by Ed Schultz
This is what I tell my children: Manage your debt. Love what you do. Work for yourself if you can. Stick up for yourself by joining a union if you want to work for someone else. And through it all, leave the world a better place.
DON’T DIG A HOLE DEEPER THAN YOU CAN CRAWL OUT OF
The first advice I would give to any young person starting out is to be wary of debt. You are entering the job market at a most inhospitable time, so try not to exacerbate the situation by taking on too much unnecessary debt. There are two kinds of debt—necessary and unnecessary—but only you can define what is necessary for you and your circumstance.
No one really knows if the American economy will continue to churn out jobs at the rate it has historically. I’m optimistic, but economists are all over the map because with outsourcing and the vagaries of trade policy and global economics, we are in uncharted territory. After the first George Bush recession, the jobs lagged far behind, and that is what many predict will happen this time. Hope for the best but prepare for the worst.
The New Normal may well include higher unemployment. Rutgers economists Joseph Seneca and James Hughes say even Clintonesque job growth at 2.4 million a year would still mean unemployment numbers wouldn’t fall to 5 percent until 2017. That’s partly because, as the population grows, the labor force expands by a million annually. The job market may be further squeezed if those near retirement age, whose 401(k)s have evaporated, decide they have to keep working a few more years. It’s not an easy time to be joining the workforce.
Well, when the going gets tough, the tough get going.
As ruthless as it may sound, during a recession blood flows in the streets, and that’s when the sharks make money. It’s better to be the shark instead of the meal. There are opportunities in every economy, and it’s the action of the risk taker that sparks economic revival. If you see an opportunity to start your own business, do your homework, and then go for it.
Here’s where necessary debt comes in. If you have completed a business plan, imagined every worst-case scenario, and it still pencils out, then that’s the time to start talking to a lender—maybe even investors. Whatever you do, don’t take a step until you know which direction you are going. A well-thought-out business plan is the key.
I have been pushing hard for the president and Congress to make available low-interest loans with favorable terms to small businesses—that is where the long-term stability of the economy will come from. It is about diversity. It’s a way of hedging our bets. Why plow billions into Wall Street and ignore Main Street? Think about it. We’re investing in the American economy. Let’s use a time-tested economic investment strategy and diversify!
Did you know that slightly more than half of the jobs in this country are provided by small businesses? According to the Small Business Administration, that’s about 30 million jobs. I’ve called for a small business czar to put the focus on job creation through small business expansion, so I was pleased when President Obama announced the formation of the Task Force on Middle Class Working Families, led by Vice President Joe Biden, to find the best ways to create jobs, improve workplace safety, and pursue other policies that benefit the middle class. I would add to the agenda finding a way to cut through all the SBA red tape and put loans to small businesses on a fast track. Small business owners who have tried to work with the Small Business Administration know how slow and unwieldy the process is.
And how about a stimulus package for the people on the ground floor of growing this economy? Give them incentives! Cheap loans with favorable terms! Zero interest for five years! That’s how we can put Americans back to work again.
It’s too early to know how much impact Joe Biden’s task force will have, but he’s a good man with blue-collar roots, and I think the president needs more of that blue-collar background in the White House. In Washington, when billion-dollar industries start to collapse, it gets everyone’s attention. So the president has wisely put big business experts like Treasury Secretary Tim Geithner and economic advisor Larry Summers around him to help steady the economy.
But where is the guy in the administration who has sat up in bed at 3 a.m. in a cold sweat wondering if he can meet payroll, wondering if he is going to have to lay off workers? The president needs someone who has been in those trenches to advise him.
I’m serious as a heart attack about this. Washington sees the big picture, but unless you have been in the trenches on Main Street—where the most potential for job growth is—you cannot possibly know how to jump-start small business growth. I am sometimes dismayed when I talk to senators, congresspeople, and other Washington officials because they often don’t have a clue about the obstacles small business owners face. That’s because we have morphed from what was supposed to be a citizen government into one that is comprised of professional politicians who, as well meaning as they may be, are out of touch. Sure, get me Larry Summers, but get me Larry the Cable Guy, too.
That ought to make for an interesting conversation.
RETHINKING CAREER PATHS
Some jobs cannot be outsourced. Plumbers, electricians, mechanics, and carpenters are in demand and well paid. You want to make a good living and enjoy some job security? Consider the trades. The schools are often cheaper, and there is an opportunity to work for yourself, which I highly recommend. I think we are dug into a mind-set that the only real success in this world comes through wearing a suit and a tie. That couldn’t be farther than the truth.
I speak from experience. My sons operate E. A. Schultz Construction—our small company that pours concrete and can build pretty much anything you need built. Joe and Christian work hard on the job sites—it’s backbreaking, physical labor, but if they choose to, someday they can take what they have learned in the trenches and apply that to management or even ownership. The best managers and owners in the world are the ones who have done every tough, dirty job in the business. If you’ve walked the walk, you can damn sure talk the talk.
