Why Business Wants a Recession

           Give Jerome Powell credit for candor: the Fed chairman admits that his policy of increasing interest rates to fight inflation might push the economy into a recession. “No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” he recently told reporters.

            If it does, one sector won’t be entirely displeased: employers.

            According to the Deloitte accounting firm, a typical Fortune 500 company spends $1 to $2 billion a year on payroll, averaging between 50% and 60% of total spending. Controlling labor costs, unsurprisingly, is a top priority for employers.

            In the boom-bust cycle of labor-management negotiations, the post-pandemic Great Resignation has triggered a labor shortage, a phenomenon we rarely witness and tends to fizzle out fast. Workers are quitting and retiring early, tanking the labor force participation rate. Those who remain enjoy the upper hand at interviews that feel like the job prospect is sizing up the company rather than the other way around. Labor shortages are driving up salaries, shortening hours, prompting signing bonuses and forcing bosses to accommodate people who prefer to work at home. Just 8% of office workers in Manhattan are back in the office a full five days a week.

            The most recent data published, for June, finds that wages and salaries soared 16.8% on an annualized basis as benefit costs went up 14.4%.

            Workers, angry and resentful after decades of frozen real wages and merciless downsizing, are becoming demanding. This reversal of a power dynamic in which workers were supplicants and bosses called the shots has also strengthened labor unions that had been losing membership for years.

            This, some CFOs may be thinking, calls for a recession.

            Company profit margins are at a 70-year record high, up 25% each of the last two years as the result of raising prices during the pandemic. Which means that, even allowing for an 8% inflation rate, a generic S&P 500 corporation should easily be able to ride out the average 26% earnings decline suffered in the most recent typical recessions that took place in 1990, 2000 and 2020. (A bigger crisis like the 2008-09 Great Recession, which reduced earnings by 57%, is another matter.)

            No corporate officer would voluntarily reduce earnings. Or would they, in order to get something more valuable: regaining leverage over labor?

            Traditional conservative allies of big business are openly arguing in favor of higher unemployment. “The recent drop in work and labor force participation—particularly among young workers—is troubling [my emphasis],” writes Sarah Greszler in a white paper for the Heritage Foundation, the right-wing think tank. “Job openings, at 11.3 million, remain near record highs, and record percentages of employers report unfilled positions and compensation increases.”

            Greszler summarizes: “Continued low levels of employment [sic] will reduce the rate of economic growth, reduce real incomes and output, result in greater dependence on government social programs, require higher levels of taxation, and exacerbate the U.S.’s already precarious fiscal situation.”

            Workers, of course, feel like they can finally breathe. High demand for labor means that they can quit positions where they feel unappreciated and/or undercompensated, pack up and move to another state and create a healthier balance between their family and work lives. The current situation is anything but “troubling.”

            Executives at employers like Apple, Tesla and Uber have had enough of workers calling the shots. They’re demanding that people get back to work — at the office — or find another job. “A quickly shifting employer-employee dynamic could give companies the ammunition to take a harder line against the full-time work-at-home arrangements that many employees have pushed for, according to corporate policies experts. In fact, they say more companies are likely to start pressing staffers to come back to the office — at least a few days a week,” reports CNBC. “The hybrid workforce is not going to go away, but the situation where employees refuse to come to the workplace at all is not likely to hold,” Johnny C. Taylor Jr. of the Society for Human Resource Management tells the network.

            Perhaps no one has told CEOs that at-home work empowers them too. Rather than hiring security goons to escort laid-off workers past their terrorized colleagues, companies can memory-hole the condemned by deactivating their remote-access passwords. Who’ll notice one less square on the Zoom screen?

I’m not subscribing to a dark Marxist suspicion that CEOs, the Fed and other powers-that-be are conspiring to slam the brakes on an economy that would otherwise be coming in for a soft landing as pent-up consumer demand from the pandemic naturally ebbs, in order to return their recently empowered employees to their rightful status as wage slaves. Powell and his fellow governors are doing what comes naturally to government, treating a disease based on a diagnosis that is close to a year out of date and, reasonably, including wage increases as part of their calculus of what constitutes a major driver of the inflation rate.

Business, however, does see what’s coming. If the captains of industry aren’t worried enough to be calling their pet politicians to demand an end to interest-rate hikes, one reason might be that they see a silver lining to the next recession.

(Ted Rall (Twitter: @tedrall), the political cartoonist, columnist and graphic novelist, co-hosts the left-vs-right DMZ America podcast with fellow cartoonist Scott Stantis. You can support Ted’s hard-hitting political cartoons and columns and see his work first by sponsoring his work on Patreon.)

Ask Him

Hillary Clinton has supported most “free trade” agreements that have encouraged American jobs to leave overseas. Now she’s heading to states that have been devastated by outsourcing. Will people forgive and forget and vote for her?

SYNDICATED COLUMN: Digging Your Own Grave: Evil Employers Can Lay You Off, But You Don’t Have To Go Quietly

You’ve seen it in movies: gangsters are going to kill a guy. But before they do, they force him to dig his own grave. Who would go along with that? What are these doomed souls thinking? Why, during their final moments alive, doesn’t the victim avail himself of the chance to die defiantly, with dignity, going to his death with the small pleasure of knowing that his assassin will at least be inconvenienced by the disposal of his body?

That was the question running through my head as I read a story that made my blood boil: Disney World in Orlando, Florida recently laid off 250 tech workers and had an Indian outsourcing company supply their lower salary replacements with foreign recipients of H-1B visas. This disgusting practice, which is becoming increasingly common and is the subject of a congressional investigation and at least one lawsuit, is illegal. H-1B visas are only supposed to go to highly educated foreign workers brought to the U.S. to work for employers who can’t find American citizens to do the job — but with 3 out of 4 American techies un- or underemployed, that’s never the case.

Disney, which had a profit of $7.5 billion last year, could easily have afforded to obey federal immigration law.

If found guilty of visa fraud, Disney should be treated the same way that individual criminals get slammed by “three strikes” laws: 250 felony counts? This rogue company is too big not to be failed. It should be nationalized and its executives sent to prison for life.

The part that really got my goat was that Disney pressured its laid-off workers, many of whom had received such glowing performance evaluations that they thought they were being promoted when they were called in to meet with their bosses, to train their replacements. “I just couldn’t believe they could fly people in to sit at our desks and take over our jobs exactly,” one of the H-1B outsourcing victims, an American in his 40s who has been unemployed since his last day at Disney on Jan. 30 told The New York Times. “It was so humiliating to train somebody else to take over your job. I still can’t grasp it.”

It is astonishing how few workplace shootings there are.

Why didn’t the 250 fired workers tell Disney to go to hell, and refuse to train their replacements?

Why did they dig their own graves?

The answer is, they got paid. But not much.

Disney “offered a ‘stay bonus’ of 10% of severance pay if they remained for 90 days. But the bonus was contingent on ‘the continued satisfactory performance of your job duties.’ For many, that involved training a replacement. Young immigrants from India took the seats at their computer stations,” reported the Times.

How much cash are we talking about?

Obviously, there’s the 90 days of pay. Nonmanagerial workers laid off by Disney receive one week of pay for every full year of service. So if you worked 10 years, you’d get 10 weeks severance, plus one additional week – 10% – for the so-called “stay bonus,” for a total of 11 weeks. But to assess the net benefit, you subtract the $275 a week in unemployment benefits most workers receive in the state of Florida, as well as the 10 weeks severance the laid-off employees would have received even if they’d refused to train their replacements.

According to the corporate salary site glassdoor.com, Disney tech jobs at Orlando start at about $61,000 a year. So let’s assume that the average salary of the poor suckers pushed out the door in favor of the new guys from India was $80,000.

Disney paid the laid-off Americans $20,000 – minus income taxes, so more like $15,000 – to dig their own graves.

Look, I get it. Most Americans are living paycheck to paycheck. That $15,000 looks like it’s going to matter a lot when you’re about to lose your job, especially when you are an older worker in technology, a field where age discrimination isn’t merely tolerated, but gleefully celebrated.

At the same time, how much is your dignity worth? That’s the big picture.

Victims of oppression have a responsibility not only to themselves, but to those who are suffering at the same hands, and to the next generation of victims, to resist and throw their bodies on the gears of bloodthirsty corporate capitalism. What if every worker refused, as a matter of course, to train their replacements? The resulting disruption would create a cost for the company.

What if the standard response of a laid-off employee in the United States was not to leave quietly, but to sabotage computers with viruses, trash their office, break as much equipment as possible, and go out kicking and screaming? What if every employer who tried to replace their American workers with outsourced foreigners on fraudulent H-1B visas could count on a big fat class-action lawsuit? Resistance might make some employers think twice before behaving with such disgusting impunity.

Auschwitz survivor Primo Levi wrote that the Nazis’ great triumph in their oversight of death camps was to reduce their Jewish inmates to animals, so that they would turn against one another in their desperate struggle to subsist. Levi was haunted by the horror of what he witnessed, and how easy it was to decivilize human beings. On the opposite side of the spectrum, we celebrate the heroes of the uprisings in the Warsaw ghetto and at Sobibór death camp because, though they knew they were going to die no matter what, they fought to the end.

Comrades! Don’t dig your own graves.

Not for $15,000.

(Ted Rall, syndicated writer and the cartoonist for The Los Angeles Times, is the author of the upcoming book “Snowden,” the first biography of NSA whistleblower Edward J. Snowden. It is in graphic novel form. You can subscribe to Ted Rall at Beacon.)

COPYRIGHT 2015 TED RALL, DISTRIBUTED BY CREATORS.COM

How To Get Laid Off

Originally published at Breaking Modern:

Why don’t you spend as much as other generations? So called Millennial culture has nothing to do with it. Odds are, you’re just broke. And here’s how to get laid off if you aren’t.

ted-rall

 

ISIS is Hiring

Silicon Valley has added zero net new jobs in 16 years, and many of the old jobs pay poorly. ISIS, on the other hand, is hiring.

Back to Normal

Pundits and politicians are looking forward to the “recovery” following race riots in Ferguson, Missouri. What will “back to normal” look like? Police randomly stopping young black men in the streets just because, checkpoints by heavily armed uniformed goons, police shootings of unarmed men, high unemployment and underemployment.

The New Optimism

According to a new poll, Americans are increasingly pessimistic about their future and that of their children. Half of Americans doubt they’ll get as raise or a better job within the next five years. But hey, we’re Americans. We’ll adapt!

SYNDICATED COLUMN: The Mayors of Brokesville

To Be Young, Technodouchey and Shilly at SXSW

It’s not like I didn’t know what I was getting into.

This was my second year at South by Southwest, the Austin music festival that has morphed into a trilateral Comic Con of the tattered remnants of the music industry, the on-the-ropes independent film sector, and a New Third Thing, the tantalizingly monetizable-for-a-few culturo-fiscal tsunami that left the first two that way, which SXSW hath dubbed Interactive.

Which is, of course, the Internet. Or more exactly, the hapless wretches who want to make money from it because, this being 2013, what else are they going to do – build real stuff and sell it? They seek to profit directly, by coming up with an awesome app like Foursquare which, as every article about this topic is required by law to mention, launched at SXSW in 2009 (and which said articles are never allowed to say, is pretty boring and useless and lame and, anyway, isn’t it kind of sad to have to point back four years to find a Big SXSW Launch?). Either that, or indirectly – by sucking dry a gullible VC (venture capitalist).

In case you’re wondering what goes on SXSW and why you should care, here’s what (why comes later; feel free to skip ahead, I would if I didn’t have to write this):

It’s a bunch of incredibly douchey – you think you know douche? you think you’ve met douches? oh, no, not like these douches you don’t – 25-to-37-year-old wannabentrepreneurs trying to market Webby things, 99% of which are apps for smartphones. And 99% of those 99% of those apps are redundant.

Redundant as in: “You can find restaurants in your area and review them. You can talk to other patrons about them in our online community.”

“Like Yelp?”

“Yeah, well, yes, but…”

“Like Yelp?”

Sad confused face.

I told you they were douches.

