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How folks are making do with less
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Tess Vigeland: As the recession drags on in Vegas and everywhere else, more businesses are trying to cut costs without necessarily cutting staff. A recent survey by outplacement firm Challenger, Gray and Christmas found that more than a quarter of companies polled are slashing or freezing salaries. Others are requiring some employees to take temporary unpaid leaves. From WBUR in Boston, Monica Brady-Myerov tells us how some of those affected are learning to live with less.
MONICA BRADY-MYEROV: Some people have taken their salary cut with a little irony.
Members of the largest union at the Boston Globe held a cookout dubbed "Farewell to Fair Wages" when the paper's owner cut their salaries by nearly a quarter. Reporter Scott Allen saw several hundred dollars a week vanish from his paycheck.
SCOTT ALLEN: The day after the company said they were going to cut our pay, I immediately dropped my contribution to my retirement fund down to zero to free up that cash to make up part of it.
Some of Allen's pay cut has since been restored, but he's still not putting away as much money for retirement as he used to. It's probably no surprise newspapers like the Globe have had to cut salaries to stay afloat. Even before the recession, declining ad sales robbed them of much of their revenue.
But H.R. departments are also taking out the salary shears at law firms, high-tech companies, factories and ad agencies. Tom Kohan teaches management at MIT's business school. He says the wage cuts are the worst since the Great Depression.
TOM KOHAN: It's more prevalent now than it has been in any recession that's been recorded.
Economists say more reductions are likely if the recession persists. Kathy Lemus of Cambridge says she can't afford to lose much more. She sells Hondas at a local dealership. With cuts in her base pay and a drop in commissions, she's making about a quarter less than a year ago. She says she's stressed and not sleeping well.
KATHY LEMUS: There are months that you don't even break even on the rent, the bills, the food, child care, so it's tough.
To make up for the shortfall, she's running up credit-card debt and taking out loans. Lemus has an 8-year-old son she's caring for alone.
LEMUS: When you ask him why doesn't mummy have money for games, because she's got to put a roof over my head. And she's got to pay the electricity, and she's got to put food on the table. That's coming out of my 8 year old. It's hard to hear.
In this recession, not even executives are immune from a pay cut. Fran Kelly is CEO of Arnold Worldwide, an advertising agency in Boston. In April, he cut all salaries at his company by 10 percent, including his own.
FRAN KELLY: I had more questions about the cut at home than I had here at the office. Because that's where my paycheck goes and that's who was most affected by it.
His wife keeps track of the family finances, and she started cutting the household budget.
KELLY: We postponed a trip. We're thinking about getting another car. We may buy a nice, used car instead of a new car. And even when we're out to dinner, my wife inevitably will order just the appetizer, not the entree.
Others are changing their eating habits too. Maura Hodge has been temporarily furloughed from her accounting job and lost 80 percent of her salary. Her husband works and they have no kids. They've adjusted by putting less money into savings and cooking more at home.
MAURA HODGE: I make all of our own bread, I've tried to make cheese. I make our own yogurt now, and we have a garden and that helps cut back on some of the expenses as well.
Hodge says her reduced income has made her appreciate life's simple pleasures. But she's looking forward to fall. That's when she resumes work at her accounting firm and starts getting her full paycheck again.
In Boston, I'm Monica Brady-Myerov for Marketplace.
Sad state of affairs when promoting savings and fiscal responsibility has to be defended. And the only patriotic thing to do is to run oneself into bankruptcy by compulsive spending and taking out liar loans.
Ever notice how the money flowed to the big wigs of finance so easily with TARP. Yet when it comes to manufacturing like the auto companies they have to beg for a few bucks?
The fat cats on Wall Street and high finance are not hurting for money. When their corps go bankrupt they make out with millions. Yet it is all put on the poor guys to rescue America by going into debt.
We talk of living in a sustainable world, yet our actions betray our true feelings. All we have to do is to look at the stock market to see what happens when growth declines even a little.
Even if a company yields stable earning, but does not grow its earnings it is looked down upon. Stability and balance is part of a sustainable footprint, yet we shun such balance.
With one breath we talk about cutting global warming and how we have to cut our dependence of fossil fuel.
Then with the next breath we demand no cut backs in our standard of living, we must spend and consume above all else...build more, build faster, build bigger.
The GDP must only go up, up and away...all the while this consumption just increases global warming and keeps depleting the fossil fuels faster and faster.
Sick...sick..sick mentality, buy more cars, build more houses and monstrosities of architecture, spend more but 'cut back' to save our dear fossil fuels. For all practical purpose we will be out of crude oil and natural gas in 2 or 3 decades and possible much sooner.
Consumption is ingrained in us and we know no other way. And even if we wished to amend our ways, how could all our retirement funds take the hit?
Our world population has grown to levels where it has passed the point of no return for supporting a sustainable human population as we know it today when it comes to their energy demands.
And what does all that consumerism lead to?
It leads to the mess we are in now and the bigger mess the world will be in once India and China pick up momentum to copycat the envious lifestyle that they have held in high esteem as the 'American Dream'
The problem is not with the earth having enough land for all its people - the problem is with earth providing ad infinitum for all the needs the people crave.
The more people born, the more heat is produced from their life and all their cravings, As such, the warmer and more polluted the earth gets and the more energy they all use and the earths resources are depleted.
Fueling the problem of consumption is the games the Federal and World banks play with interest rates. They manage the economies in ways to fuel consumption and mask the real trend.
Witness the recent cries for Federal bankers to lower interest rates...so the stock market can go up...fueled by spending of the consumer.
It is drug habit that Greenspan got us hooked on and we just can't get away from.
Our economy is not based on sustainable health - it is based low interest credit to encourage compulsive spending, debt and living a life of constant consumption with a 'disposable mentality' when it comes to durable goods.
All this consumption to artificially fuel our economy to make our retirement funds only go up contributes to more and more global warming and the depletion of our natural resources.
Then the governments juggle the numbers to make the inflation figures seem artificially low, so everyone's retirement portfolio will make them happy so they will continue to buy and consume more...and on it goes....IT IS ALL WE KNOW and the bill is coming due soon!
We can see we have created a time bomb. Even the highest level brainiac economists can't fix what ails us. Our whole system is based on an unsustainable model that will eventually collapse no matter how much money that is printed up by the Fed. (...they don't even need to print money nowadays, all that needs to be done to create billions is to magnetize a silicon chip!)
Now maybe if our energy supply was stable and affordable and global warming was not an issue, things would be different and we could keep on consuming and expanding as infinitum
Sad thing is...IT'S NOT THAT SIMPLE TO DO A 180...Without compulsive spending and conspicuous consumption funded by unaffordable debt, we would fail as a country.
You ever hear the saying...'I got the tiger by the tail and can't let go?' That is how it has developed in the US of A.
Lets say everyone becomes voluntary simplicity and frugal squirrel devotees. We recycle, reuse, repair and just say no to buying more crap. If we stop buying all the stuff that America imports from China - who keeps the billion plus people in China from starving, so they do not go back to old ways of trying to take over the world?
China and Russia tried to support its people though a sustainable, self sufficient manner when they ere totally RED. Now that they are PINK, they are much more successful at support, So the world exchanged the dread of communist domination for that of the problem of more capitalism and consumption.
But as Taoists tell us...fleas come with the dog. America now wishes China and India had stayed backwards. But as long as the crude holds out, they can't go backwards once they got a taste of the American dream.
Maybe if China was a a balanced self sufficient economy with less mouths to feed and things would not be so bad. Same as the US...self sufficient. But everyone is globally connected nowadays.
And on a more local level, if the consumer stops consuming even US goods, the US companies go bust, everyone loses their jobs and his or her retirement funds will collapse.
What about growing a garden...nothing wrong with that? Lets say everyone starts growing 'victory gardens' in the backyard as food has become unaffordable. So some of the few farmers left in the US go bust cause their food just rots on the shelves unsold. Now there is less food being produced and at even a higher cost to those that can afford it the least.
What about more taxes? Tax the little guy so DC can pay for their compulsive spending disease. More taxes = less for us to compulsively spend 'trying' to buy happiness = lower earnings for the greedy corporations = raise hell with the DOW = less cap gains tax income for the gov to squander = everyone's retirement funds sink lower and lower = even less compulsive spending since everyone is poorer..."A debt-based society cannot prosper and is doomed to fail..." ~ Ron Paul
Back in the day, (prairie and turn of the century) citizens were more of a self sufficient nature. Most of us have lost that skill of self sufficiency and we have shifted gears to be dependent on gov and a few other such as farmers or oil producers or China to take care of the whole pop of the US. The problem is, it is very hard to go back without causing a lot of pain. (Actually a lot of deaths)
Hell, the impotent people of modern day and age can't even make pancakes or peanut butter sandwiches and have to buy them ready made in the store...it's really scary.
