Interesting that this is a concern for you. Fewer employees earning a paycheck... the economic climate slowing an industry's recovery...worried about a downward spiral when one industry experiences a downturn...

So it MATTERs when the jobs are in finance, and in New York, but not when the jobs are in industry in Detroit?

It shouldnt matter whether its New York or Detroit itÂs all connected. Another new fad is cutting back on hours for white collar and blue collar workers alike.

At our dealership the hours are getting cut to 6 hours one day a week per employee. Hours are going to be staggered so the store can stay opened but all employees will be making less money. All the employees agree that this is better than more layoffs and they are all happy to just have a job at this point.

This is not just the dealerships but all the companies that supply them. It would probably take pages to list them. Everything from the janitorial supply companies to the local mom and pop restaurants. The balloon people across the country will be losing millions as more and more dealerships realize just what a costly expense they are. When DH was talking about ways to cut expenses I ask him if people would really just pass us by if we didnÂt have the balloons out front on every car. And do we really need fresh flowers in the restrooms. Not at this point! So the flower girls who came twice a week to water plants and bring new flowers are out of one more job. This year for the first time the girls in the office decorated the Christmas tree. We always had a service that did that but they are expensive so they had to go. The tree is just as pretty and the office had a fun time doing it so thatÂs another company we will not be using again.

So less money going into 401Âs, state and federal taxes, less sales tax revenue for the towns overall economy. DH is taking a 25% pay cut and working more hours to make up for what his people donÂt have time to do. He worries about all his employees. He came home sick to his stomach after the first round of layoffs and is still not over it.

Soon the state will not have the money to fund unemployment. The percent that is paid into unemployment by employers and employees is not enough to cover the extended week the feds have mandated or the number of people who are applying for first time benefits. No to mention the money for all the people who will be applying for social services that never thought they would ever be in that situation.

DH was at a meeting of the local auto dealers association last week and all the dealerships have had layoffs and all are cutting employee house both foreign and domestic. Most people donÂt know or understand how interconnected the whole industry is. It doesnÂt matter what kind of a car you buy the parts that make up that car are made by both foreign and domestic manufactures. Some Toyota transmissions are made by Ford and GM and some parts for Ford and GM are made by foreign manufactures.

nancy....missing my point, i said IN ADDITION to layoffs...I still don't support supporting an industry,ANY industry, that is on life support..It is survival of the fittest,and sadly Detroit automakers may not survive...

I dont think Nancy was missing your point at all. I dont support any industry on life support either but the auto makers would not be on life support if not for all the greed and thieving on Wall Street. They would have been able to get the loans that they have always gotten in the past, and paid back, if not for the financial mess that the banking industry and Wall Street created.

Put that together with the public flogging congress and the news media has given the big three and they may fail. You can say whatever you want about American cars but the fact remains they were doing pretty good out sailing the foreign market until the gas prices went up and Wall Street created the financial mess we are in now. I think I read it here and it was spot on "they wanted the big SUVs and trucks until the day gas hit $3 and then they didnt"

Ford is in pretty good shape because they were smart enough to get a loan months ago before the banks stopped giving loans. GM would have been OK if they could have gotten the loans needed to carry them over until the new contract agreements they made with the UAW last year go into effect next year.

When they say 1 in 10 jobs is somehow connected to the American Audo Industry I dont think people believe it. It not just the suppliers of parts or the suppliers of service that support the industry think about all the medium duty trucks you see every day from the construction industry, farmers, to medium to small delivery trucks. UPS is the only one I know of that buys foreign trucks. Its not just family transportation that the American Auto Industry supplies.

It is all very disconcerting regardless of the industry. I've thought for several years that Americans were living a grotesque life of excess consumption at every level - many doing so in a highly leveraged manner - again at every level. This house of cards and the economic growth fueled by this conspicuous consumption simply could not go on. Everyone still seems to be trying to regain that same lifestyle and frankly I think it may be a thing of the past that we will not attain again anytime soon. Sadly if people were focused more on values that are truly important (not greed, arrogance and material wealth) unlikely we'd be in this predicament. But alas - that's the nature of many humans - more and more wealth and stuff for themselves.

