Labor Law Guy

Recession, Or Return to Normalcy?

Posted in Random Musings by laborlawguy on January 8, 2009

This morning I was poring over a press release from a law firm advising employers to use caution and follow labor law mandates in laying people off in hard times. The release began by lamenting a 40-percent rise in business bankruptcies in the 12-month period ending in June 2008, which saw a total of 33,822 firms seek protection, up from 23,889 in 2007.

The release listed the Administrative Office of the U.S. Courts as its source, so I began doing some digging around the Web. What I discovered was actually pretty startling.

First, as for the release, the authors didn’t even use the latest data, which was for the 12-month period ending September 2008, which saw business filings rise 49 percent from September 2007–38,651 now and 25,925 then.

Now for the somewhat startling part: As bad as the current figures are, for the most part things were much worse  in 2004 and 2005, and nobody is calling those recessionary years.

Over the past five years (September to September), business bankruptcies have stayed nearly steady except for two fairly “good years” in 2006 and 2007. In 2004, 34,817 businesses filed; in 2005, 34,222; in 2006, 27,333; in 2007, 25,925; and in 2008, 38,651.

Overall, there are four types or chapters of bankruptcy–chapters 7, 11, 12 and 13. Let’s look at the trends for all chapters and all filers over the past five years: In 2004, there were 1,168,987 filings; in 2005, 1,782,643; in 2006, 1,112,542; in 2007, 801,269; and in 2008, 1,042,993.  So, in point of fact, bankruptcy filings have a ways to go to catch up to the good ‘ol “boom days” of the housing bubble in 2004-2005.

If I were to offer my interpretation to all of this, I would say that the twin good years of 2006 and 2007 saw people exhausting and living high off the hog from the salad days of the real estate bubble. Then in 2008, as it always does, reality caught up to everyone from Wall Street to Main Street.

(Of course, there’s another side to this, and that is that the Bush Boys tightened bankruptcy rules around 2005, so there may have been a rush to file before the new, more restrictive law kicked in.)

Today, Mr. and Mrs. Small Business can no longer tap into their HELOCs, which they’ve depleted, and for everyone on Main Street and Wall Street, the banks and lenders have adopted a policy of “just say no.”

That leaves the federal government, whose largess has gotten so ridiculous that porn magnates Larry Flynt and Joe Francis yesterday asked for a $5-billion federal bailout of the adult industry.

“People are too depressed to be sexually active,” Flynt said in a statement. “This is very unhealthy as a nation. Americans can do without cars and such, but they cannot do without sex.”

Can’t argue with that logic, I guess.

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One Response

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  1. Patrick Byer said, on January 21, 2009 at 8:16 am

    As a business owner I find Personnel Concepts is a great resource. If I can’t get my questions answered from a blogger like this I know I can always call and talk to someone directly that is on the up and up on what is going on in the world of labor laws. I agree you need to understand the laws or else it can bite you in the rear. Posting labor/osha posters or utilizing a program such as the kind Personnel Concepts sells is only half the battle. However in my experience I’ve found just having information posted or a program documented shows a labor attorney representing a distraught employee your not as stupid as the rest of the general population of business owners.

    Then again as Flynt said people can do with out many things but they can’t do with out sex. I guess that is why we have employers being sued and labor attorneys making money.


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