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The Art of the Big Lie on the Minimum Wage
Politics at times is the art of the Big Lie. That thought reared its head when I saw articles about a bunch of Congress people recently. They had called a big press conference — to announce how they were getting behind the idea of the $15 minimum wage for all Americans. These politicians know absolutely […]
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Politics at times is the art of the Big Lie.
That thought reared its head when I saw articles about a bunch of Congress people recently. They had called a big press conference — to announce how they were getting behind the idea of the $15 minimum wage for all Americans.
These politicians know absolutely that what they propose will harm many workers. They know it will cause many job losses. They know the job losses will hurt older workers and minorities the most, especially young minorities.
To say that research shows this is like saying the sun came up today. The politicians have seen countless studies that detail the harm. Still, they push for the $15 wage across the land.
How can they do this? It endangers the jobs of so many voters.
They do it because most of those voters don’t know how much such forced minimum wages harm them. And harm their prospects. They only know they can’t find a job, or that they were laid off. They don’t associate this with the high minimum wage.
The latest research on this comes from the National Bureau of Economic Research. It details how much harm the higher minimum wage inflicts on jobs that can be done by robots.
Suppose a company pays 50 folks $10 an hour to do menial work. Now the government orders the firm to pay them $15. The business crunches the numbers, and concludes that a few robotic machines are worth the investment. The cost of the machines is less than the cost of the 50 workers.
An article in The Wall Street Journal described McDonald’s recent moves. Unions, cities, and states pressured the company to raise entry-level wages. It did, and the politicians claimed victory for the workers. Ah, but McDonald’s immediately accelerated moves to digital technology. In order to cut the number of employees it needs. Duh.
We know many jobs will become automated. The politicians know this. They know if they raise the minimum wage dramatically, they bring on the automation more quickly.
Yet they trumpet their plan and whistle in the wind. They falsely promise that “increasing the minimum wage will provide economic security for all working Americans.”
This is utter rot. And they know it. A few cities have jacked up minimum wages dramatically. This makes residents feel they have done a good thing for the low-wage folks. Yet, in many of those cities, low-wage jobs have shrunk in response to the new wage.
The cold reality is that some jobs are only worth $10. If we artificially raise the cost of those positions to $15, employers scrub them. Simple as that. Or they automate them.
The politicians remind me of an old farmer I chatted with years ago. We talked about new farming techniques that would reduce his plowing. Less plowing would preserve more of his precious topsoil. It would reduce erosion. It would cut his fuel and equipment costs.
He agreed that it would, but…
I can still see the sheepish grin on his face as he said, “I’m gonna keep on plowin’ — I just like to see that soil turned over. Just like I’ve seen it all my working days.”
The politicians just like to keep saying, “We’re working to save jobs and to create more jobs. Increasing the minimum wage will provide economic security for all working Americans.”
All working Americans who happen to be in Congress.
From Tom…as in Morgan
Tom Morgan writes about political, financial, and other subjects from his home near Oneonta. Contact Tom at tomasinmorgan@yahoo.com. You can read more of his writing at tomasinmorgan.com
Nine Presidents — their Attributes & Faults
One reason I consider myself fortunate to have led a life in politics is that, over time, I have had a chance to work with nine presidents. From Lyndon Johnson through Barack Obama, I’ve talked policy, politics and, sometimes, the trivial details of daily life with them. Johnson was a deal-maker — always trying to
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One reason I consider myself fortunate to have led a life in politics is that, over time, I have had a chance to work with nine presidents. From Lyndon Johnson through Barack Obama, I’ve talked policy, politics and, sometimes, the trivial details of daily life with them.
Johnson was a deal-maker — always trying to figure out how to get your vote. He notched great domestic accomplishments, yet was brought down by a war he could neither win nor quit.
Richard Nixon was one of the more complex personalities to inhabit the office: highly intelligent and brimming with energy, but he could be vindictive and had a flawed moral compass.
Few people were nicer in politics than Gerald Ford, whose great contribution was to help the country heal after Watergate and Nixon’s resignation.
Jimmy Carter was a down-to-earth campaigner whose engineer’s mind led him to seek comprehensive solutions to the problems of the day. But his outsider approach led to difficulties, even with a Democratic Congress.
Ronald Reagan may be identified as the great conservative ideologue, but he was pragmatic. He criticized government, but signed the appropriations bills that came to his desk. He denounced Medicare, but made no effort to repeal it.
George H.W. Bush, meanwhile, came from the aristocracy yet devoted his life to public service with decency, honor, and modesty. He deserves praise for his skill in handling the transition from the Cold War.
Bill Clinton mastered policy detail and had superb political skills, but couldn’t get his major health-care bill through, and was hobbled by the Monica Lewinsky scandal and his impeachment. I often wonder how much more could have been accomplished had he not been distracted by personal problems.
George W. Bush was affable and likable, and right after the 9/11 attacks he effectively led the country. The course of his presidency, however, was downhill: from peace and prosperity to war and the Great Recession.
Obama was deliberative, smart, and took a compromise-ready approach. But he changed in the face of implacable Republican opposition, arriving with expansive goals and leaving with a far shorter, more incremental horizon.
Presidents are human, with qualities both fine and troubling. Each was different, and at least one tested our democracy. Yet our system of government showed considerable resilience — in part because Congress often played a crucial role as counterbalance, a role much needed with our current president.
Lee Hamilton is a senior advisor for the Indiana University (IU) Center on Representative Government, distinguished scholar at the IU School of Global and International Studies, and professor of practice at the IU School of Public and Environmental Affairs. Hamilton, a Democrat, was a member of the U.S. House of Representatives for 34 years, representing a district in south central Indiana.
S.E.E.D. Planning Group sprouts clients
BINGHAMTON — Travis Maus (pronounced MOSS), the managing member and chief compliance officer of S.E.E.D. Planning Group, LLC, has a picture of Alexander Hamilton prominently displayed in front of his desk. The purpose is not to remind him that Hamilton was one of the nation’s Founding Fathers, a promoter of the U.S Constitution, and the
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BINGHAMTON — Travis Maus (pronounced MOSS), the managing member and chief compliance officer of S.E.E.D. Planning Group, LLC, has a picture of Alexander Hamilton prominently displayed in front of his desk. The purpose is not to remind him that Hamilton was one of the nation’s Founding Fathers, a promoter of the U.S Constitution, and the founder of America’s financial system. Rather, the picture is on a $10 bill Moss carried with him for six months during the recession of 2008 in case he needed gas money to get home. At the time, Maus was a commissioned representative with AXA Advisors and not only received no income during a six-month “dry spell” but also was “underwater” owing AXA money.”
