The Business Case for Immigration
Over the next decade, the Congressional Budget Office expects immigration to lessen wage increases, drive demand, and produce an additional $7 billion in GDP.
Here are today’s highlights:
This year, bosses and employees have different expectations for raises.
Employees who don’t feel well say they face a tough choice over whether to come to work.
Ransomware payments hit an all-time record—but it probably won’t happen to your business. Right?
BUSINESS FOR SALE
The owner of a third-generation, 130-year-old California bookstore is looking for a successor: “For people of all ages in Pasadena, Calif., Vroman’s Bookstore, founded in 1894, has been a mainstay, a meeting place, a reliable sanctuary in a world of rapid change. When its founder, Adam Clark Vroman, died in 1916, he left the bookstore to his godson, Alan Sheldon, a Vroman’s employee. The current chairman and majority shareholder, Joel Sheldon III, 79, is the third generation of his family to guide the company and has been at the helm for more than 45 years. Now, as Vroman’s prepares to celebrate its 130th anniversary, Sheldon has decided it’s time to hand over the reins.”
“‘Vroman’s deserves new ownership with the vision, energy, and commitment necessary to take it successfully into the future,’ Sheldon said in an Instagram post announcing his decision last month. He continued: ‘We will take the time needed to find the right new ownership — someone who shares our core values and who is committed to preserving Vroman’s as a community treasure.’”
“Reputedly the largest independent bookstore in Southern California, the store has two locations in Pasadena, two boutiques at LAX airport, and an e-commerce site. Its main Pasadena location, on Colorado Boulevard, also has a coffee shop, wine bar, and large space for book readings.”
“Nearly 40 percent of Vroman’s business comes from merchandise other than books, including gifts, kitchenware, greeting cards, and stationery. It would be fine if a new owner chooses to lean more in that direction, Sheldon said: ‘Adaptability and resilience has allowed a good owner to run a great bookstore.’” READ MORE
Immigration is expected to boost GDP by $7 trillion over the next decade: “The stronger growth will be good for the federal government, lifting revenues by about $1 trillion more than otherwise over the period, according to the non-partisan [Congressional Budget Office]. Wages, however, will rise more slowly, in part reflecting the increase in the number of lower skilled workers, in the CBO’s estimation. ‘Increases in the population boost the demand for goods, services, and housing,’ the CBO said in its budget and economic outlook for the next 10 years. ‘They also expand the productive capacity of the economy by increasing the size of the labor force.’”
“The increased migration stems mainly from people entering the U.S. illegally and from those released by Customs and Border Protection officials with humanitarian parole or with a notice to appear before an immigration judge. After a lag, many of those migrants join the labor force.” READ MORE
There’s a bit of a disconnect between employers and employees over 2024 raise expectations: “Workers are still feeling squeezed by inflation — and that could push many of them to look for new jobs. About 81 percent of workers from a 2024 Work Watch Report by Monster Worldwide said their current wage has not kept up with the rising cost of living. About 47 percent of workers said they had higher salary expectations than they did in 2023. ‘Job seekers are continuing to tell us that their current wages aren’t covering the the rising costs of living,’ said Vicki Salemi, Monster career expert, adding 34 percent of employers say those higher salary expectations are putting a strain on their bottom lines.”
“But employers say they are increasing pay, with 59 percent reporting in the survey that they are raising salaries and overall compensation in 2024. ‘They are realizing that the labor shortage is real,’ Salemi said. ‘If you start losing your current workforce, it's valuable time, money, energy, and resources to fill those positions.’”
“Despite some signs of a softening labor market, such as lower quit rates and fewer overall job openings, companies are still competing for talent. About 43 percent of employers in the Monster survey said their top priority was to hire for hard-to-fill roles. Only 2 percent anticipate layoffs or furloughs while 64 percent say they will continue to hire as expected.” READ MORE
Google is matching ChatGPT by offering an AI chatbot subscription: “The search giant will begin charging $19.99 a month for its most powerful chatbot, Gemini Advanced, as part of a subscription plan that also grants access to extra file storage and other perks. Gemini Advanced is the latest update to the chatbot Google released a few months after the sudden rise of OpenAI’s ChatGPT caught the company flat-footed, despite its reputation as a pioneer in artificial-intelligence research. Microsoft, the largest backer of OpenAI, last month released a subscription chatbot catering to individual users of its work software.”
“The new Gemini Advanced offering is Google’s attempt to directly profit from growing consumer interest in AI services that can generate novel text and images. A free version of the chatbot using less sophisticated AI technology will remain available.”
“Generative AI, the technology behind chatbots, is particularly costly to develop and deliver to large volumes of users. The price tag for Google’s chatbot will match similar offerings from Microsoft and OpenAI. Several smaller startups such as Character and Perplexity also charge subscription fees for their most powerful chatbot products.” READ MORE
A lot of small businesses still don’t know that there’s a new requirement that they file ownership information: “The Financial Crimes Enforcement Network, the anti-money-laundering bureau of the Treasury Department, says it has been working hard to inform those affected by the new law, spreading the word through social media and asking other government agencies to help. But small-business advocates say more needs to be done. ‘As we talk to small businesses, there is a great lack of awareness on this,’ said Todd McCracken, president of the National Small Business Association, on the requirements. The advocacy group in 2022 filed a lawsuit challenging the law.”
“The new filing requirements are mandated by the Corporate Transparency Act, a piece of sweeping bipartisan legislation passed in 2021 that Congress hopes will curtail the use of anonymous shell companies and track the flow of illicit money.”
