Employers Look to Rein in Those Raises
But employees seem to have other expectations.
Good Morning!
Here are today’s highlights:
There’s more money in dog poop than you might think.
Does it matter if a salesperson makes more than the business’s owner?
Gene Marks believes he has to use LinkedIn—even though he hates it.
When disaster strikes, the vulture investors are close behind.
HUMAN RESOURCES
Employers are trying to rein in those raises, but employees may have other ideas: “A new analysis by job listing website Ziprecruiter analyzed 20,000 job titles and found the number of job titles seeing increases in pay over the course of 2023 has fallen — a significant change from a year ago. Julia Pollak, chief economist at ZipRecruiter, said employers are hoping to reset pay expectations after a 2022 in which workers saw both big raises and large bonuses. And since pay bumps were historically large across a number of industries, that means starting pay for many posted jobs is lower than in 2022. She said wage growth has slowed in official data but is still outpacing inflation and pushing costs up for employers.”
“‘Employers are clearly trying to cool wage growth further. But they are only one side of the market. They do face a cost in terms of attrition if they don’t pay what the market demands,’ Pollak said.”
“Companies might also be setting starting pay lower in job postings to give themselves more room to negotiate, as more workers push for higher starting pay when switching jobs. But worker expectations are still high.”
“The annual expected salary of a job offer jumped to $67,416 in July 2023, up from $60,310 in July 2022, according to the Federal Reserve Bank of New York’s SCE Labor Market Survey, the highest the survey had recorded.” READ MORE
SOCIAL MEDIA
Gene Marks says he hates LinkedIn: “But I need LinkedIn. As the owner of a business that sells products and services to other businesses, I begrudgingly admit that LinkedIn is the only social media platform that makes sense. My customers and prospects may be — for all I know — defending Trump on Truth Social and taunting wild animals on Instagram all while teaching adolescents how to apply makeup on TikTok. But they’re also selling tubes and wire and containers and all sorts of other boring products that make up the core of the US economy and the base of my business. And they’re all on LinkedIn.”
“So yes, I post my writings on LinkedIn. I comment on other people’s posts (‘great story, Bob!’, ‘inspiring message, Alexis!’, ‘amazing event, Amanda, so happy to be there!’) and I routinely message customers and prospects (‘thanks for connecting, Mike’ and ‘would you be interested in speaking, Kim?’) because it happens to be a good place to generate business so I’m playing the game.”
“And everyone — and I mean everyone — is simply crushing it on LinkedIn. They’re getting promotions. Their products are saving humanity. They’re giving money and time to charities. They’re mentoring, speaking, coaching and advising others. They’re on boards and committees. They’ve got endorsements and recommendations and likes and applauding emojis.”
“But I know the truth about these people. Because I am one of them. We’re not really crushing it. We’re stressed. We’re worried about money. We’re worried about losing our jobs and our customers.” READ MORE
SALES
If a sales person ends up making more than the owner of the business, is that a bad thing?
OPPORTUNITIES
People are building real businesses scooping dog poop: “‘Customers are either grossed out, physically unable, or don’t have the time,’ said Tim Stone, 36, of Dallas, president of the national Association of Professional Animal Waste Specialists (aPAWS), who runs Scoop Masters, with branches in Dallas-Fort Worth, Los Angeles, Jacksonville, Fla., and Nashville. Stone isn’t bothered by people who laugh at his profession. ‘I take in $1.8 million a year from Dallas-Fort Worth alone,’ he said. ‘I pay some of my employees $40,000 to $50,000 to pick up dog poop. ‘I couldn’t care less what people think about what I do for a living.’”
“Mike Zlotnick, 60, owner of Poopie Scoopers R-Us, headquartered in Northeast Philadelphia, said his clients are ‘the top 3 percent with disposable income who can afford this work,’ for which he charges $20.50 to $26.50 a week, depending on the number of dogs.”
“The profession likely started in Southern California in the 1980s, said Keith Brandt, owner of Poop Genie, with offices in Dauphin County and King of Prussia. Out West, perpetually warm weather causes dog waste ‘to stink every month, as opposed to just four hot months around here,’ making the job a necessity, said Brandt.”
