Financial Literacy

There are many counties and local governments in the U.S. that want to increase their population of educated professionals. One tool to attract them is offering money to repay college loans, ranging from $7,000 to $15,000. Some of these areas are urban, like Niagara Falls, and some are rural, like in Kansas, where there are over 70 counties that will write checks if you re-locate within them.

Other student loan forgiveness program include: joining the Peace Corps or AmeriCorps for teaching, Association of Medical Colleges, American Federation of Teachers, National Health Service, Corp. And no, your degree may have nothing to do with teaching to help others in AmeriCorps. Some law schools forgive loans if you work your first two years as a public defender or at a non-profit. Some law enforcement agencies have loan forgiveness and the U.S. military has programs that forgive up to $2,500.

Individual states offer student loan forgiveness for services that are in demand. Today, for example, Kentucky needs large-animal vets, Illinois and California need doctors and nurses, and so these states pay off some student loans for graduates that can fill these needs.

Of course, it is best to map out student-loan affordability before entering school, and adjusting as your interest and major changes, but there are options to reduce the burden of student loans if you can find a program that fits your future career plans.

Since the 2008 financial crisis, the labor market in the U.S. remains horrible. Nearly 7 years later:

• Record levels of people on food stamps is not decreasing (over 40 million families)
• Duration of unemployment is still double what it used to be (at 31 weeks right now)
• The labor participation rate has fallen to a 40-year low (under 63%)
• Unemployment duration is the longest since World War II

Alongside of the difficulties in finding work, there is an anomaly that job openings have recovered and have now surpassed the pre-2008 levels. There are currently 4.8 million non-farm open positions. How can there be so many unfilled positions with so many people looking for work? This disconnect is called a “labor market skills mis-match.” People who are looking for work do not have the skills that are needed for the positions that are open.

There is a gap between the skills that the unemployed have and the skills that employers are seeking. Experts have suggested that people who lost their jobs pre-2008 could get work related to the real estate boom (construction, mortgage broker, etc.). Those jobs did not require a high level of skill, however, far fewer of those jobs are available today.

The critical element for your employment is to keep your skill set current. Your set of skills that you offer employers needs to stay in alignment with the changes in your industry. You should periodically review your industry for its attractiveness:

• Is your industry growing or shrinking globally? How about in your country or region?
• Are processes changing in your industry and are you keeping up with those changes?
• Is there a disruptive technology or company that may damage or eliminate your company?
• Is there a disruptive technology that may eliminate your position or current skills?
• Are you increasing your skill level with certifications or degrees to increase your value?

To maximize your career trajectory, you need the skills that will increase your desirability to employers. This requires on-going adjustments throughout your career to make sure you are in the best industry, with a best employer, offering opportunities for your development and advancement. By doing this you are simultaneously minimizing your risk of falling into the skills-gap of a long stretch of unemployment.

While moving through your career there are landmines to avoid and one of them is what I label, “The Swinging Pendulums and Treadmills.” There are two types of corporate management initiatives, one is structural pendulums while the other is managerial treadmills, and I will explain them along with their danger.

Structural pendulums are corporate tactics that continually swing from one extreme to the other. For example, a company will have a more decentralized hierarchy and then to “improve” the company it will begin moving to a more centralized hierarchy. Then to “improve” upon the centralized hierarchy it will begin moving back to a more decentralized hierarchy. Back and forth, changing with each new management team that arrives, this is one of the many pendulums in business structures that occur over many years. Some other structural pendulums include: functional department silos vs. department cross-training, internal promotions vs. external promotions, conglomerate vs. single industry focus, outsourcing vs. in-house, acquisitions vs. build your own, open floor plans vs. offices with doors, team tasks vs. individual autonomy, and many others.

Managerial treadmills are fads created by consultants that are sold as ways to improve a company but mostly end up a distraction that consumes time and resources from normal operations. You can recognize them from several attributes: one size fits all, promises of happy and motivated employees, can only be implemented by expensive consultants and company-wide training. There are rare occasions where these temporarily help a company but most of the time fads are abandoned within a couple years. You’ve likely heard many of these management fads: quality circles, six sigma, vision statements, core competency, management by consensus/objectives/walking around, benchmarking and best practices, yet another new type of “matrix”, process re-engineering, continuous quality improvement, performance ranking, customer satisfaction data mining, and endless others that appear every year.

