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(Des Moines Register)   If you were one of the 5,500 Wells Fargo employees who was recently laid off, take comfort knowing that because of your sacrifice the company was able to post record earnings   (blogs.desmoinesregister.com ) divider line
    More: Asinine, account of profits, mortgage refinancing, comfort, West Des Moines, Wells Fargo, U.S. Bancorp  
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1796 clicks; posted to Business » on 11 Oct 2013 at 2:54 PM (2 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-10-11 08:47:02 PM  
4 votes:
I've lived through several 'recessions' but it wasn't until the early 80's that I spotted businesses slashing the ranks of employees and people lining up to invest in them afterwards. Yuppies, usually, quick to capitalize on greater returns from the climbing profits now that there weren't so many pesky employees around to suck down the cash.

A bonus was that the remaining employees were so terrified of loosing their jobs that not only did they work harder, but many took pay cuts and loss of benefits, which translated into bigger corporate profits and greater returns for the investors.

I'm not sure when CEO's became gods, worth millions a year, plus Golden Parachutes so vast that even if they got fired they'd never really have to work again. Including the CEOs who did shiatty jobs or were so hostile towards the average consumer they were nearly psychotic.

Then again, I never expected to see so much of the nation in abject poverty due to the greed of financial institutions and have billionaires start popping up like popcorn. It seemed the more folks that lost their jobs and homes, the more billionaires appeared.

Sometime between the 80's and 2000's, a judge made the cap on interest rates, placed by the federal government decades ago to protect the average consumer, illegal and non-constitutional. Companies left skid marks jumping interest rates up over night.

I recall a time when it was never really hard to get a job, especially, for school kids, a summer one. Businesses were usually willing to hire on a new worker who looked like he might benefit the company. During the summer break and Christmas season, businesses were actively looking for temporary full time help.

Now, they seem looking for ways to fire or restrict the employees they have.

We're in a financial crisis now and yet I keep finding news reports mentioning how housing booms are on their way back in some areas -- even though thousands of repossessed homes lay empty across the country.

The financial situation is so f**ked up that I can't make any sense of it anymore.
2013-10-11 03:28:15 PM  
3 votes:
If Wells Fargo felt it could be MORE profitable without 5,500 employees - it should either fire those 5,500 or reduce their pay.
If an employee thinks they could make more money WITHOUT their job, or at another job - they should either quit or demand an increase in pay.


I really don't understand this mentality that so many people seem to have.  'A company is profitable, therefore, employees can't be fired!'

I worked for a company where the CEO felt the company was a big, happy family.  As nobody was ever let go.  But there was so much dead weight.  But we were profitable....right until we weren't.  Then, it was already too late.  Laid off 1/4th of the staff, but they seemed to know exactly which 1/4th wasn't contributing....and I swear to God, productivity went up!  Now, maybe I'm biased, but I swear, things were BETTER.  As in, these people weren't just NOT contributing, they were actively impeding work.

Still, at that point, they company was so far gone, it didn't matter.  I think it was 3 months more and the company declared bankruptcy and laid off almost another 1/2 of the employees.....while everyone who wasn't let go had started sending out resumes and even more people started to trickle out.
2013-10-12 03:05:28 AM  
2 votes:
kab

Our brand of economics considers shareholders to be far more important than employees. It also generally doesn't consider individual performance when making cuts to appease said shareholders.

Remember that next time you're asked to stay late.


Very good.

This began with the Yuppies, who took advantage of the then new computer technology that allowed them to invest from home and cut out the professional Stock Investors, who charged a fee. They neglected to realize that for that fee they got the many years of the professional's wisdom in dealing with something as unpredictable as the stock market.

The some genius made an automatic investing program that you could set and forget -- but the program did not have the innate skills to abruptly stop selling shares when you realized that by doing so, you were contributing more harm than good.

So, in the 70's the market crashed.

Skilled investment companies knew when to halt runaway sales of stocks to prevent a crash or to lessen the impact. Machines don't.

