Written by: Samira Fatehyar
Synopsis
You can listen to the podcast here.
As the Covid-19 pandemic continues to spread, the uncertainty of an economy recovery continues to increase. When will the economy jump back? Will a stimulus package ever get passed? Will a Trump presidency bring an economic recovery? Will a Biden presidency? My honest opinion is that it won’t matter who wins when it comes down to the economy. Though, I still believe that everyone should vote. But that is beside the point. Everyone keeps pointing out the different tax plans and although there is merit to that argument, the fact of the matter is that until we can stabilize the employment level and have the pending eviction and poverty crisis under control, taxes won’t be something we can have a meaningful conversation about. Let’s focus on stopping the bleeding first.
We’ll first look at explaining the impending housing crisis, assess corporate health, and take a look at unemployment. Then we have the pleasure of talking with Ms. Kylie Rowe about the job market during the Great Recession and lessons everyone can apply to the job market today. Finally, we end with the European View, where we’ll be assessing the labor market in Europe and comparing it to what we are witnessing in the US currently.
Economic Update
The impending housing crisis explained
I’ve talked to several people outside the field of real estate trying to understand why I’m so concerned with eviction moratoriums ending and how that will all effect the housing market. So, I thought it would be helpful to explain why in detail. Before I start, I know many are also wondering about the Covid effect and how that has also impacted the housing market. I will address this once I explain the fundamentals.
So what is an eviction moratorium? An eviction moratorium is basically a legal action to stop all evictions from taking place. This was passed all over the country back in March when we started understanding the economic ramifications of the Covid-19 pandemic. This was great at the time, because so many jobs were lost and financial priorities of the average American shifted. Instead of having to worry about rent at the moment, they could help feed their family. But the eviction moratorium did not forgive the rent that wasn’t paid; many were asked to talk with their landlords to work out some sort of payment plan. The unfortunate truth is that though many states across the country, including Nevada, have lifted the eviction moratorium, only roughly half the number of jobs that were lost have come back. That’s roughly 12 million unemployed people. Okay, so 12 million unemployed and they are being forced to pay rent with money they simply don’t have. They can’t count on the stimulus and unemployment insurance since that program ended in July. So over the past 3 months they have been struggling.
Okay, so how would this effect the housing market? Well, when people can’t afford current market rental rates (which are currently heavily inflated), landlords are forced to reduce their asking rental rates. When this happens, this in turn affects the overall price of the asset. Since investors look at it and say, wait, I can’t get more than x amount per year from this asset, the asset itself becomes worth less because of the reduced cash flow. When these assets go on to the market to be sold, they in turn end up decreasing the price of all the surrounding homes. But that’s not necessarily a bad thing right? Especially with prices being inflated right now. No, it would not be a bad thing, minus the homeless crisis we would end up seeing. But if people remain unemployed and we don’t see federal assistance come in, then the demand for residential real estate will plummet regardless of if people are looking to rent or buy.
Now I know everyone is wondering, why is there such a limited supply of residential real estate all over the country right now? Well I have found a few explanations as to why. During uncertain times, there are a portion of people that don’t want to relocate to another home. Many are choosing to refinance their mortgages instead. But because of the pandemic, we are witnessing people relocating from major cities to more suburban areas that don’t have enough housing to fill this demand. So if we use basic economic principles here we see that when there is limited supply and an excess demand we have a shortage which creates higher prices for those goods. The reason there aren’t enough new home construction projects is due to the housing crash of 2008 when many developers went under and stopped building. They have been more hesitant in recent years and have only started building at those levels again in the past 2-3 years. Our population has increased in that amount of time, so I do foresee supply not being able to meet demand for sometime.
That being said, many people won’t have the opportunity to become first time homebuyers. An economist from the National Association of Realtors, made it clear that in a healthy market, we will usually see 35-40% of buyers being first time homebuyers. We are now witnessing 31% of buyers being first timers. I foresee this percentage decreasing even more. If we look at the homes that are selling, we see that many of those are not in the price range first time homeowners can usually afford.
Graph 1
Year to Year Comparison of Home Sales
https://www.npr.org/sections/coronavirus-live-updates/2020/10/22/926657942/housing-boom-sales-of-million-dollar-homes-double
Graph 1, above, shows the year to year comparison of home sales by different price ranges. The biggest increase in sales are for homes with asking prices of $1 million or higher. There have been slight increases in the lower price ranges but not anywhere near the 106.5% increase for the $1 million+ homes. According to the jumbo loan definition in 2020, a jumbo loan is anything above $510,400 in most areas and anything higher than $765,600 in higher priced areas. So we can see that in those ranges, there are most likely people applying for jumbo loans, but those people are not usually first time home buyers. This evidence is adding to the mounting evidence that we will definitely experience a K-shaped economic recovery.
