time is running out to change voter perceptions: There are just two more
monthly job reports before Nov. 2.
Mr. Bush's first challenge is what to say - acknowledge that there's a
problem, or ignore it. Both carry big risks in an election season. His
father, doggedly making a case that the economy was improving, looked out of
touch in 1992, contributing to his loss to Bill Clinton. It was little
consolation when revised government data later confirmed that he was
correct. For now, one adviser to Mr. Bush says the latest job data "won't
make a difference" in either the pResident's rhetoric or his actions.
Indeed, top administration officials labored to portray Friday's report as
good news. "The economy is back on track," Vice pResident Dick Cheney
declared on Friday in East Grand Forks, Minn. Mr. Bush, the same day, said,
"Economic growth is strong and it's getting stronger," though he seemed to
have dropped his line about the job situation having "turned the corner."
Gregory Mankiw, chairman of Mr. Bush's Council of Economic Advisers, said
in an interview, "I'm not satisfied with the payroll employment data." But,
like many Republicans, he noted that the Labor Department's more volatile
survey of households showed employment gains of 629,000 in July (though 30% were part time). The two surveys diverge in part because they
measure employment differently. The household survey, for example, found an
increase of 175,000 among the self-employed in July, which the payroll
survey doesn't measure. Republicans highlight the household survey because
it shows 1.9 million more jobs since Mr. Bush took office, while the payroll
survey shows a loss of 1.1 million. But most economists, including Mr.
Greenspan, consider the household survey less reliable because it is based
on a far smaller sample.
Mr. Mankiw added, "Oil prices are clearly a drag on the economy. Price
spikes have been associated with economic downturns in the past, (so)
whenever oil prices spike up, one starts worrying." Still, he noted
conventional economic models find that even a $10 increase in crude-oil
prices per barrel trims just a third of a percentage point off annual
The other challenge facing Mr. Bush is what, if any, policy actions to
take. Even before the latest economic reports, the White House was in the
midst of an internal struggle over whether to produce an ambitious
second-term economic agenda - so far lacking - as part of the re-election
The pResident, attending a family wedding at the Bush compound in
Kennebunkport, Me., over the weekend took some policy options to study. A
top adviser says Mr. Bush is inclined to propose major economic initiatives,
figuring that "elections are about the future, not the past."
The theme of the proposals will be about creating "an ownership era." As
part of that, Mr. Bush is likely to stress homeownership, creating private
retirement accounts as part of Social Security and simplifying the tax code.
He might propose giving individuals and businesses tax incentives for health
insurance and for the production and use of alternative energy sources,
among other things.
For the past month, economic advisers have been vetting all sorts of
potential tax-code variations. The adviser said Mr. Bush was likely to
propose "tax-code simplification" in general terms, perhaps directing his
administration or a commission next year to recommend changes - much as
Ronald Reagan did amid his 1984 campaign, giving rise to the landmark 1986
While Mr. Bush wrestles with the political fallout of the softening
economy, Fed Chairman Alan Greenspan is struggling with the policy
implications. In June, the Fed began what it thought would be a series of
quarter-point increases in the federal-funds rate, the rate on overnight
loans among banks. That would raise it from the unusually low 1%
earlier this year to a "neutral" level (probably between 3% and 5
percent) that would neither stimulate nor retard growth. The rate is
Fed officials were prepared to tolerate fluctuations in economic growth as
they proceeded, believing the risk of breeding inflation later on by leaving
rates low exceeded the risk of aborting the expansion with tighter credit.
When job growth and consumer spending softened in June, Mr. Greenspan said
it was a "soft patch" that would prove "short-lived."
The latest job numbers surprised the Fed much as they surprised Wall
Street, raising the possibility that the soft patch may be something more
ominous. So far, there is enough offsetting evidence for the Fed to stick
with its view that the economy will grow solidly in the second half. On
Tuesday, it is likely to raise its federal-funds target to 1.5%. If
August data suggest the soft patch is indeed ending, the Fed would likely
raise it again on Sept. 21, its last meeting before the Nov. 2 election.
