Frustrated Workers, Few Options

Are you fed up with your job but have nowhere to go? You’re not alone.

Despite high rates of workplace frustration, fewer Americans are switching jobs today than at the start of the Great Recession.

According to a report released this month by the Bureau of Labor Statistics (BLS), two million people quit their jobs in July. This “quits rate,” used by the BLS to determine the American workforce’s willingness to switch jobs, was 40 percent higher in December of 2007.

Additionally, a recent Gallup poll found that fewer Americans are satisfied with their jobs than in early 2008.

The stubbornly high unemployment rate, which currently stands at 8.8 percent, is the likely cause of this convoluted phenomenon of low worker-mobility despite high worker-dissatisfaction.

“Like most people, I probably have issues with my job,” commented Vi Sherman, a systems analyst for MetLife’s Long Island City office.

“But if you’re in a position that’s paying all of your bills, it might not be what you want or what you hope or dream about, but it is getting you across the finish line…..it would have to be really horrible where you’re just going to abandon something and roll the dice on finding something out there.”

Not everyone, however, follows this pragmatic approach when evaluating future employment prospects. Danny Pfeffer, a freelance film producer, believes the long-term benefit of remaining capricious outweighs the security of a regular nine-to-five.

“I would rather jump ten dollar-an-hour to ten dollar-an-hour jobs, then have to permanently instill myself in a corporate office for too long because that’s actually a nightmare.”

In spite of all the negative employment news, there are individuals still able to find their ideal job. Sometimes, however, they have to tread off of the traditional job search avenues. Natanya Silverman recently found a teaching position at a private school in the Hudson River Valley north of New York City.

“What I found was the work that’s now going to sustain me was work that my friends connected me with.” She adds, “it’s really about who you know to help you get a foot in the door.”

The BLS did publish one bright piece of information recently. According to their future projections, the American economy is expected to add 15 million jobs by 2018, and as job creation gathers steam in the future, a related increase in the quits rate may follow.

If this forecast does not come to pass, Danny Pfeffer has an alternative life plan.

“Worse comes to worse we move to the Virgin Islands, live in a hut, eat fish and octopus all day.”

Euro Travelers Find Surprising Deals in Soho

NOTE: This article is apart of my news writing workshop and is a slight deviation from the normal jobs theme.

If European tourists didn’t already have enough reasons to visit New York City, maybe this will tip the balance and bring them across the pond – cheap high-tech consumer goods. A simple internet search illustrates the notable discrepancy in electronics prices between the United States and Europe.

A new Macbook Air, for example, retails in Paris for almost 1300 dollars. But at the Apple Store in Soho the same computer will set you back a mere 999 bucks, and Apple products aren’t alone in demonstrating this difference. A Sony Tablet S is listed at 499 dollars at Best Buys throughout the United States. In contrast, Media Markt, a similar German retailer, sells it for 479 Euros. Converted to dollars that’s 652.

“A lot of people ask me if I can find them a tablet device,” comments Jean-Philippe Lumia, a New York City vacationer who works in information technology for Hewlett Packard in France. “But I just buy what I need.”

He adds, however, that the deal becomes less lucrative if the French customs learn of his purchase. “If they catch me then I have to pay the tax.”

Large corporations aren’t the only ones benefitting from this phenomenon. NY Electronics, a small retailer near Times Square, relies heavily on purchases by tourists from Europe. “Our electronics sell for 20 percent less than ones in Europe,” states Nabil, the shopkeeper.

It may be tempting to attribute this difference to the periodic fluctuations in the price of the dollar against the Euro. But, since 2008, although there have been significant peaks and valleys, this price has not trended much of either direction. This monetary topography, however, does offer another way for foreign tourists to squeeze out as much savings from their trip as possible.

Lumia elaborates, “I changed my money when the dollar was a good change with the Euro.”

Nabil at NY Electronics credits another cause for the relatively low prices of high-tech goods.

“New York is the Mecca of electronics.”

Wealth and the Job Market

I’ve noticed an uptick in news coverage recently regarding the overall levels and distribution of wealth in the US. PBS Newshour, for example, recently produced a feature highlighting an increase in the disparity of this distribution, and how many Americans are unaware of this trend.

The precipitous drop in housing prices since 2008, likely, fuels this conversation as most middle class wealth is held in real estate. As homes lost value so did wealth for the average American.