This leads me to a discussion about the Covid-19 effect on the housing market. We are seeing many people from metropolitan cities like San Francisco, Los Angeles, and New York, moving out of those areas and working remote in either suburban or rural areas. Living in Reno, I can tell you that we have seen quite the influx of Bay Area residents moving to Reno and Lake Tahoe and buying much bigger homes to essentially ride out the pandemic and hopefully live here permanently, even when the pandemic ends. Which is fantastic, but when we look at what it does to our micro economy, we see that this is actually not that great after all. I’ve said this time and time again, every area has its own dollar valuation. Whether you want to believe it or not, is up to you, but it’s fundamentally true. A dollar from California stretches further in Nevada than a Nevadan dollar would. So when we have Californians moving into Nevada and ending up having a price bidding war over a house, it only makes the Nevada home that much more impossible to obtain for the average Nevadan. On top of this, we of course have the wage growth which has not caught up to home prices, or living costs, in even the slightest.
So when we have all of these factors in place, it leads to home prices rising at extraordinary rates, and when this happens it leads to a bubble bursting. When will the bubble burst? I have not a slight clue, but I can tell you that it will happen. This isn’t sustainable for any healthy economy.
On a side note, I will mention that refinancing of homes is increasing at rates we haven’t seen in a long time. Refinancing is 66.1% of total mortgage applications, according to the Mortgage Banker Association. Why are so many refinancing? Well interest rates are at all time lows, so this is the perfect time, right? Yes, this is true, but I suspect we’ll start seeing refinances slowing down because of a new Adverse Market Refinance Fee that will be imposed starting December 1st, 2020. What is the Adverse Market Refinance Fee? It’s only applied to refinance loans sold to Fannie Mae and Freddie Mac. Freddie Mac described the new fee as necessary “as a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty.” So what do this mean in terms of numbers? Well, on average, lenders will increase refinance rates up to 0.125% to 0.5%. So essentially, the fee amounts to about 0.5% of the total loan amount, which can be quite hefty if it’s a large mortgage amount. This was something I thought everyone should be aware of and educated on.
CORPORATe health
I thought it would be a great time to assess how corporations have been fairing through the pandemic. As we know, many of had amazing returns while others have been suffering and even declaring bankruptcy. To have these many large, public, American corporations become unprofitable is something that has never happened before. If we look at the YTD (year-to-date) numbers, we find that 207 companies with more than $50 million in liabilities have filed for bankruptcy. To help put it in perspective, in a comparable time period, we saw 243 companies with the same criteria file for bankruptcy in 2009.
Graph 2
Bankruptcy filings of companies with $50 million+ in liabilities
https://www.bloomberg.com/news/articles/2020-10-20/u-s-bankruptcy-tracker-debt-war-escalation-adds-to-debtor-woes?utm_content=business&cmpid=socialflow-twitter-business&utm_medium=social&utm_campaign=socialflow-organic&utm_source=twitter&sref=jbVt2saA
Though, if we were to look at Graph 2, above, we’d see that things are actually starting to calm down; in the sense that since August we have not seen bankruptcies above the bankruptcy average since April. This is good news. But, since our economic fundamentals continue to remain unstable, I don’t foresee this being the worst of it.
If we step back and just look at how many corporations have posted losses we see an even clearer picture of just how dire the situation is becoming in the corporate space. According to Bloomberg, 45 of the 345 companies that have market valuations at $25 billion or higher have recorded cumulative losses over the past 12 months. For comparison, there were only 73 companies that met the same criteria in 2009 and only 4 of them reported cumulative losses. Table1, below, illustrates several companies that have remained unprofitable this year.
Table 1
Table of Several Unprofitable Companies that have gained enormous market valuation
https://www.bloomberg.com/news/articles/2020-10-14/record-number-of-u-s-corporate-giants-lost-money-in-pandemic?srnd=premium&sref=jbVt2saA
The major thing here is that investors need to start figuring out which companies’ market valuations are justified and will last long after Covid-19 passes and which one of those are just fads. Peloton is an example many use as its market share has increased enormously but when gyms reopen, will there still be a desire to use it from home? These are the questions that will remain for awhile and will essentially make or break companies.
