Getting By In America

So the posting was light today because I was doing my Christmastime good deed, pitching in on a food drive for needy families in South Central L.A. Every year the nonprofit One Voice reaches about 2,500 families in the area with a holiday food basket.

And this year, that bounty is apparently more needed than ever, because I keep hearing about epic demand at our nation's food banks. For too many, it is a struggle to survive without help in America. Costs are rising faster than wages, despite an unemployment rate that doesn't count people who've stopped looking for work jobs are tight and the underground economy isn't paying the bills, and the mortgage crisis is raising rents all over the country as demand increases. Donations are not keeping up with need, either.

Where there used to be thriving suburbs there are now tent cities.

Between railroad tracks and beneath the roar of departing planes sits "tent city," a terminus for homeless people. It is not, as might be expected, in a blighted city center, but in the once-booming suburbia of Southern California.

The noisy, dusty camp sprang up in July with 20 residents and now numbers 200 people, including several children, growing as this region east of Los Angeles has been hit by the U.S. housing crisis.

The unraveling of the region known as the Inland Empire reads like a 21st century version of "The Grapes of Wrath," John Steinbeck's novel about families driven from their lands by the Great Depression.

As more families throw in the towel and head to foreclosure here and across the nation, the social costs of collapse are adding up in the form of higher rates of homelessness, crime and even disease.

I don't think people have an understanding of how bad it is out there. There was a house a few months back that was being transported here in Los Angeles, and it fell off the truck on the 101 and stayed there for a couple weeks. People started living in it. There are families who are finding it easier to turn in their keys and walk away from their homes. It's obscenely easy to become invisible in America, whether you're desperately poor or even middle class. And there's a fine line between ignorance and a flat-out lack of compassion. And yes, in many ways the U.S. economy is built that way.

The entire American economy is based on making people feel bad about themselves, making them feel poor, ugly, sick, helpless, stupid, inadequate and then offering to sell them something to relieve the pain of rejection and failure.

It's based on making them afraid, too. Of losing the aforementioned house/health insurance/paycheck and of the myriad of boogymen under our collective beds. You think we don't have national health care because we can't do it or can't afford it? We don't have national health care because if we did, quitting your job and moving on to something better or even to the unknown wouldn't be so fucking terrifying. Some American dream, huh?

Meanwhile, as the poor are shunted aside, the rich are feted. Circuit City, perhaps the biggest bastards in the business world, who fired all their workers who made any kind of decent wage and hired neophytes for less, couldn't be losing more money if they tried. Nobody wants to go to an electronics store where nobody has a clue what they're doing. Turns out the management tried to hire back their informed employees to no avail. And all this loss for their shareholders hasn't hurt the suits a bit.

We all know what happens when you mess up in the dog eat dog world of big business -- you get retention awards (that's because your stock options aren't worth anything). The Post reports that Circuit City's executive vice-presidents will get retention awards of $1 million each. That's 35 years worth of pay for one of sales clerks who earned $14 an hour. And that's just the bonus.

This touching account of Santa Claus visiting Circuit City's executive suites belonged on the front page of the Post and every other newspaper. What better way to get in the Christmas spirit?

America is on a bad track and the suits on Wall Street can't seem to understand why. The gap between rich and poor is unreal, and the media isn't covering any kind of real labor and class issues that would put this in front of people's eyes. As a result people feel almost completely alone.

Do You Trust Circuit City With Your Security?

Yesterday I wrote about the Fort Dix Six, and how their super-duper terrorist plot (which involved ambushing a heavily fortified military facility with six people) was foiled by a New Jersey store clerk. I wrote about how this "hero" and other service-sector workers of this kind are consistently disrespected by the American economy. Well, now we know a little more about that store clerk, which confirmed everything I said.

He worked at Circuit Freakin' City.

A Circuit City spokeswoman has confirmed an employee at the electronics chain's Mount Laurel store tipped off police about a video showing men firing assault weapons and screaming about jihad.

Spokeswoman Jackie Foreman said the store is not releasing the name of the employee. Foreman said the employee still works for the company, but she would not say where.

Well, if the clerk worked at Circuit City, we know that he or she doesn't make a lot of money. Otherwise they would have been fired.

