Sunday, August 7, 2022

Would You Flip Burgers For $12 an hour? I Thought Not

 I live near a Sonic Drive-In restaurant that has been closed lately during business hours. At first, I thought it closed for good, but yesterday I saw a big HelpWanted sign out front.

Sonic is looking for  "crew" workers--$10 per hour. It's looking for cooks--$12 an hour. And it's looking for managers--$15 an hour.

I had a lot of low-end jobs when I was young, and I did them willingly. I saved some of the money I made working for a buck an hour and banked it at the Anadarko Bank & Trust, where it earned three percent interest.

I was willing to do those jobs because I was confident about my future. Someday, I told myself, I would have a middle-class job and a middle-class lifestyle.

 Yesterday, as I drove by that closed Sonic Drive-In, I found myself wondering how many young Americans are willing to work for $10 or $12 an hour.

Before the pandemic, many adults in my town were willing to work low-wage jobs. But then things changed.

During the pandemic, many unemployed Louisianians received enhanced unemployment checks--equivalent to an annual salary of about $40,000. According to a 2020 Brookings report, $40,000 a year puts a family of four in the middle class.

Forty thousand dollars a year not to work; that's a pretty sweet deal. How many people who got that deal are willing to flip Sonic burgers or do other menial work for 40 hours a week only to earn an annual salary of $25,000? 

Not too damn many, judging from the Help Wanted signs I see all over Baton Rouge. 

According to the Wall Street Journal,  the national economy created about half a million jobs last month, and that unemployment is down to only 3.5 percent.  That's terrific news.

However, remember that the 3.5 percent unemployment rate only measures people looking for work. Millions of Americans aren't looking.

They certainly aren't looking for the countless minimum-wage service jobs in the United States: big-box store clerks, airport baggage handlers, burger flippers, and receptionists.

Years ago, economists predicted that the United States would transform itself from being a manufacturing economy to a service economy.  In the future, the pundits predicted, manufactured goods would be assembled in Asia while Americans would perform high-end services--medical care, research, financial services, legal services, and education.

That prediction turned out to be a pipe dream. It is true that Americans don't manufacture much anymore, but most of them aren't working in high-end service professions.

No, Americans are finding tons of jobs in the low-end service sector: jobs that pay between $10 and $15 an hour: hotel maids, fast-food cooks, delivery truck drivers, and retail sales workers.

Until the Covid pandemic, many Americans were willing to do those jobs, at least until they could find something better. However, once they got a taste of what it was like to raise their living standard by not working, they became unwilling to lower their living standard just so they could go home at the end of the day smelling like a hamburger.

That's my opinion anyway. Would you like fries with it?

Ten bucks an hour to smell like a hamburger? 

Thursday, August 4, 2022

The Middle Class is Shrinking, But You Already Knew That

In recent years, the Brooking Institution published a series of papers as part of its Future of the Middle Class Initiative. In a 2020 paper, Brookings defined the Middle Class as the middle 60 percent of household income distribution--"not poor, but not prosperous either."

How much income must a family have to be considered middle class under the Brookings definition? Its paper says that the average middle-class income is about $70,000, and a family of three would have to have an income of between $40,000 and $154,000 to be middle class.

In that same paper, Brookings reported on income growth among American households between 1979 and 2017. According to the paper's analysis, the bottom 20 percent of American families (the lower class) saw income growth of 86 percent, and the top 20 percent (the upper class) saw income growth of 111 percent.

In contrast, the middle class saw income growth of only 49 percent in that same period.  In other words, the middle class lost ground--especially compared to the wealthiest American families. 

In a 2022 paper, Brookings examined wealth accumulation across generations.  This paper is accompanied by dizzying charts and data, but I think a fair summary is this: Rich people tend to stay rich across the generations, and poor people are more likely to remain poor.

I am somewhat jaundiced about all this Brookings analysis. First, anyone who claims (as the 2020 Brookings paper did) that a family of three living on $40,000 a year is a middle-class family has not lived with two people on forty grand a year. That definition is simply not accurate.

Secondly, I believe the American middle class is disappearing so fast that it is misleading to even speak of a middle-class America.

Robert Reich, President Clinton's Labor Secretary, wrote a book in 1991 titled The Work of NationsReich said that the top 20 percent of income earners--"the fortunate fifth"--were prospering in a global economy and lived in a different world than the rest of us.  The Fortunate Fifth live in gated communities or secure luxury apartment buildings, send their kids to private schools, and have little interest in what is happening to the rest of us.

I think Reich's 1991book was prescient in its analysis.  Today, the wealthiest Americans tend to be clustered on the East and West Coasts. Many have acquired their wealth by financial manipulation and speculation. Their interests and desires are endorsed by the elitist media, national political leaders who cater to corporate lobbyists, and the nation's wealthiest universities.

In short, the Fortunate Fifth doesn't give a damn about the bottom 80 percent, who see their lifestyles declining rapidly due to inflation, growing household indebtedness, and diminishing opportunities to prosper.

As I said, America is disappearing as a nation of middle-class families prospering in a democratic society. Our country has become an oligarchy--controlled by powerful people who don't care about the shrinking middle class and, in fact, despise us. 

Perhaps that is why the people traveling from coast to coast in private jets refer to the places where most Americans live as flyover country.

Saturday, July 30, 2022

Biden Administration Flirts With Student-Loan Debtors: Throw Me A Moon Pie, Mister!

 Mardis Gras parades are an ancient tradition in New Orleans, going back to the eighteenth century. Social clubs called krewes sponsor these parades, and krewe members throw trinkets called throws at parade-goers. 

Typically, a throw is a necklace of plastic beads, but krew members also throw toys, small stuffed animals, and plastic souvenir cups. 

Every year, Louisianians flock to New Orleans to attend Mardis Gras parades and gather up the trinkets flung from the parade floats. "Throw me something, mister," is the cry of the day as parade-goers compete for the attention of a krew member preparing to toss a good throw.

Most of the stuff thrown out a Mardis Gras parades is crap. Unadorned necklaces of plastic beads are so worthless that no one even bothers to pick them up. Occasionally, however, a krewe member throws something interesting like a football or a Moon Pie, which is a chocolate-dipped marshmallow sandwich. 

College-loan debtors are much like Mardis Gras parade-goers. The Biden administration dangles various student-loan-forgiveness plans before the electorate while student debtors shout, "Throw me something, mister!"  

We already know that some of President Biden's proposals are almost as worthless as a string of plastic Mardis Gras beads. Ten thousand dollars in loan forgiveness will satisfy no one when annual tuition at a private college runs $60,000 per year, and the average student debt is about 37 grand.

Mr. Biden will almost certainly extend the pause on student-loan payments one more time, probably until after the midterm elections. But that is just another string of plastic beads. Not making loan payments for two and a half years is nice, but these loan-payment pauses do nothing to eliminate the mountains of crushing debt. 

When the midterm election season is over in November, I feel sure that 45 million student debtors will feel much like those Mardis Gras parade-goers who plod back to their cars at the end of the day with sacks of worthless beads and a hangover from drinking too much beer.

Nevertheless, everyone should cheer up. Next year there will be more Mardis Gras parades and more proposals for canceling student debt. Who knows? Maybe the Biden administration will throw you a Moon Pie!

Throw me a Moon Pie, mister!

Friday, July 29, 2022

Attention, Mr. and Ms. Middle-Class Americans: Corporate America Doesn't Give a Damn About You

 You're a middle-class American, right? 

You have enough money in the bank to be a Chase Private Client, which entitles you to a Chase Private Client debit card. 

You've accumulated enough points staying at Hilton hotels to hold a Diamond status on your Hilton Honors card. 

When you travel on business, you frequently rent cars from Budget, and you expect Budget to treat you with exceptional courtesy and to be helpful if you have a problem.

Let me set you straight in the parlance of our times. That don't mean shit!

American corporations don't give a damn about their customers, and their television ads, bonus programs, and so-called special services are just bullshit.

I have enough bucks at Chase Bank to qualify as a Chase Private Client. A few years ago, $3,000 left my account through fraud. Chase detected the scam in time to stop the transfer but concluded that the transfer had to go through.

I protested, pointing out that I was a Chase Private Client. The answer I got? "We treat all customers the same." When I contacted my so-called "financial advisor," he pleaded with me not to use the word "fraud" in my email messages because that would cause him trouble with the FTC.

I filed a complaint with the Consumer Financial Protection Bureau, the Federal Trade Commission, and the Federal Banking Commission, and I finally got my money back. Still, I learned from that experience that being a Chase Private Client doesn't mean squat.

I have enough points with the Hilton Honors program to qualify as a Diamond-Level customer. Big whoop! When I called late one night to make a last-minute reservation, some guy at the call center tried to get me to listen to a spiel about timeshares! 

Later, I stumbled outside the front door at the Hilton hotel in Halifax and scraped my elbow. My wife asked the desk clerk at the registration desk for some bandaids, and he replied that the hotel doesn't have a first aid kit. And by the way, the desk clerk said that without looking up from his cellphone. (He eventually found us some bandaids.)

Wanna hear about Budget Rentacar? I rented a Budget rental car at the Phoenix airport two years ago. Electric power went down, making the rental car center a chaotic nightmare.

The car I rented had a minor scrape, but I couldn't report that fact to any Budget employee due to the confusion caused by the electricity shutdown.  

When I returned the car, Budget claimed I had scraped it and billed me for $400. The Budget brochure I obtained at checkout stated that any dispute must be arbitrated and gave me an address in New Jersey. 

So I sent a certified letter to Budget's address in its brochure. You know what? Budget's hacks wouldn't accept the letter!

I finally got that straightened out, but I learned something from my experience with Budget. If you've got a problem, it's impossible to get in touch with anyone who has the authority to solve it.

I still patronize the Hilton hotels, bank with Chase, and occasionally rent a car from Budget, but I have learned something in my dealings with corporate America.

Corporate employees who interact with the public are generally polite and strive to be helpful. I always compliment these people when I'm asked to fill out an online survey. I always tip people when it is appropriate to do so. 

Unfortunately, the employees who work for corporate America are powerless to solve a customer's problems because the corporate shills at the top of the food chain won't let them.

Have yourself a nice day. And if you spend the night at the Hollis Hilton in Halifax, bring your own first aid kit!

Hollis Hilton: Bring your own bandaids

"Stepped in Blood": The Student Loan Program is So Screwed Up That There Is No Solution Without Pain

I read Shakespeare's Macbeth as a high school student, and I still remember one line from that play:

I am in blood stepped in so far, that, should I wade no more, returning were as tedious as go o'er.

I understood the line to mean that Macbeth had involved himself in so many murders that he might as well continue on the same bloody path as turn back.

That's America's situation with the disastrous federal student loan program. Forty-five million student debtors owe a total of $1.7 trillion in federal loans, and there is no way to undo the monstrous damage that has been done. 

Thousands of articles, books, news stories, and scholarly reports have been written about the student-loan catastrophe, but Eleni Schirmer summarized it very well in a recent New Yorker article.

Shirmer focused on elderly student-loan debtors, beginning her article by telling the tale of Mary Ann, who borrowed $29,000 to attend law school in the early 1980s. Today, she is 91 years old, and her debt has grown to $329,000.

As Schirmer explained, oppressive student debt is not only a problem for the young. One in five student borrowers is 50 years or older--about nine million Americans.

Hundreds of thousands of student debtors reach retirement age without paying off their debt. The federal government garnishes their social security checks if they default on their loans.

Millions of overburdened college borrowers have rolled their loans into income-driven repayment plans (IDRs) to lower their monthly payments. Theoretically, their debt is canceled if they successfully complete the terms of their IDR.

Unfortunately, only a handful of debtors have had their loans forgiven through IDRs. As Schirmer explained:
[O]wing to negligent bookkeeping, I.D.R's promise of cancelation has proved to be a mere mirage: as of 2021, more than four million borrowers could have accessed I.D.R. loan cancellation, but only a hundred and fifty-seven had ever received it.
As Shirmer relates, the federal student loan program is so screwed up, so burdened by bureaucracy, and so complicated that the government can't even tell us how much of the $1.7 trillion that is owed is principal on the debt and how much is accrued interest.

For years, the Department of Education has claimed that the federal government makes a profit on federal student loans. Over the last quarter of a century, DOE maintained, the feds created a tidy $114 billion on the program.

But the Government Accountability Office reported this week that DOE grossly miscalculated. In fact, the government lost about $197 billion--a $311 billion math error!

In fairness to the Biden administration, his Department of Education has brought significant relief to millions of distressed student borrowers--mainly by forgiving debt owed by students who claimed to have been defrauded by their colleges. And DOE has initiated several other minor reforms.

Unfortunately, the federal government can't tinker its way out of the student-loan mess. Real reform will be painful.

What, then, needs to be done?
  • The feds have got to stop sending student-loan money to the for-profit colleges and shut down this sleazy industry.
  • DOE urgently needs to terminate the Parent PLUS program, which has devastated hundreds of thousands of low-income and minority families.
  • Congress must reform the Bankruptcy Code to allow distressed student debtors to discharge their loans in bankruptcy. 
Finally, the federal government must put some reasonable cap on the amount of money students can borrow for their college education and force the colleges to get their costs under control.

Sadly, none of these reforms will ever take place. Why? Because reining in the student-loan program would be too painful for various higher-education constituencies, who are happy with the status quo.

Much like Macbeth, the federal student loan program is so mired in corruption, incompetence, and venality that it can't be fixed.  Tragically, this program, designed to help Americans go to college and improve their lives, has destroyed the lives of millions.

