Why You Don’t Have a Traditional Full Time Job and Never Will

The economy has changed in some very fundamental ways in the last thirty years. It has been a gradual process, too slow to make sense as it was happening, but now there has been enough change that a few things seem obvious, at least to me.

The Industrial Revolution is over. Industry was too dirty and too dangerous, so we taxed and regulated it until it moved to Asia. Did you see what the air in China looked like during the Peking Olympics? That is what air in the Steel Belt used to look like in the 50’s and 60’s. Clean, safe factories are too expensive — we refuse to pay for the products made in them, so they went to places where labor is cheap and taxes are low. Blame whoever you like — greedy business people, cheap consumers, the Democrats, the Republicans — it does not really matter because industry is gone and it is not coming back.

With them have gone unions, and they are not coming back either. Unions work only with the threat of strike, and strikes are effective only when work revolves around the needs of a machine, (with an exception I will get to in a minute). The thing that made unions powerful was the threat of workers refusing to tend to the needs of machines that were all located more or less in one place. Service work does not lend itself to unionization because it is decentralized and does not involve machines. Unions are a relic of the age of industry and both are now irrelevant.

The end of industry has effects far beyond manufacturing. Consider how factories were organized. At the end of the 19th century, hundreds or sometimes thousands of people had to coordinate their efforts to make a factory run. Aside from armies in times of war, never before had there been any need to organize such large numbers of people. How did the managers of factories do it? By creating what we now call bureaucracy. The idea was that everyone had a specialized job, and those jobs were done according to rigid procedure. Each worker came to work at a precise time and tended to a specific machine according to an explicit procedure. Deviation from process or procedure was grounds for disciplinary action.

Notice that the only places where unions survive with any vitality are in government? That is because government uses bureaucracy as its organizational model just like factories did. Just about anyone who is paid with tax dollars — social work and defense contractors included — work in bureaucracies. But bureaucracies are relics of the 19th and 20th century. They are fading away in the business world because they are no longer relevant in the internet connected global economy of the 21st century.

Businesses today do not normally organize themselves on a bureaucratic model. Today they identify a core competency — the main thing they are really good at — and outsource the rest. Human resources, accounting, supply chain management, tech support are all contracted out to companies that specialize in those things as their core competencies.

I see a lot of people arguing about outsourcing, but I’m not so sure it is a bad thing. It gives us a chance to cash in on things we love or are really good at. At any rate, outsourcing is another one of those things that is not going away, so we have to learn to turn it to our advantage as best we can. I guess I tend to think about how to make a living in the economy that exists rather than to make judgments about whether it is good or bad.

However, I think it can be useful to think about the events and forces that created the economic situation we are in because understating those forces might give some insight to where we are going and what we need to do to make a living when we get there.

At the end of the Second World War, the industrial world was destroyed. Countries that had been emerging as world economic leaders were in ruins. That meant that anyone who needed anything had to buy it from the United States. We built our incredible country to a large degree on the backs of rest of the world rebuilding from the war. (Let’s not forget the Marshall Plan, however. This was not robbery. More like indentured servitude, but even that came to an end.)

By the 1980’s the rest of the world caught up and we were competing with the losers of the war. Japan made better cars, so we bought them and US auto manufacturing began its long death spiral. The few remaining US car manufactures are not really US at all — they are international consortiums that assemble what was manufactured somewhere else. Zenith was the last domestic electronic manufacturer, (sold to Korean firm in 1995), and now just about all our electronics comes from Asia. China now makes all the odds and ends we need for daily life and we gladly buy it at Wal-Mart.

Remember all those years we felt guilty about exploiting Third World countries? Guess what! They are not Third World anymore. We live in a global economy and now people, businesses, and countries on the other side of the world are as economically relevant as different states were in the past. When I graduated from college in 1980, it was a big deal for classmates to move to another state to start their careers. When I earned my MBA in 2003, some of my classmates were considering going to India or Asia to (jump) start their careers.

As those other countries increase their share of world wealth, ours declines. I do not think that is a huge tragedy; it is just a sign of changing times. Things are evening out in the worldwide economy, but this happened once before. Things are similar to where they were at the beginning of the 20th century, with the United States competing toe to toe with Europe. Now, of course it is not just Europe, but Asia as well. We are no longer the undisputed economic super power. Things are averaging out, and our standard of living is averaging out towards that of the rest of the world.

The United States is turning into a two-class society, with people doing either pretty well or not well at all. We have known that the middle class was declining for a long time. Now we are able to see the decline for ourselves because we are living though it. Why are we acting surprised? It’s not as if we have not been hearing about the decline of the middle class for the last thirty years.

For all these reasons, (and plenty more), the world is not what it once was. The things we grew up believing in and depending upon are no longer relevant. For the last twenty years or so there has been such a glut of educated and experienced workers that education and experience do not count for much. Employers can hold out for exactly what they want — no more and no less. Being overqualified is just as big a jobstopper as being under qualified. In 2006 12% of the people living below the poverty level in Tucson, (where I live), had at least a bachelors degree. Nationally, men over the age of 40 — the age were work experience is supposed to pay off — had longer spells of unemployment than those under 40.

It used to be that a professional was a doctor, lawyer, or maybe an engineer. Someone who was so highly educated that they could work autonomously. Now home health aides in my town are called “Home Health Professionals”. Hairdressers call themselves professionals. So what is a professional? Another concept that has become an anachronism, I guess.

So what to do? We can burn up the internet arguing over whether UP is elitist because it has “professional” in its title, even thought the concept of professional is so diluted it means little. We can hope for the resurrection of unions, but people have been waiting centuries for that other Second Coming and it has not happened yet either. We can demand the government save us, but until we start making money and paying taxes government cannot do much, (not that it ever could, even when it was not a trillion dollars in debt and on the verge of bankruptcy).

Here is what I think.

In one way, nothing much has changed. If you want the world, or the country or the neighborhood to be a better place you have to start working to make it happen. What has changed, however, is that nobody is going to give you a job. Traditional jobs are quickly becoming another relic of the past. The answer is obvious — you have to create your own job. In that way things are much like they were in the 19th century before huge factories and bureaucracies created jobs. Our ancestors in the 19th century were largely entrepreneurs. You probably have shopkeepers, farmers and trades people in your family history, just as I do.

Today we live in a global economy connected by the internet. What can you do on a computer that would be of value to your neighbor? And remember, with the internet your neighbor might be in Boise, or Calgary or Ft. Lauderdale.

No, it will not be easy. So what? Our parents and grandparents did not find the Depression, or the Dustbowl or World War Two easy either. Thank God we are not facing challenges of that magnitude.

I certainly do not have all the answers — or for that matter even a few answers. However, one thing is certain. We will not be able to work our way through the challenges of the 21st century by reinventing the 20th. We need to adjust our thinking to match the reality of the times. But first we have to accept that reality.

Math Anxiety is Contagious: You’re Giving It to Your Kids. Here Is How to Stop It.