What is really disconcerting though is how everyone - at every level - believes the government will take care of everything. We now have a federal government so highly leveraged - and at such a deficit in this global economy - that we have another giant house of cards waiting to collapse - and everyone has their head in the sand standing behind the "strength of the U.S. government". I really do think the life of excess that many enjoyed in this country over the last decade was the peak - we're in for a rude awakening with what lies ahead - a major correction that will take a step toward leveling the global playing field.

I've had a nice life with many comforts. I could see that changing.

well all i can add to this is, HAPPY HONDA DAYS! HAHAHA

Sometimes the media and the government do a really good job of pitting one group against another. That way, we won't look at the real situation and at their complicity in the problems.

In several other industrialized (formerly "industrialized"?) countries, about 50% of their production goes to consumption, but in the U.S. (and probably Canada similarly, though perhaps a little less so) the amount of our production going to consumption is something like 70%.

We need to be building more capital goods - e.g. the means of production, whether material or knowledge-based. We need more high quality schools, where the next generation hone the tools that will help them compete in this worldwide marketplace.

We've stolen from our kids (and grandkids).

Our government-operated retirement systems were not funded in such a fashion that I withdraw only what I put in and the amount of its growth, but current payers are putting up part of the money that is being paid to me as a retiree. We could handle that years ago when retirees didn't live long and there was not a large number of them in relation to the number in the workforce... but now the number of retirees has grown ... and it's about to grow a lot more ... and in addition, the relative numbers working is diminishing ... and the tradition that we had of wage increases has been eroded.

Our governments have gone deep into debt in earlier years. In Canada we've been running annual surpluses for several years, but the U.S. could not do that, what with the Iraq war ... and the trade deficits, plus recent major bailouts of some major parts of the U.S. economy ... with more to come.

Consumers have been going deep into debt, as well. Some, despite meagre if any wage increases, have refused to cut back their lifestyle, what with inflation increasing prices. So they took on credit card debt (at high rates of interest) or took out loans using the equity in their homes.

With pension plans becoming scarcer and thinner, they should regard their homes as extra capital to help fund their pension plan ... but aren't.

The U.S. government (and ours, to a lesser extent) has taken to printing money. When, instead of one dollar chasing a loaf of bread, there are two dollars, guess what'll happen to its price?

Not only that ... much of the U.S. gov't. debt is held abroad. As that debt is rising rapidly, soon those lenders will require the debtors to offer major incentives if they will be willing to lend more money. A major one being increased interest rates.

If you hear screaming now - wait till interest rates double??

When I began work as a personal financial advisor in '84, several people told me with pleasure how they'd made 19% on their Canada Savings Bonds, a couple of years earlier.

When I asked them how they liked making about $2,000. - $3,000. actual return on $100,000. invested, they weren't about to believe me. The 19% was interest earnings, taxed at top rate, if 25%, that's 4.75%, leaving 14.25% after-tax residue.

I asked them if they knew what the rate of inflation had been then, and most didn't. When they took that 12% rate of inflation off of the amount that they thought they'd earned in order to maintain purchasing power ... there wasn't much left.

I've been trying for years to encourage people to build an emergency fund of 3 mos.' income (with 6 mos.' better, 9 mos.' better yet, and ideally about a year's worth) in case they had no paycheque for a while ... with limited success.

That gives a person a measure of financial freedom - I don't like being in handcuffs, not free to move financially as I choose.

Seventy years ago folks in town had ice-boxes, with delivery by horse-drawn wagon. Then 60 years ago they made refrigerators, and the ones that they built 50 years ago lasted 40 years. The ones that they build now only last about 10 years - as many folks want to remodel then, including new appliances.

We need to insist that manufacturers build those frigs to last for 50 years - they can do it!

My small car (foreign nameplate), standard transmission for slight gas saving, which also allows me to coast down hills, to yellow lights, etc. when not interfering with other cars' progress ... has been carefully maintained and is now 21 years old. Only about one person in 4 dozen is interested in operating such a car, I think.

Europe, earlier coping with expensive gas and expensive plus scarce heating fuels, have got a long head start when it comes to using wind energy for power production. Solar too, I think.

We need to insist that the leaders in our business, industry and commerce stop this irresponsible taking of recently largely increased, now huge salaries.

It was a venturesome spirit and a willingness to take risks that made our countries great in the past and it's such a spirit that we need to rediscover, now.

