Standing desks. Love 'em or hate 'em, there are plenty of articles to back up whatever opinion you have.
On the one hand, studies have shown that standing desks could help reduce your risk of obesity and diabetes. On the other, experts have said standing desks don’t help with weight loss and could give you back problems, so ¯_(ツ)_/¯.
Now, another study has come out, this one in favor of standing desks. Researchers at the Texas A&M Health Science Center found that standing desks helped employees get more done during the day. Though the results might not translate for all types of work environments, they should give standing desk proponents reason to rejoice.
Published last week in the journal IIE Transactions on Occupational Ergonomics and Human Factors, the study followed 167 employees in a call center over six months. Seventy-four of them used standing desks, and researchers found that they were 46 percent more productive than those who sat at their desks.
The participants' employer, a health services company that's not named in the paper, commissioned the study to better understand the returns on the standing desks it had bought for the office.
Productivity was determined by the number of successful calls to clients that the health and clinical advisors made per hour. The company earned revenue for each successful call, during which an advisor checked in on a client’s progress in an exercise program, for example, or verified to see that a client was taking proper medication.
Employees typically made between 400 and 500 calls a month, and the company wanted them to average around two successful calls each hour. Those who had standing desks met that quota, while those who remained seated averaged 1.5 successful calls per hour, Gregory Garrett, a public health doctoral student and lead author on the study, told The Huffington Post. If an advisor was unable to reach a client over the phone, that was counted as an unsuccessful call.
Interestingly, the people who stood actually made more phone calls than the ones who sat, Garrett said.
The results almost seem too good to be true -- after all, who wouldn’t want a nearly 50 percent boost in productivity just from using a standing desk?
Even the researchers were a little baffled by what they saw.
“My first thought was, ‘This couldn’t be right,’” Mark Benden, who leads the Ergonomics Center at Texas A&M and was a co-author of the study, told HuffPost. “I would expect the public to raise an eyebrow, and that’s okay. But this wasn’t a snapshot. This was every day, every call, every worker for six months.”
While these results might be unique to a call center or other types of offices where employee productivity is easily quantifiable, the researchers say that cognitive performance can still benefit from less sedentary behavior.
“Standing has a positive impact on an individual’s cognition, and that could be transferable” to other types of work environments, Garrett said.
The researchers add that their findings could help give companies more concrete evidence of the value of their investments in standing desks.
“How do you justify ‘this desk makes me feel happier, and I feel better’? That’s not going to pay the bills,” Benden said.
But, he continued, the study shows that standing desks can in fact "affect a company’s bottom line. That’s really significant.”
The rules for dressing for the office are completely different for men and women.
Perhaps no two people better exemplify the double standard than the most well-known executives working at Facebook: cofounder and Chief Executive Mark Zuckerberg, known for wearing the same grey T-shirt and jeans every day, and Chief Operating Officer Sheryl Sandberg, who is typically seen perched atop towering high heels.
Sandberg is arguably the most influential female executive in Corporate America, inspiring (or pissing off) many women with her book Lean In. Her frank openness about dealing with the sudden death of her husband last year was both heartbreaking and admirable. She's incredibly successful by every measure.
Yet on Wednesday, while watching her talk to Recode's Kara Swisher and Facebook Chief Technology Officer Michael Schroepfer, I caught myself staring at her shoes. Just look at them:
Here's a closer look:
Facebook/Recode
I couldn't help but marvel at the fact that while Zuckerberg slomps around in super-casual clothes every day, Sandberg is smartly decked out in full corporate power garb: towering, patent leather, red peep-toe heels.
Here's a pair of shoes Sandberg wore to the World Economic Forum in Davos in January.
Ruben Sprich / Reuters
And another from the power confab:
Ruben Sprich / Reuters
Here's a photo of Mark Zuckerberg's closet:
Here he is speaking at a recent conference in San Francisco:
Stephen Lam / Reuters
You get it.
To be sure, these two are an extreme example. Sandberg, who holds an MBA from Harvard, is a seasoned executive and considered to be the "adult" in the room who brings balance to Zuckerberg's more introverted personality. And of course, nobody is forcing Sandberg to wear her (extremely stylish) stilettos.
