Robert Shiller: A Psychology Lesson From the Markets

Robert Shiller says the Fed will have trouble reversing downward psychology in housing markets:

A Psychology Lesson From the Markets, by Robert J. Shiller, Economic View, NY Times: It is no surprise that the Federal Reserve’s discount rate cut has not entirely reassured investors. The Fed can stop a run on the banks, but it cannot control the speculative cycle — a cycle built on psychology and misperceptions that has been sweeping much of the world for the last 10 or 12 years.

I have worked with Karl E. Case ... at Wellesley College ... in conducting ... surveys of recent home buyers. In Los Angeles and San Francisco in 2005, when actual home prices were rising more than 20 percent a year, we found that respondents anticipated big increases far into the future..., the median expected annual climb for the succeeding 10 years was 9 percent.

This expectation would mean that a house valued at an already high level of $650,000 in 2005 would be worth more than $1.5 million in 2015. For most people in 2005, it would also mean that they should buy a house soon, or forever be excluded from owning one — and that it would be better to stretch and buy the most expensive house they could afford...

Now, of course, prices have been falling, and our survey over the last few months shows that in Los Angeles and San Francisco, the median 10-year expected price increase among recent home buyers has come down to 5 percent a year — a number that is likely to decline further if prices continue to drop. As price expectations fall, homeowners lose the incentive to pay off a mortgage on a home they are realizing is beyond their means. They decide to default. We thus have the beginnings of a mortgage crisis.

The problem is fundamental, tied to the imbalance caused by irrationally high home prices and declining optimism that the prices will go higher. Cutting interest rates will not change this basic situation. The problem is fundamental because the speculative cycle afflicts much of the world. ...

Classical economics cannot explain this cycle, because underlying these booms is popular reaction to the price increases themselves. Rising prices encourage investors to expect more price increases, and their optimism feeds back into even more increases, again and again in a vicious circle. As the boom continues, there is less fear of borrowing heavily, or of lending heavily. In this situation, lower lending standards seem perfectly appropriate — and even a fair way to permit everyone to prosper.

Booms cannot go on forever. Downward price feedback sets in. That is when balance sheets become impaired and widening credit problems start to show up.

The puzzle is why this speculative cycle has occurred recently in so much of the world. What do all these countries share that drives them to speculative booms? ...

As we all try to adjust to a rapidly growing and increasingly capitalist world, we have been trying to discover who we are and how we fit into it. This has meant an enormous change in values.

Many people feel that they have discovered their true inner genius as investors and have relished the new self-expression and excitement. Investors across the world have been thinking that they are winners — not recognizing that much of their success is only a result of a boom. Declines in asset prices endanger this very self-esteem.

That is why it is so hard to turn around investor attitudes once a downward psychology sets in. The Fed and other central banks do not have lithium or Prozac in their bag of remedies, and so cannot control it.

I don't have much to say in response to this, maybe you can come up with something, but let me point you to a much more detailed discussion of this topic by Shiller:

Historic Turning Points in Real Estate, by Robert Shiller, Cowles Foundation Discussion Paper No. 1610, June 2007: Abstract This paper looks for markers of ends of real estate booms or busts. The changes in market psychology and related indicators that occurred at real estate market turning points in the United States since the 1980s are compared with changes at turning points in the more distant past. In all these episodes changes in an atmosphere of optimism about the future course of home prices, changes in public interpretation of the boom, as well as evidence of supply response to the high prices of a boom, are noted.

Introduction By some accounts, the greatest challenge for economic forecasters is to predict turning points. It is easy to extrapolate time series. It is less easy to tell when the series will abruptly change trend and enter a different pattern or regime.

Figure 1 shows a chart of US stock price and home price indices since 1987. It shows the Standard & Poor 500 Stock Price Index... It also shows the Standard & Poor/Case-Shiller Composite Home Price Index, a ten-city average which is a measure of the aggregate market for single family homes, and is based on indices that Karl Case and I created in 1988. ... Since the home price index is a threemonth moving average, the S&P 500 is also plotted as a moving three-month moving average so that the two series are comparable.

