To Live Locally, Hire Locally First

January 18, 2013 by Leave a Comment

Our community has a problem. It’s difficult to earn a livelihood here in large part because too much money is leaving the community as a result of local institutions hiring people from elsewhere. Our local tradespeople find they must work outside the area while local residents must find tradespeople from other areas, draining more money going from our community. This column explains why to live locally, institutions and businesses need to hire locally first.

I have earned my livelihood primarily as an author since my wife and I wrote the first commercially published book about how to work from home. Because most home-based businesses rely on a local economy, I have had a professional interest in local business conditions.

We moved to a mountain community outside Los Angeles and became even more interested in localization, and, of course, localization is a well-recognized national movement that enables people to live, work and shop in their community. For us who live in a beautiful location, this means being able to be here 24/7.

So six years ago we founded Let’s Live Local.  One of our primary missions is to help stimulate a local economy.  I am concerned about the survivability of small towns in general with the rise in energy costs. A recent article entitled American Ghost Towns of the 21st Century identified towns and counties with vacancy rates above 55%.  Here in California, one of these is Mono County, which has a 59% vacancy rate.

Non-urban locations are under pressure generally and so anything that undermines the economy of local community is troubling. In our communities local institutions are displacing local people by hiring people hires from elsewhere for jobs – from educational positions to meter reading. In some cases hiring preferences may be sporadic; in others, it appears to be systematic.  Bear in mind the money our agencies spend comes from us as taxpayers and ratepayers.  While this may be thought of as localism in reverse, why is this a problem? When a job goes to someone outside our area, it has a larger affect. It does not occur in isolation.

  1. Chances are the non-local hire who leaves at the end of the workday doesn’t patronize the local stores and restaurants in our community often because items are not available and the selection of goods is better where they live.
  2. Local residents who commutes to jobs elsewhere  –jobs  that may not be all that different than ones here that are going to non-residents  –   are apt to shop in the larger community in which they work.  As the study Let’s Live Local co-sponsored, we found 71% of households in which a commuter is present, the household shopping is usually done by a member commuting outside the mountain communities.
  3. Even if the local resident wants to shop locally, the commuting expenses gallon lessens their spending power.
  4. With gas between $3.00 and $4.00 a gallon, people decide to get rid of the long commute. Chances are they won’t put their house on the market – they will leave their homes– contributing to the 53% of home sales in California that are short sales or foreclosures.
  5. So the effect of people not being able to work where they live contributes to more business closures, lower home prices, less sales tax and a lower real estate tax base for the schools and county making this area even more dependent on the county as a whole, and, of course, at the bottom of the list when the county prioritizes where it provides services.

What can be done: Our local agencies need to adopt PREFERENTIAL HIRING OF LOCAL LABOR policies. Such policies are being put into practice from one end of the country to another . Here in California, Oakland, San Francisco, Los Angeles are among those cities that have adopted local hiring requirements. I believe it’s to initiate and support campaigns to get local hiring policies adopted.

For an initial free consultation to discuss this or finding a sustainable livelihood that bests suits your personality and your community, contact us.

Comments on the substance of the blogs are welcome. If you have other questions, please contact me directly for a consulting appointment.  mailto:paul@elmstreeteconomy.com

Filed Under: Changing The Economic Direction, Localization, Sustainable Home Businesses, Whatcha Gonna Do to Stay Afloat Personally Tagged With: , , ,

Where You Live Makes Localization All the More Important

July 24, 2012 by Leave a Comment

A recent article in Forbes entitled The New Geography Of Jobs: Where You Live Matters More Than Ever – Forbes provides startling comparisons, which can mean the difference in finding a sustainable livelihood. Forbes cites a new book by Berkeley Economics Professor  Enrico Moretti, entitled The New Geography of  Jobs.

Within the same state, local economies vary significantly, determining this discretionary income and spending. This is evident from the differences in the share of workers who have college degrees and their average salaries. For example, in Stamford, Connecticut only 15% of the workforce are college graduates with average salaries of $54,651 while in Stamford, 56% of workers have college degrees with average salaries of $133,479. In Modesto, California, 16% of workers graduated college and earn an average of $60,563 and in San Jose, it is 47% and $87,033. Similar contrasts can be found in many states.

The higher salaries results in the demand for more service and support jobs and how much those with service and support jobs earn. The kind of jobs and businesses range from business services to dog walking, fitness coaches and financial planners. Another consequence of lower incomes is mobility – the ability to move to another job.

We believe the net consequence of this is to make localization imperative because it enables the creation of local businesses and institutions through which people can buy cooperatively, barter, share or engage in exchanges of such resources as tools and clothing, and barter for things they need.

Communities have a choice when faced with unfavorable economic statistics – either let their areas deteriorate or work together to find local solutions. For more reasons for why localization is vital, see our earlier blog.

you think we can help, we offer counseling.

Comments and questions on the substance of this blogs are welcome. If you have other questions about this website, please contact me directly for a consulting appointment

Filed Under: Changing The Economic Direction, Whatcha Gonna Do to Stay Afloat Personally Tagged With: , , ,

Does Being Middle Class Require a New Definition of Success?

July 1, 2012 by Leave a Comment

“Who is the middle-class?” This is the most common question we have been asked while doing dozens of interviews.  When economists  are asked about who is middle class, they answer the question by citing specific income ranges. But the ranges vary widely, anywhere from $25,000 to $250,000. So income doesn’t seem to be the key to why 60% of Americans define themselves as middle class.

Middle class is more of a state of mind than a bank balance. We define ourselves as middle class as long as we feel we’re on track to success and thereby to a happy, secure life. But just what is success?

That is the question John Izzo, Ph.D., asked 250 people from all walks of life in writing is book Five Secrets You Must Discover before You Die. You might be surprised at the answers he got.

First, he found that 84% of people he interviewed reported thShopping is a mainstain of a consumer cultureat “having money beyond a basic level of comfort did not increase their personal happiness.”  Second, he found that 81% said the most important factor in career happiness was “being true to yourself.”

Psychologist and associate professor at Knox College, Tim Kasser goes a step further in disconnecting happiness from material success. In his books, The High Price of Materialism and Psychology and Consumer Culture: The Struggle for a Good Life in a Materialistic World, Kasser summarizes extensive research to show that after reaching a basic level of comfort, continually striving for more money and more things actually works against our sense of happiness.

In writing Middle-Class Lifeboat, we found that in choosing to pursue new lifestyles and sometimes new careers, the people we interviewed had re-defined success . It no longer meant making more money or owning more things. They were stepping out of our materialistic consumer culture and found they were HAPPIER!!

So instead of aspiring to some externally-measured, material definition of success, perhaps it’s time for us to re-evaluate what makes us happy and define that as success. What would that be for you? How would it be different from what society’s definition of “success?”

If you think we can help, we offer counseling.

Comments and questions on the substance of this blogs are welcome. If you have other questions about this website, please contact me directly for a consulting appointment

Filed Under: Changing The Economic Direction, Whatcha Gonna Do to Stay Afloat Personally Tagged With: , , ,

Health Care for All

December 5, 2011 by 16 Comments

Do you remember the Harry and Louise ads used by the health insurance industry to help defeat the Clinton health care initiative in the 1990’s? Chances are today a couple like Harry and Louise, who were so happy with their employer-provided health insurance plan then,  are worrying now  about whether they can afford the premiums, co-pays, and deductibles, or they may not have any health insurance at all. In the past few years, the number of employers offering any health coverage has slipped from 7 in 10 to 6 in 10.

In fact, when medical bills now prompt more than 60 percent of U.S. bankruptcies. This is a dramatic shift from when in the late 1960’s I did a study for the Bankruptcy Court of Western Missouri to determine why people were taking bankruptcy.  Only one in fifty – just 2% – cited medical bills as the reason.

Who doesn’t know someone who has delayed or gone without treatment because they can’t afford it and don’t have health insurance to cover what they need? How ironic considering Americans spend more per capita on health care than any other advanced country.

While there is no single reason for our health care predicament, one factor that contributes mightily to what prompts  so many personal health calamities are are big insurance companies motivated primarily by profit, are systems for denying care at any chance. Consider how they routinely deny coverage to people who consider themselves to be in good or excellent health. Here, for example, are some of the grounds insurance companies are using to prevent people from qualifying for health insurance:

allergies, breast implants, ear infections, herpes, high blood pressure, impotence, infertility, mild depression, migraines,miscarriage, pregnancy “expectant fatherhood”, planned adoption, psoriasis, recurrent tonsillitis, ringworm, swelling from a spider bite, three months of psychological counseling after a marriage breakup, and varicose veins.