“‘Our customers are millennials, progressive people who think outside the box,’ many with two incomes, Brandt, 44, said. ‘They work hard and prefer going to their kids’ football practice. We take one big chore off their plates.’” READ MORE
While communities mourn, investors start making offers: “They purchase the cheap land and then wait to resell the properties after the lingering effects of the disaster have passed and property values increase. Critics refer to these real-estate players as ‘vulture investors’ because they prey on grieving families. In the Maui fire, more than 2,000 buildings were destroyed — 86 percent of them residential homes. Before the fire, many of those properties would have been worth millions of dollars. But just a week after the devastation, investors began calling residents of Hawaii's destroyed townships to try to convince them to sell their homes for cut-rate prices.”
“The vulture playbook is pretty straightforward: Investors approach affected homeowners with an offer just days after tragedy strikes, hand them a prewritten contract, and try to reach an agreement on the spot.”
“A 2019 Wall Street Journal report found that one investor who bought up properties damaged by Hurricane Michael was able to earn $10,000 to $15,000 per property — without doing any work on them. Another investor group bought up more than 600 properties after Hurricane Katrina, making an average of $20,000 per property, also without touching most of them.”
“Prices generally go up post-disaster because the area is suddenly hit by a reduced supply of habitable property, while the demand to live there stays the same. So as homes are rebuilt or the debris is cleared for a new structure, the plots become more lucrative. The rebuilt homes are also newer than the ones that were destroyed, which adds value.” READ MORE
RESTAURANTS
For many diners, 5 p.m. is becoming the new 8 p.m.: “Jacky Robert of Ma Maison on Beacon Hill has seen decades of dining habits in Boston and elsewhere. ‘When I worked at Ernie’s in San Francisco, we were open for dinner until 11 p.m., and there was lots of late dining.’ It made for long days and nights for the staff, he added. Now his Beacon Hill restaurant opens for lunch and serves through the afternoon into evening. ‘We are very busy at 5,’ he says. Dinner service begins at 4, and the rush is at 6 p.m. ‘We didn’t have that before.’ Ma Maison has plenty of regulars, and some of them dine at 3 p.m., Robert says, as their main meal of the day.”
“And while diners may start earlier, they still seem to be ordering good wines and having a full dining experience. He himself changed his habits: He eats his main meal at 6 or 7, and goes to bed earlier. ‘I feel good, and sleep better,’ he says.”
“The Mida restaurants in Newton and East Boston serve lunch or brunch daily, and [chef-owner Douglass] Williams says opening earlier ‘keeps the momentum, the energy up’ for the employees. ‘For us, energy is the biggest component.’”
“Besides, Williams says, people who now routinely work from home often have a different take on dining times. Workday hours may be more flexible, and fewer people have to factor in commuting time and changing clothes before going out to dinner. Plus, he adds, there’s nothing as off-putting as looking inside a restaurant that’s locked but with people still inside finishing lunch. ‘Telling people no is not something we want to do.’” READ MORE
RETAIL
All of those empty storefronts downtown suggest it may be time to think differently about retail space: “Filling so much empty ground-floor space may require cities to rethink what brings people downtown. It may force officials to change how they regulate buildings, and property owners to shift how they profit from them. ‘The ground-floor restaurant or ground-floor coffee shop or bar should not be seen as the moneymaker for an office high-rise but as a benefit to the community to serve anyone that comes downtown,’ said Robbie Silver, head of the Downtown San Francisco Partnership. ‘That mind-set has not really happened yet.’ To the contrary, property owners may find a tax benefit in writing off vacant retail space. And they may be wary of lowering rents to fill those spaces, for fear of admitting to investors that a building’s profitability has declined.”
“Oliver Carr, a longtime Washington-based developer, said he no longer counts on turning a profit on the ground floor. He now views it primarily as adding value to the floors upstairs. A restaurant is worth keeping even at a loss, in other words, if it helps fill the offices above, or even boosts the rents there.”
“To fill vacant downtown storefronts now, cities will have to consider other such uses. Perhaps fewer coffee shops, and more health clinics, day care centers, university classrooms, live/work spaces and fabrication shops. Ms. Preuss today proposes filling vacant spaces with small-scale manufacturing that has the added benefits of paying more than retail and relying less on foot traffic.”
“She doesn’t mean noisy factories, but people producing tangible things, like bottling hot sauce or roasting coffee beans. Or maybe the empty storefront becomes something else entirely. ‘What if there were just more public bathrooms?’ said Kim Sandara, an artist living in New York.” READ MORE
FEATURE
Big Gay Ice Cream is melting down: “With a rollicking rise that leveraged queer identity as a brand strategy, the New York City-based soft-serve chain opened seven shops in the Northeast and landed its products in supermarkets nationwide. The company now is down to just one location. On Friday, a founder and partner, Doug Quint, filed a lawsuit in New York State Supreme Court accusing another partner, Jon Chapski, of mismanaging the company and fraudulently collecting government loans during the pandemic. On Tuesday afternoon, through a spokesperson, Mr. Chapski said only that he was reviewing the lawsuit with his lawyer and would respond ‘when appropriate.’”
“The company’s first shops exploded in Greenwich Village in a burst of rainbow sprinkles. Locals and tourists alike thrilled to the cheeky branding (Barbie dolls, glitter, ‘Golden Girls’ references) and made pilgrimages for Bea Arthur swirls and Monday Sundaes.”
“Mr. Quint and Bryan Petroff, the avuncular (and gay) founders, went on to draw a mainstream following that helped make ‘don’t ask, don’t tell’ a thing of the past (in food marketing, at least). In 2017, Nestlé began distributing the company’s hard-pack ice cream in supermarkets nationwide.”
“During the pandemic, though, the good vibes evaporated. Today, after multiple missteps, unpaid debts and evictions, the company’s future is murky. Mr. Quint is working in a Walgreens pharmacy in Pittsfield, Maine, where he grew up. Mr. Petroff works in human resources for a New York restaurant chain.”
“‘We were so naïve,’ Mr. Quint said ruefully, acknowledging that he and Mr. Petroff willingly entrusted Mr. Chapski with both their corporate finances and personal livelihoods.” READ MORE
INSURANCE
Extreme weather isn’t just driving up the cost of home insurance: “States prone to climate disasters have seen some of the steepest auto-rate hikes. In Colorado, car insurance premiums have increased 52 percent since last July as blizzards, tornadoes and hailstorms have led to an increased number of claims. And in Florida, premiums have soared 88 percent as insurers scramble to make up losses from hurricane-linked damage claims.”
“In 2022, State Farm reported $13.4 billion of underwriting loss in its auto insurance department. Allstate, which reported a $678 million loss in that sector in the first half of 2023, increased its auto insurance rates by 9.3 percent across 15 locations in May to make up for the losses, Allstate chief financial officer Jess Merten said last month.”
“‘We’re going to maximum file rates everywhere we can, and we’re not getting as much pushback from regulators because the numbers are pretty clear,’ Allstate chief executive Tom Wilson said during the company’s most recent earnings call. ‘Like, it’s not like we’re making it up.’”
“‘There’s one thing worse than rising rate hikes,’ Georgia Deputy Insurance Commissioner Steve Manders told The Washington Post. ‘And that’s not having coverage at all.’” READ MORE
THE 21 HATS PODCAST
In this week’s bonus episode, Dr. Randy Spencer talks about the changes that have been roiling vet businesses: For one thing, that pandemic puppy boom we all heard about has brought additional stress to veterinary workers who had already had more than their share. For another, there’s been a wave of corporate money and private equity flowing into the industry. That sounds as if it could be a good thing, and Spencer says he’s been dodging a constant series of acquisition inquiries for years. But the big money has also engendered considerable turnover and disruption, and in response, Spencer decided to sell 100 percent of his business, 1st Pet Veterinary Centers, to an employee stock ownership plan in 2021. The transition to an ESOP remains something of a work in progress, in part because veterinary people tend to be more focused on pets than they are on profits.
“Veterinary medicine,” Spencer says, “is just the best profession in the world. In a way, it's a service industry, but we get to serve pets. That's why veterinarians get into it.”
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren