The American Jobs Act
Well, we’ve seen the President’s new jobs plan—The American Jobs Act—and it looks pretty much like the programs of the 1930′s (which didn’t work very well then until the second world war started). Although I think it is a good idea to fix some of our roads and highways before they are beyond repair, the jobs incentives fell woefully short of accomplishing much of anything.
All the small business owners I know hire employees to grow their business in support of an increase in sales. Likewise, when sales fall off, we all reduce our workforce because there is not enough for all the workers to do. Most small businesses do not have huge cash reserves to carry non-producing workers.
To take it one step further—in a growing economy most small business owners will hire more employees in ANTICIPATION of increased business. However, no anticipation—no hiring.
The federal government can pass out all the incentives they want—in the form of hiring bonuses, payroll tax reductions, and on and on—but the fact remains; if a small business owner does not need a new employee to fill a current (or anticipated) job opening, they will NOT hire a new employee. Small business owners are too savvy to fall for the government’s financial smoke and mirrors incentives.
Why aren’t the people in the White House and Congress smart enough to know this?
Maybe this is one reason why:
- Only 8.4 percent of all lawmakers majored in a field related to economics.
- Only 13.7 percent of lawmakers studied business or accounting.
- Only 11.5 percent studied a field related to science or technology.
- Over 55 percent focused on government or law studies (perpetuation of professional politicians?).
(Data from The Employment Policies Institute [EPI]).
I have yet to find any information on how many people in the White House, or in Congress, have actual experience as an entrepreneur in a small business—but it appears the number would likely be quite small.
And we wonder why Washington cares so little about small business!
Where does this situation leave American Businesses? I think a recent article in The Huffington Post spelled it out pretty well—at least in the manufacturing sector—with the title: “American Manufacturing Slowly Rotting Away: How Industries Die.” What more can I say?
What about your business? Your industry?
I am also wondering if this situation is endemic to the U.S., or do other developed nations, such as the European Union also suffer from government suppression of small (or not-so-small) businesses?
Leave a comment and let me know how your business/industry has been (and is being) affected over the last few years.
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Solar Panels–Forget “Made in U.S.A.”
Three American solar panels manufacturing companies bit the dust in the last month. A fourth, BP Solar, closed down its U.S. plant last spring, moving its operations to China, India and other countries. This leaves China as the dominant manufacturer of solar panels in the world. It should also be noted that China exports 95% of the solar panels they manufacture–many to the U.S.
Moreover, of the two remaining major American manufacturers, the dominant one, First Solar, builds their panels in their factory in Malaysia.
And don’t think it’s because labor costs in China, India, and Malaysia are lower—solar panel manufacturing is NOT labor-intensive…production labor is a very small part of the manufacturing cost. That is why solar panel prices are dropping like a rock—technical innovations (by China) in the manufacturing process make the price of solar panels more affordable for home installation as well as general power production.
But, take a look at the business environment under which solar panel manufacturers in China operate:
- They receive loans from state banks at very low interest rates.
- They receive free or subsidized land to build their factories on.
- They receive extensive tax breaks—at all levels of government.
- China provides a variety of additional government assistance programs.
- China also has a strong base of qualified technical employees.
Contrast that list with what American companies are up against:
- There is no such thing as loans with very low interest rates—even when guaranteed by the U.S. government. (See Solyndra, Inc.)
- Land in the U.S. is extremely high-priced, and especially so for Industrial-zoned land.
- With the exception of a few cities and towns that may defer some property taxes, the additional taxes and local fees for studies, analyses, permits, and government oversight are near criminal levels. (More on this subject coming in future articles.)
- There is little, if any, form of federal, state or local government assistance for developing a for-profit business—this is especially true for smaller businesses. In fact, most local governments try to milk every dollar they can out of small business.
- Finding qualified technical employees in the U.S. is becoming harder and harder, even in these times of high unemployment. (For more information, check here.)
President Obama is about to address a joint session of Congress (and the public) about jobs and the economy, and if he doesn’t address the issues of government suppression of small business, he might as well save his breath to cool his porridge.
