Income Median

According to the latest Paulson and Co. Inc. 13F-HR (Q4/09), the hedge fund firm had just under $20 billion invested in 13f securities at the end of the fourth quarter. Included in this total were four separate investments that were valued at ove...

In response to my rumination about the strategy for surviving in Year 1 of Bumhood, when Social Security imposes an earnings limitation that amounts to real poverty, readers have speculated that structuring my business as a sole proprietorship rather than as an S-corporation would allow  me to deduct Medicare, Medigap, and long-term care premiums dollar-for-dollar against business income, rather than having to jump the 7.5% hurdle set up for people who itemize. Frugal Scholar made the interesting discovery that “employees of an S corp can take the self-employment health insurance deduction.”

It’s an interesting concept; I just sent off an e-mail to Tax Lawyer inquiring about it.

Somehow, though, I doubt Uncle Sam will let me run Medicare premiums through a corporation. Social Security automatically withholds Medicare Part B from your Social Security check—you don’t get a choice about it. It might be possible to work some sort of scam with the Medigap premiums, but even there…questionable.

The point of incorporating CE Desk as an S-corp, in my case, is to allow me to stay in business during this endless first year of penury, during which the government penalizes me if I earn more than $14,160 because I’m under age 66. I earn about $240 more than that teaching six sections of freshman comp. Without a way to shelter my editing and blogging income, I would have to close both of those enterprises down. As we know, when you quit working at a freelance enterprise, your clients go away permanently, so that when you want to revive your little business, you have to start over from scratch. I’m getting too darned old to start over from scratch! Plus FaM is starting to earn a small but steady income…I don’t want to get rid of that, either.

Channeling the income from the S-corp means that if I earn, let’s say, $5,000, through freelance enterprises, the money belongs to the corporation, not to me. I am an employee of the corporation. My “job” is to direct the corporation. The corporation has to pay me an amount deemed “reasonable” by the IRS. It’s not paying me for my day-to-day editing and writing work; it pays me to be a corporate director. So, on a $5,000 income it pays me a little over $500. That is salaried income.

The S-corp does not shelter the salary you pay yourself from self-employment tax. What it does is convert some (but not all) of your freelance income into a “dividend,” on which none of the social welfare taxes are due. From my pittance, it has to withhold FICA and Medicare, and it has to pay FUTAand the employer’s share of FICA on the amount it pays me. The rest of the money—the part that remains after my “salary” is paid—can either remain in the corporation to be used to cover operating expenses (or just to sit there) or can be disbursed to the corporation’s owner(s) as “dividends.”

Because Social Security views dividends as return on investment, not as salaried income, this part of my freelance revenues doesn’t count toward the $14,160 earnings limit.

While it is true that you don’t pay self-employment tax on the dividend part of your drawdown from the corporation, it also is true that you don’t get credit toward Social Security for that part of your annual earnings. Thus if you did this for a very long time—say, starting fresh out of law school or medical school—you would greatly reduce the amount of your Social Security entitlement when the time comes to retire. If you engaged this strategy, you would have to be certain that you were going to earn and save a great deal of money during your career…otherwise, in your old age you’d end up just as penurious as an aging college English lecturer.

According to Elderlaw, qualified long-term care insurance premiums and Medigap premiums are regarded as medical expenses and are deductible if they exceed 7.5% of your gross income:

Premiums for “qualified” long-term care policies will be treated as a medical expense and will be deductible to the extent that they, along with other unreimbursed medical expenses (including “Medigap” insurance premiums), exceed 7.5 percent of the insured’s adjusted gross income. If you are self-employed, the rules are a little different. You can take the amount of the premium as a deduction as long as you made a net profit–your medical expenses do not have to exceed 7.5 percent of your income.

Medigap will cost me about $1,200 in 2010; long-term care is about $960, for a total of $2,160. Medicare Part B will cost me $1,326 this year.

According to IRS Publication 502, Part B premiums are also treated as medical expenses:

Medicare B is a supplemental medical insurance. Premiums you pay for Medicare B are a medical expense. If you applied for it at age 65 or after you became disabled, you can include in medical expenses the monthly premiums you paid.

