Personal Income Fell For New Yorkers

From The Economic Times: 

The recession put a 3.1 per cent dent in the personal incomes of New York state residents, who endured their first full-year decline in more than 70 years, according to a report released on Tuesday. Paychecks or net earnings tumbled 5.4 per cent, while dividends, interest and rent slid 8.4 per cent, to a grand total of nearly $908 billion, the state comptroller's report said.

Not only did New Yorkers' personal incomes fall "almost twice" as much as they did in the nation as a whole, but they have yet to recover to pre-recession levels, Comptroller Thomas DiNapoli said. The drop occurred even though the job-destroying recession was milder in New York than in the rest of the country. One reason for the hit to New Yorker's pocketbooks is Wall Street's dominance among the state's employers; pay and job security are often highly volatile in the securities industry.

Over the past two years, workers across the country have become all too acquainted with the concept of "settling." But, surprisingly enough, many employers have been less than thrilled to have PhD candidates applying to management positions and former CFOs managing small nonprofits. 

It turns out, there's some science behind this overqualification-phobia. As the Times put it this weekend,

"conventional wisdom warns against hiring overqualified candidates [because they] often find themselves chafing at their new roles."

Fair enough. But it seems that, for some, "settling" has been working out just fine. The New York Times profiled several employees who have taken pay- and responsibility-cuts in the recession. Yet instead of "chafing" these workers are excelling in their new roles, going above and beyond the call of duty, and becoming huge assets to their respective employers.

Of course, it may be that they're not chafing because they've been frightened into silence by the prospect of bankruptcy. They may be excelling because they are terrified that their current employer will suffer a setback and lay them off. They may be going above and beyond because, well, you get the point.

Congratulations, capitalism, you've won again. Workers of the world, don't unite; just settle.

Goldman Sachs Ruined Christmas!

It's raining glass over at 200 West St. According to the Tribeca Tribune last Saturday, a pane from the new Goldman Sachs building in Battery Park City flew out of its pane to shatter the lives of the innocents who toiled below.

No one was hurt, but in addition to causing traffic jams and scaring the crap out of passers by, the falling glass crushed the holiday dreams of children all over New York City: that's right, the hazard delayed the opening of Battery Park City's brand new ice skating rink!

Goldman will compensate both the rink manager and the local cafe that was counting on making a killing selling après-glace treats on opening day.

The New Scrooge

Economist Joel Waldfogel doesn't want you to buy presents this holiday season.
His new book argues that holiday gift-giving is not only stressful but in fact economically unsound. That's because the money spent on presents (especially when they're bought in a caffeine-fueled frenzy on December 24th--wait, is that just me?) doesn't follow the same rational patterns that other spending does.

As Waldfogel explains it on Planet Money, we only buy ourselves things that are worth their price to us (a $50 sweater that will give $50 worth of pleasure, for instance.) But all sorts of other variables come into play when the item is bought for a third party. If that present is a dud, and ends up in the closet, it represents a complete (100%) waste of resources. And the chances that the present will be unwanted, or be worth far less than its monetary value to the recipient, are unacceptably high for a guy whose life's work is cost-benefit analysis.

Another argument for re-gifting?

Wal-mart Wins Again

This recession has turned even the Japanese into Wal-Mart shoppers.
As long as most of us can remember, the Japanese have been such faithful consumers of luxury goods that items like designer handbags were effectively considered mass-market. Perhaps for this reason, Wal-mart has never yet seen a profit from its Japanese subsidiary (Seiyu) since first opening the stores 7 years ago.
But that is soon to change. Against all odds (popular consumer opposition, resistance on the part of employers) the company dug in with its pointy little claws and stayed the course, waiting for its luck to change. It's business plan included forcing layoffs of about 25% of the store's employees (an unheard of practice in Japan), aggressively cutting out distribution middlemen, mandating that stores remain open for 24 hours, and pushing historically unpopular and lower-quality goods from China.

Sure enough, Wal-mart's luck has changed in Japan, much as its wealth this past year has grown at a rate inverse to that of consumers worldwide. Sales at Seiyu have risen every month since November, and this year, the company expects to make a profit. Congratulations, you blood-sucking parasite.

Meanwhile, handbag designer Louis Vuitton canceled its plans for a fancy new store in Tokyo, as the company's sales in Japan have dropped 20% in the first 6 months of this year.

Be Cool To Your School?

Not if you're Trina Thompson, a woman who is suing her college for its failure to find her a job after graduation.

Thompson received her degree in information technology this past May from Monroe College in the Bronx, finishing with a 2.7 GPA and a "good attendance record." She now charges the school's Office of Career Advancement with putting "insufficient effort" into assisting her in her job search.

According to her complaint, "the office of career advancement information technology counselor did not make sure their Monroe e-recruiting clients call their graduates that recently finished college for an interview to get a job placement. They have not tried hard enough to help me."

She also complains that, "they favor more toward students that got a 4.0."

Sounds like maybe Ms. Thompson shoulda gone to law school.