Yuppies took advantage of the disaster by buying up stocks and eventually gaining enough power to actually force companies to change their business philosophy, starting with demanding greater profits in shorter times. A company which had churned out consistent profits for generations and kept it's employees working was no longer a good investment.

It had to generate major profits so the Yuppies could get greater returns on their investments. They didn't want to wait 20 years to become filthy rich like their forbearers did. They wanted it within 5. The result was major companies trimming their employee base, starting with long time, aging, loyal employees who had produced well for the companies, were coasting deservedly on their past work and close to retiring. They also slashed the accumulated retirement packages they had come to expect by forcing them out early.

Benefits were slashed and the 39 hour work week appeared to prevent mandatory benefits from being earned. Thousands of employees were laid off. Health insurance was cut because the companies usually paid a percentage of that. Accumulated vacation and sick days, unused, could no longer be saved and paid out in cash upon retirement. Use them or loose them became the philosophy.

If a company did not perform to the new standards, Yuppies transferred their investments elsewhere, which could cripple a business that had been established for years.

The Yuppies started the Greedy 80's, which in turn spawned a host of predatory businesses -- including these little payday loan companies which could and have charged as much as 500% interest if a client was late on a payment. Charge cards raised their interest rates dramatically and also started applying stiff penalties for late payments. Banks tripled their over draft fees and tripled them again, then started adding in previously never used service charges.
Clever fellows developed ways to make money from waste, which is fine, but as their businesses grew, they increased the cost of their products, helping to negate the savings they once touted for the consumer. Recycling is now major business, earning billions a year.

In 1975, scrap paper companies would haul away bails of cardboard from department stores. They charged roughly $5.00 a bail, which could weigh nearly a ton. They would sell it to processing plants for maybe $20. Now, department stores can pay $65 a bail to get rid of it and the recyclers sell it for over $100 a ton. 'Clean' bails cost more. (Meaning bails opened up, scoured of all non-paper stuff like plastic, then rebailed and sold.)

Then came the house flippers. The businesses designed to fail to provide major tax write-offs for sports figures and wealthy investors. Developers discovered they could buy designated farm land for a song, due to regulations, hold it for a year or two, get it rezoned for development and sell it at a huge profit to build houses on. Taxes, BTW, on farm land are lower than land used for development. So, a win-win for the developers. Not so much for the consumers, who found independent farms vanishing and the cost of food creeping up.

The 80's ushered in an unprecedented age of greed that made the Age of the Robber Barons look like amateurs.

The hard working, loyal employee became expendable. Being a Company Man was no longer even worth the cost of a cup of coffee.

Yuppies also ushered in the Age of Litigiousness, suing the krap out of anyone for everything, making the USA the most litigious nation in the world and even further changing the way businesses functioned.

I was a Company Man. I basically lived on the job. I gave in hundreds of free hours and tons of additional work. I was fiercely loyal to the company. I even found ways to save it money. .... right up to the point where they fired me.
2013-10-11 04:09:50 PM  
2 votes:

Fark_Guy_Rob: I really don't understand this mentality that so many people seem to have.  'A company is profitable, therefore, employees can't be fired!'


Seems like there should be a balance, though. We're at a point now where if a company like Wells Fargo posts, say, a $1.1 billion quarterly profit, but Wall Street (somewhat) arbitrarily thought they should have made $1.2 billion that quarter, their stock will take a 10-15% hit and the talking heads are on TV for a week yelling "Sell, Mortimer, Sell". Or, if their profits only rose 10% instead of 11%....HOLY CRAP PANIC WHAT IS WRONG WITH WELLS FARGO??? There's nothing wrong with Wells Fargo, their profits rose 10% for pete's sake, but now a bunch of computer programs can make $47 million in 20 seconds shorting the stock.

