Category Archives: Business and Economy

Why add this line in interview about Netflix in Canada: “Americans are somewhat self-absorbed”

Posted on by

In an interview with The Hollywood Reporter, the Netflix CEO (and co-founder) discussed the company’s new foray into the Canadian market. Netflix prices in Canada will be one dollar cheaper: $7.99 vs. $8.99 in the United States. But the CEO added another line that seems superfluous to the discussion and may not be helpful to his company’s efforts in the American market:

THR: American services when they enter the Canadian market typically charge the locals more than they charge stateside. Why the discount for Canadians?

Hastings: We want to provide an incredible value for Canadians, and it’s the lowest price we have anywhere in the world for unlimited screenings. And anyone can try it for free for a month. It’s pretty addictive.

THR: Are you concerned that American Netflix subscribers will look north and ask for the same discount Canadians get at $7.99?

Hastings: How much has it been your experience that Americans follow what happens in the world? It’s something we’ll monitor, but Americans are somewhat self-absorbed.

I’m guessing more Americans will pay attention now to this than would have before. Whether he is right or wrong about Americans being self-absorbed, why potentially hurt a large market when he didn’t have to?

Generation Y sees the downsides to cars

Posted on by

A short article from Kiplinger suggests Generation Y has a different relationship to the automobile than previous generations. Rather than viewing them as status symbols, Generation Y sees them as polluting objects and the use of mass transit and car sharing is on the rise.

This has car makers worried:

The trend won’t cause car sales to tank, of course, but the generational shift doesn’t bode well for manufacturers and auto dealers, which for decades have counted on wooing young new drivers to their brands in hopes of cementing lifetime customer relationships.

Gen Yers are a big potential market: At 80 million strong, they represent the biggest generation in U.S. history. Baby boomers are a close second, but millions of them begin turning 65 next year — an age at which car purchases drop off sharply.

There is nothing that guarantees that the American obsession with the car will continue. It sounds like manufacturers will need to change their tack and convince people that they need cars – perhaps it could be tied to ideas about personal freedom.

If this is the case among Generation Y, this has big implications for urban planning and the suburbs.

The importance of having meaningful work

Posted on by

Recent research suggests that the satisfaction individuals derive from work is not based just on a paycheck but rather on the meaning found in even doing menial tasks:

In several recent studies, social scientists have zeroed in on why paychecks alone can’t explain the link between work and well-being. The evidence shows that people can find meaning in seemingly insignificant jobs and that even trivial tasks make us far happier than no tasks at all.

“We become very dedicated to things it would be hard to be dedicated to if we were perfectly rational,” says behavioral scientist Dan Ariely, author of “The Upside of Irrationality,” published in June. “It turns out you can give people lots of meaning in lots of ways, even small ones.”…

The findings suggest that, although people often yield to idleness, deep down they seek excuses to stay busy, because busyness is happiness. However much Sisyphus rued his meaningless job, the authors conclude, he would have been even more miserable with no job at all.

Interesting findings that would have profound implications for the workplace.

Some quick questions:

1. Do these researchers argue that these benefits of working are linked to human nature or is it a conditioned response based on culture and other factors?

2. What are the long-term consequences of people having no work? If work is meaningful, what happens if people cannot work for different reasons (health, unemployment, other possibilities)?

3. How many workplaces (or what percentage) explicitly talk to employees about the meaningfulness of their individual work?

Collecting online sales taxes

Posted on by

With so many governments struggling to make ends meet, more states are looking at how to collect more sales tax revenue from online purchases. While Internet users may not like this, it seems like this is primarily being held up by complications about how to collect the money:

Under a 1992 Supreme Court ruling, businesses are responsible for collecting sales taxes on every sale they make in a state where they have a “physical nexus.” In other words, if the business has a store, an office or even a single sales rep in your state, it’s supposed to tack the state’s sales tax onto your bill.

Online retailers like Amazon.com typically don’t add the tax, except in the states where they’re based or where they have physical facilities like warehouses or distribution centers. Amazon, for example, collects sales taxes only in Washington (its home state), Kansas, Kentucky, North Dakota and New York.

The tax is still supposed to be paid, however. And if the seller’s not responsible, then you, the buyer, are. In general, you’re supposed to voluntarily file your own report and pay the standard tax on your out-of-state online purchases. (The appropriate forms are available on state tax agency websites, revenue officials are happy to remind you.)

But it turns out that the vast majority of Americans are completely unaware of those rules, so the forms don’t get filed and the taxes don’t get paid — to the tune of $8.6 billion in 2010 alone, the National Conference of State Legislatures estimates.

Two quick thoughts:

1. Why have states waited so long to get on this? Perhaps they didn’t want to look like the bad guys while things were relatively good.

2. If more of these taxes are paid, what effects would this have on Internet commerce? There would still be benefits to Internet purchases: no need to go out to a store, often a lot more options, delivery to your doorstep. At the same time, would this help traditional retailers?

Median income falls in the 2000s, poverty rate up

Posted on by

Recently released figures from the Census Bureau show troubling news with two oft-cited measures of income:

The bureau’s annual snapshot of American living standards also found that the fraction of Americans living in poverty rose sharply to 14.3% from 13.2% in 2008—the highest since 1994. Some 43.6 million Americans were living below the official poverty threshold, but the measure doesn’t fully capture the panoply of government antipoverty measures.

The inflation-adjusted income of the median household—smack in the middle of the populace—fell 4.8% between 2000 and 2009, even worse than the 1970s, when median income rose 1.9% despite high unemployment and inflation. Between 2007 and 2009, incomes fell 4.2%.

While the poverty figures have drawn a lot of media attention, they are now at 1994 levels (also around the time of a recession). It is not good news that the poverty rate is up but this isn’t catastrophic compared to recent historical figures.

Perhaps more troubling is the decrease in the median income over the course of an entire decade. This suggests that the economic problems aren’t just limited to those at the bottom of the economic ladder; it is affecting many more Americans who saw no real income growth over a ten year stretch. Figures like these are also used by some as evidence of the growing income gap in America.

Decrease in office romances

Posted on by

Businessweek suggests that office romances are on the decline because of a confluence of lawsuits and third party discrimination claims, which may be linked to pressures from the current recession. But there are those who argue that such romances are actually good for productivity and for businesses:

A once-amorous workforce already seems to be feeling the effects. This February, 75 percent of U.S. workers surveyed by job search website Monster.com (MWW) believed a workplace relationship could bring a conflict. Sixty-two percent said they felt office romances were a distraction from job performance. Careerbuilder.com’s annual Valentine’s Day romance poll has shown an alarming decline in reported office trysts. In 2006, 50 percent of respondents claimed to have partaken in a workplace relationship during their career. Earlier this year, the number dropped to 37 percent.

This is disturbing news not only for employees but also for their bosses. Some management experts believe that a workplace fling can “greatly increase something called ‘engagement,’ ” says Stephanie Losee, co-author of Office Mate, a guide to finding love in the workplace. “That’s when you’re excited to come in and work and you care about your company.” For these reasons, National Public Radio, Princeton Review (REVU), Pixar (DIS), and Southwest Airlines (LUV) encourage in-house matchmaking. Frederick S. Lane III, author of The Naked Employee, argues that co-worker couples spend more time at work, take fewer sick days, and are less likely to quit.

So if office romance is down due to economic pressures, are people now building romantic relationships elsewhere? Or are people just less likely to pursue romantic relationships when economic instability is present?

Additionally, I don’t envy managers who have to look out for and monitor such relationships. Such situations seem ripe for Michael Scott-type awkwardness.

IMF warns of social consequences of global recession

Posted on by

A new report from the International Monetary Fund and the International Labour Federation suggests the recent global economic crisis could lead to social instability:

A joint IMF-ILO report said 30m jobs had been lost since the crisis, three quarters in richer economies. Global unemployment has reached 210m. “The Great Recession has left gaping wounds. High and long-lasting unemployment represents a risk to the stability of existing democracies,” it said.

The study cited evidence that victims of recession in their early twenties suffer lifetime damage and lose faith in public institutions. A new twist is an apparent decline in the “employment intensity of growth” as rebounding output requires fewer extra workers. As such, it may be hard to re-absorb those laid off even if recovery gathers pace. The world must create 45m jobs a year for the next decade just to tread water.

The Telegraph headline say this social instability was termed a “social explosion.”

So what kind of social consequences are these groups talking about? A number of commentators have noted how such recessions affect future behaviors, particularly among younger generations who become scarred by such experiences. But when a term like “social explosion” is used, it suggests images like riots, labor strikes, labor demonstrations, perhaps even the collapse of democracies in the face of pressure from angry citizens. In the United States, it is hard to imagine this. (Indeed, it is an interesting question to ask: what would have to happen for a majority of Americans to participate in more demonstrative collective action?) Even the Great Depression didn’t lead to many violent or excessive disruptions (or at least the history books don’t discuss much of this).

I wonder how much of this language is prompted by particular political viewpoints. The Telegraph hints at this:

“Most advanced countries should not tighten fiscal policies before 2011: tightening sooner could undermine recovery,” said the report, rebuking Britain’s Coalition, Germany’s austerity hawks, and US Republicans. Under French socialist Strauss-Kahn, the IMF has assumed a Keynesian flavour.

The whole situation bears watching – how will average citizens respond?

From corn syrup to corn sugar to boost image

Posted on by

The Corn Refiners Association is putting in a request to the Food and Drug Administration to change the name of “corn syrup” to “corn sugar.” This rebranding is being done to help shed the image that consuming corn syrup increases the likelihood of obesity.

Apparently, there is some precedent for changing a name like this. Ever heard of “low eurcic acid rapeseed oil”? Once renamed “canola oil,” sales apparently picked up.

If this name change goes through, how long before those opposed to corn syrup start a campaign against corn sugar? I wonder how much time the Corn Refiners Association thinks they can buy.

Starting salaries by college major

Posted on by

The National Association of Colleges and Employers has released a new study looking at 2009 starting salaries by college major. Average starting salaries for all graduates dropped a small amount from 2009:

NACE’s Fall 2010 Salary Survey shows that the overall average offer to Class of 2010 bachelor’s degree graduates stands at $48,288, compared with $48,633 offered to the Class of 2009. This represents a drop of 0.7 percent.

Liberal arts majors were below the average starting salary:

The average starting salary offer to liberal arts graduates—as a group—dipped 3 percent from last year to $35,508. Salary offers to sociology majors climbed 3.1 percent to $35,357 and history majors saw a slight increase of 0.7 percent to $38,731. Meanwhile, offers to English majors dropped 1.8 percent to $35,946 and offers to psychology majors fell 6.7 percent to $32,260.

The top five salaries? Four of five involve engineering – from number 1 to number 5, petroleum engineering, chemical engineering, mining and mineral engineering, computer science, and computer engineering.

What matters in a hybrid: financial value or something else?

Posted on by

A recent study compared hybrid models to their traditional counterpart models and found that the hybrids are not a very good value:

Everyone knows hybrids get better fuel economy and emit less CO2 than their conventional counterparts, but they also cost more because of the added technology. And that makes them a lousy value because you won’t recoup that added cost in fuel savings.

So say the car gurus at CarGurus.com, who repeat a common argument against hybrids but back it up with some stats. They examined the purchase price and operating costs of 45 popular hybrid models and discovered the average gas-electric automobiles costs 25 percent more to own and operate than its gasoline-only sibling.

This may help explain why hybrids still are only a small part of the market – just under 3% according to this study.

But for those who currently drive hybrids, is financial value the primary reason? While this seems to be key to the larger market, I would guess there are a lot of current hybrid drivers who drive them for other reasons like being (or perhaps appearing) green. If more people truly wanted to be green or were worried about pollution from cars as opposed to saving money, then they would probably purchase more hybrids.