Could The Stock Market Really Effect Income Inequality? What We Discovered May Surprise You…

We have seen some pretty drastic stock market gyrations over the last few weeks. At one point broad market indicators like the S&P 500 dropped over 10%. Ouch!

So what?

In reality more than 50% of Americans have little if any exposure to the whims of the stock market ups and downs as shown in this recent New York Times article.

What is this really telling us about income inequality?

First of all lets get this straight… Sure 84% of all stocks are owned by the wealthiest 10% of households but the US Stock market is unquestionably the easiest access way for anyone with $10 or more to build wealth over time. And by wealth, I mean the kind of cash pile that can help lift people up on the economic ladder. And by more than a few rungs as you will see below.

Sure you can go out and invent the next big technology gizmo that grows into a billion dollar company, invest in some real-estate or even buy a winning lottery ticket… but, over time, nothing builds wealth as easily and reliably as the good old US stock market.

For people who think they don’t have a enough money to invest in the stock market skip that pack of cigarettes, cup of Starbucks coffee, expensive lunches, or whatever else is robbing you of future wealth and make that money really work for you.

If the distant possibility of a better future doesn’t convince people then the actual numbers might be helpful.

If a person puts $20 a week into the market, that comes out to $1,040 each year.  Let’s forget about the wild 20%-plus stock market returns in each of the last few years and just use a more conservative 7% return going forward.

Please stay with me on these numbers because it will be well worth it.

Assume you are 25 years old so that gives your money forty years to grow… How much money do you think you would have in 40 years?

How about $207,620 for just giving up a few packs of cigarettes or something else you really don’t need?

What if someone offered you a check for $207,620 right now to give up some bad and costly habit? Of course, that check would be postdated 40 years. But it’s still a lot of money and could make a difference some day in the way you live or even survive.

$207,620 may not be enough to convince some people… I commend them on being finical over-achievers and not selling out their bad habits for a measly $207,620. Well if you tweak the return rate up to 10% you would have $460,296. And if you can find whole $50 a week in disposable bad habits at a 10% annual return that is $1,150,741. The kind of money people dream of…

If people can’t be convinced with a million-dollar check then they have bigger problems.

If you don’t believe my numbers see this handy spreadsheet titled “How can $20 a week really create wealth? “

For people not sure how to actually invest only $20 a week in the market see this article that lists companies that can help make this happen.

The reality is that there will be some down years in the stock market but over time average returns like these can really happen. Maybe even more.

And that million dollars is the generous gift for giving up some bad and costly habit.

How about even more bang for a small investment dollar?

Maybe the $2 Million mark ($2,301,481 to be exact but what is $300,000 between friends?) is really where a person could go.


Maybe the person’s company has a 401K plan where deposits are matched for a 100% guaranteed double your money proposition.  How many people don’t put money into 401Ks? It’s not like organ donation. No one will harvest your eyes, kidneys, and spleen while your body is still warm because some hurried doctor checks the wrong slot on an electric form. (<- This really happens!)

This 401K thing sounds like a no brainer, right?

Well…  according to a recent Bloomberg article 79% of Americans work at places that sponsor a 401(k)-style plan. But over half (59%) of workers at those companies DO NOT participate in the company offered 401K plan.  It’s free money! What’s wrong with people?  Your organs will be safe. I promise!

Could better financial literacy really be the key to dragging people up the income ladder?

As the numbers here show… Maybe people should try and get their money to work as hard as they do.

Could These Three New Year’s Resolutions
Fix Income Inequality Forever?

By this time most people have ran through their New Year’s resolutions and basically forgot all about them. Humans seem to be hardwired to forget resolutions within about two weeks. I think it could be  some kind of survival mechanism.

That’s okay for the typical lose weight, exercise more, drink less, and read more resolutions because in the grand scheme of things if you weigh a few more pounds, can’t run a four-minute mile, have a few beers on the weekend, and haven’t read Moby Dick it’s not really going to have a huge impact on your life.

Maybe that’s why these kind of resolutions usually evaporate in a week or so… No real urgency.

So now that you have these basically unkeepable resolutions out of the way how about a few real resolutions that could profoundly change your life for the good or for the bad if you don’t do them?

And of course, these better resolutions all have something to do with income inequality.

No matter where you are on the income ladder climbing a few more rungs up or keeping yourself from falling a few rungs down will make you feel less unequal. And that’s a good thing.

It should be no surprise that all three of these better resolutions have to do with education… That may seem odd but education is the only sure fire proven way to add value to yourself so you can move up the income ladder.  It’s definitely an antidote for income inequality.

Unfortunately waiting for someone else to boost you up the income ladder is probably not going to get you where you want to be any time soon. Especially if you are waiting for some government agency to come to your rescue… Not gonna happen. You need to do it yourself.

First resolution…

Do something in 2018 to learn as much as you can in an area that will get you to a higher paying job or a higher paying position in your current company.

This may sound like a tall order but with free options like Coursera ( ) where there are classes in a range of subjects from things like better math skills to improved selling and people skills. Other places to hunt for education opportunities could be a community college or even the Human Relations department at your company. When you get on HR’s radar as someone with a desire to move up the ladder you will be surprised what can happen.

This “get more education” resolution has a potential pitfall. And it’s a big one.

That leads us to the second resolution…

Don’t overspend on education.

