Posts Tagged ‘wages’

Captain Rick: U.S. Job Growth has crawled upward to pass the break-even rate with with population growth. The trend is in the right direction. The jobs being added are mostly low wage. There is little hope of regaining the 8.7 million medium to high wage jobs lost during the Great Recession any time soon.

The chart below shows the new jobs added during each month of the the past year. 

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GREEN LINE: an average of 214,000 new jobs have been created each month during the past year

BLUE LINE: an average of 185,000 new jobs need to be created each month to keep up with U.S. Population growth of 0.7%

REAL JOB GROWTH: is represented by the difference between the Green and Blue lines … 29,000 new jobs each month that exceed population growth.

How long will it take to recover the 8.7 million jobs lost during the Great Recession: At the ‘Real Job Growth Rate’ of 29,000 new jobs per month, it will require 300 months … or 25 years. That is a long time, during which many other significant concerns will come into play … like the U.S. Debt crisis … on track to explode during the next decade.

Wages remain stagnated: Federal Reserve Chair Janet Yellen has said she wants to see wages rise faster than inflation so American households will have more buying power. That has yet to happen. I personally think Janet and the entire Fed are living in a ‘dream cloud’.

New poll show majority rating the U.S. economy as ‘Poor’: Many Americans still think the economy is not fully recovered. According to the results of a CNN/ORC International poll released Friday, 41% of people surveyed rate the economy as "good", while 58% rate the economy as "poor."

Perceptions about the U.S. economy will be a key factor in November’s midterm elections: More than a third of the Senate and the entire House are up for grabs. Both sides of the aisle are blaming each other for holding back the recovery. I blame almost all of them. I hope the American voters will exercise their thoughts and register their voices in the upcoming elections and vote out of office the majority of those now in office.

Captain Rick’s Prognosis: America is traveling into uncharted territory, which if not handled properly by the U.S. Congress (which is very unlikely, based on performance in the past decade), has the potential to drive America over the pending ‘real fiscal cliff’ and reduce America to a ‘third world nation’.

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Captain Rick: Detroit was once the 4th largest city in America and ‘motor capitol’ of the world. Decades of internal destruction caused a mass exodus of people, reducing its population to 18th place. Its automotive manufacturing plants have been shut down or relocated. What went so wrong?

I conducted in-depth research on this important event. I have compiled the following report to accurately present the ‘Rise and Fall of Detroit’ and what went so wrong. I conclude with sobering concerns for all Americans, especially those who have the responsibility of managing our cities and states…many of which are on the same course as Detroit.

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The above photo of the GM building in downtown Detroit was taken with a telephoto lens looking southeast from Bush and Watson Streets, about 1.5 miles to its northwest. The large area around this boarded up house contains similar houses and open area where old houses have been removed. 

The Rise and Fall of Detroit

Ford Motor Company ignited the rise in 1903

In 1903 Ford founded the Ford Motor Company. Ford’s manufacturing—and those of automotive pioneers William C. Durant, the Dodge brothers, Packard, and Walter Chrysler—reinforced Detroit’s status as the world’s automotive capital.

Labor Unions took control with strikes for increased wages, benefits, pensions

With the factories came high-profile labor unions such as the American Federation of Labor & the United Auto Workers which initiated strikes & other tactics in support of such things as the 8-hour day/40-hour work week, healthcare benefits, pensions, increased wages & improved working conditions. The labor activism during those years increased influence of union leaders in the city such as Jimmy Hoffa of the Teamsters and Walter Reuther of the autoworkers.

Mergers helped companies expand elsewhere, while causing the disappearance of plants in Detroit … often to escape the profit robbing effects of labor unions

Mergers in the 1950s, especially in the automobile sector increased oligopoly in the American auto industry. Detroit auto manufacturers such as Packard & Hudson merged into other companies and eventually disappeared. Plants in Detroit, with heavy union control, were closed as new plants were built elsewhere in less union-friendly locations. Behind the scenes, it can be said that labor unions played the first major role in the fall of Detroit

Detroit became America’s fourth largest city as companies looked to reduce labor costs by importing cheap labor from the South

Tens of thousands flocked to Detroit with the hope of better pay and benefits, particularly black workers from the Southern United States. It resulted in Detroit rocketing to become the fourth largest city in the United States with blacks as its majority residents.

