General


Thanksgiving

cr-td16This week we will celebrate the beginning of the holiday season with a traditional American holiday, Thanksgiving.  For some, it will be a joyous time of getting together to celebrate family, food and football.  For others however, it will be a time to once again remember how much you don’t have in common with your in-laws.  After the recent contentious election, the opportunity for discord will only be magnified by getting together with relatives.  Perhaps lost in all the hustle and bustle is the reason we celebrate Thanksgiving in the first place.

 

Three hundred and ninety-six years ago a small ship carrying 102 passengers left Plymouth, England in September for the New World, lured by the promise of prosperity and land ownership.  They were also seeking a place where they could freely practice their faith.  Following a difficult 66 day journey, passengers of the Mayflower dropped anchor far north of their intended destination.  One month later, they crossed Massachusetts Bay and established a village at Plymouth.  During that first brutal winter, most of the colonists remained on board the ship, where they suffered from exposure and outbreaks of disease.  Only half of the original passengers and crew lived to see spring.  The following March, the remaining settlers moved to shore, thereby starting a wave of immigration that continues to this day.  Far from being shunned by the natives, the settlers received an astonishing visit from an Indian who greeted them in English.  Several days later, he returned with another Native American named Squanto, who was a member of the Pawtuxet tribe.  Squanto had been kidnapped by an English sea captain and sold into slavery before escaping to London and returning to his homeland.  Squanto taught the pilgrims, weakened by malnutrition and illness, how to cultivate corn, extract sap from maple trees, catch fish in the rivers and avoid poisonous plants.  He also helped the settlers forge an alliance with a local Indian tribe, one which would endure for more than 50 years.  In November 1621 after the pilgrims first harvest proved successful, Gov. William Bradford organized a celebratory feast and invited a group of native American allies to join them in giving thanks.  This is now remembered as America’s “first Thanksgiving.”

 

The trend by retailers to get you thinking about Christmas giftgiving is not a recent one either.  Abraham Lincoln established Thanksgiving is a national holiday in 1863, designating the final Thursday in November for its celebration.  Franklin Roosevelt moved the holiday up a week in 1939 however in an attempt to spur retail sales during the Great Depression.  Opponents referred to his plan as “Franksgiving”, and Roosevelt reluctantly had to move the holiday back to the fourth Thursday in November in 1941.

 

So if you are already dreading the journey over the river and through the woods, remember to think about why we celebrate Thanksgiving in the first place and remember the blessing that is your family, your career and this country.  Now, if you could please pass the turkey!

Happy Thanksgiving from Callahan Roach!


The Case for Disability Insurance: Part 2

A major disability is something that happens to someone else… until it doesn’t!  The sad fact is most Americans are better prepared to die than they are to deal with disabilities.  In the last blog, we made the case for having disability insurance.  In this blog, we will make the case for affording disability insurance.

 

 

The Bureau of Labor Statistics estimates that as of April, 2016 there are about 122.74 million people working on a full-time basis.  According to the chart below, only about 37% of private sector employees are covered by long-term disability insurance.  This would suggest that only about 45 million full-time workers are covered by long-term disability.

 

 

According to Kaiser Health News, only 47% of employers offer long-term disability coverage to their employees, and companies with at least 100 employees are almost certain to offer some sort of disability benefit.  Furthermore, they report that the majority of people with disability coverage get it through their jobs.  The chart below offers a glimpse of disability insurance coverage by occupation group.

 

Access to disability benefit combinations, by occupation group, private industry workers, March 2014
Occupation group Percent with access to both short- and long-term disability insurance Percent with access to only short-term disability insurance Percent with access to only long-term disability insurance Percent with no access to insurance
All workers 25 15 9 51
Management, professional, and related 42 12 17 29
Service 6 14 4 76
Sales and office 25 13 9 53
Natural resources, construction, and maintenance 21 18 6 55
Production, transportation, and material moving 25 22 7 47
Note: Costs calculated from Employer Cost for Employee Compensation (ECEC) published estimates.

Source: National Compensation Survey, U.S. Bureau of Labor Statistics.


The cost of providing both short- and long-term disability insurance access to all private sector workers would be approximately 1.0 percent of total compensation. This would cost an employer $624 each year for a full-time (2,080 hour) worker, as illustrated below.


Estimated cost of access to short- and long-term disability insurance, by occupation group, private industry workers, March 2014
Occupation group Short-term disability insurance Long-term disability insurance
Percent with Access Benefit cost per hour worked Employer access cost per hour worked Percent with Access Benefit cost per hour worked Employer access cost per hour worked
All workers 40 $0.06 $0.15 34 $0.05 $0.15
Management, professional, and related 54 $0.10 $0.19 59 $0.09 $0.15
Service 20 10
Sales and office 38 $0.04 $0.11 34 $0.03 $0.09
Natural resources, construction, and maintenance 40 $0.09 $0.23 27 $0.03 $0.11
Production, transportation, and material moving 47 $0.06 $0.13 31 $0.06 $0.19
As seen in table 6, the cost of access for short-term disability and long-term disability across all private industry workers is $0.30 per hour worked ($0.15 each). The estimate ranges from $0.11 for sales and office workers to $0.23 for natural resources, construction, and maintenance workers. There are no reliable estimates for service workers, which is not surprising given that few service workers have access to employer-provided disability insurance. As a whole, however, the cost of providing both short- and long-term disability insurance access to all private sector workers would be approximately 1.0 percent of total compensation cost ($0.30/$29.99). This would cost an employer $624 each year for a full-time (2,080 hour) worker.

Note: Costs calculated from Employer Cost for Employee Compensation (ECEC) published estimates. Dash indicates data not available or applicable.

Source: National Compensation Survey, U.S. Bureau of Labor Statistics.


Of employers that offer disability coverage 37% paid the entire premium in 2010, down from 49% in 2002.  As of 2011, voluntary programs (meaning the employee pays the full cost) make up 50% of all long-term disability offerings, up from 41% in 2002.  According to the Council for disability awareness, however, when employers add disability insurance as a voluntary benefit, participation is only around 40%.

 

Sources

Forbes

Counsel for Disability Awareness

US Bureau of Labor Statistics

Kaiser Health News


The Case for Disability Insurance

A major disability is something that happens to someone else… until it doesn’t!  The sad fact is most Americans are better prepared to die than they are to deal with disabilities.  If you are in your twenties, the chances are you rarely think about this.  But you should.  Just over one in 4 of today’s 20-year-olds will become disabled before they retire.In fact, over 37 million Americans or about 12% of the total population are classified as disabledMore than 50% of those disabled Americans are between the ages of 18-64.  At the end of 2012, 8.8 million wage earners representing more than 5% of the entire workforce were receiving Social Security disability insurance, (SSDI) 2.5 million of these were in their twenties, thirties or forties.  But I’m careful, I eat healthy and work out you say.  As it turns out, accidents are NOT usually the culprit.  Statistically, about 90% of disabilities are caused by illness.  Cancer, heart disease and other illnesses cause the majority of long-term absences.  Consider the following statistic for a 35-year-old male.

These costs are immediate, expensive and often not covered by insurance!

These costs are immediate, expensive and often not covered by insurance!

A non-smoking male, 5’10”, 170 pounds, who works an office job with some outdoor physical responsibilities and who leads a healthy lifestyle has the following risks:

  • A 21% chance of becoming disabled for 3 months or longer during his working career
    • Of these, 38% run the chance that the disability will last 5 years or longer
    • the average disability length for this person is 82 months

 

Similarly, a 35-year-old female weighing 125 pounds has a 24% chance of becoming disabled for 3 months or more during her working career.  As you can see, the chances are simply too great to ignore for the average working person.  Furthermore, most people think that Workers Comp or Social Security Disability insurance will cover their needs if they become disabled.  According to the Council for Disability Awareness, less than 5% of disabling accidents and illnesses are work-related.  The other 95% are not, meaning Workers Compensation does not cover them.  In addition, according to the Social Security Administration, 65% of initial SSDI claim applications were denied in 2012.  The average SSDI monthly benefit payment for males was $1256 and for females was $993, with 93% of all recipients receiving less than $2000 per month.

 

Given these numbers, how well prepared are American workers for disability?  Not very.  Forty-eight percent of US families do not save any of their annual income, and one third of working families have no retirement savings.  Consider the following chilling statistics.

