There's No Better Time

At this time of year the financial publications are rife with advice about income taxes. Usually the emphasis is on reducing taxes in the current year through taking deductions such as charitable contributions or dramatic steps such as moving to a low-tax state or getting married. This year, however, is different, and not just because tax rates are going up; the increase in complexity has been exponential.

With the introduction of the 3.8% net investment income tax (Sec. 1411), and the return of the 20% capital gains rate (Sec. 1(h)) and the 39.6% income tax rate (Sec. 1(i)), America shifted overnight at the start of 2013 from a two-dimensional tax system to a four-dimensional system. [snip]

The complexity of going from a two-dimensional system to a four-dimensional system is exponential, not linear, and requires a quantum leap in tax analysis methodology, tax strategy, and tax planning software tools.

It may only seem that the vast majority of Americans will not have to deal with this complexity; only if a married couple has income over $250,000 (or a single person over $200,000) will they be subject to the investment-income tax.

However, more people will be affected than just the supposedly "rich". As taxpayers approach these income thresholds, many will scale back their economic activity to avoid crossing them, just as small businesses avoid having more than 49 employees to escape the penalties of Obamacare.

Also, the interconnection between income and estate/gift taxes has become much more complicated. It is easy to be unconcerned about the problems of "wealthy" estates, which pay taxes if they are valued at more than $5.34 million, but it wasn't that long ago that having a $1 million estate was an uncommon experience.

In the view of your humble observer, society underestimates the cost of complexity. We regularly come across productive individuals---doctors, accountants, businesspeople---of a certain age who don't mind paying somewhat more in taxes; they hate the hassle of new regulations that have nothing to do with their fundamental business operations. So they are cutting back or quitting altogether. The silver lining--for them, not society--is that if they have been thinking about doing something else with their lives, there's no better time. © 2013 Stephen Yuen

Songs of the Season - Part 1

In the late 1990's my employer had enough of a talent pool to put together a decent holiday choir (videos uploaded from VHS tape).

Songs of the Season - Part 2

An old chestnut, plus Santa cracks up under the pressure.

Songs of the Season - Part 3

An unserious musical history of the Twelve Days of Christmas. I like the Hawaiian lyrics myself ("a mynah bird in one papaya tree").

Songs of the Season - Part 4

Have yourself a Merry Little Christmas now.



Through the years we all will be together
If the fates allow...

But the fates do not allow. Our time together is too fleeting, gone in the wink of an eye. Like the ghostly watchers in Grover's Corners, we have an eternity to mull the regrets of moments unappreciated until too late.

On this Christmas and in the New Year, resolve not to let that happen.

Imelda Was Ahead of Her Time

In my 20's and 30's I had four pairs of shoes: two black, one brown, and sneakers. Now the count is up to seven, and I'm only working part-time. Eric Jennings, Saks Fifth men's director:

"There is an explosion of men's shoes right now. The business is on fire...It runs the gamut from classic dress shoes to designer sneakers that are extremely fashion forward."

In addition to bowing to the needs of fashion, one requires more shoes in the rotation because modern footwear is less durable. A pair of 4-year-old $200 loafers that were used about twice a month developed holes in their synthetic bottoms on a recent trip to Las Vegas.

They weren't salvageable: too bad, because the shoes were comfortable, looked decent, and were easy to slip on and off when going through airport security.

I went to the mall in Las Vegas and replaced them immediately with two pairs. Wouldn't want to get caught short again.

Life Lessons

Two diagrammatic answers to the question, "What has life taught you?", from Quora.

The Venn diagram displays how difficult it is to hit the sweet spot of careers. Very few individuals are able to make a lot of money while both doing what they love and what they're good at. Top-tier athletes and entertainers are on the list, as well as billionaire entrepreneurs. Most of us, if we're lucky, become good at something that pays well. Love? that's for retirement and/or second careers.

The Project Triangle is a favorite way of picturing the difficulty of achieving three conflicting goals. Achieving two is difficult, and accomplishing all three is nearly impossible. Students usually strive for good grades and social life, with sleep coming in last. However, that would be a mistake, as sleep is more important to performance than most people think. Well, maybe in our lifetime, science will come up with a pill, not to help insomniacs sleep but to safely get by without it. © 2013 Stephen Yuen

More Skype, Less Frustration

Earlier this week I was traveling east on the Hayward-San Mateo bridge (the road is usually uncrowded against the westbound morning commute) when traffic came to a dead stop. There was a three-car accident on the bridge, and all lanes were blocked.

After texting everyone that I was going to be late indefinitely--yes, I know that texting while driving is illegal but does the rule still apply to texting while stopped?--and second-guessing whether I should have taken the Dumbarton Bridge, I "third"-guessed that I should have teleconferenced and/or worked from home.

Eventually arriving at the office, I had some worthwhile face-to-face meetings, informative interactions with a few people that I had not planned to see, and a tasty lunch to boot. Nevertheless, the benefits were not quite equal to the cost of the day's commute. Next time: more Skype, less frustration. © 2013 Stephen Yuen

The Punishment is Merciless

A male business acquaintance tried to make conversation with a formerly svelte female colleague, asking "When is the baby due?" The poor guy took years of grief from the women executives for not perceiving that she had given birth two months earlier.

Today at the doctor's office one young woman who had worked there for years was clearly showing, but I refrained from even a friendly comment.

I have learned the lesson of my friend: friendliness yields little reward, and the punishment for making a mistake is merciless! © 2013 Stephen Yuen

Cart Before Horse

From Walt Isaacson's biography of Steve Jobs:

“Most people have a regulator between their mind and mouth that modulates their brutish sentiments and spikiest impulses. Not Jobs. He made a point of being brutally honest. “My job is to say when something sucks rather than sugarcoat it,” he said. This made him charismatic and inspiring, yet also, to use the technical term, an asshole at times.”

Unfortunately, too many would-be tycoons think that being an a**hole is sufficient to be the next Steve Jobs. Sorry guys, smarts, vision, and a willingness to work round the clock are also requirements. And if you happen not to make it and aren't a jerk, at least you'll have some friends when it's over. © 2013 Stephen Yuen

Still Achievable

Bob Funk, founder of a company that finds jobs for 500,000 people annually, says obtaining employment is still achievable for most people:

"First you need integrity; second, a strong work ethic; and, third, you have to be able to pass a drug test." If an applicant can meet those minimal qualifications, he says, "I guarantee I can find employers tomorrow who will hire you."

However, Bob Funk does not guarantee enjoyment, fulfillment, friendship, or fame. That's why it's called work.

Ivory Towered Bovine Emissions

An academic disparages the prevalence of "bull----" jobs [bold added]:

rather than allowing a massive reduction of working hours to free the world’s population to pursue their own projects, pleasures, visions, and ideas, we have seen the ballooning not even so much of the “service” sector as of the administrative sector, up to and including the creation of whole new industries like financial services or telemarketing, or the unprecedented expansion of sectors like corporate law, academic and health administration, human resources, and public relations.

I do agree with the professor's observation that there are not enough people "making, moving, fixing and maintaining things," but I disagree with his explanation that the reasons are the "ruling class" trying to keep the masses placated or "right-wing populism" and "Republicans" "mobilizing resentment."

As an accountant I have spent much of my career filling out (or directing a staff to fill out) a plethora of forms that have nothing to do with helping our business but everything to do with giving government bureaucracies their raison d'être.

For example, companies with a national scope not only have to fill out income tax forms by state but also sales and use tax returns by county (there are over 3,000 counties in the U.S.). There are the voluminous rules of Sarbanes-Oxley that require public companies to map out the work flow and responsibilities of every employee, a "bulls***" task because the charts are obsolete the day they are completed in the era of hope and change. Each agency of the government--e.g.,Environmental Protection, Department of Labor, Internal Revenue, Health and Human Services--has its own inviolable requirements and arcane language.