The seeds for starting his own business were planted early on in his career in financial services as an account executive with HSBC Finance (then HFC/Beneficial) and later as a branch manager in Hazelton, Pennsylvania. Maus joined AXA Advisors in 2007 and was promoted to a VP in 2012.
“The fracking revolution created an oil boom in Pennsylvania,” says Maus. “Suddenly, farmers were millionaires because of oil leases they signed. Most had no experience in how to handle their new-found assets or in how to create a financial plan. What was obvious to me was the need for a fee-based service that offered advice not dependent on the sale of any product. AXA showed no interest in the concept.”
Planting the Seed
In 2009, Maus created a d/b/a called S.E.E.D. Financial Strategies designed to sell insurance products. The mnemonic — S.E.E.D. — reflected the values of the new business: Stimulating environment, Ethical standards, Exceptional in meeting and exceeding high standards, and Duty as a fiduciary. In 2013, Maus and two other business owners converted S.E.E.D. Financial Strategies into an LLC and simultaneously set up S.E.E.D. Planning Group, LLC. Leveraging his interests, experience, and passion, Maus registered the planning group in 2015 with the U.S. Securities and Exchange Commission (SEC) as a registered investment advisor (RIA) and registered S.E.E.D. Financial Strategies with New York State as an insurance agency.
“In just two years, our assets under advisement have grown exponentially and should reach $173 million by year-end,” notes Maus.” Our discretionary assets under management (AUM) should total $94 million by then. The growth trend is obviously positive: In 2016 our annual AUM growth was up 43 percent over 2015, and this year we’re trending up 90 percent over last year. While the industry likes to measure success by AUM growth, I prefer to count the growth of our [client] households and our rate of retention. At the beginning of this year, our client base included 330 households, and I’m projecting adding another 130 by year-end. That to me is real growth. Another positive sign is our geographical reach. While our core business is conducted within 50 miles of Binghamton, we now have clients in 16 states scattered from Vermont to California.”
As an insurance agency, S.E.E.D. Financial Strategies sells products such as term-, disability-, and long-term-care policies.
“Our insurance revenue from commissions is barely 1.5 percent of the gross revenue of the two corporations,” explains Maus. “The focus is clearly on the planning group whose planning revenues are fee-based only. We provide objective and transparent financial consultation and coaching. For individuals, the major areas include retirement, estate planning, elder care, college education, and investment. For small-business owners, the major areas include employee-benefits design, succession planning, and executive compensation.”
S.E.E.D. employs 10 people in its 6,500-square-foot Binghamton office on Lewis Street and retains an advisor in the Florida office. Corporate ownership is split among four members, all of whom are active in the business: Maus; Ryan Berkeley; Fred Constantino, Jr.; and Amy Michaels. The Business Journal estimates that the firm’s consolidated revenues in 2017 will total $1.2 million.
The industry contrarian
Maus’s approach to building clients through financial planning rather than focusing on amassing assets makes him an industry contrarian. “Financial planning is the preferred introduction to our clients,” avers Maus. “It drives the business. Unlike management advisors who are looking for a minimum in net assets to invest, the Planning Group doesn’t require a minimum. We engage some clients long before they have liquidity, because we want to build the trust required to be effective, financial planners and asset managers. All of our advisors are on salary with no bonus arrangement for collecting assets, and we sell no products. There is no conflict of interest: The only focus of our advisors is on the best interest of the client. The company’s revenue-per-household is currently lower than the industry average, but that will change over time. There is often a lag period between our financial planning for a client and … [his/her] decision to have us manage personal assets. The steady growth of our AUM is proof that our approach of building trust works. Further proof is that almost all of our clients put us on retainer and prefer to pay upfront.”
S.E.E.D. Planning Group is not approaching its market demographics as one size fits all. “We’re launching a number of divisions this year geared to different segments of the market,” states Maus. “For those with assets in excess of $1 million, we now have ‘S.E.E.D. Wealth Management’ to focus on high-income individuals and their concern for capital appreciation through an individual, customized program.
He continues, “In addition to the financial-planning and investment advice we offer our wealth-management clients as an RIA, we coordinate those activities with accounting and tax services, retirement-planning, and estate-planning for a set fee. Our understanding of wealth management is that it encompasses all parts of a person’s financial life. ‘S.E.E.D.s of Hope’ is focused on those not-for-profit corporations that want to increase their revenues and endowments, but are too small to have an advisor on staff to help with issues such as investment stewardship and legacy gifting. And SPROUT is designed for Millennials who are tech savvy, new to financial planning, and may have recently come into an inheritance. These divisions are growing so quickly my guess is we will spin each one off into an LLC by year-end … While we cater to a wide variety of clients, our sweet spot is serving clients with $1 million to $5 million in [net] assets.”
Navigating the industry turmoil
These are turbulent times for financial advisors grappling with a number of industry changes.
“The advent of the Internet and social media has fundamentally changed the relationship between client and advisor,” opines Maus. “Not too long ago, financial advisors/brokers controlled investing information and trades. Today, clients have access to vast quantities of information and are aware of multiple options that are available. This empowering of the client creates a different, more collaborative relationship with the need for transparency of the process and fees, personal support, and real-time decision-making. The clients want to feel in control of the process. Another change is the client’s demand that the scope of advice be broadened. Not long ago, financial advisors concentrated strictly on investment and asset management. Today, clients want their advisors to help them with liabilities, tax and estate planning, insurance needs, health-care decisions, assistance with budgeting and spending, and income generation. This requires a much higher level of expertise and creativity on the part of financial advisors and a focus away from a transactional relationship to a goals-based approach over the long term.”
