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Part-time job losses affect UM students

By Aislinn Sarnacki

Posted on Oct. 21, 2008, at 12:00 a.m.

Students looking to make extra cash will have trouble finding part time work, said marketing professor Paul Myer at a public symposium Oct. 16.

The symposium, “The Current Financial Crisis: What Does It Mean For Us?” was held in the Donald P. Corbett Business Building and drew a crowd of students, faculty and the local community.

Myer addressed changes in retail in his PowerPoint presentation titled “Weathering the Perfect Storm,” where the elements of fear, uncertainty and doubt fuel the tempest.

“This is a classic black swan. How did we all not really know that this was going to happen?” Myer said.

Retail stores are chief providers of part-time employment, jobs students depend on to earn money during the semester.

“Retails need to react, so they’re going to contract,” Myer said. For example, L.L. Bean recently cut employment approximately 23 percent.

Employment opportunities may look grim, but it is a good time to shop, Myer said. Businesses are responding to altered consumer habits by offering deals. For example, Wal-Mart is now advertising $10 toys.

Other panelists included finance professor Richard Borgman, finance professor Robert Strong and marketing professor Harold Daniel.

Strong provided a crash course on stock prices and why they have changed. The keystone of his presentation was the concept of a stock price ratio: future earnings in the numerator and psychology in the denominator.

“In the short run, it’s psychology that causes stock to change,” Strong said.

When the “risk dial” is turned up, the denominator of psychology rises and stock prices drop. According to Strong, fear and uncertainty can affect the risk dial.

“We are seeing elements of risk that we just haven’t seen before . just not something that’s on our historical radar screen,” Strong said. “I’ve never seen volatility in the market like this.”

Borgman supplied the audience with a timeline of the events leading to the current financial crisis. According to the handout, the crisis started at the end of 2006, when house values started to drop and foreclosures began to increase.

Borgman also distributed an “investigation of suspects,” a sheet listing and examining those who have been blamed for the economic downturn.

Daniel focused on tourism in Maine. Overall, his point of view was optimistic. Although it is predicted next summer’s tourism revenue will decrease 3 percent, he called the present a “time of opportunity.” He suggests Maine residents should develop new tourism products, maintaining the level of competitiveness and advertise.

“Invest in tourism. Contribute to the state budget. Plant these seeds that will grow and germinate in the state’s recovery,” Daniel said.

Associate Business Dean Ivan Manev stressed that the professors would not formally provide financial advice. However, during the question-and-answer portion Strong said, “If you’ve got money in a tin can in the backyard, now’s the time to buy. If you’ve got cash and the time . stuff is cheap right now.”

From her seat in the audience, Associate Professor of Economics Adrienne Kearney contributed to the discussion by comparing the current crisis to the Great Depression. During the Depression, unemployment was at 19 percent, compared to today’s 6 percent unemployment.

“It’s not a depression. There’s a huge contrast from then and now, and they are trying to avoid the mistakes made during that time,” she said.

The discussion was scheduled to last from 5 p.m. to 6:30 p.m., but an inquisitive audience kept the professors until after 7 p.m.

This entry was posted on Tuesday, October 21st, 2008, 12:00 am. You can follow any responses to this article through the RSS feed.