• WisBusiness

Tuesday, May 26, 2009

Tech colleges ready to help in economic downturn


By Jennifer Sereno
Wisconsin's technical colleges are on a roll and that's good news for the future of our state -- not to mention the tens of thousands of students who will benefit from a bigger paycheck after graduation.

Policy makers have long known that a better-educated, better-trained work force attracts new businesses and stimulates job growth. But the main reason most people attend one of Wisconsin's 16 technical colleges is because they know the experience will virtually guarantee them a better job and a higher salary.

Dan Clancy, president of the Wisconsin Technical College System, says enrollment in two-year associate degree programs, technical certificate offerings and custom training typically mirrors the economy.

"As unemployment increases, more individuals turn to us for education and training and we've certainly seen tremendous growth in enrollments over the past year," Clancy says. "But even when the economy was good a few years back, our enrollments were still growing. It indicates to us that the whole idea of upgrading skills and staying current with your field -- lifelong learning -- has become a necessity."

The enrollment growth has been particularly notable in areas of Wisconsin hard hit by layoffs. Blackhawk Technical College, serving the Janesville area and Mid-State, serving Wisconsin Rapids, have seen double-digit increases over the past year. For the system as a whole, 2008-09 enrollment is up 4 percent over the prior academic year. It's up 25 percent over the past decade.

Clancy says the system calculates the figures based on full-time student equivalents because so many students take a few classes part-time while working or sharing family responsibilities. So, this year's equivalent of 73,000 full-time students represents some 400,000 people actually being served.

The need for flexibility as traditional students and returning adults try to balance work and other responsibilities has not been lost on the technical college system's leaders. Clancy says most campuses have been adding night and weekend class sections as well as online and accelerated course options.

At the same time, the system has been working closely with regional employers and labor groups to make sure that its programs are relevant. The process has gotten a big boost from the Obama administration's economic stimulus package.

A significant portion of the money flowing from the federal government into the state's regional workforce development boards is earmarked for job training and education. The workforce development boards, which also work closely with regional employers to learn about employment needs, then contract with the local technical colleges to provide appropriate programs.

Clancy says some of the stimulus money has encouraged the development of curriculum focusing on energy and utilities, conservation and construction. Creating a work force with these skills will help pave the way for the growth of green businesses, he says. Even now, in the Wisconsin Rapids area, Energy Composites Corp. is working on plans for a wind turbine factory and predicts a need for up to 400 employees.

"Our colleges are looking closely at the whole field of green and renewable energy, while some are specializing in wind and biofuels," he says. "Also, just utility work in general has been a strong area of demand. People are being hired in electrical power distribution," where there is a need for increased transmission capacity and system upgrades.

The technical college system also ensures a steady supply of workers for the state's more traditional industries. For example, while the auto industry may be slumping, other Wisconsin manufacturers have achieved significant gains in efficiency and are performing well against the odds. Clancy says campuses in the northeastern part of the state are continuing to see a strong demand for graduates from welding programs.

For other students, particularly returning adults who have experienced a layoff or are considering a career change, the technical college system can offer help with computer literacy as well as math and science refresher courses. Such coursework may be needed for a transition into a number of better-paying jobs in health care and information technology fields.

Speaking of money, Clancy says the technical college system tracks the starting salaries and employment rates of students through surveys sent out six months after graduation. The latest survey, which captured the experiences of 16,574 students for a 72 percent response rate, showed nine out of 10 graduates (91 percent) were employed within six months.

Even better: the median annual salary for students graduating with a two-year associate degree was $36,192, with many individual fields commanding significantly higher wages. Dental hygienists averaged $51,970, while graduates in diagnostic medical sonography earned $50,046. Students with a one-year technical diploma in electrical power distribution reported annual salaries averaging $49,916.

For more information, view this year's report at http://www.wtcsystem.edu/reports/data/graduate/index.htm

-- Sereno, former business editor of the Wisconsin State Journal, is a senior manager at Wood Communications Group in Madison. E-mail jenny.sereno@wcgpr.com or call (608) 770-8084.

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Friday, May 22, 2009

Living within your means



By Kevin Reardon
As a young man in my middle 20s, I came across a saying in a book that made a lot of sense. I typed the sentence into my computer at work, enlarged the font so that it took up an entire page, and then taped it the inside of my bedroom closet door. I read it every day before leaving for work and again at night before going to bed.

The sign read:

"Live like no one else WILL for a few years, so you can live like no one else CAN for the rest of your life."

The concept is simple. Live within your means and don't spend more money than you make. Reflecting back on that period in my life, I realize how frugally we lived and how happy we were in spite of having few material possessions.

Newly married, not only did my wife and I have little money, we had significant debts hanging over our heads from post-graduate schooling. With both of us beginning our careers, our income was modest at best. We both work in industries that require an investment of several years before the pay scale begins to reflect something respectable.

A year later, our first child came along. The birth was certainly no surprise but we were completely unprepared for the financial ramifications that come with having a child. I remember stacking our various bills in order of importance and then earmarking the coming month's income towards paying those bills. Although you can debate the order listed, we prioritized the bills accordingly: first came the rent check, daycare, our monthly food & credit card bill, our student loans, and then a reserve fund, in hopes of accumulating more than $79 in the bank.

What we viewed as a necessity, even back when we had nothing, was the "need" to immediately contribute towards our 401(k) retirement plans at work. Having had nothing, we wanted desperately to change that, so we aggressively saved towards retirement in spite of our ongoing concerns to meet monthly bills. Not surprisingly, we made our meager budget work by clipping coupons and refraining from spending money on items not on our list. Nowhere in our budget did we have a "Leisure & Entertainment" category. We decided that we would give up the many comforts our family and friends were enjoying for several years so we could be assured of enjoying them later in life. Ironically, between family get-togethers, picnics with friends, and movie nights at home, we seemed to enjoy ourselves quite well.

Two years later, our second child arrived. At the same time, we bought a house, my wife needed to take out a new loan to invest in her company, and I quit my job to start Shakespeare Wealth Management. Keep in mind that, although we were consistently paying down student loans, we still had significant debt balances at this stage.

The list of monthly expenses grew quickly. We persevered and made tough choices with our budget. In addition to monitoring our expenses, we both focused on increasing our incomes at work. At no point did we stop our savings program because we knew it would be too easy to spend those dollars on other items and delay our financial independence.

The differences between a "want" and a "need" can be dramatic, depending upon your stage in life. Back then, we wanted a television, unlike today when we feel as though we need a large flat screen TV. Back then, we wanted a cell phone, yet today it would be listed as a need for most people in the world. We always wanted to take a vacation, yet today many need to schedule a getaway from work.

Today's financial calamities have caused people to revisit their budgets, with many trying to carve out unneeded expenses. The irony is that we all have great difficulty carving out items that only a decade or two ago were considered luxuries, or better yet, didn't even exist (i.e. the Internet, cell phones, computers, iPods).

We have noticed that when it comes to budgeting, people fail to visualize two items. First, people refuse to believe they can live without something they have previously come to rely on and enjoy. Imagine having to live without a cell phone, computer, or even your car. Although those items are all considered needs, the reality is that if forced, we would figure out how to live without them. Recognizing this natural human emotion, we should all take pause prior to purchasing that next item, thinking how we might feel later in life if we are no longer capable of affording it.

The second observation is that people have difficulty visualizing the positive ramifications of foregoing something today with the belief that they will be able to afford something even better in the future. Our society and culture stress the importance of immediate gratification and the concept of having what we want, when we want it, and having a lot of it. Deferring gratification has dramatically positive effects on one's budget and future financial health.

Having lived on a thin budget for the better part of ten years (and the years that preceded it), my wife and I have paid off all of our debts and continue to save for the retirement we both dream of. Although we don't drive new cars or live in a big house, we feel as though we are on a path to accomplishing our financial and life goals.

The path of financial independence starts when you choose to live like no one else WILL for a few years, so that you can live like no else CAN for the rest of your lives.

-- Reardon is owner & president of Brookfield-based Shakespeare Wealth Management Inc. He is also a member of the National Association of Personal Financial Advisors (NAPFA). He can be reached at 262-814-1600 or kevin@shakespearewealthmanagement.com.

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Wednesday, May 20, 2009

Options to consider after refinancing


By Kevin McKinley
Last month's column encouraged homeowners with good credit and a good chunk of equity built up in their homes to at least consider taking out a new, 30-year fixed-rate mortgage at today's record-low rates. The result might be a large sum of money, a smaller monthly payment, or both.

The reasoning behind this proposition is that the same economic measures that have produced these low rates may also bring about higher inflation, and subsequently higher interest rates.

If that occurs, those who borrow now will not only be repaying their mortgages with dollars that are declining in value (a good thing for the borrower), but can also use the proceeds from the new loan to ensure that they never have to borrow money at higher rates in the future.

But the key factor in making this work is what you choose to do with the proceeds of the new loan, or the extra money you get from lowering your monthly payment. Here are the best places to salt away any extra savings.

Pay off other debt

If you've accumulated some debt via credit cards, car loans, or student loans, you're probably paying a higher interest rate on those debts than you would be paying on a new 30-year mortgage.

Unlike the credit cards, the interest rate on a fixed-rate mortgage can't be raised at the whim of the lender. And unlike just about all other debt, the interest on your mortgage might be tax-deductible, rendering the net cost of the mortgage even lower than the stated rate.

Even if your only debt is an outstanding balance on a home equity loan or home equity line of credit, you're probably going to be able to cut your interest rate by rolling the old loans into a new fixed-rate mortgage.

Best of all, whether you get a lump sum of cash or a lower monthly payment from the new mortgage, you can stash the savings and use it to pay cash for future purchases for which you otherwise would have had to borrow money at a higher, non-deductible interest rate.

Stay at the bank

If you're a little apprehensive about pulling equity out of your home when you don't necessarily have to, then perhaps you shouldn't venture too far from the financial institution that gives you the loan in the first place.

Depositing the money in a certificate of deposit or two will keep the money relatively-readily accessible if you need it in an emergency, or decide to pay the mortgage off sooner than scheduled.

The only drawback is that the rate you earn on the CDs may be a couple of percentage points below what you're paying on the mortgage—a relatively small price to pay for the increased liquidity you've achieved.

And that rate disadvantage may not last forever. If that higher inflation and interest rate scenario comes to fruition, you may be able to renew those CDs at higher interest rates than what you are paying on the mortgage (and if this happens, try not to gloat in front of your banker).

A retirement boost

Of course, there's an even better place to get an immediate, higher rate of return on the money, especially if you winced a little when you opened your most recent retirement plan statement.

Raising your at-work retirement plan contribution to the maximum amount allowed (in 2009, it's the lesser of your earnings or $16,500, $22,000 if you're over 50) may benefit you in two ways.

First, you get an automatic reduction in this year's tax bill, usually from $200 to $400 for every extra $1,000 you are able to set aside. Then, your earnings are sheltered from taxation until you retire.

Finally, equity prices might shock everyone and actually rise at some point during the next several decades, which may help you earn a rate of return equal to or higher than what you are paying on your new mortgage.

But it might be prudent to keep your retirement plan investment allocation at a moderate mix of stocks, bonds, and cash, just in case it takes awhile for a new bull market to begin.

Next month, some slightly less conventional destinations for your mortgage proceeds.

-- McKinley bought his first share of stock at the age of 14, and began working for an investment firm at 17. After graduating from the University of Wisconsin with a degree in economics and history in 1988, he became one of the youngest licensed financial advisors in the country. He is now a Certified Financial Planner practitioner, and owner of McKinley Money LLC, a registered investment advisor in Eau Claire, Wisconsin that provides fee-based financial planning and investment management to individuals and families. Read McKinley's complete bio

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Monday, May 11, 2009

Not the change Kenosha was hoping for


By F. James Sensenbrenner
The "restructuring" of jobs at the Chrysler Kenosha Engine Plant is a prime and realistic example of why I voted against the bailout funding, the Troubled Asset Relief Program (TARP) and the other mass amounts of spending Democrats have done over the last few months in the name of "economic recovery."

