Small Businesses Threatened by Increasing Regulation

A friend shared an interesting article that could threaten the livelihood of small business in America. Being a small business owner for over 37 years I understand the risk, effort and opportunities that making individual business decisions involve. This decision by the National Labor Relations Board increases the risk and effort, while decreasing the opportunities for small business owners by the government having greater control of a small business while taking that control away from the individual owner.

Business owners trying to keep a clear understanding and meet the federal guidelines regarding the separation of employees from independent contractors now will have the lines muddier. This opens the door for increased liabilities regarding workers compensation, unemployment compensation, insurance liability, overtime, etc.etc.

This reminds me of the gerrymandering of election districts that political parties do to control the outcome of elections. The control of  electing our electing government officials is taken away from the individual and put in the control by the parties redistricting.

Individual liberty and the freedom to succeed or fail has been the cornerstone of entrepreneurship. It is what made America a diverse nation in the first place. People flocked to America because they wanted the freedom to control their destiny and escape the governments controlling every aspect of their lives.

After reading this interesting article how do you feel about this decision by the National Labor Relations Board?

From – Small Business Solutions – by Diana Furchgott-Roth

Under a National Labor Relations Board decision released on Thursday, the Board has dramatically expanded the numbers of “joint employers” in America. Now, employees of franchised business such as Burger King may be classified as employees of the parent company. Employees of subcontractors, such as office cleaners, may be classified as employees of the company that hires the subcontractor.

With its decision, the Board overturned a prior ruling by its regional director that employees of Leadpoint were not joint employees of Browning Ferris, a recycling plant that subcontracted operations to Leadpoint. Subcontractors and franchisees across the country had better watch out for more lawsuits and higher costs of doing business.

Last week, speaking at the Detroit Economic Club, Republican presidential candidate Senator Marco Rubio said, “The National Labor Relations Board is on the verge of declaring that David doesn’t even own his business, that he is a ‘joint employer’ with his franchisor. The likely impact is that fewer franchises will open, and costs and litigation will increase for existing ones.”

Before this decision, if a firm did not exercise authority over the employees of its subcontractors then it was not counted as an employer.  Now the NLRB is saying that if a firm just possesses the authority to control its subcontractor’s employees—even if it does not use this authority—then it is a joint employer.

The implications of this decision are immense. Millions of franchises are at risk of being told that they are joint employers with parent companies such as Jiffy Lube, Dunkin Donuts, or H & R Block.  Millions of subcontractors may find that the company that is employing them has morphed into a boss. This raises the costs of doing business, encouraging companies to reorganize or go offshore.

The Board notes, disapprovingly, that “the diversity of workplace arrangements in today’s economy has significantly expanded. The procurement of employees through staffing and subcontracting arrangements, or contingent employment, has increased steadily…”

What the Board fails to note is that franchises and subcontractors have come about as the most efficient way of providing particular services.  Franchises make it easier for people to start their own businesses, and independent contractors can move from one employer to another at will, or work for multiple employers at one time.

The Board’s ruling follows guidelines from the Labor Department  on when to classify workers as employees, who are entitled to fringe benefits, or independent contractors, who are not.  These guidelines, which became effective in July, attempt to make it more difficult for employers to hire independent contractors.  In June the Labor Department issued new proposed expanded overtime revisions that would reduce workplace flexibility for millions more workers by prohibiting time off in exchange for extra time on the job.

With the new Labor Department rulings and the National Labor Relations Board decisions, President Obama wants to move America back to the mid-20th century when people worked for one employer for most of their lives and independent contractors were less common.  The sharing economy, with Uber and Airbnb, were unimaginable.

One result of the new 21st century economy is that unionization levels have decreased. People don’t want to pay union dues and initiation fees.With the share of wage and salary workers who belong to unions declining from 20 percent in 1983 to 11 percent in 2014, unions are feeling the pinch. They lack dues to pay salaries for union bosses and give political contributions to political parties, practically all Democrats.   That is why the Board is trying to make it easier for unions to coerce workers into joining. It is far easier for a union to organize one large workplace than several small ones.