In your career you will be involved in both structural pendulums and managerial treadmills. Don’t be upset when they show up, you know that more of them will be coming in the future. The best way to handle a structural pendulum is to go with the flow because these may last for many years. If the company is centralizing you need to be willing to help or your job will be in jeopardy. Contrarily, avoid becoming too attached to management fads, just be positive, do the paperwork or whatever you are required to do, and then get back to your primary job. A potential career killer is to become too engulfed with a management fad or volunteering to “head up a task force” on these fads. This is because fads are short term, lasting only 6 months to a few years before they are abandoned for a newer and shinier management object. If you align yourself too closely to these fads, then when it is abandoned, so is your skill or even your job.

One management professor called these management initiatives, ‘painting the garbage cans.’ “Every once in a while management paints them a different color, thinking it will solve all their problems, and when it doesn’t, they then move on to a different color.” So be careful about identifying yourself with one of the colors because it will certainly change and you don’t want to be left behind when it does.

You may have heard that the difference between having a college degree adds a million dollars to your lifetime income, over just having a high school diploma. But there are many aspects to statistics around this, including elements such as which kind of degree and where you live that can increase or decrease this million-dollar number.

U.S. census data released last month adds some further weight to the value of a college education. For example, high school dropouts have very low odds of a median or high-paying job. Specifically, a high-school dropout only has a 1% probability of ever earning a salary in the top 20% of all incomes; and only a 19% chance of earning an average-or-above level income. Conversely, even someone raised among the poorest American families, as a college graduate he or she has a 20% probability of having salary in the top 20% and a 67% chance of earning an average-or-above level of income.

Although there are numerous influences over income mobility up the income ladder, the most significant influence for anyone is completing a college degree. Plus, it also has a great impact on their children’s level of income if one or both parents have a college degree as well. The good news is that while most of the other income mobility factors are something you cannot control, your level of education is something you have total control over.

According to federal labor statistics, the retiring baby-boomer generation spent an average 15-25 years at a single company. The current millennial generation however, only spends 4.4 years at a single company. The speed of change in business is faster than ever. For example, last week a national magazine that started and operated successfully for two decades near my home just fired everyone to relocate on the other side of the country.

There are two people that have the most control over their career, those employees that are superstars and intrapreneurs. A superstar is defined by being the top in their field, specialty, or department; and an intrapreneur is someone who initiates new projects and manages them to completion (an entrepreneur working within the corporate environment). Companies always find a way to hold on to these people no matter how many restructurings take place. I first experienced this when I worked at a computer manufacturer: they invented a new position in a different department to keep me on when layoffs were hitting my department and I had no seniority. Since then I have seen this play out in all kinds of companies – top talent always has a job or are quick to rebound if they lose their job.

Unfortunately, the education system does not teach entrepreneurialism, intrapreneurialism, or what it takes to be a top talent. They mostly focus on: do what you are told and don’t make waves – the advice of career mediocrity. This classic training leads those who follow it to experience those government statistics of 4.4-year stints per company and many instances of unemployment. If that is a future you want to avoid, you need to actively manage your career in the many ways I have written about before: mentorships, certifications, networking, being active in your career associations, along with going after the top companies in growth industries.

The last several decades have seen a stagnation in wages that have not kept up with inflation. One of the main reasons is that there are two very different labor markets in the U.S., a smaller one that is skilled labor and larger one that is unskilled labor.

Although unemployment for unskilled workers is generally twice as high as skilled workers, since the mid 1970’s, the unskilled jobs have been moving offshore. First apparel and textiles left, then steel and shoes, then televisions and autos, etc. Once trade agreements like NAFTA and China’s entrance in the WTO, offshoring unskilled work has hit nearly every industry. Adding to these job losses are advances in technology; such as the migration to smart phones apps and cloud computing solutions that has reduced the demand for swaths of unskilled labor. For example, publications from newspapers to books are now electronic only and Amazon has grown into one of the largest retailers.

Since the Great Recession of 2008, both skilled and unskilled have lost jobs but, in general, the skilled workers are able to eventually find new jobs while the unskilled have been forced out of the labor force.

