Down and Out in White-Collar America

XorNand writes "Fortune has a pretty sobering article on the employment situation for white-collar workers. By many accounts, we've never had it harder--the slump in the 80's primarily hit blue-collar workers. While bleak, things might be inching towards the light; as my econ professor says, jobs are the last thing to recover after a recession."

Comments

Re:*cough* 30's? *cough*

[malia8888]

I worked early in my life as a "headhunter" for corporate America. This gave me a rather different view of applicants for jobs than they have of themselves.

For example, from the Fortune article: Klinck earned more than $200,000 a year at MetLife, managed more than 1,000 people, and knows languages and programs ranging from Fortran to PeopleSoft, but cold-calling for jobs has been--well, cold.

I hope that Mr. Klinck reads my post and finds it useful. Klinck's problem or anyone at his high level in the employment food chain is that there are very few companies who could afford him. The "Catch-22" is that even if he says he will take a salary cut in half--$100,000--companies won't believe he will live happily on this relative pittance. He is screwed in corporate America.

Unless he is very lucky and lands a MetLife clone job, his best bet is to hire himself. Mr. Klinck has very little choice other than to become self-employed. He is the only person/company who can afford to hire him.

solution to national debt

[js7a]

It would be easy to get rid of the U.S. national debt, if we didn't have the lowest tax rate of all but one of the industrialized nations. Take a look at the country with the highest tax rate as a fraction of GDP, Sweden; they have very responsible debt levels (unlike ours), along with 4% unemployment (we just hit a nine-year record high above 6%) and very reasonable 2.2% inflation. Moreover, Sweden is way ahead of the U.S. in the only way known to make more citizens. While Sweden is the best place to raise kids, the U.S. has increasing crime rates (which tend to correlate with unemployment), and therefore likely soon-to-be-decreasing property values.

What is Sweden's secret? Progressive taxation. Average production workers in Sweden pay no income tax to their central government because the bottom bracket starts about a tenth above the average production worker's salary. The Swedish tax rate is typically about 57% of income earned above that base. Sweden only has two central government tax brackets: 0% and 25%, so their "federal" taxes are actually closer to the "flat tax" than ours are in the U.S. The additional 32% or so varies by local jurisdiction, as does the income bracket at which it takes effect.

The problem in the U.S. is that top-bracket income earners (including corporations, medium-sized businesses, and most of the top 1% rich, excluding some of the prominent top rich in the media spotlight) pay a huge amount of money in order to help elect government officials who will keep the top tax brackets low. This effectivly "saves" them an even larger amount of money, except for the externalities like crime rate, debt, and property values. We used to have regulations providing equal air time for federal candidates, but Reagan's FCC did away with those, so most candidates today, even most nationally prominent Democrats, sure know which side of their bread is buttered on. There are some notable exceptions, however.

Re:solution to national debt

[javiercero]

You sir know nothing about "moving money"

" Yeah, people are really worried about the long term ability of the US to pay its deb"

Acutally they are, why with continuous tax cuts under the Bush administration. People who are investing in dollars are getting the signal that the US is in no hurry to pay its debt. Therefore they are funneling all their money into Euros, because they can liquify their investment quicker when dealing with the European Central Bank. The federal reserve can not guarantee the current issuing of debt to 3th parties. And that is a fact, most Americans are unaware of how capitalism works, and that is quite sad.

Look at it this way, you have a "friend" who just asked you for money. At the same time you find out that he is buying a brand new car, house, stereo, whatever. And at the same time you have found out htat his employment status has been demoted from branch manager to the guy that has to flip the burgers. So common senes tells you that his income has been dramatically reduced, while his expenses have skyrocketed. Just after you find out (and he is making no effort to hide these facts in fact he is quite proud of his new lower position in the workplace and he drives his shinny porche everywhere), your friend comes asking you for more money even though he still has not payed back hte money he borrowed before. Mind that during the same time you have had to deal with a much more tight budget for yourself, i.e. you have to drive your old crappy car and you do not want to buy much stuff (you like to keep you bank balance in check).... so tell me: Will you lend more money to your friend?

The US is sadly setting itself for some rude awakening. Then again, welcome to capitalism... now that people have an alternative to the dollar, the US economy may have to actually get real! The US really has nothing to back up the inmense debt staked against its currency. The only reason why the US was getting away with it for so long was because it was the defacto trading currency, hence people had to support the dollar (even though they were not too happy to do it), but now... there is an alternative. Buh bye monopoly, now there is a real competition.

