Debt Collection Industry Employers Add Jobs to U.S. Economy in Second Quarter
Even as the overall economy added 117,000 jobs in July, dialing back the official U.S. unemployment rate to 9.1 percent, nobody’s grandmother is ready to whip out the fancy cashews instead of that dish of plain old mixed nuts when the company arrives. On the heels of an acrimonious debt ceiling mêlée in Congress, S&P’s historic downgrade of the U.S. government’s credit rating, and last Thursday’s 512 point drop in the Dow Jones Industrial Average—the biggest one day drop since December 2008—lots and lots of peanuts appear to be in America’s future.
But the news isn’t entirely distasteful. Data from insideARM’s ARM Barometer, a quarterly survey of collection agencies, debt buyers, collection law firms, and credit grantors showed that many ARM companies in the outsourced business services sector of the U.S. economy added jobs in the second quarter of 2011.
While net employment gains among asset buyers were offset by layoffs, collection agencies and debt collection law firms both increased their payrolls. According to survey respondents for the Summer 2011 Barometer sponsored by Kaulkin Ginsberg Company, 51 percent of collection agencies and 41 percent of collection law firms grew their employee rosters between April and June of this year.
The significance of these numbers is tripartite.
First, more collectors should boost service providers’ recovery performance, meaning a greater number of outstanding receivables are being converted to cash and injected into the broader U.S. economy.
Second, more ARM industry jobs mean more jobs—period. A greater number people working in cities like Minneapolis, Atlanta, Buffalo, Phoenix, Milwaukee, and St. Louis helps to improve not just the national unemployment picture, but local economies too.
Third, this data serves as an important tool in opposing the negative images often ascribed to ARM companies. From the misguided notion that recessionary periods are a boon for debt collectors to slipshod reporting common in many media reports about the collection industry that associate complaints about debt collectors with actual FDCPA violations or that tie any collection activity—a legitimate phone call or legal dunning notice—to abuse and harassment.
But a tool is only useful if you use it. How will you help build the reputation of the ARM industry today?
Michael Klozotsky is the managing editor of insideARM.com. He’s not a statistician, but he knows enough of “the maths” to say that even when the “dreaded debt collection industry” adds jobs, a few more American families can eat, learn, play, and live a little better.
Whoa Nellie! Debt buyers hiring in India and Panama does NOTHING for the employment picture in the US. Supporting evidence comes from Encore Capital’s [Nasdaq: ECPG] most recent quarterly filing:
Excerpt 1 – A significant element of our business strategy is to continue to develop and expand offshore operations in India. While wage costs in India are significantly lower than in the U.S. and other industrialized countries for comparably skilled workers, wages in India are increasing at a faster rate than in the U.S., and we experience higher employee turnover in our operations in India than is typical in our U.S. locations.
We may not be able to manage our growth effectively, including the expansion of our operations in India. We have expanded significantly in recent years. However, future growth will place additional demands on our resources, and we cannot be sure that we will be able to manage our growth effectively. Continued growth could place a strain on our management, operations and financial resources.
Excerpt 2 – Headcount as shown on page 34 of the 10-Q filing dated June 30, 2011.
Headcount as of June 30, 2011: United States = 759 versus India 1,394
Easy Tiger! You might want to start by checking my source. As the article states in multiple places, “According to survey respondents for the Summer 2011 Barometer…” “Supporting evidence for your claim” might in fact come from Encore’s financials (which we’ve read too), but my data is derived from proprietary survey responses.
Have you reviewed our data? Maybe, but that would mean that you got to Mike Bevel before we asked him to memorize every single tidbit of the survey results and then eat the original paperwork, washing it down with a few sips of the finest imitation maple syrup. And Bevel’s tough; I doubt he would cave so quickly to someone without knowledge of the secret insideARM handshake.
Your critique is interesting, but off the mark.
Also, Encore is a debt buyer, and the focus of my claims here is tied to agency and CLF responses, not asset purchasers.
Regards,
Kloz
Looks like there is a graphic on debt buyers in the article…regardless of data sources and their accuracy or credibility, jobs in India can be jobs in the US. Isn’t jobs the focus?
@illini:
You are correct; debt buyer responses are represented in the graphic above. I do however note that “net employment gains among asset buyers were offset by layoffs” (21% added, 29% eliminated, 50% no change = no change), and the rest of the text goes on to address collection agencies and collection law firms. I don’t think there’s anything misleading about this–and the text and the graphic aren’t mutually exclusive.
I’m not sure I follow your “jobs in India can be jobs in the US,” unless you meant “can’t.” Either way, I revert to my initial comments about the data.
But more importantly, are you a true UIUC alumnus?
Kloz
Kloz – Thanks for the spirited reply. As readers of my posts quickly deduce, I see no redeeming value to the large debt buyers. This article from Sunday’s Wichita Eagle just reinforces the unwanted misery and wasted cycles that I believe the debt buyers inject into American life: http://www.kansas.com/2011/08/07/1964866/collection-companys-practices.html