More Than A Third Of U.S. Workers Are Freelancers Now, But Is That Good For Them?


The rise of Uber, Lyft, Task Rabbit, Elance and other online labor marketplaces, combined with employers’ desire to lower payroll and insurance costs, has driven up the number of people cobbling together a living from freelancing. According to a survey released this week by the Freelancers Union together with freelance platform Elance-oDesk, 53 million Americans, or 34% of the population, qualify as freelancers.

Not all of them make their living exclusively as freelancers. The number includes 14.3 million workers who would be called “moonlighters”—people who have a primary, traditional job that pays benefits, and supplement their income with extra work, like a full-time tech support worker at a corporation who also does consulting with private clients on the side or a web developer who takes on projects for non-profits in the evening.

Of the remaining 38.7 million, 21.1 million are what the survey calls “traditional” freelancers who do  temporary work on a project basis. Some 9.3 million have multiple sources of income which can include a part-time job like working 20 hours a week at a dentist’s office. Another 5.5 million are temporary staffers who work for a single employer but not on a permanent basis that comes with benefits, like a business strategy consultant working for a startup on a contract that can include months of employment. Then there are the 2.8 million business owners who have between one and five employees, like my friend Cynthia Cross who does boutique market research through her Hagen/Sinclair Research Recruiting, which puts together focus groups and interviews for clients including Samsung, Wellpoint, Google and AT&T.

The last time the government took a tally of freelance workers was in 2006 when the Government Accountability Office produced a report that found that 31% of American workers were employed on some kind of contingent basis, including as freelancers, part-time or temporary workers.

The Freelancers Union survey, conducted in July with an online questionnaire it put to 5,050 workers over age 18, including 1,720 who identified themselves as freelancers, paints the freelancing trend in upbeat colors. Founded in 2003 as a nonprofit group that provides portable health, dental, disability and life insurance in addition to retirement accounts through its for-profit Freelancers Insurance Company, it has 250,000 members nationwide. “Freelancing is the new normal—and this survey shows that America’s new workforce is big, crucial and here to stay,” said Sara Horowitz, founder and executive director of the Freelancers Union in a statement. Given its for-profit insurance arm, the group has reason to claim the trend is a positive one.

According to the union’s data, freelancers are enjoying an increase in demand for their services, with 32% saying that their workload has increased over the last year. Other positive trends, according to the survey: Some 65% said freelancing as a career path is more respected today than it was three years ago. More than a third, or 38%, said they expect their hours to increase in the next year. Also a greater share of Millennials are working freelance, with 38% of those under 35 saying they do freelance work. Elance-oDesk, which collaborated on the study, bills itself as “the world’s largest online workplace,” with 2.5 million businesses and 8 million workers using its platform. Headquartered in Mountain View, CA, like the Freelancers Union, it has a vested interest in putting a silver lining on the freelancing trend.

In the same vein, another work platform for independent contractors, Minneapolis-based Field Nation, released a survey this week showing that freelancers are more engaged with their work than what it calls “full- and part-time W2 employees.” Though the sample size was small, just 846 people who filled out a questionnaire, Field Nation is broadcasting the following: 90% of independent contractors “view themselves as deeply committed to the work they do for their clients.” Those workers, it says, are three times more engaged in their work than the 30% of W2 workers who said they feel engaged.

Meanwhile, the progressive non-profit group National Employment Law Project released a report this week, Temped Out: How The Domestic Outsourcing of Blue-Collar Jobs Harms America’s Workers, that explores the dark side of contingent work. It focuses on the 12 million people who got jobs through staffing agencies last year. Though NELP’s focus is on blue collar workers and it tallies its numbers differently from the Freelancers Union, Rebecca Smith, the report’s co-author, says the report’s findings extend to many of the jobs highlighted by the Freelancers Union.

The focus of NELP’s study is the spread of temporary work to areas of the economy like manufacturing and warehousing, where workers were traditionally full-time and often unionized, with full benefits and good wages. Now that those workers are temporary, employers are paying median wages that are 22% lower than in the overall economy, according to NELP’s research. Says Smith, “Staffing agencies not only fail to provide livable wages, benefits or job security for their workers, but their influence in an industry can lower standards for all workers in that industry.” When a worker has an issue, it’s not clear whether the staffing agency or the top-line company is responsible for setting wages or controlling working conditions.

The NELP report highlights the conditions faced by several workers who got their jobs through staffing agencies, like David Fields, a 45-year-old father of four who worked for staffing agency LINC Logistics in a Walmart consolidation center in Hammond, IN, where he toiled outside in sub-zero temperatures on a warehouse loading dock during the Christmas rush. “It’s dangerous to move heavy equipment when you can’t feel your hands and you’re walking on ice,” Fields told the NELP researchers. “But as temp workers, we were expendable, so we just kept on working.” Fields wound up organizing fellow workers and presenting a petition to LINC and Walmart, which put a turbine heater on the dock and granted workers warm-up breaks. The vast majority of workers who are employed through staffing firms are not as successful, says Smith.

What seems clear: The pendulum is not going to swing back toward traditional work arrangements. Lawmakers will have to grapple with the fact that old labor laws do not necessarily apply. Robert Reich, the secretary of labor during  the Clinton administration, who is now a professor at the University of California, Berkeley, talked to The Wall Street Journal earlier this week, and observed that independent workers “don’t have the workforce protections that have developed over the last 80 years. They are simply on their own.”