But Friday's jobs data prompted some on Wall Street to speculate the Fed
will convey a more worried economic outlook in the statement following its
meeting Tuesday. That would leave the door open to pausing in its program of
"measured" rate increases, perhaps in September.
7/23/2004 1 megadownsizing, totaling 8,246 lost jobs in Wall St Journal (j) -
7/17/2004 1 megadownsizing, totaling up to 14000 lost jobs in NY Times (t) -
- 13% workforce cut (6446+1800= 8246 jobs lost) as Washington Mutual mtg shrinks, now to close 100 offices, instead of just trimming 13% of its workweek (to five 7-hour days for everyone, including top executives), re-investing overtime savings in overtime-targeted training&hiring and keeping everyone together working, earning and (re)financing at least 87% as much as before (j.A2)
6/04/2004 1 megadownsizing, totaling 2,940 lost jobs in Wall St Journal (j) -
- 3000 lost jobs as Brown & Williamson closes cigarette plant in Macon GA - will have ripple effect of 9000-14000 more lost jobs in region (t.A7)
5/03/2004 1 megadownsizing, totaling 10,000 lost jobs in Wall St Journal (j) -
- 7% workforce cut (2940 jobs lost) as Seagate Technology diskdrives responds to shrinking markets by shrinking employment (and markets), instead of just trimming 7% of its workweek (34 minutes a day for the whole firm, including top executives), re-investing overtime savings in overtime-targeted training&hiring and keeping everyone together working, earning & buying at least 93% as many diskdrives as usual (t.C3, 6/04 j.B4)
4/13/2004 1 megadownsizing, totaling 3500 lost jobs in Wall St Journal (j) -
- 10% of workforce cut (10,000 jobs lost) as Winn-Dixie Stores closes or sells 156 stores, 3 distribution centers & several mfg businesses, instead of just trimming 10% of its workweek (to four 9-hour days for whole firm, including top execs), re-investing overtime savings in overtime-targeted training&hiring and keeping everyone working, earning & buying at least 90% as many groceries as before (j.A12)
3/17/2004 1 megadownsizing, totaling 13,000 lost jobs in Wall St Journal (j) -
- 6% of workforce cut (3500 lost jobs) as DuPont Co. chemicals faces high natural-gas prices by cutting costs (& consumers), instead of just trimming 6% of workweek (29 minutes a day for whole firm, including top executives), re-investing overtime savings in overtime-targeted training&hiring and keeping everyone together working, earning, confident & buying at least 94% as many chemicals as before (j.A1>16)
2/17/2004 1 megadownsizing, totaling 15,000 lost jobs in Boston Globe (g) -
- 7% combined-workforce cut (13,000 jobs to be lost) as Bank of America gobbles FleetBoston (10/28/2003 #1) & cuts expences (& markets), instead of just trimming its workweek 7% (34 minutes a day for whole firm, including top executives), re-investing overtime savings in overtime-targeted training&hiring and keeping everyone together working, earning, confident & banking at least 93% as much as before (j.A3) - again the toxic takeover-downsizing connection
2/10/2004 1 economywide downsizing story (uncounted in roll-ups) in Wall St. Journal (j) &/or NY Times (t) - (missing earlier and later dates are handled entirely on current homepage or archive pages) -
- Siemens to shift 15,000 jobs from US & W.Europe to India, China & E.Europe (g.C2)
- Jobs, jobs, jobs - Why is this man so cheerful?, op ed by Paul Krugman, NYT, A27.
Last Friday the Bureau of Labor Statistics delivered yet another disappointing employment report.
Since there's a lot of confusion on this subject, let's talk about the numbers. The bureau actually produces two estimates of employment,
Most experts regard the employer survey as more reliable; even in the midst of the recovery, that survey has contained nothing but bad news. The household numbers look better, but not particularly good.... (Why the discrepancy? We don't know.) ...The official unemployment rate is based \on\ the household survey..\..
- ...based on a survey that asks each employer in a random [danger!] sample how many workers are on its payroll,
- ...[based] on a survey that asks each household in a random [danger!] sample how many of its members are employed.
...Employment as measured by the payroll survey rose by only 112,000 - well short of the increase needed just to keep up with a growing population [which is ??]. If employment were rising as rapidly as it did when the economy was emerging from the 1990-91 recession, we'd be seeing monthly numbers more like 275,000.
...Since the recovery officially began in November 2001, employment has actually fallen by 0.5%, while the working-age population has increased about 2.4%. By this measure, jobs are becoming ever scarcer.... The number of people who say they have jobs has risen since the recovery began - but has still lagged behind population growth.
The only seemingly favorable statistic is the unemployment rate, which has recently fallen to 5.6%, the same as in November 2001. But how is that possible, when employment has grown more slowly than the population, or even declined? The answer is that people aren't counted as unemployed unless they're looking for work, and a growing fraction of the population isn't even looking. It's hard to see how this is good news.
Other indicators continue to suggest a grim job picture. In the last 3 months, more than 40% of the unemployed have been out of work more than 15 weeks. That's the worst number since 1963, and a sign that jobs remain very hard to find - which is what anyone who has lost a job will tell you.
One last statistic - not about jobs, but about wages. Since the last quarter of 2001, real GDP has risen 7.2%. But wage and salary income, after adjusting for inflation, is up only 0.6%.
[And yet standard economists are still claiming that wages go up with productivity?!!]
This matches what the employer survey is telling us: America's workers have seen very little benefit from this recovery.
In the light of these dreary statistics, pResident Bush's recent cheerfulness seems almost surreal. On Friday, he said that he was "pleased, obviously, with the new job growth." When Tim Russert asked in the "Meet the Press" interview what happened to all the jobs that Mr. Bush promised his tax cuts would create, he replied: "It's happening. And there is good momentum when it comes to the creation of new jobs."
We expect politicians to place a positive spin on economic news, but to insist that things are going great when many people have personal experience to the contrary seems foolish. Mr. Bush's father lost the 1992 election in large part because he was perceived as being out of touch with the difficulties faced by ordinary Americans. Why is Mr. Bush - whose poll numbers are a bit worse than his father's were at this point in 1992 - running the risk of repeating his experience?
The answer, I think, is that the younger Bush has no choice. He has literally gone for broke, with repeated tax cuts that have fed a $500B deficit. To justify policies that more and more people call irresponsible, he must claim that wonderful things are happening as a result.
For awhile, that famous 8% growth rate [Q3?] seemed to be just what he needed. But in Q4, growth dropped to 4%. And as we've seen, the jobs still aren't there.
So Mr. Bush must put on a brave face. He and his officials must talk up weak economic statistics as if they represented stunning success, and predict marvelous things any day now. After all, they have to keep this up for only 9 more months.
[See also our main webpage on the rose-colored glasses presented by the BLS's unemployment statistics.]
1/28/2004 3 looming downsizing stories (uncounted in roll-ups) in Wall St. Journal (j) &/or NY Times (t) &/or Boston Globe - (missing earlier and later dates are handled entirely on current homepage or archive pages) -
- French gov't talks loudly vs. Aventis takeover but has little power to prevent it or its est. 12k jobcuts (t.W1)
- Germans worried too - Aventis has major operations in Frankfurt (t.W1)
- Cargill & IMC Global to combine fertilizer units & execs predict large jobcuts (t.C11)
1/27/2004 11 general downsizing stories (uncounted in roll-ups) in Wall St. Journal (j) &/or NY Times (t) &/or Boston Globe - (missing earlier and later dates are handled entirely on current homepage or archive pages) -
- Recovery, unlike others, has barely 1% inflation (=deflation) & weaker job creation than any recovery since World War II (t.C1)
- Education is no protection - white collar jobs are headed abroad (t.A27)
- Migration of skilled jobs abroad unsettles globalization fans (j.A1)
[except one globalization fan -]
- Greenspan sees a jobs benefit in globalization (j.A2) - such a benefit has had plenty of time to show itself - how come Greenspan is the only one who sees it? autism leaps from White House to Federal Reserve? (or v.v.?)
