UW Study On $15 Minimum Wage Bad News For Liberals...

Minimum wage

If there's anything that will get a healthy dinner conversation going (or get people fighting), it's the idea of the $15 minimum wage.  A better wage for core entry-level workers is hard to argue against as a reasonable person.  I want it to be true as a moderate, but my business focus always makes me wonder - is it actually a good idea?

This is the problem being a moderate.  I'll get 5-7 emails from each side on this post just crushing me for even daring to be in the middle.  Only the polar extremes get the oxygen and attention these days.

Fortunately, there's some research pouring in on the minimum wage that seems to be based on reality, not theory.  

More from the Washington Post

There’s bad news from Seattle for advocates of a $15-an-hour minimum wage law. Turns out the measure’s costs to the city’s low-wage workers have outweighed benefits by 3 to 1, according to a new city-commissioned study by University of Washington researchers. The average low-wage worker has lost $125 a month because of the higher-wage decree, the study found — even before it is fully phased in.

David Autor, a leading labor economist at MIT, told The Post the study seemed “very credible” and suggested that it might have enough “statistical power” to “change minds” in the perennial argument over the minimum wage.

Autor was wrong — not about the study’s credibility, but about its potential for moving people off their “priors.” The Seattle study met a furious counterattack from proponents of a $15 minimum. Defenders of the law came armed with a much rosier assessment of its impact by economists at a pro-labor University of California at Berkeley think tank, produced a few days before the more skeptical one came out.

It seems that Seattle’s mayor, a big advocate of the $15 minimum, had gotten a heads-up on the impending negative study and asked the Berkeley group to weigh in. Seattle Weekly called it “an object lesson in how quickly data can get weaponized in political debates like Seattle’s minimum wage fight.”

Woof.  Go dig in if you dare, but the UW study found that businesses react to the $15 wage by contracting total work hours, which results in low-wage workers in the area losing $125 per month due to the law.  That's interesting.  But if you go look at the Berkley study, you'll see the opposite.

If you really want to geek out, see this article at 538.  It talks about limitations of both studies.

My gut tells me this.  Businesses probably will restrict total hours to low-wage workers when minimum wage hikes hit because the margins for success are so thin.  The left and anyone else can shake their fist and wax poetic about evil owners trying to stay cost-neutral on labor expense.

But the critics don't risk their capital or their livelihood.  Add more labor costs to any business with limited margins and one of two things is going to happen - prices are getting raised or labor cost is getting scrutiny.  Prices are hard to raise from a competitive perspective.

I believe the UW study.  Sucks to be an owner when laws get passed by people who don't have to live with the consequences.  


FOXCONN & APPLE - Will The Suicide Nets Be Shipped to Wisconsin?

Did you hear the news?  Apple, through it's partner FoxConn, is bringing some of it's manufacturing to the US.  Click here to get the whole story.

Is that a good thing?  Of course it is.  The Trump administration is going to shout it from the rooftops - WE BROUGHT MANUFACTURING BACK TO AMERICA, PEOPLE!!!

For those of you that hate Trump, this has to be painful.  For politics in Wisconsin, it's going to be a visible reminder that pays dividends in 2020 - Trump won Wisconsin by a narrow margin of 47.2% to 46.5% for Hillary Clinton, thanks to overwhelming and underestimated support from working-class whites, making him the first Republican candidate to carry the state since Ronald Reagan in 1984.

You think commercials with a new Apple factory as the reminder aren't going to run on the hour in Wisconsin in 2020?  Don't be a rookie - OF COURSE THEY ARE.  Which means Wisconsin is likely done for the GOP in 2020. Suicide nets

Next stop with visible manufacturing jobs - at any incentive cost - Ohio, followed by Pennsylvania.

What type of jobs are going to be in this factory?  Pretty good ones - early reports are that Foxconn will invest $10 billion to build the massive display panel plant in Wisconsin that could employ up to 13,000 workers.  It will start with 3,000 workers making an average of $53,900 a year plus benefits.

But before my GOP and neutral Trump friends (I don't know any people who say they are pro-Trump these days) celebrate too much, put it all in perspective.  The iPhone factories aren't coming to the USA - you know why?