Maus then turns to the impact of technology on the industry. “The introduction and performance of ETFs (exchange traded funds) have had a profound impact,” continues the S.E.E.D. managing member. “For those clients who don’t want to think about investing, are disenchanted with high fees, and seek solid returns with low risk, ETFs are a very attractive alternative. Many who are comfortable with technology are also embracing the concept of robo-advisors where an automated, digital platform based on algorithms is replacing the RIA. Financial advisors are now creating hybrids where they marry the robo-concept to a help-desk which offers personal advice. Technology has also put the client in a position to control his/her total portfolio by creating a digital dashboard of all assets. We use Fidelity’s e-Money wealth-planning software which aggregates all of the client’s assets in real time. Anytime our clients want to review their financial status, they simply log in and get a comprehensive visual display of their current positions and correlated risk.”
At the top of the list of items roiling the industry is the new “Fiduciary Rule” issued by the U.S. Department of Labor (DOL).
“Commissions paid to financial advisors and the conflicts of interest created are the most polarizing issues today in investing,” stresses Maus. “Until the DOL issued the first part of its rule this spring, there were two industry standards. The ‘Suitability Standard’ simply required that investments must fit a client’s investing objectives, time-horizon, and experience. [Furthermore] … an advisor working under this standard doesn’t have to disclose any conflicts of interest or act in best-faith to minimize any conflicts. The new ‘Fiduciary Standard’ states simply that advisors and financial planners must put the clients’ best interest ahead of their own. We won’t know the full extent of the new fiduciary standard until the rules are finalized in January, but the move to a higher industry standard is apparent. S.E.E.D. Planning Group adopted the fiduciary standard long before it became mandatory, because we think it benefits our clients.”
Competing
What sets S.E.E.D. Planning Group apart from the competition? “Our emphasis on establishing a trusted relationship with clients based on planning rather than just accumulating AUM certainly sets us apart from the competition,” asserts Maus. “We’re also proactive in reaching out to our clients rather than passively waiting for them to contact us. Education is a big part of our business and so is offering options by introducing ‘what-if’ scenarios. The Internet and social media have leveled the playing field so we can compete with the big companies as well as the local, financial-advisor businesses. And when it comes to promoting the firm, we don’t rely on media. Our strategy is to encourage advocacy referrals and word-of-mouth to develop new business.
“S.E.E.D. has tied its success to the development of the local community. When we see Binghamton, we see opportunity. That’s why you will find our employees on a number of local not-for-profit boards [of directors] to help ensure economic and social growth through community-building. As further evidence of our commitment to the community, S.E.E.D. Planning Group recently created a full-time position — director of community engagement — to strengthen the bonds between the firm and the community and to foster synergistic relationships with local leaders and professionals.
“But most importantly, our people make the difference,” continues Maus. “The firm has assembled a talented group of employees, including a number of young professionals, who believe in our mission. They are focused solely on our clients’ best interests and know how to listen. We never just assign an advisor to a client; we spend time pairing them to assure building long-term, positive relationships. S.E.E.D. offers equity opportunities for all key personnel as one way to attract and retain career employees. In a sense, we are planting people, which yields a rich harvest over time, not just for ourselves but also for all of our stakeholders. The fact that financial advisors are eager to join the firm because of our vision confirms that S.E.E.D. is on the right path.” (An ancient Chinese Proverb says: If your vision is for a year, plant wheat; if your vision is for 10 years, plant trees; if your vision is for a lifetime, plant people.)
Maus is a native of the Southern Tier. He began his career in 2004 at HSBC and joined AXA Advisors in 2007. Maus and two partners left AXA in 2013 to launch S.E.E.D. Financial Strategies. In 2015, S.E.E.D. Planning Group, LLC was listed with the S.E.C. as an RIA and S.E.E.D. Financial Strategies, LLC was registered with New York State as an insurance agency. Maus, 36, is an accredited investment fiduciary and has completed an executive-education course as a retirement specialist at the Wharton School at the University of Pennsylvania. He lives with his wife and four dogs in Conklin.
Maus now looks at his office picture of Alexander Hamilton and smiles, because he no longer worries about having enough gas money to get home. He and his fellow corporate members have built a successful business in a very short time with a strategy and vision that makes S.E.E.D. Planning Group stand out. The key is to keep planting seeds for the long-term. The result: Maus should be looking at a lot of Alexander Hamiltons over the next decade as Generation X and Millennials enjoy an enormous inter-generational wealth transfer. By 2020, PricewaterhouseCoopers (PwC) anticipates that the younger generations will control more than half of all investable assets, a number approaching $30 trillion. PwC also estimates that more than 50 percent of the younger cohorts will choose not to keep their parents’ financial advisors.
It looks like S.E.E.D. Planning Group will continue to sprout clients for a long time to come.
Syracuse University professor wins $52K NSF grant to study workers in the gig economy
SYRACUSE — A Syracuse University professor was recently awarded a grant from the National Science Foundation (NSF) to study how people pursue work in the gig economy, and what challenges they need to overcome to be successful. School of Information Studies (iSchool) faculty member Steven Sawyer won an NSF grant of more than $52,000 through
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SYRACUSE — A Syracuse University professor was recently awarded a grant from the National Science Foundation (NSF) to study how people pursue work in the gig economy, and what challenges they need to overcome to be successful.
School of Information Studies (iSchool) faculty member Steven Sawyer won an NSF grant of more than $52,000 through the foundation’s EAGER (EArly-concept Grants for Exploratory Research) program, Syracuse University said in a recent news release posted on its website. EAGER grants fund researchers’ exploratory work in early stages on “untested but potentially transformative, research ideas or approaches.”
Sawyer’s research will especially focus on “understanding how workers from disadvantaged backgrounds are prepared to participate in this quickly growing arena.”
Common gig-economy jobs include driving for ridesharing companies Uber or Lyft, doing programming work on the freelance marketplace Fiverr, and handling data-entry tasks on the Mechanical Turk digital-worker platform. Others earn money by selling products and services in an online marketplace or by renting out their properties on a home-sharing site such as AirBnB or onefinestay.
Altogether, 24 percent of American adults made money last year participating in the various online marketplace and gig-work platforms, per the Syracuse release.