Still, their case highlights the fact that even in the tech world, where the concept of dressing down was invented, and even at Facebook, a progressive company run by a guy in jeans, women and men don't quite play by the same rules.
Women can't just roll out of bed, toss on yesterday's jeans, brush their teeth and do well at work. If they do, they'll struggle in the professional world. One woman I spoke with recently, who works at a private equity firm, told me that she wasn't taken seriously at work until she started wearing stilettos.
In fact, women who spend more time grooming -- including efforts like putting on makeup -- are promoted more often and make more money than their bare-faced colleagues, according to one recent study.
“Although appearance and grooming have become increasingly important to men, beauty work continues to be more salient for women because of cultural double standards with very strict prescriptions for women,” the paper says.
So if you're looking to be the next Sheryl Sandberg, better bust out that lipstick and heels. You'll be be spinning your wheels without them.
What would you say are the defining characteristics of the American eater?
If you look at our obesity rates, they'd suggest we’re mostly overeaters. But beyond that, the question is tougher.
It’s not so much that we lack a U.S. food personality — if anything, we have multiple, conflicting ones. At the same time, more consumers are demanding that their food be “natural,” organic and GMO-free, even as Taco Bell sells record numbers of Doritos Locos tacos. We seem more interested in celebrity chefs, cooking shows and recipe videos than ever before, and yet we’re also spending a record amount of money eating out and ordering in.
To address our nation’s diet-related concerns, it would seem necessary first to better understand what we eat, how we eat it and, of course, why.
In her new book, Devoured: From Chicken Wings to Kale Smoothies — How What We Eat Defines Who We Are, Culinary Institute of America program director and food writer Sophie Egan digs into these questions.
It turns out previous attempts to dissect our dietary schizophrenia have ignored some important pieces. Principal among those, Egan argues, are the ways in which Americans working longer hours than the rest of the industrialized world has impacted both their motivation — and ability — to make healthier food choices daily.
So how do we go about resetting our workplaces, cafeterias and the norms they help instill to a healthier default? The Huffington Post recently spoke with Egan about the challenges ahead and the reasons for hope.
What prompted you to explore this question of how we wound up with the food culture we have today?
I’ve been working in food professionally for a number of years and was thinking about how powerful a mirror food is for who we are at a much deeper level. I was tired of hearing that in the U.S. we’re so diverse and are such a huge country that we don’t have anything we could identify as a national food culture. I felt like, well, what can be said? I dug into that question of who we are as eaters, these core values we have as Americans -- these are things we don’t even see sometimes because they’re so deeply ingrained in how we think.
And that led you to this discussion of how the way we work impacts the way we eat. It almost seems so obvious now that I’m asking you about it, but we don’t really talk about that relationship. Why is that?
It really comes down to a reframing of how we look at the root causes of our eating choices. We typically center those conversations around individual willpower or these character accusations, if you will: That Americans don’t cook because they’re lazy or we just follow whatever we saw on TV. But I would say work is a root cause. In addition to a lack of financial resources [being a factor for many people], another important root cause of some eating behaviors that maybe aren’t as healthy as people would like is lack of time. If we’re working more than we used to, something is falling by the wayside.
What was stunning to me was seeing how technology has really blurred the lines between work and home for many people. This mindset of, well, if you can work, why wouldn’t you? Whether it’s on vacation, in the evenings or on weekends, all of it. So with the increase in the numbers of hours we’re spending working, we’re not focusing on food. We look at food as fuel. You squeeze in a sandwich if you have three minutes in between meetings, or grab a Kind bar when you’re racing to catch the subway in the morning. Eating is a secondary need as opposed to something people used to design their days around.
And this starts in childhood. Kids in K-12 schools usually don’t have enough time to eat, so they’re scarfing down pizza or hot dogs or whatever is being served in their cafeteria in 10 minutes. By the time you’re in college, it’s a grab-and-go, grazing mentality. So you’re trained from an early age to see food as secondary. This is a huge cultural norm that’s very difficult to reverse.
Credit: Seth Perlman/Associated PressStudents at many schools are rushed to eat their lunches quickly. The Culinary Institute of America's Sophie Egan argues this helps instill a mindset that food is principally fuel, rather than something to be savored or celebrated.
