Monday, September 12, 2011

The American Dream (Revisited): Reflections on Labor Day 2011

Is the current economic environment an obstacle or an opportunity? Do any of us have any control over the current situation, or are we free to empower ourselves to do something to make a difference at this time?

I have been pondering this question lately. During the past several months I have been researching the current job market amidst the economic challenges we have been experiencing over the past several years and discovered that many of the paradigms that I had when I entered the workforce in the 1970s are no longer even a glimmer of the current realities that we face in 2011.

Unemployment and Underemployment in the US

The figures that the media reports on the unemployment rates represent people currently searching for a job. News that the unemployment rate in my home state of North Carolina rose above 10% again in August 2011 reinforces the challenges that many of our family, friends, and neighbors are facing today and likely in the years’ ahead. 17 Of course this figure does not include the large number of unemployed that have given up and surrendered on their job search and the tremendous number of underemployed professionals across the country.

One fact that does not get a lot of publicity is our current state of underemployment. For instance, “Many of the underemployed can be considered the unseen faces of the recession because their numbers are not fully reflected in the Bureau of Labor Department's metrics. A Gallup poll published on February 17, 2011 found that the number of underemployment surged to 19.6 percent in mid-February 2011 from 18.9 percent at the end of January 2010.” 21 With unemployment over 10% in some regions; the number of part-time workers seeking full-time jobs at 10%; and underemployment approaching 20% – the figures are disturbing and indicative of substantial structural changes in the job market in our country.

My recent research and personal experiences have refuted my original set of beliefs that I had when I embarked on my professional career, which included:

  1. I have a contract with Corporate America.
  2. I submit a resume and cover letter for an open position and someone contacts me on a timely basis if they are interested in scheduling an interview with me.
  3. The investment I have made into real estate over the past four decades is my golden nest egg for my retirement.
  4. I can look forward to transitioning from working full-time into retirement and recreation when I reach my mid-60s.

My research provided me with greater insights into the current set of challenges and opportunities that we face today.

Living the American Dream with the Contract with Corporate America (Revisited)

The “Contract with Corporate America” was a paradigm that many of us perceived when we joined the workforce in the 1960s through early 1980s. We accepted positions with the expectation that if we worked hard, were dedicated to the corporate mission and values, and executed our job with loyalty and integrity – that we could look to retire with a pension and benefits somewhere in our early to late 60s. Back in the 1970s, I entered the workforce with the following paradigm in regard to my professional career:

> Go to school
  > Get a job with a reputable company
    >Work hard
      > Settle down, raise a family
        > Earn several promotions over three or four decades
          > Retire
            > Relax – “No worries!”

Far too many have had to confront the reality that our version of the “American Dream” has crashed and burned over the past decade. Millions of hard working corporate citizens have been downsized, rightsized, restructured, acquired, merged, and outsourced – quite often multiple times. The perceived corporate agreements in the 1960s and 1970s in where you retire from the first company you join in a professional job are long gone. During the past several months we have witnessed substantial layoffs, tens of thousands of jobs, from major corporations including HSBC, Borders, Merck, Lockheed Martin, Bank of America, Cisco, Pfizer, Credit Suisse, Research in Motion, Boston Scientific, and Goldman Sachs to name just a few.

The current economic challenges have been particularly devastating to American men who have seen their employment rate drop 20% in our lifetime. The employment figures also indicate that many men over 55 who are displaced from their jobs quite often do not have to opportunity to reenter the workforce. 2

Another interesting predicament at this time is that corporations aggressively invested billions of dollars into productivity improvements to make products and services faster and cheaper over the past several decades. The good news is that it has positioned many corporations to continue to compete in highly competitive global markets. Unfortunately, on the other hand, “American Productivity” is a key element of the foundation of the “jobless recovery” that we have experienced over the past two years. 35

Bottom line is that today the terms of the new “Corporate Handshake” are:

> Go to work and execute your job to the best of your ability
    > Company squares-up with a paycheck every two weeks
       > Repeat cycle…

If you are fortunate and are able to land a full-time job, you may get a break on your healthcare costs and the opportunity to participate in a company 401K program. The full complement of corporate benefits that many of us enjoyed several decades are only a memory today for the majority of workers.

Living the American Dream by Finding the right Corporate Job (Revisited)

The process of identifying and securing a new job has also certainly changed over the past few decades. The good news is that most companies post their open positions on their own websites along with a host of popular career and recruiting websites. Professionals searching for new career options can easily spend 8 to 12 hours each day visiting hundreds of websites looking for positions that match their career objectives. The bad news is that millions of their peers also have access to the same job postings. The net effect is that while the figures vary according to the source; typically between 100 and 400 resumes are being submitted for each job opening today. 23 The other key factor is that there are far more talented unemployed and underemployed professionals searching for new jobs than the available number of opportunities.

This is how I recall my job search process from a decade or two ago:

> Check the want ads (career web sites) for interesting open positions
  > Create a cover letter, fine tune resume
    > Submit for open position
      > Receive confirmation of submission from recruiter or HR rep (24 hours)
        > Receive confirmation for interview or “not a fit at this time” (1 week)
          > Interview for position (1 to 2 weeks)
            > Receive request for 2nd interview or “not best candidate” (2 weeks)
              > Complete interview process (4 to 8 weeks)

My most recent experience with the job search process was as follows.

> Check the career and company web sites for interesting open positions
  > Fine tune cover letter and resume
    > Submit for position
      > Still waiting for an acknowledgement or feedback (Black Hole syndrome)

Today recruiters may field 250 or more phone calls a week; send as many emails; produce status reports for hiring managers and their HR heads; coordinate interviews and provide feedback to candidates; get offer letters approved; follow-up and negotiate with selected candidates; and support the on-boarding process for the selected candidates. For the majority of applicants, no acknowledgement, confirmation, or feedback is ever conveyed leading me to view company career and on-line job posting websites as “Black Holes” – a vast amount of energy is sucked in and nothing ever comes back out.

The other critical dimension for job seekers today is to understand that the majority of new positions are never posted on a job or career website. It is imperative that you are connected in the right places with the right people at the right time quite often to have a shot at being considered for new opportunities.

In my opinion, while it is certainly worthwhile to explore and become aware of current job openings, I believe that professionals seeking new career opportunities have two choices today:

  1. Network, Network, Network – be patient; Network, Network, Network, …
  2. Start your own business

Living the American Dream through Home Ownership (Revisited)

When I launched my own professional career, I was living in the following paradigm relative to home ownership.

> Get a mortgage
  > Buy a house
    > Invest in home improvements
      > Receive a great job offer in another geographic location
        > Sell your home (with a handsome return on investment)
          > Accept new job, relocate family and belongings
            > Buy a bigger home
              >

The current housing crisis is exacerbating the employment situation. A recent article in Businessweek noted that “A lack of mobility – particularly for homeowners who owe more than their dwellings are worth – keeps workers from going to where the jobs are”. 18 This predicament continues to impact both the unemployed and underemployed from capitalizing on new career opportunities outside his or her current geographic location.

Unfortunately, this situation has led to the following scenario becoming reality for many Americans today:

> Get a mortgage
  > Buy a house
    > Invest in home improvements
      > Current mortgage underwater due to housing crisis
        > Learn about a new career opportunity in another area
          > Decision to relocate without family, or pass on job opportunity
            > Put career on hold until housing market turns around
              >

Living the American Dream through Retirement (Revisited)

Most of us have envisioned a time in our life where we would finally have the time and financial resources to enjoy golf, tennis, music, theatre, arts, travel, leisure, time with grandchildren, and/or down time for perhaps the first time in our adult lives. The good news is that a new generation of hard working American women and men are approaching retirement age and can begin to enjoy the fruits of their labors over the past 40 years. The bad news is that a new generation of hard working American women and men are approaching retirement age and many cannot begin to envision being in a financial position to consider retiring. At the same time, our elected officials continue to debate about whether our social infrastructure and programs are sufficient enough to financially support the emerging Baby Boomer generation.