Steeped in blood and no painless options

Wednesday, July 27, 2022

Air Travel is a Nightmare: Let's Travel Anyway

 The Wall Street Journal reported today that the worst two airports in the world for delayed flights are Toronto and Montreal.  I can confirm that Journal's findings are accurate. I was in both airports a few days ago, and the experience was a nightmare.

Due to flight delays, my wife and I spent an unscheduled night in a Toronto Airport hotel and an unplanned-for night in an airport hotel in Atlanta.  These delays cost us more than $600, and we weren't reimbursed.

In addition to airline hassles, we found that the cost for almost everything we bought in airports has increased dramatically. At the Montreal airport, two burgers, a beer, and a glass of wine cost us 80 Canadian dollars (not including a tip). The hotel room in Toronto--more than $300 a night.

Despite the hassles and the unanticipated expenses, I'm glad my wife and I visited Quebec and Nova Scotia last week. Why?

First, the Canadians are almost universally courteous and friendly, and it was a pleasure to interact with them. A cab driver warned us that the French-speaking people of Quebec would be rude if we didn't speak their language, but that was not true. We had a lovely visit to a charming city.

Second, Canadian food is delicious, especially the seafood. Nova Scotia's sparkling wines are the best I've ever tasted--much better than French champagnes or the sparkling wines of California.

I have always found international travel stimulating, and my recent trip to Canada was no exception. For example, I learned the Canadians have told the penny to bugger off. They simply don't use pennies. You get charged ten bucks if you buy something for $10.01. If you buy something for $9.99, you don't get change back from your ten.

How sensible! Why don't the Americans adopt the same policy?

I was also moved by the Canadians' public displays of patriotism and remembrance for those who died while performing their duties. At the Halifax wharf, I saw The Last Steps memorial, which includes an old-fashioned gangplank. A nearby sign said that 350,000 Canadian men and women embarked from Halifax for Europe to fight in World War II.

 Sixty thousand Canadian soldiers did not return, and those young people took their last steps in their native land in Halifax before walking the gangplank toward war.

Who could not be touched by this simple memorial?

Thus, despite the hassles, the unexpected expenses, and an occasional rude encounter (only in the airports), I was grateful for my visit to Canada, our cheerful, hearty, and gracious neighbor.

The Last Steps Memorial

Sunday, July 17, 2022

It's Good to Be Shifty in a New Country: Young People Should Be Cautious About Going to College

 "It's good to be shifty in a new country," Huckleberry Finn observed in Mark Twain's most famous novel. 

What does it mean to be shifty? I think Twain meant that people should be cautious in a strange environment and suspicious about entrusting their safety and wellbeing to strangers--not to mention their pocketbooks.

You will be entering a new country if you enroll in college for the first time this fall, and it will behoove you to be shifty and cautious.  Higher education is in a tumultuous--even calamitous transition, and you don't want to get buried in the wreckage.

First, college enrollments are down, and the universities are scrambling to replace their lost revenues and lure more tuition-paying butts to sit in their lecture halls.  In fact, the small, non-profit schools discount tuition on average by more than 50 percent. That's how desperate the colleges are to snag new students.

In fact, many small non-profits are on the edge of closure and surviving almost solely on federal student-loan money. Religiously-affiliated colleges and schools with enrollments of less than 1,000 students are especially vulnerable. 

If you are wise, you will not enroll at a nonselective, nonprofit school unless you know how a degree from St. Nowhere College will help you get a job and pay off your student loans.

And for God's sake, don't attend a for-profit school owned by a hedge fund or trades on the stock exchange. The creeps who own these schools are focused on money--not your welfare. 

Second, college towns are becoming more dangerous, especially the big cities, where many prominent public universities are located. Violent crime--rape, robbery, and carjackings--is spiking upward in urban areas.

If you plan to live off campus, do some research. Find out which neighborhoods are safe and which are not. If you come to college with a car, keep your vehicle locked and be cautious if you park in an isolated parking lot. Be vigilant when pumping your own gas. 

Finally, don't take out more student loans than absolutely necessary. President Biden has done more than any previous president to ease the student-loan crisis, and his administration has introduced many good reforms.

Nevertheless, it would be a mistake to take out student loans based on the expectation that government won't make you pay them back. 

The Biden student-loan relief efforts are commendable, but the feds have done nothing to bring down the cost of going to college. Tuition rates are continuing to climb, and naive young people who borrow a hundred grand to get a humanities degree at an obscure private college may be committing economic suicide.

So remember Huck's advice and be shifty in a new country. When you get to college, you will soon find that many of the people who are making a good living in the higher-education racket are not looking out for your welfare. 

It's good to be shifty in a new country.