Category Archives: Business and Economy

More Chicago suburbs hiring staff

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Perhaps this is another sign of a more positive economy (and more tax dollars): some suburban governments are hiring again.

According to a Daily Herald analysis of 61 suburbs, 31 of them added the equivalent of 139 full-time jobs during the fiscal year that ended April 30, 2015, for most suburbs and Dec. 31, 2014, for others.

But 16 suburbs eliminated the equivalent of 46 full-time jobs and 14 towns held the line on the head count from the previous year, the analysis of the suburbs’ most recent audits show…

Still, the vast majority of towns are operating with much smaller staffs than just a few years ago. At its peak seven years ago, employment by the 61 towns was nearly 10 percent higher with the equivalent of 13,251 full-time jobs, compared to a low point of 11,977 full-time equivalent positions two years ago, according to the analysis…

According to the analysis of the audits, the 61 towns in suburban Cook, DuPage, Kane, Lake, McHenry and Will counties first saw significant job reductions in 2010, when they reduced their workforces by 3.8 percent.

While this analysis is interesting, more background might be helpful. Suburban governments today have to balance efficiency (meaning keeping tax increases small or cutting the budget) and quality of life (the suburban life that many of the residents who moved to the community want to continue and enhance). This is not easy to do; residents tend to want more for their money and many might be convinced that government can always cut waste (or at least cut the money they don’t personally care about or benefit from). But, at some point, employees are needed.

This article suggests that a number of the new hires in suburban communities are part-time employees to limit the benefits costs. I’d be interested to see data on whether having more part-time employees in local government leads to better service and community outcomes.

What is a “digital sociology firm”?

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This news story reports the sale of a “digital sociology firm” named mPathDiscovery:

Richard Neal, CIO of mPathDiscovery, described TBX as a group of investors from different industries that came together in April. The transaction will provide mPathDiscovery with access to TBX’s capital, experience and business connections.

Neal said mPathDiscovery has two employees — himself and President David Goode — and uses an array of contract employees. The company will remain in Kansas City and soon will begin looking for its first office space.

One result of the transaction has been the purchase of the “digitalsociology.com” web domain. Neal said the name had been owned by a cybersquatter who offered to sell it for a profit.

Neal said digital sociology helps companies see who is saying what, when and where about them online. The process can help companies see how marketing messages are being received by the public and analyze attitudes about competitors.

Two things strike me:

  1. So this is beyond web analytics where companies try to figure out who is visiting their site. (That industry is crowded and there are a number of ways to measure engagement with websites.) This goes to the next level and examines how companies/pages are perceived. I imagine there are plenty of people already doing this – I’ve heard plenty of commercials for site that want to protect the reputation of individuals – so what sets this company apart? This leads to the second point…
  2. What exactly makes this “digital sociology”? As a sociologist, I’m not sure what exactly this is getting at. Online society? Studying online interactions with companies? The use of the term sociology is meant to imply a more rigorous kind of analysis? In the end, is the term sociology attractive to companies that want these services?

Recession decimated construction workforce

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Here is another sign the construction industry has not fully recovered from the economic crisis: the number of construction workers is still low.

The new-construction housing market is slowly recovering from the turmoil of the recessionary years, but builders haven’t been able to pick up where they left off. More than 2 million skilled labor jobs were lost to the economy, and many of those workers are gone forever…

Nearly 30 percent of the construction workforce disappeared during the Great Recession, reports FMI Corp., a Raleigh, N.C., provider of management consulting, research and investment banking to the construction industry. Among its ranks are plumbers, electricians, roofers, bricklayers and carpenters.

The shortage seems to be worsening. According to FMI’s 2015 “Talent Development in the Construction Industry” survey, 86 percent of respondents reported shortages of skilled labor. That’s up from the 2013 survey, in which 53 percent of respondents reported such shortages.

It may take a long time before the housing industry approaches where it was in the early to mid-2000s. In the meantime, those workers have to do something and/or go elsewhere. Even with all the political talk about helping workers, I don’t remember anyone suggesting plans for helping construction workers in the same way that politicians have discussed manufacturing workers.

Additionally, I wonder what it takes to ramp up with a lot of new workers if the housing industry starts booming again. Businesses today tend to shed workers when times are bad, add when the economy picks up, and disregard training and upstart costs. However, it is not always simple to just hire large numbers of laborers.

