Another Case For Change In Pennsylvania

Mark Scolforo writes in an Associated Press article and printed in the post-gazette.com that Pennsylvania has 3,129 local-government pension plans. This is one-quarter of the nations total. Some of the locally managed plans have as few as 10 active employees enrolled and cost as much $1,500 per person to manage.

The state also subsidizes these local pension plans to the tune of $200 million per year. As quoted in the article: “About one-third of the municipal funds have "unfunded actuarial accrued liabilities" -- a red flag that indicates potential future financial problems. Those liabilities total more than $5 billion, for which taxpayers could eventually find themselves on the hook.”

Note: actuarial is defined as "theory of probability"

How Fortune 500 Companies Can Save $58 Billion a Year -- Just Send 1.5 Million More Jobs Overseas

Eric Chabrow of Information Week reports on a Hackett Group research study that as much as $58 billion a year can be saved, by America’s fortune 500 companies, by sending back-of-the-house and administration functions overseas.

I haven't seen any studies on just what the loss of 1.5 million white collar jobs would do to our economy and the effects that a loss of that magnitude might have on their clients. Since The Hackett Group bills itself as "global strategic advisory firm" a study like this should be viewed self-serving.

Still Time To Send A Free Card To Our Troops

Click here and link to: Let Say Thanks.Com to send a free Christmas card to our troops in Iraq.

Americans Are Lining Up For Jobs That Americans Won’t Do

An article By Fernando Quintero of Rocky Mountain News reports that people are lining up at the Swift and Company human resources office and at the unemployment office in Greenly, Colorado. There seems to be a large demand for the jobs that were made available compliments of the Immigration and Customs Enforcement Agency.

So much for jobs that Americans won’t do.

At What Age Are You Going To Retire?

The majority of people answer age 64, but 22% of retirees are forced into early retirement, for various reasons, by age 56. This was reported on by the Business Wire covering a Harris Interactive survey for Sun Life Financial Inc.

This puts a new light on retirement planning. The game has changed and people have to take the task of retirement planning seriously. The majority of people our relying on the equity in their home to carry them through the retirement years, but that may not get people to far any more. Get serious and get prepared.

Balance of Trade Sets New Record

As reported on from the AP, the trade deficit hit a record $225.6 billion in the 3rd quarter. A number of our esteemed economists feel that there can be no harm done because the economy is growing and unemployment is low. You have to wonder how much better things would be if that number was reversed.

Immigration Poll by CNN

CNN conducted this poll: http://www.cnn.com/2006/images/06/21/lou.dobbs.tonight.poll.results.pdf this past summer. Take it yourself and post your comments. It overwhelmingly shows the public wants increased enforcement but is split on an actual fence.

It also states that the public thinks that additional laws are required. As with gun control, I feel that there are sufficient laws, they just need to be enforced.

Leave your opinion.

Employers Snubbing Reservists

We need a law, not one to punish employers but one that rewards employers who follow the rules and provide jobs for reservists.

In an USA Today article writer Barbara Slavin states that claims by reservists against their employers are up 30% from 2002. Many small companies find it impossible to fill in for our called-up reservists and are forced to replace the position. Instead of creating an impossible situation for both the employer and the reservist, the government could offer a reasonable tax credit to the employer kicking in when the reservist is reinstated.

Ms. Slavin also quotes Retired Marine lieutenant general Dennis McCarthy, executive director of the Reserve Officers Association, a private advocacy group, acknowledged the deployments can be difficult for employers, particularly small companies. "That burden is an acceptable cost when it's compared to the value of reserve service to our country,"

I say why does that “acceptable cost” have to be borne by the small employer who can afford and work around it the least. If you were an employer, would you hire a reservist likely to be called up for a year. They deserve a reward for the disruption that a call-up forces upon their businesses.

Dollar at 14 Year Low Against the Pound

A further explanation of the effects that our trade deficit can have.
This AFP article on Breitbart.com illustrates the precarious position the dollar is in after 7 straight years of decline against the British Pound and nearly 2 years against the Euro. The Chinese government has only allowed for a revaluations since July of last year and those are tightly regulated. Even with their stringent efforts to keep products from China cheap too maximize exports, the dollar has fallen 5% against the Yuan.

China has become such a large part of our economy that any increase in pricing will first hurt the people that can afford it the least.

Wages Slowing, Manufacturing Orders Down, Wall Street Cheers

Wages, when adjusted for inflation, are below there 1973 levels. Along with health care and retirement benefits having been drastically cut. Exactly what more does Wall Street expect the American worker to give up and still have an economy.

I fail to understand how bad news for the American worker is always construed as being good for the economy. It’s just one more example of the short term thinking that now defines the American financial community.

In an AP article out this morning “Investors applauded Labor Department figures showing wages and benefits increased at a much slower pace”.

In another AP article: “In other economic news, the Commerce Department said that orders to U.S. factories plunged 4.7 percent in October, the third decline in the past four months, and the biggest drop in more than six years. The manufacturing sector is starting to experience the adverse impact from this year's slowdown in the overall economy with auto sales and home construction suffering."

