American families have cut expenses to the bone, but stagnant wages still make keeping up with inflation impossible for the middle class. (Photo Credit: CC BY-SA/Dennis Jarvis/Flickr)

A corporate information service called American Pulse recently conducted a survey that shows how far the U.S. job market has fallen into the mire of class distinction. As the Huffington Post notes, 90 percent of U.S. workers surveyed admitted that they do not expect their stagnant wages to be able to compensate for rising gas and food prices.

‘Permanent midnight’ for the middle class

As the American middle class continues to sink beneath mountains of debt, rising prices and inadequate pay en route to a “permanent midnight” of poverty, faith in U.S. government’s economic policies has declined. Talk of rising inflation and a double-dip recession continues, and families who can ill afford to tighten the belt any more wonder where they can cut back. Provided salaries remain at low levels and prices continue to skyrocket, survey respondents said they’d undergo greater austerity measures in the following areas:

• Only buying necessities: confirmed by 70.5 percent
• Infrequent driving: 63.4 percent
• Spending less on clothes: 58.9 percent
• More bargain hunting: 53.1 percent
• Tightening the personal budget: 50.0 percent
• Buying generic: 49.9 percent
• Buying fewer groceries: 42.0 percent
• No change: 6.6 percent

Adieu, gross domestic product

Historically, consumer spending accounts for about 70 percent of the United States’ gross domestic product. Significant decreases in consumer spending retard economic growth. As the consumer spending growth rate of 2.2 percent in the first quarter of 2011 was much lower than economists had anticipated, the problem becomes obvious.

Nearly half of Americans believe a second Great Depression is rapping at the chamber door, according to a CNN poll. A June Gallup poll reflected shrinking consumer confidence, while a separate poll found that workers are currently less satisfied with their salaries and overall economic condition than they were before recession struck in 2008. Lack of career advancement was a common problem listed by respondents in nearly all recent surveys on the topic.

Breaking the link between profits and raises

Getting a raise used to have some connection to corporate profits, notes Brad Delong in Mother Jones. However, even though U.S. Department of Labor research has shown that U.S. worker productivity has surged, income has remained stagnant for most Americans. Data indicates that if the median U.S. household income had kept pace with the state of the economy since 1970, it would currently be $92,000, rather than $50,000. U.S. CEOs are making more money than they have since 2007.

How to ask for a raise, just in case

Sources

American Pulse

CNN

Economic Policy Institute

Huffington Post

Mother Jones

Pay Czar Kenneth Feinberg will once more slash and burn the salaries of TARP CEOs. (Photo: Wikipedia)

Obama “Pay Czar” Kenneth Feinberg wields a mighty money ax, and that ax is coming down once more on executive salaries at bailed out companies, says Reuters. The five firms under consideration – AIG, General Motors, GMAC, Chrysler and Chrysler Financial – are still depending upon government assistance to remain afloat. Since the Obama administration has found that previous crackdowns haven’t sent talented workers “fleeing for the exits” as the companies feared, the Pay Czar has the power to make another cut. Overall for 2010, the Treasury cut cash pay 33 percent.

Pay Czar’s office says 84 percent still with firms, despite pay cuts

In fact, Feinberg told the media that “There is a striking number of holdovers.” So far, that’s all the evidence the Treasury needs to justify striking this delicate balance and enable more money to come back to American taxpayers. The firms must be able to function, but taxpayers’ overnight loans must also be repaid. If a firm received “exception assistance” from the $700 billion in TARP funds, that firm must make sacrifices to repay America’s taxpayer base.

People don’t like to hear about AIG execs receiving multi-million-dollar bonuses

Yet that’s what happened, even after taxpayers had given up TARP monies to keep them afloat. Now that Pay Czar Feinberg is making wider cuts, the hope is that more Wall Street firms will follow the example. It could be the only way to begin restoring public confidence in a financial sector that openly played unnecessarily risky games with other people’s money. Reuters reports that Bank of America and Citigroup have repaid all or some of the TARP money they took, but too many offenders are still on the hook.