We’re in big trouble.

Among industrialized nations, Americans have the worst relationship with arithmetic and math. According to a 2015 Pew Research study, in a field of 71 countries, American 15 year olds placed 28th in math scores.

Those 15 year olds grow up to be American adults who cannot do simple math.

A research study appearing in the journal Education finds that 71% of Americans cannot calculate gas mileage, 58% cannot figure a tip and 78% do not have the skills to compute loan interest.

How do people manage these routine calculations when they have no idea how to do them? Researchers find that they simply guess, then “pad” their answer. In other words, they overpay. Imagine how much money is lost by avoiding learning how to do these simple calculations.

Babies only a few months old have basic mathematical skills, but by the time these babies are old enough to enter college 80% will report math anxiety to researchers studying the topic.

How can this be? What is causing this epidemic of math incompetence?

Research shows that it is us — parents and teachers.

In one sense, math anxiety is contagious — parents and teachers who suffer from math anxiety easily pass it onto their children and students.

For example, researchers writing in the Journal of Cognition and Development found that parents suffering from math anxiety tended to have children also suffering from math anxiety — but only if parents helped the children with their homework. The more the parents helped, the more severe their children’s math anxiety became!

Some researchers find that more than half of people reporting math anxiety recall it beginning with a specific incident causing public humiliation. These were things like going blank while standing at the chalkboard in front of the class, being called dumb or stupid when having difficulty with a problem, or having a teacher or parent turn their back and walk away in frustration when trying to help.

Experiences like these result in “social pain”, the same sort of pain one experiences after a romantic break up, suspension from work or school, or when bullied by others.

When social pain related to math happens often enough, anything associated with math, such as numbers, formulas, even the sight of a math book, generates feelings of fear and dread. Just thinking about math brings on the fear response. When that happens, our brain goes into defense mode, or threat response. One of the major features of the threat response is hypervigilance — scanning the environment with all our senses looking for the source of the threat.

Normal brain function stops at this point, and one of the first things to go is working memory.

Working memory is our ability to hold discrete bits of information in our conscious or short-term memory. Most cognitive researchers believe that we can hold no more than four numerical digits at one time in our working memory.

This is why telephone companies present ten digit phone numbers as two groups of three digits and one of four digits, and financial institutions break up account numbers into groups of four. By creating “chunks” of data points, we combine numbers into portions we can keep in our conscious memory.

We use working memory when doing mathematical calculations by holding numbers while we attend to calculations. For example, when multiplying 23 x 2 in our mind we first multiply 2 x 3 and hold the product of six in our working memory while we then multiply 2 x 2 for a product of 4, then put the four and six together for a solution of 46.

In his fascinating book The Emotional Brain, neurologist Joe LeDoux explains what happens in our brain when we experience anxiety. When an individual encounters a situation — say, seeing a math quiz — working memory holds that image. Simultaneously it searches long-term memories looking for a match.

If strong negative emotions are associated with that image, the amygdala — the brains fear center — activates. Instantly a number of neurological events occur. Neural circuits to the Executive Functioning area of the brain in the prefrontal cortex activate and working memory immediately shifts to assessing the environment for threats. At the same time, the amygdala sends a signal to the thalamus releasing stress hormones initiating the fight or flight instinct.

Imagine working an algebra problem while trying to keep your fight or flight response under control!

Anxiety compromises working memory so that even the most basic arithmetic becomes a huge challenge. It is important to remember that these things are happening in a social context — most commonly in a classroom in front of an audience. The fear response in this setting is exactly the same fear response we experience when we think we are going to be in an auto accident or victim of an assault.

Neurologist Matthew Lieberman has written a wonderfully informative book about social relationships and the brain called Social: Why Our Brains are Wired to Connect. Leiberman studies how the brain processes social pain, the discomfort that comes with rejection by others.

In a fascinating series of fMRI experiments Lieberman finds that the same brain structure involved in processing physical pain also process the pain of social rejection. Incredibly, he found that over the counter pain remedies, (that is, Tylenol), diminishes the sensation of social pain, measured by both subjective reports from participants and the objective measures of brain activity.

Lieberman tells us about Roy Baumeister’s experiments examining the relationship between social pain and cognitive functioning. All Baumeister did was give some subjects a fake assessment indicating they would never marry and would likely have few friends and then use IQ and GRE questions to detect changes in intellectual functioning. Subjects led to believe they would be socially isolated in the future scored about 20% lower on IQ questions and 30% lower on GRE questions than subjects who did not receive the prediction of social rejection.

If a subtle suggestion has such a dramatic effect on cognition imagine what years of math anxiety must have. That gives an idea of how powerful the negative experiences reported by people with math anxiety can be. Isolated episodes of embarrassment and humiliation associated with arithmetic can have devastating effects on the ability to do math many years after they occur.

The idea that social pain and physical pain are so closely related is probably the most important aspect of understanding people with math anxiety. Procrastinating and rushing though calculations are just ways to avoid the pain, not signs of character flaws like laziness or apathy.

Procrastination and rushing through math problems are the two biggest reasons for poor math performance and most common behaviors of people with math anxiety. These are also the two things that teachers report the most frustration in combating. When you think about it from the point of view of the person with math anxiety they make perfect sense

For them math is painful. It hurts. Exposure to any sort of math related activity dredges up memories of social pain — verbal abuse by a teacher in front of classmates, or the very public humiliation of going blank at the blackboard.

So how can we help people struggling with math anxiety?

One way is to educate our children and students about common myths about math.

Math Myth #1 Math Success Requires High Intelligence

We try to instill confidence by telling learners they are smart when they answer a math question correctly. Although teachers and parents have the best of intentions this feedback easily leads to the learner thinking that they are dumb the next time they get an answer wrong. Every wrong answer reinforces the idea that “I’m really dumb at math,” and sets the learner up for more failure.

Instead of associating math skills with intelligence, and lack of math skills with lack of intelligence, emphasize practice and study. When students get a correct answer, emphasize things they can control like study and practice, not something out of reach like innate intelligence.

“Right! Good job. You must be practicing. I can always tell.”

“Math is like everything else — ten percent theory, ninety percent practice.”

“Don’t practice until you get it right. Practice until you can’t get it wrong.”

Myth #2 You Must Never Be Wrong

People with math anxiety have no tolerance for making mistakes. They berate themselves when they forget to carry a three, or are off by one decimal place. They see success and failure as the only possible outcomes of a math question. In their view, there is no other option, so every mathematical operation is an opportunity for fleeting success or plumbing the depths of new humiliations.

Teachers and parents can help learners overcome this myth by not allowing them to fail. Always find something positive in every failure. Find something to praise in every incorrect answer.

“So what if you are off by a decimal point? You did the computation correctly, and that is the hard part. Putting the decimal point in the right place is easy next to computing a formula. You’ll figure it out.”

“What do you mean you’ll never get math? Two weeks ago, you hardly knew what a fraction was and now you’re multiplying them! That’s pretty impressive even if you are making mistakes.”

“Every time you get a wrong answer you also get the opportunity to learn how not to repeat the mistake. It’s OK to make more than one mistake before you learn how to get it right. How do you suppose you learned to walk?”

Myth #3 You Must Be Fast

No, you don’t need to be fast. You need to be methodical. Do the problem, and then do the proof. The entire reason for doing the proof is to see if the original answer is correct. If it is not correct, look for an error in the equation and calculations.

Being in a hurry lends itself to feelings of anxiety, when the key to doing well in math is to be relaxed. There is no rush about this. Encourage learners to go at a slow, even leisurely, pace. This introduces the idea that math can be fun.

Also, it is OK to take breaks, whether they be short excursions to a social network site or a short walk. Our brain is like any other part of our body and gets fatigued with use. Encourage learners to study hard for no more than about 20 minutes at a stretch. Forcing yourself to study for longer than this just makes learning that much harder.

Teachers should avoid timed tests. What do times tests measure, anyway? Do scores reflect math skills or are they a better measure of anxiety levels and frustration management? Timed tests have no relationship to the challenges of math in the real world, and do more harm than good.

Timed tests do little more than create anxiety and lower scores. Avoid them and preach the virtues of a slow and methodical approach to math problems.

Myth #4 You Know How Good You Are By Comparing Yourself to Others

Researchers find that learners brake down into one of two orientations, a performance orientation and a mastery orientation.

Learners in the performance orientation measure their performance by comparing themselves with others or against set criteria. Learners with performance orientation tend to suffer from math anxiety more often and to greater severity than learners with a mastery orientation do.

Learners with a mastery orientation are motivated to learn by the intrinsic value of learning or for personal satisfaction of knowing useful skills.

Formal education evaluates learners exclusively from a performance perspective. IN this traditional view, students compete with one another and against set criteria. This approach almost guarantees that a good portion of students will face huge challenges in learning.

The good news is that parents and teachers can easily address this issue by helping learners to adopt a mastery orientation. Emphasis needs to focus on improvements in over time for individual students. The message to transmit is that the learner is not in competition with students that are more skilled or against unattainable standards.

Myth #5 Poor Math Skills Are a Sign of a Learning Disorder

The only proven learning disorder affecting math skills is dyscalculia. People with this condition often do not realize that a number represents how many things are present. They may not understand the concept of one quantity being larger than another is, or that the number 5 refers to five different things.

Dyscalculia is very rare. People who think they have it most likely have garden-variety math anxiety. The only way to be sure is through comprehensive testing. However, if a learner shows they can improve their skills even minimally they likely do not have a legitimate disability.

Study and practice are the only way to learn math, and the more fun and rewarding teachers and parents can make it the better learners perform.

A few closing tips:

Celebrate accomplishments, no matter how small.

Emphasize the importance of study and practice over innate intelligence.

Discourage long uninterrupted study sessions. We are good for only about 20 minutes of intense study.

Encourage a mastery mindset. The learner is competing with themselves, not other students, or a clock.

Check out the books mentioned in this article at Amazon:

Social: Why Our Brains are Wired to Connect

The Emotional Brain

Five Things I Learned From The Secret Life of Fat

Sylvia Tara, PhD has given the frustrated world of struggling weight losers a bushel of gifts in her new book, The Secret Life of Fat.

Like many of us, Tara has struggled with keeping fat at bay most of her life. The experiences she describes are the same ones that I have been facing my entire adult life. Through years of experimentation, I find that I have to keep my caloric intake around only 1400 calories in order not to gain weight. Panicked friends make a habit of telling me that I’m starving myself and no good can come from eating so little.

It turns out that Tara has come to the same conclusion about her weight and maintains the same daily input that I do. She is a trained biochemist, which vindicates the ways I have been keeping my fat at bay all these years. It’s also one of the reasons Tara is so good at explaining the latest research on fat and diets in a way that lay people can understand.

Here are five “takeaways” from The Secret Life of Fat:

1. Eat the Pulp, too.

Have you noticed that the Juicing craze has lost its luster? The juices of most vegetables are loaded with naturally occurring sugars that are absorbed right through your intestinal wall and into your bloodstream, which carries it to your pancreas. The pancreas reacts to this onslaught of sugar with a ton of insulin. The insulin converts the sugar into fats, including dangerous triglycerides, that ends up sitting around your vital organs.

It turns out that the pulp of most fruits and vegetables is fibrous, and fiber absorbs water. If you eat the whole food as nature intended the fibrous pulp releases its natural sugars only gradually as it travels through the intestines, avoiding the shock to the pancreas because that is the natural way for the body to digest sugars.

Interestingly the idea of eating as nature intended applies to polished rice. Polished rice has the external coating of rubbed off making the carbohydrates inside each grain of rice easier for your body to digest quickly. Since our bodies process carbohydrates into sugars almost immediately, eating rice that without the external coating polished off is probably not a good idea.

2. Sleep Well

After reading Tara’s book, I was surprised to learn that my life struggles with insomnia contribute to the challenge of losing fat. It turns out that lack of hormones have a lot to do with the way we experience feelings of fullness and satiation. Lack of sleep lowers the hormone leptin and increases ghrelin, a combination researchers find that leads to metabolic changes leading to overeating and obesity.

Additionally, being awake late at night is associated with eating and drinking. For one thing, there is not a lot to do at two or three in the morning and the temptation to eat a little something can be overwhelming. If you find yourself awake try reading or writing and avoid computers and TV — the wavelength of electronic displays tends to keep us awake.

Also, there is a certain logic in drinking alcohol to force sleep, even though it is notorious for putting on weight. Yes, alcohol is a depressant and will put your to sleep, but it won’t keep you asleep unless you drink until you pass out. Drinking alcohol to go to sleep just ensures that you will awake up in a few hour later more wide-awake than ever.

The iron clad rule must be no eating or drinking, (aside from water), after dinner.

3. Intermittent Fasting

Fasting will result in weight loss, and that is no surprise. After all, fasting is simply not eating for an extended time. When no calories are entering the system there is nothing to be turned into fat, so even the most modest of everyday activities results in fat loss.

The problem is that extended fasting is not a good long-term fat loss strategy. Not eating for days signals your metabolism that times are hard and your body reacts by hanging on to every bit of nutrition that comes its way. You might be encouraged when you see you weigh less while you are fasting, but as soon as you start eating again — no matter how gradually — your body will turn everything it possibly can into fat.

What about intermittent fasting, that is, eating for only portions of the day? This weight loss strategy is quickly catching on and has the backing of nutritional research. The idea is to fast only for portions of a day.

For example, your daily fast might begin right after dinner and last for 18 hours because you skip breakfast. By skipping breakfast, the “eating day” lasts only from about noon to six or seven in the evening.

Not eating anything for 18 hours might sound like a daily dietary water boarding session, but it is not that bad. It is simply extending the “fast” we naturally experience while we are sleeping.

And…well…there is a trick that makes it very easy to integrate intermittent fasting into your life.

For some reason it is a lot easier to fast for 18 hours a day if your body is not processing loads of carbohydrates. I’m not sure why this is, but I found that I could routinely fast on a daily basis only when I had already reduced carbs and replaced them with oils and fats.

This brings a word of caution. Avoid the temptation of eating carbs after you have successfully reduced them in your diet. Like addictive drugs, carbs start a cascade of biochemical changes that are an invitation for fat to return.

4. Mind your Biome

Most people have a vague idea that their intestines digest food, extracting nutrients and distributing them throughout the body while anything that unusable turns into waste. That the basic idea, but there is a lot more to it.

Think of the digestive process as one huge biological process operating at the level of cells and hormones. Our intestines are filled with a colony of bacteria that digests our food. This colony was not there when we were born — viruses and bacteria from the environment created it when we started eating solid food when we were babies. (This is why the stuff that fills a diaper does not smell bad until after weaning.)

We do not naturally have enzymes that can break down complex sugars called polysaccharides, but we pick them up in the food we eat as babies. These polysaccharides are a kind of bacteria that convert complex plant based sugars into simple sugars our digestive system can turn into energy.

You might think that your skin or lungs are the biggest organ exposed to the external environment, but it is actually your digestive tract. Our digestive tract is about 30 feet long and averages a little more than an inch in diameter. I did the math and was astounded at the surface area. The number I got was so impressive I will not share it here. You do the math. (Hint: about the same square footage as a “tiny house”.)

One last biome related surprise courtesy of Sylvia Tara:

As amazing as it sounds, recent nutritional research finds that a virus found in chickens can cause the biome to change resulting in obesity. Yes, it is possible to become obese by catching a particular virus from a chicken.

5. Schedule sleep, exercise and meals

If you have read this far it should now be obvious that eating whatever seems appealing no matter what time of day with no regard for future consequences is a great way to gain weight and eventually become obese. Creating and maintaining structure is vitally important if we want to stay healthy and control weight.

There is an interesting psychological aspect to creating a daily structure around eating, nutrition and exercise. Many people object to the idea of creating structure because of issues of control — they feel as if they lose control over their lives if they follow a strict routine.

However, their lives are already out of control. If they had control of their lives, they would not be doing the things that make them fat and uncomfortable. Creating structure is not lack of control; it is a method of exerting control over our bad habits, poor decision making and impulsive behaviors. It seems to me that is the definition of control.

Creating structure is just a matter of creating habits, and habits are easy to establish. Just do the same thing every day for a month and a habit will appear. Go to bed at the same time every night, eat meals at the same time every day, and establish an exercise regimen for the same time every day. Do that for a month and you have a structured routine.

Of course, routines always get interference, but a well-established routine can weather occasional interference.

Develop an evening routine before going to bed as well. Repeat that evening routine every day and you will find sleep comes faster and deeper. We all have the occasional sleepless night, but we can usually power through the next day.

Eat only at meal times, (you are supposed to be hungry right before lunch or dinner), get exercise at the same time every day. It is a good thing to incorporate change into the routine as well. Maybe you will do cardio and strength training on alternate days, or eat fish on Mondays and Fridays. We are omnivores and that means variety in all things.

Buy it at Amazon: The Secret Life of Fat

Two Questions You Should Always Ask About Statistics in the Media

There are two questions to ask whenever you see a statistic.

First, what exactly is being measured? The statisticians crunching numbers know what they are measuring, but the people repeating the numbers know what they want to promote. And promote they do! There seems to be a lot of temptation to misrepresent data promoting political and social agendas.

For example, we are repeatedly told that the unemployment rate is less than five percent. Politicians and pundits are beating us over the head with this number and arguing over which President should get the credit.

The only thing is, it doesn’t “feel” like full employment. I do not know anyone taking a loan for a new car, buying a bigger house or signing a lease on a new apartment. According to polling company Rasmussen 46% of us know someone out of work. Although that is less than it has been in the past, it does not support the idea of full employment. What can we do to find the truth?

This is where the first question comes in…

Question #1:

What exactly is Being Measured?

In other words, what does it mean to be employed?

According to the Bureau of Labor Statistics (BLS), people are employed if they work at least 15 hours a week. But they don’t have to make a living wage, or even be paid.

For example, a stay at home mom might help her entrepreneur husband keep the books on weekends, but she is not paid for it. However, because she benefits from her work, she is considered employed.

Likewise, contingent workers cobble together a living from as many gigs as they can find and make up about 40% of what the BLS considers employed, but they do not generally make a living wage.

We tend to think that being employed equals making a living wage, but that isn’t true anymore. A better measure of economic health of the average American might be the midpoint of all annual W-2 income. That number has hovered around $30,000 for years.

Question #2:

How are they collecting their numbers?

The way numbers are collected means a great deal.

For decades, the education industry insisted that the more degrees one has the more money one makes. But wait a minute! I work at a community college where all instructors are required to have at least a master’s degree, but more than half are part timers because they cannot find a full time job. This is a well-known crisis across the country that has been getting a lot of attention. Also, the Department of Education (DOE) follows bachelor’s degree graduates for years and tells us that about 30% are unemployed or completely out of the labor force four years after graduation.

That does not sound like more education necessarily means a better job or more income.

How can this be?

Just a little sleazy data collection…

The education industry surveyed companies in which people with advanced degree worked. Sure enough the longer these people when to school the more money they made. But these people were already working. The graduates who could not find jobs are uncounted. The education industry does not want to know how many had to take low paying jobs because they could not find jobs for which they studied.

Think about it. Do you know anyone with an advanced degree working in a job that does not require it? The roofer who fixed a leak in my roof had a master’s in public administration and the tech who hooked up my high-speed internet had two masters’ degrees. The education industry will never detect those people because they looked only at jobs requiring an advanced degree.

The DOE can tell us because it follows students for four years after graduation. That is a longitudinal study and it is the most accurate method of detecting cause and effect.

What do they find?

in 2012, four years after graduation, 15% of bachelor degree holders are unemployed, about half suffering long-term unemployment and the other half short-term unemployment. The other 15% have left the labor force, either going back to school or finding other ways to get by without a job.

You probably have never a funny book about statistics. Here are two — Drunkards Walk and Naked Statistics. I promise they will make you laugh out loud at the same time that they explain how statistics are manipulated and misinterpreted.

Wage Equality in the Wake of the Great Recession

It is the 21st century version of Plato’s maxim that owners should make no more than five times the wage of their lowest paid employee. We are quickly coming to the end of concepts like wages and hourly pay. The problem is that things have changed so much it’s hard to understand how things now work, not to mention how to create workable alternatives.

In my view, the Great Recession was more than just the housing bubble bursting — it signaled the last gasp of the industrial economy. Home building was the last labor-intensive assembly line to go out of existence, and there was no other path forward than leaving the industrial age behind. However, that means that all of our financial measures are no longer relevant, (or maybe relevant in a different way than they had been).

For example, productivity had always meant the degree to which workers could make their efforts more efficient. After 2006, it measures the degree to which machines are replacing humans. A job used to mean a 40-hour workweek and financial security. Now the average workweek is only 33 hours and about half the employed in the United States receive some sort of government assistance.

One of the most glaring casualties of the end of work is the end of traditional jobs. About 40% of all jobs are now contingent — that is, part time and/or short duration. Workers work only when there is enough work and are often paid piecemeal, not hourly. There are now fewer people in the labor market then there were in the 1970’s when women began entering the labor market.

One of the consequences is that full time jobs go largely to people who already have full time jobs. Recent studies from the Fed found that employers use other employers to vet job candidates, that very few people over 40 are ever hired, and that when unemployment lasts more than six months candidates are very unlikely to get hired. The number of good paying jobs has not expanded for years, so there is no need for large scale hiring; workers lucky enough to have a good job circulate within the job community.

So how does Wage Equity work when there is no work to generate wages? How will that affect the millions of people who have created a way to survive without a job? (Like going on disability, staying home to take care of kids, or like me, going to school forever.)

Wage Equity runs into complex tax issues, also. Under the new tax reform act the highest tax bracket for corporations is now 21% for firms claiming over $15 million in profit. However, up to that point there is a sliding scale and “percentage plus” calculation. To make things even more complicated tax attorneys and accountants have a lot of latitude in how they structure their tax reports.

For example, salary compensation is considered COGS, (Cost of Goods and Services), a deductible expense and therefore “free money”. Additionally, CEOs and others often accept stock option contracts — the chance to buy corporate stock at some point in the future at current prices. These can be very lucrative, but quite challenging to assess as compensation. I’m not even sure if stock options are considered compensation in the same way that salary and bonuses are.

This brings up the entire issue of “ ” class=”markup–anchor markup–p-anchor” rel=”nofollow noopener” target=”_blank”>financialism” — that is, the trend of large corporations to abandon their core service or product business model and switch to making profit by manipulating their financial activity. This is what led to the recent General Motors lock debacle. At GM the “finance guys” have pushed the “car guys” out of influential management positions; GM still makes lots of money, but most of it is from increasing stock prices rather than increasing sales or profit margin. Design and production mistakes are on the rise throughout corporate America as a result.

We are seeing a lot of this in the medical and health insurance industries. You may have noticed the surge in M&As in the health insurance and pharma industries in the wake of ObamaCare. Tons of tax dollars flooding the market, combined with guaranteed profits turned companies like Alergin and Health Net into finance companies instead of health or drug manufactures.

Something similar is happening in the housing industry involving the creative manipulation of debt. Private equity companies like Blackstone will put up $10 million in real estate as collateral for a $100 million loan. They use the loan to buy property of a distressed real estate company or a block of repossessed homes, and then lease the property to either the original owners or property management firms who collect rent. Then they claim the debt as a business loss and amortize it over a period of years to avoid taxes. (That is shadow banking by the way.) Figuring out how much senior manager’s benefit from that kind of arrangement, especially given the variable meanings of salary and compensation is a lawsuit-filled nightmare.

We live in an era that does not need millions of workers. Computers and software have replaced people. Imagine — For the first time in history, there are more people than there is work to go around! There is so much excess labor that its value has dropped to nothing. The median W2 wage is only $30,000, and that follows year’s long decreases following the collapse of the industrial economy in 2006–08. We might be heading for an economic culture like that of the Middle Ages — impoverished serfs working at the will of elites who own all the wealth.

Maybe the solution is Universal Basic Income. If we get rid of all the social service bureaucracies sucking up wealth and not passing it onto their clients we can afford to give everyone — yes everyone — enough money for food, shelter and basic health needs. Finland is experimenting with this idea, as are a few states here in the US. Eventually the entire tax bill to support such a scheme will come from the wealthy elites who write the laws. They might see this as a good business decision because the last thing anyone wants is a population of idle hungry –often the fuel for social upheaval.

The End of the Industrial Age: What Next?

The old economy gave its last gasp in 2008 when the “housing crisis” brought down Lehman Brothers and we found out that some businesses are “too big to fail”. At least that is what we have been brought to believe. The real story is more interesting and something we all need to understand in order to chart our personal paths into the next economy.

What happened in 2008 was the end of the Industrial Age. The Industrial Revolution that began with the steam engine in the early 18th century matured into the Industrial Age during the 19th and early 20th century, and ended with the emergence of an electronically connected global economy in the late 20th century. By that time the means of production, (that is, factories), began integrating with computerized robots, redefining the entire concept of “industry”.

Historians could easily choose the 1980’s as the beginning of the end of the Industrial Age. It was a time of stunning economic changes, when huge companies that were synonymous with the global dominance of the industrial strength of the United States suddenly when bankrupt. Tens of thousands of people who had worked faithfully for these industrial giants found themselves not only unemployed, but also without promised retirement plans. Thousands more who had already retried found themselves without their pension payments, dependent only on government old age benefits. The people who lived through that time had no inkling of the underlying causes of the financial chaos they endured or the end of an era it signaled.

Two completely different things happening at about the same time combined to drive a stake into the heart of US industry and ushered in the first glimmer of the global economy. At the time, neither of these things attracted much notice, but as the years went by their impact became clear. Individually, neither is much to take note of, but each one magnified the effect of the other, and over the years each matured into more efficient and ubiquitous forms; now more mature versions surround us, yet we fail to appreciate how dramatically they affect global business.

The first of these two occurrences was the fax machine. Fax machines are not a 20th century invention. The first business use of a fax machine was a devise that converted the dots and dashes transmitted by telegraph to letters and were used to send messages between Paris and Lyon in 1865. By the turn of the century an improved devise transmitted a wanted poster, complete with a drawing to the suspect, from Paris to London.

The problem with fax machines is that only one is useless; in order to send a message the person to whom one wants to send a message needs to have a compatible devise, along with electricity, telephone lines, and related infrastructure. It was not until the early 1980’s that enough people in the United States had fax machines to create a “critical mass” robust enough to support widespread business use. When that point was reached, however, it took very little time for fax machines to go global. Suddenly orders, receipts, and bills of sale could be transmitted instantly to whoever had a fax machine. Physical financial instruments delivered by the mail system established by Benjamin Franklin were no longer required to place an order when inventory got low or a market demand for an item emerged.

The financial industry began their move towards electronic financial transfers during this time. No longer, did physical checks need to be flown to and from central processing centers every night before credits and debits could be applied. The international banking system very quickly integrated the speed that fax machines provided into their business transactions. For a while in the early 1980’s international financial transfers were facilitated by clerks sitting at computer terminals. Popular culture featured these workers in movies like the 1986 Whoppi Goldberg film Jumpin’ Jack Flash, and Texas singer Michelle Shocked referenced her time as an international financial clerk in her song “Anchorage” on her second album “Short Sharp Shocked” released in 1988

The increased speed that orders and financial transactions could be made did not mean much without the second event. Not really an invention as much as a change in perspective it changed the world, but went largely unnoticed. In the early 1980’s goods were transported much as they had for the preceding century. Factories created products and stacked them on wooden pallets that were driven into railroad boxcars with forklifts. Once at their destination more forklifts would drive the pallets of goods form the boxcars to large delivery trucks that would transport the goods to warehouses. At the warehouses, the goods were organized and stored until ordered and delivered to retailers. Ocean transport was still a matter of cranes lowering large empty nets into holds of ships where strong men would use their muscles to place goods into the nets. Cranes would lift the filled nets out of the hold and place them on the dock where more men would stack the goods on pallets for the forklifts to drive into boxcars for transport to warehouses.

In the late 1970’s and early 1980’s Burlington Northern Railroad Company was becoming concerned about competition from more efficient means of transportation. It was losing freight business to trucks, and passenger travel was becoming dominated by cheap air carriers. In their book Wisdom of Teams, Katzenbach and Smith wrote a fascinating account of how a small group of experienced managers working for Burlington Northern inadvertently revolutionized international transportation. Their idea, a simple concept that became obvious only after a change in perspective, would not have had the impact it did except for the worldwide use of fax machines. Those two things taken together — a simple change in how rail transportation was thought of, and the advent of cheap international communication — combined to drive industry from the United States to Asia and to signal the beginning of the end of the industrial age.

For years, railroads had loaded semi trailers belonging to the trucking industry on flatcars, carried them close to their eventual destination, then unloaded them and turned them over to the trucking industry for final delivery. This was called intermodal transportation, but it had been viewed by the railroad industry with contempt because it involved cooperation with what they viewed as their direct competition, the trucking industry.

Burlington Northern saw truckers as brutish amateurs, upstarts in the freight hauling business who were unconstrained by fixed rail networks or interstate regulations, who had no tradition or reputation to recommend them. When a small team was assigned to upgrade Burlington Northern’s’ small inter-modal division little was expected. As the team studied the deficiencies of the intermodal system, it became clear to them that the company had not exploited a valuable possibility. The inter-modal system could be made more efficient in a number of ways, but a vague and unidentifiable piece was missing. It was not until the team looked at the problem from a different direction and in so doing redefined the entire situation.

For months, they had thought of themselves in the railroad business making a foray into the trucking business, but suddenly it occurred to them that they were not in the railroad business at all — they were in the transportation business. That simple change of view made all the difference.

Instead of viewing tucks as competitors they began to see trucks as a tool to be used. At first Burlington Northern contracted with tucking companies, and quickly bought their own fleet of tractors and trailers. They reorganized the network of ramps and cranes needed to move trailers from pavement to flatcars and made the entire system more efficient.

As diminishing costs and increasing business proved the value of the concept, someone came up with a new idea. Why use trailers? Why not use a container that was just as much at home sitting on a flatcar as being hauled down the highway behind a tractor? Or for that matter, stacked on a ship? Or rolled into a jet powered cargo aircraft?

And so started the era of container shipping. Now a container could be packed with products made in efficient Asian factories with cheap nonunion labor, placed aboard a ship with hundreds of other containers, off loaded on the west coast of the United States, moved by rail to a location near the final destination, and trucked the final distance to the eventual destination. Computers calculated the cheapest method of transportation every step of the way and products with the highest profit margins and shipping charges became a priority. Suddenly the cost of shipping goods fell dramatically.

So dramatically, that factories in the United States could no longer compete. Not only did Asian producers have much cheaper labor, but they also had the money for the most modern production facilities. US Steel was the benchmark steelmaker for every other producer in the world, an icon of American industry and the pride of US industrial might. However, the furnaces of US Steel were using the technology of the 1920’s, while Asian steelmakers were financing state of the art computerized steel mills. US Steel went out of business.

Thus ushered in an era in which Americans learned a new vocabulary of finance terms. “Arbitrage artists” launched “hostile takeovers” of factories because their assets were worth less than “net future value”. In other words, the property the company owned could be sold for more money than what it could ever be expected to make. The dawn of the global economy had arrived, and suddenly American factories and workers were competing with factories and workers in Asia.

“Arbitrage” is a financial term used when an imbalance exists between the values of two or more things. In the case of the US economy in the 1980’s the imbalance was between the cost of output between old American industries and newer industries in Asia using lower priced labor. Arbitrage artists were wealthy and well-connected Wall Street professionals who created complex deals in which investors offered enormous sums to shareholders of struggling companies. Shareholders were offered far more money for their shares they they could ever hope to gain by holding them. They had little choice but to sell, although companies often used bankruptcy a tactic to hold off these hostile takeovers. It did not matter if the arbitrage attempts were successful or if bankruptcy succeeded in maintaining the original owners of the company. In either case, assets — the physical property of the company — were then sold, often to foreign competitors. Entire factories were exported to Asia, Mexico and South America.

However, what sparked the ire of Americans against the arbitrage artists and the deals they made was that pension funds and other worker benefits were included as assets of the company. Bartlett and Steele, two reporters at the Philadelphia Inquirer, explained the details in America: What Went Wrong, published in 1992. They profiled hard working Americans who found themselves without pensions or health insurance because those assets had been liquefied during an arbitrage battle or bankruptcy proceeding. After working for decades in American factories that supplied the world with everything from freight cars to bubble gum, these people created the middle class, bought homes ownership, sent their kids to college and drove new cars. One the verge of retirement, however, these same people often found themselves selling all they had acquired in a lifetime of loyal labor in order to preserve their lifestyle. In the end many of them moved in with children or went on public assistance.

How I Lost Forty Pounds and Kept It Off and Why You Probably Can’t

Losing weight is easy. It’s an easy concept anyway. I lost over forty pounds and have kept it off for 20 years. You can live your dreams if you are willing to pay the price to make them come true. Unfortunately, the price of losing weight is simply too high for most people. I’ll tell you how I did it and maybe you can join me.

Before doing anything else you will need to educate yourself about food and nutrition. Don’t worry. It’s easy! All you have to do is start reading nutritional labels. The law requires that any packaged food must have a nutrition label listing things like calories, carbohydrates and fat.

When I started reading nutritional labels, one of the first things I learned was how incredibly small a serving size is. This is the first shock for many people taking the first steps to controlling their weight. Part of the problem is that we do not use plates and bowls for their intended purpose.

A portion of cereal is one ounce, about a quarter of a cup. The first time I dumped a quarter of a cup of flakes into a soup bowl intended for three cups of soup the flakes looked ridiculous. Just a little dab of color in the bottom of the bowl. That same amount of corn flakes in a cereal bowl looks more like a serving. At least it did when I got used to eating only one serving at a time.

As I learned more about serving size, I realized that we humans need very little food to stay healthy and even less to lose weight. When I cut down on portions and calories, I found myself becoming very pragmatic about the foods I eat throughout the day. I started thinking more about foods that satisfies hunger in small portions. Lunch consisting of avocados and sardines is an excellent choice. It packs lots of nutritional value, keeps me satiated, is inexpensive and discourages thoughts of second helpings.

Whenever I heard about diets and weight loss, I also heard about exercise. Most people think exercise is a key to losing weight, but it isn’t. I found that exercise did not make as much difference in weight loss as reduced calories. Decreasing caloric intake is the most effective way for me to lose weight, but exercise is important also.

Exercise does two things that go along with losing weight. First, it keeps you generally healthy. It’s a good idea to have strong bones, clear lungs and highly oxygenated blood. Exercise also makes you look good, which is one of the main motivations for losing weight.

Think about it…you might lose the blubber on your belly, but if the underlying abdominal muscles are soft and saggy you will still look fat. So get on the floor, slide your feet under the dresser and start those sit-ups.

Unlike exercise, changing my diet didn’t take any time. In fact, since I spend less time eating I have more time for other things like exercise. There are all sorts of guides and standards telling me how much time to exercise every day but none seem to agree with one another. So I decided to spend about an hour a day alternating between strength training and aerobics. As time passed, I found I liked walking and increased my exercise time to about two hours a day.

That is about all there is to losing weight, at least for me. Read nutrition labels, cut calories and carbohydrates by about half and spend an hour a day — less than 5% of a 24-hour day — exercising. I did these things for only a couple of weeks and started seeing lower numbers when I got on the scale. When I got to the weight I wanted I ate just a little more. With a little experimentation, I found I could easily maintain my desired weight.

I know what you are thinking. “If losing weight is that easy why are so many people overweight? He’s not telling us everything.”

Well, yes there is one thing I have left out. It has nothing to do with the biology of losing weight. The “Eat Less and Exercise More” principle really works.

What I have avoided until now is why none of this works, at least for most people.

We get fat because we live a lifestyle of constant overeating. Not only do we need to drastically reduce the amount we eat; we need to eat a wider variety of more nutritious foods, like fish and fresh vegetables.

The only path to permanent weight loss is permanent lifestyle change. Adopting a new lifestyle is a daunting and scary task for most people. Few of us are willing to make that change, and for very understandable reasons.

Losing weight means losing our friends and maybe our jobs.

Imagine walking into the lunchroom at work. A conference table creaks under the weight of bagels, cream cheese, plates of cut sausages, cheeses and snack meats. All the delicious garbage food that made you fat. Your coworkers are delighted to see you and invite you to join them. But there is no way you are going to eat anything they put on the table.

Maybe you sit for a few minutes munching on your apple slices, then excuse yourself and spend the next 45 minutes on a brisk walk at a nearby park putting in your hour of aerobic exercise. For the rest of the afternoon you feel energized and focused while your co-workers complain about drowsiness and tight clothes. They notice the difference.

That evening you go to a Mexican restaurant with friends. They order delicious traditional Hispanic fare like beef burritos stuffed with cheese and whipped cream and chicken tacos bathed in melted cheeses washed down with imported beer.

You order a chicken breast and salad, finish your meal and sip water while your friends gorge themselves. Likely they will insist you join them in their gluttony and when you don’t they resent it. It is not your intention but you have brought their attention to their poor eating choices.

You see the problem. You might change your lifestyle, but your friends and co-workers will not. The very reason they are your friends and co-workers is that you once shared very similar lifestyles. That is why they are your friends and co-workers. We like people who are most like us.

When you make drastic changes to the way you eat, you no longer share in the eating and exercise lifestyle of others. Simply being successful in changing your eating habits creates feelings of guilt and shame in people with whom you previously shared unhealthy habits.

At the beginning of this piece, I said that you could dream dreams and make the sacrifices needed to make them come true.

Do you really think you will be able to prepare dinner for your family, and then retire to the living room while they eat? How will clients and colleagues respond when you ignore the catered fare and eat a side salad during a working lunch? Will friends and family be disgusted when you eat sardines right out of the can?

These are the sacrifices for making your dreams come true.

This is the hard truth about losing weight. If your dream is to become slim and healthy you cannot allow anything — ANYTHING — to compromise your efforts.

It does not matter that your friends drift away. Your new lifestyle does not allow you to sit around with them overeating. Get new friends who share your dedication to a healthy lifestyle. Join a gym or an outdoor activity club, find a new hobby and build a new social network. Do whatever it takes.

It does not matter that it is 1AM and raining. You have to do that daily one hour of aerobic exercise. You don’t feel safe in your neighborhood after dark? Then do whatever it takes to feel safe — hire a bodyguard, get a big dog, find a 24-hour gym — whatever it takes.

Your new lifestyle means big changes. Welcome those changes and do whatever it takes to allow for them or forget about losing weight.

If you are willing to make the sacrifices, you can live the dream of a slim body, and create a healthy lifestyle guaranteeing you keep your new body for a lifetime.

If you like this article I highly recommend Sylvia Tara’s book The Secret Life of Fat. Tara is a microbiologist who is gifted at writing about science in a way lay people can understand. Read the book and let me know what you think

The Myth of the Glass Ceiling

For years I heard that women are paid only a fraction of what men are paid. Something about that never sounded right to me. We have laws against gender discrimination, and there does not seem to be any sign of lax enforcement. I have never heard of men and women getting paid differently for the same job and I have never heard complaints about pay disparity based on gender. Just the same it seems that there are an awful lot of poor women, and many of the low paying jobs I see are held by women.

So what is going on? Do women get paid less than men? If so, why?

I recently decided to look into this question. Here is what I found out.

Women do indeed make less money than men, but it is not the result of discrimination as much as it is the choices that men and women make about education, careers and lifestyle.

Zafir (2009) distributed electronic questionnaires to 191 students at Northwestern Universities Weinberg College of Arts & Sciences that asked a variety of questions about demographics and future plans and choices. Although the results are complex and far reaching, relevant findings for our purposes are summarized here:

“Enjoying coursework, finding fulfillment in potential jobs, and gaining the approval of parents are the most important determinants in the choice of college major. Males and females have similar preferences while in college, but their preferences diverge in terms of the workplace:

Nonpecuniary (non-financial) outcomes at college are most important in the decisions of females, while pecuniary outcomes realized at the workplace explain a substantial part of the choice for males” (Abstract)

“Non-pecuniary determinants explain about half of the choice for males and more than three-fourths of the choice for females. Males and females have similar preferences regarding choices at college, but differ in their tastes regarding the workplace; females mostly care about non-pecuniary outcomes (gaining approval of parents and enjoying work at jobs), while males value pecuniary outcomes (social status of the jobs, likelihood of finding a job, and earnings profiles at jobs) more” (p. 28).

Gupta et al (2009) looked at survey responses from young people from India, Turkey and the United States who had had not made a career decision but were considering entrepreneurship. They found that respondents associated male characteristics with entrepreneurship regardless of their own gender or cultural background:

“Specifically, we found that both young men and women associate entrepreneurs with stereotypically masculine characteristics. More importantly, we found that it is not group membership based on biological sex, but identification with masculine characteristics that is positively associated with entrepreneurial intentions. Our findings indicate that men and women’s entry into entrepreneurship may be enhanced or limited by their perceived similarity to masculine characteristics.” p. 413.

In other words, entrepreneurship is mediated not so much by biological gender as much as how closely individuals perceive their attitudes to correlate with masculine traits. In view of Zafirs results (above) this means that women would do well to take a male perspective and consider future financial rewards of academic degrees rather than strictly job satisfaction or parental approval.

The Gupta paper identified social learning as the root of gender identification. This is an increasingly controversial position as more becomes known about the effect of genetics on personality. Although no definitive answers now exist, it is thought that the influence of genetics on gender role acquisition is at least as relevant as social learning. This means that women would do well to make a conscious effort to think in masculine terms when making academic or career decisions. What “comes naturally” for women when considering these issues is not generally conducive to high income or personal worth.

In a paper addressing the question of why female associate professors are more prolific producers of academic papers Rothausen-Vange et al (2005) found that marriage, partnering and the presence of children were a significant independent variable on the rate of publication. In other words, productivity was correlated to a marriage and child free lifestyle.

“…our data show that women associate professors in more research-oriented departments had forgone or delayed family formation (e.g., not partnered or married or not had children) more than had men. We found that male faculty in more research oriented departments were 33 times more likely to have partnered or been married during their assistant professor years and five times more likely to have had children during their assistant professor years than were female faculty in more research oriented departments” p.736.

Cole and Mehran (2009) examined a series of surveys conducted by the Federal Reserve, the 1987, 1993, 1998, and 2003 Surveys of Small Business Finance (SSBF), to examine the impact of gender on small business formation, and the ability to attract capital. They found that female headed firms displayed a number of predictable characteristics:

  • Smaller in terms of sales, assets, and employment
  • Younger and more likely to fail as determined by the firm’s age;
  • More likely to be informal proprietorships than corporations or partnerships
  • More likely to be in low wage service sectors, retail trade and business services than more profitable construction, manufacturing, or wholesale trade
  • Have fewer and shorter banking relationships
  • Female owners are significantly younger, less experienced, and not as well educated.

“Specifically, female-owned firms are significantly more likely to be credit-constrained because they are more likely to be discouraged from applying for credit, though not more likely to be denied credit when they do apply. However, these differences are rendered insignificant when we control for other firm and owner characteristics. This evidence suggests that observed gender differences in credit availability are attributable to other differences in male- and female-owned firms, such as the firm’s size and industry and the owner’s age, experience, and educational attainment” (p. 20).

In other words, female owned firms do not receive as much credit as male owned firms not because of the gender of ownership, but because of the gender specific decisions made by the owners. Firms that have a more professional business foundation — incorporation instead of sole proprietorship — and are in high value economic sectors like construction or wholesale, with early and long term banking relationships fare better than others.

These conclusions resonate with those of Zafer (2009) who found gender differences in the choice of academic majors. According to Zafer men look to the economic rewards of their academic choices to a far greater degree than women. When this trend is carried forward into business decisions things like choice of business entity, economic sectors, and start up funding suffer the same gender related outcome — women simply do not take these things as seriously as men.

Turning now to the personal outcome of gender related decisions, Yamokoski and Keister (2006) used the Bureau of Labor Statistics’ National Longitudinal Survey of Youth 1979 to examine the impact of marriage, divorce and children on net worth. They found that the combination of divorce and children resulted in significant decreases in net worth for both men and women, although it was particularly pronounced for women.

“Single mothers and fathers are economically disadvantaged in comparison to adults without children. Most notably, though, never-married and divorced mothers fare the worst in estimates of median net worth. Moreover, our regression analyses reveal that, compared to married adults with children, divorced mothers, in particular, are considerably disadvantaged in their wealth accumulation” p. 189.

This result is probably because academic and business decisions are magnified by the expensive presence of children. Children are high in cash outflow, but also in opportunity costs — the things that cannot be done because of a previous decision.

Ferrell (2005) makes a convincing case that gender disparity in overall wage income is largely the result of occupational choices. Women tend to make occupational choices that result in lower wages, even within professions. For example, in the medical profession women chose specialties that pay substantially less than specialties that men choose (p. 74).

Drawing on data in the National Longitudinal Survey of Youth (NLSY79) Gabriel and Schmitz (2007) found that gender differences in occupation were the result of free choice rather than discrimination or limitations imposed by geography or economics.

“Although gender differences in occupational attainment persist, they apparently result from voluntary choices of men and women and from long-term changes in labor markets, such as the simultaneous growth of white-collar occupations and women’s labor force participation rates” (p. 23).


Cole, R. A., & Mehran, H. (2009). Gender and the availability of credit to privately held firms: Evidence from the surveys of small business finances. [Electronic Version]. New York. Federal Reserve Bank of New York. Available at: http://www.newyorkfed.org/research/staff_reports/sr383.pdf

Farrell, W. (2005). Why men earn more : the startling truth behind the pay gap — and what women can do about it. New York: AMACOM.

Gabriel, P., & Schmitz, S. (2007). Gender differences in occupational distributions among workers.[Electronic Version] Monthly Labor Review Online, Bureau of Labor Statistics, 130(7 & 8), 5 Available at: http://www.bls.gov/opub/mlr/2007/06/art2full.pdf

Gupta, V. K., Turban, D. B., Wasti, S. A., & Sikdar, A. (2009). The Role of Gender Stereotypes in Perceptions of Entrepreneurs and Intentions to Become an Entrepreneur.[Electronic Version] Entrepreneurship: Theory & Practice, 33(2), 397–417 Available at: 10.1111/j.1540–6520.2009.00296.x http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=36839781&site=bsi-live

Rothausen-Vange, T. J., Marler, J. H., & Wright, P. M. (2005). Research Productivity, Gender, Family, and Tenure in Organization Science Careers.[Electronic Version] Sex Roles, 53(9/10), 727–738 Available at: 10.1007/s11199–005–7737–0 http://ezp.waldenulibrary.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=19300848&site=ehost-live&scope=site

Yamokoski, A., & Keister, L. A. (2006). The wealth of single women: Marital status and parenthood in the asset accumulation of young baby boomers in the United States.[Electronic Version] Feminist Economics, 12(1/2), 167–194 Available at: 10.1080/13545700500508478 http://0-search.ebscohost.com.library2.pima.edu/login.aspx?direct=true&db=aph&AN=20338588&loginpage=Login.asp&site=ehost-live

Zafar, B. (2009). College Major Choice and the Gender Gap [Electronic Version] Federal Reserve Bank of New York Staff Reports(364 ) Available at: http://www.newyorkfed.org/research/staff_reports/sr364.html