The shame is that every American could have health insurance for about what is being spent on health care today if we did just one thing – wring out the administrative cost and profit out of health insurance that accounts for one dollar in four of what we pay for health insurance. Before 1990, insurance companies like Blue Cross charged only about 5% for their services.  Even today non-profit systems like Kaiser Permanente and Medicare can offer care for less than 5% for such costs, not 25%; Canadian Health Insurance runs below 3.2%.

In other words, we know about one dollar in every five  could be saved from what’s now going into processing paper, corporate marketing, executive bonuses, and shareholder profits.

How could this happen? Many people advocate Medicare for All. How might this be funded? Congressman Dennis Kucinich calculates a 7.7% payroll tax will enable universal coverage. The State of California calculates that a 4% payroll and a 2% income tax would provide health coverage for all Californians.

But there are other alternatives, too, such as:

Returning to an all cash system and allowing new community-based health insurance plans and pricing to emerge.  Right now the cash price for health care in the U.S. is a fraction of those billed insurance companies, exceeding the co-pays. They could enable U.S. health care costs more in line with those in countries that are now attracting medical tourism when people who needing hip replacements, for example, spend $10,000 on  travel in order to get a new hip for $5,400 instead of the $45,000 it would cost in the U.S.

One example of the kind of insurance companies that could emerge is the Freelancers Insurance Company in New York State. The for-profit company is wholly owned by the nonprofit Freelancers Union. It insures 25,000 independent workers and family members charging premiums more than a third below what they would otherwise pay for health insurance. Another example is Grand Junction, Colorado. Such a plan would be possible in an Elm Street Economy.

Regardless of the alternative we settle upon, no one should profit from insuring the illness of others. We need to wring the administrative costs out of the system, provide professionals with a decent income, and quality health care for all without raising the overall cost of health spending.

Let’s use our voices and voting power to make this happen. It can start by creating  local Elm Street Economies.

Comments on the substance of the blogs are welcome. If you have other questions, please contact me directly for a consulting appointment.

 

Filed Under: Changing The Economic Direction, The Future Tagged With: , , , , , ,

RX for the 99%

October 23, 2011 by 20 Comments

As the Occupy Wall Street movement is spreading across the globe while gathering
public support, a persistent question is “What are you asking for?”

Given that underlying this movement is a sense of fairness that what people value
most should be better distributed, I modestly offer this simple idea:

Education for All, including Tutors for All
Health Care for All
Housing for All
Jobs for All

In future blogs, I will offer ideas about how to provide Health Care for All, Housing for All, and Jobs for All.

Speaking of 9’s – instead of Herman Cain’s 9 Zero 9, I suggest adding another zero to his first “9”
to  make it 90% for earnings above five million dollars. This would not be an all-time high as it
was 94 % on taxable income over $200,000 ($2.5 million in today’s dollars during
World War II), which was  another time of crisis. This would help pay for Health Care
for All, Housing for All, and Jobs for All.

For more information about the need for a progressive tax, take a look at Robert Reich’s
recent  blog entitled The Flat-Tax Fraud, and the Necessity of a Truly Progressive Tax.

Comments on the substance of the blogs are welcome. If you have other questions, please contact me directly for a consulting appointment.

Filed Under: Changing The Economic Direction, The Future Tagged With: , , , , , , ,

Tutors for All

October 8, 2011 by 4 Comments

Only one in five adult Americans have the work skills or education to be competitive in the global economy, says MIT  economist Lester Thurow. To be equipped for the global economy today’s children  today need to learn more than ever before sooner than ever before. Vic Lee illustrated how true this is in his comic strip Pardon My Planet when he pictured a young boy saying to his father,  “Dad, you really should help me with my homework while you still can. Next year I enter the 4th grade.”

