Coffee heat rising

Economy

And did I mention we were through the looking glass?

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Funny to functionary in business office, re: furloughs:

SK [Sidekick] and I would like to ensure that each of us takes our furlough days on different days of the week, to be sure someone who is not a grad student is in place at [Our Spectacular Office] at all times. To accomplish that, here’s the plan I would like to suggest:

I take each payday between now & the end of the current FY as the furlough day. This is 11 days. I will need to see how much one of these things actually reduces my take-home pay before deciding when to take the 12th day, as I will have to figure out where the survival money will come from. This will probably happen while the weather is still cool enough that we don’t have huge air-conditioning bills.

SK may then take the Thursday of payday week off, if she would like, or any other day in each pay period. Similarly, SK will need to figure out how she will make ends meet before deciding on a 12th day.

The only question we have about this is the effect the lagging pay policy would have on using the payday itself as the furlough day. As far as I can figure, there are 11 paydays between now and June 30, because the July 2 payday actually covers a period that ends in June. Is that correct?

I hope this strategy is acceptable to the Dean’s Office. If there’s any problem with it, please alert me so we can adjust accordingly.

Functionary to Funny, re: furloughs:

There are actually 12 pay periods in the furlough time. It began this week. You will be able to figure out approximately how much it will reduce your take home pay if you take 10% of your pay and subtract it from the total pay. (one day of each pay period is 1 out of 10 days or 10%) If you and SK, start this week, then you have 12 pay periods and you will not have to have any check with 2 days missing. Does that make sense?

Thank you for being conscious of the fact that it is important we have coverage in your office at all times. The College appreciates that.

Heh heh heh heh heh heh…you betcha!

You understand: We get paid on July 2, a day earlier than normal because July 3, a holiday, falls on our usual payday. We have what is known as “lagging pay,” meaning our paychecks cover periods of varying distance in the past. No one who is human has been able to figure out a rationale for this system, which makes exactly zero sense.

M’hijito once explained lagging pay to me, pointing out that, among other benefits for the employer, it amounts to a way to short you for paid vacation time at the time you leave a company’s employ. It was all over my head, so I didn’t understand a word of what he said. But I’m quite certain that whatever its effects, they’re not in the worker’s interest.

Last year our mid-July paycheck was issued on July 18 and covered June 30. That would suggest this year’s scheduled July 17 check will also claim to cover days in the prior fiscal year.

What this means is that even though the furloughing is supposed to stop at the end of the fiscal year (June 30), we still get our pay docked in not one but TWO paychecks in the following month.

Meanwhile, we still have only eleven pay periods of days (22 weeks) that we will work in the current fiscal year. If we take a day off between July 1 and July 17, we’re taking it off in the next fiscal year. The only way we can squeeze 12 furlough days into eleven pay periods is to take two days in one pay period.

Actually, you’re allowed to take part days. So you could, in theory, divide one day in four and take 1.25 days off in four pay periods.

Isn’t that cute?

caterpillar

Illustration from Alice in Wonderland by John Tenniel

The perqs of pinching pennies

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Spent some time this morning updating the Excel and Quicken books and realized things didn’t look nearly as dark as one might expect, given the current brouhaha over the economy.

On the other hand, we do recognize that any time now, the layoff ax, sharpened to a fine edge by a legislature in full Mme. LaFarge mode, may fall. So, I took a little more time to look over the current state of the safety net.

Four things have helped to weave that net:
1. I set up a “pool” account to hold my paychecks, from which I disbursed enough cash into one credit union account to cover my monthly recurring expenses, such as utility bills, insurance premiums, and workmen into one checking account and then, into a different account, enough to cover all my other expenses, which are charged on American Express and paid off at the end of each billing cycle. The disbursements are monthly. But my paychecks are biweekly.

The effect of this has been to turn those so-called “extra” biweekly paychecks into real-life, de jure extra income: the money to cover regular expenses comes out of two checks a month, and so a month with a third paycheck pours two weeks of net income into my “pool” account, where it sits and accrues.
2. I based the amount needed for monthly recurring bills on the maximumamounts those bills reach. My electric bill, for example, has reached $225 in the summer, but in December it was $63.52. Then I pinched pennies: this winter I’ve not run the central heating more than six hours, grand total, pushing each month’s bill well below what they were in 2007. I also cut my “all other expenses” budget by $300, even though I had enough income to cover the old, more generous budget.

Here, too, the net effect was to leave cash sitting in those “piggy-bank” accounts. This money has accrued by dribs and drabs over the past several months.
3. After I’d accrued enough cash to pay off the small 30-year fixed-rate second mortgage I took out to pay for renovations on the Investment House (the house my son and I are coinvesting in, part of whose mortgage is covered by rental income), I continued to put the monthly contribution into savings. I had been saving $200 a month for emergencies and indulgences. Reaching the loan payoff goal meant that I could start saving $404 a month.

Even though that doesn’t sound like much, it’s amazing how fast it adds up. Especially because…
4. My associate editor and I started a small side business, which has created a small but steady second income. All of the after-tax revenues from this activity went directly into savings.

The result: my emergency and indulgence savings quickly jumped from $600 to almost $4,000. Even after I paid $670 to insulate the Investment House and $330 for the Talbot’s clothing frenzy, I still have around $3,000 in that savings account.

When I surveyed my credit union accounts and added up the overage in each account, the total extra amount that has quietly built up over just a few months is $6,797!

That is 2.26 months’ worth of my present take-home pay: over two months of living expenses, and we’re not talkin’ Depression mode there. If I’m not putting $404 a month into savings and not buying booze and not shopping at my favorite gourmet emporium, that amount will stretch a great deal further.

Meanwhile, the amount that I’ve stashed to pay off the loan represents another seven months of take-home pay. Because the payments are so small as to be almost negligible, I’ve kept the money in savings instead of paying it off, figuring that if I need to cut expenses drastically I can use the money to get rid of the monthly payments. Or not: in a real emergency, I’ll have the choice of using some or all of the cash for survival.

If I had to do that and I were really in desperation gear, that 9.26 months’ of my current net income would go much further: it would support me for well over a year. Remember, that’s not counting freelance income and whatever part-time teaching I can scrounge from the community colleges. It doesn’t count Social Security, and it doesn’t count the $17,000 the state owes me for back sick leave, or the month’s worth of accrued vacation time for which the state will owe me.

So. Un-American though it may be, frugality has saved this worker’s little tail. If I’m laid off within the next few weeks or months, a threat that again looks very credible, I have a safety net that will keep me from falling to the ground and breaking into a million little sherds—because I’ve been living within my means. Well within my means: I’ve been spending enough less than I earn to stash a substantial amount of beat-back-the-wolf cash in savings.

Call me unpatriotic and call me naïve. But I still think this is not a bad thing. I still think if most Americans understood what simple frugality means—and that it does not mean living like Scrooge McDuck—we would all be in a lot better shape.

Well…all of us except a few zillionaires who took advantage of our late, great free-spending times.

McDuck portrait(link) by Carl Barks

Through the looking-glass in Layoff-Land

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Never let it be said that The Great Desert University is not a weird place to work.

Yesterday one of our client editors dropped by to break a bottle of champagne over the latest issue of her journal to set to sea. While we were confabulating, the subject of the next issue came up, and I remarked that of course I did not know whether our office will still be in business when the spring 2009 issue is in preparation for press.

This caused a moment or two (or three) of stunned silence.

While she was struggling to catch her breath, I explained that the rumor mill first had it that everyone in my job category was to be laid off; then that only certain people in my category would be laid off; then that 50 people on our campus will go; then 100.

She said the university can’t be that broke, because it’s still hiring: her department is doing three searches right now, and Our Beloved Employer finally signed the candidate for the directorship of our sister program. I pointed out that the Learning Factory of Baja Arizona has a hiring freeze on; that I’d applied for a job there only to see the opening go away.

(Good God! She applied for a job there!?!) You could see the alarm as the thought registered.

This is one of those midcareer academics who’s been around long enough to have considerable clout but not long enough to be paid equitably. That means she has access to various ears.

“Well,” said I, “if you know any political strings to pull, now is the time to pull them, because from what I’ve been told the decisions will be made in December.”

“Okay,” said she.

Forthwith, she put the electronic touch on her chair, forwarding a copy to moi.

About three hours later, along comes this message from Her Deanship:

Just a note to say that we value the work of [your office] and the work you all do to support our journals. This is an integral part of [our vast unit’s] operations and value added.

This is classic Deanspeak. Deans do not say anything, not so much as “hello, how are you today,” in a direct manner. To do so would put them and everyone around them at risk. So, they speak in code.