This may seem like a no brainer but when you look at the huge amount of student debt outstanding your nose will start to bleed.  How much? Does $1.5 Trillion (that’s with a “T”) make you feel a little queasy?  That comes out to an average close to $30,000 per graduate. And if that number doesn’t worry you then consider it is just an average. Estimates show that almost 2.5 million people owe over $100,000 in college debt.  Make no mistake, with that much debt the rungs on your ladder to a better life will be firmly blocked.

This college debt or any money you spend or borrow for education should be thought of as an investment in your future. And like any investment you need to be reasonably sure that you will see a solid return on your investment. And this particular education investment can cost you a lot of money and time.

Sure… People might be telling you to follow your dream in college. But the way I think about it is that college is career training. Getting a job. If you want to pursue poetry, creative writing, psychology, history, or a foreign language don’t mortgage your future for something that at best will get you a job frothing cappuccinos. You can always pursue these dreams for free at your local library where stacks of books await you at no charge. Probably the same books used in a college course that could cost you up to $10,000.

So… Do the math and make sure a job awaits you and the end of your education adventure that can actually provide enough money pay back all of your education loans in not more than ten years.

And of course, this leads to resolution number three…

Don’t get suckered into paying for someone else’s education.

This may seem harsh but some parents (and even grandparents) have an attitude that it is required for them to pay for their children’s college education. Sort of like how Disney has everyone convinced that every parent has an obligation to bring their kids to Disney World.

Here’s the dilemma… When a parent diverts money to paying for college for a kid it comes from somewhere. Usually indirectly from retirement savings.  The parent is basically trading off future security so some kid can go off to a four-year party. And the bill for that education adventure can be as high as $250,000 when you include everything.

Now here’s some interesting math to show what this $250,000 really costs the parent… Assume the Parent is forty-five years old. That means that the $250,000 would have twenty years to grow in a retirement account if it was not spent on a kid’s college. At a conservative 7% interest per year that means the college adventure actually cost the Parent $967,421 of retirement savings.  And that is just for one kid.

That’s another income inequality aspect of this… Will an extra million dollars have any impact on your retirement?  I bet it will…

Bottom line is that a kid can take a loan out for college. The government and banks are standing in line ready to loan kids money for college. But when you get to the ripe old age of sixty-five no government agency or bank will be ready to loan you a million dollars so you can pay for food, housing, medical, and other expenses in your retirement.

So… If your kid is putting the pressure on you to pay for college simply ask them this question… “Since we will be taking this money out of our retirement savings we may be at risk of not having enough money for food, housing, and medical when we retire… Can we count on you to financially help us when we are retired?” If they ask how much… Figure the million dollars over 25 years or around $3,500 a month.

If they say sure they will send you the monthly checks… Then you have a great kid. Get your attorney to draw up the papers. But I will bet that most kids will laugh when you suggest they help you out in retirement. Mine did…

I hope these New Year’s resolutions will be easier for you to keep than the ones you already forgot about. Good luck…

Can Three Recent News Reports Tell Us All We Need To Know About Income Inequality?

It’s always mysteriously eye opening when three seemingly unrelated news reports appear to possibly provide a coherent story. And these reports surely combine to tell us some significant data points related to the Income Inequality puzzle.

Sometimes people can oversimplify the Income Inequality problem suggesting potential solutions like just redistributing income. The Robin Hood “take from then rich and give to the poor” solution. If it were that simple, then all lottery winners would be living happily ever after. But that doesn’t always happen. More on this lottery winnings paradox in a future article

Now on to the three unrelated news reports…

News report Number 1: From the New York Times – “In the Shopping Cart of a Food Stamp Household: Lots of Soda”

We have this $74 billon US Government program (SNAP) to help the 43 million people at the lower end of the income scale buy food. Basically, they get a debit card loaded with money from the US Government that they can use at any grocery store. There are limitations on what can be purchased with the program.  Things like pet foods, alcoholic beverages, paper goods, cleaning supplies, and soaps are not allowed.

But most forms of food are allowed by the program. The goal is to assure that everyone has the meat, chicken, vegetables, bread, etc… to build nutritious meals and keep families healthy.  There is no expectation that busy people will try to stretch their SNAP budget by doing things like baking their own bread or eating home built casseroles every night.  Frozen foods and other convenience items are allowed with the program.

But according to this New York times article a recent study showed that SNAP program participants are spending 20% of their SNAP budgets on sweetened soft drinks and junk food. That’s a lot of money that could go into much more nutritious foods like fruits and vegetables.

I would never want to keep anyone from an occasional Twinkie, Jays potato chips, or Pepsi but 20% is a huge number. $14.8 billion huge.  That’s a lot of apples, oranges and carrot sticks. And in a country where obesity and diabetes are like a plaque all that sugar can’t be good.

But we can’t tell people how to fill their shopping carts at the grocery store. It’s up to them to decide how to feed their families. Junk food or Good food? It’s their choice and they have not been choosing wisely.

Income Inequality Problem Number 1: Bad decision making.

News Report Number 2: From CNN Money – “6 in 10 Americans Don’t Have $500 In Savings”

This news report talks about a study that says 60% of Americans, a majority, could not pay for an unplanned expense of $500. They don’t have at least $500 in savings!


I know $500 sounds like a lot of money but that’s about what it would cost for some emergency dental work because your teeth are having a hard time dealing with all the sugary soda and junk food you have been eating.

This savings issue has been a persistent problem in America. People, 60% of them, can’t seem to save any money. Nothing gets squirrelled away for eventual emergencies. And this doesn’t even begin to address the problem these same 60% of Americans will have some day when they can’t work anymore and decide to “retire”. If it still exists, Social Security might send a few dollars their way but not nearly enough to cover all their living expenses. Their savings will need to bridge that expense gap.

For these 60% of Americans, is their budget so tight they can’t even put $5 a week in their mattress, or a bank, for the inevitable rainy day? There must be someplace in their weekly budget where even a few pennies can be trimmed. Enough pennies add up to dollars then before you know it… $500!

And an even scarier thought… If somehow, they work a little harder, overtime maybe or a second job, what will they do with that extra cash in their pay envelope? Will it find its way into savings?

Problem Number 2: Bad budgeting.

News report number 3: From The Guardian – “Richest 62 People As Wealthy As Half Of World’s Population”, says Oxfam”

Remember all that recent noise about “Fake News”?

Well this article fits then classic “Fake News” mold… Sensational headline, simple words to communicate better with the lowest common denominator, slightly factual, but mostly inaccurate.

This is the kind of news that smart people understand as sensationalistic and largely inaccurate just from the headline.  But those less educated and more easily influenced by nonsensical numbers believe this stuff. Shame on you Oxfam for creating and/or propagating “fake news”.

This is right up there with supermarket tabloid headlines like “Dick Cheney Is A Robot!”, Tome Cruise Is A Space Alien!”, and “Half-Human Half-Fish Found In Florida!”.

Somewhere someone believes these news reports. If they didn’t these publications would not exist.

The only thing missing from this Guardian headline is the exclamation mark at the end. They coulod have used a headline like; “62 Aliens On Earth Own Everything!” or “Why Work Hard To Get Ahead?… 62 Aliens Control Most Of Worlds Wealth!”

Notice my clever use of exclamation marks.

The problem is that people believe these kind of stories about who holds the wealth in the world. Smart people know that these 62 people probably have private planes, yachts, and a nicer wardrobe. But most of their so-called wealth is probably tide up in something like stock. For example, most of Bill Gates’, Warren Buffet’s, Mark Zuckerberg’s and Larry Ellison’s wealth is based on their stock holdings. The problem with owning a large pile of stock is that if they ever tried to sell it the value would drop like a stone.  Stock based wealth is mostly a mirage.
But smart people know about how stock based wealth numbers are really artificial. It’s not like these 62 people own something with real value like property, buildings, stockpiles of canned lima beans, or mountains of gold coins.  I am most worried about the people that don’t known this about how these articles are designed to mislead.

Problem Number 3: Uninformed readers believe sensational headlines.

These three news reports appear to be the “trifecta of the day” when it comes to Income Inequality… They show how bad decisions, bad budgeting, and inaccurate sensational headlines and news stories can undermine efforts to eradicate Income Inequality.

No rational amount of income can compensate for bad decision making. Education, discipline and good decision making can make even the smallest income go farther. If a person can’t adjust their budget to save even $500 how will they ever build the assets needed for the unplanned essentials in their life? Financial catastrophe could be days away. And… If a person believes every news story they see, could that demoralize them and take away the hope and optimism that really fuels a long persistent climb up the income ladder?

Clinton v.s. Trump… Who Will Do the Most To Fix or Amplify Income Inequality?

lady and manIncome inequality is not a good thing by any measure. More people earning more money and spending that money on everything from new homes to cars to groceries and vacations is what helps our economy grow for everyone. If only a few people control all the wealth and income, then the economy will continue to weaken and no one will win.

That said, boosting income for the lower 99% artificially through transfer payments (free money giveaways) and other economic tricks and tactics will only provide an unsustainable short term partial fix with a day of reckoning on the horizon where the 99% will ultimately feel most of the pain. If the upper 1% lose 90% of their income they will still have more than enough for the essentials. Not so for the lower 99%. An economic shock like that would be devastating.

99 - 1It is essential that this Income inequality puzzle is solved. It effects everyone in the country in so many ways and influences the ecology, our health, and personal safety.

So what will Hillary Clinton or Donald Trump do to improve or amplify Income Inequality if they get to the White House?

Recently the New York Times asked their readers to choose the most important question to them from a selection of fifteen possible questions. Nearly 90,000 readers responded and the Income Inequality question scored the second most burning question right behind a question on climate change.

While the televised presidential debates can look like a mud wrestling match at times the candidates’ responses in a newspaper story show only the actual words they are using not the rest of the distracting circus show.

The New York Times asked the candidates:  “What would you do to reduce extreme income inequality in this country?  The actual word-for-word text of their answers is in the actual article but I will summarize what they said here:

Hilary Clinton basically said how terrible income inequality is and laid out her proposals to help reduce it. Her list included promoting profit sharing for all employees, more jobs, support small businesses, 12 weeks paid family leave, universal pre-school for every four-year old, and a fairer tax system. She finished with the clinton-trumpstatement that; “We won’t raise taxes on people making less than $250,000.”

