Category Archives: Business and Economy

Dome sweet dome?

Posted on by

Wired points to a recent Toronto Star article about the financial and environmental benefits of dome-style housing:

It’s earthquake-proof, tornado-proof, fireproof, can be buried into a hillside, and it’s impervious to insect and animal attacks.

Cost efficient, easily maintained, earth-friendly and extremely endurable….While typical new homes exceed an EnerGuide rating of 65 to 70 [link], high energy-efficient homes can push over 75, and R2000 houses can exceed 80, an Ottawa dome house hit 88 when constructed in 2006.

According to the article, the main problems with constructing a dome home are the local regulators and lenders suspicious of its current novelty:

[Collin] Cushnie and [Sunny] MacLeod [of the Great Lakes Dome Co.] realize that widespread appeal will only come through acceptance as an alternative to “stick and bricks” construction. In fact, they usually have to coach the local building inspector and mortgage holder for approval.

One common complaint leveled against McMansions is how “tacky” and “ugly” they are.  Given all the benefits of dome housing (environmental and otherwise), it will be interesting to see if domes can overcome similar perceptions and achieve widespread acceptance in the marketplace.

Hochschild highlights new individualized service jobs like “wantologist”

Posted on by

Sociologist Arlie Hochschild has written a new book, The Outsourced Self: Intimate Life in Market Times, that explores the rise of jobs to meet our individualized needs:

Don’t know what you want out of life? No problem. Hire a wantologist!

This new profession actually exists in 2012. Just fork over a little cash (a couple hundred an hour or so) and this individual will help you figure out your most important goals in life – and help you get closer to achieving them.

Sound like a bunch of hooey? Consider Esther James, a wantologist in San Jose, California. She has a PhD in psychology from NYU, practiced for twenty years as a Jungian psychologist, trained as an executive coach – earning $250 an hour – and has now transitioned into full-time life coaching in the wake of the economic downturn, as she explained to sociologist Arlie Russell Hochschild.

Hochschild, based at the University of California, Berkeley, profiles James and many other personal service providers in an enlightening new book, The Outsourced Self, which describes how the market has risen to meet the needs of increasingly harried and needy Americans…

Hochschild puts these out-of-the-blue service professions in the broader context of a society right now that “undermines community, disparages government, marginalizes nonprofits, and believes in the superiority of what’s for sale.” As she told The Fiscal Times in an interview, “The wantologist’s profession is fledgling at the moment, but it’s very real – it’s its own speciality. I’ve seen the ‘wantology workbooks.’ I’ve talked to the clients. Services like this are only going to proliferate. A lot of things that seemed weird yesterday aren’t weird today.”

The themes of this book sound similar to Hochschild’s previous books, The Managed Heart and The Second Shift, that also address the intersection of individuals and a changing social context. In this new book, it sounds like Hochschild is arguing that we lose something as a society when important individual tasks are outsourced to free up the time for us to do “better” things.

The interview with Hochschild is worth reading in full but there would seem to be another aspect to this shift that is not addressed. Wouldn’t these sorts of services primarily cater to those with the economic resources to pay for it? Hochschild mentions how dating websites could also fall into this category (and these are relatively accessible) but in order to hire a life coach or personal organizer or “wantologist,” you would have to have some extra money. Or, perhaps these services could be quickly becoming “necessary,” meaning that people have to cut back elsewhere in order to achieve certain priorities. For example, this might include a family that feels it is a necessity to hire a college application consultant for their high school student since college is such an important decision and predictor of chances later in life. If these services are becoming more normal, than it could be another marker between social classes: can you afford to outsource some of the mundane or necessary tasks of lives off to others? And who is expected to work in these service jobs? Perhaps this is simply a more palatable, market-based solution to the issue of the wealthy hiring servants in the past.

This also reminds me of two other things:

1. Could this be viewed as an example of extended cognition, the idea that we as humans are effective at utilizing other resources to tackle certain issues for us (even as basic as writing ideas down on paper so we don’t have to devote extra brain space to remembering these things) and freeing ourselves for other things?

2. A.J. Jacobs wrote about an experiment in personal outsourcing (with more detail in his book The Guinea Pig Diaries: My life as an Experiment).

When looking at the minimum wage, should we consider whether a poorly paying job is better than no job?

Posted on by

I ran into an argument about whether the minimum wage should be raised in the United States and it got me thinking about the reasons behind the argument for raising it. To start, here is some of the debate:

One of the harshest realities of America’s slow economic recovery — and there are many — is the fact in spite of modest job growth, pay for workers is falling. Year over year, average inflation adjusted wages have dropped by 0.6 percent for all private sector employees. They’re down a full 1 percent for non-supervisors — your retail salespeople, your shop floor factory workers, your cashiers. In other words, even as the overall employment picture has improved in fits and starts, the working poor are getting poorer.

