s/o economy post

[Deb in NZ]

It is interesting to read in most posts about the state of the economy that people feel deprived because they aren't getting their annual raises &/or bonuses. Growing up my parents never were really open with us about family finances. All I knew was that we had enough to cover our needs & we weren't ever hungry. My father also planned well enough that we didn't need to take on any student loans. I never was aware of raises &/or bonuses.

 

In the 22 years dh & I have been together he has never, ever recieved any raise or bonuses at all, unless you count child tax credits as bonuses:glare: And my pay for relief teaching (subbing) is the same today as it was back in 2000. Dh's pay was what was offered when he took the job & it never changed, unless he changed jobs. If we made more money, we simply worked more hours.

 

When in history did annual raises / bonuses become a normal, expected part of employment? Was it during the 1920s? after WWII?

 

I can't see where it was part of society anytime before the 20th century. Over the past century prices have risen more than any time previous. Wages & standards of living have rise sharply as well. My parent's house is worth over 20 times what my parents paid for it 45 years ago. The value of my house has doubled in the past ten years. Why the astronomical rise in value? We feel richer $-wise, but has our quality of life really improved? We make more money than any generation before, but feel we are worth even more. Where does this sense of entitlement end? Yes, I'd love to get a raise, but I don't expect to get one.

 

Please don't take this post as "bashing" anyone. I'm trying to understand. Maybe the 20+ years I've lived outside the States has changed me more than I'd realised. :confused:

 

JMHO,

[redsquirrel]

In many professional jobs there is a COLA. That stands for Cost Of Living Adjustment. The cost of living goes up and so your pay goes up to keep up with the higher costs. It is generally about 2-3%. If you aren't earning about 2% more per year then you are losing money. Your take home amount might stay the same but you are earning less. If you don't get a COLA for several years running you will feel it because your same paycheck won't go nearly as far.

 

My dh has earned actual raises (beyond COLA) over the past couple years by getting promoted to higher and higher levels of management. That increased his pay grade. One raise came because he was head hunted by another university. His workplace gave him a raise to 'show their appreciation' for all his hard work. In other words, they were willing to up his pay to convince him to stay.

[kalanamak]

I earn 25% more than I did when I got out of training a bit over 20 years ago. However, experience is very important in medicine. I am far more efficient than I was 20 years ago.

 

My last raise was 2005, and then we were put on mandatory (unpaid) time off, so it was taken away. I work straight-pay overtime to make up any expense over my budget.

[Deb in NZ]

but doesn't COLA just keep the inflationary cycle going higher & higher? Where does it end?

[cdrumm4448]

In many professional jobs there is a COLA. That stands for Cost Of Living Adjustment. The cost of living goes up and so your pay goes up to keep up with the higher costs. It is generally about 2-3%. If you aren't earning about 2% more per year then you are losing money. Your take home amount might stay the same but you are earning less. If you don't get a COLA for several years running you will feel it because your same paycheck won't go nearly as far.

 

My dh has earned actual raises (beyond COLA) over the past couple years by getting promoted to higher and higher levels of management. That increased his pay grade. One raise came because he was head hunted by another university. His workplace gave him a raise to 'show their appreciation' for all his hard work. In other words, they were willing to up his pay to convince him to stay.

 

You make a very good point here. Raises just for existing are expected today. Raises and bonuses should be awarded for increased education, experience or knowledge. Adding more to the company. If I don't like what my current company is paying me I can always shop my skills around. I've done it my whole life.

[Hwin]

I am buying less food and paying more in groceries and the cost to commute to my job grows more expensive. I would not care so much about more income if these costs were not rising so much. Also, if my company is charging more and making more profit then of course I would expect that 2-3%.

[redsquirrel]

but doesn't COLA just keep the inflationary cycle going higher & higher? Where does it end?

 

Who knows? Are you going to turn it down?

[Deb in NZ]

Who knows? Are you going to turn it down?

 

We've never recieved any raise, including COLA. We just have learned to stretch the $s farther or do without.

[amy g.]

My husband gets a merit raise every year, and a 40% bonus if he reaches his targets.

 

If his salary stayed the same, our standard of living would go down every year because the cost of what we buy just keeps getting higher.

[elegantlion]

I know when I worked, white collar office job, early 90s, pay raises were expected. If not an employee would simply go work for another company. Most jobs I've held offer a pay increase with a promotion as well.

 

My dad worked at his job for 30 years. He received raises and increases, there is no way he could have worked there on a salary from 30 years ago.

 

What we've seen in the construction industry in our area, midwest, is that salary prices are stagnant. Dh is earning what he did a decade ago and it wasn't good then. He was self-employed in between there and had to constantly adjust prices as supplies continued to rise and rise in cost. Many of the jobs he applied to in the industry were not hiring. If they were they weren't paying extra for his experience, they were offering entry level pay, what you would pay an unskilled laborer.

 

I don't know the economics of it, but promotions aren't always an option. Employees depend upon raises to actually help them not lose ground each year.

[Mrs Mungo]

I am buying less food and paying more in groceries and the cost to commute to my job grows more expensive. I would not care so much about more income if these costs were not rising so much. Also, if my company is charging more and making more profit then of course I would expect that 2-3%.

 

I think this is a large part of the problem. I think there was a sweet spot in time when workers had some power and companies looked out for their workers. Now, large companies (which may or may not have anything to do with small companies) are all about raking in more and more profits.

 

My dh worked for a small, family-owned manufacturer in college. In the early nineties Wal-Mart approached them about stocking their products. But, Wal-Mart wanted to buy the products at a ridiculously low price. In order to meet that ridiculously low price? Wal-Mart offered to *help them move their manufacturing to Mexico*. My dh (who speaks Spanish) helped them move their company to Mexico not long before he graduated college. They have since been bought out by a Chinese firm and everything has been moved to China. That is *extremely typical* and why Wal-Mart is so very dangerous to our economy.

 

The family who owns Wal-Mart (essentially made up of 6 people) has more wealth than the bottom 49 MILLION (or bottom 40 percent) of families in the US. They are *directly responsible* for manufacturing job loss in the US in order to grow their already enormous wealth.

 

To check the facts:

http://www.politifact.com/truth-o-meter/statements/2012/jul/31/bernie-s/sanders-says-walmart-heirs-own-more-wealth-bottom-/

 

So, it is a little crazy to me to start blaming people like random government workers or random people who work for financial companies for the state of things.

[redsquirrel]

Then there are things one has to worry about in the US, but not (I think) in NZ. For example, last year my dh got a 2% raise. On the same day he got the letter with the raise notification we got another letter telling us our health insurance costs were increasing 2%. It was a bit of a disappointment, but at least it wasn't a 2% pay decrease, which it would have been without the raise.

 

I have another friend whose partner has earned a raise for the last 5 years only to see every single one eaten up by increased health care costs. My last place of employment was hit very hard by the recent economic turn down (It is an agency that helps people in abusive relationships and those who have been sexually assauted) in order to keep the agency afloat the employees gave up their retirement benefit. It was a very small amount for each person, but it was something to put in a retirement account.

 

I don't know if in NZ you have health care and retirement provided for? If so, that makes a difference.

[Stacy in NJ]

If we work a bit harder, budget more efficiently, plan better, we should be able to do better econmically. It just speaks to the American Dream - that anyone with a strong work ethic can succeed with some effort and a bit of luck.

 

There's been this expectation for a long time, with the depression era being the exception.

 

In our history, we've periodically questioned the validity of this assumption - now is one of those times.

 

I'm actually rather optimistic about the future of the US. I think after a long period of denying reality, we're beginning to have serious conversations about how we're going to move forward.

Edited August 29, 2012 by Stacy in NJ

[redsquirrel]

I think this is a large part of the problem. I think there was a sweet spot in time when workers had some power and companies looked out for their workers. Now, large companies (which may or may not have anything to do with small companies) are all about raking in more and more profits.

