Archive for August, 2009

Career: Tough Times, Tough Measures

Tuesday, August 11th, 2009

Let’s start with the facts. The US is in the worst recession since World War II with the unemployment rate rising for the 10th month in a row and to the highest level in 26 years. Current unemployment rate is 9.6 percent, up from 9.5 percent in June. The good news is job losses slowed in July to a pace of 320,000 – the slowest since August 2008. The government reported last week that the economy shrank at a pace of just 1 percent from April-to-June, the strongest signal yet that the recession may be ending.

According to JEANNINE AVERSA, AP Economics Writer, “Many analysts predict the economy could start growing again in the current quarter. And, the Fed recently observed that the economy is finally showing signs of stabilizing in some regions of the country – especially in parts of the Northeast and Midwest – bolstering hopes of a broader-based recovery this year.

The deepest job cuts of the recession came in January, when 741,000 jobs disappeared, the most in any month since 1949. The economy lost an average of 691,000 jobs each month during the first quarter. That slowed to an average of 436,000 a month in the second quarter. Analysts predict that companies will continue to ax jobs through this year, but they hope that the pace of those reductions will ebb.

Even if that happens, the unemployment rate is likely to top 10 percent this year. Some Federal Reserve officials think it could rise as high as 10.6 percent in 2010. The post-World War II high was 10.8 percent at the end of 1982, when the country suffered through a severe recession.

When the economy is healthy, employers add a net total of around 125,000 jobs a month just to keep the unemployment rate stable. To get the jobless rate down to a more normal 5 percent range, it would take stronger job growth – of at least 200,000 jobs a month. Economists say it might take until 2013 to drive down the unemployment rate to 5 percent.”

“Although the economy seems to be at a turning point, we’re not at a turning point for the labor market. That is some way off,” said Brian Bethune, economist at IHS Global Insight.

The scarcity of job openings means nearly 15 million unemployed Americans are still looking for jobs, and their ranks are likely to keep growing into 2010. Layoffs, like bullets, are nondiscriminatory. Prepare yourself for the plausibility of losing your income source. Some of you have already been laid off and many of you are living each day fearing you are next. You may be the end-all employee and still be headed for the chopping block as companies try to survive the remainder of this year. It’s not personal, so get over feeling angry and take care of yourself and your family starting now!

Here are a few tips for you:

  1. Build a savings account that is equal to 8 months of your necessary expenses. Why 8 months you ask? This is the average amount of time it is taking in this economy to find a job! I cannot emphasis how important this is. Don’t say its too late or there is no way to cut back. There is and you have to find it!
  2. If you do not have 8 months of savings, you need to be making changes in your spending. Lower your cable service (a few months without HBO won’t kill you), hold your gym membership (jogging around your neighborhood is free), rideshare (saves money and relieves a little stress), trade in expensive car payments for something more affordable (not Cash for Clunkers, taking on more debt is just stupid), and make your coffee instead of buying a daily latte (that’s a $150 savings per month, sorry Starbucks).
  3. Look at your debt differently. I am and always have been against debt. Simply put, it is living outside your means. And normally I tell folks to pay it down as quickly and aggressively as possible. NOT NOW! Pay minimum amounts on student loans, mortgages, and even credit cards. All extra money should go into the 8 months savings including any severance pay if you do get laid off.

Tough times call for tough measures and there is no room for excuses! You can begin today building up that 8 months of savings ensuring your expenses are covered. The government may be trying to stimulate the economy by lowering interest rates and offering incentives for buying cars but you as an individual and for the sake of your family need to be smarter than the average bear. We are at a turning point, if not now then in the months to come. So hang on, be smart and I’ll see you on the other side!

