Not All Recoveries Created Equal

Ah yes...

The economy grew at 4.5% in 1983, with a few quarters of growth north of 8%. In 2011, meanwhile, the economy grew just 1.7%.

In just one month—September 1983—the economy added more than a million jobs. For the full year, the economy added almost 3.5 million jobs, a trend that continued into 1984, an election year in which Reagan captured 49 states in a landslide victory.

Obama can claim job growth of 1.8 million in 2011. A welcome comeback, but still tepid by comparison.

Looking ahead to 2012, Obama could replicate the 243,000 jobs created in January over each of the next 11 months and still not approach Reagan’s total for 1984 of 3.9 million.

Indiana Now Right-to-Work

Welcome to the 21st Century, Indiana!

Gov. Mitch Daniels signed “right to work” bill this afternoon without ceremony making Indiana the 23rd state in the nation with the law,

And to the union folks in Indiana whining about the change—if the services your union provides are as valuable as you say they are, you’ve got nothing to worry about.

Interesting

The most interesting part of this ad is Obama’s statement that he doesn’t know why the woman’s husband is having trouble getting placed. Not “getting a job.” Not “getting hired.” “Getting placed.” For someone to get placed, someone else must place them. It reveals Obama’s perspective on working Americans.

Pipeline to China

While I know some in our readership assume that the Keystone pipeline will be adjusted and built anyway, some Canadians may disagree. If I were Canada, I would certainly be considering diversification after being slapped in the face.

Prime Minister Stephen Harper says Canada’s national interest makes the $5.5 billion pipeline essential. He was “profoundly disappointed” that U.S. President Barack Obama rejected the Texas Keystone XL option but also spoke of the need to diversify Canada’s oil industry. Ninety-seven percent of Canadian oil exports now go to the U.S.

“I think what’s happened around the Keystone is a wake-up call, the degree to which we are dependent or possibly held hostage to decisions in the United States, and especially decisions that may be made for very bad political reasons,” he told Canadian TV.

[...]

Meanwhile, China’s growing economy is hungry for Canadian oil. Chinese state-owned companies have invested more than $16 billion in Canadian energy in the past two years, state-controlled Sinopec has a stake in the pipeline, and if it is built, Chinese investment in Alberta oil sands is sure to boom.

“They (the Chinese) wonder why it’s not being built already,” said Wenran Jiang, an energy expert and professor at the University of Alberta.

The High Cost of College

Here’s another story about the high cost of college.

The cost of college has far out-paced inflation over the past five decades, making it harder for students to work their way through college and come out debt-free, or even with manageable debt. Tuition, books and living expenses for an in-state student living on an adequate but moderate budget is estimated at $22,542 at UW-Madison for 2011-12. It was $1,430 in 1960, which equates to $10,867 in 2011 dollars, according to the Bureau of Labor Statistics.

It’s an issue that leaders at both the state and national levels are looking at closely. President Barack Obama unveiled a plan Friday to tie a college’s eligibility for federal aid to the institution’s success at improving affordability. The UW Board of Regents will discuss how to keep costs down at its February meeting.

The reporter tells the tale of a young lady who is struggling to pay for school at UW Madison as the costs continue to go up. It’s an important issue with a lot of layers. How much should taxpayers subsidize college education? If so, how much control should the taxpayers exert over universities? Why are costs going up so much faster than inflation? Etc. There were two things that caught my eye about this particular story. Here’s the first one:

“It is much harder to work your way through college than it was,” Baum said. “That said, there didn’t used to be all this financial aid.”

Hmmmm… that’s interesting. So is the availability of “all this financial aid” driving the price of college? Generally speaking, when one is having to work to pay for something, they are generally more particular about what classes they are willing to pay for. Is the availability of “free” money (and I say “free” including borrowed money which many college students never think about how they will pay it back) resulting in colleges expanding into unwise areas just to soak up those dollars? It wouldn’t be the first time that “free” money created an entire industry designed to get it.

Perhaps that sentence in the story caught my eye because of the second part of the story that got my attention:

Ohlinger is double-majoring in horticulture, and community and environmental sociology, with a certificate in global cultures.

That’s the lady whose story weaves throughout the article. OK… so here we have a young lady who is struggling to attend UW Madison. She admits that she’ll be $40,000 in debt after college and, on her 5th year, she’s easily going to spend $100,000 or more for her education. What’s the ROI on a $100 degree in Horticulture and community and environmental sociology? Might I suggest that if she is struggling to pay for school that she attend a less expensive university? Or get a degree in something that has better job prospects? And if there wasn’t so much “free” money available, would UW Madison even offer a degree in community and environmental sociology?

Workers Lose Pay For Obama Visit

Well, that’s lovely.

President Obama arrived in Chandler, Arizona Wednesday to talk jobs, but his appearance cost hundreds of laborers a paid day of work.

More than 1,500 workers building the Intel manufacturing facility where Obama appeared were ordered to stay home for security reasons and told they would not be paid for the day, according to KTAR in Phoenix.

