Archive for the ‘Economics’ Category

Writing History

June 26, 2020

You wouldn’t know it from reading local news stories, but public officials are allowing mobs of people to destroy public landmarks – the costs of which are borne by taxpayers.

For instance, in San Francisco several statues were recently knocked over by mobs of people. The reports of what happened and why are fascinating. Consider this report, which begins as a fairly neutral account of what happened and some of the costs entailed, but then devolves into a virtual legitimization of the destruction due to essentially bureaucratic red tape. If only officials had moved more quickly to respond to input, the situation could have been handled properly. The writer ends the column justifying the destruction of public property as appropriate, despite the fact that some of the destruction mentioned in the article is also described as “less thought out”.

Or you could read this report, that begins with justification of the actions. Neither article describes any real effort to apprehend the vandals or stop them from destroying the statues in the first place, even though it seems likely the police could have effectively intervened. Perhaps fear of reprisals in the form of demands for disbanding or defunding the police department caused officers to hesitate to get more directly involved? Regardless of the rationale, those police officers will be directly involved in terms of their tax monies being used to pay for necessary cleaning, removal, storage, and whatever other costs the mobs incurred.

Closer to home an effort was made – perhaps half-heartedly – to destroy a statue in Ventura, California.

This report makes it seem like a rather innocuous discussion, really. A respectful exchange of ideas about the future of a statue commemorating a historical figure prominent in California history. A “rally” is described to “discuss” relocating the statue to private property.

Or you could read this account, which describes a far more volatile confrontation and a desire for more than discussion, at least by some of those present. Again, police presence is described as somewhat distant, but in this case enough to deter those bent on illegal activity from pursuing their goal.

I’m not quite clear how these events are described so casually despite the destruction of public property intended or carried out. Does the fact that someone is allegedly angry mean they are not subject to the law? Isn’t the law intended, at a very practical level, to discourage certain behavior by people who might be highly emotional and not thinking most clearly? I’d be fascinated to learn if Black Lives Matter has plans to reimburse cities for the forced redecorating (dedecorating) carried out in the movement’s name? Perhaps they’ll take up collections from people happy that the offending monuments are gone to defray the costs? Or is that really not at all something they’re concerned about? Hmmm. That’s a tough one to figure out, isn’t it?

It’s a dangerous situation when people believe they can act with impunity, destroying parts of their community without bothering to consider how others think or feel about the destruction, and expecting those other people to pick up the tab for their actions. If this is a foreshadowing of how things will operate in the future of defunded police departments, I can’t say I’m a fan of it.

Not that anybody’s asking me.

Round 2

May 18, 2020

A massive spending proposal has passed the House of Representatives.  Intended to provide further financial assistance to individuals and businesses reeling  from COVID-19 restrictions and losses, the bill still has to pass the Senate and there is considerable uncertainty whether that can, will, or should happen.  The price tag is roughly $3 trillion dollars ($3,000,000,000,000,000) on top of our current national debt which is over $25 trillion dollars.  So this package would bump up our national debt by approximately 12%.

The legislation is over 1800 pages in length.  If you have the stomach and time for it, you can read through it here.

Which Court Is the Ball In?

April 15, 2020

The Los Angeles Times today ran an editorial by journalist Michael Hiltzik claiming consumers will be the ones to dictate when the US economy goes back to work from the Coronavirus shutdown.  The pace of any return to normality will be dictated by you and me – by consumers making their own judgments about when it will be safe to resume old habits, and business owners running cost-benefit analyses on when a flow of customers will warrant reopening.

It’s a very warm and fuzzy,  we’re-all-in-this-together kind of pro-America statement one might expect to find in newspapers, or perhaps newspapers of another era.  The irony however is that his statement is blatantly false – for now.  It is not consumers or business owners who are making these decisions but rather government officials – governors and mayors and other officials who direct law enforcement to enforce edicts on what businesses are essential and non-essential.