Many large corporations are also now trying to renegotiate their liabilities with their debtors. This is a big signal that more bankruptcy filings are yet to come. See when they renegotiate their liabilities, they are now entering a distressed debt exchange (DDE) as a way to avoid bankruptcy but this essentially just makes it more troublesome if bankruptcy does happen anyway. And for those who aren’t aware, a DDE can be thought of as a company asking existing debt holders to take a small loss on their principal amount they invested in order for the debt holders to move up in repayment priority which comes in the form of a secured debt. So basically, they take a bit of a loss in order for the reassurance that they will be the first people to get paid back and most likely at a higher interest rate. This is extremely risky.
Table 2
Top 10 Distressed Issuers
https://www.bloomberg.com/news/articles/2020-10-20/u-s-bankruptcy-tracker-debt-war-escalation-adds-to-debtor-woes?utm_content=business&cmpid=socialflow-twitter-business&utm_medium=social&utm_campaign=socialflow-organic&utm_source=twitter&sref=jbVt2saA
If we look at Table 2, above, we see that among the top 10 distressed issuers is names like American Airlines and AMC Entertainment Holdings. This is big as these are massive corporations. We won’t know which of these will end up declaring bankruptcy for sometime, but it’s something I wanted everyone to keep in mind as we continue along our rocky economic journey.
Quick Unemployment UPdate
This past Thursday, the Department of Labor reported weekly jobless numbers. The numbers were an improvement but not something we should celebrate just yet. The fact is, I’m more interested to see monthly job numbers that will come out on November 6th. This will show us not only the “official” unemployment rate but also the percentage of those who have been out of work for 27 weeks or longer. If we look at the latest chart from the BLS that shows that percentage we see that it has risen to it’s highest level since the pandemic began. Graph 3, below, demonstrates this.
Graph 3
Rising long-term unemployment
https://www.cnbc.com/2020/10/23/long-term-unemployment-is-increasing-as-relief-is-running-out.html
In the most recent BLS labor report, it was found that for almost every job opening there was 2 unemployed people. This is rather big. The fact is that unemployment will keep rising if businesses cannot continue to operate. Businesses won’t be able to operate if there is no demand for their goods or services and if there isn’t another stimulus package passed soon. The timing of the stimulus package is critical as well, since if people are already exhausting all their savings and are running behind on car payments, credit card payments, and their rent or mortgages, were about to see some very depressing scenarios ahead. The fact is many have already exhausted all their resources. I stated several times that I don’t expect a stimulus package to be passed before the election. And as of right now, I still don’t see that happening.
America, we need to get our politicians to get their act together! It’s not even a bipartisan issue. Americans are struggling and if help doesn’t come soon, we’ll be entering a point of no return.
Lessons From the Great Recession
Lessons from the Great Recession
A Conversation with Ms. Kylie Rowe
I met Kylie Rowe back in my undergrad days at the University of Nevada, Reno. I attended a business school event and remembered her recount her experience of the tough job market during the Great Recession. I thought of bringing her on the podcast to share her experience with everyone along with advice she can give to those currently having a hard time in this rough job market.
As the Founder & CEO of Kylie Rowe Co., Kylie designs actionable plans for teams and individual contributors to become the best leaders of themselves and others. She also guides organizations to establish a leadership position in their industry through business development, strategy advancement and reputation enhancement. Prior to launching her strategy firm, Kylie served as a vice president of the Las Vegas Global Economic Alliance (LVGEA) where she led communications, marketing, government affairs, strategic partnerships, new initiatives and served as a business development executive for the regional development authority. Before moving to Las Vegas, Kylie spent more than a decade in Reno where she was the vice president of relocation and corporate services at Dickson Realty, a trustee on the board of the Economic Development Authority of Western Nevada (EDAWN) and a team member of TEDxUniversityofNevada. Kylie was recognized as the 2020 Executive of the Year in Las Vegas; she was honored as a ‘Twenty Under 40’ award winner in Reno-Tahoe, and the ‘Best Talk Show Host’ of Northern Nevada. To listen to the interview, please check out the podcast. The following is a transcript of our conversation.
Samira: Thank you so much for coming on the show, Kylie!
Kylie: Yeah, thanks for having me.