Because that stuff is sold en masse.  Phones are something everyone buys, and if you jack up the labor cost embedded in the phone, Americans will squawk.

Tim Cook and Apple did the smart thing by forcing Foxconn to build the factory they're going to build - the Wisconsin plant is going to make liquid crystal display panels used in computer screens, televisions and the dashboards of cars.  Less price sensitivity than the highly visible smartphone.

Advantage GOP.  I'm guessing at average pay of $53,000, the American Foxconn plant won't have suicide nets to catch workers intending to commit suicide by jumping from a building to allow their families to collect life insurance - because they've done the math and determined that's better for everyone, including themselves.  Click here for that full post on Foxconn I did in the past.  Picture of those nets to the right of this post.

Things that make you go hmmmm.

 

 

 


White People and College Admissions - It's Complicated...

Of course, I kid with that title - you know that, right?

But I have to tell you, there's stuff going on with white people and college admissions that, given the fact I have a rising junior who I expect will go to college, I should be interested in. Lottery_1

It all revolves around who gets the offer - which seems talent-related (as is education as a whole) so I'm covering it here.

There's two flavors going on with white people and college admissions.  Allow me to break down what I see:

1--The first flavor is white people without stellar GPAs, test scores, etc. not being able to get into universities that were once thought to be a given.  In Georgia, the state used lottery money to guarantee a form of college scholarship for the masses (read more on the Hope Scholarship by clicking on the link).  One result of more people having the means to attend college was that some affluent families no longer had the ability to get a middling-performing son or daughter into the University of Georgia, because now everyone could afford it.  Interesting, right?  

2--The second - and more problematic - flavor of white people and college admissions is that many families have kids with great GPAs and test scores, but a) due to universities seeking to become more diverse, some high achieving white kids can't get in, and b) if they do, there's no financial aid available on merit (Georgia notwithstanding) due to what the family earns.  

I don't understand all the issues yet, but a year or so ago I read a great post by my friend Tim Sackett who went on a parent rant and penned a gem of a post.  Here's taste, you should go read it all:

"My middle son is about to make his college choice. He’s got some great schools that have accepted him. He has some great ones that did not. His dream school was Duke. He also really liked Northwestern, Dartmouth, and UCLA. He has a 4.05 GPA on a 4.0 scale (honors classes give you additional GPA) and a 31 on his ACT (97th percentile of all kids taking this test).  He had the grades and test scores to get into all of those schools.

What he didn’t have was something else.

What is the something else?

He didn’t come for a poor family. He didn’t come from a rich family. He wasn’t a minority. He doesn’t have some supernatural skill, like shooting a basketball. He isn’t in a wheelchair. He isn’t from another country.

He’s just this normal Midwestern kid from a middle-class family who is a super involved student-athlete, student government officer, award-winning chamber choir member, teaches swimming lessons to children, etc., etc., etc.

What is the other something else, from a financial perspective?

He got into Boston College, another dream school for him, and one that wanted him to come and continue his swim career at the Division 1 level. BC also costs $68,000 per year.

Colleges and U.S. Federal Government hate kids who come from families that do the right thing.  What’s the “right thing”?  He comes from a family that pays their mortgage, saved some money for his tuition and put money away for retirement.

Because he comes from a family that made good decisions, Boston College, and the Federal Government thought it was a good idea for him to pay $68,000 per year to attend their fine university."

I liked the initial comments coming from both sides in reaction to Tim's post that I subscribed to the comments.  Every week, like clockwork, I get a gift - someone else has posted a comment with a hot take on the situation Tim identified.

With a rising junior starting to look at colleges, I just became interested in this talent issue.  I'm sure I'll be back to write about what I see.  Buckle up - I'll be back next spring with a hot take of my own.


Targeting Companies Doing Layoffs in Recruiting Strategy - Smart or Lame?

If there's ever been something that's generated a "yeah, duh" in the halls of corporate America, it is the following:

"Company Z just announced a big layoff.  We should go after them from a recruiting perspective."