The photo above is what this looks like.  My favorite used bookstore had this posted on their window warning them to cease operations.  As with many small businesses, they were working to figure out how to honor social distancing and other recommendations.  They set up a system where people could order books and pick them up curbside.  They also offered a bag o’ books program where people could pay a set price for a random selection of books in a bag.  Apparently that’s not good enough.  What really matters is whether the State thinks you’re essential or not.  If you aren’t essential, it doesn’t matter whether you’re following best practices to keep your employees and customers healthy. The e-mail it came in indicated there were threats of large fines if they ignored the order to shut their doors.

(This whole topic is ironic,  in that I just re-watched last night one of my all-time Favorite The Twilight Zone episodes – the second season finale The Obsolete Man)

Ideally, it should be a matter of consumers and business owners figuring this stuff out.  If consumers don’t feel safe they won’t go shopping which will drive business owners to reduce hours and do other things to compensate.  But when the government is involved in the mix in terms of dictating  not only how to do business but whether your business is essential or not, things get complicated.  Fast.  And it derails the free-market principles that otherwise (at least imperfectly and impurely) work in our economic system.

One of the fish Hiltzik is trying to fry is Trump, of course.  Trump’s spat with state governors over who controls when the US returns to work or not.  Hintzik’s real issue is to argue against Trump’s claims.

But Hiltzik also envisions a US workplace very different than a month ago.  A workplace governed by social distancing and other factors.  Are these factors mandated by the government or dictated by the free market system?  Are consumers going to demand these changes and so employers will accommodate them?  He recognizes this will increase costs – but those increased costs may not enable businesses that were viable  a month ago to remain viable.  If you operate a restaurant – an example Hiltzik mentions – reducing your seating capacity and therefore the amount of business you can bring in may make your entire business model untenable.  Who is going to be driving those changes and the attendant business closures – the government, or the free market?

But the bigger fish than Trump Hiltzik’s dealing with is capitalism itself, chastising the US for not handling aid like many other countries in the world have – by funneling money to businesses so they won’t lay off their employees even though they can’t be open for business.  He cites our unemployment issue as an “American peculiarity” not  seen in other countries because in those countries, wages are socialized for the current crisis.  He doesn’t indicate or cite whether in those other countries wages were socialized to some extent before the crisis, though the short list of examples he cites certainly have a lot of socialist economies in them.  Certainly America’s response to the crisis will be peculiar because we are – or at least once were – very peculiar indeed.  A place where the well-being of our people was dictated by the people rather than the State, with according levels of risk and reward that more directly benefited the people taking the risks.  If you were willing to innovate to find out how to create a new business opportunity when nobody else was there was the hope you could benefit financially from your risk-taking.  Now, taking risks is much harder to do because the State dictates more of what can and can’t be done – all the way down to mandating which businesses are essential and which aren’t, even if risk mitigation efforts are put into place which are acceptable practices for essential businesses.

Hiltzik clearly favors a socialist approach to things, touting calls for guaranteed paychecks for all Americans until things return to normal.  He doesn’t indicate how that massive expenditure would be paid for.   Nor does he indicate how making such a demand integrates with a government imposed shutdown.  Our governor is working on plans on how to reopen the economy in our state, though his roadmap is so vague as to literally useless.  He cites six criteria that will guide his determination of when it’s safe to go back to work, and in what fashion.  And he’s bluntly stated that neither consumers nor business owners will have much say in that – if any.  Science, rather, is what he claims will guide his decisions as he positions himself for a future presidential run by loaning out the very medical equipment he cites as one of the six criteria that must be met before reopening the economy.

Hiltzik’s idea that consumers and business owner should drive decisions is right on – even if I don’t think he really believes that’s true.  As the ones facing the predominant economic and health risks in this entire crisis, it’s patently unfair to dictate to us how we must handle the situation and then stick us with the bill for paying for it – whether we wanted it or not.  It might be a plan that works in socialist economies, but it’s a poor and dishonest fit for the free market we ought to be proud of and which continues to draw people from around the world to make America their home so they might possibly benefit from it in ways then can’t in their own economies.

When the Emperor Tells You to Strip

April 13, 2020

You might be familiar with the Hans Christian Andersen fable The Emperor’s New Clothes.  In it an emperor is convinced he is wearing an amazing new suit of clothes that will be invisible to anyone who is stupid or unworthy of their position.  In fear of being seen as stupid, nobody around the Emperor wants to tell him he’s naked.  People play along with the Emperor’s whims rather than risk their social status or rank or public opinion.  A child is the only honest one, perhaps in part because the child has nothing to lose, but mostly because children are sometimes able to call a thing for what it is when nobody else will.

A cautionary tale about the dangers of power and the influence power has on the otherwise common sense of people.  But what if instead of just pretending to admire the Emperor’s clothes, you were commanded to strip naked as well?  What then?

It sure feels like that is what Americans – and perhaps most of the world – are being asked to do in fear of COVID-19.  We are being asked to sacrifice our personal economic well-being and the well-being of our families in order to stay physically safe from a terrifying and mysterious infection.  Numbers are paraded out unceasingly to show us how dangerous COVID-19 is.  But the numbers are often portrayed in isolation from any other numbers that would provide context for them.

For instance, headlines recently blared that America surpassed Italy’s COVID-19 death toll.  Since we all remember the headlines about Italy a few weeks ago when COVID-19 hit there, this sounds terrifying!  But it assumes that America was in a better position than Italy to deal with COVID-19, which I doubt is the case (or the case for much of any country), and it ignores the fact that the US has six times the population of Italy, so it seems only reasonable the number of deaths here would be higher.  It also ignores the fact that Italy currently is on a downward trend in terms of  number of infections and deaths.  Yet without any other information, the headlines just hype fear and worry.

But news half-stories are the basis driving our government officials to insist on forcing businesses to close and lay off people.  We are told it is worth destroying our economy, putting millions of people out of work and on unemployment, and destroying untold numbers of small, medium, and even a few large companies because the alternative is the danger of spreading COVID-19, which we are told is more contagious than the flu and more deadly as well.  Two trillion dollars has already been spent in the US on COVID-19 relief and far more actually has and will be spent in terms of state of emergency spending and other forms of government relief to citizens and businesses (oh, and don’t forget banks).

But let’s examine these claims.

In terms of contagiousness, we are daily given new statistics about continuing rates of infection of COVID-19.  Some sources say the rate of infections is slowing and other sources don’t.  But both are using numbers that are, charitably at best, inadequate or, at worst, wrong.  The numbers reported are newly confirmed cases.  Confirmed cases occur when someone tests positive for COVID-19, either alive or dead.  But not everyone with symptoms of COVID-19 is tested.  Despite repeated assurances of widespread testing being made available, testing is still reserved only for those with severe symptoms.  While I don’t know anyone diagnosed with COVID-19 (or anyone who knows anyone for that matter), I do know of at least one person who was refused testing because their symptoms weren’t acute enough to warrant testing.  I’m positive that person didn’t have COVID-19, but the fact that they weren’t tested is a reminder that testing is far from ubiquitous.  Tests are only for those who evidence the full-blown symptoms.

And tigers.

So the numbers being cited of infection rates can hardly be accurate since testing is so spotty and limited.  There are two conclusions we can draw from this.  One would be that we are incredibly good at visually identifying the tell-tale signs of COVID-19 and excluding by external observation cases that aren’t, so the infection rates being reported are essentially accurate because we’re actually testing most of the people who actually have it.  In which case, the more lethal nature of COVID-19 is substantiated because we’re likely identifying most of the actual cases of COVID-19.

Personally, I find that hard to believe.

The other conclusion has two versions.  One is that the reported rates of infection are representative and can be extrapolated out to  the entire population of the country/world.  This of course results in much higher levels of infection and much lower mortality rates.  Or, since we’re only testing extreme cases, the reported  rates of infection are not at all accurate and infection rates are much higher across the board, which drastically reduces the mortality rate associated with COVID-19.

