Tonight we look at prices at those “dollar” stores.  Sales at these stores are increasing which prompted us to see if these places really can save you money.  The danger, however, is falling into that “bargain” trap which we’ll explain more in detail tonight.  Interestingly, Dollar Tree, the largest chain in this genre, attracts  more affluent consumers -  than budget shoppers.  What does that tell you?

A home is the biggest investment you’ll make.  Unfortunately, it is the most emotional one which is never a good ingredient for making a wise money decision.  In any case, it may not matter in Michigan.

Have any of you applied the 6% rule mentioned in my story last night? (your house is suppose to gain 6% in value every year,  2 to 3 percent from plain old inflation, 2% due to normal population growth, and 1 % from other factors like changes in local personal income levels). It can be pretty shocking.

My house should be selling double the price I paid for it 14 years ago.  I’m lucky I could get 27% more than I paid, and I’ve owned the home 14 years.

It’s an big problem if you have to leave the state.   I looked at this issue once before  in 2007 and heard from a former Pfizer executive who moved to California to take a high paying executive job.  Because this person was unable to sell their Kalamazoo home at a break even level (or sell it at all!), this person was renting, paying twice as much as the mortgage payment in Michigan.  This person could make it work because they were getting paid a lot.  Not everyone is in this category, and I’m afraid as more jobs continue to get lost,  people will start seeing their Michigan homes as an albatross.

Maybe I’m not up to speed on these things  but a rest stop costing $3.6 million dollars? I’m referring to the new rest stop MDOT will unveil Friday on eastbound I-196 between Zeeland and Hudsonville.  It’s a nice looking building.  There’s lots of new concrete  and I’m sure it was time for new toilets but aren’t we suppose to be putting the brakes on this kind of thing or at least finding other uses for this money like fixing pot holes without having to raise the gas tax even more?

MDOT says the 30 year old building was in deep need of updating.  It must have been in really bad shape because the whole building had to be knocked down.   My house is 30 years old.  Should I be knocking it down?  The new building is more “energy efficient.”   When will we see the return on this investment?  I hope it’s sooner than 30 years.  The new rest stop  is now “no longer in the flight path of planes at a nearby airport.”   I bet the motorists stopping for a few minutes are relieved to hear that.  And why stop there?  Why not move the entire highway?  And nearby houses , the farms and the stores?

Some of the money went to pay for more truck parking.   There’s also room more room for tourists.  We can appreciate that in a recession.     MDOT  points out that 85 percent of the money is coming from the federal government.  Glad to hear that.  I thought maybe is might have been tax dollars or something.

“Why are you making so much fuss about food prices? “a member of my family asks.  For the past month, I’ve done several reports on food prices, first comparing prices among the various grocers.  Tonight, we look to see if a retailer could be even WalMart’s prices.

Food prices are compelling simply because so much of the family budget goes to paying for food.  Most consumers became aware of the fact when gas prices skyrocketed last year and there was less change in the purse to buy other stuff, like bread and milk.  I looked at my own personal budget and found my yearly bill for food was exceeding $11,000 a year!

Until now, I paid no attention to food prices.  Sure, I noticed when things went on sale, and I’d stock up.   If I saw the same item elsewhere for 30 or 40 cents less, it didn’t really bother me.  Time and convenience were more important.  I shopped in places where I could get in and out quickly.  I also liked the little services,  like someone carrying my bags to the car.

But then retirement funds plunged and more friends of mine were losing jobs.  I decided it was time to pay attention to food price and so I’ve been on a mission.  My goal is to trim at least $2000 off my food bill this year and if the surveys we presented mean anything, it is possible to do that.

Tonight, you will see how the lowest priced grocer we found is nearly 48 percent lower than the highest priced grocer in our survey.   On my grocery bill, that’s a savings of nearly $5000 a year.   But like everything in life, there is trade-off.  There are some brands I simply cannot give up.  The deep discounters don’t carry everything I need or want, so then I have to evaluate the loss in time I’ll suffer going from store to store.

I think it’s worthwhile to pay at least one visit to the deep-discounters, just to see what you don’t get that you’re really paying for everywhere else (someone has to be paid to collect your cart in the parking lot!)

As I expected, there was strong response when I reported last night that WalMart’s food prices came in 28% lower than the competition.

GVSU Marketing Professor Ben Rudolph told me  about this love/hate relationship that America has with its largest company:

“…there  are so many people that hate Wal Mart, actually.   People can get bargains and actually raise their standard of living by shopping there and if you’re having a hard time making a living, it’s wonderful what they do.  On the other hand if you’re affluent, it is sort of bare bones.”

Here’s one letter from a viewer:

Temporary gain for permanent gain.  I’m hoping that is the case with the stock market.  The only thing that keeps me hopeful are those reinvested dividends in my retirement account.  With stock prices so low, you can really rack up those shares so when the market comes back…..

I don’t know what to think about the market.  It is no doubt unsettling.  Some retired people I know are trying to gain back some of their losses by selling now and reinvesting shortly later.   They calculate that the losses have been so great that they can now offset  their capital gains for the rest of their lives.    That’s a big tax savings, especially if you believe the capitol gains tax rate will go up. (more…)

I wanted to share this with you from Van Buran County Circuit Judge William Buhl.  Buhl is one of the judges who I’ve featured in my coverage of Michigan’s Driver Responsibility Fees.  You may find it amusing, or maybe not – depending on your level of fines.

DESTROYING CITIZENS ONE FEE AT A TIME
By William C. Buhl, Circuit Judge
Larry Legislator and Sammy Senator were having lunch, discussing ways to stimulate Michigan’s economy after  the Governor’s State of the State address. “I’ve got it!” Larry exclaimed.  “Let’s assure employment for District Judges.  Let’s keep creating lots and lots of unlicensed drivers!”  Sammy was puzzled. “How can we do that?” Larry scowled. “Haven’t you heard of the Drivers Responsibility Fee?  It’s easy. We slam the uninsured driver!  They won’t be able to pay the fines, costs, and $1,000 fees, so they will be suspended.  They will try to get to work anyway, and when they’re caught, bingo, another $1,000! But some idiots are trying to repeal it.”
“I don’t know, Larry.  Seems kinda speculative.”  Larry was losing patience.  “We have evidence that it’s already working.  Haven’t you read  “Driver Responsibility Fees: A five-Year Checkup” by your own Senate Intern, Elliot Wild?” *
“Guess I missed that one,” Sammy confessed.
“Well, the good thing is, it will employ more cops, too.  And generate more $12 booking fees!  And it could employ more wrecker drivers hauling vehicles when the drivers are arrested.  And we can employ more prosecutors and clerks in the courts! And of course the bonus is all those millions we get in our Treasury for fees – especially the $8.5 million for the Fire Protection Fund!” Sammy shook his head, pretending to understand.
“Hey, don’t leave out the Circuit Judges,” Sammy remembered. “We can not only make more misdemeanants, we can make more felons!  If someone gets in an accident with one of those drivers, and gets killed or seriously injured, the suspension makes them felons!”
“Of course the automobile insurance guys won’t like it.  Those unlicensed people can’t insure their vehicles,”  Larry added.
“Heck, they shouldn’t mind,” Sammy said.  “They’ll have an easier job, because they’ll collect bigger premiums, from fewer people! And we are making our constituents safer on the roads, too.”
Larry winced.  Obviously Sammy hadn’t read the Report by the Intern.

The Fees in Michigan have always had opponents. The reasons for their protests have now been documented as valid. Representative Thomas Pearce (R-Rockford) chaired a special Subcommittee of the Transportation committee, and after hearings held in December 2005, when asked about the fees by the Washington Post when Virginia enacted them, Pearce was quoted:  “Had any lawmaker in Virginia called me, I would have said, ‘Don’t do it,’ ” said Tom Pearce (R-Kent), a state representative in Michigan. “An awful lot of my colleagues would not have voted on these had they understood the unintended consequences.”  Virginia enacted the fees in 2007, and repealed them in 2008.
Well now the verdict is in: it isn’t as bad as opponents claimed – it’s worse.

Highways are more dangerous, not less:  From 2005 to 2007, the Senate Report shows increases of 21% in alcohol related driving crimes, 13% in assessments for no insurance and no proof of insurance, and most alarming, 26% for crimes of failing to stop at accidents and fleeing and eluding.  Do you feel safer?  Not surprisingly, the biggest increase was for driving while suspended – 44%.  And keep in mind, many officers, prosecutors, magistrates and judges are helping people avoid their driving while suspended convictions.

The State makes the dough, but locals pay the price:  The fees have an overall collection rate of 48.5%, well below the 60% expected.  That was $120,878,236 in 2007.  But at what price to police agencies, prosecutors, and courts around the state? Ask any one of them what they think of the Fees and what it costs.

The poor pay the most:  You don’t have to be a genius to see what a spiral of economic doom this makes for the person on the economic edge.  And this is good for people in a failing economy? It makes the State of Michigan a lousy place to live if you have money problems.

Each year the pool of unlicensed, uninsured drivers grows larger, and their debt bigger. Wake up Sammy Senator and Larry Legislator. Repeal the Drivers Responsibility Fee “sin tax” now!

*http://www.senate.michigan.gov/sfa/Publications/Notes/2008Notes/NotesJulAug08ew.pdf

The Bureau of Labor Statistics released its latest survey on National Compensation.  The reports come out four times a year and gives hourly wages for just about every job description you can imagine.  The reports are chock full of information and may give clues about why some areas face employment hurdles. You can look to see how your wage stacks up against workers in other industries or you can determine if there is a surplus or shortage of workers in your field simply by looking at wage growth or declines.

I went throught the latest report for the Grand Rapids/Wyoming  -  April 2008   The average worker in the metro area makes $18.91 an hour.  If you work in the private sector, your average wage is $18.10.  If you work for the government, you’re making on average $28.68.  Union employeess make about five dollars more an hour than non-union workers.  If you are paid by the hour, you make $18.19.  If you are paid by output (often known as “piece-meal”), you earn $29.28.  Workers at large organizations make more than those at smaller companies.  The difference is about $4 an hour.

Now, the interesting part.  I took a look at jobs requiring college degrees.   Coming in tops, no surprise, are physicians, surgeons and CEO’s.  Their hourly wage tops $84 an hour.  Top lawyers make a mean of $59.73 an hour (some professions, like this one have a huge pay differential, so you dig deep into the date).

The next highest might surprise you -  public school teachers, who command $50.54 an hour.    They make more than architects, engineers, geologists, and computer scientists.  One reason  is the time they actually spend on the job.  I did a report on this in November.  I found West Michigan teachers are now spending between 152 to 180 days teaching students. Salaries may not have gone up, but when there is more time off, it will boost hourly pay.  And when it comes to pay, teachers in Grand Rapids and Michigan are close to the top. I looked at a hand full of cities and found teachers making much less, even in places with a high cost of living like San Jose, California ( $46.49) and Northern New Jersey ($48.37)  Other lower paying areas include Raleigh Durham($27.44),   Rochester, New York ($36.45), Austin, TX ($29.33)  and  Salt Lake City  ($31.62)

The $50.54 mean hour wage for local teachers does not include teachers in the private sector  Their mean pay is $19.16 an hour.

Wages have become huge interest in both the public and private sectors and the Michigan economy gets squeezed more and more.

To see where your pay stands, you can check this table on line from the  U.S Bureau of Labor Statistics. It lists 800 job descriptions:

In this day when our state can’t seem to attract anyone without some kind of handout, it’s encouraging to see a guy like Bob Israels. Israels says he turned down abatements, grants and the like to develop what he believes to be the future for the retail furniture industry.

Today Israels will be reopening the Klingman’s Furniture store in the old Roger’s Department Store.
Israels spent at least 20 million dollars of his own money remodeling the structure. The City of Wyoming offered him an abatement. He turned it down, saying the city needed the money more. Instead, he concentrated on getting the biggest bang for his own bug. He chose the 28th street property because of its attractive price and location. The savings allowed him to spend more on people, inventory, and design.

Sure, he knows he’s taking a big risk, putting his own money on the line, in a volatile economic climate. Furniture is closely tied to housing sales. Israels instead is focusing on the long term picture. His demographic study, which cost 200 thousand dollars, shows plenty of opportunity. Instead of thinking local, he’s going regional. He’s confident shoppers he can lure customers from affluent markets, three maybe five hours away, because they have no good place anymore to shop for furniture. Many retailers, he says have gone low end – cutting their inventories to save space and money. He believes people who are willing to spend money on furniture want to see it and touch it. His store houses 3.6 acres of furniture – plenty to touch and see. His ideas have paid off big time before and given the skin in the game this time, they could pay of again.

The man of the hour arrives. It’s 10 o’clock. He’s talking about job losses, which is familiar to the crowd, especially in Michigan. This seems to warm the crowd up. Part of the value in attending these events live is to see the setup and arrangements you don’t get from television. The candidates are well presented. They are lit with full studio lighting. Tonight on national television, it will look like it was a sunny day in Grand Rapids. They speak with teleprompters. The crowds up front are hand selected. A volunteer told me that certain supporters are given “red” tickets from advance people.
Those people apparently meet some key demographic. They will get up right in front and most certainly will be seen in some camera shot.

Back to the speech, economy is clearly the theme. Obama was introduced by an ordinary citizen. A man from Ionia who has a wife, children and home that is worth 30 percent lower than what he owes. Obama continues by attacking McCain claiming his notion that the fundamentals of the economy are sound. “If you believe that…Ive got a bridge to sell you in Alaska.” That gets the crowd going.

You can’t come to Michigan without talking about the auto industry. Obama promises fuel efficient cars that will be build in the U.S. (a minor flub with the script, but the crowd doesn’t notice). The talk about cars dovetails into alternative fuels. The crowd really likes the part about independence from foreign oil. Obama then talks taxes. He promises just about to just about everyone in the crowd they’ll get a tax cut. This speech then covers health insurance, education. No new ground here. All the people here know where Obama stands on most of this stuff.

The speech sounds like it’s wrapping up. Can Obama promise any fast exit to beat the traffic out of GR? TBA