Racial tension took hold to begin the Fall of Detroit

Social tensions rose with the rapid pace of growth. On January 20, 1942, with a cross burning nearby, 1,200 racist whites tried to prevent black families from moving into a new housing development in an all-white area of the city. Later in June 1943, Packard Motor Car Company promoted three blacks to work next to whites in their assembly lines. In response, 25,000 whites walked off the job. The Detroit Race Riot of 1943 occurred 3 weeks after the Packard Motor Car incident. Over the course of three days, 34 people were killed. Of them, 25 were African–American, and approximately 600 were injured.

In June 1963, Rev. Martin Luther King, Jr. gave a major speech in Detroit that foreshadowed his "I Have a Dream" speech in Washington, D.C. two months later. During the African-American Civil Rights Movement of the 1950s and 1960s, Detroit witnessed growing confrontations between the police and inner city black youth, culminating in the Twelfth Street riot in July 1967. Governor George W. Romney ordered the Michigan National Guard into Detroit, and President Johnson sent in U.S. Army troops. The result was 43 dead, 467 injured, over 7,200 arrests, and more than 2,000 buildings destroyed. Thousands of small businesses closed permanently or relocated to safer neighborhoods, and the affected district lay in ruins for decades.

On August 18, 1970, the NAACP filed suit against Michigan state officials, including Governor William Milliken. The original trial began on April 6, 1971, and lasted for 41 days. The NAACP argued that although schools were not officially segregated, the city of Detroit and its surrounding counties had enacted policies to maintain racial segregation in schools.

District Judge Steven J. Roth held all levels of government accountable for the segregation. The Sixth Circuit Court affirmed some of the decision, withholding judgment on the relationship of housing inequality with education. The Court specified that it was the state’s responsibility to integrate across the segregated metropolitan area.

U.S. Supreme Court was most responsible for massive exodus from Detroit

The Governor and other accused officials appealed to the Supreme Court, which took up the case on February 27, 1974. The subsequent Milliken v. Bradley decision would come to have enormous national impact. According to Gary Orfield and Susan E. Eaton in their 1996 book Dismantling Desegregation, the “Supreme Court’s failure to examine the housing underpinnings of metropolitan segregation” in Milliken made desegregation “almost impossible” in northern metropolitan areas. “Suburbs were protected from desegregation by the courts ignoring the origin of their racially segregated housing patterns.” “Milliken was perhaps the greatest missed opportunity of that period,” said Myron Orfield, professor of law and director of the Institute on Metropolitan Opportunity at the University of Minnesota, “Had that gone the other way, it would have opened the door to fixing nearly all of Detroit’s current problems.” John Mogk, a professor of law and an expert in urban planning at Wayne State University in Detroit says “Everybody thinks that it was the riots [in 1967] that caused the white families to leave. Some people were leaving at that time but, really, it was after Milliken that you saw mass flight to the suburbs. If the case had gone the other way, it is likely that Detroit would not have experienced the steep decline in its tax base that has occurred since then."

The Fall of Detroit

Long a major population center and major engine of worldwide automobile manufacturing, Detroit has gone through a continuing economic decline over the past 60 years.

