Monday, November 15, 2010

QEII: What Does It Mean For Your Employees?

Nearly everyone has weighed in on the second round of quantitative easing (QEII) which government is implementing to "jump start" a recalcitrant economy. There is something about the term "quantitative easing" that just doesn't sound dangerous. Indeed, it is almost soothing, until one realizes it is a cruel euphemism for printing money backed by nothing.

The question addressed in this brief and admittedly dark essay is, simply, "What will QEII mean to the American worker and the ones who have already lost their jobs (who we will call "former workers," mostly because that's what they are)?"

The argument for QEII by government is simple and straightforward: Government will print money and pump it into the economy; business will borrow it; business will hire American workers; American workers will spend money on American goods; and American workers and businesses will pay it all back through increased tax revenues. (It is a bit more complicated, but close enough.)

While the government's argument is, indeed, simple and straightforward and easy to understand, it is altogether wrong for many reasons, the main one being that QEII does nothing to address the most fundamental problem in the American economy -- our unmitigated lack of global competitiveness. QEII, as did QEI, and perhaps a lot of unheralded, but very real, QE's before those, all ignored the one billion 5-pound gorillas in the room -- those billions of factory workers in other parts of the world who are glad to earn $5 a day to make stuff -- the stuff we want.

No amount of money pumped into the American economy changes that reality one wit. And, by failing to address the obvious, what is the most likely scenario going forward?

First, unemployment in the U.S. will remain high, if only because American business will continue to ship jobs overseas, and when all that new money has been spent, the only thing that will be high are stock prices.

Second, when the money runs out, the stock market will return to earth, too, kind of like a 787 that loses power at 30,000 feet. What consumption there is at the time will fall further, such that the last recession will seem like a walk in the park compared to Recession 2.0 which (and I will go out on a limb her with my own saw) will likely begin sometime before the end of 2011.

But, I could be wrong, at least temporarily. There could be a QEIII which might sustain the bubble a while longer, drive stocks and asset prices way beyond real value and set up for a fall no one alive has ever witnessed before.

Regardless of when, the net effect of all this money printing is exactly what the Chinese, Germans and others are bitching about -- the U.S. dollar will turn into play money and that's a problem for them for two reasons: 1. They lent us real money and aren't happy about getting Monopoly money in return; and 2. With the U.S. dollar at all time lows, their goods will be more expensive for the U.S. consumer who will already be battered and bloody from the experience, which means their economies are at risk by our hand.

The American workers' (and former workers') 401k plans will be decimated (again) in the ensuing crash simply because the money printing machine will keep down bond prices which will continue to encourage excessive risk taking by the little guy. Joe Six-Pack will miss the sleight of hand and will run the market up gleefully believing all is well even as institutional investors are exiting stage left. They will be holding the bag (again) when it hits the fan.

So, what is a worker (or former worker) to do? They are, after all, not multi-national corporations that can simply blow off the U.S. and move to other markets.

No, most will be sitting right where they are, frozen in position, their faces masks of terror when they are ravaged by an economy with an attitude of a pit bull on speed.

In the interim, most employees will do nothing, if only because they have no idea what any of this means and little interest in finding out. They just want an I-Pad for Christmas. Others, the few, who sense something has gone dreadfully wrong will hope. (Definition: "Hope" - the excuse for a business plan for those who don't understand business.)

So, that's it, except for the most important part.

Where do "credible connections," (communications from management to employees at all levels) come into play?

Right here. Right now.

Employees need to know the facts. They need to understand the business, your business. They need to know exactly what will be required of them to keep their jobs safe. After all, even if all of the above is true, all is not lost, not for everyone. BMW and others in Europe compete with wages and benefits at least as high their counterparts in the U.S. and not only survive, but thrive globally. Why? Productivity that justifies the wage and benefit package.

In short, employees should not be left guessing, wondering and worrying whether their jobs are next on the chopping block. Rather, they should be told what they need to accomplish to save them, to be competitive and successful in an ever more difficult environment.

And, it wouldn't hurt to give them a little third party counseling on personal finance, investing, and the importance of being ready for a rainy day. I, for one, can see clouds on the horizon. Many employers offer smoking cessation and weight management counseling as perquisites of employment, as a way to keep their employees healthy. How about some counseling on how not to become a financial victim? Makes sense to me and I have seen it done effectively.

Could I be wrong about all of this? Of course. QEII might end up working magic and we will all be sipping Mama Bear's soup this time next year wondering what all the to do was about.

I'd hope that was the case, but then, hope is not a business plan.

Thursday, November 11, 2010

"Work Sucks."

We began our book, "Why Work Isn't Working Anymore," with a two word sentence that set the tone for the entire tome:

"Work sucks."

Indeed work does suck for a large majority of people, and over the next few weeks I will get more into that issue here -- why and what, if anything, can be done about that unfortunate reality.

In the meantime, Drew Carey perhaps said it best, “Oh, you hate your job? Why didn't you say so? There's a support group for that. It's called EVERYBODY, and they meet at the bar.”

Just a note to say "thank you"

Those of you who read "Why Work Isn't Working Anymore" may remember the "Care Card," a tool to let others know you appreciate and value them, not only for their work but as people.

As has been the case with many of the anecdotal observations in that book, there is now some statistical support. This from an article called "12 Health Boosts" in Prevention Magazine.

Pen a thank-you note

Health boost: Feel 20% happier

Students who wrote letters expressing gratitude to someone special were happier and more satisfied with their lives, researchers at Kent State University found. Other research has shown that expressive writing may improve immune, lung, and liver function; reduce blood pressure; and provide a greater sense of well-being.

But be sincere: "It has to be a heartfelt sentiment showing significant appreciation," says researcher Steven Toepfer, PhD, an assistant professor of family and consumer studies. Dashing off a quick e-mail or texting a pal might not have the same effect, adds Toepfer, who says taking the time to put pen to paper allowed students to reflect: "Through the process of writing, they had time to think about the links they established between themselves and others and to count their blessings a bit, which made them feel more grateful."

So, in this beginning of the holiday season, it might be time to develop a new habit -- the habit of writing simple thank you notes to those who have helped your road of life be a little smoother.

P.S. For those who haven't read "Why Work Isn't Working Anymore," it is, regrettably, out of print. However, the e-book is still available at

Friday, November 05, 2010

Unions Are Back . . . Winning With A Vengeance

Union organizing is up, not particularly surprising.

But this might be . . . unions are wining 7 of every 10 elections. Indeed, in the first half of 2010 unions won 69.2% of 812 private sector elections. And note the recent election won't matter -- unions have friends in high places, the most important one of which is the National Labor Relations Board and they are appointed and they will be there a while.

The Bureau of National Affairs breaks down the numbers as follows:

Most Active Unions: The Teamsters led all unions, participating in 217 elections and winning 59.9% of the time. The SEIU organized the most workers (5,833) and won almost 70% of its elections.

Service Sector Focus: Over 40% of all representation elections during the first half of 2010 occurred in the service sector, including healthcare, with unions winning 72% of those elections.

More Manufacturing Victories: For only the third time since 1990, unions won more than 50% of the elections in which they participated in the manufacturing sector.

Unions Target Smaller Bargaining Units: Unions continue to target smaller bargaining units. Approximately 67% of all elections occurred in bargaining units with less than 50 workers.

Bottom line: The only way to win this game as an employer is not to play it. That means the training of supervision, not only in how to engage in early detection of union activity, but by enhancing their abilities to satisfy their employees and to be able to spot and deal with dissension and dissatisfaction affirmatively and pro-activity.

More information on "Avoiding Unionization: Doing The Right Thing," e-mail: