Young Entrepreneur

Full disclosure: The Benjamin Bear and Patrick Hill are friends of mine.

There is a special feeling that each of us occasionally experiences. It goes something like this: Absolute tunnel vision focus – the unsureness of it – rechecking – everything looks aligned – the release – I figured it out! I figured it out! I figured it out! – the slow relaxation of satisfied accomplishment.

I can see myself in 9th grade math, Course 1 in NY, sitting at a wooden desk with my head down working on a math problem. I have a pencil, sheet of paper, calculator, and a symbolic message. What does the message say? Its a puzzle worth figuring out because I want that feeling again – “I figured it out!”

In last week’s NY Times, Janet Rae-Dupree wrote an article called Eureka! It Really Takes Years of Hard Work that describes the misconception regarding innovation – that is it an epiphany. Do the magic moments exist? Yes, but the hard work surrounding them is much more important. The magic moments simply give you the feeling I describe above, but the hard work before and after the moment is what is important.

This week marks an important milestone for The Benjamin Bear. This is the week of the Magic Marketplace Fashion Exhibit in Las Vegas and The Benjamin Bear is a new fashion line (new is a relative term) owned by Patrick Hill. He is a young entrepreneur who is toiling away with the business day in and day out. His business has progressively gotten closer to today – today didn’t just come for him. Today was built on many yesterdays. There were conversations with people in Egypt, China, LA, and Jacksonville (North Carolina). There were local boutiques, cotton suppliers, and small business organizations. There were doubters and there were supporters. But mostly, there was hard work and long hours. When he makes a sale, it certainly won’t be an epiphany being bought.

Uncertainty of a New Job (part 3)

In part 1 of this three part set, I explained the area of the brain that keeps you alive. It is called the amygdala.
In part 2 I went over how the biology of species survival has evolved into self preservation in social situations.

A type of self preservation is now disabling people from going after better career situations. It is called the impostor phenomenon. The impostor phenomenon comes about from self doubt. It is a means of controlling expectations. People that demonstrate this behavior have a fear of not being as capable as others think they are, so they fake it and either avoid situations of being found out or go out of the their way to exergerate the compentency.

So suppose you are in a job that is no longer suitable to your situation. To get a better job you have to promote yourself. Everything you say about yourself is true. You can achieve great things, but you walk the line of over promotion. If you have adopted the impostor strategy of self preservation, then this type of activity is worrisome because what happens if you do get the job? Are you expected to perform flawlessly right from the get go? That is how you just sold your abilities.

If you relate it back to going into the woods while camping in part 2, suppose you do go into the woods and you do encounter an adversary. What do you do? You pump yourself up to impress your potential rival. Some of it is a bluff and some of it isn’t. But what happens if your bluff doesn’t persuade the rival to back off and you have to fight? Is that worse than never going into the woods to begin with? To an impostor it is.

What is unfortunate about this style of self preservation is that it is mostly temporary. For instance, if you are in a job that you have outgrown it is because you have performed the many tasks several times and well enough to succeed (success is because you still have the job). But that feeling of accomplishment the first time you performed a new task doesn’t stick with you long enough to motivate you to attempt more new tasks, especially those outside of the safe environment of your current job.

So in summary, a new job provides so much uncertainty – whether it is the promotion of your abilities or the assumption that you over promoted your abilities to not warrant a learning curve – that it paralyzes people into staying in their current job. Your amygdala has won.

US Productivity Stats for Q4 of 2007

Here are the productivity statistics for the fourth quarter of 2007:

  • Overall productivity increased at a annual rate of 1.8% (nearly double what analysts thought)
  • This is compared to an increase of 6% in the third quarter
  • For all of 2007, productivity was up 1.6%
  • In 2006 it was 1%
  • Earlier in the decade (2000-2004) productivity averaged 3.2%
  • Labor costs rose by 2.1 percent (a little lower than analysts expectations)
  • Labor costs fell by 1.9 percent in the third quarter
  • Labor costs fell by 1.1 percent in the second quarter
  • For all of 2007, labor costs were up 3.1%
  • For all of 2006, labor costs were up 2.9%
  • GDP was 0.6% in the fourth quarter (revised to a contraction of 0.2%)

When productivity outpaces labor costs then living standards improve. Why? Because it allows businesses to pay their employees more without raising the cost of their goods, which keeps inflation in check. That didn’t happen in the fourth quarter of 2007.

Revision: Productivity was revised to 1.9%
Revision: Labor costs changed from 2.1% to 2.6%

Remember, an increase in productivity is good for the economy because it
allows businesses to pay their workers more for their increased output,
without raising the cost of their products.

Uncertainty of a New Job (part 2)

In part 1 of this three part set, I explained the area of the brain that keeps you alive. It is called the amygdala.

Think of it this way – suppose you are camping in a wooded area you’ve never been to before. It is dark and you can hear noises of the creatures of the night milling about. You have your tent set up in the middle of a clearing. You are familiar with the east and south sides of the clearing, but the north and west sides are completely unknown to you. Each direction has a pathway that you can see for about 5 feet before darkness takes over. There are bushes lining each walkway and the wind is slightly blowing. Assuming there is no urgency forcing any decision, how likely are you to explore north or west at this current time? The answer is that you aren’t likely. Your amygdala would create a very intense feeling of fear to prevent you from trying those directions out. Not because they are dangerous, but because you can’t be sure they aren’t. Uncertainty of a situation hinders you from choosing rationally.