Population Decline from ‘White Flight’ … Detroit reached its population peak of 1.8 million people in the 1950 census and ranked as America’s fourth largest city. Massive ‘white flight’ to the suburbs and other cities took place following the 1974 Milliken case. As of the 2010 census Detroit has lost 60% of its population, falling to 18th place with just over 700,000 residents remaining, of which over 82% are black/African American and 6% Hispanic … a total reversal from 1950 when over 90% were non-Hispanic whites. The city’s tax base eroded along with that population decline. There is no question that ‘white flight’ was the top cause of the fall of Detroit. It in turn led to all of the following problems…

High unemployment … was compounded by white flight and middle-class flight to the suburbs (and in some cases to other states), and the city was left with a reduced tax base, depressed property values, abandoned buildings, abandoned neighborhoods, high crime rates, and a pronounced demographic imbalance.

The unemployment rate, while down from a peak of 27.8% in the summer of 2009 — when General Motors and Chrysler Group were going through their own bankruptcies — is still at 16.3%, nearly twice Michigan’s statewide average.

Loss of Tax Revenue … Most of the auto industry’s Michigan plants moved out of our build in locations outside of Detroit city limits, severely limiting how much tax revenue they contribute to Detroit. General Motors, is the only automaker with headquarters inside of city limits, and Chrysler Group operates just one plant inside the city. Both companies declared bankruptcy and were bailed out at the expense of U.S. tax payers.

More than half of the owners of Detroit’s 305,000 properties failed to pay their 2011 tax bills, exacerbating the city’s financial crisis. According to the Detroit News, 47 percent of the city’s taxable parcels are delinquent on their 2011 tax bills, resulting in about $246 million in taxes and fees going uncollected, nearly half of which was due to Detroit. The review also found 77 blocks in Detroit had only one owner who paid taxes in 2011.

Urban Decay … The ongoing decline has left its mark on the city, most notably in severe urban decay and thousands of empty homes, apartment buildings, and commercial buildings around the city. Some parts of Detroit are sparsely populated resulting in the city having difficulty providing municipal services such as policing, fire protection, schools, trash removal, snow removal, lighting, etc. The city has sought and considered various solutions such as demolition of abandoned homes and buildings, though there are tens of thousands of abandoned structures; removal of street lighting from large portions of the city; and encouraging the small population in certain areas to move to more populated areas of the city as there may not be a quick response for city services such as police in de-populated areas.

Crime … Detroit has the sixth highest total rate of violent crime, five times the national average. At 16.73 per 1,000, it has the highest per capita rate of violent crime among the 25 largest U.S. cities in 2007, those with a population exceeding 200,000.

Nearly two-thirds of all murders in Michigan in 2011 occurred in Detroit. It has been reported that about 65 to 70 percent of homicides in the city are drug related. he police department closes only 8.7% of its criminal cases.

Detroit was rated the most dangerous city in the United States for the 4th year in a row in a 2010 survey by the FBI. It has been reported that 4 of the top 10 most dangerous neighborhoods in the nation reside in Detroit.

Blight: 78,000 blighted buildings either abandoned or ruined. 

Lack of Lighting: 30,000 defunct streetlights– about 40% of the 88,000 street lights don’t work.

Response time: Call for a police officer takes 58 minutes to get help — more than five times what it takes elsewhere in the United States. Response times for Emergency Medical Services and the Detroit Fire Department average 15 minutes, which is more than double the 7-minute averages seen in other cities.

Hazardous waste sites: 70 Superfund hazardous waste sites

Parks: Two-thirds of parks closed since 2008, with only 107 remaining open

Aging equipment: Fire stations are old and not adequately maintained. A fleet of city vehicles is aging and poorly maintained. A power grid that is deteriorating. A city-owned power plant that has been idle for two years. 31 sub-stations that need to be decommissioned. Information technology systems in multiple departments that urgently need to be upgraded or replaced.

Detroit Files for Bankruptcy

The situation reached a crisis and almost resulted in the state of Michigan taking over administrative control of the city. The state governor declared a financial emergency in March 2013, appointing Kevyn Orr as emergency manager. On July 18, 2013, Detroit filed for bankruptcy.

Orr said the city had filed for bankruptcy because it would take more than 50 years to pay off the city’s $11.5 billion in unsecured debt while not conducting even the most basic maintenance, such as filling potholes and plowing snow.