I’ve noticed that the “food as fuel” mindset is behind a lot of the marketing of Soylent and similar products. I tried one last year and thought it tasted just as joyless as you would think. Why is this sort of message at the heart of a lot of so-called “foods of the future” today?
Culturally speaking, Soylent is a huge step backward. There’s this sense that we can take food and improve on it, to take what nature gave us and say there’s got to be a better way. A life-hacking approach. A Silicon Valley approach. But [AOL co-founder] Steve Case has this great quote that food is not something disrupting the disrupting you have to do.
Soylent is an extreme, but I would say it represents a larger idea of reducing food to its nutrients. Food is so much more than that. It does nourish us and we need certain things to survive, but I hope that people are starting to realize that flavor and taste and joy are some of the greatest pleasures of life. I think in the U.S., we have a very related discomfort with leisure and with pleasure. It’s sort of unspoken that if you sit around and do nothing, you’re lazy and you’re lesser. I think similarly there’s this sense of taboo around pure enjoyment of taste and of eating food with other people.
There’s also an element of purity to utilitarian foods like that. In the book, you make a strong case for food — whether it be a particular diet or the practice of going to brunch — as a sort of "secular church." Is that a hypothesis you held going into this, or did it develop along the way?
I started with this question about the contradiction of why we’re willing to spend basically the whole day seeking out brunch when our typical mindset is to go to extreme lengths to minimize the time we spend obtaining, eating and cleaning up after food. So it was more of this question of what is so different about that. Very quickly, my research led me to this discovery about how different our weekday eating habits are from our weekend eating habits. We spend the least amount of time of any major developed country preparing and eating food. We’re hardwired in terms of that idea of efficiency.
But looking back, it’s very clear weekends are about indulgence and treating yourself after a long, hard week. These are also some of the only times we aren’t as scheduled, though many families have soccer games and a million other activities too.
Your book also discusses how Americans are so used to getting our food exactly the way we want it, and points out how companies are always pushing new flavors and innovations or “stunt foods” like Doritos Locos. How do you balance these trends with ideas that could push us in a healthier direction? The answer can’t be to go back to the “good ol' days,” right?
This is a really tough question. It’s not just that we all should return to the old ways, because there’s clearly some innovation or new ways forward that should be welcomed. But what kinds of pieces from our past do we really want to resurrect?
Everyone talks today about how people are paying more attention to food than ever before, but from a policy standpoint, a number of things are still missing. One is the amount of time in schools for lunch. I think, at a broad level, going forward what I’m hoping for is for us to collectively find ways to focus on food more. And what I mean by that is, if more employers could make the American lunch break the norm in office settings. I’ve heard of a handful of companies where they ring a cowbell and everyone knows to take a break. You can’t expect individual change in the midst of the same larger environment, not only the physical marketing environment, but the cultural environment. I’m calling for cultural change, and it has to come from the top down.
I think the piece most worth resurrecting from the past would be teaching people to cook. You don’t have to call it home economics. But it should be painted as essential life skills. What if, in order to graduate from college you had to demonstrate that you knew how to cook an omelette so that you could feed yourself? If it was considered the same way as learning a language or riding a bike?
We’ve outsourced the preparation of food to the professionals. Are we going to stop eating food that comes in packages? Of course not. But we would be wise to see for what it is the availability of real, whole foods and the power that comes with feeding yourself and preparing food yourself instead of being sort of over-reliant on new solutions.
Credit: Kevork Djansezian/Getty ImagesMany "Big Food" brands like Kraft have been altering some of their trademark packaged foods to contain fewer artificial ingredients and flavors in recent years.
Are you optimistic that we're moving in the right direction, toward getting back into the kitchen and eating more “real” food? Or are we too set in our ways at this point?
I am optimistic. I think our appreciation for novelty and innovation is a double-edged sword. We’re eating more foods from around the world than five years ago, which is a silver lining to how much more we’re eating out. But it’s really brought a world of flavors to the masses. It has tremendous potential for healthier eating habits, because some of those other cuisines taste amazing and happen to be good for you without being positioned as good for you. That’s the best way to go.