[or tomorrow, two -]
- 'Outsourcing' is good for America, by Prof. Douglas A. Irwin of Dartmouth economics, 1/28/2004 WSJ, A16.
[IF you like a weaker consumer base and the inefficiencies of switching from Ford's huge do-it-all River Rouge plant...]
...to sourcing component parts from a vast array of domestic and foreign suppliers....
[which might be called, not only private sector makework like the sabotage of US freight trains in favor of the trucking lobby, but also thinly camouflaged Luddism, due to the obvious obstacles in the way of robotizing the whole operation.]
- Asia poulty farmers despair as avian flu spreads into Thailand (j.A1)
- Rise of the machines - but mfg jobloss eases - but so what in svc econ (j.A1)
- The way we live now - pols (& jobless!) bemoan loss of jobs to China, India... & Warren Buffett calls USA 'Squanderville' (j.A14)
- Europe's great 'reform' wimp-out - except for more of most basic freedom, free time (j.A15)
- Mfrs show a pulse but key to jobs is adding capacity = not happening in any major country (j.A2)
- [numbers we don't have -]
Realistic jobless numbers, letter to editor by John Rexine of Arlington MA, Boston Globe, H10.
Are we now at the point where the government unemployment figures, used by the pResident in his State of the Union address, should no longer be used by the press to report on the number of unemployed in this country ("Bush used selective data in his address, critics say" (1/22 BG, A3)?
Isn't there a more realistic statistic that includes those no longer eligible for unemployment benefits? [Yup.] Or is the reality of that number too frightening to publicize? [Duh, yup yup.]
[What we really need is the proportion of people who need to support themselves and are not privately supported (like children and traditional house-spouses and old-fashioned 'live-with' grandparents) relative to the total population of people who need to support themselves more easily, including those in unemployment, welfare, disability, homelessness, prison, and also those in under-employment (forced into part-time, early retirement, interrupted retirement, or self-employment regardless of lack of skills, benefits, or ... clients). The Timesizing program creates and collects this figure as one of its two main referendum targets in Phase One (the other referendum target being central-bank interest rates).]
1/23/2004 1 megadownsizing, totaling 15,000 lost jobs in Wall St Journal (j) -
1/15/2004 1 downsizing, totaling 1,421 lost jobs and (3-in-1) uncounted economywide downsizing stories, in WSJ &/or NYT -
- Tech blessing becomes Rochester's curse (j.A8) - 21% workforce cut (15000 jobs lost) - there goes Rochester! - as Kodak cuts costs (& its own best markets) in response to digital push, instead of just trimming its workweek 21% (to five 6hr20min days for everyone, including top executives), re-investing overtime savings in overtime-targeted training&hiring and keeping everyone together
- US Airways to close its Allegheny Airlines unit, AP via NYT, C4.
[Most people thought "Agony Airlines" was long gone anyway.]
...either by merging operations into another subsidiary or by liquidation. Allegheny, based in Middletown PA, employs 1,421 workers &...serves 38 cities, mostly in the mid-Atlantic region....
- The sound of jobs floating away offshore, (3-4) letters to editor, WSJ, A15.
- ...By Joseph A. Ames Jr., BA, MBA, of Bryn Mawr PA.
Well gosh golly. I feel so much better about being broke and ruined at age 39 knowing that Schumpeter's [Jan.6 'creative destruction'] theorizing [may] make things better for future generations of Americans. In the time being, perhaps the estate of Dr. Schumpeter - and the gang at the editorial page - can pass the hat for this destroyed piece of human capital that still resembles a man, beaten and bloodied as he is.
After all, unlike those beloved Indians, Mexicans and Chinese, I had to pay for my education and my $120,000 in student loans must be repaid whether or not I have a job.