Current Fiscal Situation … What is at stake? 

Detroit halted payments on about $2 billion in debt last month to preserve its dwindling supply of cash. The city faces total liabilities of about $18 billion.

The reorganization plan argues that the city needs to shed $9.5 billion of its $11.5 billion in unsecured debt in order to be able to pay its bills and make necessary improvements in services. Much of the debt targeted for elimination is related to pension benefits and retiree health care coverage required by union contracts. That would mean that investors and retirees would receive an average of just 17% of what they are owed.

When employees of a bankrupt business lose their promised pensions, the Pension Benefit Guaranty Corp. steps in and provides a minimal level of benefits. But that federal agency doesn’t back pensions in the public sector.

Detroit appears to be the first municipal bankruptcy that has ever involved involuntary cuts to retiree benefits.  The possibility exists that U.S. tax payers could get stuck bailing out Detroit to cover its workers pensions, similar to the Obama bailout of two of Detroit’s largest companies…GM and Chrysler. Given the poor state of funding for many public sector pension funds nationwide, its an issue which is likely to end up being addressed by the U.S. Supreme Court.

Bankruptcy could slash pension benefits to city workers and retirees, and leave bond holders with only pennies on the dollar. Investors say the bankruptcy will make it more difficult for cities and towns everywhere to raise the money they need to build bridges, schools and other infrastructure. It will also hurt municipal bonds held by individual investors. There are more than $1 trillion worth of bonds at risk. There is bound to be a ripple effect nationwide.

Many American Cities and States are following in Detroit’s steps

The lucrative pension and benefit plans that cities and states across America have adopted…with a hefty helping hand from the powerful America-destroying unions…are on a rapid course heading for the edge of the real ‘Fiscal Cliff’. None of America’s pension plans are sustainable. It will not be long before they all begin to fiscally implode.

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Associated ATRIDIM NEWS JOURNAL Report Categories:

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Captain Rick: The January Jobs Report shows a continuing drop in new jobs created and a reality that job creation in America is stuck in neutral … or possibly reverse. 150,000 new jobs are needed to be created every month just to keep pace with population growth as represented by my red line in the chart below. Overall, the U.S. economy lost 8.8 million jobs during the Great Recession, and is still down about 3.2 million jobs from the labor market’s height in January 2008. The 5.6 million jobs that were created since the Great Recession also had to provide for the 9 million new job seekers entering the market since January 2008, due to population growth. Realistically, another 8.8 million jobs would have been needed to be added during the past few years to equal the American job scene of January 2008. At the current pace, those jobs will not be returning any time soon. Making things even worse is the fact that many of the jobs being added are relatively low paying in comparison to the jobs that were lost.

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The U.S. economy added 157,000 jobs in January. That’s slower growth than in December, when employers hired 196,000 workers. Some call it “Groundhog Day in the labor market” and say “We’ve been waking up to this same story for four years.”

The biggest job sector gainers
In January, businesses added 166,000 jobs while federal, state and local governments cut 9,000. The government continued to cut jobs for the fourth month in a row.

Retail added 33,000 jobs, with about a third of those gains at clothing stores.

Construction firms added 28,000 jobs, reflecting a stronger housing market and rebuilding efforts after Superstorm Sandy.

Health care added 23,000 jobs. Most of those jobs were in ambulatory health care services, a category that includes doctors’ offices and outpatient care centers.

Manufacturers added only 4,000 jobs. The Labor Department noted that employment in this sector has changed little since July. Manufacturing once was the job sector that built and sustained America as a great country. America’s manufacturing jobs have mostly been lost to places like China because of lower wages and NO unions!

Unemployment Rate
The unemployment rate increased to 7.9% in January, as 12.3 million people were counted as unemployed.
The number of jobless Americans out of work at least six months was roughly unchanged at 4.7 million and that group represents only 38% of the unemployed.

