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Renegade
12-20-2008, 06:33 AM
Fri Dec 19, 2008 4:26pm EST

By James B. Kelleher - Analysis

CHICAGO (Reuters) - Federal Express Corp's decision this week to force its salaried workers to take at least a 5 percent pay cut and to suspend its 401(k) match isn't just bad news for the shipping giant's employees.

Experts say the takebacks are an ominous sign of things to come at many other U.S. companies as businesses -- even healthy ones like FedEx -- adopt defensive corporate crouches in response to the worst economic downturn in decades.

The moves also underscore how much the tables have turned on U.S. workers as a result of the economic crisis, which has put employers firmly back in the driver's seat.

According to the employment consulting firm Watson Wyatt, 11 percent of all the companies it recently surveyed either already had cut wages or planned to do so over the next 12 months.

And 10 percent either have reduced their employer 401(k) match or planned to do so.

"There's some real opportunism operating here," said Lawrence Mishel, president of the labor-oriented Economic Policy Institute.

"The companies are counting on the fact that people will be scared and won't resist. I mean in this environment, who wants to quit and look for another job?"

NUCLEAR OPTION

Salary cuts are normally considered a last-resort nuclear option when it comes to corporate cost-cutting measures. Companies are typically loath to roll back wages because of the devastating effect such moves have on employee morale.

Indeed, experts say companies would rather lay off workers than force them to take a paycut. The reason: layoffs create disgruntled ex-employees; pay cuts create disgruntled employees.

"The fact that we've got more than one in 10 companies saying they've already reduced pay or plan to do so is pretty dramatic," said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt.

"The thing about base pay is it is the most basic, fundamental attraction and retention tool that companies have. So historically, it's been sacrosanct."

Sejen said the record drop in consumer prices -- those prices fell in November at the fastest rate since the government started collecting the data in 1947, pulled down by a 17 percent drop in energy prices -- was probably providing some cover for benefit-cutting companies.

"If the price of gas was still $4 a gallon, it might be a more difficult discussion," she said.

But the irony is falling energy prices -- U.S. crude oil prices have tumbled more than 75 percent since mid-July -- are good news for FedEx and likely to bolster the company's profitability during otherwise tough times.

'STRONGER MEASURES'

FedEx is not the first U.S. company to respond to the current economic mess by cutting benefits and demanding givebacks from employees.

A host of companies, including AK Steel, General Motors Corp, Eastman Kodak Co, Dollar Thrifty Automotive Group and Frontier Airlines Holdings Inc, have asked workers to take it on the chin in one way or another in recent months, citing the downturn.

But those companies were all in serious straits. Frontier is in Chapter 11 bankruptcy. GM is teetering on the edge. Kodak, already scrambling to play catch-up in the digital photography game, now contends with the dramatic pullback in consumer spending.

"Normally when companies suspend the match, it's because they are facing significant economic challenges," said David Wray, the president of the Profit Sharing/401(k) Council of America, a trade group representing 1,200 companies that sponsor defined contribution plans.

FedEx is different: The company announced its takebacks on Thursday in the same breath that it reported higher profits. It said the measures would reduce expenses by $800 million by the end of its fiscal 2010 year.

Those kinds of savings mean FedEx will not be the last. Indeed, a report published on Thursday by Watson Wyatt found that 6 percent of the businesses that responded to a December survey said they planned to cut salaries in the coming year, up from 4 percent in October, and 7 percent planned to reduce their 401(k) matches, up from 4 percent in October.

"As the economic downturn has both broadened and deepened," Sejen said, "the need to contain costs has resulted in stronger measures that that are ultimately affecting more workers."

GONE FOR GOOD

Wray at the Profit Sharing/401(k) Council said that so far, the 401(k) suspensions appear limited in number and confined to big-name companies such as Cushman & Wakefield, Ford Motor Co and Motorola Inc.

But because the employer match is a big incentive for employees to start saving for retirement, he worries the suspensions could discourage new hires and younger employees from planning for old age.

"Certainly if there's no match, it's much harder to get people to join these plans," he said.

The good news for workers is that historically, companies that suspend their 401(k) matches in bad times turn around and reinstate them once the good times return.

But the lost matches -- and the money vaporized by pay cuts -- are gone for good.

"There would never be a retrospective makeup," said Sejen at Watson Wyatt.

"If your salary is reduced by 5 percent or 10 percent for 12 months, that's just lost income opportunity."

(Reporting by James B. Kelleher, editing by Matthew Lewis)
http://www.reuters.com/article/ousiv/idUSTRE4BI5ZZ20081219?sp=true

Coyote
12-20-2008, 09:22 AM
With the information presented in the press since Thursday, I think this is a good move. Business is down dramatically for FedEx. An alternative to this decision is lay-offs. It is much better to keep the employees working than to have them on lay-off, both for the employee and the company.

For the employee, a cut of five to ten percent is a far better deal than what they can get with an unemployment check. They also have the opportunity to look for a new job, if they so choose, while continuing to receive a paycheck. It's much easier to find a job when you have a job. They keep their seniority and will be returned to their original pay and benefit package when business picks up.

For FedEx, they get to keep a higher percentage of already trained workers and avoid the cost of new hire training when business picks up.

The pay cut is being shared across the board with the top management taking the biggest cut at twenty percent.

In the current downturn, I think this is a very reasonable move.

Susie
12-20-2008, 09:29 AM
Better a job at minimum wage than no job at all.

BirdGuano
12-20-2008, 11:13 AM
It's not just FedEx.

This is a cookie-cutter HR best practices response from
some "save your business now" seminar.

I know of two of my large technology clients that announced internally almost the EXACT same cuts, down to the percentages.

This reaction is modeled after how some Asian subsidiaries have responded to the downturn.

Next level on the agenda is cutting back to a 4 day work week, which equals a 20% salary cut.

BirdGuano
12-20-2008, 11:18 AM
But the lost (401K)matches -- and the money vaporized by pay cuts -- are gone for good.

This ought to help the equities markets starting next year.


NOT

rb.
12-20-2008, 11:29 AM
It's not just FedEx.

This is a cookie-cutter HR best practices response from
some "save your business now" seminar.

I know of two of my large technology clients that announced internally almost the EXACT same cuts, down to the percentages.

This reaction is modeled after how some Asian subsidiaries have responded to the downturn.

Next level on the agenda is cutting back to a 4 day work week, which equals a 20% salary cut.

Back in October, DH's steelmaker employer announced that we will soon only be able to purchase our benefit-covered drugs via two pharmacies to have no out of pocket expense. They had put out a proposal to all local pharmacies, and only two responded. Any other pharmacies we use we will have to pay out of pocket, and be reimbursed by the insurance co., at whatever rate they deem fit. So, the erosion of our benefits begins.

Now...they are talking the 4 day work week. This brings up a whole host of problems as it is union, and may affect contract language. What a mess. I'd still rather DH work 4 days a week, though, than no days a week.

BirdGuano
12-20-2008, 11:35 AM
I'd still rather DH work 4 days a week, though, than no days a week.

That's what they are counting on... as the frog slowly boils.:D

Also look for some MAJOR draconian security to backstop all of this.

When you fire someone, you have a disgruntled FORMER employee. When you cut hours/benefits drastically you have a disgruntled CURRENT EMPLOYEE.

Statistically the latter is MUCH more dangerous to a business.

So look for things like increased computer keystroke monitoring and more cctv surveillance. I'm already
seeing the demand ramp.

Coyote
12-20-2008, 11:53 AM
BirdGuano, keep in mind that the employees are completely free to seek employment elsewhere, strike or flat out quit.

Having a job with benefits far outweighs the alternative.

When you cut hours/benefits drastically you have a disgruntled CURRENT EMPLOYEE.
Or one thankful to still have a job and benefits.

Teal
12-20-2008, 11:58 AM
FedEx got most of DHL's customers. I switched to them, and at a recent webmaster seminar I attended, all of us had switched to FedEx and NONE to UPS, "the box crushers".

FedEx must have purchased DHL customer lists, because I got about 7 or so emails from them, asking for my business and offering discounts, and none from UPS. Is FedEx actually down, or are they screwing with the numbers to make it look so? My FedEx deliveries are up, WAY up, and UPS deliveries are way down, with *someone* stepping into the DHL business.

"There's some real opportunism operating here,"

I have a friend that has managed a large auto repair business for 16 years. About 1/4 of his yearly pay comes from his Christmas bonus. He was told yesterday, the 19th, that things were sooo bad that he wouldn't be getting it. Their business is actually up. The people that own it have little customer contact. In other words, no customer loyalty to them, but a lot to my friend, who they do business with. He's been afraid to go off on his own. That is ending. A lot of businesses think they're being very savvy and opportunistic, when in fact they are poisoning the pot.

When you fire someone, you have a disgruntled FORMER employee. When you cut hours/benefits drastically you have a disgruntled CURRENT EMPLOYEE.

Statistically the latter is MUCH more dangerous to a business.

+++1

BirdGuano
12-20-2008, 12:17 PM
BirdGuano, keep in mind that the employees are completely free to seek employment elsewhere, strike or flat out quit.

I hope you were sitting down when you wrote that.

:rofl::rofl:


Having a job with benefits far outweighs the alternative.
Notice I never said it didn't. Just that the first round of cuts will not be the last, thus the frog-in-water comparison.

Or one thankful to still have a job and benefits.

The statistical and empirical evidence suggests that is NOT the most common response. :beer:

Which is why that part of my business will see an increase next year.

YMMV

sandyd
12-20-2008, 12:46 PM
It's not just FedEx.

This is a cookie-cutter HR best practices response from
some "save your business now" seminar.

I know of two of my large technology clients that announced internally almost the EXACT same cuts, down to the percentages.

This reaction is modeled after how some Asian subsidiaries have responded to the downturn.

Next level on the agenda is cutting back to a 4 day work week, which equals a 20% salary cut.

DH works for a japanese owned company....so before layoffs, we can expect to go to 20% cut? (Just got the 10% starting in 09)....

Heck, he might be working till June at this rate :)

sandyd
12-20-2008, 12:50 PM
When you fire someone, you have a disgruntled FORMER employee. When you cut hours/benefits drastically you have a disgruntled CURRENT EMPLOYEE.

Statistically the latter is MUCH more dangerous to a business.

Current employees are dangerous to the business due to the attitude? Have any current but disgruntled ones ever come back shooting like some of the former employees have at some businesses?


If I'm the boss, a bad attitude seems easier to cope with than being shot.


YMMV

:D

Coyote
12-20-2008, 12:51 PM
The statistical and empirical evidence suggests that is NOT the most common response.
Got anything to support that?

dyrt
12-20-2008, 01:35 PM
FedEx got most of DHL's customers. I switched to them, and at a recent webmaster seminar I attended, all of us had switched to FedEx and NONE to UPS, "the box crushers".

FedEx must have purchased DHL customer lists, because I got about 7 or so emails from them, asking for my business and offering discounts, and none from UPS. Is FedEx actually down, or are they screwing with the numbers to make it look so? My FedEx deliveries are up, WAY up, and UPS deliveries are way down, with *someone* stepping into the DHL business.



I have a friend that has managed a large auto repair business for 16 years. About 1/4 of his yearly pay comes from his Christmas bonus. He was told yesterday, the 19th, that things were sooo bad that he wouldn't be getting it. Their business is actually up. The people that own it have little customer contact. In other words, no customer loyalty to them, but a lot to my friend, who they do business with. He's been afraid to go off on his own. That is ending. A lot of businesses think they're being very savvy and opportunistic, when in fact they are poisoning the pot.Interesting anecdotal information but my recent experience shows something different. We (work group) gathered some research on small package and LTL carriers for a client and found UPS to offer the better value.

We found several third party audits and surveys. Fedex and UPS were almost equal in most regards with UPS having a slight edge. They damaged less packages and their on-time delivers were better. The differences were not very much though. Shippers that switched because of damage will eventually be compelled to switch back again because the hard numbers show both carriers damage about the same amount of packages . . . on average. UPS also got higher customer satisfaction ratings but again, not by much.

UPS was recommended, not because of less damage or better transit times, but because there are opportunities to save money in other ways when the whole shipping process was examined. Also, this particular client had a high priority of avoiding disruptions and Fedex is facing some right now. The highest risk was the lawsuits from the government and "contract" drivers.

I think the "contract" dispute played a part in the Fedex pay cuts and other cost reductions. The issue might end up being an expensive transition next year for the company.

BirdGuano
12-20-2008, 01:36 PM
Got anything to support that?

Sure, my billing rate is $85/hr. or you can buy the pre-packaged
report for $2,500

Fiddlerdave
12-20-2008, 01:38 PM
For the employee, a cut of five to ten percent is a far better deal than what they can get with an unemployment check. Of course, no cuts at all are even better. But even companies with record profits and expanding markets are going to cut simply because they can. Managers smile as they read reports of people begging on their knees to get $9/hr dirty hard jobs. Some people will find those articles on the company time clock or bulletin board. They also have the opportunity to look for a new job, if they so choose, while continuing to receive a paycheck. Maybe not. That increased surveillance BG talks of is already happening, and evidence of job-hunting, missed time, long lunches or any sign of disgruntlement will get you fired much easier and faster. It's much easier to find a job when you have a job. They keep their seniority and will be returned to their original pay and benefit package when business picks up. Ahh, the Voice of Management Verbal Promises! Sorry, these wage and benefit losses not only will be permanent, they have just begun. Just like the fact that housing will drop until people can afford to buy them, wages and benefits will drop until we are competitive in the world labor market. And remember, in most industralized countries, companies don't pay for health costs. TO be competitive, that's a long drop from where workers are now.

Quote:
Or one thankful to still have a job and benefits.
Quote:
The statistical and empirical evidence suggests that is NOT the most common response.

Got anything to support that?:lol: A Fedex worker gets his pay and benefits cut 10%. He notes business is very good, the company is making record profits, they are working harder than ever. While he may happy to still have a job, what world do you live in that you think very many employees will be grateful to their employer for taking advantage of the fact that the job will be hard to replace?

BirdGuano
12-20-2008, 01:40 PM
Interesting anecdotal information but my recent experience shows something different. We (work group) gathered some research on small package and LTL carriers for a client and found UPS to offer the better value.

You (the royal you) are putting your business at risk if you assign all of your freight to just one carrier.


:beer:

Coyote
12-20-2008, 02:01 PM
Sure, my billing rate is $85/hr. or you can buy the pre-packaged
report for $2,500
In other words you have nothing to back it up.

It would be interesting to see a survey of FedEx workers and see if they would rather take the pay cut or get laid off.

Like rb and her husband, I expect workers would rather have a job even at a reduced rate of pay.

dyrt
12-20-2008, 02:02 PM
You (the royal you) are putting your business at risk if you assign all of your freight to just one carrier.It depends on the scale of your shipping. This common belief was discussed . . . a lot, and found to be false for our client. Even though there are costs involved in getting a new carrier if one goes under, the costs and risks are less than having multiple carriers. The everyday labor costs of multiple carriers are far more than having only one.

The risk of one carrier is that there will be a failure and the shipper will have to change to another.

The recent collapse of DHL is a good example of how easy it is to change carriers. Fedex and UPS are doing everything they can to pick up those customers. Even the really big shippers that have warehouses at the DHL air hub are not left holding the bag. Even though DHL airplanes and trucks won't be pulling up to their docks, Fedex and UPS will. They are fighting very hard for that volume.

Coyote
12-20-2008, 02:04 PM
Dave, do you have *anything* at all that indicates that FedEx is making "record profits"?

BirdGuano
12-20-2008, 02:15 PM
In other words you have nothing to back it up.

Not at all, I'm just not willing to share proprietary data with YOU on an open internet forum.. for free. :D

IF you look around, you can find it for yourself.

It would be interesting to see a survey of FedEx workers and see if they would rather take the pay cut or get laid off.

Like rb and her husband, I expect workers would rather have a job even at a reduced rate of pay.

But we weren't discussing that. That much is obvious.. "would you rather lose an arm to cancer or die". Easy choice.

We were discussing a higher security risk to business of workers that are forced to take a pay/benefits cut and keep working, vs those that are just terminated.

The psychological effect is the same (loss) in either case, as is the normal human psychological RESPONSE to loss, but the first case presents a much higher security risk to business than the latter because those employees are still working through the stages of loss while still having contact with customers and handling fiduciary responsibilities.

Not a recipe for success.


Like I said. YMMV

Teal
12-20-2008, 02:18 PM
Nobody will ever see the real "damaged delivery" numbers, since those are in house and easily manipulated, by nature anecdotal.

In my 6 years with UPS, I had too many damaged boxes to count, hundreds. In 6 years with DHL, maybe a dozen badly damaged boxes. A look in the back of the trucks on busy days tells the tale. Yes, UPS is cheaper. False economy.

BirdGuano
12-20-2008, 02:18 PM
It depends on the scale of your shipping. This common belief was discussed . . . a lot, and found to be false for our client.


Yes, it is scale-specific.

My very large client didn't have a backup when UPS struck and was royally screwed because the other carriers could NOT pick up the slack at the time.

Despite "cost savings" they no longer have exclusive shipping commitments with any one carrier.

If you are a mom-pop outfit, then it would have little effect.

That much is true.

And that's why you crunch the numbers to prove/disprove your theories. :D

Teal
12-20-2008, 02:22 PM
The argument about PO'ed employees is just silly to anyone who is from this planet. Of course that is the natural response, and of course having someone PO'ed at you who has their hand wrapped around your cojones is a greater risk. Geez, people. To think otherwise is astonishly naive.

BirdGuano
12-20-2008, 02:24 PM
The argument about PO'ed employees is just silly to anyone who is from this planet. Of course that is the natural response, and of course having someone PO'ed at you who has their hand wrapped around your cojones is a greater risk. Geez, people. To think otherwise is astonishly naive.

And contrary to every laboratory study of human psychological response published in the last century.

:rolleyes:

dyrt
12-20-2008, 02:27 PM
but the first case presents a much higher security risk to business than the latter.It is a risk but there are more variables.

If a company lays off skilled workers then an investment is lost. Those that are left suffer a loss just as if they had been laid off. Lay offs have a depressive effect.

If a company has poor people management skills then the risk of disgruntled employees is higher. Fedex does not have this problem. Their salaried employees are generally hard working and want Fedex to succeed. The companies success is proof of that. They can still fire those that don't perform.

Fedex is very very good at managing risks. Their epic battle with UPS has honed their decision making, management and measurement skills. I think their decision is well thought out.

BirdGuano
12-20-2008, 02:31 PM
Fedex is very very good at managing risks. Their epic battle with UPS has honed their decision making, management and measurement skills. I think their decision is well thought out.

Again, I didn't say their decision was not well thought out.

I merely said it carries a statistically higher risk, and that is one of the reasons the risk management discipline exists.

The real changes will be in what you don't see. Increased risk management and employee monitoring for risk.

And like I said, I'm already seeing the increased demand for these services in my business.

dyrt
12-20-2008, 02:33 PM
Nobody will ever see the real "damaged delivery" numbers, since those are in house and easily manipulated, by nature anecdotal. That is just not true. The surveys are done on a large scale and paid for by big shipper associations. They survey those doing the shipping and receiving. We did not accept UPS or Fedex supplied numbers and had to pay for reports and white papers.

Your experience as described is way outside the national numbers.

Coyote
12-20-2008, 02:56 PM
Like I said. YMMV
And it does. :beer:

dyrt
12-20-2008, 03:06 PM
Yes, it is scale-specific.

My very large client didn't have a backup when UPS struck and was royally screwed because the other carriers could NOT pick up the slack at the time.
Your point is well taken. The 15 day strike by Teamsters in 1997 did create havoc and left a lot of hard feelings. If Fedex slips closer to disruption then it would behoove shippers to prepare. Using multiple carriers might be considered a form of insurance and the numbers one must crunch concern risk management.

But a decision to use multiple carriers right now is an emotional one, not so much based on crunched numbers but management's psychological aversion to risk. It is good to have contingency plans but the risks of a disruption like 1997 is very small and the labor costs of using multiple carriers is larger than most shippers understand, probably because they don't have time to run them all down.

Fedex, USPS and UPS absorbed the DHL volume without missing a beat. If Fedex was totally disrupted then UPS and USPS would burp but pick up the volume. If UPS is disrupted then I don't care how many carriers you have coming to your door, there will be major problems for everyone.

BTW, our project also uncovered risks with the Yellow, Roadway, etc. freight system. They are having troubles merging cultures, computer systems and processes. Just something shippers should keep an eye on.

rb.
12-20-2008, 04:33 PM
Or one thankful to still have a job and benefits.

Oh yeah. That's where we're at. Given that this steel mill currently has about 3200 employees, and HAD 13,000 in the early 80s, this city is very well aware they need to be happy there are still steel plant jobs. And I mean the WHOLE city.

Given that most of these guys work in danger daily (big equipment, cranes, molten steel, etc.), they aren't about to pull anything to get back at the company. All it would do is endanger their own lives, or those of their co-workers. And considering they lost an employee to accidental death back in October, it's still all very clear in their minds.

So...you lose some benefits. Least you have a paycheque. DD's friend's parents have both lost their jobs in the last month. Father is IT, mother is hotel clerk. And they're devastated.

rb.
12-20-2008, 04:37 PM
BG, I do know what you're talking about, though. In the early 90s, when Free Trade went through, I was working in the office of a metal parts manufacturer. Made parts for Ford, Xerox, etc. One of four plants, two in the US, two in Canada. The small plants picked up by an American/German company. Anyway, at Christmas shutdown, they brought in security to guard the plant over the holidays. So we thought. When we got back the beginning of January, we learned the plant was closing, and that was REALLY why security was there. And yes, they were needed, there were lots of VERY angry employees. I believe there was a bit of paperwork sabatoge that went on before they shut the doors in April, but I'd left by then for university. So yeah, I do know that crap happens.

sandyd
12-20-2008, 08:15 PM
And like I said, I'm already seeing the increased demand for these services in my business.

Then is it really cost effective for a company to do pay cuts and not just lay off?

Sounds like you have done studies BG. Does it make a difference like in rb's case?


I think with rb's case, everyone knows to be grateful and won't steal or play games to 'get back' at the company but I do understand many other employees, especially those out of touch with reality (like California state workers? LOL ) will think there is no real reason to take a pay cut and some will steal to make it up or do less at work to 'get even' and even bitch to customers.

But I haven't studied any of it just been exposed to both grateful and ungrateful co-workers at different times.....

BirdGuano
12-20-2008, 11:42 PM
California is a bit of an altered reality.:D

I don't think our "norms" of behavior are the same as much
of the country.

sandyd
12-21-2008, 01:09 AM
BG,

The studies done in the past were of pay cuts and employees who were ticked about it....but as I drove around tonight, looking at pretty xmas lights, and finding housing developments stopped with pads cut, or just a road and 5 houses, or one place that poured the foundations on some homes and stopped and another that must have been the victim of the credit crunch....cuz homes were built but now are sitting empty with for sale signs....(so someone ordered the home and then the loan fell apart when it was done?).....

Anywhere in the country--maybe anywhere in the world, that people are living next to "Bank Owned" or incomplete developments....I think the mindset will have changed...and instead of the traditional disgruntled employee with a pay cut, this time, most people will be happy to have jobs.....

Not sure if that is a study you can sell or if it's true you might lose money (so we gotta hush up :D )....

But there are few places in the world not seeing right in their town, the effect this 'downturn' is having on people living next door.

sandyd
12-21-2008, 01:11 AM
California is a bit of an altered reality.:D

I don't think our "norms" of behavior are the same as much
of the country.


