Banker Pay Is Pretty Good - The Price of Destroying the Economy

A few months ago, I (only half facetiously) offered my services to BP as CEO after I had read about and watched bits of Tony Hawyard's testimony before Congress on how he was like Sgt Schultz (I know nothing, nothing!), figuring I could do at least as good a job as Hayward for a lot less money. Win-win all the way around for everyone!

The Sgt Schultz defense seems to be fairly common among CEOs and upper management for many companies, even though they are paid to be aware of what is going on. I would imagine that there are many of us among the millions of long term un and underemployed who could do the jobs of CEOs and so-called Masters of the Universe and be not only more honest in our dealings with others but also more empathetic for those who are struggling.

Instead, we get to see Lloyd Blankfein's salary and other compensation jump again in 2010:

The firm’s board granted restricted stock valued at $12.6 million to Mr. Blankfein and other senior executives, including Gary D. Cohn, the firm’s president. The board also approved a new annual base salary of $2 million for its chief executive, up from $600,000. Mr. Cohn and others will see their base salaries increase to $1.85 million, according to the filing on Friday.

With his previous salary of $600,000, Mr. Blankfein’s 2010 compensation comes to $13.2 million. Senior executives often receive part of their compensation in cash, but Goldman did not release details on this component of Mr. Blankfein’s compensation.

It's Not Just Jobs That Are Needed

While I write mostly about the need for jobs and long term un and underemployment, there are always a number of related issues bubbling just below the surface for me. The past couple of days, I've seen a few articles that are seemingly unrelated but are probably more closely related than most folks realize.

The first article was from today's (Friday 1/28/11) NY Times on Standard & Poors downgrading Japan's Long Term Sovereign debt.

S.& P. lowered its sovereign credit rating for Japan to AA- from AA. That is three levels below the highest possible rating, and S.& P.’s first downgrade of Japanese government debt since 2002. With the lower grade, Japan’s debt rating is now on par with China’s, which last year overtook Japan as the world’s second-largest economy, after the United States.

S.& P.’s move came just weeks after both it and its rival ratings agency, Moody’s, cautioned that they might take a more negative stance on the United States. It highlighted just how deeply indebted many of the world’s developed economies remain — despite concerted efforts on the parts of governments to improve their balance sheets.

Yesterday was this from Reuters on Moody's considering downgrading the ratings for states:

(Reuters) - Some U.S. states face so much pressure to fund pensions for public employees that it could hurt their credit ratings, Moody's Investors Service said on Thursday.

As concerns grow over the financial health of many states after the 2007-2009 recession and how they will cut spending to cope, the ratings agency combined pension and debt data to rank the liabilities of each state.

In the past, Moody's evaluated credit risks from pensions and debt levels separately. Lower credit ratings could raise the costs to states of borrowing money.

Interesting isn't it how suddenly Moody's has to change how they figure things for rating the states and combine debt AND pension liabilities all of a sudden. One might think they have an ulterior motive in doing so.

Where are the Jobs?

Even though the media cheerleaders (such as this from CNN, this from McClatchy, and this from Reuters) keep trying to tell us that the US economy is looking up and hiring is going to expand, reality keeps rearing its head to proclaim otherwise. And even the cheerleaders have to temper the optimism somewhat. From the CNN article:

Companies are expecting less of a boost in the areas of employment and investment spending, with 68% of firms saying the tax deal will have no effect on hiring, while 37% said it would have a positive effect. Only 1% said hiring would be negatively effected.

From the McClatchy article:

Finally, after months with the economy essentially stuck in neutral, there are encouraging signs: Employers are beginning to add jobs, from manufacturers of steel, cars and heavy machinery to online retailers and high-tech firms.

But like a massive cleanup after a natural disaster, righting the nation's economy after losing 8 million jobs will be a long, painful process for millions of job seekers.

The worst economic downturn in a generation has sorely tested the patience and resolve of American workers, and analysts say it could take another five years before the unemployment rate returns to a "normal" 6 percent.

Sometimes I Hate It When I'm Right

Last week when the Jobs Reports for December 2010 came out, I was a bit skeptical:

But you will pardon me if I'm a bit skeptical about this wonderful news. December is a time when there are a lot of short term hires due to the holiday season. I assume that ADP does make some adjustment for the seasonal factor and while 297K new jobs is definitely a good start, as I (and others) have noted recently, even if those jobs are something more than short term, minimum wage positions for the holidays, the odds are good that a lot of them are of the Perma-Temp fashion, with limited to no benefits. So I guess I'm going to hold off on the cheerleading the report.