A broader measure of the job market’s health called the underemployment rate — it includes the unemployed, discouraged Americans who have stopped looking for work and part-time workers who want full-time jobs — was unchanged last month at 14.4%.

Outlook for 2013 and beyond
Economists are expecting job growth to remain stalled during 2013.  Political uncertainty that is still hanging over employers, as they wait for Congress to hash out a budget deal. Amid an impasse between Democrats and Republicans, chances are growing that automatic spending cuts, which aim to reduce deficits by $1.2 trillion over a decade, could take effect starting in March. All of this will likely have significant negative impact on the job scene.

The best hope we have of seeing an improving job scene in the next few years is for the U.S. Congress to pass legislation to permanently solve the U.S. Debt Crisis, including working towards balancing the budget. Our nation can not continue living on deficit spending … money it does not have. That is a recipe for eventual total economic failure. While it’s continuing practice of ‘kicking the can down the road’ might prevent further erosion of jobs short term, it will most assuredly will set our nation up for a much larger recession and loss of jobs in a few years.

View prior reports on Jobs: https://atridim.wordpress.com/category/jobs/

Captain Rick: Gross domestic product (GDP), the broadest measure of the nation’s economic health, grew at an annual rate of 3.1% from July to September (Q3). That’s more than double the sluggish 1.3% rate in the second quarter, however it only measures even with the break-even line. 3% economic growth, represented by the red line in the chart below, is necessary to provide enough jobs and wages to keep pace with U.S. population growth. America has fallen short of the line in all but three quarters during the past four years. A GDP growth rate of 5% for 4 quarters is required to reduce the unemployment rate by 1%.

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Consumer spending, which typically accounts for more than two-thirds of the U.S. economy, was the single largest driver of economic growth between July and September. U.S. households bought more motor vehicles and health care services, leading consumer spending to rise at a 1.6% annual rate in the quarter.

Government defense spending was another large driver, rising 12.9% in the third quarter. And home sales picked up, also contributing to economic growth.

Meanwhile, businesses built up their stockpile of goods and were hesitant to make new investments. Business spending contracted at a 1.8% annual rate in the quarter, dragging on overall economic growth. The largest cuts in business spending were on equipment and software.

Economists point to uncertainty about 2013 taxes and government spending cuts as the culprit that’s weighing on business investment decisions. The uncertainty generated by fiscal ineptitude has basically shut down investment spending. 

Economic Outlook: Overall, economic recovery remains sluggish. On average, the U.S. economy has grown about 2% a year for the last three years. Essentially this means the economy has actually going backwards at a rate of about 1%. Major portions of the fiscal cliff remain unresolved. The fiscal cliff and the pending debt ceiling will have to be addressed by about March 1 to prevent government default. The manner in which they are addressed will play a role in whether America dips into another recession next year.

Captain Rick: Wal-Mart, the world’s largest store, with 1.3 million workers, fights back as workers are preparing for a Black Friday walkout. Wal-Mart has filed a complaint with a federal agency accusing one of America’s largest labor unions of unlawfully organizing picket lines, in-store “flash mobs” and other demonstrations. Unions and union backed groups are calling for America’s largest employer to end what they call retaliation against employees who speak out for better pay, fair schedules and affordable health care.

A Wal-Mart spokesman said: Black Friday is the “Superbowl” for retailers and that Wal-Mart is ready. If employees are scheduled for work, we expect them to show up and do their job. If the don’t, there could be consequences. While Wal-Mart respects its workers federally-protected right to express concerns, it will act to protect its stores and customers from illegal and unprotected conduct that threatens the safety of our business operations… such as protestors trespassing on Wal-Mart grounds and interfering with business.

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OURWalmart, one of the main union groups says it has 1000 events planned this week. It has a Facebook page with 28,000 likes and  YouTube video with over 103,000 views. I have viewed both and do not find them worthy to pass on.

