Category Archives: Business and Economy

Incorporating Hispanic businessowners into civic and business groups

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Many communities have civic and business groups comprised of local businessmen. In Iowa and in other places in the United States, it has been a challenge to incorporate Hispanic business owners into these organizations:

Main Street Iowa, like other programs nationwide, has been working to overcome barriers, many of them cultural, that keep Hispanic-owned businesses from joining the historic preservation group.

Specialists such as Thom Guzman and Norma Ramirez de Miess said the effort is crucial to revitalizing Iowa main streets and downtowns, because Hispanics are rapidly becoming a fixture in Iowa’s business landscape. Hispanics are the state’s fastest-growing business owners and have the fastest-growing population…

Terry Besser, a sociologist with Iowa State University, said Main Street programs — as well as chambers and other merchant or business groups — have their work cut out for them. Her research shows that Hispanic owners often distrust outsiders and government.

A study of 18 rural communities in Iowa, Kansas and Nebraska showed that 24 percent of Hispanic-owned companies were business association members, vs. nearly 70 percent of businesses owned by white men.

The main suggestion in the article is that community leaders need to build personal ties with Hispanic businessowners before they can address commerce issues. How many communities do a good job at such outreach? This is an issue of social networking: white businessowners are plugged into these community organizations which can then lead to other opportunities.

This is a growing concern in communities where shopping areas, whether they be historic downtowns or strip malls or shopping centers, may be split between businessowners of different backgrounds. Working on projects, like building preservation or facade improvement, may prove to be more difficult. Local business organizations, such as the Chamber of Commerce, usually aim to work on improving business opportunities for the whole community but this could be problematic in terms of lobbying or getting things done if large portions of the business community are not on board.

Yet I wonder if the aims of Hispanic business owners and these groups are the same and if it is really a problem if they are not.

Become friends with your Toyota

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Companies are looking for ways to leverage social networking sites for their own purposes. Now Toyota announces plans to create their own social networking service where you will be able to become friends with your car:

Toyota is setting up a social networking service with the help of a U.S. Internet company and Microsoft so drivers can interact with their cars in a way that’s similar to posting on Facebook or Twitter.

Japanese automaker Toyota Motor Corp. and Salesforce.com, based in San Francisco, announced their alliance Monday to launch “Toyota Friend,” a private social network for Toyota owners…

With the popularity of social networking, cars and their makers should become part of that online interaction, [Toyota’s president] said.

“I hope cars can become friends with their users, and customers will see Toyota as a friend,” he said.

There is the whole purpose of this: strengthen the relationship between customer and product. I wonder if Toyota owners would really flock to this concept. They might be loyal customers because of the value and reliability of Toyotas but is there a fervent fan culture that would want to be part of a social network?

But there is an interesting phrase in this article: “cars can become friends with their users.” Perhaps it was not intended this way but it implies that cars have agency. The article talks about how newer cars, such as plug-in electric vehicles, need more monitoring and so users will be open to getting more information from their cars. But in the end, these cars are just cars, machines that help people get around. We are a ways from having cars that could hold human-like conversations with their owners (see this recent piece on progress in tackling the Turing Test).

While some commentators have lamented the difference between off-line and online friends, perhaps this is the next controversial step forward: friendships with products. Right now, you can be a “fan” on Facebook but a friendship implies a closer and more interactive relationship.

With banks and lending institutions owning so many homes, housing values will be lower for several years

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Foreclosures are not just an immediate problem; the New York Times reports that the number of foreclosed homes now owned by banks and mortgage lenders are likely to depress the housing values for years to come:

All told, [banks and mortgage lenders] own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.

Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales. With the spring home-selling season under way, real estate prices have been declining across the country in recent months…

Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes. As a result, home values nationally could fall 5 percent by the end of 2011, according to Moody’s, and rise only modestly over the following year. Regions that were hardest hit by the housing collapse and recession could take even longer to recover — dealing yet another blow to a still-struggling economy.

Not good news for those who want to sell a home in the near future. It is interesting that we now hear very little about this at a policy level. There are certainly other important pressing issues in the world (jobs, gas prices, military actions, Republican candidates for President?) but housing values affect a lot of people.

At the same time, I have heard and seen new advertisements from the National Association of Realtors. I wonder why they are running these ads now: are they worried that more people will rent rather than buy? Is there an uptick in the number of people who are trying to combat lower housing values by selling the home on their own? Do they feel that there might soon be changes in public policies, perhaps through measures like limiting or getting rid of the mortgage-interest deduction, that would limit the government’s promotion of homeownership? And interestingly, these advertisements have stressed that homeownership helps create jobs.

Acquire the bookstore chain to get the digital reading device

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With the recent bankruptcy of Borders (see some reaction here), who knows how long Barnes & Noble might be able to hold on (and the news wasn’t good last August). But at least one businessman thinks B&N would make for a worthwhile purchase:

Barnes & Noble is well-situated to get a piece of the action: the company claims that the Nook already accounts for one-quarter of the e-book market. (Amazon’s rival Kindle product accounts for over 70 percent, although neither company discloses actual sales figures.)

Candidly, the Nook’s success is important, because more competition in the space will help keep prices in check and spur innovation. Sony also has a credible market entrant with its Reader product.

Malone’s company Liberty Media offered $17 per share Thursday — or about $1 billion — for a 70 percent stake in Barnes & Noble, a 20 percent premium over the Thursday closing price. Investors greeted the news warmly, pushing Barnes & Noble shares up over 30 percent — yes that’s higher than Malone’s bid! — in midday market action Friday. As a result, Malone will likely have to sweeten his offer to at least $20 per share.

In a statement announcing the offer, Liberty described Barnes & Noble as being at the “forefront of the transition to digital.”

While there is a lot of talk about how all of this affects bookstores and reading, I would love to see more about what this might mean for all brick-and-mortar businesses. The saving grace for Barnes & Noble is this particular digital reader which is well-positioned in a burgeoning market. In the near future, the B&N stores might disappear even as corporate name goes on through this device.

More broadly, how many other companies are actually creating digital content or devices rather than simply putting a Facebook page together and slapping the Facebook logo on all of their commercials?

Finding community at the office

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In a new economy where workers are “free agents” or “portfolio workers” among a relatively high unemployment landscape (at least in the United States), could workers be missing community life at work as well as the regular paycheck?

In the late 1990s the world of work moved away from security and towards freedom.

A job for life was out. Work became splintered, spliced and diced: contract, sub-contract and casual labour, part-time, sessional and seasonal, project-based, freelance and temp work emerged, as the frequencies and rhythms of work became subject to the vagaries of the economy.

Richard Sennett, a professor of sociology at the London School of Economics, described it as ”new economy” work – the work of flexible capitalism where ”workers are asked to behave nimbly, to be open to change on short notice, to take risks continually”…

The experience of being a highly mobile new economy worker is as Sennett says: being continuously exposed to risk can eat away at your sense of character. You are always ”starting over”. And just like your employment, your witnesses are not long-term. The writer Karen Blixen (better known by her pen name, Isak Dinesen) used this line for one of her characters: ”I was constantly in flight, an exile everywhere.”

Sometimes flight cannot be helped. But community helps stave off the feeling of being exiled, of drift.

Some interesting thoughts here. As I have talked to college students, the new economy jobs are what they want: they want to be able to use their skills, to flourish (which may be different than being happy), and to be able to set their own pace and priorities. Of course, these goals can be difficult for many to obtain in the early years after college. Additionally, many of them do want to find a community to be a part of, a place where they can fit into and still be somewhat autonomous. So perhaps this commentary is really about a larger issue: how do modern people who seek after individualistic goals also find enough community so that they don’t become alienated from society? And are there groups or companies that do this better than others?

This reminds me of what one might hear from college faculty: the job of a professor offers a balance between these two goals. We enjoy our jobs because it offers freedom (to study what we want, to have some say over our own schedules) but also places us within an academic context that runs on a very predictable calendar with regular interaction with others.

The commentary also notes the role technology can play: we can be apart from others but are seemingly connected through devices like cell phones or platforms like Facebook. But these seem less like “true” community and more like community of our own choosing, calling whom we want or making “friends” with whom we want. This is quite different than what might go on in an office:

Yet there can be a joyous, awful, wonderful cacophony when you don’t get to choose – the possibility of a richer, messier, wider community; a mosaic of quirks, histories, personalities. Look around your office – they are all there.

This not getting to choose, however, seems to go against all modern sensibilities: it is one thing to put up with others but it is another to do this without any other options.

The quick reference to television show The Office is intriguing. Throughout the course of the show, there is little indication that the employees want to leave. At the same time, there are very few (if any?) moments where the workers make a conscious decision to stay because they really like the community of people there (versus liking one or two people). It is too bad we don’t see more of these characters given options where they could leave but they choose not to because they realize who they are living behind. Perhaps this is too much to ask: if workers are given brighter opportunities elsewhere (money, benefits, chance for advancement, etc.), perhaps they will always go for that over any community ties.

Lobbynomics v. empirical data

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Ars Technica points to a UK report asserting that “lobbynomics” rather than empirical data drives much of the intellectual property policy debate:

There are three main practical obstacles to using evidence on the economic impacts of IP…[3] Much of the data needed to develop empirical evidence on copyright and designs is privately held. It enters the public domain chiefly in the form of “evidence” supporting the arguments of lobbyists (“lobbynomics”) rather than as independently verified research conclusions.

My own experience in dissecting IP developments supports this view.  It is surprisingly difficult to find “hard data” about copyright piracy, leaving any “debate” to a shouting match between proponents of bald assertions.

We need better data, and we all need to be more circumspect (and humble) before drawing sweeping conclusions from the little that is available.

Righthaven class action?

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Ars Technica is reporting that one Righthaven defendant is “launching a class-action counterclaim against Righthaven”:

BuzzFeed…quickly moves from a defense of its own conduct to an attack on the conduct of Righthaven, and it asks the judge to put every Colorado defendant into a class which can pursue Righthaven for extortion-style behavior.

I’m not sure that Righthaven’s behavior should be turned into some sort of perverse-reverse legal payday for defendants, but I suppose this was an inevitable development.

Federal government looking into redlining practices

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During the economic crisis of recent years, mortgages have been more difficult to obtain for many compared to what was available in the mid 2000s. With these tighter lending practices, the US government is looking deeper into possible redlining practices by lenders:

At the Justice Dept., a new 20-person unit dedicated to fair lending issues received a record number of discrimination referrals from regulators in 2010 and has dozens of open cases, according to a recent agency report. Potential penalties can reach into the millions of dollars. “We are using every tool in our arsenal to combat lending discrimination,” Thomas E. Perez, the assistant attorney general for the Civil Rights Div., told a conference of community development advocates in Washington in April.

To some banks the crackdown has come as a surprise, say consultants and lawyers representing financial institutions in discussions with regulators. Like Midwest BankCentre, some lenders are being cited for failing to operate in minority and low-income census tracts near their branches, even when they have never done business there before. “If you put your branches only in upper-income areas, the regulators are not accepting that anymore,” says Warren W. Traiger, a lawyer at BuckleySandler in New York, which advises banks on fair lending issues.

Mortgage refinancing activity doubled in white neighborhoods but dropped sharply in minority neighborhoods in a sample of major U.S. cities in 2008 and 2009, according to Paying More for the American Dream, an April study by a group of seven community development nonprofits. “The pendulum has swung back too far the other way,” says Kevin Stein, associate director of the California Reinvestment Coalition in San Francisco, one of the report’s authors.

Several things strike me as interesting about this:

1. As the article notes, this oversight goes back to the 1977 Community Reinvestment Act (CRA). I wonder how the HMDA data, data lenders must report every time someone applies for a mortgage (including factors like race), has been a part of these government efforts. With this data, regulators (and others) can get an idea of who lenders approve for loans and who they do not.

2. The Drudge Report headline about this article,  “Obama admin pushing banks to offer subprimes again…,” seems somewhat misleading. There is little to indicate in this article that the government is telling lenders they should make subprime loans. Rather, it sounds like the government is suggesting that lenders need to make their products available to all people. One adaptation to this in order to account for worse credit scores or other factors might be for the lenders to offer subprime loans in order to protect some of their investment. But there is little indication the government is saying that lenders have to offer subprime loans.

3. Access to credit really is an important issue. If it is not widely available or limited to certain groups, the purchasing power of consumers for goods like houses or cars can be severely limited. And this can then have a large impact on the greater economy.

The sociological origin of the term “McJob”

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With McDonald’s hiring 62,000 employees on April 19, a journalist looks at the sociological origins of the term “McJobs“:

The term McJob first appeared in the summer of 1986, when George Washington University sociology professor Amitai Etzioni wrote a column for the Washington Post decrying the “highly routinized” jobs at fast-food restaurants and their effect on American teens.

“By nature, these jobs undermine school attendance and involvement, impart few skills that will be useful in later life, and simultaneously skew the values of teenagers -especially their ideas about the worth of a dollar,” Etzioni wrote.

He went on to criticize the culture and routine of working at McDonald’s and other fast-food companies, noting that the jobs do not provide opportunity for entrepreneurship like the traditional lemonade stand, or the lessons of self-organization, self-discipline and self-reliance like the traditional paper route.

“True, you still have to have the gumption to get yourself over to the hamburger stand, but once you don the prescribed uniform, your task is spelled out in minute detail,” he argued. “There is no room for initiative creativity or even elementary rearrangements. These are breeding grounds for robots working for yesterday’s assembly lines, not tomorrow’s high-tech posts.”

The article then goes on to describe how McDonald’s has tried to fit back against the term, including a 2007 from “the British arm of the company…to get the Oxford English Dictionary definition changed.”

On one hand, such jobs may not be great and this is what Etzioni was getting at: they generally are low-paying and in many places don’t pay enough to be considered a “living wage.” A work like Nickel and Dimed (a review of the theater version here) portrayed such employees as having difficult lifestyles and little hope for the future. More broadly, we could think of these jobs as emblematic of a larger process of McDonaldization, coined by sociologist George Ritzer, that describes the rationalization of the modern world.

On the other hand, we live in a country that really pays attention to job reports with less interest in what kinds of jobs were actually created. The April jobs figures showed good jobs growth but we could inquire about the quality of these jobs: are they well-paying, sustainable jobs that will pay American workers for decades to come? Or, were the majority of jobs middling to lower-skilled jobs that serve American consumers in the service industry?

In the end, we have a society that is quite dependent on such “McJobs.” The term is unlikely to go away though it clearly applies to a lot more corporations and areas than simply McDonald’s. Just as Walmart tends to get singled out as emblematic of big box stores and suburban sprawl because of its revenue (still at the top of the Fortune 500), McDonald’s size and influence draws attention (Super Size Me, anyone?). But as a society, we could have larger and ongoing discussions about what kind of jobs we wish to hold and to promote. In these discussions, we need corporations like McDonald’s, Walmart, Starbucks, Apple, and others involved to think about the American future.

The decline of men in the American workforce

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The Economist examines some recent figures showing that men, particularly less-skilled workers, have lower levels of participation in the labor force:

The decline of the working American man has been most marked among the less educated and blacks. If you adjust official data to include men in prison or the armed forces (who are left out of the raw numbers), around 35% of 25- to 54-year-old men with no high-school diploma have no job, up from around 10% in the 1960s. Of those who finished high school but did not go to college, the fraction without work has climbed from below 5% in the 1960s to almost 25% (see chart 2). Among blacks, more than 30% overall and almost 70% of high-school dropouts have no job…

The main reason why fewer men are working is that sweeping structural changes in rich economies have reduced the demand for all less-skilled workers. Manufacturing has declined as a share of GDP, and productivity growth has enabled factories to produce more with fewer people. Technological advances require higher skills. For the low-skilled, low demand has meant lower wages, both relative and absolute. This in turn reduces the incentive to find a job, especially if disability payments or a working spouse provide an income.

Men have been hit harder than women by these shifts. They are likelier to work in manufacturing; women have been better represented in sectors, such as health care and education, where most job growth has taken place. Women have also done more than men to improve their academic credentials: in most rich countries they are likelier than men to go to university.

There is a lot to think about here. One reason that the article cites for this trend is the numbers of women (compared to men) who are getting college degrees. This has been noted by others (with some interesting data from the White House here) and it really does seem to be a sizable shift in American society.

A few other questions come to mind:

1. Could politicians promote policies that specifically target less-skilled male workers?

2. What are some of the broader consequences of this trend, such as the impact on community life or family life?

3. How could schools, particularly high schools and colleges, tackle this issue?