Samira: So let's get right down to the questions. I remember meeting you five or six years ago when you told a group of students and alumni about your experience of graduating into a recession. You basically told us how you had to reinvent yourself. Can you please recount your experience for our listeners?
Kylie: Yeah! And I'm so glad you're asking about this because this is super relevant to what's going on in today's economy. I graduated with an economics degree in December of 2008, so that was right after the financial crisis occurred and I remember when I was in school always looking to get straight A's be the top student and I just had this mentality that if I worked really hard in school and I performed really well and I was at the top of my class that the jobs would not only be plentiful, but that people would even come to find me and I think that it was just and it was a false thought that I had. Especially at that time because after graduating, I not only was applying for positions that were entry level, but I was now competing with individuals that had more experience, higher levels of education that we're now starting to apply for the same jobs that maybe they were over qualified for. So at the end of the day, is an employer going to hire someone with less experience and less education or they gonna go ahead and hire somebody who already has their Masters degree? So it was a little bit of a rude awakening for me. There's a few lessons and I wanted to kind of be thoughtful about this, so the lessons that I learned during that time were internship or other experience while you're completing a degree program is invaluable and it should be a priority for students over getting straight A's because I was so focused on my school work that I wasn't necessarily gaining industry experience while I was in school, and I think that that particularly would have at least given me some other sort of value add; that I've been working in the industry before but instead that wasn't the case for me, and so that was a lesson that probably could have helped. Another thing is, I really learned that you kind of have to redefine how you look at success or what success means post graduation, and I think for me I thought employers would be running and chasing after me, I'd get this great starting salary, but in the end the first job that I could actually land ended up being a volunteer position. And I worked for AmeriCorp Vista, which a lot of people know because it's similar to the Peace Core, but you served domestically, so I ended up working at an outdoor education with a focus on environmental studies and science nonprofit and I was shocked to have found myself there. But the really important lesson in working at a poverty wage rate and working in volunteerism is learning things about yourself that you didn't know and learning more about where you want to go in the future. And so I think, for me the reinvention process occurred through changing my definitions around success or change or just being more flexible around what I was willing to take and not take and a final realization that I have here is: when you don't have a job, there's other things that you can learn so you can develop yourself. You can develop skills and ultimately make yourself a more well rounded person. A healthier holistic person and also a better candidate.
Samira: Yeah, no, that's amazing. You know that you could take away all of that stuff and you know, look at how successful you are now. I mean starting, you know, having that rude awakening and then now you know being where you are. It's a positive note to kind of tell everyone who's struggling right now. Do you think that what you experience then is similar to what Generation Z graduates are facing today?
Kylie: OK, so first of all I want to say I am by no means an economist or someone who regularly projects job opportunities and job forecasts reports. But I will say that I did a little bit of my own research and you can correct me if I'm wrong, but in the Great Recession or when I was graduating from college, we maybe lost 9 million jobs over the course of five year period. Between February and April of 2020, the United States lost 21.5 million payroll jobs and so it's significantly worse in terms of the impact on the job climate and then it increased. We lost more jobs, but the good news is, according to the research that I conducted to prepare for this, we're starting to see a recovery and from June to July, we recovered 57.5%. And I don't know exactly where we are at now, but we're not too far off, maybe 7.4% compared to where we were at maybe in July of 2019. So although we're still down and you can tell me if I'm wrong. We've made quite a bit of recovery since the huge drop off.
Samira: We've recovered about half of the jobs, is what estimates have stated.
