Falling Wages Threatening U.S. as Consumers May Cut Spending

Ninety-one percent of people in the U.S. labor force have a job.(bullshit) That may be the extent of the good news for these Americans, whose incomes tell a darker story.

Take-home pay, adjusted for prices, fell 0.3 percent in August, the third decrease in five months, and personal income dropped for the first time in two years, the Commerce Department reported last week. The declines followed news from the Census Bureau that median household income in 2010 fell to $49,445, the lowest in more than a decade, and the poverty rate jumped to 15.1 percent, a 17-year high.

Salary and benefit growth “has been going nowhere,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “One of the key reasons the recovery has stalled is that real incomes have fallen.”

While policy makers from Federal Reserve Chairman Ben S. Bernanke to President Barack Obama focus on cutting unemployment stuck near or above 9 percent since April 2009, the widespread stagnation in wages may offer a better explanation for the failure of economic growth to accelerate two years after the end of the recession. Workers’ ability to negotiate higher earnings won’t return until the job market strengthens, and flagging confidence has raised the risk that consumers may retrench.

Inflation-adjusted weekly earnings have fallen for six consecutive months, dropping 1.8 percent in August from a year earlier, a pace not seen since the 18-month economic slump ended in June 2009.

Getting ‘Squeezed’     http://www.businessweek.com/news/2011-10-03/falling-wages-threatening-u-s-as-consumers-may-cut-spending.html

Has Dallas, Texas Got a Good Idea or What?

Recently, the City of Dallas, Texas passed an ordinance stating that if a driver is pulled over by law enforcement and is not able to provide proof of insurance, the car is towed.

To retrieve the car after being impounded, they must show proof of insurance to have the car released. This has made it easy for the City of Dallas to remove uninsured cars.

Shortly after the “No Insurance” ordinance was passed, the Dallas impound lots began to fill up and were full after only nine days. 80+ % of the impounded cars were driven by illegals.

Not only must they provide proof of insurance to have their car released, they have to pay for the cost of the tow, a $350 fine, and $20 for every day their car is kept in the lot.

Accident rates are going down and… Dallas’ solution gets uninsured drivers off the road WITHOUT making them show proof of nationality.

Wonder how the ACLU or the Justice Department will get around this one.

Just brings tears to my eyes.

GO Dallas!   

Cuomo now open to 'tweaks' in labor contract

ALBANY, N.Y. -- After a public workers union boldly rejected wage freezes and benefit cuts and New York Gov. Andrew Cuomo responded by ordering 3,500 layoffs, both sides are returning to negotiations.

"Nobody feels this responsibility more than I do," Cuomo said in the radio interview. "Are you open to tweaks?" he asked himself. "Of course, I'm open to tweaks. It's 3,500 people. It depends on how you define tweaks."

Cuomo told "The Capitol Pressroom" radio show Friday that he would consider reallocating elements of the Public Employees Federation contract as long as the overall cost to taxpayers remains the same. Cuomo, through a spokesman, had previously said the only way to avoid layoffs would be for union workers to ratify the tentative budget they rejected Tuesday. Layoffs are scheduled to begin in about 20 days.

He emphasized he wouldn't add to the cost of the labor deal or provide the job security union members seek.

"We are anxious to discuss with the governor's negotiators how we can reach an agreement my members are willing to ratify while preserving state services and meeting the savings the state requires," PEF President Ken Brynien said.

The Public Employees Union has said it hopes to make changes in benefits such as health care that could lower the increased cost for the lowest paid members. 

http://www.forbes.com/feeds/ap/2011/09/30/business-us-ny-state-workers-layoffs-new-york_8710584.html

How Generous Are Federal Employee Pensions?

USA Today reports that “retirement programs for former federal workers—civilian and military—are growing so fast they now face a multitrillion-dollar shortfall nearly as big as Social Security’s.” USA Today’s figures include both pension and retiree health costs and are inclusive of military programs, so it is a broad figure. Nevertheless, it raises an interesting question: how did retirement costs for a small segment of the population grow to rival Social Security, a program designed to cover nearly all Americans? One big reason is that federal pension benefits are simply very generous relative to typical private sector plans.

How generous? To check, I took a stylized worker and ran his annual salary through both the federal pension programs and a typical plan offered to private sector employees to see the difference in how much they would end up with at retirement. Since federal workers receive higher salaries than the average private sector worker (more on thathere) I assumed the employee earned 150 percent of the average wage each year; that would put his earnings this year at a bit over $60,000. I assumed he entered the workforce at age 21 and worked until age 65; in reality, most people take some time out of the workforce and most federal employees have held other jobs, but for these purposes that doesn’t matter too much.

Most current federal employees are covered by two pension plans: a defined benefit (DB) program known as the Federal Employees Retirement System (FERS) and a defined contribution (DC) program called the Thrift Savings Plan (TSP). For a federal employee who retires at age 62 or older and has 20 or more years of service, his basic FERS benefit will equal 1.1 percent of his highest 3 years of average earnings, multiplied by his years of service. For FERS, most federal employees contribute 0.85 percent of pay, with the remaining costs covered by the government. The Thrift Savings Plan functions similarly to a private sector 401(k) plan. Federal employers contribute 1 percent of worker wages to the TSP regardless of whether individuals participate. In addition, the federal government matches employee contributions $1.00 per $1.00 for the first 3 percent of earnings contributed and $.50 per $1.00 for the next 2 percent of earnings. A federal employee contributing 5 percent of earnings to the TSP would receive a total employer contribution of 5 percent of earnings. Most current federal employees also participate in the Social Security program. 

 Andrew Biggs

http://blog.american.com/2011/09/how-generous-are-federal-employee-pensions/  

With billions of dollars in Medicaid spending at risk in Congress

(Reuters) The "red" and "blue" states that mark America's political divide between conservative and liberal sympathies are often far apart on issues involving healthcare, including Medicaid, the $420 billion-a-year program for the poor.

But lobbyists say governors, legislators and other state officials, Republican and Democrat alike, have found common ground in a push to convince a special congressional deficit panel that White House-backed Medicaid cuts totaling $41 billion will only weaken a system that already struggles to deliver care to 60 million beneficiaries.

The 12-member bipartisan panel, dubbed the "super committee" because of its powers, is tasked with finding $1.2 trillion in savings to cut huge U.S. deficits. The full Congress is due to vote on their recommendations by late December.

State officials appear most unified on an alternative cost-cutting strategy, which they say could save more than $100 billion by changing the healthcare delivery system for the poorest, sickest and most costly patients. Known as "dual-eligibles," they qualify for both Medicaid and Medicare, the government-run program for the elderly.

There are about 9 million dual-eligibles and state officials see billions of dollars in savings from shifting them into managed care plans better able to eliminate unnecessary doctor's visits, tests and hospital admissions.

"Support for that proposition is very broad," Maryland Governor Martin O'Malley, who chairs the Democratic Governors Association, told Reuters.

States also hope the super committee will adopt proposals to control Medicaid prescription drug costs, combat waste and fraud, and relax federal restrictions on benefits and eligibility, lobbyists said. http://www.reuters.com/article/2011/09/29/us-usa-debt-states-medicaid-idUSTRE78S0PK20110929

Freeze government salaries until the economy picks up again

Since 55 million retirees have received no cost of living increases for the last two years it only seems fair to freeze all government and elected officials' salaries until jobs in the private sector grow and tax revenues increase.

Moreover, there should be no bonuses for government employees until the economy becomes healthy enough to increase tax revenues.

These are ominous times and really tough decisions are needed. Printing and borrowing more money is not the answer.

Bill Huppert  

http://www.baltimoresun.com/news/opinion/readersrespond/bs-ed-social-security-colas-20110929,0,2739843.story

Invite to Tea Party After He Calls Movement Racist

Actor Morgan Freeman has received a standing invitation to attend a Tea Partyevent after he dismissed the conservative grass-roots movement as racist.

Ali Akbar, a 26-year-old black small business owner who is one of the original national Tea Party organizers, wrote an open letter to the Academy-Award winning performer, who is African American, inviting him to a Tea Party in Tennessee, the place of Freeman’s birth, or any location in the country, to prove his opinion is wrong. 

McCaughey: Surge in Costs Start Of Obamacare Disaster

A new report claims that Obamacare is only negligibly responsible for the surge in health insurance premiums this year, but former New York Lt. Gov. and healthcare expert Betsy McCaughey says its provisions do come with a steep price and there is “no tooth fairy.”


The survey of private and public employers conducted by the Henry J. Kaiser Family Foundation disclosed that the average cost of a family policy climbed 9 percent to $15,073 in 2011, the largest increase since 2005. Premiums for single coverage rose 8 percent.

The group’s findings also showed that health insurance is consuming a bigger share of employer costs, forcing many companies to eliminate pay raises and pass on more medical costs to workers.

Drew Altman, chief executive officer of the Kaiser Family Foundation, asserted that the healthcare reform bill enacted last year accounts for just 1 to 2 percentage points of the premium increases in 2011.

But McCaughey told Newsmax: "The early provisions of the Obama health law are bending the cost curve up, the opposite direction from what the president promised. The new rules — young adults on parents' plans, no annual caps on benefits, and no copays for preventive care — are not free. They add to the premium. There is no tooth fairy." http://www.newsmax.com/Headline/mccaughey-healthcare-costs-insurance/2011/09/28/id/412623?s=al&promo_code=D261-1