Discover more from The 21 Hats Morning Report
The Tide May Be Turning on Mandates
Since the spring, Benny Buller, CEO of Velo3D, has required vaccines of employees and anyone else wishing to visit his facilities, including customers.
Here are today’s highlights:
The 10 best books for small business owners.
Paying new hires more? Don’t forget about wage compression.
The Restaurant Relief Fund has not had the impact its backers intended.
Steven Wilkinson, a 21 Hats contributor, listed his top 10 books for small business owners in his excellent newsletter on Friday, including this gem: “Next on my list is Doug Tatum’s No Man’s Land, constructed around his 4 Ms framework—model, market, management, money—and his deep insight after 30 years of consulting with growth companies around the transition from an owner-centric small company to a sustainable professionally run business. Doug shows that that transition follows a specific path in which the owner and his resources are challenged simultaneously on four fronts as well as posing a fundamental psychological challenge to the owner themselves (the fifth M of Mindset or Momentum). This path is treacherous and—until Doug gave it a name—unmarked, which made it even more treacherous.” READ MORE
THE COVID ECONOMY
Benny Buller, founder and CEO of Velo3D, which sells manufacturing hardware and software, required his 150 employees to get vaccinated in the spring: “I've now had the rule in place at my company for several months, and the results have surpassed my expectations. We did see one employee resign after we announced the vaccine mandate. And there have been some others who said they are ideologically opposed to the mandate, although they didn't mind getting vaccinated themselves. I respect their opinion, although I do not agree with it. But the vast majority of employees have told me they appreciate the rule and what it has achieved, both for the company and for themselves.”
“I also made the same rule for anyone else who wishes to visit our facilities. This includes representatives of businesses that might want to buy parts from us and wish to see our work in action. It also includes investors and contractors.”
“Many of our customers are in red states, including Oklahoma, Texas, Arizona and Ohio. They've told me that they value how the decision made us more stable and operationally sound, as we've been able to count on our personnel to deliver with fewer interruptions and setbacks from Covid.”
“In the end, many people appreciate the bottom line — even if they are ideologically opposed to the idea of employers mandating vaccines. Pragmatism rules.” READ MORE
Walmart and Disney are mandating vaccines for employees: “The burst of new policies, which has intensified in just the past few days, has jolted automakers in Detroit, retailers in Texas, state universities in Missouri, technology giants in California, and now theme park and hospitality workers in Florida, California, Hawaii and elsewhere. In the latest development, Walt Disney Co. on Friday told all salaried and nonunion hourly employees that they must be vaccinated by the end of September. Walmart, the country’s largest private employer, also announced it will mandate vaccines for workers at its headquarters in Bentonville, Ark. The retail giant also doubled its cash incentive, to $150, for store and warehouse workers who get the vaccine.”
“The Green Gate Garden Center in Seguin, Texas, began mandating vaccines for all customer-facing employees two weeks ago. All but one of its roughly 15 store workers complied, said office manager Robyn Wolters.”
“‘We realized we had to be very clear about it: You’re either vaccinated or you can’t work here,’ said Wolters, who has two heart stents, putting her at high risk for covid complications. ‘We’ve been very fortunate that nobody here has gotten covid, but you just can’t trust everybody to do the right thing.’” READ MORE
Who pays when companies decide unvaccinated workers have to get tested? “Doctors typically charge about $50 to $100 for the tests, so the costs of weekly testing could add up quickly. Federal law requires insurers to fully cover the tests when ordered by a health-care provider, but routine workplace tests are exempt from that provision. ‘It’s really up to the employer,’ said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms. ‘They can require employees to pick up the tab.’”
“In practice, insurers do often end up covering employer-mandated tests — it’s hard to tell from a doctor’s bill whether a workplace ordered the care — but they could start reviewing cases of patients who suddenly have claims every week for the same service.”
“MGM Resorts, which owns many hotels and casinos in Las Vegas, will charge a $15 co-pay for the testing at an on-site clinic for unvaccinated workers, multiple news outlets reported last week.” READ MORE
Wage compression is compelling companies to give raises to existing employees: “When companies announce pay increases for entry-level jobs, they also send signals to their internal workforces, said Diane Burton, academic director of the Institute for Compensation Studies at Cornell University’s ILR School and a professor of human resource studies. Those signals can prompt companies and individuals to reassess the value of skills, experience and seniority. ‘The symbolic aspects of wages matter. People want to know how they stack up,’ Dr. Burton said.”
“[Chipotle Mexican Grill], which owns and operates its nearly 2,900 locations, made sure the raises included a premium for experienced employees within each role, and gave raises that averaged around $2 an hour to hourly managers and commensurate raises to salaried managers.”
“To pay for the extra labor expenses associated with the raises, Chipotle raised its menu prices by 3.5 percent to 4 percent this year, Chief Financial Officer John Hartung said in July. He also said Chipotle’s labor expenses would rise from 24.5 percent of total revenue in the second quarter to just over 26 percent in the third quarter.”
