Recession: An American Experience
The subprime mortgage meltdown started around 2007, the last year I lived in the States. At the time, newspapers and economists believed the risk was contained to only subprime or the domestic house market. Since then we’ve seen big banks fail, investments plummet, and trillions of public dollars injected into banks around the world. We’ve learned about collaterized debt obligations (CDO), credit-default swaps (CDS), and a slew of other culprits in what amounts to the steepest recession since the Great Depression.
I wasn’t around during the Great Depression; I only have the impression I got from American textbooks. My impression was that it was depression, a miserable time that spanned over ten years. Similar to that impression, my feel for the current economic stumble was limited to what I’d read in newspapers and among economists (In Peru, GDP growth still hasn’t dipped into the negative). This work holiday was the first time living in America during the biggest recession of my lifetime. Things were noticeably different, some in unexpected ways.
My goal and justification for 6 weeks was to earn as many US dollars as possible. Before leaving Colombia, I secured a 30 – 40 hours / week job serving and bartending at my old college employer. I also lined up retail promotional work for about 15 hours / week. Finally, I presented the same company a proposal for an e-marketing campaign (a four-figure deal), which was accepted.
So I definitely found work. In fact, I gave up all my restaurant shifts my last week because I felt I hadn’t spent enough time with family and friends.
I worked 3 long weekends doing promotions inside Costco stores, one of the more innovative retail giants in big-box capitalism. Many of the deals I saw in the States were in similar stores: Target, Walmart, etc.
The VitaMix Solution for $394.99 – This product was featured in a similar promotion to the one I was working in Costco stores, on the same days. The Solution included a big power blender, a disc and recipe book to make your own juices. VitaMix demonstrated the product and handed out samples of the juice they made. The one I tried had pineapple, carrot, spinach, strawberries, and more. It tasted excellent. The blender easily hacked through the carrot and pineapple, which weren’t chopped but simply cleaned.
I’m biased being accustomed to cultures that drink juice from a blender as opposed to a bottle or can. And the VitaMix is a big powerful blender with extras that add value, but I couldn’t help thinking they’re selling a $400 blender during the worst recession since the Great Depression. You don’t have to sell many to make a profit at that price.
¼ pound hot dog + free refill fountain drink for $1.50 – Everyday in the Costco food court: ¼ all-beef hot dog with a refillable drink for 3000 pesos? Not in Bogota. Big-box capitalism with a selection of fountain flavors, deli sauces, chopped yellow onion, and napkins in the service bar. I must’ve eaten 20 over 3 weeks.
6 lb bag of EAS protein blend for $29.99 – I stock up on protein powder In the States because it’s profanely overpriced in Latin America. In Bogota, I paid 80,000 pesos ($40) for a 2 lb tub! In St. Louis, I grabbed three 6 lb bags of EAS from Costco to fit into my luggage.
Levi’s jeans for $19.99 at Target –The Levi’s brand suffered overexposure in America during the 90s, but it’s a top quality brand internationally and especially in Latin America. I’ve seen authentic Levi’s and Wrangler jeans retail for $60 – $100. The ones I got at Target didn’t have that red tab on the butt, but they’re classic dark Levi’s nonetheless for $20.
City Museum’s best year to date was 2009 – My friends who work at the City Museum told me the fast growth from before the recession never slowed, their best year being the last one. Something had changed though. They said they’d often heard some redneck from Missouri or Southern Illinois or wherever explain his family usually goes down to Florida this time of year. But with the economy the way it is, they decided to road-trip it to St. Louis.
I noted St. Louis is an inferior good to Florida, as far as tourism’s concerned anyway. When a product sells better in a down economy, it’s defined an inferior good. Busch beer, Wal-Mart, and vacations to St. Louis are examples of inferior goods.
PBR: $2 pints at Fitz’s, $1 16 oz cans at Delmar Lounge – Pabst Blue Ribbon was always widely available on Delmar, but never at these two places. One carries the sub-premium brand on tap and the other in a 16 oz can. These two bars didn’t have PBR because they didn’t want the PBR crowd. Any increased distribution isn’t due to branding ground gained but the recession. PBR is also an inferior good.
High-end marijuana and vaporizers – My smoker friends (most aged late 20s, early 30s) have abandoned cheap marijuana. Everybody pays $50 for 1/8 ounce of bright green, super-potent marijuana. Things apparently aren’t so bad to warrant sacrifice in this category. One health-conscious friend ordered a vaporizer on eBay so he could vaporize his marijuana instead of smoking it. Vaporizers have apparently become popular in California in an apparently new legal industry sprung from the state’s legalization of medical use. This gadget provides for a smoke-free THC high.
Restaurant food costs & revenue – The restaurant where I worked had changed the burgers from an 8 oz patty to 7 oz, while standard price increases on burgers kept with inflation.
Labor costs – The same restaurant runs a much leaner operation than before. Former management subscribed to the TGIFriday’s school of using lots of staff. However, when sales are a significant percentage down from previous years, cuts must be made to stay profitable. The floor managers won a bonus by achieving their goals in cutting labor costs.
I used to work in three different positions: bartender, dairy bartender, and server. Instead of the opening bartender coming in at 10am to prepare the upstairs, at least for the winter (slow) season, they come in at 11am and the owner takes down all the chairs and makes it easy to set up quickly. The dairy bar position was where, in the winter, I got much of my grad school reading and homework done while getting paid $8 / hour. Now they’ve cut the position for Monday – Friday, servers making their own ice cream drinks (working harder but not tipping out the dairy bar). The servers are also responsible for cleaning and closing the dairy bar Sunday – Thursday nights. So in addition to adding these extra tasks to the server’s responsibilities, they also reduced the number of server hours by staggering start times for the shifts. There used to be two start-times: 10am and 4pm. The new system had so many start-times and I had three different positions to learn that I never really learned how it worked. However, when I had shifts that historically weren’t money makers, I saw that I got busy during those off-hours and ended up making good money during those hours. They trimmed all the fat they could from the shift and job tasks to get the most production as possible for the money.
Whenever the economy is back to healthy growth, the restaurant will enter the season of opportunity after having gotten stronger during the down-time. The labor costs and work environment at the restaurant taught me to look at recessions as belt-tightening seasons and opportunities to cut fat, rather than misery and depression.
Unemployment – A couple family members are out of work. Another big conclusion on recessions and their real impact on quality of life is that it’s not so bad so long as you don’t lose your job, but life’s still grand for them too.
comments
5 Responses to “Recession: An American Experience”
Leave a Reply
Interesting thoughts. I’ve observed many changes also, though from a slightly different perspective.
For people who are having to cut back, there’s never been a better time to be poor. Everything from flat screened TVs, to Hyundais, to Target, to computers, to free movies and TV over the internet, there has never been so much high quality available at low prices or zero prices. The value one can get for very little money is just amazing. There has never been a better time to be poor.
If you are building a business, you’ve never been able to find as many, incredibly high quality people available and eager to contribute to promising businesses. Executives from multi-national businesses are seeing the writing on the wall for their firms and bringing programs and ideas their businesses were to tradition bound to implement to very small businesses.
I fear the depression in the US is going to get much worse and it will be very difficult for many people, however it will be very good for the US. One has to remind themselves that the best time in the history of the world to start a bank was in 1934. The scars from past mistakes were still fresh and led to a responsibility and focus. The innovative businesses of that period in banking, advertising, entertainment and services dominated the world for the next 50 years.
The next five years are likely to be very painful for the US as consumers and the government deleverage, but looking at the businesses start to take shape, America’s future has never been brighter.
How do you think the recession/depression effecting Colombia?
Andrew, I’m thrilled to see someone cares about the economic posts.
I think most Latin American countries weathered the storm just fine, including Colombia. The countries overly dependent on oil were the hardest hit, but it’s no surprise to those who follow given those countries’ leaders. Colombia may have dipped into negative GDP for a quarter or so, but I believe it’s generally steaming right along with Peru. Building construction sure hasn’t disappeared. Some of Latin America’s solid fundamentals showed through and that’s why The Economist is churning out a bunch of articles drooling over Latin America, focusing on Brazil.
I agree, I found the post pretty insightful. Nice job
economy fucking blows here. im still looking for jobs. and 60 dollars is nuts for levis i buy them too at target as i like how they fit. i got a few pairs in different styles.
The economy here in the states IS great if you have a job! My husband just got a job in Dallas and he’s making more money now than when the economy was “booming” five years ago.
Sure, there’s a lot of competition, mostly for unskilled and illegal workers, but if you have an education and the gusto to get off your ass you can find well paid opportunities.
I move to Dallas when the school year ends in Louisville and I’m opening up my own food operation down there. Good economy or bad economy, people like to eat. I have never seen restaurants so busy!
Anyway, great post. I think you prove that if you are creative enough, there’s money to be made.
BTW, I worked for a vitamin and supplement distributor in Peru and the prices are marked up considerably high. The product is intended for a higher end clientele and most of it is imported from Canada and the U.S.