But American children are falling behind. They are leaving school unprepared to meet the demands of fast-changing industries, while children in other countries are springing ahead.  More than one in every four college freshmen is taking a remedial math or English course. National Science Foundation data  over the past seven years shows a 14% decline of enrollment in science and  engineering graduate programs with current numbers showing further declines. As  a result, not only are many skilled jobs being off-shored to other countries, but skilled workers from other countries are being recruited to fill many of our top jobs here.

An  Obama-Biden campaign  policy paper stated “Too many Americans are not prepared to participate in a 21st century economy: A recent international study found
that U.S. students perform lower on scientific assessments than students in 16 other economically developed nations, and lower than 20 economically developed
nations in math performance. Only one-third of middle class physical science teachers are qualified to teach in that subject, and only one-half of middle
school math sciences have educational background in that subject area.”

To bridge this educational gap, I propose a Tutors for All program. Every child can benefit from the individual attention and guidance of a tutor, or even a team of tutors, to
help master the requirements for today’s highly skilled positions. Research shows that tutoring works! It produces better results among all groups than virtually any federal aid to education program, too many of which cost school districts $1500 to administer and comply with for every $1000 in aid. We need to invest our resources in people, not paperwork. We need to enable children to compete – not feel compelled to cheat.

Unfortunately, the Obama Administration is proposing to spend money on school buildings as an improvement to the nation’s infrastructure whereas a Tutors for All program would employ tens of thousands of people who are now out of work,  including teachers who have been laid off by so many school districts. Another problem with the existing school structure is they operate a on a  top-down,  hierarchical model that prescribes a one-size-fits-all education where students all learn the same thing in the same way on a schedule that many find out of pace with their individual biology. A combination of computer-based learning and tutoring will enable students who learn differently to do so and at their own pace. Berlitz, Vocabu, and Popling are producing computer-based innovative modular instruction.

New approaches can save money, too. A Jefferson County, MO, school district that was spending spends about $330 a year per student on textbooks is buying tablet computers, leaving it over half this amount to buy or rent digital textbooks.

Tutors for All can serve as a benefit not unlike the GI Bill that enabled millions of vets to go to college after WWII.  A publicly funded voucher system would allow parents to choose from among pools of capable local tutors.  Such a direct investment in the future will also provide meaningful work for millions, particularly older skilled Americans who would like to continue
working and earning even after retiring.

Higher education must become more affordable if the U.S. is going to produce the  knowledge workers necessary to our economic future.. The National Center for Public Policy and Higher Education gives 43 states an F’s for affordability. Tuition for students attending four-year public colleges and universities in-state averaged $16,140 a year in 2010-2011, almost triple the 2006-07$5,836 cost. The cost of a college education higher than it cost to own a home only 40 years ago.

Textbook costs are skyrocketing too, averaging $1137 for that same period. These costs have become  economically crippling, often leaving college graduates with a heavy debt from student loans even before they enter the workforce.

To bridge this affordability gap, we advocate a strong program of online education. George Washington University Online High School (GWUOHS), is offering such a program for  $9,995 per student, or $4,995 per semester and similar programs are available from leading universities such as Stanford, Northwestern, and Johns Hopkins.

Despite the criticism of skeptics who claim there is no valid evidence that online
education provides a good education, the Virginia Department of Education is
finding:

  • Interactive e-books increased student engagement.
  • Studentsappreciated being able to work at their own paces, whether in small groups or
    independently.
  • The vast majority of students reported being enthusiastic about reading and using e-books.
  • Many teachers noted a dramatic increase in the students’ independence and willingness to be
    responsible for learning on their own
  • Teachers noted that the e-books encourage more engagement to learn the material.

What I offer here is an idea that needs and deserves research and testing.

Comments on the substance of the blogs are welcome. If you have other questions, please contact me directly for a consulting appointment.

 

Filed Under: Changing The Economic Direction, The Future Tagged With: , , , , , , , ,

Reduce Mortgages to Save the Economy

September 28, 2011 by Leave a Comment

Consider what would happen if all of a sudden two trillion dollars of consumer spending were released into the economy. If you’re like most people, you have a “Wish list” of things you’d like to do or buy – going to the doctor or dentist, fixing your car or buying one, a household repair or improvement, a vacation, a smart phone, or moving to a new home.

Left out of President Obama’s job plan is housing – the segment of the economy that we’re told has lifted us out of prior downturns. Mortgage debt constitutes over eight and half trillion dollars and if that were slashed by a quarter, the payments servicing that would flood into the economy.

How unreasonable is this? Consider it took two trillion dollars to bail out the banks in 2008 and 2009, who in large part caused our current mess and have done little to turn around the economy.

While it would take political heroism and risk to accomplish this, it is doable. Consider that recent audit of the U.S. Federal Reserve shows 16 trillion dollars in bank bailouts over time. Citigroup alone has received over two trillion dollars in loans so far.

All we need to do is reset mortgage payments across the board to one-third existing income, what they arguably should have been in the first place, and overnight folks would begin spending their monthly savings on their wish list, supercharging the economy.

Comments on the substance of the blogs are welcome. If you have other questions, please contact me directly for a consulting appointment.

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The World Seems Upside Down

September 25, 2011 by 1 Comment

Having grown up in a nation where the mantras were about the American Dream, economic growth and “new and improved” products, the news is weird these days.

Instead of:

  • Ads urging us to buy this or that, six of nine of the full
    page ads in the main edition of the Sunday September 18 Los Angeles Times were
    devoted to solicitations to buy gold, silver, coins, jewelry.
  • Banks urging us to deposit our money, banks are discouraging
    customers by slashing interest rates. As stated in the Los Angeles Times by E.
    Scott Reckard, “Banks don’t want your money.”
  • American household income growing, the Census Bureau reports
    that household incomes have dropped over 10 percent since 2000. In 2000, after
    adjusting for inflation was $53,164. Last year’s census found it had fallen to $49,445.
  • The suburbs and the middle class lifestyle being synonymous,
    the 2010 Census reveals that one-third of the nation’s poor live in suburbs. That’s
    more than live in the nation’s central cities.

The key to reversing these trends is finding our way to a sustainable economy where there is work and  jobs.

In future weeks, I will suggest some ideas for creating jobs fortoday and jobs for tomorrow.

Comments on the substance of the blogs are welcome. If you have other questions, please contact me directly for a consulting appointment.

Filed Under: Changing The Economic Direction Tagged With: , , , , , , ,

My Take on Standard and Poor’s Downgrading of U.S. Debt Worthiness

August 28, 2011 by 1 Comment

Nations with comparable and higher percentages of debt relative to their Gross Domestic Product are still rated AAA. While high, note the U.S. is at the bottom of this list: Singapore, 102 Canada, 84 France, Germany, 78.8 Britain, 76.5 Austria, 70.4, Netherlands 64.6, US 58.9.

Then the report came that Standard and Poor’s made a two trillion dollar mistake in its math. While the firm spokesman said this didn’t matter, how significant an error of this size? It’s one-seventh of the current U.S. national debt. Think if your mortgage were reduced by 15% – your payment, depending on the size of your mortgage – would be several hundred and for some thousands of dollars less.

It’s interesting to note that this same firm was a prime contributor to the collapse of the real estate bubble in 2008 because it had continually given AAA ratings for very risky mortgage backed securities from Wall Street and the big banks. Robert Reich described S&P as major (and thoroughly irresponsible) credit-rating agency that’s neither standard nor poor.” My own view is that the firm as set a new standard for poor performance.

When the stock market plunged after S&P’s announcement, where did people invest their money? Money poured into U.S. notes and gold. While investing in the U.S. debt lowered the interest rate the federal government pays, investing in gold essentially takes money out of the economy. It can’t be loaned or invested in new job-producing technologies or enabling businesses to grow or even stay in business.

Standard and Poor’s is a subsidiary of McGraw Hill, a respected publishing company since 1884. S&P’s performance is a cloud on McGraw Hill’s reputation. Since the writing of this post, McGraw Hill has announced it will be splitting off S&P from its publishing business.

While companies that rate debt need to be independent, they also need to be responsible and if they can’t be, then we add more layers of regulation to an arguably already overregulated economy. For a lighter look at this issue, check out the editorial cartoon by Times Picayune Editorial Cartoonist Steve Kelley.

Comments on the substance of the blogs are welcome. If you have other questions, please contact me directly for a consulting appointment.

Filed Under: Changing The Economic Direction Tagged With: , , ,