Source: Forbes

Posted in Economy, Freelancer, Human Resources, Leadership, Millennials, Salary, Statistics, Survey, Technology

When Debt Markets Don’t Really Act as Markets

Is the debt market really a “market”? Several recent events, each largely independent from the others, should cause us to ask this basic question.

Start with leveraged loans. In a recent bankruptcy case, traders complained that a bankruptcy court allowed a debtor to “cram down” their claims by paying below-market interest rates.

But is there any reason to think that this leveraged loan market is a “market” that provides reliable information? Indeed, a recent Bloomberg article noted that the market in question is marred by faulty, if not backward, infrastructure. The article makes the loan market seem as if a systemic crisis were waiting to happen.

Then there are the complaints that the “liquidity rules” recently enacted by financial regulators do not consider municipal debt to be all that liquid. Financial institutions complain that this will undermine the ability of municipalities to finance themselves. Maybe, but the Dodd-Frank regulatory overhaul and the Basel III bank regulation are not really intended to address issues in the municipal debt market.

And most traders regard the bulk of the municipal debt market – issued by small towns, school districts and sewer authorities – to not be very liquid anyway. Most of this debt has but a handful of trades at most each day. That too suggests it’s not really a “market,” or at least, it’s not a very efficient market.

Then there is the bond market itself, and the questions that have been raised regarding the pricing of exchange traded funds that hold those bonds. This has special salience given the scrutiny of Pimco recently.

Fundamentally, corporate bond funds often hold large positions in bonds that don’t trade in large amounts each day. A quick liquidation is probably a bad idea, which is why some officials are thinking about whether some of these asset management firms should be regulated a bit more closely. That’s the subject of another column.

But the difficulties in pricing that the firms face again suggests that maybe, just maybe, we have to be too careful about having too much faith in even these markets.

The issue gets even more complex when we talk about the market in distressed and outright defaulted debt. After all, the business of distressed debt funds is to make money on mispriced assets. Doesn’t this tell us a good deal about the markets they play in?

Source: New York Times
October 2014

Posted in Debt, Economics, Psychology

How not to be a lawyer

Bob Collins Oct 2, 2014

“I assumed the more education, the higher salary,” Lisa S. — we don’t know her real name — tells “I was aware that with a master’s degree, in certain jobs you can get a higher pay grade, and that you’d be eligible for more jobs, even with just teaching.”

She’s from Minneapolis and Forbes is telling her story in its report on whether grad school is worth it.

According to the story, she got a master’s in film after getting her undergraduate degree from Minneapolis College of Art & Design.

But the work she was able to get didn’t pay the bills nor the student loan bill.

She had a child and was a single mother.

To delay the student loan repayment and try for a better job, she went to law school, pushing the total loans amount to $275,000.

She graduated in 2009, just in time to catch the recession for lawyers.

She moved back to Minnesota and had to take the Bar, a period during which she ran up $40,000 in credit-card debt.

Now a solo practitioner in a small Minnesota town, where the median income in her field is $50,000 a year, she is just starting out and making about $20,000 per year. Even with that income, and $500 a month in child support, she and her son are on food stamps, and he is in the free school lunch program. She is aware that her low income is affecting the extracurricular choices she makes with him and tries to take advantage of some of the special programs offered by her state for food stamp recipients, such as $9 tickets to the science museum, where the actual price is $30.

Though she has good credit — between 650 and 700 — “I have this big mark over my head because I have too much student loan debt,” she says. Though she once had hoped to buy a home, she cannot even afford the median home price of $150,000 in her small town, where many of the local farmers who don’t have degrees own their homes. She also rues her inability to save for retirement or for her 10-year-old’s college education and doesn’t know what she’ll recommend to him when it is his time to consider higher education.

The debt even affected her marriage this past February. Though they consider themselves married, she and her husband had a ceremony but skipped legally tying the knot for several reasons: Her debt could hurt him financially, plus their combined income would force some of her loans out of deferment. However, though they are nervous about the cost, they did decide to have a baby, due next spring, because of her age.

Forbes says she’s now working in a small Minnesota town making about $20,000 a year. She’s on various forms of public assistance.

The article doesn’t say what conclusion we’re supposed to reach with the choices she made or the system in which she tried to thrive.

Source: Minneapolis St. Paul Business Journal

Posted in ABA, Debt, Legal Education, Student Loans

Student Loans, Moral Hazard and a Law School Mess—Conclusion

By Steven J. Harper
October 3, 2014

My most recent post in this three-part series discussed manifestations of law school moral hazard at Thomas Jefferson School of Law and Quinnipiac Law School. Both institutions have spent millions on flashy new buildings where attentive students will have a tough time getting jobs requiring the expensive JDs they are pursuing.

This series now concludes with two more schools that illustrate another dimension of the dysfunctional law school market. Recent graduates of Golden Gate University School of Law and Florida Coastal School of Law live in the worst of two worlds: Their schools have unusually low full-time, long-term, JD-required employment rates and unusually high average law student debt.

Muddy Disclosure

The recent decline in the number of law school applicants has resulted in many schools struggling to fill their classrooms. When a school depends on the continuing flow of student loan-funded revenues, the pressure to bring in bodies can be formidable. One consequence is especially unseemly for a noble profession: dubious marketing tactics.

