US Consumer Bankruptcies Jump By Most In Three Years; Third-Party Collections At All Time High

Zero Hedge ^ | 8-14-13 | Tyler Durden

[RKBA Democrat]

Something funny happened on the road to the epic consumer balance sheet cleansing and subsequent releveraging (without which there can be no actual non-Fed sugar high fueled recovery): the second quarter. And specifically, as the Fed just disclosed in its quarterly Household Debt and Credit Report, the number of consumer bankruptcies during the second quarter, just jumped by 71K, to 380K from 309K in Q1, the biggest quarterly jump in precisely three years - on both an absolute and relative basis - and the most since the 158K jump recorded in Q2 2010. It appears that when the "releveraging" US consumer isn't busy buying stuff on credit, they are just as busy filing for bankruptcy. Healthy consumer-led recovery and all that.

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But wait, there's more.

Because as this other data set also from the NY Fed shows, the proportion of US Consumer that have a third-party collection process commenced against them is pretty much at all time highs, where it has been for the past two quarters. Must be the recovery too.

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[kearnyirish2]

“There are thousands of people who were living within their means right up until 2009.”

That’s right; their “means” included a job that paid better than McDonalds, and the rug was pulled out from under them. Regardless of what some resident gurus may think, without people borrowing against future earnings we’d have even less jobs related to homes and automobiles and anything related to children (the average person would be 60 by the time they could “afford” a family).

[DannyTN]

"Then there are the dollars that need to go to retirement and matching fica funds and Obamacare dollars and OSHA safety training seminars and on and on..."

I did leave out a couple of things that I should have included:

• The employer tax for Medicare of 6.2%.
• The employer tax for Social Security of 1.45%.
• Employee Comp is required for any but the smallest firms in TN, so I assume that's true of all states. 1.7%

That adds a 9.35% cost, to the 2.7% staff time I already identified. Woohoo, we are up to 12.05%. Still a long way to go to get to 50%.

But Retirement plans and Health insurance plans other than Medicare and SSA are optional. That's not a "compliance" cost. At least it's not a federal compliance cost. There may be some states that require it. TN doesn't. If it's optional, it's not compliance, instead it's a wage differential. Companies offered those plans to be competitive in the marketplace.

Now that there is excess labor, you see more and more companies dropping these benefits.

Health will become compliance under Obamacare, but that does nothing to justify the offshoring of the past.

OSHA training seminars. When I worked for the firm with 3000 employees, the only people I can think of that would have been required for OSHA training would be warehouse workers. So that's 4 out of 3000.

When I was CFO for a company using lasers, EPA and OSHA compliance was one of my duties. The laser company compliance was limited to operations personnel (50% of total) watching a 2 hour video on blood borne pathogens and the gathering MSDA sheets for every chemical we used. I did the latter that took me about 4 hours one day. Seems like I also had to write a plan that took me about 4 more hours.

When I owned a medical firm, OSHA costs were a little higher. Everyone had to have the training on Blood borne pathogens. It probably took me a day to gather all the MSDA sheets. We had to have special disposal procedures. But most of the regs were from Medicare or State Health regulations. Not OSHA. We also had to properly mark the exits and certain rooms. That was less than a $200 one time cost.

EPA was never a significant factor in either one. Medical waste had to be disposed of properly, We had some special containers and a service that picked it up once a week. But that's still not a significant cost.

[Mad Dawgg]

So now you've changed your story from 2.7 to over 12 percent. and we still haven't discussed sick days mandatory pregnancy days vacation time down time for holidays and glossing over retirement and healthcare costs and such is a nice try on your part but it don't fly. IT ALL ADDS COSTS to the bottom line!

Don't forget that the FEDGOV can arbitrarily change the compliance regs and tax laws which then cost even more money.

If you notice every time I point out stuff you were wrong about you go "Well yeah but..." and then try and coverup the fact your first claim was totally wrong.

[DannyTN]

"So now you've changed your story from 2.7 to over 12 percent. and we still haven't discussed sick days mandatory pregnancy days vacation time down time for holidays and glossing over retirement and healthcare costs and such is a nice try on your part but it don't fly. IT ALL ADDS COSTS to the bottom line!"

I have gone to 12%. But your claim was 50%. And you've offered no support for that number. At least you can see exactly how I've quantified mine.

Sick days are not a requirement here in TN or by Federal law. If it's voluntary on the behalf of the company, then it's part of the wage differential. It's not a "compliance" cost.

By pregnancy days, I assume you mean the Federal Family leave act. Yeah, you are required to let the employee have time off. You aren't required to pay them a dime for that time off. For most companies that's not a major cost. There is only a very small percentage of employees that take off due to pregnancy each year/

And again, retirement and healthcare costs do add to the bottom line, but they aren't "COMPLIANCE". Because they aren't required. They are part of the wage differential compared to foreign countries, but they aren't COMPLIANCE.

[Mad Dawgg]

"They are part of the wage differential compared to foreign countries, but they aren't COMPLIANCE."

Your problem is you can't even comprehend the English language.

I said Compliance costs as well as healthcare retirement training etc.

You really just prattle on and prove yourself wrong over and over again.

You know like, the USA is a NET EXPORTER of Crude Oil hahahahah

[DannyTN]

So why do you keep bringing up retirement and health care costs when they weren't required and weren't compliance.

Oh yeah, that's right, because I'm only up to 12% and you claimed compliance costs were 50% of salary costs.

[DannyTN]

So why do you keep bringing up retirement and health care costs when they weren't required and weren't compliance.

Oh yeah, that's right, because I'm only up to 12% and you claimed compliance costs were 50% of salary costs.

[Mad Dawgg]

Post 25: The major LABOR related costs in the USA are not Salary. They are compliance costs, healthcare costs, safety regs costs and retirement costs." All of those are heavily encumbered with government rules and regs and so on. You literally have to hire people to satisfy all the paperwork and compliance BS. Not to mention someone to deal with the insurance and retirement stuff.

[DannyTN]

I said Compliance costs as well as healthcare retirement training etc."

The major LABOR related costs in the USA are not Salary. They are compliance costs, healthcare costs, safety regs costs and retirement costs. All of those are heavily encumbered with government rules and regs and so on. You literally have to hire people to satisfy all the paperwork and compliance BS. Not to mention someone to deal with the insurance and retirement stuff."

Okay, fine. But if it's not compliance, you can't blame government for it. Companies did that voluntarily. That's just part of the wage structure. So when I compare $17/hour U.S. manufacturing labor costs to Chinese $0.17/hour, I'm actually leaving out all those extra voluntary benefits like retirement, and health plans. Include the cost of those voluntary items in our wages, and the wage differential just got worse.

Of course if we offshore all our jobs, we will be out from under all those voluntary benefits that American companies used to offer.

Is that the America you want to live in? One where American companies offer no more benefits that Chinese companies currently do?

Low tariffs result in a race to off-shore our industries and to lower the real wages and benefits of Americans workers to third world status.

[Mad Dawgg]

"Okay, fine. But..."

hahahahah there she blows again. Another quick admission of being TOTALLY wrong and then the BUT to obfuscate.

Face it sparky you get wronger every time you post.

[VerySadAmerican]

I got the same deal on property and school taxes. The rate is “frozen” but the assessed value can go up. And it WILL go up. My home’s retail value has jumped $1700 in the past 30 days according to Zillow. It plummeted right after I bought. It’s been gradually going up ever since. So, next year there’ll be a tax increase. Which means I’ll either have to write a check to the bank or raise my escrow payment.

The plus side is we may sell next year. Right now we’re sitting a little above the pay-off amount. Six months ago I’d have had to written a check to sell it.

[DannyTN]

I'm not wrong about the big picture. We've got the lowest import tariffs in our country's history. We've lost a lot of industries to off-shoring. We've got 25% unemployment and rising.

I'm not wrong about your 50% claim. Even if you add Healthcare costs and retirement costs to my 12% we're still a long way from your 50%.

• Retirement is what 3% matching 401k funds. And many companies don't offer retirement. So Retirement brings us up to 15%.
• According to this site, Companies pay about 8% of salaries on healthcare. That brings us to 23%. Still less than half of your 50%.

I'll grant you that your comment didn't put all the extra costs on compliance. But if you weren't trying to blame government for those costs, then what was your point?

The context of the thread was that I said, ""No it's the imports. You can eliminate every government regulation and every government tax, and you still can't compete with Chinese labor that is at 1% the cost of our own."

And you came back with The major LABOR related costs in the USA are not Salary. They are compliance costs, healthcare costs, safety regs costs and retirement costs. All of those are heavily encumbered with government rules and regs and so on. You literally have to hire people to satisfy all the paperwork and compliance BS. Not to mention someone to deal with the insurance and retirement stuff.". If your point wasn't to blame compliance. What was your point? I'll admit I misunderstood your comment. I understand it now, but I don't understand why you said it. What was your point?

[Mad Dawgg]

"That brings us to 23%. Still less than half of your 50%."

hahahah so we went from 2.7% to over 12% and now your last "Okay, fine. But..." takes us to 23%

And you are still leaving out lots of stuff. We still haven't touched on Unemployment costs especially bogus claims that jackup the rate you must pay. (People quit then claim unemployment which is not covered BUT if you don't fight it the Government will automatically grant it) The lost time in fighting those claims or just giving up and let the claims stand. Both cost the company money.

Then there is fighting the bogus workman's comp claims that can literally cost a large firm mega bucks. you either fight them with high priced lawyers and court cost outlays or pay bigger workman's comp rates.

incoming: "Okay, fine. But..." in 3... 2... 1...

hahahah

[dalereed]

“If you also enjoy supporting 100 million Americans on food stamps”

welfare, food stamps, and section 8 housing should be totally eliminated!!!

If you can’t make it lie down and croak.

I sure won’t support you by choice.

[Balding_Eagle]

Thanks Dawgg, you’re pointing out his ignorance.

From his posts it’s easy to see he’s all hat, no cattle. Even the tone shows that.

[DannyTN]

Okay, the average State Unemployment Insurance rate is 2.8%. That gets us to 24.8. You're almost halfway there.

Lawyer costs were already included in the 3 staff lawyers I included in my first 2.7% remember. It doesn't amount to a whole lot.

For it to be a bogus unemployment claim the person had to be fired not laid off.

• What percent of employees do you fire? Lets go with 2%, we'll fire 1 out of 50 employees every year.
• A portion of those won't file a bogus claim, but let's say 50% do. In TN that first ruling was handled with a phone call from the state to the employer and maybe a fax documenting the employer's position. Cost of that is neglible.
• The next step is an appeal. That's not at a regular court, but at an administrative court. And in TN, I understand that is usually a quick hearing under an hour. I'm not sure whether they charge court costs. I don't think they do. However, in TN unemployment appeals usually go against the employer. So companies don't spend an arm and a leg fighting them. They present their side and live with the results. The average SUI already reflects increased rates from bogus claims. It is after all an "average".

So what are we left with? 2%x50%x50%x$250 an hour lawyer fee. So that's comes out to $1.25/employee/year But let's go really conservative. Let's let the lawyer spend 2 days on this. That brings the cost to $20/employee/year. It's still negligible. It's less than 0.1%

Worker's comp is similar. Let's let the lawyer spend 2 weeks on this one. Now we're up to $100/employee. that's 0.5%.

So between the two I'll add an additional 1%. We're up to 25.8%. Congrats you crossed the half way mark. Your claim of 50% is still ludicrous. And worse, since you've distanced yourself from blaming government for all those costs you mentioned, and haven't offered an explanation of why your brought them up, it's completely irrelevant to this thread.

It appears your still wrong, but now that you've whatever your original point in bringing up these costs was supposed to be is irrelevant.

Maybe you were just trying to point out that the wage differential was really larger than I was claiming, thanks to voluntary benefits. But that would only bolster my case for tariffs.

Got any more straws to grasp at? Want to throw in the sanitation cost of cleaning up the blood from the bogus worker's comp claim? And maybe the kleenex for the fired employee?

[DannyTN]

All he’s doing is pointing out all safety net programs and voluntary benefits that American companies used to offer, that we are losing, by allowing China to take our market share, our industries and our jobs.

[Mad Dawgg]

"For it to be a bogus unemployment claim the person had to be fired not laid off."

Oh no sparky most bogus unemployment claims are for people who just up and quit.

So AGAIN you are wrong.

Further if you don't fight this is raising the rate you must pay. And if you are a large firm this can really add up.

Then there is workman's comp and maybe you didn't hear about it but we have a literal plague of people filing for workman's comp these days. And the more people filing claims the higher your rate goes. So your calculations are off.

Then of course you glossed over Holidays (lost revenue due to down time because the employees aren't working.) Then there is paid vacation time that figures into labor costs again glossed over by you.

Your last ""Okay, fine. But..." took us above 25% have you noticed a pattern here. On this point alone you have been wrong 5 times. You should have got one right by accident now. hahahah

[DannyTN]

I used average SUI and worker's comp rates. So the increased rates you are talking about are already averaged into my numbers.

The point of the last post was to deal with the lawyer costs you raised. Companies will spend some money fighting these claims, but they won't spend a fortune fighting them.

According to this Worker comp claims have been falling.'. And according to the Wall Street Journal too The number of workplace injuries recorded by the federal government has dropped by 31% over the past decade.

Maybe you are thinking of Social Security Disability, instead of workers comp?

[DannyTN]

"Then of course you glossed over Holidays (lost revenue due to down time because the employees aren't working.) Then there is paid vacation time that figures into labor costs again glossed over by you."

Those ARE salary costs. Paid holidays and vacations are already included in Salaries. They are also voluntary and not compliance.