Grand Opening, Grand Closing.

Sadly, not just a Jay-Z lyric anymore (...God damn, your man Hov' cracked the can open again!)

You know things aren't going well when a Grand Opening coincides with the same store's closing sale.

(picture from Huffington Post)

Kids, Get That Guest Room Ready For Your Parents!

...to live in. Forever.

The Obama Administration announced on Tuesday that the program's reserves face depletion by 2037, four years earlier than last year's estimate. Meanwhile, the Medicare fund is predicted to exhaust itself in 2017.

Just in case you still took the phrase "Social Security" seriously.

The Road To Knowledge Is Paved in Family Money

This year, "elite" colleges all over the country are taking a closer look at the financial stats of their applicants and targeting for admission those who can pay full tuition, according to the New York Times.

As you might well guess, the decision comes out of these private schools' own heightened financial need, having suffered from the same economy that's left Joe Highschooler's family unable to afford higher ed.

But schools aren't abandoning that classic and oh-so-comforting "need-blind" philosophy. In fact, what's surprising here is that these colleges haven't and don't plan to cut their financial aid budgets. Instead, the shift in their admissions policy is supposedly the result of greater demonstrated need among those applicants who have requested financial aid. (As in, they will accept dumb rich kids to pay the way for poor smart kids.) But even the schools who champion this new admissions policy admit that "the inevitable result is that needier students will be shifted down to the less expensive and less prestigious institutions."

In other words, “there’s going to be a cascading of talented lower-income kids down the social hierarchy of American higher education, and some cascading up of affluent kids,” according to Williams College prez Owen Schapiro.

The Times reported that the colleges in question plan to judge applicants' ability to pay not only by whether they have applied for aid but also on factors such as ZIP code or parents' background. This seems unnecessary as well as creepy. I can only assume that these considerations are a way to ensure that even students who don't apply for aid their first year (clever student!) can be flagged as a potential $ drain later on.

As much as I'd like to throw some spitballs at prez Schapiro and his like, I think that we are all implicated in the exaggerated, illogical reverence for private higher education in this country, and the resulting lack of attention, funds, and prestige reserved for public institutions. So we can't blame the private colleges in question alone for this sad state of affairs, because to do so would be kinda like blaming drug dealers for the world's drug problems (instead of a worldwide, age-old, human craving for narcotics,) and we all know how messy that can get.

Haagen-Dazs Hoax

The New York Times Economics blog reported this week that Haagen-Dazs is using the recession as an excuse to skimp on the volume of its pints of ice cream, downsizing their standard pint to 14 oz from 16. WHAT THE?!?!

First of all, the price of milk has been going down since the recession hit, which if anything should have reduced costs for manufactures of ice cream and other dairy products by now.

And accordingly, first quarter earnings reported by General Mills, owner of Haagen-Dazs, indicate that the company is in fact doing just fine.

Finally, H-G's case isn't helped by the fact that good old Ben and Jerry's has vowed to keep offering the full 16 oz, acknowledging that “Now more than ever, you deserve your full pint of ice cream.” I happen to agree.

This trick has some precedent, but mostly in "gallon" sizes. It's desperate times, and apparently, stingy companies are getting bolder and bolder...

ps. generic brand Dolly Madison sells perfectly good pints for $1.50 at bodegas all over Brooklyn, so why anyone is still buying Haagen-Dazs is beyond me anyway.

A Park Slope Sign Of The Times

Bougie/bitchy Park Slope shop The Cabinet must be feeling the Recession stranglehold to have taken down this sign that they thought was oh-so-clever back in November.

Perhaps they feel they can no longer afford to alienate the sensitive mommies and daddies who just may need to call the nanny to have her take the nursery dimensions while they shop!

'Til Debt Do Us Part

In case you weren't depressed enough about being unemployed, poor, and lacking in career prospects this recession, don't worry: soon your relationship will fail too.

It shouldn't come as too big of a surprise that unemployment, foreclosures, and the realization that middle age will be spent caring for aging parents abandoned by social security aren’t exactly conducive to romance and love-making.

Just before valentine's day, American Public Media's Marketplace interviewed someone from the National Foundation for Credit Counseling who confirmed that through the years, the court documents have shown that financial distress is one of the major causes of divorce. In Forbes magazine, University of Chicago Business School economist Gary Becker agreed that, "recession has always been a factor raising divorce rates."

This TIME magazine article explains a few different theories for the link between recession and divorce. And as this article tells it, many women are bailing because their moneybags husbands aren't worth so much any more (by now many of you have heard about these girls, who were ready to call it quits as soon as their banker boyfriends got laid off). But it turns out, the breadwinners are just as likely to initiate the divorce, since they have less to lose now on alimony. One divorce lawyer quoted in the article said "I've had several clients come to me recently and say, 'I've wanted to get divorced for years but didn't want to give up half of my business. Now that my business is not worth anything, wouldn't it be a good time to do it?'"

For richer and what now?