Trade Deficit and Exporting American Jobs

The thin gray line is a new blog that discusses issues that effect employment in America. It’s called this because the issues facing the current American workplace have compelling arguments that are counter to a positive outcome for the American worker.

We view the arguments that are pro-offshoring and foreign competition as falling into three categories:

1. Globalization, we’re in a full world economy now so just get over it. Our importing vast sums of products assist foreign economies to grow, prosper and provide jobs for the underprivileged of the world.
2. Offshoring is good for American businesses. The myriad of services being sent overseas allows American business to compete. A healthy American enterprise is good the remaining workers.
3. Pricing improves our standard of living. Lower prices is what all of us is looking for.

These are admirable high ideals, but as with most “high ideals” they only apply over a short period of time and the real underlying issues remain. Is fair trade fair when one side welcomes imports and the other side restricts and creates barriers. As in China's Compulsory Certification program or India’s numerous trade restrictions.

Restrictions and barriers aren’t the only form of trade manipulation. China keeps a tight fist on the valuation of it’s currency, maintaining a favorable pricing structure to foster exports, they have also amassed an enormous stash of US dollars and aren’t afraid to threaten the dumping of those dollars to discourage any attempt to even the playing field. Three weeks ago they took a shot across the bow of the Democrats ship when they suggested tariffs as a way of controlling imports.

Another contemporary view is that these countries should restrict trade so they can catch up to the prosperity enjoyed in the United States. What is forgotten is that while these countries maintained their hierarchy and suppressed economic opportunities to their populations, our grandparents and parents spent decades practicing capitalism by sacrificing, investing and building for our future. Now they want to tap into our economy as a way of building theirs.

Everyone agrees that China is a repressive regime with a long standing record of human rights infractions, and that our exported oil dollars is being used to finance anti-American terrorist activities, but somehow we become the abusers if we suggest any form of intervention to protect American industries.

Offshoring became a necessary step for American manufacturers to compete with products from low wage areas. But as a result Americas manufacturing infrastructure has been in a 15 year downward spiral. Consumer electronics, textiles, steel, autos and auto parts are mostly manufactured offshore. In 1990 the U.S. Census Bureau lists manufacturing at 8.1% of total population, and 4.7% for 2006, resulting in an overall loss of 35.4% of total manufacturing jobs in little more than 15 years.

Through the 1990’s computer/Internet companies dominated the media, anything that wasn’t attached to the Internet, (or President Clinton), was second page news. This decade started with our attention on the bursting bubble and the War in Iraq. Interest rates fell to a 30 year low and the consumer, armed with fresh re-fi money, went shopping. The economy and jobs grew at a respected pace and unemployment fell to 5 year lows. But the economy was being driven by a dynamic construction market and the consumer. Job growth was being carried by construction jobs and the 1.7 million jobs added to the medical field. Take away these two categories all other job categories were flat or negative.

Since English is a relatively common language in India and wages are about a third of what they are in the US, they became the next wave of offshoring. Besides English, India has other advantages over the previous popular offshore hot spots. They also have a large population well educated in computer sciences, engineering, accounting, medical and legal professions. Offshoring for IT, R&D, product engineering, medical transcription, data entry and legal services are being offered, and embraced, by businesses large and small.

Imported products and offshore services save the American consumer money. Wal-Mart claims that they save the average family of 4 over $2300 per year. The American consumer deserves to make their purchases at the lowest price possible. But history has showed that once a market is captured by foreign competitors, prices rise. Imported textiles are still cheap, but as the dollar loses value against foreign currencies or China lets its Yuan be adjusted to a real market value, those too will rise.

Wall street is currently applauding the dollars fall in value, saying that this action will result in greater exports and growth for American industries (that export). Since imports have almost a 2:1 ratio over exports, as the dollar falls the cost of imported goods rise, and will not bring about an improvement in the trade deficit.

The Manufacturers Index came in under 5.0 for the second time this year and this has historically been an indicator of an economic downturn. The consensus on the street is that the Fed will cut rates in response. With the dollar in a long term fall the Fed may have to reverse that course and start raising rates. The thinking is that a recession would do less damage than inflation.

If we get entrenched in a recession what would be the vehicle that pulls us out. We had Reagan’s investment tax credit program that ignited manufacturers and businesses to capitalize in the 80’s but if they get the building bug again it will be offshore where labor is easier. In the 90’s it was the computer/Internet explosion and they’re having great success in India. So far this decade we’ve had a construction boom that would require low interest rates to reignite, and a very lively consumer that has built up considerable debt in the process. If the consumer takes a breather, I have to wonder which segment of the economy will spark an upturn.

The trade deficit by itself could easily be overcome by a resilient citizenry, they have come together in the past, to surmount much greater. But when combined with a lack of direction from Washington, a diminished manufacturing infrastructure and a business community committed to relieving themselves of the burdens that being an employer in the United States carries, some other unforeseen sector has to kick-in.