Monthly Archives: September 2013

Leaving the Workforce

There was some big news today on August unemployment.  Approximately 169,000 jobs were created during the month and the unemployment rate dropped.  On the surface, the jobs number was lower than forecasted, but the decline could be seen as a good indicator.  Taken alone, the lower rate could also have been seen as a good sign.

However, when you look below the top line numbers you see some very bad trends.  The labor force participation rate — the percentage of people over 16 who either have a job or are actively searching for one — fell to 63.2% in August. The last time it was that low was in August of 1978.  What this means is only 63% of people of working age… were actually working (or looking).  During the month of August, over 300,000 people decided to leave the ‘official’ workforce.

The percentage of people in the work force, in the latter half of the 20th century, had been rising.  The rate rose steadily for decades as more women were entering the workforce, eventually peaking at 67.3% in 2000.  But the number has been on the decline ever since — a trend that was accelerated by the Great Recession.  There are now 90.5 million Americas who don’t work and are not counted as part of the ‘official’ labor force.  This excludes kids under the age of 16 and non civilians such as those in the military or in prison, but includes just about everyone else.

Many of them are either retired or are high school or college students, according to the Labor Department. But the other 40 million or so aren’t trying to find work for a variety of reasons — they might be rich, they might stay home with kids or relatives, they might be disabled, or they might simply have given up looking for a job.

What this means that a smaller chunk of the population is paying for promised entitlements such as Social Security and Medicare.  It also means fewer people are paying taxes and contributing to economic growth.

While I don’t have numbers to substantiate it, I believe a large number of these people have only left the ‘official’ workforce, which means they are not paying social security or medicare taxes, they are not paying state or Federal income taxes and they are are still working!  They have just decided to work as part of the underground economy.  In doing so, they put more money in their own pockets today and ignore the impact on the future and the economy as a whole.

We as Americans like to stay busy and work.  I truly believe that a majority of those 40 million people are ’employed’ somewhere, they are getting paid ‘cash’ and avoiding the ‘taxes’ and fees that everyone that is part of the official economy are paying.  People are working as babysitters, doing yard work, collecting deposits on thrown aways bottles and cans, they are fixing cars out of their garage, doing manual labor after being pickup outside Lowes or Home Depot.  They are cleaning pools, painting houses, selling things on Ebay, they are playing poker online and so many other things to make money.  They are supporting themselves and putting more money in their pockets.  People like to stay busy and they need money to support themselves and their family.  Most of those 40 million people are working.

I am not sure the solution to this problem, other than millions of high paying jobs.  In order to make more of these jobs part of the ‘official’ workforce, we would need to significantly cut taxes and create incentives for people to want to be a part of the official economy.  This is very difficult.  We could also significantly increase enforcement… so that there are very very painful penalties if you are caught working in the underground economy.  More enforcement is expensive and will make people angry.

There will always be people working in the underground economy, however, the government must do everything possible to create good jobs and incentives so that people want to work in the official economy, so that they want to pay taxes and contribute to Social Security.  We need more working people participating in the official economy.

Pace of Technology Change

It is really amazing the fast pace of technology change, especially in the area of wireless communications and interactions.  I started my business career working for a company called PrimeCo Personal Communications, which eventually became a part of Verizon.  At that time, texting was new and was called “SMS” or short messaging service.  Coverage was spotty, service was expensive and you used your wireless device primarily for ‘talking’ (and you had very short conversations due to the expense).

There were limited choices on phones, Nokia and Motorola were the top brands and if you changed phone companies, you lost your number.  You only accessed your email from a computer, either from home or work and a majority of people still had a home phone.

You actually talked to people when you were out in public, rather than text someone, read the internet or send an email.  You worked when you were at work… you didn’t answer your emails at all hours of the night and day from your phone.  If you needed directions for a cross county trip you contacted triple A for a “trip-tic”,  you had to balance your checkbook, rather than your bank sending you a text for every transaction on your account, along with your balance.  There are thousands of examples of how “Apps” or programs that run on our phones have changed the way we live and work, communicate and conduct business.

Earlier today, Samsung announced the availability of a “watch” that communicates with your phone.  You can take pictures, videos, see who is calling, send text, use your ‘apps’ and so much more.  The watch also looks great and tells you the time!  Apple, Microsoft, Google, Sony, Pebble and others are either close or ready to launch watches of their own.  I am fairly confident that this is just the beginning of ‘wearable’ technology, especially when you consider that Google is testing glasses that are connected to the internet.

