Laura is demoralized. I’m feeling luckier every day personally, but I’m seeing signs of “things are not so good” around me. A neighbor lost a job he held for nearly 20 years. The discount grocer around the corner is going out of business. A guy on the corner was advertising that they’re selling off even the fixtures. Old Navy reduced its square footage, giving over a chunk to the defunct nail salon next door. Involvement? I’m as bad as the rest. I do read the papers. I pay attention to who to vote for, but I do not go to the meetings–council meetings, school board meetings, etc. I do sometimes download the minutes. I’m with a lot of Laura’s commenters. I feel disempowered. Nothing I did helped anything. I didn’t cause nor could I prevent the financial meltdown. My family and I have been lucky to avoid much of the fallout. Tenure and being in a good field has saved my husband’s job. Hard work and being in the right place at the right time landed me a job. The real estate in our area has been remarkably resilient. We lost money in our 401k’s but have time to rebuild them. A lot of our money was in a basic savings account, which isn’t gaining much, but didn’t lose anything either. We mostly lived within our means. I feel lucky. Really, really lucky. And I feel terrible for people on the other side of that luck.
I actually hate that every scandal gets -gate attached to it in order to liken it to Watergate. But the more I’ve been thinking about the financial crisis (or meltdown), and the more that comes to light about what many of the big banks were up to, the more I think that this scandal is more like Watergate than many of the other -gates we’ve seen over the last few years. The news is awash with stories about Goldman-Sachs improprieties, some of which are being exposed through inter- and intra-office emails. This Frank Rich column argues that it’s about time the banks were held accountable and that he’s ashamed that our government hasn’t done more. As during Watergate, it’s the press that’s been exposing many of the problems that were at the root of the banking crisis. The fallout of Watergate, many believe, is a loss of faith in our government to be honest and straightforward. It exposed not just that the government used doublespeak to cover up bad things it was doing, but would resort to illegal activities in order to maintain power. It’s why we often go there when our faith in presidents is shaken. Maybe, just maybe, we think, they’re another Nixon. But Watergate didn’t bring down our entire country. Our democratic processes spun into action and we recovered. The financial crisis has shown us to be chumps. Many people trusted the big banks to, at the very least, not completely screw us over. But we were wrong. We believed the snake-oil salesmen, and unfortunately, the unveiling of the charade didn’t just bring down a single man and a few of his co-conspirators. It brought down the whole economy. It took with it millions of people who lost their homes, lost jobs, lost their entire savings. Nixon was forced to resign. Goldman-Sachs just awarded millions in bonuses. What’s wrong with this picture?
I had to laugh at this article in the New York Times, suggesting part-time college teaching as an option for un- or underemployed people. Really? Honestly, for the amount of time one puts in, you’d be better off waiting tables. But I understand, you’ve got your Ph.D., why waste it as a waitress. I do like my part-time gig, but if I were looking to make an actual income, I don’t think part-time teaching is what I’d be pursuing. I agree with the article that there are a lot of intangible benefits to teaching part time. But it also glosses over the generally poor treatment of adjuncts and all the complex reasons for the fact that there’s such a demand for adjuncts in the first place.
I’ve been following the Edmund Andrews story as it’s been unfolding via various blogs, mostly via Megan McArdle. In case you weren’t following, Andrews excerpted part of his book on his succumbing to the subprime mortgage market in the New York Times. Since the story came out, lots of blame has been going around, a lot of it focused on his wife, who had been a stay at home mom, struggled to get jobs and, it turns out, had two prior bankruptcies.
Reading the numbers makes me sick. As far as I can tell, these people make about as much as we did when we were both working. And yet, thanks to putting themselves into huge debt, they have a lot more than we do: a larger house, kids in private school, expensive clothes. Granted, they are on the verge of losing much of that, but it’s still depressing. I’m glad I didn’t run up $50k in credit card debt in order to have fancy clothes, fancy cars, and private school. Are there things I wish I had? Sure. But instead of getting in over my head, I’ve lived (mostly) frugally. Like the anger over the AIG bonuses, I think much of the anger directed at Andrews is about the relative wealth they displayed compared to most people. While many people went into debt to live a modest lifestyle–finally getting into a home in a decent neighborhood, for example–a lot of people lived within their means, forgoing an expensive lifestyle. Many people being foreclosed on now did not have 3000 square foot or larger houses. They are now living with family, don’t have jobs, etc. And yet, Andrews still has a job, still has a house even, and a book out that will certainly bring in some income.