Not only that ... while our forebears were rugged individualists, they also co-operated, worked together to achieve worthwhile ends.

For example, when settlement took place on the Canadian Prairies, often involving people from various European countries who'd come with little, they built community halls together ... and in many places decided to have only one church ... which was a major component of the uniting of (most) Presyterians, the Methodists and the Congregationalists into the United Church (of which I was a minister) in 1925.

Remember Benito Mussolini, who led the Fascists in Italy, telling how one small stick can be broken easily ... but if you put a bunch of them together, they achieve much incresed strength.

Let us resist the temptation to throw rocks at one another, but learn increasingly once again how to put our skills and effort together to achieve great results.

Not just for our own area, or nation. When one part of our world is sick (air travel being what it has become) the contagion soon spreads everywhere.

We need to learn a new sense of loyalty to our world as a whole.

It's a small canoe ... if some guys in one end get into a fight ... and we tip over ... we may all drown.

Ata meeting of all of the plants and animals, there was some discussion that humankind, a fairly recent comer to the earth, was at risk of destroying himself/themselves. Some participants were of the opinion that such might not be such a bad thing for the future of the world, for his presence has surely made life difficult for many of them.

Good wishes for a New Year in which we envision various ways to build a more effective means of having a more worthwhile life for many of us residents of the earth. And begin working toward bringing that/those vision(s) to reality.

ole joyful

P.S. We've been acting rather like a bunch of spoiled brats, wouldn't you say? While parts of the world have been burning.

o j

What, no further comments?

ole joyful

Here's your comment - That's the best letter I can remember reading in a long time, especially the part about how the world would probably be better off without us (vs plants, etc). Sad, isn't it, that having the (supposedly) best brains of all the species, we've managed to so completely mess things up?

This is not a new "fad". Our family works in the BIG 3 and they have for years stopped and started 401K matching based on profits. Currently there is no matching.

I think the content of this string of posts has veered away from qdognj's original comments. He's not talking about the auto industry or bailing out a specific industry.

His point is that investing in stocks/bonds is what fuels the economy. True, while so many people can't afford to invest, it becomes a circular problem. By not investing in the market compounds the recovery of our economy. And unfortunately, with so many people unemployed, having hours reduced, etc., makes for less income to invest.

A lot of people, who can afford to, may be contributing to their company's 401k as a tax reduction to their pay, and may only be investing up to their company's match. If my company matches the first 5%, I may only be contributing 5% to my company's 401k. And contributing even 5% would do something to spur the economy into recovery. With no incentive to receive a match to their contribution, I would think people might think "why bother."

qdognj, is this what you are referring to?

sephia, thank you for clarifying that,yes, that is what i meant

If, however, John or Jeanie choose to buy new shoes or a new fridge instead of contributing to their retirement plan, wouldn't many of our economists say that they were helping to keep the economy humming, especially in these recessionary times (and especially if they choose to spend on a locally-produced product - which much electronic stuff, to which we've become so addicted, is almost entirely not)?

That said, I've been recommending that we not only spend, spend, especially on consumer goods, but build some capital, including an emergency fund, so that we have some financial freedom.

I don't want to be in a position where, should I miss a couple of paycheques, I'm sweating blood, in that there's that mortgage payment due ... and credit card fees, whose regular rates are disgustingly high and that really mutiply when payments are missed ... or even late.

Living in such a cage is not my idea of a good time!

On the day that I start work, I have brains and hands at work ... and no money.

On the day that I retire ... I have brains and money at work .. and no hands.

It used to be that our retirement date (from, in many cases, our original employer) was pretty well pre-determined ... and many of us had reasonably secure ... plus adequate pension plans.

Now ... security of employment is something of a pipe dream ... and many of us have had surprises to cope with related to retirement dates ... and structured retirement plans are getting scarcer ... and less robust.

All of which makes it hugely more important for us to build a financial asset to see us through tough times ... which, in recent years, have become not only more probable, but more frequent ... and more prolonged. In addition to the savings plan to fund retirement.

I like the metaphor of saying that it makes it a lot pleasanter walking if one has two legs, rather than one (one leg being the income from the employer, and the other being savings, to build and produce increasing income).

