How Jack Stack Learned to Love Recessions

By viewing recessions as opportunities, Stack has repeatedly doubled the value of SRC Holdings

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Today’s highlights: How to use a tax credit to offer a hiring bonus. Why the PPP forgiveness process could take a decade. And how Amazon managers hit their turnover quotas.


Since 1983, Jack Stack, CEO of SRC Holdings, has been using recessions to buy assets, shift strategies, and transform the business. And now he’s doing it again: “We've been in four recessions in the last 30-some years, and historically what has happened to us is we've been able to really make great acquisitions. And what we've learned over a long period of time is that when you're ready to hit a recession, that's the time you want to redo the company. And when we have done this in the past, we've been in a position that doubled the value of the company five years after each recession.”

  • “So that construction company I was talking about? They did $16 million in annual sales, and in 2009 we bought them for $100,000.”

  • “In 2010, as SRC emerged from the Great Recession, Stack created a plan to set aside $100 million that would serve as dry powder for the next recession.” READ MORE


Struggling to hire? Gene Marks suggests using a tax credit to offer a hiring bonus: “The [Work Opportunity Tax Credit] is available to employers that hire certain types of employees, such as those coming off welfare or a ‘qualified’ veteran ... The list of eligible workers also includes ex-felons, qualified Social Security insurance recipients or those who have been receiving long-term welfare assistance. But the credit is also available to employers who hire a ‘qualified long-term unemployment’ recipient. That worker is defined as someone who has been unemployed for not less than 27 consecutive weeks at the time of hiring and received unemployment compensation during some or all or the unemployment period. Sound familiar? It should. Given the deep impact of the pandemic recession, many workers today find themselves in this situation.”

  • “When you’re looking to hire a prospective employee, find out as soon as possible whether that person falls into any of the credit’s eligible categories.”

  • “Calculate the credit in advance of hiring the employee and use all or a portion of that future benefit to offer a hiring bonus.”

  • “It’s extra money that the government is providing you and it could make the difference between hiring a great person or losing the job candidate to someone else.” READ MORE

States are rejecting federal unemployment payments: “A growing number of Republican-led states are rejecting enhanced federal Covid-19 pandemic unemployment payments, saying the extra $300-a-week supplement is providing an incentive for some people to avoid work at a time when employers are struggling to find labor. On Tuesday, Iowa and Tennessee joined the list of at least nine states that are moving toward the elimination of the extra benefits ahead of the program’s scheduled expiration in September. The U.S. Chamber of Commerce has also called for an end to the bonus.”

  • “Unemployed workers are eligible for an additional $300 a week on top of regular state jobless benefits, which average $318 a week, according to the Labor Department. That means the average benefit recipient earns slightly more than the equivalent of working full time at $15 an hour.” READ MORE

Amazon managers say they hire employees just to make sure they have someone to fire: “The practice is informally called ‘hire to fire,’ in which managers hire people, internally or externally, they intend to fire within a year, just to help meet their annual turnover target, called unregretted attrition (URA). A manager's URA target is the percentage of employees the company wouldn't regret seeing leave, one way or the other.”

  • “In a statement to Insider, Amazon's spokesperson denied that the company hired employees with the intention of firing them and said it did not use the phrase ‘hire to fire.’”

  • “But the existence of the practice in at least some parts of the company shows how Amazon's system of requiring managers to hit a target attrition goal every year can foster controversial norms and practices.” READ MORE


Be prepared for the PPP forgiveness process to last many years: “That is partly because of the addition of a second round of the forgivable loan program that launched in 2021, as well as the crush of forgiveness applications in front of what has historically been a small agency, said PPP expert and attorney Tenley Carp, a partner at law firm Arnall Golden Gregory LLP. She said the timeline, in which small businesses have up until 10 months from the end of their loan’s covered period, to apply for forgiveness, plus time for lenders and the SBA to consider appeals, and the resulting legal challenges that follow, could see some PPP loans in limbo for the better part of a decade.”

  • “Small business owners have 10 months after their covered period ends to apply for forgiveness, lenders have another 30 days to review the business’s PPP loan application and SBA has another 90 days to agree or reject the determination, after which small businesses can appeal.”

  • That puts PPP loans made in 2021 well into 2022 and even 2023 on just the standard forgiveness process. But it is unclear which courts might see legal disputes over forgiveness, or which government agencies could act as mediators.” READ MORE


Consumer prices rose faster than expected in April: “The Consumer Price Index climbed 4.2 percent during the month, from a year earlier, the Labor Department said, the fastest pace of increase since 2008. From March to April, prices increased 0.8 percent. Economists had expected the C.P.I. to rise 3.6 percent over the year, and 0.2 percent from the month before, based on the median forecast in a Bloomberg survey. The core index, which strips out volatile food and energy, rose 0.9 percent in April from March — its biggest monthly increase since April 1982.”

