Fixing the economy....

This gentleman from California pretty much sums it up. He has a bit of an advantage over others as he will be eligible for some pensions and union membership gives them access to affordable healthcare. In many respects, the issue he describes is the key issue of why things are off track.

Workers who have a job haven't seen a decent raise in years, the costs of everything has gone up and the uncertainty of the whole system makes one not want to spend or increase your debt load. Until this aspect of things change, the POLs in Washington can bleat on about things but things won't get better.

What we need is for businesses to get people back to work and go back to giving people a decent increase in pay for the hard work & effort they provide the businesses. Many companies have seen record profits but the workforce who provides that is not given their share as workers who complain can be replaced by others very easily. Companies have been hording cash for the past few years and not enough has been given back to the workforce in lower costs for healthcare and raises.

Until this paradigm shifts back to normal, consumers will be hesitant to spend their meager incomes and the economy will remain morbid. The answer is a simple one if the businesses will listen as they need consumers otherwise who will buy their products?


Why we quit spending ...
Postcards from the recession
... and how our cautious consumption, and that of many others, creates a drag on the country's economy.

Cautious spending by consumers slows down the economy.
October 23, 2011By Scott Martelle - LA TIMES

I may owe the nation an apology. It turns out I'm a prime reason why the U.S. economy can't regain its footing. Because as a wage-earner, and as a consumer, I'm not what I used to be.

My full-time newspaper job was cut in September 2008, and since then I have worked as a freelance journalist, the author of history books, a part-time university instructor and an occasional writer-for-hire for various non-journalistic projects. My wife, an elementary school teacher, has faced furloughs and stagnant wages, but (thanks to her union) we have healthcare coverage we can afford.

It's how we and others in our situation are living now that helps explain the persistence of the economic crisis, and hints at the troubles of the future.

Our household income is less than two-thirds what it was when I had a full-time staff job, and at my age — 53 — I'm unlikely to land another job with wages and benefits similar to the one I had (ageism in this jobs marketplace is pervasive, but that's another issue).

With one son in college and another in his senior year of high school, we're treading financial water in the short term. Better off than others, yes; we're not at risk of losing our home (we bought in 1997, far ahead of the bubble). Yet we're spending significantly less than we once did, forming an incremental drag on the economic recovery. Ironically, we have more money salted away in our savings account now than before my job was cut. That's what financial fear does; it makes you hoard cash.

So we patronize fewer restaurants, buy fewer books (a painful cutback for an author; if I'm not buying their books, are they not buying mine?), and rarely contemplate a weekend train getaway to Santa Barbara or San Diego. Take in a professional hockey or baseball game with the family? Um, no.

But a recovery needs us to spend. So we're not helping. And that's why the future is worrisome. We never were high-debt spenders (at the moment, mortgage, car payments and a small credit card balance are our only outstanding debts), but it's highly unlikely our household spending will ever again be what it was.

Part of that is a personal refocus on frugality — that financial fear thing again. Part of it is financial reality. Less money coming in necessitates less money going out. And looking ahead, what once promised to be a comfortable retirement is now a big question mark. I will get checks from Social Security (if it, and I, are still alive), small pensions from two former jobs (nine years' credit in each) and the proceeds from a 401(k) that, unfortunately, mirrors the economy, and to which we're no longer adding money at exactly the point in our lives when we should be.

My wife will also qualify for a pension as a teacher, but if she works until age 65, she will have 28 years in the California system where we live. Because of state laws, she will not be able to collect Social Security from her previous jobs. Given the ongoing assault on public employees — and on Medicare — we don't know what shape our medical coverage will take then. Our house will be paid for, but we'll still be on the hook for property taxes.

What all this means is that we both probably will need to work until we are closer to age 70, taking up slots that younger workers — like our sons — will be anxious to fill. And in the interim, our impulse will be to save rather than spend.

Three years ago we were part of the consuming class that helped drive the economy, thinking nothing of spending a couple of hundred bucks on a new piece of stereo equipment, dining out a couple of times a week, throwing patio parties for our friends or going to concerts. And we made regular investments in a 401(k) that both put money in Wall Street and offered the promise that we would be able to continue spending in retirement.

Now, we're an anchor on the economy, adding little to the national investment pool and quicker to save a buck than to spend one — personal patterns that are likely to continue for years, if not decades.

We're just one little choke point in the national recovery. But extrapolate our spending decisions across the millions of others who have lost their jobs, many of whom have had less luck managing these doldrums than we have. Add in a generation — our sons, having witnessed this at an impressionable age, are not likely to become profligate — and the macro problem comes into focus.

A consumer economy without consumers does not make for a robust future.

Scott Martelle, an author and former Los Angeles Times staff writer, lives in Irvine. http://www.scottmartelle.com