My father in law used to say, “Poor people have poor ways.” And it’s sometimes true that poor people make some bad financial decisions, but it’s also true that they sometimes get hoodwinked into doing so or simply have no other alternative than a payday loan in order to put food on the table. Increasingly, though, I think the phrase should be “Rich people have poor ways.” As more stories come out about wealthy Wall Street bankers and mortage brokers as well as people like Edwards, it occurs to me that many of them weren’t so financially savvy. Unlike the poor, however, who tend to only suffer personally for their decisions, the poor ways of the rich are dragging us all down.
I was going to write an upbeat post, given that it’s Friday, and it looks like it’s going to be gorgeous today and through the weekend. There’s a lot to look forward to.
But, underlying much optimism is the knowledge that for many people, the world is not looking bright and sunny. I’ve been reading NPR’s Planet Money for several months now as a way of keeping up with what’s going on in the economy (in a way that makes sense but doesn’t shy away from complexity). A couple of days ago, they posted about the suicide of David Kellerman, CFO of Freddie Mac, and the familicide in Maryland that many now think was linked to mounting debt and financial problems. On my way back from a doctor’s appointment yesterday, I listened to a story about these familicides, which are up in the last few months and are almost always up during an economic downturn. Many problems don’t reach the level of familicide, and instead financial woes lead to increased incidents of spousal and child abuse.
As I drive around town, I’ve seen stores shuttered or giant going out of business signs. I’ve had the experience of going to a store to buy something only to find it out of business, as Anjali wrote about on her own blog. People I know at the college have been laid off. My stepfather was laid off. Parents of kids at my kids’ schools have been laid off. I regularly receive email from the college about budget meetings, budget cuts, etc. I feel a huge amount of sympathy for these people. I feel a sense of survivor syndrome given that I quit my own job and we can afford for that to happen. And yet I worry that, at 41, if I needed to get another job, I couldn’t. All that doom and gloom and conflicted feelings can be debilitating.
I think that’s what’s behind some of my blah. Yesterday, I got the letter officially terminating my part-time teaching gig. I, of course, had not expected to continue, so it wasn’t like this was necessary. The point of the letter was to make sure I returned my library books and gave up my office and its equipment, etc. Next week is the last week of classes. On the one hand, I’ve enjoyed teaching this class. I’ve learned a great deal about myself, about my teaching, and about the subject matter of the course. On the other hand, I’m looking forward to having more time to build my business and to explore other kinds of work. The bad economic situation makes me feel uneasy about that. It makes me think, maybe I should pursue another part-time teaching job just so we have some extra steady income. And then I think, but it takes time to do freelance consulting work and teaching would take away from it. And then I think, but the teaching is related to the consulting work. It’s a vicious circle.
The reality is that time will take care of some of these worries one way or another. Either we’ll discover we need for me to work or we don’t. Either the business will take off or it won’t. And then we can make decisions. I’m borrowing trouble, so to speak. And despite some financial worries on my part, I think it’s important for me not to have a regular gig for a while. In the weeks just before classes began, I was humming along. Things were good. I need to remember that instead of looking at the worst case scenario.
*someone in my blog world was writing about this the other day and now I can’t find it-gah!
I have some personal connection to GM. My father-in-law and his father were long-time employees of the company. Almost 20 years ago, my fil retired early when the division he worked for was sold off to a French company. 20 years ago, we didn’t think GM was doing all that well. While most of Mr. Geeky’s family drove only GM cars, we drove whatever was inexpensive. Although on occasion that turned out to be a GM car, most of the time it didn’t. We saw, through riding around with various family members the kinds of cars on offer and they certainly didn’t appeal to a young couple on the move. They were grandma cars. We did actually go through an SUV stage, driving two Ford Explorers (consecutively) rather than any of GM’s offerings (one was a hand me down, no choice there really). And now, we’re in a GM brand minivan, which, I have to say, has lasted a long time (122,000 miles and counting) and a fuel-efficient Toyota. Mr. Geeky’s family’s loyalty to the company only made sense for the people who actually worked for them (since they got a discount on the cars they bought). For the aunts and uncles who drove cars they may or may not have like out of a desire to “buy American” or buy within the family, it didn’t make sense to me. Why not buy what you wanted or what you could afford? And, as it turned out, their loyalty didn’t save the company.
Not that long ago, Mr. Geeky and I watched “Who Killed the Electric Car?,” a film that describes how GM was working and actually built an electric-powered car, a car that had potential, but was eliminated from the product line after 3 years. The film makes GM look like it’s in the oil industry’s pocket and that’s been the theory behind their resistance to increases in CAFE standards in addition to their resistance to change manufacturing procedures.
It’s weird, even though I’ve never been a fan of the automakers as they seemed largely to be an industry in denial and out to make a quick buck at the expense of the planet, I feel a strange sense of sadness at the real possibility (probability?) that GM will go the way of the dinosaur. But the whole idea of capitalism is that the best product survives and GM is no longer making the best products across the board. Like any business that’s not doing a good job, it should probably fail. Maybe what I’m feeling is the loss of so many jobs at once. Detroit and Michigan are already at the top of the unemployment list. What will happen if/when GM fails? What will all those people do? What will Michigan look like? It’s a depressing and scary thought.
