What’s going on in the world? This is how it looks to me after two weeks in Silicon Valley, on sort of a vacation.
The U.S. economy continues to rebound – but rather like a partially deflated basketball. Growth is tepid after a rough first quarter when the ferocious five-month winter in the North killed retail. Yet the numbers show unemployment receding, with some of the long-term unemployed actually finding work, but wage growth is still very light.
New home sales are mediocre, mortgage rates are trending down again. Home re-sales are robust in San Francisco, San Diego and Boston, but mediocre in Chicago and New York. Detroit is bouncing back again, but it is long way from getting out of the toilet. Some people expected Baby Boomers to be moving en masse to apartments but it is not happening. A weak home market, especially in suburban markets, and high prices for apartments and condos in city centers make an exodus by boomers to the city uneconomic. A Boomer exodus to warmer climates has been slow to happen, probably because 60-70-year-old folks feel they need to work more to afford a pensionless retirement with incredibly minuscule interest on savings.
I have an unusual view of the housing, Baby Boomer and unemployment world. I live in the depressed area of the Southern Suburbs of Chicago, in the once high-end suburb of Olympia Fields. It is the home of the elite Olympia Fields Country Club, which hosted the 2003 U.S. Open Golf Tournament. Back in the day, it allowed no Blacks, Jews and probably not Eskimos, if any ever applied. Today it cannot afford to be quite as restrictive. A middle class Navajo might pass muster. Olympia Fields ranked in the top five Chicago suburbs 35 years ago. Today it might make the top 40 in the Chicago metropolitan area.
My 3000 square foot home is worth slightly more than the $136,000 we paid for it in 1979. My wife and I have put a ton of money into improvements for it. It is within walking distance of the Metra commuter train. You can get to downtown Chicago in a half hour on the express train.
During the housing boom of 2004-2007, many African Americans used 100% financing to buy homes in Olympia Fields. A lot of them lost their homes a few years later. Several neighbors of ours are now renting their homes from lenders and speculators who are still buying up more homes in the neighborhood for a song. Half of the re-sales in Chicago’s suburbs are for cash these days. Low mortgage rates are for the few in 2014, not the masses. My neighbors, at least those that I know, are an eclectic group of bus drivers, teachers, doctors, lawyers and retired folks.
When my wife and I travel to Silicon Valley to see our daughter’s family, we see the bungalows built in 1959 up for sale, with full page ads in local newspapers. Usually they are unoccupied, staged with brought-in furniture, carpeting, lighting and landscaping to give the small houses drama. Prices start in the $1.5 to $1.8 million range and often attract overbids. It is unusual for a house to last a month on the market near Stanford University.
New multi-family housing is going up, but there are no available vacant lots to build single family houses. If you want to buy into the area, you play the game, otherwise, head 30 miles down the freeway where more affordable housing still exists.
We’ve now had the opportunity to see both ends of the housing spectrum. Chicago is generally still soft, but where we live it is toasted marshmallow soft. Some people see depressed housing prices as part of a conspiracy against African-Americans. This month’s cover story in The Atlantic is a long diatribe, arguing for reparations for Black people as compensation for 500 years of persecution. The story focuses on Chicago.
I’m wondering. Should I be paying reparations to my next door neighbors in Olympia Fields? I get the writer’s point, but America is not Nazi Germany. Olympia Fields is not Nuremberg.
America is a country of rich and poor, to be sure, but I do not feel the outrage that I see in the popular press or from self-serving politicians and professional do-gooders.
At Graff-Pinkert we recently hired several men, comprised of Hispanics, Whites, and African Americans, for our machine cleaning department at $10.50 per hour, no benefits. They are eager to work and found the job vacancy on Craigslist. Most of them are turning out to be good workers who don’t mind working hard and getting dirty.
It’s America, summer of 2014. Boomers keep on trucking. People are finding work if they are smart enough to read Craigslist, take their hats off, and make appointments on time. Googlers are paying $2 million for homes in Palo Alto that bus drivers would pay $150,000 for in Olympia Fields. If you mow grass for a living you make the same in both locations, but the season is longer in the Valley.
Question: Do people work harder today than they used to?
You’ve got to keep up Lloyd. The economy’s shrinking and the “R” word – recession – is being bandied about – http://online.wsj.com/articles/u-s-gdp-contracted-at-2-9-pace-in-first-quarter-1403699600
As to reparations, lefties will from time to time re-inflate a dead issue to see if it’ll fly this time. Reparations won’t fly any more this time then last with the additional worry for lefties that they won’t have as much of a hold on the black vote as they have the last two presidential elections. Talking up reparations is a way to try to hold onto the black vote but I doubt it’ll succeed as much as lefties need it to succeed.
If you use the data that rates productivity per hour the answer is yes.
If you look at the average number of hours worked per year it is also yes.
So my answer is yes, but if you look at the purchasing power of our paychecks it is at best stagnate or more than likely lower than 3 or 4 decades ago.
Middle class people in non-government jobs are being worked over by the wealthy elites who subbed out all our work to the low cost countries. CEO’s who used to make 30 times what the average Joe made in 1980, now makes 300 times while laying off all the average Joes. Financial companies and MBA’s continue to apply voodoo economics to every possible scenario, to insure they get their cut of the American dream while paying 3rd world wages to any employees left in the USA
The wealthy elites whether Republican or Democrat continue to throw our money at their problems. Those funds either go large companies or private enterprise to fix our problems or make our goods, like military spending. Here again the CEO’s or wealthy benefit from these expenditures. Look at the misuse of public school funds to benefit private enterprise. Wealthy Individuals walking away with hugh dividends from their “Private For Profit” schools funded by the government. The majority of which cherry pick docile students and then do a crap job of providing facilities and teaching.
The same applies to most government employees have jobs in which they are paid well with great benefits. I still don’t understand how the private sector is forced to use the social security system, yet government employees have their own pension system. Private Enterprise leveraged the Social Security System to eliminate the cost of pensions. Next step will be when many wealthy Obama bashers will figure out how to eliminate the cost of health insurance for it’s workers via the Affordable Care Act aka Obama-Care.
Our division of wealth has become very stratified, with a small elite generating a new oligarchy in american politics and economics.
Oh, yes i do feel that the working men and women of America are getting a raw deal. The extreme poor get taken care of by the government and I don’t worry about the wealthy, as they’ll be all right. But the honest working stiff is being abused. The Guy that tries to play fair and live by rules seems to take the biggest whack.
This is one of the best responses to one of Lloyd’s blogs that I’ve seen. Hear hear! I wholeheartedly agree.
Lloyd. I’m not sure folks are working harder than they used to. They seem busier, though. I have shifted to retired mode, and I note a slowdown in my productivity. The fact that nobody is paying me for my time probably has something to do with it! It is funny, I grew up on the other side of the world from you – in Palo Alto. It was and, in many ways, it still an excellent place to live. I recall my 7th grade Science project, The Trees of Palo Alto. I toured the city photographing the trees and gathering leaves and data on each tree. (Got an “A”!) Palo Altans loved trees, and still do. Since I am not rich, I took the thirty mile south detour you mentioned and live in San Jose. I understand the eagerness of some to “buy-into” the Palo Alto area, but the cost jump has pushed out many families. With a pair of robust salaries needed to pay that “Jumbo+” mortgage, the idea of taking a few years off for child rearing, whether it is the husband or wife doing it, would cause a serious financial pinch. My mother stayed at home until my younger brother started kindergarten, then jumped back into the work environment, luckily, we had a grandmother (AKA live-in sitter) for afternoons, until my brother was into his teens. When the Army took me out of the house, and many others of my age were leaving for other reasons, we wondered about the future of Palo Alto. It wasn’t long until they were closing elementary schools, then junior, then a senior high school, as the kids left – but the parents stayed. (Watching them close down Cubberley High, the arch rival of us Palo Alto High graduates, was a guilty pleasure!) The Stanford Industrial Park was a boon to manufacturing, and workers streamed in for jobs at Varian, HP and many others. The manufacturing is pretty much gone from the Valley, but the High Tech jobs, like Google/Facebook/etc. are providing good wages. The long hours, those good wages, and a desire to avoid commute time, are what has driven up the prices in Palo Alto, and surrounding towns. I could not afford to buy the house where my parents raised us. Once in a while, I find myself in the area and I take a drive-through “breath” of the city. The trees seem smaller now (everything is relative) but the area is still inviting. I am glad your “daughter” visits give you a chance to experience the good and the not-so-good ($$) of the area. Drop me a note next time and I’ll buy the milkshakes at Peninsula Creamery downtown! Enough waxing nostalgic, it’s shiny enough!
I love the Peninsula Creamery’s handmade milkshakes, though I have been trending toward Philz Coffee and the Zombie Runner for lattes on this trip. Cubberly High is shut down now, and used for a community center, but the new boom in children in Palo Alto may force a rebuild or reopening. It is crazy expensive to live here now, but it is a lovely place. Redwoods, eucalyptus, and lemon trees all over. It is amazing that despite its expense, even WalMart is recruiting on KQED Public Radio for high tech people to work here. Ford and GM have big centers here also vying for talent. I like my Starbucks near Olympia Fields, but the conversations I casually overhear at the Palo Alto Peet’s Coffee are more provocative. Seth, keep reading the blog and thoughtfully writing comments in your retirement in San Jose, future home of the 49ers.
People in Santa Clara – New home of the 49ers – are forming a posse to come and get you.
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