Phooey on you all.
- ..\..By Jeffrey Katcher of Bainbridge Island WA.
You've grasped an important truth when you declare that software professionals are not interchangeable. Unfortunately, those who make outsourcing decisions rarely recognize this fact.... Managers have gone abroad to seek their zombie armies....
[An apt metaphor. Zombies are Haitians who have committed a capital crime, such as adultery, under the rules of the Voodoo or Vodoun cult, and are punished by the Vodoun priest (the 'bokor' or 'houngan') by being touched with pufferfish toxin (which simulates death), buried, dug up (before 3 days are up, else too late), awakened with a beating, and kept dazed with datura while worked for the rest of their lives as slaves on sugar plantations. See Wade Davis' "Serpent and Rainbow."]
I can personally testify to the...lack of success of many of those efforts, but they somehow never rise to the same visibility as the statements of outsourcing intent.
[Compare the many merger disasters, which "somehow never rise to the same visibility as the statements of (merger) intent." In fact, this very day we have "Big mergers have a long history of failure and troubles," NYT, C8.]
- ..\..By Ferish Patel of NYC.
[This one starts off well then totally crashes -]
It would be myopic to believe that the threat India poses to American workers extends no further than "bottom end" programming jobs and call centers [though the letter above, by Corwin Slack of Houston, seems to believe this - the WSJ put it first]. In the coming years, any American job whose end product or service could be cheaply and expeditiously returned to [and sold in] the U.S. will face the possibility [we'd say probability] of being outsourced to India.
[Now at this point, you'd expect the obvious remedy of denying American markets to those who are gutting them by offshore-outsourcing, would you not? But au contraire, this genius suggests gutting them faster -]
Unless serious efforts are made to reduce immigration restrictions on talented individuals
[now you might think this guy's naive enough to assume Indian immigrants are going to get the same high pay as the American programmers whose jobs they're taking, just because they've come here, but the next clause would prove you wrong]
and to pare back significantly higher American labor costs, including those of high-skilled workers,
[so American programmers' pay should be pared to India's levels - ergo, downsized American markets for end products and services]
India's highly educated, English-speaking workforce of programmers, engineers and scientists will eventually compete against more crucial American jobs.
[They're already competing against "more crucial" (= high-skilled/high-paid?) American jobs and taking them over. The only strategies that will retard and reverse this drain are Timesizing including Phase Five's option of tight immigration controls, and a trade policy of "you access US markets for your output only to the extent you maintain US markets with jobs and salaries" - also in Phase Five.]
In such a scenario [already happening] it would [WILL] be only a matter of years before America's technological superiority is permanently outsourced.
[whereas, in the scenario Patel is advocating, it would be only a matter of months. The naive letter by the aptly named Corwin Slack that the faith-based Journal puts first still believes in the invulnerability of American productivity, despite its dependence on employee burnout.]
1/06/2004 (2) uncounted economywide downsizing stories in WSJ &/or NYT, copied from our general badnews page & elaborated here due to length -
1/01/2004 2 downsizings, totaling 672 lost jobs, in WSJ &/or NYT -
- The broken promise of NAFTA - Does the U.S. really want to finish what it started 10 years ago?, op ed by Joseph Stiglitz, NYT, A27.
The celebrations of NAFTA's 10th anniversary are far more muted than those involved in its creation might have hoped.... In Mexico [we'd add Canada - ed.]...the treaty remains controversial and even harmful - as do America's efforts to liberalize trade throughout the hemisphere. There is some good news.
In America, the "giant sucking sound of jobs being pulled out of this country" that Ross Perot predicted never quite materialized.
[Or did it just change from Mexico to China and India, which are now suctioning even Mexico? Is Stiglitz on another planet, or does he have some weird data? -]
The first 6 years of NAFTA saw unemployment in the U.S. fall to new lows.
[They also saw the U.S. tinker with its definition of unemployment to make its rate look lower.]
(Of course, to most economists there was little basis for Mr. Perot's worries in the first place.
[Could that be because most economists have to be slugged between the eyes with a sledgehammer before they see a problem with the status quo they've bought into and are so superciliously defending? You'd think maverick Stiglitz would be beyond this but alas -]
Maintaining full employment is the concern of monetary and fiscal policy [we haven't noticed much effectiveness from that quarter lately despite near-zero interest rates and massive gov't spending], not of trade policy.
[Here Stiglitz, of all people, is parrotting party line. He astonishly buys the effectiveness of superficial monetary and fiscal policy whose limits even Greenspan has admitted. He fails to see the future in our 150-year pre-1940 past of worksharing (the workweek halved between 1776 and 1940 while pay doubled and redoubled). And he is rebutted in the neighboring article by Charles Schumer and Paul Roberts, which argues that "America's trade agreements need to reflect the new reality," meaning the recent death of comparative advantage due to the new mobility of all factors of production except cheap labor, now increasingly skilled and educated, and the recent massive loss of jobs "not to competition from foreign companies but to multinational corporations" (MNCs), i.e., to MNCs' CEOs, determined, as they still are, on downsizing instead of timesizing.]
- [The neighboring article is -]
Second thoughts on free trade - Ricardo's dictums have lost relevance in a digital age, op ed by Sen. Charles Schumer & Reagan's Asst. Secy. of Treasury Paul Craig Roberts, NYT, A27.
[This article winds up with a version of The Big Question -]
...Old-fashioned protectionist measures are not the answer, but the new era will demand new thinking and new solutions....
[Sounds like a call for Timesizing. Note the attempted WSJ preemptive rebuttals today -]
Feeling the muscles of the multinationals, by George Melloan, WSJ, A19.
Creative jobs destruction - Schumpeter's law and the transfer of work to India, editorial, WSJ, A18.
[wherein the simple-minded cheerleaders of the WSJ editorial staff refer wishfully not only to Schumpeter's "law" of creative destruction [no thought of the dangers of cumulative destruction or diverging rates or destruction and creation or production-consumption imbalance or uncapped concentration and consequent de-dynamization of national income] but also to the "law" of comparative advantage - now destroyed by Schumer & Craig's "blinding glimpses of the obvious" - see above.]
(we're duplicating these entries on our general badnews page, where we'll be putting even the targeted badnews like downsizings in future unless we get carried away with our coverage or our comments - hopefully this will leave us time to revise the book, slap some tollbooths on this site to make it self-supporting and rack our brains how to take this agenda the next steps to pervasiveness) -
- US Airways to lay off  flight attendants, AP via NYT, C3.
...most of them in Philadelphia...on Jan.15 based on seniority..\..after hundreds of others return from voluntary leave, which was intended to help the airline weather its spiraling finances and bankruptcy....
- Rayovac Corp. to close Remington razor service stores, Bloomberg via NYT, C3.
...The battery maker...based in Madison, Wisc.\..will close the last 65 service stores belonging to its recently acquired Remington Products Co. razor business and cut as many as 120 jobs...by the end of February....
[Again, the lethal takeover-downsizing connection.]
Rayovac agreed in August to buy Remington for about $322m to enter the more-profitable razor business amid slowing battery sales.
[Lordy, if the battery biz is in tougher shape than razors, it's trash indeed. The razor biz is so desperate, it's straining to a 3-blade and even a 4-blade shave. Quadruple jumps in figure-skating, quadruple blades in shaving. Must be something in the letters SHA_ING.]
Click here for downsizing stories in -
Earlier 2001 downsizings accessible via links at bottom of Dec.16-31/2001 page.
Earlier Y2000 downsizings accessible via links at bottom of Dec.16-31/2000 page.
Earlier 1999 months accessible via links at bottom of Dec/1999 page.
Earlier months accessible via links at bottom of Dec/98 page.
For more details, our laypersons' handbook Timesizing, Not Downsizing is available at bookstores in Harvard Square, Cambridge, Mass. or from *Amazon.com online.
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