Another example is the Ellsberg Paradox. The idea is that people in the face of uncertainty will avoid it. A PBS show called Curious: Mind, Body, Planet, Universe does a great job illustrating the Ellsberg Paradox in this video clip.

So the feeling of fear is an emotional mechanism for self preservation. Change is the near term enemy of self preservation, but it enables long term viability. Think of it like exercise, when you are doing it is hard and grueling, but the more you become familiar with it the more enabled your are for the long term.

I used the example of camping above, but self preservation in today’s society looks differently. Self preservation is more centered on social interactions. Being new to a group is difficult and representing yourself in a new job is challenging. Like I said in part 1, people will stay in a bad job situation simply because they fear the uncertainty of how to represent themselves in an unknown job situation.

Long Term Unemployment and Layoff Stats for January ’08

This is a supplement to my Friday post titled January Job Report Statistics, Wage, Spending, Inflation, and China Changes regarding planned layoffs and long term unemployment.

Layoffs for January 2008:

  • Job cuts rose by 69% in January 2008
  • December of 2007 had 44,416 (source is Challenger, Gray & Christmas Inc.)
  • January of 2008 had planned 74,986 layoffs
  • August of 2007 was the most recent high with 79,459 and I think that was mostly tied to the abrupt end of housing construction
  • 2001 had a an average of 140,000 layoffs from March to September

Long Term Unemployment:

  • In January of 2008, 1.4 million people in the US are considered long-term unemployed
  • The average for all of 2007 was 1.2 million people unemployed for longer than six months, that is 17.6%
  • The percentage for all of 2000 was 11.4% (this was right before the 2001 recession)
  • January of 2007 was about 21%
  • December of 2007 was showing a reading of 18.3% (that is a one month growth of 3%) of those unemployed are unemployed longer than six months

Notes:

  • The long term unemployed don’t affect the unemployment number reported by the government
  • A high percentage of people that are long term unemployed erode away at the economy because they have used their unemployment insurance and savings and are now accepting of jobs that will pay less than their previous market standard (creating wage pressures for the employee)
  • The rate of layoffs isn’t recessionary high yet, but it is increasing
  • Those that have been laid off are not finding comparable jobs quickly

Resources for this post:
Why job market is even worse than you think
Stimulus plan may not lead to many new jobs

1st 100 Entries at Working Thoughts

This past Friday I entered my 100th post. 100 is an arbituary number, but I did want to celebrate and recognize my wife, Amy, for putting up with me while I figure out what I want to say day in and day out. My extended family also demonstrates patience with me as I expound about the latest idea I have that they really don’t care about. So thank you to those that deal with me.

Also, thank you to those that read my posts. I try to give a different angle with my entries, so I hope people like them.

Thanks – Ben

January Job Report Statistics, Wage, Spending, Inflation, and China Changes

Here are the job market and compensation numbers for January of 2008:

Net loss of 17,000 jobs in the month (revised to a loss of 76,000)

  • If this number holds up in revisions, it is the first month to post a loss of jobs in four years
  • December was revised up from 18,000 to 82,000
  • Forecasters (economists) predicted a gain of 70,000 jobs

Unemployment rate moved to 4.9%

  • Forecasters thought unemployment would remain at 5.0%
  • The private sector only increased by 1,000 jobs in the month

Wages were up 0.2% for January

  • Wages were up 3.7% for all of 2007, this is slower than inflation
  • 2006 saw an increase in wage of 4.3%
  • Inflation for 2007 was 4.1%, up from 2.5% in 2006
  • Over the last 12 months, the salaried worker has in essence seen their pay decrease
  • The number of hours employees work has declined from 33.8 to 33.7
  • With the number of hours reduced and 4 cent increase in wages means that weekly wages dropped for the first time since April

$17.75 is the average hourly wage

Inflation:

  • Inflation for 2007 was 4.1%, up from 2.5% in 2006
  • This is higher than what the Fed would like to see – 1% to 2%
  • Prices in December alone rose 3.5% from a year ago

Consumer Spending:

  • December saw an increase in spending of 0.2%
  • Adjusted for inflation, that is a flat month for spending
  • November saw an increase of 1%
  • New orders by business owners dropped to the lowest rate since May of 2003
  • Personal income increased by only 0.5% in December
  • Since December of 2006, disposable income (after tax salary and adjusted for inflation) has increased by 2.1%

The Chinese Impact:

  • 7.5 of American spending on consumer goods is from China
  • Chinese exports increased 2.4% over 2007, but that 2.4% creates a snowball effect where it increases the cost of everything else, from competitors goods, to the consumption of energy and food
  • Chinese exports account for 80% of toys, 85% of footwear, and 40% of clothing
  • Because of a combination of factors, the cost to American consumers for these items might increase by 10% this year
  • The cost of certain types of plastic has risen by more than 30% – blame oil and its consumption
  • The dollar is down about 7.6% against the yuan and can drop further in the next year
  • Chinese factors don’t publish this number, but it is speculated by experts that wages in Chinese factories have increase 80% or more in certain parts of China
  • The lowest month income for a factory worker is now $125 (in certain parts of China)
  • Chinese factories for 2009 orders are increasing their prices by 20% to 50%

Other information:

The 2007 review by the government was completed in January and it found a drop in jobs by 191,000.

Recent Job Reports:

December 2007 Job Report Stats
November 2007 Job Report Stats
October 2007 Job Report Stats
September 2007 Job Report Stats