The Restless Project

Restless LogoWe need drugs to sleep at night.  Nearly half of us don’t have enough in a bank account to cover next month’s expenses, let alone any real head start towards retirement. We buy homes with mortgage payments our parents couldn’t fathom, or we make student loan payments almost that large. We are digitally tethered to work by gadgets that constantly let us down with bad directions or dead batteries. We almost never take vacations, but when we do, we read email every day anyway. We chug Starbucks and Red Bull to try to keep up, but we feel like we are letting everyone down all the time anyway.

America, land of the Restless.

But why?

I have a simple question I ask when I try persuade people that there’s something very wrong with the way we live in America today.

“Can you think of any friends with children who are secure they will be able to pay for their kids’ college?”

There’s always an uncomfortable chuckle, as if I’d just asked if they knew someone who could weave straw into gold. Then there’s usually a discussion about how everyone feels like they are working harder, and perhaps even making more money than they’d ever dreamed, but yet falling behind anyway. So they run on the rat-wheel faster and faster.


Today I am announcing a new long-term effort, an on-going series, called The Restless Project.  I plan to unpack the root causes of this Restlessness. I believe they are paradoxically both more subtle and more obvious that most busy people realize. And I think it’s such an important discussion — I think it is the story of our time — that I am interrupting my career to shine a spotlight on it.  Along the way, together, I hope we can explore ways to jump off the Crazy Train.

Trina Foster-Draper. No one should have to undertake a Fourth Act.

Trina Foster-Draper. No one should have to undertake a Fourth Act.

I will talk about humble Americans like Trina Foster-Draper, a 56-year-old single mom of four who will be proudly writing her last check for her kids’ college this year.  She was recently laid off by CenturyLink in Logan, Utah, where she’d worked in customer service for nearly six years.  What will she do now? Go back to school for information technology and begin her fourth career transition.

“Everybody has to keep changing, keep reinventing themselves now,” she said to me, sitting in her apartment she shares with her father – a brand new building adjacent to a massive Walmart. “There’s no choice.”

Despite the occasional catcalls from folks who casually argue that today’s adults are just lazy and selfish, for the most part, there’s general agreement on the problem — the creeping sense that life is somehow spinning out of control.  It is.  Today, we all live under pressure from a diabolical combination of economic dis-ease and technology disruption that keep all of us, not just on our toes, but on the edge of a cliff.  Second Acts are fine, even romantic. Fourth Acts? That’s insanity.

The reasons for Restlessness that I will explore in this series are myriad:

1) It’s an economics story. Just 50 years ago, an American household with one decent job could afford a decent home.  That math is now horribly broken. Today, it takes two incomes, and even at that, a much higher percentage of household income to buy a home. That’s why you never feel like you have enough money.

2) It’s a work-life balance story.  Since you are insecure about having enough (what if one spouse loses a job?) you work too hard. Fear is an excellent, horrible motivator. People don’t take proper nights and weekends any longer, instead putting in hours over remote corporate networks, in large part because they feel like they have to. Forty hour work weeks took hundreds of years to evolve, which is an interesting history I will share soon. Smartphones took them away in five years.

3) It’s a technology story. Smartphones haven’t just wrecked our ability to disconnect from the office.  Pick your favorite restaurant: How many people are staring at phones while half-talking to each other?  Step back from the scene for a moment. We all look like rude idiots doing that, always more interested in people somewhere else than the ones we are with.  Sure, you could be better about phone etiquette. But billions of dollars have been spent figuring out how to make you addicted to these things. You didn’t stand much of a chance.

4) It’s a broken social contract story.  America’s social contract, always part-myth and part reality, has broken down entirely, in a way that doesn’t make sense. Today, people with regular jobs in regular cities can’t afford regular homes there.  That should be impossible. After all, the price of most homes should settle roughly into what most people can pay for them.  But not when the value of those homes is propped up impossibly by a credit system built like a pyramid scheme.  The math, you see, is against you.

5) It’s a disappearing middle class story. A quick thought experiment: What is a solid middle class job that would let someone comfortably own a modest home? Teacher? Cab driver? Bike mechanic?  Today, workers are driven towards high-income, lottery ticket-like professions such as information technology. Of course, a decent home in an IT-friendly neighborhood near Silicon Valley costs $1.2 million. Better work hard and get that big bonus. Meanwhile, not everyone can write computer code or be a physical therapist. What are the rest of American workers supposed to do?  This isn’t a minimum wage story. This is an average wage story.  By every measure, the economic “recovery” after the Great Recession has done nearly nothing to help the middle class. Sure, unemployment is shrinking, but that’s a misleading stat. Here’s the truth: Low-wage jobs represent nearly half of all jobs created as part of the recovery.