Captain Rick’s thoughts: I feel for those who work for Wal-Mart and don’t feel they make enough money or receive enough medical benefits. Keep in mind, you always have the option to find employment somewhere else. Where? Wal-Mart or no other company has an obligation to better yourself. Only you can do that. Stop whining and take control of your own destiny. Don’t rely on the unions and associated groups to save you. They have only one goal in mind… to make themselves rich… and destroy America as a by product. History shows that unions have played a huge role in the destruction of entire American industries. They are directly responsible for the execution of thousands of high paying jobs in America…jobs that are now being fulfilled overseas at much lower costs. The only sector that the unions have not killed in America is the service sector…jobs like those in retail sales…like Wal-Mart. With stupid efforts like this, it wont be long before unions destroy it too.

Another example is civic government. This is perhaps the worst of all sectors for unions to attack and kill…it’s the last American stronghold, one that is protected by our ‘warped’ government laws. In the private sector, unions can cause companies to fail. In the public sector, failure is not possible…so unions have free rain to pillage them to an endless extreme with the total cost transferred to the tax payer. America’s laws are reckless in this regard and are in serious need of change…hopefully before the unions are finally allowed to totally destroy America.

Captain Rick: Once upon a time in America, unions were an entity to protect job safety, like having clean air to breath and working with equipment that doesn’t maim or kill. In recent decades unions have become mostly about a means to push member benefits and wages as high as possible … historically, beyond justifiable means … at the expense of the consumer and their employer. All too many times we have witnessed massive job losses as the result of union greed. Detroit, once automotive headquarters and union central, is America’s greatest example. The city is all but dead, killed by the unions and their thirst for endless, unwarranted greed.

Hostess gave the unions a 5 PM deadline Thursday, November 15 to return to work. The workers did not return. As a result, the union workers killed Hostess, with annual sales of $2.5 billion. 18,500 workers have lost their jobs. 33 bakeries, 565 distribution centers and 570 outlet stores have closed across America. Annual sale of 500 million Twinkies and 127 million loaves of Wonder Bread also end. It’s the end of another American classic.

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Hostess will move in bankruptcy court to sell its assets to the highest bidder. I trust the Twinkie and Wonder Bread will live on … but will be produced by companies  of dedicated workers who are not unionized … workers who understand the true value of their jobs … not some super hyped imagination of job glory that does not exist in today’s America. Thus, the companies might not be headquartered in America. Its time for all unions to exit America or America will continue to watch our great companies be washed to the sea.

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Captain Rick:

Unions in America have well outlived their benefit. Over the past half century I have witnessed thousands of good paying manufacturing jobs shipped overseas because of union pressure for higher wages and benefits. The fact is that there are lots of people in other countries that will willingly do the jobs that America thinks do not pay enough. Now that unions have destroyed most of the manufacturing jobs, they are attacking the only ‘meat’ left…the service jobs, which include teaching, police, fire and other government jobs. The unions figure that these jobs cant be shipped overseas so they are safe territory to strike with demands of higher wages and benefits.

WRONG! This plan will fail and it will take what is left of good paying American jobs and make them history. This strike is so big (and stupid) that it most likely will effect the federal Jobs Report which already demonstrates that American jobs are on life support. President Obama, who supports unions and accepts significant financial support from them, might find himself out of office in November because of them.

The above is a photo snip is from: http://money.cnn.com/2012/09/17/news/economy/chicago-teachers-strike-jobs-report/index.html?iid=Popular

Some interesting excerpts:

NEW YORK (CNNMoney) — As it drags on for a second week, the Chicago teachers strike is so large it could distort national economic statistics, including the Labor Department’s key monthly jobs report.

About 26,000 teachers and support staff are striking in Chicago, demanding higher pay, better job security and changes to a new evaluation system.

The strike’s timing is key, in that it coincides with the period in which the government collects data for the national jobs report.

Last month, that report showed the economy added only 96,000 jobs. The number was seen as weak, posing a challenge for President Obama as he faces re-election.

September’s report could look far worse if the strike continues.