Well, yeah.  No Sh##.  The devil of course, is in the details.  That's what makes this recent tweet by Marc Benioff, CEO of Salesforce, so interesting.  He's going direct and talking to up to 5,000 people recently impacted by a Microsoft layoff, encouraging them to consider a career at Salesforce.  See the tweet below (email subscribers enable pictures or click through for image):

 Microsoft announced July 6 that it would cut 10% of its global sales team — around 5,000 people. Around the same time, Microsoft CIO Jim DuBois resigned, although it's unclear whether his departure was related to the company's reorganization.

But back to the concept of recruiting people from companies doing layoffs.  Thoughts/questions for your reading pleasure and comments:

  1. Do we really want the laid off people?  They were the weak ones, right?  (damn - that's harsh. Bear with me)
  2. At the end of the day, most of us would love to create FUD (fear, uncertainty, doubt) in the minds of everyone at the targeted company.  Benioff has a big enough microphone to do that on a macro basis, but the rest of us can't really do that.  Neither can our CEOs, because most of them are babies when it comes to their use of social, their following, etc.
  3. That means in order to target survivors, your recruiters have to do the equivalent of the Mosul ground initiative (read up on your news!) and plant FUD the old fashioned way - by reaching out to candidates one at a time.
  4. But let's face it, if there was ever a time where you were going to reach to a passive candidate or two at a competitor with a "just checking in, heard about the BS" note, it's when a layoff occurs. Sadly, most TA shops have so much going on this won't happen unless it's demanded.
  5. Follow up notes on the value of laid off candidates - I believe they have value.  The bigger the layoff (5,000 is pretty big) and the better the economy when it happens (means the company missed on strategy, not a reflection of the talent), the more there will be high quality employees in the layoff.

Should we recruit from competitors who just announced a layoff?

Um - yeah.

But it's harder than it looks.  And you're CEO tweeting is likely to give you jack in the process.  So get ready to roll up your sleeves and spend a day targeting and pinging candidates with a personalized message.

PS - Benioff is talking to the survivors at Microsoft as much as he's talking to the impacted.  That's the value of having a rock star CEO who can "imply" a whole bunch of things with the social megaphone they have.

 


NASHVILLE - What Happens When An Employment Market Becomes Too Cool For School....

If you know anything about the Southeast US where I live, there's a couple of big realities from a lifestyle/work perspective:

--Atlanta is the capital

--The Southeast is booming in general

--There's no hotter market than Nashville, or as I like to call it, #Nashvegas

Since I travel a lot for work, I tend to measure how hot a market is for business, employment and cultural gravity by the general availability/price of hotels in the market.  By that measure, Nashville is red hot.  It's hard to find a business class hotel that won't make you cringe for less than the high $100s or right at/above $200.

That's a lot.  Compare to the market to Atlanta, where great rooms can be found from $110 to $140, and it's clear that Nashville is booming.  Because of the boom over the last decade, inventory on the hotel and Nashvegashousing front hasn't caught up to the demand yet.

Why is Nashville so hot?  Many would tell you that the growth is a function of multiple factors - including a centralized metropolitan government that generally allows the metro to work together (see more about the government setup here), a unique cultural pull with origins in country music (expanding beyond that taste, but still the flagship) and an emerging hipster dufus vibe ITP (inside the perimeter).

Add it all up, and employers have been flocking to Nashville for the last 10-15 years.

But with great growth and a lagging housing market comes a few problems - namely what it costs to live "comfortably" in Nashville.  More from the Nashville Business Journal:

"It is obvious that living in Music City is starting to add up, and now a study shows the city has seen the greatest year-over-year cost of living increase in the nation.

Released by financial planning website GoBankingRates, the study compared the change each of city's cost of living index from Numbeo to GoBankingRates's metrics for how much annual income it takes to "live comfortably" in a city. For instance, it takes a salary of $70,150 to live comfortably in Nashville today, according to the study.

Local home prices have skyrocketed recently, with the median single-family sales price in Nashville in June of this year at more than $293,000, according to the Greater Nashville Realtors. For comparison, Nashville’s median sales price hit $200,000 for the first time in June of 2013.

