I’m still searching for jobs. Wages Too. Where are they?
Enquiring Mish readers probably want graphical displays so here goes:
In Where the Hell are the Jobs we showed how the unemployment numbers are a blatant fabrication and tonight we are going to look ahead and see just what might be coming down the road. Clearly we can see this recovery produced less than ZERO private sector jobs. No one can deny it. Well I take that back (Bush apologists can and do deny it but that is another story for a political blog).
Not only have we lost private sector jobs over the last four years (in spite of a mammoth housing boom and retail sector expansion), but real wages have declined as well. What is amazing is that figure holds true in spite of mammoth earnings growth at corporations, bonuses, and blatantly disgusting CEO salaries.
Consumers have gotten away with lifestyles by literally and figuratively consuming their houses with cash out refis, home equity loans, etc etc etc. One might think that foreclosures would be up in this situation. Well they are. Then again they are not. Foreclosures are down in California and some of the bubble areas, but in areas where job losses are severe (Ohio Michigan Indiana) foreclosures are rocketing. For a good analysis of the home foreclosure situation see: Housing Bubble: Foreclosures up 57%, Mostly Non-Bubble States
Rest assured Mish readers that home foreclosures are about to skyrocket everywhere. See A Tsunami Wave of Foreclosures for further discussion.
Bottom line #1: Home prices can not keep rising above real wages regardless of what anyone thinks about
1) The scarcity of land
3) The Long Haul
4) Anything Else
Japan proved it and we will prove it too. The reason foreclosures are down in California is that people (for now) still have a huge profit on their purchases. Recent buyers are probably underwater or will be soon and that is all it will take to start one incredible deflationary downslide.
Bottom line #2: Wages are falling, jobs are stangant, and the FED (for now) is hiking. That is a lethal mix.
Meanwhile let’s take a look at some recent happenings starting with something you probably never even thought about “Outsourcing the Drive Thru Window”. Yes Mish readers, McDonalds is test piloting a program to outsource drive-up windows. When I first saw reports of this I thought it was a spoof. It is not. “That friendly voice at the drive thru of the Hermiston McDonald’s is no longer your neighbor, or even someone from your own town. Instead, you are now patched through to someone working in Grand Forks, North Dakota.North Dakota’s minimum wage is $5.15 and Oregon’s is $7.25, so it makes sense for them to want to hire someone who can do the same job, for a lot less money.”
Is there another side of this story? Isn’t there always?
Here it is: The orders are actually being taken in a call center run by a company called CCS-SEI. The calls are not being taken by minimum wage McDonalds employees at a store in another state, but by professional phone support staff in a calling center. The idea of this order taking alternative is not to save money so much as to make sure that the people taking the orders get them right – apparently complaints and replacing incorrect orders uses up a lot of staff time and materials. What savings there are to this system are in increased efficiency, not lower wages.
Enquiring minds might be wondering if there is a Mish side to this story. Of course there is: McDonalds would not be doing this at a wage loss to save a potential screw-up on a “supersize” vs. a regular fry. This is a test pilot under “ideal” situations to see if it will fly. If it will fly here, why won’t it fly in … India or Ireland or wherever? I do not know if it will fly here, but I think it will. If it does, then it’s only a matter of time before someone in India is asking “Do you want to ‘supersize’ that ma’am?” How many jobs will this cost? I can’t even begin to think about it. If you have a number, and a number for self-checkouts at grocery stores as well. Send me a buzz. Somehow I think it will EVENTUALLY be staggering.
Enquiring Mish readers might be wondering about the “American Job Creation Act of 2004”. This 650 page bill is essentially corporate welfare that over the long haul can not possibly create any jobs but let’s kick off with some of its lesser known monstrosities:
The bill is a veritable treasure trove of tax handouts for companies ranging from General Electric to Plano Molding Co., a maker of tackle boxes in Republican House Speaker Dennis Hastert’s Illinois district. Let’s take a look:
Current law imposes a 10 percent excise tax on imported fishing equipment. It seems some anglers are stowing their lines and lures in sewing kits, which are not subject to the tax. So Plano’s representatives backed a measure to cut the tax on tackle boxes (but not other fishing gear) to 3 percent.
Among other minutiae, bows such as those used for hunting are subject to an 11 percent excise tax if they have a peak draw weight of 10 pounds. The bill increases the peak draw weight to 30 pounds before a tax applies. It also repeals the tax on all fish-finding sonar devices.
In a stroke of bad timing, the bill imposes a 75-cents-per-dose tax on flu vaccines, to be paid by the recipient. The tax is equal to that imposed on other childhood vaccines and will go into a vaccine injury compensation fund.