People are routinely getting laid off/fired not because the company is doing terrible or they're dead weight, but because the company did slightly worse than the expectations of a bunch of individuals who's only interest in the company is how much money they can make off of it buying or selling their stock.
2013-10-11 03:38:52 PM  
2 votes:
They'll want those people back in less than 2 years - and they won't be able to get 'em.  Instead they'll get new folks with less experience, no loyalty to the company, no customer service skills, and will generally be a shiattier company going forward than they would have been if they invested in maintaining a strong workforce.
2013-10-11 03:03:04 PM  
2 votes:
Earnings report is from 2nd quarter.   3rd quarter the mortgage side tanked.   4th quarter Subby reads article.
2013-10-12 05:44:12 AM  
1 vote:

inclemency: Some great posts in this thread(Rik01, Diogenes, et al).

Also some unsurprising zero-sum capitalist mentality posts.

This is an unsurprising story, in that it is not unique. This saddens me.

Corporate greed, and individual greed with intentionally dulled empathy is an illness. A serious illness that has repeated itself through history. Perhaps it is our fate. But I feel pretty good about how I make what little money I do (from a moral perspective) and will never have to apologize for it.

Thank heavens I never got a real taste of it... I have an addictive personality and would hate to hate myself more than I do.

/fark money worshippers


Capitalism is based on self-interest and self-esteem; it holds integrity and trustworthiness as cardinal virtues and makes them pay off in the marketplace, thus demanding that men survive by means of virtue, not vices. It is this superlatively moral system that the welfare statists propose to improve upon by means of preventative law, snooping bureaucrats, and the chronic goad of fear.  - Alan Greenspan (1963)

Of course having said that...most of the problems in the capitalist system come from people acting criminal at worst or far less than virtuous at best.  The problem isn't that Capitalism as system lacks some sort of inherent virtue promotion mechanism...so much is it that people in general are short term thinkers.  Many of them are sociopaths on a spectrum ranging from *gave you a wedgie* to *killed you because you go in his/her way*

Did Wells Fargoneed to fire those 5500 individuals in order to perform better?  Were all 5500 dead weight?  I suppose that is a possibility.  Much more likely is that this is a short term stunt to prop up profits for the Q4 reports.  Sure its cynical but probably accurate.   Many companies like Wells Fargo are lobbying Congress to be able to import more foreign workers as they fire existing domestic employees.  The H1B system is used as a wage-slavery system by the corporations so they can pay a discount and hold down wages even further. (Citation) And yes I know he's a prof of computer science and no economics...doesn't make him wrong or uneducated in these regards.
2013-10-11 11:18:04 PM  
1 vote:

Skyd1v: sure haven't: Employees don't make the company happen, employees are an annoying cost. A liability that needs to be eradicated. If every company did away with these "employees", they would save millions to distribute to lottery-winning upper executives.

We'll get there someday. For now though, we can only cut bit by bit. Soon though, every company will gloriously be employee-free, and will finally be able to make the board even richer. It will be paradise.

Good post. An entertaining use of sarcasm/snark.

My problem, anecdotally, is I see this IRL at the company I work for all the time over the last couple of years. I work on the executive floor ( just a drone though ) and overhear a lot of meetings on how to "reduce employee expense". Since we are a service based company, one would think crapping on the very people providing the services we sell wouldn't be considered, but, here we are.



It's the new business mentality. American businesses are now so poor that they can't compete on the quality of their goods and services anymore... doesn't matter if they are selling cars, mutual funds, cameras, mortgages, snack food, or college degrees. They've cut costs too much by outsourcing production and planning for immediate obsolescence, and lost too many customers by treating their service workers like dirt and by designing products/services based on executive decision and "corporate direction" instead of customer feedback.

Because of this, they want the rules to favor them as much as possible. It's turned us into a country filled with patent trolls, contract employees, and empty storefronts. They also want to make sure their customer base is too uninformed to realize how poor their products/services are on a global scale.

Want a quick explanation as to the cause long-term recession? We are living in a consumer-based economy that no longer values its consumers.It's as simple as that, and it's in the deepest roots of everything that has happened over the last 33 years.
2013-10-11 05:40:28 PM  
1 vote:
This is why no matter how mad you may be, you should not automatically sell your company stock when you get laid off.  Then again, if you are the sort who takes sound financial advice, you don't own a lot of stock in the company you work for anyway.
2013-10-11 04:52:53 PM  
1 vote:

Linux_Yes: HotIgneous Intruder: Yay banks!
Yay capitalists!