Thus the total amount, before I buy any eyeglasses, contact lenses, or prescriptions, that will qualify as medical expenses will be $1,326 + $1,200 + $960 = $2286. And I’m not even adding Medicare Part D into that. The total, with Part D, probably will come to around $2,400.

If I stand down off one class this fall, my total earned income will be $1257(12) + $2,400(5) + $500 + $500(12) = $33,584. That’s Social Security + teaching + freelance income + drawdown from 403(b). Multiply that by 7.5% and you get $2,518. So…one pair of Costco glasses puts me over the 7.5% qualifying threshold—that’s before I visit a doctor, before I buy a prescription drug, before I buy a couple boxes of contact lenses, before I pay for a shingles shot. And the 7.5% is on adjusted gross income, which you can be sure will be less than $33,584.

I don’t earn enough from freelancing to live on (far, far from it!), and so there’s no question of my working the business so that I write off medical costs and everything else against my taxes. If a miracle happened and FaM’s traffic went up about tenfold, I’d have to reconsider that. But unless the government can be persuaded to regard my teaching income as “self-employed” (which Tax Lawyer says it will not do), in my case the S-corporation is probably better than a sole proprietorship, because it allows me to keep the pittance I do earn through freelance editing and blogging from biting into my Social Security earnings.

Next year, when I’m 66 and can work until I drop without being punished for the privilege, will be another matter. But I’ll cross that bridge when I come to it.

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Banks are showing their true colors and what little regard they have for the average American.  As they advertise with cute and friendly faces assuring consumers they are looking out for their best interest, behind their backs they send in a locust of lobbyist onto Washington to do everything in their power to gut any sensible financial regulation.  The vultures are picking off every piece of what used to be the middle class.  This is the model of the new banking and financial system that many will have to contend with.  Americans have seen their access to loans and credit contract at the fastest pace in history while banks have now opened up an unlimited credit card with the taxpayer paying the bill for too big to fail.  Banks are doing their best to create a narrative that “if we didn’t bailout the banks then the world would have ended storyline” but the vast majority of Americans did not support the banking bailout.

If you want to see how quickly credit is contracting take a look at this:

The chart above merely highlights what you already know. Banks no longer trust the average American.  While they based all their bailouts on the idea that taxpayer money was needed to keep banks lending this has been a lie.  In fact, banks need the money to plug the hole that their toxic assets are burning on their balance sheets.  You can also look at the amount of credit card offers you are getting in the mail to gauge how quickly the market has changed.  No longer do banks want to give credit out (that is, unless it is government backed like mortgages which they are all the more willing to lend out).

The U.S. has over 8,000 banks with the large concentration of assets in 10 banks.  These banks continue to use bailout funds to plug the problems from the boom years.  But this is not in the best interest of average Americans.  If Wall Street and politicians were honest, the bailouts would have been labeled as a massive charity to the elite of the country who made disastrous bets over the past decade.  The public takes the lumps while Wall Street actually gets richer.  While banks don’t want to reel in their spendthrift ways, Americans are pulling back:

Americans are now having to save more and more of their money as is expected in a tough economy.  Yet banks are back to gambling in the stock market while shutting down lending to consumers.  Banks are playing the poor me card by arguing that with too much tight regulation, they can’t make loans because they are worried about future balance sheet problems.  Thanks for telling us after you took the public money under false pretenses!  But this is all a political ploy to steal from the working class.  With so many people just unable to even service the debt and rising bankruptcies, banks are now going after good customers who pay their bills on time each month just because they are running out of “options.”  Don’t be fooled.  They are reaping billion dollar profits because they are using excuses to squeeze the golden goose dry.  How about we allow the typical American to borrow at the subsidized low rate from the Federal Reserve directly?  Why in the world do we need banks to operate as loan sharks in between?  What we need is to transform the banking industry into a utility model.  A model designed to serve the people, not the banks.  After all, why should they get the privilege of borrowing at criminally low rates while everyone else has to pay the interest and subsidize their gambling adventure?

Even after all the correction in the market American households still carry an inordinate amount of debt:

A giant portion of income simply goes to pay off debt.  A large part of the debt is interest or money the banks can suck out of the neck of middle class Americans.  Banks live off this margin.  Take for example a $100,000 30 year fixed rate mortgage at 6 percent:

Principal:             $100,000

Total Interest:   $115,838

In the end, you are paying more than the initial cost and all that interest goes to who?  What purpose does it serve?  Banks are delusional and want the public to believe in the propaganda that they need to charge a higher rate because of “risk” in the loan.  Are they kidding?  We already know that they are being supported by the entire Federal Reserve and U.S. Treasury.  They can make the most insane kind of bets and ultimately the taxpayer will eat the bill.  And keep in mind many of these banks are borrowing at low levels from the Federal Reserve.  Why not allow the public to keep some of that interest?  How is this bad?  If banks were lending their own money it would be a different story but they are not.  They are creating a dishonest narrative and most Americans are not buying it because they operate in reality and not some parallel universe where you can create something out of nothing.

Just think of the billions charged in overdraft fees.  This is criminal.  Why not just default debit cards to stop once the account is dry?  Instead they want people that charge a $2 burger a $39 over draft “convenience fee” for this nonsense.  Are you kidding?  Most people don’t want this.  They find out the hard way and now billions have left the wallet of consumers for this nice little loan shark fee.  $39 can buy you lunch for a few days so this is nothing to laugh at when 38,000,000 Americans find themselves on food assistance.  The bulk of the billions are paid by the poor.  Good job banks for helping your fellow Americans.  Yet banks are leeches sucking the productive life blood out of the economy with gimmicks like this.  Time to break the banks up and turn them into utilities.

Take for example JP Morgan.  They announced a Q4 profit of $3.28 billion.  Where did they make their money?

“(Huff Po) JPMorgan’s biggest trouble spots were in consumer banking and credit card lending. The bank’s retail financial services division, which includes its mortgage operations, lost $399 million. That was worse than the final quarter in 2008, when credit markets had essentially shut down because of the collapse of banks including Lehman Brothers.

The company reported increases in mortgages that were charged off, or classified as uncollectible, including prime mortgages, the highest quality home loans. It also reported an increase in home equity loan charge-offs.”

Wait.  So mortgages are being charged off as foreclosures remain high.  And this has spread to so-called prime mortgages as the unemployment and underemployment rate remains at 17.9 percent.  So let us write off mortgages to average Americans.  Where in the world did they get those billions?  Maybe they made good money in their credit card unit:

“The credit-card lending division lost $306 million during the final three months of 2009. Results would’ve been worse had the bank not had a payment holiday in the period.”

More losses here?  So we’ve ruled out credit cards and mortgages which have become the life blood for Americans.  We’re running out of places to look for where they can make a $3 billion profit:

“Despite the ongoing problems with consumer banking, JPMorgan is still performing well because of its robust investment banking unit. As long as stock and bond markets continue to improve, the bank will be able to churn out profits and reward its employees handsomely.

JPMorgan’s investment bank earned $1.9 billion during the fourth quarter, while its asset management division generated $424 million in net income.

Fees from financing debt and stock offerings continued to surge in the fourth quarter. Debt financing fees jumped 58 percent to $732 million from the same quarter a year earlier, while stock financing fees climbed 66 percent to $549 million.”

And there you have it.  We are financing Wall Street’s wonderful gambling casino once again while the traditional banking model has collapsed.  How this isn’t the number one priority for the government and the people to fix is simply astounding.  How we have had no serious financial reform after 26 months of the Great Recession boggles the mind.

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At long last, we’re ready to announce the winner and runner-up of Bankruptcy Bill’s Bankruptcy Song Contest!

Thanks to everyone who submitted an bankruptcy song, to everyone who voted and shared their comments and to illustrator Gideon Kendall for suggesting the cartoon announcement prize idea.

Also thanks to our sponsors for their support of the first-ever (to our knowledge) Bankruptcy Song Contest and for collectively making a donation to the National Consumer Law Center in the amount of $25 for each song submitted (for which we received a nice thank you note from the NCLC’s Executive Director):

• Bruce Weiner (Rosenberg Musso & Weiner) – NYBankruptcyNet (Brooklyn, NY)
• George Haines & David Krieger (Haines & Krieger) (Las Vegas, NV)
• Russell A. Demott – Charleston Bankruptcy Blog (Charleston, SC)
• Nancy Rapoport (nancyrapoport.blogspot.com), the Gordon Silver Professor of Law at the William S. Boyd School of Law (UNLV)

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2nd Place

Congratulations also to Arlene Robins of Woodbury, NY for her wonderful submission “BANKRUPTCY WIFE’S LAMENT”. Arlene will receive a t-shirt (or other item from our fabulous catalog of BAPCPA Man and Bankruptcy Bill merchandise on Zazzle.  (Note:  Arlene is the wife of good-humored Long Island bankruptcy attorney Craig Robins, who also has an excellent song entry titled “DEBT-FREE GIRL”.)

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The Bankruptcy Song Submissions

Once again, here are the song entries for Bankruptcy Bill’s Bankruptcy Song Contest:

1.  “AMEND IT MY WAY” by Judge Sheri Bluebond (United States Bankruptcy Court for the Central District of California)

2.  CABARET” by Judge Sheri Bluebond (United States Bankruptcy Court for the Central District of California) (Click song title or scroll down the page to see lyrics.)

3.  “DON’T CRY FOR ME HOUSEHOLD FINANCE” by Judge Sheri Bluebond (United States Bankruptcy Court for the Central District of California) 

4.  “DEBTS IN WRONG PLACES” by Judge Alan S. Trust (United States Bankruptcy Judge, Eastern District of New York)

5.  “‘TWAS THE NIGHT BEFORE FILING” by Mark Sippel, Esq. (Sippel & Carroll PLLC (Kingman, AZ))

6.  “PHARAOH OBAMA – LET THE DEBTORS GO” by Mark Sippel, Esq. (Sippel & Carroll PLLC (Kingman, AZ))

7.  “THE BANKRUPTCY ABUSE SONG” by Mark Sippel, Esq. (Sippel & Carroll PLLC (Kingman, AZ))

8.  “DEBT-FREE GIRL” by Craig Robins, Esq. (Woodbury, NY)

9.  “BANKRUPTCY WIFE’S LAMENT” by Arlene Robins (Woodbury, NY)

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BONUS!

And if you just can’t get enough bankruptcy music, CLICK HERE to hear “Bankruptcy Lover“ by Bankruptcy Bill & The Fresh Starts.

As I've been combing through the recently released 13F-HR's for the fourth quarter of 2009, something has really jumped out at me - a number of the most notable hedge funds in the world are snapping up Citigroup in a big way. Citigroup? That Citi...

So far—all of two months into this new Bumhood adventure—I’m doing so well at staying on budget and living within my apparently reduced means that I’m thinking next fall I should teach two sections instead of three.

The community colleges pay $2,400 per class. Six times $2,400 comes to $14,400. Contrary to predictions, Social Security did not raise its earnings limitation this year: it remains at $14,160. While I certainly can afford to sacrifice half of $240 for the privilege of earning slightly more than a sub-poverty wage, I can’t afford the way they expunge it from your pocketbook. As soon as SS find out that you’re over the limit, they take away an entire month’s payment. From that they withhold the amount they think you owe them. But they don’t give the rest back until the following January. So, that’s $1,000 that goes away for months, maybe as long as a year.

My net on one section is $2016. True, it’s twice as much as a thousand bucks, but prorated over four months, it’s only $504 a month.

Meanwhile, I have over $16,000 residing in savings now. Because I started with a $14,500 cushion and so far have not spent anything like as much as I expected, the “cushion” keeps accruing feathers. Every month, another chicken’s worth of feathers gets stuffed in there. In addition, The Copyeditor’s Desk has $2,000 remaining to pay out in “dividends.”

When SDXB said you don’t need anything like as much as you think to live well in retirement, he wasn’t kidding. At the moment I’m coming nowhere near using all the money I budgeted to survive. That will change in the summer, when utility bills rise into the stratosphere, but by then enough will have accrued from the monthly underruns to cover those extra costs. It’s amazing. The guy is right: money happens!

Standing down off one section in the fall presents several sterling advantages:

1. Bureaucratic hassle avoidance. Not having to deal with Social Security over an earnings limit violation is worth a great deal. After the endless fights and negotiations with ASU’s HR department, the shape-shifting COBRA monsters, and now Medigap insurance predators, I have developed a bureaucrat flinch reflex.