By now, most people are aware of ABA rule changes that require each school to disclose in some detail its recent graduates’ employment results, specifically, whether jobs are full time, part time, short term, long term or require a JD. But those requirements don’t prevent Golden Gate University School of Law’s “Employment Statistics Snapshot” page from touting this aggregate statistic for its 2013 graduates: “85.4 percent were employed in jobs that required bar passage … or where a JD provided an advantage.”

The school’s “ABA employment summary” link appears on the same page. But Golden Gate has supposedly made things easier for prospective students by showing its 2013 graduates’ employment results in a large pie chart. According to that chart, nine months after graduation, 38.2 percent of the school’s 2013 graduates had JD-required jobs.

Here’s what the chart doesn’t reveal: Even that unimpressive total includes part-time and short-term positions. Golden Gate’s full-time, long-term, JD-required employment rate for 2013 graduates was 23 percent.

Money To Be Made

I’ve written previously about Florida Coastal, one of The InfiLaw System’s private, for-profit law schools. Florida Coastal’s website includes all employment outcomes—legal, nonlegal, full time, part time, long term, short term and a large number of law school-funded jobs—to arrive at its “job placement rate” of 74.3 percent for its 2012 graduates. That number appears on the program overview pages of the school’s website. But you have to dig deeper, and move into the “Professional Development” section, to learn the more recent and relevant data: The overall employment rate dropped to 62 percent for the class of 2013.

However, those overall rates aren’t even the numbers that matter. Anyone persevering to the school’s ABA-mandated employment disclosure summary finds that the full-time, long-term, JD-required employment rate for Florida Coastal’s 2013 graduates was 31 percent.

The Cost of Market Dysfunction

At Golden Gate, tuition and fees have increased from $26,000 in 2006 to more than $43,000 today. During the same period, Florida Coastal increased its tuition and fees from $23,000 to more than $40,000. That’s why Florida Coastal and Golden Gate rank so high in average law school loan debt for 2013 graduates, with $150,360 and $144,269, respectively.

To its credit, Florida Coastal eliminates any doubt about the trajectory of law school debt for its future students. The median debt for its 2014 graduates rose to more than $175,000, all of it consisting of federal student loans.

Searching for Solutions

My criticisms of current market failures should not be construed as an argument for eliminating the government-backed student loan program for law students. Were it not for federal educational loans, I could not have attended college, much less law school. The program was a good idea when Milton Friedman promoted it in the early 1950s, and it is still a good idea today.

But the core of this good idea has gone bad in its implementation. Shining a light on resulting market dysfunction should generate constructive approaches to a remedy. At the Oct. 24 American Bankruptcy Institute Law Review Symposium at St. John’s University (and my related law review article appearing thereafter), I’ll outline my ideas.

Here’s a preview: Viewing the law school market in the aggregate as a single market obfuscates a reasoned analysis of the problem. It protects the weakest law schools from the consequences of their failures. They should pay an immediate price for exploiting the moral hazard resulting from the current system of financing legal education. At a minimum, the government should not be subsidizing their bad behavior.

The profession would be wise to lead itself out of this mess. The financial incentives of the current structure, along with its pervasive vested interests, make that a daunting task. Even so, human decisions created the problem. Better human decisions can fix them.

Source: The Am Law Daily

Posted in ABA, Department of Education, Ethics, Legal Education, Student Loans

Burdened with Record Amount of Debt, Graduates Delay Marriage


I now pronounce you in decades of debt.

Student loans have hit a record high of $1.2 trillion, putting a crimp in The American Dream of owning a home and starting a family. And it’s affecting the broader economy too.

“People cannot participate in the American dream because of student debt,” said Natalia Abrams, executive director and co-founder of

Cody Hounanian, 23, graduated from University of California, Los Angeles last year with about $30,000 in debt. He worked part-time at an In-N-Out Burger restaurant near campus throughout college and now works full-time as a manager at Whole Foods in his hometown of Santa Clarita, Calif. He is in the process of applying to law school.

He’s not married, doesn’t expect to be anytime soon and puts part of the blame on the burden of student debt.

“I’m sure there are people who say, ‘I don’t want to have a husband or a wife who is $100,000 in debt,’ but I think the real problem is more indirect. There’s almost not enough time to go out and start a family,” he said. “It’s an aspect that people forget. Planning and investing: forming relationships get in the way of that.”

“People cannot participate in the American dream because of student debt.”

“I don’t want to sound materialistic, but there’s a financial aspect,” he said. “In finding someone, there has to be a cash flow in order to take someone out.”

Abrams said that even people with decent-paying jobs are delaying that walk down the aisle because of debt. “If you owe $100,000 to $150,000 in student loans, you’re paying $1,000 to $1,500 a month. It’s cost-prohibitive,” she said.

“Everything from saving for a home to saving for retirement is completely off the table,” Abrams said.

Student debt isn’t the only reason young people are putting off marriage, of course. Women are putting significantly more time into earning advanced degrees. And jobs for less-educated Americans have withered, causing a longer search for a career that can provide a middle-class lifestyle.

Never Married

While there is no specific data on student debt-related delays to marriage, a recent study by the Pew Research Center shows that a record number of Americans have never married. The study found the median age at first marriage is now 27 for women and 29 for men. In 1960, the median age was 20 for women and 23 for men.

Student loan experts say indebtedness is weighing heavily in the young adults’ decisions to get married, buy homes, and save for retirement, however.

Heather Jarvis, an attorney in Wilmington, N.C., who specializes in student loans and student loan education, said she considered her student debt when getting married and merging finances with her husband.

“Getting married actually reduced the loan payment assistance benefits from my law school. My debt became more squarely on my shoulders upon marriage,” said Jarvis.

According to the Internal Revenue Service student loan interest deduction regulations, graduates may not claim tax deductions on their qualified student loans if they are married and file separately from their spouse. If a married couple chooses to file jointly for a student loan interest deduction, they cannot be claimed as dependents on someone else’s tax return.

Debt burdens “do limit students and graduates’ choices, influencing their timing,” she said.

Jarvis, who graduated from Duke University School of Law in 1998 with $125,000 in student debt, just recently finished repaying her private loans. She now has to pay off her federal loan debt from law school, which is about $30,000 – just above the current national average for undergraduate borrowers.

“People are delaying marriage, looking for more fulfilling partners, delaying childbearing. This demographic is people in their late 20’s, and most demographers would agree with that,” said Dr. Robert Bozick, a sociologist at the RAND Corporation in Santa Monica, Calif. Bozick published a study in June that found student loan repayment affected marriage timing for women, though less so in men.

As college tuition rises, Bozick said, it’s likely that “we are going to see more non-traditional lifestyles” than in generations past, emphasizing the “greater levels of debt.” He has found more young people have changed how they weigh whether or not they’re going to disrupt their careers for marriage, when in previous years, it was often the reverse.

Dr. Bozick himself earned his master’s degree from the University of Maryland, College Park, in 2001, and his doctorate from Johns Hopkins University in 2005. He has not yet finished repaying his student loans.

Source: NBC News

Posted in Debt, Ethics, Financial Planning, Millennials, Student Loans

The Freelance Workforce and Services Procurement: What is Your Share of $1 Trillion in Spending?

By JASON BUSCH – October 10, 2014 2:31 AM

MBO Partners just released its 2014 State of Independence in America workforce study. Based on surveys and interviews with of more than 11,000 freelance workers in the past 4 years, the annual report highlights the rise of both the part-time and full-time freelance workforce. MBO defines this group as “people who report in an average week working in non-traditional, non-permanent full or part-time employment and include workers who identify themselves as consultants, freelancers, contractors, self-employed and on-call workers, among others.” These workers earn over $1 trillion annually in North America and represent what appears to be the fastest growing segment of the overall workforce based on MBO’s survey data and other analyses we’ve seen.

This segment of the workforce is not only growing quickly – its members report high levels of overall job satisfaction and plan to stay in the field. MBO suggests that there are 17.9 million “solopreneur” freelance workers that “regularly work 15 hours or more per week … with an average of 34 hours per week. The absolute size of the market has increased 1.2% since 2013 and 12.5% from the first year the MBO survey was carried out in 2011.” In the report, MBO notes that “this growth, which is more than 11 times higher than the 1.1% growth in the overall U.S. labor force during this 4-year period, demonstrates the continued, structural shift toward independent work. In addition to growing in number, the majority of independent workers continue to be satisfied (82%) and plan on to staying independent in the future (76%).”

We’ll be sharing some additional highlights from the study (and what it means to procurement organizations) in the coming weeks on Spend Matters. The report should be a wake up call for procurement teams and leaders to factor in this growing group of professionals into their overall services procurement strategies. Run-of-the-mill processes and technologies (e.g., vendor management systems) do not necessarily address all – and in some cases, most – of the nuances associated with the sourcing, onboarding, management and off-boarding of this group of workers. Moreover, the staffing-led MSP ecosystem may pay lip service to this group – especially when directed by clients – but is rarely expert in it.

In short, it is procurement’s job to get smart about the rise of the truly independent contractor. We’ll also share some learnings from a recent interview with Gene Zaino, president and CEO of MBO Partners, in the coming days, featuring his thoughts on the study and the topic.

Source: Spend Matters

Posted in Economy, Freelancer, Jobs

What Do We Talk About When We Talk About College Debt?

By Georgia Nugent

Americans talk a lot about college. Eavesdrop on almost any conversation — in a restaurant, an airport, even the local pub. Chances are, it won’t be long before it becomes clear that the folks you’re overhearing met in college. Or college basketball takes over the conversation. Or the topic turns to whether the kids will get into good colleges. We ask, “Where did you go to college?” We “give it the good old college try.” We instantly understand the age cohort meant by “college kids.” Seniors (NOT those in college) think about retiring to “college towns.” Even without speaking, we proclaim our college allegiances on ubiquitous T-shirts and gear.

But what do we really mean by the word, “college?” The fact is, we use this generic term for the whole, broad spectrum of very different kinds of higher education institutions that America can boast: research universities and their graduate programs, community colleges, and the growing sector of for-profit institutions. All of these, different as they are, are subsumed under the useful, catch-all term.

But “college” most specifically names the traditional, four-year, residential college. The distinction is clear in our nation’s oldest institution of higher education. The four-year, undergraduate program is officially, “Harvard College.” The larger amalgam of graduate programs and schools, research centers, and the like are “Harvard University.”

Is this a distinction without a difference? No, it’s not. Calling all of higher education “college” can lead to quite misleading beliefs about those traditional, four-year colleges. A report recently published by the Council of Independent Colleges on student debt (perhaps the “college” topic MOST discussed these days) illustrates the issue.

Recently, America’s attention has been riveted on “college debt.” And virtually all of that attention — in the media, among policy makers, and no doubt in living rooms around the country — is focused on undergraduate degrees. After all, we are now a nation where more than two-thirds of all high school graduates enroll in post-secondary studies.

A far smaller percentage of students continue on to graduate school. But, in fact, America’s “college debt” is actually highly concentrated in graduate programs. Graduate students account for 40 percent of student debt, although they make up only 15 percent of student borrowers. Characterizing loans for these advanced degrees as “college” debt can easily mislead prospective students to far over-estimate the costs they may incur for an undergraduate degree. Seldom do we hear, for example, the fact that more than one-quarter of the graduates of private colleges graduate with no debt at all.

Medical students, law students, and those in PhD or other graduate programs may indeed take on relatively high debt. And that’s certainly a problem in itself. But calling it “college debt” is misleading. President Obama has spoken frequently of the debt that he and Michelle Obama carried for their education. Yet data they have released shows that more than two-thirds of their indebtedness was for Harvard Law School. And, typically, those who attain a Harvard law degree realize a substantial earnings premium on their investment.

But let’s look at indebtedness for undergraduate education. The “trillion dollar” figure that we hear about so much is a cumulative figure, representing all the outstanding debt incurred over time by students and graduates. That is, the recent graduate of a community college is included here, as well as that Harvard Law grad, who may be whittling away at substantial debt a number of years after graduation. Misplaced emphasis on “college” debt may lead many to assume that students at America’s private, undergraduate colleges incur a substantial part of that debt. In fact, only about 16 percent of the total is for attendance at undergraduate, independent colleges.

As student indebtedness is highly clustered in graduate education, so is it in the for-profit sector. Although for-profit programs enroll only half as many undergraduates as do private colleges, the amount of federal loan monies going to that sector is equal to the disbursements to private college students. In other words, indebtedness in the for-profit sector is twice that in the private colleges.

Because we don’t distinguish among types of higher education, many students don’t know that undergraduate colleges can be much more affordable — and lead to much less indebtedness — than they realize.

More broadly speaking, calling all higher education experiences “college” can foster other misconceptions about the traditional small, four-year undergraduate colleges. For example, a number of books and studies in recent years have indicted “colleges” for various faults. These include claims that faculty are only concerned about research, not teaching, or that students are herded into huge lecture classes and taught mainly by graduate students. These may well be issues in some higher education settings; they are not in small, undergraduate colleges. Faculty members in these institutions are centrally focused on teaching. They are hired, evaluated, and rewarded professionally for their ability to teach undergraduate students. Classes are small, and the vast majority of colleges don’t even have graduate students, let alone delegating instruction to them.

I’m not expecting or even suggesting, that, in casual conversation, “college” be replaced by finer distinctions among, say: community colleges, undergraduate colleges, for-profit programs and research universities. But when it’s a matter of clarifying costs, qualities, and outcomes to prospective students, it’s important for them to know that this is a distinction with a difference.

Source: Huffington Post

Tagged with: ,
Posted in Department of Education, Education, Student Loans

Study: Student loans are killing the housing market

By John Arsvosis
October 6, 2014

A new study suggests that the burden of large student loans is forcing college graduates to either buy smaller homes, or not buy at all.

The analysis is rather back-of-the-envelope — meaning, it’s a bit of an educated guesstimate — but it’s something that crossed my mind a few years ago as well.

Basically, we pay a lot for a college or graduate school education in this country. And the debt you amass can be enormous.

At a certain point, that debt comes with an opportunity cost — several in fact. It can force you to take a higher-paying less socially-aware job (good luck working for the government or a non-profit with high student loans — let me tell you, it ain’t fun). And, it can make you awfully gun-shy about spending any money until (and even after) the loans are paid off. And that includes putting off buying your first home.

John Burns Consulting concludes that “8% fewer homes will transact than normal in 2014, purely due to student debt,” and that “414,000 transactions will be lost in 2014 due to student debt, at a typical price of $200,000, that is $83 billion per year in lost volume.”

I was $60,000 in debt after undergrad, grad school, and law school. Thank God my parents paid for most of undergrad, and for my grad and law room and board. I took loans for the tuition. And I spent 15 years paying those loans back, and at the beginning they cost me the same amount monthly as my rent — $600. I was in essence renting two apartments, financially speaking, which didn’t leave a lot of room for buying a place, or for socking money away for my retirement.

It did not, however, stop me from pursuing jobs in the public interest, but that lifestyle choice definitely hurt my retirement prospects (as I’m now learning). I’d have done much better financially had I taken that job as a lawyer at the Fed in 1989, or as a consultant with Booz-Allen in 1994 — both of which I was offered (at nearly the salary I’m making today), but turned down because I wanted to do something with more purpose.

It’s hard to turn down good money when you owe a ton. And if I knew then what I know now about how much you need to retire, it would have been an even harder choice. (Fortunately for my soul, and the overall gay rights battle, I didn’t know :)

But what I did decide, early on, was that I couldn’t afford to buy a place — and I didn’t until I was 45. It was nearly impossible to save enough money to make a real down payment, and I wasn’t comfortable putting down no down payment, or paying more in mortgage than I was currently paying in rent, as I was already quite gun-shy about debt because of my significant loans.

Source: America Blog

Posted in Legal Education, Real Estate, Student Loans

Brokerage says tech platform lets it offer big commission discounts

By Teke Wiggin
September 23, 2013

Todd Siegel, a real estate agent who claims to have 14,000 transactions under his belt, says selling a home is a lot easier than it used to be.