“While we know that gig-based jobs are growing in popularity for workers across the spectrum, we don’t have a great understanding of what it takes to be a worker in this kind of environment, especially among disadvantaged populations,” said Sawyer. “Our goal is to understand, in greater depth, what will be needed to make this kind of work successful, and to identify the particular challenges and needs of workers who come from disadvantaged backgrounds, such as single parents or rural workers, for example.”
Sawyer and his research team plan to study how these gig workers obtain and organize their resources, how they use digital tools and services, and where they work.
“These workers often work outside of typical office settings. Their workspaces include coffee shops, libraries, co-working centers and other on-the-go places,” he said. “Some have routine circuits of travel and can rely on co-working spaces, while some are more nomadic. Either way, they must organize and reconfigure their work resources, creating ‘mobile offices’ that provide cognitive space, physical space, communications and direct work resources.”
A second goal of Sawyer’s work will be to to develop better methods for collecting data on gig workers, and how to understand the alternative uses of the digital platforms, applications, and devices that these workers utilize. He said he hopes his work contributes to “policies and programs focused on educating, training and preparing a more digitally-enabled workforce of the future as it is clear that these new digital platforms and gig-work opportunities are only going to get more popular as their adoption steadily increases.”
A chat with Franciscan Companies’ Frank Smith
Editor’s Note: CNY Executive Q&A is a feature appearing regularly in The Central New York Business Journal, authored by guest writer Jeff Knauss, who is co-founder of his own digital-marketing firm. In each edition, Knauss chats with a different executive at a Central New York business or nonprofit, with the interview transcript appearing in a conversational
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Editor’s Note: CNY Executive Q&A is a feature appearing regularly in The Central New York Business Journal, authored by guest writer Jeff Knauss, who is co-founder of his own digital-marketing firm. In each edition, Knauss chats with a different executive at a Central New York business or nonprofit, with the interview transcript appearing in a conversational Q&A format.
In this issue, I speak with Frank L. Smith, Sr., who served as president and CEO of Franciscan Companies for 21 years and vice president of St. Joseph’s Hospital Health Center for 23 years. He currently serves as a consultant at Franciscan.
KNAUSS: Tell me a little bit about your background and how you ended up in health care.
SMITH: I came to Syracuse in 1970 to go to college at Upstate Medical University. I attended the College of Health Related Professions and received an associate degree in respiratory therapy. In 1971, I was allowed to work clinically, so I started offering patient care at St. Joseph’s Hospital. In 1972, I graduated from Upstate and worked at St. Joe’s for a year. I was later hired by Upstate Medical Center to be an instructor and I was working on my bachelor’s degree in health-care administration at Empire State College. I subsequently earned a master’s degree from Syracuse University.
While at Upstate, I went from an instructor to assistant professor. I was also the clinical coordinator for the College of Health Related Professions respiratory care program. I was tenured and promoted to associate professor. In late 1983, I was asked to help St. Joseph’s Hospital as a consultant. There were some changes they wanted to make in their respiratory care program. As a result of that consulting work in 1984, I gave up my tenured position at Upstate and came on as a full-time employee at St. Joseph’s Hospital Health Center. At that time, I was director of the Respiratory Care Department.
Part of my plan, based on a paper I wrote when I was in graduate school, was preparing hospitals for prospective reimbursement. This included setting hospitals up with home care, durable medical equipment, and a lot of ambulatory care programs that hospitals traditionally didn’t have. St. Joseph’s gave me the green light to do that. It promoted me to assistant administrator. With Dr. Thomas Aiello, a pulmonologist, I started Franciscan Health Support, which was the first of Franciscan’s companies. This program was specifically designed to reduce the length of stay for patients who had chronic pulmonary disease in our hospital, which was a big problem back in those days. It continues to be a big problem.
We looked at what was available in the community, and we added a clinical touch to it. We had registered respiratory therapists going into the homes, providing their services 24-hours, 7-days-a-week on call, with a pulmonologist who was also our medical director. If we hit a problem, we could call him. We were quite successful in reducing the length of stay and providing high-quality care so that people could have an improved life at home. As a result, the program kept growing. We ended up creating joint ventures with several hospitals, including Lourdes Hospital in Binghamton and St. Elizabeth’s Medical Center in Utica.
Subsequently, we set up little companies with several other hospitals in the area: Oneida, Carthage, Lewis County, and Auburn. We’re the preferred provider for just about every hospital in this area, and this region. At that point, I wore two hats: I was the VP for St. Joseph’s Hospital, and I was the president and CEO of Franciscan Companies. About two years ago, I gave up my VP job and just focused on my job at Franciscan Companies, because I knew I was getting ready to retire. There were some things that I had to do, and wanted to do, for Franciscan.
I’m still working on some projects with Franciscan Companies now, but in January of this year, I retired. They asked me to stay on and help with the transition, and to work on some projects. My forte is strategic planning and development. I’m working with a person who is going to be doing that for Franciscan, and we’re doing a lot of different special projects. So that’s how I got here after 45 years in health care.
KNAUSS: What about health care made you so passionate to stay in it for so long and continue to do the kind of work you’re doing?
SMITH: I had a very traumatic experience when I was 10 years old. My little sister died of cancer. She was only 17 months old. It had a profound impact on my entire family, and my older sister became a nurse. She was very motivated and wanted me to also get into health care. At that time, I wanted to be a policeman — my father was a policeman. I’d come from Rome, which is a small town. At that time, you either worked in the mill, became a policeman, a teacher, or a fireman, or went to college. My mother and my sister didn’t want me to be a policeman so I ended up going to Upstate. It changed my life.
KNAUSS: What drove you to administration and management roles in health care?
SMITH: I quickly realized that the boss makes the decisions. That’s the bottom line. To eliminate barriers, to get done what needed to be done, I wanted to be the boss, but I never considered myself a boss. I considered myself the leader. I engaged my staff and colleagues to assist me, but I wanted to be able to have the ability to say, “this is what we have to do” and do it. I didn ‘t want to have to go through a bunch of barriers to get it done.
KNAUSS: Speaking of leadership, if I were to walk out of the room and ask a handful of people that you’ve managed over your career, how would they describe your leadership style?
SMITH: My employees have been very open with me over the years. I think they know that I’m very humanistic; I firmly believe that family comes first. I’ve always supported my employees in their personal lives as well as their professional lives. I’ve had to make the hard decisions, but they were fair decisions whenever I had to make them. I think they know me as being fair and very loyal. They know that I expect that loyalty back in return. Their job is to make me look good. If they make me look good, I can make them look good.
KNAUSS: Did you take on leadership roles from an early age?
FRANK: I’ve been working since I was 13. My father was a policeman and wasn’t paid well for the work that he had to do, and my mother wasn’t well. I had five sisters and I was the only boy. So, working hard has always been my priority. I decided very early on that no matter what I did, I was going to be the best at it. When I worked at a gas station, I came in at 9 p.m. and cleaned the gas station, cleaned the men’s room and the ladies room. It was the cleanest men’s room and ladies room in the city of Rome. I delivered papers and I was the best paperboy in the city. I worked in a store and I was the best bagger and best stocker in the city.
I’ve always been known to be a high achiever. I require very little sleep; I sleep about three or four hours a night. I read tremendous amounts of material just because that’s what I do at night. I’m dyslexic. A lot of people didn’t know that about me and I didn’t really learn to read the right way until I was in graduate school.
KNAUSS: Tell me a little bit about what you look for when you hire and how does that contribute to the culture that you’ve developed?
SMITH: It depends on the position. If I’m looking for a clinical physician, I look for an individual who is passionate about patient care and passionate about his/her patients. I told the following to every employee who came to work for me when I was hiring: “I want you to treat every patient as though it’s somebody you love. If you love somebody, you would do whatever you had to do to help them, and that’s the way I want you to treat your patients. They didn’t ask to be sick. They didn’t ask to be in that position. Their lives have been turned upside down. Our job is to help them and make them as comfortable as possible, and improve the quality of their life the best we can.” I told this to every employee at every orientation.
I look for people that are compassionate and really have the skills. They wouldn’t even be talking to me if they didn’t have the skills. It’s the same thing with management and the other positions. I wouldn’t waste my time talking to somebody that I wasn’t serious about hiring. What I look for from them is loyalty, because if they are loyal then they will want to do the best they can to make me look good and the organization look good. That’s what it takes. We’re a team and I tell everybody that you don’t have to know everything. Ask the question. Don’t sit back and not know something or not do something right because you don’t know the answer. Ask the question. We’re a team. There’s no such thing as a bad question or inappropriate question. With education being my background, I learned that a long time ago. Students that were asking the questions were the ones that were interested and really wanted to know more.
knauss: What is the biggest frustration you’ve faced in your career?
SMITH: The biggest frustration that I’ve had working in health care all these years has been the lack of understanding people have about health care. Their perception of health care has been primarily perceived from watching television or reading a book, or maybe some intimate experience that they had. Health care has been so highly regulated over the years, especially in New York state and very highly regulated by the payers over the years. It’s very difficult for a health-care provider to strive for the best and do the best, and be able to break even. No money, no mission. I’ve always been frustrated with that.
My oldest son had an opportunity to go to medical school. The kid is brilliant. He went to an orientation and they talked about managed care. He came home and said, “Dad, I’m not going to become a doctor. I don’t want you discouraged.” He says, “I’m going to go into computers. I can help people more. I don’t have to worry about somebody telling me how to do my job, not worry about telling me how much they are going to pay me and not worry about having to harm anybody or do something wrong. I’m going to do that.” That always bothered me, but it’s the truth.
It’s very easy to point a finger at a doctor, nurse, or therapist and say they made a mistake. Well, nobody goes to work in health care and tries to make a mistake. We go to work trying to help somebody, but things have turned. The downside of health care is everybody expects it, but nobody wants to pay for it.
KNAUSS: What’s the one main point of differentiation for Franciscan Companies?
SMITH: It’s our culture. It’s more than a job. The people are here because they really want to help people. We’re a family. We treat each other like we’re family. We have our differences, but we’re a family. When one of our family members has a problem, we all have a problem. We do everything in our power to help that individual. We’re the same way with our patients. Our patients get 100 percent of all the resources we have available. That includes our physicians who are medical directors. We have five of them that we utilize to help us with our patients, to make sure we’re doing everything the best we can. I think that the culture is critical. A lot of people say we’re a family. A lot of people say we’re compassionate. A lot of people say we practice what we preach.
KNAUSS: How do you spend your free time?
SMITH: I spend as much time as I can with my wife, my children, and my grandchildren. Everybody knows that I’m a Disney World fanatic and I go to Disney World probably once a month or so.
KNAUSS: Come on, really?
SMITH: Yeah, I really do. I used to have a house down there. Instead I bought a timeshare with Disney World and it has been seventh heaven. It forced me to take vacation time, which I rarely did early in my career. Now I have a place to take my grandkids and I love it. You wake up in the morning and you don’t have to think about what you’re going to do today. You can go to any park. You can go to any pool. You can do whatever you want. You don’t have to have a plan.
About the author: Jeff Knauss is co-founder of the digital marketing agency, Digital Hyve, and has always had a passion for learning about successful executives and their stories. He also is a current board member of Byrne Dairy, the Food Bank of CNY, and Loretto Foundation. For more on Knauss, check out www.digitalhyve.com
The Status of the Regional Economy
[My goal is to] provide an update on economic conditions in the region, and then discuss the issue of regional wage inequality. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. Current economic conditions The Federal Reserve has
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[My goal is to] provide an update on economic conditions in the region, and then discuss the issue of regional wage inequality. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System.
Current economic conditions
The Federal Reserve has pursued an accommodative monetary policy since the Great Recession to facilitate achieving our dual mandate of maximum sustainable employment and price stability. This policy stance has provided support to the economy and helped lower the unemployment rate from 10 percent at the depths of the Great Recession to 4.3 percent currently. Measures of underemployment have also improved considerably and are near pre-crisis levels.
Stronger labor-market conditions are perhaps the best means to improve the economic well-being of most Americans, particularly those who have been struggling and are most vulnerable to economic downturns. Improved job opportunities have helped to support household income growth, consumption, and saving, as well as the housing market. And, as discussed in the Fed’s recent Monetary Policy Report and in Chair [Janet] Yellen’s testimony before Congress, it is encouraging that unemployment rates continue to fall for most major demographic groups, including African-Americans and Hispanics. At the same time, we should remain concerned about those groups, for which the jobless rates remain above the unemployment rate for the nation. Our outlook anticipates a continued moderate growth trend, with some further strengthening in the labor market and an increase in inflation over the medium term toward our objective of 2 percent.
Although job growth in our region has slowed somewhat in recent months, economic activity continues to expand. After outpacing the United States as a whole for a number of years, job growth in New York City is now running a bit below the national average. Over the past year, job growth has flattened out in much of upstate New York, with Albany remaining a bright spot in the region.
While the post-crisis expansion is now the third-longest on record, by historical standards it has been marked by a relatively weak pace of growth, with annual GDP growth averaging just 2.1 percent since mid-2009. Wage growth has also been comparatively modest even as unemployment has declined. In part, this likely reflects the fact that productivity growth has been sluggish compared to historical experience. Relative income differences are likely to get more attention when economic growth is weak and people do not see significant improvement in their absolute income levels. With that in mind, as we consider how to address the issues of income inequality and mobility, we should also consider how to improve flagging productivity growth, because that would help raise the level of household income.
Wage inequality
Currently, we see comparatively high levels of inequality in the labor market in terms of differences in the wages workers earn. This situation has been in the making for several decades. Since the early 1980s, wages have increased more rapidly for workers toward the top of the income distribution than for the median worker, and much more rapidly than for workers toward the bottom of the distribution. Further, this increase in inequality can be seen throughout the entire distribution of wages.
In my view, two main factors are responsible for this pattern of differential wage growth and the resulting increase in wage inequality. First, advances in technology have dramatically changed the nature of work, increasing the skill requirements for many jobs while displacing others. Second, the pace of globalization has accelerated in recent decades, with increased cross-border trade, investment, immigration, and the emergence of global supply chains. Together, these economic forces have contributed to significant job losses in certain sectors, most notably manufacturing. The resulting decline in demand for middle- and lower-skilled workers has resulted in fewer jobs and has depressed wages for many people in those industries. Other, less important factors behind the rise in inequality include the decline in private-sector labor unions and the falling real value of the minimum wage.
At the same time, technological change and globalization have created jobs in areas such as engineering and software development. Demand has been particularly high for knowledge workers, resulting in strong wage growth in certain sectors. All told, the forces of technological change and globalization have contributed to wage inequality by pushing up wages for those toward the top, and stifling wage growth for workers toward the middle and bottom of the wage distribution. As I have said in previous remarks, we need to do a better job of helping those hurt by globalization.
Monetary policy can help support economic growth, but it is much less powerful in addressing the structural factors that underpin inequality in the labor market. That said, understanding the causes and consequences of economic inequality is important to the Fed. We are working hard at producing research, information, data, and analysis so that we can better understand inequality and participate in an informed debate on how to best address it. One significant initiative within the Federal Reserve System is the creation of the Opportunity and Inclusive Growth Institute at the Minneapolis Fed. The institute conducts research to measure, analyze, and make recommendations to improve the economic well-being of all Americans, with a particular focus on structural barriers that limit full participation in economic opportunity and advancement.
Lagging economic mobility
In a free-market economy, some wage inequality is inevitable given variability in individuals’ endowments, skill sets, and education levels. These attributes influence the demand for their services and the wages they are paid. We don’t expect those just starting out to have the skills of more experienced workers.
But, the access and opportunity needed to attain the attributes associated with higher wages may not be uniform — and that is concerning. Inequality reflects impediments to people reaching their potential. These include limits on access to education, credit, transportation, and housing. Such impediments may discourage workers from investing in themselves, and may lead some to drop out of the labor force. We should all work to ensure that people have opportunities to develop their skills, build human capital, and improve their job prospects.
To me, inequality is especially problematic when it reflects and reinforces barriers to economic mobility. Too many parents are increasingly pessimistic about their children’s economic future. According to a recent Pew Research Center survey, only 37 percent of American parents think their children will be better off financially than they are. This is a deeply troubling finding. I believe that income inequality is generally less problematic when it does not impede economic mobility and when economic mobility is high. While the “rags to riches” story has been a popular theme in U.S. history, income mobility in the United States is now notably lower than in many other advanced economies.
Unfortunately, substantial differences in economic mobility exist in this nation. Important research by Raj Chetty and his co-authors — “Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States,” Quarterly Journal of Economics — suggests that upward mobility strongly depends on where one grew up. That is, places themselves seem to have a measurable effect on economic outcomes for children as they reach adulthood. This research indicates that higher upward mobility is associated with areas that are less residentially segregated by race or income, and that have higher-quality schools, stronger social networks, greater community involvement, and stable family structures. Significantly, they find that places with greater upward economic mobility tend to have lower income inequality. This evidence suggests that there is a fundamental inequality of opportunity for advancement that is tied to where people live. Reducing inequality of opportunity is something we should all work toward.
Directions for policy
So, what are some specific ways policy can address inequality and improve economic mobility? While this is a difficult and complex set of issues with no easy answers, I do have a few thoughts. First and foremost, we can improve the quality of education for our most vulnerable citizens. Children who attend better schools and attain higher levels of education have more favorable long-term outcomes, including better job prospects and higher earnings. There are large disparities in the quality of education a student receives, which are highly correlated with where that student lives. We need to look for ways to provide higher-quality education regardless of where people live. Reducing the role of local property taxes in school financing to better equalize school quality across locations is one example.
In addition, education’s benefits start very early in life and are cumulative. While we need to further strengthen primary and secondary education, there is convincing evidence that educational investments in early childhood have especially high rates of return in terms of lifetime earnings and are associated with many other positive outcomes, according to a paper, entitled “Skill Formation and the Economics of Investing in Disadvantaged Children,” by James J. Heckman.
Workforce development is another key policy area that can improve economic mobility and reduce inequality. Because of the swift pace of economic change driven by advances in technology and globalization, we ought to step up efforts to help workers build the skills necessary to adapt to change. This means providing these types of services at the local level. These efforts should include innovative workforce-development programs, coursework, and certifications in key skills that are in demand, and fostering partnerships between higher-education institutions and local employers. Here, I would point to Monroe Community College in Rochester as a model of successful collaboration with employers to create job-training programs that align with current employment opportunities.
