Financial Pessimism
Not only do I read a lot of personal finance blogs, but in this economy everyone’s talking about money and how secure you feel.
I’m really lucky. I have, for the first time in my career, a solidly middle class income at a company where layoffs are unheard of. I have a good bit of seniority and my industry is one of the few that has not been affected by the recession. However, I just talked yesterday about lifetime earnings losses being serious for anyone that’s been laid off in this recession. And despite the fact that I am on paper doing probably the best I’ve ever done in my life it’s really hard to shake away the bad vibes this economy is giving off.
Thou shalt not covet…
There’s this whole thing about "keeping up with the Joneses". It’s probably an easier message to spread that the only reason us middle class folks feel squeezed is because we want things we shouldn’t have. But I think it’s more like keeping up with where we were just a few years ago. Inflation has been pushed under the rug but everything costs more. Those of us who own are own homes are probably underwater or near there. Despite home prices taking a deep dive that hasn’t seemed to help people with housing costs, even those who are standing on the sidelines and renting.
Bare necessities…
What is a person "entitled" to? It’s hard not to feel like when you’ve worked hard for years, and maybe your income has gone up, that your lifestyle should also be able to go up. But that doesn’t seem to happen. Everything gets more expensive. Emergencies keep happening. I’m tired of my old car and it’s non-working A/C and heat. I’m tired of no A/C or heat in my home. I feel like I deserve these things. But it doesn’t really matter. I can’t afford them. And I’m doing better than most.
Shadow of a doubt…
I don’t see my income moving up much from where it’s at now anytime soon. And layoffs seem to be happening pretty frequently at HerrTech’s job. So the financial security feels almost like an illusion. And that’s probably where most people are at. If anyone changes their finances in the short term it’ll likely be a change for the worse. It’s hard to imagine the average income going up anytime soon or cost of living going down. You just stare at the numbers and try to think how you can make it work in one way or another.
Like financial blogger Funny About Money who was recently talking about earnings from her personal business. Sometimes I read her posts and think, OMG that’s the lowest cost of living I’ve ever seen! What have you got to complain about! But then I know the shadow that hangs over my head, and the shadow that’s hanging over her. And she has variable income and much more varied expenses as well. It’s hard to feel optimistic or secure. Or fellow blogger John McKay who like many Americans has been unemployed for years now. He too has tried to work on a side business (soaps and creams and balms from Howling Pig, isn’t that a cute name?) but as he noted in his blog as we all worry more and more about our own financial security we spend less. No matter where you are on the political spectrum, and no matter what quadrant of middle or lower class you are in, you are probably thinking a lot lately about how to just stay afloat. (Photo via Creative Commons from ccdoh1)
Design. Build. Play. 
Hi, Frautech– Thanks for the mention. 🙂
Cost of living here is low because pay is notoriously low. You can’t charge the full fare to a citizenry that doesn’t earn the full fare. Plus my house is paid for…tho I still have to chip in on the house my son and I are copurchasing and that we thought we were getting SUCH a good deal on. Nyuk nyuk!
Cobbling together a living after the layoff isn’t working: three jobs are returning less than half of what I earned on my real job, and that amount itself wasn’t great, in the grand scheme of things. Right now I’m not earning enough from those 60-hour work weeks to meet my expenses, even though they are relatively low compared to what folks in other parts of the country experience.
In a previous blog, you castigated employers for their “lame excuses” for not hiring people. Yet, in this blog, you say “It’s hard to feel optimistic or secure.” So I guess it’s OK for you to pull back and not spend money to fix your car because of a sense of economic unease, but businesses should be hiring regardless of their outlook?
Dave- That’s a good point you have. But not feeling secure has not stopped people from spending. I still have to buy gas to fill up my car and when it’s broken down I still have to pay to fix it. Mechanics are not my employees. I can’t ask one mechanic to do the same repair by himself for half the price that would have required two people in prior months. But businesses can keep asking more. And when my income went up as an engineer I started spending more money. I bought more things and paid for more local services. Again, BIG businesses are just absorbing the raises and asking more of current employees.
My problem is not that some businesses are holding back and not hiring. My problem is business keeps propagating certain myths like the need for more STEM qualified employees or that they can’t find qualified people. The aim seems to be to lower wages even further. As an individual I accept the prices I pay for goods or services. I don’t manipulate the market and then not even buy anything.
I agree that people have not stopped spending, but neither have businesses. They, like you, are spending on essentials and avoiding big-ticket items. So while you put-off that home A/C unit, a business puts off hiring new employees because that is the biggest expense many companies have (especially those that employ STEM employees).
And, actually, you can ask the mechanic to do the same repair for half the price. It’s his decision if he wants to do that or not, and that decision will take into account how much the mechanic needs the money. He may not like doing it and you may not like asking for it, but that’s how prices adjust to reflect changing realities.
I agree that it verges on being morally wrong to keep asking fewer employees to do more work. But for many businesses, reducing payroll is the only lever they have left for controlling costs. Government and Fed Reserve policies have brought inflation into the commodity markets, and businesses have been trying to mitigate the effects and not pass the increases on to consumers for fear of losing market share. Since you can’t bake bread without flour, you have to try to do it with one less baker. And better to have one less baker than to shut down the entire bakery because no one would buy the higher-priced bread. (As for those businesses that increase workloads solely to maximize profits that are distributed to only a few, hopefully they will suffer a mass exodus of employees if times ever get better.)
I agree with you that some companies are falsely claiming that they cannot hire because there are no qualified candidates, but these are few and probably concentrated in the technology sector where you work so they seem more abundant than they are. I believe the majority of companies aren’t hiring for the same reason you aren’t fixing your car A/C: “We don’t know what’s coming, so we had better keep some reserves to survive whatever does come.” I think it’s useless to adopt an “us-vs-them” attitude when the reality is that most people and companies are reacting identically to the same economic conditions.