Talk about closing the barn door after the horse is out! What about those millions of foreclosures that have already happened? What about those families? And oh by the way, Bush's plan completely locks out those folks who are already screwed and are running more than 30 days late now or have been more than 60 days late over the last year. What about those families? What this plan does is to give help to those who don't need the help (by virtue of their ability to stay on top of their exploding interest rate)? It's kind of like giving tax breaks to the top 10% income earners.
Corporate America and George Bush have a lot in common. The little guy is merely currency to be used and then forgotten. Bush used them when he got re-elected, yet he's turning his back on them now. Corporate America uses workers' skills until they aren't need any longer and then sends them on their way.
It is time for workers to be insured against what is now becoming the liklihood of being fired for no cause. Workers have insisted on having access to disability insurance, and the average worker now has access to group long term disability. And the government has even carved out a tax advantage for those poor souls who find themselves in the position of having to file a claim for and collect disability...no federal income tax on their benefits as long as the worked was W2'd the premium amount. So the precedent is there...corporations and government providing an insured safety net for workers who lose their jobs because of accident or illness (not their fault). So, what's so different about being fired just because the corporation has decided it just doesn't need you any more (not your fault)? Not much as far as I am concerned.
It's time to press hard for severance insurance. Talk to your HR department. E-mail your Congressman and your Senator. E-mail Senator Kennedy at www.kennedy.gov and ask him as the ranking member of the Committee on Health, Education, Labor and Pensions what he thinks.
willy
Thursday, December 6, 2007
Saturday, December 1, 2007
Severance Insurance
So, I'm spending my usual too many hours sleuthing out what I think is an intelligent approach to severance, when I come across a Stamford, CT based company called Transition Services, Inc. http://www.tsisolution.com/ . They position themselves as providers of "advanced severance management". Clearly, they are not in playing in the insurance space, but it is clear that they understand that there are ways to save on the costs associated with severance, using the same mechanisms that I have already identified. And oh by the way, their CEO is a guy with insurance background (AIG and CNA) and their COO comes out of the insurance brokerage universe (Marsh, Inc.) This all makes sense, because their parent company is an insurance company called RVI Guaranty Company. So, don't you just think they just might be "aware" of severance insurance...maybe even in bed with the severance insurance guys?
willy
willy
Wednesday, November 28, 2007
Severance Plan...Severance Package
Give some thought to the terms severance plan and severance package. Who's plan? What package? It sure isn't the plan of the employee who just got fired. It's the plan the corporation has for buying off a fired employee's promise not to sue. The term severance package just goes to show that a corporation is trying to deal with their firing an employee with a neat and clean strategy, again to buy off the employee. If you think a corporation is doing it out of some sense of loyalty, you're either super crazy or super naive. Get with it folks, severance has nothing to do with taking care of an employee and everything to do with managing their reaction to getting fired.
Tuesday, November 20, 2007
Severance Insurance
It must mean something, because www.severanceinsurance.com is now in the top spot when you Google "severance insurance", and I'm pissed, because up until now good ol' willy has been up there. So who's looking at the site? It sure doesn't look particularly special. But it does make a point and get all of the information across. and given its position on Google more than a few people are looking at it.
If nothing else, the severance insurance guys have got themselves on the map. So whyt haven't we heard, or better yet why can't I find anything material about it other than on their website? Maybe the reason it is flying under the radar is that corporations are using their captives as a way of securing the insurance so it doesn't hit the obvious radar screens. I'll bet I'm pretty close on that one...like I have been on a few other things.
Good on me! The problem is I still haven't found a job and that sucks.
willy
If nothing else, the severance insurance guys have got themselves on the map. So whyt haven't we heard, or better yet why can't I find anything material about it other than on their website? Maybe the reason it is flying under the radar is that corporations are using their captives as a way of securing the insurance so it doesn't hit the obvious radar screens. I'll bet I'm pretty close on that one...like I have been on a few other things.
Good on me! The problem is I still haven't found a job and that sucks.
willy
Tuesday, November 13, 2007
Severance Insurance
Things are a shakin'! Word on the street is that the severance insurance guys are about to make some announcement. Big placement? Fresh capital? Strategic alliance? Kissing corportions off and casting their lot with the folks who have gotten fired? I haven't a clue. I guess we'll just have to wait and see.
The one thing that I do have a clue about is this economy is in free fall (whether acknowledged by the pundits, or not) and going to generate a whole lot of folks who get fired. Whether caused by the global economy, the declining dollar, outsourcing, technology...you name it, real full time jobs held by real people are at risk.
I've talked about the similarities with disability insurance. The most obvious similarity is that whether injured, ill or fired they all have lost their jobs through no fault of their own. The disabled have all sorts of options. I still can't figure out why the displaced have none.
willy
The one thing that I do have a clue about is this economy is in free fall (whether acknowledged by the pundits, or not) and going to generate a whole lot of folks who get fired. Whether caused by the global economy, the declining dollar, outsourcing, technology...you name it, real full time jobs held by real people are at risk.
I've talked about the similarities with disability insurance. The most obvious similarity is that whether injured, ill or fired they all have lost their jobs through no fault of their own. The disabled have all sorts of options. I still can't figure out why the displaced have none.
willy
Monday, November 5, 2007
Severance Insurance
On October 29th I got real cocky and started talking about what I called engineered severance. I acknowledged that it wasn't insurance. But what a weekend's worth of modeling has shown me is that I really can take most of the strategies that the insurance guys are using and use them to extend severance benefits...and not insignificantly. Rather than call it engineered severance which might freak soime people out, let's call it extended severance, because that is basically what it is.
Stick with me, and I'll figure out how to best explain how it works to you all.
willy
Stick with me, and I'll figure out how to best explain how it works to you all.
willy
Severance Insurance
No question that Citi's and Merrill's CEO's deserve to lose their jobs. But what about the Boards of Directors? What were they doing. What reports were they reading? Why didn't they challenge management on the disproportionate portfolio growth in sub-prime mortgages?
What's really interesting to me is that there doesn't seem to be a lot of discussion beyond the reality that banks are taking hits to their earnings and will probably take more. No one seems to be focused on the overall impact that the increased number of foreclosed houses is going to have on the real estate market and the prices that these houses are going to have to be listed for in order to get them off the banks' balance sheets. It's already happening. My daughter pointed out a house over the weekend in one of suburban Boston's tonier areas that was on the market for $659k. A year ago that house would have been on the market for something above $850.
I've got to think that recession follows, and when that happens more jobs are going to be lost.
willy
What's really interesting to me is that there doesn't seem to be a lot of discussion beyond the reality that banks are taking hits to their earnings and will probably take more. No one seems to be focused on the overall impact that the increased number of foreclosed houses is going to have on the real estate market and the prices that these houses are going to have to be listed for in order to get them off the banks' balance sheets. It's already happening. My daughter pointed out a house over the weekend in one of suburban Boston's tonier areas that was on the market for $659k. A year ago that house would have been on the market for something above $850.
I've got to think that recession follows, and when that happens more jobs are going to be lost.
willy
Thursday, November 1, 2007
Severance Insurance
Remember the good old times back in the 1970's when inflation was out of control? Do you remember what we were told was the driving force behind it? The cost of oil. And back in those days you were accused of smoking dope if you thought the price of oil would ever get to $50 a barrel...EVER!
I guess "ever" is now synonymous with 30 years, because here we are. 50 bucks a barrel is a joke. Singapore's market closed this morning at over $96 a barrel. And yet nobody is talking about the impact this is going to have on inflation in the US. Since the price of oil is denominated in US dollars, and the value of the dollar against other currencies is weak, other countries aren't going to feel the pain the way we are. So what does that say? It says to me that the cost of US made goods is going to inflate. It says that foreign made goods will be even more competitive in the US than they already are. It says that a recession is just around the corner. It says that more US jobs are going to be lost not to outsourcing but to our inability to compete in a global market. AND NOBODY IS TALKING ABOUT INFLATION!! The only possible reason is that the really smart economists realize the extent of the problem for mortgage lenders and the fact that 2008 is going to put real meaning behind OREO (other real estate owned in the parlance of the banks). Do you suppose that significant deflation in the housing market is what is driving the economists' silence in inflation? Could be.