I have worked for some of the biggest media groups in the country, and I always worked hard because I took pride in being the best employee in the building—and when I created my own businesses, I worked even harder. My work ethic will never be the reason I fail. I may make mistakes, I may get a bad break, but I won’t ever fail because I didn’t try hard enough. In fact, the way I see it, as long as I keep trying, I will eventually succeed. It’s about seeking excellence. You can’t half-ass it in this life.
I talk about an economic “New Normal” in this book—a world of suppressed wages, of peons and kings, and when you look at the imbalance of wealth in the nation and in the world, the evidence is there that this is what has happened, but that doesn’t mean we should stop trying. It means we have to try harder. Forget about the odds and the statistics. One bright mind and a strong work ethic can rise above all that. We have got to become as tough as the times in which we live. The key to survival is excellence. That, and voting in your own self-interest.
WHY WE NEED UNIONS
Not everyone is cut out to operate his or her own business, but working for someone else leaves workers vulnerable. That’s where unions come in. Without unions, the working conditions in America would be as bad as they are today in emerging economies around the world.
The working conditions in Chinese factories remain abysmal—in some cases, a death sentence. Reporter Loretta Tofani, who spent fourteen months in China researching workplace conditions, returned with a report to PBS NewsHour in 2007 that featured photographs of workers in oxygen tents dying from inhaling metal particles, pictures of workers spraying lead paint with no masks on, and others with missing fingers.
There is a cancer epidemic in the making in China. Tofani said, “I found that there were carcinogens being used by people, by the workers, in a really extravagant manner. People were spraying benzenes. There were people who had silicosis from making our metal goods. And it would seem like it was in every industry. It was furniture. It was shoes, clothes, marble tiles, granit
e countertops. Virtually every industry went through this system, where workers were living and breathing in carcinogens or using machines that were unguarded and resulted in amputations.”
Why is this allowed to continue? In China, unions are forbidden.
Unions were instrumental in building the American middle class—an economic machine the likes of which the world had never before seen. There is no doubt in my mind that without unions, this would be a much different country. In this book I have mentioned countries with no labor standards where children as young as five are put to work. If you go back in American history, you’ll discover child labor was once common here, too.
But late in the nineteenth century, unions appeared to defend the American worker. The most famous of them was the American Federation of Labor, founded by Samuel Gompers. At its peak, the AFL had 1.4 million members who sought child labor laws, workplace safety, a shorter workday, and fair wages. In short, what they sought, Gompers said, was “more school houses and less jails. More books and less guns. More learning and less vice. More leisure and less greed. More justice and less revenge. We want more…opportunities to cultivate our better natures.”
I remember reading about Samuel Gompers in school without ever grasping what a transformational figure he was. When he died in 1924, the world he left behind was on its way to becoming a much better place. What Gompers and other labor organizers did was to literally emancipate the American worker. Furthermore, I believe that the revolution in the workplace set the stage for women’s rights and civil rights, too. They are all human rights issues. When it comes to human rights, if we are not advancing, we are backsliding.
For decades, because of the power of the unions, the middle class in America prospered, but that all began to change with globalization. The country adopted trade agreements that rewarded outsourcing and embraced a policy of indifference toward illegal immigration. Corporations brazenly turned the clock back on all the hard-fought gains unions had won over the years by moving factories overseas where unions were illegal and labor standards virtually nonexistent. Cheap labor flooded in from Mexico, and suddenly the incomes of middle-class Americans stagnated…stopped dead in their tracks. That’s where we are today.
The crazy thing is that this new generation of CEOs doesn’t get how important—how crucial—the middle class is. They seem to think they can continue to ship American jobs overseas with no consequences. They forget that the workforce is comprised of the very same people who make up the marketplace. It’s an insane economic model that works only for a small, greedy few for a short while and is destined to wreak havoc on society as a whole. They just don’t get that what’s good for the middle class is good for the country.
The good news is that labor now has a friend in the White House.
“The strength of our economy can be measured directly by the strength of the middle class,” Obama said when he announced the aforementioned Middle Class Task Force. “I do not view the Labor Movement as part of the problem. To me, it is part of the solution…. We need to level the playing field for workers and the unions that represent their interest…. When workers are prospering, they buy products that make businesses prosper.”
The American form of government is predicated on checks and balances. That’s what unions are—a check to the power of corporations. That’s why a resurgence of the labor movement at this moment in history is critical. While tax loopholes that reward outsourcing are closed and illegal labor restricted, it is equally important that a worker’s right to join a union be free of intimidation by ownership.
I support the Employee Free Choice Act, a bill that would do just that.
Under the current system, corporations have learned to stall and intimidate those who would start a union. The Employee Free Choice Act moves the process along more quickly and fairly. If the process stalls, arbitrators are called in. Those on the wrong side of the issue have created a hullabaloo because the act shifts some leverage from ownership to the worker.
Corporate opposition to this has been strong, and why wouldn’t it be? Even as productivity has risen, corporations have managed to suppress wages. Lower overhead means higher profits and a windfall for owners and stockholders—what’s not to love if you’re at the top of the food chain? According to economist Jagdish Bhagwati, from 2000 to 2007, “virtually all of the nation’s economic growth went to a small number of wealthy Americans.” The problem? “The erosion of workers’ ability to form unions and bargain collectively.”
According to the AFL-CIO, “Union members are 52 percent more likely to have job-provided health care, nearly three times more likely to have guaranteed pensions and earn 28 percent more than nonunion workers.”
The Employee Free Choice Act does play hardball. But you know what? These are hard times. Don’t weep for Big Business. Ownership will always have the advantage. Always. If workers cannot organize freely, they don’t stand a chance. Freedom…Fairness…That’s what this is all about. We want a little more of the profit to go from the CEOs to the guys busting their asses on the factory floor. These folks aren’t asking for anything more than a fair shake.
According to the Institute for Policy Studies and United for a Fair Economy, the ratio of compensation between CEOs and workers in 2005 was to be 411 to 1. This is the direct result of the Republican trickledown mind-set ushered in by Ronald Reagan in 1980. Back then, according to the Economist, the CEO-worker ratio was only 40 to 1. If you’re a workingman or workingwoman who votes Republican, don’t you have to look at a statistic like that and wonder why you are voting against your best interests?
STOCK MARKET PERVERSIONS PUT AMERICAN WORKERS ON THE STREET
Let’s talk for a moment about stockholder expectations and publicly traded corporations. In the last thirty years it seems to me we have been accelerating toward greed and away from economic fundamentals, and it is another nail in the coffin of the middle-class worker.
The system used to make sense. A company sold stock to raise capital for expansion and innovation. The money funded research and new products, which in turn legitimately increased the value of the stock. Ideally, the company expanded and more workers were added to the payroll. That’s the way it’s supposed to work. And there was a time in the not so distant past when a veteran of the stock market could advise you to simply buy good stock and hold it. But that just doesn’t seem to be true anymore.
Stock prices are hard to predict, it seems to me, because we have veered so far away from the basics. You could probably do just as well by going to the track and betting on the prettiest pony.
Before technology stocks tanked in 2000, investors were like the Dutch speculating on tulip bulbs—with no rhyme or reason. In 1637, tulip contracts sold for ten times as much as the wage of the average craftsman. In 1998, we were happily investing in companies that were hemorrhaging money. Many people holding tech stocks in the 1990s became wealthy on paper, but ended up bloodied. Just before the crash someone asked Warren Buffett if he should sell a stock that had shot up in value, or if he should hold out for even higher gains. Buffett replied, “No one ever lost money by taking a profit.”
If you invest in the market, remember that advice.
The goal has become to increase the value of the stock price, but as often as not, that effort has little relation to the productivity or direction of the company. Sure, there is a time and a place to bet on a new, innovative player, but most stocks are not worth what they are selling for. If you actually looked at the profit and earnings of each company, the real value of the stock market would be shrunken considerably—probably to about half of what it is today.
I know it is almost un-American to ask this question, but I will: How much profit is enough? Unreasonable stockholder expectations and corporate greed have combined to pervert entire industries. Even very profitable businesses have chosen to take advantage of cheap labor in China and India so they can make even more profit. The stockholder loves it, and the CEO gets giant bonus
es, but what about the American worker? He or she is on the street.
If this isn’t selling your soul, I don’t know what is.
Remember, all profit comes at a price.
The sad fact is that there are lines of greedy people willing to sell out their fellow Americans for a few dollars more. If there is such a thing as economic treason, this is it.
In the push to inflate stock prices, workers become little more than part of an equation—being hired or fired to make the books look good in the short term, without any regard to the reality that these are human beings with families to raise and mortgages to pay. Ironically, with the advent of the 401(k), the workingman himself has become an investor, but paradoxically, what is good for him as an investor may not be good for him as a worker.
As investors, I think it’s important that we become more accountable, too. There are moral decisions to be made. As investors, we can be part of the problem or part of the solution. If my 401(k) is holding Halliburton stock, I don’t want any part of it or any company that might put a dime in that son of a bitch Dick Cheney’s pocket. I don’t want to own any part of a company that uses child labor, and I damn sure don’t want to invest a dime in any outsourcing bastards. I don’t want to support bad corporate behavior, period!
There are millions of people who think like you and I do. There are “socially responsible” investment funds, some with very good track records. We know fair trade coffee sells when customers are given a choice. I know products made in the USA sell—even if they might cost a bit more. People will always support something they believe in. Surely, if enough people start investing only in companies they find ethical, it could begin to change the way other companies do business. Believe me, if there is more money in wearing a white hat instead of a black one, they’ll do it.