Apparently, I missed the memo. I wasn’t supposed to quit my job; I was supposed to be rejoining the workforce. Last week, Judith Warner wrote about the media frenzy of covering the opt-outers having to return to work and give up their 9 a.m. yoga classes. There was actually a Blogging Heads conversation between Rebecca Traister and Emily Bazelon that started with a discussion of the wives of Wall Streeters who were disappointed that their lives weren’t living up to their expectations. Both Warner and these two women point out that at the lower end of the income scale, the pain is worse and the cooperation between the spouses is greater. As Warner says of working class women’s spouses:
But their husbands, very often, are holding their own at home just fine. For while the stereotype has long been that working class men won’t do “women’s work,” Coontz said, the truth is that in recent years they’ve had a better track record than the most high-income men in sharing domestic duties. Twenty percent of these men, in fact, actually do more housework and child care now than their wives. “These people have been doing it for some time and they’re much more ideologically committed to doing it,” she said. “I think your worst offenders” (dirty coffee mug-wise), “are in that top 5 percent.”
That rings true with my own experience in a working-class/middle-class neighborhood where I routinely see men at the grocery store, at parent-teacher meetings, at the soccer field (we have soccer dads too!), and doing their fair share around the house. The Bloggingheads conversation ends with hoping for more equity in the home, but also points out that there’s still a huge pay gap between men and women, which families are going to feel even more of if it’s the woman in the workforce and not the man. Hello? When is the excuse that the man has to support a family and therefore needs a bigger salary going to be shot down. Warner also points out that the focus on the wealthy’s problems takes away attention from the problems of the majority, problems that need to be addressed:
There’s a deeper reason, too: paying attention only to the – real or perceived – “choices” and travails of the top 5 percent hides the experiences of all the rest. And this means that the needs of all the rest never quite rise to the surface of our national debate or emerge at the top of our political priorities.
One can’t help but see a connection between this and the greater debate over bonuses and protecting banks from collapsing. Think about how AIG bonuses are being treated and how the banks are being treated compared to the UAW and the automakers (hat tip to rzklkng).
Yesterday, I listened to this show segment from NPR’s Tell Me More, where several returning to work mothers told their stories of how and why they returned to work. Not all of them fit the label Economommies (bleh, what an insulting term). One mother, for example, had always determined that when all of her kids were school age, she herself would return to school. The story didn’t really add much to the conversation, in my opinion. Sure, it shows how adjustments need to be made, how the spouses and the kids have to contribute more to household work, but this, to me, is an old story.
The Time story (linked to above), on the other hand, is a little more interesting and a little more creepy at the same time. On the one hand, it highlights many businesses that have cropped up that seek to help women onramp back to work by matching them with jobs that have flexible hours and/or providing training and networking opportunities. What shocks me is how out of it some women are in terms of technical and other skills. Even though I’m currently off-ramped, there’s no way I’m letting my skills deteriorate. I didn’t when I was home before and I won’t do it again. I always want to be able to jump back in whenever I need to.
When I was reading the article, I was actually thinking about the middle school PTO committee meeting I went to the other day. Working with the PTO or other volunteer organizations is one way to keep up your skills if you do it well. The thing that happens to some women when they’re at home moms is that they get into a comfortable groove of hanging out with certain people and doing certain things. The same people always seem to be running the PTO, for example. They not only do PTO together, but they go to the same church, eat at the same restaurants, and their kids are on the same soccer team. Everone and everything is always familiar and they think that it’s like this for everyone. So, when a new person shows up at their meeting, they don’t think to introduce everyone. Also, they don’t think that people’s time is valuable and they don’t have an agenda for the meeting. Both of these skills (and non-technical ones at that) are ones that one learns in a business environment. A meeting that could have taken an hour at most turned into an almost two-hour nightmare. I’m also participating in an after-school activity at my daughter’s elementary school that is equally disorganized. Also, no introductions at that meeting either. Ugh. Obviously, these women (and they were all women) are smart and capable, but if they were to take these events a little more seriously, a little more professionally, they’d really up the quality of them and be able to chalk this up as good experience should they need it on the job market one day. If they did that, I’d write them a Linked-In recommendation or a paper one to help them out.