The eye naturally picks out what appear to be major historic turning points. Looking at the chart, one sees that the stock market has shown abrupt changes in regime in early 2000, when it left a strong bull market, and went into rapid declines, and in late 2002 or early 2003, when it resumed a new strong upward climb. The real estate market changed its direction markedly around 1990, from a booming market to a market in the doldrums for the better part of a decade, and then the market started accelerating upwards at increasing rates. The national home price boom since the late 1990s appears unprecedented in US history, although the “baby boom” in housing of the late 1940s and early 1950s comes close, and there have been some very large local booms. The rate of US housing appreciation slowed after 2005, and, to some eyes at least, it would appear just sometime after mid 2006, we are entering a new regime of downward price changes.

These, then are the natural questions for today: How shall we think about these major turning points of the past? Can study of these turning points offer to us any way to predict when the upward trend in the stock market? Is there any way to decide whether we really are entering a new regime of real estate market price declines? Some people who think in terms of time-series analysis may disagree that such questions should even be asked. Prices observed in the stock market are widely described as random walks, if only approximately. If a time series is a true random walk, of a kind that may be generated by a random number generator, then it will be seen to have occasional major “turning points” that one could say have no other explanation than the chance arrival of a string of negative shocks after that point. Probability theorists can calculate the probability that the random walk will surpass the peak again, or calculate the improper spectral density of the random walk, but they would not seek to “explain” the turning point.

Of course, even if an economic time series is found to have the stochastic properties of a random walk, we could still “explain” the turning point by interpreting the sequence of shocks to the random walk that allow us afterwards to choose a point as the turning point. We might be able to tell a story about the causes of the sequence of negative shocks that came afterwards, which of course were really not generated by a random number generator but instead have interpretations in terms of various historical events. But, so long as the series is truly a random walk, the explanation would have to be entirely after the fact, and would offer no insights into the future forecasting of turning points.

Stock prices are not known to be exactly random walks. It has been demonstrated, for example, that stock prices have shown some momentum through time. Certain models very different from a random walk, involving such things as sudden regime changes, are not easy to reject statistically. There is a substantial econometric literature that documents deviations from random walk properties, and there is an econometric literature on the identification of regime change in time series. But stock prices are fairly close to random walks.

While stock prices somewhat resemble random walks, real estate prices certainly do not. There is, in fact, a very obvious smoothness to home prices historically, as can be seen from Figure 1. In fact, if one fits a quartic polynomial to the home price series shown in the figure one gets an R squared, as a measure of closeness of approximation, of 99.6%. Of course one should not use the fitted polynomial as a forecasting device, but the goodness of fit does illustrate the smoothness of the series, which no doubt has something to do with the difficulty that professionals and speculators have in reacting to new information about the housing market. The housing market is populated mainly ordinary folk who do not react with the speed of professionals. 

A polynomial has no unambiguous turning points. The point at which the slope changes from positive to negative or negative to positive may stand out to the eye on a plot of the polynomial, but the same point would not stand out on a plot of the slope of the derivative of the polynomial. Indeed, Figure 2, which shows the annualized rate of change of the same monthly series that appears in Figure 1 along with the National Association of Home Builders Index of Traffic of Prospective Buyers, gives a somewhat different impression where turning points might lie. There is of course seasonality, hard to detect on Figure 1, but which stands out as a powerful annual oscillation in Figure 2. Beyond that, it is clear that the housing market goes through long periods of either steadily increasing or steadily decreasing home price inflation, and that these periods have ended rather abruptly.

For example, it would appear that there was a major turning point in 2004 when home price increases peaked, and that corresponds roughly to a time when the traffic of home buyers also peaked, something that would probably stand out to home builders and real estate agents as the true turning point. The plot of increases in home prices in Figure 2 looks rather more (abstracting from seasonality) like a broken straight line composed of about three line segments. The rate of growth of home prices made abrupt changes in trend in 1991 and 2004. Because of the suddenness of the change in growth rates, these dates are only a couple years away from the breakpoints indicated by looking at the Levels chart, 1989 and 2006, in Figure 1. ...

