The Upside of a Downturn?

AIR DATE: Friday, May 2nd 2008

Warren Buffet says we're in a recession. The President calls it a "slowdown." Either way, the Fed says "economic growth is slowing."

But for whom?

Recently, we sent out a question to people in our Public Insight Network asking "Are you feeling an economic slowdown?"

I spoke with a software developer in Portland who told me that the tech industry in Portland appears to be thriving right now, recession or not.

And some people claim to be doing well because of the slowdown. An Oregon bankruptcy attorney told me that he's seen a steady increase in calls from potential new clients. A professional resume writer told me she's seen an increase in the demand for her services, and I spoke with a residential property manager in Vancouver who said he has very few vacancies right now, and a waiting list to get in.

Are you feeling a slowdown? Or do you work in an industry that's been spared? Are you preparing for tough times? Or do you see a recession as an opportunity -- personally or professionally?

Tagged as: recession

I personally see a recession as an opportunity (I am a college student going to graduate next year). Many people go back to school, or to school for the first time, during recessions and in that respect I will be ahead of the game. Many people try to convince me that it will be hard to get a job after graduation, but I disagree based off of the field of study I am majoring in. I have been contacted with three job offers just this week alone and I'm not even in my senior year. I believe if you are at the top of your field you shouldn't have anything to worry about (as far as college students), and if you're not at the top this is reality hitting you in the face that you should have tried harder.

As for non-college students I believe this can be an opportunity as well in that maybe you aren't doing what you originally wanted to do in life, and this will now give you a chance to rethink your future. Of course if you are doing what you love already, and you are being forced out of it due to RECESSION (slowdown is a sugar coat), that is truly unfortunate. I guess that's the way it goes in a capitalist system such as ours though.
textchampion —
What's your major?
David Miller —
I am a Public Policy and Administration major with a Legal Studies minor. I have had job offers from almost every state agency in Oregon, I suspect that is due to the fact that the public sector is not as much a victim to the laws of supply and demand as the private sector. By no means am I saying it's invinsible, as recessions lead to budget cuts, but I personally feel that if you are at the top of your class in a quality program, the jobs will be there for you if you are diligent in your search. I know some 2.0 GPA English majors that have some rough futures ahead of them.
textchampion —
From my vantage point, the Web startup community in Portland--and the Silicon Forest, in general--is stronger than I've ever seen it. We're attracting attention. We're courting talent. Venture capital is beginning to take notice.

And most importantly, we are establishing some strong footholds, in areas like open source, OpenID, and geolocation/mapping.

Does the downturn/slowdown mean that that exciting startup activity is coming to an end? Hardly. I think startups, especially those small and nimble ones, have the opportunity to achieve success in ANY economic environment.

And the Portland folks seem poised to prove that assumption. ;)
turoczy —
In recent news, it is reported the economy grew by .6 percent last quarter, and so we are technically not in a recession.

However, I think a recession has arrived for people on the lower end of the income scale. People who live hand to mouth are more greatly impacted by the dramatic rise in the costs of necessities.

Most of us notice the prices at the gas pump, but how many of us notice the rising cost of corn-based products, for example? Corn has risen 30 percent this year. When you consider we are all swimming in high fructose corn syrup, and that the price of meat is dependent on cows that eat corn, that cost increase is being seen at the grocery checkout. And there are more increases to come.

If you earn $70,000 a year, rising gasoline and grocery costs are temporary pangs that leave a couple blocks after leaving the pump or the Safeway parking lot.

But if you are someone who lives on nickels and dimes, you are being nickel and dimed to death right now.
Luke T. —
Very excellent points.
textchampion —
As for upsides, I work in the private aviation industry. As some of the biggest buyers of private aircraft are Middle Eastern royalty and oil men, and with the fears that arose from public aviation transportation after 9/11, you can imagine how well things are going right now.
Luke T. —
I work out in Washington County where the county government is already preparing for a hit to their budget in the next few years, thereby not investing in affordable housing and other services for the poor most hit by economic hardship these days. A retorical question at best: Why is it that when things go down, the collective "we" is not prepared?
CharlaC —
I am a waiter in West Central Florida, and a member of Waiters Of The World, spearheaded by one of your guests..Paul Paz. Our tourist season was definitely cut short this year. Our establishment caters to traveling business people, as well as locals and tourists. In all three groups business was down. I think this recession is going to be devastating for the restaurant workers. Especially tipped personnel. In some states, Florida included, a tipped employee only makes $3.77 per hour. With business dwindling, the tips we count on for a living wage will not be there. Thank You
Ron Marino —
Hello...
You make a very valid point regarding Professional Waiters having the opportunity and ability to earn a "living wage" as tipped employees working in our indusrty and careers of choice.
Thank you for your post on OPB!
Paul C. Paz
www.WatersWorld.com
waitersworld —
Hello,