“A lot of agents put your house on the MLS, and they just wait for the phone to ring,” Siegel said. “Should someone pay 6 percent for that? We don’t think so.”

Screen shot of LevelRE’s website.Screen shot of LevelRE’s website.

Siegel has teamed up with a few tech vets to launch LevelRE, an “online full-service” brokerage that promises to save consumers thousands of dollars with the help of a proprietary platform that lets agents, buyers and sellers manage much of a property transaction from beginning to end.

The brokerage, which claims to be “leading the real estate revolution,” furnishes its agents with free marketing, leads, office space and other services, and pays them through a mix of salary and commission.

Sound familiar?

Sure, trailblazer Redfin and other tech-focused brokerages that have followed in its footsteps, like Urban Compass and Suitey, hawk similar value propositions.

But Siegel says the brokerage stands apart from those companies because it can offer more savings, caters more to sellers and offers its services a la carte. On top of that, LevelRE’s seller clients never work with LevelRE agents in person.

Glimmers of Reesio

In seeking to provide tools to sellers to automate transaction paperwork and tasks normally handled by agents, LevelRE in some ways resembles the original incarnation of Reesio, a San Francisco-based company that started out as a flat-fee real estate brokerage and morphed into a technology provider.

Reesio developed a network of just over 300 real estate agents and brokers in California who would, for a flat fee, enter sellers’ homes in the local multiple listing service, and provide photography, broker price opinions (BPOs) and open houses.

Reesio quickly dropped that business model, saying there was more interest in its platform from agents than sellers. Reesio now offers its platform to real estate agents, brokerages and multiple listing services, competing with companies like dotloop and Cartavi.

Before launching LevelRE, from 2011 to 2013 Siegel was the CEO of Level Luxury Real Estate, a flat-fee listing service specializing in luxury real estate.

The whole package?

Sellers who work with LevelRE get many of the services you receive when working with a for-sale-by-owner company or flat-fee brokerage, like marketing materials and placement in the multiple listing service.

But clients can also use a proprietary system to price a home; make, accept or negotiate offers; interface with LevelRE agents and other parties involved in a transaction; and manage paperwork.

Sellers are assigned a licensed real estate agent, but they never see that agent in person. They can communicate with an assigned agent only on the phone or through LevelRE’s platform.

If a seller’s assigned agent isn’t available, the client can also get in touch with support staff or another agent, both of whom can use LevelRE’s system to quickly get up to speed on a client’s situation.

If a buyer isn’t represented by another brokerage, a seller pays LevelRE 1 percent for these services. But if a buyer is represented by a brokerage — a much more common scenario — the seller will pay that 1 percent, plus an amount to cover a commission for a cooperating brokerage.

Sweetening the deal for buyer’s agents

Siegel says the discounted rate that LevelRE charges can give the sellers the “flexibility” to offer an above-average commission to a buyer’s agent “to encourage a faster sale.”

“We encourage them to offer extra commission to agents thereby making LevelRE commissions potentially the most attractive of all to buy-side agents,” he said. “Agents get notified via special marketing when there is a LevelRE listing with a higher commission.”

For example, a seller might normally pay a 6 percent commission to cover a 3 percent commission for a listing agent and a 3 percent commission for a buyer’s agent.

But if a seller works with LevelRE, which charges a seller only 1 percent for its basic services, the seller could offer a 3.5 percent commission to a buyer’s agent, and still only pay a cumulative commission of 4.5 percent.

The 1 percent that LevelRE charges clients selling their homes to unrepresented buyers is 0.5 percentage points less than the 1.5 percent that Redfin charges clients selling their homes to unrepresented buyers.

More differentiators

Another reason why Siegel says LevelRE is different from Redfin: LevelRe’s platform and services were originally built to serve sellers.

“There was lot of stuff out there for buyers, and we started off focusing exclusively on sellers,” he said.

One reason LevelRE can offer such a low rate to sellers is that its agents aren’t leaving their desk chairs to work with sellers.

If a client wants LevelRE to show a home, the brokerage will do it, but only for a higher price. That goes for lockboxes, marketing campaigns and other services that are part of its a la carte menu, too.

Siegel says that ability to provide some services piecemeal also sets LevelRE apart.

“Sellers will only meet an agent when they buy one of the extra services where an agent’s presence is required, such as running an open house or showing,” said LevelRE spokeswoman Susan Von Seggern.

On the buy side, LevelRE takes a bigger cut, but still can offer up to a 1 percent rebate, around what Redfin generally offers buyers. In contrast to LevelRE listing agents, the brokerage’s buyer’s agents interact with clients in person, by showing them properties, for example. Buyers are expected to find listings without the help of a LevelRE agent, though.

“A buyer’s agent is driving somebody around, helping them purchase a house,” Siegel said. “We’re trying to put the money where it belongs.”

‘Listing-search agnostic’

LevelRE’s listing search tool is “listing-search agnostic,” tapping the APIs (application programming interfaces) of several listing portals, said Steve Repetti, the company’s chief technology officer.’s search page proclaims that it’s “Trulia powered,” but the site also displays graphics of and that link to listings on those sites. shows only one image of a property and its price.

Clicking “details” takes users away from, delivering them to third-party listing sites where they are likely to encounter lead forms for buyer’s agents working for other firms. At a time when many brokers are keenly interested in getting more traffic from the big portals, rather than sending their own visitors packing, LevelRE’s approach to listing search might seem unorthodox to some.

