Economy improving?

[woodturner]

Warren Buffet and I disagree . Too many executives are allowed to select their own compensation committees, then further stack the deck when it comes to connecting short-term #'s (prone to cooking) w/ bonuses.

Clearly there are those who abuse the system, and the opportunities exist in some cases as you cite. However, in general, it is the market that sets compensation rates for essentially everyone

Shareholders don't force executives out because the dollars involved are decimal point dust on the corporation's bottom line.

Good point - but if the numbers are insignificant, why are people complaining about "excessive" executive salaries?

Maybe your example isn't the best, but I have hired carpenters w/ 20+ years experience, and carpenters w/ 2-3 years experience. There is a world of difference.

Maybe the amount of experience I used in my example wasn't right. My point is that in many jobs, one eventually learns everything they need to know to do their job efficiently and correctly. People with experience beyond that point are not adding additional value, but still expect to be paid more. If the value of a competent, efficient carpenter's work is $20/hour, then a carpenter with 40 years experience should not expect to be paid more than the $20/hr the 20 year experience guy is making, IF they are doing the same work at the same skill level

Have unskilled workers earned $20 to $30/hour? I know skilled workers (welders, for example) can make $20-$30/hour, but I don't know of any places paying unskilled workers $41k to $62k/year.

I do - the bus drivers in Pittsburgh make something like $30/hour to start, one reason that the transit system in Pittsburgh is in such bad shape. People won't ride the bus because it is too expensive, but they have to keep fares high because union driver wages are excessively high. Unfortunately, unlike private business, they can't relocate to escape the union burden.

Disagree, can't give banks a free pass. Basically, they were lending money to people that couldn't afford to repay.

OK, but the people who borrowed the money that they could not afford to repay are the primary ones at fault. No question that the banks "gave them the rope to hang themselves with", but the people did the hanging themselves.

Saw an ad for a mortgage company offering 4% loans to "savers". Read the fine print - they are 5 year loans, so there is a balloon payment at the end. I suspect some people will be foolish enough to get those loans, then lose their house when the balloon payment comes due and they can't refinance. At the same time, the person who has relocated for a 3 year contract or otherwise knows they would not own that house for more than 5 years wouls save a lot of money with that loan. The bank can't know which category a given buyer fits, in general.

[woodturner]

Minimum wage is a liveing wage ? You must be one of those CEO's or an ungrateful small bussiness owner. Blame the houseing bust on the consumer ?

Not an exec, just a worker. Minimum wage IS a living wage in much of the country, but not everywhere. A person making minimum wage and working 40 hours per week can support a family of four and own a modest but nice house in much of the US. If that isn't a "living wage", what is? As I said, people's expectations are out of proportion with reality. One does not have to have cable TV or cell phone to be able to live well - luxuries are wants, not needs.

No question the home buyers are responsible for signing for loans they could not pay back. We are all personally responsible for our actions - including those who tried to game the system and lost the game.

[billwmeyer]

Minimum wage a living wage?

I would like to see a budget set up for a family of 4 using a minimum wage income. I think it may be hard to do with a house and a car payment. There is no public transit here, so a car is a must. I hope you are right!

Bill

[cgallery]

A person making minimum wage and working 40 hours per week can support a family of four and own a modest but nice house in much of the US.

Here is a great site documenting living wages in all fifty states (and you can drill-down to individual cities).

$7.75 gets you close the living wage for a single adult. For two adults and two kids, a living wage is typically considered about $22 to $26.

http://www.livingwage.geog.psu.edu/

[dbhost]

Not an exec, just a worker. Minimum wage IS a living wage in much of the country, but not everywhere. A person making minimum wage and working 40 hours per week can support a family of four and own a modest but nice house in much of the US. If that isn't a "living wage", what is? As I said, people's expectations are out of proportion with reality. One does not have to have cable TV or cell phone to be able to live well - luxuries are wants, not needs.

No question the home buyers are responsible for signing for loans they could not pay back. We are all personally responsible for our actions - including those who tried to game the system and lost the game.

Okay I was with you until you went there...

Minimum wage is NOT what anyone would be able to reasonably feed, clothe, and shelter a family of four on, and it is not supposed to be. Minimum wage is intended as a base line, for those that are completely unskilled, or otherwise unmarketable, to obtain marketable skills and move up the career ladder. Those people SHOULD be high school and college age people that are moving up the ladder of life, and NOT middle aged and older workers with more marketable skills and experience.

So let's look at minimum wage shall we? The current minimum wage is $7.25 / hour. Do some basic math of $7.25 x 40 for one week's wages and you get $290.00, multiply that by 4 for a month's wages and you end up with $1,160.00. Now subtract 20% off the top for federal, state, and social security taxes. You have $928.00 to live on for a month.

So let's do a break down of the BASICS in modern society.