6) It’s a marketing story. What do you do when you feel scared of the future?  Well, you drink Red Bull, for one, so you can work all night and impress the boss. And maybe work yourself to death. Or maybe you pay $250 for a new pair of shoes, just so you can put aside for a moment those hopeless feelings that you’ll never, ever, pay off that student loan. Or maybe you’ll hand over your finances to that lovely man in the white shirt who tells you he can help you pay for your kids’ college, even though all he’ll do is suck out a percentage of your money in fees every year. But he does make you feel better.  The cycle of Fear and Consumption, as we all learned in the movie Bowling for Columbine, is powerful.

7) It’s a where-to-live story.  NYC dwellers have always been restless, always with one eye looking out for an emerging neighborhood where it might be possible to afford a dreamy 3-bedroom apartment in relative safety.  All of America lives like this now.  As I travel the country, everyone with a second or third kid on the way is trying to make impossible math work – where are the wages higher and the housing costs lower? North Dakota? North Carolina? Florida’s west coast? Oregon? So-called “second tier” cities are gaining steam and migrants as the recession’s recovery drags on, but these moves bring on other problems – like proximity to meth houses.

8) It’s a hacker story. Sure, computer criminals who might empty your bank account in ways that you didn’t even know possible is enough to keep you up at night. But that’s barely the beginning of the story.  Behaviorists have hacked you and now desperately try to deliver just the right ad at just the right moment so you can’t resist buying your product.  Huge firms with names you’ve never heard of collect data on you by the hard-drive-full – Axciom admits having 3,000 data points on nearly every American.  Heck, folks are hacking your genetic code.  What are your right to all this incredibly important, personal information? Basically, you have none.

We’re restless, and I want to explain why.  I’m certainly not alone.  Brigid Schulte, a Washington Post reporter, recently explored the complex life of American woman in her excellent book “Overwhelmed: Work, Love and Play When No One Has the Time. You’ll recognize some of the concepts about the relationships between two income homes and housing costs from Elizabeth Warren’s classic, The Two-Income Trap.

Since I’ve spent 20 years writing about ripoffs and the dark side technology, I think I have a unique perspective on the problem of restlessness. For the past year, since I left my job at NBC, I’ve been chipping away at stories in this area. Here’s a few examples:


I plan on covering the hell out of this topic.  (There’s already 27 stories in my special “Restless Project” section, which you can find here.) And don’t worry, I promise to write about hopeful trends, too, such as the explosive growth in yoga, or the technology tools that really do make our lives easier, or what folks in other countries do to stay sane in our digital world, or the members of the “Resistance” who are fighting for worker rights or simply promising to turn off the cell phones for the weekend. I hope you’ll follow along, you’ll criticize me, and you’ll make suggestions to help bring this story the attention it needs. The best way to make sure you don’t miss a post is to sign up for my email newsletter by clicking over to this form, or just fill out the box on the upper-right hand corner of this page.

The journey is personal. As I look around at my own career, I see the insanity of journalists trying to do an honest job and raise families in world where everyone is judged – not just by Neilson ratings – but by Facebook likes and ReTweets.  That’s a popularity contest which no one can win.  And I see my friends, who are increasingly incapable of having fun without having their faces in a phone or a video game, and I fear the lonely future that seems stretched out before me. I love a good chat.  I hope you will, too.

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Scroll down for a clickable version of this map.

Scroll down for a clickable version of this map.

If you want to know why home prices are out of whack in America, look at our lousy schools.

One oft-overlooked element of home pricing is the scarcity of good public schools in America.  Overlooked by everyone except young families, of course, who know quite well how much good “free” schools cost.

In plenty of Americans towns and cities, parents feel the public schools aren’t good enough for their kids, so they spend anywhere from $5,000-$25,000 annually — per child — on a private school.  Quick math will tell you that buying a home in a good school district is worth its weight in gold. Econ 101 tells you that home prices in districts with good schools soar as parents try to fight their way in.

Here’s another big reason American families are restless. They must navigate a terribly unfair Catch-22 — either they stretch their budgets to afford a home near good schools; or buy a more affordable home and pay for private school.

Now I have some data to prove it, courtesy of the folks at RealtyTrac. The firm analyzed school test scores for nearly 27,000 elementary schools in more than 7,200 U.S. zip codes, along with home price affordability in those same zip codes. (Good schools were derived from Department of Education data, and ranked at least one-third higher than average on test scores.) The result: surprise! In two-thirds of zip codes that had at least one “good” school, average wage earners would be forced to spend more than one-third their income to buy a median priced home.  Or as I like to say, average people with average incomes can’t afford average homes, a sign of a broken market.  Meanwhile, the median sales price of homes in areas with good schools was DOUBLE the price of homes not near good schools ($411,573 vs $210,662).

Below, you’ll see a chart of 10 zip codes where home prices are low relative to wages, but there are good schools nearby. Below that is a clickable, national map that you can use to explore the data yourself.  If for some reason you have trouble loading the map, click here.

affordable good schools

*Includes zips with at least one good school (defined as having a 2014 test score at least one-third higher than the state average) and with affordable homes (where buying a median priced home requires one-third or less of the average wage-earner’s income). Only most affordable zip code from each state is listed. States with no good schools in affordable zip codes or insufficient home price data were not included. Sources: RealtyTrac, BLS, State Depts. of Education.