I want here to pursue the “why” of the apparent turning points, linking the apparent regime changes to economic events and to principles of behavioral economics. I will not be able to give a complete answer, as I will not be systematically pursuing all economic factors that might logically have an impact on home prices. On the other hand, in this paper I will concentrate on some apparently important psychological factors that are likely to be omitted completely in a rigorous econometric analysis of the real estate market.

The method here will be largely narrative, recounting the stories that people told about the market of the times. Economists are usually very careful to avoid entering such evidence. And yet, research by psychologists has found that narrative-based thinking is extremely important in human decision making. People’s thinking is often more influenced by human-interest stories than they are by quantitative evidence, see for example Schank and Abelson (1977,1995). Pursuing such an analysis may actually help us to forecast turning points, providing information that is hard to pursue with rigorous econometric analysis, or that may at least augment such econometric analysis by suggesting alternative models or suggesting priors for models. ... [continue reading here]

Comments

[realpc]

Speculative bubbles and crashes have been going on for centuries. What about the tulip craze in 17th century Holland? Maybe bubbles were bursting even in prehistoric times.

Lots of people do well as the bubble inflates, and no one can predict exactly when it will start to burst. Some get rich, some get screwed, most are somewhere in between.

A good rule of thumb might be that when everyone is doing something, don't do it.

[ilsm]

What has happened is mortgages were created based on some wild speculation the about mortgagee making monthly payments, for a time.

A marketing concept at least as old as the end of WWII.

Sell on "payment" rather than value.

The old saw on mortgages was 2.5 times salary.

Also 35% of gross.

These things are what people with sense and prospects use to buy homes.

Schiller better realize the only folks with "prospects" as this mess unravels will think in terms of multiples of gross earning.

Not that they might scrape togethet the payment.

The medicine show is over.

Get out the tar and feathers.

[R]

Looking at Schiller's Figure 1 chart, plotting house and stock prices, it looks like the housing index went from ~60 in 1987 to ~225 in 2007. Flat for a decade, then it takes off. Over the entire period, that is a CAGR of 6.8%, a few points less than the stock market, and a couple of points higher than a T-bill.

I am not very sophisticated, so can someone please tell me why that is considered to be so out of whack? (I am serious).

Thanks,
R

[Nate]

There is obviously only one solution. The government should move in and monopolize the market for land. I mean, we only can own land because government allows us to own land. And we can only use that land as the government sees fit (think zoning permits).
The government should buy up (I mean seize through eminent domain) all property. Give each individual an equal share and restrict the trading of this property.
Obviously the free market can not be trusted to price houses and land. Only the government is capable of this.

[gordon]

Schiller says: "Classical economics cannot explain this [speculative] cycle..." Oh, I dunno. Maybe excessive money creation could have something to do with it...

[RW]

R: Evidence from cognitive psychology strongly suggests people are most affected by recent events so a CAGR taken over the entire period wouldn't be meaningful to most. Over time housing prices, on average, seem to more or less keep up with inflation but that doesn't make the newspapers and it doesn't constitute the kind of narrative(s) that foster speculation and asset bubbles.

I have no idea what the other comments in the thread thus far refer to but think Shiller's approach has some promise; successfully extracting variables from narrative requires considerable skill and special methods but it can yield good results in cases where it is not clear what the 'right' variables are or, as Clifford Gertz once phrased it, what differences a real difference make.

[calmo]

I dunno Nate. You mean this government?
Izit really obvious?
Obviously obvious?
Ok, 'snot obvious to me, but you sound like a, you know, ravin lunatic...if not a full-blooded Socialist...and some of us remember those days before Terrorists stole the show from those Commies.
But I am partial to lunatics...and tar and feathering the bad actors like ilsm notes.
But this seems a tad off to me: What has happened is mortgages were created based on some wild speculation the about mortgagee making monthly payments, for a time. Wasn't it (the wildness) that the house prices would look after themselves: the shortcomings from the wages would be met by the capital gains earned (there are better words like "scored" but I B soooo mellow tonight)...on those very investments as you moved up? And where were the august men of the Fed Reserve to point out this problem? They were chanting that the fundamentals were sound, that there was no housing bubble...these arses first for ilsm's tar and feathers.

[ken melvin]

More we look, the more things look like the 1920s. And, caveat emptor. Not guilty says, it's their own damned fault for buying snake oil.

[ilsm]

R,

I have modest experience trading primary residences, I am somewhat a vagabond and enjoyed a freeing experience called divorce.

In 5 trades: 3 sold more than purchase, one even and one loss.

Over the years I netted "equity", but the house was not an investment it was a place to live. Most of my equity was over paying to reduce interest paid.

My feel is a broader part of the house buying population, like me looks at a house as a home and will be more comservative in anticipation, if care at all, about speculating on becoming rich on the "old homestead".

[ken melvin]

Rather the Fed bailing out Market Street on the housing bubble, suppose the government implemented a scheme that tied the payments for those homeowner’s mortgages facing foreclosure to the home’s current value and stipulated that the rate of interest for the loan always be within a small margin of prime.

An example-model: Say that a homeowner purchase a home for $500k with 20% down leaving a principal of $400k financed initially with an ARM at 6% resulting in interest payments of $24k/yr or $2k/mo. If the interest rate went to 8%, the interest payments would be $32k/yr or $2.67/mo. All well and good if the price of the home continues to go up. Thus, the speculative bubble. But, if the price of the house went down 10% to $450k , the principal 0.8 x $450 = $360k and the $32k/yr is now 8.88% . Little incentative for the homeowner here. But, if the above scheme were implemented and the prime remained the same, the interest payments would be 0.06 x $360k = $21.6/yr or $1.8/mo. Unless they’ve suffered other losses, the homeowners would try their best to hang in there. A major consequence of this scheme is that the lenders are partnered in, making them less likely to fuel the speculative bubble. If applied in a perhaps somewhat modified form during those times when housing prices are rising too rapidly, the scheme could be used to take off some of the speculative edge that leads to bubbles.

[tyouung]

gordon says...

Schiller says: "Classical economics cannot explain this [speculative] cycle..." Oh, I dunno. Maybe excessive money creation could have something to do with it...

I've read some of Shillers' books. He never mentions IR or monetary policy as having a role in the formation of financial bubbles. Probably cause he's a good ole Keynesian at heart.

[Peter Schaeffer]

Robert Shiller asks

“The puzzle is why this speculative cycle has occurred recently in so much of the world. What do all these countries share that drives them to speculative booms?”

His next comment is substantively the answer (in my opinion).

“As we all try to adjust to a rapidly growing and increasingly capitalist world”

Historically, much of the left / center and some of the right sought to better the lives of ordinary people through higher wages and salaries. However, the very idea of higher wages has become an anathema of late. Of course, the cheap labor right regards an infinite supply of (imported) docile, subservient workers as a constitutional right (literally, the WSJ proposes to amend the Constitution to mandate unlimited immigration to eliminate even the possibility of higher wages).

However, the left has gone the same way as well. Famously, Teddy Kennedy ranted and raved on the Senate floor about the impossibility of paying “chicken pluckers” $10-15 an hour and then exploded at a fellow Democrat (Dorgan) who dared to suggest that such a thing was indeed conceivable.

Of course, the SEIU is quite willing to act as the labor front organization for La Raza Unida (“The Race United”) and signing low wage sweetheart deals with employers and promoting mass immigration to keep wages low.

The left (mostly) sees low and declining wages as a way of keeping the door open for mass immigration and the cheap labor right simply doesn’t want to pay fair wages to American workers. Of course, the patriotic left and right vehemently disagree. However, they don’t control public policy, at least so far.

