Ah, Labor Day — the 24-hour, star-spangled glorification of the good old American worker. Too bad so many of them are currently unemployed.
The Labor Department reported on Thursday that there were 2,108 ”mass layoff actions” in July, a whopping 58 percent increase from last year. That makes this July the second worst month for job cuts in the past two years. Through the first seven months of this year, 1.4 million workers have received their walking papers, compared to 984,000 for the same period in 2000.
When the August figures are released next month, they will likely include a fair chunk of former Charles Schwab employees. The company announced yesterday that it will cut up to 11 percent of its workforce (as many as 2,400 jobs). That news comes on the heels of a similar cut in March. This time around, however, higher salary employees are getting the axe, and the company said it will also consolidate office space and scale back certain IT investments. Similar moves have been made by most Wall Street firms of late.
Meanwhile, the Conference Board reports that its Help Wanted Index remained flat in July, matching levels not seen since the recession of the early ’90s. That means employers are laying off, but not hiring. Robert Hendricks, chairman of Holt Value Associates LP, says that fear of lay-offs may put a severe crimp in consumer spending, which could extend the recession beyond most current forecasts. Consumer spending slowed last month, the Commerce Department notes, rising just 0.1 percent. A worrisome figure, considering thee was a 0.5 percent increase in personal income — attributable mostly to the economic recovery plan currently being carried out by the United States Postal Service.
All of this will no doubt cast a pall on Labor Day celebrations. In Pittsburgh, members of the United Steelworkers of America plan a march during which they will solicit support for the Steel Revitalization Act, an effort to fend off foreign competition through federal intervention. The aim: save jobs. The AFL/CIO is holding its second annual Online Labor Day Festival, which features, among other things, online games called Shatter The Glass Ceiling and Smash Corporate Greed. It’s good to see labor relations have improved over the years.
Another Sign of Recession: More Grande’s, Less Venti’s?
When wags grew bored with phrases like ”the go-go 90s,” they sometimes spoke instead of the ”cappuccino economy,” — an acknowledgement that the rise of high-priced coffee purveyors signaled good times.
Well, the bellwether of those purveyors, Starbucks, is reporting a bit of a cool down in its business. For the four-week period ending August 26, the company saw same-store sales increase a mere 1 percent over the same four weeks in 2000. In July, the increase was 4 percent. For the 47-week period leading up to its most recent announcement, same store sales at Starbucks rose only 5 percent.
An increase is an increase, right? Maybe. But during that nearly year-long reporting period, Starbucks opened more than 1,100 new stores worldwide — a 24 percent increase. Yet consolidated net revenues for the beverage seller only jumped 18 percent. Given all those new outlets, you’d think the company’s sales would jump accordingly.
Meanwhile, Starbucks’ share price continues to suffer, down 32 percent from its high in February.
Employees Say They Need Help with 401(k)
More than three-fourths of workers surveyed in an ING Aetna Financial Services say they’d like their employers to provide more 401(K) investing advice. More than half say they’d also consider seeking third-party help in managing their pension money, from financial planners or other experts.
With many American workers seeing the value of their 401(k) plans decline for the first time, calls for such measures are likely to increase. Indeed, the survey found that 42 percent of workers don’t change their 401(k) allocations once they make them.
Currently, Congress is debating the merits of the Retirement Security Advice Act. If passed, the legislation would modify ERISA regulations so that employers could provide financial advice without fear of liability — as long as they disclose any fees and potential conflicts of interest. On a positive note, the survey found that the children of baby-boomers are almost twice as likely as their parents to have begun contributing to a 401(k) or similar plan by age 30. 66 percent of the applicable respondents said they contributed to their 401(k) before hitting that age.
One More Shareholder Suit
Some people continue to court dot-coms, but not in the good way. Yesterday WebMD was on the receiving end of a class-action lawsuit, accused of making materially false and misleading statements in its prospectus by failing to disclose that it had solicited and received undisclosed commissions from investors in exchange for allocating shares to those investors, and for agreeing to allocate shares to certain investors in exchange for those investors buying additional shares in the aftermarket at predetermined prices. WebMD had no comment about the suit, nor the length of that last sentence.
Spark plug vs. Sparc station
A final nugget for Labor Day: Rustler, maker of the ”hard working jean” for the working man, points out that, while blue-collar jobs are generally more dangerous and less prestigious than managerial positions, median pay for many of those type jobs has outpaced that of computer systems analysts.
The company reports that pay for Information Age employees has risen around 22 percent since 1994. During that same period, however, the median income for an auto mechanic has jumped a staggering 169 percent. Overall, pay for the overall crowd increased 52 percent in the past five years, Rustler claims.
Those figures don’t jibe with data from the Bureau of Labor Statistics, though. Those numbers show about a 20 percent increase in hourly wages for production workers in the past five years. The BLS also says that the mean hourly pay for white collar workers exceeds that of blue collar workers by about 44 percent