Are you working a few hours less or feel insecure about your job?
By Alex Mai at 2 July, 2009, 10:42 am
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Yes, the current economic downturn is threatening your working hours and your job, but how exactly?
This collapse wasn’t caused by the real economy, it was caused by a bubble bursting in housing, with huge implications for financial institutions. The overwhelming losses caught many institutions totally off guard. Now that some time has passed, and the first losses have been taken (or swept under the blanket but still real enough), what we need to stabilize our financial institutions and then the real economy, is a stabilization of house prices.
e.g Most of companies in American own a lot of real estate property, the value of house drops which means that company couldn’t borrow as much as before from bank, and they need to fill up the price gap for the house. For doing that, they need to tightening the budget and/or cutting the positions.
e.g for individual, the price of house drops does the same thing to householder. They need to replay a huge chunk of money for that gap with their income, how can you expect them to consume with this obligation each month?
This is why the demand does down down down…..
How bad is the working hours now?
When the report comes out, pay attention to the hours worked. Last month the average work week dropped by one-tenth of an hour. I think it went from 33.2 down to 33.1 hours. No big deal…..right?…..Wrong!
Every one-tenth of an hour drop in the average work week is the equivalent of losing slightly more than 400,000 full time jobs. And with capacity utilization hitting new lows, I suspect the work week probably shrank again by 1 to 2 tenths of an hour.
Another Angle not mentioned.
How many people Have been cut from working 48, 55, 60 hours, down to 40?
I know a few who have gone from 40 to 32 hrs. per week.
I also know of a few who have taken a 10% Pay Cut!
This all equates to the “Bottom Line” for Families and their ability to Spend.
No Spend, No Recovery.
It’s that simple.
The “trendlines” are critical.
An increase in unemployed and a decrease in hours worked suggest trendline is still downward.
Bad begets bad, ie less income, less commerce, fewer orders, less production, fewer sales, more need for business to contract, consumers to save, government burdened with more demand for services as revenue slows!! No, it is NOT encouraging!
Biggest problem is this is NOT just the US! This problem is global so we have little hope of exports leading us out of this. But wait, we’ve slashed manufacturing jobs - long before the crisis. We’re increasingly employed in service, ie less to export, increasingly reliant on our consumers to spend us out of this hole!!! Not a pretty picture!! God bless America!
You are welcome to share your stories about your job here.
The updated news about jobless and payroll:
“WASHINGTON (MarketWatch)-Workers lost jobs at a faster pace in June than in the prior month, the Labor Department said Thursday. Nonfarm payrolls shrank by 467,000 in June higher than the 325,000 decline expected by economists surveyed by MarketWatch and the 322,000 jobs lost in May. The unemployment rate ticked higher to 9.5% in June from 9.4% in the previous month. Economists had expected the unemployment rate to rise to 9.6%. Average hourly earnings were flat at $18.53. Economists had been expecting a 0.2% gain. Earnings are up 2.7% in the past year. The average workweek fell six minutes to 33.0 hours. Hours worked fell 0.8%” — Marketwatch.com
Alex Mai
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