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Chart derived from data provided by Berkeley Terner Center for Housing Innovation.

Chart derived from data provided by Berkeley Terner Center for Housing Innovation.

Life in up-and-coming cities like Raleigh, Jacksonville and Memphis might not be quite as inexpensive as you’ve heard. At least not if you are a renter.  It’s another reason you might feel Restless.

Recently, examined markets in America with the highest (and lowest) rates of housing-poor residents. Generally, analysts describe residents as housing poor if they spend more than 30% of their income on housing. We generated top 10 and bottom 10 city lists of housing-poor residents using data from the U.S. Census Bureau via the Berkeley Terner Center for Housing Innovation. Cities at the top of the list — where the most residents are housing poor — were no surprise: Los Angeles, New York, Miami. Cities in the bottom of the list were a bit predictable, too. That included Raleigh, N.C.; Columbus, Ohio; and Buffalo, N.Y. This is a familiar story: America’s “second-tier” cities are where the affordable housing is.

Scratch the surface, however, and things aren’t quite so clear.

(This story first appeared on Read it there.)

The census data also includes information on how many renters vs. homeowners are housing poor. When you isolate renters, you find that many of these affordable cities aren’t that affordable. If half a city’s renters are housing poor, it’s hard to call that place inexpensive.

In every city studied, renters were more likely than homeowners to be housing poor. That makes sense. A certain portion of homeowners have paid off their mortgages. People who are deep into mortgage terms, thanks to inflation, see their payments essentially go down over time and are far less likely to spend a big chunk of their paycheck on housing.

But the discrepancy between housing-poor renters and buyers makes for interesting reading. In some places, renters are more than twice as likely to be housing poor; in other places, the rate is far lower. We’re calling this gap between housing-poor renters and owners the “rental penalty.” If you live in places with a big rental penalty, odds that your financial life is under serious stress are far higher when renting.

When we ranked cities this way, there were several surprises. Rochester, N.Y., had the highest rental penalty. There, only 22% of owners are housing poor, while 54% of renters are. Also in the top five are Jacksonville, Fla., and Raleigh — both considered inexpensive escapes for big-expensive-city dwellers. In Raleigh, 19.8% of owners are housing poor, but 48.1% of renters are.

Pittsburgh appears to be the most affordable place to live in the simple list from the other day, and it survives this rental penalty analysis, landing roughly in the middle of the pack. So do Columbus, Oklahoma City and Louisville. But Buffalo and Memphis, Tenn., don’t. There, renters are more than twice as likely to be housing poor.

eneralizations about any housing market are fraught with peril, as all housing is intensely local, so it’s important to note that the “rental penalty” which shows up in the data could be caused by many factors.

“I suspect there are multiple reasons for why the difference in being ‘cost-burdened’ between renters and owners would be higher in some local markets,” said Jed Kolko, who called attention to the data in his report on highlights from the recently-released 2014 Census data for the Berkeley Terner Center. “One reason is that markets with long-term residents would have fewer cost-burdened households because they bought their home long ago and might not have [a] mortgage any longer. Another is that in markets where housing generally is very expensive, renting is more common for middle- and higher-income households, who may look less different than owners relative to other cities.”

On the other hand, some cities that showed up as expensive for renters didn’t surprise Daren Blomquist, vice president of RealtyTrac. In those markets, investors are scooping up homes and renting them, he said, putting price pressure on both first-time homebuyers and renters alike.

“Raleigh and Jacksonville stand out as hot spots for investors,” he said. “These are markets that on face value are fairly affordable, but you have these situations where institutional investors are creating more demand … they are willing and able to pay more than first-time homebuyers, who are not able to compete, so they stay as renters. Then rental costs go up.”

In a normal market, as rental prices rise, more people would make the leap to owning, putting the markets back into balance. But that’s not happening in some areas because outside investors are altering that delicate balance.

What Can Consumers Do?

The rental penalty data suggests two lessons for consumers. First, moving to Buffalo or Raleigh is not cheap for everyone. A New York City dweller trading apartment rent for a mortgage payment will probably feel like either place is Shangri-La, but someone who moves there to rent might end up feeling just as housing poor as they did in the big city they left.

Second, if you are already renting in a market with a big rental penalty, it’s probably a good idea to redouble your efforts to buy. (You may want to check your credit before youapply for a mortgage, though, since a good credit score will qualify you for better terms and conditions. You can get your free credit report summary on to see where your credit stands.) For example: Blomquist and RealtyTrac regularly generate “rent vs. buy” data, and in Jacksonville, residents spend 36% of their income on rent, while a new home can be purchased with a mortgage payment that is only 21% of income.

“There may be some hesitancy on the part of a person moving there. They don’t know for sure it’s a long-term move,” he said. But the combination of relatively high rental prices and a strong job market can make such markets a smart buy. “Even if they are only going to be there for five years.”


