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Thursday, May 11, 2006

Discretionary Income; or, How the rising price of gasoline is affecting Tom Cruise

I work in a factory that manufactures CDs and DVDs. I am not exactly what you would call a "factory worker", but I am a little too hands-on to be classified as an "office worker." I am the Asset Manager for our DVD Compression, Encoding, and Authoring department. That means that I get the bits and pieces that will become all the video and audio features on the DVD from our clients, and then I figure out how they will all fit onto a little shiny disc. After a few mathematical magic tricks, the project assets are ready for my friends to Compress, and Encode, and Author.*

So in a sense I'm in both the manufacturing industry and the entertainment industry. We are, first and foremost, a manufacturing facility, with gazillions of widgets being popped out every so many days.** But the product we make is essentially an entertainment consumable. It's something people want to buy to keep themselves entertained.

Over the years I've learned bits and pieces of business terminology. "Fixed costs", for example, are extremely important to understand in everything from factories to schools to hospitals to the Space Shuttle program. If you don't understand your fixed costs and how they relate to your total costs, you don't have a hope in hell in business.

A more personal business term that I've learned is "discretionary income." This is the money that's left over from your paycheck after you've paid for all the things that must be paid for - taxes, housing, food, necessary transportation. This is the money you can spend, or save, as you please. This is the money that pays for your satellite dish and your HDTV and going out to eat three or four times a month. This is the money you spend on vacations and road trips. This is the money that you spend on CDs or DVDs or going to the movies.

Three years ago gas was, according to my records, about $1.50 a gallon, half of what it is today. Six years ago it was closer to $1.00 a gallon. I consume about 600 gallons of gas a year, mostly for going back and forth to work. I am spending $900 a year more on gas than I did three years ago, and $1200 a year more than I did six years ago. That's a lot less discretionary income for me to play with, a lot fewer CDs and DVDs and trips to the movies that I can spend money on.

Mission: Impossible III opened this past weekend and took in more than $47.7 million dollars - a box office gross that is considered disappointing by Hollywood, at least for a Tom Cruise film. That crazy Scientologist Tom Cruise and his crazy couch-jumping antics, the Hollywood analysts say. See how he has hurt the opening weekend box office for this film.

Well, yes, that may be true. Tom Cruise's Year of Living Weirdly has perhaps taken a toll on the public perception of an actor who was once considered a bit odd, a lot private, but generally kinda nice and likeable. But is that why people didn't go to see his movie?

The price of gas is up. Discretionary income is down. Even if you use you car for nothing more than getting to work, you are still paying twice what you were three years ago, three times what you were paying six years ago. You might not have noticed, but you really do have less money in your wallet after you've paid for all the things that must be paid for. That means you have less money to spend on eating out, or going on vacation, or on CDs, or DVDs, or movies.

People say, "When will the high price of gas start affecting the economy?" I say, it already has. It's affecting me, as people choose not to spend their discretionary income on CDs and DVDs. It's affecting Tom Cruise, as people choose not to spend their discretionary income on going to the movies. It will eventually affect every sector of the economy, as people continue to reprioritize their discretionary spending - or worse, opt to go deeper in debt for that new car or widescreen HDTV or other luxury item that they simply cannot live without.

But there is something you can do about it. Something you can do which will have a positive impact on the economy. Something that will help make American jobs more secure.

Buy more DVDs. (Cue The Battle Hymn of the Republic.) Yes, by buying more DVDs, DVDs that have been made in America***, you are helping the economy, and helping to make American jobs more secure. My job in particular. Screw Tom Cruise, he's loaded. Spend your discretionary income on DVDs.

Thank you for your support.


*This is a completely different process than what you might be doing in your basement with the "DVD Authoring" program that came with your new computer.

**This is a lot cavalier of me. Our widgets are extremely sophisticated, complicated, high-tech widgets, and I do not mean in any way to imply that this is the same sort of process that's used to make pancakes or bottlecaps or soapdishes.

***Check the back first to make sure they're not stamped "MADE IN MEXICO" - those discs don't do anything to help me, though they may in the long run have a positive effect on the illegal immigration situation
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1 comment:

Betz said...

Bravo! Bravo! Bravo!
Or something like that. ;)