Career: A Letter from the Boss

Wednesday, August 5th, 2009

I’ve no doubt this will really piss some people off. The economy is horrible and many are scared of losing their job. I’ve sat in airports and in restaurants overhearing people talk of being laid off. I wonder if they have any idea! Of course, as ‘the boss’ who had to make the awful decision of laying off beloved, hard working staff members, I am sensitive to the unspoken story of how I came to be in this place. This was sent to me by my mom right after I laid off 5 people from my company. No idea who wrote it but it truly hit home for me.

To All My Valued Employees,

There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn’t pose a threat to your job. What does threaten your job however, is the changing political landscape in this country.

However, let me tell you some little tidbits of fact which might help you decide what is in your best interests.

First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a Back Story. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You’ve seen my big home at last years Christmas party. I’m sure; all these flashy icons of luxury conjure up some idealized thoughts about my life.

However, what you don’t see is the BACK STORY :

I started this company 28 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living apartment was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you.

My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn’t have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business — hard work, discipline, and sacrifice.

Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting the Nordstrom’s for the latest hot fashion item, I was trolling through the discount store extracting any clothing item that didn’t look like it was birthed in the 70’s. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, someday, I too, will be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don’t. There is no “off” button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat, and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden — the nice house, the Mercedes, the vacations… you never realize the Back Story and the sacrifices I’ve made.

Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bailout all the people who didn’t. The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for.

Yes, business ownership has is benefits but the price I’ve paid is steep and not without wounds. Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don’t pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my “stimulus” check was? Zero. Nada. Zilch.

The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check? Obviously, government feels the latter is the economic stimulus of this country.

The fact is, if I deducted (Read: Stole) 50% of your paycheck you’d quit and you wouldn’t work here. I mean, why should you? That’s nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy.

Here is what many of you don’t understand … to stimulate the economy you need to stimulate w hat runs the economy. Had suddenly government mandated to me that I didn’t need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.

When you have a comatose man on the verge of death, you don’t defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the poor of America are the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep.

So where am I going with all this? It’s quite simple.

If any new taxes are levied on me, or my company, my reaction will be swift and simple. I’ll fire you and your coworkers. You can then plead with the government to pay for your mortgage, your SUV, and your child’s future. Frankly, it isn’t my problem any more.

Then, I will close this company down, move to another country, and retire. You see, I’m done. I’m done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

So, if you lose your job, it won’t be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about….

Signed, THE BOSS

Stop the World, I Wanna Get Off!

Tuesday, August 4th, 2009

What an absolutely crappy year when you look at the economic changes we have witnessed! I say this because we ALL have seen it and felt it. I’ve read article after article and heard commentary after commentary on the breadth of those affected! In past recessions (namely the down turn we experienced in 2001), the collapses seemed regional not global and while one industry was failing another was flourishing. Not this time around! With such a global crisis and no solution at hand, the blame game continues! Here is a short list compiled by Joe Miller and Brooks Jackson at factcheck.org:

  • The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
  • Homebuyers, who took advantage of easy credit to bid up the prices of homes excessively.
  • Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
  • Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
  • The Clinton administration, which pushed for less stringent credit and down payment requirements for working- and middle-class families.
  • Mortgage brokers, who offered less-credit-worthy homebuyers sub prime, adjustable rate loans with low initial payments, but exploding interest rates.
  • Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
  • Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
  • The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
  • Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

I am fascinated by this list and feel compelled to add myself to it as a consumer. A consumer who lives in the US and has become spoiled by the idea I can have anything I want, anytime I want it. My children are learning the same thing and my parents are the ones who taught me. So here we stand, a nation of gluttons three generations deep. The financial collapse, the environmental catastrophe, even the healthcare crisis all brought on by an attitude of excess! Too much credit, too much greed, too much greenhouse gases, too much trash, too much fatty food, too much processed sugar, too many pharmaceuticals.

I believe we have the power to change our world, both near and far! Living within our means is a great start, taking care of our environment in small ways, giving our bodies a chance to work as designed. Mostly, we need to stop blaming and take responsibility. We ALL got ourselves into this mess; it will take us all to get out.  May sound overly simple but most often the best solutions are just that – SIMPLE!