Circuit City fired 3,400 employees in stores across the country yesterday, saying they were making too much money and would be replaced by new hires willing to work for less.

The company said the dismissals had nothing to do with performance but were part of a larger effort to improve the bottom line. The firings represent about 9 percent of the company's in-store workforce of 40,000.

"Retail is very competitive and store operations just have to contain their costs," said Jim Babb, a Circuit City spokesman. "We deeply regret the negative impact that was had on these folks. It was no fault of theirs."

The company gave the dismissed workers severance pay and told them that after 10 weeks they were free to apply for any openings. Employees reached by a reporter said they were notified yesterday morning and told to leave immediately.

Store clerks that were targeted for this dismissal were making as little as $11.59 an hour. Even that was too steep a price for Circuit City to bear. So they cut all their "highly paid" workers loose and kept the ones who didn't tax them as much. Including this alert person who allegedly thwarted a terrorist plot. We know that the employee still works there - was he or she fired, and hired back at a lower salary, or was he or she making too little for the company to care? It's unclear, but we know now that this employee to whom the FBI is indebted doesn't make much more than 10 bucks an hour. And so everything I put in my original post holds:

That would put our sales clerk right on the edge of the poverty line.

We know that the statewide average rent in New Jersey is almost $1100/month, and 53% of all New Jerseyites couldn't afford the rent on a two-bedroom apartment, for example. So if this average sales clerk has a family, he's cramped, especially if he has children.

We know that 14% of the state's citizens don't have health insurance, and that this number disproportionately affects those in the income bracket as our average store clerk. Even if the clerk does have insurance, the quality of care is among the nation's costliest while simultaneously being among the nation's poorest. And without health care, it just gets that much more expensive.

Getting sick anywhere can be an expensive proposition for those lacking health insurance, but nowhere is it more expensive than in New Jersey, a new study has found.

The state's hospitals, on average, charge uninsured patients or those who pay out of pocket more than four times what insurance companies and Medicare end up paying for the same care, according to the study published today in the journal Health Affairs.

For example, a patient without insurance would be billed $456 for the same services a New Jersey hospital charged insurance companies $100, according to the study by John Hopkins researchers, which used 2004 billing data.

That gap was the greatest of any state, and overwhelmingly affected the working poor and other low-income residents, the study concluded.

We have this very fragile open society where we all put our safety and trust in the hands of people who are consistently disrespected by the modern economy. If this attempted dubbing by the Fort Dix Six happened AFTER Circuit City decided to fire everyone who was making too much money, when morale in the stores was likely to be non-existent, would this clerk have been as perceptive? Would they have cared at all? Would they just be trying to get through the day?

Why do we deny a living wage and basic dignity to people who could credibly be called "heroes"? If I was a smart labor union organizer, I'd be asking that question. Publicly.

By the way, this store clerk may not have a job with Circuit City for very long, considering that nobody wants to go to a store with an untrained sales staff and management that hates their workers, and if it keeps up there may not be a Circuit City anymore.

Eric Savitz (Barron's) submits: Circuit City (CC) shares got clobbered this morning following its surprisingly poor May quarter earnings forecast announced after the close late yesterday. The Street is not happy about the news, understandably; analysts at Credit Suisse and Citigroup downgraded the shares [...]

The one thing that seemed most disturbing in Circuit City’s outlook was the very weak sales of large screen TVs in April. “We believe consumer expectations for TV pricing were set at an extremely low level in the last two months of 2006,” says Pacific Crest’s Andy Hargreaves, who keeps his Outperform rating on the stock. “Since then, TV pricing has stabilized, which has likely driven many consumers to delay purchases until another round of price cuts.”

Given the specific weakness in April, maybe there is another explanation: the company’s March 28 restructuring plan, which called for the layoffs of 3,400 of its highest paid sales associates. Fire your best sales people, and then sales disappoints…ya think maybe that wasn’t such a good idea?

Heh indeedy.

Karma's A Bitch

Circuit City is getting exactly what they deserve. You might remember that they did a mass firing of everyone in their stores who was making too much money a couple months back. Now it turns out they don't have any experienced employees and their service is suffering. And consumers have either figured that out or they just don't like what was done in the first place. Because:

Circuit City fired 3,400 of its highest-paid store employees in March, saying it needed to hire cheaper workers to shore up its bottom line. Now, the Richmond electronics retailer says it expects to post a first-quarter loss next month, and analysts are blaming the job cuts.

The company, which on Monday also revised its outlook for the first half of its fiscal year ending Feb. 29, 2008, cited poor sales of large flat-panel and projection televisions. Analysts said Circuit City had cast off some of its most experienced and successful people and was losing business to competitors who have better-trained employees.

"I think even though sales were soft in March, this is clearly why April sales were worse. They were replaced with less knowledgeable associates," said Tim Allen, an analyst with Jefferies & Co.

In particular, the televisions showing disappointing results are "intensive sales" requiring more informed employees, Allen said. "It's a big-ticket purchase for somebody. And if they feel like they're not getting the right advice or are being misled by someone who doesn't know, it would be definitely frustrating. They will take their business elsewhere."

We're going to need global unions to deal with this global problem of "racing to the bottom" to push down wages. But ultimately, the marketplace will decide on who carries the best service. And right now, they're deciding on Circuit City. Don't be surprised if you see a few "Help Wanted - $$$" signs in their storefronts soon.

Getting Screwed in the Bush Economy

The average worker has been getting screwed in the Bush economy since its inception, and now we have proof of this in action. As GDP has risen, the media wage (the wage in which half of the workforce is above it and half below) has remained flat or even shrunk. And workers aren't stupid, they recognize this:

A business coalition hired pollster David Winston to figure out why voters remained so dissatisfied with the economy. His focus groups of middle-income voters in Cincinnati and Pittsburgh found voters going deeper into debt to keep up with rising costs of health care and energy. Executive compensation "is getting to the point where it's obscene," said one focus-group participant.

The more politicians talked about how good the economy was, the worse these voters felt. "It's almost as if these folks are floating around in the ocean, watching the yachts and speedboats go by, thinking, 'Hey, I'm here, someone notice me,'" says Dirk Van Dongen, a co-chairman of the coalition and president of the National Association of Wholesaler-Distributors. Mr. Winston advised Republicans: "Our message should be that while the economy is getting back on track, we need to do more to help people with the cost of living."

There's an aspirational class that believes they will be on the yachts and speedboats someday soon. But there's also a far bigger middle class that has been fundamentally stepped on since 2001, and they cannot be mollified anymore. The Circuit City story is a perfect example of how workers have been disrespected in the current economy.

Circuit City Stores Inc. has a message for some of its best-paid employees: Work for less or work somewhere else.

The electronics retailer on Wednesday laid off 3,400 people who earned "well above" the local market rate for the sort of jobs they held at its stores.

In 11 weeks they'll be able to apply for their old positions — which will come with lower hourly wages.

The move put Richmond, Va.-based Circuit City, which has more than 40,000 employees in the United States, at the forefront of a new way of controlling labor costs in the service industry. Employers determine the prevailing market wages for particular jobs in various geographic regions and then find ways to make sure that their workers' salaries stay within that range.

That is a description of a race to the bottom, and it's actually anti-capitalist. You have a the biggest employers in the service sector (typically big-box stores) artificially setting wages based on one another and calling that "the market," when it's in the self-interest of all the respective management to lower those wages. One sign at a burger joint notwithstanding (yes, Mickey Kaus is that stupid that he believes one sign advertising jobs at In n Out for $9.50/hour, when they've always been a good employer anyway, means the economy is robust and strong), this is collusion. and it's going on across the service sector. Look at this looming Southern California grocery strike, where even with union backing, employees have had to endure anti-worker practices. Management across the board is dedicated to spending obscene amounts to ensure that the people they hire have no leverage, no bargaining power, that they do what their told and go home hungry if they must.

The Bush Administration thinks this is a PR problem, and so they make cosmetic trade policy shifts like putting tariffs on glossy paper coming out of China (how about a tariff on wheat gluten that kills pets?). It's too little and too late. They're making sops to a nonexistent manufacturing sector, while still vowing to veto the Employee Free Choice Act, which would give a fair shake to collective bargaining. They have a choice to make; continue to anger the largest group in the population, who sees through the "family values" mirage more and more as their families and their work are devalued, or do the right thing. I expect the former.