Rent. A CHEAP efficiency apartment in the Houston Metro area rents for $500.00 / month. And Houston is CHEAP to live in.
Telephone. To get and keep a job for at least the last 60 years, a Telephone is mandatory. I don't keep a land line anymore, but let's just say $50.00 / month. Electricity would be dirt cheap at $100.00 / month, water $50.00 / month, bus / train fare just to get back and forth to work $200.00 / month. We have already blown through $900.00 and haven't even gone over such things as food, personal grooming supplies, clothing etc...

So no I don't buy the "minimum wage is a living wage" argument. But that's okay, it is a MOOT argument anyway. It is not intended to be a living wage, it is intended to be a starting point.

[woodturner]

Rent. A CHEAP efficiency apartment in the Houston Metro area rents for $500.00 / month. And Houston is CHEAP to live in.
Telephone. To get and keep a job for at least the last 60 years, a Telephone is mandatory. I don't keep a land line anymore, but let's just say $50.00 / month. Electricity would be dirt cheap at $100.00 / month, water $50.00 / month, bus / train fare just to get back and forth to work $200.00 / month.

I suppose "cheap" is subjective, but Houston doesn't sound cheap to me, based on the numbers cited.

For comparison, around here:
Efficiencies rent for $250/month or so in nice areas, or you can rent a room in someone's house for $150/month or so. Alternatively, if you can come up with the $4,000 downpayment and cover $150 or so a month mortgage, one can buy a small but decent home for $20,000 or so.

Land lines cost $10 per month for measured service (that's what I actually have and pay)
Utilities are around $100/month for electricity, gas, water, trash, and sewer.
Bus fare is $50/month (BTW, most places have a monthly unlimited transit pass, but after checking the web, it appears Houston does not).

So, using these numbers, we are at $410/month, add another $100 for food and some for miscellaneous, call it $600/month. Well within the $928 per month calculated for minimum wage. With two people working at minimum wage, a family would be reasonably comfortable and middle-class in much of the midwest. I do understand that the coasts are more expensive and the comparison may not hold as well in those areas.

I agree with the points that minimum wage is a starting point and that primarily teenagers and retired people earn minimum wage. Given that Costco and similar stores pay $10 to start, one could argue that's the effective minimum wage.

[woodturner]

Here is a great site documenting living wages in all fifty states (and you can drill-down to individual cities).

Thanks for the link. That is a good site - and confirmed my estimate that living wage in these parts is around minimum wage.

They are showing $8.32/hour for Houston, which seems to support the conclusion that the cost of living in Houston is a bit higher than here (but only about $0.70 per hour, per that site)

[jackellis]

Yeah, those high paying executives that come up with the bright idea of abandoning the American worker...

I think the rest of us are as complicit in "abandoning the American worker". How often do consumers look at the label on an item they're buying and put it back because it's made overseas? Not very often, even when they have a choice. Why? Because almost all of us will buy a less expensive product so long as it's not too much worse than the premium brand. What other folks looking for a better life are doing to American workers is no different from what American workers did to the British over a hundred years ago.

The folks who do well economically are the ones who get an education and keep reinventing themselves. What drives them is knowing the world will pass them by if they don't keep learning and figuring out what skills are in demand. This isn't anything new. From Wikipedia, "The Luddites were a social movement of British textile artisans in the early nineteenth century who protested—often by destroying mechanized looms—against the changes produced by the Industrial Revolution, which they felt were leaving them without work and changing their entire way of life." In the case of the Luddites, their jobs were taken over by machines that could do the work faster, cheaper, and maybe even better.

Of course, if you really want time to stand still, hand over your computer, your cell phone, your landline and your gasoline-powered vehicles. Disconnect from the grid and haul ice on a horse-drawn cart to keep your ice box cold.

Blame the houseing bust on the consumer ?

There's plenty of blame to go around, but I think the earlier posts that talked about excess supply and consumers who took out loans they didn't understand are very valid. As my mother used to say, "You can lead a horse to water, but you can't make him drink". No one forced people to buy more house than they could afford or take out loans they did not understand.

Minimum wage is a liveing wage ?

I guess it all depends on your perspective. On a visit to Africa two years ago, I saw people living in tin shacks by the highway. No running water, no flush toilets, I have no idea where they got food since Namibia is very dry and this place was far from the nearest grocery store. Forget about cars. Luxury transport for most people of these folks was a donkey and a cart to ride in, rather than a long walk in the hot sun. Most people in America do at least a little bit better.

I'm a little sympathetic to the plight of folks who feel like they're being left behind. For every Lake Wobegone where the children are above average, there has to be a place where the children are below average. So it goes with jobs and wages. Not everyone can be a top performer or a top earner. Not everyone can cope with change. In the interest of avoiding badly bruised knuckles, I think I'll stop here.

[dbhost]

I suppose "cheap" is subjective, but Houston doesn't sound cheap to me, based on the numbers cited.