This is an alarming indicator for the job market because when it comes to job searches, wealth is about more than owning stuff.

Unemployed people who possess some personal wealth can use it as a backstop for their finances while they search for work. It allows them to base their future employment decisions on long-term factors and, as a result, levels of wealth for the unemployed can indicate the vitality of an economy.

Let’s look at a hypothetical.

Imagine two bank tellers who work at the same bank in a midsize-American city, let’s call them Robert and Sara. They are alike in a number of ways, they both earn about 32,000 dollars a year, both are single parents of one child, both rent a small house, and both are 30 years old.

One key difference separates them, however. Robert holds 35,000 dollars in stocks and bonds.

Now imagine both our tellers lose their jobs.

They find themselves unemployed at the worst moment. Tens of thousands of other unemployed people in their city are competing for work at a time when most companies aren’t hiring.

Both Robert and Sara make the rounds at various banks submitting resumes and speaking with managers. But after a few weeks of scouring the banking job market they both decide to broaden their search.

Up to this point, both paid their bills through a combination of unemployment insurance and, when necessary, swiping their credit cards. They realize, however, these resources are not everlasting.

Here’s where their paths diverge.

Robert scrutinizes his finances. He determines, if he liquidates his 35,000 dollars in investments, finds a part-time (albeit low wage) job, and uses parts of his state’s safety net, he can return to school and get a degree in electrical engineering. A field of personal interest for him, and one with long-term job potential.

Sara, on the other hand, similarly examines her personal finances and determines school to not be a viable option. Without the wealth to help finance a few years of education, she determines student loans would be prohibitively large. The risk is too much particularly for a parent who is already facing a significant amount of debt.

As a result, she continues to search for work.

The point of the story is to illustrate that when examining the tiers of our economy, income isn’t everything. Wealth, especially amongst the lower half of the income spectrum, is a factor that can indicate the dynamism of an economy.

Team Building

Note: This report is apart of a series coming from activities done with my news writing class.

Yesterday, in my weekly news-writing workshop, our class formed into three groups and completed an interactive scavenger hunt on and around Wall Street. The game involved one designated smart phone user within each group texting or emailing answers to questions about various locations in this financial center.

It was cool. I had fun chatting with my group and seeing our collective competitive spirit arise. We also received a brief history lesson from a pleasant New York woman about the relationship between the song “New York, New York” and the War of 1812.

The only downside, we lost.

But this activity got me thinking about team-building exercises in general. In a time of slow growth, does it make sense for businesses to spend money on activities that don’t directly relate to the production of their product? Also, other than anecdotally, how does one measure an idea as subjective as workforce compatibility?

SO I did some Google searches to find out more. The first thing I learned is it’s a large industry. Various corporate excursion companies offer activities ranging from expensive retreats at mountain resorts to more basic day field trips, similar to my scavenger hunt.

Also, speaking of Google, I found a 2009 article explaining their cutbacks due to the down economy. One of the things to go…..their annual employee retreat to Lake Tahoe. That one must’ve hurt.

I think it’s wise for companies to drop the extravagant excursions to distant resorts, but I see the advantage of small-scale activities where workers can get to know each other outside the office. If employees are comfortable around each other, I think there is a good chance they will also willingly challenge each other. And, a robust marketplace of ideas within an office should lead to better products.

At the very least if they’re doing a scavenger hunt, they might learn some handy Jeopardy facts from friendly locals.

The Opaque Future of Jobs

An increase in productivity is a good thing, right?

For the consumer the answer is undoubtedly yes. Increased productivity means the price of an item should go down. But the answer is less clear for jobs.

Literally, productivity measures how much you get from how much you put in. If I took three hours to build a chair a month ago and today I can do it in two, and produce the same result, my productivity increased. But it also means I now only have two hours worth of work.

What if economy wide all carpenters similarly increased their productivity? The price for chairs would probably drop. In normal times this would cause a few more chairs to be sold, and may also encourage chair-building companies to expand their workshop and produce new products.

But the economy behaves differently in a time of crisis. Consumers bogged down in debt become frugal and, rather than buying more chairs when the price drops, they may choose to use that savings to pay down their mortgage or credit cards. As a result, that expansion the workshop considered might just be put on hold until consumers are more willing to spend. Also, in this crisis economy, the shop may find it difficult to secure a loan to finance an expansion.

