Just Say No...to Millions of Dollars??

This is quite a story, about a major league pitcher who walked away from millions of dollars because he didn't feel he deserved it.

Pitcher Spurns $12 Million, To Keep Self-Respect

The guaranteed contract is a fundamental principle of Major League Baseball, as
much a part of the game as balls, strikes and outs. No matter how a player
performs, or how his body holds up, he must be paid in full. Only in rare cases
— an injury sustained off the field, gross personal misconduct — does a player
forfeit his paycheck.

But the case of Gil Meche is rare for an entirely
different reason. Meche, a 32-year-old right-handed pitcher, had a contract that
called for a $12 million salary in 2011. Yet he will not report to Surprise,
Ariz., with the rest of the Kansas City Royals for spring training next month.
He will not have surgery to repair his chronically aching right shoulder. He
will not pitch in relief, which involves a lighter workload.

Meche
retired last week, which means he will not be paid at all.

“When I
signed my contract, my main goal was to earn it,” Meche said this week by phone
from Lafayette, La. “Once I started to realize I wasn’t earning my money, I felt
bad. I was making a crazy amount of money for not even pitching. Honestly, I
didn’t feel like I deserved it. I didn’t want to have those feelings again.”

I hope he makes a second career of giving speeches to corporate CEOs-- some of them could certainly stand to learn from his example!

Banks in Poor Neighborhoods

An interesting story from yesterday's New York Times:

City’s Poor Still Distrust Banks

In 1986, when the Lower East Side had just one bank in a 100-square-block area, the high numbers of residents without bank accounts alarmed the city but did not surprise anyone.

In the years since, the number of bank branches has skyrocketed, with the big names compelled to open in underserved areas. Community credit unions have sprung up from Washington Heights to Bedford-Stuyvesant. Outreach workers have taken to the streets to draw the “unbanked” — many of them the city’s poorest, living check to check — into the system and away from the high-fee world of check-cashing and money orders.

But none of it has worked. In Manhattan, long the world’s banking capital, 12 percent of households still do not have a bank account, compared with the national average, 8 percent, according to recently released data by the Pew Charitable Trusts.

You'd think the reason might often be that banks charge high fees for low balances, but many of the people quoted in the article aren't even thinking about that: they hardly ever have any spare money. If they do, they send it to relatives in another country. And sometimes they just don't trust banks not to rip them off. So instead they go to check-cashers who really do rip them off!

Salaries in Publishing

Publisher's Weekly just released their annual salary survey results. No big surprise: raises were lower and job dissatisfaction was higher!

Some stats from their data, which was based on 1,408 responses to an online survey sent to the magazine's subscribers:

• The average raise in 2008 was only 3.3%, down from a recent high of 5.3% in 2005
• Only 13% of respondents feel "very secure" about their jobs, down from a high of 25% in 2005.
• 75% of respondents would recommend publishing as a career-- in 2004, 86% said they would recommend it.
• Women's average pay is $66,000, men's is $96,600. I was surprised the disparity was that high, but maybe the survey responses come disproportionately from more junior employees. Although publishing employs a lot of women at all levels, including some of the highest executives, there still is probably a higher percentage of men in the upper echelons than in mid- and lower-level positions.
• 70% of respondents said their companies had instituted a salary freeze within the past year. 66% cut marketing budgets.

Median Compensation Based on Years Experience:

	Less than 3	3 to 6	7 to 10	Over 10
Editorial	$32,000	$40,000	$54,500	$80,250
Sales/Marketing	35,000	45,000	60,000	95,000
Management	93,250	77,625	94,500	132,000
Operations	37,750	42,750	60,000	74,500

(The survey sample is small enough that some oddities emerge here-- I'm sure managment salaries don't really tend to be lowest for people with 3-6 years experience!)

By these measures, I guess I'm not doing too badly. I have over 10 years experience and my salary is $93,000 plus a bonus that has been over $10,000 the last few years. My raise last year was around 4%, and it's frozen for this year. I feel relatively secure about my job, at least for the moment! I like what I do and it works well for me in a lot of ways, but I don't love it enough to not care about the money. Fortunately I've gotten past the entry level years when the money makes it a struggle to live in New York-- now I just have to hope I can successfully navigate the turbulent waters of this fast-changing industry for another 30 years or so til I retire, or come up with some better career... Wish me luck!