Unions are particularly interested in the fast food industry because of its rapid turnover.  On average three people per year occupy one slot at a fast food restaurant. People come for a short period of time, such as the summer, then leave. Someone else might start in the fall. If each of these three people had to join a union, the union would get three sets of initiation fees per year.  With fees at about $50 per person, that is $150 annually.

As federal and state governments have tried to expand the benefits that employers must provide, it has become more advantageous for small firms to form to avoid these mandates.  Take the Affordable Care Act, for instance.  Firms with more than 50 employees have to offer a certain level of health insurance or pay a penalty.  Firms with fewer than 50 workers are often exempt from other mandates, too. Contracting out some operations keeps the size of the firm down, along with the costs of doing business. With the new rules, watch for more companies going offshore, and the share of Americans who are employed or looking for work declining further.

The franchise model has dramatically expanded the number of small businesses in America. Congress should place a clear definition of an employer and a subcontractor in the law.  The NLRB’s decision is a travesty that Congress and the next president can and should reverse.

 

Write Your Eulogy, Then Live the Life You Want

Here is great article shared with me from a friend and fellow fly fisherman Pete Dodds. Pete found this article by Geoff Yang a Partner of Red Point Ventures on LinkedIn. Given the fact it is graduation for so many young people starting their careers and the fact there are so many still looking to make changes in their lives do to lay offs, dead end jobs or people unsatisfied with their current career path I felt this was so appropriate to share. Mr Yang explains so well what I tell others when speaking about the LIFE community and the opportunity to pursue significance and a meaningful life.

Take the time to read and think on where you are in your current journey. Breathe and give yourself a chance tolive the life you’ve always wanted”.   

There’s always so much encouragement for graduating classes. “You are the generation.” “You will change the world.” I’m sure you are and you will, but how? How will you make a difference? I’m not going to tell you how to change the world; that’s up to you.

What I am going to give you is my advice on what will help guide you to make that difference. In my 30-year post-grad career, these are the words of wisdom that helped guide me—both personally and professionally:

Life is short. As you embark on the rest of your life, consider what you want it to be like and what you want to accomplish. Pretend for a moment that rather than graduating, starting your career, and moving on toward the rest of your life, you are at the end of it. How would people remember you, as both a person and a professional? Write your eulogy now. Think about how you want to be remembered by your family, friends, and colleagues. Let this shape you.

Do something you’d do even if you didn’t get paid to do it. If you don’t, then life will end up a chore. My dad was a chemical engineer who designed large-scale process plants. I remember seeing him get up every morning and go to work, and I don’t think he passionately loved what he did. He did it because he felt it was his responsibility. Life will be more fulfilling if you do what you love.

When I was finishing my MBA, the highest paid jobs were in investment banking and consulting. They were also the jobs with the highest prestige because they tended to attract the best and the brightest. Because of this, they were alluring for many graduates—when you have been out of the job market for a couple of years racking up student loans, working for a top-tier company with a solid paycheck made sense. I knew that neither of these routes was right for me. My choice to go a different direction ended up serving me well in the long run. I’m lucky enough to have found something I love doing. Not to say that it’s not work and it’s not tiring. It is. However, I constantly think about how lucky I am to do what I do—and get paid to do it.

It’s OK to be impatient, but don’t rush things. There’s a fine line between chasing your dreams and not being willing to lay a long-term foundation for success. When I finished graduate school, I saw a few people in my class who wanted a shortcut to success. They suffered from the “get rich quick” syndrome. Early on, they took risky bets with second-rate companies in hopes of accelerating success. With very few exceptions, that strategy did not work. Unfortunately, when they wanted to return to the mainstream, they didn’t have the foundation of success upon which to build.

Take risks with smart people. It’s fine to take calculated risks with your career, but when you do, make sure you understand the risks along with the reward. Make sure you take risks with the best people you can find. It will make all the difference in the end. If you want to start a company, recognize the risks you’re taking and do a gut check about how much you believe in what you’re doing. If you passionately believe in it, then do it with your eyes wide open and surround yourself with the smartest people you can find.

There is always next year, but at some point you start running out of next years. As you move forward in your career and in life, you’ll find yourself putting things off until next year. But there are only so many next years in your life. I’ve generally never passed off an opportunity to have a great life experience—be it travel, learning how to fly or play piano, or taking courses that weren’t directly relevant to the path I was on. The more you can do to round out your life outside of work, the more fulfilled you will feel in the end.

Don’t be one-dimensional. Life is more than your career. Life is about being a responsible, interesting person, and in my opinion, one of the greatest gifts in life is having close friends. As you move forward on your journey, you’ll find good friends are few and far between. I am fond of saying that I don’t need more friends, I just need more time to spend with the friends I already have.

Best of luck in your journey—and don’t forget: The journey is its own reward.

Fiat Degrees

Over the last 30 years there has been an emphasis on the need for a college degree in order to be successful. There has been so much of an emphasis on obtaining a degree that degree programs are everywhere, and the cost to obtain one has far exceeded inflation. While Food and the (CPI) Consumer Price Index had just over 200% increase, and Shelter just over 300% increase, Tuition rose over 1100% during the same period (see graph).

tuition graph

Is the cost worth the return? Have we begun printing degrees like the Federal Reserve prints money? Fiat money as defined by Investopedia is “Currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves.” Could this surge on the apparent need for degrees by the same definition – A Degree(s) that a government has declared to be legal tender, despite the fact it has no intrinsic value and is not backed by reserves (reserves being solid market demand). If the demand is low (college graduates can’t seem to find jobs in their field of study) then why the high cost? Is the cost artificially high versus the value of the degree?

When I was in high school the opportunities to advance in a company in many cases were because there were few people with a college degree, so those who had one were the ones with the best opportunity to “climb the corporate ladder”. Now it seems everyone has a college degree; the janitor, the girl who makes your latte in the coffee shop and the security guard by the elevators. The value of the degree has decreased because there are only so many available spaces at the top of the company. I recently had a young man with a Bachelors degree in Physics tell me that his degree is now the equivalent of a high school diploma. He can only get a job in a lab for just over minimum wage.

In analyzing the value of a college education today I came across this article from Globalization 101 a Project of the SUNY Levin Institute:

American Perception of the Value of a College Education
Hundreds of articles in major newspapers on the decreasing value of a college education have been written over the past year.

Basic findings:
• School quality is declining. A federal study showed only 25 percent of college graduates had information literacy. Thirty-three percent of college students had less than 40 pages of required reading per semester (The Economist, 2012), a measurement that demonstrates a lack of rigor in U.S. colleges. The book Academically Adrift, confirms the decline stating that students did not gain critical thinking, complex reasoning and writing skills after three semesters in college (Ripley, 2012)

The tech sector inspires and rewards college drop-outs. The Thiel Fellowship pays students to drop- out of college and pursue their own ventures. While, many tech companies are hiring college drop-outs, who are viewed as free-thinkers and risk-takers. (Williams, 2012)

The bachelor’s degree is worth less than it used to be. Many bachelor degree holders are employed in jobs that do not require a college degree and furthermore these degrees are not necessarily aligned with job openings that require different skill sets. So, alternatives, such as training programs and online programs are proliferating and Master degree programs are increasing as well (Lawrence, 2012).

Has your college degree provided you the salary you expected?

An Article from the Wall Street Journal entitled The Declining Value Of Your College Degree  stated ; “ A four-year college degree, seen for generations as a ticket to a better life, is no longer enough to guarantee a steadily rising paycheck.”

Have you received your college degree and found it difficult to find a job in your field of study?

Did you feel you received your money’s worth for the education you received?

In retrospect would you have reconsidered getting a college degree?

Money Focused or Purpose Focused?

What is your Money View?

A great question to ask ourselves, because we spend so much of our life working for it – Chris Brady New York Times best-selling author does a talk explaining the concept of a money-view. Because like your worldview, your money-view determines how you approach money. And because we all have the need to earn money, how we view it determines the role it plays in our lives.

In a well articulated article Eric Blomdahl explores finding and living your GOD-given purpose. The challenge we seem to face as a society is we serve GOD on Sunday or in Bible study or on a missions trip, but 40 hours a week (80 for most couples) people focus on money by going off to a job. Many Christians feel that we are not doing GOD’s work if we make a profit, yet Christian authors are paid, and most Pastors are paid, and they usually have a paid staff to assist with the operation of the church. Our defense is the Pastor and staff, are doing GOD’s work.

In contrast most people work a job not because it was their life’s purpose or GOD’s purpose for their life, but because it paid better than the last job.  Where I live near the State Capital of Pennsylvania when asked where someone works if they work for the state you usually get the response with a reply like “I work for such and such at the state, only 12 more years to go. Does that sound like the response of someone whose job is fulfilling their life’s purpose? It sounds more like a prisoner who is doing their time for a crime committed. Maybe it should be considered a crime wasting the life and talent GOD gave us to make money when the only reason we do it because it pays more. In Scripture it states “the love of money is the root of all evil”. Well why else would someone devote their entire life to a job where they are counting the days until they retire if it wasn’t for the money? I doubt they would be there if they weren’t getting paid.

Perhaps our worldview has been shaped in the church. Many of us get our perspective on money from hearing people misquote scripture by saying money is the root of all evil or we attend a church that tends to criticize and make its members feel guilty if they earn income.

A white paper titled Pastoral Care in the Context of New Wealth authors Cooke and Moon researched to determine a Pastor’s capacity to counsel a church member who came into money through inheritance or financial success and found that most are ill equipped to provide such counsel or even know where to turn to provide direction for a church member. They cite several reasons but generally speaking it has to do with the misunderstanding of money and the role it plays in a person’s life. This confusion has been passed on in many cases to the congregation. Money in the hands of good people who understand it’s role can do amazing things.

LIFE challenges men and women to step out of a job where we work for money and into a life of purpose. What is that purpose you ask? That’s for you to decide, but let me offer a few suggestions. I’ve said recently if my children were young with today’s technology we would home school them and travel the country so they could see and experience life first hand. Imagine the memories that would be created stopping to view a sunset on the Pacific Coast of California or to wake up with your kids overlooking Lake Tahoe and have breakfast lakeside. How about going on a Missions Trip every quarter of the year? Would you take your parents on a trip to Bermuda, or a cruise to Alaska with their grandchildren? Would you volunteer more time to your favorite charity? Would you take time to really appreciate your family and each other rather than living the hurry scurry of life most families endure?

What legacy do you want to leave and when are you going to start living that legacy to leave one?

New Year’s Resolution

It’s a New Year and the time so many people make some new commitments to change their LIFE.  So what can you do different than every other new commitment you have made to change your life? How about changing some associations?

I found out many years ago that I had to change the habits that got me the same place every year. Experts call it Pattern Interrupt. I had to interrupt the patterns I had formed that caused me to make the basically the same decisions year after year. One thing I did was to get some new input, from some new associations. I made some new friends that had results in life I had hoped to accomplish. How did I do it? Like many people I went to a seminar to learn new information and make some new friends, because life is like a team sport. You win and lose based on who is on your team and how they play the game.  Hey, what I was doing wasn’t giving me the results I wanted so why not change what I was doing?

It’s not too late so why not give it a shot. Do something so absolutely crazy your friends will think you lost your mind. What could possibly be so wild that is so different that your friends will think you’ve lost it? How about taking a weekend and not going to the bar or a birthday party for a child so young they will never remember and go to the LIFE Convention in Columbus Ohio Jan 27-29, 2012 (can you believe it is 2012?).

Maybe you went to a LIFE Open or Teamcast, or maybe someone shared the concept of the LIFE business. What could you possibly learn that you don’t already know about what you may have seen?

How about a different perspective on money? Maybe meet some young people who have left their jobs before the age of 25, 30, 35, 40, anyway way before having to wait until age 65 or 70? You might just learn something about yourself.

How about a change in your regular weekend routine? One thing for certain, it won’t be boring. Still uncertain, ask yourself this question; what could you possibly do that weekend that could change your life forever? This convention could. It did for us and many others. Why not for you?

Make a New Year’s Resolution, and follow the Nike quote and “just do it”!