Last year, a Nashville Business Journal analysis of wealth data from researcher Esri found the average net worth of Greater Nashville’s most affluent areas had increased by 48 percent, increasing the Greater Nashville's inequality ratio to 5.7. That means the wealthiest 20 percent of ZIP codes in the region have an average net worth that is 5.7 times larger than the average net worth of the bottom 20 percent. This gap has climbed from an inequality ratio of 4.47 in 2013."

If you click through and dig in, you'll find some gems related to how much income you need to live comfortably in Nashville compared to some other cities of note:

Los Angeles - $76,047

Seattle - $75,283

Nashville - $70,150

San Diego - $69,958

Atlanta - $62,184

Dallas - $57,984

Austin - $54,631

Louisville - $48,897

Want some analysis of those numbers?  It's now cheaper to live comfortably in Atlanta than it is in Nashville.  Also, if you ruled out the west coast as a professional living in Nashvegas, you might want to look again, because your standard of living is similar to those who live in San Diego, Seattle and yes, Los Angeles.

Of course, you won't see Dolly Parton pulling through a Jack's in Seattle like I did in Nashville in 2006.

Final note - Austin is widely thought to be an incredibly hot market with many similarities in cultural pull and hipster vibe to Nashville. If you were buying stock by the measure listed above, you would sell on Nashville and buy Austin.

The market never lies.  Nashville's a great town, but these numbers show it may have heated to the point where it's going to level off from an employment perspective soon.

 

 

 


PEOPLE STAT OF THE DAY: Jobs in The Steel Industry & Automation...

I'll just leave this here...

14 people make 500,000 tons of steel annually at a location in Austria.

Not a typo.

From BusinessWeek on automation in the steel industry:

The Austrian village of Donawitz has been an iron-smelting center since the 1400s, when ore was dug from mines carved out of the snow-capped peaks nearby. Over the centuries, Donawitz developed into the Hapsburg Empire’s steel-production hub, and by the early 1900s it was home to Europe’s largest mill. With the opening of Voestalpine AG’s new rolling mill this year, the industry appears secure. What’s less certain are the jobs.

The plant, a two-hour drive southwest of Vienna, will need just 14 employees to make 500,000 tons of robust steel wire a year—vs. as many as 1,000 in a mill with similar capacity built in the 1960s. Inside the facility, red-hot metal snakes its way along a 700-meter (2,297-foot) production line. Yet the floors are spotless, the only noise is a gentle hum that wouldn’t overwhelm a quiet conversation, and most of the time the place is deserted except for three technicians who sit high above the line, monitoring output on a bank of flatscreens. “We have to forget steel as a core employer,” says Wolfgang Eder, Voestalpine’s chief executive officer for the past 13 years. “In the long run we will lose most of the classic blue-collar workers, people doing the hot and dirty jobs in coking plants or around the blast furnaces. This will all be automated.”

From 1,000 jobs in the 1960s, to 14 FTEs today. Sounds like a post for Labor Day weekend rather than the 4th of July.  Too good to wait until 2 months for, however.

Mamas, don't let your babies grow up to be Cowboys labor that can be automated...

 


Sleepy HR Pros Won't Spend More than 30 Seconds On This Post... (The Mary Meeker Slides)

Only the true players will spend 5 minutes or more with this post and it's referred content...It's deep, but pure gold...

Kleiner Perkins general partner Mary Meeker launched the 22nd edition of the Internet Trends Report at the Code Conference in Rancho Palos Verdes, California, on May 31, 2017. Dating back to 1995, when Mary was still an equity analyst at Morgan Stanley, the annual report compiles and analyzes data from a wide range of sources, providing insights on the state of the Internet Economy. The deck covers a broad array of topics, including global internet user trends, advertising and e-commerce, gaming, online media, digital health, and much, much more. This guide is intended to highlight some of the key topics of discussion in this year’s edition – and to help media navigate the report.

It's deep.  I can guarantee if you spend 10 minutes with it, you'll find 4-5 things to share with you team and you'll look smart as hell.  A trend-spotter, if you will...