Papal Encyclical About the Economy

You know everyone's got the economy on the brain when even the Pope weighs in:
Pope Urges Forming New World Economic Order to Work for the ‘Common Good’

More than two years in the making, “Caritas in Veritate,” or “Charity in Truth,” is Benedict’s third encyclical since he became pope in 2005. Filled with terms like “globalization,” “market economy,” “outsourcing,” “labor unions” and “alternative energy,” it is not surprising that the Italian media reported that the Vatican was having difficulty translating the 144-page document into Latin....

In many ways, the document is a puzzling cross between an anti-globalization tract and a government white paper, another signal that the Vatican does not comfortably fit into traditional political categories of right and left.

“There are paragraphs that sound like Ayn Rand, next to paragraphs that sound like ‘The Grapes of Wrath.’ That’s quite intentional,” Vincent J. Miller, a theologian at the University of Dayton, a Catholic institution in Ohio, said by telephone.

“He’ll wax poetically about the virtuous capitalist, but then he’ll give you this very clear analysis of the ways in which global capital and the shareholder system cause managers to focus on short-term good at the expense of the community, of workers, of the environment.”

Indeed, sometimes Benedict sounds like an old-school European socialist, lamenting the decline of the social welfare state and praising the “importance” of labor unions to protect workers. Without stable work, he noted, people lose hope and tend not to get married and have children.

Well, that's all very interesting. But I really think he should be more focused on how to get all those rogue nuns to stop doing reiki...

RIP

What a strange week: three celebrities passed away, at least two of whom were famous, and/or notorious for financial issues.


Ed McMahon, of course, was famous for delivering those big Publishers Clearinghouse prize checks, as well as his later battles with foreclosure and bankruptcy.


Michael Jackson made bazillions, but spent them all and struggled with debt in recent years-- the perfect illustration of the lesson that living beyond your means will get you in trouble no matter how large or small your means happen to be.


And then there's Farrah Fawcett. Of the three, her death somehow saddened me the most, and I know a lot of my old grade school friends felt the same way. I think it may have been that she was the most famous icon of beauty when we hit the age at which little girls suddenly become conscious of beauty as something to which they aspire-- so of course we all wanted to look like her. My attempt at the hair was a voluminous disaster, but I did at least get my mom to buy me the sneakers she's wearing above. And as far as I know, Farrah managed her millions well enough to stay out of debt.

They'll all be missed.

Overdue Library Books

I was quite impressed that a two-week amnesty period actually got people to return all these library books. I would have thought laziness was a much bigger factor than racking up fees, especially since the average fee due per book was less than $2.

The San Francisco Public Library received back nearly 30,000 overdue books during a two-week amnesty period last month, the library announced Thursday.

The library estimated the total value of the 29,228 returned books at $730,000.

One of the oldest books returned was a 1947 copy of George Bernard Shaw's "Man and Superman." It had a due date of Jan. 29, 1964 and was borrowed from the Presidio Branch Library.

The returnees saved themselves a total of $55,165 in overdue fees, the library reported. Along with the returned books, they were also asked to submit "excuses" for their lateness.

One apologetic library patron, known only as "Antonio," blamed his tardiness on a two-month abduction by aliens, the library said.

Read more here.

Obama Read That Health Care Article Too!

Apparently President Obama was just as struck as I was by Atul Gawande's New Yorker article about health care costs, which I posted about yesterday. According to today's New York Times:

President Obama recently summoned aides to the Oval Office to discuss a magazine article investigating why the border town of McAllen, Tex., was the country’s most expensive place for health care. The article became required reading in the White House, with Mr. Obama even citing it at a meeting last week with two dozen Democratic senators.

“He came into the meeting with that article having affected his thinking dramatically,” said Senator Ron Wyden, Democrat of Oregon. “He, in effect, took that article and put it in front of a big group of senators and said, ‘This is what we’ve got to fix.’ ”

Unfortunately, it sounds like everyone kind of missed the point! If I understand Gawande correctly, he sees the problem as arising from the culture of the doctors in certain areas, which has been influenced by the hospital administration and its compensation structure. Members of Congress are considering capping Medicare payments in high-spending areas, but with the current system in these areas, that would just lead these doctors to do even more unnecessary procedures so they can make up in volume what they're losing in margin.

So how do you solve this problem? Can government pass laws that would require all hospitals to emulate the culture and structure at the Mayo Clinic, where all the doctors and staff are paid from pooled revenues rather than per procedure performed, so decisions can be made on the sole basis of what is right for the patient? The Mayo Clinic is renowned for great care, and their staff physicians seem to make between $200-300,000 in salary, or more as those numbers were for the Minnesota and Wisconsin locations as of 9/06 to 6/08. (Their salaries are supposed to be in line with "marketplace salaries for physicians in comparable large group practices.") That may seem like less when you consider that a doctor may rack up $300,000 in educational loans, as a commenter pointed out on the last post, but it's still quite a lot of money. This comes back to the problem of culture. How many of these doctors are comparing themselves to lawyers and investment bankers who make millions a year-- or at least did until recently. Maybe if the good old days on Wall Street are over, doctors won't have to feel quite so much like they're missing out!

The other thing that has to change for this problem to be fixed is patient expectations. We are all told nowadays to take control of our own health care, to get second opinions and do our own research, to demand the treatments we feel we need, and to ask our doctors if Medicine XYZ we saw on TV is right for us. And that is a tough one. Who wants to be told they can't have something that might work if they've run out of other options, even when a study has shown that that treatment is 99% likely to fail? I mean, if my dad's doctors had said there was a very expensive brain tumor treatment available but that they weren't going to try it because people like him had a 99% chance of not being helped by it anyway, I'd have had a pretty hard time agreeing that it wasn't "worth it" and just letting him die. (He had an experimental treatment and is doing very well now, by the way.) But there are probably plenty of cases that aren't life and death, where doctors provide unnecessary treatment just to shut patients up!

Anyway, greater minds than mine will have to figure out the answers on this one! For more reading on this topic, here's a book that has been on my radar ever since it was called the "best economics book of the year" by David Leonhardt of the New York Times: Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer.

I Just Saved $5? $10? a Week... Depending on How Much New York Times Delivery Actually Costs

Sometimes it's so satisfying to find some small money leak that you can fix. I realized that just didn't need my weekend newspaper delivery any more-- I tend to be with Sweetie, and by the time I'm back at my place, the papers have been thrown out or stolen and I've already read Sweetie's copy. So why keep paying for that?? I switched to a Monday-Friday subscription. A few dollars a week may not seem like much, but it adds up over time, and why waste any money, however small the amount?

But how much money did I actually save? Here's an interesting tidbit I discovered along the way. According to the Times' website, the regular, undiscounted price for a 7-day a week subscription price is supposedly $21.20--the website quotes a $10.60 per week price but says it increases to the regular price after an introductory 12-week period. The Monday-Friday price is $11.20 ($5.60 intro). The Saturday-Sunday-only price is $11.40 a week ($5.70 intro). But I have only been paying $42.40 a month, or I guess every 4 weeks, as that is 4X the $10.60 rate above. I'm well past any initial promotional rate, so I don't know why this is the case. But it means my savings for canceling weekends is actually only $5. But at least I am still paying less than the cover price, which is $1.50 Monday-Saturday, and $5 on weekends, which comes to $14 a week. (The Times recently announced they'll raise the price to $2/$6 as of June 1, though home delivery prices supposedly won't change just yet. OOPS-- I wrote this a couple of days ago, but since then, I've gotten a delivery price increase notice!)

In any case, my original point still holds: it's nice to save a few bucks, however you can!

What's a Necessity?

Here's something very interesting from Floyd Norris's blog on the NY Times website:

What’s a Necessity?

In 2006, 70 percent deemed [air conditioning] a necessity. This year the figure was down to 54 percent. Dishwashers, clothes dryers, microwave ovens and television sets are also seen as necessities by fewer people now than in 2006.

Overall, 52 percent think a television is a necessity. That is the lowest figure since that question was first asked in 1973.

The television breakdown is interesting. The older you are, the more likely you are to view it as a necessity. Among those over 65, 68 percent think a set is a necessity, compared to 38 percent of those age 18 to 29. But both those figures are down from three years ago.

Similarly, the young are more likely to view a cellphone as a necessity, and less likely to see a need for a landline.

Fascinating! I'm sure some of this must be a psychological adjustment to being faced with the possibility of not being able to afford something you used to think was necessary-- it's easier to accept if you can brush it off as something you didn't really need anyway! The data is from the Pew Research Center, where there is a nice chart that shows the sudden decline in necessary-ness of quite a few items!

A Couple Tidbits of Recent News

Gotta love this headline: Ford Has Loss of $1.4 Billion in Quarter, but Beats Forecast. How bad must that forecast have been??

