Equal Opportunity – Access or Outcomes

Say No More

Say No More (Photo credit: Feggy Art)

“This crap has got to stop.”

“Ok, Avi, fill me in. What has to stop?”

Avi slid in the opposite side of the picnic table, obstructing Bevin’s view of the band busy performing a decent rendition of Ventura Highway.

“I am tired of all the crap at work. I am underpaid, I work harder than everyone else and not only does it not get noticed; now they filled Billy’s position with a new woman. So I got passed over when everyone knows I should have gotten the job. Billy said I was next in line. And everyone knows the only reason this new lady got the job is she is Spanish.”

“Uh, I think you probably mean Hispanic,” Bevin replied.

“Whatever,” sighed Avi, waving a half empty mug.

“Look,” Bevin stated, “not to be a killjoy, because I love a good complaint as much as the next person, but why would you even say that? And what makes you say you are underpaid? I thought you said Billy gave you a little extra last review to bring you in line?”

“First of all, why else would they bring in someone from the outside unless they needed to fill a quota. You know that is how all the hiring at the clinic is now. And yes, Billy did give me more last year, but I still don’t make nearly enough to live on. And you know what? Now I am going to have to do double the work because my new boss is clueless. She not only doesn’t know how to do anything, including paperwork for cases, she doesn’t think it’s her job either.”

This would have been a good time to take a stroll around the festival and just let it drop. But Bevin didn’t. “Ok Avi. I am not going to touch the whole thing with whether your new boss is qualified or not. But please tell me we aren’t going back down the avenue of ‘social workers are all underpaid’ again? I thought we killed that horse already.”

“Easy for you to say,” retorted Avi, hackles rising. “You have a good paying job that you like. I work just as hard and for what? Do you know that coal miners can make $80,000 to $90,000 a year and they don’t even need a degree?! For crying out loud, I put in time to get the education that everyone talks about and tell me how that paid off?”

“Then go get a job as a coal miner,” Bevin shouted back! “Let me tell you they couldn’t pay me $180,000 to go down in a mine everyday. You like it so much, go get a job as a miner then!”
“That is not the point. The point,” Avi clarified, “ is that this is just the kind of wage inequality that we need to fix. We have to get the pay in this country evened out. And now people…”
“Wait a minute,” Bevin cut in, tone incredulous. “Wait. Are you telling me you want miners to make less money? Are you kidding me?”

“Noooo,” Avi replied condescendingly. “I don’t want miners to make less; I think everyone should be able to make more. Some pay is too high for sure, but they could take some of that and spread it around so that everyone gets to make a little more and people aren’t pigeonholed by their occupation and underpaid for doing just as much work as someone else. That is what equal opportunity is all about.”
“That is definitely not what equal opportunity is all about. Ari, what you are talking about is equal results!  That is completely different.  Equal opportunity is all about ensuring that everyone has the same chance, the same access to the opportunities. Not that we all get the same compensation in the end.”

“Well we all know that the access isn’t equal.  If you have the money you get into the right schools, and coming from certain schools gives you a better chance for the kind of job like what you have,” Avi concluded. “And now I am stuck with the degree I have, so I am stuck with the job I have.”

“What?  First of all, I paid my way through school.  I took out loans and worked the whole time I went to school, and yes my parents sent me a couple bucks when they could help, but you know my parents didn’t have two pennies to rub together.  And you could have chosen this same path, but you have never been even a little bit interested in business and you hate numbers.  You have said before that you would hate my job,” Bevin exclaimed in frustration. “And you could go back to school, or switch careers.  Just because you have a Psych degree, doesn’t mean you have to be a social worker.  That was your choice.  Heck, I had a CFO that had an education degree at one point!”

“This isn’t about you Bevin.  It doesn’t always have to be about you.  Yes, you did it ‘right’ and all.  But you keep avoiding the point.  Yes, you might have been able to make the system work for you, but it doesn’t work for everyone and that is what is important.  That is what we have to change to give everyone an equal starting point; an equal shot.”

“That is hogwash, Avi, and you know it!  This is the only country in the world where it doesn’t matter what race you are, what your last name is, where you are from – we all have a chance to make it.  Yes, there are advantages in coming from a wealthy family or attending different schools, but look at the people every year who come from different places around the world for their shot, their opportunity and that make it …”

“Oh come on and cut the crap”, retorted Avi! “You are starting to sound like one of ‘them’.  You know the system is broken and we are finally in a position to do something about it.  We have a President who wants to make it better and all he is asking that everyone have a fair shot and those of you that have more and can afford it, share a little more.  And you bet your sweet bottom, I am going to do something about it, too.”

