Mont. Factory Workers Slow to Spend
HELENA, Mont. (AP) _ What would happen if people in a small community were showered with $97 million all at once? The results are just now starting to come in, and they’re not as exciting as some had hoped for.
Many of the recipients are apparently paying down their debts instead of splurging on hot tubs, cars, TVs and the like.
About 1,000 aluminum workers in the Columbia Falls area got checks ranging from $1,000 to more than $250,000 back in April. The windfall resulted from a settlement of a lawsuit between the Columbia Falls Aluminum Co. and employees over how they were owed under a profit-sharing agreement.
The workers were flooded with offers for real estate, cars, jewelry and more, and economists saw a rare opportunity to learn what happens when people in a small town are given a pile of money.
The economists haven’t actually studied what happened, and no one knows for sure yet, but businesses said they haven’t seen the big surge in spending they had been expecting.
``It was money they knew they had coming, and they planned carefully how they’d use it,″ said Greg Eisinger of Eisinger Motors in Kalispell. ``By the time they paid the tax man, the attorney fees, the ex-spouse fees and all the rest, there just wasn’t that much left.″
Furniture and appliance dealers also said they have seen little effect on sales.
``It sounded like a lot more money than it really was,″ said Rosemary Lyman, whose husband, John, got $104,000 and ended up with $61,000 after deductions.
Lyman, who is in his mid-50s and has worked as a furnace tender for about 30 years, did treat himself to a Harley-Davidson motorcyle, but he also paid bills.
Theory has it that people will not spend lavishly when they come into new money if they believe it is a one-time event, said Sung Won Sohn, an economist for the Norwest Bank system.
``A lot of people think that when we get bonus income, we go out and blow it,″ Sohn said. ``But we’re a lot more rational, on the average. ``Your purchase today depends on what you think your long-term income stream is going to be.″
Economist Ed Lotterman of the Federal Reserve Bank of Minneapolis said aluminum workers in Montana would probably use a windfall more cautiously than, say, high-tech employees in California.
Montana’s economy is not as strong as the economy in many other parts of the country, and a natural-resource industry such as aluminum is probably seen as an industry under siege, Lotterman said.