Teri Bernstein, MBA, CPA has been teaching full time in the Business Department of Santa Monica College since 1985. Prior to that, she worked in Internal Audit and Special Financial Projects for the 1984 Los Angeles Olympics, CBS, Inc., and Coopers & Lybrand. She attended the University of Michigan and Wayne State University.
another analogy (and more advice) for benefits open enrollment
Most employers who provide benefits have a fall open enrollment period, where participants can choose a different type of plan. The dates change from employer to employer, so pay attention. The main benefit areas include:
It is not only open enrollment season at workplaces--it is also open enrollment season for the Affordable Care Act (November 1 to December 15, 2017). Some of the same issues arise when choosing benefit plans, with a notable addition: subsidies. All choices apply to 2018 and if you are late, in many cases you become ineligible for coverage. You might want to check out some advice:
Source: "How to navigate benefits enrollment season at work," by Lacie Glover, Los Angeles Times, October 29, 2017.
Snapchat and Bitmoji teamed up; from Mashable
We know that retail stores are not trending well, but in-store shopping at Halloween has helped boost this season to all-time sales highs. From Business Insider:
"This year, consumers are expected to spend a record $9.1 billion on Halloween products, according to the National Retail Federation, an 8.3% increase on last year's total. Of that, consumers plan to spend $6.1 billion on candy and costumes. This is good news for the retail industry, as is the fact that consumers plan to do a significant majority of their Halloween shopping in stores, a rare break from the industry's trend toward online purchases. Just 22.3% of consumers say they plan to do their Halloween shopping online this year, while the rest will frequent discount, department, grocery, and even dedicated Halloween stores."
Pop culture and technology have influenced purchases of costumes, specialty candies, and decorations.
Source: "Halloween costume differences between kids and their parents reveal a growing generational rift," by Mark Matusek, Business Insider, October 27, 2017.
Hickies is a company that makes one product: silicone bands that connect the parallel eyelets of shoes semi-permanently. Their function is to replace shoelaces in a forgivingly stretchy way so that shoes never have to be tied or untied--they just have to be stretched on.
The idea for Hickies arose from Gaston Frydlewski's habit of not tying his laces--and his observation that others often didn't tie their laces, either. He was in college in Argentina when he met Mariquel Waingarten, whom he thought would be impressed with his idea. She wasn't. But when they reconnected six years later, she could feel that this idea was an obsession that had to be realized. Waingarten and Frydlewski are now both business and romantic partners. They live and work together--and their focus is Hickies.
They were fortunate to garner interest from Topper (a Brazil-based athletic shoe maker) and Adidas. Both companies wanted to incorporate Hickies into their products. But Hickies were also sold (as a novelty accessory to be used on any shoe) in Brookstone stores and catalogs, and in Equinox fitness clubs. Waingarten and Frydlewski received financing from Kickstarter and Indiegogo campaigns. The company also does outreach with the autism community--connecting with a solution to the universal problem of tying shoelaces.
Shoelaces are a serious annoyance for me. I have a husky dog that needs to be walked and taken to the dog park daily (not to mention a Fitbit that needs to be fed) so I am often taking my athletic shoes on and off. I'm looking forward to trying these no-tie lace replacements myself. If they work out (and the reviews I've read seem to indicate they will), I will probably buy a few sets as stocking-stuffers for others for the holidays.
I thought that the name was from the term "do-hickey" (definition: "whatchamacallit" or "thingamajig"). But it turns out that Waingarten and Frydlewski were thinking of the other definition: "marks of affection"--which they wanted everyone to have on their shoes.
Source: "At Hickies, a 'life without laces' ties a couple together," by Crystal Kang, wework.com: creator, December 7, 2016.
image from linked podcast header
As the baby boomer generation ages, one thing is certain--the need for burial or other end-of-life services will peak for more than a decade. As it happens, this coincides with a larger world population and less space for burial. Enter innovation and entrepreneurship.
Hurdles remain: first, many for people are unwilling to deal with mortality practicalities, due to a desire to avoid the topic of death. Also, religious requirements and cultural traditions play a huge role in end-of-life practices.
I recently had a 17-year old shepherd-mix dog die. We had prepared for her death by digging a five foot deep grave and purchasing a new product--a shroud from the start-up Coeio. It was imbued with a type of mushroom spore that would, when buried, spring to life to hasten the process of decomposition.
Practices at death vary widely throughout the world, and entrepreneurs are breaking new ground in adapting these practices in ecologically sound and economical ways. NPR's Planet Money explores some of these practices.
Source: "Episode 801: The Death Show," by Stacey Vanek Smith, Bryant Urstadt, Sonari Glinton, and Sally Helm, NPR's Planet Money, October 20, 2017. [transcript]
In September of this year, Equifax announced a security breach that had occurred in July that affected just about every American with a bank account or credit card. There was a flurry of stories telling you want you MUST do if you want to ensure that your identity isn't stolen:
FREEZE YOUR CREDIT FILES AT ALL THREE REPORTING AGENCIES--
In case you didn't take the time to do this, or were waylaid because of fees and sales pitches, you might want to give yourself a rude talking-to by listening to John Oliver's reminder. He includes what can happen when your data does become public. He also warns consumers to avoid traps set by the credit reporting agencies to sell you less-than-freezing services. He also warns about a third party service that acts as a middleman that buys its services from Equifax.
If you don't want to listen to his rude (and angry) reminder, you can read the article about it below, or just go straight to his website link for instructions on the quickest way to get yourself protected from this breach: https://equifaxfraudprevention.com NOTE: this website is NOT affiliated with Equifax, regardless of what it is named. Instead, it is John Oliver's and Last Week Tonight's website for consumers to quickly get to the correct place to freeze their credit.
Source: "John Oliver is super angry about the Equifax breach, offers one thing you should do immediately," by Peter Weber, The Week.com, October 16, 2017.
The Consumer Financial Protection Bureau's (CFPB) mandate is to protect individuals from corrupt and fraudulent practices by big financial institutions. The 2010 Dodd-Frank Act created the bureau and also established a student loan ombudsperson. The CFPB has had several successes. It has enforced clearer disclosures on credit card bills, mortgages and other loans. The CFPB also investigates complaints filed by individuals--many of which have been initiated by former students who were pressured into signing expensive loan documents by brokers using fraudulent practices. The CFPB has also helped students renegotiate loan schedules, and has helped veterans get lowered interest rates on their student loans.
Secretary of Education Betsy DeVos, however, suspended the CFPB's standing to intervene on behalf of students and these loans. She directed the Education Department not to share data with the CFPB. She claimed that, in helping students, the CFPB was "an overreaching and unaccountable agency.” Perhaps Secretary DeVos is not familiar with the language in the law that established the student loan ombudsperson.
DeVos wants the Education Department, which helps private banks set up sometimes problematic student loans, to avoid having to deal with a regulating agency that might help consumers undo part of the damage they have suffered. Others do not think this "fox guarding the henhouse" approach is a good idea:
“'The Department of Education is both a lender and a loan servicer,' observed Whitney Barkley-Denney, senior policy counsel for the Center for Responsible Lending. 'We don’t want to be in a position where the department is overseeing its own loans. That would be like having a bank regulate itself.'”
Nevertheless, the current administration is cutting off the CFPB. And the chairman of the House Financial Services Committee has thanked DeVos and her people for doing so. I wonder if DeVos's investments in private for-profit colleges and student loan debt collection agencies had anything to do with her decision? Perhaps she just objected on principle to the agency set up by Dodd-Frank.
Source: "GOP would rather see student borrowers get screwed than let consumer agency do its job," by David Lazarus, Los Angeles Times, October 24, 2017.
Recent fires in Northern California have caused massive damage to marijuana farms. But because marijuana growing is illegal under federal law, no insurance company will insure these businesses. Just at the point when the potential market was to expand due to changes in California law--as well as it being harvest season--tragic fires have wiped away some farmers' crops and homes. Even plants housed in greenhouses that have survived fires may be contaminated by smoke.
Source: "Devastated Northern California marijuana farms are ineligible for insurance," by Tonya Mosley, Marketplace: American Public Media, October 23, 2017.
Rexnord Corporation has employed 43-year old Sharon Mulcahy in a plant manufacturing industrial-use bearings for over seventeen years. She'd dealt with sexual harassment and physically demanding job tasks to keep a job that gave her security and standing, in spite of many difficulties in her personal life. But the plant is closing, and 300 workers like Mulcahy will lose their jobs. Like many of the 67% of American adults who do not have a college degree, the future is uncertain. In a changing economy where goods can be manufactured more cheaply and with less regulation elsewhere, manufacturing jobs are disappearing. Short term profits trump the long term reputation for quality that used to be a hallmark of American production.
If a company has an economic reason to move its manufacturing operations overseas (or across the border), should they be allowed to if Americans will suffer?
There is no checkpoint asking that question. Sharon Mulcahy is losing her job to cheaper Mexican workers.
Has government done its due diligence? There are many opinions on that question.
Source: "Becoming a Steelworker Liberated Her. Then Her Job Moved to Mexico." by Farah Stockman, New York Times, October 14, 2017.
Maybe each of them should talk to Elon Musk first. Developing, manufacturing, distributing and selling automobiles is a major undertaking. The capital investment, changing technologies, and fickle consumers contribute to challenges at all levels of the process. Nevertheless, to some observers, the car manufacturing industry is at a pivotal point of change. “There is a lot of fluidity in the entire industry space, which is what these players see,” said Peter Wells, a business professor at Cardiff Business School in Wales.
While Ratcliffe is eyeing the marketing niche created when Jaguar Land Rover decided to no longer manufacture its iconic car, Dyson brings a lot of development and manufacturing experience to this venture. Dyson envisions spending £1 billion on the car and another £1 billion on the battery, which may not be enough (Musk has spent over £6 billion on the Tesla Model 3). In any event, Dyson has already bought Sakti3, a company whose work on solid state batteries may give him an edge.
I doubt that either car will be in my price range, but I am curious about what will develop.
Source: "An electric car and a throwback: the dreams of 2 rich Britons," by Stanley Reed and Amy Tsang, New York Times, October 12, 2017.
Almost every homeowner has fire insurance...but, is it enough to replace one's home and belongings? Like every contract, the devil is in the details. What is covered?:
In situations like the devastating fires in and around Santa Rosa, California, where whole neighborhoods are wiped out, the rebuilding costs will soar due to supply and demand as many people make claims. What is worse, however, is that insured homeowners might think they have coverage when they don't.
"Narbeh Shirvanian, a Glendale lawyer who handles fire-related claims, said it’s not unheard of for an insurer to change the terms of a policy during the renewal process. 'It might be disclosed,' he said. 'But let’s be honest, nobody really reads all this stuff.'"
In other words, your renewal policy might not account for inflation, or may have substantive language changes that leave you under-insured. In addition, smoke and ash damage may or may not be covered. Here is a heads-up to keep your assets covered:
"A smart idea is to pay a little extra for what’s known as an extended replacement cost endorsement. This is basically additional coverage intended to accommodate at least a portion of any unexpected cost increases. You can also purchase additional coverage for code upgrades. For example, the rules might have changed for electrical systems or insulation since your house was built. Code-upgrade insurance will protect you from so-called betterments that your basic policy might not address."
Source: "As California burns, here's what you need to know about fire insurance," by David Lazarus, Los Angeles Times, October 11, 2017.
Noam Scheiber, writing in the NYT, has researched labor law regarding the recent kneeling done by athletes during the national anthem. Is it legal? Should the NFL stop it? His take-away:
"How far can workers go in banding together to address problems related to their employment?...In principle, the answer in the N.F.L. and elsewhere may be: Quite far. To the extent that most people think about the reach of federal labor law, they probably imagine a union context — like organizing workers, or bargaining as a group across the table from management. As it happens, the law is much more expansive, protecting any 'concerted activities' that employees engage in to support one another in the workplace, whether or not a union is involved."
I am reminded somewhat of the "I'm Spartacus" scene in the Stanley Kubrick film starring Kirk Douglas, Tony Curtis and Laurence Olivier. There is strength in numbers, and solidarity can sometimes help shift the balance of power.
Source: "NFL Player may have an ally in their protests: Labor law," by Noam Scheiber, New York Times, October 12, 2017.
Ken Garduno, illustrator (from link below)
There are many professionals from India working in Kansas City, Kansas. Apparently, this is a big deal, as evidenced in the cricket community:
"The Indian community here, now 7,000 strong, has boomed as the economy back in their home country has exploded. This is a global story of Indian talent, connecting with U.S. education, technology and investment. Almost all of the bowlers (pitchers in baseball terms) and batsman (batters) on this Saturday morning are products of the Indian government opening up to competition and foreign investment the last two decades, and they've brought their education and job skills to the American Midwest." (Scott Tong in conversation with several members of this community, in the podcast linked below)
Nevertheless, there has been discrimination, prejudice and hate speech:
"'Even if you’re born and raised here, when something like the shooting in Olathe happens in your community, everybody feels vulnerable. Because we look different,' said Aviva Ajmera, an Indian-American business strategy consultant in Kansas City. Ajmera was born in Albany, New York. The concern goes beyond the shooting. People of Indian descent have heard President Donald Trump talk about limiting trade deals and visas, and during the presidential campaign they heard then-Breitbart radio host (and later White House strategist) Steve Bannon blast South Asians in a talk radio show."
This population is parallel to other waves of U.S. immigration spurred by differences in economic opportunity. "Currently the average annual economic output per person in India is about $2,000 dollars, compared to about $57,000 in the U.S. — this according to the metric known as GDP per capita. While India is catching up with richer economies, there’s still a long way to go."
Source: "As India's economy catches up to richer world, tensions emerge," by Scott Tong, Marketplace: American Public Media, September 12, 2017. [podcast and text]
Harvey Weinstein has been accused by many women of having sexually harassed them. He used his incredible power in the film business to, well, I'm not sure what--but plenty of women felt vulnerable. My twenty-something daughter reports that young men that she knows have also experienced harassment. Not to the extent that she herself has, but, still.
What gives? The law is clear. Business ethics are clear. Work is work. Personal relationships have to be separate--particularly if there is a power discrepancy.
Subsequent reports have Weinstein ejected from the film Academy. But others are saying that he didn't do anything "everyone" else wasn't doing. That perception doesn't make it right. Kate Winslet has a perspective worth considering.
Source: "The fallout: How the Harvey Weinstein scandal exposed sexual harassment as Hollywood's dirty secret," by Josh Rottenberg and Amy Kaufmann, Los Angeles Times, October 12, 2017.
The U.S. soccer team will not be involved in the World Cup play-offs for the first time in 30 years. They lost in the men's qualifying event to LAST place Trinidad-Tobago. But Fox Sports was an even bigger loser:
"The most notable casualty is Fox, which in 2011 paid a reported $425 million to broadcast FIFA matches — including the 2018 and 2022 men’s World Cups — in English in the United States. Even at a major increase from the combined $425 million ESPN and Univision paid for English and Spanish rights for the 2010 and 2014 tournaments under the most recent contract, the deal at the time fit nicely into Fox’s overall broadcasting strategy."
Ad revenue is a major issue, as is audience and ad rates for future World Cup competitions. The risk Fox took in entering this contract seemed to be less than it turned out to be, given this upset. When the U.S. team is not involved, soccer audiences in the U.S. are smaller. This affects future contracts, and may have a ripple effect with interest in soccer by younger players.
Source: "Fox Sports was the real loser in the U.S. World Cup qualifying flop," by Alicia Jessop, Washington Post, October 11, 2017.
Ozark's initial reviews described it as being less compelling than Breaking Bad. Therefore, in the era of Too Much TV (Forbes), it did not get my attention right away. But a recommendation from a former student got me to check out the first episode. I was impressed by how much Ozark conveyed about accounting and the business relationship to crime. Also, I certainly did not expect a TV show to portray business relationships as vehicles for healing cultural divides.
The compassionate and complex way characters of all types are portrayed as they interact as businesspeople was a fresh and educational approach. City/rural, rich/poor, millennial/Gen X/Baby boomer, male/female, dishonest/straightforward, gay/straight, foreign-born/multi-generational resident, book-smart/street-smart, liberal/conservative, gun-smart/gun-ignorant, selfish/selfless, religious/non-religious: all find common ground in various business relationships. Different perspectives are portrayed with their own internal integrity.
Anyone wanting to expand their business opportunities needs to understand those who are motivated by different goals than they themselves might be. This series, at least in its first season, has shown itself to be a painless way to learn about the needs and motivations of others--as well as provide a cautionary tale about the unintended consequences of stepping out of one's ethical comfort zone.
Source: "Ozark: TV Review," by Daniel Fienberg, The Hollywood Reporter, July 17, 2017.
Facebook has been in the news lately--not for its cute baby goat videos, but for its considerable political influence. Mark Zuckerberg's belated and underwhelming response to his company's role in abetting Russian tampering in the U.S election has raised questions about what we as a society have gotten ourselves into. In the New York Magazine article linked below, Max Read asks:
"What is Facebook? We can talk about its scale: Population-wise, it’s larger than any single country; in fact, it’s bigger than any continent besides Asia. At 2 billion members, 'monthly active Facebook users' is the single largest non-biologically sorted group of people on the planet after 'Christians'—and, growing consistently at around 17 percent year after year, it could surpass that group before the end of 2017 and encompass one-third of the world’s population by this time next year. Outside China, where Facebook has been banned since 2009, one in every five minutes on the internet is spent on Facebook; in countries with only recently high rates of internet connectivity, like Myanmar and Kenya, Facebook is, for all intents and purposes, the whole internet."
Mark Zuckerberg seems to have been blindsided by what may have been negative (or certainly unforeseen) consequences of Facebook's market penetration and open access. He conceived this business as aligning with this mission: "Give people the power to build community and bring the world closer together." But aren't parts of the world creepier and scarier than many Facebook users would like to be connected to? Moreover, Facebook generates revenue from selling data gathered from its users. And revenue from selling access to its users.
Who is using whom, exactly?
Facebook is not the only trans-national internet business that controls access to information as well as information about millions of users. Interestingly, Ad Age asked this question in 2012: "Will Facebook be an internet behemoth in 10 years?" Time flies. Other behemoths include:
These internet powerhouses will shape the business environment for decades. As such, the questions about what they are, what they can do, and how they can be understood are well worth the consideration of anyone near the beginning of their own working life.
Continuing a sad tradition in soap advertising, Dove posted an ad on Facebook this week that was racially insensitive. It morphed a woman of color with a "dirty" brown shirt into a white woman with a white shirt. On social media, a segment of the ad was converted to a .gif that replayed the transformation again and again, drawing attention to the bad advertising choice.
Whenever I see ads (or films, or scenes on TV) that seem ill-advised, I try to imagine what the conversations in the decision-making rooms must have been like. What were they thinking? Did no one notice the problem? Or were people reticent to speak up?
Although Dove did react by pulling the ad, and issuing a statement and an apology, I think it would be more instructive if they had been transparent about the decision-making process. This might be helpful in preventing future mistakes.
Source: "Dove Drops an Ad Accused of Racism," by Maggie Astor, New York Times, October 8, 2017.
The open-plan cubicle layout for office workers has certainly become a classic design. But not everyone works most efficiently in this setting. Also, some transactions require more privacy than a cubicle can provide. Nevertheless, space is still at a premium and there are reasons to not give everyone their own permanent office.
Enter an office space that looks like a phone booth. Just like a phone booth, it is not a permanent home, but it serves its purpose when needed.
Also included among the options for the modern flexible office are:
I miss seeing phone booths on street corners...maybe they might find a new home in offices everywhere.
Source: "Don't Get Too Comfortable at that Desk," by Steve Lohr, New York Times, October 6, 2017.
Retail chain stores have been suffering--internet sales are eating into ground-based stores more each year. Private equity firms have purported to come to their rescue by restructuring their debt in leveraged buyouts. The problem is, the restructured entity has more debt than it had before, and meanwhile, the private equity managers have skimmed off transactional fees. The zero-based budgeting that is typical of such takeovers cuts costs without giving any thought to the pre-existing company's culture.
Toys-R-Us has been a recent victim of this trend--Kohlberg Kravis Roberts, Bain Capital, and Vornado Trust bought it up in 2005. Now, Toys-R-Us is in the process of filing for bankruptcy prior to one last try to remain in business by making the most of the upcoming holiday sales possibilities. According to Rosemary Batt, co-author of Private Equity at Work: When Wall Street Manages Main Street, “Debt is the lifeblood of the private-equity firm, but it also sucks the life out of companies.”
Source: "Toys-R-Us and the Trump Voter," by Sheelah Kolhatkar, New York Times, October 9th 2017 print issue, where it appears as "Played Out."
A superficial assessment of corporate income tax rates might find that corporate tax rates are high, compared to those of other countries. But a deeper analysis of tax rates includes not only the top stated rate on corporate net income, but also:
Lisa Goldenberg, CEO of the privately held Delaware Steel Co., shared her views with Marketplace about the corporate taxation problem being primarily with the corporate cash that is held in other countries to avoid taxation:
"Well, let's be honest. Corporate taxes are pretty low anyway. They're talking about lowering corporate taxes, but fundamentally, corporate taxes are extraordinarily low...I would say in a more macro view, if you look at repatriating money and they come up with a way to bring that cash back. Let me say this, that if we don't figure out a way to get that money back in this country, the European Union is going to figure it out, because they've got it right now on the floor being debated...We have to sort of balance that out. And that money would really affect my business, because that money will help balance our economy."
For another view of one corporation's low tax rate, here is an analysis of Starbucks:
Source: "'Let's be honest. Corporate taxes are pretty low,' this CEO says," by Kai Ryssdal and Shaheen Ainpour, Marketplace: American Public Media, October 5, 2017.
Sarah Thompson is now the global CEO of Droga5, an innovative ad agency. But she wasn't always. The early years of her career--as well as upbringing by hippie parents--don't obviously point to where she is now. A key tenet of her approach to work, however, has been central to her success: she truly commits to doing her best, no matter what she has been employed at. This has allowed her to build bridges and personal integrity. It also helps her motivate people since she views every level as worthy of attention.
Source: "Sarah Thompson of Droga5 on the Selfless Nature of Leadership," by Adam Bryant, New York Times, August 25, 2017.