When Jerry Reinsdorf scolds you for being a cheapskate...

major league baseball owners are applying what they are doing or have done with their own organizations. pensions are going the way of the dodo bird (fairly or unfairly)

When Jerry Reinsdorf scolds you for being a cheapskate...

When it comes to his employees, there's nothing cheap about him.

I'm defining these because I didn't know the difference before my finance guy explained it to me:

"defined benefit plan" is what is sounds like. Employees either put down a small amount or none at all, and at the date of retirement get a very specific dollar amount, calculated in many instances years before. This is no matter what the markets have been doing and how the pension money was invested.

"defined contribution plan" is something that does not have a definite benefit at the end. So an employee can put, say, $5,000 per year into it (or whatever he or she wants, within limits) and get out whatever that money is worth in the end. The company invests it as it sees fit, and there's no guarantee of returns. One could theoretically lose money in the end, though with investments of any length and inflation, that's not going to happen.

Companies like the second and don't like the first. Many of them are discontinuing the first, pretending like the second is just as "good" for employees. It isn't. Individual teams should have the right to get the formula for the first type of plan best for them, but not to just throw their employees to the stock market wolves as the second plan does.

The first attempt to do so, initiated last year by a small-market owner,

Truly they remain baseball's greatest heroes.

Companies like the second and don't like the first. Many of them are discontinuing the first, pretending like the second is just as "good" for employees.

That depends.

Defined benefit plans are certainly better for long-service employees. But, in a DB system if you work less than the vesting period (typically 5 years) you get nothing. So, for any employee who works less than the vesting period, a DC plan is better.

Even if you vest, if you work 7 years for a company from ages 23-30, you get no benefits until age 65, and those benefits don't keep up with inflation (they're typical a % of your final salary). In a DC plan, your assets should keep growing.

In general, DB plans are better if you work for one company for a long time, DC is better if you work at many different companies.

I've never worked over 5 years for the same company. DB plans would not have been better for me. Even with zero return (which I had on some of my 401(k), that's better than nothing.

If you're an employer, you would want (I suspect) employees to stick around for awhile. That means they don't have recruitment and training costs for that position. I hear what you're saying about one plan working better for more itinerant workers, but companies should create incentives as much as possible for their workforce to stay with them.

Also, in my experience, a typical DC plan has a vesting period, too.

erik

employers have accepted that the workforce is now transient. so the effort is to now create an effort where you have as few full-time employees as possible and outsource or contract out everything possible

and a dc vesting period is typically a year, no more

and i am not that interested in arguing my first point with anyone because this is happening, i know it's happening, it's across every industry and businesses cannot move fast enough in that direction.

I agree with Harveys. It's clearly happening, all over the place. But that doesn't make it right. Childhood obesity, cancer, and diabetes is happening a lot as well.

Corporations are getting everything they want in an unprecedented way at the moment. They pay less to their employees - wages in inflation-adjusted terms are about the same as in 1989 - and expect more. Productivity is rising in a never-seen-before manner. That's what we get from a slack labor market for the last five years.

In a micro example, my wife is job-hunting. She just interviewed at a place in Hartford, who would pay between $30-35k. And they require a bachelor's degree and two years of related experience. Five years ago, those requirements would have justified a salary - at minimum - of $35-40k instead. But they can get the candidate they want at the price they want to pay.

A guy started at my job this year. I started at the same job ten years ago. He is making a little bit LESS than I made then. That's crazy.

Companies pay less, expect more, and grant a lot less in benefits, while raking in record profits. At some point, the job market will come roaring back and labor will be priced more realistically. The best talent would never accept an offer from a cheapskate company. And that's how wages will eventually come back.

erik

labor remains the single biggest variable cost in most businesses so companies will always be looking for ways to manage that cost

erik

the best talent is working to start their own businesses. they aren't mucking around getting hired by someone else who is going to rake in the bulk of the profits at their expense

I agree with Harveys. It's clearly happening, all over the place. But that doesn't make it right. Childhood obesity, cancer, and diabetes is happening a lot as well.

But it's not only the employers driving it. Employees are very willing to hop jobs for slightly higher pay, or just something new to do.

But do we agree, Harveys, that the pendulum is firmly on the employment side at the moment?

Companies like the second and don't like the first. Many of them are discontinuing the first, pretending like the second is just as "good" for employees. It isn't. Individual teams should have the right to get the formula for the first type of plan best for them, but not to just throw their employees to the stock market wolves as the second plan does.

Right. Under the first, you get something. Something very valuable and desirable. Under the second, you may get nothing. You're just investing some of your savings in a slightly more convenient way. Sometimes the employer will match some of your contributions, so that's something.