/Fark Wells Fargo - Wachovia.


i pulled my money out of Wachovia bank (later bought out by wells farko) right after the 2008/09 wall street bank stunt,  and put it in a Federal Credit Union.

and i've never since looked back.   very happy with my choice.  now, i don't have to feed f*cking stockholders any of my money.


Hear, hear. The only shareholders I support are me and my fellow credit union members. BECU FTW, fark Chase and BoA
2013-10-11 04:20:51 PM  
1 vote:

Fark_Guy_Rob: If Wells Fargo felt it could be MORE profitable without 5,500 employees - it should either fire those 5,500 or reduce their pay.
If an employee thinks they could make more money WITHOUT their job, or at another job - they should either quit or demand an increase in pay.

I really don't understand this mentality that so many people seem to have.  'A company is profitable, therefore, employees can't be fired!'

I worked for a company where the CEO felt the company was a big, happy family.  As nobody was ever let go.  But there was so much dead weight.  But we were profitable....right until we weren't.  Then, it was already too late.  Laid off 1/4th of the staff, but they seemed to know exactly which 1/4th wasn't contributing....and I swear to God, productivity went up!  Now, maybe I'm biased, but I swear, things were BETTER.  As in, these people weren't just NOT contributing, they were actively impeding work.

Still, at that point, they company was so far gone, it didn't matter.  I think it was 3 months more and the company declared bankruptcy and laid off almost another 1/2 of the employees.....while everyone who wasn't let go had started sending out resumes and even more people started to trickle out.


Well, you're kind of talking extremes.  The focus should be on quality, and adjusting staffing to meet the standards that quality requires.

Coddling dead weight doesn't do that.  But neither does shedding staff to make a buck.  I stand by my comment earlier.  It's incredibly lazy and most often ends up being self-defeating.

The mortgage business won't be in a slump forever.  When it recovers and that portion of the business is restored, they will need to hire again.  But they just lost people with a body of knowledge because of the layoffs.  This will create quality problems.

Additionally, rehiring is an expensive endeavor.  Not just because of salaries, but all the internal business processes required to bring new people on.  Benefits, etc.

Downturns are a natural part of a business' lifecycle.  Smart and nimble companies manage through them, without resorting to blunt tactics like layoffs.  But, shareholders demand ever higher and ever consistent profits without regard for the health of the businesses that create those profits for them.

Added to that is the laughable notion of trickle down.  Just what level of profit must be reached before that trickles down?  It doesn't.  And it's not for silly notions like "uncertainty."

This constant drive for consistent profits at higher and higher levels is not good for the sustainability of a business.  It's unrealistic.
2013-10-11 04:10:26 PM  
1 vote:

HotIgneous Intruder: Yay banks!
Yay capitalists!

/Fark Wells Fargo - Wachovia.



i pulled my money out of Wachovia bank (later bought out by wells farko) right after the 2008/09 wall street bank stunt,  and put it in a Federal Credit Union.

and i've never since looked back.   very happy with my choice.  now, i don't have to feed f*cking stockholders any of my money.
2013-10-11 03:57:13 PM  
1 vote:
Yay banks!
Yay capitalists!

/Fark Wells Fargo - Wachovia.
2013-10-11 03:42:39 PM  
1 vote:
OH FREAKING NO!

They laid off 2% of their employees in the midst of a serious decline in their mortgage business?

bastards
2013-10-11 03:25:06 PM  
1 vote:
lots of tricklin' going on.


just remember, tax cuts for the rich create jobs.

lol    schmucks.
2013-10-11 03:06:11 PM  
1 vote:
Employees don't make the company happen, employees are an annoying cost. A liability that needs to be eradicated. If every company did away with these "employees", they would save millions to distribute to lottery-winning upper executives.

We'll get there someday. For now though, we can only cut bit by bit. Soon though, every company will gloriously be employee-free, and will finally be able to make the board even richer. It will be paradise.
 
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