The proof of things beginning to unravel is what I've written about over the last couple of days. Merrill Lynch and Bank of America thinning their ranks (there's the finance side) and this morning Chrysler (the manufacturing side) drops the bomb that they're going to thin their ranks by 12,000!
It's clear that these job reductions are just the beginning. The way I see it is that the time is now for SEVERANCE INSURANCE. It would benefit the workers by giving them a more secure source of post employment benefits. It would benefit the corporations because it is cheaper than the way they fund severance now.
We all need to get on the bandwagon. These severance insurance guys are on the right track...in my humble opinion.
willy
I guess "ever" is now synonymous with 30 years, because here we are. 50 bucks a barrel is a joke. Singapore's market closed this morning at over $96 a barrel. And yet nobody is talking about the impact this is going to have on inflation in the US. Since the price of oil is denominated in US dollars, and the value of the dollar against other currencies is weak, other countries aren't going to feel the pain the way we are. So what does that say? It says to me that the cost of US made goods is going to inflate. It says that foreign made goods will be even more competitive in the US than they already are. It says that a recession is just around the corner. It says that more US jobs are going to be lost not to outsourcing but to our inability to compete in a global market. AND NOBODY IS TALKING ABOUT INFLATION!! The only possible reason is that the really smart economists realize the extent of the problem for mortgage lenders and the fact that 2008 is going to put real meaning behind OREO (other real estate owned in the parlance of the banks). Do you suppose that significant deflation in the housing market is what is driving the economists' silence in inflation? Could be.
The proof of things beginning to unravel is what I've written about over the last couple of days. Merrill Lynch and Bank of America thinning their ranks (there's the finance side) and this morning Chrysler (the manufacturing side) drops the bomb that they're going to thin their ranks by 12,000!
It's clear that these job reductions are just the beginning. The way I see it is that the time is now for SEVERANCE INSURANCE. It would benefit the workers by giving them a more secure source of post employment benefits. It would benefit the corporations because it is cheaper than the way they fund severance now.
We all need to get on the bandwagon. These severance insurance guys are on the right track...in my humble opinion.
willy
Monday, October 29, 2007
Severance Insurance
Merrill Lynch wasn't alone last week. It sees the the investment banking crowd at Bank of America didn't quite do so well during third quarter, as in a 93% Q3 earnings free fall in that division. The result...3,ooo jobs are being cut. Wachovia is reported to be about to announce an overall 10% earnings drop. willy bets there might be a job or two that gets lost there.
In an earlier blog I queried the work force as to why they weren't rising up and making their voices heard. Well, duh! They're financially strapped. They're alone. They're scared. The last thing that there going to do is (in their minds) make a bad thing worse. It's almost like they assume there's a blackball system out there.
Well, hang on folks. willy has an idea. It's not insurance, but it is a legal way to engineer severance packages to make them last longer. They will still pay out the equivalent of a worker's take home salary. The big deal is I can cause those payments to last longer. I'm going to call it ENGINEERED SEVERANCE. I can use the leverage the severance insurance guys to save money for the corporations and use it to make severance benefits last longer.
Son of a gun if the old boy (that be me, willy) hasn't really figured out something that isn't complicated, isn't a tax deal, isn't plowing new ground and really works. It's amazing how being unemployed can work to your benefit...once you're no longer pissed off at the dolts that fired you. Hang in there with me. I'll lay this all out for you over the next few blogs.
willy
In an earlier blog I queried the work force as to why they weren't rising up and making their voices heard. Well, duh! They're financially strapped. They're alone. They're scared. The last thing that there going to do is (in their minds) make a bad thing worse. It's almost like they assume there's a blackball system out there.
Well, hang on folks. willy has an idea. It's not insurance, but it is a legal way to engineer severance packages to make them last longer. They will still pay out the equivalent of a worker's take home salary. The big deal is I can cause those payments to last longer. I'm going to call it ENGINEERED SEVERANCE. I can use the leverage the severance insurance guys to save money for the corporations and use it to make severance benefits last longer.
Son of a gun if the old boy (that be me, willy) hasn't really figured out something that isn't complicated, isn't a tax deal, isn't plowing new ground and really works. It's amazing how being unemployed can work to your benefit...once you're no longer pissed off at the dolts that fired you. Hang in there with me. I'll lay this all out for you over the next few blogs.
willy
Sunday, October 28, 2007
Severance Insurance
On October 18th Merrill Lynch announced that it was going to lay off 3,400 workers, about 5% of its workforce. They stated that they were preparing for tougher times ahead and that this move could save them $500 million. I hope they fired those people quickly, because they announced really tougher times six days later!
On October 24th the AP reported that Merrill was taking a $7.9 BILLION writedown on their sub prime mortgage portfolio. Bloomberg confirmed the AP's reporting but said the writedown would be $8.4 BILLION. What's a half a billion dollars among friends? Is Merrill's problem so big that a half a billion is a rounding error? And what did this all lead to?...the biggest quarterly loss in Merrill's history. Do they really think that laying off 3,400 workers will solve billions of dollars of writedowns? Or as a trial balloon floated less than a week before their earnings announcement would soften the blow on Wall Street? Give me a break. Once again workers are the expendable currency for corporate growth.
And how does management position themselves after they make these announcements? They "come clean" and say it was bad judgment and weak risk management strategies, careful to avoid saying that it was their BAD JUDGMENT. Whatever happened to accountability? Whatever happened to credibility? How stupid do they think we all are? Why aren't the shareholders (along with the regulators) banging at Merrill's doors? And why aren't the workers who are getting fired rising up and refusing to sign those general releases that the tough guys in HR make them sign in order to get their severance? Ooops, we know the answer there.
MERRILL LYNCH (and many of its Wall Street counterparts) ARE OUT OF CONTROL! And everybody is losing. What a shame that what was an admired symbol of of all that is good with capitalism has been reduced to a pile of its own excrement...from bull to bullshit. Somebody should write a book with that title.
willy
On October 24th the AP reported that Merrill was taking a $7.9 BILLION writedown on their sub prime mortgage portfolio. Bloomberg confirmed the AP's reporting but said the writedown would be $8.4 BILLION. What's a half a billion dollars among friends? Is Merrill's problem so big that a half a billion is a rounding error? And what did this all lead to?...the biggest quarterly loss in Merrill's history. Do they really think that laying off 3,400 workers will solve billions of dollars of writedowns? Or as a trial balloon floated less than a week before their earnings announcement would soften the blow on Wall Street? Give me a break. Once again workers are the expendable currency for corporate growth.
And how does management position themselves after they make these announcements? They "come clean" and say it was bad judgment and weak risk management strategies, careful to avoid saying that it was their BAD JUDGMENT. Whatever happened to accountability? Whatever happened to credibility? How stupid do they think we all are? Why aren't the shareholders (along with the regulators) banging at Merrill's doors? And why aren't the workers who are getting fired rising up and refusing to sign those general releases that the tough guys in HR make them sign in order to get their severance? Ooops, we know the answer there.
MERRILL LYNCH (and many of its Wall Street counterparts) ARE OUT OF CONTROL! And everybody is losing. What a shame that what was an admired symbol of of all that is good with capitalism has been reduced to a pile of its own excrement...from bull to bullshit. Somebody should write a book with that title.
willy
Wednesday, October 24, 2007
Severance Insurance
That last blog sure was out of character for me! Can you believe it? I actually hypothesized on the funding of severance from the perspective of the corporation. So unlike me! Are the corporations going to see severance insurance (www.severanceinsurance.com) as an opportunity to do something new and innovative that actually benefits the shareholders? Are they going to jump on board the severance insurance band wagon and establish it as the severance funding paradigm? Or are they going to pass it by in the name of, "we have higher priorities." They better get on board or as I see it someone is going to figure out how to take the savings mechanisms used by severance insurance (they're not rocket science) and turn them around to the advantage of the fired worker. Now wouldn't that be interesting?
willy
Friday, October 19, 2007
Severance Insurance
Following up on my last blog which ended with my obvious confusion in trying to identify why severance insurance actually benefits fired workers, let me ask a pretty unpopular question. Is severance, as it is known today, what it was intended (and expected) to be? Or are fired workers getting a sweet deal simply because corporations are scared that if they don't give them what they want, they'll sue. I know I'm not so far off the mark here because most corporations require a worker who is eligible for severance to first sign a general release and waiver (so that they can't sue) before they actually get their severance. Have the lawyers driven severance away from what it was originally designed to do and turned it into a "give me what I want or I'm going to sue your ass" handout.
I'm just beginning to think that the severance insurance guys might be onto something and that maybe they are being driven by the reality that severance has become a separation bonus and that corporations need to wake up and realize that they're getting hosed.
willy
I'm just beginning to think that the severance insurance guys might be onto something and that maybe they are being driven by the reality that severance has become a separation bonus and that corporations need to wake up and realize that they're getting hosed.
willy
Thursday, October 18, 2007
Severance Insurance
I find it interesting that http://www.severanceinsurance.com/ on its FAQ's page defines its target market as "Corporations in search of significant new cost efficiencies." Big whoop! Like what corporation isn't looking for new cost efficiencies. But these guys aren't all that stupid. You tell me what else new is there out there that can generate savings over current cost of 25% to 40%?
The FAQ's page also sort of answers the question "why would a corporation buy severance insurance?" The answers make it pretty clear as to where these guys' heads are. Reference to "improved returns on equity" would seem to say that these guys are focusing on private equity, the M&A universe and major activist investors. The use of "improved returns on capital" would seem to say that publicly held companies are on its radar screen. That seems to be confirmed by reference to "smoothing earnings".
I can figure out the attraction for corporations. That's pretty simple. Severance insurance saves money. But I'm still struggling with what the benefits are to the displaced worker and what would get Human Resource executives comfortable with a change in severance policy.
As I've said before the severance insurance guys are obviously not stupid, so I suspect they've got their arms around the worker benefit issue. It's probably pretty obvious, but I'm just a little slow in seeing it.
willy
The FAQ's page also sort of answers the question "why would a corporation buy severance insurance?" The answers make it pretty clear as to where these guys' heads are. Reference to "improved returns on equity" would seem to say that these guys are focusing on private equity, the M&A universe and major activist investors. The use of "improved returns on capital" would seem to say that publicly held companies are on its radar screen. That seems to be confirmed by reference to "smoothing earnings".
I can figure out the attraction for corporations. That's pretty simple. Severance insurance saves money. But I'm still struggling with what the benefits are to the displaced worker and what would get Human Resource executives comfortable with a change in severance policy.
As I've said before the severance insurance guys are obviously not stupid, so I suspect they've got their arms around the worker benefit issue. It's probably pretty obvious, but I'm just a little slow in seeing it.
willy
Wednesday, October 17, 2007
Severance Insurance
OK, it's time to be a cynic. Who me? The more time I spend on trying to figure out what is driving the heads behind the http://www.severanceinsurance.com/ website that has "magically" appeared, the more cynical I become. Give me a break...good for the company that is doing the firing and just as good for the poor SOB who gets fired. No way! The corporation saves money. The worker loses money. How does that translate into being good for both sides?
I guess you could take the position that the corporation saves money up front and the worker has his/her severance benefit controlled, so (s)he doesn't get a lump sum and blow it all at once. Wow, that sure gives new meaning to equality.
Struggling to be less cynical, which ain't easy for me, I suppose I could take the position (as I have on occassion before) that there's not a whole lot different between losing your job because of an illness or injury and being eligible for disability, and losing your job because the corporation just doesn't need you anymore and being eligible for severance insurance (disemployment) as a result. They sort of both take care of you, while you're not working.
But how similar are they? Managed disability insurance is a reality. Do you suppose the quants behind severanceinsurance.com are thinking along the lines of managed severance insurance? That would certainly fit with my concept of "service severance".
willy
I guess you could take the position that the corporation saves money up front and the worker has his/her severance benefit controlled, so (s)he doesn't get a lump sum and blow it all at once. Wow, that sure gives new meaning to equality.
Struggling to be less cynical, which ain't easy for me, I suppose I could take the position (as I have on occassion before) that there's not a whole lot different between losing your job because of an illness or injury and being eligible for disability, and losing your job because the corporation just doesn't need you anymore and being eligible for severance insurance (disemployment) as a result. They sort of both take care of you, while you're not working.
But how similar are they? Managed disability insurance is a reality. Do you suppose the quants behind severanceinsurance.com are thinking along the lines of managed severance insurance? That would certainly fit with my concept of "service severance".
willy
Thursday, October 11, 2007
Severance Insurance
Geeeezus! Out of nowhere there has appeared within the last few days a new website called http://www.severanceinsurance.com/. Do you think this is just a little bit ironic that this has appeared 90 days or so after I started pushing on the whole concept of severance insurance?
The introduction of this website, if nothing else, confirms my suspicion that someone is out there who happens to think that severance insurance is an economic (and possibly human) option to current severance funding practice. It also confirms through its content that I was right; whoever is doing it has the attention of some of the big boys in the insurance world.
My read is that the people behind this website know what they're doing. They don't tell you who they are. They don't name a broker. They don't name a carrier. They don't want to...nor do they need to. They're probably letting the big boys do their blocking and tackling.
The fact that they don't even try to brand severance insurance, underscores their cocky ass attitude and their sophistication. They obviously know that their chances for succesful branding (albeit not under their name) are far more likely, quickly and profitably to occur if the major players in the insurance universe establish severance insurance as a different way for large corporations to deal with how to fund severance. And after all, if they're nothing more than the brains behind the concept, why would they want to create what already exists on the distribution and risk taking sides...and then compete against them?
This is all really starting to get interesting. I've got my suspicions who the players are, but before I open my mouth and get my butt in trouble, I think I'll make sure I know what I'm talking about.
Stay tuned.
willy
The introduction of this website, if nothing else, confirms my suspicion that someone is out there who happens to think that severance insurance is an economic (and possibly human) option to current severance funding practice. It also confirms through its content that I was right; whoever is doing it has the attention of some of the big boys in the insurance world.
My read is that the people behind this website know what they're doing. They don't tell you who they are. They don't name a broker. They don't name a carrier. They don't want to...nor do they need to. They're probably letting the big boys do their blocking and tackling.
The fact that they don't even try to brand severance insurance, underscores their cocky ass attitude and their sophistication. They obviously know that their chances for succesful branding (albeit not under their name) are far more likely, quickly and profitably to occur if the major players in the insurance universe establish severance insurance as a different way for large corporations to deal with how to fund severance. And after all, if they're nothing more than the brains behind the concept, why would they want to create what already exists on the distribution and risk taking sides...and then compete against them?
This is all really starting to get interesting. I've got my suspicions who the players are, but before I open my mouth and get my butt in trouble, I think I'll make sure I know what I'm talking about.
Stay tuned.
willy
Thursday, September 27, 2007
Tuesday, September 25, 2007
Severance Insurance
Geeeez, you'd think I wouldn't be so inept, but believe it or not and thanks to some spade work by a very good friend (thank you Matt), I've finally learned how to show you the graphs that are generated by the Bureau of Labor Statistics for monthly unemployment duration statistics for the period 1948 to 2007. That's almost 59 years of monthly data. I'd say that is representative of reality. The graphs below (in order) show that history for:
1. The percentage of unemployed workers who go back to work within five weeks
2. The percentage of unemployed workers who go back to work within 5 to 14 weeks
3. The percentage of unemployed workers who go back to work within 15 to 26 weeks
4. The percentage of unemployed workers who go back to work in more than 27 weeks
What's really interesting to me is comparing this data with the average unemployment duration as reported by the BLS. It clearly demonstrates the arbitrage that exists between average duration and the percentage of unemployed workers who get re-employed within the period defined by the duration data. No rocket science invoilved here. Insurers can clearly see that the odds are in their favor.
I'll dial into the average unemployment duration data in my next blog.
willy
willy
Monday, September 24, 2007
Severance Insurance
It's only taken me three weeks, but I think I've finally found the source of severance insurance. I'm double checking now, but it looks like these guys (i) have a viable product. (ii)have been around for a number of years, (iii) have been playing with some of the big boys, (iv)but haven't met with significant success yet due to an ineffective distribution strategy.
It sure as hell has got to be ineffective, because nobody seems to know about them except for a few high placed finance executives in a few Fortune 200 companies. Give me a few more days, and I should have the facts straight.
willy
It sure as hell has got to be ineffective, because nobody seems to know about them except for a few high placed finance executives in a few Fortune 200 companies. Give me a few more days, and I should have the facts straight.
willy
Monday, September 3, 2007
Severance Insurance
Following up on my earlier blog about whether it would be cost effective for corporations to re-train obsolete workers rather than fire them, pay severance and hire new employees, the following data suggests that if the almost 60 year trend continues, the cost to corporate America, to state unemployment trusts, to the Federal Treasury is going to reach a tipping point. This all says to me that the current approach is broken and without a proactive effort to change the model, the future isn't very bright for anyone.
I'm trying to figure out how to include some graphs from the Bureau of Labor Statistics. They go back to 1948 and show the cumulative month by month data for four categories of unemployment duration:
What is interesting are the trends shown in these graphs. Fewer people are getting back to work in less than 5 weeks. The range of those who go back to work between 5 and 14 weeks has narrowed. The number of workers who are taking from 15 to 26 weeks to get back to work is growing, as is the number who takes more than 26 weeks. What I'm learning here is that the trends are not only against the workers trying to find new jobs but also against the state governments whose unemployment trusts are paying out unemployment insurance and corporate America that is finding premiums on state unemployment insurance increasing. The residual impact on Federal programs has to mirror this data, so it would seem.
Is the reason that unemployment duration is increasing because (i) there are more workers to employ (estimated 140 million today) or (ii) that rather than being retrained in place workers are being fired, thrown into the "system", trying to get re-trained and then getting re-employed?
Somebody besides me needs to be thinking about this.
If you want to see these graphs before I figure out how to include them:
I'm trying to figure out how to include some graphs from the Bureau of Labor Statistics. They go back to 1948 and show the cumulative month by month data for four categories of unemployment duration:
What is interesting are the trends shown in these graphs. Fewer people are getting back to work in less than 5 weeks. The range of those who go back to work between 5 and 14 weeks has narrowed. The number of workers who are taking from 15 to 26 weeks to get back to work is growing, as is the number who takes more than 26 weeks. What I'm learning here is that the trends are not only against the workers trying to find new jobs but also against the state governments whose unemployment trusts are paying out unemployment insurance and corporate America that is finding premiums on state unemployment insurance increasing. The residual impact on Federal programs has to mirror this data, so it would seem.
Is the reason that unemployment duration is increasing because (i) there are more workers to employ (estimated 140 million today) or (ii) that rather than being retrained in place workers are being fired, thrown into the "system", trying to get re-trained and then getting re-employed?
Somebody besides me needs to be thinking about this.
If you want to see these graphs before I figure out how to include them:
- Go to http://www.bls.gov/
- Click on "Get Detailed Statistics"
- Click on "Schdeule A"
- Click Unemployment by Duration
- Bring up data
- Set time frame to 1948 through 2007
- Click on "Include Graphs"
- You should now be able to look at the graphs
Interesting stuff.
willy
Severance Insurance
Let's start with the idea that companies hire skills and fire people. If there is any truth to this, that means that training new workers with "in demand" skills is going on virtually full time in order to keep the pipeline full, because we know that companies are hiring even as they are firing, but I sense it is going on outside the universe that requires the skills (more in a minute). Also, figuring out what those new skills are is pretty interesting challenge. But both (identifying new skills and training workers to them) are going on; think tanks, universities, community colleges, vo-tech programs, you name it. They're doin' (sounds like Bush) it, as are plenty of others.