If you are still thinking like the money traders of the 80's and before, you are setting yourself for a massive reality check. Fine with me though...

Re:solution to national debt

[Hobbex]

Get a clue before you start painting pictures of socialist wonderlands. Sweden is everything but a positive example.

Firstly, the unemployment rate. The Swedish government plays number games, and uses artificial means to suppress the "open" unemployment down to under 5%. In truth, if you start including the people who have been given early retirement because they were deemed unemployable, or those in different government reeducation or temporary placement programs, the unemployment rate is closer to 15%.

Average workers do pay income tax, and a lot of it, they just don't pay the central government tax. The 30-35% of the income paid to on the local level (and it isn't actually local either, because richer counties are taxed for the poorer ones) is paid by all. And that is not everything: there are hidden taxes on labour, in the form of taxes on companies for employing people: the true tax rate, including these, is closer to half for people with low incomes, and to two thirds for people with "high" incomes ("high" starts at around $35k - hardly considered high income in the States).

Sweden has not thrived under it's cleptocratic government. In the last thirty years, it has fallen from being the second or third richest nation in the world, down to being among the poorest of the western countries. In the EU only Portugal and Greece are poorer, and that looks likely to change. If Sweden had enjoyed the same economic growth since 1970 as the US, it's per capita GNP would have been double what it is today.

Sweden lacking in innovation and corporate growth as well. Entrepeneurs, skilled labor, and even large companies are leaving the country at alarming rates mostly driven out by the standard of living. With such high taxation on labor, purchasing services is beyond the reach of the typical family, which leads to stressful do everything yourself lives and a generally unhealthy population. American leftists often laud the less time Europeans spend at work, but in truth people here are more stressed because they spend that time at home doing things which the a middleclass American family can afford to pay for (the result of which is a less efficient society and destruction of potential wealth).

And for the highest taxes in the world, what do we get? Sweden is hardly a great place to live any more. Crime victimization rates are actually higher here then in the US (the US has more murders and gun crime - for obvious reasons) and the justice system has been on the brink of collapse for 15 years. A minority of all crimes even get investigates. There is state health care, but it involves long waiting lines, deteriorating service, and is in a constant state of crisis. The school system is also fairing ill - the education is sub par compared to the rest of the EU.

If you want this so bad, then please take it. Sweden is a country drowning under it's own system, and unable to do anything except continually raise the taxes and devalue it's currency, slowly consuming the countries entire post-war wealth. Only Thatcher and Reagan type reforms could begin to save it.

My Experience And Predictions

[Bloodmoon1]

Back when I was in highschool (Class '01), I was sold on taking Cisco classes at our Community College for the better part of my day all year. My initial plan was to graduate early, get a job doing whatever, but I went for Cisco instead because 1) It was 13 free college credits and 2) EVERYONE was telling me how I'd be making $30k/yr easy, probably even before I got out of college. Took the classes, got my CCNA in Nov. '01, right about the time the economy officially turned to shit. I worked making collection calls for Ford until 6-02 when I joined the AF, got a medical discharge 6 months ago, and now I can't find a job anywhere. I know my stuff, I'm a CCNA, but I can't get a job. I do mean anywhere to. I never had a problem getting jobs when I was in high school, but now that I have a diploma, some college, a professional cert., and some life experience, I'm having to dig through the my sofa for change for food or gas.

Now, I'm really not trying to sound like I'm bitching, because I'm not, I'm just recounting my experience. I'm also not saying all those people who told me Cisco was great screwed me, but rather, I think they we're just going with the info they knew to be true. Problem is their info was from '99 or so. Now all the IT jobs I can find open want more experience and skills than I think any human could have, and want to pay them something in line with McWages.

All in all, my whole experience has me actually wondering if IT is even going to be a viable career for long. For some reason, I see it going to something of a plumber type occupation. Very few places have a in-house plumber and only call one when they are need for their specialized skills. With computers becoming easier to use and more stable all the time, I can see IT people no longer needed on a day to day basis and instead delegated to being the IT plumbers. Seriously, have you ever seen one of Apple's XServe's? I don't think it can get much easier than that. Maybe I can be a teacher, seems like I'm always hearing about more of them being needed...

Re:US National Debt

[Sycraft-fu]

You are not remembering correctly. During WWII we were spending in excess of 60% of our GDP on the military. For all intents and purposes, it was all we did. The only onther production that really existed was that which was necessary to keep the nation necessary. All industries that could be were converted to the war effort.

Now today, our spending on military is about 3.2% of our GDP. As you say, trivial. What is more interesting is teh comparatvie numbers. In overall spending, as in dollars, we are, by far, the biggest spender. However in terms of % of GDP we are rather low.

My attempt to explain some economics

[Imperator]

IANAE

You got it mostly right. It's easier to look at it the other way: when foreigners want to invest in the US, they need dollars. Thus the demand for dollars increases, and the price level of the dollar will rise. (This is of course in an idealized world where that's the only thing going on at the time--ceteris peribus, as economists would say.) A similar thing happens when people in other countries want to buy American goods and services.

When the "value" (price) of the dollar goes up, it means Americans (who own lots of dollars) can afford to buy more PS2s because it takes fewer dollars to buy a yen than before. Unfortunately, the Japanese can't buy so many, uh, whatever they buy from us because it takes more yen to buy a single dollar. So our imports go up and our exports go down when we have a "strong" (high priced) dollar.

When the factors reverse, we have a weak dollar, and the opposite happens. We export more and import less. (Before you assume this is ideal, think what happens to the prices of consumer goods when competition from overseas is lessened.) As you might guess, the ideal value of the dollar relative to the yen (remember, the dollar might get stronger against the yen but weaker against the euro at the same time) is something the US and Japan might not agree on.

Now, about worker efficiency. Economists have a term for this: productivity. It's not just a buzzword: productivity can be measured in terms of product per man-hour. To find a (somewhat meaningless) national productivity, divide the GDP by the total number of hours worked. For a time in the 90s some economists in the Federal Reserve (which influences the economy, but that's beyond the scope of this post) thought that technology advances were pushing up productivity faster than usual, allowing the "natural rate of growth" of the American economy to increase. (Some even talked about the "end of the [boom-bust] business cycle", in the same way people talked about the "end of history" and other such nonsense.) So instead of aiming to grow GDP at say 3%, they though they could get away with 5%. The result of this was an economy that starting moving faster than the Fed could control it, finally spiraling into a recession. The truth of the matter is there's very little hard data to suggest that overall productivity grew any faster during the last ten years than at any other time in the postwar period.

Finally, consider that there are other major causes for this recession. For example, a collapse in consumer and business confidence. This has been caused partially by the post-9/11 hysteria, fueled by FOX News and color-coded alerts. Also contributing is the government's increasing deficits. Gingrich and his radicals forced Clinton to balance the budget, and that worked great in good times. Now that bad times have hit, the government is going a little crazy with deficit spending--some is good, but it should be targeted spending, not tax cuts to people who already have lots of discretionary income. Government deficits have all sorts of reprecussions in the economy, few of them good. Another cause has been the amount of corporate crime that has recently been revealed (e.g. Enron). Businesses have been getting away with more and more under the last 4 presidents, and it sure doesn't give people confidence to think "my company could be next--where will the food come from if I'm out of work?". So people are saving more, and an economy built on rising amounts of consumer debt is collapsing.

In the long run the current shake-up in the economy is health. That sure isn't comforting to the man on the street, though. If you don't like what's being done about it, remember to vote in 2004. That's the only way you'll get people in power that share your views, whatever they may be, on what should or should not be done for the economy in tough times.

Re:US National Debt

[Anonymous Coward]

http://www.nationalpriorities.org

Try the Interactive Tax Chart.

look again

[js7a]

1) [Sweden is] a small boutique economy

With their citizens enjoying 2.4 years more life expectancy than those of us in the U.S.

2) They have a ... homogeneous work force

In that they have a 99% literacy rate, while the U.S. has 97% (what a joke! As a certified literacy tutor, I can personally attest that the U.S. English literacy rate, including undocumented workers, is closer to 85%.)

3) Because they are a small country, they can depend on other countries for things like defense

They spend 2.1% of their GDP on defense.

4) since they are a small country, their economy is a tiny fraction of something like the US

Their economy is 69% services, whereas the U.S. economy is 80% services. Which do you think is more robust?

Re:First ask yourself this.....

[js7a]

A) Have you ever lived outside the United States for longer than one Month?

Yes, in Germany.

B) If Yes, Have you ever had to deal with a Non-U.S. Gov for anything important?

Yes, assuming you think having a child, obtaining a birth certificate, etc., is important.

C) If Yes, Do you know anyone that was born and raised within this country?

Yes, many people.

D) If Yes, What does this person think about their system of government/taxation/health care/social services?

I would be hard pressed to find a single German citizen in a thousand who prefers the U.S. work week and typical vacation schedule. So their taxes are higher, so they get more time off. It's a wash. TANSTAAFL.