“The new law became effective on Jan. 1. The law creates a beneficial ownership database and reporting requirements for companies to file ownership information to FinCEN, similar to existing requirements in the U.K. and the European Union.”
“The reporting requirements, which exempt businesses with more than 20 employees as well as many heavily regulated public entities, focus primarily on small and private companies, many of which may lack the staffing and resources to meet the obligations.”
“The pressure to comply is particularly urgent for new companies, small business advocates and legal consultants said. Entities created in 2024 have only 90 days to file after they initially register, making early April the first possible deadline, while companies created before this year have one year to file their report, according to FinCEN.” READ MORE
As they expand their logistics and supply-chain operations, TikTok and Shein are opening offices in Seattle and poaching Amazon employees: “The move into Amazon’s home city represents a new front in what has quickly grown into one of the tech giant’s greatest retail threats. Shein, TikTok, and e-commerce company Temu, all of which have Chinese roots and close ties to sellers in Asia where many products sold on Amazon originate, are investing heavily in U.S. online shopping. TikTok launched a shopping tool on its app last year, and Shein has become America’s largest fast-fashion seller. Many of the e-commerce products TikTok creators market on that platform are from Shein, though TikTok says hundreds of thousands of products come from other sellers.”
“Seattle has long been a hub for logistics talent because of Amazon’s presence, said Will Gordon, a former Amazon executive and co-founder of Latchel, which sells home-maintenance services. But companies that try to replicate Amazon’s success aren’t guaranteed to do well, Gordon said. Logistics firms like Flexport and now-defunct Convoy have relied on former Amazon talent and struggled.”
“Dozens of ex-Amazon employees work at TikTok in the Seattle area in various roles. TikTok owner ByteDance recently subleased an additional 66,000 square feet of space at the Key Center after first subleasing 44,000 square feet in 2021, according to real-estate brokerage Broderick Group.”
“Shein and TikTok’s push for Seattle staff comes at an opportune time. Amazon has slashed jobs in recent months across its healthcare, entertainment, devices and gaming divisions, citing shifting priorities—including a focus on artificial intelligence—across its businesses. The cuts arrived after the company laid off roughly 27,000 employees about a year ago.”
“In December, Amazon sharply reduced the fees it charges merchants that sell clothes below $20, a move industry analysts saw as a response to the popularity of Shein and Temu.” READ MORE
Employees are getting “sick-shamed” by bosses if they stay home or by colleagues if they come to work: “If it seems like coughing and sneezing are a louder-than-usual workplace soundtrack this winter, it isn’t your imagination. Respiratory illnesses have lingered above the national baseline since November, according to the Centers for Disease Control and Prevention, as influenza, Covid-19, RSV and the common cold circulate. Far from staying home to halt the spread of germs, American workers are reporting to their desks at the highest rates in almost four years. Last week office occupancy hit its highest level since March 2020, according to Kastle Systems, which tracks building-access card swipes.”
“‘You really have to be unable to speak and unable to function to really make an excuse for yourself and say, I’m going to take a sick day,’ says Alberta Johnson, founder and chief executive of People Experts, an HR consulting firm.”
“In a January survey of 1,000 U.S. managers by Resume Builder, one-fifth said they encourage under-the-weather employees to come to the office. Almost a quarter said they suspect workers lie about being sick or exaggerate the severity of their illnesses.”
“Managers frustrated by the many ways we work now are trying to gain a sense of control over their people, says Stacie Haller, Resume Builder’s chief career adviser. The survey results are consistent with others that show managers often doubt whether their charges are giving full effort while working from home.” READ MORE
Ransomware payments hit a record $1.1 billion in 2023: “A year ago, there seemed to be a glimmer of hope in the cybersecurity industry's long-running war of attrition against ransomware gangs. Fewer corporate victims of those hackers, it seemed, had paid ransoms in 2022, and cybercriminals were earning less from their ruthless attacks. Perhaps the cocktail of improved security measures, increased focus from law enforcement, international sanctions on the ransomware operators, and scrutiny of the cryptocurrency industry could actually beat the ransomware scourge. Well, no. That respite appears to have been a mere hiccup on ransomware's trajectory to become one of the world's most profitable, and perhaps the most disruptive, form of cybercrime.”
“‘It's like we've picked up right where we left off, the real onslaught during Covid in 2020 and 2021,’ says Jackie Burns Koven, head of threat intelligence at Chainalysis. ‘It feels very gloves-off.’”
“The spike in the number of attacks appears to have offset a more positive trend: By some counts, fewer victims of ransomware are paying the ransoms that hackers demand.” READ MORE
THE 21 HATS PODCAST
Why Would You Want to Own a Business? This week, Shawn Busse, Jay Goltz, and Jennifer Kerhin respond to a somewhat depressing view of business ownership offered by an investor who buys businesses for a living. That view, essentially, is that for most owners, building a business is a daily knife fight of long hours, unexpected risks, slow growth, and meager returns. In this episode, I read most of the investor’s observations to Shawn, Jay, and Jennifer, and get their reactions, which hit upon a bunch of issues that are not widely understood—including how fast growth can destroy a business, how even a profitable company can go bust, and why a good metric to assess the health of a small business might be how many people have been crying in the bathroom this year.
While Shawn, Jay, and Jennifer disagree vehemently with a few of the investor’s assertions—”Kiss my ass!” says Jay in response to one—they do acknowledge that he makes a lot of good points, which leads to an obvious question: Why would anyone do this? Why would anyone subject themselves to this kind of life? As you might expect, Shawn, Jennifer, and Jay have a response to that as well.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren