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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Working America
March 19, 2013 at 10:44 AM

The Alpo Generation

The Wall Street Journal reports today, “Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement.” According to a report by the Employee Benefit Research Institute, 57 percent of workers surveyed had less than $25,000 in total household savings and investments (excluding their homes), up from 49 percent with so little in 2008. According to the report, “Retirement savings may be taking a back seat to more immediate financial concerns: Just 2 percent of workers and 4 percent of retirees identify saving or planning for retirement as the most pressing financial issue facing most Americans today. Both workers and retirees are most likely to identify job uncertainty (30 percent of workers and 27 percent of retirees) and making ends meet (12 percent each).” Only 18 percent were very confident they would have a financially secure retirement.

This is only the latest evidence of the challenges facing large numbers of aging Americans. This is the first generation that will retire heavily dependent on the social experiment called 401(k)s — and they’re proving to be a disaster. In 2010, the median household retirement account balance for those between 55 and 64 was only $120,000. And that’s if they have a 401(k) or set up an IRA in an era of diminishing wages and benefits: One third of households don’t have a retirement account of any kind. The average monthly Social Security benefit of $1,230 won’t go far.

The Great Recession destroyed 40 percent of Americans’ personal wealth — unless you’re in the 1 percent — and, as the Washington Post reported:

For the first time since the New Deal, a majority of Americans are headed toward a retirement in which they will be financially worse off than their parents, jeopardizing a long era of improved living standards for the nation’s elderly, according to a growing consensus of new research.

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Comments | More in Poverty, Retirement, Stock market, Working America

May 3, 2012 at 10:45 AM

Steady or slowing?

Today the government reported that initial claims for unemployment fell by an unexpectedly large 27,000 to 365,000. The trouble is, we don’t really know what this means. More discouraged workers may be dropping out of the labor force and some states are cutting back jobless benefits. Challenger, Gray & Christmas said that jobs cuts rose 7.1 percent last month 40,599, up 11.2 percent from last April. According to the Economic Policy Institute, the state jobs picture, while still mostly positive, indicates slowing. Also, continuing government job cuts are disproportionately hurting women and minorities.

The more interesting report came from the Institute for Supply Management, whose index of the vast service sector fell much more than expected, to 53.5 in April, down from 56 in March and the lowest since November. Bloomberg notes, “Expansion among service industries may be moderating after a surge in the first quarter that coincided with the strongest pace of job growth in six years.”

The political ramifications of even slower growth aren’t as important as the continued misery for millions of Americans.

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Comments | More in China economy and business, Jobs/Unemployment, Lindsay Lohan, Oil prices, Politics and the economy, Recovery, Working America

January 12, 2012 at 9:54 AM

Pay grew modestly in Q4

If you were fortunate enough to have a job, 2011 was a fairly good year for many employees, according to Seattle-based PayScale, which tracks quarterly nominal changes in total cash compensation for full-time, private industry employees. “This is the best performance of wages across the various measures since The Great Recession,” the company reports. For metro Seattle, wages grew by 1.6 percent, the fifth-best among 20 metros. Houston led with a 2.2 percent increase.

Not surprisingly given the rush to lock up new energy supplies, the mining, oil and gas exploration sector produced the best raises, at 2.6 percent, followed by utilities at 2 percent. Food services and accommodation lost 0.1 percent. (Pay increases have slowed over the last quarter for workers in the mining, oil and gas exploration industry, but the levels still remain over 2 percent higher than the previous year.)

The picture was different among job categories: transportation, science and biotech positions pulled down the best wage increases, 2.4 percent compared with the same period in 2010. High-skills in demand means high pay.

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Comments | More in Income/living standards, Working America

September 13, 2011 at 9:30 AM

Is Social Security a Ponzi scheme

No. The classic Ponzi scheme is always a private phenomenon, where returns are offered that can’t actually be met; early investors are paid by the money from newer investors, until the fraud unravels. And the originator of the scheme is enriched until, or if, he is caught. Named after Charles Ponzi, a fraudster from the Roaring ’20s, it was on display in our time with Bernie Madoff. If one wants to stretch the definition, the housing bubble was a sort of public-private Ponzi scheme, with easy Federal Reserve money setting off a mania that enriched a few banksters while socializing the losses and leaving millions foreclosed or underwater on mortgages when it collapsed.

Whether Social Security in its present form is sustainable is a valid question. The program traces its roots to that famous bleeding heart, Otto von Bismarck. The Iron Chancellor began the program to undercut the appeal of socialists and communists. It was heavy lifting to achieve Social Security in this country during the New Deal, even with FDR and heavy Democratic majorities in Congress. Since then, it has kept tens of millions of older Americans out of poverty (without Social Security, at least 45 percent of senior citizens would be below the poverty line today). It is a social insurance program, an inter-generational compact, where working people pay taxes to support the retired. Many now worry that longer-living baby boomers will bankrupt the program.

Thanks in no small part to the Irishmen’s deal between President Ronald Reagan and House Speaker Tip O’Neill, Social Security is in much better shape than many Americans realize. According to the Congressional Budget Office, Social Security’s shortfall over the next 75 years is equal to about 0.6 percent of gross domestic product.

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Comments | More in Deficit, Social Security, Working America

June 21, 2011 at 9:50 AM

The Supremes deal another blow to working Americans

In the late 1990s, Merrill Lynch faced a class-action lawsuit alleging that women brokers faced gender discrimination in promotions, wages, account distributions and other areas of employment. Eight former or then current brokers brought the suit in 1997 and some 2,900 women were eligible to join the class. This was back in the day when female brokers were breaking into this all-male province and Mother Merrill was among the most resistant to change.

It wasn’t alone in facing a class-action. Salomon Smith Barney allowed the notorious “boom-boom room,” where, as the Times of London recounts, male employees described female colleagues as “whores” and worse.

Strippers and lap dancers were hired, pregnancy derided. … They took their lead from their boss, Nicholas Cuneo, who made no secret of his hostility to career women. Male colleagues enjoyed the partying; Salomon Smith Barney appreciated the profits he made.

Full disclosure: My future wife worked at both firms as a pioneering female broker and received a modest payout. But the justice the women won, and the fairness that resulted in the workplace, would not have been possible with today’s Supreme Court, as was made astonishingly clear in the Wal-Mart decision.

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Comments | More in Business legal issues, Working America

July 16, 2010 at 9:55 AM

Catch-up Friday: King Co. biz survey, wealth inequality, cities and offshoring, and more

Catching up:

— The Greater Seattle Chamber and 30 business organizations and government agencies are undertaking what they hope is an extensive survey of conditions for employers in King County. The Job Sector Survey will collect data on sentiments, challenges and aspirations of businesses. Go here to learn more and take part.

— Business Insider offers “15 Appalling Facts About Wealth and Inequality in America.” Among them: the gap between the top 1 percent and everyone else is wider than at any time since the 1920s; the top 1 percent owns one-third of the country’s wealth, while half of America only owns 2.5 percent, and half of America owns only 0.5 percent of the country’s stocks and bonds.

— You think the iPhone 4 is Apple’s biggest problem? Umair Haque in the Harvard Business Review writes a provocative piece about the real vulnerability of Steve Jobs’ baby:

So Apple’s Achilles heel is this: It’s part and parcel of what you might call a global Ponziconomy. That’s one where businesses do better by doing bad. There, companies compete to make some people better off by making others worse off. Like Bernie Madoff’s returns to investors were largely illusory, so the benefits offered by a Ponziconomy are often simply fictional — as we’ve discovered the hard way over the last couple of years or so.

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Comments | More in Income/living standards, Jobs/Unemployment, Macro/Big picture, Outlook, Small business, Tech economy, Working America

May 28, 2010 at 10:50 AM

Unemployment and incomes: The economic indicators that matter

Unemployment may be the most important indicator in today’s economy, but wages and incomes are a close second. Today’s report that personal income rose 0.4 percent in April is largely meaningless. What matters is the long view — and it’s not pretty.

Median household incomes actually declined in the ’00s, and wages largely stagnated. Meanwhile, a USA Today analysis finds that private-sector paychecks have shrunk to their lowest level of personal income in history.

A look into suicide-plagued Foxconn, the Asian manufacturer for Apple, HP and Dell, finds more than 420,000 employees at two “campuses” in Shenzhen, China, alone. This one company’s total workforce in China is around 800,000. The workers make $32 for a regular work week. The equivalent of this work was once done in places such as Dayton, Muncie, Akron — all over America, and for good, middle-class wages. Pointing this out is not a call for protectionism. All God’s children should have a chance to enjoy rising living standards and American “consumers” have no doubt benefited from the inexpensive products created by two decades of off-shoring of production.

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Comments | More in Income/living standards, Jobs/Unemployment, Working America

September 4, 2009 at 10:15 AM

The jobs report: Getting better, but a long way to go

Top of the News: The Labor Day weekend slouches in with the highest unemployment rate, 9.7 percent, since 1983. This recession, the longest of the post World War II era, has claimed nearly 7 million jobs.

A total of nearly 15 million Americans are out of work. Add in the underemployed — part-timers seeking fulltime work and discouraged workers — and the number swells to an astounding 26.4 million.

Economist Heidi Shierholz of the Economic Policy Institute estimates that the federal stimulus is saving or creating between 200,000 and 250,000 jobs a month. Before the stim began to kick in, in the first quarter, the economy was losing about 700,000 jobs a month — Depression velocity. The past three months, the losses have moderated to 318,000 jobs per month.

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Comments | More in Jobs/Unemployment, Working America

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