Kylie: Yeah, so we've recovered half the jobs, but the rate at which that's occurring is not consistent, so we can't really anticipate where growth is going to come from, but we do see that we are in recovery. Great, so that wasn't the question that you asked me. So what I want to say is OK, the question was: Is this similar to what I experienced before? And I really wanted to get down to the data and compare the difference and obviously this is much different of an economic impact and a job impact, but what I will say is in some ways yes, it's similar because the job market of course has become more competitive. There's certain industries and sectors that are more affected by it. Some businesses have completely shut down and will never come back. There's far fewer jobs, and also what's true is what we expected is not what is, and I think that's important as a perspective employee that you expected that you would have all these job offers, you expected you would work in a certain field, you expected the economy would look a certain way, and it's just not. And I think that's something that we solidly have to sort of accept. And then this point I love a lot, but what's similar is for people that are coming out of school, we're still potentially relying on our parents. We might still be living at home despite the fact that many of us went back for higher education. Me: two different Masters degrees since the Great Recession. We have all of this higher education and learning yet it doesn't necessarily translate into a readiness or focus on getting married or buying a house, or getting a puppy and so I think that in those cases that's similar, you know we're still seeing that. How it's different is, you know, we're more than a decade later, but we are now conducting more business online than we ever have before, so the nature of how business is done is completely different. And what employers are seeking for in terms of candidates has changed. And so now we're really looking at people who have computer or other engineering skills. In terms of marketing, we're really interested in people that understand digital marketing, social media, and then of course the logistics industry is completely booming and and so I wanted to do a little bit more research on this. So I did conduct some stuff to say what industries and certain sectors are still hiring. Today, we know that Amazon, for example UPS are hiring they’re in logistics, they're doing shipping and delivery. Online learning programs and companies are hiring grocery stores, delivery services, remote meeting, and communication companies like Zoom, Slack, Microsoft Teams are hiring. And then another place is of course in healthcare, in pharma. Education, we're seeing education, continuing to boom, people are going back for higher education. And then key jobs within those industries: Software engineers and architects, data science, data storage, tech support, customer success, sales reps, behavioral health, nursing, cybersecurity, developers. And then there was an article from LinkedIn that said 83% of job postings right now are looking for these skills: communication, business management, problem solving, data science, data storage technologies, technical support, leadership, project management, digital literacy, employee learning and development. And so I think when we look at how things have changed, we do also have to look at how has industry and how has business particular business sectors change in the demand for skills in the jobs that they need for the future.
Samira: Interesting, yeah, I like that you went out and did all your research for this. You know that's great! I'm really happy to hear that. And you gave some really great advice to Generation Z graduates. And so I guess this really translates and gives a great segue into the next question of: from your experience, what’s some advice you'd give Generation Z graduates who are now facing a very tough job market?
Kylie: I love this and this is probably the third time in the last month that I've been asked this question and I decided actually to crowdsource this one and I like to do this sometimes, but I leveraged my own network on Facebook this time and I pitched to my network and I asked this question: What advice would they give for Gen Z graduates who are looking to find a job? And I want to recognize the individuals that shared because they gave some really great advice. So a longtime friend, former colleague of mine, Louisa Hall, she's based in the DC area, she said networking is critical, letting people know what you're looking for and to also join Facebook groups and LinkedIn groups in the industries in which you're interested. There was another person, Ivy Ziedrich, she said, don't rule out grad school, also utilize the career services centers at the schools that you are currently going to. Emily Jeffries, formerly of Reno, a Reno graduate, now lives in Washington DC, she said networking, but to think of it as a long game, what you do now will serve you for years to come, but then also be active in conversations online. So when you're looking at building your professional brand and network, show up in places where you want to be eventually working and then gain leadership experience, whether it's formal program training or even through volunteer work. A longtime friend of mine who now lives in the Los Angeles area, Andrew Andrews, said use LinkedIn or Facebook to see if you know anyone at the companies that are hiring. Ask for help from your network. Do homework on the company you want to work at, or have an interview and this was a really interesting point, he said for an interview, create something tangible that's of value to that company and share with them so that they see that you're already coming forward with a potential value add. I thought that one was really brilliant. I have an incredible friend, global citizen, originally from Pakistan, Salman Ahmad, he said personal branding- if we can actually look at ourselves as products and brands that contain value then we should consider where we are on the product lifecycle curve and what we should do to grow to the next stage or survive where we're currently at. A friend of mine who worked in education in the University system, entrepreneurial ecosystem Whitney Roberts, she's in Wisconsin now, she says, look at opportunities outside of the career story you've told yourself. Our generation and the ones behind us are likely going to be working in jobs we create, or jobs that aren't created yet. We also have to identify skills you can add to your tool belt to be more competitive and then of course when you're trying to connect with someone on LinkedIn, don't just press the connect button, write something thoughtful to differentiate yourself. Marcus Casey, a former employee of mine who is a successful graduate that now has a great job in Reno, said get as much experience you can while you're in school. Say yes to a lot of different things, but be careful not to do too many things. And then Matt Seltzer out of Las Vegas said pick up marketable skills HubSpot offers free trainings in CRM, social media, email marketing. Jamie Schwarzbach, another former employee and friend of mine based in San Francisco area, she says there is no shame in contract work. And I personally really like this idea because the other day I updated my personal profile on Upwork, which is a heavily utilized platform known for “gig jobs,” but now there's incredible consultants that are charging upwards of $200.00-$300.00 an hour. I mean, there's all kinds of opportunities on there for people to look, so don't just expect the only way is a full time job. There is contract opportunities in gig stuff out there. And then another really great comment was from Amanda McLernon out of Denver. She said be able to articulate why the mission of the particular organization means something to you, make a personal connection to the person you're trying to work with, and also in addition to just being savvy about their company and the person hiring you, be savvy about the industry. And I thought that that was a really good point and so I love that. And then on top of that, the things that I would say are be aware of who is hiring. We just talked about that before, really understand who's hiring in your marketplace and think about if you're willing to relocate and then find out who's hiring there. I would also say take care of yourself. Make sure that you're paying attention to your own mental, emotional and physical health and that you're not only looking at ways to grow your career and your education, but you're taking care of becoming more of a leader of your own. And then finally, the last thing that I would always say is look for ways to help others. I genuinely believe that the more you give, the more that it will come back to you.
Samira: I feel like a lot of this advice could be for anyone in any state of their career. I love this, you know, it's not just for those starting out, it's for any stage and that's great. I'm really glad that you crowdsourced this question and used your network. You applied your advice. Just, you know, through that question, I think that's brilliant. So now let's move on to a more macro level. I know you once worked with the Las Vegas Global Economic Alliance, with the pandemic and everything that's gone on this year, what are some policies and strategies you'd give cities that are trying to reinvent themselves under these new circumstances that we're all facing in the pandemic?
Kylie: I think this is a great question and yeah, I love that we're going macro here. I think that if you're in economic development, you probably understand this, but communities at large should understand what economic developers are focused on and what it’s made of. So for example, economic development is just as much about recruitment of new companies as it is to the retention of existing business. And then we also need to look at what are we doing to attract a skilled workforce. What are we doing to support entrepreneurs and also people who may be looking to consult or to get these gig jobs? We have to create long-term plans, especially to support entrepreneurship, because you can't just build something and give up on it. This is really like a 20 year plan that economic developers need to invest in. And it's not just the developer, it's their board, it's their community. And in the long run the greatest impact of supporting a startup community would be that company, for example going public and ultimately infusing that local money back into the supply. So then you have more people that are going to invest in other businesses and create more companies and more jobs. And then I do have some. Well, why don't you respond. But I have some other things to add as well.
Samira: Well, yeah I was just gonna say also education, investing that into education and I know in Reno, Tesla has invested in some of the trade programs at TMCC, Truckee Meadows Community College in order to help get their employees to have the skills that they need.
Kylie: Absolutely, that was another comment that I had to make. And what I'll say is public private partnerships are basically everything in the time of a down economy, and even when it's not. I mean, there's just so much more power that comes from that. And also just partnering with champions in your own community, so we all live in places where there is “influencers” or big voices, someone who can amplify your message. So I think strategies in economic development include identifying community champions who will share messages that are relevant to business owners or relevant to people looking for work. There always has to be a multi pronged approach to disseminating information that people need to hear. And then of course, a lot of the economic development groups look at offering incentives, so how can we restructure incentives to really line up with what businesses and companies need right now? And how can we incentivize people in the right way so that we're actually attracting a skilled workforce? And we can ultimately have higher educated individuals that work here, live here and again and leave an impact on that community. And then to your point, first and foremost, more than anything, economic development agencies really need to be surveying businesses. They need to listen to their needs. Who will they be hiring? How many people will they be hiring? What skills do they actually need now and in the future? And that's where you bring in the universities and the two year colleges to make sure that there are critical pathways where students can actually learn something specific, and be trained to exactly the needs of that corporation, so that we can actually develop the workforce within our own communities and retain talent. And then finally is the marketing for the region aligned to attract individuals with the in-demand skills with the growing industries? And I think that that's probably, when I worked in economic development, one of the last things that we started doing was a campaign to actually attract workforce, and that's so hard to do. I mean, it's a little bit easier to go B2B, you know, hey, I'm going to go talk to this corporation, but how do you reach individuals from anywhere in the world to come work in your region, based particularly on the industries you know are growing, so we have to really be thoughtful about that.
Samira: Wow, yeah I love this answer because I agree with every aspect of it. It's great advice and it's definitely something that every city needs to really keep in mind. Not even just now during the pandemic, but always, you know to make sure that their developing the economy the right way and bringing in that skilled labor and all of that. I love that. So now you've created your own business where you help businesses with their leadership and basically help with the betterment of their firm by elevating their business culture. What's some advice you can give leadership of businesses across the board to move forward in such an uncertain time?