I have brick and mortar small business clients that regularly run into the problems outlined above—but, what has been your experience in this area? Please leave a comment, or contact me directly and let me know. I live in the Western U.S., and maybe things are different in the East. I also understand there are many countries that do not have these same problems, so I would like to hear from you also.
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A New Demand for an Old Industry
This subject would not have caught my attention had I not just read about how rich the executives of big companies were becoming…while everyone else was moving backwards. A recent article in the Huffington Post pointed out that the executives of S&P 500 publicly traded companies had pay increases of more than 28 percent in 2010, over 2009, while rank-and-file workers are at the same place they were in 1980. This doesn’t count all the other new millionaires made within partnerships, and non-S&P 500 big businesses.
So, I guess it should be no surprise that a nearly extinct (at least according to media attention) industry has been resurrected and made fashionable again. I’m talking here about “professional domestic service.” All of a sudden the domestic service industry in the U.S. is taking off to try and meet the demands of the new wealthy.
Of course, the “domestic service industry” has a long and prestigious history dating back centuries. The industry is steeped in pride, because not just anyone can be a professional butler, chauffeur, housekeeper, governess, personal assistant, houseman, laundress, or chef (emphasis on “professional”).
That is why Christopher Ely, former butler and estate manager for the powerful figure of Brooke Astor, teamed up with Manhattan’s “French Culinary Institute (FCI)” to form the “Estate Management Studies” program. This new program is now a part of the FCI overall curriculum, and is directed by Christopher Ely.
The training is not cheap. They currently have five different special curriculums set up and they cost about $1,750 for each class. More detailed culinary training is more costly. However, Ely doesn’t think his school will have any problem attracting students, since the demand for “trained” people is rising so fast, because, in the words of professional butler, Charles MacPherson: “The rich just want to live like rich people.”
At the same time, the rewards can be substantial, Professionally trained domestic staff can make a very good wage. Ely says a “good” butler should make about $80,000 per year in base salary.
So, for everyone out there who is unemployed, maybe this is something to consider. Professional domestic service is an industry that prides itself in a long history of integrity, professional service and financial success.
For specific information on “Estate Management Studies” at “The French Culinary Institute,” click here. They have classes in both New York and California.
No Worker Left Behind?
It appears that the concept of “no worker left behind” is a mythical term, at least according to a recent article in the New York Times. This article discussed what is happening to the American labor force, and here are some interesting statistics from that article:
- In 1954, around 96 percent of American men between the ages of 25 and 54 were in the workforce.
- Today, only 80 percent of American men in the same age group are in the workforce.
- One-fifth of all American men in their prime working years are not even in the workforce today.
- The U.S. has a lower percent of prime age men in their workforce than any other G-7 nation.
Please note that this does not include those who are in the workforce, but are currently unemployed. The numbers above are only for those men who cannot work, or do not want to work…they are out of the workforce entirely.
So, why are so many American men dropping out of the workforce? What has happened to the concept of “no worker left behind” on the national level? Here are some additional statistics that may shed some light on the reasons:
- Ten years ago there were 5 million Americans receiving Disability payments, primarily from federal funds.
- Today, there are 8.5 million Americans on disability—and the number is growing like wildfire. Today’s annual cost to U.S. taxpayers is $115 Billion, or around $1,500 per household.
- There are now more non-working men in the U.S. than at any time since the “Great Depression.”
All of these statistics are interesting in view of a post I wrote last week—Places That Are Hiring—about how large tech firms cannot find qualified people to work for them, and so they are buying up their smaller brethren just to acquire the talent.
In addition, it seems that many companies are not outsourcing work for monetary gain, they outsource because they can’t get the work done in the U.S. They move their business to where the qualified labor force is located. What a sad commentary on the quality and capabilities of America’s workforce.
America is losing its vigor. People in the U.S. today no longer exhibit the energy that made us great. Worse yet, no amount of stimulus money from the government is going to help—in fact our government has become so obsessed with programs that provide “comfort,” they have ignored programs to reinvigorate our country.
