Economics concepts and applications

Customer Satisfaction Index Suggests More Patience with U.S. Government

Wall Street Journal, December 17, 2001

The American Customer Satisfaction Index is measured quarterly by the University of Michigan Business School in conjunction with the American Society for Quality and the Ann Arbor-based consulting firm, CFI Group. It measures consumer satisfaction with the private sector, however analyses federal agencies once a year. Consumer satisfaction with the IRS this year was up 10.7% from last year. One reason for this is that customers like the electronic filing feature. Scores were higher among those who filed electronically, however, scores were also up among traditional filers as well.

The FAA scored low this year. Consumers in this area were commercial pilots who cited unclear regulations as their reason for dissatisfaction. Even though the consumer satisfaction score was low, it was still up 5.4% from last year.

Americans were more pleased with government services than they were last year with scores up 3.5%. Private sector satisfaction fell slightly, which is unusual, considering that they have competition. One reason for this rise in government satisfaction over the private sector may be that consumers have more patience with the government after September 11.

Agencies that provide information and services scored better than regulatory agencies, who sometimes have conflicts with their customers.

Attacks Hit Low-Pay Jobs the Hardest

New York Times, November 6, 2001

The terrorist attack on the World Trade Center was an attempt to crush American capitalism. However, the impact of the hit affected normally low-paying jobs such as cooks, cabdrivers, sales clerks, and seamstresses the hardest.

The New York Department of Labor forecasts that 80,000 people will lose their jobs by the end of the year. The average salary for 60% of the jobs lost is $23,000 a year, which is much lower than the citywide average of $58,000 a year. Earlier this year losses were mainly among white-collar workers like dot-com programmers, stockbrokers, and advertising executives. Now the job losses are concentrated in the service area such as hotels and restaurants.

Unemployment insurance has been inadequate to sustain the 25,000 workers who claim to have lost their jobs due to the World Trade Center attack. The government is now instituting a Disaster Unemployment Program, which currently only has 2,350 recipients.

The reason for this drop in service related jobs is the devastating effects that the attack had on the tourism industry. Businesses in Chinatown have been greatly effected as well as airport services such as parking attendants, freight forwarders, truckers, and limousine drivers.

Eighty percent of the World Trade Center jobs were low-income. .

Winter of Discontent Could Worsen Consumer Slowdown

Wall Street Journal, February 20, 2001

Economists have felt for months that a decline in consumer confidence has made the economic slow down worse. Some feel that poor service may be responsible for this slowdown.

Much of last year the customer satisfaction rose, however last quarter, it declined. This means that consumers are less happy with the goods and services that they are buying. If this continues, it could lead to further declines in spending

This weakness was most obvious in the retail sector. The numbers were not actually too low, however they were two points worse than the banking sector. They were on the same level as the U.S. Postal Service, but worse than the tobacco companies. Staffing appears to be the biggest obstacle to offering good customer service. Retailers are having trouble retaining staff.

Overall, the customer satisfaction results were not disastrous in all of these sectors. The total decline over all sectors was small. The overall decline worries economists as it may signal a further slow down in the economy. More consumer spending is needed to get the economy going again, but that will be difficult with the high rate of household debt and low customer satisfaction.

The banking sector seems to be recovering from a steady decline in the 1990s. Changes in company routine have led to unhappiness in the supermarket sector. When you change something, even for the better, customers will still be dissatisfied.

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December 17, 2001

Politics & Policy

Customer Satisfaction Index Suggests

More Patience With U.S. Government

Despite Own Improvement, FAA Now Trumps the IRS