I’m also optimistic about how much consumer awareness can change Big Food, and we’re seeing that in food companies removing artificial flavors and colorings, or antibiotics. Consumers’ collective demands are really starting to make change happen faster. I think in some ways we’re more empowered than ever before.
It is only with this greater awareness that we can we collectively take more control over our food choices. And with that, we can celebrate the aspects of our food culture that we sometimes overlook, and change those aspects of our food culture that are hurting us so that we can end up with healthier, happier relationships with the food we eat.
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Joseph Erbentraut covers promising innovations and challenges in the areas of food and water. In addition, Erbentraut explores the evolving ways Americans are identifying and defining themselves. Follow Erbentraut on Twitter at @robojojo. Tips? Email joseph.erbentraut@huffingtonpost.com.
The attorney general of New York filed a lawsuit against Domino's on Tuesday, accusing the pizza giant of systematically shorting workers' pay.
Fast-food restaurants are sued all the time for alleged wage theft. What makes this suit different is who's included among the defendants: Domino's itself, as opposed to just the franchisees who run Domino's shops.
"At some point, a company has to take responsibility for its actions and for its workers’ well-being," Eric Schneiderman, New York's attorney general, said in a statement.
The lawsuit claims workers at 10 Domino's shops in New York were underpaid by a total of at least $565,000. Schneiderman said that his office's investigation revealed "intensive involvement by Domino’s headquarters" in the alleged labor violations, and that Domino's should therefore be considered a joint employer alongside the franchisees.
“New York law -- as well as basic human decency -- holds Domino’s responsible for the alleged mistreatment of the workers who make and deliver the company’s pizzas, and it is incumbent upon Domino’s to fix the problems," Schneiderman said.
The fast-food industry is predicated on a franchise system, with the owners of individual outlets -- franchisees -- paying fees to the company in exchange for an established name and business model. The franchisees sign workers' paychecks and are typically considered the employers in this equation. When workplace laws get broken, they're usually the ones on the hook for the violation.
But in this case, New York alleges that Domino's really controls the work inside the pizza shops, and therefore should be held accountable for any violations of the law. The lawsuit claims that Domino's headquarters directed franchisees to discipline certain employees, dictated staffing levels and hours at the shops, and even tried to scuttle a union campaign by workers.
In a statement, Domino's said the lawsuit "disregards the nature of franchising and demeans the role of small business owners." The company said it worked with Schneiderman's office for three years to help franchisees understand and comply with the different wage and hour laws.
"It’s unfortunate that these steps were not enough, and that the Attorney General now wants the company to take steps that would not only deprive our independent business owners of the opportunity to make their own employment decisions, but could impact the viability of the franchise model, the many opportunities it offers to those looking to start their own businesses, and the millions of jobs those franchised businesses create," the company said.
According to its most recent annual report, Domino's has more than 4,800 franchised locations in the U.S., owned by 841 franchisees who each have an average of six locations. Domino's itself only owns 384 stores.
According to Schneiderman's office, Domino's required franchisees to purchase an online software system called PULSE, and encouraged them to use it for payroll reports. The lawsuit alleges that PULSE routinely miscalculated workers' gross wages, and that these mistakes led to workers being shorted on their paychecks. Domino's headquarters, the suit claims, was aware of the problems, but deemed the miscalculations a "low priority."
The sale of PULSE, Schneiderman contends, amounted to "fraud" perpetrated on the franchisees by Domino's.
Domino's isn't the first fast-food company to be sued alongside some of its franchisees. In 2014, workers in three different states filed lawsuits against McDonald's, saying the company violated minimum wage and overtime laws. As in the Domino's complaint, the plaintiffs in that suit argued that McDonald's steered in-store work policy and was therefore liable for the alleged violations. The cases are pending.
Schneiderman's office has aggressively pursued criminal cases against fast-food operators, and Domino's stores have been in the attorney general's crosshairs in the past. In 2014, a group of Domino's franchisees agreed to pay workers nearly a half-million dollars to settle wage theft claims brought by the attorney general.
This story has been updated with comment from Domino's.
