War Was The Safest Bet
"Son," Chief Roley said, "when I graduated from High School, I had some choices. I could have gone to college, I could have gotten a job at American Airlines like my Dad did, or I could have volunteered to go into the military before I got drafted."
"You willingly went to Vietnam?"
"I sure did," he said. "Seemed like the surest bet at the time, with one possible exception that thankfully never came up."
He was right. It's June 17th, 1988, and my father is about to step onto a small stage to be something he never liked: the center of attention. It's the day he retired from the Navy. It's also the day I graduate from high school. We're in the middle of a long day.
"Kris, it's all about looking at what options you have, and picking the one that has the most longevity. As long as you don't screw up, you're set."
To be fair, there was a point in time where he was right. After he took some much deserved time off--about a month--he started working for a defense contractor, on the civilian side of the project he worked on in the Navy. He had a good paying, decent job.
Then, when the contract ended, he moved with the contract to the next company. Then the next, and the next, and the next. He was the foremost expert on this particular project, and if you didn't have Doug Roley, you didn't have this contract. He stuck with one thing, and in his life it worked. A 48 year career, and two jobs.
My father was not a highly educated man. His spelling was atrocious, his English was worse. But he knew what he knew backwards and forwards, and because of that, people paid to have him, and all the other more colorful parts of him that came along.
I tell this story to tell you that it is the last story of job security I think I'll ever hear in this lifetime, and frankly, it couldn't have happened to a more stand up guy than my father.
Sawblades to Sedans
Burton Norris Bagley (Dec 3rd 1919-Mar 30, 1985) was a salesman, and a damn fine one at that. He worked for the Rier family of Machias, Maine for 40 years. Prior to that, he served in the Army during World War II, and just prior to that, he was selling sawblades to the paper mills. Sales wasn't necessarily in his blood, but he learned the one good connection between sawblades and sedans. He was a gentleman. My grandfather never had an unkind word for anyone, and the courtesy he showed people when dealing with them had a rather interesting result.
I spent a summer living with my grandparents and helping out around the house. Part of helpng out also meant that I would wash the cars at the dealership and keep the place clean. One day, an elderly couple came up to the lot and asked for him. I fetched Burt (he found it rather strange to be referred to as Grandpa, everyone just called him Burt), and his face lit up when he saw who had arrived. "Kris", he said, "These two come up here every few years from Florida to buy a new car."
I looked at them like they'd grown a third head between them, and they laughed.
"Your grandfather sold us our first car, and it was his first sale," they explained. "We've come to see Burt ever since." That's the value of customer service, leading to a long term relationship with a customer. It's rare to see that anymore. More to the point, it's rare to see a sales person with 40 years on a job.
I live in Virginia Beach, Virginia. The main drag, Virginia Beach Boulevard, is also known as the Boulevard of Wheels. There's the big players--GM, Ford, Toyota--but then there are the little used car places as well. Blocks and blocks of them on one particular stretch of that road. I give you even money that if you walked in there today, and then walked in there two weeks to a month from now, you wouldn't see the same people. The turnover rate is astronomical. Not only is the service poor, so is the relationship between management and employee.
In my experience, there is one place that trumps all others in the shabby way employees are treated.
May I Help You?
I've worked for twenty five years in the customer service industry, and I've done everything from Telemarketing to Tech Support. There's almost nothing I havent done in this business, except for collections. Since my first job in the business in 1990, I've worked for six employers. That averages out to a little more than 4 years per employer.
It takes a pretty special kind of person to work in this industry. As near as I can tell, it's the perfect job for masochists. The amount of abuse you withstand while taking calls is only surpassed in some cases by the amount of abuse heaped upon the poor worker by call center management in recent years. This is not to totally denigrate the many companies such as Apple and the company that currently employs me, because I believe these companies still believe in ethical behavior by it’s management towards it’s employees towards the betterment of all within it’s organization. That said, I have seen a 25 year slide from being very picky with an organizations hiring practices, to putting butts in seats. If you don’t care about the caliber of the butt in the seat, then you don’t care much about how you treat them.
There is no greater of example of the slide to just putting butts in the seats than the outsourcing of customer service and technical support to other countries than the one you bought the product or service in. Companies who do this have no regard to the people they are selling to, believing that cutting costs in after market service is the best way to the bottom line. This is silly thinking, and yet I’m sure you can name a company you deal with that has done it.
In this new age of no job security, the average worker is expected to hold somewhere between twelve and fifteen jobs between the ages of 18-48. Those stats come from the Bureau of Labor Statistics. Contrast that between the age of our fathers and our grandfathers who worked only one or two jobs in their entire life.
There is no more gold watch. Retirement from one company is a thing of the past.
You're Getting Rolled
Because pensions became way too expensive for companies to maintain over the years, a new investment option was implemented, the 401k. Investopedia defines the 401k as "A qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. Employers offering a 401(k) plan may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis."
As of June 30, 2014, there is an estimated $4.4 trillion in private-sector defined contribution plans like 401(k)s, according to Federal Reserve data. An estimated 52 million American workers participate across 515,000 different types of 401k plans. That’s a lot of money.
While it’s true that the 401k participants fared reasonably well through the financial crisis and subsequent economic recession, the truth of the matter is that what happened should have never occurred in the first place. Because the Glass-Stegall act was repealed in 1999, the wall between consumer bank assets and investment bank assets was removed. In essence, the investors could gamble with the house money. Mortgage backed securities were infested with low quality subprime mortgages, which played a role in the Global Financial Crisis.
Here’s how it worked: You take out a mortgage with a 5.5 interest rate through Bank A. That bank now has a mortgage bank security as an asset that they can sell to Bank B. Bank B buys it, now they have an asset that produces income—the 5.5 interest rate. As long as you pay the mortgage, it’s a good asset.
But if you default on the mortgage, the bank no longer gets the money it is entitled to receive. In most cases, the house goes into foreclosure, and sold for a fraction of the price. When that happens, the bank only gets a fraction of the money it is entitled to. That asset—the mortgage backed security—becomes a toxic asset, and is unsellable. Would you buy something that is going to lose money? Of course not.
Because of the housing boom that started in 2004, many of the mortgages were subprime. Companies like Countrywide were famous for subprime mortgages, and lending to folks that may not have had the ability to buy a house. The bankers knew this, and looked the other way, and continued to explain to us that the credit ratings of the companies were good…until it suddenly wasn’t. Banks took major hits, and investment firms took massive hits. Over a trillion dollars was lost in retirement assets alone. Your 401k took a hit. Many people lost half their nest egg, or more. The dream of retirement and a peaceful post-career dried up and went away. Forever.
That should not be allowed to happen to anyone who works for decades, plays by the rules, and lives a good and decent life. However, the people who control all of this do not play by the rules. They change the rules to fit them, and we take the hit. Then, they tell us that they need our help to put it back together again. They get our leaders to bail them out with the money we pay in taxes. Then, they get right back to business as usual, having learned nothing but the reality that as long as their mistakes are on the scale of a global catastrophe, the rest of us will HAVE to clean up their mess.
It’s good to be the Kings.
Your Paycheck (More or Less)
Here’s where we get to talk about the value of the money you earn. The bad news is that it’s not what it used to be. Depending on how you compare it, the worth of a new dollar in 1970 (the year of my birth) ranges from 6.10 to 16.20. What this means is that in the worst case scenario, it would take you 16.20 to buy what one dollar bought in 1970. That’s just inflation at work, and that would be fine except for the fact that wages have not kept up with the inflation index.
Today’s minimum wage is 7.25 an hour. Unlike every other thing in the federal government that involves money, the minimum wage is not updated to take inflation into account. Inequality.org, which is part of the project for the Institute for Policy Studies, states that if “…income distribution and US standards of decency remained exactly what it was in 1968, the minimum wage would now be $21.16 per hour.”
If you don’t think the minimum wage affects you, understand this: A lower minimum wage lowers all other wages. If the minimum wage was 21 dollars and you were making less than that, you would be bumped to the minimum. Those making above that would ask for a commensurate rise in pay to ensure their job value. A rising tide lifts all the boats, but it also raises the ire of those who believe that there should not even be a minimum at all.
But what about voluntary contracts with employers? I don’t necessarily disagree with voluntary contracts with employers as you will see later. However, in this circumstance we are not negotiating from a strong position. The employer holds the cards. If the free market economy was actually free, then there would be an accepted going rate for goods and services performed by workers for employers. Without a secured floor, even that gets renegotiated, and most likely downward. We all lose.
Some of us have a lot more to lose. It’s well past time for that to stop.