Sen. John McCain, R-Ariz. called it the “worst example of the influence of the special interests I have ever seen.”
OK let’s take a look at the REAL problem:
The nation’s corporate tax rules provide strong incentives for American companies to shift their profits from the United States to low-tax havens such as Ireland and the Bahamas. Outside the country, in tax havens, profits are allowed to grow untaxed by the United States until they are repatriated. On the silly notion that repatriating this money back into the US will “create jobs” Congress passed and the president signed the “Job Creation Act of 2004”.
Congress’s ostensible purpose for allowing the holiday is to unleash a flood of money for “job creation” by repatriating money sitting abroad. Instead of taxing corporations at 35% rate it lowered the tax burden to a measly 5.5%.
Here are approved uses that “supposedly” will create jobs:
1) Worker hiring and training
3) Research and development
4) Capital improvements
5) Financial stabilization
6) Debt pay down
7) Corporate acquisitions
9) Legal Liabilities
Of those approved uses only “hiring” will create jobs. However, any company planning in hiring would probably just shift funds around, use repatriated money to “hire” and earmark funds for “hiring” to do something like increase dividends or bonuses. Rest assured, not a single job will be created from this monstrosity.
For instance: Merck, which is sitting on some $15 billion in untaxed foreign profits and faces an estimated $18 billion in potential claims arising from the Vioxx debacle may use it pay claims. Will that create any jobs?
The drug giant Schering-Plough announced a $9.4 billion repatriation, and Eli Lilly announced one for $8 billion. Pfizer is considering whether to repatriate $29 billion in untaxed foreign profits; Hewlett-Packard has $14.5 billion eligible for repatriation; Intel has $6 billion. By the end of 2005, an estimated $100 billion to $500 billion will have found its way home. All in all, Congress’s Joint Committee on Taxation projects that the holiday will allow companies to avoid $3.3 billion in taxes.
Where does Mish think this repatriated money will go? That’s easy: Mergers and acquisitions. We will get to this topic a bit later but rest assured mergers and acquisitions will not create any jobs.
The big problem with this bill is that it establishes a horrible precedent by encouraging companies to leave profits abroad in anticipation of future “tax repatriation holidays” and it makes fools of companies that regularly pay the full corporate tax rate, while providing incentives for mergers that will actually cost the US jobs.
I have been tracking mass layoffs for quite some time. I am positive I have missed more than a few. Here are the ones I know about, announced since Dec 2004. Note: only totals greater than 700 are in this list or it would go on forever.
Colgate Plans to Cut About 4,400 Jobs
Colgate-Palmolive Co., which makes consumer products including Ajax detergent and Irish Spring soap, plans to cut its work force by about 4,400 jobs as part of a restructuring plan aimed at boosting its sales and profits around the world.
750…. Time Warner’s America Online
Job cuts hit AOL’s Dulles operations
Time Warner’s America Online division began handing out pink slips Tuesday, firing 750 employees division wide, with more than half of those cuts in Northern Virginia.
United Airlines to cut another 825 positions
Delphi Announces Plans to Cut 8,500 Jobs
Delphi Announces Plans to Cut 8,500 Jobs Next Year, Revises Its 4Q Sales Forecast
The Troy-based company had set the same goal for 2004 and exceeded it.
4200…. Cardinal Health
Drug wholesaler Cardinal Health Inc. said on Monday it would cut 4,200 jobs, or 7 percent of its work force, and close 25 facilities around the world as part of a plan to reduce costs.
Merck to Cut About 5,100 Jobs by Year’s End
Merck to Slash About 5,100 Jobs by Year’s End, Will Cut Millions of Dollars in Spending
Westinghouse Savannah River Co. Announces Up to 1,200 Job Cuts by Oct. 1 2005
Westinghouse President Bob Pedde told employees in an e-mail the company that operates the Savannah River Site near Aiken had formally requested the layoffs, which needs Department of Energy approval.
Up to 800 additional workers could be laid off by Oct. 1, 2006, Callicott said, as site projects come to a close at the former nuclear weapons complex.
American Express Co. said it will cut 2,000 jobs, or 2.5 percent of its work force, in a restructuring designed to save more than $75 million a year before taxes.
1000…. Lockheed Martin
Lockheed to shed 1,000 local positions
2000 wet seal
Wet Seal to cut 2,000 jobs, close 150 stores
Wet Seal said it will record the restructuring costs in the fourth quarter ending Jan. 29. It also said it will announce its closing cost estimate in January.
2500…. Northrop Grumman
Northrop Grumman job cuts target Gulfport, New Orleans shipyards
Cutbacks in the U.S. Navy’s budget likely will cut 2,500 jobs at Northrop Grumman Corp.’s Ingalls shipyard in Gulfport and Avondale shipyard in New Orleans in the next three years, the company’s senior shipbuilding executive says.
GM…. 7% of workforce
GM to Continue Shrink Work Force in 2005
the automaker said it would offer buyout packages early this year to some of its 38,000 salaried workers in the United States.
GM Chief Executive Officer Rick Wagoner at the Monday briefing denied a local press report that the automaker would cut up to 7 percent of its U.S. workforce this year.
“Seven wasn’t my number,” Wagoner said, but he declined to give a target for job reductions.
2465….West Point Stevens
The Upstate’s textile industry could face further layoffs as it struggles against foreign competition, industry representatives said the day after WestPoint Stevens announced it would close three plants in Clemson. The company, which has filed for bankruptcy, said lower-cost textile imports are the reason the company is cutting a total of 2,465 jobs at plants in the Carolinas, Virginia and Indiana.
J.P Morgan Chase has told 1,900 employees of its Tampa call center that they will be out of a job by the end of 2005. The cuts follow the merger between J.P. Morgan and Chase Manhatten a year ago.
Oracle to PeopleSoft: The pink slip’s in the mail
Oracle appears to be adding insult to injury in its merger with PeopleSoft–taking the unusual step of notifying workers of their termination by sending pinks slips via express mail to their homes. As earlier reported, shipments to thousands of PeopleSoft employees across the country are expected over the weekend, according to sources close to the company. Those spared pink slips will get packages too–containing new Oracle employment contracts. “The view of most of the employees out there is that it’s a really callous way to do it,” said Joe Davis, chief executive of Coremetrics and a former group vice president at PeopleSoft, who stays in touch with his former co-workers. An Oracle representative did not return repeated calls for comment.
907….Glass plants shutting
Local Glass Plant Workers Given Layoff Notice
2 Other Glass Companies Close Their Doors
MONACA, Pa. — A layoff is not the news anyone wants to hear from their boss. But, 250 workers at a Beaver County glass plant were told they will soon be out of a job.
The Anchor Hocking Company in Monaca blames the job cuts on a restructuring plan that will consolidate some operations.
The No. 4 U.S. bank, on Wednesday said quarterly profit rose 32 percent, reflecting its acquisition of SouthTrust Corp. and helped by growth in loans, deposits and fees, and said it will cut up to 4,000 jobs. Wachovia said the reduction of 3,500 to 4,000 jobs, or roughly 4 percent of its work force, is part of a move to save up to $1 billion a year and will be accomplished by 2007. The cuts are on top a reduction of 4,300 jobs related to the Nov. 1 acquisition of SouthTrust, which made Wachovia one of the biggest banks in several southeastern and eastern U.S. states.
MBNA Net Rises 9.3%; 1,000 Job Cuts, Buyback Planned
U.S. Jan. 20 MBNA Corp., the world’s largest independent charge-card company, said earnings rose 9.3 percent as credit quality improved. The company also said it will incur as much as $350 million in costs to shed about 1,000 jobs.
2000…. US Airways Group Inc.
7000…. SBC Communications Inc.
Jan. 27–SBC Communications Inc. said Wednesday that it expects to eliminate 7,000 jobs this year, making 2005 the fifth straight year in which the communications giant has shrunk its workforce. A crew member uses a machine to push fiber-optic cable into an underground conduit. San Antonio-based SBC included the updated job information as it reported that its fourth-quarter earnings were down 16.7 percent from a year earlier. Its results were pulled down by severance costs for 2004 job cuts, changes to its pension plan and its share of Cingular Wireless’ expenses
5600….Proctor and Gamble on merger with Gilette
P&G; Strikes $57B Deal For Gillette
In the headlines this morning, Procter & Gamble is buying Gillette for $57 billion in stock, creating the world’s largest consumer-products company.
It plans to cut up to $16 billion in costs and lay off 4% of the combined workforce of 140,000.
Celestica’s latest job cuts reflect industrywide overcapacity, analysts say
Celestica’s latest restructuring, which will cut 5,500 more employees worldwide and trim over $;1 billion US from its bottom line in 2004 and 2005, has some analysts wondering if it will ever achieve acceptable profitability.