2. Reduction of taxable income. Of course, it’s not enough to drop me into the lowest tax bracket. However, as it develops, Medicare, Medigap, and COBRA premiums are regarded as tax-deductible medical expenses, as are my long-term care premiums! Those will add up to at least $3600 this year. That’s 13 percent of an income cobbled together with Social Security and five sections. And that will make those costs deductible, even if I do earn a small wage from the S-corporation this year.

3. Brief reprieve from freshman comp. Since I’ll be teaching one section of magazine feature writing next fall, taking on just two sections will leave me with only one section of composition to have to struggle through. If I’m lucky and the section is 102 instead of 101, then I’ll have only three papers to have to grade for that course.

4. Hugely reduced course load. The feature-writing course is an eight-week online section. The chair has already agreed to make one of the comp courses he expects me to teach next fall an eight-week session, so that at any given time I’ll only be teaching two sections. If he stands by that, then I could end up with one composition course in the first half of the semester and the feature-writing course in the second half.

Hot dang! This would get the dratted comp class out of the way in eight weeks. The feature-writing course is online, and so for the rest of the semester I wouldn’t have to go to campus at all. At 19 miles per gallon, that represents a nice little saving in gasoline. And it sure represents a pretty saving in workload.

While I enjoy meeting with the young people and watching them bounce around, freshman comp is a discouraging class to teach. Especially in the community college, a good portion of the students struggle with serious learning problems and ESL issues. There’s very little you can do to help them. Really, in one semester there’s nothing you can do to make up for the shortcomings of 13 years of third-rate education, and there’s nothing you can do to change the way a dyslexic young adult’s brain is wired. You can’t teach them in 16 weeks what they didn’t learn in 13 years of K-12 training. It’s frustrating, and in many students’ cases, it’s just downright sad. So…any time I can get out of a section, I’ll be happy to do it.

Now, this scheme has some significant disadvantages, too.

1. Summer bills will deflate the cushion by about $1,200. This amount would be recovered by October if I’m reaching three sections.  By the end of December, I would have plenty of cash to carry me over the winter break: barring a huge unexpected expense, around $4,800.

However, in reality that’s way  more than I need to survive for a month of unemployment. With one fewer section to teach, I’ll still be back in the black by the end of October. The amount accrued to make it through winter break would than be about $3,300, more than enough to get by when utility bills are low.

2. Boredom factor. Teaching two sections will not give me enough to occupy my time. I’ll have to come up with new things to do.

That may not be a bad thing.

3. Boss annoyance factor. The departmental chair thinks he has me for three sections this fall. He won’t like having to hustle up someone else to teach a section of composition on short notice. Given the precariousness of my position, I hesitate to annoy this guy or bring myself to his attention in any negative way.

I really can’t make this decision until I get my tax forms. When ASU was jacking us around with furloughs, I changed the number of withholdings on my exemptions, as to retain enough income to  live on. I never changed them back. Then at the end of the year I changed the amount withheld for Arizona’s rip to the minimum amount, so as to avoid having any more money gouged out of RASL and my vacation pay than absolutely necessary. This means that instead of having a refund coming, I may have to pay taxes this year.

Tax Lawyer has the mountain of paper I shipped to her office. It’s an incredibly complicated mess. She said she expects to have the returns ready the middle of this week. So it will be several days before I know whether I’ll have to pony up a chunk of the cushion to the government. If a lot of that money goes away, obviously I can’t take a chance that there won’t be enough to support me through 2010.

The longer I delay telling the departmental chair that I won’t be teaching three sections in the fall, the larger the headache for him. Hence, the greater the Boss Annoyance Factor.

However, the community colleges are not the only places to find freelance teaching work. Because I’m experienced in developing online courses, the fact is I can teach for any college in the nation. With the extra time freed up by dumping that third section in the fall, I could hustle up some jobs in other states, which might pay better than the District does. In 2011 I’ll be allowed to earn as much as I can, and so it would be useful to find someplace that pays more than $2,400 per section. Someplace that’s not ASU: I could earn about $3,200 teaching there, but I really want to be done with ASU, now and forevermore.

Speaking of teaching…time’s a-wastin’. Gotta run!

Related posts:

• Reprojecting next year’s income
• Early Retirement: The health insurance hurdle
• So this is retirement?

Am I the only person who has developed a certain jaundiced skepticism about compact flourescent bulbs (CFLs)? Or is that yellowish tinge around the eyes just the result of the dim and ugly light the dratted things throw off?

In the first blush of enthusiasm over CFLs, I went out and bought a boatload of them. Replaced all the incandescent lights in the house, except in a couple of lamps that cheerfully blew the contraptions out every time I stuck one in the socket.

Some inanimate objects have better sense than the rest of us.

Time passed. I saw exactly zero difference in the power bill. As far as I can tell, CFLs do little or nothing to lower your electric bill, at least if you’re the sort of person who turns the lights off when you leave a room and who opens the blinds during the day so as to navigate by natural light.

As it develops, there’s an explanation for that. Whether it’s the correct explanation and whether CFLs have as their unintended consequence increased greenhouse gas emissions,  I do not know, but I certainly would agree with Sudden Disruption that these devices have been oversold. And removing all incandescent bulbs from the market to replace them with the things is Big Brother at his Draconian best.

Other unintended consequences wait in the wings. For example, studies have shown that CFLs may induce or aggravate migraines, may be harmful to people with retinal disease, and may aggravate certain skin ailments. The flicker and hum, unnoticeable to all but a few humans, are audible to and may be harmful to cats, dogs, and other household  pets.

It could be, of course, that you can’t see much difference in your electric bill because you can’t see the bill at all. You can’t see much of anything by the light of a CFL. No matter what the equivalent wattage, they cast a murky glow, indeed. They muddy the colors in your room and require you to break out the reading glasses for copy you could decipher easily under a brighter light..

Especially annoying is the dim half-glow they emit when first turned on. Flick on the switch in my bedroom and you feel like you’re inside a cave lit by the bioluminscent mildew on the walls. The older a bulb gets, the more time it requires to come up to speed. It takes quite a while, now, for the lights in my house to reach their maximum brightness. Not a very maximum, we might add.

I’ve already bought a bunch of incandescent bulbs and cached them in the storage room. Thanks to the Selling of the CFL, old fashioned lightbulbs are now pretty cheap. I think I’m going to buy another couple of pallets before they go off the market!

Related posts:

• Holy water bill, Batman!
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Thanks to the Center for Responsible Lending for posting a great cartoon from Pixton.com that calls out the weakness of the arguments being made against the creation of a Consumer Finance Protection Agency.

"Mega cap" status is a very exclusive club. In order to be considered a "mega cap" (as opposed to a "large cap"), a company needs to have a total market cap of $200 billion or more. As of right now, there are currently only three publicly tra...

The American financial press cheered on Friday when “only” 36,000 jobs were lost in February.  This if you haven’t noticed now passes for good economic news.  The unemployment rate remained unchanged because the actual workforce continued to show a decline yet Wall Street somehow viewed this as positive developments.  And why not?  The middle class is under assault from every angle.  Things are so twisted with propaganda that many Americans now believe that the banking elite are actually looking out for the well being of American workers.  As news of the job losses somehow echoed as positive developments, more and more Americans are continually being kicked out of their homes from banks they helped to bail out.  Irony has no meaning to Wall Street.

And if we look at the details of the jobs report, it turns out that 17.9 percent of Americans are either unemployed or underemployed or flat out have stopped looking for work:

Source:  BLS

This wasn’t the only spin going on in the media.  Before the jobs report came out there was a preemptive flow of information trying to justify the job cuts by blaming it on the weather.  Yes, now instead of blaming the financial catastrophe on the actual perpetrators in Wall Street who systematically looted the American system and turned our economy into a giant casino that they leeched onto, we are now to believe people are losing their jobs because of the weather:

“(CNSnews) Ahead of Friday’s announcement, Goldman Sachs predicted that the storm might skew the job loss number by as much as 100,000 – a prediction that was embraced by officials in the Obama administration.

“The blizzards that affected much of the country during the last month are likely to distort the statistics,” Larry Summers, director of the White House’s National Economic Council, said in an interview with CNBC. “So it’s going to be very important … to look past whatever the next figures are to gauge the underlying trends.”

If the storm caused a skewing of job loss numbers I wonder how many job losses can be linked to Goldman Sachs and their casino style gambling in the derivatives markets and mortgage backed securities?  Then again, people should be happy that the unemployment rate remained steady at 9.7 percent even though more Americans are working part-time with no benefits and many others have simply fallen off the payrolls.  This is supposedly the new American dream for the middle class through the eyes of Wall Street who are selling capitalism but living in a world of corporate handout socialism.

There is a new show called Undercover Boss where a CEO goes undercover to work in the trenches with the proletariat.  As it turns out, the middle class is being worked to death and as we all know, the CEO can’t even do the job most workers do on a daily basis.  Even Henry Ford understood the interworking of the cars he was putting out.  In the end the CEO reveals his identity and gives a nice little handout to the worker and all is well in TV land.  The check is a token of what CEOs actually make.  This is the ultimate reflection of our trickle down economy where those at the top act like sociopaths and rulers of the universe but when it comes to doing the daily tasks of their company, they have no clue.  This is the de facto rule running on Wall Street.  In fact, CEO pay has grown outrageously over the past few decades as the middle class has gotten poorer:

Source:  American Progress

In reality, part-time employment has spread even to poor CEOs making 300 to 400 times the average American worker salary.  Poor CEOs and Wall Street executives need time off to enjoy their tax payer funded yachts and all expense hedonism trips to the Caribbean.  They would like to convince each other that the money they have is all through their will power and market prowess but in reality it is nothing more than being part of a corporatocracy and buying out the government with an army of lobbyist and insiders.  You have to be a self indulgent narcissist to take the economy to the brink of financial destruction in the case of many Wall Street firms and still reward yourself with outrageous bailouts.  The fact that average Americans are still not protesting in mass about this tells me that many actually believe what Wall Street is saying.  You see this when many would rather blame the working class for the ills of today than focus their energy where it really needs to go.

Wall Street loves this economic crisis.  They receive trillions in bailouts yet convince the public that what is occurring today is merely the “market” correcting itself.  So as most Americans have more and more troubles keeping up with their daily bills, companies are squeezing every little excess from those currently working.  Those that have jobs out of fear will work harder and probably demand less merit increases in the current economy.  After all, the head guy is only making 300 times what you make even though he can’t even understand the main function of the organization.  So what if the low level guy is selling toxic crap to some homeless person with no income and giving him access to a $500,000 loan.  These Wall Street tycoons are big picture thinkers and can’t be worried with the day to day operations of the proletariat unless it means turning it into a caricature for mass viewing and quick TIVO access.

You don’t think productivity actually increased?  Take a look at this:

Source:  BLS

This recession has been fantastic for productivity.  Just look at the above chart.  American workers have been doing their part during this recession.  After all, now you can hire a cadre of “contract” workers and not have to pay them one cent in healthcare support or even contribute to their pension.  Once the job is done you can kick them to the curb.  After all, this is capitalism so long as those at the top have managed to setup sweetheart deals and golden parachutes.  This is how the top 1 percent makes sure their hold on 40 percent of the nation’s wealth isn’t damaged.  And if you think financial institutions deserve this bailout money and their outrageous bonuses then companies like Circuit City or Mervyns would still be around today if that model applied across the board.  But this doesn’t apply to the general economy.  This applies to Wall Street and somehow the absurdity of it all still goes on.  The worst financial crisis since the Great Depression and not one solid reform has been enacted.  26 months of job losses and nothing.  Who is running the show?

The rise of the part-time work force is nothing new as we become more and more like Japan.  Japan bailed out their financial institutions after their failed stock market and real estate bubbles popped and today, their working class is made up of one-third part-time workers:

“(LA Times) In the world’s second-largest economy, the global financial crisis has forced part-time workers such as Kudo to face a harsh new reality.

Over the last few years, temporary employees have gone from being a rarity in Japan to accounting for one-third of the workforce of 67 million. They enjoy far fewer protections than full-time workers — placing their necks squarely on the layoff chopping block.

By March, the government predicts, 85,000 part-timers will fall prey to haken-giri, or temporary-worker cutbacks — a relatively small number compared with U.S. layoffs but high for a nation where job security has long been a staple.

On Wednesday, embattled Prime Minister Taro Aso made the plight of part-timers a major piece of a proposed stimulus package. Aso pledged to create 1.6 million jobs, partly by turning part-time jobs into full-time ones.”

Japan’s headline unemployment rate is 4.9 percent.  Just like our headline unemployment rate, the devil is really in the details.  If we continue on this path part-time work may be all that is left.

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