Emotional Claim or Fact?

http://www.taxfoundation.org

http://www.homepricetrend.com/

http://www.payscale.com/cost-of-living-index.html

There’s an article on the front page of our Advocate today that says that a “desperate” man had to move from Wisconsin to Nevada for a job. Of course, it is an AP article, so you’ve seen it in your own paper somewhere. It’s by Christopher Leonard, a “business writer.” But it’s not what he writes so much that bugs me as what he doesn’t write. Whatever happened to “just the facts, ma’am.” But it does bring me to one of my longest posts. Still, it is amazing what one can get out of a simple article – too simple, really – and just one lone starting point – a day in the life of our fellow citizen Mr. David Becker.

It laments that this guy, David Becker, had to take $25,000 less to get the new job. Well, OK, that’s bad, isn’t it? Further, he laments that this man had to “uproot” his family from somewhere in Wisconsin. Well, OK, so that’s bad, too, I guess. That a man had to move from the family’s neighborhood would seem a negative. He moved from Milwaukee to Reno, the article says. To a similar job except that instead of overseeing 60 employees he is only overseeing 12 at the new digs. All this after a year of unemployment and using his savings to survive the year. But the thrust of the article posits that the lower pay is bad – and that’s that. Ergo, somehow this is a sob story about which, no doubt that the government, and more specifically, the president, has to do something, anything. It’s not quite stated that that is what is wanted, but that’s the undercurrent of the article. The fact that all the figures used in the piece are national averages created from government data point in that direction. The fact that the article seems to be reported from Washington seems to point in that direction. But oddly – no, typically – the article doesn’t mention the reason for the difficulties – only that there are some.

Also, the article, instead of concentrating on the one case in depth, goes off a slew of tangents to show other similar sob stories. Experts, of course, are quoted. And certainly “economists say,” “government data show,” and non-profits and opaque research groups opine about the disasters in our midst. But I’ll just look at this one case and see if either a) more information is needed, b) what can be deduced from what we can learn outside of the article, and c) what is the condition of the man and his family before and after the move.

Another big problem, as far as I’m concerned, is where did Mr. Leonard find Mr. Becker? To me, in the interests of transparency, the repo …, um, I mean, the writer, should say how Mr. Becker’s case was chosen. Did Becker know Leonard? Where they old college chums? Did Leonard go to Reno and walk around and say – “ah, there, let’s go ask that man!” Did Becker call or email Leonard? Is Becker looking for a reality TV show? You know, instead of the Young and the Restless he can be the new “Middle Aged and Downsized” or something. How on earth did Becker come so specifically to Leonard’s attention? That would seem to lend some credence and parameters to this whole report.

OK, so Becker is traviled, or is he? For it might not be the case that he is worse off. It might not be at all. It might be that he is either breaking even, or coming out ahead. It’s hard to say, right off, isn’t it? It looks bad right from the get go, that’s for sure. Still, there’s a lot of conflicting facts and figures from which to choose from to make or break the case. As well as a slew of missing information. Thus the analysis is difficult. I’d dare say that most readers, though, would simply take this information at face value for it is the “newspaper” and they are “objective.” Bad for Becker and all that. Yeah, right. I’m sure they are. Still…

The three websites above are where I got my information from. It took me about an hour or so to breeze through them and collect the data, and about an hour to sort of mull them over and begin this post. I pulled a lot more info that I use here, but it would take to much to analyze it. This is blog post, not a policy paper. And, I don’t endorse the websites, or claim they are 100% correct. Nor do I really know where they got their data, and where their data sources got their data, and so on. It is often a loop, and of that one must be careful. They are, though, merely where I got the data I use to analyze the situation today. As they say, “you can look it up.” But, who knows if it could be different a year or two ago, or will be different a year or two hence? Of course there is also a lot of information missing and there’s a few intangibles that are hard to get a handle on. But I’ll take a stab. At the least I can show how we should read the news – and preferably how the news should be written sothat it makes sense and is something we can use. Leonard is deficient, and that’s the problem with news today.

Yes, I know, how terrible that the Beckers had to uproot themselves and go somewhere else. But one thing that the article does not say is how long Becker was at the company from which he became unemployed. That’s necessary information. And here’s why >> It does not say if he had uprooted himself to go from say a $100,000 salary in perhaps maybe Buffalo NY just a year or two ago to go to Milwaukee in the first place. Look how it alters the calculation of how well off he is:

$100,000 in Buffalo in 2006

$150,000 in Milwaukee in 2007-2008

Unemployed in 2009

$125,000 in 2010.