“ADP found that wages rose an average of 9.8 percent for job-switchers in the information industry from June 2020, 7.8 percent for switchers in finance and real estate, and 9.6 percent for those working in professional and business services. Pay for workers in those industries who didn’t change jobs during the year rose on average between 3.7 percent and 4.7 percent.” READ MORE
In Silicon Valley, nondisclosure agreements have come to form the backbone of a culture of secrecy: “Insider reviewed 36 agreements shared by tech workers at companies ranging from Fortune 500 giants like Facebook, Google, and, Apple, to smaller startups. Taken together, they provide one of the most comprehensive reviews to date of these widely used contracts. Among the findings:”
“Nondisclosure agreements meant to protect confidential trade secrets are often so broad they cover information an employee learns outside work, such as personnel matters and information not necessarily marked as ‘confidential’ internally.”
“All the separation agreements reviewed by Insider also include non-disparagement clauses, many of which are so broad that employment lawyers say they could limit the employee from saying virtually anything about the company.”
“Many of the separation agreements from Silicon Valley companies would not be legal in California if the Silenced No More Act — a bill that would limit the scope of NDAs in instances involving harassment and discrimination in the workplace — becomes law. (The bill is expected to be signed by California Gov. Gavin Newsom this year.)” READ MORE
The $28.6 billion Restaurant Relief Fund didn’t play out the way restaurants expected: “The funds became mired in legal challenges, and then ran out far too quickly, leaving more than 200,000 applicants — nearly two in every three restaurants that applied — in the lurch. Now, food-service workers say, it’s splitting the industry in two: the haves and the have-nots. ‘Imagine you live on a street and all the houses burn down, and the government says, ‘You’re going to be okay and we’re going to help you rebuild,’ said chef Steve ‘Nookie’ Postal of Commonwealth in Cambridge, which didn’t receive any funds. ‘And then the government turns around and says, We’re just going to give it to 30 percent of the houses on your block. They can rebuild their house. You’re [out of luck].’”
“Those flush with cash, Postal said, are able to pay workers more than their competitors, giving them an edge in a tight labor market. They can pay down debts, afford the surging prices for the cost of goods, and make repairs to their equipment.”
“Last week, as he announced his five brewpubs would stay closed for good, BeerWorks owner Joe Slesar told the Boston Business Journal that not getting RRF was ‘the final straw’ in his attempt to survive the pandemic. He applied the first day the grants opened but his application was never fulfilled.”
“Last month, the Small Business Administration released a full database of recipients. In Massachusetts, they ranged from a handful of large restaurant and catering groups that received $10 million apiece to food stand operators who got less than $2,000.”
“When the list of recipients was released, it ricocheted through industry circles like a high school slam book. People pored over the list to see who received how much. It made for some testy conversations.” READ MORE
For Korean dry cleaners, the pandemic has been especially challenging: “These were not family businesses steeped in the hope of a child someday carrying on the tradition. Rather, dry cleaners were a vehicle to higher education for their children and the careers in medicine, law, and teaching that they themselves could not achieve, with their limited English and foreign degrees. Before the pandemic, the ranks of Korean dry cleaners were already dwindling. The whole point was that there would be no one to take over. Now, many middle-aged and older immigrants are on the precipice of financial collapse, the future uncertain for dry cleaners as companies weigh permanent work-from-home arrangements and office attire becomes increasingly casual.”
“The Yuns’ only child, Samuel, did well in school and entered UC Berkeley, majoring in data science. On April 7, during a semester of pandemic-induced distance learning, Samuel killed himself in his bedroom. He was 23.”
“‘I wanted my son to do what he wanted and something other than dry cleaning,’ Yun said. Yun said he wants to speak about his son’s death because of a failure among some Korean immigrants to have meaningful conversations with their children.”
“He and Samuel shared a similar ethic, working and studying for long periods with little rest. They rarely chatted. ‘Korean parents work so hard for their kids, but we can’t forget to appreciate them, to listen to them, and to spend time with them,’ Yun said.”
“Yun’s dry cleaning business is at about a quarter of pre-pandemic levels. But he finds solace in the work. ‘Dry cleaning and my family is what I know,’ he said.” READ MORE
THE 21 HATS PODCAST
Episode 70: Oh, No! They Accepted Our Offer: This week, Laura Zander, Diana Lee, and Dana White all share big news. Laura tells us that she and her husband/co-founder Doug put in a bid to buy a building for their business in Reno—and she’s not sure how she feels about the fact that their offer was accepted. Diana explains why she’s decided to pay a fortune to take over space vacated by glitzy magazine company Conde Nast in Manhattan’s Freedom Tower, a move that required her to put down a $2 million security deposit. And Dana tells us that she’s had preliminary conversations about opening Paralee Boyd salons on U.S. military bases around the world.
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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