Well, today (January 13) Initial Jobless Claims Report seems to bear out my skepticism. From CNN:

NEW YORK (CNNMoney) -- The number of Americans filing for their first week of unemployment benefits jumped sharply last week, two weeks after hitting a 2-1/2 year low below 400,000.

There were 445,000 initial jobless claims filed in the week ended Jan. 8, the Labor Department said in a weekly report Thursday.

That's up 35,000 from a revised 410,000 the previous week -- when jobless claims climbed back above 400,000 after falling below that mark for the first time in more than two years.

Last week's rise was bigger than expected. Economists surveyed by Briefing.com had forecast initial claims to edge up to 415,000 in the latest report.

So Much for Those 297K New Jobs

Today's report on jobs creation for December 2010 is out and the numbers are not particularly good. While Wednesday's report from ADP declaring that there were 297K new jobs in the private sector in December (discussed in yesterday's post here), today's report says there were a net new jobs of 103K for December with the "official" unemployment rate falling to 9.4% and the Un and Underemployed number at 16.7% (Table A-15 here). Of course, the economists were surprised at the figures reported.

Here's the NY Times on the jobs report:

Federal, state and local governments continued to shed jobs — cutting another 10,000 last month after trimming 8,000 in November, revised from 11,000 mostly on the local level. States and municipalities dealing with tighter budgets may be faced with further cuts as they try to shrink their deficits.

While the overall picture showed improving job growth, the additions in the private sector in December were not enough to significantly reduce the ranks of the unemployed or keep pace with people entering the work force. The outlook remains bleak for many workers. More than 14.5 million people were out of work in December.

Still, economists noted that the jobs data is a lagging indicator and pointed to other signs of a turnaround, though their outlook for 2011 remained varied.

Jobs: The Spin Continues

Well the December Jobs and Jobless reports are coming in and while there's still the big one from the US DoL's Bureau of Labor Statistics due tomorrow (Friday, 1/7/11), we can already see the spinmeisters in operation.

First off is the monthly report from ADP that is released on the first Wednesday of each month (yesterday) detailing the job growth or shrinkage in private sector employment for the previous month. Via McClatchy:

WASHINGTON — Private businesses hired new workers at a surprisingly energetic pace in December, according to a widely tracked job-tracking report released on Wednesday.

The ADP National Employment Report showed that private-sector employment rose by 297,000 in December. That's the highest monthly gain since the report's inception in 2000, and it's double or triple what was expected by mainstream economists.

Most important, job gains that high are what's needed to knock down the stubbornly high unemployment rate, which has been stuck at just under 10 percent for more than a year. Currently it's at 9.8 percent, with a new official BLS report on December employment due on Friday.

Companion to Perma-Temp Futures - Part Time Retail

Saturday I wrote a post on the Perma-Temp Future for many people who are among the long term un and underemployed from the Great Recession. This is the future reality for many people who have considered themselves professionals in a chosen field. People like myself and the field of Software Quality Assurance for example.

Today (1/3/11) there are a couple of articles from Reuters and CNN on hiring for 2011. The titles probably say as much about what 2011 hiring will look like as the articles themselves. The Reuters title:

Jobs trickle in. Whither workers?

The CNN title:

2011: A hiring boom, even at 9% unemployment

Though it might seem counter-intuitive, both titles are probably accurate.

The Perma-Temp Future

The past couple of days I have found a couple of related articles during my daily job and news searches. Now, since many members of the TradMed seem to be willfully obtuse on a lot of issues, I very much doubt if they will draw the same linkage to things that I draw. But contrary to much reporting, things really do not happen in a vacuum.

To start with, there was this article from the Kansas City Star (via McClatchy).

In a CareerBuilder survey released Wednesday, 34 percent of hiring managers said they’ll hire contract or temporary workers next year, up from 30 percent this year and 28 percent in 2009.

Research by The Human Capital Institute indicates that one-third of the U.S. work force is now composed of non-traditional “contract” workers, sometimes referred to as freelancers, free agents, contingent workers or temps.

The institute says the pool of these workers, who often are part-time, is growing at more than twice the rate of the full-time work force.