In a few years, it will be interesting to look back to today and see where we are as a society and with wireless technology.  And of course some of us will be able to look even further back to the day we used pay phones, when you heard people say “its long distance” and people answered your phone and took messages on paper.  We have come a long way….

Paying for College

There have been a number of articles written lately about the high cost of a college education, student loans and how for many Americans a college education is out of their reach.  These articles allude to the fact that it is becoming more and more difficult for people to obtain a college education and that as a result the United States is becoming less competitive.

I always find it difficult hearing people complain about how they can’t afford college or how they have to delay their education, to “save”.  While I understand the cost has risen since I was in college, I think there are many more college options available today; online programs, community colleges, states schools and private universities.  If someone wants an education, it is in their reach.  It is about priorities and sacrifice.  Sometimes the things are are worth the most are the hardest to achieve.

In its most recent survey of college pricing, the College Board reports that a “moderate” college budget for an in-state public college for the 2012–2013 academic year averaged $22,261.  A moderate budget at a private college averaged $43,289.  While the cumulative total ranges from $90,000 to 175,000 for those finishing in 4 years.  There are many options for students to pay for this savings, student loans, grants, scholarships, and working.

In my situation, I went to a 4 year private school and paid for it with little to no help from my family.  I used grants, student loans, and work to pay for my education.  I was determined to get an education and better myself.  I worked full time and went to school full time.  I worked two jobs during the summer and I made sacrifices to obtain a higher education with the goal of having a ‘better’ life than I would have without an education.  I didn’t feel I had a choice and did what was necessary.

When I graduated, in 4 years, I had an enormous amount of student loan debt.  My sacrifice continued even after college to pay off my student loans.  I made weekly payments to minimize interest, I used any extra money to pay off my student loans.  I did what I needed to in order to pay back my loans.  I didn’t default on my loans like I hear many people doing today, because it became easier than continuing to pay back.  While paying back my loans, one of my motivations was this little voice in my head that said to me… “you paying these loans back will enable others to get an education.”   I worked hard, and paid it all off well before the end of the repayment period.

According to the US Census Bureau, persons with doctorates in the United States had an average income of roughly $81,400.  The average income for an advanced degree was $72,824, with men averaging $90,761 and women averaging $50,756 annually.  Year-round full-time workers with a professional degree had an average income of $109,600 while those with a Master’s degree had an average income of $62,300.  Overall, “…average earnings ranged from $18,900 for high school dropouts to $25,900 for high school graduates, $45,400 for college graduates and $99,300 for workers with professional degrees.

I point out the earnings differential between those with a degree and those without to point out the economic value and pay back period.  A person with a 4 year degree will earn over $20k more per year compared to someone without a college degree.  Assuming that a 4-year degree cost, $90k, that is a 4.5 year pay back.  Considering that most people today have a 35-40 year career, from an economic stand point, a 4-year degree is well worth the investment.  If someone is able to do an online program or part of a 4-year degree at a lower cost community college, the economics become even more positive.

Anyone desiring an education, can obtain one.  There are many types of programs and options for paying.  It may require creativity, sacrifice and hard work but, in the end, it will be well worth the effort.

Diana Nyad: 5 Lessons from Cuba to Florida Swim

This past weekend Diana Nyad, at age 64, became the first person to swim from Cuba to Florida without a shark cage or swim fins, swimming from Havana to Key West.  This is really an amazing accomplishment and testament of what one can accomplish if they truly desire it.

It took Nyad 5 attempts to accomplish her goal and she did it at a stage of life when most people would never dream of taking on such an endeavor.  She swam continuously for over 50 hours and traveled a distance of over 110 miles.  She battled jellyfish, sharks, the sun and currents to accomplish this amazing feat.

This amazing accomplishment has a number of lessons for us all.

1.  Don’t give up your dream.  Even if  you fail to accomplished what you set out to achieve the first time, try again.  It may even takes several times, but don’t give up.

2.  Learn from failures.  Even if you don’t achieve your objective, you can learn and use that knowledge to your advantage on your next try.

3.  Age is a number.  You can accomplish your goals at any age, you are never too old or too young to accomplish something if you work hard and want it bad enough

4.  It takes a team.  It is ok to ask for help in achieving your goals and objectives.  People love helping other people achieve their dreams and feel good about lending a hand.

5.  Be yourself.  There is no need to pretend to be someone you are not.  Live your life, work hard and treat people as you would like to be treated and you can not only achieve your goals but also live a fulfilled life.

Diana Nyad is truly a remarkable woman.  She is a role model for all of us hoping to achieve a dream.