I want to comment on the career of choice idea. I have been a waitress for almost 30 years and I would still be one if not for a horse accident. I loved being a waitress for many reasons, not the least of which was the great lifestyle of freedom and travel and the wonderful people whom I met--in and out of the kitchen! In regard to the statistics that Paul talks about concerning the industry in America, it is amazing to me how waiters and waitress are seen in America. It is such a huge industry and so many people have been or are involved, but they still don't see it as a career. "When are you going to get a real job?" is still asked of many of us who are happy in our work and our lives! It is a real job!

I am in New Zealand at the moment touring around promoting my movie (more in a minute) and have discovered a few interesting things. For the most part, and generally speaking, when you go to a place to eat here, you go to the counter and order, get your beverage (even alcohol), take a seat and they bring your food to you. They will come and take your plates away, but as far as being waited on, it is not the norm (except for finer dining establishments) and so the industry is very different. Also different is the fact that they get minimum wages-- $12.00 and hour. Maybe that explains why a small square of lasagna and a salad that all fits on the same smallish plate costs $23! And realize that the US dollar isn't too great at the moment... So I think that the industry doesn't led itself to professionalism and knowledge as much here (again except for places where there is serving happening). Also, there isn't tipping, the bright side is that there isn't any illegal tip pooling either.

There is a lot of press about the cost of food here in New Zealand as in the States as of late, and I realize that the economy is not great in the States, but remember: if you can afford to go out to eat and be served, you can afford to compensate those who serve you. We need to eat too!

In the States, people who are lifers are those who love their profession and have pride in what they do. Unfortunately, in many forms the media, we are consistantly portrayed as less than the intelligent, fun and hard working people who we are. Because of this, I was inspired to make a movie that shows us as we really are. My website is listed at the end of this post, and I want to mention that an interview that I did in the past will be replayed on "To The Best of Our Knowledge" program on NPR this weekend. I want people to learn about those of us in the industry and like Paul Paz, just want people to know that it is a profession of choice and deserves respect. We are not waitresses and waiters because we have to be, we are because we want to be! I look forward to hearing about this discussion!

Thanks for reading!
Patti DiVita
www.didisaythousandisland.com
PattiDiVita —
Hello...

I posted some stats for Oregon and the USA nationaly regarding the restaurant industry and specificially waiters who earn minimum wage plus tips. This will assist in creating a more clear image of the economic role of the restaurant industry in Oregon and those who work many of the direct customer-service positions.

Thank You,

Paul C. Paz
www.WaitersWorld.com


2005 OREGON
WAITERSWORLD

Analysis of restaurant sales compared to cost of wages/tips

$17.00 per hour = $7.25 wage plus $9.75 per in tips

Oregon restaurant employees average 25.5 hours a week. To earn $9.75 per hour in tips an employee would have to generate sale revenues for their employer as follows:

1-Waiter SALES FOR THE RESTAURANT
Tips Hourly Monthly Annual Annual 7.25 Min-Wage Cost
10% $97.50 $10,774 $129,285 $9,613
12% $81.25 $8,978 $107,737 $9,613
15% $65.26 $7,211 $86,534 $9,613

10 waitstaff that would generate restaurant owner revenues of:
10-Waiter'S Tips RESTAURANT OWNER REVENUES
10% $1,292,850
12% $1,077,370
15% $ 860,534

AVERAGE ANNUAL INCOME for an Oregon waiter making $17.00 per hour:
(25.5 x 52 weeks = 1326 hours) $22,542
2004 Oregon per capita income $29,971