The cheapest cities in America, based on percent of residents who are housing poor.

The cheapest cities in America, based on percent of residents who are housing poor.

One good measure of affordability is this: How much of your paycheck do you spend on housing every month? Experts have traditionally pegged 30% as an optimal amount — people who spend more than that might be considered “housing poor” — though that number is fairly random, and the real answer is “it depends.”  Lower-income folks who spend half their paycheck on rent live far more stressful financial lives than high-income folks who spend half their income on a mortgage — the latter group still has plenty left over at the end of the month. The former group is certainly restless,what I’m writing about in my Restless Project.

But 30% is certainly a good measuring stick; once you climb over 40%, you are probably in a real danger zone for cash-flow problems. And if nearly half the people in a city spend more than 30% of their income on housing, we can all agree that’s an expensive place to live.

(This story first appeared on Read it there. )

Housing affordability, or the rate of housing-poor citizens, is a nice data point to ponder because it takes several factors into account — home prices, salaries, even unemployment, to some extent.

While stories about housing unaffordablity pile up on news sites — rents are up, home prices are up, first-time homebuyers are disappearing — it’s easy to forget that the housing market is not one thing. It’s hundreds of smaller “things.”  Lexington is not San Francisco. Columbus is not Seattle.

So here’s a little gem tucked into the Census Bureau’s 2014 American Community Survey, courtesy of the Berkeley Terner Center for Housing Innovation. Above and below you will find lists of the 10 most- and least-expensive metro areas to live in the U.S., based on the percentage of residents who spend more than 30% of their income on housing. The headline: People within the U.S. are living vastly different lives based on their housing costs.

Jed Kolko, who called attention to the data in his report on highlights from the recently-released 2014 Census data for the Berkeley Terner Center, told me that the calculation is performed based on a household income question and a monthly housing costs question.

“So it’s a calculation done by the Census based on self-reported data,” he said.

The areas used in the study are called CBSAs, or Core-Based Statistical Areas, as defined by the U.S. Census. Essentially, they group together cities and the suburbs from which workers in those cities might commute. It should be noted that within such large areas, residents’ lifestyles and financial stresses can vary wildly.

And as for the wide disparity between cities, there could be many reasons that fewer people might be housing poor in one area than another — a lot of long-timers, for example.

“Markets with long-term residents would have fewer cost-burdened households because they bought their home long ago and might not have a mortgage any longer,” Kolko said.

In other words, just because fewer people are housing poor in an area doesn’t mean you won’t be housing poor if you move there. Still, if you feel like housing eats up too much of your paycheck, it might be time to consider a move to a place near the top of this list.

I want to hear from you if you already live in one of these “cheaper” places, like Raleigh or Pittsburgh or Kansas City or Oklahoma City. How did you land there? Do you think it really is cheaper, and do you think you feel less stress about money than folks living in San Francisco or Miami? Write in comments below, or email me at Bob at BobSullivan dot net.


MOst exp top 10


zillowFurther evidence that the housing market is still broken: Even as home prices rise, first-time home buyers keep disappearing.  In fact, first-timers now  represent the smallest percentage of home buyers in three decades, according to a report issued Thursday by The National Association of Realtors.

How can prices rise while an incredibly important part of the market dries up?  Well, that’s one reason we’re all going nuts, a phenomenon I’m covering in The Restless Project.

There’s plenty of external factors propping up prices — chiefly, low interest rates.  But that is a stopgap, not a solution. Meanwhile, an entire generation of would-be homeowners and families stay on the sidelines in a kind of limbo — paying high rents, waiting to marry, waiting to have children.  This is a poor way to run a society.

I’ve covered various reasons for this problem before.  A huge element: The death of the starter home. Construction companies just don’t bother building small homes for young families any more. It’s go big or go rent.

That’s why, as I wrote for this week, adults under 34 (millennials) are just as likely to live “at home” as to own a home.  In fact, independent living is still on the decline, as most 30-somethings decide each year to live with their parents.

Mortgage broker and market expert Logan Mohtashami said he sees the impact of delayed household formation every day, but he’s optimistic that the issue is a one-time shift in the way young adults live.

“Everything is moved up a few years,” he said. “(Ages) 28-37 is the key mark for homebuying.” The 21-25-year-old age group is the largest demographic in America, he added. (Here’s a CIA World Factbook age pyramid).

Basically, the housing market will be stuck in neutral until today’s 25-year-olds turn into 30-year-olds, he thinks.

“They still need more time,” he said. “Years 2020-2024 will come bigger numbers.”

But plenty of other factors are at play here, too.  The rise of the disposable worker means that portability is absolutely essential to 20-somethings, who might hold 3-4 jobs before age 30.  That certainly doesn’t encourage home buying.  (Portability is actually important to all workers now; that’ll be the subject of an upcoming Restless Project story).