Since the spend-a-thon started, i've held many town hall meetings. At each of these meetings I hear how the people of Wisconsin are fed-up with their hard-earned taxpayer dollars being spent on subsidizing failing corporations. In my opinion, no corporation is too big to fail.

But now, the President has added insult to injury. Despite many vocal objections, the Obama administration approved the restructuring plan with Chrysler's bankruptcy filing on April 30. What this means is that the 800 employees of Chrysler's Kenosha Engine Plant will face "restructuring" (read: lose their jobs), AND they, along with their fellow Wisconsinites will be paying for their jobs to be relocated to a facility in Mexico.

Yes, you read that correctly. Chrysler is asking for an additional $8 billion from the government, on top of the $4 billion they've already received, to help implement their plan in Mexico, despite the proper resources already existing at the Kenosha Engine Plant.

Now, outsourcing jobs in a terrible economic market is really bad governing; but then having those workers help pay for their jobs to be outsourced through taxpayer bailout funds is a slap in the face and absolutely appalling. This is not the economic recovery Wisconsinites hoped for and expected.

Last Thursday, I sent a strongly worded letter to Treasury Secretary Tim Geithner asking him to deny future bailout funds to Chrysler if it goes forward with outsourcing American jobs to Mexico. I know others in the Wisconsin delegation continue to take similar actions with the administration to bring about a positive resolution for the people of Wisconsin. Under no circumstances, should we be rewarding these types of action with more money. Let's hope the administration reaches that conclusion as well, before it's too late.

I guess when the president says that it's time for change -- he should really talk to those 800 employees who are about to experience some real life change.

-- Sensenbrenner, a Republican, represents Wisconsin's 5th Congressional District.

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Thursday, May 7, 2009

Book review: "The Power of Less"


By Terri Schlichenmeyer
by Leo Babauta, read by Fred Stella c.2008, Brilliance Audio $19.99 4 CDs / approx. 4 hours
Just like everybody else, you have 24 hours in a day.

You sleep some of it away. You eventually have to take time for daily ablutions, nutrition, and a few minutes to catch your breath, no matter how quick. But at the end of the day, it always seems like you have more task than you have time.

What would you say to doing less and getting more out of your 24 hours? Pick up the new audiobook "The Power of Less" by Leo Babauta, and you may discover the secret to better time management.

No doubt about it, fighting distraction is a big part of your workday. It's difficult to resist the lure of e-mail and easy to justify going on Facebook or Twitter (they're networking, right?). Check last night's scores, your horoscope, and before you know it, you've wasted an hour of your day.

So what to do? First, author Leo Babauta says, set limitations and "choose the essential to maximize time and energy." Playing online isn't networking, it's playing online; in fact, he says, you probably don't even need to check e-mail more than twice a day and you can usually reply in 5 sentences or less.

Every morning when you get up, decide on what Babauta calls the MIT: the Most Important Tasks. Choose three MITs each day, then batch them for maximum efficiency. Start small and learn to focus.

Stay informed by reading a blog or magazine or participating in an online forum. Try to do your absolute best on one big project, rather than working on a bunch of smaller ones. If the boss asks you to complete a task, carefully assess what he or she is asking you to do. Once you get going, find "flow" and immerse yourself in the work.

At the end of the day, try to simplify and relax. Clear the clutter from your desk, your home, and your life. Learn to eat, drink, and drive slower. And don't forget to take care of yourself -- if you get more time by doing less, you'll want to be healthy enough to enjoy it.

In today's workplace, where twenty people want your job and you're being asked to do more and more, does it make sense to slow your pace?

I didn't think so, either.

Author Leo Babauta has some good ideas, in theory. Who wouldn't like to focus on a mere three tasks each day? Who wouldn't jump at the chance to participate in an "online forum" during worktime? All these things are wonderful if you can get away with them, but Babauta's program is filled with what I think most executives would consider a waste of precious time and -- since a good chunk of this audiobook is devoted to meticulous (and common-sense) diet and exercise advice -- a waste of good money.

If you think you have the luxury of slowing down your pace at work, give this audiobook a whirl. For most workin' folks, though, "The Power of Less" is a lot less useful.

-- Schlichenmeyer has been reading since she was three years old and she never goes anywhere without a book. She lives on a hill in Wisconsin with two dogs and 11,000 books.

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Monday, May 4, 2009

Prevailing wage mandate will have impact on development and small business


By Jeff Hoffman
The proposed state budget has a public policy issue inserted that will require any private development that uses any form of public financing in excess of $2,000.00 to pay a prevailing wage to all laborers involved with the project.

While this is a laudable goal, the Wisconsin Realtors Association believes that this mandate could increase the cost of development for some projects by anywhere between 10 percent and 40 percent. The current form of the mandate has far-reaching implications for the life of a development.

There are two possible scenarios that come to mind that extend well beyond the initial development where the mandate could be detrimental to job creation and new development.
  1. After Mr. Developer has developed a new 100-acre business park that required public financing and Mr. Developer has paid the prevailing wage mandate for the development of the land, the prevailing wage mandate is attached to any new development that occurs within this project for the life of the project.

    As an example, two years from the completion of the new business park, ABC Manufacturing would like to build a new manufacturing facility on a 5-acre parcel of land within the development. Although ABC Manufacturing had nothing to do with the original development ABC will have to pay a prevailing wage to any contractor they select to construct their new facility within this business park.
  2. Another example would include Mr. Real Estate Investor constructing a multi-tenant office building in this business park. Mr. Investor will pay a prevailing wage at the time of construction, as well as during the life of the property as tenants move on and the space needs to be re-tenanted. Mr. Investor will have to pay the prevailing wage every time that he has to complete renovations to a space within the property.
There are certainly trades within a development, especially on larger scale and complex developments that warrant paying a higher cost to the contractors to ensure the necessary expertise and quality of the task. There are also areas of construction, such as small-scale tenant improvements, where small businesses compete more on flexibility, speed, and price. The need for a highly skilled laborer and the additional costs that they bring are not necessary for these types of projects. The prevailing wage mandate will drive up the cost of development for developers, investors, and for businesses.

The end result will be that the development does not happen or the cost will be passed on in one or all of the following ways: to the taxpayers in the form of a larger request for public funding, to the tenant in the form of higher rent, or to the business in the form of a higher cost for the facility.

A strong argument can also be made that small businesses associated with the field of construction will be disproportionately affected by this mandate because their distinct competitive advantages include competing on pricing, flexibility, and speed. All things being equal on pricing, if a developer is faced with paying a prevailing wage to a large union shop who has the reputation of better training and skill level and a choice of paying a prevailing wage to a small business owner who does a quality job but doesn't necessarily have the access to the skilled and trained labor pool, the easy selection would be to employ the large union shop. The small business will also be hampered by the increased burdens of record keeping and confusing classification issues both of which are issues that a human resource department could easily handle, however such departments are rarely in place at small contracting companies.

The use of public financing in the form of TIF districts, new market tax credits, and other public incentives are extremely important tools to spur economic development. Two projects that were recently in the news and related to Wisconsin included the announcement by the state of Michigan offering nearly $150 million in tax credits and incentives to Johnson Controls for a state of the art lithium-ion battery plant and the state of Louisiana offering $9 million in public incentives to lure Thomas Industries away from Sheboygan.

In a globally competitive market place the state of Wisconsin should be looking at ways to enhance the effectiveness and use of appropriate public financing options to spur economic development as opposed to creating obstacles to the implementation of a successful tool that encourages job creation.

Prevailing wage is certainly warranted for many aspects of larger scales developments, however mandating prevailing wage for all aspects of a development with $2,000 or more in public funding will drive up the costs for developers, businesses, and taxpayers, potentially prevent projects from happening, and also impact the ability for small businesses in construction to land contracts because their competitive advantage on pricing will be taken off of the table.

-- Hoffman is president of IBA-W, a member of the Commercial Association of Realtors Government Affairs Committee, and vice president at Judson & Associates, s.c.

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