More Americans fell below the poverty line last year, according to U.S. Census Bureau data released Tuesday.
The nation's poverty rate rose to 15.1% in 2010, up from 14.3% in 2009 and to its highest level since 1993.
Last year marked the third year in a row the rate increased. All told, 46.2 million people are considered in need. In addition, real median household income last year was $49,445, a 2.3% decline, the Census Bureau reported.
People laugh at me when I talk about higher education in negative terms. And I understand – it sounds hypocritical coming from someone with multiple academic degrees. But times and environments change. For my generation, higher education was far less expensive, more intellectually challenging and somewhat more rewarding than it is for young people today.
Now colleges lower their educational values, so that the degrees seem more intellectually accessible. The individual thinking is not cultivated anymore and slowly disappears together with independent studies. It became all about mechanistic skills of test-taking instead of true intellectualism.
Except for a few institutions still adhering to their academic values, most colleges' coursework does not require any reading beyond the textbooks. This is how we end up with scores of degreed "professionals" who never read. My famous pet peeve is having young subordinates with accounting degrees who don't understand the fundamental principles of double-entry bookkeeping.
So, for $200,000 you get a low-grade minimal intellectual input and the promise of… What? Nowadays, nothing. Ok, so wealthy parents may be willing to pay this kind of money in order to delay their children's exposure to the doldrums of the adult life – as far as I am concerned, not a bad idea if you love your children and can afford to do so. But other than that – it's really just nothing but a bad investment.
Yet, more and more children continue entering colleges, ending up with unbearable debts. Some are locked forever in terrible jobs, others are not capable of getting a job at all. And people still insist that the degrees open some highly desirable doors? Why is that?
Because, of that stupid club mentality that pollutes every aspect of our lives. Hiring managers and recruiters, themselves college graduates, will look down on those without the degrees, regardless of their abilities and knowledge. This idiotic pattern has to change. Not to boast or anything, but I always look for a spark of an intellect in a candidate's eyes before I look at the Education section on his resume.
At the same time, we cannot deny the fact that having graduate and post-graduate degrees inhibits entrepreneurial potential of many bright and capable people. I have been saying for years that the possibility of being paid good wages prevents people from entering the entrepreneurial route. It's too scary to gamble on your business success if you have a steady job. Thus, instead of building small and midsize businesses that could revive our economy, kids "all go to the university, and they all get put in boxes, little boxes, all the same."
But this point becomes even less relevant now: those highly paid jobs opportunities will not be there in the near future. Young people, please, you don't have to follow the rest of the sheep. Think for yourself; let your creativity take you on the self-fulfilling journey. And you don't have to strive to be rich and famous overnight either – not everyone is meant to be Gates or Zuckerman. There is nothing wrong with building your own small business that will provide you with middle-class living, while creating jobs for other people on top of that.
A couple of weeks ago New York Magazine used The Hiring Gap chart (see picture) as their Intelligencer topic. It compares domestic employment powers of ten "most valuable" ( in terms of their market capitalization) public companies in America in 1964 (converted into 2011 dollars) and now. Even though the numbers on their own are very striking and Andre Tartar's few-lines of commentaries and footnotes cut right through the fact that
"being a top American business no longer… means employing lots of American workers,"
the data left my calculating mind somewhat unsatisfied; it begged for further interpretation.
First of all, it's the damned "market capitalization" crap, which nothing more than a perceived value of the company by investing public – the very same public that cannot evaluate companies on its own and follows the leads of their brokers, WSJ analysts, CNBC (especially if they are doled out by sexy Maria Bartiromo or engaging Jim "Mad Money" Cramer), etc. Thankfully, there is an instrument we can employ to make these numbers somewhat more real – Price-Earnings Ratio:
Here is the new ranking of the 2011 listing, based on the companies' earnings.
Only three giants retained their places in this modified view: Exxon, Berkshire and Google. And, by my standards, those three are overpriced anyway: any stock with P/E ratio higher than 11 is overpriced. Google with 20 – ridiculous. Of course, it's not as bad as some other stocks, like Wynn Resorts, for a example, with a preposterous 60. It always shocked me that people buy stocks like that and then act all surprised when their savings go, "Bye-bye."
Another interesting angle of the chart is its reflection of the fundamental changes in industrial mix of Large-Cap companies, which speaks volumes about this country's economic and social environment. The only two companies present on both lists are GE and IBM. In 1964 we did not have any financial institutions big enough to claim not just one, but two spots in the top 10. The three tangible goods manufacturers that drove the US to its economic dominance in the 60s are gone off the list – GM, Dupont and Kodak. So, is the telecommunication super-power of the time – AT&T. Now, we have Apple and Microsoft, dividing the world into two camps of PC vs. Mac users. And isn't it comforting to know that as far as our OIL-dependence is concerned, we are still at the same point as we were nearly half a century ago?
Now, the focal point of the piece – the dwindling number of the jobs infused by these companies into American economy. In accordance with proper statistical rules, let's explain away the two companies with the highest and the lowest number of workers. Walmart employs 2.1 million of people, but it is irrelevant, and not because their average salary rate is one of the lowest in the country, but because their expansion put out of business smaller chains and thousands of independent retailers. Google, on the other hand, generates the majority of its revenue without any human participation, so I am surprised even by the 24K number.
Look at our beacons of stability, though – GE's number practically did not change and IBM employs nearly three times more people now than they did 47 years ago. Holla to that! The rest of them… well, we all know the story – there are three reasons for jobs going away and never coming back:
At the time this issue of New York Magazine came out, the unemployment rate was at 8.8%. Now it's 9%, and I believe that unless something changes fundamentally in our economic structure, it is only going to get worse. The new reality is that we cannot look at the giants whose operations financed through their publicly-traded stocks as the source of new jobs.
As long as investors listen to analysts' opinions and follow the "trends," the large companies' executives will continue applying their hardest efforts to minimization of costs in order to preserve their multi-million compensation packages. The workload will continue being exported abroad and jobs will disappear.
At this point, we can only rely on small and midsize American business for the influx of new jobs. That's where the efforts must be concentrated: helping the existing smaller companies' survival and stimulating creation of new entrepreneurial businesses.
Those who read this blog consistently know that I am developing a product that will help small and midsize businesses in their daily struggle for success, assuming I manage to solicit sufficient venture capital.
Back in the Fall of 2009, when "Up in the Air" was released, I didn't see it, but people told me I should have. I watched it the other day. Wow! It is not just an excellent movie and the most realistic piece of American cinema I've seen since 2005. It is also a gold mine of occupational themes that hit so close to home, it's unreal. You know, the subtle truths about corporate existence, which are so familiar to those of us, who have been boiling in that soup their entire lives. Thank you, Jason Reitman!
Our new economic reality of depressed businesses and desperate people serves as a recognizable background to the personal stories unfolding in front of us. The uncertainty of survival in the contemporary corporate world is so pervasive, nobody knows what tomorrow shall bring. "Living in the Now" is not a conscious choice of enlightened individuals anymore. Whether a CFO or a receptionist, in companies large or small – every wage-dependent person lives one day at a time.
As the matter of fact, George Clooney's character, Ryan Bingham, is sent to large companies. These companies can still afford to hire an outside firm to conduct the "separation" exercise for them, with fancy folders and severance packages.
In small business environment, even during the best of times, you wouldn't think of spending money on protecting yourself from the brutal necessity of firing people with whom you worked side by side. As a CFO/Controller, I've had my share of sitting across the table in a conference room, looking into a person's eyes and delivering the bad news. I developed my own style as well: do it gently, make them feel better, give them hope… Some even thank me at the end. Just doing my job, like Ryan Bingham.
He, actually, works for a small company owned and managed by his boss (Jason Bateman), who (how typical!) changes his mind about the company's direction three times in a few depicted weeks. Ingeniously, the filmmakers reduce smooth and dashing George Clooney to a powerless subordinate: his entire way of life is about to be changed by his boss's decision and there is nothing he can do about it. "…Here's the boat?.. Do you want to be in the boat?" You are either in or out. You have no choice. You swallow your pride and you go along. Just doing your job.
What are we doing? How do we go on and live with ourselves when we fire someone who is good at his job? How do we sleep at night after dismissing hundreds of hopefuls' resumes? And what happens when our own resumes get swept into trash? Do people feel anything at all? Those are our hopes that get dismantled. Do we register the weight of what we do? I don't know.
Everyone's life is up in the air, with no help coming. Help ourselves? We can try to stay positive and continue struggling on – that's the best we can do.
Don't you worry, dear readers, I am not planning on retelling "The Terminator" plot. As the matter of fact, the two technological developments I want to discuss are related to the CFOs' and Controllers' supervisory responsibilities. On the surface (!), they seem to serve a good purpose and could be attractive solutions to some of our common problems.
Every exec with subordinates communicating with financial institutions, investors, key vendors and customers, is vulnerable to their emotional whims, diplomatic abilities and verbal skills. This is especially true with out favorite mode of communication – emails, which remove the recipients' faces and voices thus making the expression of aggression easier.
I have a list of actual stories to be told about relationship damage caused by employees' spiteful writing. And it is not like I don't employ prevention strategies. I give training talks. I impose a sense of supervision by requesting to be copied on all important communications. I even write Post-Its and stick them on the worst offenders' monitors, "Please re-read ALL your emails three times before sending them out." Still, once in a while something happens that requires damage control.
Lo and behold! In NY Times Year in Ideas I read about ToneCheck – "an e-mail outbox filter that works as a sort of emotional spell-check, offers typists a chance to reconsider their words before" sending their missive. I watch the cute animated video attached and my first reaction is like "Finally!!! Hooray!!!"
Then I read further and I forget that I am a CFO with unruly subordinates who require monitoring. I remember that I am a Person and that Freedom of Speech is an important issue for me. Yeah, it's useful in the office environment, but this dangerous program has a capacity to be tuned to ANY CONTENT. I imagine it being installed without my knowledge by my ISP and checking my personal emails for "inappropriate" content as defined by… whoever has the power to do so. How do you feel about it now?
Here is another common problem and even scarier solution for it. How many times we catch our employees attending to their personal business or even playing online games during working hours? We wonder about the hours they waste the costs of it. Frustrated, we think we should like to watch them. So, here you go Computers That See You and Keep Watch Over You. This "wonderful" program sees you and analyzes your facial expressions. And it can be installed on your personal computer without your knowing it.
You know what? I don't want these "solutions." Not even in my office. Let me work harder with my employees on their work attitude, verbal skills and aggression management. If boycotting these products means that we can keep them away from invading our personal privacy, then be it. I hope you click on the links, read about it and agree.
It's like what Benjamin Franklin said,"Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety."
The Frustrated CFO 