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Earlier this week, the New York Times announced that it would be shrinking the size of its pages to save money. Oh, and its staff too. Again.

Here's a quick timeline of New York Times recent history of staff reductions:

January 2001

New York Times announces that it will cut 69 jobs of its Internet staff (at the time, 17% of its Internet workforce.)

April 2001

New York Times announces will begin across-the-board layoffs. Job cuts include 100 employees from its regional newspaper group.

May 2005

New York Times annouces staff reductions of 190 employees (less than 2% of workforce).

September 2005

New York Times announces layoffs of 500 employees (4% of workforce.)

July 2006

New York Times announces will shrink newspaper (newsprint), news (5%) and employee headcount by 250 (2%).

By our count, we find that the New York Times has laid off some 1109 employees in the six years since the beginning of the century, a little over 8% of the total number of its employees in 2000.

The Real Question

Of course, the real question has nothing to do with how many hard-working people the New York Times will slash from its payroll. Oh, no. The real question is: How will the same business conditions that have led to the ongoing shrinkage (in workforce, and now literally) of the New York Times affect publisher Arthur "Pinch" Sulzberger's annual bonus?

What makes this question relevant is how the New York Times' Board of Directors acted just last year, as the Times' management team, led by Sulzberger, moved to reduce its staff by 500 people as a permanent cost savings measure. Despite the newspaper's stagnant business condition, which apparently required the ouster of 4% of its staff, they awarded him a substantial bonus of $560,521 in cash and granted him restricted stock units worth $817,500 - on top of his $1,055,596 annual salary for a grand total of $2,433,617 in total financial compensation.

But, let's put the situation at the New York Times differently - we'll compare the newspaper's business condition (represented by its stock price) with Sulzberger's compensation in the chart below:

Is Pinch in for a pay cut this year? Draw your own conclusions, but consider the following two questions and answers....

Why was Pinch's pay so low in 2001? We've listed Sulzberger's compensation in the chart above as occurring when the New York Times annual report for the previous year's business was released - in this case, in March 2001. Here, Pinch's low pay level is the result of the New York Times' falling advertising revenues throughout 2000, which led, in good part, to the paper's layoffs later in 2001. Sulzberger did not receive a bonus for that year, which accounts for its "low" level compared to other years.

Why did Pinch get such a huge spike in compensation in 2002? It might have something to do with what the New York Times called the largest circulation gains it experienced in over 10 years, which also coincided with the papers Pulitzer-prize winning coverage of the terrorist attacks on the U.S. on September 11, 2001 (it won seven Pulitzers - its most ever in a single year.)

The paper's performance since then, reflected in its recently announced cost reduction measures, suggests that Sulzberger's compensation in 2002 was grossly excessive as the New York Times has moved away from the balanced coverage of stories of both great national and local interest.

Because of that factor, it's difficult to see a responsible board of directors approving any bonus for the newspaper's management team in the upcoming year. It may all be a moot point however since Sulzberger's family controls the company's board and can set whatever minimal and arbitrary performance requirements it desires in setting its compensation policies for executive bonuses.

Previously on Political Calculations

• Declining Circulation at the New York Times

If only there was a place on the web where you could catch up on all the best blog posts from all of the business, money and career-related blog carnivals. Wait a minute! Isn't that what On the Moneyed Midways, a summary of the best posts from each of the week's blog carnivals dedicated to money and business-related matters, with one post declared to be The Best Post of the Week, Anywhere!^(TM) is all about?

Well, you know the answer to that question, otherwise you would have hit the back button on your browser already! Just click here for the wrap-up of the week that was....

About the Picture

Yes, it's not your imagination - it's Steve Martin in a scene hawking carnival goods in The Jerk (it's also not your imagination that it's been flipped!)  Why have we chosen this particular image to flack our weekly review of money-related blog carnivals?  Our thanks to Rexblog for showing the appropriate context of the scene:

How much debt do Americans have and can they handle it?

To answer these questions, we here at Political Calculations went to the Federal Reserve's 2004 Survey of Consumer Finances (SCF), which provides a breakdown of the median amount of debt (of any kind) held by the surveyed families. The Fed interviewed some 4,552 families, which through the miracle of statistical sampling, represent approximately 112.1 million families in the United States!

The survey report breaks down its data by a number of different methods (age, income, work status, etc.), but the method we found most interesting was by net worth. The following table shows the breakdown of the percentile brackets by which the report presented its data, along with the corresponding median income and net worth for each bracket range:

So that's the basic profile of who's been surveyed. Now, let's see the median debt that each grouping has along with their median debt burden, which is defined as the percentage of debt payments divided by income (also called the debt-to-income ratio.) This latter figure gives us a good indication of how well the families surveyed are able to manage their debt:

We can measure how well families manage debt by seeing where they fall on the debt burden scale. Lending institutions are reluctant to extend credit for individuals whose debt-to-income ratio is greater than 36% - often charging people with a debt ratio above 36% higher rates of interest to discourage them from exceeding this debt burden level. Since the median debt held in each grouping is well below this level, it indicates that overall, Americans are in pretty good shape when it comes to managing their debt.

Is the New York Times being rejected by its readers?

In New York City, at least, the answer appears to be "Yes." The following chart illustrates the declining importance of the newspaper's circulation in the 31-county area that makes up its home market, which has dropped from representing 64% of its total weekday circulation in 1993 to just 49% in 2005. Numerically speaking, the New York Times' circulation in the "Big Apple" has fallen some 27.1% from more than 757,000 in September 1993 to almost 553,000 in September 2005, according to data derived from the NY Times parent company's annual 10-K SEC filings:

The chart also shows that the New York Times has been able to largely avoid the continuing decline in overall circulation being experienced by local newspapers across the United States, declining only 4.8% overall during this 15 year period. By contrast, the Los Angeles Times, the second largest daily newspaper in the U.S., has seen its circulation drop from 1,104,317 in 1993 to 843,432 in 2005 - a decline of 23.6%.

The New York Times has thus far avoided a fate similar to the Los Angeles Times through a concerted campaign that it launched in 1998 to focus upon becoming a national newspaper, rather than being the leading newspaper in the U.S.' largest city.

Interestingly, both the New York Times and the Los Angeles Times share a strong leftist editorial bias that has become much more stringent in the years from 1993 to the present day. One wonders how much of the erosion of each paper's local circulation may be due to their editorial board's growing contempt for opposing viewpoints held by a large percentage of the population in their home markets.

Thomas Lifson and Jack Risko provide a neat analysis of the state of the New York Times' business in All the Risk That's Fit to Disclose from March 2, 2006 in The American Thinker.