Donald Trump used his valuable New York Times ink to blast Hilary of course. He claimed that she is an extreme globalist who helps foreign corporations and governments raid wealth from U.S. workers. His solution to reduce Income Inequality is to control our borders and get the fair-trade agreements with our trading partners to be more fair. And he also proposes to “massively” reduce taxes, regulations and energy costs so “America can be the great jobs magnet of the world.”

Both responses are scary for anyone who knows how economies really work…

Hilary Clinton’s response looks like a typical politician desperately running for office who is offering the world to her potential voters without facing the realities of costs. When you do the math, if you taxed 100% of the income of the upper 1% you would not be able to sustain this kind of spending. Not to mention how fast the 1% would relocate to a more tax friendly country so the year two tax receipts would be zero. And she better not even think about a wealth tax. This will send people for the doors. That wall on the Mexican border would be to keep wealthy Americans in the USA so their wealth could be taxed away. You think  wealth tax would not get on the table?  It’s already there in the form of the property tax we all pay whether we own a home or rent. Yes renters… When the property tax goes up you rent will go up.

And Hilary’s promise of not raising income taxes for people making less than $250,000 a year feels a lot like Obamas affordable care healthcare program promises like how we could keep our own doctors and our insurance premiums would go down.

Donald Trump’s response seems to show that even though he is representing himself as some kind of business person he doesn’t know much about the real mechanics of operating an economy.

IE Chart1Scary…

So all we learned from this New York times article was that neither presidential candidate has any idea about what to do to get the US economy working again. All they care about is winning the election.

Where does that leave us?

Basically if you are counting on the fine people in Washington or your local city or state governments to magically wave their wands to solve the income inequality problem then you will probably be wrong. The Federal government consistently spends more than they take in right now and many state and governments are technically broke when you consider the huge municipal employee retirement obligations they are hiding.

The government in any of its many forms doesn’t have the money or motivation to tackle the income inequality problem.

It’s really up to us to tackle the problem ourselves…

To start, if every man, woman and child in this country made a commitment to better education for our children and not relying on strangers to do the whole job within ten years you would see a whole new income inequality formula. Without the right education a person cant even get on the first rung of the income ladder.

maxresdefaultBy commitment to education I mean little things like reading to our toddlers every night (even if it’s the sports page), making sure teachers know you are involved in your child’s education, and putting the priority on getting homework done every night.

And if there is any man, woman, or child who is not ready to make the commitment to their kid’s education then you might want to say that they have earned there spot and their child’s spot at the lower end of the income ladder.

Harsh… Yes, but that’s how economies really work. Without leaders that inspire people to commit to their goals you can’t ever tax/spend or deregulate/untax your way to a better economy.

The people need to do the hard work not the politicians.

Mike Pence Can Save Trump and the Republican Party – Why Not Make Some History Today?

sad-trump-bigDonald Trump is looking like Dog Dirt today. Finally, his past indiscretions may have caught up with him. More and more former supporters are saying they will not vote for Trump. The Republican Party has been reluctant to fully embrace Trump from the start. What did they know? What other shameful evidence could be trotted out over the next few weeks leading up to the election?

Which brings us to the thorny subject of making history…

On a good day The Donald might make one of the greatest presidents of all time… His combination of transparency, business acumen, and negotiating skills might just make America great again.

But with the latest evidence about his dark character I think most people can agree that this guy is not going to make it to the White House. A week ago maybe there was hope but today no way. His candidacy is done.

This thing can go two different ways right now and the future of our two party system hangs in the balance:

1) Trump stays in the Presidential race – He will lose in the biggest landslide in history.
2) Trump bails out right now – There is still time for the Republican party to partially recover and at least gain back some credibility.

The problem is that Trump has said he will not bail out and I believe him. Why quit when he has come this far. Somewhere in the back of his head he is hearing a little voice saying “No publicity is bad publicity”.

Well this time that old saying doesn’t count.  The American people will not put a person like Donald Trump in the White House. The big hint for Trump should be the number of Republican Leader who have said they will hold their noses and vote for Hilary Clinton.

sad-penseThis brings us to Mike Pence the Vice Presidential Candidate and Trumps running mate and how he has a chance to make history and right the Republican ship…

Mr. Pence has the choice right now to follow Donald Trump down the river in a stunning presidential loss that not only will cost the Republicans the White House but very possibly Congress, too.


Mr. Pence can choose to make history right now today and step up to a podium some place and resign as the Vice Presidential Candidate. And along with that say a few choice words about Mr. Trump’s character and why he is no longer interested in working with Trump.

And… Mr. Pence should resign about seven minutes before Donald Trump steps up to the podium to debate Hilary Clinton tonight.

Let’s see how Mr. Trump takes that news…

The Political Conventions Are Over… How did we get into this mess and what does it mean for income inequality?

Hil-TrumpThe Republican and Democratic political conventions are over and the two champions of their parties have been selected. These two conventions were little more than a platform for a parade of speeches by various political hacks saying stuff we already know in hopes of grabbing some prime time TV attention.

Leading up to these conventions we knew who the two presidential nominees were going to be and we know exactly what they stand for.

And… Both candidates scare me right now.  A lot!

