Paycuts felt everywhere

[Marionnette]

If they would have saved some of their earnings, they wouldn't be in such bad shape.

In the story, only one of the people they talked to said he had a savings account to fall back on (and IIRC, he was in his late 50's). Yes, you have larger bills ~ you also have a much larger paycheck.

Just like everyone else, when your income falls, your output needs to be adjusted.

The smaller bonus checks that hit accounts across the financial-services industry this month are making it difficult to maintain the lifestyles that Wall Street workers expect, according to interviews with bankers and their accountants, therapists, advisers and headhunters.

This is one paragraph that really stuck out to me.

I guess that we're all supposed to feel less sympathy for these people because they work on Wall Street? That's the impression that I get from you because it's neither bolded nor underlined in the article itself.

It appears to me that they are no different than most Americans have been. They lived beyond their means, saved very little and are now having to make adjustments because of it. Funny how we're expected to have compassion for the person who purchased more house than they could afford to pay for (and even bail them out with our tax dollars). But we cannot muster any sympathy for someone who made more money than we do and who is also facing the decision to cut back on discretionary spending.

 

[eliza61]

Sam, I felt the same about a bonus. They should be treated as gravy, not something you spend before its even in the bank. I'm lucky enough to get a modest bonus most quarters, but I don't budget based on it.

What really killed me was that most of them don't save. Really?!?! Wow!! That's ridiculous.

Most Americans didn't save. Until this latest recession which was a national wake up call, the savings rate was some thing like -2%.

Rich have not better habits than the poor, they just have bigger checks to do their habits with.

 

[mjbaby]

On Wall ST., the bonus IS the bulk of remuneration. The salaries are actually rather small in comparison to total comp. For example, there are people who have salaries of $250K but their bonuses (including cash and stock options are in the millions). Now imagine if their bonus was cut to $0. They have expenses of a $million income, but only made $250K. You can bet that's going to hurt.

Exactly. Wall St. bonuses don't work quite the same way as other industries'. The word is the same although the mechanism differs. A bonus that's 1/52 of an annual salary is not at all the same as one that's 1/3 or even 1/2 of compensation (especially when even a good chunk of that is tied to stock price and/or deferred compensation which may, itself, turn into nothing). It's not unheard of for a Wall St. "bonus" to contain no actual cash.

It's a risk to take, certainly, working in a company like this in a role where one is paid this way. And we all know that sometimes risks don't play out the way we'd like. But to pretend that someone shouldn't feel angry or in pain when that happens just because the upside was so high is ridiculous.

 

[punkin]

Schadenfreude....http://www.youtube.com/watch?v=t9B-ZoS0wvU

"Happiness at the misfortune of others." That is German!

 

[SaraJayne]

I guess that we're all supposed to feel less sympathy for these people because they work on Wall Street? That's the impression that I get from you because it's neither bolded nor underlined in the article itself.

I did the bolding. It was underlined because the software knows it's a link within the story.

I was referring to the "lifestyle they expect".

 

[DWGal210]

Most Americans didn't save. Until this latest recession which was a national wake up call, the savings rate was some thing like -2%.

Rich have not better habits than the poor, they just have bigger checks to do their habits with.

Wow, that's a depressing stat, isn't it??

If you're not a good budgeter/money manager, it doesn't matter if you make $35,000 or $350,000. Sure, at a high salary you can obviously purchase more stuff, bigger home, better car, etc - but if you don't save in some capacity, you're sunk no matter how much you make. No one really controls 100% of their income, even if you're your own boss. There's always outside factors - that money tree won't continue to bloom forever.

 

[ccgirl]

I guess that we're all supposed to feel less sympathy for these people because they work on Wall Street? That's the impression that I get from you because it's neither bolded nor underlined in the article itself.

It appears to me that they are no different than most Americans have been. They lived beyond their means, saved very little and are now having to make adjustments because of it. Funny how we're expected to have compassion for the person who purchased more house than they could afford to pay for (and even bail them out with our tax dollars). But we cannot muster any sympathy for someone who made more money than we do and who is also facing the decision to cut back on discretionary spending.

Most Americans didn't save. Until this latest recession which was a national wake up call, the savings rate was some thing like -2%.

Rich have not better habits than the poor, they just have bigger checks to do their habits with.

Both put very well!

I did the bolding. It was underlined because the software knows it's a link within the story.

I was referring to the "lifestyle they expect".

When it comes right doen to it, we all expect a certain lifestyle. It is the level of lifestyle of which we have been accustomed to that differs. One is not more worthy of the other.

 

[SaraJayne]

Both put very well!