Some believe this is a sign of the recovery’s weakness, and today the National Employment Law Project used it as a rallying point to call for a higher minimum wage. According to their analysis, which is current through the beginning of 2011, while the bulk of job losses during the recession affected medium wage earners, such as paralegals and nurses, most of the hiring post-recession has been for low-paid service work. Middle class jobs, they argue, have been replaced with poverty wage jobs…

But here’s the alarming part. All of this might simply mean that the same forces that caused wages to stagnate before the recession will make them stagnate after the recession. It’s just another sign that income inequality is here to stay, unless something radical changes that will give working class families a larger slice of the pie. Will raising the minimum wage do that? It might help on the margins, certainly for the 3.8 million workers who earn it.  (I’m not one of those who believes that a higher minimum wage actually kills jobs. This great, short Slate piece from 2004 explains why.) But the vast majority of American workers won’t see much benefit from it. Rather, fixing the wage problem means we need to think about the fundamental problems skewing income growth towards the top, from spiraling CEO pay to an inadequate education system.

Falling wages are taking us back to where we were before the recession. For many workers, that’s not a good place. And there aren’t any easy ways out of it.

Of course, arguments for raising the minimum wage often focus on the idea that it is not enough money to live on. Hence, calls for a living wage that is more closely tied to a more steady standard of living.

But I wonder if there isn’t a bigger issue at work here: the idea that low-paying jobs may not be worth having. In other words, people might be better off without a minimum wage job. The low-paying job may be helpful in securing a new job (you don’t want an unemployment gap in your resume) or moving up but too many of these low-paying jobs pay so little that employees may not be able to do the things they need to do to move up (move to a new area where jobs are more plentiful, own a reliable car to expand job prospects, enroll in classes, etc.). Additionally, a number of these jobs don’t really offer chances for advancement; if they do, it is limited to a small group of workers. So these workers can get trapped in a cycle of low-paying positions that meet some basic needs to survive but never provide the hope to do something better. This is reflected in books like Nickel and Dimed: it is hard enough to do the daily grind, let alone find some light at the end of the tunnel in terms of a better-paying job.

In this sense, making a small adjustment to the minimum wage wouldn’t seem to do much. It might offer a little more money but this is likely eroded quickly by inflation (past and future). What we then need is more jobs that provide a higher standard of living and give more employees the opportunity to move on and up to something better.

(I realize there is a lot more going on here. But I wanted to get at the idea that simply having a job isn’t a guarantee of having the chance to reach the American Dream. Being willing to work doesn’t necessarily guarantee a good outcome. This also reminds me of Katherine Newman’s book No Shame In My Game about the working poor who want to work but can’t access the jobs that would lead to success.)

Argument: “Peak Housing, Peak Fraud, Peak Suburbia, and Peak Property Taxes”

Posted on by

Charles Smith suggests the housing issues in the United States are related to several other concerns and all of this isn’t likely to improve soon.

I don’t know if Smith is correct but why aren’t more people talking about the possible long-term consequences of a depressed housing market? Is this unlikely to happen or are people afraid that this actually might happen?

Can Weber’s concept of charismatic authority predict a decline for Apple?

Posted on by

One analyst suggests that Apple without Steve Jobs will decline because as sociologist Max Weber suggested, organizations change after their charismatic leader is gone:

Weber described three essential business categories: Legal/bureaucratic, traditional, and charismatic, with the latter companies typically helmed by individuals with the “gift of grace.”…
“Followers and disciples have absolute trust in the leader, fed by that leader’s access to nearly magical powers. Charismatic authority repudiates the past, and is in this sense a specifically revolutionary force.”

According to Colony, Apple chose a “proven and competent executive” – Tim Cook – to succeed Jobs. Nevertheless, the analyst believes the new CEO’s “legal/bureaucratic approach” will prove to be a mismatch for an organization that feeds off the gift of grace…

“Apple’s momentum will carry it for 24-48 months. But without the arrival of a new charismatic leader it will move from being a great company to being a good company, with a commensurate step down in revenue growth and product innovation,” the analyst predicted.

I guess we can wait and see if Weber’s ideas apply to this situation. Weber described this transition after the loss of a charismatic leader as a process of routinization where the group bureaucratizes this charisma.

A few things make this process more messy:

1. At one point, Steve Jobs didn’t have this “magic” either such as before he was inventing things or when he stepped down from Apple. This suggests that context matters: certain ideas are produced or take off based on a variety of other circumstances.

2. Judging by the recent stock price, investors don’t seem too worried about Apple’s future. At what point will they and other start publicly suggesting that the loss of Jobs is a really big hurdle to overcome? Is this an “acceptable” reason for a company to plateau?

3. Shouldn’t one measure of a good leader be the ability to empower others to take over and do well (or even better?) in the future when that leader is gone? If so, perhaps we should be asking whether Jobs was equipping others at Apple to succeed after him or not.

4. Is this an inevitable process for groups that lose a charismatic authority?

Sociology article helps lead to getting diversity information on NYC financial firms?

Posted on by

Earlier this week, two major financial firms said they would release data on the gender and race of their employees:

There is no requirement that Corporate America disclose its diversity data, but Monday two major companies – Goldman Sachs and MetLife — announced they’d be giving up the long-held secret…

The information is available and has been since 1964, because under the Civil Rights Act of that year, companies with 100 workers or more have had to report the data on race and gender annually to the U.S. Department of Labor. The problem has been, they were not under any requirement to release that data to the public, or even to local governments such as New York…

And there’s a lot of inequality, especially in the higher ranks at companies where the lack of diversity is greatest.

When I saw this, I was disappointed we didn’t get any information willing these companies were to start releasing this data or whether they were feeling enough public or government pressure. And then the article had a quote from the author of a recent sociology article on the topic that was published in a top journal and I wondered if this article made any difference…

Liu’s push for disclosure is a good first step on the road to more diversity, said Emilio J. Castilla, professor at MIT Sloan School of Management and author of  an article titled “Bringing Managers Back In: Managerial Influences on Workplace Inequality,” published in the American Sociological Review late last year.

“But this might not be enough,” he stressed. “They’re increasing transparency, showing some percentages, but I’d think about accountability. Are there organizational procedures in place to make sure these efforts result in the outcomes they want?”

I’m probably too hopeful here that an article in a sociology journal was influential but it couldn’t hurt…right?

British economics writer: economics has failed but are the sociologists ready to step up?

Posted on by

This is an interesting viewpoint: “Mainstream economic models have been discredited. But why aren’t political scientists and sociologists offering an alternative view?” Here is some of the discussion about how sociology has failed to seize this opportunity:

Perhaps you have more faith in the sociologists. Take a peek at the website for the British Sociological Association. Scroll through thepress-released research, and you will not come across anything that deals with the banking crash. Instead in April 2010, amid the biggest sociological event in decades, the BSA put out a notice titled: “Older bodybuilders can change young people’s view of the over-60s, research says.”

Or why not do the experiment I tried this weekend: go to three of the main academic journals in sociology, where the most noteworthy research is collected, and search the abstracts for the terms “finance” or “economy” or “markets” since the start of the last decade.

Comb through the results for articles dealing with the financial crisis in even the most tangential sense. I found nine in the American Sociological Review, three in Sociology (“the UK’s premier sociology journal”), and one in the British Journal of Sociology. Look at those numbers, and remember that the BSA has 2,500 members – yet this is the best they could do…

It wasn’t always like this. One way of characterising what has happened in America and Britain over the past three decades is that people at the top have skimmed off increasing amounts of the money made by their corporations and societies. That’s a phenomenon well covered by earlier generations of sociologists, whether it’s Marx with his study of primitive accumulation, or the American C Wright Mills and his classic The Power Elite, or France’s Pierre Bourdieu…

Nor is there much encouragement to engage with public life. Because that’s what’s really missing from the other social sciences. When an entire discipline does what the sociologists did at their conference last week and devotes as much time to discussing the holistic massage industry (“using a Foucauldian lens”) as to analysing financiers, they’re never going to challenge the dominance of mainstream economics. And it’s hard to believe they really want to.

Ouch.

I can imagine some sociologists might argue that the world is much bigger than markets and economics. They would not be wrong. At this same time, this critique could be viewed as a call to action: does sociology offer a compelling alternative way to view the world? How can we account for both economic and social life?

I will say that there does appear to be growing interest in economic sociology. This may not be reflected in these particular journals but more sociologists are looking at the social and cultural dimensions of economics. As noted, this was a key concern of a number of foundational sociologists, observers who noticed that industrialization was changing the social world. I wonder how many sociologists would view studying the economic realm as something “dirty” (too many ties to capitalism, too messy, too close to economics, etc.) or “uninteresting” (not what really motivates them to research, teach, and engage in public life).

Economist argues best restaurants often in “dumpier locales”

Posted on by

Over at the Atlantic, George Mason University economist Tyler Cowen explains why excellent restaurants consistently appear in the “cultural wasteland” of suburbs:

Low-rent restaurants can experiment at relatively low risk. If a food idea does not work out, the proprietor is not left with an expensive lease. As a result, a strip-mall restaurant is more likely to try daring ideas than is a restaurant in, say, a large shopping mall. The people with the best, most creative, most innovative cooking ideas are not always the people with the most money. Many of them end up in dumpier locales, where they gradually improve real-estate values…..

I love exploring the suburbs for first-rate ethnic food. Many people consider suburbs a cultural wasteland, but I am very happy searching for food in Orange County, California; the area near San Jose; Northern Virginia, near D.C.; Somerville, Massachusetts; and so on….It is especially common to see good ethnic restaurants grouped with mid-level or junky retail outlets. When it comes to a restaurant run by immigrants, look around at the street scene. Do you see something ugly? Poor construction? Broken plastic signage? A five-and-dime store? Maybe an abandoned car? If so, crack a quiet smile, walk through the door, and order. Welcome to the glamorous world of good food.

Cowen’s argument about restaurants reminds me of another Atlantic piece celebrating “low road” buildings which Brian previously discussed.  It’s not surprising that great work–and great food–often happens in low rent locales like “junky” suburban strip malls and office parks given their lower (financial) barriers to entry and lower operating expenses that free up more cash to flow each month into improving their tenants’ business.

Still, it strikes me that the financial health of restaurants is more location-dependent than for many of the business populating “low road” office parks.  Whereas many office-based business are not dependent on high volumes of foot traffic for survival, restaurants almost invariably are.  (Unless, of course, that particular restaurant focuses primarily on a delivery and/or catering business model.)  A less prestigious restaurant location is a good value for the owner (and likely to survive long term) only if the drop-off in foot traffic/customers due to the “bad” location is more than outweighed by lower rent.

More foreclosures on the way in 2012?

Posted on by

While many might hope for economic progress during 2012, some are suggesting that another wave of foreclosures will hit during 2012:

In 2011, the “robo-signing” scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur…

Online foreclosure marketplace RealtyTrac estimated that while foreclosures dropped slightly nationwide in February from January and from February 2011, they rose in 21 states and jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).

One big difference to the early years of the housing crisis, which was dominated by Americans saddled with the most toxic subprime products — with high interest rates where banks asked for no money down or no proof of income — is that today it’s mostly Americans with ordinary mortgages whose ability to meet payment have been hit by the hard economic times…

Is this the final wave?

If it is primarily “hardworking, everyday Americans” who bear the brunt of the 2012 foreclosures, will the coverage of foreclosures and the proposed remedies change? In previous years, it has been easy for some to suggest that those who made and accepted subprime mortgages deserved what they had coming as they extended their credit and debt too far. If this year’s foreclosures are now occurring to people who didn’t overextend themselves yet still fell prey to the economic crisis, will the narrative change?

“A region’s workforce is not defined by its immediate suburbs”

Posted on by

The Chicago Tribune has a story about “super-commuters” who make the trip between Chicago and St. Louis. While the story seems more intent on putting a face on this growing phenomenon (although the numbers are still relatively low), there is a very interesting quote from a researcher about how we should view jobs and regional economies:

Regardless, said Mitchell Moss, the NYU professor who authored the study, the trend speaks to both the increased flexibility of modern-day workers — “the office” can be almost anyplace — and the challenges facing two-income families in a weak job market: Why uproot your family when your spouse can’t get a job in the new city?

The trend illustrates how the economies of places like St. Louis are increasingly hitched to their neighbors.

“It tells you that there is an inter-regional economic relationship, which is growing between places like St. Louis and Chicago,” Moss said. “A region’s workforce is not defined by its immediate suburbs.”

I’ve written several times about the need for more regional cooperation in the Chicago region between city and suburbs (see this post regarding Mayor Daley and this post about Mayor Emanuel). With limited cooperation, communities can end up fighting over corporations and jobs, whether tax money from a particular municipality should be spent elsewhere, and how best to address regional-level issues like transportation or affordable housing.

What exactly would it mean for Chicago and St. Louis to cooperate? One area could be transportation: I assume both Chicago and St. Louis were on-board for plans to construct a high-speed rail line between the cities. Environmental issues could be another area. For example, both cities rely on interconnected water sources and shipping so common issues could arise (but remember there is a regional fight about Asian carp). But what about business issues? Could they set aside their separate issues to encourage economic development that might benefit both cities? Are there really economic opportunities they could both benefit from in spite of the distance between them?