Beginning January 1st, 2011 and continuing through 2030, more than ten thousand Baby Boomers will reach the age of 65 each day. This will result in the doubling of the numbers of senior citizens over the next two decades. During the Baby Boomer years (1946 – 1964), approximately 78 million Americans were born. Today this represents over 26% of the total US population.16

One of the more dramatic changes from previous generations is our concept of retirement which has been influenced by the increasing demands on our social security system from the emerging Baby Boomers and two key economic recessions over the past decade. Those of us who envisioned retiring in the same fashion as our parents are confronting a rude awakening. The current stock market volatility and global economic environment; the impact on 401K retirement savings from the market crashes in 2001 and 2008; and the high rate of unemployment and underemployment continue to delay any plans that Baby Boomer may have made to retire from the workforce.

Another surprise that most Baby Boomers were not anticipating is that many parents are currently providing support for the children in the 20s and even 30s. A recent survey revealed that almost 60% of parents have or are currently providing financial support to their adult children. 6 This is yet one more challenge that weighs on Baby Boomers contemplating retirement plans.

What are our options?

I always have been a firm believer that every issue, challenge, and problem presents me with an opportunity for action. While each of the factors listed above challenge many of the paradigms that we have carried for decades, the current economic environment does present each of us with a new set of opportunities that we can choose to embrace.

As Baby Boomers transition into “empty nesters”, many professionals begin to examine and reevaluate their career objectives. I have summarized key desires of Baby Boomers based on interviews with hundreds of senior level professionals and executives across the US during 2011:  

  • Opportunity for increased employment certainty and security
  • Opportunity to make a meaningful contribution to something of value
  • Opportunity to increase retirement savings
  • Opportunity to improve work-life balance including schedule flexibility

In my experience, traditional Global 2000 corporate jobs are not nearly as likely to satisfy these types of career and lifestyle objectives from senior-level professionals as they may have several decades ago.

Importance of Entrepreneurs and Small and Medium-sized Enterprises in the US

Entrepreneurs are the foundation of the US economic engine. Small businesses currently create two-thirds of new jobs. 24 According to the US Small Business Administration 25, small firms:

  • Represent 99.7 percent of all employer firms.
  • Employ just over half of all private sector employees.
  • Pay 44 percent of total U.S. private payroll.
  • Have generated 64 percent of net new jobs over the past 15 years.
  • Create more than half of the nonfarm private gross domestic product (GDP).
  • Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
  • Are 52 percent home-based and 2 percent franchises.
  • Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
  • Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.
While large firms are continuing to focus on productivity (i.e. more output from fewer workers) for their survival, small businesses and entrepreneurs continue to fuel the growth in employment opportunities during good time and bad.

    Franchise Business Opportunities

    During the past year, I was certainly surprised to learn a number of enlightening facts about franchise businesses including that one 1 of every 8 jobs in the US is franchise-related and 1 out of every 12 businesses is a franchised business. 39 Franchising is an interesting business model that enables entrepreneurs that have created a successful business to replicate their success across a larger geographic footprint. The franchising model can often position an entrepreneur to scale their business more quickly and efficiently than doing so with their own financial and human capital.

    According to the authors of Street Smart Franchising, “It is estimated that more than 1 million people per year (mostly employees) investigate starting a franchise. Conversely, relatively few existing franchise owners leave self-employment to look for jobs”. Additional background information on the economic impact of franchising from the International Franchise Association:

    • 17,430,700 = the number of jobs filled within and because of franchised businesses
    • 9,125,700 = the number of franchise business jobs
    • 828,138 = the number of franchise establishments
    • $2.1 trillion = direct and indirect economic impact of franchised businesses
    • $1.2 trillion = Gross Domestic Product (GDP) of franchised businesses

    For those “wannabe” entrepreneurs who are still waiting to come up with a brilliant idea for the next, best thing – and those professionals that are interested in exploring non-traditional business opportunities, franchise business opportunities could be the right chose for your next career option. The franchise model includes thousands of different businesses to consider in dozens of quite varied and diverse business categories.