Speaking of which:

So during SXSW 2012 I wandered down to the lobby of my hotel to get coffee. Some douches were ambling zombie-aimlessly around, heads cocked in the familiar 20°-forward-head-tilt-toward-iPhone position. Other douches were clustered on the floor, deeply engaged in a random hackathon that accomplished little more than stressing the Hilton’s already technorati-overburned wi-fi network. But that still left other douches to notice that I wasn’t wearing shoes.

“Dude,” a tall male douche, about 32 years old, smiled at me. And pointed at my feet.

“What?” I asked, grouchily. Which was appropriate, considering that he was standing between me and the coffee line. Which was long. Shilling redundant apps requires caffeine as well as gall.

“No shoes,” he replied. “What are you promoting?” He actually seemed interested in my answer to his question.

Another douche, apparently the first douche’s comrade, joined us. “Hey, that’s great!” the second douche chimed in. “Are you repping a foot app? A shoe app? What is it? I gotta know! Hey guys” – he motioned toward a small douche-flock – “check it out!”

They were visibly, crushed-like-kids-who-got-lame-presents-on-Christmas-morn disappointed by my explanation, which was boring and simple: I didn’t feel like putting on shoes since I was just going back upstairs to my room. They thought I was lying.

“No one just doesn’t wear shoes,” the first douche accused. “You are promoting something.” Because, you know, the way you promote a product is by refusing to admit it.

To paraphrase Bruce Springsteen and Dave Edmunds, from big dumb things small dumb things one day come. So what came out of tens of thousands of douches dropping millions of dollars into Austin’s tourism industry?

“The breakout star of [the 2012] SXSW was Highlight, a location-aware app that alerts you when people you know are nearby, and attempts to introduce you to people you might want to know,” the Austin Business Journal reported. “Highlight dominated the buzz at the conference and was crowned the winner early on. However, it struggled to expand afterward because it was a battery hog, and it didn’t work as well outside of SXSW’s target-rich environment, where everyone was using it.” Which is why you’ve never heard of it.

So anyway, this year was more of the same. It was depressing and maddening. Except, without anything as thrilling as Highlight. It was also enlightening. Because SXSW is a metaphor for what’s going on in the American economy.

Like most U.S. businesses, SXSW attendees wanted to sell stuff. The problem was, no one wanted to buy, or hire, or invest.

So no one was selling or getting hired or invested in.

If the balance in Austin at SXSW and in the U.S. (and for that matter internationally) were less extreme – if, in Marxist terms, the oversupply of production merely exceeded rather than dwarfed consumer demand – you’d merely have downward pressure on wages and prices. Which, in fact, we’ve seen since the end of the Vietnam War. And isn’t good.

As things stand, the demand side – companies that want to hire people, which increases the number of goods and services consumers want to buy – is virtually nonexistent. And that’s catastrophic. The U.S. economy added 177,000 jobs in January, 237,000 in February, and 158,000 in March. Moody’s Analytics chief economist Mark Zandi estimates that overall growth is running at about 175,000 a month. Since the U.S. needs to add 180,000 jobs per month just to keep up with population growth, the U.S. in “recovery” is losing 5,000 jobs a month. “If that’s the case, underlying job growth is not changed appreciably,” Zandi says dryly.

Sassy ex-Reagan budget chief David Stockman – say what you will about his blame-the-Fed politics, he’s the most thrilling economist-writer ever – says America is doomed because of failed government intervention. “The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest [Wall Street] bubble pops, there will be nothing to stop the collapse.”

Stockman is probably wrong about the why – more old-fashioned socialist state control would have avoided or at least mitigated this mess by redistributing wealth, thus stimulating consumer demand – but right about the what. When you’ve got a marketplace full of would-be sellers but no one who wants to buy, you’ve got no market at all.

All that’s left is a bunch of douchebags looking at your feet.

(Ted Rall’s website is tedrall.com. His book “After We Kill You, We Will Welcome You Back As Honored Guests: Unembedded in Afghanistan” will be released in November by Farrar, Straus & Giroux.)

COPYRIGHT 2013 TED RALL

Fake It Until You Make It

Studies prove that employers discriminate against the unemployed, viewing them as incompetent and undesirable. What should someone who got laid off a couple of years ago do? Hire a company to hire them, and leverage their fake credentials to get the job of their dreams.

css.php