Kylie: So I'm going to bring this one back to the advice that I gave before of take care of yourself first. And make sure when we're running businesses or the CEO or business owners, we can be so afraid about the vitality and the health of the business. And if we're gonna have enough revenue to cover our expenses, but also, how is that affecting you as a human? How are you affected mentally and emotionally? Are you taking care of your physical health? Make sure that you're doing that, and then after that take care of your people. So spend time to reframe or reenergize, re-inspire why you work where you do and what your mission is. And really think through, OK, the things that I care about in my life are XYZ values and I want to rethink how my values actually aligned with my mission so I can start to feel inspired again about why I work here and then encouraging employees and individuals at work to do the same. So right now, for example, I'm working with a high profile Federal Department and we're doing a 10 week leadership development training program and every week we go through exercises where we learn best practices, evidence based research, and information about particular topics. But at the end of the day, what we're doing is team building, we’re trust building and it doesn't necessarily take an expert per say to facilitate that type of a thing in an organization. But someone, like me can come in and can facilitate learning and discussions. And ultimately, I think the greatest learning anytime you're doing something like that is in the self reflective work that's assigned, typically in homework or post session, and so we really have to take time to encourage people to be thoughtful about what matters and about what they care about. And then another thing that I wanted to point out is I recently wrote a blog on my website at kylierowe.com. And I wrote a blog on change and I think that it's very timely to talk about change because change happens in four different ways and I created this change matrix because if you're an individual, sometimes you are seeking change. And how can you approach that? If you're an organization or you're the leader of an organization you want to change something at work, you want to change processes operations the way that you're designed, who knows? Or there's the type of change that happens that happens to you and it wasn't your choice. And I think that lot of us, especially in a crisis or maybe even in a time of the unstable or unknown political environment that we're in, are going to feel an impact of some change that we didn't choose. So how do you handle that? And so from the perspective of an organization that is facing some sort of change that is outside of their control, what can they do? And so first you have to think, how are you going to respond. Well, I need to identify the potential impacts of the change to the organization and to myself. How those could affect business goals, objectives, KPI's evaluate how that change aligns, where does that not align with established goals and seek a well informed team to assist in a business strategy realignment, if necessary. Create a course of action to address the change in a way that aligns to new or established business strategy. And then I have a few more questions. Well, what do you need to make this happen? You need insight and information. How do you motivate others? You have to create transparency through communication and training with a focus on building trust. You have to identify a diverse of individuals who will weather the change and act as agents to protect the best interests of the organization. And you often, if you're going to implement a big change, wanna have a support structure because change in an organization affects individuals massively. Offer counseling, mentorship, and Open Door Policy. And then, after you've implemented a change, what are the next steps? Listen for feedback. Communicate transparently measure the impact against goals, objectives, and KPI's and then finally identify strategies to do this better and different in the future.
Samira: Wow! This is great advice. I really hope businesses listen to this and can actually affect change through this. And I think this applies to people on the individual level as well. Taking care of yourself, especially in these uncertain times, I know it’s hard, but putting that focus of mental health is extremely important. Do you have an general advice you’d like to give to our listeners?
Kylie: I think this is my third time I’m going to push for a focus on personal leadership. And that definition is sometimes new or maybe unheard of, but the way I define it is I believe personal leadership is the ultimate inside job. It’s about becoming intimately familiar with yourself, your light and your dark. It’s about exploring your reality, your belief system, and your identity. It’s also about introspection and find the core of your being. It’s about defining your dreams and going hard or going rogue, which I like to say, to achieve them.
Samira: Wow, yeah that’s some great advice! If anyone is interested in contacting you, what’s the best way to get ahold of you?
Kylie: Well if you go to my website at kylierowe.com all my stuff is there. But my email is kylie@kylierowe.com or find me on social media @kylieroweco.
Samira: Awesome! Well thank you so much for coming on the show, Kylie! It was a pleasure and I hope to have you back on again!
Kylie: Yeah absolutely, anytime!
European View
Unemployment Rate
So with all this talk about the labor markets in the US, I thought it would be great to turn our attention to the European labor markets and see how they are fairing. I will state that it seems as if though the US is entering its 3rd wave of Covid while Europe is entering its 2nd wave. With that being said, we’d imagine that the US economy is suffering at a worse extent than Europe is. Let’s examine this further.