No cash bonuses, no long-term restricted stock, no golden parachutes

Those have all been eliminated in those companies under Pay Czar Feinberg’s watch. That frees up $45 million for AIG to repay their obligation to the American people. Salaries will also remain frozen at AIG with only “one exception” until they meet their obligation, says Feinberg. GMAC’s CEO has no cash salary now, only long-term stock. Chrysler’s CEO has a similar deal. Salaries there and at General Motors have been tightly monitored and kept down.

Let us reflect back on your greed

Companies that repay their TARP obligation would technically slip out of Pay Czar Feinberg’s regulation. Perhaps this is why he is looking to expand his legal authority. Reuters says he has contacted 419 TARP firms – including those who are technically off the hook – and asked them to “look back” at their past salary history. If pay was “excessive” between October 2008 (when TARP funds were first distributed) and February 2009 (when legislation affected pay levels at TARP firms), Pay Czar Feinberg wants there to be renegotiation. Specifically, pay above $500,000 for 2008 that is “not in the public interest” will apparently be routed back to American taxpayers in a yet to be determined percentage. Companies can either cooperate voluntarily or be forced by the Pay Czar to comply and give up news of their transgression to the public.

That’s quite an aggressive retroactive plan, isn’t it?

It will be interesting to see how many TARP companies fall in line. It is difficult to imagine the American public having any sympathy for them at this point. The recession has run too long and struck too deep in the country’s consciousness for more excuses. Taxpayers are not a personal loan company for these wasteful behemoths. Pay Czar Kenneth Feinberg may be the czar America needs; he may be the czar that Glenn Beck will regret weeping over.

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It should come as no surprise that graduates from Dartmouth and MIT end up in very high-paying careers. However, some people are surprised that fourth on the pay-scale list, right after Harvard, is a liberal arts university called Harvey Mudd College.

The New York Times reports that the mid-career median salary for Harvey Mudd College is about $124,000, right in the same range as MIT and Harvard. Dartmouth tops the list with a median mid-career salary of $130,000. That’s enough to allow you to pay back the personal loans that paid for your tuition in just a couple of years.

Why the surprise?

People are not the least bit surprised that MIT graduates make big money because it’s common knowledge that jobs in technology are among the highest paying in the country. But Harvey Mudd College is just another liberal arts school in California, right? Though it does label itself a liberal arts university, the Harvey Mudd College web site says:

We’re one of the premier math, science and engineering colleges in the nation. We’re also unique because we are a liberal arts college. Aren’t math, science and engineering mutually exclusive of the liberal arts? Maybe at some places, but not at HMC.

What do you mean, liberal arts?

So, if Harvey Mudd College is a math, science and engineering college, what makes it a liberal arts school? The web site says:

We educate engineers, scientists and mathematicians who become leaders in their fields and have a clear understanding of the impact their work has on society. That’s the big picture.

Now here’s how we make it work. Mudd offers nine math, science, and engineering-based majors, all grounded in a solid core curriculum that includes a healthy dose of humanities and social science courses. Why? Because we know that you don’t have to sacrifice your interest in music or art (or anything else) to be good scientists. And because an understanding of history and politics will make us more effective engineers, chemists, lawyers, doctors and human beings.

More effective human beings, eh? That certainly sounds like a liberal arts college to me. Sounds like Harvey Mudd College has a good formula figured out.

Not just in it for the money

Though Harvey Mudd College is not an Ivy League school, it does cost roughly the same, about $40,000 per year for tuition and fees. So if all you want is to maximize your earning potential, you might as well go to Dartmouth.

However, if you want to stay in the west but make as much money as an Ivy Leaguer after college, Harvey Mudd College is your best choice, as far as earning potential goes. A very close second on the list for West Coast schools is Stanford, whose graduates’ median mid-career salary about $122,000.