SBC to Cut 13,000 Jobs After Buying AT&T;
SBC Communications Inc. said Tuesday it expects to eliminate about 13,000 jobs after its $16 billion acquisition of AT&T; Corp. closes. The projection came during an occasionally heated meeting with investors a day after SBC announced plans to acquire AT&T;, its former corporate parent, a deal that would create one of the world’s biggest telecommunications companies on numerous fronts. The cuts would come in addition to existing plans at the two companies to eliminate at least 12,000 jobs before the merger is finalized at least a year from now. [Am I reading this correctly? Is that 25,000 jobs to be eliminated? Mish] San Antonio-based SBC had recently indicated it would cut about 7,000 positions from its work force of 163,000 during 2005, primarily through attrition, which executives said typically total about 1,000 a month. [Amazing. Working conditions are such that 12,000 people a year leave that place. Mish] AT&T;, based in Bedminster, N.J., had already planned to eliminate at least 5,000 of its 47,000 jobs this year, though those cuts likely will involve layoffs in the customer call centers which the company plans to close as it retreats from the traditional consumer phone business.
Suburban employees still facing job losses
Despite recent job gains in Illinois, the state said about a dozen companies are planning to eliminate 1,723 jobs, including more than 800 workers at five suburban companies. The companies filed the layoff notices by Jan. 31 and the list was released this week by the state. Many of the layoffs either started with the notice or will continue through March, the documents said.
1800…. State of Wisconsin
MADISON — Cutting 1,800 state jobs, letting more senior citizens stay in their own homes and raising hunting fees are included in Gov. Jim Doyle’s budget plan for the next biennium. The governor released tidbits of the budget, which he will submit to the Republican-controlled Legislature on Tuesday, in interviews with various media outlets around the state. He will recommend cutting about 1,800 more state jobs over the next two years as part of his long-range goal of cutting 10,000 jobs, spokeswoman Ethnie Groves confirmed Sunday.
11,400…. or 30% Pfizer
Pfizer rises on layoff speculation
Pfizer stock traded higher midday Tuesday, as analysts speculated the drug giant soon would announce massive cuts in its sales and marketing force in a cost-reduction effort. In a note, Lehman Brothers analysts said they confirmed rumors that the pharmaceutical firm planned to slash its sales and marketing force of 38,000 by as much as 30 percent, or 11,400 employees.
Lehman said it believed Pfizer senior management would meet to discuss the move later Tuesday.
Citigroup announced it was making “limited staff reductions” in its corporate and investment banking division. An estimated 1,000 jobs are expected to be cut worldwide, according to people familiar with the decision. The division currently has about 48,000 workers. Citigroup employs some 285,000 people worldwide.
Verizon Communications Inc. is acquiring MCI Corp. for $6.75 billion, a swift response to the acquisition of AT&T; Corp. by SBC Communications Inc. and the third big telephone industry merger in two months. The agreement announced Monday, scuttling a competing bid for MCI by Qwest Communications International Inc., will result in about 7,000 job cuts from the combined Verizon-MCI work force of about 250,000 employees.
Circuit City plans store closures, job cuts; reviews $3.25 bn takeover offer
Acuity Brands Inc. said it would slash 1,1000 jobs worldwide, or about 15 percent of its salaried work force, and take a $17 million pretax charge in its fiscal second quarter ending Feb. 28. The Atlanta-based maker of lighting and specialty chemicals said it expects the job cuts will reduce operating costs by at least $13 million in the second half of fiscal 2005 and about $50 million annually by the end of calendar year 2005.
Lawmakers Unveil List of Job Cuts
(Buffalo, NY, February 23, 2005) – – It is the largest wave of layoffs for Erie County workers so far. Tuesday night, county lawmakers unveiled a massive list of job cuts. News 4’s Barbara Pinson reports from Erie County Hall with the detailed list.
Department leaders have agreed to nearly 700 job cuts.
Chief Executive Todd Stitzer is shedding 10 percent of Cadbury’s workforce and shuttering 20 percent of Cadbury’s factories, a plan that saved 75 million pounds last year and is expected to save about 100 million pounds this year. Cadbury plans to spend that money on marketing as well as research and development. The company promoted Bubblicious Lightening Lemonade gum during this year’s Super Bowl.
Sun expands software staff cuts
The firm has increased planned layoffs to include 3,600 staff, but insists it is still committed to software. Sun has laid off employees in its software group, part of a gradually expanding job-cut programme by a company that has yet to return to consistent revenue growth.
40000….Mittal Steel or 8000 a year
Mittal Steel plans to slash jobs worldwide
Mittal Steel Co., set to become the world’s largest steelmaker next month, may shed as many as 8,000 jobs a year through 2010 to cut costs after the purchase of International Steel Group, the company’s owner said.