An Intel spokesman said the days will be made up since the work still must be done, but some workers disagreed and expressed frustration that they were losing overtime pay.

Mining in Wisconsin

Responsible mining of our natural resources has long been acceptable and profitable. In Wisconsin, we’ve done it with lead (Badgers), timber, furs, and many other resources. Why not sand?

A major Wisconsin sand mining company is looking to build one of the controversial mines in Dane County, and at least one town is planning to strengthen its local zoning laws after landowners there were approached by the company and asked to sell their property.

Rich Budinger, regional operations manager for Wisconsin Industrial Sand Co., said his company has sought willing sellers who own land in the town of Berry, between Cross Plains and Black Earth, in recent months in the hope of buying enough contiguous land to build a large sand mine.

Budinger said those efforts have so far been unsuccessful. He added, however, that the company, which operates three large sand mines in central Wisconsin, is looking to buy land elsewhere in the county for a mine though he wouldn’t name a specific area.

Why Your iPhone Was Made in China

Interesting.

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

[...]

Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.

“the uncertainty was different”

Irrespective of whether the corporate welfare in this case is for good or ill, the process is telling.

“In the end, the dollars were not different; the uncertainty was different,” Klapmeier says in Flightglobal. “In Maine, they were trying to put together (financing) parts that would line up; in Wisconsin, they had the authority to get the pieces done.”

State officials say they have been working with Kestrel since a meeting at the EAA AirVenture show in Oshkosh in July and the discussions got serious in September.

Sometimes being easy to work with weighs more then dollars.

Spectrum Stays in Wisconsin

Good or bad?

Spectrum Brands said Thursday it came close to transferring its world headquarters and Remington operations to Florida.

But the company said it has now dropped those plans and instead will move from Madison’s West Side to a new building in Middleton in late 2013.

The announcement was the first time Spectrum Brands, whose products include Rayovac, Remington, Cutter and Dingo, has disclosed any plans to move to Florida.

[...]

He also is seeking more information about the role of a $4 million forgivable state loan and how it might have influenced Spectrum’s decision to move to Middleton, Crawley said.

An earlier version of the story pretty much said that the $4 million loan was the reason for Spectrum staying, but that may have been speculation by the reporter.

So… here we are… assuming that the forgivable loan was the deciding factor, it may cost the taxpayers $4 million to keep Spectrum from moving to Florida. Is it a good deal? Absolutely, yes. $4 million is a small price to pay to keep a corporate headquarters and all that means in Wisconsin. Should the state’s taxpayers have to fork over corporate welfare to pay for it? In a perfect world, no. But that’s how the game is played nowadays.

Obama Rejects American Jobs

Gee, thanks Mr. President.

President Barack Obama on Wednesday rejected a Canadian company’s plan to build a U.S.-spanning, 1,700-mile pipeline to carry oil across six U.S. states to Texas refineries, raising the stakes on a bitter election year fight with Republicans.

Venturing Into Wisconsin’s Capital

Mike Ivey has a pretty good article in the Capital Times (I know… I know…) about venture capitalism in Wisconsin. He has a lot of great commentary from different sources and some different perspectives on the issue. I encourage you to click through and read he whole thing.

Basically, it’s an issue now because the Wisconsin legislature is considering various means of creating a public or public/private entity for venture capital in Wisconsin. There are a few other states doing something like this that range from the government directly investing in companies like a private venture capital firm does to funneling money to a private agent who does the investing to using their borrowing power and extending it to select firms. There are varying success rates with current iterations in other states.

The reason for this activity is that Wisconsin sucks when it comes to attracting venture capitalists to invest money in Wisconsin companies. It happens, but we are way behind other states. Because of this, some legislators are seeking to fill the void.

There are some inherrent problems with this. First, it doesn’t fix the problem. The problem is that too many venture capitalists don’t want to invest in Wisconsin companies, and in conjunction with that, there aren’t enough startups for them to invest in.

Second, anything the government does in this area will serve to squeeze out private investment. Private venture capitalists may be reluctant to compete with a government-backed investment firm on high-risk companies.

Third, and perhaps most difficult, there’s virtually no way to craft something likt this that isn’t fraught with problems. For example, if it’s set up as just another government agency that invests taxpayer dollars in companies, then it’s ripe for fraud, cronyism, and bribery. It is also prone to bad investments since the people managing it aren’t investing their own money. What do they care if a company goes bankrupt? Furthermore, many venture capitalists set up the egreements where the investors own a sizable portion of the firm and can take it completely over in certain circumstances. We certainly don’t want our state government directly running a bunch of formerly-private companies.

Or let’s take another way to do it… if the government uses taxpayer money to fund a private firm who will they “independently” invest in other private companies, who picks the investment firm? Again, it’s a recipe for fraud, cronyism, and bribery.

While I’m not opposed in concept to the government finding a way to spur capital investments in Wisconsin companies, I’d much rather they focus on fixing the underlying reasons for why Wisconsin lags behing in venture capitalism in the first place.

The Damaging Impact of Regulations Encouraging Defensive Management

This story is a little convoluted, but it’s extremely revealing. I’m going to cut the story up a little to put into a timeline, because it’s important.

Smiley said her job had became so stressful that she suffered a stroke and was off work for almost three months, beginning July 13, 2009, according to the court filing.

[...]

Smiley, 48, punched out of work for lunch Jan. 28, 2010, but remained at her desk to finish a project assigned by a manager because she did not plan to eat that day, she said.

Smiley, who had passed her 10-year anniversary with the company more than a month before, said another manager told her it was time for her to go to lunch and step away from her desk, but she refused. That manager observed Smiley working on a spreadsheet on her computer, answering the phone and responding to questions by people who approached her desk, according to a filing from the appellate court of Illinois.

[...]

The company’s human resources director then became involved, explaining that hourly non-exempt employees were required to take a 30-minute lunch break, a policy that had been in the company handbook for 10 years, according to the filing. Not following the policy would be a violation of Illinois’ labor laws, the HR director said.

The prominent location of Smiley’s desk, “which was directly at the front door of the office, made this particularly important for her,” according to the human resources director in the court filing. She and Smiley had “many discussions ... over her eating breakfast at her desk,” the filing states

“I knew you couldn’t eat lunch at your desk,” Smiley told ABC News. “I was under the impression that because I was punched out and I could do what I want.”

[...]

Like several states, Illinois has a law that requires employers to provide employees a lunch break. But the law cannot be read to require an employer to fire a worker who refuses to take a break in order to finish her work, said Michael LeRoy, law professor at the University of Illinois at Urbana-Champaign.

“Nonetheless, Illinois is an employment-at-will state, which means the employer can fire someone for a good reason, no reason, or a bad reason, as long as it is not discriminatory,” he said.

The story goes on to tell us that she had initially been denied unemployment benefits, but an appelete court overrulled that initial decision. But the behavior here is more interesting to me than the legal aspects.

Here we have an long-term employee. Given her tenure, I think we can presume that she performed her duties adequately and to the satisfaction of management. She suffers a stroke allededly due to stress and was on a medical leave until September (or so) of 2009. Three months later she clocks out and is working through her lunch.

It is against Illinois state law for the company to NOT give her time for lunch and, in an effort to comply with that law, it is against company policy to eat at one’s desk. Presumably the policy is designed to force employees to leave their work area for lunch to make sure they aren’t sneaking in work. Management sees the woman working during her required lunch and fires her for not complying with company policy.

(As an aside, this whole discussion if foreign to me. I work through lunch, breakfast, and dinner all the time. My work schedule is dictated by the needs of the business - not by arbitrary time windows.)

So… put yourself in the mind of management. First, they create a policy the demands that employees leave their desks in order to comply with a state law mandating that employers offer a lunch. They likely, and understanably, interpreted the law as meaning that they would get in a heap of trouble if employees were caught working during lunch. One could argue that if employees made a practice of working at lunch, then even if there is a policy that they must take a lunch, the company culture coerced employees to work anyway. So they write the policy and enforce it in a way to prevent employees from sneaking in work during the mandated lunch time.

Second, this particular employee suffered a medical issue allegedly because of stress from work. Yet she is the one working during lunch and not taking advantage of the break, and stress relief, than a half hour lunch can provide. Not only is she breaking the policy, but she is also contributing to work stress that has led to past medical issues - issues that I’m certain would have to be financially covered by the company due to various regulations (short-term disability, workman’s comp, whatever). Furthermore, if the company is shown to have known that she was working through lunch in violation of the law and allowed it, some jury might find them liable for future stress-related medical issues.

At the end of all that… worried about future lawsuits; worried about complying with state law; worried about her health; and worried about consistent enforcement of company policy; they fired a long-term employee and decided that the cost of recruiting and training an adequate replacement was less that the exposure to risk.

That’s defensive management at its finest. I certainly can’t blame the management of the company for what they did. The laws are set up to make it far too risky for them to just sit down with the employee, explain the policy and the reasoning for it, and keep her on board. It’s a shame, really, that the law too often penalizes those who would “do the right thing.”

Don’t Trust WEA Trust

Very slimy.

Intended to help employers offset the cost of health insurance for early retirees, WEA applied for and received ERRP funding for its plan participants last school year. The nonprofit health insurer sent letters out to each district, informing each that it would receive credits toward its insurance premiums. But after each school district dropped its WEA coverage in favor of other insurers, WEA refused to pay the school districts any of that money, instead redistributing it to those that remained plan participants.

Uptick in New Businesses

Excellent.

Nelson’s new bar and grill is one of 33,000 new businesses that opened in Wisconsin last year. According to the state’s Department of Financial Institutions, that’s a 2.3 percent increase from 2010.

“We’ve changed some corporate tax policy in the last year, that has certainly helped people, willing to explore,” said Dick Granchalek, president of the La Crosse Chamber of Commerce. “And unfortunately unemployment pushes people into saying, ‘Ok, what can I do on my own?’”