$ 25,000 ahead in three years. Did you get a $25,000 salary increase over three years? A 25% raise in fact.

Under this circumstance is he really worse off than he was four years ago? He is not. He’s ahead. But suppose something else – what happened if he went from $125,000 three years ago at the Milwaukee firm, and just got a $25,000 raise in 2009, to $150,000. Then he get’s laid off. Now he’s back at $125,000. He broke even, right?

But without this crucial information we can’t see the man’s circumstances over a few year’s time – which is what talking about trends is all about – which is what the article purports to show – trends.

Nor do we have any sense of Becker’s rootedness in Milwaukee. I would suppose there are people who move to that city. I would bet there are even people, for the right money, who would move from Tampa, Florida to Milwaukee. You couldn’t pay me enough to do so, but perhaps Mr. Becker was induced to head north. We don’t know. Perhaps he was born and reared in Milwaukee and was a cub scout there. Who knows? But to use the word “uproot,” which I guess is technically accurate that to go from one city another is that, there is a connotation in the word that you had “roots” in the first place. We don’t even know how long he owned a home Milwaukee. We have no clue as to how rooted he may have been. He may be just as transient in Milwaukee as he now is in Reno. For all we know he’s from Reno originally and is moving back home for some reason or another.

Then too, what sort of company was this Milwaukee firm? Was it a one client wonder of the sort that just closed with the loss of 350 jobs in Monroe, Louisiana that I spoke of just yesterday? You know the type – unsustainable economic development funds gone with the wind. It could very well be, no? Or was it a company that was swallowed by some other company, like Embarq was swallowed by CenturyTel, of which I wrote? Why did the firm lay off Mr. Becker? Were all the staff laid off? Just him? How many total employees did the firm have? We know he supervised 60 – must be a big company. What sort of big company? Shouldn’t that be part of the process of reporting – to know all the particulars? It wasn’t like it was a state secret, or was it? Yes, so what – he was employed – but if you are going to discuss his problems, then put out all the mitigating facts or background information. Since Mr. Becker is in this article, I wouldn’t be surprised if he would have been willing to be the subject of a much more intensive profile. His 15 minutes of fame perhaps.

Suppose it was a company that was making an obsolete product? Suppose the company was vastly overstaffed? Suppose Mr. Becker sealed his own doom by hiring too many people in the first place – who were those 60 after all — and thus became unemployed because his employers had no confidence in his managerial abilities? After all, everyone knew times were tough. That was the incentive to cut costs, manage better, manage more efficiently, be more productive. Usually staff go first, not supervisors, unless it was specific to Mr. Becker. How come it was the supervisor who was laid off? Where all other 60 laid off? None of this is in the article, and yet it is a beachfront on which we can begin to assess the travails of Mr. Becker. If he was a lousy manager, and beyond his competancy, should I fret that he was cashiered? What of the fates of the 60 over which he showed his inabilities? Surely they are entitled to the best bossing they can get, no? Maybe the new manager is so good – for sixty still need managing right? — that they all got a big bonus. No one likes an incompetant boss, do you? Again, the complete lack of these details leads us to endless supposition, if we are inclined to go beyond Mr. Leonard’s dire desperation of Mr. Becker. Well, I’m prone to think of these things – I wish everyone did – policy discussions would be so much the better.

OK, so he owned a house. Suppose he had the median value one in Milwaukee – $199,000. On this he paid a mortgage, the article says he paid it out of savings for a year. In Nevada the median value home is $137,000. Doesn’t that mean that he’s paying less in a mortgage on a new house? Sure he is. Further, it says his two kids are in college. Perhaps mom and dad downsized. Maybe they had a house worth $300,000 in Milwaukee and now they have a $100,000 condo in Reno. That’s perhaps a third lower mortgage. From say $2,100 a month to $700. Makes no difference the actual numbers for the logic, though it makes a difference in knowing if I should fret over Mr. Becker. Even median to median for comparable houses and he’s got a spread of nearly $50,000 to work with. Perhaps he made that on the sale of his old house and put that back in the bank to cover his year of unemployment. That didn’t work out too bad. He still would have paid the college costs, as the article says he does, since his kids would still be in college. Not to mention that Wisconsin’s median value fell 3.7% and Nevada’s only fell 2.1%. In fact, perhaps, given Nevada’s skyhigh foreclosure rate he even did better, which is not inconceivable, and bought a bigger and better house for only $75,000. But we don’t know this crucial bit either, (no) thanks to Mr. Leonard.

Now, property tax-wise Nevada is ranked 28th in the nation – at about $1,141 and Wisconsin at $1,506, which is number 12. Not much, but these are tough times, every bit counts, and too, it lowered his cost of living. Now too, in overall taxation, Nevada stands at 6.6%, varying between 48th and 49th across the nation in one measure of the tax burden over the past four years. Wisconsin on the other hand has a 10.2% overall rate and thus is ranked variously over the past few years at number 4, 4, 10 and 6 – up and down swung its national rank. Still, it is at the opposite side of the spectrum from Nevada. Surely that was helpful to Mr. Becker.

Then there is the cost of living. Overall, Becker comes out a little worse in Nevada. What $100,000 buys in Wisconsin costs $106,230 – but only in the “complete” and “big” picture. Ah, but the slicing and dicing of real data might indicate something else – we don’t know if Mr. Becker is a spendthrift or frugal. However, since Mr. Becker was able to save at least $100,000 this might not be as bad as it looked. He is apparently a careful money manager to some degree. To save that on a $150,000 salary, and still be sending two kids to college and have at least a median value house shows some apptitude for savings. Groceries are 8% more expensive in Reno than Milwaukee. Though with such a broad basket and without knowing what Mr. Becker actually buys it is hard to say if he might actually be ahead of the game. The modern grocery list includes, say, chips and dips, two of the most expensive things. Suppose Mr. Becker doesn’t eat those? That means his figure is different then the plus 8%. By how much we can’t figure. Housing is supposedly 2.1% higher in Nevada, but the median is lower, so it is hard to figure that out either. It depends on how the data are collected and collated – and Becker’s particulars. Utilities are however, some 15% lower. And Health Care – the BIG issue of our times — is actually 6% less in Nevada than in Milwaukee. That’s two things he came out ahead on. Transportation is supposeldy 1% higher state to state. But Reno is small, and Milwaukee is large. And commuting in a smaller city is almost certainly cheaper for it perforce has to have less miles. Still, we don’t know the different distances he has to travel home to work in either location – which could affect the issue.

On the state tax issue Wisconsin is #12 at $2,296, and Nevada is #23 with $2,031. So that is a plus for Nevada. But what the article completely fails to mention is that there are absolutely 0 dollars in personal and corporate state income taxes in Nevada, and the rates are 14.9% and 2.1% respectively in Wisconsin. And so on the individual level, he was paying 14.9% on $150,000 in Wisconsin and 0% on $125,000 in Nevada. That’s a significant difference. How much? $22,500. That’s what Mr. Becker perhaps paid on his income in Wisconsin to the fine government up there. That’s without knowing any particulars about his tax deductions, or indeed, I know absolutely nothing about the income laws of Wisconsin – that was Mr. Leonard’s job – to inform me. He did not. In fact, he ignored the issue completely – or at least didn’t say if it was pre or post tax income in Wisonsin. And Becker paid nothing to Nevada – because Nevada has a cash cow called Las Vegas which has the convenient feature of luring millions of tourists who pay the higher liquor tax, higher cigarette tax and all those other gambling industry taxes that Wisconsin cannot rely on. But still, that $22,500 cut in personal income taxes nearly equals the $25,000 cut in pay. For after all, Mr. Becker only took home $127,000 in after tax income in Wisconsin. That’s only a $2,000 difference. That doesn’t seem he made that big of a leap then at all. And Nevada is ranked as having among the best bridges, so highway-wise perhaps better even – and he’s getting at least similar government services in both states. Though to be true, Nevada surely has a lot less bridges than Wisconsin no matter how you look at it. The Rivers of Nevada are not exactly many.

Then there are the really intangible things – like the quality of life. The mountains of Nevada are right off far more beautiful than the flat cityscape of Milwaukee. The traffic has got to be less, too. As is the more neighborly feel of small town America versus big industrial city. While both places get snow, I’d wager that the winters in Milwaukee are just a bit more arduous than Nevada. The outdoor living is healthier, no? That’s what we are told constantly. The more abundant sunshine is surely nice. Though Wisconsin is said to be healthier — #14 vs. $47. By what criteria this is predicated on I do not know. But I don’t think you can count the zonked out gamblers getting hurt as part of Nevada exactly, even if they did get hurt in Nevada and go to the hospital there. And no doubt the increase in drinking and smoking and overeating per capita as measured by sales volume is higher in Nevada because of all the buffets and bars at the casinos that Wisconsin doesn’t have and that Mr. Becker probably doesn’t have time to access, and isn’t part of because he’s busy at his new job. Though how one could measure per capita resident consumption of bad goodies versus tourism consumption I haven’t thought about.

Nor is there word if the higher taxes of Wisconsin is what drove the company that Becker worked for out of business – or even out of Wisconsin and to some other state where Mr. Becker did not want to move. In fact, we have no idea if Mr. Becker was offered an incentive package to leave the company. Or if the company was lured to Buffalo and Mr. Becker had no intention of going from the ice pond to the freezer.

Nor do we know if Becker sent out thousands of resumes, or took time off to write his great American novel because he had the luxury of having a year’s worth of savings to rely on. Was that his choice? Or was he simply unable to find a job? How hard did he look? Why did he look in Nevada? Where else did he look? Is the Nevada company a new company, with great potential for growth? What would be the case if Becker was given non-income calculable stock options or other benefits? Maybe there was less hours guaranteed. Maybe the progaming language used was what lured him – that was the trick that flipped my friend David K. from a slightly higher salary to a slightly lower salary – he didn’t want to work with the old way – but wanted the new. What if the new company had a great health club right there at work – which cut out $200 or $300 in dues back there in Wisconsin? What of the less stress of managing a dozen versus 60? Is that something that Becker wanted? Was it worth giving up $25,000 – or really $2,500 given the tax differential? These are other questions that in depth, investigative and analytical reporting might have unearthed. Maybe Leonard knows all this and decided not to write about it. Who knows? How can we know? And why does Mr. Leonard not think it worthy of our consideration?

This is just the tip of the iceberg. But one thing for sure, without all this other information we can’t really tell if Becker is better off a year or more or three or four ago. And when I think about it, that “uprooting” itself – some 1/3 of Americans change jobs and houses every year. We are a mobile culture. Why is Becker to be pittied for being part of the culture? In IT he’s at the forefront. Hell, back as early as the 1960s it was joked that IBM stands for “I’ve Been Moved.” Nor do we know if Becker voted for more taxes in Wisconsin, and now that the consequences are in, has to move by his own hand.

Remember the question that Reagan asked of Jimmy Carter’s presidency? “Are you better off than you were four years ago?” We have no way of knowing if this is true or false for Becker. Though that would be Mr. Leonard’s self proclaimed job with the vaunted AP – to give us an analysis to see if Becker is a Typical or Atypical example of the dynamic economy we are in.

One thing for sure though – he’s going to be worse off because of the rising “misery index.” This is the ratio that Jimmy Carter created to use against Gerald Ford. Carter said it is the unemployment rate plus the inflation rate. Under Ford it was like 14. Under Carter it rose to 21. Under Reagan it plummeted to like 7 or 8, even lower in parts of the country. And what polices does our current president follow? Carter’s. He hates Reagan’s ideas. And so while today we have about 3% to 4% inflation and 10% unemployment our misery index is back up to 14 or so. With inflation set to rise dramatically – where do you think all those stimulus and borrowed bucks are coming from and with what will they be repaid? Mr. Becker is set to lose out even further – if he lost at all. But we don’t know if he voted for Obama, as a liberal in Wisconsin might be known to do. And Nevada does have one of our chief socialists. So that’s going to be interesting whether Mr. Leonard sees this ‘going forward’ as they say – and will he, in the interest of advancing our understanding of our times, go ahead and follow up with Becker in a year or two?

Still, let’s all hope Mr. Becker settles into his new home just fine. I wish you well, sir. And that his kids are above average in college. And too, that Becker’s new senator is retired as he should be as fast as possible so that Becker might keep his new job, for Reid imperils it with every passing moment he is in his seat.

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