Conclusion
The issues of economic inequality and income mobility are among the most important that we face as a nation and as a region. These issues are particularly relevant for our region because the Fed’s Second District is home to some of the highest and lowest levels of wage inequality in the country.
William C. Dudley is president and CEO of the Federal Reserve Bank of New York. This viewpoint article is drawn and edited from his remarks, as presented for delivery, at the New York Fed’s Aug. 10 economic press briefing on the regional economy, held in New York City. Jaison Abel, Jason Bram, Gerard Dages, Richard Deitz, and Joseph Tracy assisted in preparing these remarks.
ICS Solutions Group expanding in Syracuse, coming to Ithaca
ICS Solutions Group, an information-technology (IT) support firm, has moved its Syracuse–area office to a larger space at 6007 Fair Lakes Road in DeWitt. The firm also plans to open an office in Ithaca. ICS expects to add employees in its Syracuse–area office, prompting the move from its previous 4,500-square-foot location at 2518 Erie Boulevard
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ICS Solutions Group, an information-technology (IT) support firm, has moved its Syracuse–area office to a larger space at 6007 Fair Lakes Road in DeWitt.
The firm also plans to open an office in Ithaca.
ICS expects to add employees in its Syracuse–area office, prompting the move from its previous 4,500-square-foot location at 2518 Erie Boulevard East in Syracuse.
It moved to a 6,500-square-foot space in the 34,000-square-foot Fair Lakes Road building. The company moved in on Aug. 4, says Kevin Blake, president and co-owner of ICS Solutions Group.
ICS plans to add between five and 10 new employees at the DeWitt office in the next year, he says. The new employees will include both sales and technical people.
“We felt 6007 Fair Lakes gave us a little more of a professional feel, gave us some more space that allowed us to grow,” says Blake. He spoke with CNYBJ from Endicott on Aug. 14. The company is headquartered at 111 Grant Ave. in Endicott.
ICS employs between 75 and 80 people total, including 17 in the new office in DeWitt.
Blake declined to disclose the company’s annual revenue total, but noted that the firm is “on pace” to grow 25 percent in 2017.
“A big area of growth in the last year has been around digital security with all the compliance, so that’s driven a lot of our growth in the last year,” he notes.
Founded in 1986, ICS services small, medium, and large businesses, providing IT and security services. The firm also handles phone systems, surveillance cameras, and printers.
Blake owns the company along with Travis Hayes, he says, adding that he is the firm’s majority owner.
New Ithaca office
ICS also plans to soon open an office in Ithaca. The office at 700 Cascadilla St. would represent the company’s third location.
In the last month, ICS hired two employees who live in the Ithaca area, so the firm will begin with four or five employees in that office.
“We’ll be looking to add more [technicians] in the next three to six months as we add clients,” he adds.
Blake would also like to open offices in both Elmira and Oneonta, which could happen through acquisitions, but said he couldn’t yet provide more details on that.
“I see the company growing 20 to 25 percent per year and the same percentage of employee growth, so I see us adding 10 to 15 jobs a year,” says Blake.
Customers
ICS Solutions Group services a client base that numbers “somewhere in the 500 range,” according to Blake.
ICS services customers that include Modern Marketing Concepts, Inc.; Wagner Lumber in Owego; Syracuse Behavioral Healthcare; Associated Gastroenterology of Central New York, P.C.; Stafkings, a Binghamton–based recruitment firm; and Matthews Auto Group, which is headquartered in Vestal.
Blake estimates that ICS Solutions Group generates about 15 percent of its revenue from clients in northeast Pennsylvania in communities such as Gowanda, Sayre, and Montrose.
Empire State manufacturing index jumps to highest level since September 2014
After declining in July, the Empire State Manufacturing Survey general business-conditions index soared 15 points in August to 25.2, its highest level in nearly three years. Economists had forecast an August index reading of 10, according to several media reports. The big increase comes after the index fell 10 points in July to 9.8, after
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After declining in July, the Empire State Manufacturing Survey general business-conditions index soared 15 points in August to 25.2, its highest level in nearly three years.
Economists had forecast an August index reading of 10, according to several media reports.
The big increase comes after the index fell 10 points in July to 9.8, after rising 21 points in June to 19.8.
A positive reading indicates expansion or growth in manufacturing activity, while a negative index level points to a decline in the sector.
The results of the August survey indicate that business activity “grew strongly” for New York manufacturers, the Federal Reserve Bank of New York said in its report issued Aug. 15.
The survey found 42 percent of respondents reported that conditions had improved over the month, while 17 percent said that conditions had worsened.
Survey details
The new-orders index climbed 7 points to 20.6, pointing to a “solid increase” in orders, and the shipments index rose slightly to 12.4.
The unfilled-orders index held steady at -4.7.
The delivery-time index was “little changed” at 5.4, pointing to “somewhat longer” delivery times, and the inventories index fell to -3.1, indicating that inventory levels were “slightly lower.”
Labor-market conditions also improved. After retreating for the preceding three months, the index for number of employees rose 2 points to 6.2, pointing to a “modest rise” in employment levels.
The average-workweek index advanced to 10.9, indicating that the average workweek “lengthened.”
The prices-paid index rose 10 points to 31, a sign that input-price increases “picked up,” while the prices-received index fell 5 points to 6.2, suggesting that the pace of selling-price increases “moderated slightly.”
Optimism about the future
Indexes measuring the six-month outlook implied that firms were “very optimistic” about future conditions, the New York Fed said.
The index for future business conditions rose 10 points to 45.2, and the index for future new orders moved up 8 points to 41.3.
Employment was expected to increase “modestly,” though the average workweek was expected to decline “slightly.”
The capital-expenditures index slipped to 11.6, and the technology-spending index dipped to 9.3.
The New York Fed distributes the Empire State Manufacturing Survey on the first day of each month to the same pool of about 200 manufacturing executives in New York. On average, about 100 executives return responses.
How do we debate something we don’t know?
A few humble thoughts on the debacle known as Obamacare, including those of hope. Yes, hope. Indeed, the problems of Obamacare are too many to list. But here is one that stands out. Unfortunately, few of us can understand the damned thing. For proof go to healthcare.gov and find the glossary of terms used in Obamacare.
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A few humble thoughts on the debacle known as Obamacare, including those of hope. Yes, hope.
Indeed, the problems of Obamacare are too many to list. But here is one that stands out. Unfortunately, few of us can understand the damned thing.
For proof go to healthcare.gov and find the glossary of terms used in Obamacare. Start in the As with Accreditation Actuarial Value. End in the Zs with Zero Cost Sharing Plan.
Obamacare has hundreds of terms you and I don’t understand. We are not sure we know what health-care exchanges are and do. We sure don’t know about CSRs — and how they threaten to destroy health care. If they are not fed emergency reimbursements.
Meanwhile we’ve got to broaden exemptions to individual mandates. And raise the threshold of employer mandates. And don’t forget the good ole’ Stability Fund. Let’s hear it for single payer.
Are you still awake?
Two questions: We don’t understand Obamacare. So how are we supposed to intelligently debate it? And do you truly believe your Congressional representative understands this stuff any better than you do? Nancy Pelosi sure doesn’t.
Another thought on this mess has to do with deceit. We had politicians promise to repeal Obamacare. They solemnly promised voters before the vote to get rid of it. Now, safely in Congress, they vote to keep it. They can call their votes whatever fits in their press release. I call it deceit. I call their promises lies and I call them liars.
They belong in the Congressional Hall of Shame. Which is a pretty crowded place. It is packed with recent inductees who promised to reform immigration. And to simplify taxes. And who ignored these subjects after elected. They lied to voters, period.
And Congress people wonder why the public rates them below skunk dinners?
Is there any hope in this fiasco? The answer is yes. Perhaps, that surprises you.
Used to be major legislation received votes in Congress from both sides. The “no” votes came from the extremes on the left and right. The big laws were fashioned by both sides. That is, by the middle. That gave them a better chance of success long-term. The civil rights legislation is the best example of this. (One party now claims credit for the laws. Truth is, both parties created the Civil Rights Act.)
Obamacare was written totally by the left. It did not receive a single vote from Republicans. The law was rammed through Congress on a procedural trick. Zero input asked from Republicans. Zero given. (Actually, there was a request. But it was a PR gesture. Input was ignored totally.)
The attempt to repeal and replace Obamacare was written totally by the right. It did not get a single vote from Democrats. In other words, Congress went from one extreme zig to another extreme zag.
There is a golden opportunity now to drive a tank called “cooperation and compromise” down the middle of this divide. These days some lawmakers are in fact trying to discuss health care with their opponents. They could use a boost from the president.
If the president was politically savvy, he would see the opportunity. He has hinted that he does see it. Will he act on it? We will have to wait and see.
President Lyndon Baines Johnson (LBJ) would by now sprawl across the middle. He would bargain and swap horses. He would promise goodies to the left and right. He would entice pols to legislate together. Emphasis on “together.”
“There are no problems we cannot solve together, and very few that we can solve by ourselves.” LBJ said.
The opportunity is there, if President Trump will seize it. If he did, he might break the logjam. We might begin to see a lot more cooperation between the factions in Congress on other matters.
Hope springs eternal.
From Tom…as in Morgan
Tom Morgan writes about political, financial, and other subjects from his home near Oneonta. You can write to Tom at tomasinmorgan@yahoo.com. You can read more of his writing at tomasinmorgan.com
Craft Beverages Given More Support in State Law
The craft beverage industry is among the fastest-growing industries in New York with nearly 900 licensed manufacturers in the state. Part of this growth has to do with the state’s focus in recent years on trying to make it easier for craft-beverage producers such as beer, cider, and liquor producers to do business in New
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The craft beverage industry is among the fastest-growing industries in New York with nearly 900 licensed manufacturers in the state. Part of this growth has to do with the state’s focus in recent years on trying to make it easier for craft-beverage producers such as beer, cider, and liquor producers to do business in New York. Many of the changes focused on easing financial and regulatory pressures in an effort to help craft-beverage producers enjoy the same benefits that wineries do.
This year, the state legislature built on this progress and passed legislation that would exempt from sales tax tastings at licensed beer, cider, and liquor producers. Under current law, only wineries are eligible to receive the sales-tax exemption. This legislation would help craft-beverage producers to market their products without consumers having to pay New York State the additional tax.
In 2013, New York put into effect the Farm Brewery Law. The law created a farm-brewery license, which enables craft breweries to operate similarly to wineries. The law was modeled after the 1976 Farm Winery Act, which spurred the growth of wine production in this state and helped create the Finger Lakes Wine Trails and other small wine trails throughout the state which bolstered tourism. The increase in tourists also benefits surrounding businesses such as hotels and restaurants.
Like with the Farm Winery Act, with the farm-brewery license, brewers do not need an additional permit to serve beer by the glass. The license also permits farm brewers to make cider to be served by the glass. Brewers may sell their products at restaurants, conference centers, inns, bed and breakfasts, or hotels the brewer owns in addition to tasting rooms and farmers’ markets. Selling related products such as beer-making equipment, souvenir items and food at breweries is also permitted under the new law. The law also provides tax breaks and relaxes some regulations and fees for breweries.
While the law was designed to increase demand and promote locally produced beverages, it was also created to support farmers. To receive the farm-brewery license, brewers must use locally grown produce in their beverages. By 2018, at least 20 percent of the hops used to make beverages and 20 percent of all other ingredients used in the product must be grown or produced in New York. By 2024, no less than 90 percent of the hops and 90 percent of all other ingredients must be grown or produced in the state in order for breweries to maintain their license. Not only will this policy help support local agriculture, but it will also help New York create and market a distinctive flavor. Interestingly, Volney is home to the largest barley-malting operation in the eastern U.S. — an ingredient required in beer. The 1886 Malt House is located at the former Miller Brewery plant and is on track to supply more than 2,000 tons of barley malt each year.
William (Will) A. Barclay is the Republican representative of the 120th New York Assembly District, which encompasses most of Oswego County, including the cities of Oswego and Fulton, as well as the town of Lysander in Onondaga County and town of Ellisburg in Jefferson County. Contact him at barclaw@assembly.state.ny.us, or (315) 598-5185.
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