2004 - $4.7 Billion Sales for Oregon Eating & Drinking Establishments
Average labor costs are 30%
Waiters represent 25% Food and beverage staff labor mix
110,100 restaurant employees

AVERAGE RESTAURANT WAGES (USA)
Restaurant Manager: $45,200 (50-hour week)
Chefs & Head Cooks: $37,800 (40-hour week)
OREGON WAITERS: Minimum Wage (2005 - 25.5 hours a week AVERAGE)
(2008 - $7.95 plus Tips ? No Tip-Credit)



OREGON RESTAURANT ASSOCIATION
http://www.restaurant.org/states/statedetail.cfm?st=or&CFID=19030151&CFTOKEN=90976444

2005 OREGON STATS

9,000+ Restaurants
1 in 14 payroll workers in the state.
Oregon?s largest private sector employer 120,000 Employees
$4.7 billion - 2005 posted sales
$9.7 billion - Overall Oregon economic impact
7.6 percent of the Gross State Product.

Nearly half of all adults have worked in a restaurant during their career.

Nearly 80 percent of restaurant employees earn above minimum wage?and nine percent earn greater than Oregon?s per-capita income.

Restaurants employ more minority managers than any other industry in America.

One in four Oregonians found their first job in a restaurant.

One in four hospitality businesses are owned by African-Americans, Hispanics or Asian-Americans?higher than the average for all businesses.

Almost half of all adult Oregonians are patrons of a restaurant on any given day.

typical Oregonian consumes an average of 5.3 meals or snacks prepared away from home each week.

Travelers and visitors account for 15-30 % of sales at restaurants. Tourism is one of our state?s largest industries and restaurants are the biggest component.

23% of the tourist dollar is spent on food.

RESTAURANT INDUSTRY OCCUPATIONS
8% Other
12% Dishwashers, attendants, hosts
46% Food and beverage
24% Cooks and food prep workers
7% Supervisors, food prep and serving workers
3% Food service workers



USA NATIONAL STATS
NATIONAL RESTAURANT ASSOCIATION
http://www.restaurant.org/research/ind_glance.cfm

2008 RESTAURANT INDUSTRY OVERVIEW

? Sales: $558 billion
? Locations: 945,000 ? serving more than 70 billion meal and snack occasions
? Employees: 13.1 million ? one of the largest private-sector employers

CORNERSTONE OF OUR NATION'S ECONOMY
?Restaurant-industry sales are forecast to advance 4.4% in 2008 and equal 4% of the U.S. gross domestic product.
? The overall economic impact of the restaurant industry is expected to exceed $1.5 trillion in 2008, including sales in related industries such as agriculture, transportation and manufacturing.
? Every dollar spent by consumers in restaurants generates an additional $2.34 spent in other industries allied with the restaurant industry.
? Each additional dollar spent in restaurants generates an additional $0.99 in household earnings throughout the economy.
? Average unit sales in 2005 were $833,000 at fullservice restaurants and $694,000 at limited-service restaurants.
? More than seven out of 10 eating-and-drinking places are single-unit (independent) operations.

NUMBER TWO EMPLOYER
? The restaurant industry employs an estimated 13.1 million people, making it the nation's second-largest employer outside of government.
? Eating-and-drinking places are extremely labor-intensive -- sales per full-time-equivalent employee were $61,344 in 2006 and notably lower than other industries.
? The restaurant industry provides work for more than 9 percent of those employed in the United States.
? The restaurant industry is expected to add 2 million jobs over the next decade, for total employment of 15.1 million in 2018.

LADDER TO MANAGEMENT OPPORTUNITY
? Women and minorities represent three of five owners of eating and drinking place firms, compared to less than half of all U.S. firms.
? One-quarter of eating and drinking place firms are owned by women, 15% by Asians, 8% by Hispanics and 4% by African-Americans.
? Eating-and-drinking places employ more minority managers than any other industry.
? Nearly half of all adults have worked in the restaurant industry at some point during their lives, and 32 percent of adults got their first job experience in a restaurant.
? The number of foodservice managers is projected to increase 11 percent from 2008 to 2018.