When it comes right doen to it, we all expect a certain lifestyle. It is the level of lifestyle of which we have been accustomed to that differs. One is not more worthy of the other.

Expecting a lifestyle and the reality of the situation are two different things. That's something we're teaching our 15 year old DS right now. Just because he wants expensive clothes and flashy toys doesn't mean he'll be able to afford them.

It's a lesson that many adults don't learn.

 

[akcire]

Here's what has been bothering me lately. There was a time when being wealthy allowed people to have different lifestyle. Now it allows people to have a different life. First class isn't just a travel class. It never bothered me until my daughter was born. Now it is glaringly obvious, when I think about the advantages of children who have full time nannys, with SAHM's, attend $25,000.00 pre-schools, and have thousands spent on extra activities. Ok, complaint over. We do fine, I don't have to worry about my kid eating--but if anyone knows some out of work french tutors, piano teachers, ballet instructors---I have food and will swap for lessons.

The real reason I decided to post, is the upper classes are cutting back, even the "real" money wealthy---those with old money. My friend has worked for years for a super high end sail manufacturer, the sails cost $75,000+ and are used for racing, etc. She loved her job, but recently since the orders are so slow (this company used to have a waiting list) she has been laid off and is basically on call if they get some orders. The ultra-luxury goods industry used to be untouchable--not true anymore.

I have another divorced friend who put her 3 kids through college as a salesperson for Cartier, let's just say it's a good thing the youngest finished last year and all the boys have jobs.

 

[ccgirl]

Here's what has been bothering me lately. There was a time when being wealthy allowed people to have different lifestyle. Now it allows people to have a different life. First class isn't just a travel class. It never bothered me until my daughter was born. Now it is glaringly obvious, when I think about the advantages of children who have full time nannys, with SAHM's, attend $25,000.00 pre-schools, and have thousands spent on extra activities. Ok, complaint over. We do fine, I don't have to worry about my kid eating--but if anyone knows some out of work french tutors, piano teachers, ballet instructors---I have food and will swap for lessons.

The real reason I decided to post, is the upper classes are cutting back, even the "real" money wealthy---those with old money. My friend has worked for years for a super high end sail manufacturer, the sails cost $75,000+ and are used for racing, etc. She loved her job, but recently since the orders are so slow (this company used to have a waiting list) she has been laid off and is basically on call if they get some orders. The ultra-luxury goods industry used to be untouchable--not true anymore.

I have another divorced friend who put her 3 kids through college as a salesperson for Cartier, let's just say it's a good thing the youngest finished last year and all the boys have jobs.

Just remember, that different life is not always better!

I teach my children to work hard for what they want. Do not expect handouts. But, expect to help others. If you have an extra dollar - give it away.

 

[sam_gordon]

Exactly. Wall St. bonuses don't work quite the same way as other industries'. The word is the same although the mechanism differs. A bonus that's 1/52 of an annual salary is not at all the same as one that's 1/3 or even 1/2 of compensation (especially when even a good chunk of that is tied to stock price and/or deferred compensation which may, itself, turn into nothing). It's not unheard of for a Wall St. "bonus" to contain no actual cash.

It's a risk to take, certainly, working in a company like this in a role where one is paid this way. And we all know that sometimes risks don't play out the way we'd like. But to pretend that someone shouldn't feel angry or in pain when that happens just because the upside was so high is ridiculous.

Let's look at a sales person who works on commission though. Aren't they expected to properly budget and live within their means? Does someone feel bad if a sales person doesn't sell enough? After all, when you don't buy, they don't make money.

My point is that's the gamble you take when you sign on to one of these jobs. It's not for me. I want that steady "here's what you'll get" amount, supplemented by OT & bonuses. Others would rather gamble, which may pay off generously, but when it doesn't, I don't think they should complain.

 

[brucerob62]

You know what? We could all get some kind of smug satisfaction from reading about a 1%-er who can't live the lifestyle that he was accustomed to, but try to look at the total picture.

The guy in the article will not be able to make the additions or improvements on his home this year. That means that some contractor and his crew are not going to have work this summer. Maybe not all summer, but certainly for a few weeks.

And if this same guy decides to send his kids to public school instead of that private day school? Well, some teacher is going to lose her job. And another public classroom is going to become that much more crowded.

That landlord who is only going to get 1/4 the number of weeks rented out at his summer house is still going to have to pay his taxes and mortgage. Guess how he decides to make ends meet? He lets the landscaper go. And somewhere a waitress, shopkeeper and restaurant owner in that little town is going to have a rotten summer because tourism is down 75%.

That $17,000 a year that was spent on the dogs partially paid the salary of a dog walker, groomer and vet tech.

We can all be jealous of that 1%-er who feels like he's missing out on the American dream he worked so hard for. Or we can be worried about how salary cuts and job losses anywhere have an affect on our economy.

you have a great point..glad you said it..I was thinking it...we all as americans aspire to be in the top 1% and if we get there..we would do the same thing...just remember it can all come crashing down...lesson learned dont live for the bonus..it may not come..I have learned that at the company i work for....dont LIVE BEYOND YOUR MEANS either

 

[brucerob62]

not to get political..but this is why the rich should not be punished and pay a higher percentage in taxes....get rid of the IRS..and everyone pay a flat percentage based on income and be done with it..that will save us lots of money as a country..taxing the top 1% a higher rate..will cause them to go out of business.stop hiring employees...then what..everyone would be affected ..not just them..think about it..

 

[ccgirl]

I get that we sound crazy to people who live on $1/day- but the difference is that here you actually can't live on that. I can't just go out to a field, build a hut out of sticks and farm the open land. There is no such thing as getting a place to live that you could get for that in expensive here, the cost of living is totally unable to be compared. If you didn't get kicked off for code violations, most areas you couldn't even buy or rent the land for $1/day. The modest income in the midwest is dirt poor on the coastlines... and it would be filthy rich in some countries. In places where people live on $1/day you get much more for that dollar than you do here.

As strange as it sounds, the more money you have, the harder it often is to take a huge cut because of lifestyle patterns.

That's right....that's where welfare comes in. Here, you can live on no job and collect welfare for as long as you need it.

 

[sam_gordon]

not to get political..but this is why the rich should not be punished and pay a higher percentage in taxes....get rid of the IRS..and everyone pay a flat percentage based on income and be done with it..that will save us lots of money as a country..taxing the top 1% a higher rate..will cause them to go out of business.stop hiring employees...then what..everyone would be affected ..not just them..think about it..

That would explain why a bunch of businesses & jobs disappeared between 1993-2002 (when the top bracket was almost 40% instead of the current 35%).

It was even higher in the early 80s.

ETA: Source: http://www.taxfoundation.org/taxdata/show/151.html

 

[punkin]

not to get political..but this is why the rich should not be punished and pay a higher percentage in taxes....get rid of the IRS..and everyone pay a flat percentage based on income and be done with it..that will save us lots of money as a country..taxing the top 1% a higher rate..will cause them to go out of business.stop hiring employees...then what..everyone would be affected ..not just them..think about it..

I am completely against the flat tax, but really don't want to discuss it here because it is bound to turn political.

It's also completely OT for this thread.

 

[brucerob62]

That would explain why a bunch of businesses & jobs disappeared between 1993-2002 (when the top bracket was almost 40% instead of the current 35%).

It was even higher in the early 80s.

ETA: Source: http://www.taxfoundation.org/taxdata/show/151.html

exactly my point thanx

 

[sam_gordon]

exactly my point thanx

But that doesn't explain why the unemployment rate was as low 96-02 (with higher percentages for the top earners) as it was through 09. Source: http://www.infoplease.com/ipa/A0104719.html

I thought higher tax percentages for high earners = layoffs. If that's the case, why wasn't unemployment high when the tax rates were high?

 

[iheartnmr's]

People in other countries who make $1.00 a day can't live on that either. That's why they are in poverty we can't even remotely understand. There is no social safety net in those countries, no food banks.

But that being said, I begrudge no one the money they make. If they've earned a high salary, then let them earn a high salary and the perks that come with that. Some of the comments here are reminicent of communism disguised. I don't think the rich should live like the poor. I don't think they should give away their money to those less fortunate so we are all equal. I for one am glad for the rich. They employ me and pay for a lot of the cultural things around me. They run the businesses I buy my goods from. If we were all the working class who would we be working for?

 

[sam_gordon]

But that being said, I begrudge no one the money they make. If they've earned a high salary, then let them earn a high salary and the perks that come with that. Some of the comments here are reminicent of communism disguised. I don't think the rich should live like the poor. I don't think they should give away their money to those less fortunate so we are all equal. I for one am glad for the rich. They employ me and pay for a lot of the cultural things around me. They run the businesses I buy my goods from. If we were all the working class who would we be working for?

I have no problem with people earning a high salary and enjoying the perks. BUT, I also don't feel they should complain when they can't afford an extra MONTH of vacation or their third or fourth house. Maybe if they would have SAVED some of that money they earned, they would have been able to "ride out" a low spot.