Highlights of the 300 slide deck from ReCode (full deck below from Slideshare, click through if you don't see the slides):

  • Global smartphone growth is slowing: Smartphone shipments grew 3 percent year over year last year, versus 10 percent the year before. This is in addition to continued slowing internet growth, which Meeker discussed last year. (editors note - what's next?  Apple needs a new product)
  • Voice is beginning to replace typing in online queries. Twenty percent of mobile queries were made via voice in 2016, while accuracy is now about 95 percent. (editor's note - holy ****)
  • In 10 years, Netflix went from 0 to more than 30 percent of home entertainment revenue in the U.S. This is happening while TV viewership continues to decline. (editor's note - holy ****, even with all those shared passwords?)
  • Entrepreneurs are often fans of gaming, Meeker said, quoting Elon Musk, Reid Hoffman and Mark Zuckerberg. Global interactive gaming is becoming mainstream, with 2.6 billion gamers in 2017 versus 100 million in 1995. Global gaming revenue is estimated to be around $100 billion in 2016, and China is now the top market for interactive gaming.
  • China remains a fascinating market, with huge growth in mobile services and payments and services like on-demand bike sharing. (More here: The highlights of Meeker's China slides.)
  • While internet growth is slowing globally, that’s not the case in India, the fastest growing large economy. The number of internet users in India grew more than 28 percent in 2016. That’s only 27 percent online penetration, which means there’s lots of room for internet user-ship to grow. Mobile internet usage is growing as the cost of bandwidth declines. (More here: The highlights of Meeker's India slides.)
  • In the U.S. in 2016, 60 percent of the most highly valued tech companies were founded by first- or second-generation Americans and are responsible for 1.5 million employees. Those companies include tech titans Apple, Alphabet, Amazon and Facebook.
  • Healthcare: Wearables are gaining adoption with about 25 percent of Americans owning one, up 12 percent from 2016. Leading tech brands are well-positioned in the digital health market, with 60 percent of consumers willing to share their health data with the likes of Google in 2016.

Daaaaamn.  There's a lot here.  This one's for the true players. Enjoy...


If I Were Starting A Union, Here's What I'd Do...

I'm spent a lot of time over the last week thinking about the challenges of the budgeted merit increases - you know the drill - 4% across the board, and you need to get "pay for performance" out of that.  Which got me thinking about this ...

---------------------------------------

If I Were Starting A Union, Here's What I'd Do...I'd rip a page from the player's unions in the major sports leagues and focus my bargaining on the establishment of a salary cap.

Once the cap was established as a percentage of company revenue, the deal would be pretty simple from an economic perspective - members of the union would get more cash as revenue grew, and they'd be at risk if revenue didn't grow or decreased (I'd have to figure out how new headcount impacts that - there would have to be some way to protect a certain % of growth for the incumbents).

Of course, membership drives for my union would be challenged - mainly because the majority of workers in America have no interest in that kind of risk, or at least see little value in the upside. They'd rather take their 3% annually.

Which means I'd have to attempt to unionize high performers and Linchpins only.  Of course, that's problematic since this group really doesn't need representation and can increase their compensation on their own, both within the same company and via the free market.

Crap.  Back to the drawing board...


ECONOMIC MOBLITY CHART: The Older I Get, The Less I Judge People...

As tax time approaches, I find myself searching for a little balance.  Why do I have to pay so much in taxes?  I'm sure a lot of Americans feel like that up and down the tax bracket.  

The alternative, of course, is to not earn enough to pay high taxes. We all know that the global economy, the advent of technology eliminating jobs and more has conspired to make the gap separating the haves vs have nots larger.

A secondary question to that reality is economic mobility.  Can people born into poverty actually bootstrap their way to the American Dream?  The answer is yes, but it doesn't happen as much as we'd like it to.  Check out this great chart (enable images or click through if reading via email) based on a study from the Federal Reserve Bank of St. Louis:

Economic mobility

 Here's a run down from Business Insider:

"The notion of an American Dream can be boiled down to a simple concept: a meritocracy in which place of origin and social status do not preclude success for hard workers.

Talk of that dream fading has been present since the Great Recession sucked 9 million jobs out of the economy and knocked down already-depressed wages for millions.

Now, a study published by the Federal Reserve Bank of St. Louis has found a way to measure that decay. It does so by coming up with a simple, mathematical definition of the American Dream as represented by social mobility defined as "the probability that a child born to parents in the bottom fifth of the income distribution makes the leap all the way to the top fifth of the income distribution."

In the US, children born to parents in the bottom fifth of the income distribution have a 7.5% chance of reaching the top fifth, according to Stanford's Raj Chetty, the paper's author.

Hmm. It's one thing to say that 7.5% chance of starting from the bottom and arriving at the top is low.  But when you think about it, that's almost 10% - probably the hardest working, smartest and most gifted 7.5% for sure.  That kind of follows the bell curve and seems reasonable.

But - and there is a but - the older I get, the less I judge people for being different than me related to language, behavior, values and more.  That's especially true for children and young adults.  The stats related to presence of 2-parent families, education and more are scary when you look at the bottom fifth of this same distribution.  If you didn't have the same level of access to resources, education and yes - parents being unyielding in what they value, provide and expect - you can't be expected to have the tools to bootstrap yourself to the top fifth.

That means that kids with the raw gifts to make the leap get left behind through no fault of their own.  That sucks.

A more important measurement might be the probability the same citizens in the bottom firth can bootstrap themselves to the median of income distribution.  That's another version of the American Dream that might look pretty good to someone starting in the bottom fifth of income slotting.

I can't solve any of the red in the chart above.  But I've long since stopped judging most of the people who start in the lower fifth.  The next step for people like you and me is to try and impact a couple of kids who start there and make sure they have what they need to arrive at the top fifth - or even the middle fifth - based on their own merits rather than where they started.


Amazon's Getting Ready to Crush Another Industry Near You (aka Call Center Services Killer)

When you think about how the business world is changing and how those changes affect the workforce and talent issues, a good place to look first is Amazon.

First, the great marketplace in the sky made shopping online easy.  Then, it made shopping online preferable for many to shopping locally in a store through it's bundle of value called Amazon Prime. Amazon_one1

In the background, it's a been a hub of innovation through it's rollout of corporate services (look up Amazon Web Services to see how it's crushing cloud competitors) and consumer products alike (Kindle, Alexa).  It's so into investing for the future and innovation that it basically keeps it's profitability at zero by reinvesting all earnings into forward-looking ventures (click that link to see the chart).

Sometimes we forget that the advances cause big shifts in the workforce.  The giant sucking sound you hear is the slow implosion of the retail sector, with a lot of jobs going with it.

Next up after retail?  How about Amazon rolling up the call center industry?  More from GeekWire:

"Amazon Web Services is developing a suite of cloud-based tools to sell to enterprises that would help them manage their call centers, based on technology the online commerce giant developed for its own retail call centers, according to a report from The Information. 

According to the report, citing a person briefed on the plans, the programs will incorporate Amazon’s digital assistant Alexa to answer some questions on the phone as well as via text message. The report claims the service will also employ Lex, a chatbot building service that uses the same deep-learning technology as Alexa, and text-to-speech program Polly. All these aspects together paint the picture of a suite of tools that allows customers to build their own customer service programs using bots and voice control with the ability to learn and adapt to specific industries.

The Information reports that the new products could be announced as soon as mid-March and could jolt the call center software industry. It’s a market that features many players such as Seattle-based Spoken, as well as other companies like Cisco Systems, Avaya and Genesys.

Amazon Web Services has been in the news a lot lately for new products that it has announced and others it is considering. Amazon’s cloud service arm is reportedly considering bundling its email, file storage, and video conferencing apps into a productivity suite that would compete with Google G Suite and Microsoft Office 365."

If there's any good news in this for current call center outsourcers, it's that Amazon seems intent on owning the technology part of the call center business model rather than owning actual call centers.  Of course, at one time it didn't have any interest in the shipping business either, and it's now getting ready to ramp up it's own fleet of planes and hub.  

Thanks for the memories, Fed Ex and UPS.  I'm sure Amazon will name a conference room after you to commemorate what you meant to each other at one time.

The good news for HR?  Amazon doesn't seem to have any interest in rolling up the HR industry.

#yet