Some might suggest that Social Security should be improved to deal with this, but apparently that is being scaled back too. At least that hasn't yet been turned into another type of "investment account" or whatever.

Companies pay less, expect more, and grant a lot less in benefits, while raking in record profits. At some point, the job market will come roaring back and labor will be priced more realistically.

Not if current policies are maintained.

But do we agree, Harveys, that the pendulum is firmly on the employment side at the moment?

You mean the employers have all the power? Sure.

the best talent is working to start their own businesses. they aren't mucking around getting hired by someone else who is going to rake in the bulk of the profits at their expense

That's an overly broad generalization, Harveys. There are plenty of the "best and brightest" that aren't entrepreneurial, and/or work in areas where you can't "start your own business".

snapper

actually employees are willing to move to jobs wiht lesser salaries if the employer is willing to be flexible with work schedules or make other non-cost accomodations. and many businesses are saying, 'sure. whatever'

snapper

actually employees are willing to move to jobs wiht lesser salaries if the employer is willing to be flexible with work schedules or make other non-cost accomodations. and many businesses are saying, 'sure. whatever'

That's true too. But, plenty of people still move for more money. And, why not?

snapper

law school admissions have cratered. investment banking with its 'pay me maybe' approach has lost its appeal.

nah, if you are really smart you are in a startup area and not scr9wing around with corporate america. the best kids are too smart for that bs

not going to tell me otherwise. seeing the evolution happen. it's great.

The reverse of what Harveys describes in #18 is what makes the recent Yahoo! move so fascinating. Yahoo! doesn't make enough money; they have too much staff. Layoffs are expensive. So tightening workplace rules, such as compelling people used to working remotely to come in to an office, is a great way to "convince" a lot of the workforce to quit. This saves management millions of dollars, and doesn't have the PR sting of layoffs.

snapper

because right now the real money to be had working for someone else is in brazil or india and that isn't getting the reaction as china did in its heyday. so again, kids are looking to startups to hit it big

the best talent is working to start their own businesses. they aren't mucking around getting hired by someone else who is going to rake in the bulk of the profits at their expense

In order to have any financial security, you have to be an entrepreneur. Most of whom fail again and again - we all know what happens to new businesses - until they eventually become a boss. You have to have that special entrepreneurial personality, and you have to be lucky.

This would be highly depressing even without all the student debts people are told are good investments, the uncertainty of constantly shifting health insurance, etc.

companies are also exploiting that a certain sect of the working public are tied to a certain area. why give out raises if you know someone isn't going to leave and you know the general labor market is soft?

not looking to sound like an 8sshole. just pointing out the dynamic

If a publicly-held company was paying its workers too much for the area and industry, the shareholders would revolt and fire the CEO. The system is set up to let market forces dictate things like wages and prices. I don't hold you, Harveys, responsible for this. If people agree the system is set up badly, the correct move is to change the system.

The system is set up to let market forces dictate things like wages and prices. I don't hold you, Harveys, responsible for this. If people agree the system is set up badly, the correct move is to change the system.

What do you want to determine wages and prices if not the market?

employers have accepted that the workforce is now transient. so the effort is to now create an effort where you have as few full-time employees as possible and outsource or contract out everything possible

and a dc vesting period is typically a year, no more

and i am not that interested in arguing my first point with anyone because this is happening, i know it's happening, it's across every industry and businesses cannot move fast enough in that direction.

But I do think it's a chicken-and-egg thing.... Did the workforce become transient and employers follow suit in crafting benefit plans -- or -- benefit plans (and let's layer into that, just the general way that employers viewed workforces) more or less lead to employers dealing with a transient workforce?

I'm not trying to play 'pile on the big bad, uncaring employers here'.... but my personal opinion is that it's more the latter than the former. Defined pension plans have been on the wane in non-unionized industries longer than I think the workforce has become transient... so employers have reaped what they've sown.

I've been with my company for 13 years now... When I started, the company's defined plan had been frozen for about 5 -- and was completely axed a few years later. At that point - a ton of the people I've worked with had been there forever (some for better, some for worse) -- but the point is that it wasn't a transient workforce. It is now.

We're a very large, publicly traded company operating in a virtually non-union space... and what ought to really frighten the hell out of the shareholders (who, I'm certain, have no clue this is the case) -- I could utterly, absolutely, and wholly rip the heart out of a 3-4 billion in revenue/~12k worldwide workforce by convincing no more than a few dozen people to exit with me. That's not an exaggeration -- I'm not saying the lights would go out the next day, but it would only be a matter of weeks before significant pain would be felt against revenue streams, and mere months before organic growth and NPD would cease almost entirely. That's what happens when you have such a transient workforce -- you end up leaning heavily on a dwindling few... I'm quite sure that 20 years ago - no one could have said (with any degree of truth) what I'm saying here simply because there were enough veterans around who knew enough to fill in gaps...

To back off on the Marxism a bit:

We should address "living wage" concerns with a higher minimum wage.
We should mandate the companies provide decent retirement benefits.
We should expand - not raid - Social Security and Medicare.

Besides the moral question:

"Is it acceptable that in the richest nation in the history of the world for people to work hard or for people to have a long career and not be able to afford the necessities of life?"

is another, deeper one:

"Is it best for companies to employ workers who can afford, and thus bolster the market for, the company's products?"

I could utterly, absolutely, and wholly rip the heart out of a 3-4 billion in revenue/~12k worldwide workforce by convincing no more than a few dozen people to exit with me. That's not an exaggeration -- I'm not saying the lights would go out the next day, but it would only be a matter of weeks before significant pain would be felt against revenue streams, and mere months before organic growth and NPD would cease almost entirely.

If true, and it seems dubious that it is, aren't you and your colleagues dumb for hanging around rather than forming a competitor company?

snapper

law school admissions have cratered. investment banking with its 'pay me maybe' approach has lost its appeal.

nah, if you are really smart you are in a startup area and not scr9wing around with corporate america. the best kids are too smart for that bs

not going to tell me otherwise. seeing the evolution happen. it's great.

Except that most "startups" are basically producing vaporware, and just hoping to be bought out by large corporations, so the founders can cash in. Very, very few are interested in actually producing anything, or creating jobs for Americans.

Quite frankly, the smart move today is to go work for the gov't. If I was a new grad, I'd try to get a job at the Federal Reserve, or Treasury Dept. You can easily make into the low six figures, with great benefits, almost no risk of being laid off, and retire at 55 with a great pension.

zonk

it's possible. mergers have failed because the resident knowledge didn't stay at companies being merged.

but in today's market i bet i could find enough consultants/independent contractors to fill you and your pals depatures well enough to spackle the gaps to be able to keep things together and then get back to regular speed in 4-6 months. and in the interim hire some eager fresh faces, have them coached up by the mercenaries, and now i have younger and cheaper employees delighted to be in key positions

so my guess is that your leadership isn't that concerned.

snapper

the govt has been bleeding jobs for years now. and thanks to sequestration pay cuts and furloughs abound. and the states jobs losses have been even more severe which has been a drag on the unemployment number improving

the govt job heyday has also passed. for now at least.

We should address "living wage" concerns with a higher minimum wage.
We should mandate the companies provide decent retirement benefits.
We should expand - not raid - Social Security and Medicare.

If you raise the cost of labor too much, jobs will disappear. Not to mention the fact that companies often go bankrupt and can't pay the retirement benefits anyway.

We can't pay for the SS and Medicare liabilities already incurred. They will be cut b/c they have to be.

I'm not unsympathetic to your issues, but the idea that anything can be done to change the labor market dynamics, while maintaining a policy of free trade, and high immigration, is laughable.

If you want to raise wages and benefits for American workers you need to 1) restrict the ability of companies to move jobs to low wage locales, 2) restrict the entry of additional labor into the market.

The reverse of what Harveys describes in #18 is what makes the recent Yahoo! move so fascinating. Yahoo! doesn't make enough money; they have too much staff. Layoffs are expensive. So tightening workplace rules, such as compelling people used to working remotely to come in to an office, is a great way to "convince" a lot of the workforce to quit. This saves management millions of dollars, and doesn't have the PR sting of layoffs.

I'm actually on Marissa Mayer's side on this one...

My very, very strong suspicion is that this was a "policy change" in the realm of "no more full-time/regular telecommuting", not an end to telecommuting entirely. We had a similar 'policy-change', which I dutifully passed along to my peeps "on the record", with a wink off the record.

by the way, if folks here are not going to classes or getting additional professional education regularly you are becoming less and less valuable to your employer

experience is not something deemed to be of the same value as it once was

sorry

My very, very strong suspicion is that this was a "policy change" in the realm of "no more full-time/regular telecommuting", not an end to telecommuting entirely. We had a similar 'policy-change', which I dutifully passed along to my peeps "on the record", with a wink off the record.

zonk

no, she wants people to leave. like yesterday

snapper

the govt has been bleeding jobs for years now. and thanks to sequestration pay cuts and furloughs abound. and the states jobs losses have been even more severe which has been a drag on the unemployment number improving

the govt job heyday has also passed. for now at least.

The job losses in gov't have been much less severe than in the private sector.

https://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/historical-tables/total-government-employment-since-1962/

Federal civilian employment increased 140K during the recession (2007-10) and had onlyt dropped 20K by 2011

I'm not unsympathetic to your issues, but the idea that anything can be done to change the labor market dynamics, while maintaining a policy of free trade, and high immigration, is laughable.

A lot of the stuff I said isn't politically realistic today (though I have hopes for the minimum wage part; it polls exceptionally well).

I think the most realistic and practical move is to wait for the pendulum to swing towards labor. The history of the business cycle is just that; a cycle. With respect to those who think differently, I think that any realistic US Government policy is not going to prevent that. This was a deep and in many ways unprecedented period in labor relations. I think it will go the other way at some point; it HAS to.

But snapper, you can transfer your pension from company to company can't you?

If this is a backdoor layoff at Yahoo!, Mayer deserves some sort of corporate Nobel Prize for doing it without leaving fingerprints on it. As much as I am pro-labor, I have to admire this as strategy.

Except that most "startups" are basically producing vaporware, and just hoping to be bought out by large corporations, so the founders can cash in. Very, very few are interested in actually producing anything, or creating jobs for Americans.

You don't actually know any startup founders, do you?

snapper

does that reflect contractors? because those were shed en masse the last few years

and i have multiple relatives in various departments including homeland security and the service and all have gotten their notices which equate to pay cuts of sometimes more than 15 percent

i don't know how that is very appealing to anyone

I think the most realistic and practical move is to wait for the pendulum to swing towards labor. The history of the business cycle is just that; a cycle. With respect to those who think differently, I think that any realistic US Government policy is not going to prevent that. This was a deep and in many ways unprecedented period in labor relations. I think it will go the other way at some point; it HAS to.

Not in an era of increasing globalization, it doesn't.

If true, and it seems dubious that it is, aren't you and your colleagues dumb for hanging around rather than forming a competitor company?

Well, start-ups in our particular space need loads of capital -- and a professional sales force -- we don't sell $2 apps...

it's possible. mergers have failed because the resident knowledge didn't stay at companies being merged.

but in today's market i bet i could find enough consultants/independent contractors to fill you and your pals depatures well enough to spackle the gaps to be able to keep things together and then get back to regular speed in 4-6 months. and in the interim hire some eager fresh faces, have them coached up by the mercenaries, and now i have younger and cheaper employees delighted to be in key positions

so my guess is that your leadership isn't that concerned.

Leadership never is -- until leadership itself finds the bill come due.... but again, I've seen the revenue numbers, what they're tied to -- when it comes to things that are ~new, those new streams can be traced back to a shockingly small number of people. The theoretical/philosophical is easy to transfer -- the practical, not so much...

Except that most "startups" are basically producing vaporware, and just hoping to be bought out by large corporations, so the founders can cash in. Very, very few are interested in actually producing anything, or creating jobs for Americans.

those are not reflected in the proposals i read. you are thinking this is 1998

"Is it best for companies to employ workers who can afford, and thus bolster the market for, the company's products?"

The response from the (big) companies:

"Consumption can be outsourced too."

They're expecting growing middle classes abroad to offset a shrinking middle class in this country.
It will work out fine for them. Of course if you're a small businessman or professional providing products or services that can't be marketed overseas, you're screwed. The same is true for those unfortunate large corporations that sell things that have limited (if any) appeal to foreign consumers. Any company that relies on the disposable income of average Americans for its survival is going to have a very hard ride through the next several decades. Major League Baseball, for instance...

So, getting back to TFA, perhaps they're making all of these cuts in anticipation of tougher times. But by doing stuff like this they will be adding a few more pebbles to the avalanche of downward mobility that might one day bury them...

zonk

;eadership is not concerned

veteran employees are not going anywhere. veteran employees are comfortable. they have roots. tehy want their weekends and their holidays

even if you convinced your wife this would work there is no way you get enough of the others (and their spouses) to commit

leadership is not concerned

by the way, if folks here are not going to classes or getting additional professional education regularly you are becoming less and less valuable to your employer

But don't expect those additional classes to be anything more than an expensive speculative bet, unless your employer has specifically told you that these specific classes or credentials are recommended for your specific job.

But snapper, you can transfer your pension from company to company can't you?

Not a DB pension.

those are not reflected in the proposals i read. you are thinking this is 1998

Well, it's not being reflected in the employment statistics. Company formation and job creation are at very low levels.

You should be aware I consider Facebook to be vaporware.