 

My dh worked for a small, family-owned manufacturer in college. In the early nineties Wal-Mart approached them about stocking their products. But, Wal-Mart wanted to buy the products at a ridiculously low price. In order to meet that ridiculously low price? Wal-Mart offered to *help them move their manufacturing to Mexico*. My dh (who speaks Spanish) helped them move their company to Mexico not long before he graduated college. They have since been bought out by a Chinese firm and everything has been moved to China. That is *extremely typical* and why Wal-Mart is so very dangerous to our economy.

 

The family who owns Wal-Mart (essentially made up of 6 people) has more wealth than the bottom 49 MILLION (or bottom 40 percent) of families in the US. They are *directly responsible* for manufacturing job loss in the US in order to grow their already enormous wealth.

 

To check the facts:

http://www.politifact.com/truth-o-meter/statements/2012/jul/31/bernie-s/sanders-says-walmart-heirs-own-more-wealth-bottom-/

 

So, it is a little crazy to me to start blaming people like random government workers or random people who work for financial companies for the state of things.

 

Mrs Mungo makes an excellent point. We can sit here and talk about an increase of 2 or 3% and what that does or does not do the economy, but the pay of top CEOs and other people has increased at rates far, far, far above that. A quick google shows that the average CEO pay of companies in the S&P 500 Index rose to $12.94 million in 2011. Overall, the average level of CEO pay in the S&P 500 Index increased 13.9 percent in 2011, following a 22.8 percent increase in CEO pay in 2010.

 

So, I don't think that the average rank and file worker earning a 2 or 4% COLA is really at issue.

[Carrie12345]

http://www.thegeminigeek.com/why-does-inflation-occur/

[MBM]

Mrs Mungo makes an excellent point. We can sit here and talk about an increase of 2 or 3% and what that does or does not do the economy, but the pay of top CEOs and other people has increased at rates far, far, far above that. A quick google shows that the average CEO pay of companies in the S&P 500 Index rose to $12.94 million in 2011. Overall, the average level of CEO pay in the S&P 500 Index increased 13.9 percent in 2011, following a 22.8 percent increase in CEO pay in 2010.

 

Exactly!

Not only has the pay increased astrononically, but a number of them have financially ruined their companies while being richly rewarded at the shareholders' expense. People just love 'em. Go figure.

[redsquirrel]

And to the OP, you say that your dh has been earning the same salary for 22 years? The same job at the exact amount with no adjustment for inflation for over 20 years? That is difficult for me to believe. Even the minimum wage in the US is adjusted more frequently than that.

 

Assuming it is true, he should ask around and see if his co-workers are still earning the same amount for over 20 years. Or maybe he should look around for another job where he is valued more. He is losing money every year at his current job.

[Crimson Wife]

When in history did annual raises / bonuses become a normal, expected part of employment?

 

It isn't in most industries. But in the financial services industry, it may be called a "bonus" but it really functions more like a sales commission. It is deferred compensation to make up for a relatively low base. So the total comp has a guaranteed portion (the base) and a variable portion that depends on the INDIVIDUAL'S performance (the bonus). Nobody would try to claim that a salesman shouldn't receive his earned commission simply because somebody else at the firm in a totally unrelated division screwed up.

[amy g.]

I agree that the fastest way to make more money is to change companies.

 

I'm always suggesting this, but my husband believes that the people who change jobs every 2 years never have time to really build relationships, and become experts.

 

This is why he continues to resist me every time I ask if he will just follow up and get more details about job offers.

 

It will be interesting for me to see if his loyalty pays off and if he is making as much in 10 more years as his friend's who have job hopped.

 

Also I do think that bonuses are just a part of certain industries.

[amy g.]

I understand about only changing jobs when he has to.

 

Buyouts are a predictable part of life here too. Talk about stressful.

[prairiewindmomma]

Here's a great NYT article on the history of holiday bonuses: http://economix.blogs.nytimes.com/2009/02/02/a-history-of-the-holiday-bonus/

[DawnM]

Your husband has worked for 22 years and never received a raise? He has made the same amount since 1990?

 

It is interesting to read in most posts about the state of the economy that people feel deprived because they aren't getting their annual raises &/or bonuses. Growing up my parents never were really open with us about family finances. All I knew was that we had enough to cover our needs & we weren't ever hungry. My father also planned well enough that we didn't need to take on any student loans. I never was aware of raises &/or bonuses.

 

In the 22 years dh & I have been together he has never, ever recieved any raise or bonuses at all, unless you count child tax credits as bonuses:glare: And my pay for relief teaching (subbing) is the same today as it was back in 2000. Dh's pay was what was offered when he took the job & it never changed, unless he changed jobs. If we made more money, we simply worked more hours.

 

When in history did annual raises / bonuses become a normal, expected part of employment? Was it during the 1920s? after WWII?

 

I can't see where it was part of society anytime before the 20th century. Over the past century prices have risen more than any time previous. Wages & standards of living have rise sharply as well. My parent's house is worth over 20 times what my parents paid for it 45 years ago. The value of my house has doubled in the past ten years. Why the astronomical rise in value? We feel richer $-wise, but has our quality of life really improved? We make more money than any generation before, but feel we are worth even more. Where does this sense of entitlement end? Yes, I'd love to get a raise, but I don't expect to get one.

 

Please don't take this post as "bashing" anyone. I'm trying to understand. Maybe the 20+ years I've lived outside the States has changed me more than I'd realised. :confused:

 

JMHO,

[justamouse]

If we work a bit harder, budget more efficiently, plan better, we should be able to do better econmically. It just speaks to the American Dream - that anyone with a strong work ethic can succeed with some effort and a bit of luck.

 

There's been this expectation for a long time, with the depression era being the exception.

 

In our history, we've periodically questioned the validity of this assumption - now is one of those times.

 

I'm actually rather optimistic about the future of the US. I think after a long period of denying reality, we're beginning to have serious conversations about how we're going to move forward.

 

:iagree:

 

I am extremely optimistic.

 

My Dh has not taken a pay raise in about 6 years.

[DawnM]

In answer to your question, my DH and I have always gotten annual raises, except for a couple of years when my salary froze due to budget cuts. Dh gets an annual raise/bonus other than a couple of years where there were salary freezes there.

 

Some of the raises were due to promotions.

[Crimson Wife]

Here's a great NYT article on the history of holiday bonuses: http://economix.blogs.nytimes.com/2009/02/02/a-history-of-the-holiday-bonus/

 

Interesting article, thanks for sharing. It is interesting to see that the use of the year-end bonus to keep total compensation competitive goes back over a century:

 

"Indeed, it is reported that Woolworth’s first Christmas cash bonus to employees in 1899 ($5 for each year of service, with a limit of $25) was meant to match competitors’ higher wage."

[Roadrunner]

I think there are very profound structural changes in the economy that have so much to do with globalization that we can't compare what is happening now to the past so easily. We are no longer a "U.S. labor market", and increasingly American employees will have to compete with those abroad. Manufacturing was just the beginning. I think any job that can be done over the wire is in danger. I think overall there is going to be somewhat of an equalization in living standards. So we might have a "better economy" next year, but the longer-term trend isn't too favorable for the middle class.

I don't know why losing manufacturing capacity in this country isn't considered a threat to the national interest.

[Mrs Mungo]

I don't know why losing manufacturing capacity in this country isn't considered a threat to the national interest.

 

I agree. It is part of why the North won the Civil War and why the US has always had such a strong military. When the going got tough, we were the only ones with the manufacturing power. Not all military equipment is even made in the US now. It is dangerous, IMO.

 

Even worse?

http://www.armytimes.com/news/2011/11/defense-phony-military-electronics-traced-to-china-110711/

 

Contracted companies using cheap counterfeit goods in US sensutive military equipment to make a bigger profit. Highly risky on all kinds of levels.

Edited August 30, 2012 by Mrs Mungo

[Deb in NZ]

Mrs Mungo makes an excellent point. We can sit here and talk about an increase of 2 or 3% and what that does or does not do the economy, but the pay of top CEOs and other people has increased at rates far, far, far above that. A quick google shows that the average CEO pay of companies in the S&P 500 Index rose to $12.94 million in 2011. Overall, the average level of CEO pay in the S&P 500 Index increased 13.9 percent in 2011, following a 22.8 percent increase in CEO pay in 2010.

 

So, I don't think that the average rank and file worker earning a 2 or 4% COLA is really at issue.

 

CEOs & politicians are the few people here that are guarrenteed annual pay raises. CEOs are the worst :angry: I have yet to figure out how one person is doing a job that is worth ten average salaries each year. It's the middle class & lower class workers for whom raises & bonuses are quite unusual.

 

Luckily NZ has universal healthcare, so as long as you are willing to wait if necessary & not have much, if any, choice in how that health care is provided; you don't need insurance. I have been happy with the quality of healthcare in NZ, but at times having no choice is annoying. I've had to give up a day's work this month as the hospital would not be flexible as to appointment times for me to get my cast off. As far as retirement, NZ provides a universal pention at age 65, but it is of similar amounts to social security in the States. It is possible to stay alive on with only the pention as income, but you wouldn't live well. Most people try to have some private retirement savings if possible. If you are not debt-free at retirement age, life is really difficult as the COL is a lot higher here than in the States.

 

JMHO,

[Deb in NZ]

And to the OP, you say that your dh has been earning the same salary for 22 years? The same job at the exact amount with no adjustment for inflation for over 20 years? That is difficult for me to believe. Even the minimum wage in the US is adjusted more frequently than that.

 

Assuming it is true, he should ask around and see if his co-workers are still earning the same amount for over 20 years. Or maybe he should look around for another job where he is valued more. He is losing money every year at his current job.

 

Yes, the same salary. He was on a salary of $50k when we married back in 1991 & his salary when he was made redundant in 2010 was $48k. He has worked for 4 companies over that time, all paying the same rate. It has been a choice of job vs. no job. Dh is a qualified, skilled tradesman with 40+ years experience working in NZ & the Pacific, working on the tools as well as supervisory positions. If you work in construction & need your job to support a family, you don't have much room for negotiation.

Edited August 30, 2012 by Deb in NZ

[Roadrunner]

 

Even worse?

http://www.armytimes.com/news/2011/11/defense-phony-military-electronics-traced-to-china-110711/

 

Contracted companies using cheap counterfeit goods in US sensutive military equipment to make a bigger profit. Highly risky on all kinds of levels.

 

I am speechless.

[EmilyK]

I think this is a large part of the problem. I think there was a sweet spot in time when workers had some power and companies looked out for their workers. Now, large companies (which may or may not have anything to do with small companies) are all about raking in more and more profits.

 

My dh worked for a small, family-owned manufacturer in college. In the early nineties Wal-Mart approached them about stocking their products. But, Wal-Mart wanted to buy the products at a ridiculously low price. In order to meet that ridiculously low price? Wal-Mart offered to *help them move their manufacturing to Mexico*. My dh (who speaks Spanish) helped them move their company to Mexico not long before he graduated college. They have since been bought out by a Chinese firm and everything has been moved to China. That is *extremely typical* and why Wal-Mart is so very dangerous to our economy.

 

The family who owns Wal-Mart (essentially made up of 6 people) has more wealth than the bottom 49 MILLION (or bottom 40 percent) of families in the US. They are *directly responsible* for manufacturing job loss in the US in order to grow their already enormous wealth.

 

To check the facts:

http://www.politifact.com/truth-o-meter/statements/2012/jul/31/bernie-s/sanders-says-walmart-heirs-own-more-wealth-bottom-/

 

So, it is a little crazy to me to start blaming people like random government workers or random people who work for financial companies for the state of things.

 

This is perfect. I'm a centrist, basically, but this just doesn't get talked about enough.