Probably the biggest factor is recent experience.  Once bitten, twice shy.  Buying a home seemed like such a great idea in 2005.  In 2015, it sounds kind of terrible.  Those are both generalizations, but who could blame a young person for not wanting to risk their financial fortune so soon after the housing market broke so many hearts?  Renting is a perfectly fine alternative for many people, and has even been described as the new American dream.  At least, renting was sensible until the rent became too damn high.

How are you dealing with the rent / buy dillema?

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royalsdotcom Click for site.

What ever will become of Big Data now?  Is it possible the Kansas City Royals might be able to help you get a raise?

The Royals have now won the World Series. The bunting, stealing, just put-the-ball-in-play Royals.  The we-don’t-strike-out-or-hit-many-home-run Royals.  The team that rejected the ways of Moneyball sit atop the baseball world.

Is Moneyball dead? The Royals are known as the anti-Moneyball team. Last year, they slayed Billy Beane’s spreadsheet-friendly Oakland A’s; this year, they might have slayed the idea behind them.  And I suspect a nation of underpaid workers may have secretly cheered the Royals on.

The Royals play smallball. The kind of baseball you learned in Little League and then — if you played on in life — forgot by college. They won the World Series on a low-percentage, high-risk play that would have made a data slave like the Yankees’ Joe Girardi cringe–what was essentially a steal of home that risked the final out of the game.

Professional sports are copycat leagues. You can bet plenty of teams are today trying to figure out how they can play Royalball.

What does this have to do with your money?  Last year, when the Royals screwed up the Oakland A’s best chance to finally win a World Series, I wrote about sports’ biggest, newest rivalry — the analytics crowd vs the data haters — and I came up with five reasons I think people irrationally hate Billy Bean and Moneyball.

When my book The Plateau Effect came out, I was (a bit unfairly) cast as king of the Big Data Haters. That’s silly, of course. I love data. Some of my best friends are data.  I do hate it being abused, however, particularly when it’s being abused to hurt people.

I think many people who believe that spreadsheets don’t lie have missed the reality that in most companies data is used primarily for cost cutting, not to find and reward hidden value.  (In a piece I wrote recently for CNBC, I explored the concept in detail — basically, data helps defense more than offense, and at your company, it helps owners a lot more than workers).

So there is built up dislike and distrust of analytics.   In sports, that plays out this way: that manager who goes with his gut over his head?  He’s an idiot.  At work, like this: Everybody loves that employee, but her rating dipped to 3.9 last quarter, so she has to go.

The head vs. heart debate has many tentacles and I’d encourage you to read last year’s essay if you have five free minutes.  But to get to the point: This is a false binary.  You’re cheating yourself if you reject either. Moneyball is just a word, of course, and I could argue that the Royals were just playing a more advanced form of it (Slate did a lovely job of this last week). The Royals have found hidden value doing things that Billy Beane-imitators have long dismissed, things like doing anything to put the ball in play and avoid a strikeout, and that gave them their advantage. At a bare minimum, any data lover should be humbled by this, and realize that even spreadsheets have blind spots.

Last year, the Royals’ season ended with a runner rounding third who stopped because heading home would have been a low-percentage play. This year (while admittedly playing with house money), the Royals won by taking a very similar chance — and the element of surprise forced a defensive error.

I played baseball for 20-something years, and I can promise you this: You can’t fit into a spreadsheet what it does to a team when an offense constantly puts pressure on a defense like that.  The offense starts to feel invincible.  The defense gets scared.  The Royals gave other teams the yips, and it happened again and again in these playoffs.  Maybe you can believe that they were lucky. I believe they were making the most of a mystery ingredient. But … they also had scouting reports indicating the Mets defense was shaky, and putting pressure on them could force some mistakes.  It did.

Head and heart, working together. That’s how all good decisions are made.

Did the Royals kill Moneyball? Of course not. As I wrote last year, the basic premise of using data to find hidden value is so obvious it should never be controversial. But I hope these last two years have humbled the spreadsheet tyrants just a little bit.  They sure need it.  Maybe you can’t reduce a baseball player, or a worker, to a single number like “Wins Above Replacement” after all.

Maybe there’s a little more going on than meets the eye. Maybe, just maybe, the hidden value you seek is something that can’t be quantified.

And maybe the next time a consultant suggests a small cost savings for something that kills your workers’ spirits,  you’ll think of the Royals and perhaps come up with a different calculation.

See all my Restless Project stories.

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Click to read The Economist

Click to read The Economist

There’s a new crisis looming in the way Americans plan for retirement, and it’s not a much feared stock-market correction. The crisis is much more fundamental.

For years, the accepted wisdom has been this: Invest all you can in that 401(k) or you are crazy.  Not contributing to a 401(k) is akin to not going to the dentist or refusing to change the oil in your car.  Sure, the stock market goes up and down, but over the long haul — the very long haul – returns between 5 and 10 percent have been nearly guaranteed.