    Taking control over your destiny

    For me personally, I embrace entrepreneurship and the power and overall impact of small and medium-sized businesses on our economy and the ability for the US to continue to complete globally. Based on my own professional experiences, I recognize the following advantages of small businesses versus large corporate enterprises:

    • Ability to maintain a long-term, strategic perspective on the business versus the distraction of maintaining quite often unreasonable expectations of analysts and achieving quarterly earnings targets
    • Ability to stay nimble and agile by responding quickly to changes in marketing and client requirements, competitive threats, and economic challenges and opportunities
    • Ability to consistently focus on exceeding customer’s and employee’s requirements versus internal political affairs
    • Ability to consistently feel empowered to make a difference in the world

    While I too have personally felt the impact from the economic challenges over the past few years, I continue to be an optimist and see my glass as half full. Challenges always create new opportunities and you can take advantage of the current situation today by being reflective, resourceful, creative, opportunistic, and capitalizing on best practices and lessons learned throughout your career.

    While many senior level professionals may be sitting by their phones and checking their email Inbox several times a day praying that a corporate recruiter or human resources representative will contact them or provide them with feedback on the last 20 positions in which they have submitted resumes – other professionals have decided to take control of their own destiny by evaluating and launching new business ventures.

    NOW IS THE TIME to evaluate launching your own new business, engaging in an early stage business, or investigating launching a proven business in your own geographic area with a franchise, distributorship, affiliate, or licensing business model. Remember that there are numerous examples of successful companies today that were launched during a recession including Apple, Microsoft, HP, Trader Joe’s, Disney, CNN, FedEx, IBM, and GE to name a handful. Each of these successful business was also launched as a small business.

    Take control of your own professional career destiny. Recognize that you continue to have multiple career choices and that you are ultimately the one empowered and responsible to make your own career decisions. While you are waiting for a phone call or email from a recruiter or hiring manager – investigate options to fulfill your own dreams and aspirations through launching your own business.

    Background: Reality Check on the American Workplace in 2011

    I have captured a small snapshot of the indicators of a new set of realities that the Baby Boomer generation is facing at this time.

    • “The White House said yesterday that it predicts the unemployment rate will remain stubbornly high, not falling below 6% until 2017” 29
    • “Total payrolls were unchanged in August, the first time since 1945 that the government has reported a net job change of zero. Economists warned that the economy can’t keep growing indefinitely if hiring remains stalled.” 33
    • “Not only are vast numbers of Americans unemployed or underemployed, for the first time since the Great Depression many American workers are facing the prospect of very-long-term — maybe permanent — unemployment. Among other things, the rise in long-term unemployment will reduce future government revenues, so we’re not even acting sensibly in purely fiscal terms. But, more important, it’s a human catastrophe.”20
    • “From its peak of 19.5 million in 1979, manufacturing employment declined, on average, by about 1.5 million jobs a decade until 2001. Then it fell off a cliff: America lost 2.5 million manufacturing jobs from 2001 to 2007 and almost that much again during the latest recession. So, nearly five million American manufacturing jobs have disappeared since 2001, an astonishing 29% plunge in less than ten years. The US has lost more than 42,000 factories during that time. ” 27
    • “In the 1970s, the U.S. computer industry had 150,000 workers. This became two million at its peak but now is back to 150,000. Meanwhile, computers went from a $20 billion to a $200 billion industry.”22
    • “Adults 18-64 who were laid off in the recent recession - as well as single twenty-somethings still looking for jobs - represent nearly 3 out of 5 poor people - a switch from the early 1970s, when children made up the main impoverished group.” 38
    • “The number of planned layoffs at U.S. firms rose to a 16-month high in July as sectors which had been seeing fairly few layoffs unexpectedly bled jobs, a report Wednesday showed. Employers announced 66,414 planned job cuts last month, up 60.3 percent from 41,432 in June, according to a report from consultants Challenger, Gray & Christmas, Inc.” 5
    • “IBM's announcement on Jan. 5 that it will close its traditional pension plan likely came as a shock and disappointment to the 117,000 employees affected. But the move didn't surprise anyone who's been keeping an eye on America's fast-evolving retirement landscape. … The move by financially strong IBM indicates that corporate America's shift away from traditional pension plans will likely continue--and that Americans will be forced to take even greater personal responsibility for their retirement finances.” 36
    • The share of American men aged 16 to 64 who are employed has fallen in a sawtooth pattern, from nearly 85% in the early 1950’s to less than 65% now”. 2
    • “Yet an equally important reason for the lower jobless rate is that many people, men in particular, have simply given up looking for work and are no longer counted among the unemployed”. 2
    • “A Bureau of Labor Statistics study found that many older works who lose jobs never go back to work again. Of those aged 55-64 who were displaced from 2007 through 2009, 21% were out of the labor force as of January 2010”. 2
    • America has a smaller fraction of the prime-age men in work and in the labour force than any other G7 economy. Some 25% of men aged 25-54 with no college degree, 35% of high-school dropouts and almost 70% of black high-school dropouts are not working.” 3
    • The portion of men who work and their median wages have been eroding since the early 1970s.” 31
    • “The portion of men holding a job—any job, full- or part-time—fell to 63.5 percent in July—hovering stubbornly near the low point of 63.3 percent it reached in December 2009. These are the lowest numbers in statistics going back to 1948. Among the critical category of prime working-age men between 25 and 54, only 81.2 percent held jobs, a barely noticeable improvement from its low point last year—and still well below the depths of the 1982-83 recession, when employment among prime-age men never dropped below 85 percent. To put those numbers in perspective, consider that in 1969, 95 percent of men in their prime working years had a job.” 31
    • Men who do have jobs are getting paid less.” 31
    • “Over the past 40 years, a period in which U.S. GDP per capita more than doubled after adjusting for inflation, the annual earnings of the median prime-aged male have actually fallen by 28 percent. Indeed, males at the middle of the wage distribution now earn about the same as their counterparts in the 1950s! This decline reflects both stagnant wages for men on the job, and the fact that, compared with 1969, three times as many men of working age don’t work at all.” 32
    • Technology, specifically the Internet, has disintermediated and disrupted entire industries. When was the last time you used a travel agent? Doesn't everyone book their own flights and hotels online? Do you use a stock broker to buy stocks? I haven't used a stock broker in over 20 years. When was the last time you went to a store to buy music? Does anyone have a secretary anymore? When was the last time you went into a bank and talked to an actual person? Doesn't everyone use ATMs and bank online? All of these jobs have been severely disrupted and reduced by the Internet. Those jobs, and many more like them, are never coming back.” 34
    • “Reportedly, the home of the great American Cheeseburger [McDonald’s] hired 62,000 people after receiving more than 1,000,000 applicants19
    • Half of Baby Boomers expect to be at least in their 70s before they fully retire from the workplace. 1
    • Over 75% of Baby Boomers expect to keep working after “retirement”. 1
    • Between 1995 and 2007, the number of older workers on full-time work schedules nearly doubled while the number working part-time rose just 19 percent. As a result, full-timers now account for a majority among older workers: 56 percent in 2007, up from 44 percent in 1995. 14
    • The number of workers between the ages of 65 and 74 is predicted to soar by 83.4 percent between 2006 and 2016. Similarly, the number of workers aged 75 and up is predicted to grow by 84.3 percent. By 2016, workers age 65 and over are expected to account for 6.1 percent of the total labor force, up sharply from their 2006 share of 3.6 percent.” 15
    • Americans over 55 were particularly hard hit by this past recession. Not only did their jobless rate hit record levels, but their average length of joblessness, according to the U.S. Bureau of Labor Statistics, was over 35 weeks, compared to 30 weeks for workers ages 25 to 34.” 4
    • “For 2011 so far, employers have announced 312,220 cuts, down 8 percent from the first 7 months of 2010”. 5
    • A new survey finds 59 percent of parents are providing, or have in the past provided, financial support to their adult children when they are no longer in school”. 6
    • “…43 percent of parents providing financial support say they are doing so because they are "legitimately concerned" with their child’s financial well-being”. 6

    Background: Reality Check on the Prospective Business Opportunities in 2011

    So much for the depressing news – there is also an abundance of encouraging headlines as well, including:

    • With the U.S. unemployment rate at 9.1 percent as of July 31 and a fragile economic recovery underway, many workers feel they are left with no choice but to take their careers into their own hands. Employees are bidding farewell to corporate America in the hope of finding a more secure, or at least fulfilling, future. They are reinventing themselves by starting their own companies or by pursuing long-put-off dreams that include creative or charitable endeavors. While it might seem like a bold move, countless workers believe the abundance of uncertainty in today’s job market mitigates the fear factor. 7
    • Small businesses create 2 of every 3 new jobs. More than half of Americans who work, own or work for a small business. And right now, small businesses are driving our recovery, as they’ve done time and again throughout U.S. history.” 24
    • “The unemployment picture has been unrelentingly gloomy for some time now. But one recent study shows that more than 40 percent of small businesses plan to hire in the next six months. Top jobs in demand? Sales and marketing -- nearly half of business owners making hires said they were looking for more staff in this category.” 40
    • “In 2008, there were 29.6 million businesses in the United States, according to Office of Advocacy estimates. Census data show that there were 6.0 million firms with employees in 2006 and 21.7 million without employees in 2007 (the latest available data). Small firms with fewer than 500 employees represent 99.9 percent of the 29.6 million businesses (including both employers and nonemployers), as the most recent data show there were about 18,000 large businesses in 2006.” 26
    • Small businesses are an important and growing driver of the US economic growth and dynamism. They employ over half of America’s private sector workers, product over half of America’s non-farm private GDP, and create roughly 75% of new private sector jobs13
    • “Small businesses will be better positioned than large corporations to provide customers with highly targeted, customized, and relevant products. Small businesses, because of their size and agility, are extremely well positioned to serve niche markets”. 13
    • “Small businesses will reclaim manufacturing, fueling small-scale and specialized production. New manufacturing technologies will allow small businesses to lead the market in meeting demands for customization”. 13
    • “Almost half of US small businesses will be involved in global trade by 2018. Small businesses will more readily take advantage of the global marketplace in their businesses”.13
    • “92% of Americans say entrepreneurs are critically important to job creation: 75% think the US cannot have a sustained economic recovery without another burst of entrepreneurial activity”. 8
    • New firms add an average of 3 million jobs in their first year, while older companies lose 1 million jobs annually”. 8
    • More than half of the companies on the 2009 Fortune 500 list were launched during a recession or bear market, along with nearly half of the firms on the 2008 Inc. list of America’s fastest-growing companies”. 8
    • In 2009, an average of 0.34% of adults created a new business each month, equaling about 558,000 new businesses per month”. 8
    • There’s been a surge of people aged 50-plus starting businesses, and it’s happening for a number of reasons. But today’s driving factor, according to the Staying Ahead of the Curve 2007 survey from AARP, appears to be “financial need.” 4
    • “… [academic and researcher] Vivek Wadhwa, … conducted a study [in 2010] of over 500 successful technology businesses and found that older startup entrepreneurs were actually more successful than younger ones — despite common perceptions. Wadhwa credits their expertise, customer experience and relationships, and established network of supporters for their success. ” 4