Will China Cause the Next Recession?

When China's stocks crashed last month, economies across the globe worried about a market meltdown; China, the United States, and countries across Europe worried whether the hard-won economic recovery could be on the brink of reversal. The Dow plunged 1,000 points, the worst day since August 2011. Stocks for a number of large American companies also fell the same day. A few weeks later, China's economy is still limping along and their slowing economic growth may be even worse than originally feared. Some worry that without improvement, China could bring on the next recession.

China has the second-largest economy in the world and has had explosive growth for the last twenty years. Its rapid industrialization has also fueled growth in other countries that feed China's appetite for natural resources, such as Brazil. As a juggernaut leading global growth, China's slowing economy has produced fears that many countries might find their own economies declining, and even sliding back into a recession.

In the weeks following the plunge, China's government intervened in order to prop up the domestic market and to stabilize the yuan and prevent the currency from spiraling into a freefall. However, China's slowdown may be worse than originally predicted: in the last month, its output of industrial commodities weakened, growth in factory output missed predictions, and production of steel and coal declined. The government is aiming for 7% economic growth in 2015, the lowest in fifty years (CNBC, 9/13/15).

Volatility in America's own stock market from China's instability and fears of an economic slowdown may affect the Federal Reserve's decision whether to raise interest rates on Thursday. A majority of economists polled believe that the Fed will not raise rates amidst the uncertainty (The Wall Street Journal, 9/14/15). Meanwhile, some 75% of investors view China as the largest risk to investments and only about 20% feel positive about the global economic outlook for the coming year (Business Insider, 9/15/15).

China's weakening growth could send other countries into a dangerous downward spiral. The repercussions of the stock market crash has been a rollercoaster, which other economies have no choice but to ride.

Readers, do you think we should be worried about China? Comment and let us know!

Where are They Now? Updates to the 4 Biggest Stories of 2015 (So Far)

So far, 2015 has been a year with many businesses and hiring trends making headlines daily. Cities have raised their minimum wage, companies have made unique (and sometimes controversial) personnel decisions, and court decisions have thrown some companies' entire existence into jeopardy. These stories continued to be front-page news. Here are the updates for the biggest four stories of 2015 so far.

Walmart Gives 500,000 Employees a Pay Raise
When the retail giant notorious for low pay decided to raise the hourly wage for 40% of its workforce, it was applauded for following successful companies with high wages. The company estimated it would be spending an additional $1 billion in increased pay and revised training programs. Almost 6 months later, Walmart is experiencing weak second quarter earnings and has predicted that extra expenditures in pay will decrease its earnings per share by 24 cents in 2015. However, Walmart is confident investors will see a payoff for higher pay; same-store retail sales were the highest in 3 years and the company had its third straight quarter of higher traffic (CNBC, 8/18/15).

Lawsuits Spell the End of the Sharing Economy?
A wave of lawsuits against companies that are part of the "sharing" or "gig" economy had their entire business model thrown into jeopardy. The suits claim that that companies like Uber and Lyft exploit workers by classifying them as independent contractors, not as employees, and therefore avoid paying benefits, health insurance, and other costs. Last week, a judge in California allowed drivers in a class-action lawsuit against Uber to proceed with their claim. If the drivers win, Uber could face a large settlement - and more devastatingly - a possible change to their business model, at least in California.

The Company with a Starting Salary of $70,000
In April, Dan Price, CEO of Gravity Payments in Seattle, decided that all 120 employees at his company would earn at least $70,000 a year. The choice was both lauded as a smart and generous business practice and also criticized as foolishness that would make the company unstable by eating into its profits. Just 3 months later, Price is seeing some fallout from his decision. Two of the company's "most valued" employees quit and although the company was signing on new clients from the positive publicity, some customers left, anticipating a rate hike.

Los Angeles' $15 Minimum Wage
Los Angeles became the largest city to pass legislation that would institute a $15 minimum wage and a familiar debate around the possible benefits or detriments ensued. The success of the Fight for $15 in Los Angeles, also spurred other cities to raise their minimum wage. New York plans to raise wages for fast food workers to $15 an hour by 2018. In the Bay area, an arms race of raising wages was triggered as Berkeley, Oakland, and Emeryville all increased minimum pay.

