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Long-term unemployment easing, as many accept lower pay

James Ensley, of Rocky Face, Ga., took a $10,000-a-year job last month as a school bus driver after almost two years of unemployment benefits ran out. While that's one-third of what he had made as a warehouse manager, the father of two says he's content.

"It feels great to go to work instead of having somebody tell you, 'I can't help you,'" said Ensley, 51, whose former employer went bankrupt in the housing slump. "I miss my old job, but it is not coming back so I have to get over it."

A surge in long-term unemployment, which Federal Reserve Chairman Ben Bernanke has cited as evidence of a "far from normal" labor market, is abating. That's good news for American companies, which are taking advantage of a pool of 5.2 million people whose career hardships have made them eager to return to work.

Most of the re-employed have had to settle for reduced pay, allowing businesses to keep labor costs low while boosting profits amid sluggish sales gains after the deepest recession since the 1930s.

http://www.chicagotribune.com/business/ct-biz-0910-long-term...



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This might help the

This might help the unemployment numbers, but it is not good news. People taking jobs that are far below their qualifications means that the economy does not have the capacity to employ at the level of those qualifications (whereas it had the capacity previously) as well as desperation on the part of the employee, both of which are poor economic indicators. It might be that many people have run through their savings and can no longer continue looking or waiting for better jobs.

...

Falling wages coupled with rising cost of living

It is a downward spiral for the individual and the economy as a whole.

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

Slave wages are not the answer. Here's how to fix the economy...

In 1914, a business executive named Henry Ford did a startling thing:
He announced that he was going to more than double the wages he was paying his employees, from $2.34 to $5 a day--the equivalent of $120 a day in today's money.
The country was as shocked by this then as it would be today.
A powerful company voluntarily sharing some of its profits with its rank-and-file workers and paying them more than it absolutely had to?
Had Henry Ford gone mad?
Didn't he understand that the only goal of a business was to make money?
Didn't he realize that, as a successful business executive, he was entitled to make as much money as he could possibly make--the financial health of his employees being nobody's business but their own?
Didn't he understand that smart executives pay their employees no more than "market rates" because the executive's job is to "create shareholder value," everyone in our economy gets what they deserve, and the financial well-being of employees is not something that business owners or bosses or shareholders should be concerned with?
Yes, Henry Ford understood all that.
The story you hear frequently about why Henry Ford made this decision was that he wanted to allow his workers to be able to afford to buy his cars. The wage increase certainly made the cars (and many other products) more affordable for Ford employees, but the historical consensus is that Ford actually made this decision for a different reason: To reduce employee turnover--and, in so doing, reduce recruiting and replacement cost.
Regardless, it worked.
Thousands of people immediately lined up to get jobs at Ford. Employee turnover plummeted, and recruiting and training costs dropped. The new wages allowed Ford employees to live middle-class lives, instead of being poor. And it presumably made Ford, Ford's senior executives, and Ford's shareholders even more proud of what they had created.
In short, instead of viewing "shareholders" and "customers" as the only two corporate constituencies that matter, Ford introduced the idea that great companies should also serve a third constituency:
Employees.
And because one company's employees are another company's customers, Ford's decision helped spread the country's wealth to more citizens and expand the purchasing power of the country as a whole. And, in so doing, it helped the overall economy.
Specifically, Ford's unprecedented move also helped usher in an age in which the middle class became the driving force in the American economy, turbo-charging the nation's economic growth right up through the early 1980s, when relative middle class wages began to decline.
Henry Ford's story is highly relevant today.

Read more: http://www.businessinsider.com/henry-ford-salary-increase-20...

And one more thing: if American companies can't see their way clear to raising wages, the government just might do it for them.

-
"Stand up for what you believe in. Even if you stand alone."
~ Sophie Magdalena Scholl
"Let it not be said that we did nothing."
~ Ron Paul
"You must be the change you want to see in the world."
~ Mahatma Gandhi

$30000 isnt great to begin

$30000 isnt great to begin with; well a single person could live comfortably on it if they arnt a spender. $10000 is hard or impossible to live with even if you stretch it. I mean if you spend about $100 a week for you and your family on food and basic needs items, thats already over half of your pay.

To climb the mountain, you must believe you can.

You heard it from the stable pilots.

They shovel the droppings and they "pile it" there.

At its base Keynesian "Economics" is all about market psychology. All the models and the aggregate reporting is nonsense designed to create the correct emotional response.

Free includes debt-free!

Inflation is troubling though.

Hi,

If wages are to go down, so will inflation, but I don't see that happening. This is troubling news to me. People are accepting low pay and the cost of living is going up. We might as slap slave title on people and throw them into factories.

correction

Not thrown into factories. They will use public transportation.

a nod's as good as a wink to a blind bat

this is exactly why the

this is exactly why the minimum wage laws should be removed.

um

it is much more complicated than that, but you bring up a good point. Minimum wage laws should be removed.

a nod's as good as a wink to a blind bat

It has more to do with hundreds of thousands being

transferred to disability benefits.
A useful means of hiding long term unemployment (though the taxpayer will pay even more.)

"In the end, more than they wanted freedom, they wanted security. They wanted a comfortable life, and they lost it all -- security, comfort, and freedom. When ... the freedom they wished for was freedom from responsibility, then Athens ceased to be free."

Falling wages are not

Falling wages are not automatically a bad thing.

It is said that part of the premise behind the controlled inflation a central bank can provide, is that it masks falling or stagnant wages, which people don't like to accept. Nobody likes taking a 2-3% pay cut, but almost nobody notices when the dollars they're paid with lose 2-3% value.

2-3% value loss? Try 10-50%

2-3% value loss? Try 10-50% value loss in the last 5 years on nonnegotiable expenses.

2-3% annually

of course that is the official number, probably it is closer to 5-8% annually, or 25-40% over the last 5 years......

Josh Brueggen
Engineer
Entrepreneur
Gardener
Jack of all Trades
Precinct Commiteeman Precinct 5 Rock Island Co Illinois

I feel for him

I've been out of work since December of 2011 and I have been looking everyday for work. I have managed to get maybe a dozen interviews only and half of them don't call to say if you did or didn't get the job. It's frustrating, and there is no way to live on 10,000 in someplace like California or New York, but especially in California where I am. I'm in the OC area in Southern California and you can't find a studio for less than a thousand a month, except maybe in a really bad area. Even there rent will cost you as much as $800 to $1000 a month.

reedr3v's picture

You have an advantage of awareness

that the long term outlook is shaky at best. Have you thought of a back up way to earn some money while still looking for the type of employment you prefer? Perhaps freelance consulting or mentoring your skills?

Move to Australia. Lots of

Move to Australia. Lots of opportunity.

10K a year!

Are you kidding?

He went from $30,000 a year as a warehouse worker to.......

......$10,000 a year as a school bus driver. At least he has a job, although $10,ooo is not enough to support one person let alone a family, it is better than nothing.

This is typical of our society at this time. We are being turned into wage slaves. We are told the only way to stimulate the economy is to give more money and tax breaks to the wealthy. That has been the mantra for the last 40 years. I am still waiting to be trickled on from the Reagan era.

The only way to get the economy going is to pay the working poor more, cut bureaucracy, stop the wars, and possibly do debt relief for taxpayers ( cut $100,000 debt for each tax paying citizen from credit card, mortgage and/or school loans ).

I honestly don't think that

I honestly don't think that minimum wage laws help anything. Businesses and free markets will drive wages to what that service is valued at for the given service each employee provides. If people take personal responsibility for knowing who they lay in bed with (businesses) then they won't promote unscrupulous businesses and their owners. I don't honestly think the government should dictate anything, their track record is so terribly bad.

In, "The Road to Serfdom"

Hayek points out that higher wages as in a minimum wage have the effect of eliminating marginal businesses. This becomes very important during a downturn, or when an industry becomes outmoded because workers have less options on where to go for further employment. Eventually it leads to a higher "normal" unemployment rate as some people who wish to work simply do not have skills marketable at minimum wage, and thus will never be hired.

Josh Brueggen
Engineer
Entrepreneur
Gardener
Jack of all Trades
Precinct Commiteeman Precinct 5 Rock Island Co Illinois

Haha, oh, we've been

Haha, oh, we've been "trickled" on all right.

I don't think the government should do debt relief though. I've worked hard and have never owned a credit card, dropped out of college so I wouldn't have debt... I shouldn't have to pay for other people's debt.

End The Fed!
BTC: 1A3JAJwLVG2pz8GLfdgWhcePMtc3ozgWtz

Give more money to the

Give more money to the wealthy? What makes you think that reducing taxes is "giving more money". It is THEIR money in the first place. Not mine, not yours, not the govt, it's theirs.

The ONLY way to get the economy going is reducing spending so taxes can be reduced for everybody, get the govt out of regulating markets and have a sound currency!

Debt relief? Are you kidding? That just create more moral hazard. Do you think it is moral to give a debt relief to negligent people that took a loan they couldn't afford and dump on people that were more responsible with their finances?

We need liberty, not more govt "solutions" using force and coercion against our fellow citizens.

"When the people find that they can vote themselves money, that will herald the end of the republic." Ben Franklin

Give more money AND tax breaks...

They could have meant bailouts... As well as the specially low interest loans for the super rich only granted by the fed.

The biggest problem tax wise is the inflation tax its a tax on the poor the wealthy own assets more than currency.

The ultimate trickle down economics is the Fed the mantra is give the money to the banks and they'll loan it to the little guy. The Hypocrisy of democrats on this form of trickle down economics is ridiculous, especially seeing as they can put the nozzle of this economic hose anywhere they want...