Solution to Cure Worker Skills Gaps, Underemployment



Updated April 23, 2018 –


An innovative solution has been unveiled to solve a big economic conundrum.

The conundrum:

A big schism exists between what employers need in worker skills but millions of people either can’t get a family wage job and or work a full 40-hour work week.

Even though the unemployment rate has dropped to a low 4.1 percent in the Trump economy, employers complain they have 6 million unfilled jobs because of a huge skills-gap among job seekers.

In addition, the average American workweek is only 34.4 hours. Underemployment is a chronic problem for Millennials and seasoned workers.

Underemployment exists when a worker has a job, but his or her work hours and/or pay levels are too low.

Forty-six percent of respondents to a 2016 Payscale.com study said they were under-employed. Fifty-one percent of Millennials complained of under-employment in a 2016 Accenture report.

To be sure, lack of education plays an important role. But even college-educated workers are suffering. Many had the wrong majors that won’t lead to good jobs.

A college degree is not a guarantee of career success. Millennials are learning at an early age that they need to be flexible and strategic in their choices.

3 issues for employers

The Business Roundtable, an association of chief executive officers of top U.S. companies, reported many jobs go unfilled because workers lack skills needed for the 21st century.

As it is, the roundtable-member companies employ 15 million workers and have $6 trillion in annual revenue.

“As employers, we know that America’s economic growth is directly linked to the skills of today’s workers. Unfortunately, the skills of many job applicants and existing employees have not kept up with the requirements of current and future jobs,” said Wes Bush, Chairman, chief executive officer and president of Northrop Grumman Corporation and Chair of the Business Roundtable Education and Workforce Committee.

In a press release, the roundtable cited employers’ three challenges:

  1. A lack of individuals with fundamental “employability skills,” such as the ability to use basic math, communicate effectively, read technical manuals, work successfully in teams and participate in complex problem-solving.

Seventy-five percent of responding CEOs indicated that fundamental math, reading and writing skills are important.

Fifty percent of them are having difficulty finding qualified applicants with these skills.

2. A lack of workers who have the specialized skills needed to fill many trade positions.

Forty-four percent of responding CEOs expressed difficulty finding qualified candidates for at least one skilled trade occupation.

3. A lack of applicants with the science, technology, engineering and math (STEM) skills needed for many of today’s jobs.

Cybersecurity, data science, robotics, software and computer science engineers were among the most difficult positions to fill with qualified candidates.

Economic solution

To combat the underemployment issue and to return to 4 percent annual economic growth, the Trump Administration is pushing to create 25 million new jobs.

President Trump is employing a tactic in which he succeeded as a reality TV star and real estate magnate – he’s embarked on a campaign to create apprenticeships.

How?

He is encouraging workforce training partnerships between among companies and schools. That includes programs in which Americans learn skills from seasoned workers while earning a paycheck.

But he’ll do it without spending vast sums of taxpayer dollars. He’s pushing for effective training programs and for the private sector to create apprenticeships.

“The reality is that there are still Americans seeking employment despite low unemployment rates and companies are struggling to fill vacancies that require various levels of skills and training,” said Ivanka Trump, the president’s daughter and one of his advisors.

She said her father’s administration challenges Congress “to pass reforms expanding apprenticeships and raise awareness about the fact [that] there are important, very viable career paths outside of the traditional four-year college experience.”

Many of the 6 million unfilled jobs are in healthcare, information technology and manufacturing according to Labor Secretary Alexander Acosta.

He indicated less than 0.2 percent of workers have been in apprenticeship programs. However, 90 percent of those who worked as an apprentice got a job at that paid an annual average of $60,000.

Hmm. Really?

The Trump Administration apprenticeship-initiative sounds pretty good. It works for me.

From the Coach’s Corner, here are related public policy solutions:

Why President Trump’s Growth Budget, Reforms Matter — Deficit-spending and the resulting massive debt severely damages America’s economic prospects and hurts each American. But a disciplined approach will make America great again — by shrinking the national debt and implementing other needed reforms.

How Bad Policy and Journalists Hinder Economic Prosperity — The nation’s economy will strongly improve if we capitalize on lessons in common-sense economic-growth policies from two late presidents.

