11.23.2003
SpinI think it’s interesting, the recent spate of articles about how wonderful the economy is becoming, and the inevitable backlash of articles saying we're not out of the woods yet, we're still going to hell in a hand basket, companies are still laying off, etc. etc. I see this as a war between Republican and Democratic ideology. Moreover, they're duking it out through the media. You see, the Republicans desperately want the economy to improve (or at least to be seen to have improved) by the time Election Day rolls around. The Democrats want a recovery too – but not as quickly (or not to appear as immediately) so that they can use the leverage of the current administration’s ineptitude (if that is indeed the case) against them in the court of public opinion. If it appears that the economy is recovering right now or in the near future, then the Republicans will take credit for it as proof that their policies were effective. If the economy doesn't appear to start to recover until right before the election or right after, then the Democrats will take credit for it – see? Getting rid of the Republicans must have been what fixed what was wrong with the economy.
The truth?Shoot, Job Fairies routinely catch hell for telling the truth. But we love it; it’s our job – we gotta do it. As Tom Lehrer said, “Fish gotta swim, bats gotta fly”. We have to tell you how it really is. To paraphrase J. P. Morgan – “The market will fluctuate”. That’s it. Seriously. The market will go up and down. It does so in a cycle that’s not entirely predictable but inevitable. There will be periods where it’s gung-ho and then that'll be followed by a period where the economic conditions aren't all that great. And after a while, things will get better again. It doesn't have all that much to do with the current administration, what their ideology is, or who they're in bed with in the corporate world. So, it’s not all that sexy or attractive an answer. But it’s the truth.
Sure, politicians influence things a little bit. Tax cuts tweak things; so does spending on big-budget items like defense during a war. However, they don't have nearly the influence that you or they think. The whole genius of the American economy is that most of the mechanism is hidden away, safe from the impatient fingers of politicians who would fiddle with its gears and levers without really knowing what the hell they're doing. In times of crisis (or perceived crisis), those “in charge” like to create the appearance of great activity. If they're smart, they'll just make a lot of noise and movement until things get better of their own accord, as they will eventually. If they're stupid, they'll actually try to twiddle the knobs of the economy. Heaven help us if they do.
So, What Can I Do About This?JobFairy.com isn't just about improving your resume, finding a better job, and being paid fairly. It’s also about surviving your career in IT. Since there are going to be radical changes in technology over the course of a thirty-year career, it’s reasonable to expect that the economy will also fluctuate along with those changes. We advocate financial preparedness. Just as you prepare for a disaster, you should also expect a couple of downturns that may affect you. We advise you to pare down debt to a minimum or to not have any debt at all (it reduces your maneuverability and makes you vulnerable to bad corporate behavior), and to build up savings that you may eventually have to use. Six months’ worth is a great goal, but most people don't have that in cash. What is more realistic is that you have operating funds lined up for the next year.
Wait a minute, you say. If I can't save six month’s worth of money, what makes you think I can put together a year’s worth of expenses? Maybe you can, and you just don't realize it. It works like this. You know you're going to get unemployment. That’s nine months of half pay. If you pared your expenses down and paid off all (or most of) your debt (before the layoff), that should cover (or almost cover) your mortgage payment. You might have gotten severance when you were laid off. That may cover your expenses other than the mortgage for a while. Download the burn rate spreadsheet to calculate how long those payments will stretch out more precisely. You should be putting no less than 10% into your savings every payday. 20% if you can manage it. Before you are laid off, at the first time you smell trouble, start paying off your credit card debt if you have any (starting now, get in the habit of paying off balances each month). Call your card companies and see if you can get your balances increased on your cards, and/or your rates dropped. You may need to live on these. Call around and see if refinancing makes financial sense for you. If it does, you might want to pull out $20K or so to use as a reserve – in case. (Because you won't be able to do it once you're unemployed. Use the spreadsheet to figure out what you'd need in addition to all other sources of funding.) Or contact your mortgage company about getting a home equity line of credit, and what their forbearance policy is. Most places don't charge you until you actually start to use it. Now that you've lined up all this money – don't touch it. Many people are tempted to spend it if they have it. These funds are to ensure you don't become homeless, lose your car, and trash your credit rating. According to the burn rate spreadsheet, make sure you have enough potential sources of funds to last you at least one year. Using Job Fairy techniques, you shouldn't be out of work for any longer than six months though. (Experienced Fairies usually find work within 6 - 8 weeks, even in slow periods, like the Summer of 2002.)
P. S.
And what about the so-called improvements to the economy? What about the outsourcing of U.S. jobs overseas? Well, no matter what kind of political spin is going on, the numbers don't lie. People are starting to get hired. There are more jobs posted available now than there have been in months. Recruiters are busy these days, and that's good. This could work in your favor - it's an election year, so the current administration has every reason to make things get better in a hurry. And as for the outsourcing - the other side of the story is that not all companies can make it work as a solution. Qwest has been moving to replace its Tata consultants with Colorado-based Java programmers, because they just couldn't make the language, cultural, quality, and time difference barriers work out. So jobs might get outsourced in the short term, but they might not be gone for the long term. If you pay attention to the overall numbers, the steady increase in job creation, plus the rapid decline in layoffs, you'll see the real picture - not some political party's spin.
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