On one hand we have a Democratic presidential nominee who will probably promise us the world (things like free college tuition to start) but as the current president has found, its not so easy to actually run a government. Especially when everyone is at each other’s throats like they have been for the last seven and a half years.  Scary…

Mule ElepahntOn the other hand, we have a Republican presidential nominee that scares about everyone including most of the people in his own party. The unprecedented number of people who watched the televised Republican debates shows that Mr. Trump is fun to watch as a nominee but I’m not really sure he can lead the country in a rational, thoughtful, compassionate way. No matter what his wife says. Even if she is skillfully using Michelle Obama’s words from eight years ago.  It makes we sort of want to see a debate between this Slovenian fashion model and current first lady/former high powered attorney. In a fair fight I’m pretty sure I know who would win. But a cat fight worth watching.

All this convention political noise was just designed to get us to like these two hugely unlikable presidential candidates.

People said a lot of great things. Somewhere deep down we started to feel a little better about making a choice this November. At least that’s what the political party captains would like.

But I really don’t see much of a choice…

Especially when it comes to getting the country on the path to resolving the two ton guerrilla (I didn’t use elephant because of the political connotations) in the room. Income Inequality.

The unemployment numbers are telling us that a higher percentage of people than ever are working yet the economy seems to be in a weak sluggish position. This is simply because too many people are working too many hours for too little pay. At the end of the week they get a paycheck that barely covers their basic living costs and Obama-care premiums.

All this while people at the other end of the income spectrum are earning more income than ever and thanks to lenient Fed policies they are enjoying an unprecedented high valuation of their assets.

If you listen to one scary candidate, the solution is to tax the heck out of the big earners and find ways to transfer that cash to the people at the other end of the spectrum. Better known as a “Hand Out”.

If you listen to the other scary candidate, he is preaching a system with less government regulations, more opportunity and lower taxes. Better known as a “Hand Up”

Yes folks it is that simple… One system is a “Hand Out” and the other is a “Hand Up”.

What happens with a "Hand Out" system... The walls make people mad.

What happens with a “Hand Out” system… People just don’t like the walls!

We know for sure the Hand Out system does not work. At its extreme is looks like socialism. You know, that Soviet system where everyone gets education, a job, food, and a place to live. Not much choice but they do get the basics and everyone except a handful of “leaders” are very equal on the income scale. It’s works best for the Vodka companies since this system seems to really promote alcoholism. The most famous “virtually everyone equal system” collapsed years ago because it can only survive as long as someone is there to foot the bill. And when taxes go up or things get really bad people will leave unless you build a wall. And that wall will only keep people from leaving for so long.

If you don’t believe me… Ask the state of New Jersey about why a guy named David Tepper left the state because of its high income tax rate for a new home in Florida with a Zero percent income tax rate. The move saved him millions of dollars a year. Wouldn’t you do the same thing?

New Jersey may need to build a wall…

Tax and spend, Hand Outs, are no way to build a long term sustainable economy and try to chip away at Income Inequality. Higher taxes and rampant government spending will just make the problem worse for everyone in the end.

Who is this guy named "Rich"? It's everyone who earns a paycheck!

Who is this guy named “Rich”? It’s everyone who earns a paycheck!

In reality this Income Inequality problem we are in these days is most likely the result of an economy in transition. We are painfully moving from a union controlled manufacturing economy to a free agent services economy.

In the past, millions of workers enjoyed a middle class life while doing the hard work of making things like cars, TV sets, shoes, and furniture. Through the important work of labor unions salaries and benefits always kept pace with the needs of a middle class lifestyle. And that was in an amazing time when one wage earner could provide for a family. And they lived a nice life.

But… As we all experienced when the U.S. auto, steel, shoe, clothing and furniture manufactures collapsed this socialist type non-market driven pay/benefit system could not survive when no one was there to pay the bill. Now most cars, steel, shoes, clothing, and furniture still manufactured in the USA are done in non-union factories where pay/benefits are more in line with the actual value created.

So the Bottom line for these newly anointed presidential candidates is that one candidate is unelectable. And the other candidate promises us four more years of the same Washington gridlock we have had for the last eight years.

Scary… Especially if you are on the wrong end of the income inequality scale.

Only real innovation can fuel the demise of Income Inequality

Only real innovation can fuel the demise of Income Inequality

The simple solution is that the fine people we send to Washington to represent us in Congress pull together and create some policies that might have a little “Hand Out” component but be made up of largely sustainable growth oriented job-creating “Hand Up” policies.

The Fed has done their job with easy money and low interest rates but without the help of congress all those sacks of money just sit in bank vaults not helping anyone. Don’t be fooled by this media-generated presidential election horse race noise. The real culprits in this inequality gridlock situation is congress.

Congress needs to pull together and decide it’s time to get America back on track. Small business is what really fuels growth. Get out of the small business person’s way and you will be amazed what can be accomplished.

Remember… All of today’s big businesses started as small businesses in the past.  They all started with a motivated person with a great idea and a plan to get things going.

These two guys had an idea back in 1976. Now Apple directly employs over 66,000 people and over 627,000 people indirectly.

These two guys had an idea back in 1976. Now Apple directly employs over 66,000 people and over 627,000 people indirectly.

If Congress enacts a package of small business incentives, education initiatives, research/innovation credits, and reasonable regulations more people will move up the income ladder and large scale inequality will be a thing of the past.

Think it can’t be done?… We’ve done it before and that’s why America out-produced, out-grew, and had the fastest increase in standards of living back in the 1950’s. And the 1970’s weren’t so bad either.

Congress needs to bring back the good old days. No president can do that on their own.

Could These New Year’s Resolutions Chip Away At
Income Inequality?

New Year 2016This is the time of year when people might be thinking about New Year’s resolutions. So here are five New Year’s resolutions that just might help get us on a path to solving this Income Inequality dilemma…

As a transparent person I really can’t ever claim to know anything about the struggles that confront people of color (any color beside transparent) in the United States. I can’t claim to have a real sense of the fear some people feel when a police officer stops them on the street, or the feeling of being turned down for a job when I met every qualification, or the realization that I just won’t be able to give my kids a wonderful “story-book” Christmas.

So please cut me some slack as you read this. It comes from the right place. Give me a chance. Maybe the same chance you might want some day…

I recently watched a speech by a young black man. He had been a victim of unwarranted police violence. He survived physically but the his mental scars cut deep and may never totally heal. A white kid in the same situation probably would not have been victimized. But unfortunately this is the world we live in today. It is appalling…

Although my heart goes out to this young black man for the injustices he has suffered, unfortunately I could not agree with the theme of his speech. And… You might not either…

He restated his theme over and over. He pounded it as hard as those cops pounded on his face. Maybe harder.

His theme was that black kids in this country have no hope of improving their lives.  No matter how hard they work they have no hope. Poverty, discrimination, futility was all they could ever expect from life! His words. Not mine.

This young black man was a student at a leading university. He was from a poverty level broken home but he had somehow found his way out of the inner city. He was born when his mom was a in her teens and his father was largely not involved in his life.

Hopelessness Is The Real Problem

Hopelessness Is The Real Problem

The scary part for me is that this young black man is being given a national platform to bring his THERE IS NO HOPE message to the masses. I could picture thousands of five year old black kids hearing this well-spoken articulate young man tell them they had no hope.

My hope is that those kids don’t believe him.

Believing a THERE IS NO HOPE message means only one thing… Failure is assured.

I wish this young black man would have used his new found notoriety to instead talk about how he made it. What were the key things that got him from a desperate childhood to a classroom in a leading university and certainly on the way to a bright future.

Instead of preaching a message of THERE IS NO HOPE maybe he could lay out the four things black families could do to be sure that this terrible Police Brutality, Hopelessness, and Income Inequality gets put a path to ending.

These four things could be just the New Year’s resolution needed that could make a big difference.

First lets agree that education is the key…


The Best Way To Succeed At Life And Love

Barring any effect related to wizarding magic, winning lottery numbers, and inheritance from a long lost rich uncle the only way to get ahead is to get a good education. In an information centered economy like ours people with a solid education in marketable fields will always find work. You will probably always find work if you are a plumber too. But that takes education also.

So where is the education breakdown in this country?

We can complain about the schools, the teachers, and the lack of classroom technology but all those will probably cost money that schools and municipalities just don’t have. And the rich (those 1% to 10%ers) alone can’t pay for what’s really needed even if we had a 99% tax rate. The middle class has been hollowed out or left the areas where the tax revenue is needed. And those people below the middle class don’t pay enough taxes.

Bottom line… There is not enough money for the government to solve this education problem on their own. If you think they can solve the problem on their own then you probably believe in wizarding magic, winning lottery numbers, and inheritance from a long lost rich uncle.

So… Baring wizarding magic, a huge lottery win, or a rich uncle (even all Bill Gates and Warren Buffet’s  money could not solve this education problem)…  What can be done?

We can whine and moan while we tell everyone else what to do or what we deserve.  And… tell our kids their future is hopeless or we can formulate a plan for real change like these five New Year’s resolutions:

  1. HAVE A BETTER ATTITUDE – Tell our kids that their future is bright if they work hard and make the right decisions. And offer to support them any way we can. More on this later.
  2. FOCUS ON FAMILY – Teenagers stop having kids so young. Moms have fewer kids. Mom and Dad stay together if you
    Family Is Important

    Family Is Important

    can. If you split up still take full responsibility for your kids. Forget about your potentially terrible childhood. That’s over. This is a chance for you to make a difference going forward.

  3. PARENTS TAKE RESPONSIBILITY – Own your child’s future. No one else is going to do this for you. Not teachers, not politicians, not anyone. What you do and how you behave will dictate 80% of how your child will end up in life. Things like showing an interest in their school work, providing a good environment for doing homework, requiring they do their homework. Sure you might say that what if the kids are just bad or refuse…. Start when they are four years old. Start the habits early and stick with them. If you are not willing to put in the effort then there is a high probability of failure. Your child’s failure. Like I said no one else can do this. It’s your responsibility.
  4. MAKE BETTER DECISIONS – You are not powerless. You decide how you spend your time and how to set your priorities. These decisions are a key to what happens in your life. Here’s a secret… Only make a decision to do something that will improve your current situation. If doing something move you to a worse place then don’t do it. The long-term (even just a year) cumulative effect of making decisions that only improve your situation are huge. These small steps add up. I know I’m repeating here but… Little things like showing interest in your child’s school work, going to a parent/teacher conference, praising your child for accomplishing an class assignment, keep the television (one any of the other screens) turned off until homework is done. I’m sure you can think of about a thousand other example decisions you might be faced with in 2016… Before your decide what to do and take action simply ask yourself, “Will this improve my (or my child’s) life?” If yes, then proceed. If no, don’t do it!
  5. FIND A MENTOR – Absolutely no one has all the answers on their own. Look at your community and try to find
    The Right Mentor Can Make A Difference

    The Right Mentor Can Make A Difference

    someone you can talk with to help you make the right decisions going forward. This could be a person at your church, a business person, a person at your child’s school, or your great aunt Wilma. Pick someone you admire. Someone whose life you would like to emulate. Whoever you pick, I can guarantee they will be flattered and glad to help. Test your key decisions with your Mentor. See what they think. They may make some suggestion for options you didn’t realize existed.