Readers, what do you think has been the top story this year? Comment and let us know!

August Jobs Report

In August, U.S. employers added 173,000 new jobs and the unemployment rate decreased slightly to 5.1%, according to the Bureau of Labor Statistics' Employment Situation Summary. The amount of new jobs was weaker than expected and economists are predicting that slower growth will delay the Federal Reserve from raising interest rates.

Industries that experienced the most growth in August included health care and social services (+56,000), professional and business services (+33,000), food service (+26,000), and financial activities (+19,000). Staffing firms created 10,700 new jobs in August and temporary help services increased 0.4%.

Back to School: 3 Reasons To Train Your Front-Line Managers

TradePost would like to welcome back Bonnie Cox, founder of Power Training Institute. As summer ends, Bonnie outlines 3 reasons that you should send your managers back to class.

Fall is just around the corner. Books, pencils, and notebooks are filling the backpacks of children once again. Of course, most employees aren't at that stage of life anymore. How long has it been since your managers have been trained? Did it stick? Is it in the budget this year? Do you need to hire... again? Here are the top 3 reasons why sending your managers "back to school" should be one of your company's top priorities.

1) Not training has a cost.
It's proven that it is far more expensive to hire and/or fire an employee than to train them. Remember what Marcus Buckingham (First, Break All the Rules) says about employees that resign: "People leave managers, not companies." Well-trained managers will help you maintain your workforce and their morale. It costs more to remain on standby as your turnover rate escalates, than to invest in a professional development program for your managers.

2) A happy manager means business.
A recent Gallup poll highlights that only 35% of managers in the U.S. are engaged in their workplace . What does this mean? A disengaged manager means that the workforce under their watch will be less inclined to perform. It will affect key profit factors such as productivity, profit margins, and customer satisfaction. Employees who work for engaged managers are 59% more likely to participate in their work (Gallup, 4/2/15) . This means high quality performance and workforce stability for your organization.

3) Focusing on purpose can increase profit.
So how do you engage your managers? Franklin Covey always taught to "begin with the end in mind." To grow any company you need a high-performance management team that is organized, accountable, and strategic. Managers need to feel engaged to the company's mission and purpose in order to perform and influence others to perform. Just understanding a company's purpose is not enough; managers and employees need to feel that their efforts are a contributing factor to your mission.

Equip your staff with the right tools to take your company to the next level. Think about what your staff needs. Are they lacking motivation? Are you experiencing high turnover? Are your managers communicating effectively, consistently, and appropriately with their teams? Don't hesitate and join the back to school season. It's time to send your managers back to class.

To learn more about PTI and their management classes, call (805-456-5227) or visit www.powertraining.biz.

Amazon: The Future of White-Collar Work?

Last week, The New York Times ran a lengthy article on the work culture for white-collar employees at retail giant, Amazon. The piece describes a harrowing experience where Amazon employees (often self-dubbed as "Amazonians") face punishingly long hours, sabotaging feedback from coworkers, and an annual purge of the staff who are performing in the bottom 10% of employees. But for some Amazonians, their workplace, although harsh, allows them to work on innovative, groundbreaking ideas, to openly question the status quo, and to interact with some of the smartest people in the tech world. Amazon will never be described as an employee paradise for white-collar workers, but is the results-focused culture obsessed with innovation the future of American workplaces?

Amazon is not a forgiving place for employees: an internal feedback system allows coworkers to sabotage each other anonymously, individual performance is measured obsessively, and personal crises can make workers the target of escalated monitoring and even being edged out of the company. Jeff Bezos, founder and CEO of the online behemoth, created the twelve principles, Amazon's foundation for its work environment and management culture. The principles are not guidelines or vague banalities; they are essential to the company and Amazonians who want to stick around must adhere to each one. In a 1997 letter to shareholders, Bezos wrote that "you can work long, hard, or smart, but at Amazon you can't choose two out of three."

Unlike other tech giants famous for employee perks, Amazon does not offer unlimited vacation, on-site gyms, free meals, or even any parental leave policy. So with a grueling culture and minimal perks, why does Amazon employ 50,000 white-collar workers on its Seattle campus alone with more clamoring at the door to join? Compensation is competitive and successful employees can earn the equivalent of an extra salary from stock. But more than that, those who thrive as Amazonians do so because they have bought into the company and have truly embraced Bezos' twelve principles, especially the first: customer obsession. One former Amazonian found herself "addicted to wanting to be successful." With the second highest turnover rate of Fortune 500 companies, the average tenure at Amazon is about 12 months (PayScale, 7/28/2013). This is partly due to the fact that the company has grown rapidly and adds new staff all the time; their Seattle office alone currently has about 4,500 job openings (The New York Times, 8/15/2015). Despite high turnover and a need for workers, Bezos and Amazon have not toned down the culture and survivors are only those able to buy totally into the vision of the company.

Although taken to the extreme, some of Amazon's principles may sound familiar. Companies are becoming ever more obsessed with results, data, and evaluating employee performance with hard metrics. Businesses are looking for employees who will take ownership (Amazon's 2nd principle) of their work and care about the long-term success of a business. Working 'round the clock has become the norm for many white-collar employees, and not just at tech giants. Many companies are even adopting internal feedback systems similar to Amazon's where coworkers give comments on their colleagues' performance. Amazon's culture may be the modern American workplace taken to the extreme, but are other companies heading down a similar road? Is an obsessive, almost cult-like culture the future of the workplace?

Readers, would you work for a company with a culture like Amazon's? Comment and let us know!

The Digital Destruction of Middle-Class Jobs

When a new piece of technology is introduced, it's touted as the miracle solution to make work and life smarter, easier, and faster. Nearly every person carries around a small super computer in their pocket, the Internet keeps faraway family or coworkers connected, and mountains of data and information can be stored for time immemorial. Technological innovations claim to aid people in life and employees at work, but is the constant march of digital development actually destroying middle-class jobs?

The end of employees and the rise or robots is an apocalyptic prediction that has been forecast before, but never come to pass. However, the rapid advancement of tech could eliminate middle-income jobs that sustain many households, leaving workers without a digital skill set out of luck. Until about the year 2000, labor productivity and private employment grew together in the U.S. However, at the turn of the century, a gap emerged between productivity and employment: productivity continued to increase, while private employment decreased (see chart). Because of new technology, the economy and GDP were growing, but not coupled with job creation (Tech Republic, 8/19/14).

Since that time, new technologies created high-paying jobs – but only for a few and only for those with the right skill set. In the past, most middle-income households were sustained by factory or manufacturing jobs. In 1970, more than one quarter of U.S. employees worked in manufacturing (Bloomberg, 4/25/2014); those jobs accounted for only 8.8% of U.S. employment in 2013 (Economic Policy Institute, 1/22/15). The decline of U.S. manufacturing has several contributing factors: outsourcing and a surge of Chinese imports both contributed to the continual drop. However, manufacturing employment is falling globally in nearly every country, including China, (Bloomberg, 4/25/2014), due mainly to technology and the elimination of the need for industrial workers.

It is not just factory jobs being claimed by automation. About 47% of all present jobs in the U.S. are predicted to be computerized or automated within the next two decades (Oxford University, 7/17/13). Some service and white-collar positions are also expected to succumb to technology; accountants, retail salespeople, technical writers, and telemarketers, all have a high probability of being replaced by robots within the next twenty years (see chart, Business Insider, 7/23/14).

As middle-class jobs decline because of automation, others jobs do replace them; however, these are typically highly-skilled tech jobs or low-wage service jobs, leading to a polarized workforce. Those working in high-skilled jobs will benefit from high wages, while those working in low-skilled jobs will encounter the continuing trend of finding their earnings depressed. Additionally, technology allows companies to substitute labor for capital, which boosts productivity, but does nothing for wages, and concentrates wealth among a small group and resulting in ever-increasing inequality (University of Oxford, 2/2015).

But are the dire predictions are a bit too apocalyptic? Is the technology boom all part of typical economic cycles that destroy some categories of jobs but open up a whole world of new employment? A few decades should determine whether technology replaces workers with robots.

Readers, do you think technology is creating or destroying jobs? Comment and let us know!

