Am I missing something here on car payments?

[BehindBlueI's]

The wages are what they are. Because we trade with other countries, fair or not, there is competition which sets the payscale.

Yet the US has the highest ratio of CEO pay to labor pay in the world. How much is paid to stock holders in dividends and how much is paid to labor? What percentage of expenses is labor vs, say, energy costs? These will vary by company and location, of course, but it's over simplified to the point of being wrong to simply say it's a global economy so wages are what they are.

Regardless of the causes, people are free to choose among multiple employers in the area they are willing and able to travel to, so there is also competition for workers domestically. If the wages are what they are and you can't attract workers, you will fold. People do not owe it to you to accept poverty wages to keep you in business, unless they are serfs.

Wages is a part of that competition for labor, often a large part, but not the only part. If you can't hire people, you're losing that competition. Your pay is not enough for your work conditions to attract available labor. It may be that you can't simultaneously win both competitions for labor and for market share and you'll fold, but that doesn't mean people won't work in factories. It means people won't want to work in YOUR factories due to the competition being more attractive. It's hard to get and retain quality candidates at the injection molding plant for $13/hr when temps at Ford start out at $17 with a shot at a union position, the Honda plant offers $21/hr, and Pepsi is union and $21-$25. Those are real numbers in my state, where the cost of living is pretty low compared to much of the nation. $25/hr is enough to start out on pretty reasonably. $13/hr much less so.

[SecondsCount]

Yet the US has the highest ratio of CEO pay to labor pay in the world. How much is paid to stock holders in dividends and how much is paid to labor? What percentage of expenses is labor vs, say, energy costs? These will vary by company and location, of course, but it's over simplified to the point of being wrong to simply say it's a global economy so wages are what they are.

Regardless of the causes, people are free to choose among multiple employers in the area they are willing and able to travel to, so there is also competition for workers domestically. If the wages are what they are and you can't attract workers, you will fold. People do not owe it to you to accept poverty wages to keep you in business, unless they are serfs.

Wages is a part of that competition for labor, often a large part, but not the only part. If you can't hire people, you're losing that competition. Your pay is not enough for your work conditions to attract available labor. It may be that you can't simultaneously win both competitions for labor and for market share and you'll fold, but that doesn't mean people won't work in factories. It means people won't want to work in YOUR factories due to the competition being more attractive. It's hard to get and retain quality candidates at the injection molding plant for $13/hr when temps at Ford start out at $17 with a shot at a union position, the Honda plant offers $21/hr, and Pepsi is union and $21-$25. Those are real numbers in my state, where the cost of living is pretty low compared to much of the nation. $25/hr is enough to start out on pretty reasonably. $13/hr much less so.

You missed my point. Regardless of pay, who do you know that wants to sit on a production line and put soles on shoes, or paint lips on barbie dolls?

Pay is what it is for a lot of reasons. You can't lay it all on the back of the CEO. People want their 9mm ammo for $10 a box and will buy it from whomever gets close to that number, whether it comes from Croatia, Mexico, or the US.

[DDTSGM]

Who really wants a factory job?

There are thousands of openings for factory jobs right now and they aren't being filled because nobody wants to fill them.

...at the wages being offered.

The wages are what they are. Because we trade with other countries, fair or not, there is competition which sets the payscale.

I kind of wanted to accompany several of BBI's posts in this thread with amens, but I'll just jump in here and say my piece.

First of all, I will admit to some confusion over WTF folks are thinking job wise.

I agree with BBI that we need a robust middle class to buy the goods that are produced. As you are well aware, the last three decades in the United States have been a period of wage stagnation. Wages in the middle class have not kept up with the cost of goods or services. As a result, the middle class is shrinking. This can't continue much further before we have our version of the French Revolution.



I think a large part of the problem, aside from what was discussed in the video, is that companies haven't been bound by any sort of 'social contract' for decades and it is starting to catch up to us. The social contract that I refer to is the idea that if you hire someone to work for you, in return for their loyal labor, you are somewhat required to run the company with their best interests - wage, benefits and continued employment - somewhat in mind.