And if COVID-19 isn’t nearly as lethal as it’s being portrayed, why are we destroying our entire economy and  Lord knows what else to contain the infection levels? Are there other options to shuttering an entire economy and trying to force people to stay home as Constitutional rights are violated?

Our county has – as of the 2010 census, roughly 424,000 people in it.  There have been 264 identified cases of COVID-19 as of yesterday.  Over 80% of the identified cases are either fully recovered or in recovery at home.  There have been two deaths in the county thus far.  Yet the entire county is supposed to shelter in place and embrace the drastic measures applied in much higher infection areas and cities.

Things just don’t add up.  I’m more than happy to be educated in why my assessment of this is wrong.  And certainly I know the issue is more threatening to people older than I am (though I’m snugly in the middle of the two age ranges with the highest reported rates of infection in my county).  I know in some more congested areas of the country things are worse – that only makes sense.  Yet the same precautions insisted upon in many of the hardest hit urban areas are expected from our county as well?  The people I know are out of work and hoping for unemployment for a localized rate of infection that is ridiculously small.  In the most recent data available (2017) there were 53 deaths in our county in one year from the flu and/or flu-like illnesses.  Nearly 30 times as many deaths in a single flu season than COVID-19 thus far.  Certainly more people could die of COVID-19, but still.  At this point, the flu is far more dangerous in our county than COVID-19.

It leads one to wonder how much of this is based simply on the novelty of COVID-19.  After all, the flu is no big deal.  It’s been around forever.  We’ve learned to live with it and we’re comfortable with the idea that a lot of people get sick every year  from it (~19 million nationwide) and a lot of people die from it (~24,000 nationwide).  There’s nothing we can do about it (apparently), so we just deal with it.  Oh, and get your flu shots, we’re told.  Even though the 24,000 fatalities expected this flu season are going to happen despite wide scale efforts to convince people to get their flu shots.

But COVID-19 comes along and it’s new and sexy and we can mount a massive effort to provide a vaccine for it, despite the fact we lost interest in creating vaccines for other Corona-family viruses like SARS and MERS.  Once the epidemic or pandemic subsides, there’s no money to be made in funding a vaccine effort, apparently.

I understand different people have different tolerances levels in terms of anxiety and fear and health-related issues.  But when the government demands we cease work and shutter our businesses because of a medical issue that might be scary because it spreads so quickly but is no more dangerous than the flu, that’s a lot like the emperor demanding everyone else strip naked.  At some point, somebody has to stand up and state the obvious.

This is overkill.  The economic and financial damage is going to be far greater, longer-reaching and harder to recover from than the physical health damage.  It’s time to start thinking how to best continue to protect those most vulnerable to this illness while allowing the rest of the country to get back to work.  It’s time for all of us – including our leaders – to put our clothes back on, acknowledging that perhaps we slowed the spread of the infection through these drastic measures, but that drastic measures can’t  be sustained indefinitely when the illness proves to be far less devastating than originally feared.

 

 

 

 

 

Curiouser and Pricier

April 7, 2020

If it seems as though some things have gotten more expensive over the years, even taking inflation into account, you’re not wrong.  This graph tracks the price of various things as compared with wages over the past 30 years.

I find it interesting that the two things that have increased most dramatically in cost are things backed by government money.  Inexpensive and these days nearly ubiquitous government student loans, and now healthcare backed by insurance which now is mandatory.  Sort of.  Kind of.  Maybe.  Obviously, as the graph indicates, government backing isn’t necessarily causative of the rise in health care costs, since Obamacare is a relatively recent thing and doesn’t seem to have driven costs up at a higher rate than previous years.

One thing that surprised me was the relative cost of new cars has only gone up by 18%.  Seems like a typical new car is a lot pricier today than it was 30 years ago, even considering inflation.