2500….more- Marsh & McLennan
Marsh & McLennan Has Loss, Cuts Dividend
Insurance broker Marsh & McLennan Cos. posted a quarterly loss related to charges from a settlement of a bid-rigging scandal, and cut its dividend by half while warning of more job cuts. The world’s biggest insurance broker, whose fourth-quarter results were also hurt by restructuring charges, said the restructuring could result in the loss of another 2,500 jobs, pushing recently announced layoffs to 5,500.
Citigroup Inc. the world’s largest financial services company, on Monday said it will cut about 1,400 jobs in its corporate and investment bank in early 2005, and take a related $275 million pretax charge in the first quarter.
1400…more- Erie County
Another Round of Massive Layoffs for County Workers
Buffalo, NY, March 1, 2005. 1400 employees will be getting their pink slips Tuesday morning.
UPS to Close Hub in 2006, Laying Off 1,400
DAYTON, Ohio – UPS Inc. will close its recently-acquired freight sorting hub in Dayton in 2006, eliminating 1,400 jobs, the world’s largest shipping carrier announced Thursday.
General Motors Corp. to lay off several thousand workers in Lansing
DETROIT – General Motors Corp. said Tuesday it will lay off nearly 3,000 hourly workers at its Lansing Car Assembly plant later this spring. The company already has announced it is closing a 69-year-old plant in Baltimore and a second plant in Linden, N.J. Those moves will affect about 2,000 workers.
800…LG Philips displays
Electronics Group LG Philips Displays is to close its cathode ray tube factory in Durham, trade union Amicus is claiming. The closure in July will result in the loss of 800 jobs – production is moving to China, Amicus says.
Weston puts closing sign on 2 plants
North America’s third-largest bakery, George Weston Ltd., is closing two plants and cutting 1,100 jobs as consumer tastes shift away from sweets and white bread and more toward healthier whole-grain products.
Springs Industries said Wednesday it would cut 700 more jobs this year, leaving little more than 4,000 workers in South Carolina clustered around its Fort Mill headquarters and bringing its total layoffs in the state close to 10,000 in the past 13 years.
Citicorp Credit Services Inc. will lay off 745 local employees in phases as the company goes through the process of shutting down a large west Houston service center.
Automaker to trim up to 2,000 workers
DETROIT — General Motors Corp. expects to reduce its white-collar work force in North America by 1,000 to 2,000 employees this year and reduce the head count in some departments by more than 10 percent.
PITTSBURGH — Alcoa Inc. will cut 2,000 jobs over the next 12 months as the aluminum company streamlines its operations as part of its new global business structure, the company announced Tuesday.
Pioneer to Cut Workforce by 5.1 Percent, Ito Says
Pioneer Corp., which forecasts its first annual loss in nine years, said it will try to recover profitability by cutting jobs and closing factories.
The company will eliminate 2,000 jobs, reducing its workforce by 5.1 percent to 37,000,
Delta Air Lines outlined plans to reduce its technical operations staff by from 1,600 to 2,000 employees on Tuesday. In a Form 8-K filing with the Securities and Exchange Commission, the Atlanta-based airline also said it plans to partner with Avborne and Air Canada Services in a move aimed at reducing maintenance expenses.
1400….Bank of America
Bank of America Corp. has cut about 1,400 employees in Massachusetts in its merger with FleetBoston Financial Corp., about half of its total job loss in New England, the bank has told elected officials. The Massachusetts layoffs are double the number the bank had previously disclosed
BMC Guides Down, Sets Layoffs
BMC Software previewed a fourth-quarter earnings and revenue shortfall Monday and set plans to cut about 12% of its global workforce.
800…. Chicago City Schools
City schools brace for cuts
800 teaching jobs, programs targeted
There you have it. Take a good look at the bolded job losses due to mergers above. I defy anyone to tell me how the “American Job Creation Act of 2004” is going to create any jobs. In fact, if someone can figure out exactly how many it will cost I would appreciate an estimate.
Bear in mind that many of those layoffs above have not been felt yet, especially in telecom and banking. Meanwhile the FED is hiking away and assumes that corporate spending will pick up the slack if consumer spending slows.
I do not know what the FED is smoking but whatever it is please send me some. Consumer spending is now 70% or more of GDP. WHEN (not IF) that falls off the cliff corporate demand will NOT pick up the slack. Whatever spending corporations do will be to improve productivity (as McDonalds is doing) and that will COST jobs. Mergers will cost jobs. A slowdown in housing will cost jobs. More outsourcing will cost jobs.
This “recovery” is on its last legs and the FED and most economists are clueless. Without jobs and rising real wages, housing (the only thing holding the economy together) will collapse.
I am searching for jobs. Do you see any coming? I don’t.