The bottom line is that the elites that profit from globalization have created an economy where “your income is going nowhere, but at least your house price is going up”. That is a quote from someone. However, I have lost the source.

Now your home price isn’t rising either and you may be stuck with a vast mortgage on property with a declining value. The bottom line, is that elite globalization doesn’t work for ordinary people, but serves the “cosmopolitans” (Shiller’s term) all too well.

[Peter Schaeffer]

R,

Fair question. Two answers. First, Shiller has shown that over long periods of time, house prices do not appreciate any faster than the rate of inflation. His data goes back hundreds of years and spans many countries. Second, house prices really can’t rise much in real terms (sustainable) because mortgages have to be paid out of incomes. In other words, incomes bound house prices. Indeed, in some parts of the US house prices exceed 10X incomes. Either house prices are going to decline or incomes are going to soar. Your guess as to which is more likely.

[anne]

"Of course, the cheap labor right regards an infinite supply of (imported) docile, subservient workers as a constitutional right (literally, the WSJ proposes to amend the Constitution to mandate unlimited immigration to eliminate even the possibility of higher wages)."

Always rubbish, always lunatic ravings, meant only to deceive and intimidate.

[robertdfeinman]

Nate:
If you've never read Henry George you should give him a try.
All his works are available online.

In a nutshell he wanted all taxes to be collected on the value of land (not including improvements). The tax would be designed so that all "profit" from holding land would be gathered by the tax. This would remove "speculation".

Like all utopians he went a bit overboard with a one-size-fits-all solution, but some of his arguments still sound contemporary.

[Peter Schaeffer]

Anne,

Get a grip on reality. Facts are still facts even if you don’t like them and they don’t fit your elitist worldview.

See “REVIEW & OUTLOOK (Editorial): In Praise of Huddled Masses” (http://www.bizzyblog.com/ThereShallBeOpenBorders_WSJ070384.html)

“If Washington still wants to "do something" about immigration, we propose a five-word constitutional amendment: There shall be open borders.”

[Peter Schaeffer]

robertdfeinman,

Henry George’s ideas lost relevance because land rents declined as a percent of GDP (or so I think) and the cost of government rose far beyond what rents could possibly cover (very true).

I believe that land rents are now rising as a percent of GDP. However, the rents are now tied to home prices, which means that they are owned by a vast swath of the population. Not equally owned of course. As a practical matter this makes high levels of taxation politically less palatable. Property taxes address this issue to some extent. That doesn’t make them popular.

[anne]

"Of course, the cheap labor right regards an infinite supply of (imported) docile, subservient workers as a constitutional right (literally, the WSJ proposes to amend the Constitution to mandate unlimited immigration to eliminate even the possibility of higher wages)."

This is, of course, simply a hate-mongering deception.

[Lafayette]

Schiller: The Fed can stop a run on the banks, but it cannot control the speculative cycle — a cycle built on psychology and misperceptions that has been sweeping much of the world for the last 10 or 12 years.

Shiller is over-exaggerating here. The sub-prime phenomenon is an American invention (exported due to lax regulation and numskull brokering). The housing revaluation IS international, agreed, but only the UK and the US share a market pricing bordering on "bubble bursting" proportions.

Psychology DOES determine consumer behaviour, but I don't see how this should be limited to the "past 10 or 12 years". It has always been there and always will be.

If it has become exaggerated, then there is another more perverse psychology that is at play. And, it's called "making a killing". That is, because of the advent of really cheap capital, the sentiment that the average person can make exaggerated gains in real estate became anchored within the conventional wisdom.

If the cost of capital comes down again, as many would like it to happen, then broad realty speculation will continue as before. The only way to remedy a speculative sickness (as in real estate) is to attack it at its roots -- and in this case, the root is cheap capital costs.

NB: Of course, a bit of regulatory surveillance in the matter of lending practices could help as well to avoid the most perverse cases of fraudulent loan approvals.

[Peter Schaeffer]

Anne,

If you don't like the editorial line of the WSJ, you are free to criticize it. However, pretending that it doesn't exist won't work.