For comparison, around here:
Efficiencies rent for $250/month or so in nice areas, or you can rent a room in someone's house for $150/month or so. Alternatively, if you can come up with the $4,000 downpayment and cover $150 or so a month mortgage, one can buy a small but decent home for $20,000 or so.

Land lines cost $10 per month for measured service (that's what I actually have and pay)
Utilities are around $100/month for electricity, gas, water, trash, and sewer.
Bus fare is $50/month (BTW, most places have a monthly unlimited transit pass, but after checking the web, it appears Houston does not).

So, using these numbers, we are at $410/month, add another $100 for food and some for miscellaneous, call it $600/month. Well within the $928 per month calculated for minimum wage. With two people working at minimum wage, a family would be reasonably comfortable and middle-class in much of the midwest. I do understand that the coasts are more expensive and the comparison may not hold as well in those areas.

I agree with the points that minimum wage is a starting point and that primarily teenagers and retired people earn minimum wage. Given that Costco and similar stores pay $10 to start, one could argue that's the effective minimum wage.

That sort of money wouldn't buy you an abandoned crack house in the worst part of the ghetto in Houston.. Admittedly League City, Friendswood, Clear Lake, Pearland etc... are, well better off than say Pasadena, Deer Park, La Porte, Dickinson etc... And housing costs reflect that.

FWIW, I was living, paying rent, utilities, etc... not but about a mile from my current house, on $8.00 / hr when I was in college. I went backwards career wise to be able to have the flexibility to do school. I had a car, no payments though. I got my 2nd degree in 1999. The lumber yard worked at currently is paying $11.00 / hr for the position I held.

I have no clue where in the midwest you are... But I have family in Ohio, and their cost of living is MUCH higher than mine... I haven't seen rent #s like that since I moved out of my parents place when I was 18...

I know it varies by community. I know I could have bought a mobile home, similar in size to my site built home, in Alvin Texas not too far from me, for $35K... But that was a rare repo deal, and having a mobile home, in windstorm prone land, with NO ability to have a cellar is NOT a wise idea....

[Charlie]

Deleted by me.

[woodturner]

I think the rest of us are as complicit in "abandoning the American worker". How often do consumers look at the label on an item they're buying and put it back because it's made overseas? Not very often, even when they have a choice. Why? Because almost all of us will buy a less expensive product so long as it's not too much worse than the premium brand.

I would argue that if we buy an inferior product at a higher price because it is made in the US, that we are contributing to the decline of US business.

A company has to make products that are quality and price competitive in the global marketplace. In the 1980's, I bought a foreign brand car -because the US brands were poor quality and overpriced. The automakers learned from those mistakes and improved quality. We now own two US-brand vehicles, because they were the better value, price and quality. Now I read in the newspaper and surveys how much Toyota's quality is declining. I suspect that it is more that the consumer has become more aware and more discerning and expects higher quality as a baseline.

Suppose I need a hammer. I go to my local store and I see a cheap foreign made hammer for $1, a decent foreign made hammer for $5, and a decent US made hammer for $10. Which do I buy? If I need the hammer for only one job and think I can make the $1 hammer work, I buy that. If I need a better hammer and the other two hammers seem to comparable design and quality, I buy the $5.

So why is the $10 US made hammer not $5? I would definitely buy the US hammer if it were comparable quality and price. The US hammer costs more because the workers are paid more, corporate taxes are higher, and a host of other reasons that eventually doom that company to failure if they do not learn how to make a $5 hammer.

Fortunately, many companies have learned to compete. Have you noticed that electronics manufacturing is moving back to the US? It's because automation has allowed US companies to compete within the shipping cost expense of many smaller electronics products. But those companies who do not learn to compete eventually fail.

[woodturner]

I have no clue where in the midwest you are... But I have family in Ohio, and their cost of living is MUCH higher than mine... I haven't seen rent #s like that since I moved out of my parents place when I was 18...

Western Pennsylvania, but I'm from Ohio and can rent a decent apartment almost anywhere in Ohio, except Cleveland and Cincinnati, for around $250/month. Rents have been higher at times in the past, but there are a lot of apartments off of 161 in Columbus that are vacant at $250/month rents.

When I was in college, I was married and living well on $5,500 a year (I had scholarships and student loans for tuition). Still not sure how that worked, but it did. Costs were a little lower then, but we were paying $229/month for a townhouse in Westerville, and rents are not a lot higher than that now.

[woodturner]

Your just a worker doing what ? in what industry ?

I've said it before, electronics manufacturing. How about you?

[Charlie]

Deleted by me.

[dbhost]

Western Pennsylvania, but I'm from Ohio and can rent a decent apartment almost anywhere in Ohio, except Cleveland and Cincinnati, for around $250/month. Rents have been higher at times in the past, but there are a lot of apartments off of 161 in Columbus that are vacant at $250/month rents.

As far as the Columbus area goes, there weren't any apartments available under $550.00 / month that I could find when I looked at relocating 5 years ago... But I was using an apartment finder at the time.