“Do what you love to do and give it your very best. Whether it’s business or baseball, or the theater, or any field. If you don’t love what you’re doing and you can’t give it your best, get out of it. Life is too short.”

-Al Lopez


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.




Unhappy Millennial photo by David Castillo Dominici at www.freedigitalphotos.net 

Analysis: Trump’s Vision to Fix Trade Deficit, Create Jobs



Admittedly, the trade imbalance with China wasn’t the sole catalyst determining the outcome of the 2016 presidential election. But the election was a lesson in common sense — a complete repudiation of the country’s direction.

Unlike the erroneous and disingenuous claims by the media that the uneducated and uninformed elected Donald Trump or Hillary Clinton’s post-election assertion that FBI Director James Comey killed her chances, Mr. Trump won the Presidency because of several factors.

For instance, his election had to do with Hillary Clinton’s long pattern of alleged corruption and the insular arrogance of her campaign and most in her party who want to expand their Democrat power base – even if it’s at the expense of America’s future.

The group-think mentality of the liberal news media also played into Mr. Trump’s hands. His supporters have been and still are angry at the overt media bias.

id-100102805Mr. Trump’s victory stemmed from his marketing slogan, “Make America Great Again,” and from his solutions for critical issues that influenced 60-million voters.

Creating hope

For them, his business background and philosophy created an environment of hope. That includes former supporters of Mr. Obama because they never realized benefits from the hope and change he promised in 2008.

Essentially, Mr. Trump’s core supporters – in the Rust Belt and other economically soft regions lacking in family wage jobs – wanted Mr. Trump to win for three reasons.

Common-sense Americans are sick and tired of the Democrats’ reign of politically correct terror, the movement for income redistribution, and the massive loss of good-paying jobs.

What they want is not to be treated as though they’re invisible. They’re inspired by Mr. Trump’s success.

His supporters also want level-headed strategies for economic growth and jobs instead of the left-wing no-growth mantra for income equality leading Americans to covet their neighbors’ cars, electronic gadgets, money, and prestige.

Yes, Mr. Trump campaigned on eliminating the onerous business regulations, cutting taxes, and increasing energy production.

But none will help the economy more than creating jobs by repairing America’s trade policies.

As a free-enterprise advocate, my sense has always been that it’s best to keep tariffs low and to break down all barriers to global commerce. And, yes, American consumers do benefit from less-expensive foreign products.

Unfortunately, U.S. exports simply do not equal imports.

Ironically, American workers are more productive than their foreign counterparts.

$500-billion trade deficit

But America has a $500-billion trade deficit; $375 billion of it with China.

The nation’s gross domestic product is decreased by $260 billion as a result of the reduced demand for American products and services.

Admittedly, advances in robotic technology are a factor. But essentially the trade deficit translated to a loss of 4-million American jobs.

GDP is additionally decimated by dormant companies and the laid-off workers to the tune of $130 billion.

Oil imports and the other trade deficits with China are the primary culprits.

To make America energy-independent, it would help to expand drilling in energy-producing states. (But decades of drilling in Oklahoma might explain the rash of earthquakes, which might be problematic.)

Solutions for Chinese obstacles

Mr. Trump is correct in opposing the Chinese currency manipulation, theft of intellectual property and their restriction of American investment and goods.

China’s devaluation of the yuan undercuts global competitors in making its exports cheaper. Part of China’s restriction of American goods stems from its high tariffs.

Strangely, Wall Street CEOs and Democrats have ridiculed Mr. Trump’s call for a 45-percent tariff on Chinese products.

Their lack of vision is perplexing. America’s GDP under the Obama Administration is the most anemic in history.

Mr. Trump knows the importance of renegotiating trade policies. His two strategies for China will not cost any taxpayer money.

Short-term, tax revenue will skyrocket and would offset his proposed tax cuts. This will lead to a dramatic improvement in the nation’s GDP and will create millions of jobs by the end of Mr. Trump’s term in office.

Long-term, the prospective economic benefits are eye-opening.

Sustained economic strength

American productivity, global leadership and innovation have all been influenced by businesses that invest in research and development.

R&D will again be a factor in turbo-charging the economy as Mr. Trump erases the trade deficit.

Firstly, he will deal with China’s average 9.6 percent tariff on American products. The U.S. average tariff on imports is 3.5 percent.

