All Articles Tagged "recession"
A degree in law might not be as secure as it once was.
In a column by Steven Harper published on Business Insider, the author writes the following:
The Lawyer Bubble is about much more than lawyers. It’s about a mentality that has accompanied the corporatization of America’s most important institutions, including the legal profession — a dramatic transformation that is still unfolding. Behind the change is a drive to boost current-year performance and profits at the expense of more enduring values for which there are no quantifiable measures.
As a result of this need to maximize profits at the expense of some of the other values of the industry, says the headline, the legal profession is on its way to “imploding.” The legal industry has already seen a big drop in the number of available jobs for law school grads. To kill two birds with one stone, a number of law schools are creating programs that will help new grads connect with those who don’t have the means to hire a lawyer. The experience provides those who need it with legal services and new lawyers with much needed experience and a job. However, those jobs aren’t the high-paying ones that we’re used to seeing from this industry. In some cases, the experience gained is in exchange for school credit.
This could serve as a solution to the issues that Harper and the industry have brought up. According to a recent study, whose results were written up in The National Law Journal, “ Only 5 percent [of polled pre-law students] responded that salary potential was their primary reason, while 71 percent said that they were motivated most by pursuing a career they are passionate about.” But this wasn’t always the case. For a long time, a career in law was an indicator of great intelligence and an even greater salary. Nowadays, that survey found that 43 percent of pre-law students plan to use their education to pursue other avenues, like a graduate business degree or government work. More than half — 58 percent — said a big reason for their decision to explore other avenues is the job market.
With the market shifting, it’s time for prospective lawyers to re-evaluate their reasons for wanting to go into law. If you have plans for public service or an alternative career, a law degree is a versatile one that can help with those goals. But anyone thinking in terms of big law firm dollars might want to do a little research and have a clear strategy. The last thing you want is to have all this education, all that education debt, and no job.
According to a report by the special inspector general for the Troubled Asset Relief Program, 137 community banks used $2.1 billion from a special fund aimed at boosting lending to small businesses to repay their bailouts from the financial crisis.
Congress created the small-business lending fund in 2010 to encourage banks with less than $10 billion in assets to increase their lending to small businesses. “At a time of economic distress, the aim was to help small businesses get capital that had become difficult for them to obtain. The loan program charged the community banks lower interest rates if they used the money for loans to small businesses,” reports The Huffington Post.
Here is how the numbers break down: The Treasury Department was given permission to spend up to $30 billion on loans to small banks under the program. But only $4 billion was spent. Of that $4 billion, $2.7 billion was forwarded to 137 bailed-out banks. But instead of using the money to increase their small business lending, the banks used $2.1 billion of it to repay the higher-interest rescue aid they had received from the government—and it was all legal.
Under the Troubled Asset Relief Program, the small-business lending fund “turned out to be little more than a TARP exit strategy,” Special Inspector General Christy Romero said in a statement. Under the law, the banks were allowed to use money from that program to repay their bailouts. “By repaying TARP funds, banks were able to escape limits on executive compensation and other restrictions” explains HuffPo.
The Treasury Department isn’t happy with the report and in fact has disputed the report’s findings. But, according to the Treasury, some of the bailed-out bank funds did go to small business lending. The department claims that the increase in small business lending was about 40 percent.
The latest financial crisis to take over the news cycle is a tangled situation in the island nation of Cyprus. Chances are, if you pick up a newspaper or turn on the news over the next couple of days, there’s going to be some talk about the European economy, bank policy, and Cyprus.
In a nutshell, the country, whose banks were closely tied to a lot of Greek debt, are in trouble and need a bailout. There was a proposal on the table until just a few hours ago to raise $13 billion. The Cypriot government had proposed raising $7.5 billion through a one-time tax on all deposits, such that if you have money in the bank, the government will just take a piece of it. People are, of course, protesting this plan.