Like everyone else, I’ve been outraged by the AIG bonus story. The more I read about it, the more angry I get. As I commented over at 11D, I used to work on a bonus structure. I know what a bonus is for and it’s not for failure. In our scheme, you got a bonus if you personally had good sales, but you got significantly more if the company did well overall. This eliminated much of the competition and we were inclined to help each other out. And I’m not the only one who’s worked under such conditions–waitresses and salespeople of all stripes function under a compensation plan that rewards better service and hard work more than it does poor service and less work. So it makes no sense to most people that people get rewarded for failure, either their own or the company’s. There were certainly times when I personally did very well, but the compay didn’t and so my bonus reflected that (an additional company bonus was on the order of 5-10 times what an individual bonus was–usually something like $50 or $100 compared to $500; we weren’t getting millions).
Tim Burke writes quite cogently about the backlash against the outrage, registering a complaint similar to the one I’m making above–that is, that one is in line for bonuses because one takes certain risks that when they pay off, monetary awards accrue and when they don’t, too bad so sad. He makes two other arguments, one against the idea that we’re too far removed to be able to judge and so we should just be quiet and one against the idea that these guys are jumping ship for greener pastures (to mix my metaphors). The gall of, in this case conservatives, arguing that we should just let the professionals do their jobs, strikes me as paternalistic at best and to me, goes against the idea of a democracy. Hello. We own most of AIG. We have a right to make complaints. Anyone who thinks otherwise wants a different kind of government.
And I agree with Tim that many of these former employees must not look too good to future employers. I’m thinking that their ability to find a job at all is difficult. Although I also think the financial industry tends to have a short memory to go with their shortsightedness, so that in 6 months or a year, these people will be right back in it, bonus structure in tact.
I don’t know that I want a witch hunt whereby the names of these people are plastered all over the newspapers and the Internet, but I do think there should be more accountability than just subtracting the bonus amounts from our latest loan to AIG. Part of me thinks that we shouldn’t loan them anything, just let them fail. Then there will be no arguing about bonuses. The articles below have more, including the little tidbit that the bonuses now amount to $450 million. Yippee.
As I was driving my son to school this morning, I heard that 82% of the people who’ve lost jobs are men. This is because many of the jobs that have been lost are in traditionally male occupations such as construction and manufacturing. I’ve seen around the online magazines and blogs commentary about how the stimulus package is focusing on trying to get those men back to work while ignoring traditionally female occupations such as health care and childcare. Jennifer Barrett at Slate presents the same argument today and wonders if this isn’t a good time to start working on the wage gap. I agree. She argues for having basically a quota on hiring women in male-dominated fields and on men in female-dominated ones. I have a better idea. I’m guessing that many of those women working as nurses, home health-care aids, teachers, and daycare workers have a husband at home who just lost their job and it may be a while before they get another one. Why not raise the wages of the traditionally female jobs? I mean, whether a male or female takes the job, they still don’t pay enough? And that might help cover some of the income loss resulting from a spouse’s job loss. There are probably a million reasons why this won’t work, but you know, if you’re gonna give AIG a few billion to stay solvent, how about a similar about to hospitals and daycare centers so they can raise their wages to something people could actually live off of?
A friend and I were talking over the weekend about longing for better houses. A mutual friend is in the process of buying what sounds like to both of us a fabulous place to live. We both have good houses in good locations, but we both also have things we don’t like about our houses. And whenever someone we know buys a new house or we visit someone with a great house, we start seeing the flaws in our own houses all the more clearly. Luckily for me, most of the people I socialize with are other faculty who are as priced out of the larger house market as I am. But there’s still the occasional playdate visit that sends me into envy again.
I also noted that I have a smaller house than my parents did. Financially, my mother ended up in about the same place as she was when she grew up. My dad fared much better. Me, I’m doing worse (yay for the education industry!). Of course, it would have been difficult to go up from where my dad was–near the top of the income ladder, especially for the small town I grew up in. Every once in a while, I lament that I didn’t follow in his footsteps and become a lawyer. Of course, knowing me, I would be a public service lawyer of some kind and still not make any money.
House envy (and probably general envy of other goods) has to have played some role in the current crisis. You watch friends and relatives move up to bigger houses or add on to and improve existing houses and you think, I want to do that. And so you go to the bank and no, you can’t quite afford it, but the broker plays on your envy and next thing you know, you’re paying more than you can afford for a house that isn’t worth as much as it once was. I think it’s a pretty easy trap to fall into.
The whole issue of envy is something I’ve been working on a lot. I think because my lifestyle is somewhat downsized compared to what I grew up with, I’ve struggled with my frustrations at not being able to have some of the things I had as a kid. At the same time, I contribute some of the relationship issues my parents and I had (have?) to the fact that they were both somewhat obsessed with keeping up with the neighbors and we were in a living space where we could all easily avoid each other. So, I’ve been focusing on other things: spending time with the family, enjoying the things I do have. I actually want less stuff now, not more. And we’ve tried to do small things to make our house more enjoyable. Frankly, I often feel lucky to have a roof over my head.