NYC Unemployment

Found a short, interesting article titled "A Localized Breakdown of Joblessness in New York" about the unemployment rate for all of New York City, including a neighborhood by neighborhood breakdown. Of course there are myriad dynamics that have caused the unemployment distribution in NYC (and which may affect the validity of these numbers), but nevertheless its good to have a gauge of which areas are weathering the recession better than others.

The Recession's impact on Teenagers

As we enter 2010 an embark upon a year of fresh starts, there are certain things we cannot leave behind; the most obvious being the financial woes of 2009. In this post I want to breifly explore the recession's impact upon a specific demographic: teenagers. Although teenagers have been aware of the weakened economy, in many cases they haven't been primarily (directly)affected. For instance, many parents and households have cut back their expenditures, thus decreasing the amout of money that they pass down to their children in the form of disposable income. Apart from these types of secondary (indirect) affects, the recession hasn't been extremely impactful up to this point amongst this demographic (outside of the effect on finding employment) aside from being a topic of discussion, and the commonly heard colloquialism "its a recession." However, a recent article titled, Recession? Teenagers Get It, and Are Cutting Back, details how the recession has finally had a primary impact amongst the youngest consumer group. According to the article, "Sales are down sharply in recent months at nearly every major retail chain catering to teenagers, and interviews with teenagers suggest that the reasons go beyond their own difficulty finding part-time jobs." Additionally, teens are starting to understand the proportional relationship between price and quality. The idea that a $30 high quality shirt in most situations is a better buy than purchasing three low quality $10 shirts. Teens have also been impacted by the recession as "the teenage unemployment rate is at a record high, more than 26 percent, according to the Bureau of Labor Statistics, compared to an overall unemployment rate of 10 percent." Bottom-line is that the recession has officially hit everyone, however, this is more of a formality than a fearsome development since teenagers don't move the economy. Nonetheless the article provides interesting food for thought.

The Stimulus Package and Job Creation, thus far...

It's been approximately 8 months (in two days) since the 787 billion dollar recovery act was passed by Congress and signed into a law by President Obama. While 8 months is not adequate amount of time to evaluate the largest recovery act in history, one can still inquire about the effects of the bill, with the main question being: has the act created jobs? The answer? It depends who you ask and how they define a "job." An article titled, Stimulus: Creating jobs or not attempts to provide clarity around this question. The article does a great job of summarizing the views of the White House, Republicans and state representatives. Essentially, the White House says yes, Republicans say no and state reps seem to be on the yes end. Things aren't so cut in dry of course, but in evaluating the effectiveness of the bailout in regards to job creation, it's important to keep (at least) three things in mind. First, rather than concentrating on the absolute number of jobs that have been created, consider the rate of jobs losses (creations). In these regards, the recovery Act has significantly slowed the rate of job losses. Specifically, the "number of jobs lost in the third quarter averaged 256,000 per month, two-thirds less than the country sustained at the beginning of the year." Additionally, from a micro viewpoint, states seem to believe that the stimulus is helping employ their residents. Confidence is a big driver of employment and the overall economy. Lastly, over half of the funds apportioned for the rescue plan haven't been spent yet. More money spent = more jobs? Not exactly, but it will certainly help.

Recessions: A time for Entrepreneurship

Recessions are often considered to be "the worst of times," however, for some people recessions often present attractive opportunities. For example, lower stock prices enabled me to start investing in the market. Regardless of such opportunities, recessions tend to negatively consume a society, often times providing its members with a strong reality check. However, during recessions, society needs its dreamers, innovators and entrepreneurs more than ever. Innovation is often the vehicle that drives a country out of a recession. Although recessions may have a dearth of financial capital, they are full of human capital which is equally if not more important. As people are laid off during recessions they begin to search for new opportunities, thus making it easier for those starting a business to find the people with the talent and skills that they need. An article titled "6 companies born during downturns" details six major companies that were started during recessions or recession-like periods. These companies are just a small example of the many successful businesses that have been created during harsh economic times. Such successes demonstrate that entrepreneurship is not only a viable option during recessions, but may even be a preferable one. I offer the following suggestion for fellow students: free your inner entrepreneur. The recession may offer increased access to the support you need to start your dream business. For those who aren't students and are looking for opportunities, consider joining a start up company. You never know when you're becoming a part of the next Proctor and Gamble or IBM.

...And I'm Back

After entirely too long of a hiatus, I've made my return to the blogosphere. For those of you who keep up with my blogs: I apologize for the long time in between posts. Intensely studying for finals lead to an overwhelming need for a break from most activities that require some sort of analytical thinking. But now I'm back, mentally well-rested and eager to blog. Stay tuned for upcoming posts.

The other side of the story: A case for bonuses

Bonuses have been a popular topic of conversation throughout the recession. Specifically, many people have complained about the excessive nature of the bonuses paid to top executives on Wall Street. Although I agree that it is crazy for anyone to take home a $25 million dollar bonus, I fully understand why bonuses are such a crucial part of the financial services industry. An article titled "Greed is Good" provides a great overview of the important role that bonuses play on Wall Street. Essentially, its important to understand that bonuses are based upon performance and as such they provide strong incentives to employees to turn out their best output. Additionally, the way that bonuses are structured means that they are often paid to those who make things better, not worse, thus ensuring that there is minimal/no reward for poor performance.

Aside from providing incentives for employees to produce outstanding work, bonuses the main way that banks compete for top talent. Banks choose to attract top talent via performance based incentives which reward money whereas Silicon Valley firms choose to compete for talent by offering unique cultures which often come with offices filled with innovative perks (Nintendo Wii's, pool tables, you name it). If banks are going to, and need to, ask employees to work long, tireless, stress-filled hours they have to provide them with the right incentives and let's be honest, money talks. I think it helps to frame the situation like this: How do engineers decide which jobs to take in Silicon Valley? It's a complex algorithm involving money, friends, brand name and free food. How do those who want a career in finance make their decisions? Its a combination of brand name, opportunity for advancement and the strength of the pay for performance system. In the end, I feel the fundamental logic behind bonuses is strong, its just the nominal dollar amounts that needs to be fixed.

Facebook: A Business Perspective

Facebook is an interesting company/website/service/way of life—take your pick on what you want to call it. Anyway, I wanted to take some time to briefly talk about Facebook from a business perspective. Facebook is about to register its 200 millionth user (if it hasn't already by the time I post this), yet has struggled to find a way to profitably monetize its user base. Apparently, Facebook's CEO, Mark Zuckerberg, says the company is focused on growth rather than making money at this point. To be able to do so is clearly a luxury during today's rough economic times. Anyway, an article titled "Is Facebook Growing Up Too Fast?" talks about this issue plus more by providing a thorough in-depth analysis of the company's performance. After reading the article it seems like Facebook is a little confused about its identity as a company. Its objectives seem to be a mix of Google's mission complimented by Twitter-like features both of which are made possible by their government-like control over our information as users. Facebook primarily makes its money through ads, but it's hard to fathom how much revenue they are generating. Think about it, how often do you click an ad on Facebook? If you're like me, that's almost never. In fact, a former colleague of mine at Google commented on his status the other day (a Facebook reference during a Facebook critique is a little paradoxical, I know) that he finally got an ad that he could relate to (a targeted ad) on Facebook. I'm not sure how long Facebook has to perfect its advertising system before investors start to ask for a return on their investment, but I hope its sooner rather than later—I spend too much time on Facebook anyway.