A (Practically) Perfect Parental Leave Policy

Last week, Netflix, a company used to receiving fanfare for its employee policies, announced that it would be offering new mothers and fathers the opportunity to take off as much paid time as they'd like in the first year of becoming parents. Netflix's new plan goes well beyond even generous parental leave policies of other companies like Google or Facebook, and far surpasses outstrips the majority of American companies which offer no paid parental leave. The streaming company announced the new plan in a blog post and has made the policy accessible to both men and women. Netflix's new plan may be spurring other companies to offer more generous parental leave: Adobe and Microsoft both expanded their policies shortly after Netflix's announcement. The policy seems practically perfect, and it could be, if implemented correctly.

The company's new plan states that new "parents can return part-time, full-time, or return and then go back out as needed,"without changes in pay in the first year of parenthood. This policy is coupled with Netflix's unlimited vacation plan, but not every employee benefits. The parental leave applies only to salaried workers, not the hourly employees working in the DVD distribution centers. Netflix won't disclose exactly how many employees are not eligible for the parental perk, but it has reported about 2,300 total workers, of which an estimated 400-500 are not eligible (NPR, 8/6/15).

America is only one of three countries in the world, and the only developed nation, which does not offer paid maternity leave (ABC, 5/6/15); so although groundbreaking compared to receiving no paid parental time off, Netflix's new policy ushers in its own set of challenges. Like unlimited vacation time, such a flexible policy means that some employees may be unsure of if and how they can take advantage of it. Without defined limits, employees may be hesitant to partake of this new perk, and if they do they may be resented by their bosses or coworkers for doing so.

New mothers may have a particularly hard time taking advantage of the policy without repercussions. Although the leave is open to both men and women, women are already under-represented in tech companies and if only women use their paid parental leave, while men tend to pass up the perk or take less time off, women could still be pushed in a "mommy track"at work, with fewer promotions and raises once they return to work, a cycle already typical for many women.

Netflix should be applauded for implementing a paid parental leave policy for its employees. The next step will be ensuring that company culture actually supports its usage.

Readers, what do you think of Netflix's new parental leave policy? Comment and let us know!

July Jobs Report

In July, U.S. employers added 215,000 new jobs, compared with an average monthly gain of 246,000 over the prior 12 months, according to the Bureau of Labor Statistics' Employment Situation Summary. The unemployment rate remained unchanged at 5.3%. The labor participation rate was also unchanged at 62.6% in July, after declining 0.3 percent in June. Economists wonder if the report is good enough to keep the Fed on track to raise rates in September.

Industries that experienced the most growth in July included retail (+36,000), health care (+28,000), and professional and technical services (+27,000). Temporary help services showed little change from June to July (-0.3%) but is up 4.5% over July 2014.

Is it Time to "Ban the Box?"

Anyone who has applied to a job is probably familiar with "the box." Most applications require candidates to indicate if they've ever been convicted of a crime. Many people skim this section and check "No" without much thought. For the nearly 70 million Americans who have been convicted of a crime, however, that small box can be a huge hindrance in finding a job. Activists gathered last week to urge President Obama to "ban the box" when hiring for federal agencies or contractors, following the trend of many cities and states which have already removed criminal history from the application process. Even as job growth surges ahead, applicants with criminal records have trouble finding work. Is "the box" an unfair barrier to employment and would removing it from job applications help unemployed people with criminal records integrate back into the workforce?

Nine out of ten employers check databases for criminal records when hiring and advocates of banning "the box" claim that the use of background checks in the hiring process has systemically excluded applicants with criminal histories. Of nonworking men in the United States, 34% have a criminal record (The New York Times, 2/28/15). With nearly one in four Americans having a criminal record, "the box" could be hindering nearly 70 million people from finding work (NBC, 6/5/14).

The "ban the box" campaign has surged in the last several years. The initiative works to remove conviction history from the application process and delay any background check until later in the hiring process. Momentum for the idea has gained traction in the last several years: over 100 cities and counties have adopted the rule and a total of 18 states have also followed suit, including California, Colorado, Georgia, Illinois, Ohio, Oregon, and Virginia. Most of these laws apply to pubic employers; only seven states have removed the conviction history question for applications for private employers (National Employment Law Project, 7/1/15).