What to do?

• Make certain your skill set is compatible with growth industries, not one in decline.
• Make certain your skill set will be in demand from demographics – like healthcare for the elderly
• Keep your skill set current, digital industries change rapidly and 5 year-old skills can be long obsolete
• Manage your career by getting project management skills along with continually networking and building resume achievements and experiences.

From Tucker Max on explaining the 21^st Century free market for careers:

It used to be normal that you had to have:

• a hospital to be a nurse
• a publisher to be a writer
• a restaurant to be a chef
• a school to be a teacher
• a TV network to be an actor
• a manufacturing company to be a product designer
• a radio station to have a radio show
• a bank to be a banker
• a record label to be a musician
• etc.

However, there were always a few other ways to be in those professions as freelancers, consultants, tutors, trainers, and private service companies. While these used to be fringe ways of getting around the old institutions, today, getting into a career directly is the mainstream path.

The old gatekeepers and institutional bureaucracies of the past are becoming the fringe employers while the various online worlds are making them less relevant. It has never been easier to independently make money in a profession. To do something your way, on your schedule, or to provide value in a new way.

How about a few specific examples?

• Write a report and have an ebook for sale on Amazon in a day.
• Put up a podcast on iTunes on subjects that interest you the most.
• Buy a food truck to sell your specialty sandwiches and use Twitter and Facebook to get clients.
• Engineer your electronic prototype with Raspberry Pi processor and open source software and hardware like Arduino.
• Shoot a short video (as an actor, teacher, or musician) and upload it on YouTube for the world in minutes.
• Put up a Yahoo Store in a day to sell about anything and have them advertise it for you.
• Sketch out a product, use a freelance website to have someone turn it into a computer-aided design (CAD), and rent a 3-D printer to make your prototype or final product.
• Rent space in one of the commercial kitchens for part-timers to make your food items for sale at flea markets.
• Buy products out of season cheaply to sell later on Amazon’s FBA program.
• Ask programmers to bid on making your smartphone app idea that you then promote.
• Use Alibaba to find wholesale sources for products that you sell locally.
• Raise money on a crowd funding website to fund your projects and product launches.
• Snap together littleBits electronic components to make your prototypes.
• Lend money as a private lender or on peer-to-peer platforms.

These are just a few of the ideas and mechanisms where today, anyone can directly enter a profession and bypass bureaucratic institutions if they do not support your goals.

There is a book on entrepreneurialism by Michael Gerber named, “The E-Myth.” In it, Gerber popularized the concept of: you have to work on your business, not just in your business. In my opinion, employees need to do the exact same thing for their career: work on your career, not just in your career.

Let me explain what this means. For example, if you were a copy-editor for a newsletter, your career task is copy-editing. This is working “in” your career. Working “on” your career would be doing things like: joining copy-editing groups, networking at copy-editing events, advancing your copy-editing skills, becoming a mentor to new copy-editors, streamlining the copy-editing process, etc.

Working on your career is the critical element to:

• Become paid what you are worth
• Advance to more challenging tasks
• Grow into getting more responsibility
• Access more career opportunities

Knowing some of the ways to work on your career, and taking the time to actually do them, is the best route for your career advancement. Being the best at a task does not mean you’ll ever get promoted to managing people doing that task. In fact, there are several elements that must occur before that can happen; such as supervisors knowing what you do, problems you have resolved, having an interest in becoming a supervisor, etc.

Working on your career also includes spending time each and every week to:

• Keep some kind of journal of your accomplishments for the week. This way, you’ll have it nearby to complete your employee review instead of trying to remember everything at the last minute.
• Think about what skills or experience is needed to advance upward. Do you need a lateral transfer to gain knowledge in another area?
• Determine who may assist your career and who may be detrimental to your career.
• Regularly meet with others in your career at different companies or industries. You’ll learn things that you’d never get exposed to and you’ll hear about career opportunities that you’d never have access to unless you do this.
• Certifications and advanced training to keep your skills up-to-date and to become more valuable to employers.

There is an endless list of ways that you can work on your career but most people do none of them and are then surprised when their career stalls or others with less skill pass them by. Please take time every week to find new ways to work on your career, find mentors, develop marketable skills, and keep your career moving upward and onward.