Siegel said directing consumers to third-party listing sites is part of its “core strategy” to embrace existing technologies that benefit consumers.

“We’re just not going to pretend that there aren’t great tools out there already or spend millions to create one unless it adds some benefit to our clients,” he said.

That may make it more challenging for the brokerage to generate leads through its website. But Siegel said the brokerage will attract enough clients through marketing campaigns, and then “grow old school through referrals.”

“Social media has made [referrals] infinitely more scalable, and we have extensive social media integration and upcoming conventional marketing plus an inside sales force,” Siegel said.

LevelRE agents make money through a combination of salary and commission. Agents are paid a commission when they represent buyers. When representing sellers, LevelRE agents don’t earn a commission, but they receive referral fees if they bring a seller to the brokerage.

LevelRE’s “join us” Web page informs prospective agents that they can expect to provide services to clients from afar.

“As part of your base salary, you will be required to spend a portion of your time providing expert assistance via telephone or video conference to our customers,” the website says. “Those agents that provide exemplary service and assistance will be eligible for additional benefits.”

“We want real-time access for our customers whenever they want help, and that’s one of the reasons why we’re giving our agents a salary,” Siegel said.

LevelRE is a licensed brokerage in 30 states, and has brought on full-time agents in New York, California, Tennessee, Georgia and Florida, and is on a “hiring spree,” according to Von Seggern. Von Seggern said that in many markets where LevelRE doesn’t have full-time employees, the company is working with partner agents.

The California Bureau of Real Estate lists William E. Garrett as LevelRE’s designated officer, and does not list any agents as affiliated with the company. Garrett is also LevelRE’s broker of record in New York, Texas and Washington state, which show no other employees affiliated with the company. In California and Texas, Garrett is listed as broker of record for two other companies, CompassRock Real Estate and CORT Business Services Corp.

Founders and financing

The other founders of LevelRE are involved in securing financing for the startup. Co-founders Franc Nemanic, who led Hostopia to a $120 million-plus initial public offering, and Steve Repetti are also founding members of CrunchFire Ventures, one of LevelRE’s backers.

Meanwhile, Ricardo Weisz, chief financial officer of LevelRE and a former vice president of the Walt Disney Company, is a board member of the Miami Innovation Fund, LevelRE’s other investor.

“They are brilliant technology guys who have capital, so it was a perfect match,”Siegel said.

Siegel said that LevelRE has already spent millions developing the proprietary technology platform that’s the backbone of its service. Having raised $3 million to date, the company is “queuing up” for a Series A funding round in October or November, Von Seggern said.

Source: Inman News

Posted in Real Estate, Start-Up, Technology

The 3% Economy

By  @RanaForooha   Sept. 25, 2014

Yes, 3% growth is better than 2%. But, for most Americans, it’s actually more worrisome

A little over three years ago, I wrote a column titled “The 2% Economy,” explaining how a recovery with only 2% GDP growth, no new middle-class jobs and stagnant wages wasn’t really a recovery after all. Like everyone, I hoped that once growth kicked up to about 3%, middle-class jobs and wages would finally revive.

But we’re now in a 3% economy, and I’m writing the same column. Only this time, the message is more disturbing. Growth is back. Unemployment is down. But only a fraction of the jobs lost during the Great Recession that pay more than $15 per hour have been found. And wage growth is still hovering near zero, where it’s been for the past decade. Something is very, very broken in our economy.

It’s a change that’s been coming for 20 years. From World War II to the 1980s, according to data from the McKinsey Global Institute, it took roughly six months after GDP rebounded from a recession for employment to recovery fully. But in the 1990–91 recession and recovery, it took 15 months, and in 2001 it took 39 months. This time around, it’s taken 41 months–more than three years–to replace the jobs lost in the Great Recession. And while the quantity has come back, the quality hasn’t. The job market, as everyone knows, is extremely bifurcated: there are jobs for Ph.D.s and burger flippers but not enough in between. That’s a problem in an economy that’s made up chiefly of consumer spending. When the majority of people don’t have more money, they can’t spend more, and companies can’t create more jobs higher up the food chain. This backstory is laid out in an interim Organisation for Economic Co-operation and Development report cautioning that poor job creation and flat wages are “holding back a stronger recovery in consumer spending.” If this trend is left unchecked, we are looking at a generation that will be permanently less well off than their parents.

There are so many signs of this around us already. The decline in August home sales–a result of wealthy cash buyers and investors stepping back from the market–shows how what little recovery in housing we’ve seen so far has been driven by the rich; anyone who actually needs a mortgage has been slower to jump in. The real estate recovery too is very bifurcated, with much of the gains concentrated in a few more affluent, fast-growing cities. (Plenty of places in the Rust and Sun Belts are still underwater.) While overall consumer debt is down, it is still high by international standards, and student debt is off the charts. When I asked one smart investor where he expected the next financial crisis to come from, he said, “Student debt.” Interest rates on tuition loans are high and fixed, and the loans can’t be refinanced, meaning they’re a trap that’s hard to escape. And student debt continues to grow fast. History shows that the speed of increase in debt, more than the sheer amount, is a predictor of bubbles. By that measure, student debt is blinking red: it has tripled over the past decade and now outstrips credit-card debt and auto loans.