In other economic news, I really liked the charts of median housing prices vs. income in various cities that accompanied an article in the NY Times a few days ago. If you look at it this way, quite a few cities never really had a housing bubble at all-- there was just the kind of price increase you'd expect as incomes grew. Example, Atlanta:


Then there are cities that had extremely pronounced skews in housing cost as a percentage of income. San Francisco and New York have always been expensive, and are still priced higher than historical averages:


It's interesting to note that in 1979, New York was actually a more affordable place to live than San Francisco in these terms:


Los Angeles had one of the biggest spikes of all, but prices have fallen steeply in relation to income:


What I'd really like to see is a breakout of the two factors in each of these graphs-- the actual median home prices over time and the actual median incomes over time. I think part of the story here is that median incomes are pretty flat, as most people have gotten pretty much no benefit at all from the economic growth we've had over the past decade. In cities with the highest degrees of income inequality, like New York, we see the biggest housing bubbles, as those at the highest end of the income spectrum, who have increased their wealth the most in both absolute and relative terms, help drive up prices for everyone else. That's my theory anyway... either way, I do love data and charts like this. I should have become an economist!

Layoffs at Company That Makes Money

Here's a news story I stumbled across today: Mass. company responds to decreased demand for personalized stationery by cutting 70 jobs

NORTH ADAMS, Mass. —

The Massachusetts company that makes paper for U.S. currency has laid off 70 employees in its personalized stationery division in response to a drop in demand for the product.

Officials at Crane & Co. also announced Tuesday that the roughly 200 remaining employees in the division would take a 9 percent pay cut.

Chief Executive Charles Kittredge called the layoffs "extremely difficult."

He says in a tough economy people do not have the discretionary income to buy personalized stationery.

Fifty of the eliminated positions were in Crane's personal design services facility in North Adams and 20 cuts were at the company's factory in Dalton.

The company, founded in 1801, also makes currency and passport paper, and water filters.

It doesn't surprise me at all that people are cutting back on personalized stationery... but what about all the increased demand they'll be getting for paper as the Fed prints more money?

Almost $13 Trillion in Net Worth Lost

From the NY Times website:

Net Worth of Families Down Sharply

Family net worth had hit an all-time high of $64.36 trillion in the April-June quarter of 2007 but has fallen in every quarter since that time.

The record 9 percent drop in the fourth quarter pushed total net worth down to $51.48 trillion, a level that is 20 percent below the third quarter 2007 peak.

Wow. If you estimate the population of the US at around 305 million, it's a drop from about $211,000 per person to $169,000 per person, a drop of $42,000 each. I can't say I'm proud of having done more than my share of the losing!

Looking at Japan's Stock Market

Ugh, this is the ugliest thing I've seen in a while:

Japan's Long Slump Tests Faith in the Resilience of Stocks




I've been continuing to contribute to my 401k, and I still have a fairly aggressive blend of investments there. And with the kind of share prices we've fallen to, I've been thinking about perhaps even buying a few individual stocks again, a few good dividend-paying blue chips that may be relative bargains right now. But when I see things like that chart, I wonder if my dad was right all along when he seemed to scorn the stock market as being a risky, rigged game that was better avoided in favor of conservative investments. And this is a man who has a real defined-benefit pension-- it's not like he even had to worry about losing all his retirement income!

What's scary is that some of this isn't even about the underlying value of the companies. It's about panic and herd mentality. So far I've had the nerve to stay the course and hope I can benefit from the poor choices of others. But at other moments I start thinking "30 years to retirement isn't going to be enough..."

Where Did It All Go? Here's One Answer...

I got a kick out of this story: Paul Greenwood is the Town Supervisor of wealthy, horsy North Salem, NY. He is also a partner at Westridge Capital Management, where he is accused of bilking investors of $553 million. According to the 2/28-3/1 Wall Street Journal weekend edition, "prosecutors allege that client money was used for horses, homes, collectible teddy bears and other luxuries."

What next, will we find out that Bernie Madoff spent his ill-gotten gains on Cabbage Patch Kids? Did Allen Stanford's Ponzi scheme fund a Beanie Baby binge?

Bizarre...

Executives Starting to Get the Message

From yesterday's NY Times business section:

CEO of Hewlett Packard cuts his own salary 20%

CEO of G. E. declines his 2008 bonus

Soon we will have wealthy masters of the universe falling all over themselves trying to outdo each other with their pay cuts!

Women Get Taken to the Cleaners

Remember this post? Price Discrimination at Dry Cleaners

So I hand the girl my two shirts and she says "are these man shirts or lady?" I look at her blankly and she says, "oh, these are ladies blouse, so dryclean." I say no, that I don't want them drycleaned, just laundered, no starch. She says they only do that for men's shirts, and that women's shirts have to be drycleaned, at a cost of $2.50 vs. $1.50 each. I argue that that is ridiculous, as all collared cotton shirts are the same and they should charge based on the service rendered, not what gender wears the shirts. She doesn't budge, so I told her I would be taking all my laundry and drycleaning business elsewhere.

Well, I'm not the only one. Check out this article from today's New York Times.

For women across New York City and beyond, it basically amounts to being taken to the cleaners. Women’s shirts often cost much more to launder than men’s, even if they are smaller and made of the same cloth.

Many women grudgingly accept the higher prices, much as they accept the perennial lack of pockets in their pants and the lengthier lines outside their restrooms. But not Janet Floyd, a 44-year-old mother, community volunteer and newly minted missionary for gender equality in the wash place.

Ms. Floyd’s crusade began in November, when, she said, she and her husband brought their nearly identical blue Brooks Brothers oxfords to be laundered at Best Cleaners in Chelsea. The shirts came back clean, but Ms. Floyd discovered that hers cost $8.75, his $7.

And yes, that is where I totally choked. $8.75 vs. $7? For one shirt? My current price for drycleaning a shirt may be a bit higher than the $2.50 price I paid in April 2007, but I think it's still $3 or less. Janet Floyd pays extra to have both her and her husband's shirts hand-ironed, which make the price discrepancy even more outrageous-- the standard justification for charging more for women's shirts is that they do not fit on the pressing machines used for larger men's shirts. Anyway, I feel Ms. Floyd's pain but I can't imagine paying $7 and up to have a shirt cleaned by any method!

Is this a problem particular to New York? How much do places in other areas charge to launder shirts?

Earnings of the Richest 400 Americans

This was buried in the Business section of the NY Times today-- the IRS has released statistics on the 2006 income and taxes for the wealthiest 400 Americans.

The income of the 400 wealthiest Americans swelled in 2006, soaring nearly 23 percent from the previous year, to an average of $263 million, according to data released Thursday by the Internal Revenue Service. Since 1996, this group has nearly doubled its share of all income earned in the United States.

The top 400 paid just more than $18 billion in federal income taxes in 2006, or an average of $45 million, on a record $105 billion in total income — the lowest effective tax rate in the 15 years since the agency began releasing such data.

How lovely for them.

"Dating a Banker Anonymous"

Today's grossest story from the NY Times: It's the Economy, Girlfriend, which is about a support group for women who are dating investment bankers.

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.”

[She and other women] 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.”

If you read the blog, you'll get the sense that this is all rather clever satire, but I wonder if the women attending these meetings really think so?

It's not that I don't sympathize on a certain level-- layoffs and a tough economy definitely put stress on relationships, and people in certain industries are much more likely to feel like they're next on the chopping block. But please-- "it's not what I signed up for?"

Gross. Gross, gross, gross.

Financial Adviser Tries to Fake His Own Death

Another story of what sounds like a desperate sleaze bag, trying to escape his comeuppance...

A financial adviser from Indiana disappeared into the Alabama woods early Monday after faking a distress call and parachuting from a small plane that crashed in Florida.

The police in three states were looking for the pilot, identified as Marcus Schrenker, 38.

No one was hurt in the crash. According to the police in Santa Rosa County in the Florida Panhandle, where the plane went down, Mr. Schrenker turned up safely about 220 miles north of there. And there is evidence that Mr. Schrenker was an experienced pilot who might have been trying to fake his own death.

His life seemed to be unraveling. Court records show that Mr. Schrenker’s wife filed for divorce on Dec. 30. A Maryland court recently issued a judgment of more than $500,000 against one of three Indiana companies registered in his name — and all three are being investigated for securities fraud by the Indiana Secretary of State’s Office, a spokesman, Jim Gavin, said.

Here's the link to the rest of the New York Times story.

After reading this, don't forget to tell me how much money you make in the comments on the next post!

More Stats from New York Magazine

Another set of interesting stats from New York Magazine, though less scary than Monday's-- this, in fact, is rather heart-warming:

Citymeals on Wheels donations:

October 15, 2008:
603 donations
For a total of $49,201
Dow dropped 733 that day, closing at 8,577

October 15, 2007:
314 donations
For a total of $22,760
Down dropped 108 that day, closing at 13,984

It's good to know that some New Yorkers are more inspired to give when times get tough!