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Thursday, April 05, 2007
Alan Reynolds :: Townhall.com Columnist
Layoffs in Perspective
by Alan Reynolds
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In the most recent report on the current status of workers displaced within the past three years, the bureau found that 30 percent were not working or seeking work during the survey month of January. That consisted of 12 percent of those under the age of 55, 27 percent of those between 55 and 64, and 64 percent of those over the age of 65. Combine those figures, and 30 percent appear to have "dropped out of the labor force entirely," which means most retired.

The claim that "only a third held new jobs two years later that paid as well as those that were lost" is deceptive because about one third accepted buyouts to retire early, go to college or start their own business. The article mentions one man who is using his $100,000 buyout to finish college. It notes that such a "lump-sum payment ... could be used to start a small business or to buy into a franchise."

But people who begin working for themselves are no longer counted as wage-earners, and neither are those who attend college or retire. Uchitelle counts them all as not receiving a wage as high as before, but that is because retired people, students and small business owners are not earning a wage.

The BLS finds that "of these re-employed full-time workers who reported earnings on their lost job, 51 percent were earning as much or more in their new jobs as they had earned on the job they lost ... (while) 29 percent reported earnings losses." That is not an entirely pretty picture, but it is not nearly as dark as the Dust Bowl image Uchitelle attempts to paint.

Mass layoffs are unfortunate, but this is one of those cases where the cure is much worse than the disease. Uchitelle has long urged the United States to adopt Europe's regulations and sanctions that make it difficult and costly for employers to fire workers. Yet such policies always backfire, making employers extremely reluctant to hire in the first place and particularly afraid to give inexperienced young people a chance.

Citizens of Michigan's cities are entitled to ask state and local officials some tough questions about why their state and-or city appears so unattractive to prospective employers. The Tax Foundation, for example, has some cautionary advice about replacing the nefarious Single Business Tax, which is to be phased out next year.

The last thing the people of Michigan should be asking for is the sort of "job protection" policies that produced unemployment rates of 8.6 percent in France, 9.3 percent in Germany and 11.5 percent in Belgium.

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Fat At the Top
Tonight's TV news (and you can find it now on google) reported that Ford paid its top six executives $62 million during the same year (2006) it posted a $12.6 billion loss. Ford CEO Alan Mulally, hired in September, had by the end of the year been paid $28.2 million in salary and perks (such as a $7.5 million signing bonus)---that's for four months' work.

I am curious: do townhall conservatives see anything wrong with a CEO getting that kind of compensation from a company that is meanwhile forced to close plants and lay off tens of thousands of workers? We hear the argument that CEO's are worth that money because they guide the company so well---but they get it even they fail. I remember a Disney CEO getting the boot after about a year during which he was paid something like $40 million.

This sounds like a system in which the cards are stacked against labor and shareholders alike. Why does the country put up with this system, in which American CEOs are paid hugely more than CEOs in any other industrialized country---google "comparative CEO pay" for a shock.

Not Only Michigan II
Its odd, after writing my first comment on this article earlier today I came home to find that my next door neighbor had just been laid off by his furniture company. The irony is that his job had involved traveling to Asia to assure that their plants were running properly. Most of those plants were in China. The US Deptartment of Commerce has just recently increased the tarif on their imports from 7% to 58% in an effort to preserve American Manufacturing jobs. The result was a $4,000,000 tarif bill retroactive to August of 06.

I also noted that the North Carolina Departemnt of Commerce says that new manufacturing plants require about 10% of the employees that were needed in the 80's for the same amount of product. As I noted above there are big structural changes occuring in the economy. Tom Peters noted this about ten years ago and predicts that the service sector is next.

BTW the bright folks who want to raise the minimum wage are just making it happen faster.
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