Capital is unavailable to small businesses, regulations are crushing, incentives are non-existent, there are no effective training programs that help people develop the skills they need to enter the workforce, and on, and on…and no one in Washington seems to care. All we hear today are rants on Social Security, Medicare, and war. What happened to the concepts of “no worker left behind” and “full employment?”
Isn’t it about time we looked at the big picture and tried to figure out how best to reinvigorate America, so we can provide good paying jobs for well-trained people in our workforce, and help that workforce grow back to be the best in the world—again. With more successful businesses, there would be more taxes paid, and we could stop the “slash and burn” approach to trying to balance budgets.
Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has. —Margaret Mead
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Places That Are Hiring
I keep reading where there are many places that are hiring, but they are faced with a shortage of candidates. Then I saw on the morning news today where 53 percent of college graduates over the past 4 years had not found full employment. Hmmm.
To really confuse the issue, I then read an article explaining that large tech companies are buying up newly started small tech companies–just to acquire their employees. Obviously, large tech companies are some of the places that are hiring.
However, it seems that competent talent is so scarce that companies like Google, Zynga, Facebook, and the like, are buying startup companies and killing their products while enfolding the founders and engineers into the acquiring company.
An executive from Facebook recently said; “Engineers are usually worth from a half to one million dollars each when buying a startup company.”
It appears that Facebook has acquired some 20 startup companies just to get the design and development talent of the startups. It is reported that Facebook bought FriendFeed for about $47 million, or about $4 million per employee. Although FriendFeed is still alive, it languishes in the shadows, with little or no attention being given to it. Facebook only wanted the talent that came with the business.
So, here is what I make of this apparent contradiction between unemployed college graduates and places that are hiring:
- There is really only one game in town, and that is high tech.
- If an engineer or developer wants to get noticed by a tech firm, they should start up a business and get some media coverage.
- Colleges are turning out graduates that are not in demand in the real world.
- High paying jobs for young college grads in America are all in industries that do not make anything, other than stock market value.
- I see nothing on the horizon that will improve the lot of most of the non-tech grads looking for a career-starting job.
Obviously, the disparity between a surplus of college graduates and the places that are hiring is incredible. Why might that be?
You don’t suppose that college students today are simply following the programs that require only a minimum of effort to graduate–while giving little thought to what they will do in the real world?
What do you think?
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The New American Workforce
It appears that in the wake of ongoing—and lengthy—unemployment, the U.S. is creating a new class of worker—the “Permanent Temporary Worker.” Of course there has always been this classification of worker, but it now appears to be going mainstream and currently accounts for 26% of all U.S. workers.
With the U.S. economy in disarray, and government legislation in process that will heavily impact employers, companies simply are not hiring full-time employees. There is such a wealth of talent available on an “as-needed” basis there is no real reason why companies should hire full-time employees. A company can enjoy the flexibility of using temporary employees—without all the hassle and expense of benefits.
But, what about the employees? How is this current trend going to affect them? Well, here is a part of the reality:
- No paid health insurance
- No sick days
- No paid vacation
- No company-funded retirement plan
- Usually no premium for overtime pay
- Without any job security, benefits, or social ties to the rest of the workforce, stress levels are increased and depression sets in, which results in permanent temps being twice as likely to report symptoms related to mental illness than their counterparts who are permanent employees.
With 26% of today’s U.S workforce falling into the permanent temp category, what does the future hold—for either the employer, or employee? When the new healthcare reform becomes law, and every person is required to buy health insurance, that will reduce the permanent temps disposable income. When small business owners are required to provide health insurance for their employees, they will likely reduce their workforce in favor of permanent temps, thus increasing the role of permanent temps even further.
A recent Princeton University study predicted that 22% to 29% of all U.S. jobs would be offshored within two decades. It may not take that long—IBM had 71% of its workforce outside the U.S. at the end of 2008, and in 2009 reduced it’s U.S. workforce by 10,000 (8%). It seems so many companies are offshoring today that any “permanent” jobs left in the U.S. may only be in the service sectors—auto, food, health, and yards.
If the U.S. should ever get to this point, the permanent temporary worker may really have the best deal of all, and that would be a very sad situation.
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