Secondly, unlike Presidents Obama and Bush, Mr. Trump will penalize China over its currency manipulation.

Mr. Trump is not advocating economic isolationism. He doesn’t want economic stagnation. Nor does he want to stifle competition and consumer choices.

He’s merely calling for economic common sense for America’s future. Democrats would be better off pursuing the principles of growth, not income redistribution.

From the Coach’s Corner, here are relevant public-policy articles:

‘Dirty Little Secrets’ Trump Hasn’t Told You about Economy — Donald Trump has pushed the envelope to say the least. Many businesspeople get it. So do entrepreneurs, and millions of different demographics of voters who are angry at the economic decline of America.

Like Nobility in the Age of Kings, Ruling Class Gets Trumped — Throughout history, there have been ruling classes in every region of the world. Noteworthy in Europe were the Dark Ages in which the ruling classes dominated ordinary, hardworking folks. That’s true for 21st century America. But like the Age of Enlightenment in the 1700s, America’s ruling class in 2016 is getting trumped by a voter revolt.

Ideas to Accelerate Slowest Economic Recovery in Decades — Most voters are likely to vote their pocketbooks. So for them the positive spin on the economy by Hillary Clinton and President Barack Obama doesn’t reflect reality.

Avoiding Taxes, Apple’s Irish Strategy Apparently Backfires — The most nonsensical irony in corporate America involves Apple CEO Tim Cook’s tax strategy which has drawn fire from the European Commission. Why? It’s apparently backfiring, and is unpatriotic and shortsighted.

Scary Reasons Not to Get Giddy over the Monthly Jobs Reports — Curiously, the news media conveys optimistic stories, and Wall Street investors and others are jubilant over the 4.9 percent unemployment rate. Why? Countless Americans can’t find family wage jobs. But misleading news headlines trumpeted the meager creation of jobs instead of the sad reasons for the mediocre report.

“A conservative is a liberal who got mugged the night before.”

-Frank Rizzo


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.





Photo courtesy Michael Elliott at www.freedigitalphotos.net

The Link: Artificial 4.9% Jobless Rate, Obama’s Firing of His Jobs Council



Updated July 30, 2016 –


Economic growth is an oxymoron under the Obama Administration.

The broadest measure of the economy is the nation’s gross domestic product (GDP). But it only grew at 1.2 percent from April to June this year – far short of the 2.6 percent forecast by most economists.

Even the 1.2 percent might be wrong – in Q1 GDP was 1.1 percent but the government revised it downward to .8 percent. That’s three consecutive quarters of pathetic growth.

So no surprise why countless Americans are stuck in low-wage or part-time jobs, which means the unemployment rate is at an artificial 4.9 percent — a phony statistic.

It’s worth remembering President Obama fired his jobs council — comprised of CEOs at major companies. Ostensibly, he didn’t like their advice.

A noted economist has been expressing the same concerns for years.

ID-10043269 xedos4“The jobless rate may be down from its recession peak of 10 percent, but much of this results from adults, discouraged by the lack of decent job openings, have quit altogether. They are neither employed nor looking for work,” explained economist Peter Morici, Ph.D., in his analysis on August 1, 2014.

“Only about half of the drop in the adult participation rate may be attributed to the Baby Boom generation reaching retirement age. Lacking adequate resources to retire, a larger percentage of adults over 65 are working than before the recession,” he wrote.

“Many Americans who would like full time jobs are stuck in part-time positions, because businesses can hire desirable part-time workers to supplement a core of permanent, full-time employees, but at lower wages,” Dr. Morici added.

“The economy needs to add about 360,000 jobs each month to push unemployment down to about 6 percent and provide employment for those frustrated adults,” explained Dr. Morici. “That would require GDP growth in the range of 4 to 5 percent.”

But under Obama, the nation’s GDP growth rate has been comparatively tepid.

President Reagan’s Administration inherited a worse economy from President Carter than Obama from Bush. But the Reagan White House performed at a much higher level than Obama. Millions of legitimate jobs were created and the GDP was 4.8 percent.

Sadly, the mainstream news media has largely failed to report such facts, as well as two other economic developments:

1. There’s a connection between the president ignoring his own Council on Jobs and Competitiveness a year, and the artificial unemployment rate.