I dunno.....I'm a native, married to a native.

:yes:

:D

Teal
12-21-2008, 01:27 AM
And contrary to every laboratory study of human psychological response published in the last century.

:rolleyes:

That's funny, BG, since I was agreeing with you. I think people will be furious at their employers, and that passive-aggressive behavior will be the norm.

flourbug
12-21-2008, 06:34 AM
I think people will be furious at their employers

I think it a lot will depend on the employer's circumstances. If employees can SEE their employer is struggling - if they know orders are down and everything has been cut to the bone, and they like their co-workers, then I think pay cuts will be tolerated. But if they see ANY waste or excess while they are expected to take pay cuts, then they will revolt. Of course, this is in the eye of the beholder, so it is very possible to have people go postal simply because they are hurting.

BirdGuano
12-21-2008, 11:52 AM
That's funny, BG, since I was agreeing with you. I think people will be furious at their employers, and that passive-aggressive behavior will be the norm.

I was agreeing with you as well by my statement.

FB says it the best. The reactions depend on communications, and that's the weakest link in a LOT of businesses I deal with.

Those workplaces that are already adversarial will fare the worst.

BirdGuano
12-21-2008, 11:54 AM
I dunno.....I'm a native, married to a native.

:yes:

:D

Ain't the natives that have corrupted California. :beer:

Even within the state it's split between inland and coastal.

sandyd
12-21-2008, 12:17 PM
So....if we get rid of the not natives, CA will do better :D


There might be a silver lining in all this yet.

Fiddlerdave
12-21-2008, 08:33 PM
I think it a lot will depend on the employer's circumstances. If employees can SEE their employer is struggling - if they know orders are down and everything has been cut to the bone, and they like their co-workers, then I think pay cuts will be tolerated. But if they see ANY waste or excess while they are expected to take pay cuts, then they will revolt. Of course, this is in the eye of the beholder, so it is very possible to have people go postal simply because they are hurting.I agree with this. But the point of the article WAS that Fedex has record profits, and how are employes going to feel about cutbacks with that in play, along with the "economies" Fedex are implementing.

I expect since their ground service is heavily contract drivers in pickup trucks around here(which has caused me no end of grief due to flakiness - I suspect plenty of illegals work that contract work for them as well), Fedex may well be getting ready to do the same to the overnight part of the company if drivers don't cooperate.

Fiddlerdave
12-21-2008, 08:36 PM
So....if we get rid of the not natives, CA will do better :D


There might be a silver lining in all this yet.CA can't get rid of the non-natives. All the natives I know are paying $400-$500 per year in total prop 13 property taxes. The non-natives are paying many thousands for the same houses, the state would really go broke if they left.

Coyote
12-21-2008, 08:45 PM
Dave, how is it that non natives pay more property tax, "for the same houses", than natives?

penguinzee
12-21-2008, 09:12 PM
Coyote,
"Native" may not be the best term here, more like "long-homesteaded" would be better. IIRC, the old California Prop 13 basically froze property taxes for existing homeowners at that time, and that if you bought a house afterwards, the taxes you paid were frozen to MOL your initial assessment (FD, please correct me if I'm wrong!). Anyways, as the years went by, in order to bring in more tax revenue, CA municipalities kept raising the assessments on new homes and resales, to make up for the lack of growth on existing homesteads (I'm sure that's part of why CA home prices were stratospheric, but I regress). The end result is you would have someone who has lived in the same house for 20+ years who paid maybe $1000 in property taxes, and his new neighbor, who might be paying 10 times that...

BTW, we have something similar here in Florida-it hasn't quite reached the epic proportions of Cali yet, but it's noticeable...

Franc (penguinzee)

sandyd
12-21-2008, 10:33 PM
CA can't get rid of the non-natives. All the natives I know are paying $400-$500 per year in total prop 13 property taxes. The non-natives are paying many thousands for the same houses, the state would really go broke if they left.


Might be good if Cali went broke and started over......heck, be real, even if we keep the non-natives, it's gonna happen anyways. :beer:

Fiddlerdave
12-21-2008, 10:36 PM
Coyote explains it well, and "long homesteader" is indeed a better term. Although everyone I know pays more like $400-$700/year on some awfully nice properties ($600,000 to 1.4 million now, having dropped quite a bit).

Do note prop 13 tax exemptions can be passed to another property if you move, and can be passed on to an immediate family heir, as well, so they are a permanent distinction for the lucky genetic lottery winners..

sandyd
12-21-2008, 11:51 PM
FD, I didn't know it but was told Prop 13 wasn't as much about family homes....as about commercial property.....

That is where the big bucks are and who did the most fighting to pass it according to a guy who helped the fight and owned apt buildings.

Fiddlerdave
12-22-2008, 04:09 AM
FD, I didn't know it but was told Prop 13 wasn't as much about family homes....as about commercial property.....

That is where the big bucks are and who did the most fighting to pass it according to a guy who helped the fight and owned apt buildings.True enough, housing exemption was what got the votes but business getting off the hook for paying for government was the driving force of the campaign. The economic impact may be much larger from commercial property, I think, but I have not seen numbers. Everyone just does long term leases with options to buy, I have been told. Some of the subleases are a 15 or 20 layers deep.

Now, when a commercial foreclosure occurs (and they say there will be alot of them), the taxes are going to go from almost zip to huge, and businesses simply can't pay it and be competitive with the businesses that don't have to, and prices will rise as competition diminishes.

BirdGuano
12-22-2008, 01:22 PM
Coyote,
"Native" may not be the best term here, more like "long-homesteaded" would be better. IIRC, the old California Prop 13 basically froze property taxes for existing homeowners at that time,

"Frozen" isn't entirely accurate.

They were indexed to a base year, but the main emphasis of Prop13 was to LIMIT The amount of increase each year to 1-2% of assessed valuation (depending on a formula).

Prior to Prop 13 the increases were so limitless that people were being forced out of their homes because they couldn't pay the ramping tax increases. The increases were going parabolic.

But my quip about "non-natives" actually has NOTHING to do with Proposition 13's tax limitations.

It has to do with a HUGE influx in "entitlement mentality" people from East of the Mississippi that made the state into their socialist playground, and who thought that paying back bonds was somebody else's job.

California's bond debt is directly related to the ballot initiative process, where you can get anything on the ballot to indenture bond debt with about 15,000 signatures on a petition.

Then the morons vote for it because they don't understand that a bond is DEBT.


California has a SPENDING problem.

dyrt
02-10-2009, 09:07 PM
FedEx Freight to layoff 900 employees
San Antonio Business Journal

FedEx Freight is making “staffing adjustments” to about 900 positions at 150 of its facilities.

Employees were made aware of the cuts in an e-mail to employees by FedEx Freight President and CEO Doug Duncan on Feb. 5.

FedEx Freight is a unit of Memphis, Tenn.-based FedEx Corp. (NYSE: FDX).

Duncan cited a continued decline in consumer spending and overall industrial production as putting unprecedented pressures on the trucking industry.

“It’s the worst I have seen in my 30-plus years in this business,” Duncan said in a statement. “The outstanding value proposition and customer service that our team delivers every day is still growing significant market share, but not sufficiently to counter deep declines in our base customer volumes.”

The company has a FedEx Freight location in Schertz, according to its Web site.

A company spokesman said it was too early to know if any local employees would be affected.

FedEx said the company will offer an option for affected employees to transfer to other positions or the employees could be recalled if conditions improve in the next three months. FedEx will offer severance packages to affected employees and maintain health benefits for 30 days.

http://www.bizjournals.com/sanantonio/stories/2009/02/09/daily14.html

Ought Six
02-11-2009, 02:50 PM
The telecom company I am working for did a significant layoff a couple months ago, and gutted our medical benifits starting this year. There have been other cost-cutting measures implemented thoughout the company in the last year. They have had pretty good profits, especially compared to some of our competitors. They are clearly positioning themselves to survive the ongoing recession.