People with money think this is changing, however.  The stock market has increasingly become a sucker’s game. Investing is a good idea. Investing in publicly-traded companies?  Not such a good idea.

And you can bet mom-and-pop investors will be the last to know about this.

The Economist summed up a series of trends this week in good overview of the problem called “Reinventing the Company.”  The upshot: The stock market is only for entrepreneurs who are suckers. Clever companies are using private funding now, and staying private.  The insanity of trying to make quarterly numbers while still growing a firm’s long-term prospects has been exposed. People who invent a thing would rather answer to a few private investors than the wolves on Wall Street. Also, taking a company public is distracting and expensive.

“After a century of utter dominance, the public company is showing signs of wear,” the Economist says.

If you rely on stock market gains for retirement, bells should be ringing in your head right now.  Instead of the first place that upstart companies go for funding, the stock market is now the last place firms go when founders want a big big exit — if they go public at all.  So you, solid long-term investor, no longer have access to the best and the brightest.  Smart companies are growing in an investment ecosystem outside your reach.  You have access to the big, old, lumbering duds.

What has changed? Plenty of things. I think the biggest factor is something we described at length our book in The Plateau Effect — the end of the dreaded step function.

Step functions are among the biggest obstacles to growing companies.  Once your little restaurant is full of diners each night, you have little choice but to buy the place next door and double your size.  But that’s a big leap fraught with risks – a step function.  What if you only grow 50%? Then you’ve wasted 50% of your investment.  Many small firms die after a poorly-calculated step function choice.

The internet has flattened steps.  Need more server space for your ecommerce company?  You don’t have to add a server farm.  You can buy it one byte at a time from a cloud provider.  This reality plays out over and over again.  Uber can add one driver at a time. A small inventor can raise a few thousand dollars on Kickstarter. And with no step functions, there is no need to make that enormous leap into the public markets in order to raise a huge chunk of capital. Instead of every entrepreneur’s primary goal, going public now seems like the last resort.

“A growing number (of startups) choose to stay private—and are finding it ever easier to raise funds without resorting to public markets. Those technology companies that list in America now do so after 11 years compared with four in 1999,” the Economist says.

So you, dear 401(k) investor, are now betting your future on someone else’s last resort.

Does this mean you should stop putting money into your 401(k)? No, of course not. If your firm matches contributions, that’s still free money you are getting.  You should maximize that benefit, always.  And you probably should be putting in even more than the 6 percent your firm might require to max the match, given the tax advantages of 401(k) plans.

HOWEVER, it’s high time you took a really hard look at where you money is INSIDE that 401(k).  Far too many workers simply pick two or three of the seven available options and never think about it again.   Remember, even if you picked intelligently when you signed up, things change as the market ebbs and flows, and you need to review your choices at least once each year, and preferably more often.

Find out:

What companies you are invested in:  Yes, yes, you are probably invested in mutual funds, but those funds are probably composed of stocks, and in all likelihood, your various funds are composed of the same giant companies.  It’s easy to look up where the mutual fund manager is putting your money — the top  10 “holdings” in the fund (here’s one example).  You might be shocked at the number of old, depressing companies that you’ve bet your future on.

How much you are paying in fees: Your 401(k) is free, you say? Far from it.  The managed mutual funds you pick suck out about 1 percent of your money every year through “expense ratios.” So those old, slow companies are costing you even more.

What your options are: If you are young — 20 or more years from retirement — you can afford risk.  So take some risk.  There might be an interesting emerging market fund to try.  Dip your toe in with 10 percent or so.  On the other side of the risk equation, there might be a bond fund that gets your money out of the stock market. Try that. (Though it might be invested in corporate bonds issued by old, slow companies, so be sure you understand it). If you are skittish, put a little of your money into a money market fund that won’t lose any value unless the entire economy goes under. Actively invest your money, even if you lose a little along the way. That’s the only way to really learn what’s going on.

How much of your money is invested in your employer’s stock: That’s playing roulette.  Move most of it elsewhere.  Never have more than 5 percent in your company’s shares. That ties too much of your financial prospects to one entity.

Most of all, make alternate plans: Now that you know smart people are turning their backs on Wall Street, don’t just sit there, do something.  You know how 40-somethings think of Social Security today — either it will be gone when we retire or it will be paltry — well, 20-somethings are likely to feel something similar about 401(k) plans.  Sure 401(k) balances recently reached a record, averaging just more than $100,000.   Know what that amount means to you at retirement?  Assuming you don’t spend it all on your first post-retirement health problem, something like $500 a month. You’ll get more from Social Security (if it still exists).

So, what other plans?

Chiefly, save money.  Once you’ve maxxed out the tax benefit of your 401(k), think of your emergency fund as part of your retirement money.  Soar past the recommended 3-6 months of living expenses and see if you can’t pile up 1-2 years worth of cash in a high-yeilding savings account.  When interest rates finally rise — and they will — cash really will be king.