Table 3
Unemployment Rate of Four Major Countries in EU
https://www.marketwatch.com/story/so-called-hidden-unemployment-is-masking-the-jobless-problem-in-europe-11601381652
Our latest numbers tell us that the US official unemployment rate is at 8.4% while the EU is seeing a 7.9% unemployment rate. Looking at Table 3, above, we see that some of the numbers we’ve been told coming out of the EU have been misleading.Why do I say this? Well if we look at the latent unemployment rate (or the potential) in the four countries we see them to be much higher than what was officially reported. I wanted to understand why that was the case and I found two explanations.
But before I get into criticizing the numbers we see above, I will say that if you’ve read my previous blog posts, you know that I disagree with using the official unemployment rate as it doesn’t account for many people including those who have been unemployed for 27 weeks or longer. Currently this number is at 12.8% in the US.
So, why will Italy, Spain, and France most likely see double digit unemployment rate numbers? Well, as we know, European countries don’t usually layoff people, instead they furlough employees or cut their hours. Now, in Spain it’s been reported that they have cut hours to zero for many employees, but they are not counted as unemployed. So here we see there is a definitional difference in how unemployment is being reported. The second explanation was the fact that those “furloughed employees that work zero hours” were then not able to look for another job because they were considered employed to begin with. Many economists agree that the EU unemployment rate by 2021 will increase to 10% or higher.
Fiscal Help
On October 21st, the European Commission issued the first part of the EU SURE program. So first, I want to go over a few things before we dive into what the implications of this program is. According to European Union:
The European Commission is the EU's politically independent executive arm. It is alone responsible for drawing up proposals for new European legislation, and it implements the decisions of the European Parliament and the Council of the EU.
This is important to note because the European Union has a different political system than we do and how they implement measures is also quite different. So the European Commission is basically an executive branch and is really in charge of the day to day business of the EU. Okay, so now what is the EU SURE program? According to the European Commission:
So far, 17 Member States will receive financial support under the SURE instrument to help protect jobs and keep people in work. Financial support will be provided in the form of loans granted on favourable terms from the EU to Member States.
These loans will help Member States to cover the costs directly related to the financing of national short-time work schemes, and other similar measures they have put in place as a response to the pandemic, in particular for the self-employed. SURE could also finance some health-related measures, in particular at the work place, used to ensure a safe return to normal economic activity.
What’s interesting to me is the fact that this is the first time that the European Commission has issued a bond in order to help fund social programs in the EU. You might be wondering who are the 17 member states that will be receiving this financial support. Well it turns out that it’s the hardest hit nations. They include: Belgium, Bulgaria, the Czech Republic, Greece, Hungary, Spain, Croatia, Italy, Cyprus, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, and Slovenia. By issuing the bonds the European Commission has helped the hardest hit nations who are reeling from the effects of the Covid-19 pandemic. They are stabilizing the labor market by subsidizing it and though this may sound like an overreach by a government, the fact is these nations need it.
On the other side of the world, the US is in dire need of a stimulus package and yet nothing has come of it. Unfortunately, with the way our politicians are handling this, I don’t see one passed until after the election and even if it does, it won’t be until 2021 when people will start feeling the effects of it. At least in Europe they are issuing bonds on the market to help sustain the workforce and people’s economic struggles.
Concluding Remarks
This is the last blog post before the presidential election on November 3rd, which also happens to be my birthday. The feeling of both anxiety and excitement is in the air. What will happen next? Who will win? Will there be a quick economy recovery? Will we know the results by the time the next blog post comes out? Who knows.
But there is one message I want to get across to everyone reading this: We are all Americans. We’ve been torn apart to pick one team over the other. But the truth is, we’re about to hit some really rough economic times and it will hit everyone regardless of if you’re team blue or team red. We need to support one another. And remember we are the UNITED States of America, so let’s start acting like it. Sometimes I feel as if the social divide is so deep that it’s beyond repair, but then I realize that change starts with us at the individual level.
I have friends who I fundamentally disagree with, but at the end of the day, they are my friends and I would never want to see them harmed in any way. Remember that as social tensions keep rising, that the people on the “other side” could very well be one of your friends, and even if you think they can’t, they are still human being with people that love them and cherish them. So be wise, be smart, and remember that whether you like it or not, we’re all in this together. Be kind. Be patient. Wear a mask. I’ll write to you all in 2 weeks.
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