In the end, some of those carpenters with an extra hour of time on their hands could lose their jobs. A company cannot afford to pay idle employees and if expansion is discouraged by a lack of demand or a lack of business credit or both, some of those employees will likely find themselves in an unemployment line.

Over the long-term this may prove beneficial. Those unemployed carpenters will be able to shift to new dynamic industries or start their own businesses. But until that time, it will be tough-going for both the individuals and their community. Those carpenters may no longer pay their house payments causing the credit situation to worsen; and, they will more than likely stop buying as much stuff, exacerbating the problem of anemic demand.

I wonder to what extent this phenomenon describes the US today? We have witnessed some recovery but one without many added jobs. Will this situation constitute a new normal of high unemployment for the foreseeable future?

Send me your thoughts.

A Clearer Understanding

I’d like to launch this site with a discussion of fiscal stimulus. With the US economy confronting anemic growth and high unemployment, recent efforts to prop up aggregate demand has made this, perhaps, the most noteworthy debate in macroeconomics (and politics) today. China’s 586 billion dollar spending package revealed in late 2008, and the US’s 787 billion dollar bill passed in 2009 are two of the most ambitious programs of this type in years.

So when President Obama outlined his jobs proposal last night in a speech to congress, many commentators not surprisingly called it a stimulus. Whether the plan really is one is up to interpretation because, as Mr. Obama noted, it doesn’t increase the deficit. It did, nevertheless, bring about similar comments and criticisms heard during earlier stimulus legislation.

Paul Krugman from the New York Times, although supportive, stated, “It’s not nearly as bold as the plan I’d want in an ideal world.” While Dan Danner of the National Federation of Independent Business wrote in the Washington Times, “Rather than the retread failed ideas we heard…..we want government to get out of the way to let us do what we do best: create jobs.”

In order to accurately consider these arguments, I think a clear understanding of their theoretical underpinnings is necessary. On that thought I’d like to post the best summaries I’ve found describing the benefits and drawbacks of a fiscal stimulus. And, they happen to be from the same book, Crisis Economics, by Nouriel Roubini, professor at NYU’s Stern School of Business.

On page 160, Roubini describes the rationale for stimulus as first championed by the British economist John Maynard Keynes in the 1930’s;

“…..in an economic downturn, the total demand for goods and services falls far below the supply, triggering unemployment and a drop in production. Writing in the shadow of the Great Depression, Keynes concluded that this cycle, if permitted to go unchecked, could feed on itself. If the crisis got bad enough, the ‘animal spirits’ of the economy would perish, and fearful entrepreneurs and consumers would curtail spending more than was justified by weakened incomes and economic woes. Despite a surplus of desperate workers and idle factories, a vicious cycle of ever falling demand, employment, production, and prices would grip the economy in a deflationary spiral and result in a permanent state of stagnation.
Keynes believed that the economy would not emerge from the doldrums on its own. Only if the government stepped into the breach and directly or indirectly picked up the slack in demand relative to the glut of excess supply and idle supply could the economy stabilize itself, let alone return to prosperity.”

Two pages later Roubini continues by discussing the drawbacks of Keynes’s idea;

“…..a few words of caution are in order. For starters, fiscal policy isn’t a free lunch: if a government increases spending and cuts taxes – and does so during a recession when tax revenues decline – the budget deficit will soar. The government will have to issue more debt, which it will eventually have to pay. If it doesn’t pay the debt, and the deficits grow larger every year, then it will have to entice investors to buy more debt by raising interest rates. Those higher returns will then compete with interest rates on other investments – mortgages, consumer credit, corporate bonds, and auto loans – and can drive up the cost of borrowing for everyone else, thus reducing debt-financed capital spending by firms and consumption spending by households.”

Rather than fuel an ideological divide, Roubini demonstrates that fiscal policy needs to be fluid and tailored to a specific situation. In the US’s case, borrowing is cheap because interest rates on federal treasury bonds are low. Therefore, it’s as good a time as any to upgrade the country’s weathered public infrastructure, not to mention provide jobs for many of the unemployed.

Two questions remain, however. First, can a government afford to prop up demand if a recovery lasts years; at what point will the debt be too much to service in the future? And finally, will public borrowing draw capital away from important private sector projects as gun-shy banks happily move their money to the security of government bonds?