It’s easy to understand why. Much of the population is desperately trying to educate its way out of a terrifying cycle of downward mobility. But students are fighting strong structural shifts in the economy. While technology-driven productivity used to be what economists said would save us from jobless recoveries, technology these days removes jobs from the economy. Just think of companies like Facebook and Twitter, which create a fraction of the jobs the last generation of big tech firms like Apple or Microsoft did, not to mention the multitude of middle-class positions created by the industrial giants of old.

And we’re just getting started: consider the outcry in certain cities over companies like Zillow, Uber and Airbnb, which are fostering “creative destruction” in new sectors like real estate, transportation and hotels. McKinsey estimates that new technologies will put up to 140 million service jobs at risk in the next decade. Critics of this estimate say we’re underestimating the opportunities that will come with everyone having a smartphone. All I can say is, I hope so. What’s clear is that development isn’t yet reflected in stronger consumption or official economic statistics.

What I do see is growing discontent with the economic status quo. In my 2011 column I wrote, “It’s clear that the 2% economy heralds an era of even more divisive, populist politics–at home and abroad.” Ditto the 3% economy. Witness outrage over displaced lower-income workers in the Bay Area, or the fact that the Fed is keeping interest rates low in part because gridlock has prevented Washington from doing more to stimulate the real economy, or the Treasury Department’s new rules limiting American companies’ ability to move outside U.S. tax jurisdiction. Whatever number you put on growth, a recovery that doesn’t feel like a recovery is, yet again, no recovery at all.

Source: Time

Posted in Economy, Jobs, Millennials, Start-Up, Student Loans, Technology

Watching Porn at the Office: ‘Extremely Common’

By Claire Suddath
October 13, 2014

Office workers have long mastered the art of hiding what they’re really doing. Online shopping when the boss walks by? Minimize your browser! Perfecting your dating profile when your co-worker comes to chat? Press F4! Yet earlier this year an employee at the U.S. Environmental Protection Agency got caught, almost literally, with his pants down. A special agent from the EPA’s Office of Inspector General showed up at the senior-level employee’s office to find out why he’d stored pornographic images on the network servers. The agent walked in on the guy—you guessed it—watching porn.

When pressed, the employee admitted he’d been watching sexy sites for two to six hours every workday since 2010. That’s somewhere from three to eight months of continuous porn watching. The man, who makes about $120,000 a year, is on administrative leave while the government investigates him. So far, EPA officials have found more than 7,000 porn files on his work computer. At a congressional hearing, it was revealed that he liked to visit a website called Sadism Is Beautiful.

Similar porn scandals have erupted recently at the Department of the Treasury, the National Science Foundation, and the Federal Communications Commission, where an employee said he watched porn for up to eight hours a week because he was bored. In 2010, 33 Securities and Exchange Commission employees were found to have viewed pornography repeatedly instead of doing their work. One senior attorney downloaded so much that he ran out of hard-drive space and just started burning porn to DVDs he kept around his office.

“It might surprise you, but this sort of stuff is extremely common—at all kinds of companies,” says Nancy Flynn, founder of management training company ePolicy Institute. A 2010 Nielsen (NLSN) survey found that 29 percent of U.S. employees have looked at porn at least once at work, their sessions averaging 13 minutes at a time. That’s nowhere near the EPA dude’s consumption, probably because everyone knows that at private companies, if you get caught, you’ll likely be fired. Schools are less tolerant, too. In 2006 a Wisconsin biology teacher was fired for looking at thumbnail images of porn for only 67 seconds.

“If there is a sexual harassment or discrimination lawsuit, you can take it to the bank that e-mail and Internet search will be looked at—which means pornography can come into play,” says Flynn, who also appears as an expert witness in the occasional sexual harassment lawsuit. “I was a witness in one class-action case against a publicly traded international company where pornography was so pervasive that a senior executive had hired an assistant whose sole job was to file his porn.” The suit ended in a settlement.

Things don’t move as swiftly in the federal government. “There is an administrative process we must follow,” EPA Administrator Gina McCarthy explained during a June congressional hearing, when asked why her porn-crazed worker was still on the payroll. The EPA’s employee policy forbids viewing or downloading “sexually explicit” material at work, but like many government agencies, it doesn’t guarantee that doing so will get you fired. “Any way that we can make these processes move more quickly, I’m all for it,” McCarthy said.

“Agency after agency has an unbelievably horrendous problem with people looking at inappropriate material on their government computers. Shouldn’t there be internal blocks on websites? We have them in my congressional office,” says Representative Mark Meadows (R-N.C.). In response to the EPA scandal, he introduced a bill that would make it illegal for federal employees to tap into pornography while at work, meaning they’d automatically be fired. “Hopefully, the bill won’t be necessary. We’re trying to get agencies to institute their own zero-tolerance policies,” he says. In the meantime, perhaps the government should consider investing in another controversial workplace practice: the open-plan office.“Any way that we can make these processes move more quickly, I’m all for it,” McCarthy said.

“Agency after agency has an unbelievably horrendous problem with people looking at inappropriate material on their government computers. Shouldn’t there be internal blocks on websites? We have them in my congressional office,” says Representative Mark Meadows (R-N.C.). In response to the EPA scandal, he introduced a bill that would make it illegal for federal employees to tap into pornography while at work, meaning they’d automatically be fired. “Hopefully, the bill won’t be necessary. We’re trying to get agencies to institute their own zero-tolerance policies,” he says. In the meantime, perhaps the government should consider investing in another controversial workplace practice: the open-plan office.

Source: Bloomberg Businessweek

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Posted in Entertainment, Government, Technology

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