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Friday, June 30, 2006

Big Boeing Bonus... Bubble Booster?

Given that the housing bubble is so closely tied to the economy, both on a national and a local scale, I feel compelled to mention the $346,500,000 stock infusion that will soon be distributed among 63,000 Puget Sound residents.

If Boeing's stock ends the day near Thursday's closing price of $83 a share, employees will receive Boeing shares worth about $5,500, and the regional economy stands to get an infusion from the bonuses.

The windfall, worth hundreds of millions of dollars, will go to an estimated 191,000 full-time, part-time, current and retired employees companywide — 63,000 people in the Puget Sound region — who have worked at Boeing during the past four years. Workers who have been with the company for just a portion of that time will get smaller, pro-rated stock bonuses.
...
Bret Bertolin, a senior economic forecaster for Washington state, said the bonuses will have more significance to the local economy than when Microsoft paid out its $3-per-share special dividend in November 2004.

The reason, he said, is that the vast majority of the dividend went to big shareholders like Bill Gates, Paul Allen and Steve Ballmer, rather than to rank-and-file workers. Gates gave his $3 billion windfall to his foundation, which spends its money around the world.

Even so, Bertolin doesn't expect the checks to lead to a big boon in state tax revenue. Even with the rosiest of estimates, he said, it could generate only $20 million of tax revenue, relatively small change for a state that expects to collect $28.9 billion in tax revenue in the current two-year budget cycle. Most of the windfall is expected to be spent in retail.

The bonus represents 6.8 percent of the $5.1 billion payroll for the aircraft-manufacturing industry in Washington state in 2005.
Just what we needed to stretch this party out for just a little bit longer.

(Luke Timmerman, Seattle Times, 06.30.2006)

20 comments:

The Tim said...

The alliterative title just jumped into my head and I couldn't resist.

Anonymous said...

How is approximately 5K per person going to extend the bubble?

Explain please.

Anonymous said...

It won't. Are you kidding me? With the prices where they are now? No point in arguing that. However, I find it funny (since I'm an employee and a recipient of this bonus) that a person who has spent his whole life in Seattle private schools, graduated from a prestigious local University, and landed a good job (a GREAT one actually, and I'm getting paid well as defined by me...$50-$75K) have a Masters...come from a good family with a reasonable amount of savings...still cannot afford a house in my own damn city. It makes me sad. Fuck Ballard and the flippers.

Anonymous said...

Hate to judge but since you put it out there, if you're old than 30, having a masters degree and making less than $100k mean you don't have the right masters degree from a top school. It sounds money hungry to gear the kids towards more marketable degrees but they have to be made aware that picking certain areas of study will put them at a significant disadvantage of achieving financial security.

Anonymous said...

Yea,
I know some people who are ARMed to the hilt. They will be using this bonus to stay afloat.
At least for a few more months.

Seems they every time they get some windfall, they end up incurring more debt.

lake hills renter said...

I would hope that the local housing market wouldn't live or die on whether Boeing gives a bonus. Just shows how out of whack things are. I can't image, though, that $5500 makes much difference when you're underwater on your mortgage(s) or your ARM has reset. Just delaying the inevitable.

Anonymous said...

Anon 7:35:

Actually, I recently broke the 30 barrier, and got a Master's in Computer Engineering from Washington University (in STL), which I believe is tied for #11 on USNews.com. On a good year with a reasonable amount of overtime, I barely break the 100K barrier. I have no kids and am married to a medical resident. Albeit I started a bit late than others in my age group (it took me a while to finish school because I kept screwing around), but I think I'm "alright" financially right now. We cannot afford a house in Seattle without creative financing, which I saw through right from the very start. OK...sorry...just had to respond. Either way, I don't believe a measly $5K is going to stimulate me to start scouring the market, nor will a 20% raise next year (which WOULD bring my base salary to over $100K, not that it means a damn thing in this time and age).

Anonymous said...

Boeing workers aren't exactly paid in many cases as well as there counterparts.. example couple of friends have Identicle degree as my brother who graduated nearly top of his class. The other 2 friends had average grades..

Brother went to work for Boeing after graduation and makes about 75,000. less than the next person making 140,000 and much less than the person making 165,000.. Identicle degrees..

Boeing Wages do not on average support much more than a 200,000. mortgage in my opinion. Machinist wages start generally at 12.75 for a grade 4 position with 6.5 years to make your maximum pay rate of just over 27 bucks an hour..

funny thing is much of the general public is under the impression that boeing machinists make much more starting and top out quicker.. most the machinist are probably toooo embarassed stating the truth.

try raising a family on 12.72.. Can we make rent and put food on the table? of course there is all that overtime that exists in certain areas of production at Boeing. Then again Overtime sure erodes the quality of life in my opinion.

Anonymous said...

Holy crap.

I don't think that anyone out there ever dreamed that Boeing machinists make a measly 12.75/hr.

Is that before taxes?

Unbelievable. This will be worse than I thought.

Anonymous said...

MACHINIST WORKERS


I think personally the kicker for the Boeing Machinist workers is that 6.5 year period making the top pay rate.

I have a friend that complains regualarly..

He has been there since June of 1997 and been though 2 layoffs..

Because of the Contract the Union and Boeing have They effectivly if you havent completed the 6 month step increase they round you back to the step increase completed.

So lets say you were laid of with 1 month to complete your next step increase to get your .50 cent raise.. "They re-hire you back several months later they then move you backwards in your wage step increase and you effectivly have to go the full 6 months again to get that .50 cent raise.

My friend has been though 2 layoffs since 97.. even though he has been working on the Job over 5 years he still is at the 3 year company time.

Been there since 1997 and only making just over $15. dollars an hour.

He also tells me that many of his Co-Workers during there layoffs acquired heavy dept on average and to break even many will need couple more years just to get to the break even point. Those Bonuses on much to most cases are probably going to be spent on dept.

He tellse me about how inside Boeing plant they have BECU Bank machines and on any given day you can pick up just about any bank slip laying on the ground around the machine with average saving of several hundred dollars... every once in while he pull off the ground with a few thousand dollars.. If our local ecomomy is dependent on Boeing wages I don't see much upside from he tells me.

Anonymous said...

Yes-- from What Im told.. BOEING MACHINISTS

Boeing has 10 different grade levels of employees.
1 thru 10...

The Grade 4 position is the majority of the jobs in Production with the "support Jobs being Grade 3 and Below= People that work to support the people that build the planes.

people that inspect are normally 6-7 pay grade and people that work outside on the flight line are generally higher grades also.

Most the People that work as machinist are Grade 4 Positions... there job classes numbers far outweigh everyone else. (Machanics, electrical installation, sealers, plumbers etc.) Probably well over 70% of the machinist jobs are grade 4 or lower.

Inpspection and Flight Line doesnt employee a high number of people.

Grade 4 Starting Wage is if I recall correctly $12.72 to start with 50. cent raised every 6 months with cost of living raises based off inflationary numbers.. which personally I think are skewed.

The different grade classes get something like 80.cents pay-raises to start and a ceiling that directly reflects this.

example grade 9 about 32.00 dollars an hour maximum.. Then again there is only a small percentage of empoyees that reach this level of Pay-Grade.

still remember your there 6.5 years to get that and you might be putting in a good deal more years to reach it after all the lay-offs.

Anonymous said...

Wow. what an unbelievable load of sh#t Seattleites have swallowed when it comes to the economy here.

You Boeing guys should have been posting a lot sooner.

Have any of these Boeing workers bought houses in the past few years?

Anonymous said...

I'm not saying it is any healthier, but our economy in this area is driven by Microsoft not Boeing. Sure, if Boeing up and vanished, our economy would go into shock, but Microsoft has a bigger impact on this ecnomoy than Boeing does ranging from housing to disposable income.

How many Microsoft millonaires are there in this area? Most people at MS are making over 100k (including cash + bonus) in less than 5 years.

I'm not trying to degrate Boeing machinists, but 12.75/hr doesn't translate into a lot of spendable income in this region, especially when it comes to housing in King County

Anonymous said...

Have any of these Boeing workers bought houses in the past few years? I'm a Boeing engineer and bailed the house hunt earlier this year, too overpriced

Anonymous said...

Ha! Take heart, Boeing engineer, you too may someday be able to afford a Seattle home (soon!).

I've been going on the MLS lists and checking those mortgage/payment thingy's where you can manuipulate the interest rate and see what your monthly payment will be.

It's going up a LOT with the new rates and the old prices. In the home price section, put in a new price til it comes up with the same monthly payment as the old rate.

You will be amazed how far home prices need to fall to catch up with the old monthly payments at the old interest rate.

Oh yeah, I forgot, wages are gong to go up and none of this will matter!

And housing never goes down! Except when it does- like clockwork.

It's called an RE cycle- RE bulls get used to it and plan accordingly.

Anonymous said...

RE bears have been wrong for how long now? They have been preparing for the downturn since the dot com crash.

Anonymous said...

Seriously.. myself I have been a real-estate bull up to about 1.5 years ago.. in fact I was still a bull on areas like Texas up to about 6 months ago..

In fact I been a real estate investor with my cousin holding and myself holding properties in the Houston area.

Many of the great real estate investors at this point in the game are now Bears as well.. except the ones selling infomercials, of course there wealth is tyed to selling courses.

Anonymous said...

See the Seattle RE investor link on this blog.

He now admits RE could depreciate here. BIG step.

If you are an RE bull, do not torture yourself by reading the bubble blogs.

Especially now, with interest rates rising, always a sign that prices will drop.

Nick said...

"still cannot afford a house in my own damn city."

I still just don't see what's so bad about having to rent. Seems as if you can very easily afford to rent.

Anonymous said...

To each his own Nick. If you like renting, more power to you.

You can relax while the market unwinds. For those of us who are chomping at the bit to own, waiting for the bottom (or at least near-bottom) is more frustrating.