Some folks believe that unionization broke the spirit of this bond between worker and employer. My thought is that the advent of mutual funds, which in turned pushed the demand for companies to return dividends to shareholders. This in turn lead to the current system in which expenses are shaved/minimized, often at the expense of the company's long-term health in order for the CEO to be rewarded for maximizing dividends. Here's an example of that mindset:

http://content.time.com/time/special...026107,00.html

The rub is that this system is also how vast numbers of the middle class have saved to ensure they have a healthy retirement.

I don't pretend to know what the answer is, there is no magic way to instill the mindset that 'hey, I'm making good money, let's share it with the employees' into folks. I think we've simply forgot what Red Green used to say every show 'we're in this together.'

[Wise_A]

And even if they do they think you're an idiot with the fuel prices where they are. It's just a ride.

The Vee-Dub got me to and from work in some really nasty weather. Big Blue gets me there and home without any effort or stress--important because I do have a job where you just don't call in duty to weather, and sometimes get stuck for a 16-hour shift and wind up driving home in a travel-not-advised blizzard. Plus it rides like a Mercedes, comfortably pulls my girlfriend's two-horse trailer while hauling the tack, and somehow manages to less fuel as the 2012 VW despite weighing twice as much.

Honestly, every time I see some dude driving an Accord or Altima hum-drumming along at 75, while I'm at 65 getting 26 to the gallon, I sort've chuckle.

[jh9]

My thought is that the advent of mutual funds, which in turned pushed the demand for companies to return dividends to shareholders. This in turn lead to the current system in which expenses are shaved/minimized, often at the expense of the company's long-term health in order for the CEO to be rewarded for maximizing dividends. Here's an example of that mindset:

...

The rub is that this system is also how vast numbers of the middle class have saved to ensure they have a healthy retirement.

IDK if I'd say dividends, specifically, but I do think it's fair to criticize fund managers for basically driving the entire market toward chasing short term goals.

It seems like every earnings call is full of analysts, each one probably responsible for dozens of companies, who show up and grill the CEOs on the good/bad quarter. They don't know much about the underlying industry or business, just the top line numbers. EPS, revenue, profit, Consistent Quarters and then casting some chicken bones about whether or not next quarter will be good or bad.

They roll that up after their dozen or whatever earnings calls and then the fund manager who has a portfolio of a bunch of largely unrelated companies with a bunch of people who sat in on a bunch of calls puts their magic numbers in some fancy regression model and off it goes. Green is good. Red is bad. Cash out your holdings when the model says the numbers are as green as they're going to get then rinse and repeat.

That might not seem like a charitable read on the overall market, but it's hard to walk away with any other conclusion than "nobody's actually invested in the long term growth of the company." Everything is a buy-low-sell-high get-rich-quick scheme; LBO, pump and dump, whatever. Drive the numbers up as high as you can and cash out while everyone else is holding the bag. Because that model seems to work pretty well short term and that's all anyone cares about.

[jh9]

Regardless of pay, who do you know that wants to sit on a production line and put soles on shoes, or paint lips on barbie dolls?

Who wants to do most jobs? There's a reason it's called work and you have to pay people to do it.

Pay is what it is for a lot of reasons. You can't lay it all on the back of the CEO. People want their 9mm ammo for $10 a box and will buy it from whomever gets close to that number, whether it comes from Croatia, Mexico, or the US.

When your monthly budget's at best a wash and at worse a deficit you shop on price because you have to. Lots of people can't afford to do anything else. Back to the "shrinking middle class" problem. It's all lead paint toys and spoiled produce or caviar and megayachts when there's no middle class.

[Cory]

The payment on my wife's car (with extra toward principal) is under $300. Like $250ish. With some extra. It's a reliable 2017 hatchback mom car thing that's good on gas.

My truck is 28 years old, and I bought it a few years ago. Maybe $5k after a little work.

Every payment in that video is over my mortgage. With extra payment thats like $850. That video just seems reckless to me. My household is more risk adverse about debt. Whatever. I like the fact that we're debt free other than our mortgage and minor car payment.

[Kanye Wyoming]

Both of my grandfathers were born here of recent immigrant parents and grew up in very modest circumstances.

One made a lot of money in business. He had a Rolls Royce.

The other was a doctor in a small city who was very, very thrifty except when it came to paying for education (his own, his kids, mine), and of course anything my grandmother wanted. He had a pretty decent amount of money but you’d never know it. He drove a used Oldsmobile Cutlass Supreme for a decade, and in its later years it often needed this or that fixed. When I’d ask him why don’t you get something newer and nicer, he’d say “I could write a check tomorrow for a Rolls Royce like [my other grandfather] but it would just be showing off. Why would I want people to hate me? The Oldsmobile is just fine, gets me where I need to go most of the time. I also like talking to the mechanic at the garage, I always learn something.”

He would often refer admiringly to what he called the Blue Bloods, the old money Protestant families who went back to Revolutionary War times, who were patients of his. “They have more money than [my other grandfather] but you’d never know they had a nickel to their name.” And it was true. One of my best friends in high school was a Blue Blood whose family owned a company started by a great great grandfather that was sold several years ago for more than $500 million. Their house was nice enough but not opulent or lavishly decorated, and they drove old cars. Around the breakfast table, his mother would dispense advice such as “if you marry for money, you’ll earn every penny of it.”

All of that stuck with me. I love the way Audis drive and I suppose I could afford the payments on an Audi SUV. I’m now on my second Mazda SUV. The thought of a car payment - the payment for A CAR - over $500 simply doesn’t compute. The Mazda drives very nicely, has everything I need, very little I don’t, and people don’t hate me or think I’m a show off.

One of my clients is a Swedish company and for several years I spent a lot of time with the president, including lots of long drives (in his Volvo, of course), talking about everything in the world. He explained the bedrock Swedish philosophy of lagom, or just enough. Not too much, not too little, everything in moderation, applied to everything in life (with one notable exception in his case, which was the quality and quantity of wine ordered at dinner). That has stuck with me as well.

I was lucky enough to have been the beneficiary of the philosophies of my grandfather and my wise Swedish friend. Excluding, as we must, firearms and firearm adjacent products, that has given me the legs to (mostly) withstand the strong, unrelenting currents that tempt one into opulent consumerism.

A lot of people these days also grew up in a way that allows them to resist those currents. But way too many didn’t, including those who take on $800 or $1000 (or $1200 - AYFKM?) car payments they have no business assuming. “Hey, I see other people driving great, expensive cars, why shouldn’t I?”

[Borderland]

Of course, if you truly believe inflation is going to sky rocket long term, debt is your friend. Borrow and pay for an item at today's dollar value, and use the inflated dollars to pay it back. I've always been in the habit of just comparing interest rate on the loan vs interest rate on safe investments/cash parking spots but when inflation is 10% then really that's the bigger drive, isn't it?

In a market where used cars sell for more than you paid for them, it's no different than leveraging a more traditional investment. It'll work until it doesn't, then the heavily leveraged get fucked like a house cat. I'm too conservative/scared to play that sort of game but good on the folks it works out for.

It looks to me like this is just a temporary situation because the auto industry can't deliver the millions of new cars they have for the last 10 years. Lots of people want EV's now and the industry is trying to catch up to demand.



The declining numbers for 2007-2009 might be because of the recession and our present situation may be the beginning of another recession. Who knows?

[Corse]

The Vee-Dub got me to and from work in some really nasty weather. Big Blue gets me there and home without any effort or stress--important because I do have a job where you just don't call in duty to weather, and sometimes get stuck for a 16-hour shift and wind up driving home in a travel-not-advised blizzard. Plus it rides like a Mercedes, comfortably pulls my girlfriend's two-horse trailer while hauling the tack, and somehow manages to less fuel as the 2012 VW despite weighing twice as much.

Honestly, every time I see some dude driving an Accord or Altima hum-drumming along at 75, while I'm at 65 getting 26 to the gallon, I sort've chuckle.

I need a new truck soon, what are you driving that gets that MPG?