A Layoff in the Smith Family Ripples Through Town

By BEN CASSELMAN

Wall Street Journal

Grand Prairie, Texas

The recession hit Chuck Smith on May 30, after lunch.

The 42-year-old father of four was in his small office in a suburb of Dallas when his boss walked in and closed the door. His troubled look gave away the news before he said a word.

Mr. Smith knew he had been working on borrowed time. Metrostudy, the housing market research firm where he worked as a staff consultant since 2005, had seen its business drop. A glut of homes prompted builders to stop building, eliminating their need for Metrostudy’s market information. That prompted Metrostudy to cut back on its consulting, eliminating the need for Mr. Smith.

The few moments it took for Mr. Smith’s boss to relay his company decision to lay him off launched a series of actions that in subsequent weeks and months have rippled through the economy, affecting the lives of individuals and companies — one as far as Finland.

The Smiths sat down at the kitchen table one evening in early June to crunch the numbers. With a stack of bills and his wife’s paycheck, which would now have to support the family, the Smiths laid out their financial life on a white legal pad.

Like many families, the Smiths had to cut back on spending that collectively hurt local businesses.

The math wasn’t pretty. Mr. Smith had earned about $90,000 at Metrostudy. His wife, Kimberly, earns about the same at a retail marketing firm. The family concluded it needed to cut its spending nearly in half.

The Smiths weren’t unusually lavish spenders, but they rarely stopped to think before spending money: new computers at Christmas, new videogames for the kids’ birthdays, a new car at the first sign of trouble from the old one. If the money in the checking account wasn’t enough to cover it, well, that’s what credit cards were for. They accumulated more than $25,000 in credit-card debt.

Now they realized those carefree spending habits were the first thing that had to go. Mr. Smith stopped perusing the list of new video releases and buying DVDs that would go unwatched for months. Mrs. Smith stopped shopping at Harold’s, the upscale clothier that had been a favorite since her days at the University of Oklahoma.

Thousands of other shoppers were making similar decisions to cut back, and the drop in sales sent Harold’s, already struggling to compete with larger rivals, underwater. The 60-year-old chain filed for bankruptcy in November, and this month closed all 43 of its stores in 19 states.

Among the 50-plus employees listening to the grim announcement at Harold’s Dallas headquarters on Nov. 7 was Amanda Martin, a 27-year-old newlywed who had worked for nearly five years as a merchandise planner.

Ms. Martin knew Harold’s had been struggling, but the news still came as a shock. Her husband, Kyle, worked for Belo Corp., the local television giant that has faced its own recent financial challenges, and was pursuing an M.B.A. — a long-term investment they suddenly weren’t sure they could afford. So the Martins, like the Smiths, sat down to figure out how to slow their spending.

In the end, the M.B.A. program stayed. But Ms. Martin’s weekly shopping trips to J. Crew “just to see what’s new” did not. Nor did the couple’s frequent Wednesday night dinners at Café San Miguel. Ms. Martin, who had watched the slowdown in spending ruin her former employer, felt guilty about the decisions she was making — though she had no choice.

“I kept thinking, I’m cutting back my spending, which is hurting this store, which could put them in the same position we were in,” she said.

At Café San Miguel, co-owner and Chef Hugo Galvan already had noticed his regulars were becoming less regular, and when they did come, they weren’t ordering as many $7.50 pomegranate margaritas. So Mr. Galvan made savings adjustments of his own, buying less liquor, cutting back orders to his food suppliers and asking kitchen staff to carefully watch portion sizes.

So far, Mr. Galvan has been able to avoid laying off workers, but only by cutting back their hours by as much as eight a week. But that might not be enough.

“Most of my people, they’ve been with me since the beginning,” Mr. Galvan said. “When it gets slow, someone’s got to go home early.”

At the Smiths’ kitchen table, it was clear that cutting back on their impulse purchases wasn’t going to be enough to make the numbers balance out.

The Smiths took a hard look at one of the biggest expenses after their mortgage: child care. Between day care for their two- and three-year-old children, after-school care for the six- and 10-year-old, and summer programs for all four, the Smiths were set to pay $22,000 in child-care expenses last year. Now, with Mr. Smith free to stay home with the kids, those expenses are gone.

The Smiths’ savings are Marty Kidd’s loss. Mr. Kidd runs the day-care center where the Smiths had been sending their younger children, and said he has been losing five families a month to the economy as many make alternative arrangements to save money.

“Grandmas are coming out of the woodwork,” Mr. Kidd said.

The local Boys and Girls Club, which runs the after-school program the Smiths’ older kids had attended, is even more vulnerable. Enrollment has fallen 7% in the past year, and almost all the losses came from the 60% of children who pay the full, $180-a-month fee. That has made it hard for the program to pay for the 40% of students who receive financial aid — the needy children the program exists to help.

Steve Wurm, the club’s president, said the nonprofit already has cut its annual budget from about $2.5 million to just over $2.3 million. So far, the agency has instituted a wage freeze, cut back hours of part-time workers and laid off one clerical worker — setting off yet more ripples through the community.

Some of the Smiths’ smallest cuts reached the farthest. One of the first expenses to go was Mr. Smith’s $43 monthly membership to 24 Hour Fitness, a local gym. The chain of more than 400 clubs in 16 states has been trying to cut its own costs as customers scale back. So the company has pressured vendors such as fitness equipment manufacturer Precor to slash prices. That has hurt Precor’s profits, which in turn hurt the profits of its Finnish parent company, Amer Sports Corp. Last month, Amer Sports warned investors that it would miss its 2008 earnings target in part due to Precor’s poor performance.

Mrs. Smith has been more reluctant to cut out her own fitness spending, $40 sessions with her personal trainer, Kurt Moore. She has reduced them but she warned Mr. Moore she may have to stop. “He knows that he is still a luxury that is on the chopping block,” Mrs. Smith said as she sewed up a torn pair of pants.

Mrs. Smith wouldn’t be the first customer Mr. Moore has lost to the economy. He lost a banker and an insurance agent, and other remaining customers have reduced their sessions. The 42-year-old and his wife are watching their spending, putting off plans for a $20,000 addition to the house and thinking twice about having a second child. “If I lose a couple more clients, then I will definitely be concerned,” Mr. Moore said.

By many measures, the Smiths are fortunate. They can cover their mortgage for their modest, two-story brick house. They now buy generic cereal at Wal-Mart instead of brand names at Target, but they aren’t worried about putting food on the table.

Still, the family embodies the downshift in consumer spending. “I understand that we need to spend money to get the economy moving,” Mr. Smith said, but he doesn’t feel like he can afford that.

The family has appreciated the one luxury Mr. Smith’s layoff does afford: more time together. “We’ll make it work,” he said. “We have to make it work.”

Write to Ben Casselman at ben.casselman@wsj.com

“I got unfriended from a war zone!” -SB

From NYT

January 29, 2009

Friends, Until I Delete You

 

By DOUGLAS QUENQUA

 

A PERSON could go mad trying to pinpoint the moment he lost a friend. So seldom does that friend make his feelings clear by sending out an e-mail alert.

It’s not just a fact of life, but also a policy on Facebook. While many trivial actions do prompt Facebook to post an alert to all your friends — adding a photo, changing your relationship status, using Fandango to buy tickets to “Paul Blart: Mall Cop” — striking someone off your list simply is not one of them.

It is this policy that Burger King ran afoul of this month with its “Whopper Sacrifice” campaign, which offered a free hamburger to anyone who severed the sacred bonds with 10 of the friends they had accumulated on Facebook. Facebook suspended the program because Burger King was sending notifications to the castoffs letting them know they’d been dropped for a sandwich (or, more accurately, a tenth of a sandwich).

The campaign, which boasted of ending 234,000 friendships, is history now — Burger King chose to end it rather than tweak it to fit Facebook’s policy — but the same can hardly be said of the emerging anxiety it tapped. As social networking becomes ubiquitous, people with an otherwise steady grip on social etiquette find themselves flummoxed by questions about “unfriending” people: how to do it, when to do it and how to get away with it quietly.

“If someone with more than 1,000 friends unfriends me, I get offended,” said Greg Atwan, an author of “The Facebook Book,” a satirical guide. “But if someone only has 100 friends, you understand they’re trying to limit it to their intimates.”

Mr. Atwan, a recent graduate of Harvard (where Facebook got its start), recommends culling your friend list once a year to remove total strangers and other hangers-on. Keeping your numbers down gives you more leeway to be selective about whom you approve in the first place, he said.

(While some people prefer the term “defriending,” a quick survey of user-created groups on Facebook shows “unfriending” to be the more popular choice. A Facebook spokeswoman, Brandee Barker, said there was no officially preferred term.)

Of course, not all unfriendings are equal. There seem to be several varieties, ranging from the completely impersonal to the utterly vindictive. First is the simple thinning of the herd, removing that grad student you met at a party two years ago and haven’t spoken to since or that kid from middle school you barely remember.

These were the people whom Steven Schiff, a news assistant at Vault.com, a career services Web site, sacrificed to get his Whopper.

“I found there were quite a few people on my list that I’d never even spoken to, much less been close friends with,” he said by telephone.

Mr. Schiff, 25, said he experienced only the slightest guilt at eliminating those people. While he didn’t feel the need to write to them individually to explain things, he did use his personal blog to address them en masse.

“Let’s be honest here, questionable Facebook friend,” he wrote. “We’ve been keeping you around all this time because we’d just feel bad if you ever found out that you got the ax. It’s just, well, up until now nobody offered us a Whopper in exchange for your feelings.”

This was just the sort of sentiment that Burger King and its advertising agency, Crispin Porter & Bogusky, were aiming to evoke when they set up the campaign. Burger King decided that it would do the talking for this article rather than its agency and delegated the task to Brian Gies, a vice president of marketing who said he was not a member of Facebook and therefore had not participated in the “Whopper Sacrifice.”

Mr. Gies explained the marketing team’s thinking about Facebook. “It seemed to us that it quickly evolved from quality of friends to quantity,” he said, “which was interesting to us because it felt like the virtual definition of a friend became something different than the friends that you’d want to hang out with.”

From there, Mr. Gies said, the team started wondering: “Do you really want to have all these people knowing what you’re up to and what you’re interested in? We wanted to be part of that conversation and part of that solution, and ‘Whopper Sacrifice’ was born.”

Facebook, which now has more than 150 million members, has clearly been built on the back of the culture of oversharing. Many members broadcast the mundane details of their lives through a “status update” feature, which lets people — nay, encourages them — to describe the contents of their lunch or the virulence of their bronchitis.

Even in this environment, however, deleting friends does not generate a notification of any sort, leaving members to discover they’ve been unfriended only when they find they no longer have access to someone’s profile. It can be a jarring experience, especially considering that the person who dumped you at some point either requested you as a friend or accepted your request (on Facebook, that is how friends are made). But members understand that such selective discretion is critical to the social-networking ecosystem.

“We believe that relationships change, and users should be able to have the friend list respect those changes without the pressure of a public notification,” Ms. Barker said.

Nor does Facebook care to be a party to what might be called punitive unfriending, banishing someone from your network for violating one or more of your personal rules of conduct. Perhaps someone annoys you by posting an obsessive number of status updates, or expresses himself in a way that you consider obnoxious?

Those were the excuses that Ehren S., a former co-worker of mine who apparently unfriended me sometime this past spring, offered up recently for giving me the digital heave-ho.

“I believe it was based on a passive-aggressive update of yours to which I sighed, kinda shook my head and pressed ‘delete from friends,’  ” she confessed by e-mail. “I find negativity a bit tiresome and don’t have the patience for it.”

Fine. Though forgive me for pointing out that Ehren, who asked that I not use her full name, initially tried to fib her way out of the awkwardness by saying she did it for a Whopper.

Last week the question of friendship decorum grew so vexing for Henry Blodget, the former securities analyst whose loud crash from Merrill Lynch helped lead him to a career as a blogger, that he publicly begged Facebook for a solution. Apparently, being barred from the securities industry doesn’t keep a guy from being inundated with friendship requests from complete strangers.

“I’ve occasionally thought about trying to solve this problem by ‘unfriending’ everyone who isn’t actually my friend, but that’s too horrible to contemplate,” Mr. Blodget wrote on his Web site, Silicon Alley Insider, on Sunday. “I don’t know how I’d get through the day if Facebook kept sending me e-mails about how people I didn’t even know were ‘unfriending’ me.”

Mr. Blodget asked Facebook to develop new friendship levels that would let users sort their acquaintances by degree of separation. He suggested categories like “ ‘personal friends’ or ‘work friends’ or ‘extra special friends’ or ‘BFFs’ or ‘friends you want to hear meaningless trivia about all day long,’ ” and implored, “Please give me the ability to put friends in these groups without telling them I have done so.”

On Facebook, as in life, no unfriending is as fraught with pitfalls as the one you really mean. Rachel Heavers, a stay-at-home mother in Arlington, Va., found that out when she angrily deleted a lifelong pal, “Marie,” in December during what she described as “a hormonal moment.”

“Our first kids were born two months apart, and we are both pregnant with our second, which are due three days apart,” she said.

The two had a falling out in December after Marie (her middle name) insisted that Mrs. Heavers’s daughter had swallowed one of her earrings (she hadn’t). The friends wound up arguing in the emergency room, and later agreed to take a break from each other.

Mrs. Heavers soon tired of seeing Marie on Facebook. During an emotional late-night moment, she clicked the “remove” button, expecting never to speak to Marie again.

“Now I really, really regret it,” said Mrs. Heavers, who is starting to reconcile with Marie but afraid to send out a new friendship invitation to her on Facebook: “I’m not sure if she’s even noticed yet that I’ve unfriended her.”

From the proud sister of a brother of IBEW Local 551

From the Los Angeles Times

Opinion

The union way up

America, and its faltering economy, need unions to restore prosperity to the middle class.

By Robert B. Reich

January 26, 2009

Why is this recession so deep, and what can be done to reverse it?

Hint: Go back about 50 years, when America’s middle class was expanding and the economy was soaring. Paychecks were big enough to allow us to buy all the goods and services we produced. It was a virtuous circle. Good pay meant more purchases, and more purchases meant more jobs.

At the center of this virtuous circle were unions. In 1955, more than a third of working Americans belonged to one. Unions gave them the bargaining leverage they needed to get the paychecks that kept the economy going. So many Americans were unionized that wage agreements spilled over to nonunionized workplaces as well. Employers knew they had to match union wages to compete for workers and to recruit the best ones. 

Fast forward to a new century. Now, fewer than 8% of private-sector workers are unionized. Corporate opponents argue that Americans no longer want unions. But public opinion surveys, such as a comprehensive poll that Peter D. Hart Research Associates conducted in 2006, suggest that a majority of workers would like to have a union to bargain for better wages, benefits and working conditions. So there must be some other reason for this dramatic decline. 

But put that question aside for a moment. One point is clear: Smaller numbers of unionized workers mean less bargaining power, and less bargaining power results in lower wages. 

It’s no wonder middle-class incomes were dropping even before the recession. As our economy grew between 2001 and the start of 2007, most Americans didn’t share in the prosperity. By the time the recession began last year, according to an Economic Policy Institute study, the median income of households headed by those under age 65 was below what it was in 2000.

Typical families kept buying only by going into debt. This was possible as long as the housing bubble expanded. Home-equity loans and refinancing made up for declining paychecks. But that’s over. American families no longer have the purchasing power to keep the economy going. Lower paychecks, or no paychecks at all, mean fewer purchases, and fewer purchases mean fewer jobs.

The way to get the economy back on track is to boost the purchasing power of the middle class. One major way to do this is to expand the percentage of working Americans in unions.

Tax rebates won’t work because they don’t permanently raise wages. Most families used the rebate last year to pay off debt — not a bad thing, but it doesn’t keep the virtuous circle running. 

Bank bailouts won’t work either. Businesses won’t borrow to expand without consumers to buy their goods and services. And Americans themselves can’t borrow when they’re losing their jobs and their incomes are dropping.

Tax cuts for working families, as President Obama intends, can do more to help because they extend over time. But only higher wages and benefits for the middle class will have a lasting effect.

Unions matter in this equation. According to the Department of Labor, workers in unions earn 30% higher wages — taking home $863 a week, compared with $663 for the typical nonunion worker — and are 59% more likely to have employer-provided health insurance than their nonunion counterparts. 

Examples abound. In 2007, nearly 12,000 janitors in Providence, R.I., New Hampshire and Boston, represented by the Service Employees International Union, won a contract that raised their wages to $16 an hour, guaranteed more work hours and provided family health insurance. In an industry typically staffed by part-time workers with a high turnover rate, a union contract provided janitors with full-time, sustainable jobs that they could count on to raise their families’ — and their communities’ — standard of living. 

In August, 65,000 Verizon workers, represented by the Communications Workers of America, won wage increases totaling nearly 11% and converted temporary jobs to full-time status. Not only did the settlement preserve fully paid healthcare premiums for all active and retired unionized employees, but Verizon also agreed to provide $2 million a year to fund a collaborative campaign with its unions to achieve meaningful national healthcare reform. 

Although America and its economy need unions, it’s become nearly impossible for employees to form one. The Hart poll I cited tells us that 57 million workers would want to be in a union if they could have one. But those who try to form a union, according to researchers at MIT, have only about a 1 in 5 chance of successfully doing so.

The reason? Most of the time, employees who want to form a union are threatened and intimidated by their employers. And all too often, if they don’t heed the warnings, they’re fired, even though that’s illegal. I saw this when I was secretary of Labor over a decade ago. We tried to penalize employers that broke the law, but the fines are minuscule. Too many employers consider them a cost of doing business.

This isn’t right. The most important feature of the Employee Free Choice Act, which will be considered by the just-seated 111th Congress, toughens penalties against companies that violate their workers’ rights. The sooner it’s enacted, the better — for U.S. workers and for the U.S. economy. 

The American middle class isn’t looking for a bailout or a handout. Most people just want a chance to share in the success of the companies they help to prosper. Making it easier for all Americans to form unions would give the middle class the bargaining power it needs for better wages and benefits. And a strong and prosperous middle class is necessary if our economy is to succeed.

Robert B. Reich, former U.S. secretary of Labor, is professor of public policy at UC Berkeley and the author, most recently, of “Supercapitalism.”

seriously?? get a job, ladies.

From the NYT:

It’s the Economy, Girlfriend
By RAVI SOMAIYA
The economic crisis came home to 27-year-old Megan Petrus early last year when her boyfriend of eight months, a derivatives trader for a major bank, proved to be more concerned about helping a laid-off colleague than comforting Ms. Petrus after her father had a heart attack.
For Christine Cameron, the recession became real when the financial analyst she had been dating for about a year would get drunk and disappear while they were out together, then accuse her the next day of being the one who had absconded.
Dawn Spinner Davis, 26, a beauty writer, said the downward-trending graphs began to make sense when the man she married on Nov. 1, a 28-year-old private wealth manager, stopped playing golf, once his passion. “One of his best friends told me that my job is now to keep him calm and keep him from dying at the age of 35,” Ms. Davis said. “It’s not what I signed up for.”
They shared their sad stories the other night at an informal gathering of Dating a Banker Anonymous, a support group founded in November to help women cope with the inevitable relationship fallout from, say, the collapse of Lehman Brothers or the Dow’s shedding 777 points in a single day, as it did on Sept. 29.
In addition to meeting once or twice weekly for brunch or drinks at a bar or restaurant, the group has a blog, billed as “free from the scrutiny of feminists,” that invites women to join “if your monthly Bergdorf’s allowance has been halved and bottle service has all but disappeared from your life.”
Theirs is not the typical 12-step program.
Step 1: Slip into a dress and heels. Step 2: Sip a cocktail and wait your turn to talk. Step 3: Pour your heart out. Repeat as needed.
About 30 women, generally in their mid- to late-20s, regularly post to the Web site or attend meetings.
“We do make light of everything on the blog and it’s very tongue in cheek,” said Laney Crowell, 27, who parted ways with a corporate real estate investor last month after a tumultuous relationship. “But it all stems out of really serious and heartfelt situations.”
When she introduces other Wall Street widows to the group, Ms. Crowell added, “They call their friends and say, ‘You’re not going to believe what I just read. It’s going to make you feel so much better.’ ”
Once it was seen as a blessing in certain circles to have a wealthy, powerful partner who would leave you alone with the credit card while he was busy brokering deals. Now, many Wall Street wives, girlfriends and, increasingly, exes, are living the curse of cutbacks in nanny hours and reservations at Masa or Megu. And that credit card? Canceled.
Raoul Felder, the Manhattan divorce lawyer, said that cases involving financiers always stack up as the economy starts to slip, because layoffs and shrinking bonuses place stress on relationships — and, he said, because “there aren’t funds or time for mistresses any more.”
(One such mistress wrote on the blog that when she pouted about not having been taken on a trip lately, her married man explained that with money so tight, his wife had taken to checking up on his accounts.)
Harriet Pappenheim, a psychotherapist at Park Avenue Relationship Consultants who wrote “For Richer or Poorer,” a 2006 book on money in marriage, said that the repercussions could be acute for Wall Street wunderkinds who define their identities through their job titles and the size of their bonuses.
“It’s a big blow to their egos and to their self-esteem,” she said of the endless stream of economic bad news, “and they may take it out on their partners and children.”
Ms. Petrus, a lawyer, and Ms. Crowell, who works for a fashion Web site, started the support group when they realized that they were facing similar problems in their relationships with bankers last fall.
“We put two and two together and figured out that it was the economy, not us,” Ms. Petrus recalled at a recent meeting in the lobby bar of the Bowery Hotel. “When guys in banking are going through this, they can’t handle a relationship.”(She and her boyfriend split up last year; he declined to discuss it.)
Many of the women said that as the economic crisis struck last fall, they began tracking the markets during the day to predict the moods that the men they loved might be in later. On big news days, like when the first proposed government bailout failed in Congress, or when Lehman went belly-up, they knew that plans to see their partners would be put off.
“I was like, ‘O.K. I signed up for that, it’s fine,’ “ said Ms. Cameron. “But all of a sudden,” she said, her boyfriend “couldn’t focus. If he stayed over he’d be up at some random hour checking his BlackBerry, Bloomberg and CNBC.”
Ms. Cameron said that she and her boyfriend broke up at the end of November but that they still saw each other occasionally.
One frequent topic among the group is the link between the boardroom and the bedroom. “There’s actually the type of person who has a bad day on the trading floor and they want to have sex more,” Ms. Spinner Davis offered as she sipped a vodka gimlet, declining to say how she knew.
Ms. Petrus chimed in.
“If you’re lucky you’ll get that guy,” she said, not revealing whether she considered herself lucky. “Middle-case scenario: It gets relegated to the weekends.
“Worst-case scenario,” she began, and then took another sip of her drink.
Brandon Davis, Ms. Spinner Davis’s husband of almost three months, acknowledged in a recent telephone interview that his new job was “certainly more stressful and there’s certainly more pressure” because of the economy, but disagreed that such stresses had affected his home life. He did not want to talk about golf.
Some women in the group said the men in their lives had gone from being aloof and unattainable to unattractively needy and clinging. Others complained of being ignored — one, who called herself A.P., wrote on the blog that three weeks had passed without her boyfriend “asking a single question” about her life. Another wrote, fearfully, that her beau had told her to make a list of their favorite New York restaurants before the bad market forced a move to the Midwest.
“Next time you are stressing over some finance guy, remember that he is just a math-club nerd,” one woman wrote after recounting a breakup. “This recession just bought everyone an extra two years of the single life.”
Another, though, seemed chagrined, after her boyfriend told her to “grow up” and stop “complaining about vacations and dinner” since he had to “fire 20 people by the end of the week.”
On the blog, the objects of their affections — and disdain — are referred to as F.B.F.’s, for Financial-Guy Boyfriends. Financial news is conveyed via a color-coded daily warning system: red, when the Dow fell 300 points on Oct. 6 (“Good night to have dinner with your girlfriends and do laundry”); yellow, when Warren Buffet invested $3 billion in General Electric (“Good night to hang out with your F.B.F.”); green on Jan. 21, in honor of President Obama’s hope.
Despite the seemingly endless stream of disparaging remarks and shaking heads, some of the appeal of dating a banker remains.
“It’s not even about a $200 dinner,” Ms. Petrus said. “It’s that he’s an alpha male, he’s aggressive, he’s a go-getter, he doesn’t take no for an answer, he’s confident, people respect him and that creates the whole mystique of who he is.”

I have a blog???

So, blogging is not something I thought I would do, but here I am doing it. I don’t plan to live in DC forever, and in the future I don’t want to forget what it was like to be here, or what I was reading and thinking about. I’m mostly going to post articles that I’m reading, not sure how much I’ll write commentary on them. I’m sure I will also write about experiences that I don’t want to forget, and just fun things that I want to share. 

 

Here goes nothing!

AJ