“That’s really enough. You had the same chances I did.  If you want a job making $90,000 a year, then find out what it takes to get one and go do it, but don’t complain to me.  And if you think you are being treated unfairly at work then you have some choices to make – you can suck it up and deal with it, you can work to try to change it, or you can go somewhere else – this is a free country.  No one is stopping you. You have equal access to the opportunity. But don’t demand equal results – you have to do your part.”

I could continue as the conversation falls apart, but I think we all have a good idea how the conversation ends. Is Avi right or is Bevin right?  Should it be equal access to opportunity?  Or should it be equal outcomes for all?

So we have a good idea how the conversation ends, but not the story.  The names have been changed to protect the innocent here and the profanity removed from the conversation to enhance the civility. Click on “comment” and let me know your thoughts and let us know at the beginning of your comment – Equal Access or Equal Outcomes.

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Embarrassed of Success?

Dollars Roll

Dollars Roll (Photo credit: Images_of_Money)

“My brother is killing me,” the conversation began.

Cheryl has worked hard over the years to build a successful business career. “Don’t get me wrong, I love him, but he feels a constant need to run me down, especially at family gatherings, and attack my success in life.” Hey, I bet many of us have heard this story before right? Just to get you started in the right frame of mind, let me get a little background on the table.
• Cheryl went to college and worked part time jobs to help pay her bills and cobble together money for a graduate degree.
• “Bob” went to college as well. While he didn’t go for that whole “uptight business” thing, he did secure a job.
• Based on her grades and recommendation, Cheryl got into a great MBA program and earned a dual degree while still working part time to pay bills.
• Since that time, Bob has moved between a couple places on both coasts living what he would describe as “Bohemian” lifestyle. Bob explained he didn’t want to be tied down and that there is too much to see out there. He has some great stories and photos of parties and travel. Eventually, he landed a public sector job. Not the highest paying in the world, but with good benefits, and in general, enjoyed life.
Cheryl worked long hours, and moved to several different cities across the country. She has turned around departments and divisions more than once. She has sacrificed family time to build her career, and while she took a bit of a beating in one of the housing downturns when she had to move for her job, by all accounts, she has done very well financially.
The issues come in, as Cheryl explains, when her brother starts with the discussions regarding taxes, tax loopholes and income disparity. Not sure what card he could possibly play with his sister on income disparity, I had to ask for further explanation. “With Bob it isn’t about gender or race when it comes to income disparity, at least not when I am around,” Cheryl explained, “it is all about how those that are already wealthy aren’t doing their share.” So what exactly is the issue, I wondered aloud?
Cheryl explains it like this – while Bob was out at late night parties and living this mobile lifestyle, sometimes even just leaving a job or an area without notice and never coming back, Cheryl was buckling down and doing what she thought she needed to do to make her dreams come to fruition. A family, maybe a nice house and car, money to put kids through school, money to go on nice vacations or even better, what if one day she could be one of those folks with a ‘vacation home’ somewhere. That was what success looked like to her. And she asked everyone who would stop and give her a minute of their time what she would have to do to make something like that come true. “You know, honestly there were times I was a little bit jealous of Bob. Times when it was stressful or tough; when I thought that it would be nice to just go a blow off some steam and party in the Keys, Cancun, or go to Tahiti and the consequences be damned,” she exclaimed.
So here’s the thing, Cheryl explains to me. Bob made choices in life, and he chose the life he wanted to lead. He finally bought a house, but it is in a depressed neighborhood and his car is barely operable. Not one of Bob’s life choices would be one that would point you to a higher income or financially independent lifestyle. But he begrudges everyone else that did. Those are decisions we made – I don’t begrudge him the late night parties and living in what I would consider vacation locales. That was what he wanted. But I don’t think it is fair that after I took the risks and I did things differently to ask that I gave some to him because he made another decision. Frankly, it sounds a little like the parable of the grasshopper and the ants.
“Bob’s actions make me feel like I should in some way be embarrassed that I have been able to achieve many of my dreams, and yes, I have a nice house and a nice car – and I can assure you no one handed them to me. I worked for them. And I shouldn’t have to feel that way – no one should have to feel that they should apologize for their success, and as an American I can’t imagine for the life of me why we would want a President or a Presidential Candidate to apologize for a successful private sector career, or building a successful business. In fact, I would think they would have to explain or apologize a little if they did not!”
Have you ever had this conversation around the Thanksgiving table or the picnic table? What do you think and how did it “resolve” itself?

Do Small Business Owners Make Too Much?

Out Of Debt

Out Of Debt (Photo credit: Garrettc)

 

Chris is a small business owner with a question – Should I be able to take home $400,000?  If I have a $400k profit reported as income, is that unfair?

A short history of Chris’ business over the last 4 years

  • 2008 – Lost 3 of my top 5 largest customers.  Reported major losses in earnings
  • 2009 – I had to do layoffs for the first time ever as the losses continued to pile up.  I took no paycheck, no income.
  • 2010 – We pretty much finished at break even.  Even so, I took no paycheck and had to dip into 401K to cover expenses because we exhausted our line of credit and banks wouldn’t lend.  The bank’s position was that despite over 10 years of operations, we had depleted all our assets, meaning our cash, and had shown losses for 2 years.  Even though orders were coming in, we weren’t a “safe bet” in their minds
  • 2011 – We are making money again, and will make a nice profit, but are in such a hole from a cash flow standpoint that we were starving for cash due to some of the large orders. I depleted the rest of my 401K to keep afloat and purchase materials.

If Chris’ company shows $400,000 in earning 2011 does that make Chris one of those greedy owners who should “share a little more”?

Given that Chris went 2 years without a paycheck, and depleted his retirement savings, I can’t imagine anyone would have an issue with him taking those earnings, right?

Ok then, what if in 2012 the opportunity arises to make $400,000 again?

Chris’ argument is that there needs to be enough “working capital”, especially with business coming back and growing, to cover operating expenses.  The explanation is that the company lays out money for the materials and the costs of wages to make the goods 2 or 3 months before payment is actually received for the products.  And, especially after the lessons of 2008-2010, companies should make sure they keep a solid “rainy day fund” to cover things like economic slowdowns, plus there is equipment that needs replaced or upgraded.

President Obama and his administration and followers feel that companies like Chris’ should have to “share a little more”.  How much more?  Well, some have gone so far as to say profits should be banned!  In that case, I suppose, owners like Chris should just get a paycheck like any other employee of the business, even though they will be expected to front the money for startups, put in the hours and oversee the business as it grows.   But the current administration doesn’t see any issue with that.

“From each according to their abilities, to each according to their needs.”

Click on “Leave a comment” and let us all know your thoughts.

Here’s Really the Biggest Problem in the American Economy – What nobody wants to say Part #1

Redistribution of Wealth

Redistribution of Wealth (Photo credit: nodigio)

Here’s The Biggest Problem In The American Economy

•Globalization
• Technology
• Stagnant wages
• Business Profits
• Tax laws

“These and other factors have contributed to the most radical redistribution of wealth that the United States has ever seen. Since the late 1970s, the country’s assets and income have moved steadily from “average” Americans to the richest Americans”

-Henry Blodget, Business Insider

Wow. That is a heck of a claim. Redistribution. Let’s take a look at what redistribution actually is. The term literally means distributing again – so in effect, taking something that has already been distributed, and distributing it differently a second time. Or more clearly stated, taking something from one group or individual and giving it to another group of individuals. I can’t fathom that anyone really wants to claim the wealthy have raided the accrued earnings and personal assets of the “average” Americans and given it to owners and senior management. It is one thing to say that the income gap between the wealthiest Americans and the average, median, or mean income of working Americans has increased since the 1970’s. That would be a claim that could possibly be substantiated or refuted through data. But that is not at all what he alleges. His claim is much more sinister – one group of individuals is intentional taking from another, without justification, and arbitrarily giving to another. A claim that is purely argumentative.

He then comes right out with it. In the next paragraph, carefully avoiding using terms like “redistribution”, he proposes spending our way to a more vibrant economy. If only the businesses of America would give up some of the wealth, everything would be fine. Unfortunately, these businesses are shortsighted by not just distributing this money to other people, like Henry Blodget no doubt, who would better know how to spend it. Spend, don’t cut costs, he opines. Ironically, much later in his post, he makes a recommendation (which I agree with, by the way) that American consumers need to save more and spend less! He never reconciles these two conflicting view points.

“The benefits of our free-market capitalist system … are accruing disproportionately to owners, managers and customers, at the expense of everyone else.”

Disproportionate according to what? Are we back to the “I just think you should share more” argument? And who will decide how much to share and who should get it? I suppose the government, unless Mr. Blodgett will be so bold as to offer up his services to fairly split that pie up. Notice also customers are also lumped into that mix of individuals that are taking advantage.

“It’s everyone else who is getting hosed”

So, the “average” American is not also a customer? Who then, are these “customers”, and how will we make sure they aren’t getting unfair benefits from the free market capitalist system? Will we perhaps charge them more, maybe in the form of a tax, because remember, we don’t want the owners to make too much profit. Then we could take the tax and give it to the consumers so they can buy more stuff, which is critical to the robust economy as Mr. Blodgett envisions. But then, if prices were higher, wouldn’t the “average” American need even more money to be able to afford to make purchases? And again, who will make this decision?
Do you agree with the notion that somehow companies and owners are unfairly taking income and assets away from the “average” American? Or is it an unfortunate, pandering, political claim that demonizes those that are successful and reinforces a victim mentality on the “average” American?
In the coming days I hope to cover:
• Globalization
• Technology
• Stagnant wages
• Business Profits
Let me know your thoughts.

Who are the Job Creators?

I recently read what I must admit was a well written opinion on who creates job in our economy – who are the real job creators. The writing style itself was clear and easy to follow. The post did a surprisingly fine job at avoiding insults and outright attacks on a person. The core message, however, was that businesses don’t create jobs, the consumers do. A little bit of the chicken and egg argument, but well expressed, wrong though it might be. The writer opined the business owners unfortunately had the luxury of sulking around, hoarding their money, and waiting for better times. Our writer goes on to express that if the writer and the writer’s followers had some extra incremental income, a couple hundred or thousand dollars a month, “they” would pump that back into the economy on dinners, or movies, glasses or shoes for their kids, not speculating and investing in derivatives, which is to be assumed what all the “job creators” do with money when it falls into their hands. So instead, they would use this extra money to create extra jobs by, well, spending it.

Now it isn’t perfectly clear where this windfall would come from, but with a reference stating that the author and residents of this particular neighborhood probably haven’t moved any of their excess wealth into offshore tax shelter, we can guess the money would be transferred from the current owners to a new breed of job creating consumers. After paying the sales and local property taxes and income tax, the occupants are just short on “excess wealth”. Evidently, there would be more if they didn’t have to pay these onerous taxes.

One of the points made is allegedly by a business owner who when asked what was important to keep his small business afloat responded without hesitation, “Customer Demand.” The author inquired about the impact of tax breaks, and small business owner rightly responded that tax breaks don’t encourage hiring of more people or expansion of business. The point was followed by a disdainful comment regarding the “sanctity of small business and job creation”, leaving little question where the author’s point of view on the topic is.

I have to pause for a moment here and comment. I have a number of friends and colleagues that are current or former owners of small businesses. My spouse and I have also been owners of small businesses and are well aware of what it takes to own, operate or keep a small business afloat. The small business owners I know are interested in fewer paperwork and administrative burdens. Simpler codes. A less aggressive anti-business stance by the government. And yes, taxes are an issue. If you have run a business, you are well aware of the dizzying array of taxes and programs that you must comply with. And just because a tax credit isn’t what drives hiring and expansion, a tax increase can certainly suppress it by reducing cash flow and adding administrative burden.

I don’t understand why there appears to be so many people right now who believe that small businesses don’t create anything. Or why small business owners didn’t build their business. Job creation comes from government support? And now it comes from the consumers if we would only give them a little more of the “excess money” people have lying around. It seems job creation comes from everyone but the business owners. The perception is that everyone has handed everything to the small business owners, they just happened to be the poor souls running the businesses. If they were but a little more intelligent, they could work for the government and really create jobs. Or better, get an income redistribution and create jobs. On a blog response the other day I actually read a comment where a reader stated that they couldn’t help it if a struggling business owner is “too stupid” to just apply for an SBA loan. In this particular commenter’s opinion, everyone who applies gets a loan! The fact of the matter is large businesses almost always had to start as a smaller business. And small businesses are run by people who put everything on line to get ideas going. They make sacrifices to follow those dreams, often exceptionally long hours, risking their savings, giving up many of the things everyone takes for granted, sometimes going through long stretches of time without a paycheck. Only to face the derisive comments that prevail today – they didn’t build it. They don’t create jobs. They make too much money. They don’t pay enough in taxes. This is simple. People go into business to make money, and they start a business in hopes that the risk and effort pays off for them. There also must be a demand for the product or service. If not, the business will not exist. This is in no way supportive of a position that businesses do not create jobs, nor is it supportive of position that we should tax businesses further to redistribute wealth.

Who are the job creators? Do you believe that it lies in the hands of consumers? Do you believe that if we simply handed a subset of the population couple hundred dollars a month more, that would drive robust economic growth?

Don’t forget to click on comment below and let us know your thoughts.