  • 68% of adult Americans have no savings earmarked for emergencies
  • 65% of working Americans say they could not cover normal living expenses even for one year if their employment income was lost.
  • 38% could not pay their bills for more than 3 months.

So what does the average family do when confronted with a disability?  They begin running up expenses on their credit cards, get a 2nd mortgage, cash in their 401(k) or take out a home equity line of credit and ask family and friends for assistance through sites like go fund me.  As you might guess from the above numbers however, these solutions are inadequate.  According to a Harvard study, 62% of all personal bankruptcies and over 50% of mortgage foreclosures are a consequence of disability, and many end up on Medicaid for insurance.  Keep in mind that while Medicaid rules vary from state to state, the general requirements for income are less than $931 per month and countable assets of $2000 per person, not including your primary residence (with limitations based on your home equity), personal property and household belongings and up to one motor vehicle.  ($3000 per couple living in the same household)

 

What is the answer then?  Disability insurance!  How common is it?  Consider:

  • 65-70 % of workers in the private sector have no long-term disability insurance
  • That equates to about 75-80 million private-sector workers who are without long-term disability income insurance
  • Worse yet, only 46% of workers have even discussed disability planning

 

Next Blog: Access To And Cost of Disability Insurance

 

Sources

American Journal of Medicine

US Social Security Administration

Counsel for Disability Awareness

US Federal Reserve Board

American Payroll Association

Get Sick, Get out: The Medical Causes of Home Mortgage Foreclosures


Memorial Day

Memorial DayOh that first long weekend of the year!  Memorial Day marks the unofficial start of summer, and it’s mere mention conjurers up thoughts of picnics, parades, grilling out and adventure travel.  Pretty much everyone knows that Memorial Day commemorates those who have given their lives in service to their country.  But do you know the history of Memorial Day?

 

The practice of honoring those who have fallen in battle actually dates back thousands of years.  The ancient Greeks and Romans held annual days of remembrance for loved ones killed in battle, festooning their graves with flowers and holding public festivals and feasts in their honor.  One of the first known public tributes to war dead was in 431 BC, when the Athenian general and statesman Pericles delivered a funeral oration praising the sacrifice and valor of those killed in the Peloponnesian war.  (An ancient Greek war fought by Athens against the Peloponnesian league led by Sparta)

 

In this country, Decoration Day as it was originally known, dates back about 150 years.  In 1868, Gen. John Logan issued a decree that May 30 should become a nationwide day of commemoration for the more than 620,000 soldiers killed in the Civil War.  According to legend, Logan chose May 30 because it was a rare day that didn’t fall on the anniversary of a Civil War battle.  Logan Circle in Washington, DC is named in honor of this general.  By 1890, every former state of the union had adopted it as an official holiday.  But for more than 50 years, the holiday was used to commemorate just those killed in the Civil War.  It wasn’t until World War I that the tradition was expanded to include those killed in all wars, even though Memorial Day did not become a federal holiday until 1971.

 

The term Decoration Day was used for more than a century until it was changed to Memorial Day by federal law.  In 1968 Congress moved Memorial Day from May 30 to the last Monday in May.  Did you know that Memorial Day has a “birthplace”?  In 1966 President Johnson signed legislation declaring Waterloo, New York as the official birthplace of Memorial Day.  In 2000, Congress passed legislation encouraging all Americans to pause for a national moment of remembrance at 3 PM local time.  So this Memorial Day as you are enjoying all the festivities of the holiday weekend, take a moment to think about those who served and sacrificed to make it possible!

 

Source: The History Channel

 

I pray that our Heavenly Father may assuage the anguish of your bereavement, and leave you only the cherished memory of the loved and lost, and the solemn pride that must be yours to have laid so costly a sacrifice upon the altar of freedom.

Excerpt from letter written to Mrs. Bixby of Boston, Massachusetts by Abraham Lincoln on November 21, 1864, after two of her sons were killed in battle.