But that picture loses validity when I proceed with it - for my point is that it's wise to hang on to part of each paycheque to put it to work ... which makes that leg about two inches long, in the beginning. Pursued persistently, that leg does grow. However - the big problem is that, to retire, the person vountarily chooses ...

... to cut the other leg off!

I like to tell kids (and adults) that every one of us, past the age of about 5, has a home-based business. And that each of us has employees ... if their Dad and Mom go to work, but don't get paid, they don't keep going very long .. or, if they operate a business, if they don't pay their employees, the employees disappear.

However, in the kid's business, a lot of the time, their employees pay them! Then I pull a Loonie (Canadian Dollar coin) from my pocket and tell them that that is one of my employees.

If the child chooses to visit the ice cream store and buy some ... the ice cream tastes great ... but a couple of those employees stay behind in the ice cream store.

Is/he chooses to hang on to some of those Loonies, s/he can put them to work, to bring in nickels and dimes, that build to become more Loonies, like themselves.

As it's important for every employer to arrange work so that their employees produce more value than they cost, so it's important for each person to learn how to manage his/her dollars well, to produce good rates of return. At lower tax rates, as may be possible.

In the light of recent multiple uncertainties, implementing and persistently servicing a savings/retirement plan has taken on increased importance.

The advertising industry has succeeded in convincing us that we should live for today - yesterday is past history ...and changes are taking place so fast, that we can't know what tomorrow will bring, so why worry about it?

(Besides ... we want your money today).

Their best interest and ours don't always coincide.

Enjoy your weekend, everyone.

Arrange now ... to retire early ... which makes every day weekend/on vacation!

ole joyful

"If, however, John or Jeanie choose to buy new shoes or a new fridge instead of contributing to their retirement plan, wouldn't many of our economists say that they were helping to keep the economy humming?" - very good point, ole joyful.

It's kind of like the chicken or the egg theory. Spend $$ on consumer goods/services, etc., improve the economy and keep people employed. Don't spend $$ and the economy becomes weaker, and then unemployment rises. With high unemployment, no $$ for consumer goods/services, etc., etc., etc.

I hope Obama or someone can figure a way out of this precarious situation.

I fully expect that in about 10 days to two weeks or so we'll find out that there's a much bigger pile of doggie doo-doo than anyone not part of the situation was aware of.

I certainly do not envy Mr. Obama his task - it's going to be a very uphill climb, I think.

I fear that it's going to be almost impossible for him to bring the game off in a way that can please people.

I do wish him well.

ole joyful

It's hard for me to conceptualize this as anything more than an individual behavior problem.

I would overhear my coworkers, in good times, saying things that indicated that they lived "on the brink".

For instance, a coworker who drives an excellent car, wears fine clothes, and has a big house would say her child needs money for camp... but, that has to wait until the next paycheck!

These sort of hints of living on the edge happen over and over in the workplace if you listen.

There is an assumption, these days, that this is just how life is lived: paycheck to paycheck. I can see this with college students or the young, but full grown adults?

This is what pangs me with bouts of anxiety more than anything other dramatic news story about wall street or the big three - vast numbers of otherwise normal people living on the financial edge.

Greed is a problem, but I would say that everyone is greedy (selfish) --> Those who save (greedy money hoarders) and those who spend (greedy materialists).

We live in a world where we expect a safety net under all of our childish behaviors: we expect others to pay for our health care as we gorge on fast food, our debt, and to be able to keep our jobs even if we are incompetent. This safety-net-culture has crept up on us slowly, and has produced an entitlement syndrome that affects us all.

In the end, I am mostly surprised that otherwise normal, intelligent adults have, with respect to financial management, morphed into teenagers with credit cards. No matter the explanation, it is a shock.

Hopefully, we are all just being overdramatic about the current state of affairs and this will all pass as nothing more than a hiccup.

BK

Eliminating the 401k matching is a travesty - in just a few decades we have gone from employer funded pensions, to 'retirement funds' that are only partially funded. We keep sliding down that slippery slope. And no matter what type of retirement plan one has, there are hidden perils. Some will get burnt, and others will be okay.