So, as I suggested a few sentences ago, ask yourself how much of that sleuthing is actually being done by the corporations who are the end users of the skills? Some, I'm sure...but probably no where near as much as should be done. Wow! Maybe I've just stumbled on a new and credible reason for HR to exist...something that they could do that would actually render direct value to shareholders. There I go again...my cynical view of HR. My apologies to those of you who hang out in that space. You can tell. I've been burned.
My thinking (rambling?) on all of this was prompted by reading a review in yesterday's NY Times www.nyt.com by Stephen Kotkin of Robert Reich's new book, "Supercapitalism". It's interesting to me that Reich has the word "capital" imbedded in his title, because evidently he spends a whole lot of pages talking about labor, not surprising for Clinton's former Secretary of Labor. I guess he differentiates between capital and labor. Maybe he doesn't. I'm going to have to read the book.
What is really interesting to me is that I have taken the position more than once that corporate executives in America treat labor as capital. They accumulate it and spend it. Until I read Reich's book I can't tell whether Reich agrees. He certainly spends a lot of time on the imbalance of CEO/worker compensation. He suggests that the CEO compensation package should bear some relation to workers' total compensation....hmmmm, return on...human capital? Interestingly, he also suggests that CEO's could devote more of their "considerable talents" to raising the skills of loyal workers. Interesting thought!
Question: What percentage of a displaced group of workers from a corporation would that corporation want to keep if those people could be given the right skills? If there is even one, why wouldn't it make economic sense (it certainly would make human and social sense) to allocate the dollars that were going to be paid out in severance to retraining. If the corporation were into instant gratification, this wouldn't work, but if they weren't, it actually might work and actually position the corporation as a socially responsible employer.
Some conclusions:
So, as I suggested a few sentences ago, ask yourself how much of that sleuthing is actually being done by the corporations who are the end users of the skills? Some, I'm sure...but probably no where near as much as should be done. Wow! Maybe I've just stumbled on a new and credible reason for HR to exist...something that they could do that would actually render direct value to shareholders. There I go again...my cynical view of HR. My apologies to those of you who hang out in that space. You can tell. I've been burned.
My thinking (rambling?) on all of this was prompted by reading a review in yesterday's NY Times www.nyt.com by Stephen Kotkin of Robert Reich's new book, "Supercapitalism". It's interesting to me that Reich has the word "capital" imbedded in his title, because evidently he spends a whole lot of pages talking about labor, not surprising for Clinton's former Secretary of Labor. I guess he differentiates between capital and labor. Maybe he doesn't. I'm going to have to read the book.
What is really interesting to me is that I have taken the position more than once that corporate executives in America treat labor as capital. They accumulate it and spend it. Until I read Reich's book I can't tell whether Reich agrees. He certainly spends a lot of time on the imbalance of CEO/worker compensation. He suggests that the CEO compensation package should bear some relation to workers' total compensation....hmmmm, return on...human capital? Interestingly, he also suggests that CEO's could devote more of their "considerable talents" to raising the skills of loyal workers. Interesting thought!
Question: What percentage of a displaced group of workers from a corporation would that corporation want to keep if those people could be given the right skills? If there is even one, why wouldn't it make economic sense (it certainly would make human and social sense) to allocate the dollars that were going to be paid out in severance to retraining. If the corporation were into instant gratification, this wouldn't work, but if they weren't, it actually might work and actually position the corporation as a socially responsible employer.
Some conclusions:
- Labor is capital
- That could change if corporations were more progressive and re-trained the current workforce as a result of internal "future skill studies"
- Re-training could be funded through the re-allocation of severance dollars
- Corporations would build more loyal workforces
- Productivity would increase
- Quality would improve
- Credit markets would be less pressured during times of substantial worker displacement
- Federal/state programs for the unemployed would be less pressured
willy
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