Mr. Obama recruited business leaders to join his jobs council in January 2011. This was to demonstrate leadership in solving the nation’s anemic jobs situation, and to fix his impaired relationships with employers.

But not since Jan. 17, 2012, has Mr. Obama convened his own jobs council, which is supposed to be chaired by General Electric CEO Jeffrey Immelt.

“There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.”
-Will Rogers

Some 23 million Americans are out-of-work or are under-employed because they can only find part-time work — so the average American workweek is only 34.6 hours. And the president has not bothered to convene his jobs council?

So neither of Mr. Obama’s jobs-council goals has been attained — by default. That’s unacceptable for the nation’s economy and workers.

2. Former Intel CEO Paul Otellini, a member of the Obama jobs council, joined the ranks of high-profile business leaders who opposed Mr. Obama’s re-election.

Mr. Otellini is ostensibly disappointed by Mr. Obama’s lack of commitment to creating private-sector jobs.

He has good reason. Mr. Otellini joined the president’s jobs council to lend his expertise even after voicing his concerns about ineffective administration policies for job creation. (See: Job Creation: Will Public Officials Listen to Intel’s CEO?)

Other business leaders who were forced to actively campaign in the 2012 presidential election for Mitt Romney: Charles Schwab, Cisco CEO John Chambers, and Bernie Marcus, the co-founder of Home Depot.

The results speak for themselves. Mr. Obama has not kept his promises – from his commitment to reduce the unemployment rate to 5.2 percent – to his pledge to balance the federal budget.

You might recall in 2008 he called President Bush “unpatriotic” for his handling of the economy and heavy spending, but the national debt increased 52 percent under President Obama.

Here we have a president who campaigned on “hope and change.” But he hasn’t delivered — understandably because he doesn’t have any job-creation credentials — his experience as a community activist explain his economic failures and focus. There’s been no hope under Mr. Obama — only harm to the nation’s economy.

Even Steve Jobs criticized the ineffective Obama approach. (See: Biography: Will President Obama Listen to Steve Jobs on the Economy?)

Business leaders understandably chortled at Mr. Obama’s announcement that he wants to add a new cabinet position, a “secretary of business.” I concur.

“I don’t think adding a new chair in his Cabinet will help add millions of jobs on Main Street,” said Mr. Romney in the 2012 campaign. “We don’t need a secretary of business to understand business. We need a president who understands business.”

Agreed. It’s time for realistic hope and positive change.

From the Coach’s Corner, the media also failed to report another noteworthy development in 2012, about which I wrote: 6 Nobel Laureates Among 673 Economists Back Romney’s Economic and Jobs Plan.

The economists signed a statement — the benefits of Mr. Romney’s plan — and multiple reasons why Mr. Obama’s economic approach is a failure.

“There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.”

-Will Rogers


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.





Photo courtesy of xedos4 at www.freedigitalphotos.net

Alarming Trend — Why Startups No Longer Lead in Job Creation


Startup businesses have long been the king and queen of job creation. But that’s no longer true, according to a review of data from the U.S. Department of Commerce.

Among startups in their first year of operation, jobs have decreased to an all-time low.

The disturbing conclusion comes from a 2012 study, “The Collapse of Startups in Job Creation,” by the nonpartisan policy-research organization, the Hudson Institute.

“Entrepreneurship is down by a third these last four years,” says Hudson’s Chief Economist Tim Kane. “And the decline continued in 2010 and 2011, even after the economy started growing.”

Beginning in 1977 for more than three decades, startups annually created 3 million jobs. But starting two years into the Obama Administration, in 2010, the number of newly created jobs – 2.34 million – plummeted 22 percent.

David Castillo Dominici investigationEconomist Kane lists the reasons:

— Occupational licensing regime

— Higher taxes

— Labor regulation

— General economic uncertainty

In other words, government is the culprit.

Worse, on further review, the study indicates the job-creation figures are actually worse when factoring in the nation’s population increase.

During the presidential administrations of George H.W. Bush and Bill Clinton, 11.3 Americans per thousand were employed at startups. However, during the Obama administration, the number plunged to 7.8 per thousand.

The obvious conclusions:

“Without startup job growth, there simply won’t be overall job growth in the United States,” adds the economist.

The free-enterprise spirit is suffering in America.

Hudson Institute, www.hudson.org, describes its work as innovative research and analysis promoting security, prosperity, and freedom.

From the Coach’s Corner, sadly the economy hasn’t improved enough to create jobs. Twenty-three million Americans are unemployed or can only find part-times jobs.

Here more informative articles:

Government Spending Causes Companies to Cut Back, Harvard Study — the Hudson Institute study coincides with troubling research at Harvard University.

The Link – Local TV Journalism, Bad Government Policy, Wall Street Banks and Poor Economy — Do you ever wonder why the economic climate is still questionable? Why the unemployment rate is dubious and why the average American workweek is only 34.6 hours? Or why government policies aren’t conducive to economic growth and the creation of jobs?

7 Steps to Wealth and High Net Worth — Creating wealth and enjoying high net worth doesn’t result from pure luck. It takes a certain mindset and strong action. Here are seven proven steps.

Monopoly in Health Insurance Hurts Employers, Consumers and Doctors — How do you feel about your health insurance? Fasten your seat belt. More problems have unveiled in America’s healthcare system. Patients, physicians and employers have been in the same boat – skyrocketing health insurance costs exacerbated by a lack of competition caused by ObamaCare. Now comes an eye-opening study by the American Medical Association (AMA).

“Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.”

-George Washington


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.




Photo courtesy David Castillo Dominici at www.freedigitalphotos.net

Private ESOPs Are Where the Action Is – in Economic Value, Job Growth



Private employment stock ownership plans (ESOPs) are thriving. That’s according to a study by a former advisor to the Simpson-Bowles bipartisan deficit reduction commission and a fellow at the American Enterprise Institute.

Economist Alex Brill, who conducted 2012 study, found that ESOPs as S corporations grew their jobs by 60 percent over this past decade. Of course, such a rate of growth is really an anomaly.

Other private-sector employment rolls have been stagnant.

ID-10066167 Ambro“The unique strengths of employee ownership drove company gains and jobs in the past decade, while helping insulate S-ESOP businesses from the adverse effects of the recent recession,” wrote Mr. Brill in the study.

It’s entitled, “An Analysis of the Benefits S-ESOPs Provide to the U.S. Economy and Workforce.”

ESOPs are tax-exempt retirement plans that consist of company stock held on behalf of the company’s employees.

They are company-funded retirement plans that do not require any contribution from workers.

Congress first changed U.S. tax rules to allow S corporation businesses to be ESOP-owned in 1998. There are more than 11,000 ESOPs in the U.S.

Mr. Brill studied a decade’s worth of data from 56 ESOPs, and Labor Department figures from 2002 to 2009.

The study’s salient results:

  1. S-ESOP companies showed substantially more employment growth in the pre-2008 recession period than private businesses.
  2. S-ESOP companies regained momentum faster than other private firms after the recession.
  3. S-ESOP companies in the manufacturing sector particularly benefited from the S-ESOP business structure, which buffered manufacturers through especially challenging recent economic times.

It’s generally believed that ESOP workers are substantially more invested in the success of their workplaces. They know it will affect their own economic well-being.

A University of Pennsylvania study earlier showed that S-ESOP companies generate about $14 billion in retirement savings for their workers that otherwise wouldn’t have been possible.

If a company has a positive workplace culture, an ESOP is worth considering as a good exit-strategy for a retiring business owner.

From the Coach’s Corner, one of the nation’s most publicized ESOPs, United Airlines (UAL), was an exception to the success of the other 11,000 ESOP success stories.

UAL became an employee-owned public company, 55 percent of the shares, in 1994. Employees gave up some $700 million in wages and conceded some work rules. In exchange, the workers bought out the boss and stockholders.

But clearly since then, UAL has had a turbulent history. It’s been unprofitable with passenger-service issues and an unhappy workforce. In essence, UAL has taught us several lessons in strategic planning. (See Strategic Planning Lessons: Why United Airlines Was Forced to Merge with Continental.) 

“If you mean to profit, learn to please.”

-Winston Churchill 


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.





Photo courtesy of Ambro at www.freedigitalphotos.net

What and Whom Deserve your Vote Nov. 6, 2018?


If you want to continue the strong economic climate and job creation, and freedom from bad public policy and public officials, obviously it’s time to act this year.

This is a critical time.

What is decided at the polls will affect us now and our grandchildren, too, when they’re in the business world.

xedos4So this is the most succinct business-coaching article ever published here on this site.

The message is simple.

Please do your homework.

Naturally, you can always count on us here at The Biz Coach to monitor and research public-policy issues and provide timely insights in our  Public Policy Category.

Discuss these issues with your associates, friends and relatives. Get involved. Volunteer your services for the right causes.

Then vote by Tuesday, Nov. 6.

From the Coach’s Corner, for all the right information about a healthy economic climate in Washington state, visit these Web sites:

— Washington Policy Center (www.washingtonpolicy.org)

— Association of Washington Business (www.awb.org)

This all about knowing and implementing what’s important for economic development and job creation. You’ll be glad you did.

“Democracy is the only system that persists in asking the powers that be whether they are the powers that ought to be.”

 -Sydney J. Harris 


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.





Photo courtesy xedos4 at www.freedigitalphotos.net

Why You Can’t Get Work and Small Businesses Can’t Hire Workers


Are you one of the countless baby boomers who is relying on Social Security before you reach retirement age? You’re not alone. The dearth of jobs has prompted many Americans to accept lower Social Security payments at the age of 62. This means Social Security is forecast to start paying out more in benefits than it receives starting in 2017.

The government believes 15 million people are jobless. That’s only an estimate. It doesn’t include the high number of self-employed people desperately taking independent contractor projects because they can’t find jobs, or the under-employed taking temporary jobs.

These numbers also hurt job creation. Higher unemployment rates charged to business by government is a disincentive, too.

After having worked through 6 major economic downturns, my analysis of the data and the trends is that the real unemployment rate is about 25 percent. That’s depression-like, not recession-like numbers.

A study proves it’s getting worse for American workers. The Center for Labor Market Studies at Northeastern University in Boston sums up the problem in its study’s subtitle – “A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent.”

For the nation to catch up, most experts believe 100,000 new jobs need to be created every 30 days. But veteran pragmatists know it won’t happen. Count me as one of those.

The job drought is not a new phenomenon in the sense that it’s been years in the making. The federal government began tracking the number of unemployed in 1948.

Job losses

Many jobs have not and will not return. Not to over-simplify, institutional investors own increasing numbers of companies. Largely, they extract profits by slashing payrolls and encouraging offshoring of jobs in Latin America and Asia where labor is cheaper.

Since 2000, automation is responsible for cutting 5.6 million jobs.

After each recession since 1970, job-growth rates have decreased. Published reports indicate that even before the Great Recession, it was less than one percent a year and was only 2.4 percent in the 1990s and 1980s, according to the Labor Department figures.

Based on trends following recessions, I’m in agreement with economists who forecast it will be at least five years before the unemployment rate returns to more palatable levels – hence, the term, jobless recovery. Even then, I’m not sure it will happen.

Consumer spending

Historically, consumer spending has been a key ingredient for economic recovery. But that won’t happen unless there’s a fundamental economic change.

This also means the tax revenue pie for governments at all levels will remain flat.

For good reason, Americans have returned to 1930’s money values. They’re becoming tight-fisted with their money and are demanding government accountability.

The housing bubble resulted in a high volume of excise taxes, but the high rate of foreclosures alters that scenario.

Big lender behavior

Talk to anyone who checks credit for consumers or small businesses. The aggregate level of bad credit is huge – largely caused by the predatory behavior of big lenders. They’ve nearly destroyed the livelihoods of small businesses with mega interest rate hikes for bogus reasons.

Small business has historically has been the main job-creation engine, but no more.

Small businesses do not have the financial firepower expand and create jobs. New credit card legislation does nothing to correct the injustices.

Instead of focusing on helping business, government at every level, is hindering the economic climate. Economic and political freedoms are being stolen each day by bad government policy (see this portal’s Public Policy section).

The largest employer in many communities is government. Public-sector agencies are still growing, while spending and taxing at ever-increasing levels. For the common good of all Americans, change is needed.

Businesses and consumers can no longer afford the status quo in taxes. Government must reform.

From the Coach’s Corner, here is the essence of the 2010 credit card law:

  1. Credit card companies cannot increase the rate in the first year until the introductory rate expires. The banks must give 45 days notice to change the rate.
  2. Unless two months past due, rates can’t be changed.
  3. The original interest rate must be granted once payments are on time for six months.
  4. The fine print will be easier to grasp.
  5. Activation and annual fees can’t exceed 25 percent of the credit limit in the first year; and will be unlimited after 12 months.
  6. Credit card statements must be sent three weeks in advance.
  7. Transactions can’t take place over the credit limit unless the cardholder agrees.
  8. The “universal fault” nonsense (if you were late one day on one payment, the other credit card companies jacked up your rate) is stopped and interest rates on existing balances must stay the same (see No.1).
  9. Companies can’t give students or anyone under 21 a car unless she/he has a co-signer or the autonomous ability to pay statements. Schools have to make public any credit-card marketing deals, and companies cannot stage publicity or giveaway events on or near campuses.

“Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.”

-George Washington

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Sen. Cantwell Is Right to Question Risky Derivative Dangers, Geithner

 

Updated July 15, 2010 – 3 p.m.

An influential U.S. senator, Sen. Maria Cantwell (D-WA), worked to regulate the perilous use of derivatives by Wall Street bankers, and criticized the Obama Administration in the process. But her derivative strategy worked. The sweeping financial reform legislation will regulate the risky, intangible instruments.

This means derivative trading now faces regulation, and financial institutions will have to set up a fire wall by moving their derivative departments elsewhere.

“This isn’t about poking the White House, it’s about getting capital flowing to small businesses,” Sen. Cantwell said in an interview with Les Blumenthal, a reporter for McClatchy’s Washington state newspapers.

She helped lead the fight against investment bankers, who were bailed out by taxpayers only to shell out big bonuses and who are at it again. Instead of extending credit to business, Wall Street is back to the old tricks of playing risky derivative games that helped lead to Wall Street’s meltdown and the global-financial disaster.

She’s also had a testy exchange with Treasury Secretary Timothy Geithner over the failed efforts to bail out community banks and the associated credit issues faced by her Washington state constituents and other American businesses and consumers.

“We are trying to keep the focus on what needs to be done to get credit flowing and avoid another bubble,” Sen. Cantwell also said. “Do I wish the White House team was more attuned to these issues? Yes.”

 Yes is right. It’s commendable that she’s become outspoken about regulating Wall Street’s behavior.

If she’s successful, we’ll see job creation – the only way out of this mess. I’ve been harping about this and asking for answers to questions for an extended period of time starting with this column, “Is it Time to Police Pay at Wall Street Banks?

And she was right about voting against the reappointment of Fed Chair Ben Bernanke. Few in Congress seem to understand Main Street issues and his tardy, tepid handling of the Great Recession at the Fed.

Firewall partnership

Sen. Cantwell partnered with Sen. John McCain (R-AZ), the former GOP presidential candidate, to bring back the commercial/investment banking firewall. This will prevent risk-taking by commercial banks that exacerbated two downturns in the 1930s and the most-recent  financial chaos. The two worked together on the Senate Commerce Committee.

Cash flow and credit are critical for operating a business. With too-few funds available in loans, businesses have been failing or, at least, suffering from bad credit as a result of not having access to capital.

Efforts by the Obama Administration and Small Business Administration to provide more loans are to be commended. However, they are way too-little and too late. Most afflicted small businesses now have poor credit because of the cash cutoffs and they won’t qualify for any the funding.

Credit card regulations were too late, too.

Nothing has been done to help repair the credit of the millions of small businesspeople and consumers who were victimized by the credit card companies – domiciled in a handful of states that permit predatory behavior – their rapacious interest rate hikes for bogus reasons and slashed credit lines.

Sen. Cantwell also indicated her disappointment that the Obama Administration twice reneged on promises for action on the proposed firewall between commercial and investment banks.

“Their economic team is not living up to what they said they would,” she explained to Mr. Blumenthal.

Hmm. Broken promises? That’s not what America needs, but we can appreciate Sen. Cantwell’s candor and successful efforts.

From the Coach’s Corner, on another somber note regarding credit: Customers of the hospitality industry are ostensibly the No. 1 target of hackers, here’s the article.

New Threats to Economic Liberty: Cap-and-Trade, Spending Bills

 

Updated Dec. 14, 2009

Businesses face new threats to their economic liberty and their ability to create jobs.

This is the result of two developments: The U.S. Senate passed a $1.1 trillion spending bill last Sunday; and it is now considering yet another cap-and-trade measure.

The massive spending bill, in funding federal agencies, exceeds the rate of inflation by more than 700 percent. Critics also contend it has $3.9 billion in pork spending. I’ll have more on that later.

The cap-and-trade measure was introduced by Sen. Maria Cantwell (D-WA).

Reasonable people agree going green is healthy for all stakeholders. Indeed, Sen. Cantwell’s cap-and-trade bill seems better for consumers than the current legislation being debated in Congress, but it still threatens businesses and their ability to create jobs.

In essence, her bill would fund rebates to consumers via emission credits by requiring manufacturers and other companies to buy credits in conjunction with government auctions. She contends an average household of four would receive $1,100 a year for 18 years from 2012 to 2030 – a total of $21,000.

The government auctions would keep the Wall Street investment banks out of the process.

Cap-and-trade is a controversial, complex subject and I’ve already voiced my opposition to the current House-passed bill (http://bit.ly/8E7Hs2). So I turned to a highly respected business spokesperson, Don Brunell, who is the president of AWB, the Association of Washington Business. AWB and he are known for moderate views on behalf of business. I managed to reach him while vacationing out-of-state with his family. He says he has not seen Sen. Cantwell’s bill, but he graciously responds.

“Generally, cap and trade proposals have created winners and losers which public policy and politicians should not do,” says Mr. Brunell. “That has been the experience in Europe, Australia and California where the government has passed and implemented cap and trade.”

He argues for a positive approach, incentives, to reducing greenhouse gases.

“For example, we brought a little home in Vancouver, WA, 1700 sq. ft., and replaced out water heater with a tankless heater which has dramatically cut our consumption of natural gas because we are only there on weekends. To offset the higher costs for the tankless system, we got a $1,500 federal tax credit,” he explains.

Mr. Brunell points out the progress already made by companies:

“Because of energy costs, many businesses and industries have dramatically cut consumption and thereby greenhouse gases.”

How serious is the problem of greenhouse gases in Washington state?

“Washington state produces less than .01 of 1 percent of the greenhouse gases but Gov. Gregoire wants us to sign on to the Western Climate Initiative along with California that would put us at a competitive disadvantage with Idaho which is not a cosigner of the Western Climate Initiative,” explains Mr. Brunell. “Apply that to a national level where the U.S. may be put at a competitive disadvantage with China, India and other countries which will ignore the Copenhagen agreements on climate change and greenhouse gas restrictions unilaterally by a government – such as the U.S. under either the Waxman-Markey bill passed last August by the House and proposals we’ve seen in the Senate.”

Spending Bill

The U.S. Senate’s massive $1 trillion-plus measure is a compilation of several spending bills and contains more than 1,000-plus pages. It dotes big money on such agencies as the Education Department, the State Department, the Department of Health and Human Services.

With a 10-percent increase, it spends far above the rate of inflation. Inflation was only 1.4 percent in August, according to Bloomberg on Dec. 8 (http://bit.ly/4ZzpNU).

Taxpayers for Common Cause, a watchdog organization, complained the bill has 5,224 pet-lawmaker projects costing $3.9 billion.

A published report indicates the pork includes a farmer’s market in Kentucky and rehabilitation of a theater in New York.

“You are spending money like a drunken sailor, and the bar is still open,” Sen. John McCain (R-AZ) was quoted to say in response to his colleagues regarding their earmarks.

Just so the U.S. Treasury can continue to borrow, also planned is raising the federal debt limit by $1.8 trillion to $14 trillion.

Ouch.

So, yes, in conclusion, my sense is that the cap-and-trade concept and heavy spending, which increases the national debt, constitute silent but ominous threats to the nation and business. They must have economic liberty if they are to succeed and create jobs.

From the Coach’s Corner, for Washington businesses, here’s the link to AWB:  www.awb.org.

It contains a wealth of information. If you’re not a member, you might wish to consider joining. The folks at AWB know what they’re doing.

(Disclosure: I’ve worked with AWB on projects in the past.)

Seattle business consultant Terry Corbell provides high-performance management services and strategies.