In regards to less money going into the stock market and therefore slowing the recovery, I am mixed. My financial knowledge is comprised of little more than the supply/demand principle. (I try to gain a broader understanding, but it sometimes baffles me.) However, I have thought for years that the massive influx of $$$ from the common man would set the markets up for trouble. And when "experts" would make statements like "historicaly speaking, the markets . . ." When in history has there been an influx of money into the stock market of this magnitude? So back to my supply and demand - there has been a big demand for stocks, and therefore they have become overvalued. Yes, the markets are flooded with junk, and as long as there is money coming in, there will be something to buy. That combined with 401k plans that are very limited in their investment choices, I find it hard to beleive that everyone was going to be nicely funded in retirement. I guess this was a round about way of saying that less money going into the stock/bond markets isn't a bad thing.

As for job losses, one can't help but feel compassion. OTOH, it's about time that jobs were lost in the financial sectors. I'd actually jump for joy, except for the knowledge that the ones that should go, the ones that NEED to go, are often the ones that get to keep their jobs.

You must be fairly young, BK. I don't think there's an excess of drama attached to the current economic situation. Maybe if you've always lived in a cave, scavenged deadfall for heat, and foraged for roots and berries your life hasn't been affected by this to a greater or lesser degree.

With an unemployment rate of 7.2% - and that's only counting those on the unemployment rolls actively seeking work; does not count those who are underemployed or who have given up. Counting those, the percentage would almost double. On a pace of losing 500,000 jobs a month, we might outrun our ability to see some recovery for years. We're going to lose goods and services; local budget shortfalls are going to be made up by tacking on new fees for everything city, state, and federal govts. came dream up.

As in any situation, some are more affected than others. If you weren't living on the edge before, chances are you're not on the edge now. But it's not just the on the edgers, even the more fortunate are losing ground, even if it's just on paper. If you've got your job, are living in a house you can afford and didn't borrow against it for toys, vacations and all the fun stuff life has to offer; didn't run up credit cards because it seemed like "free money" and paying it back seemed remote; didn't spend every dime of your paycheck figuring the future would take care of itself, you'll probably be okay.

The Boomers seem to take the brunt of all this. But I think the problems are going to be much more acute with the children of the Boomers - and I suppose they come by it honestly since the've never heard the word "no", got trophies for just showing up, have gladly accepted everything parents showered on them then got bored and wanted more; have been shielded from some of life's more painful realities. The kids are the ones who think they can get out of school and step right into high paying executive positions. Those days might be over for a while and they'll be hanging their diplomas over the bars they'll be tending waiting for other job opportunities to appear. They'll also be going back to their their old room at the folks' house because it's too expensive to be out on their own.

The chatter around the water cooler will be on how to fly under the radar to keep the job you have so as not to become a statistic. In my day, office chatter was often an attempt to cover the fact that poor choices, excesses and consumption were something to be proud of but by "crying poor" you were somehow one of the regular guys.

In the history of the world this may just be another hiccup; learning something lasting from it and taking steps to be prepared for a future one might be the best possible outcome.

Yes, the "paycheck to paycheck" watercooler talk may very well be a manner of being one of the boys.

But I rarely get to know anyone who isn't REALLY living life so close to the edge.

For now, I'm examining the prospect of possible hard times for myself personally. I'm getting no hints, yet, but given the economic news, I don't want to be caught by surprise.

Already, I'm thinking of practicing for a down turn. Seeing how it "feels" to go without cable, to go with slow-speed internet, to cut back on cellular minutes, ... and, in the mean time, to keep saving.

In fact, tonight I'm going to try to bring everything into one small room in the house: the tv, notebook computer, comfortable recliners. Then, instead of heating the entire house, just using a small space heater to maintain comfort in just the one room. [This kind of thing is actually fun for me, so it's no big burden.]

We have a cold front coming to town soon.

Not sure why pulling back on "matching funds" is such a travesty. It seems, to me, that it is a cost cutting measure that may save jobs.

Matching funds were just the incentive that some people needed to actually start saving. When 401k's, 403(b)s, tax sheltered programs, etc. were first introduced to the masses, I remember many of my fellow workers were as skeptical of the concept that the company would actually give them "free" money as they were they could afford to set aside a certain % of their pre-tax dollars every two weeks. Those are the same people who might still be working until they drop dead to make up the shortfall for their skepticism.

Well invested as a group plan and nicely matched by employers, this was a really good benefit - but like the small print says on most benefit packages, they can be altered or rescinded at the discretion of the company. To this point, it hadn't been a bottom line issue so it's become another in the long list of perceived entitlements.