[anne]

"(literally, the WSJ proposes to amend the Constitution to mandate unlimited immigration to eliminate even the possibility of higher wages)"

This is, of course, simply a hate-mongering deception.

[Lafayette]

PS: If you don't like the editorial line of the WSJ, you are free to criticize it.

Why not be selective

Ok, I'll criticize it. It's just plain dumb.

Opening the flood gates to just anyone will bring in both the good and the bad. (Remember what Castro did to populate Miami with convicts from his jail cells?)

Why not be selective in terms of what the American labor force needs -- by means of continual surveillance of employers towards understanding the sorts of skills that are required. Then, we post those skills on the Internet and conduct a lottery for entry (amongst those who have the right bona fides in terms of diplomas or training certifications).

The WSJ might want to open the floodgates, but I suspect most Americans think otherwise regarding who they might share this nation with.

Mitigating higher wages is a moot point. Higher wages is ineluctable regardless of the number people selected for immigration according to their talents. The more experience they gain, the more they are worth and the more they will be paid.

[spencer]

R -- while I have no problem with the earlier comments on housing prices the single best determine on home prices is nominal income. Of course nominal income also moves with inflation and rates or they move with nominal income.

But basically, home prices move with income, or peoples ability to afford the homes. Over the past decade US housing prices have gotten way out of line with peoples incomes.

Unless you want to bet on a permanent shift in the cost of housing compared to income the obvious conclusion is that housing prices are out of line with fundamentals --peoples ability to pay for them. Shillers own work supports this analysis.

[Peter Schaeffer]

Anne,

I found a program that might help you.

See “America's Literacy Directory - Find literacy programs in your area” (http://www.literacydirectory.org/)

Perhaps these classes will help you understand that

“If Washington still wants to "do something" about immigration, we propose a five-word constitutional amendment: There shall be open borders.”

Means that the WSJ favors Open Borders.

[Lafayette]

km: Not guilty says, it's their own damned fault for buying snake oil.

No really.

In any market, a keystone criteria is full disclosure of the facts (regarding a transaction) and that includes both upside opportunities and downside risks.

That criteria was not met by the lending credit institutions, who should have been supervised/audit for "truth in lending".

Governments are there to protect people from themselves, not just terrorist attacks. And, I might suggest, there is far more abuse of one's own gullibility than terrorist threats in the US.

NB: If someone had somehow got Bill Gates to sign on to one of these bum-loans, the best lawyers in America would be jumping down the purveyor's throat seeking treble damages for "false representation" of a financial product.

[anne]

"(literally, the WSJ proposes to amend the Constitution to mandate unlimited immigration to eliminate even the possibility of higher wages)"

This is, of course, simply a hate-mongering deception.

[Peter Schaeffer]

Anne,

Do you need more help with adult literacy programs?

[F. Johnson]

Peter --

When the WSJ says "There shall be open borders," it means it favors open borders. It doesn't mean it favors open borders "to eliminate even the possibility of higher wages," as you contend. That's the hatemongering deception Anne is talking about.

[Peter Schaeffer]

F. Johnson,

Perhaps you believe that the editors of the WSJ are unaware of the laws of supply and demand. I don’t mean to disillusion you, but they are. They make it very clear that they favor Open Borders to make sure that wages fall as far as possible and don’t stop there.

Perhaps you missed George Melloan’s article in the WSJ “Immigration Paralysis”. He complains about how

“willing workers are being turned back at the border at a time when growers are desperate for hired help”

In real life wages are declining for production workers in the United States and have been (net) since 1973.

Or take a look at the editorial where the WSJ praised cheap labor immigrants, because they earn more here, than in the countries where they came from. In other words, wages in the US won’t be low enough until American workers have been reduced to the level of Bangladesh.

The sad truth is that “Anne” is just another apologist for the cheap labor lobby that uses the WSJ as its mouthpiece (one of them, that is). She is shrewd enough to cloak her greed in humanitarian language. However, her passion for ever cheaper labor always comes through. Note her defense of Teddy K. when he denounced the very idea that food processing workers might earn $10-15 an hour. Perhaps you caught her adamant defense of the merits of replacing black janitors making $25 an hour with SEIU members making a tad more than the minimum wage.

