Articles from Max Gulker
I received many interesting questions from the audience at my lecture last week, titled “Mom and Pop vs. Big Box – How Small Businesses Compete With Larger Rivals,” but one in particular stood out. One theme of my talk was that small businesses can gather and respond to richer and more detailed information about their local or niche markets and customers than can larger firms. However, an audience member asked if this was changing because of Big Data.
You may be familiar with the common business practice of using financial ratios to assess financial performance. You can use this trick with your personal finances too. With just a few numbers, you can get a basic sense of your own economic and financial wellness, relative to what the experts recommend.
Small businesses are an important part of our economy and communities, but often we incorrectly assume that their small size is necessarily a competitive disadvantage. Numerous articles have proclaimed the end of Main Street, arguing that “mom and pop” shops cannot compete with the low prices and one-stop shopping of big-box chains. Others have touted the benefits of small business to local economies, emphasizing our duty to support small firms in our communities. In both lines of discussion, small businesses are seen as passive entities, handicapped by their size in our large and increasingly global economy.
The common narrative about small business usually goes in one of two directions. First, many predict doom for “mom and pop” firms in America, arguing small businesses must be protected from giants like Walmart, who can charge lower prices.
The second narrative focuses on the benefits these businesses bring to our economy and communities, stressing the need for consumers to “support” small and local business
With energy prices and a strong dollar keeping inflation low, the average American’s cost of living did not rise in 2015 and in fact fell relative to wages. As this research brief shows, however, some Americans are spending large amounts on services such as education and health care and have seen their cost of living continue to rise.
Congress recently renewed several tax breaks for households and businesses, which the president signed as part of the year-end budget deal. Whereas previous renewals generally expired after one year, Congress made many of the tax “extenders” it renewed in December permanent. This can be helpful. When it comes to tax cuts, how long the cut remains in place, as well as whether they are offset by spending cuts, can be important in how effective the cuts are.
I’ve recently been talking to successful small business owners about what allows them to prosper when facing competition from larger firms or national chains. In a diverse array of industries including retail, manufacturing and financial services, business owners tend to report three things they do better than larger competitors.
If you’re a political candidate, “jobs” is a word that almost guarantees applause at any rally, regardless of party. We all agree that creating and sustaining good jobs is a key priority, but we’ve had essentially the same debate on how to do it for decades. So why do we keep having the same debate? Isn’t economics scientific and empirical? Shouldn’t we know who is right, based on their policies’ outcomes?
Conventional wisdom says that small businesses increasingly struggle in today’s economy. We have compared how smaller businesses have fared versus larger firms over time, and find at least some evidence to support that conventional wisdom. In terms of employment and sales, small firms have not kept pace with overall economic growth. These results hold up across many industries and geographies.
The employment status of Uber’s drivers and other workers in the “sharing economy” has become a hot political issue, with Hillary Clinton and others criticizing the lack of protections and benefits afforded to independent contractors. Implicit in this criticism is the notion that independent contractor status is a bad deal for workers. However, reclassifying contractors as employees would have both costs and benefits that would be felt differently by different kinds of workers in the sharing economy.
Will the “sharing economy” fundamentally change the way we work? Platforms like the taxi service Uber, and the vacation rental service AirBnB, sever traditional bonds between a company and its employees, instead providing platforms where customers and independent contractors match themselves for the service in question. Service providers can make themselves available at times of their choosing, but this flexibility comes at the cost of a regular salary, job security and benefits.
Observers are asking just how far this model will spread. Will we all become independent contractors rather than employees? Pundits like to talk in all-or-nothing terms, but common sense economics suggests a middle ground.