The worse case scenario is employees stopping contributing to their 401k's as the matching funds dry up. Money's got to circulate - even to Wall St. - the place we love to hate. Perfectly viable, bottom line stable companies are speculating that times are going to get worse; taking away matching funds helps hedge their bets.

Being retired, I don't have a dog in this fight anymore - my 401k sits where it is hoping to recoup a little over the next decade before I'm forced to start drawing on it.

All things considered, I suspect people might concede a lot to be able to keep their jobs.

I see the elimination of 401k matching as the final blow. It sounds real nice to say that it's okay to eliminate matches as long as it saves jobs. However, once it's gone, it's not coming back. And even when the economy recovers, I don't think that the employers savings will be reflected in your paycheck. And while a segment of the population will have to make up for their employers not contributing anything to their retirement, they will still have to pay for many other peoples retirement (I'm thinking of government employees, teachers and seniors)in the form of higher taxes. I don't want this to get into a slam session on these groups; they were given promises as to what their retirement payments should be and they shouldn't be cut. But what of the employee that has had all employer retirement funding go out the window? That is why I say it's a travesty.

I don't want this to get into a slam session on these groups; they were given promises as to what their retirement payments should be and they shouldn't be cut. But what of the employee that has had all employer retirement funding go out the window? That is why I say it's a travesty.

Just to play devil's advocate, why are the retirement promises made to government employees, teachers, etc., any more sacrosanct than the retirement promises made by my public-corporation employer?

I'm merely suggesting that if removing the employer match to a 401(k) (as my employer has done) truly does make a company-saving change in the bottom line, then we ought to seriously consider doing the same in the public sector as tax revenues dry up and expenses continue to mount.

This economic mess is going to require sacrifice on everyone's part. While I agree that benefits already being paid out monthly are off the table, I really think everything else should be discussed, private sector or public.

Doesn't come as any big surprise but then I've almost always worked for companies where any company 401K contribution was based on whether or not the company was profitable. I've worked for a few startups that weren't profitable so no match. No profit - no match - makes complete sense to me. Even now my profitable company makes a once a year contribution based on your compensation level and the company's level of profitability. Seems like a good concept since it ties $ for employees to company success so if company falls on hard times people don't have an "entitlement" mentality that makes them bitter if matching funds aren't available.

I couldn't agree more that we're all going to have to do some belt tightening - public and private sector. Can't imagine why anyone would think they would be exempt with the current economic climate.

DH's company does theirs similar to gibby300's. They have 401k match & profit sharing. The 401k match is standard but the profit sharing is based on profit & compensation level.

I'm not happy about so many companies doing this, but I'd rather they suspend this temporarily & try to save jobs.

I agree with several of you - this is going to require sacrifice on everyone's part. What makes me angry is that those of us who worked hard & didn't get into debt too deep or do stupid things are going to have to pay for everyone else's mistakes. DH & I, at age 40, have finally built a nice house. Not fancy, but finally we're not living in a starter fixer-upper. We've been very careful to make sure that we can live on less than we actually make. Certainly we can't live like we want, but we can pay our bills. We have an emergency fund, very little debt except our house (no car payments), etc. But the economy is affecting both our companies, mine especially. We've tried to plan carefully, but who knows?

i guess I could care less about the stock market. investing money in the stock market doesn't turn around the economy. I can't stand the fact that the government seems to make policy etc based upon the stock market's reaction.

regarding 401k matches. yes save jobs save jobs... we're going to need them for when we're 65 and can't retire. In general employees are too greedy, materialistic, dumb whatever you want to call it, to plan for their own retirement. I personally think there should be a mandatory 401k retirement payment from employers into an employee account to help backstop this problem.

The demise of pensions and rise of 401ks is the full employment act for our baby boomer future senior citizens.

Well, if you were to cut the fat of pensions of state employees, it may impact those who are already receiving benefits. It will depend on how other states allocate money for these funds. For my dh, 7% of his pay goes to retirement, the state matches that with 13%. He also pays a payment towards retiree healthcare. Some of that money helps to keep things afloat and is essential during downturns like this. As it stands they only anticipate being able to fund retirement health care through 2015 (which may be optomistic).