Every competent accountant I know would rather spend her time measuring product profitability or performing capital budget analysis or running scenarios for the strategic plan. Put the blame where it lies, sir, or better yet, and you do seem like a smart guy, work in a business and see for yourself. © 2013 Stephen Yuen

The Cost of Marriage Equality

Now that same-sex marriage will become legal in Minnesota, the Mayo Clinic is requiring that Minnesota employees who receive benefits in same-sex partnerships get married. This is the same rule that the Mayo Clinic and other employers apply to opposite-sex pairings [bold added]:

"Mayo has long had a policy providing same-sex domestic partner benefits because those affected were not allowed to be married. That policy notes that marriage would be required if same-sex marriage became legal in the state where the couple lives," [spokesman Bryan] Anderson said in a statement.

There are a few voices in favor of retaining special treatment. Paul Guequierre of the Human Rights campaign:

"We have heard companies consider doing this. We have not heard of any companies that have actually done this and from our perspective it is a bad idea to require them to marry," he said.

A Rising Tide in San Mateo County

Residents in our home County of San Mateo had the highest average salary in the nation during the fourth quarter of 2012. [bold added]

The federal Bureau of Labor Statistics last week reported that the average weekly wage in San Mateo County, California in the fourth quarter of 2012 rose an astounding 107% from a year earlier, to $3,240. That’s the equivalent of $168,000 a year, and more than more than [sic] 50% higher than the next highest county, New York County (better known as Manhattan), which came in at $2,107 a week, or roughly $110,000 a year.

According to the WSJ the county's stellar performance was driven by an average $1.1 million paid to 6,200 "computer systems design services" workers. The $1.1 million average in turn was skewed by Facebook employees recognizing stock-option income.

San Mateo County's top rank is temporary. In 2013, absent IPO income, our wage levels will settle down to normal; nevertheless they may crack the top-ten list. That's still impressive, considering that there are 3,140 counties in the United States.

Bay Area counties San Mateo, Santa Clara, and San Francisco are all in the top ten (source: BLS)

We Don't Need No Stinking Badges

....or diplomas. When a product (college) costs more and delivers less value (jobs), young people may well become discouraged about their prospects of achieving the American dream. Fortunately, in the recovering tech economy college is not the only path to a good job. Employers are hiring workers with aptitude in science, technology, engineering, and/or mathematics (STEM). [bold added].

A new report, "The Hidden STEM Economy," reveals that a university degree is not required for 27.5 percent of all jobs in the San Jose area in the fields of science, technology, engineering and math. The number is even higher -- 36 percent -- in San Francisco and the East Bay. [snip]

Drawing from high schools, vocational schools and community colleges, these jobs pay annual salaries averaging $73,000 [note: the national average is $53,000]-- less than positions requiring a university degree, but $30,000 a year more than those in fields outside science, technology, engineering and math.

It won't be easy, one may have to defer one's "real" calling, and one may have to swallow some pride initially because of lower pay and status, but after a few months on the job most co-workers won't care about where or even if one went to college. In the pay-for-performance economy it's remarkable how many people succeed once they get in the door.

Eye Contact

We should be expert at it because we do it every day---most of us, anyway---but there are many variables at play when we're making eye contact. Breaking the unwritten rules can hold back our careers. They are:

1) Don't text or glance at your cellphone when you're talking to someone.

2) It's wrong to look away too soon or stare at someone too long. "Holding eye contact works best for 7 to 10 seconds in a one-on-one conversation, and for 3 to 5 seconds in a group setting."

3) The rules should be adjusted for cultural differences. "In many Eastern and some Caribbean cultures, meeting another's eyes can be rude. Asians are more likely than Westerners to regard a person who makes eye contact as angry or unapproachable."

It's no wonder that many workers, especially those not experienced with face-to-face interaction, prefer to stay home and telecommute.

WSJ graphic.

And, even if we become fairly proficient at making eye contact, poor table manners can trip us up. At important business meals, one can play safe by hardly touching the food. One's job is much more important than an expensive restaurant meal, and there's usually a fast-food joint less than a block away to alleviate hunger pangs. Work would be so much easier if we didn't have to deal with other people :-)

Perspectives on Unemployment

The Wall Street Journal:

Just 88,000 jobs were created last month, far below February's 268,000 gain. The unemployment rate, derived from a separate survey, dropped to a four-year low of 7.6%. But the decline was prompted by nearly a half-million workers leaving the job market, not job growth.

The Economist:

UNEMPLOYMENT in the euro area reached a record high in early 2013. According to Eurostat, the European Commission's statistical service, unemployment in the 17 member states stood at 12% in February (and in January after a revision), the highest in the euro area's history.

David Letterman:

Yesterday [was] take-your-son-or-daughter-to-work day. You know, that's how we got Kim Jong-Un!

You know, for a lot of people it's take-your-son-or-daughter-where-you-used-to work.

And in China, kids take their parents to work!

The business pubs make you think, but David Letterman makes me laugh. Right now I'd rather laugh.

She'll Never Be the One to Throw You Out

At each of the five employers I've had during my career there were office moms:

The office mom is shorthand for a figure in many offices: the colleague who remembers everyone's birthdays and brings in cupcakes. She has Advil and tissues in her desk drawer. She knows your significant other is all wrong for you—and will say so. [snip]

Apropos of the company business, baby showers, engagement parties and birthday celebrations are officewide parties, replete with champagne, handcrafted decorations, ornately decorated cookies and tiered cakes.

Observations from my own experience:

1) The office mom does not arise spontaneously from the organizational ether. Management often wants to evince a caring touch and sets aside some funds for birthdays, employee anniversaries, etc. in the belief that celebrations boost employee morale. Executives ask secretaries, administrators, and/or human resource staff to be the unofficial office moms (often there is more than one). Personally, I've only seen women in that role.

2) It used to be that younger women could be office moms. Nowadays they view it as a gender stereotype that would derail their careers. Older women seem to be more relaxed about donning the mantle.

3) The office mom rarely is in a power, i.e., hire-and-fire, position. Like real moms, she'll never be the one to throw you out. © 2013 Stephen Yuen

Happy Thanksgiving

We sound like a broken record (what's that, grampa?) as we list the things that we have to be thankful for: our family, our health, our vocations and avocations, and our friends. But what we are most grateful for is that we were born in the greatest country in the world, where every person has the opportunity to seek his calling or worship as she pleases or speak his mind without fear of imprisonment.

On other days we can be complaining and critical, but not today. Cultivate the attitude of gratitude. Happy Thanksgiving!

Labor Day, 2012

Millions of jobs have been lost to overseas manufacturers, but there are signs that the process is reversing. According to the WSJ

About 14% of U.S. companies surveyed by a Massachusetts Institute of Technology professor definitely plan to move some of their manufacturing back home—the latest sign of growing interest among executives in a strategy known as "reshoring." [snip]

Among the main reasons cited for reshoring: a desire to get products to market faster and respond rapidly to customer orders; savings from reduced transportation and warehousing; improved quality and protection of intellectual property.

Manufacturing's rebirth could come from another direction, however. Just as the computer industry was eventually revolutionized by hobbyists tinkering in their garages, the grassroots "maker" movement is adding more enthusiasts every day. Do-it-yourself craftsmen and inventors are flocking to Maker Faires and subscribing to Make Magazine. The movement has begun to attract venture capital for companies that exploit the fruits of makers' ideas, as well as supply products to this burgeoning industry.

If a would-be Edison lacks modern manufacturing equipment and the skill to use it, he can acquire both for about the same price as a gym membership. TechShop

provides access to a wide variety of machinery and tools including milling machines and lathes, welding stations and a CNC plasma cutter, sheet metal working equipment, drill presses and band saws, industrial sewing machines, hand tools, plastic and wood working equipment including a 4' x 8' ShopBot CNC router, electronics design and fabrication facilities, Epilog laser cutters, tubing and metal bending machines, a Dimension SST 3-D printer, electrical supplies and tools, and pretty much everything you'd ever need to make just about anything.

TechShop has locations in California, Michigan, and North Carolina and will soon expand to Texas and New York. It offers safety and proficiency instruction to all its members.

From a short-run perspective the job picture is dismal. In the longer run it's rarely been more hopeful. © 2012 Stephen Yuen