Summary Blog

http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20090403.wusjobs0403/business/Business/businessBN/ctv-business

Summary

This article is a perfect example as to how hard hitting the economy is in the United States. Never has the U.S. experienced such a great amount of job losses in the month of March since the year of 1983 and this particular amount of job losses does not even include now part-time workers and discouraged workers. Ever since December 2007, when the recession first began, more than half of the total job losses occured in the last five months. Out of many struggling industries, only education and health care careers have had job gains. Analysts believe that if the recession ends this year, the economy will remain fragil and vulernable. It would be likely be that any side effects of this recession will last and finally dissolve in 2013, leaving a huge number of people out of work.

Connection

As I read the article, several connections to our accounting textbook was made. Companies cut back on employees to reduce their wages expense and not only so, hours are often reduced or in some cases, frozen. As stated in the article, employees are hoping that their payroll deductions will be less than before, which should be the case since a smaller gross pay does not allow as much room for deductions (such as a smaller amount for taxes to be based upon). While being laid off seems to only have a negative effect on the victim, the employer has to go through a series of steps to lay one off. This includes continuing to contribute to the employee's RPP, CPP, etc. A smart move to reduce the amount taken in from loans is to lower its lending rate. This would allow a company to work under a lesser loan and still manage ok. Since only education and health care are doing fine at the moment, other industries that require inventory to be stocked will be under more debt because if people are not making as much money, they will be reluctant to spend on luxury items. In the end the store will not fare well and individuals will not have the ability to purchase desired items. Debt will be amounted in no time, the credit line of a company will be given a bad rep and make money-lending companies hesitant to lend to you.

Reflection

Since so many industries are laying off workers, it really makes one wonder if they would be able to hold onto their job and pertaining to youth coming out of university, would there be positions that allow them to exercise what they have learnt? Individuals who have had their hours cut or wages frozen may look like they are the only ones on the bad receiving end but that is not true. Employers are going through an equally tough time, often questioning their company's ability to ride out of the recession. Although I do not have a job, family and friends do and at the time being, things look extremely grim. Looking at the number of laid off employees in the U.S., I wonder when Canada will go through the same drastic situation. On the otherhand Jim Flaherty, Minister of Finance in Canada states that Canada's recession is in a mild stage, which I think not. Perhaps it is when compared to other countries (ie. United States) that Canada is not in a tough time but the majority of the news, newspaper and everyday chatter reminds us of what we are going through.