A little more than a year ago, when Hillary Clinton officially launched her history-making campaign for the presidency, she did something else unprecedented. She hired Bernard Coleman as the campaign’s chief diversity officer.
The 36-year-old is responsible for helping Clinton -- the first woman with a real shot at the White House -- build a staff more reflective of the voters she hopes to win over, beyond the usual scrum of white guys who run political campaigns.
Coleman, who says he is the first chief diversity officer ever employed by a presidential campaign, briefly held a similar role at the Democratic National Committee where he was director of human resources for six years.
Clinton desperately needs Coleman, who is also the campaign's head of human resources, to succeed. A diverse staff is key to helping her understand an increasingly diverse electorate, where whites represent a declining percentage of voters. Without votes from people of color, Clinton likely cannot win the presidency -- a lesson she learned in 2008.
“We want to have the most representative staff,” Coleman told The Huffington Post. “We’re always trying to crush it."
And by all accounts they are: Thirty percent of the 700 or so people on the Clinton campaign staff are non-white and 52 percent are women, according to data provided to The Huffington Post by Inclusv, a group that finds diverse candidates for political campaigns, advocacy groups and policymakers and also is pressing for candidates to report their staffs demographic data. (Former Obama campaign staffers founded the group last year.)
Senior leadership on Clinton's staff is 54 percent women and 34 percent people of color, according to the latest data available, from March 31. The campaign won’t break down those figures any further to show what percent of staff are Hispanic or African-American. And, worryingly, the numbers haven't grown since the last time the campaign reported its diversity data in February.
Yet it’s fairly clear -- just on the gender stats alone -- that in terms of staffing, this is likely the most diverse serious presidential campaign in U.S. history. (The smaller Bernie Sanders campaign hasn't yet reported its March data to Inclusv. But in February, a report revealed that, though 31 percent of the campaign's staff are people of color, all of its top paid staff are men.)
There is not an official account of the Obama campaign staff's demographics -- nor of any campaign's prior to this year -- but Clinton 2016 is probably out ahead, Alida Garcia, executive director and cofounder of Inclusv, told HuffPost.
"The [Clinton] headquarters in Brooklyn is likely more diverse than the 2012 operation in Chicago," said Garcia, who worked on Obama's 2012 campaign helping turn out the Latino vote. (Garcia also works with FWD.us, the immigration reform group founded by Facebook CEO Mark Zuckerberg.)
Clinton's achievement is the result of a deliberate strategy spearheaded by the candidate herself, burned by her loss in the Democratic primaries in 2008, when her campaign seemed targeted mainly to white voters. She's of course spurred forward by the rapidly changing demographics of the country.
“Clinton is really hitting diversity and it’s not by accident,” said Erikka Knuti, a political strategist who’s worked on Democratic campaigns and currently is a communications director for the United Food & Commercial Workers International Union. “The fact that she is doing it speaks to who she is and lessons learned,” she told HuffPost.
Clinton campaignBernard Coleman is the first chief diversity officer to staff a presidential campaign.
Hiring a chief diversity officer is a tactic straight out of corporate America's playbook. Sixty percent of Fortune 100 companies employ a chief diversity officer, according to a 2012 analysis from executive search firm Heidrick & Struggles.
Clinton's campaign has far surpassed the business world in diversity, though. The country’s biggest businesses still are remarkably homogenous -- particularly at the highest levels. Fewer than 4 percent of the chief executives who run S&P 500 companies are women, and the number has been falling. For African-Americans the numbers are even more grim. According to data cited by Fortune, black men and women make up 4.7 percent of executive team members in the Fortune 100. There have only been 15 black CEOs on the Fortune 500 -- ever.
There’s plenty of evidence that a more diverse company will see a higher stock price and profits. And it's clear that the demographics of the nation -- i.e. consumers -- require a change. But companies have been slow to move, Billy Dexter, a partner at Heidrich & Struggles, told HuffPost.
“If corporate America wanted to do this, they could,” he said. “Some organizations have.”
The companies that have made inroads have approached the need to diversify as a business imperative, not just a moral one. The idea, Dexter said, is to make hiring diverse people as important as hitting profit goals: assign your best people to the task and look at the numbers quarterly. And the CEO must play a key role in driving the strategy.