So the answers to the questions posed in the headlines are, according to New York magazine’s Intelligencer (which offers a cool crib sheet of what all is happening):
It matters because lots of people are scared that the situation in Cyprus will spread — that Cypriots will take their money out of the bank en masse, which will cause people in Italy, Spain, Portugal, and other troubled EU countries to fear for the safety of their deposits as well, and start bank runs in their countries. That could lead to a continentwide financial crisis, and the fallout could hit markets in the U.S.
Dang it Cyprus!
Most people think the international meltdown won’t actually happen. But the government just voted against this plan, so the process of coming up with some sort of solution starts again, according to The New York Times. Cypriot banks as well the European Central Bank and the International Monetary Fund on working on a fix.
Consider yourselves up to date.
As the financial crisis unfolded in 2008, many who saw the banks get bailouts, thought they were guilty of criminal financial behavior. However, most of these banks will avoid criminal prosecution under the guise of being “too big to jail.”
According to The Huffington Post, Attorney General Eric Holder made this confession last week during testimony before the senate stating:
“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy, and I think that is a function of the fact that some of these institutions have become too large.”
This is not a surprise. This “too big” belief was exemplified last year when the federal government decided not to prosecute HSBC for years of breaking money-laundering laws out of fear that it would have negative impacts on the global economy.
Soon after Eric Holder’s admission MoveOn.org was in motion, collecting signatures seeking to encourage the Obama Administration to “break up banks and jail criminals who contributed the financial collapse of 2008.” The petition already has over 125,000 signatures.
Holder expressed the opinion that prosecuting the criminal on Wall Street will cause another recession, while others think that big banks shouldn’t get a “get out of jail free” card. Among those people are some in Washington, like Sen. Elizabeth Warren, who said, “Attorney General Holder’s testimony that the biggest banks are too-big-to-jail shows once again that it is past time to end too-big-to-fail.” According to The New York Times’ Dealbook site, the statement is even at odds with the Obama administration, whose support of Dodd-Frank financial regulations is a 180 from this statement.
There are fears also that by going after a bank, you’re hurting the workers who could lose their jobs and have nothing to do with any financial wrongdoing. Do you think the government is being too lenient?
Follow CAP on Twitter: @in_allcaps
Just when we were talking up the bright side of the U.S. economy, we had to go and get this news.
The unemployment rate ticked up to 7.9 percent (from 7.8 percent previously), based on a survey of households in which more people reported being unemployed.
BUT! There was lots of good news in this latest report, says the AP: 157,000 jobs were added in January; jobs gains were even higher than expected in November and December; the construction and retail sectors added thousands of jobs; and average hourly wages are $23.78, up 2.1 percent in the past year.
BUT! For every step forward there’s a tiny baby step back. Government spending cuts on things like the military put the kibosh on the economy’s growth in the fourth quarter of 2012. Other cuts go into effect on March 1.
“Still, economists said the seemingly bleak gross domestic product report was not a sign that another recession was looming,” The New York Times says. “The preliminary data showed relatively strong spending by consumers and businesses, even as military spending posted its sharpest quarterly drop in 40 years.”
Are you confident that the economy is on a positive path?
More jobs numbers today and, as has been the case for the last long while, the results are a mixed bag.
Applications for unemployment benefits went up by 38,000 for the week ending January 26, bringing the figure to 368,000. However, the four-week average was 352,000, which is actually a four-week low.
“The volatility reflects the government’s difficulty adjusting the data to account for layoffs after the holiday shopping season. Job cuts typically spike the second week in January as retailers dismiss temporary employees hired for the winter holidays. Layoffs then fall in the second half of the month,” writes USA Today.
The article references analyst predictions that, for the month of January, 155,000 jobs were added and the unemployment rate will remain at 7.8 percent.
The last jobs figures for the black population earlier this month show a rise in unemployment, with joblessness among African Americans reaching 14 percent in December. It was 13.2 percent in November.
These figures show persistent economic softness, which isn’t helped by the rising cost of some items, and rising taxes. Social Security payroll taxes rose back to 2010 levels at 6.2 percent this year, which is biting into middle and lower income budgets.
Then, in case you’re still sending things via snail mail (every once in a while, I guess you have to), a first-class stamp is now 46 cents.
More significantly, fees for credit card use can now be levied in 40 states. Individual businesses in these states can choose to charge four percent more if a customer uses a credit card. The new charge is the result of a $6 billion settlement between the banks, credit card companies, and merchants. The fee is equal to the cost of accepting the card. Reuters points out that the fee is illegal in a number of states including New York and California.
But not everything is so doom and gloom. Thirteen states, including New Jersey and Maryland, have put minimum wage increases in place. The federal minimum wage is $7.25, but places like Rhode Island have a minimum of $7.75. “A 2011 summary from the Bureau of Labor Statistics reports that 73.9 million American workers over the age of 16 were paid at hourly rates, of which 1.7 million earned minimum wage,” writes USA Today in a separate article.
New Jersey’s Gov. Chris Christie rejected a proposal to raise the minimum wage in his state bu $1.25 immediately, instead proposing a dollar increase phased in over three years. Democratic Senator Tom Harkin has suggested a federal minimum wage increase to $9.80 over three years along with cost of living adjustments. Some say the increased wages would put businesses, particularly small businesses, in a bind. But the article says the increases reflect a “transition” from recession to an economy in recovery.
In fact, CNNMoney says the economic turnaround is so positive, it’s part of the reason energy prices are going up. Although it’s expected that, for the year, the price of gas will top out at $3.25 to $3.50 per gallon, lower than last year’s average. Housing prices, construction and other indicators are also pointing in a positive direction.
A quick look online shows that while there are signals that the economy is coming around, it’s still a slow, hard slog that’s going to require diligence, good policy, and strategy on a national level. It’s going to require the same thing individually in our personal bank accounts and budgets.
Rev. Jesse Jackson, Wall Street Project Economic Summit To Address Financial Issues Facing the Black Community
The Rainbow PUSH Coalition and the Citizenship Education Fund are hosting the 16th Annual Wall Street Project Economic Summit, a gathering that will bring together politicians, business leaders, academics, and others to discuss the economic issues facing the black community and how to overcome them.
Among the familiar names that will be in attendance are President Bill Clinton, Rev. Al Sharpton, New York’s Gov. Andrew Cuomo, and California Rep. Maxine Waters. Berry Gordy, the founder of Motown, will be the special honoree at a fundraiser gala. And the topics up for discussion include career management, “the business of hip hip,” public contracts and procurement, advertising and minority media, and building minority businesses. The event is taking place Wednesday, January 30 to Friday, February 1. Madame Noire will be there, reporting back all the interesting info we gather.
Before that, Rev. Jesse Jackson, founder and president of the Rainbow PUSH Coalition, held a teleconference with the media today to talk about what we can expect from the event. Media outlets participating besides Madame Noire included The Huffington Post and The Grio.
“Our politics are up, but our economy is down,” Rev. Jackson said during his opening remarks. Some of the afflictions that ail minority businesses and neighborhoods are the lack of access to capital, credit, and investment, he continued.
“There’s a focus on the fiscal cliff and the debt ceiling, but we’re still facing poverty,” he said. He also emphasized the devastating effect that personal financial ruin are having on black-owned businesses and black communities.
“When plants close… when homes are targeted and foreclosed on, and people driven to bankruptcy, there’s no market. The community dries up,” he said. He was responding to a question we asked about the need for black businesses to hire blacks as a way to lower the persistently high unemployment rate among African Americans.
In poverty-stricken areas, Rev. Jackson called for “day care, transportation, job training, and jobs.” He also highlighted the effect of “devastating redlining” and other practices at financial institutions that have been detrimental.
For more information about The Wall Street Project Economic Summit, click here.
December jobs numbers remained steady, with the unemployment rate for the month holding at 7.8 percent. A total of 155,000 jobs were added for the month.
There had been fears that the fiscal cliff impasse was going to drive unemployment higher. But, the Los Angeles Times says, rebuilding following Hurricane Sandy probably had a positive impact on hiring in the construction area, with 30,000 jobs added. Manufacturing numbers were aided by robust car sales, with 14.5 million cars sold, a 13 percent increase on the year.
Also on the good side: layoffs are on the decline, the housing market is picking up, and fewer people are signing up for unemployment benefits.
But overall, hiring isn’t picking up fast enough to surpass 2011 figures, the article notes. USA Today has a chart that showcases the decline in the unemployment rate over the past year. But, keep in mind, some people have left the workforce. Overall, the country added 1.8 million jobs for the year, the same total as 2011. According to CBS News, the five years of this “Great Recession” have seen a loss of 3.9 million jobs, 75 percent from the private sector. There were eight million job losses in 2008 and 2009 with 4.7 million recovered over the past three years.
Experts predict that the unemployment rate will fall a little more in 2013, to 7.7 percent. CBS provides a breakdown of the sectors that are hiring the most (retail lost 11,000 jobs).
a numberWith these numbers in mind, people are getting very resourceful about making money, starting jobs, creating jobs, and doing a little something on the side to make some extra cash. We’ve written about of people who are doing just that (and we’re always looking for more great ideas).
More jobs numbers…
Unemployment claims figures for the week ending December 22 fell to their lowest point since March 2008, with the number of first-time applicants decreasing to 12,000 from 350,000. But those numbers could have been impacted by the holiday, with the Labor Department unable to pull together all data from offices that were closed on Monday and Tuesday.
“The recent decline in unemployment benefit applications suggests companies are not yet slashing jobs because of concerns over the ‘fiscal cliff,’” the AP (via USA Today) reports. “Still, unemployment remains high and companies are reluctant to ramp up hiring.”
Last we checked, monthly unemployment numbers (a better barometer for the state of the economy) had reached a four-year low of 7.7 percent in November. The AP notes that there are other signs of improvement, like orders coming in for manufactured goods, and more construction jobs, signaling a stronger housing market.
But stymied holiday sales numbers indicate that consumers are still worried about whether their taxes are going to go up if we go over that aforementioned fiscal cliff.
Unemployment numbers for the black community have consistently been higher (in some cases, double) those of the nationwide average. Right before Christmas, BET founder Robert Johnson called on President Obama to do something about closing that gap.
“Johnson, the billionaire chairman of the RLJ Companies and founder of Black Entertainment Television, said the disparity could be narrowed if Obama encouraged U.S. corporations to voluntarily embrace a plan to interview at least two qualified minority candidates for every job at the vice president level or above,” reported The Washington Post. “He said companies should also interview two minority-owned firms for vendor supply and other contracts.” A similar rule is in effect for the National Football League, the article continues.
The country has been consumed with the news that “right-to-work” legislation was signed into law in Michigan on Tuesday evening. “The pair of new laws, which make Michigan the 24th right-to-work state, make it harder for its workers to organize and to maintain power because workers covered by union contracts will no longer be required to pay dues,” explains NBC News. Less money means weakened unions. And it gives companies the power to hire non-union workers.
The number of union members has been steadily dropping in recent years, to 14.8 million people, or 11.8 percent of workers, NBC News reports. (The article blames the loss of auto jobs to globalization.) But even with their number diminished, unions still hold political sway. This law, and many Republican lawmakers, seek to diminish them further.
“Those who oppose unions say that’s a victory for businesses who want more flexibility in how they manage their work forces, and for workers who don’t want to be constrained by union rules or collective bargaining agreements. That, they say, will ultimately create more jobs and help the state’s economy,” NBC News continues.
The unions, of course, aren’t buying this, so they’re already plotting to reverse these laws or dump the politicians who support them out of office. Talking Points Memo lays out the options in further detail. The Atlantic is banking on union attempts to boot Republican governors from office.
“Many Republican governors in the industrial Rust Belt are aggressively challenging union power, and hoping to see the fruits of their own labor rewarded. For a Michigan governor to sign antilabor legislation and live to tell the tale would be truly historic, in the birthplace of America’s labor movement,” that website reports.
“These upcoming gubernatorial races will be a test for how much influence labor can still muster,” the article continues.
The Michigan Chronicle argues that right-to-work laws would actually benefit black workers.
“The fact is that, contrary to the “scare tactics” of union bosses, Right to Work Laws do not give employers the ability to fire employees ‘at will,’ making Black workers especially vulnerable to losing their jobs,” the outlet says. “A Right to Work Law empowers workers, giving them the option to choose whether or not to join unions without suffering backlash, such as employer or union retaliation. The law also means that workers may resign union membership, when they so choice, devoid of any consequence.”
The article argues that in neighboring states with right-to-work laws, per-capital income has grown significantly more than in Michigan. And in Detroit, the black population makes up 84 percent of the total population. Unemployment in the city is 17 percent, according to the article.
On the flip side, Slate magazine questions the numbers that are continuously pushed out by right-to-work supporters. The article quotes numbers from Fox News that puts the unemployment rate in right-to-work states at 6.9 percent vs. a national average of 7.9 percent vs. 7.6 percent in non-right-to-work states. Calling the numbers “impossible,” the site says that while the employment rate in right-to-work states might be a little higher, the cause hasn’t been established. And the article reiterates the message of the picture above and the Economic Policy Institute: workers in right-to-work states make $1,500 less annually than those in non-right-to-work states.
The same organization also says that black male union workers earn $2.60 more per hour than non-union black males, and women, $2.25 more per hour.
Workers across the country have been more actively protesting low wages and long hours in recent weeks. Walmart staffers raised their voices over schedules that had them in stores on Thanksgiving Day. And today there will be an international day of action. Port workers in Los Angeles went on strike. And fast-food workers in New York have been protesting wages — $7.25 per hour with a median annual income of $18,230, according to Daily Finance. Bureau of Labor Statistics numbers show that more older people — 28 and older, in general; 32 and older for women — are working these jobs. Some even have college credits under their belt. The headline on this Bloomberg story paints the picture: “McDonald’s $8.25 Man and $8.75 Million CEO Shows Pay Gap.” Tyree Johnson, who works at two McD’s restaurants and has been an employee of the company for 20 years, struggles to pay for his single-room occupancy home. The protesters were asking for $15 per hour.
“[S]ome protesters also hope to improve their bargaining power by gaining recognition for a new union, called the Fast Food Workers Committee, that would represent fast-food workers at a variety of restaurants,” writes Daily Finance. “[Organizer Jonathan] Westin claimed that last week’s strikes demonstrated to workers that they could strike without losing their jobs, and predicted that this would lead to increased employee involvement in future protests and build momentum for the movement.”
In other words, workers whose place on the corporate totem pole is low are finding strength in numbers and seek out the kind of support and cohesion that a single voice — like the one offered by a union — offers. If you read The Jungle by Upton Sinclair in high school, you’ll recall that many of the same issues were discussed when that book was published in 1906 — workers coming together to fight for fair pay and better working conditions. Would this lower revenues for these corporate giants and their executives? Sure (but they’d still be super-rich). Does that mean there might be fewer items on the dollar menu? Yep. But is it better for individuals and society as a whole when people make a living wage? Absolutely.
Part of the problem, The Daily Beast points out, are the unions themselves. They’ve failed to detail the modern-day significance of unions and the labor movement.
[Unions] drive up the cost of doing business, we hear, though unmentioned is that higher wages mean a stronger local economy. Unions are corrupt, we hear, though that’s a hard stone to cast for anyone living in a glass mansion built by the banking and investment industries, or with the ill-gotten gains from corporate insider trading. Even odder is to hear that argument from working-class people, who have bought into the notion that “right to work” actually has something to do with workplace freedom.
Now, as in the past, unions stand for workers who, on their own, couldn’t possibly bargain with the huge corporations that hold their livelihoods in their hands. The fight is on and neither side is backing down.