Chicago Business, ADP, BLS & Jobs, Hourly Earnings, California Taxes, and who was Gerry Shreiber?
The Numbers This Week
Let’s check out the Chicago Business Barometer.
The score came in at 56.7; greater than 50 = expansion, less than 50 = contraction. Last month came in at 62.7. That’s two months of projected expansion.
The Chicago businesses are answering the question: is business better today than it was last month?
This month, New Orders and Production showed a decline, but that was offset by gains in Employment, Order Backlogs and Supplier Deliveries.
Overall, business is better, but the devil is in the details.
Jobs, jobs, jobs: ADP has new numbers for June: 98,000 vs. 110,000 expected and 122,000 in May. Ok.
The Bureau of Labor Statistics non-farm payroll numbers also came out. You may recall that last month they were waaaay above expectations. This month, they are waaaay below expectations.
172,000 jobs added in May vs. 57,000 added in June. Expectations were set for 115,000. Ouch.
The stock market liked it because it lowers expectations for a rate increase.
And the unemployment rate dropped from 4.3% to 4.2%.
This was driven largely by workers leaving the labor force; retiring Boomers will do that.
Most critically, average hourly earnings were up 3.5%. That doesn’t seem bad, does it?
Well, it is. Inflation is running 4.3% for the same period so even though your paycheck may have increased, you are buying less with it.
The average hourly worker has seen their purchasing power drop, and that’ll leave a bad taste in their mouths.
Generally speaking, you want the increase in average annual earnings to be 1 percentage point higher than inflation. Folks feel like they are getting ahead that way.
New California Taxes
On July 1, gas prices in California went up 2.2 cents/gallon.
California’s excise tax on gas went to 63.4 cents per gallon, from 61.2 cents per gallon.
This is automatic, courtesy of Senate Bill 1, a 2017 transportation law passed by Sacramento.
Prior to SB1, in 2016 gas taxes were 27.8 cents per gallon. But that’s not the whole picture. Here’s the total picture for each gallon of gas:
California Excise Tax – 63 cents
Federal Tax – 18 cents
Sales Taxes – 10 to 13 cents
Cap-and-trade costs – 24 cents
Low Carbon Fuel Standard (aka LCFS) – 17 to 20 cents
Interestingly, this money doesn’t go to the state, at least directly. It goes to clean energy producers and utilities, like PG&E, Edison, and charging station producers like Tesla and ChargePoint.
That sums to about $1.35 per gallon in taxes and fees.
As a basis of comparison, total fees/taxes in Arizona run 40 to 50 cents per gallon.
Better take some Tums for that gas.
Two more taxes:
Senate Bill 125: This will raise the tax on your private insurance plan to $8.85 per month. I bet you didn’t even know there was a tax on your health insurance plan.
It was $1.75 to $2.25 per month.
Basically, a $6.60 increase to the insurer for your private health plan.
As a percentage, that is a 293% tax increase. Just mention that when someone tries to defend the schmucks in Sacramento.
Which means your insurer will be passing that on to you.
But know this: Sacramento is acutely aware of the affordability crisis and is doing everything it can to help you.
Maybe add Rolaids to those Tums.
Finally…, you know the Office 365 subscription you or your business has?
$99/year for a personal subscription and $12.50/month per user for a business?
You ever notice how there’s no sales tax on that stuff?
Yeah, not anymore.
In most cities/counties in California, the sales tax comes to about 10%, so now you can add $10 for every $100 you spend annually on your software subscription services.
BTW, that includes QuickBooks, Salesforce, etc., etc., etc.
Rest assured, Sacramento will NOT be targeting your streaming services. Of course they won’t. That would not help with the affordability thing.
Just like they are only targeting billionaires, because they would never dream of touching your IRAs. Or your property. Or whatever other assets you may have.
I feel a rant coming on…
Bring on the Pepto Bismol.
Who was Gerry Shreiber?
He loved talking to people, anywhere, anytime. The elevator, the toll booth, anywhere. In 1971, he walked into a waterbed store and struck up a conversation with the owner, who said he was looking to sell the business, and oh, by the way, his bankrupt soft pretzel company was about to be sold at auction.
Shreiber bought both, got rid of the waterbed business and kept the J&J Soft Pretzel Co.
Gerald Shreiber was born December 8, 1941, in Bridgeton, New Jersey.
His father ran a fruit and produce store, and his mother worked a variety of jobs.
In his early teens, he worked at a golf course and then as a busboy at the Ritz-Carlton.
He and his three brothers all helped out at their father’s store.
He graduated from high school in 1959 and in 1960, he married his pregnant girlfriend.
Both families were furious, and it was clear that they didn’t expect much from him. He was determined to prove his friends and family wrong.
That can be very motivating.
He sold pots and pans door to door, worked as an apprentice at a machine shop (then bought and sold a machine shop), and often worked three jobs at the same time.
And then he walked into that waterbed store.
He paid $72,000 for J&J, and it came with eight employees. It wasn’t that he liked pretzels; he just figured he could sell a lot of them given the right marketing.
He would lend ovens, warmers, and glass display cases to his customers at no charge.
And he would not end his workday until he had made one sale, whether it was at a convenience store or bowling alley.
Folks, that is an owner’s mentality and a sales rep after my heart.
He gave his pretzel a name: Super Pretzel. It became standard fare at stadiums, malls, cafeterias, and food courts.
He had a knack for finding opportunities in odd places and a talent for turning struggling businesses around.
His company became J&J Snack Foods, holding brands such as Icee, Luigi’s Italian Ice, and Dippin’ Dots, among others.
Gerald Shreiber died May 9 at the age of 84.
In an interview in 1993, he said, “It’s like I’m onstage every day. You see how you create economic benefit. You create jobs.”
He created 4,200 of them in a $1,500,000,000 revenue company.
His estimated personal net worth was around $250,000,000.
He certainly did prove everyone wrong.
Initiative and Persistence. I think those are the two most required traits of anyone who owns a successful business. Even if they are not successful the first time, they will be successful sooner or later because of the second trait – persistence. Many ‘entrepreneurs’ fail on the first try, go back to their day jobs, and stay there. They are missing the persistence piece. Many see a need or an open door and talk about it, but don’t have the initiative to act on it. Both are required.
I also think an early indicator is how many jobs they held as a teenager. If they didn’t work at all as teenagers, they’ll be griping about how unaffordable everything is and posting it on their iPhone.
Reader Poll: From your professional experience, what other words would you use to describe the attributes of a successful business owner?
Before you start assessing your performance for the first half of the year, watch the USA in their World Cup round of 16 match against Belgium today at 5 p.m. Pacific. It takes place in Seattle, definitely a home crowd!
The first half of the year is done. Six months to go to make your goals.