RESTAURANTS BY THE NUMBERS?
? $1.5 billion ? Restaurant-industry sales on a typical day in 2008.
? 83 percent ? Percent of adults who said there are more healthy options available at quickservice restaurants than there were two years ago.
? 70 percent ? Percent of adults who said their favorite restaurant foods provide flavor and taste sensations which cannot easily duplicate in their home kitchens.
? 64 percent ? Percent of adults who said there are more restaurants they enjoy going to now than there were two years ago.
? 62 percent ? Percent of adults who said they are likely to make a restaurant choice based on how environmentally friendly a restaurant is.
? 48 percent ? Percent of adults who have visited a restaurant?s Web site.

waitersworld —
Are we supposed to be surprised that there are many facets to the collective experience of "economic growth"? That some people benefit while others suffer? How is this possibly news, or even a conversation? The economy is like weather. You can't predict it, you can't even count on a shared experience of it. Sure, it's adequate to talk about--if you're in an elevator for 30 seconds. Beyond that, you have to narrow the question to have anything sensible to say.

Sorry to be the pigeon above the parade, but... criminy. This is an absurdly broad question.

Here's some far superior topics:
Shoes: what's happening now; men vs. women vs. you tell me
Oregon's best pancakes
What cars say about drivers
The clothes you can't throw out
The best pet $80 can buy
Organic vs. local: Deathmatch Throwdown!
Things you wish you could have done via answering machine
Desert island movies
Have you or a loved one ever pretended to be pregnant? Why?
What's the largest weapon a person should be allowed to carry?
Should pit bulls be legal?
What does "affordable housing" mean to you? Should we bother?
Is biodiesel greener than hybrids?
How stupid is it not to flouridate the water? Kinda, or very?
The worst prom date
The case against, or maybe for, Scientology: why does it sound like science?
Graduation speakers: would you rather have a good one or a ridiculously bad one? Do you think you could do better?
Attention deficit disorder: hoax? Or hoax?
Nighttime basketball
Ears: and aging; iPods and the danger to; the proper hygiene of; cosmetic alteration
Immunization: government coverup? or chilling example of natural selection, wherein those least adapted to science are doomed to suffer by it?
Typeface design: computers vs. calligraphy
The gamut of beans: Pinto vs. black vs. red is just the beginning
"I have a secret"
Summer camps
Gadgets vs. heirlooms: can't we all just get along?
Hair care on 5 cents a day
Hedge funds: what the heck are we paying the SEC for, anyway?
"Vampire" electrical draw: how you are paying *not* to use your appliances
Three things every new parent should know
How to choose a gravestone
Tournament of analgesics: aspirin vs. acetominophen vs. ibuprofen: a cage match
Should Oregon be embarassed that its bagel stores are open during Passover? Jews in the West
Ten minute recipes from the freezer
How fat is too fat?
Swiffer: some say it cleans. I say it smears. Why is nobody in jail?
The longest you ever stood in line
One thing you would change about your body OR One thing you would change about how others view your body
Lots of people think basic healthcare is a right. What about dental care? Eye care? High-end perfumes?
Personal shoppers
Jokes you can tell to a six-year-old
Can you really mix primary colors to make brown, or has the government been lying to us all these years?
How many homeless could we feed if we put a tax on the Olympics?
How did "senior citizens" become an unfashionable term, less preferred than "seniors" or "honored citizens"? If "seniors" are in retirement, how shall we refer to persons in their fourth year of high school or college? How much can we hope to gain, or obscure, by shuffling terms around? If the problem lies outside of language, what is it, anyway?
The best TV
Home remedies
Things you wish you had written--or hadn't
What you learned from gym
The "Boy Named Sue" Theory: Does a person's name shape his/her character?
Underappreciated holidays and anniversaries
First cars / jobs / apartments/houses
Why I didn't go to college
why I'm not quite a vegetarian
The first person I'd like to see substituting for "Survivor Man"
Three things to take on a trip
What you do in order to get permission to play golf
Food that looks like celebrities: investment vehicle of the future?
Pickup lines that made the breakup lines worthwhile
Fiscal new year's resolutions
Thin Elvis vs. Fat Elvis vs. young Harrison Ford vs. latter-day H. F.
How to apologize
What parents can tell you about a potential spouse
Passing cars on the right: jailable offense, a cry for help, or a further sign that our public schools are failing us?
Long-term care in a short-term world
Neighbors you miss
Regional junk food
The time you REALLY could have used a change of clothes
The books everybody starts but almost nobody finishes
Why you hate your name
Traffic ticket fines that are proportionate to your income, cf Finland
The latest in potty training
Eight great albums of the 21st century

In short--come ON. Upside of a downturn? Let's just skip over the pathetic journalism of researching a topic by posting questions to your own web forum. What's next? "Medieval Gravediggers and the Black Death: The Golden Years"??
mucker —
Man, I love this list. It's evidence of a certain mad genius. Lots of laughs, and some actual fodder for future shows. (First up, of course: the analgesic cage match. My money's on naproxen.)

As for today's show, a quick defense: our premise isn't that the fact that some people are doing well and some people are falling farther behind is stunning news. That is, I agree, not too surprising. (Although it IS often overlooked in the breathless reports of gas prices and foreclosures.) Instead we thought we'd start with that as a given, and then explore this particular downturn through the double lens of those doing well and those doing poorly. To me, the big question for the hour is: What can we learn about this downturn not simply by those who are suffering, but from those who are -- for whatever reason -- profiting? Just as it would have made sense to focus a bit more on the people who were struggling in the go-go internet boom of the late 90s, it makes sense to talk about those who are getting ahead today.

As for the notion of this as the "pathetic journalism of researching a topic by posting questions to your own web forum," I think you've misunderstood our intentions. First of all, we are doing independent research about economic trends, and some of that research will inform the hour of radio. But more importantly, we've envisioned this hour as a chance to hear real stories -- from callers, from commenters, and from our PIN network -- instead of simply going to the professional economists. If you look back at all of our others shows, you'll see that this is a bit of a departure... and an experiment. And so far, so good: it's already yielded us a show next week about the Black Death.
David Miller —
I vote for Why I'm Not Quite A Vegetarian and Gadgets v. Heirlooms for future shows!

The government lying about brown, though crucial, and underreported, might be too visual for the radio.
Emily Harris —
I thought my lifestyle was pretty recession proof, because I live less than a mile from my work and walk to buy groceries and to eat out at frugal ethnic vegetarian restaurants... but I am definitely affected by the rise in heating costs for my small home. The price of heating my home has nearly tripled in the five years since I bought it, and it now seems just ridiculous to spend as much money as I do just to keep a single family residence going for me and my daughter, in light of what it takes to sustain the typical family across the rest of the globe. I'm considering selling and living in a bigger house with more people to share costs, but I'm not sure that my house will sell in this market. And as it is being funded by fluxuating government contracts, is my job really secure? I'm not sure. In any case, there will be more and more work to do and less time/money to do it all in/with.

But I am still very fortunate comparitively--the families in poverty that I work with are really stuggling right now. The food bank is stopping its focus on education and just putting energy on getting more food these days, because there is so much need. Schools in outer SE are desperate to get financial help for their families, so much so that academic help for their kids is being turned down for sheer lack of time to focus on making the referrals. Schools didn't have enough staff to adequately meet the needs of the students even before this economic downturn happened--now they are drowning for lack of time and staff to meet the needs of families. God bless them for trying.

There is something terribly wrong with the way we have shaped our society. The poor are completely geographically cut off from middle class America--there is no intermingling of the two, except in retail stores and restaurants where one set is serving the other, so there is no relationship other than a subservient one. I think that there will soon be a lot of anger toward the rich and the comfortable, expressed by the poor. Up until now I have seen that the working poor have been pretty content to be exploited by corporations for what little they get, but that time may be coming to an end. Honestly, I'm looking forward to seeing that happen. Somthing needs to stop the exploitation going on here and abroad, against honest laborers. (Happy May Day!)

kdperkins —
"...restaurants where one set is serving the other,.."

Hello...

There's nothing subservient or shameful about serving others. Most businesses, including banking, finance, medicine, radio ?. and even restaurants, provide good living wage jobs "serving others" with plenty of additional oportunities if one wants to go that route.