Don’t sleep on the new economy.  You’ve read it here and 100 other places. Big companies won’t take care of you in old age. You have to find something new and become a part of it.  Start today dabbling in making products for Etsy or musing about Airbnb possibilities.  Better yet, talk to friends about what they are doing. Find one with an interesting start-up idea that’s not too risky and won’t require a lot of money.  Be open to investing yourself, or better still, inventing yourself.  Don’t risk any money you’ll need in the next few years.  And do ask a lot of questions first.  But now is the time to think like a 21st Century investor, not a 20th  Century investor.

Don’t panic: All bad money decisions are the result of panic. Don’t panic. Don’t throw all your money at a smiling man in a white shirt who says he’ll take care of you.  He probably can’t do any better than you. Sure, there are great financial planners.  But far too many people trust someone else to manage their money simply because they don’t want to think about it.  Trust me, this is no time for outsourcing. You are the only one who can really plan for your financial future. And the good news is this: Things are changing, and that means there’s opportunity for folks who recognize it.  If the downside of this change is regular investors can no longer access great startup companies through the public markets, the upside is that private startup investment is more accessible than ever.

Let me be completely clear: I’m not saying you should pull all your money out of the stock market, or you shouldn’t utilize a 401(k) or 403(b).  Old, slow stock market companies may very well provide you with a tidy sum that can be a nice part of your retirement planning, like Social Security. But also like Social Security, if you think your company retirement plan will take care of your old age needs you are delusional.

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Click for the report

Click for the report

There’s a growing disconnect between working parents who say juggling home and office duties is driving them crazy and their managers who don’t seem to understand the magnitude of the problem, according to a new survey.

That 98 percent working parents say they have experienced burnout is no surprise. The other two percent probably fell asleep while taking the survey.  Working parents are the very definition of Restless, the kind of people I am writing about in The Restless Project.

But before I get to the nitty gritty of the survey results, released Monday by Bright Horizons Family Solutions, two things stand out.

Suffering in silence: Many managers tell me that workers often let things slide to the breaking point before speaking up to say there’s a problem — and that’s the real problem.  Certainly in a tough economy it’s hard for workers to complain, but not impossible. In all my research on overwork, it’s become clear than many workers are at least partly to blame for doing it to themselves. Did you really *have* to send that email on Sunday night? Did you really *have* to pull out your smartphone at dinner?  Workers are struggling to keep up with expectations, but you should always question the source of those expectations — is it your boss, or yourself?

This came up in the Bright Horizons data: 64% of parents said their employers weren’t attentive to their needs as working parents, while less than 30 percent of managers worried that parents they supervise felt that way. That’s a huge disconnect.  How could that be? Well, 75 percent of parents said they wouldn’t speak up about their concerns.  There might be logical reasons for this.  In shops that reward overwork, many employees might be worried that even expressing concerns could put them at a disadvantage to younger workers with few family obligations.  Still, you’d have to think a sizable part of the problem is under-communication.  You don’t know until you ask.

Working dads feeling the pain:  The survey found that dads worried more about spending time with family (52 percent) than trying to advance in their jobs (37 percent), while managers had that backwards, with 60 percent assuming their male parents chief concern was advancement.  Dads who are involved in taking care of the kids face a new set of challenges that employers might be missing if they don’t update old gender assumptions.

Both men and women tell surveyors that flexible time or more time off is more important than money; that’s valuable insight for managers and corporations trying to attract and keep top talent.

Here are some other data points from the Bright Horizons research:

  • 48 percent of working parents are stressed about managing their health today, an increase from 41 percent in 2014
  • Almost 8-in-10 (77 percent) working parents say burnout has caused them to become depressed or anxious or get sick more often
  • Around 8-in-10 working parents (79 percent) and managers (77 percent) agree a change needs to be made at the office, not at home, to curb burnout.
  • A minority of managers have concern that working moms (37 percent) and dads (31 percent) struggle to balance work and life, while an even smaller number of managers worry working moms (36 percent) and dads (25 percent) believe their employer isn’t attentive to their needs as parents

Meanwhile, despite the sense that parents are less available for round-the-clock work that young people without kids, there are plenty of reasons for corporations to respect employees who are parents. Asked “in which areas working parents were stronger than their non-parent counterparts,” survey takers said:

  • Nearly half (41 percent) of managers say working parents are better multitaskers
  • More than a third of managers (34 percent) say working parents are more effective in time management
  • A third of managers (33 percent) say working parents are calmer in a crisis
  • 28 percent say working parents are more financially responsible on the job.

I’d welcome a discussion of the special issues facing working parents for The Restless Project.  Write below or email me directly at Bob at Bob Sullivan dot net.


Click to read my story on CNBC

Click to read my story on CNBC

Think about your last raise. Struggling? You’re not alone.  Raises are all but dead, I reported recently for

My editor there, Jennifer Barrett, recently pointed me towards a study with some curious findings: First, company bonus pools are falling short, so bonuses will be a bit disappointing this year.  Second, corporations are lamenting their inability to attract and keep top talent.  That seems like an easy problem to solve, no? But in reality, the way companies pay their workers has shifted dramatically in the past few years, putting both companies and HR departments into an uncomfortable box.  I explain this in much more detail at, but this story also has a big Restless Project component I’d like to discuss here.

Many corporations have latched onto new ways of paying workers that favor bonuses over raises. There’s plenty of reasons for this, and it can be a good or a bad thing, depending on your circumstances.  For companies, the benefit of “variable compensation” is pretty obvious. Raises are permanent; bonuses are temporary.  Raises are a permanent liability on a balance sheet.  Bonuses can be taken away with a tap on a keyboard. And when bad times come, it’s a lot easier to cut bonuses that lay off workers.

But variable compensation can also a nightmare for families trying to make long-term plans.  Bonuses have effectively become part of worker salaries, rather than a “surprise” end-of-year luxury.  So how can you sign a 30-year mortgage if your income varies dramatically year to year? How can you make a budget? Plan to pay for school tuition?

Workers with highly variable compensation might as well be independent contractors, like Uber drivers, who live in the sharing economy.  This is another reason Americans feel so restless, the topic I’ve focused on in The Restless Project. 

The death of the raise brings about another social problem, too. I remember hearing in my 20s that it was ok for me to take some risks, because I could expect my paycheck to slowly rise as I moved through the ranks in my profession. So it was ok to buy a home when I was 25, ok to move across the country, ok to go to graduate school, and so on.

This notion that better things lie ahead propels so many risky but rewarding life decisions. If raises are dead, that kind of optimism has gone missing.

There’s a raging discussion on my story, with many workers lamenting that they’ve forgotten what a raise is.  A writer identified as “ready_to_retire” offers this insight: “99% of workers get no bonus at all, and no raises either. The solution is to change jobs regularly, getting a better paying job each time. Turnover costs the employer too, but most are too stupid to realize that.”

Changing jobs is the new raise.  That’s quite an insight, I think.  It’s an option available to many workers, and it’s going to be essential to living in the “new” economy. But worker portability, as economists call it, is a very imperfect proposition.  You’re not portable if your kids really like their school, for example.  Or you have to care for an elderly relative.  Lots to think about here. When was your last raise?

Click over to CNBC to read the story.



The pot of gold isn't money, it's affordable housing.

The pot of gold isn’t money, it’s affordable housing.

Jim has a two-month old baby. He’s working at 10 p.m. when I meet him, and the baby — his wife stopped in to say hi.  It unclear when she will go back to work. You’d think Jim is sleep-deprived from working long hours or a second job.  But he’s not restless at all, except for the occasional 2 a.m. feeding.

Jim lives in Missoula, Montana.  He’s a bartender.  He earns enough in the service business to afford rent on a two-bedroom apartment with a garage about a mile from town — $900 a month — and to support his wife and child. Jim (not his real name) is a realist.  He grew up in California, and he knows all about the $5,000-a-month shoebox mortgages people pay there. How folks earning $100,000 or more are living with roommates just to scrape by.  How they are perpetually restless, the subject of my Restless Project.

Jim’s happy, and in Missoula, he’s got a future. It’s actually an advantage that he works nights — and regular service hours — because his wife will be able to take a daytime job and they can take child-care shifts.

Regular readers of my column know I have  a soft spot for Missoula, which is a perfect little mountain city just an easy day’s drive east of Seattle.  It’s got a comfortable lifestyle, incredible vistas and a surprisingly thriving music scene.  Most of all, it fits the profile of a “sane circle” I wrote about earlier this year. There are places where regular people with regular jobs can afford regular homes in America. But they aren’t on the coasts, and they aren’t where most regular people live.

Nightly light shows  are free here.

Nightly light shows are free here.

In a place like Missoula, anyone who can figure out how to bring home about $500 a week can find a decent living. Take home more than that, and you are working your way towards home ownership.  That’s just not the story in New York, or San Francisco, or Seattle…or even Denver, now.  I’m not saying everyone should live in Missoula.  In fact, I think the people of Missoula would be quite angry at me if I did say that. And Missoula’s hardly perfect — like most towns out here, there’s a big meth problem. But I do think it’s incredibly important to trave, because it reminds you that not everyone lives the way you do. There are other ways.  And to stay great, America’s greatest cities need to figure out how to be a little more like Missoula.

The next time you are traveling, perhaps stop by one of these “sane circles.” Click for the full interactive map, and more details on what makes a “sane circle.” / RealtyTrac / RealtyTrac



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Requiem for the starter home — where are young families supposed to live?

August 6, 2015 The Restless Project

I had a depressing conversation recently with someone who does big housing construction deals for a big bank. There’s only two types of deals that work, he said.  1) Building pricey, premium granite countertop homes for well-off folks or 2) Building affordable housing with government subsidies. Roughly speaking: construction for the rich or the poor. […]

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