David Brooks captured the “Anne” mindset rather well

“They parade their enlightened racial attitudes by supporting immigration policies that guarantee inexpensive lawn care”

[anne]

"Perhaps you caught her adamant defense of the merits of replacing black janitors making $25 an hour with SEIU members making a tad more than the minimum wage."

Always deception, always prejudice, all the time.

[anne]

http://www.nytimes.com/2006/11/21/us/21janitor.html?ex=1321765200&en=f139e42d0ca84d0a&ei=5090&partner=rssuserland&emc=rss

November 21, 2006

Cleaning Companies in Accord With Striking Houston Janitors
By STEVEN GREENHOUSE

Houston's major cleaning companies and the union representing 5,300 janitors there announced a tentative contract yesterday that ends a monthlong strike, raises the workers' hourly wages by nearly 50 percent over two years and provides them health coverage.

Under the three-year deal, the first for the janitors since they unionized last year, their pay, which now averages $5.25 an hour, will increase to $6.25 on Jan. 1, 2007; to $7.25 on Jan. 1, 2008; and to $7.75 on Jan. 1, 2009.

Further, the employers agreed to increase a janitor's typical shift to six hours a day, from four. Many of the janitors had said they were being given too few hours of work to support their families.

As a result of the rise in both hourly pay and the hours in the workweek, the employees expect to see their paychecks double over the next couple of years.

"It's a moment of great victory," said Mercedes Herrera, a janitor for five years who earns $5.15 an hour. "We all came together, and the union gave us strength. Many of us have never received a raise. I've earned the same ever since I started, so the raise is great." ...

[anne]

http://www.nytimes.com/2006/11/03/us/03labor.html?ex=1320210000&en=7e1de42c381db409&ei=5090&partner=rssuserland&emc=rss

November 3, 2006

Janitors' Union, Recently Organized, Strikes in Houston
By STEVEN GREENHOUSE

Last year, more than 5,000 janitors in Houston decided to form a union, giving organized labor one of its biggest victories ever in the South.

But now the janitors are locked in a new struggle. They have gone on strike because five Houston cleaning companies have rejected their proposal for a salary increase to $8.50 an hour, up from the current average of $5.25 an hour.

The companies say the proposal for a 62 percent increase, along with health insurance, is unrealistic.

The janitors, who generally work four hours a day, say they are merely asking for enough to support their families....

[anne]

"Perhaps you caught her adamant defense of the merits of replacing black janitors making $25 an hour with SEIU * members making a tad more than the minimum wage."

So a fine group of workers forms a union, where unions are awfully difficult to form, the workers then bargain and strike successfully for fair wages and benefits, and the accomplishment of the workers is then subject to deception with a typical undertone of prejudice. We need to understand what deceivers cultivating prejudice are about.

* Service Employees International Union (SEIU)

[Peter Schaeffer]

Anne,

Thank you for reposting your defense of replacing black janitors making $25 an hour with SEIU members earning a fraction thereof.

If anyone had any doubts about your anti-labor stance...

You have resolved them.

[anne]

"Perhaps you caught her adamant defense of the merits of replacing black janitors making $25 an hour with SEIU * members making a tad more than the minimum wage."

Always deceiving prejudice, all the time, because that is all that is possible for deceivers. Notice not just the deception but the crazy meanness.

[anne]

* Service Employees International Union (SEIU)

Imagine the deceiving hatred of workers courageous enough to form a union and successfully bargain and strike for proper wages and benefits. Notice the continual descent to prejudice.

[Lafayette]

PS: If anyone had any doubts about your anti-labor stance...

And yours, are they not just a tad more obvious?

What sayest thou? Particularly as regards the matter of the Texan janitors trying to make a living cleaning other people's dirt.

Put the polemic aside for a moment.