As diversity has clearly become a political imperative -- particularly for a Democratic candidate -- Clinton has done just that. In November, one-third of eligible voters in the U.S. will be Hispanic, black, Asian or belong to another racial or ethnic minority group, according to a report out from the Pew Research Center earlier this year. Democratic voters are even more diverse: 40 percent of Democrats identify as nonwhite, compared with 11 percent of Republicans, according to Gallup data from 2012.
Women, of course, are not a minority -- though they seem to get treated as one. We comprise 52 percent of the voting population.
Whites, meanwhile, are a declining interest group. This is well evidenced by the obvious racial panic behind Donald Trump's campaign, and in the data: In 2016, whites are projected to make up 69 percent of eligible voters, down from 78 percent in 2000.
Clinton learned all of this the hard way. She lost her bid for the Democratic nomination in 2008 in part by running a campaign that seemed to position her as the mainstream (read: white) candidate in contrast to Barack Obama.
In a tactic the New York Times and others decried as “race-baiting,” she downplayed the amount of white support her opponent had.
“I have a much broader base to build a winning coalition on,” she told USA Today in 2008. “Sen. Obama’s support among working, hard-working Americans, white Americans, is weakening again.”
Obama's path to the nomination and the presidency came with the help of record black and Hispanic turnout. Now, turning out the African-American and Hispanic vote is recognized as critical to a Democratic victory in 2016.
Given these realities, Coleman's mandate to diversify the campaign comes straight from the top, he said.
“If she didn’t say this is important, then no one would move,” he told HuffPost. “The country is evolving and changing. Having diverse voices helps us message. It helps almost every facet.”
The pressure to hire diverse staff is “constant,” Coleman said. “We talk about it with senior staff every week.”
Just this week, the Clinton campaign hired Jess McIntosh, vice president of communications for EMILY’s List. She is known for being skilled at bringing in women and diverse voices, Knuti told HuffPost before the hire was announced.
Coleman said a big part of his job is simply helping the campaign find good people -- and not allowing anyone to take “shortcuts” in hiring. Campaign hiring moves at lightning speed and the temptation is to just quickly bring in people you know well. Unfortunately, that's the easiest way reinforce a culture of sameness. It's how tech companies, which have also grown quickly, wind up hiring bro after bro after bro. One guy knows another guy who looks just like him.
One thing Coleman's learned is if his colleagues take a little more time to think of good candidates, they find they actually know a pretty diverse group. People just need to focus, he said. “You need people to sit down in a room, get off their phones, open a Rolodex and say, 'Who do you know who does this?' You actually know a lot of people. It has to be deliberate.”
After six years with the DNC, Coleman knows a lot of people. The bonus, he said, is people really want to work for the campaign, so they take his calls -- and help him find good candidates.
Even the private sector wants to help. Coleman mentioned that the “open a Rolodex” strategy came from “a guy at Google,” whom Coleman declined to name, who wanted to help the campaign. Google, notably, has a large diversity team, as well as a chief diversity officer, though it hasn't seen much progress.
It is easier to build a diverse campaign staff than a diverse company staff. Coleman has had the benefit of hiring a team from scratch. An established corporation cannot get rid of all its workers and start all over -- it can only hire so many new people every year. And the sense of urgency in a campaign, which comes with a built-in expiration date, is absent from a company.
Chris McGrath via Getty ImagesClinton seems to have learned a lot from her failed bid in 2008.
As Nov. 8 looms closer and the pace of hiring picks up, the Clinton campaign’s challenge will be to maintain its diversity, Garcia, of Inclusv, told HuffPost. There’s still room for improvement, she said, noting that the most recent data showed the campaign had stalled out in its push to diversify and that the percent of people of color on senior staff fell slightly to 34 percent from 36 percent.
Inclusv wants to make sure thosenumbers rise as staffing scales up for a national campaign. It has been working with the campaign since last year, helping find candidates.
“Quite honestly, based on our prior experience [with Clinton] we anticipated pushback,” said Garcia. “In reality, what we found was a willing and welcoming partner in Bernard Coleman to build upon an accessible ongoing conversation.”