 

St. COVID’s Day

April 6, 2020

March 17th.  St. Patrick’s Day.  This was the first year the BCA moved the annual world tournament from July to March.  The first year as well that my teammates were all able to attend, and so the first time we’d be competing as a team in several years.  We’ve been anticipating this time for months, saving and preparing.

I imagined St. Patrick’s Day in Vegas to be something certainly worth observing.  In a city so  obsessed with consumption and excess, I was certain there would be plenty of good people-watching to be done.  And of course, a few Irish whiskeys along the way perhaps.  But not too many, as the team competition would be starting the next morning and we would want to be sharp and ready for the the already formidable task of having to start shooting pool at 9 am instead of in the late afternoon or evening as most of us were more  used to.

But instead, as the sun was going down over the Nevada desert I was hightailing it out of Las Vegas instead of celebrating.  The team event was cancelled as of Sunday evening.  We had remained in Vegas through Tuesday for my teammate who was still competing in the individual’s tournament (and ended up winning 3rd place in his division – not bad being able to say you’re the third best player in your division in the world!).  But as of 5 pm or so he had finished, gotten his check, had his picture taken, and it was time to leave.

I drove up to Vegas the previous week alone, knowing I’d be driving two teammates and their gear back.  But now I was also driving our league president and his wife back.  The hotels were shutting down and kicking everyone out.  Rather than wait another day for their flight back to Santa Barbara they squeezed into my SUV and I used my Tetris skills to fit their gear in as well.  It was a cozy bunch headed into the sunset.

We were maybe half an hour out of town when the classic rock station interrupted their playlist for a live broadcast from the governor of Nevada.  For the next 20 minutes or so we listened to him talk about what the state of Nevada would be doing immediately to respond to the threat of COVID-19.  Yes, the hotels would be shut down by noon the next day.  All gaming machines in the state would be turned off in a matter of hours at midnight.  People were being ordered to stay at home as much as possible.  It was clear an entire state was essentially closing, hunkering down and hoping that by doing so the spread of COVID-19 would be slowed, and fewer people would get sick and die from it.

We sat in stunned silence.

Good zombie movies often center around an unlikely collection of people forced to work together to survive.  That’s all well and good for a movie, but as we raced towards the sinking sun I couldn’t  help but think that this isn’t the group of people I would have hoped to be my apocalypse survival squad.  Not that there weren’t some good skill sets here.  Our league president served in the US Navy.  One of my teammates was good with his hands.  Another had experience in caring for people with disabilities.  It was a good, gritty crew to some extent.  But I couldn’t help but lament, as we drove by mostly empty gas stations and restaurants and Motel 6’s with their lights turned off that I would have preferred to be facing the apocalypse with my family, even if we weren’t quite as gritty and our survival chances might not be as good.

That ride, and listening to the speech from the governor is likely something I’ll never forget.  Unlike any experience in my life.  Unlike 9/11.  Unlike housing busts and recessions, presidential assassination attempts or even the vague background threat of nuclear war as a child and young adult.  This was something different.

Three weeks later it remains something fundamentally different.  How long can a country shut down?  How long are people expected to shelter in place and avoid one another?  What are the long-term costs to our country not just economically but socially and politically?  We don’t have any road maps for these sorts of considerations.  As competing models and evolving models of how the infection will play out in our country shift and change, something seems clear.

COVID-19 will have to be a pretty big deal.  If it turns out to be a smaller issue than anticipated, if it turns out to have the overall impact of a really bad flu season, there’s going to be hell to pay.  Or at least there should be.  There will need to be some very specific repercussions against a government ordering people to shut their businesses down and destroy their livelihoods rather than guiding people but allowing them to make decisions that seem to make sense.

Either COVID-19 is devastating to our nation as an actual health crisis, or it will be devastating to our political structure and the people who sacrificed untold small businesses out of fear or paranoia.  It’s possible that both things could happen, though I pray not.  But understanding whether COVID-19 is ultimately dangerous enough to very possibly destroy an entire economic and political system is something we aren’t going to know until after the fact.

It’s popular to compare COVID-19 to the Spanish Flu epidemic of 1918-1920.  The Spanish flu killed 675,000 Americans in less than two years.  We’re currently at not quite 13,000 deaths.  This is, of course tragic, but also confusing, as an undetermined number of deaths attributed to COVID-19 are also strongly related to underlying and pre-existing health conditions.  At the same time, there have been an estimated 24,000 deaths from the flu through the end of March, and I assume that some number of  those deaths also involve compromised health situations.  Depending on what news reports you choose to believe, we may already be seeing the COVID-19 infection rate slowing in the US.

It will be painful and fascinating in the coming years to understand better whether we reacted appropriately to COVID-19 or not.  Whether the economic and political damage incurred is something we can recover from or will lead us into new economic and political realities couldn’t  have foreseen.  Most zombie movies never play out the long game of community and state and nation and world rebuilding.  Nobody has the attention span for that.  Or  at least, we didn’t used to.

Hopefully we do now.  Because we’re all in this together, an unlikely group of people thrust together and required to work together to survive.  I pray we’re up  to the task, and careful about the precedents that are knowingly or unknowingly being set right now.  I hope our skills, Tetris or otherwise, are up to the task.  And I hope people are willing to work together towards these ends rather than continuing to isolate and scream at one another through their face masks and social media masks.  There are challenges ahead but also opportunities, if we are wise enough to discern enough and brave enough to take them.  Hopefully the darkest part of this night-desert-drive is over, and we’ll be seeing the sun coming up shortly.

 

Nothing to Catch Us

March 30, 2020

This article caught my eye several months ago, before the current world-wide panic over COVID-19.  It caught my eye in January because of the memorable line early in the story – There was nothing to catch us.

The whole point of the story is decades and decades of failure in terms of public policy on homelessness.  The entire story is geared around the idea that homelessness is essentially a public policy issue best solved by all levels of government in a combined effort to save these people from their situations.  Yes, yes, the article will grudgingly concede, mental illness and addiction are often contributing factors.  But since those are different arenas, let’s essentially just focus on the economics of it and how government should pump more money into systems already proven to not work to fix the problem.

Here in California, where homelessness is often a matter of ‘enlightened’ live and let live, resulting in pervasive homeless camps both communal and solitary, lawmakers want to throw an additional $2 billion dollars per year at solutions for homelessness.  These solutions will undoubtedly emphasize state and local programs, social workers, case workers, low-rent housing options, and a variety of other factors.

Even should such massive appropriations be approved (raising taxes on other people and thereby putting more people at risk of homelessness, perhaps?), it won’t solve the problem.  Experts have already said as much.  But it’s better than nothing, right?  And to be fair, something is better than nothing.  But some things are better than other somethings.

And it fascinates me (but doesn’t surprise me) that so much emphasis is placed on state-provided solutions towards these issues and no attention is given to the importance of strong families as a means of protecting the most vulnerable in our society.  Of the people who approach me for help, it’s literally universal that they have no other support lines in terms of family, nuclear or extended.  There are undoubtedly myriad reasons for this, but it is a consistent factor.

I wonder what it would look like if our society finally admitted that families are actually more important than the State, in terms of providing stable environments for children to be born and raised and continuing to function as safety nets even into adulthood, both for the grown children as well as their aging parents?  I wonder what it would look like if the State invested in these directions rather than in trying to create alternative systems which repeatedly prove inadequate to the challenge despite good intentions?

The first and best line of defense against the unexpected and catastrophic in people’s lives is family.  We can’t prevent tragedies from happening, but families are naturally the first line of defense and solidarity when they do strike.  It’s a shame this sort of common sense eludes elected officials when they discuss strategies to help people, and journalists when they report on the disadvantaged.

 

Comforting?

March 10, 2020

Hopefully it’s comforting to know – as you’re paying off your student loan fees decades after you graduated from college – that part of your debt likely made it possible for student athletes to receive scholarships so they wouldn’t have to graduate with student loan debt.

Maybe there should be an arrangement whereby this is tracked better,  so that athletes that graduate – or don’t graduate but leave college early to sign on with professional teams – pay back their scholarship monies, and appropriate amounts can be refunded to each student who attended during that athlete’s time at the school.  Or perhaps it could just be applied to outstanding student loan debt on a per student basis?

Otherwise, non-athlete students are paying for athletes to attend school for free in hopes of receiving high salaries as professional athletes.  Which sure doesn’t seem very fair to me!

 

 

It’s Not About the Money (But it is)

March 5, 2020

California has suffered the first death from the corona virus.  News reports indicate an elderly adult with underlying health conditions died from this newly identified virus.

In the meantime, without much fanfare and despite increasingly dramatic efforts to convince the population of the benefits of  flu shots, over 10,000 Americans have died from the flu so far this influenza season.  Ten thousand deaths, 180,000 hospitalizations and 19 million estimated cases of the flu this flu season, but California declares a state of emergency over one death.

Governor Newsom insists the move isn’t about money, but about mobilizing resources.  Said resources including additional Federal support, of course.  The City of Los Angeles also declared a health emergency as they have seven reported cases.  All of which certainly has nothing to do, I’m sure, with the fact that the US House of Representatives approved a bill for $8.3 billion dollars to be used in dealing with corona virus issues, and President Trump could sign off on it as soon as Friday.

The flu doesn’t qualify as a health emergency apparently.  Otherwise the more than 150 flu deaths in the state alone surely would have prompted a state of emergency declaration.  Money appears to be plentiful, as just a few weeks ago Governor Newsom was demanding $1.4 billion in new appropriations to fight homelessness.   And of course he wants to expand health care coverage to undocumented senior citizens at a cost tag of perhaps $80 million.  And facing the prospect of reduced incoming Federal funds because California doesn’t want to go along with Federal immigration laws, I can totally see how the decision to declare a state of emergency has nothing at all to do with money.

We’re apparently swimming in that.

 

Proportionate Love

February 14, 2020

Very interesting bit of Valentine’s Day news – for a change.  Delta Airlines announced they are giving their 90,000 workers a cumulative bonus of $1.6 billion dollars.  The details don’t indicate whether this is a one-time thing or part of an ongoing profit-sharing program.

Curious monkey that I am, I ran the math.  The video indicates every one of the 90,000 employees will get an additional two months worth of pay.  If you divide $1.6 billion dollars by 90,000 employees, it comes out to just shy of $18,000 each.  Sounds impressive!  Divide that by two, and you get a monthly salary of nearly $9000, or a salary of $108,000 year.

Managers and other specialized and upper-level administration types may get $108,000 a year (or more), but many employees get paid half that.  Or less.  So many employees will end up with a two-month salary bonus of $7000 or so.

Don’t get me wrong, it’s still an amazing thing to do and undoubtedly a huge help to many employees and their families.  But it would have been fascinating if they had just divided the $1.6 billion up equally among all their employees.  It would have meant that top earners – like CEO Ed Bastian, who pulls in tens of millions of dollars a year in salary – wouldn’t much notice the extra dollars (and could have added a PR bonus by not taking the bonus himself!).  But it would mean the lowest paid workers would get a bonus that could really make a huge difference in their lives (either for better or worse, to be sure).  I imagine when you earn $20 million or more a year not many bonuses make too big a difference in your immediate living situation.  But if you’re making $15/hour, wow.  A $17,000 windfall (before taxes, of course, which could be challenging to some unprepared for that hit) could be a real game changer.

Likely Bastian is stinging a bit from last year’s exchange with Bernie Sanders, who accused Bastian and Delta of enriching themselves at the expense of poorly paid lowest-tier employees.  If Bastian had really wanted to do so in style, an across the board, equal bonus for everyone would have really made a statement.