  • “Prices are shooting higher as inflation figures lap extremely weak readings from 2020 and as supply chain disruptions begin to bite and demand climbs.” READ MORE

The panic buying of gasoline has begun: “Drivers along parts of the East Coast piled into gas stations on Tuesday, resulting in long lines and shortages as motorists reacted to what could be a weeklong shutdown of the nation’s largest fuel pipeline because of a cyberattack. Colonial Pipeline Co., operator of a 5,500-mile conduit for gasoline, diesel and refined products, said Monday it hoped to substantially restore service by the end of the week. It shut the pipeline late last week after a ransomware attack that U.S. officials have linked to a criminal gang known as DarkSide.”

  • “Gasoline demand Monday across the U.S. was up about 20 percent from a week earlier, according to data collected by price and fuel tracker GasBuddy.”

  • “In the Raleigh, N.C., area on Tuesday, cars were lined up 30 deep to access a dozen pumps at a BJ’s Wholesale Club.”

  • “Shortages in the area were also afflicting gas-station owners like Mike Whalen, whose family owns three locations that were out of fuel on Tuesday. ‘Am I losing money? Hell yeah I’m losing money,’ he said.” READ MORE


The market is hot everywhere, but the cheapest homes are the hottest: “The red-hot U.S. housing market is giving an extra boost to the cheapest houses, including many in historically stagnant neighborhoods that have suffered from a lack of investment. It is pushing forward efforts to revive the local economies of Detroit, Cleveland, Youngstown, Ohio, and other areas where homes can sell for as little as a few thousand dollars but typically require a lot of work to fix up and can’t be financed with a mortgage.”

  • “U.S. ZIP Codes where the median home cost less than $100,000 in early 2018 have had a 42 percent rise in prices in the three years since then, according to a CoreLogic Inc. analysis for The Wall Street Journal.”

  • “That is about double the rise for ZIP Codes where the median was between $150,000 and $200,000, and triple the rise in locales with $300,000-plus price tags.” READ MORE



The Trump tariffs have driven a dramatic decline in imports from China: “Nearly two-thirds of all imports from China—or roughly $370 billion in annual goods—were covered by tariffs imposed by the U.S. in 2018 and 2019. Tariffs now cover just half of Chinese exports to the U.S., or about $250 billion in goods annually, as U.S. companies buy more from other countries, according to a Wall Street Journal analysis of information from Trade Data Monitor.”

  • “The Trump administration imposed the levies in 2018-19, aiming to boost U.S. factory production by making Chinese imports more expensive for the American companies that bring them in. That so-called re-shoring of manufacturing hasn’t happened in any appreciable way, economic data show, as U.S. companies instead turned to other countries in Asia for supply.”

  • “Vietnam has been an especially big beneficiary. It now ranks No. 6 globally for imports to the U.S., up from 12th as recently as 2018.” READ MORE


Restaurants, bars, and food halls are providing a second life for steel shipping containers: “To drum up publicity for his downtown Indianapolis food hall, Craig Baker posted photos of orange, turquoise and hot pink shipping containers on Instagram. They might seem like an odd way to promote a food emporium and culinary incubator, but the steel boxes piqued locals’ curiosity. ‘They’re very much like Legos, right?’ Mr. Baker, an entrepreneur and a chef, said of the shipping containers inside the AMP, an artisan marketplace and a former utility garage where vendors will sell PB&J sandwiches, Ethiopian cold-brewed coffee and chocolate.”

  • “For entrepreneurs, opening a food stall in a shipping container allows them to add flourishing touches to personalize their space.”

  • “‘The creativity that opens up is the most curious,’ said Mr. Baker, the project lead for the AMP. ‘You’re giving them a canvas, and you say: ‘Look, here’s your space. What are you going to do with it?’” READ MORE


The vaccines have unleashed a wedding boom: “Wedding caterers and venues are booked solid. Sign-ups on wedding-registry sites and platforms are soaring. Designers are racing to outfit bridal parties. And invited guests, sick of being cooped up during the pandemic, are eager to join the party. The result is a logjam of demand for venues and services. Couples who put off ceremonies during the pandemic are competing with others who got engaged during the lockdown and those who had planned 2021 weddings all along.”

  • “So long, weekend wedding. ‘Monday is the new Saturday in Palm Beach,’ said Caroline Scarpinato, director of event services at the Breakers Palm Beach, a Florida resort. ‘With such limited availability, couples are willing to host their event on a Monday or Thursday.’” READ MORE

Try Morning Report Audio


Episode 61: I Think People Are Ready to Get Back to Work: Is your office open? Is everyone coming back? Or are you going hybrid? Is everyone getting vaccinated? Are you offering them incentives to get vaccinated? When do the masks come off? Are you having a problem filling jobs? Have you had to increase what you pay? Paul Downs tells us, “The people who really seem to want the job and are enthusiastic about it don't have the skill-set. And the people with the skill-set don't seem to actually care about completing the process. So we did hire one guy who started a week ago Monday, and he quit three hours later.” This week, Paul, Stephanie Stuckey, and William Vanderbloemen compare notes on what they’re experiencing as we all search for that new normal.

If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren