NewGeography.com blogs

Olivia S. Mitchell, of the Wharton School at the University of Pennsylvania, told ABC News that “roughly $2 trillion has been lost in 401(k)s and pension plans during the recession.” (According to The Economist, worldwide private pension funds lost $5.4 trillion last year. I wonder if/when the media will start calling it a depression?)

As stock values go down, the value of the company pension plan investments fall with it. In good times, companies can put cash into the plans to make up the short fall. But with all the financial turmoil around us now, companies don’t have the cash and are unable to borrow it. Some companies are capping payouts and some are offering lump-sum payouts instead of, or in combination with, monthly payments. Other companies are abandoning traditional pensions – where the payouts are defined in advance of retirement – for 401(k) plans – where the contributions are defined instead and the payouts are left uncertain. That puts the risk of bad investments and market collapses on the backs of the workers instead of the companies.

For employees who are in traditional pension plans, the Pension Benefit Guaranty Corporation (PBGC) was created in 1974 to insure pensions. If your employer goes bankrupt, your pension could still be OK if the plan pays insurance premiums to PBGC. However, the coverage is limited to $54,000 a year for workers who retire at age 65, less if you retire early. The PBGC’s investment assets went down 12 percent between September 2007 to September 2008 (latest financial statements available). That’s on top of a large (albeit falling) deficit of $11 billion (their liabilities are greater than their assets). This is the company that is supposed to protect your pension if your company goes into bankruptcy. Technically, they can’t meet today’s obligations…

If your employer is in financial trouble and you are expecting to earn more than the pension insurance will cover you may need to think about working during retirement to make up the difference. According to an article published by Wharton in 2007, the Senior Citizens Freedom to Work Act “repealed the Social Security earnings limit, allowing workers 65 through 69 to earn income without losing Social Security benefits.” Good thing, too. Looks like they’ll need to keep working to make it through the depression.

Texas Governor Rick Perry has vetoed a bill that would have created a state level “smart growth” program. The veto message is below.

June 19, 2009

Pursuant to Article IV, Section 14, of the Texas Constitution, I, Rick Perry, Governor of Texas, do hereby disapprove of and veto Senate Bill No. 2169 of the 81st Texas Legislature, Regular Session, due to the following objections:

Senate Bill No. 2169 would create a new governmental body that would centralize the decision-making process in Austin for the planning of communities through an interagency work group on “smart growth” policy. Decisions about the growth of communities should be made by local governments closest to the people living and working in these areas. Local governments can already adopt “smart growth” policies based on the desires of the community without a state-led effort that endorses such planning. This legislation would promote a one-size-fits-all approach to land use and planning that would not work across a state as large and diverse as Texas.

IN TESTIMONY WHEREOF, I have signed my name officially and caused the Seal of the State to be affixed hereto at Austin, this the 19th day of June, 2009.

RICK PERRY
Governor of Texas

Reference: http://governor.state.tx.us/news/veto/12632/

Is the recent talk of "green shoots" coming out of this recession realistic? A recent report from the New America Foundation outlines the strong likelihood of a jobless recession that "could perpetuate the crises in the housing and banking sectors and prevent a sustainable and healthy economic recovery." A jobless recovery will prevent the wage growth necessary to stimulate business investment, maintain consumption, and pay down debt.

The report outlines a constructed measure of effective employment: BLS's measurement of unemployed, 2.2 million marginally attached workers, and 9.1 million workers employed part time only because they can't find full time work plus another 4.4 million Americans who want to work but gave up the search over a year ago. This results in an 18.68% effective unemployment rate.

Other highlights from the report:

Read the full report at New American Contract and check out the NAC's Value Added blog.

Running a little behind this week, so I just wanted to pass along this story from USA Today on domestic airports adding rail service. People love the service, of course, and many airports are doing it, but later in the article they get to the economic irrationality of it in America's decentralized car-centric cities (as opposed to Europe and Asia).

Still, airport-rail ridership in the USA is woefully low compared with other countries, says Andrew Sharp, director general of the U.K.-based International Air Rail Organisation. In many European and Asian airports, 20% to 30% of travelers get to and from the airport using rail. In the USA, ridership typically ranges from 2% to 5%, he says.

...

Ongoing debates

Like most large construction projects, airport rail proposals face stiff headwinds. Opponents challenge funding sources and new taxes and cite preferences for cars and buses. But the central argument in most debates has centered around ridership, specifically whether airports have enough demand to justify millions in cost.

BART's connection to SFO, completed in 2003, has yet to reach BART's initial ridership forecast and is still not profitable. Prior to construction, BART projected there would be 17,800 average daily boardings to and from the airport by the year 2010. As of this month, SFO ridership was at about 11,000.

Frank Sterling and Juliet Ellis, activists in the Bay Area, also questioned BART's plans to spend $500 million for Oakland International's people-mover and its decision to charge $6 for the service vs. $3 for the current shuttle bus.

"The proposal to charge double that for the new connector might drive away customers, unless it delivers twice the value," they wrote in a recent newspaper commentary, "Can East Bay residents afford this?"

Then they use some of my favorite arguments from past posts:

These are appropriate debates, Coogan says. Some cities are better off sticking to buses, he says. For example, LAX's FlyAway Bus, which provides non-stop rides to various neighborhoods in Southern California, is more convenient for many travelers than the metro.

For some cities, it'd be wiser to spend scarce funds for extending metro to public transportation-friendly suburbs before considering airports, Coogan adds.

"How often does a person go to work? And how often does a person go to Paris in a year?" he says.

More on these arguments here, here, and here (near the bottom). As I said in one of those posts: I agree, and I've said before that the market here is a niche one plenty well served by buses: young singles who can't get a ride to/from the airport. Business travelers will almost always rent a car or take a taxi. Families won't schlep their luggage on transit. Most others will have friends or family pick them up or drop them off. And our off-site airport parking is dirt cheap. The ridership drivers just aren't there.

Further demonstrating the ability of technology to reduce greenhouse gas (GHG) emissions, Mitsubishi has announced development of a lithium battery driven car, to be sold within two years. The car, the "MIEV Plug-In Electric First Drive" would travel as much as 100 miles (160 kilometers) between charges.

United States Data and Comparisons: GHG Emissions per Passenger Mile/Passenger KM are indicated below (From power plants – variation is due to mix of fuel sources used in producing electricity)

Average United States: 61 grams/37 grams

Lowest (Vermont): 1.4 grams/0,7 grams

Highest (North Dakota): 102 grams/62 grams

The average GHG reduction compared to the current US automobile and sport utility vehicle fleet average would be 83 percent. The car would emit approximately less than one-half the GHGs per passenger mile as transit in New York area (the best in the nation) and one-fourth the overall US transit average.

European Union Comparison: The MIEV would be 40 percent less GHG intensive that is required by the newly adopted European Union fuel economy requirements for 2020 (the equivalent of 101 grams per passenger mile or 62 grams per passenger kilometer).

The above calculations assume the US national vehicle occupancy rate of 1.6. The comparison to the present fleet includes upstream production and transport activities.

Sources: Mitsubishi site, Edmunds Review