The end goal, of course, is a diverse White House. “At the end of the day, a lot of campaign staff ends up in government managing key policy initiatives for elected officials,” Garcia said.
Coleman is aware of this. “Being White House chief diversity officer,” he said. “That would be pretty cool.”
Detroit’s historic bankruptcy was complex and unique -- but it offers some surprisingly universal lessons for anyone who struggles with money.
When the city announced it was broke in 2013, its budget was crippled by declining revenue stemming from population loss, the financial crisis and disinvestment from the state. At the same time, officials made avoidable mistakes, according to Nathan Bomey, author of Detroit Resurrected: To Bankruptcy and Back.
Bomey, a USA Today reporter, covered the bankruptcy trial for the Detroit Free Press. Released last month, his book takes a behind-the-scenes look at how major players engineered an agreement that cut pensioner benefits, settled with creditors, and secured hundreds of millions in aid from foundations and the state. The city emerged from Chapter 9 bankruptcy in 2014, shedding $7 billion in debt.
While the bulk of Detroit Resurrected tracks the dramatic bankruptcy trial and tense closed-door negotiations, Bomey also clearly charts the financial missteps from the previous decade that helped put Detroit on a path to insolvency.
He occasionally puts them in familiar terms. One deal is compared to putting monthly expenses on a credit card; another to “a toxic mortgage that could not be refinanced.”
Detroit Resurrected isn’t intended to be a personal finance guide. But it reminded me of some of the financial mistakes I’ve made, and the difficult task of getting one’s finances back on track.
Here are a few of Detroit's money mistakes to avoid, and a couple decisions worth emulating.
Bloomberg via Getty ImagesThe skyline of Detroit on July 19, 2013, the day after it became the largest city to file for Chapter 9 bankruptcy. The city's financial missteps have similarities to mistakes individuals make with debt and managing personal finances.
There are no simple fixes for financial shortfalls, and borrowing now can can cost big later.
The “point of no return” for Detroit was an inventive and irresponsible borrowing scheme the city cooked up in 2005, according to Bomey. Under then-Mayor Kwame Kilpatrick, the city borrowed $1.44 billion to plug a huge hole in the pension funds. Only a few years later, the city risked defaulting and negotiated an even worse deal.
The one-time fix let political leaders avoid making unpopular but necessary cuts at the expense of the city’s future financial health, Bomey argues.
“What they did in 2005 was refuse to make the tough decisions that they needed to make to protect the city's retirees and to ensure that the budget was balanced,” he said.
Likewise, financial experts discourage individuals from taking on long-term debt for anything other than big expenses that have a potential return, like a mortgage or student loan.
Just because you qualify for a loan doesn’t mean it’s a good idea.
While the Kilpatrick deal looks like a terrible bet in hindsight, at the time it was heralded by city officials and Wall Street. Banks were all too willing to help Detroit borrow exorbitantly, whether or not it was fiscally responsible.
Bomey sees parallels to banks’ loosened restrictions for homeowners.
“In that era, Wall Street was lending money to homeowners who couldn’t afford to borrow, so it should come as no surprise that they were also willing to lend to a city that couldn’t afford to borrow,” Bomey said.
“This was like a subprime loan on steroids,” he writes in Detroit Resurrected.
You can’t fix financial problems until you own up to them.
The way Bomey tells it, Kilpatrick’s borrowing scheme was a way of hiding the extent of Detroit’s financial problems.
“Kwame Kilpatrick refused to tell [pensioners] the truth, which is that they couldn’t afford to pay certain benefit levels anymore, and instead we just lied to retirees for years,” he said.
When the moment of reckoning came, the problem had only gotten worse and pensioners were shocked by the proposed cuts -- the equivalent of a woman finding out her husband had racked up to $80,000 in credit card debt to keep up their lifestyle after he took a pay cut.
It’s not uncommon for people to hide their money troubles from their family. A third of people with combined finances admitted to lying to their partner about money, according to a 2014 survey of 2,035 adults conducted by the National Endowment for Financial Education.
Paying only the minimum on debt exacerbates the problem.
It might seem responsible to faithfully pay the minimum on a credit card balance each month, but you’re actually losing money and keeping yourself trapped in debt. According to debt management site Ready for Zero, it could take over five years to pay off $1,000 if you're just paying the minimum, and you’d spend $566 on interest alone.
Detroit took a similar approach. After borrowing $1.44 billion, the city only made payments on the accumulating interest for years.
“That deferred the pain temporarily but only made things worse when the city finally went broke,” Bomey said.
Plan for the future -- and expect the worst.
Detroit made a smart move during bankruptcy when it determined what return rate to expect from pension fund investments, Bomey said. They settled on 6.75 percent, one of the lowest rates in the country.
“A responsible family is going to manage their budget with relatively conservative expectations, and if you have a surplus at the end, great,” Bomey said. “If you take an irresponsible approach and expect more money to come in than eventually comes in, then you have to adjust your budget. And that can be very painful.”
Balance paying debt with investing in the future.
If you’re trying to eliminate debt, it can be tempting to cut expenses to the bone and put every penny possible toward your balance. But in many cases, it’s smart to continue saving money for emergencies and retirement to guarantee future financial well-being.
Until bankruptcy, Detroit was putting little money toward maintaining or improving city conditions -- four out of every 10 budget dollars were going toward debt, pensions and health care benefits for retirees, and that figure was set to rise to seven out of 10 by 2020.
Joshua Lott / ReutersA man walk past graffiti in Detroit on Dec. 3, 2013.
The city was beset with problems like the fire department’s malfunctioning emergency alert system. Bomey describes one station where firefighters rigged a replacement system using a fax machine that would print notifications, knocking a soda can over. A lack of basic services was one of the factors driving out residents: Garbage collection was irregular, 40 percent of the city's street lights were out and police response times were nearly triple the national rate.
The bankruptcy agreement was designed to allow Detroit to spend money on the essentials that allow residents to have a decent quality of life -- and will stabilize the city in the future.
“They are reinvesting in raises for police officers, new fire equipment, new buses, basic technology like software systems in the city that they need to improve tax collections,” Bomey said. “Bankruptcy is the first moment Detroit finally put its people before its creditors.”
Kate Abbey-Lambertz covers sustainable cities, housing and inequality. Tips? Feedback? Send an email or follow her on Twitter.
Some office perks may include free coffee and bagels, but at one biotech startup company employees get a free Tesla car.
Practichem, based in Raleigh, North Carolina, has announced plans to reward each staffer with a Tesla Model 3, courtesy of their boss.
The flashy electric sports car, that carries an estimated $35,000 price tag, will be doled out to current and future employees upon its expected 2017 release, the company said Thursday.
“We just announced it to the employees last night as they were leaving and said by the way you're going to be getting a Tesla,” company Press Director Ann Revell told The Huffington Post by phone.
Their reaction was "pretty remarkable,” she said. “They were like, 'Wow, I’ve never driven a car that's younger than 20 years old!'”
Justin Pritchard/APPractichem's CEO has said that they chose Tesla because the motor company shares their goal of positively impacting humanity.
The incentive behind the grand giveaway is to attract the best talent out there, Revell said.
“The whole point, one of the many points, was to make sure that they understand the value that they’re bringing to this organization,” she said of Practichem's employees.
Ideally, it'll also provide a little mental boost during their morning commute and get them "inspired when they get to the office," she said.
“I mean it’s not a toaster, right?” she laughed.
Practichem currently employs 10-15 people, Revell said. The company's core mission it to develop biological research tools to “cure humanity’s diseases,” according to the company website. That humanitarian focus is what led them to select Tesla, which designs all-electric vehicles.
“Our vision shares similarities with Tesla Motors; both companies positively impact humanity with real change,” Nick DeMarco, Practichem’s founder and CEO, said in a release. “People driven to solve big issues share core values. Many of our employees have marveled at Tesla’s approach. Their compelling all-electric vehicles drive us to make real change in our field.”
The vehicles, which are advertised as being able to travel 215 miles on a single electric charge, will be provided to employees while they’re working for the company. Reservations have already been made on the vehicles, Revell said.
And it's not too late to add to the orders: Revell is looking to expand the company. “We have 10 positions we need to fill, immediately,” she said.
