Daily Archives: 27 September 2023

Featherbedding

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It’s not just for railroads, or auto unions. It seems to have come to the Writers Guild of America. The WGA and the Alliance of Motion Picture and Television Producers appear to have reached a tentative agreement, wanting only fleshing out the details and then a WGA rank and file vote.

The tentative agreement appears to include these items:

  • a minimum number of writers per television show
  • guaranteed employment for those writers from conception to postproduction

If those really are included, they would be just naked featherbedding. Not even TV and movie production needs a guaranteed, fixed numbers of writers, or of any other type of employee, nor should these businesses need to provide guaranteed employment, whether or not the employees are needed at one time or another.

Instead, those items should be matters agreed in contracts between employee groups or their representing unions and the particular television and movie production company.

This wastefulness—and increased cost to consumers—is part of the price a union shop inflicts on the rest of us.

Student Debt and Savings

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The lede’s lead sentence leads into it.

Everybody knows that US households’ savings soared after the pandemic struck, as the combined effects of checks from the government and fewer opportunities to spend swelled wallets.

Increasing household savings is, in almost all cases, good since we Americans don’t keep a big enough cash cushion against unexpected exigencies, anyway. There was, though, one key area, one Critical Item, that did—and does—represent quite a large opportunity legitimately to spend: paying down the student debt held by one or more members of a household.

Sure, the Federal government, with questionable legality, initiated a pause on student debt payment and associated interest accruals. However, that pause was on lenders’ ability to demand payment. That pause in no way blocked the ability of the student borrowers to continue making payments of their loans.

Where we stand today is indicated by the San Francisco Fed (keep in mind that they say their estimate is pessimistic):

They calculate that excess savings peaked at about $2.1 trillion in August 2021, but by the second quarter of this year less than $190 billion remained, putting them on pace to be depleted in the current quarter.

Now (assuming arguendo, the estimate is accurate), in the face of those vastly depleted and rapidly disappearing savings, those student debtor households will have to resume student loan payments, whether they want to or not, next month. That represents a sequence of problems for our economy and for them: student loan debtors must make loan payments from shrunken resources, which means they’ll spend less in the consumer economy. Less consumer spending slows our economy. In a slowing economy, employers hire fewer employees or employ fewer folks outright—furloughs and layoffs. That tightening, even shrinking, labor tightens even further the economic condition of those student debt-laden households.