Calculator suggests developers can profit and build affordable housing

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The Inclusionary Calculator suggests developers can typically make 10% profits and build 12-15% affordable housing at the same time:

It can feel like a mantra among private developers: Requirements by municipal governments to include affordable units in market-rate housing developments make those developments unprofitable, even unfeasible. It may be one of the most frequently repeated claims about housing in general. Can it possibly be right?

The Inclusionary Calculator is an effort to settle this question—and to prove that one major assumption about affordable housing is a myth. Developed by the Cornerstone Partnership, the tool allows users to simulate the balance sheets for market-rate developments for any number of scenarios. It accounts for factors such as costs of production, financing, affordability set-asides, and parking requirements…

“In almost every case, we could target a 10 percent profit for the developer and still leave at least 12 to 15 percent of the units to be affordable,” McCarthy says…

So, not only does inclusionary zoning not raise the costs of market-rate construction beyond reason, it also does not raise the price of market-rate units for homeowners. It eats away at developer profits. That makes affordable housing a moral question, not a feasibility issue: Do leaders dare to challenge developers on their profit margins?

The Inclusionary Calculator is available here after watching a training video and registering.

This poses a fascinating question in the housing industry (as well as for other sectors of the American economy): just how much profit is enough? Very few people outside the housing industry would have any idea how much money developers and others make on the construction and sale of housing units. Perhaps the process is deliberately opaque or perhaps it is simply complicated. But, I wonder how the public in many communities would respond if they knew that 10% profits were generally possible while also providing affordable housing.

Of course, this is just one hurdle in the construction of affordable housing. Not allowing developers to claim that they can’t make money would help the process but in many communities, neighbors would still complain. A NIMBY response often takes over; who lives in affordable housing? What does this signal to outsiders? Won’t this lower our property values?

Naperville’s role in the founding of Coors

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After seeing numerous Coors Light commercials during football, I was reminded of Naperville’s part in the formation of Coors:

The J&N Stenger Brewery sat in what is now downtown Naperville between the late 1840s and early 1890s, slaking thirsts as far away as Chicago, Elgin and Ottawa. It was founded by Peter Stenger Sr. and was later run by sons John and Nicholas. John took over after Nicholas’ death in 1867.

In 1869, Stenger hired 22-year-old Bavarian-born Adolph Coors–yep, that Coors–as a foreman. He stuck around for about four years before taking off for Golden, Colo., where in 1873 he opened The Golden Brewery, forerunner of Coors. No one is sure exactly why Coors left Naperville, although some reasons have been bandied about.

According to the book “Coors: A Rocky Mountain Legend,” Stenger hoped that Coors would marry into the family.

“Stenger had three daughters,” said Brian Ogg, assistant curator of the Naperville Heritage Society. “And I think he did want to marry the brewmaster to one to his daughters. But it didn’t take, for whatever reason, and Coors left town.”

Both parties – Naperville and Coors – went on to do big things. Coors founded a company that is now part of the Molson Coors Brewing Company and has annual sales of $5 billion. Naperville had a number of industries in and near downtown in its early history including this brewery, Kroehler Furniture, and several quarry operations (including what later became Centennial Beach). Today, Naperville is known less for manufacturing and more for a large and wealthy population alongside high-tech and white-collar jobs in major corporations along I-88.

Yet, it is interesting to think about what might have happened if that relationship had worked out. Could Naperville today be home to a brewing empire? Would the city leaders then have made different choices about annexing land and building subdivisions after World War II? Would having such a business in the city exacerbated the downtown alcohol problems of recent years?

“What if the greatest threat to capitalism…is simply lack of enthusiasm and activity?”

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In a long excerpt from The Happiness Industry, William Davies explores a real threat to capitalism: a lack of happiness.

What if the greatest threat to capitalism, at least in the liberal West, is simply lack of enthusiasm and activity? What if, rather than inciting violence or explicit refusal, contemporary capitalism is just met with a yawn? From a political point of view, this would be somewhat disappointing. Yet it is no less of an obstacle for the longer-term viability of capitalism. Without a certain level of commitment on the part of employees, businesses run into some very tangible problems, which soon show up in their profits.

This fear has gripped the imaginations of managers and policymakers in recent years, and not without reason. Various studies of employee engagement have highlighted the economic costs of allowing workers to become mentally withdrawn from their jobs. Gallup conducts frequent and wide-ranging studies in this area and has found that only 13 per cent of the global workforce is properly “engaged,” while around 20 percent of employees in North America and Europe are “actively disengaged.” They estimate that active disengagement costs the U.S. economy as much as $550 billion a year. Disengagement is believed to manifest itself in absenteeism, sickness and—sometimes more problematic—presenteeism, in which employees come into the office purely to be physically present. A Canadian study suggests over a quarter of workplace absence is due to general burnout, rather than sickness.

Perhaps people should turn their attention away from the NSA and toward their employers:

Rather than the rise of alternative corporate forms, we are now witnessing the discreet return of the scientific management style, only now with even greater scientific scrutiny of bodies, movement, and performance. The front line in worker performance evaluation has shifted into bodily-monitoring devices, heart-rate monitoring, and sharing of real-time health data, for analysis of stress risks. Strange to say, the notion of what represents a good worker has gone full circle since the 1870s, from the origins of ergonomic fatigue studies, through psychology, psychosomatic medicine and back to the body once more. Perhaps the managerial cult of optimization just needs something tangible to cling onto.

Studying happiness (and related concepts like life satisfaction and well-being) is its own academic subfield – see earlier posts here and here. And governments are very interested in well-being as well with measures like Gross National Happiness from Bhutan and regular reports about the happiest countries on earth.

All of this reminds me of sociologist Arlie Hochschild’s research on “emotion work” in relationships to keep them going and “emotion labor” in jobs that require a consistent cheerfulness or happiness as part of the routine. This would include a lot of service and retail jobs where employees regularly interact with customers and need to present an upbeat image. This is not easy to do and can be quite draining.

And what might Marx say about this – capitalism goes out not with a revolution but rather with indifference and apathy?

Illinois tax breaks often fail to add jobs or keep companies

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The Chicago Tribune finds that tax breaks from the state of Illinois often do not work as intended:

In the first comprehensive analysis of 783 EDGE agreements, the Chicago Tribune found that two of every three businesses that completed the incentive program failed to maintain the number of employees they agreed to retain or hire.

State officials can’t say how many jobs have been created through the job program; nor can they say how many jobs EDGE companies have eliminated. The Tribune, however, found that 79 current or former EDGE recipients have reported eliminating 23,369 jobs through layoffs and closures since entering the program.

Officials have long pitched tax breaks as a competitive tool that bolsters the state’s fragile economy, and the program has seen explosive growth as Illinois battles with other states to attract and retain businesses. Leaders of the EDGE program say it has been a lifeline for dozens of companies, helping to create new jobs and improve workplaces.

But the Tribune’s analysis suggests that tax credits often do little to help companies expand or create sustainable jobs. A pattern of deals emerges in which businesses lobbied for maximum rewards and minimum requirements — and the state said yes.

Tax breaks may help politicians claim they are bringing in new jobs and money but they don’t often benefit taxpayers as much as the political and business leaders suggest. See earlier posts here and here. And perhaps the biggest issue is that once come communities or state start offering tax breaks, everyone feels like they have to play the game as well just to get a hearing from major corporations. It can then become a race to the bottom: as governments offer more and more breaks, companies benefit more and more yet the local area gets less and less.

If the Tribune‘s analysis is correct, perhaps a better route for the state would be to improve business conditions overall rather than resorting to tax breaks to simply survive.

Selling Bibles is big business

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The market for the Bible is still strong:

No official sales projections are publicly available, but if history provides a guide, the “NIV Zondervan Study Bible” could easily sell 100,000 copies by the end of the year — probably a lot more. The new study Bible by Zondervan, a Christian publishing house in Grand Rapids, Mich., owned by HarperCollins, could follow earlier blockbuster sales. The last NIV study Bible, published by Zondervan in 1985, sold more than 9 million copies.

The Bible business is booming. There are annual sales of 40 million Bibles — from study Bibles to family Bibles to pocket Bibles. That’s not even counting foreign markets. As journalist Daniel Radosh observed, “The familiar observation that the Bible is the best-selling book of all time obscures a more startling fact: The Bible is the best-selling book of the year, every year.”…

The “ESV Study Bible” is actually only one of 19 Bibles that have sold more 1 million copies in the past decade. The editors behind Zondervan’s new offering are undoubtedly looking for the same sort of sales, and there’s reason to believe they will get them…

The anxiety over kinds of Bibles — aggravated by the market — creates a demand for new, more authoritative works. Some of the most popular study Bibles are designed to reassure readers of the text’s accuracy and authority, while at the same time promising to be easy to read.

I worked for two summers in the warehouse of Tyndale House Publishers where we shipped a good number of Bibles (among other items, such as plenty of Left Behind books). We had all sorts of Bibles: different translations, ones for different people groups (teenagers, women, seekers, those with the education to make use of the original language and the translation side by side), and in all sorts of packaging from software to metal cases to real leather. I remember noting the two forces at work: the impulse to make the Bible available alongside the motivation to make money.

This is an area where Christianity and materialism come head to head and yet I’m not sure it gets discussed much. How useful are all those Bibles? How much do people need new and improved versions? Where does all that money go? Americans love to consume things…are the sales of Bible more of an indication of consumption than of religious fervor?

Indiana again takes aim at Illinois businesses

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The Illinoyed campaign ended but Indiana has a new strategy to lure Illinois businesses. From the featured story on the A State That Works website:

The state of Illinois has been drowning in debt for years due to mismanagement, and their only solution is to keep raising taxes. Sound familiar? Illinois taxpayers have been picking up the tab for longer than anyone cares to remember, but it wasn’t always that way.

Ten years ago Indiana and Illinois had the same AA credit rating, but the unfunded pension debt crisis in Illinois has steadily deteriorated over the years, to the point that their current credit rating of A- is the worst in the nation.

Illinois is borrowing a staggering amount of money to pay for state services and they’re seen as a bad risk to keep making those payments, according to the rating agencies. In fact, the interest alone on Illinois’ unfunded liabilities is about $1.5 billion per year…

Indiana is deliberately making smart financial decisions and defining what a state can do to pass the savings of efficient government on to their taxpayers by eliminating debt, keeping taxes low and continually balancing their budget.  It’s a refreshing change from a state like Illinois that has taxpayers picking up the tab for a public debt-management crisis, and it’s what makes Indiana a state that works.

Such efforts have been going on for quite a while yet I haven’t seen evidence that shows a campaign like this works. I’ve long suspected this is more about scoring easy political points than anything else; “look at the good things happening in Indiana while Illinois languishes.” Yet, somehow the Chicago region with its 9+ million people hangs on and the city is continually ranked as one of the top 10 global cities in the world.

One side note: part of northwest Indiana is in the Chicago metropolitan region. According to this campaign, some might get the best of both worlds: the residents and businesses get the lower taxes, less political gridlock, and less debt yet get to take advantage of the jobs and other opportunities the Chicago area offers. In the long run, a significant decline in Illinois or Chicago’s fortunes probably would have some residual negative effects not just on northwest Indiana but also the entire state.

Americans labor/work in order to…

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One day past Labor Day, some quick thoughts on why Americans work so much:

-We have the idea that hard work is a primary reason that people get ahead.

-We work because we need money. Many (not all) make enough to subsist even as the median income has been stagnant in recent years and working multiple low-wage jobs is seen as a badge of courage. Then, the money can be used to consume or buy the things we need to have to be up-to-date people (these days, a smartphone, flat-screen television, Internet access, etc.) or to assert our social standing. Or, we may buy things just because we like having a lot of things and we enjoy shopping and acquiring. Plus, much of our economy depends on consumer spending so people without jobs and money leads to some big issues for many economic sectors.

-We work because some like their jobs and want to use their skills and use their time doing something important or productive.

-We work to have an identity. No work = not being productive or not contributing to society. Either work or parenting (with a tentative guess that the first is ascending and the second descending) is the primary task of the adult life.

-We work to bank vacation days that we don’t use to the full extent.

Granted, I was thinking of this after teaching an Introduction to Sociology class the basics of Karl Marx’s observations about society. I paraphrased this quote from The German Ideology (pg. 12-13):

For as soon as the distribution of labour comes into being, each man has a particular, exclusive sphere of activity, which is forced upon him and from which he cannot escape. He is a hunter, a fisherman, a herdsman, or a critical critic, and must remain so if he does not want to lose his means of livelihood; while in communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic. This fixation of social activity, this consolidation of what we ourselves produce into an objective power above us, growing out of our control, thwarting our expectations, bringing to naught our calculations, is one of the chief factors in historical development up till now.

If we weren’t in this particular social economic system, how might work be organized differently to take advantage of people’s interest in creativity and production? How much of work today is freeing and leads to improvement of communities and the self?