| Job creation in
Illinois hasn’t kept pace with neighboring
states or the nation according to a report by
the Institute of Government and Public Affairs
at the U. of I. Job growth in our state was only
3% during the decade ending in 2005 trailing the
nation by a full 9 percentage points. The
manufacturing sector lost a higher proportion of
jobs than did other Midwest states and fewer
jobs were created in finance and transportation,
sectors where Illinois might be expected to
lead. Overall, the shortfall was reflected in
sector by sector with no single sector matching
or exceeding the national rate of growth.
Geographically, the Chicago area accounted for
92% of the job gains for the state during the
period studied with a growth rate of 4.14%. This
rate also trailed similar metro areas. Only the
Bloomington-Normal metro area with job gains of
17.25% exceeded the national growth rate. Click
here for a copy of the
report. |
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When you become big
enough, your business becomes everyone’s
business. The theoretical list of ‘stakeholders’
becomes acutely real as more and more people
demand their ‘stake’ in your business. No place
is this clearer than with Wal-Mart. Once a small
store in the backwoods of Arkansas whose major
concern was how to feed the family, Wal-Mart is
now called to account for how it benefits whole
communities or even society. In response to the
flood of criticism leveled at the company,
Harvard’s Working
Knowledge provides a clarifying look at
the numbers. The article refers to the
conclusions stated in a McKinsey study of the
productivity growth in the U.S. between 1995 and
2000 that Wal-Mart was by far the most important
factor contributing to that growth. Further, the
Wal-Mart business model of low prices has meant
that the greatest share of the value created by
the company has gone to consumers. Wal-Mart
prices are said to be at least 8% lower than
prices of competitors when they enter a market.
This translates into consumer savings of at
least $18 billion per year in the U.S. Of
course, this figure is just a fraction of the
total benefit to consumers as it doesn’t take
into account the additional savings generated as
others lower their prices to remain competitive.
What does this say about the ‘battle of
stakeholders?’ Clearly customers take the lion’s
share of the value as the return to stockholders
has only averaged 1.5% to 2% of revenues
compared to their 8+%. And the argument of
‘society as stakeholder’ tips even further in
Wal-Mart’s favor when you consider that the
consumers getting the greatest share of the
saving benefit are among the poorest in our
society. Wal-Mart operates 2.5 times the amount
of selling space in the poorest third of our
states than they operate in the richest third of
states. But what about employees as
stakeholders? Those demanding a greater share of
value for employees must face the reality that
increased costs will necessarily come out of the
savings currently going to customers. Even
relatively small increases in pay would
completely wipe-out shareholder surplus
requiring higher prices. So this debate is
really about whether customers are willing to
share their savings with employees and it will
only be resolved in the marketplace. Management
gets its marching orders from customers not the
philosophy of interest groups. |
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On the one hand we
struggle today to find a solution to problems of
an aging population - fewer workers and
increased costs. On the other hand we also
struggle for a solution to the continuing
outflow of jobs to other countries. Speakers at
the recent Wharton 2007
Economic Summit suggest that these two
seemingly problematic trends may, when taken
together, resolve themselves. Wharton professor
and economist Jeremy Siegel points out that
workers investing today for their retirement
will need buyers when they convert their
investments into funds for retirement living.
The next generation of workers in this country
will not be sufficient to either replace their
productive capacity nor to purchase the
investments of the retiring generation. We need
more affluent workers in developing countries to
fill this gap and thereby solve at least part of
the problems of the aging workforces of
developed economies. Michael Milken echoed the
importance of continued growth in developing
countries noting that not only is the retired
proportion of the population increasing rapidly
but their retirement demands are growing as
well. In many important ways medical advances
have slowed aging and the retired worker of the
future is much more active than their
predecessors. The developing nations are thus
needed not only as buyers of retiree investment
vehicles but also to produce affordable goods
and services for this expanding retired
population. That means that the developed
nations have a stake in the success of the
underdeveloped economies. Milken stresses the
importance of investment in human capital in
both developed and developing economies citing
examples of countries where a focus on education
has led to future growth. Both speakers warn
that protectionism among developed countries is
the single greatest threat to bringing about
successful solutions to the problems of
retirement and jobs.
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There was a time that
you didn’t have to take a B-Law course to know
the meaning of Caveat Emptor: Let the
buyer beware! Yet most young people today have
to guess if they encounter a test question
asking for its meaning. It’s hardly necessary to
enter the marketplace armed with caution so
necessary up to the latter part of the last
century. Today’s consumer is protected on all
sides by a bodyguard of regulations and court
cases some of which have stretched the
boundaries of nuttiness. Where did all of these
protections come from? Two factors propelled
government into the shopping experience. First,
the affluence that developed after WWII created
new products of far greater complexity and cost
shifting consumer focus to safety and quality.
And these products were affordable to all
inviting the formation of aggressive consumer
interest groups that reached out for government
intervention. At about the same time there was a
fundamental change in the shopping experience
itself. Small retailers with knowledgeable staff
were rapidly replaced by high volume chain
stores where the customer could no longer rely
upon the integrity of a local proprietor or
long-time sales person for product information
when making purchasing decisions. This vacuum of
knowledge and trust was filled by regulatory
authority. The U.S. led in the development of
consumer protection but other developed
countries soon followed to the point that the
old adage might now be more accurately stated as
‘let the seller beware.’ MORE
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| The Small Business
Administration has issued a new rule effective
June 30, 2007 requiring small businesses to
recertify their size status on all federal
contracts whenever they are acquired or merge
with another company or annually prior to the
sixth year of an existing long-term contract.
Announced in November of 2006, the rule is
intended to assure that the business size on
file with the federal government is accurate for
purposes of small business procurement programs.
It will also help assure that more government
contracts go to small businesses and not to
larger companies that acquire a qualifying small
business. If your business is involved with
federal contracts, be sure to note this new
reporting requirement of the
SBA. |
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| Illinois
Chamber
HR HELPLINE |
| Knowing what you can
and can't do will help you prevent costly
mistakes. Call our staff of HR experts. Let Pam
Holleman help you deal with problems safely and
avoid disputes. You can reach the HR Helpline
toll-free at 800-322-4722. |
| |
| Current
Economic
Indicators |
| Your membership in the
Illinois Chamber pays! We offer valuable
programs and services to our members at special
discounts. Click
here for our growing list of outstanding
seminars, workshops and programs that will help
you with your everyday business needs.
|
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 The Chamber
urges all Illinois employers to recognize their
Guard and Reserve employees by signing and
displaying the ESGR Statement of Support. To get
yours, simply complete an online
form and you will receive a personalized
certificate that demonstrates your support. Also
visit the SBA Veteran's Business Development web
site for assistance to small business owners
that have employees activated in the Guard or
Reserves. Click MORE
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The
Exec Report - Copyright © 2007 The Illinois
Chamber
Wood
S. McComb, Editor
Debra
McCarver, Director of Communications
|