What does it mean? Let’s parse it:

  • We value the work of your office: effectively without meaning. Everyone’s work is generally valued, even that of the scores of faculty associates who have already been canned. It’s an effort to be kind.
  • …support our journals…: meaningful. The degree to which a position supports the university’s mission will determine the likelihood that it will or will not survive the coming purge. Our office supports two parts of that mission: we support research and we provide meaningful real-world vocational training. Big, though not huge.
  • …an integral part of [our vast unit’s] operations…: this could border on huge. “Integral part” means “our vast unit would be significantly harmed by the loss of this program.” Good.
  • value added: interesting new buzzword! I haven’t heard that one in the present context. We’ll be tracking down its source and using it in our next report.

Mmm hm. I believe the gist of this message is “I don’t think you’re going to be laid off.”

LOL! We’ll find out soon enough. The Board of Regents meets in the first week of December; after that, more layoff announcements are expected.

Is frugality unAmerican?

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One narrative subplot in the ever-escalating media buzz over the economy is that the new fad for frugality, for paying off debts, and for living within one’s means is bad for America and bad for the global economy. When people stop buying, the story goes, retailers stop selling, lenders stop lending, importers stop importing, and manufacturers stop manufacturing. All the worthies in these sectors then close stores, go belly-up, and lay off employees, who are forced to behave frugally, pay off their debts, and live within their means, causing more retailers to stop retailing, more lenders to stop lending, more importers…and so on to infinity.

So it is that seedy characters like you and me, eccentrics who subscribe to the wacky theory that we should spend no more than we earn, refrain from buying every piece of junk set under our noses, and maybe even put some of what we earn into savings, are responsible for bringing this country to the brink of depression.

Yes. That’s you and me, fellow PF blogger: our little terrorist coterie has darn near brought about THE FALL OF THE AMERICAN EMPIRE! Worse! THE COLLAPSE OF THE ENTIRE PLANET’S ECONOMY!

Think of that.

Well, I am thinking of that. And I think not.

The way I see this, we’ve arrived in our present predicament not because consumers stopped spending but because they spent so much, so profligately, and so stupidly. Consider: If over the past two decades 80 percent (say) of Americans had been living within their means—if they had been educated adequately on personal finance matters and understood the basics of lending, saving, budgeting, and investing—we would not be in the mess we’re in.

  • Most Americans, having navigated clear of the shoals of unmanageable debt, would have plenty of money to spend on the things they need and—yes!—want.
  • Few people would have been naïve enough to get themselves into booby-trapped mortgages for absurd amounts of money that King Croesus himself couldn’t afford.
  • Most people would have had a fair idea of what a house is really worth. Because the public in general would have resisted buying at absurdly inflated prices, real estate prices would never have blown out of control, and so no housing crisis would have occurred.
  • Retailers would still be selling products at a steady pace.
  • Manufacturers would still be making products at a steady pace.
  • Layoffs would not be occurring.
  • The President of the United States would never have thought of responding to the horror of 9-11 by telling Americans to go out and spend themselves silly. (Who knows? Maybe his speechwriters would have been forced to come up with something more worthy of a world leader, like “We have nothing to fear but fear itself.”)

Nope. We ants are not responsible for the collapse of the economy, nor are we the ones who are digging its grave. The grasshoppers did it. The grasshoppers and all the greedy little critters who got rich off them.

The newfound penchant for frugality that the newspapers and broadcasters tell us is now the hot fashion will no doubt pass. But if it doesn’t, that won’t be a bad thing. We will have hard times—we’re going to have hard times whether we all go out and load up our credit cards or not. But if members of the American public learn to get a grip on their spending and figure out how to manage their money so they can have what they want without getting themselves over their heads in debt (or if, more amazing still, they figure out what’s really important in life), in the long run the economy will be healthier and stronger. And the world will be a better place.

Layoff fears surface again

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Harvesting Dollars reports that he survived the latest round of layoffs at his workplace. He describes the basic unfairness of the process as people were kept or canned based only on what job they were lucky or unlucky enough to occupy, rather than on the quality of their performance.

The rumored layoffs at GDU that had me so exercised haven’t occurred yet. But get an eyeball full of this!

If that’s not a university president saying “we’ll soon be canning everyone in sight,” I’d like to know what it is.

Well, so far the employer I covet hasn’t called me back for a second interview. However, if I understood them correctly, it still may be a bit early. The two people who spoke with me said they would do a second round of interviews late this month (it’s now only the 21st) and they hoped to make a decision in the first week of November. So I’m still hoping. If they come in with an offer that even approaches what I’m earning at GDU, I’ll probably jump ship…since it’s clear GDU’s boat is sinking fast.

Sigh. This is so disturbing. Even if I get another job (not bloody likely!), I like the job I have and don’t want to uproot myself this close to retirement. Damn those SOBs in Washington!

A vote for Obama is a vote against stupidity.