If you try these New Year’s resolutions and they do not help your child get a better education then you have only wasted a year… A year of having a better attitude, focusing on your family, taking responsibility for your kid’s future, making better decisions, and spending time with a mentor.

Sounds like a pretty good way to spend a year.

Stack up five or ten or eighteen years like this with your kids and you can expect they will value education more, learn from your example on how to make good decisions, and most importantly learn to depend on themselves to make a change in their lives.

NYC Imagrents

They Started With Nothing But Built A Nation

And here’s the big secret… These five New Year’s resolutions are nothing new. This is how people have been working for and achieving the American Dream since 1776.  And I am talking about people who have splashed up on our shores without any skills, ability to speak English, or any education. And most of these people achieved their dreams in a time when a thing called “Discrimination” was an ugly part of the landscape. There were no laws to protect them.

All they had was hard work, persistence, and hope. And… that was enough!

The World Is Changing… Why Shouldn’t Jobs Change Too? The Effects On Income Inequality…

Yesterday was Labor Day so between enjoying some bar-b-cued meats and cold beverages on that day off I was looking a little closer at what has been happening in the Job Market lately and what it means for Income Inequality…

A recent New York Times article had the disturbing headline: “Low-Income Workers See Biggest Drop In Paychecks“. The article went on to discuss the plight of workers in the home health care, food preparation and retailing sectors.  One example shows how a guy who worked at a KFC in the Mid-1990s earned an equivalent in today’s dollars of $8.61 then went away for two years of college and two military tours in Iraq. He came back and now earns $7.25 and hour.

What’s up with this? Why the pay cut?

This really seems crazy when you consider the recent U.S. Government employment report that tells us 173,000 new workers were hired in August and the unemployment rate is down to 5.1%. It has not been this low since April 2008.

So with what appears to be an extremely tight labor market, low-wage workers are seeing a drop in real wages. It should be the other way… Wages should be going up! If you look at the basic economics of the situation you would think that as fewer workers are available employers would need to raise wages to fill job vacancies.

If we assume the Labor Department has not botched the data there could be two forces at work here below the surface that smart people seem to forget…

1. Pay is more than just the cash you get in an envelope at the end of the week.

The recent New York Times articles on how pay has gone down for low-wage workers focuses on the actual cash people take home. But a huge change has happened over the last few years. That change comes under the umbrella of Obamacare. In most cases the huge costs of providing healthcare has added significantly to the cost of hiring workers. And this cost is reflected in lower wage increases. And… Workers should be spending less of their pay on health costs. At least that’s was the promise made when Obamacare was pushed through congress and into the laps of the American people.  Yes wages are relatively lower but healthcare cost for employees should be lower too.

ice_man12. The world is changing. 

This just may be the bigger factor influencing low-wage worker take home pay.
The world is changing… It has been for years.

Fast food workers are in direct conflict with people who are striving for healthier eating habits and may be eating at home more. Or just up-scaling their restaurant meals to places with fresher choices, better menus, and fewer employees.

blacksmiths2Home Healthcare workers are being squeezed because with better healthcare coverage people might go to the hospital or other higher end choices for healthcare. Maybe they are able use better health care to stay healthier and not need as much home healthcare services.

Retail workers are cruising stores with fewer shoppers since more and more people are shopping online. Online shopping is easier, takes less time, usually has what you need, and costs less.

These three worker categories are not in as much demand in a changing world. To push for higher wages when jobs that are falling out of favor will only result in fewer (if any) workers making more money while higher consumer costs push the few last consumers to other lower cost/higher quality alternatives or totally out of the market.
In the past when the world changed did people worry about the declining opportunities and pay for blacksmiths and buggy whip workers?  Did front page articles document the plight of lantern wick weavers as electric lights started to spread? Did the government push for higher minimum wages for ice delivery men as electric refrigerators started popping up in homes?

I don’t think the plight of these past job holders received much ink in the New York Times.

Workers in these low wage areas today are paid what the market will bear. That is a directly decided by the demand for their services/skills combined with the number of potential people to fill those positions.

Right now in an environment we have now low-wage workers need to up-skill to get higher paid positions in areas with higher demand.

The same way blacksmiths ran out of horses to shoe and became car mechanics, lantern wick weavers became electricians, and ice delivery men decided to sell and serviced refrigerators low-income workers in low demand areas need to find their next job based
on where the world is going. The wrong way to increase their wages is to cling to jobs in low demand with low-wages.


Education Is The Key To Combating Income Inequality So Why Destroy It With A Bad Plan?

It would be difficult to disprove the fact that education helps people move up the income ladder. There are few other better predictors of future income than level of attained education. People with college degrees earn many times more over their lifetimes compared to those who jump off the education train after a high school diploma.

So, in theory, easy loan money to finance a college education should help move all college graduates up the earnings ladder and help alleviate high levels of income inequality.

But now all we hear about is the approaching college debt crisis…

Now that the bill is coming due and millions of people equipped with college degrees actually need to pay for that education there seems to be a lot of whining going on.

What happened?

Simply put all college educations are not equal…

A newly minted computer programmer can earn over $80,000/year while a Political Science major might earn $30,000/year because demand is sort of low for Political Science majors and they may end up in retail, fast food, or making your morning latte a Starbucks.

It is much easier to pay back $25,000 in college debt when you are working as a computer programmer than if you are crafting fine premium coffee beverages. I don’t think computer programmers are whining about their college debt since the return on their loan is about three times their loan amount just in the first year on the job while the valuable yet less employable Political Science graduate is looking at just over a one times return on their college investment.

Yes… Maybe college students should look at their college cost as an investment in their future. The same way they will someday invest in a home, car, or IBM stock.

Maybe before signing on the dotted line for their college loan they should consider how much they might earn after they graduate in their selected field. If these loans were not government guaranteed and their repayment was the sole risk of a bank or educational institution I’m sure future ability to repay the loan would be a key factor and it might be quite difficult to get a loan for a Political Science degree which costs the same as a Computer Programing degree.

Here’s the scary part…

There has been some talk of loan forgiveness. If a college graduate can’t pay back their loan after a few years then the balance will be wiped away. Like magic.

Nice… And very dangerous!

If we start forgiving loans because people made a decision to pursue the wrong education. An education that has a low future earnings potential, then we will just end up with more people earning low future wage degrees that do not help them move up the income ladder.

And that is the goal of the entire education system… To move people up the earnings ladder.

If someone’s passion is to study Political Science, Philosophy, Anthropology, or and of the other less marketable degrees then great. They should pursue their passion. But it is a catastrophe just waiting to happen when a government offers to pay off their debt when that government has not even figured out how to pay for a near universal medical program, social security, or a bloated government bureaucracy.

Taking on a new expense like this will have two guaranteed effects:

Political Science Graduates... Welcome To Your New Office!

Political Science Graduates… Welcome To Your New Office!

1) Add to a national debt that we all will pay for at some point now and in the future.

2) Act as a disincentive for college attendees to choose areas of study that will move them up the income ladder to help alleviate and income inequality trend that is moving in the wrong direction.

There is only one downside to a program where college graduates are made to pay for their debt…

Future students will be incentivized to pick more marketable areas of study and Starbucks will need to raise wages as less people need those low-skilled jobs.

The cost of our daily lattes will certainly rise.  But I am ready to deal with that inconvenience if it will help alleviate income inequality.

Do We Really Know What To Expect From Mr. Trump At This Week’s Debate?

Since Donald Trump announced his presidential candidacy on June 16th he has shaken things up on the political landscape like never before. He has single handedly taken a pretty boring time in the election cycle and given people a reason to read the news, watch television, and laugh at comedians.

Either we are waiting for Mr. Trump to shoot his mouth off again or succumb to party pressure to drop out of the race for some not so nice things he has said.  Everyone seems to have their own countdown clock to Mr. Trump’s candidacy implosion date.

TDPollsBut in the meantime… Even though he has said some questionable things about our neighbors to the south and attacked a former Republican Presidential standard bearer  Mr. Trump has rocketed to the top spot in all the polls with a 19% preference rating among Republican primary voters.

This is significant unless you believe that somehow Donald Trump has used some of his billions of dollars to buy the poll takers or that Democrats are secretly participating in the poll with designs on causing some sort of election day upheaval.

How could Mr. Trump’s poll success be true?…

Like a professional golfer Donald Trump has been promoting his message on his hat… “Make America Great Again!”

In a country heavily populated with politicians who really don’t communicate anything they obviously stand for because it may offend or scare even one potential voter , Mr. Trump may have ceased on a core message with some real impact.

Make America Great Again!DT1

Maybe it’s this theme that has carried Mr. Trump to the top of the polls. It’s simple. It resonates. It makes sense.

From our crumbling roads and railways to our laughable public education system and our forgotten middle class I don’t think many Americans feel as great as their parents or grandparents did.

At this week’s Republican debates while nine of the candidates try to say what keeps  them out of trouble with even the smallest special interest group, I think Mr.
Trump is going to pound on his “Make America Great Again!” theme and leave the others in a rubble of confusing electioneering rhetoric.

This is what crumbling infrastructure looks like

This is what crumbling infrastructure looks like

I’m sure Mr. Trump is going to shoot his mouth off at least once.  He is going to give the media at least one golden sound bite that will undoubtedly offend, insult, and slam someone.  The comedians will crack jokes about his hair. The Republican National Committee Chairman is going to hope it’s all a dream that he can escape by clicking his heals together and repeating, “There’s no place like home.”

But at the end of the debate…  viewers, republican primary voters, and the other candidates will probably realize one thing…

Like him or not, Mr. Trump’s candidacy is for real. The political game may be changing forever. Play by the old rules and be prepared to fall into obscurity in a world where voters are looking for something different.