Friend lost his job today

I think the tax reason was probably an excuse for cost-cutting. unfortunately I think the employment picture will get much cloudier before it gets better.

 

I don't.

Obama has pledged to increase taxes on most corporations with particularly harsh increases on large successful businesses. Coupled with certain sharp increases in the minimum wage (which also affects jobs that are not minimum wage too) this will surely force corporations to cut back on expenditures including payroll.

With higher taxes, mandated minimum wages, and as long as our shores are open to free trade to dozens of countries with cheap labor it will be difficult if not impossible for most corporations and most assuredly small businesses (such as "Joe the Plumber", portrayed as a villain by the Democrats, an individual who actually has the nerve to start an evil business venture and even, gulp, turn a profit) to grow and prosper.

Rick
#4 2006

 

I completely agree with that... Increased taxes seem to make a good excuse, but they aren't law yet. They won't even be law Jan 20. Companies have a long while to figure out how they will handle any increased tax liability before that liability actually has an affect.

When a company is looking to increase profits, they have to do at least one of two things: Increase the top line, or decrease the bottom line. That is, they have to increase the amount of money they're bringing in from sales, or decrease their costs (either variable for fixed). Yeah, losing your job sucks, but i would be highly skeptical of someone who says they fired you because of a proposed increase in taxes.

 

I have tax concerns of my own because I probably fall into the category which will receive a tax hike(maybe not this year), but this country badly needs a jump start. I supported McCain in the election but I was in the minority. Obama is our President and together we need to figure a way out of this economic morass we are in. BO does not have all the answers but we need to have confidence he will surround himself with people that do.

By the way, I think that was GWB's biggest shortcoming he surrounded himself with too many big $ people and there were not enough opinions around to challenge the prevailling thought in his administration.

 

Deregulation, anybody ?

It cures all economic ills, you know.

 

Sorry to hear you mate lost his job. When one door closes, another one opens. It might take a while, but I'm sure some good will come of it.

 

wow, and here i thought healthcare was one of the safer areas to work. i guess that's not entirely true. i have heard that hospital budgets are tightening.

guess it's a good time to be a student for the time being.

any tax changes won't take effect for quite some time- the new admin won't change taxes for 08, that's for sure. it sounds like an excuse to me.

 

A jump start may be good but my version of a jump start is not to increase taxes but cut spending to preserve the taxes as is and to reenact the Bush tax cuts before they expire. Capital gains tax increases, individual tax increases, and especially corporate tax increase are sure ways to firmly depress consumer spending, business expansion, stock dividends (which encourage stock buys to expand companies), etc.

I truly believe the current economic situation we are in is a result of many believing stocks, real estate, and such could not and would not ever decrease much less earn less than 10% each and every year forever. The public built their retirement accounts and other investments on a house of cards. When the chips were called in, the foundation was not there. Was it the fault of current the administration? Perhaps, but only to the degree if one surmises the public is too stupid to manage their own investments and ignore the risks that downturns can and will always eventually happen. Regulation "forces" the public to invest into more conservative investments lessening the risk of sudden collapse but on the other hand limiting aggressive growth. The public has spoken and it is clear they wish the government to take a much more strong hand in their investments and such.

Agree 100%. I believe if he quit pandering to all sides and stuck to a conservative fiscal policy, we would have a much more stable economy today. He wanted to have his cake and eat it too.

Rick
#4 2006

 

Galaxee has this right. It's just an excuse. As for all of the political comments, take them to Fred's House of Politics.

Tom

 

Rick, I think the real issue is the derivatives. You are right that a lot of it was the belief that things would drop in value, but there was no personal incentive on the part of the investment managers at places like Lehman to not take the risk. Personally, that lot made scads of cash. $2M bonus and huge salaries to take crazy risks that few in the investment world really understood (or understand now). There was no one out there saying "you can insure something if you don't have the funds to actually insure it". The CDS market has put the large banks under enormous strain because simple greed was not put in check. Regulation in this sector of the financial world could have prevented a lot of this even if lenders were making stupid loads to home buyers who had no right to purchase the properties they were buying.

This isn't about me or you making wild, speculative bets on the market, it's about large banks, the cornerstones of the financial industry, make wild, speculative bets... And bad ones at that. Companies that are "too big to fail" have to be regulated. Like you say, they can't have their cake and eat it too.

We don't want to regulate them into the ground, but there needs to be a reasonable regulatory substrate upon which they conduct their transactions.

 

Trying to ignore the political aspects of this (as i don't want this thread relegated to FHoPol)... The economic ideas you present here, and accepted by about half the country, simply aren't terribly logical. The taxes you mention - tax cuts on the rich, capital gains, corporate taxes - don't apply to a majority of workers incomes, and changes to those won't depress their consumer spending. Yes, if changes to those taxes leads to an increase in unemployment we'll see a decrease in consumer spending, but those taxes themselves do absolutely nothing to change a majority of American's monthly after tax income or spending.

Most of those tax policies you seem to support above encourage investment and business growth, not spending. They encourage an increase in supply without providing for increasing the demand. In an economy going through a recession, companies aren't interested in expansion. It's only when demand exceeds supply that companies want to expand. Tax policies designed to increase consumer spending by putting more after-tax dollars in a consumers pocket are what will ultimately pull us out of the recession.

On a more historical note, trickle down economics used to work much better than they do today. Back in the day, Henry Ford had a dream of making the automobile affordable for every American. He did this through lowering cost by controlling the entire material life cycle (you put in sand on one side, you get glass on the other; iron ore on one side, you get a door panel on the other) and through giving his employees a decent wage. His was an era where industrialists tried to lower costs as much as possible by paying people as little as possible. He changed that. In his world, trickle down economics worked because they encouraged expansion and the creation of more high-priced jobs, and tax cuts could be passed on to the worker. His world is the one trickle down economics was designed for. Today, we are far from his world, and in fact much closer to the view he had worked to change. Those in charge take full benefit from economic breaks, and don't let any of it trickle down to their workers, who are paid the minimum the market will allow.

 

Well deregulation does work. The problem is that market goes into self regulation through trial and error and latter has its negative consequences. In the case of current economic crisis people finally learnt that stock prices do not go up indefinitely, housing prices also do not go up indefinitely, you will have to pay your debts sooner or later, and yes, Prius Chat related - buying biggest gas guzzler on the market does not make you happy, especially when oil prices sky rocket.

 

I feel for your friend. I am glad he is in the healthcare industry, at least, where I think he has a better chance of finding another job fairly quickly. Good luck to him!

 

That's good that he got some severance. That gives him a little cushion. The real trick is health insurance. If he's cobra he's probably gonna have to pay a small fortune for insurance. If he's single he definitely should look into individual insurance that's not quite as robust as his current policy. It won't be as good but he'll probably save quite a bit. He can then change to a new policy once he's gainfully employed again. The important thing is to not have a break in coverage. That's what he'll want to avoid.

 

I will say historically during recessions/depressions the health care industry has done very well. People still get sick, you can't get around that. In fact, there's plenty of evidence out there that shows investments in the health care industry and stock prices for that industry increase during recessions, because it's a safer bet than the markets that are struggling.

 

Sorry to hear about your friend. At least he got a pretty good severance package.

I got laid off last Wednesday. The product line that I managed was discontinued so they had no need of a product manager. I got no severance unless you count them paying me through the end of the week. (2 days) They even tried to screw me out of my remaining vacation days.

As someone else said, there is a silver lining. I've wanted out of this company after a couple of months on the job. The company is Bush Hog located in Selma, AL. Open racism is not only tolerated, is seems to be celebrated. Selma itself is an incredibly depressed city that is still segregated geographically and culturally. Not really an atmosphere that I fit into. Add in a 3 hour commute and it didn't really make sense. I was looking to stay around till the end of the year so I didn't have to explain why I was on the job for less than a year.

 

JHinton, there's always a silver lining. I've been laid off so many times (been a while. I've been self-employed for almost 6 years now) and each time something good came of it. When my Nat'l guard unit got activated in early '03 I was bummed. But looking back on it, it was the best thing that could have happened to me at the time (short of winning a lottery).