Paul C. Paz
www.WaitersWorld.com
waitersworld —
I guess it's all relative. Compared to my time surviving in the box (my name for the 8x10 space in a sleeper cab that "over the road" truckers endure), things aren't so bad for me now.

Btw, I have a lot of respect for wait staff, I tip at least fairly when I can afford to eat out (we just don't eat out lately). People who enjoy that kind of work and do it well deserve respect too.

I would say the biggest change for us is we're looking at churches that are within walking distance because regular trips across town (about 5 miles) wipe out our half tank of fuel for the week pretty quick (and we drive a little Escort, not some gas inhaler). We gave up on the idea of a vacation for this summer... last year.
tpohara —
I feel like a Cassandra here, but I want to chime in about the flip side of online marketing (enewsletters and the like) and that is the time factor. While these strategies are much more affordable, they are also time consuming. As a small business owner who works with other small businesses, I see a lot of people working crazy hours getting work done during the day and then going home and working on online marketing until the wee hours of the night, so it is really not a zero-sum game.
EvaCatHerder —
We live in central Oregon. This fall my husband was laid off from his job in the construction industry. He utlized all of the resources the state offers but could not find a position that would pay enough to meet our monthly budget needs. He has now relocated out of state to work and is making considerably more than he was able to here in Oregon. I have remained in Bend because of professional responsibilities I have here plus we could not even consider selling our home right now because of the housing market. Unfortunately, we can't see an upside right now to the downturn other than we are thankful that he has been able to get some work elsewhere. Thanks.
CoMo1950 —
I work for a company in Hillsboro that was acquired last year, and then the buying company was itself acquired in December. We've gone from a $40 million to a $6 billion company in less than a year. Although the new company is aggressively outsourcing work to India, the prospects for the company are very very good and the technology we build in Hillsboro is considered crucial to the company's future. I'm optimistic. Rather than an acquisition resulting in the closing of a company here in Oregon, I'm seeing a strengthening of our base.
bobuva —
And where should people looking for work apply?
skeptictank —
REstaurant Cost Cutting

Some restaurants are requiring that waiters give part of their tips to other employoees and in some instances to those positions that are not legally entitles to them by federal law. zlook at Starbucks multimilion dollar Californiia lawsuit about tip pooling.

Some restaurants are also makng waiters pay the banking credit card fees for the portion of a credit card transaction tied to the tips filled in by the customers.

Paul Paz
www.WaitersWorld.com
waitersworld —
Obviously the guy from Eugene is nto trying to sell a house in this market. We have had to drop our house price almost 30% to try to get it sold. This guys seems like a nut to me.
JuliaMJK —
Or maybe he *is* trying to sell a house and that's why he's talking up the market?
skeptictank —
Dominic is painting a rather rosy picture of Oregon real estate. The latest Case Shiller index shows home prices in Portland were down 2% compared to a year ago and down close to 6% when compared to the peak last July.

Portland is just a bit late to the downturn party.
skeptictank —
We're seriously tightening the belt at our house. My wife's job ends in a few months so we need to save up now.

What are we doing? Baking our own bread. Making all of our meals at home. Taking our lunches to work. Biking to work or telecommuting when possible. Growing a vegetable garden. Actually, all of these steps are pretty easy and quite healthy.
skeptictank —
As a restaurant owner in Manzanita, I have noticed that these type of economic situations actually benefit the tourist trade here on the coast, as it is much less expensive to drive to the beach for the day/week than it is to fly to Disneyland or Hawaii for vacation. If not for the big storms over the past two winters, the overall outlook would be very good, as what used to be a very seasonal business when we opened 15 years ago has, especially in the past few years, become much more year-round. The housing market, especially the speculative building, has taken a hit locally, but there seems to be a positive outlook among most people in that area around here.
Thanks,
Jeff
capsicum —
"Boxed Wine"

Emily... don't be a wine snob! The best wine to drink with your meal...
IS THE ONE YOU LIKE!

Thanks for letting a professional waiter speak on behalf of the Oregon-Washington economy. You provided a voice in the discussion that is usually pushed behind the scenes.

Paul C. Paz
www.WaitersWorld.com
waitersworld —

Comments are now closed.



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