 


Flat Rate Pricing Is So Easy A Caveman Can Do It – by Mike Hajduk

Flat Rate Pricing Is So Easy A Caveman Can Do ItGive me 20 minutes and I’ll show you how to raise your margins by 20%.  Ever hear anything like this?  This is a variation on the popular commercials with the caveman who is miffed at the reference that cavemen are Neanderthals.  The insurance provider claims that if you invest 15 minutes, they can save you up to 15% on your auto policy. I’m not as conservative. Take 20 minutes to read on and I will show you how to increase your margins by almost 20%. And without your customers beating you up over your prices.

 

Ok, so you do all the things right. You hired service people with a good aptitude and attitude, gave them some training through your distributor and manufacturers, promoted your company in your community, added some new truck signage and then, alas, you get called by a customer for your services to do a remodel, start weekly maintenance or repair something that has broken.  But when all is said and done and you get your Income Statement, you found that you have lost money in service.  How can that be?

 

This scenario is not unusual, and has even prompted some influential and sizable companies in the pool business to minimize or even close their service departments. Some construction companies have even resorted to having a subcontractor friend who does service to “take over the account” once the pool is out of warranty.

 

What the contractor is really saying is that they do not know how to charge enough to make money in service. Since so many contractors charge LESS than breakeven, it’s no surprise that they want out of service. It’s not unusual for a service company to incur a breakeven per hour cost of $75 – 85 per hour or higher*. Why, oh why, do so many service companies charge less than that for service? Do you?

 

“We can’t charge any more, our customers are already complaining about our rates”.  Have you ever said this?

 

If your customers are complaining about a service rate that is BELOW your breakeven, it does make sense to want to shed that losing department and let someone else worry about the customer. “After all, the customer already gave me $48,000 for a new pool and I don’t need to lose any money on the customer”.  Sound logic. But not the best for your company in the long term.

 

So what is the answer?  Stay tuned for next week’s blog!

*See June, 2016 blog about calculating your breakeven point


The Vision of Freedom

The Vision of Freedom

Betsy Ross flag, picture courtesy of UShistory.org.

Last week, we celebrated the 240th anniversary of the birth of our country.  In a letter to his wife Abigail on July 3, 1776 John Adams said this about the vote for independence, which occurred the day before in Congress.  “I am apt to believe that it (vote for independence) will be celebrated by succeeding generations as the great anniversary Festival.  It ought to be commemorated as the day of deliverance by solemn acts of devotion to God Almighty.  It ought to be solemnized with pomp and parade, with shews (shows), games, sports, guns, bells, bonfires and illuminations (fireworks) from one end of this continent to the other from this time forward forever more.”

 

I spent some time on July 4th thinking about how one could so accurately predict how this event would be celebrated in future generations.  After all, at the time of the adoption of this declaration, the state of our union was extremely fragile, and by later signing the declaration, these men had effectively signed their own death warrant.  Adams however was not on a euphoric high over the vote on July 2.  He further noted in his letter to Abigail, “you will think me transported with Enthusiasm but I am not – I am well aware of the toil and blood and treasure that it will cost us to maintain this declaration, and support and defend the states.  Yet through all the gloom I can see the rays of ravishing light and glory.  I can see that the end is more than worth all the means.  And that posterity will triumph in that day’s transaction even although we should rue (bitterly regret) it, which I trust in God we shall not.”

 

John Adams didn’t celebrate the Fourth of July because he believed it should be celebrated on July 2, the date which Congress voted on the motion for independence made by Richard Henry Lee.  (One of whose descendants included Robert E Lee, the Confederate General) In a twist of fate, John Adams died on July 4, 1826 – the same day as did Thomas Jefferson.

 

John Adams life and letter gives us all something to think about as we celebrate our nation’s independence!


If You Were Fired – Would You Be Missed?

If You Were Fired - Would You Be Missed?

Courtesy of blogging4jobs.com

A couple of years ago there was a great article in the ACHR News that asked the question, what makes an employee indispensable? One employee that I used to know said the secret was to be like a blade of grass – keep your head down so it doesn’t get chopped off. That strategy however would suggest that you blend in, fly under the radar, not stand out, fit in, in essence – be an average employee!

 

The article then referred to a post by Joe Crisara of ContractorSelling.com who posed the question that is the title of this blog. Joe suggests that rather than being invisible, you should strive to be indispensable. He further pointed out that being indispensable is a three-legged stool which includes the traits of being the go to expert, having customers who are your fans and bringing home the bacon. Joe went on to explain in his post that being good with customers is not enough if you have callbacks, and that being technically sound is not enough if you are not good with customers.

 

Being a good employee means that you have to put yourself in the mindset of your employer or supervisor. Do you know what their goals are and how they are being measured? If you don’t know, you should ask. Furthermore, look at those employees in the organization who are succeeding and who are getting the promotions. Observe their behaviors and see what it is that makes them successful. Often times, you will likely see that they are the people who tackle the tough jobs, not the easy ones. You will also likely find them to be among the first to lend a hand to a coworker who is having difficulty with something, and a common denominator of these individuals is that they have a positive attitude about both their job and the company. Finally, the successful individuals in any organization are not ones who look at their job as an 8-5 proposition. They are the ones who work to better themselves by becoming a knowledge expert, studying after hours in an effort to hone their expertise. When you’re amongst the 80/20 crowd, be the latter, not the former!


Sensible Talk about Climate Change

Any time you talk about climate change, you open the door to a lot of passion. On the one hand, you have people saying that we must take all necessary steps right now, regardless of cost, to reduce our impact on the planet lest we destroy it in the very near future. On the other hand, you have those saying that all the talk about climate change is simply hysteria, citing examples of those calling global warming “a multibillion-dollar worldwide industry, created by fanatical anti-industrial environmentalists.” In reality, the truth is somewhere in between.

 

Scientists have known about the heating potential of gases such as carbon dioxide since British physicist John Tyndall first began experiments in 1859, leading to the discovery that CO2 in the atmosphere absorbs the sun’s heat. In 1938 an engineer by the name of Guy Callander published a study suggesting increased atmospheric CO2 from fossil fuel combustion was causing global warming. In 1958 US climate scientist Charles Keeling became the first scientist to confirm that atmospheric CO2 levels were rising rather than being fully absorbed by forests and oceans. (Carbon sinks) In 1988 NASA presented testimony to the U.S. Senate stating that increases in CO2 were roaming the planet and changing our climate. The 1987 Montréal protocol is an international treaty designed to protect the ozone layer by phasing out the production of numerous substances that are responsible for ozone depletion. It was signed by all 197 members of the United Nations and has resulted in the phase down/out of CFCs (chlorofluorocarbons) and HCFCs. (Hydro chlorofluorocarbons)

Climate Change

Climate Change: Armageddon or a Bright Future?
Picture courtesy of themedicalbag.com

 

The current administration has been very active in the discussion on climate change, in 2010 it tried but failed to pass a cap and trade system. When that failed, they began tightening EPA restrictions by executive order, creating some consternation within the HVAC industry. In his 2015 State of the Union address Pres. Obama said that “no challenge poses a greater threat to future generations than climate change.” In 2016 the Obama administration essentially called for a carbon tax in the State of the Union address when the President suggested he wants to “change the way we manage our oil and coal resources so they better reflect the costs they impose on taxpayers and the earth.” This was followed up only this week when the president directed the Pentagon to incorporate climate change in everything they do, from weapons testing to training troops to war planning to joint exercises with allies. Critics like Nobel laureate Ivar Giaver rejected the president’s claims that man-made global warming is causing climate change, calling the president “dead wrong.” Giaver claims that global warming studies by Al Gore and Rajendra Pachauri (former United Nations climate head) measured the average temperature for the world for one year, and says this means nothing. He says that from 1880 to 2015, the temperature has increased 0.3%, and he says he thinks the temperature during that time has been “amazingly stable.” Still others cite the new Ice Age predicted by 1970s global cooling advocates, which hasn’t come to pass. More recently, MIT graduate Charles Clough argues that the link between CO2 levels and global temperature averages are insufficient, because they fail to look at their correlation before the Industrial Revolution. According to Clough, pre industrial CO2 levels remained relatively constant while global temperatures have not.

 

So what should we believe? It would seem prudent to take all reasonable steps to minimize our impact on the planet, which after all, is the only one we have. At the same time, we need to continue learning all we can about our planet and the things that affect it, without assuming that science as we know it today is all defining. Clean energy initiatives should be pursued with vigor, but with the realization (as cited in a recent MIT Technology Review article) that wind and solar power, in spite of declining costs are intermittent energy sources that are insufficient at affordable prices for a modern industrial society. In essence, we should avoid the temptation by some to overreact in ways that would throw tens of thousands out of work in certain industries while raising basic costs of consumer goods that could result in unforeseen economic changes. In other words, let’s use some common sense for Pete’s sake!


Doubling down on Your Employees Health

Doubling down on Your Employees Health

Given the current upheaval in healthcare, employers face more questions than ever.  As employers wrestle with the new landscape they find themselves in, some have decided to link their employee’s lifestyle with premiums.  Some have implemented premiums for employees who smoke or who are overweight.  Others however have doubled down on investing in their employee’s health and welfare in a variety of creative ways.  Matt Bishop discusses some of these in a recent ACH & R article.

BP air conditioning in Glendale, New York opened a 3000 ft. gym for employees, free of charge, in mid-2013.  “So far, its paid dividends as participation has remained constant,” John Fannin, BP group president said.  The total investment thus far was $78,000, but according to Fannin, “we went all in.”

TD industries in Dallas has long considered employee wellness a big priority.  In 2003, the company started reimbursing employees for activities or purchases that aided in a healthy lifestyle.  In 2007 it started a wellness committee, and in 2009 the company engaged a wellness provider to help monitor and provide structure to the program.  “As partners get more involved in activities, they can earn points that allow them to have reduced insurance premium rates or use those points to purchase items such as hotel discounts, electronics and iTunes gift cards,” said Maureen Underwood, EVP, people department.

Neither BP Air Conditioning nor TD industries have seen reduce rates from health insurance companies, nor have they been able to correlate reduced healthcare costs with its wellness program.  While that may come in the future, both have seen a lot of excitement and employee participation in their programs.  Since its inception in 2009, TD industries has seen a 38% participation rate in its formal wellness program.  “Successes from the program rewards and contests has motivated many to participate that would not have otherwise,” said Underwood.

The investment in these various programs is worth it for the companies, because healthier employees have meant better, stronger, more energized workers.  That’s been the case at the BP group as the company’s two owners are pleased with their return on investment.  “Investing in the wellness of each TD partner is a great investment for our company,” said Harold McDowell, CEO.  “A healthy workforce increases productivity and enhances partner engagement and satisfaction, which in turn, translates into the high quality of work our clients expect from TD.”

Source: ACH & R news, March 17, Matt Bishop


Does Your Company Have A Social Media Policy?

Does Your Company Have A Social Media Policy?

When you mentioned social media to some contractors, they might think of Facebook, or Twitter or perhaps LinkedIn.  While those are arguably the main ones, there are a host of others including Google Plus, Tumblr, Foursquare, Pinterest and Instagram to name just a few.  Joanna Turpen explored this subject with contractors in a News article some time back, and her findings should cause every contractor to think about this topic.

Are you concerned about employees using these sites on company time, and perhaps posting damaging or inflammatory comments about the company, coworkers or customers?  If so, you’re not alone.  According to the article, employers social media policies have also attracted the attention of the National Labor Relations Board, which is recently struck down several of these policies, stating that some of the provisions in the employer’s policies are too broad and therefore unlawful under the National Labor Relations Act.  That is why it is important that any policy you implement has been evaluated by a lawyer and/or HR professional.

Joanna found, as might be expected, a diversity of opinion on the subject.  While most contractors who have a policy tell their employees they will not tolerate the posting of information detrimental to the company or its employees, restrictions beyond that vary.  Some take more of a laissez-faire approach while others actively monitor their employees online activities.  One thing is for sure however, your employees will be active on social media so as an organization, it is up to you to decide what your organization’s approach will be.  If you’re not sure what your approach should be, seek the counsel of other contractors and other small businesses you know and respect for their ideas.  Typically, the construct of a social media policy for your organization will not be in a vacuum, rather it will be in the context of an overall policy manual for your organization.  There are many inputs for designing such a manual if you do not have one, the key is that any such document should reflect the values you have for your organization while simultaneously making sure it does not breach any ethical or legal barriers.
Source: ACH & R news