New York City is one of the most recent cities to join the movement and recently passed the Fair Chance Act that will "ban the box" for any employer with more than four staff members. Like other laws, the criminal background check is delayed until later in the process and a job offer can be rescinded because of a conviction record. Private employers have also taken their own initiative: major companies like Walmart, Target, Starbucks, and Koch Industries have voluntarily decided to remove the box from their job applications.

Some are not convinced and worry that "banning the box" will complicate and lengthen the hiring process, erode workplace safety, and open up businesses for potential litigation. The National Retail Federation views the box as measure to ensure security and safety at work and claims that having background information at the beginning of the hiring process allows the employer to make an informed decision. Banning "the box" could result in employers coming to an offer stage and then withdrawing due to the background check, spending time and resources on a candidate who is not ultimately hired. The National Federation of Independent Businesses (NFIB) also opposed "ban the box" laws, saying that they stretch thin the resources that small businesses have when screening and hiring applicants, opening them up to liability in the future. Before Michigan passed its own measure, NFIB surveyed business owners and found that 88% of them were opposed to the law (NBC, 6/5/14).

Activists promoting the regulations have urged President Obama to sign an executive order to remove "the box" from job applications for federal agencies and contractors. The President has already asked Congress to pass a bill that would delay criminal background checks until further into the hiring process, but proponents are pressing him to act where he can during the remaining months of his presidency.

Readers, should "the box" be banned from job applications? Comment and let us know!

Does Corporate Profit-Sharing Spread the Wealth?

As the 2016 presidential primaries draw closer, many candidates have begun to outline their economic plans, all touting to aid workers and raise the middle class. Democratic frontrunner Hillary Clinton shared her own economic plan, the centerpiece of which is increasing employee pay and raising income levels. As part of her plan, Clinton hopes to remedy stagnant wage growth with a "Rising Incomes, Sharing Profits" tax credit, which would award a two-year tax credit to companies that offer profit-sharing programs to employees. But, does profit-sharing actually spread the wealth to workers or does it have unintended consequences that could actually hurt the very employees it's supposed to help?

Clinton's proposed plan gives companies a two-year tax credit equal to 15% of the profits they share. As an example, an employee earning $50,000 a year could receive an additional $5,000 in profit-sharing and the company would then receive a tax credit of $750 per worker. The credit would only be available to companies that offered profit-sharing widely to workers and would phase out higher-income employees from the program.

Corporate profits, although lagging in the first half of the year, are still at an historic high and profit-sharing aims to distribute some corporate profits back to workers in order to raise employee wages and give workers a stake in company performance. Proponents of the plan assert that employees become stakeholders in a company under profit-sharing arrangements: when a company does well, employees share in the gains. Advocates claim that having an investment in a company's performance can lead to higher productivity, stronger employee loyalty, and higher incomes. Companies with profit-sharing plans had average compensation levels 8 percent higher than other comparable companies (National Bureau of Economic Research, 2012).

One example of profit-sharing being a win-win for both employees and companies is WinCo, an Oregon-based, employee-owned supermarket chain. The company offers its workers an Employee Stock Ownership Plan (ESOP), and more than 400 front-line, non-executive employees have accumulated over $1 million in retirement savings; within the last seven years, WinCo has paid out almost $1 billion to retirees (Forbes, 11/5/14). The grocery chain is visibly successful with 98 stores across the nation and an expected $6 billion in sales in 2015.

However, others worry that the program could actually harm the workers Clinton aims to help. Although typically bonuses from profit-sharing are in addition to normal wages, companies could try to replace some of their payroll with profit-sharing, which would harm middle-class workers that rely on consistent paychecks. Corporate profits, although high, can be erratic; for instance, during the Great Recession, profits plunged 16% (Fortune, 3/30/15). Workers that depend on reliable income could be hurt by wages being tied to their organization's performance. Skeptics of the idea also claim that the boons of profit-sharing are mostly theoretical and not enough economic research exists to prop up the idea that profit-sharing plans boost wages of middle-income workers.

Clinton's tax credit is only a proposal, and is likely only one of many that will come from a variety of presidential hopefuls in the coming months. But corporate profit-sharing is part of the larger debate around reversing wage stagnation and boosting middle-class workers.

Readers, would you want to work at company with profit-sharing? Is it a win for the economy and workers? Comment and let us know!

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