Are You Killing Your Career?

You’re probably familiar with Newton's First Law of Motion — “An object at rest tends to stay at rest unless acted upon by a sum of physical forces.”

This is the behavior of an average employee at work today. As long as they have a job, they usually won't take any risks, cause any controversy, or raise their hand at a meeting to disagree or propose a new idea.

They are an "object at rest". And this employee/object will remain at rest (meaning - no movement - no raises, no promotions, no new projects, no GROWTH) until "a sum of physical forces" are acted upon it.

What are those forces? Your industry, your customers, your investors or YOUR BOSS. They will be the force that will make the decision "act upon you". Most likely, if you have been "at rest" for a very long time and these forces are negative (lost customers, no profits, reduction in staff), they are probably going to look at the "objects" that aren't doing anything substantial (like hiding in their cubicles).

How do you solve this dilemma? START MOVING. Don't be that object at rest. Here are some suggestions:

• Start asking for more work. Any boss would love the help and it would clearly define you from the rest of your peers. And don’t ask for the ‘same old stuff’ — ask for more complex work and projects that will expose you to new people.

• Start connecting with key players outside of work. Get out there and see if there is something better than what you currently have. Choose people that are leaders in your area, people who you’d LOVE to meet.

• Start brainstorming. This is the time to come up with game-changing strategies or ideas to help your company. Don’t be afraid — most great ideas come from lowly beginnings.

• Start thinking about your future. Where are you? Where do you want to go? How do you get there? Make a plan — add steps, activities, and tasks. No successful journey ever started without a roadmap.

Bottom line: It’s the beginning of a new decade - so many companies and managers will be looking at their troops to see who will make a difference. Don't be an object at rest - start MOVING!

3 Ways To Update Your Career GPS.

It's about time. The recession is over, things are looking up, companies are hiring, executives are coming out from hiding in their offices and cubicles. For all intents and purposes, many of us have held our collective breaths for the past 2 years for this moment. It's now time to take stock of who we currently are, where we are in our career, and where we want to go.

When you take a trip, you have a destination and a general idea of how to get there. Over the past two years, many executives have been fighting a valiant battle just to hold on to territory — fighting in the trenches — and hoping that something will happen to end the madness.

TIP #1 - Are You Happy & Challenged or Frustrated & Bored?

It's time to take stock of your current situation. Do you like your current position, responsibilities, boss, peers, and team? Do you see yourself moving upwards at a regular rate or have you been stuck doing the same old stuff? Do you yearn for new challenges? Do you want to do something completely different?

You need to analyze all of these criteria, and make a decision whether to stay where you are, move to another position, or move to another company. It's that easy.

TIP #2 - Are You Positioned To Make A Move?

Do you have the connections within your organization and/or outside in the marketplace to make a successful move? Who do you know? Who knows you? Is your resume up to date? Your LinkedIn profile? If someone Google's your name, what will they see? What options are their within your organization? A possible lateral move to a higher performing or higher profile department?

Start to make these moves right now — get out and start meeting people, get your papers and web presence in order and begin to keep up on what's happening in your marketplace. People tend to get stale when hibernating for 24 months.

TIP #3 - Are You Mentally Ready To Make A Move?

It's hard to get out of hibernation mode and into full 'action figure' mode. You have to want it. You can't be wishy-washy about your decision. You either want to stay or go — so when you make the decision, it's all systems "GO". I teach my clients there is either 'Yes' or 'No' — no 'Maybe'. Living in limbo is not only a bad situation, it can be mortally wounding your career. Take action now.

Act now or forever hold your peace.

The Most Important (financial) Book You'll Buy This Year.

I read LOTS of books. And it's funny - a lot of people are amazed at the number of books I read. I don't think I read a lot - but many people I meet think I'm crazy about spending time reading books. Candidly, I feel that it's a clear sign of the 'dumbing down' of America. People are 'shamed' into not reading - you should see the faces of people when I mention I read 3-5 books at a time and finish 100-150 books a year. "Don't you have better things to do with your time?" Candidly, I don't. And you should be reading too - start with this timely and powerful tome.

You need to get Enough - True Measures of Money, Business and Life by John Bogle. Why? Let William Bernstein tell you:

"If you are wondering about the cause of the current market crisis, then you haven't been reading enough of Jack Bogle.

Because he certainly knows not only where, but why and how. For decades Jack has been communicating his disquiet in previous books, speeches, and public testimony. Years from now, when historians and investors dissect the economic and market meltdowns of 2008, they'll consult this slim, well-written volume.

In order to understand the intellectual and moral platform from which he surveys the economic wreckage, you need to know a little of his story. Bogle founded one of the world's great investment companies, the Vanguard Group. Most men in his situation would have levered such success into a multi-billion-dollar net worth; instead, he "mutualized" Vanguard, converting it, in effect, into a nonprofit organization whose only goal was to benefit its fund holders. From an ethical perspective, Vanguard is the only "investment company" worthy of that name. (As opposed to most financial firms, which are in fact "marketing companies" whose main purpose is to milk unwitting investors of fees and commissions.)

The answer to the conundrum of 2008 lies in the book’s title, "Enough," which is the punch line from a delightful Kurt Vonnegut/Joseph Heller story. Simply put, our nation has been suffering from decades of unchecked financial excess, for which we are now paying the piper: excess in investment company fees; excess in financial speculation masquerading as diversification and innovation; excess in the salaries of top executives; excess in salesmanship; and most importantly, excess in the role played by the financial industry in our national economy and national life."

Go out today and get it - it will change how you think about business, your career, money and your life.

Wall Street’s Gambling Soul.

Of all the insulting labels lobbed at Wall Street over the past two years, you wouldn't expect "overconfident" to be the one that hurt. But it has. This week's New Yorker article by Malcolm Gladwell on Wall Street's "psychology of overconfidence" struck a nerve. By Malcolm Gladwell in the New Yorker Magazine.

In 1996, an investor named Henry de Kwiatkowski sued Bear Stearns for negligence and breach of fiduciary duty. De Kwiatkowski had made—and then lost—hundreds of millions of dollars by betting on the direction of the dollar, and he blamed his bankers for his reversals.

The district court ruled in de Kwiatkowski’s favor, ultimately awarding him $164.5 million in damages. But Bear Stearns appealed—successfully—and in William D. Cohan’s engrossing account of the fall of Bear Stearns, “House of Cards,” the firm’s former chairman and C.E.O. Jimmy Cayne tells the story of what happened on the day of the hearing:

"Their lead lawyer turned out to be about a 300-pound goon from Long Island . . . a really irritating guy who had cross-examined me and tried to knock me around in the lower court trial. Now when we walk into the courtroom for the appeal, they’re arguing another case and we have to wait until they’re finished. Then I see my blood enemy stand up and he’s going to the bathroom. So I wait till he passes and then I follow him in and it’s just he and I in the bathroom. And I said to him, “Today you’re going to get your ass kicked, big.” He ran out of the room. He thought I might have wanted to start it right there and then."

At the time Cayne said this, Bear Stearns had spectacularly collapsed. The eighty-five-year-old investment bank, with its shiny new billion-dollar headquarters and its storied history, was swallowed whole by J. P. Morgan Chase. Cayne himself had lost close to a billion dollars. His reputation—forty years in the making—was in ruins, especially when it came out that, during Bear’s final, critical months, he’d spent an inordinate amount of time on the golf course.

Did Cayne think long and hard about how he wanted to make his case to Cohan? He must have. Cayne understood selling; he started out as a photocopier salesman, working the nine-hundred-mile stretch between Boise and Salt Lake City, and ended up among the highest-paid executives in banking. He was known as one of the savviest men on the Street, a master tactician, a brilliant gamesman. “Jimmy had it all,” Bill Bamber, a former Bear senior managing director, writes in “Bear Trap: The Fall of Bear Stearns and the Panic of 2008” (a book co-written by Andrew Spencer). “The ability to read an opponent. The ability to objectively analyze his own strengths and weaknesses. . . . He knew how to exploit others’ weaknesses—and their strengths, for that matter—as a way to further his own gain. He knew when to take his losses and live to fight another day.”

Cohan asked Cayne about the last days of Bear Stearns, in the spring of 2008. Wall Street had become so spooked by rumors about the firm’s financial status that investors withdrew their capital, and no one would lend Bear the money required for its day-to-day operations. The bank received some government money, via J. P. Morgan. But Timothy Geithner, then the head of the New York Federal Reserve Bank, didn’t open the Fed’s so-called “discount window” to investment banks until J. P. Morgan’s acquisition of Bear was under way. What did Cayne think of Geithner? Picture the scene. The journalist in one chair, Cayne in another. Between them, a tape recorder. And the savviest man on Wall Street sets out to salvage his good name:

"The audacity of that jerk in front of the American people announcing he was deciding whether or not a firm of this stature and this whatever was good enough to get a loan. Like he was the determining factor, and it’s like a flea on his back, floating down underneath the Golden Gate Bridge, saying, “Raise the bridge.” This guy thinks he’s got everything. He’s got nothing."

Since the beginning of the financial crisis, there have been two principal explanations for why so many banks made such disastrous decisions. The first is structural. Regulators did not regulate. Institutions failed to function as they should. Rules and guidelines were either inadequate or ignored. The second explanation is that Wall Street was incompetent, that the traders and investors didn’t know enough, that they made extravagant bets without understanding the consequences. But the first wave of postmortems on the crash suggests a third possibility: that the roots of Wall Street’s crisis were not structural or cognitive so much as they were psychological.

In “Military Misfortunes,” the historians Eliot Cohen and John Gooch offer, as a textbook example of this kind of failure, the British-led invasion of Gallipoli, in 1915. Gallipoli is a peninsula in southern Turkey, jutting out into the Aegean. The British hoped that by landing an army there they could make an end run around the stalemate on the Western Front, and give themselves a clear shot at the soft underbelly of Germany. It was a brilliant and daring strategy. “In my judgment, it would have produced a far greater effect upon the whole conduct of the war than anything [else],” the British Prime Minister H. H. Asquith later concluded. But the invasion ended in disaster, and Cohen and Gooch find the roots of that disaster in the curious complacency displayed by the British.

The invasion required a large-scale amphibious landing, something the British had little experience with. It then required combat against a foe dug into ravines and rocky outcroppings and hills and thickly vegetated landscapes that Cohen and Gooch call “one of the finest natural fortresses in the world.” Yet the British never bothered to draw up a formal plan of operations. The British military leadership had originally estimated that the Allies would need a hundred and fifty thousand troops to take Gallipoli. Only seventy thousand were sent. The British troops should have had artillery—more than three hundred guns.

They took a hundred and eighteen, and, for the most part, neglected to bring howitzers, trench mortars, or grenades. Command of the landing at Sulva Bay—the most critical element of the attack—was given to Frederick Stopford, a retired officer whose experience was largely administrative. Stopford had two days during which he had a ten-to-one advantage over the Turks and could easily have seized the highlands overlooking the bay. Instead, his troops lingered on the beach, while Stopford lounged offshore, aboard a command ship. Winston Churchill later described the scene as “the placid, prudent, elderly English gentleman with his 20,000 men spread around the beaches, the front lines sitting on the tops of shallow trenches, smoking and cooking, with here and there an occasional rifle shot, others bathing by hundreds in the bright blue bay where, disturbed hardly by a single shell, floated the great ships of war.”

When word of Stopford’s ineptitude reached the British commander, Sir Ian Hamilton, he rushed to Sulva Bay to intercede—although “rushed” may not be quite the right word here, since Hamilton had chosen to set up his command post on an island an hour away and it took him a good while to find a boat to take him to the scene.

Cohen and Gooch ascribe the disaster at Gallipoli to a failure to adapt—a failure to take into account how reality did not conform to their expectations. And behind that failure to adapt was a deeply psychological problem: the British simply couldn’t wrap their heads around the fact that they might have to adapt. “Let me bring my lads face to face with Turks in the open field,” Hamilton wrote in his diary before the attack. “We must beat them every time because British volunteer soldiers are superior individuals to Anatolians, Syrians or Arabs and are animated with a superior ideal and an equal joy in battle.”

Hamilton was not a fool. Cohen and Gooch call him an experienced and “brilliant commander who was also a firstrate trainer of men and a good organizer.” Nor was he entirely wrong in his assessments. The British probably were a superior fighting force. Certainly they were more numerous, especially when they held that ten-to-one advantage at Sulva Bay. Hamilton, it seems clear, was simply overconfident—and one of the things that happen to us when we become overconfident is that we start to blur the line between the kinds of things that we can control and the kinds of things that we can’t. The psychologist Ellen Langer once had subjects engage in a betting game against either a self-assured, well-dressed opponent or a shy and badly dressed opponent (in Langer’s delightful phrasing, the “dapper” or the “schnook” condition), and she found that her subjects bet far more aggressively when they played against the schnook. They looked at their awkward opponent and thought, I’m better than he is. Yet the game was pure chance: all the players did was draw cards at random from a deck, and see who had the high hand. This is called the “illusion of control”: confidence spills over from areas where it may be warranted (“I’m savvier than that schnook”) to areas where it isn’t warranted at all (“and that means I’m going to draw higher cards”).

At Gallipoli, the British acted as if their avowed superiority over the Turks gave them superiority over all aspects of the contest. They neglected to take into account the fact that the morning sun would be directly in the eyes of the troops as they stormed ashore. They didn’t bring enough water. They didn’t factor in the harsh terrain. “The attack was based on two assumptions,” Cohen and Gooch write, “both of which turned out to be unwise: that the only really difficult part of the operation would be getting ashore, after which the Turks could easily be pushed off the peninsula; and that the main obstacles to a happy landing would be provided by the enemy.”

Most people are inclined to use moral terms to describe overconfidence—terms like “arrogance” or “hubris.” But psychologists tend to regard overconfidence as a state as much as a trait. The British at Gallipoli were victims of a situation that promoted overconfidence. Langer didn’t say that it was only arrogant gamblers who upped their bets in the presence of the schnook. She argues that this is what competition does to all of us; because ability makes a difference in competitions of skill, we make the mistake of thinking that it must also make a difference in competitions of pure chance. Other studies have reached similar conclusions. As novices, we don’t trust our judgment. Then we have some success, and begin to feel a little surer of ourselves. Finally, we get to the top of our game and succumb to the trap of thinking that there’s nothing we can’t master. As we get older and more experienced, we overestimate the accuracy of our judgments, especially when the task before us is difficult and when we’re involved with something of great personal importance. The British were overconfident at Gallipoli not because Gallipoli didn’t matter but, paradoxically, because it did; it was a high-stakes contest, of daunting complexity, and it is often in those circumstances that overconfidence takes root.

Several years ago, a team headed by the psychologist Mark Fenton-O’Creevy created a computer program that mimicked the ups and downs of an index like the Dow, and recruited, as subjects, members of a highly paid profession. As the line moved across the screen, Fenton-O’Creevy asked his subjects to press a series of buttons, which, they were told, might or might not affect the course of the line. At the end of the session, they were asked to rate their effectiveness in moving the line upward. The buttons had no effect at all on the line. But many of the players were convinced that their manipulation of the buttons made the index go up and up. The world these people inhabited was competitive and stressful and complex. They had been given every reason to be confident in their own judgments. If they sat down next to you, with a tape recorder, it wouldn’t take much for them to believe that they had you in the palm of their hand. They were traders at an investment bank.

The high-water mark for Bear Stearns was 2003. The dollar was falling. A wave of scandals had just swept through the financial industry. The stock market was in a swoon. But Bear Stearns was an exception. In the first quarter of that year, its earnings jumped fifty-five per cent. Its return on equity was the highest on Wall Street. The firm’s mortgage business was booming. Since Bear Stearns’s founding, in 1923, it had always been a kind of also-ran to its more blue-chip counterparts, like Goldman Sachs and Morgan Stanley. But that year Fortune named it the best financial company to work for. “We are hitting on all 99 cylinders,’’ Jimmy Cayne told a reporter for the Times, in the spring of that year, “so you have to ask yourself, What can we do better? And I just can’t decide what that might be.’’ He went on, “Everyone says that when the markets turn around, we will suffer. But let me tell you, we are going to surprise some people this time around. Bear Stearns is a great place to be.’’

With the benefit of hindsight, Cayne’s words read like the purest hubris. But in 2003 they would have seemed banal. These are the kinds of things that bankers say. More precisely—and here is where psychological failure becomes more problematic still—these are the kinds of things that bankers are expected to say. Investment banks are able to borrow billions of dollars and make huge trades because, at the end of the day, their counterparties believe they are capable of making good on their promises. Wall Street is a confidence game, in the strictest sense of that phrase.

This is what social scientists mean when they say that human overconfidence can be an adaptive trait. “In conflicts involving mutual assessment, an exaggerated assessment of the probability of winning increases the probability of winning,” Richard Wrangham, a biological anthropologist at Harvard, writes. “Selection therefore favors this form of overconfidence.” Winners know how to bluff. And who bluffs the best? The person who, instead of pretending to be stronger than he is, actually believes himself to be stronger than he is. According to Wrangham, self-deception reduces the chances of “behavioral leakage”; that is, of “inadvertently revealing the truth through an inappropriate behavior.” This much is in keeping with what some psychologists have been telling us for years—that it can be useful to be especially optimistic about how attractive our spouse is, or how marketable our new idea is. In the words of the social psychologist Roy Baumeister, humans have an “optimal margin of illusion.”

If you were a Wall Street C.E.O., there were two potential lessons to be drawn from the collapse of Bear Stearns. The first was that Jimmy Cayne was overconfident. The second was that Jimmy Cayne wasn’t overconfident enough. Bear Stearns did not collapse, after all, simply because it had made bad bets. Until very close to the end, the firm had a capital cushion of more than seventeen billion dollars. The problem was that when, in early 2008, Cayne and his colleagues stood up and said that Bear was a great place to be, the rest of Wall Street no longer believed them. Clients withdrew their money, and lenders withheld funding. As the run on Bear Stearns worsened, J. P. Morgan and the Fed threw the bank a lifeline—a multibillion-dollar line of credit. But confidence matters so much on Wall Street that the lifeline had the opposite of its intended effect. As Bamber writes:

This line-of-credit, the stop-gap measure that was supposed to solve the problem that hadn’t really existed in the first place had done nothing but worsen it. When we started the week, we had no liquidity issues. But because people had said that we did have problems with our capital, it became true, even though it wasn’t true when people started saying it. . . . So we were forced to find capital to offset the losses we’d sustained because somebody decided we didn’t have capital when we really did. So when we finally got more capital to replace the capital we’d lost, people took that as a bad sign and pointed to the fact that we’d had no capital and had to get a loan to cover it, even when we did have the capital they said we didn’t have.

Of course, one reason that over-confidence is so difficult to eradicate from expert fields like finance is that, at least some of the time, it’s useful to be overconfident—or, more precisely, sometimes the only way to get out of the problems caused by overconfidence is to be even more overconfident.

From an individual perspective, it is hard to distinguish between the times when excessive optimism is good and the times when it isn’t. All that we can say unequivocally is that overconfidence is, as Wrangham puts it, “globally maladaptive.” When one opponent bluffs, he can score an easy victory. But when everyone bluffs, Wrangham writes, rivals end up “escalating conflicts that only one can win and suffering higher costs than they should if assessment were accurate.” The British didn’t just think the Turks would lose in Gallipoli; they thought that Belgium would prove to be an obstacle to Germany’s advance, and that the Russians would crush the Germans in the east. The French, for their part, planned to be at the Rhine within six weeks of the start of the war, while the Germans predicted that by that point they would be on the outskirts of Paris. Every side in the First World War was bluffing, with the resolve and skill that only the deluded are capable of, and the results, of course, were catastrophic.

Jimmy Cayne grew up in Chicago, the son of a patent lawyer. He wanted to be a bookie, but he realized that it wasn’t quite respectable enough. He went to Purdue University to study mechanical engineering—and became hooked on bridge. His grades suffered, and he never graduated. He got married in 1956 and was divorced within four years. “At this time, he was one of the best bridge players in Chicago,” his ex-brother-in-law told Cohan. “In fact, that’s the reason for the divorce. There was no other woman or anything like that. The co-respondent in their divorce was bridge. He spent all of his time playing bridge—every night. He wasn’t home.” He was selling scrap metal in those days, and, Cohan says, he would fall asleep on the job, exhausted from playing cards. In 1964, he moved to New York to become a professional bridge player. It was bridge that led him to his second wife, and to a job interview with Alan (Ace) Greenberg, then a senior executive at Bear Stearns. When Cayne told Greenberg that he was a bridge player, Cayne tells Cohan, “you could see the electric light bulb.” Cayne goes on:

[Greenberg] says, “How well do you play?” I said, “I play well.” He said, “Like how well?” I said, “I play quite well.” He says, “You don’t understand.” I said, “Yeah, I do. I understand. Mr. Greenberg, if you study bridge the rest of your life, if you play with the best partners and you achieve your potential, you will never play bridge like I play bridge.”

Right then and there, Cayne says, Greenberg offered him a job.

Twenty years later, the scene was repeated with Warren Spector, who went on to become a co-president of the firm. Spector had been a bridge champion as a student, and Cayne somehow heard about it. “Suddenly, out of nowhere there’s a bridge player at Bear Stearns on the bond desk,” Cayne recalls. Spector tells Cohan, “He called me up and said, ‘Are you a bridge player?’ I said, ‘I used to be.’ So bridge was something that he, Ace, and I all shared and talked about.” As reports circulated that two of Bear Stearns’s hedge funds were going under—a failure that started the bank on its long, downward spiral into collapse—Spector and Cayne were attending the Spingold K.O. bridge tournament, in Nashville. The Wall Street Journal reported that, of the twenty-one workdays that month, Cayne was out of the office for nearly half of them.

It makes sense that there should be an affinity between bridge and the business of Wall Street. Bridge is a contest between teams, each of which competes over a “contract”—how many tricks they think they can win in a given hand. Winning requires knowledge of the cards, an accurate sense of probabilities, steely nerves, and the ability to assess an opponent’s psychology. Bridge is Wall Street in miniature, and the reason the light bulb went on when Greenberg looked at Cayne, and Cayne looked at Spector, is surely that they assumed that bridge skills could be transferred to the trading floor—that being good at the game version of Wall Street was a reasonable proxy for being good at the real-life version of Wall Street.

It isn’t, however. In bridge, there is such a thing as expertise unencumbered by bias. That’s because, as the psychologist Gideon Keren points out, bridge involves “related items with continuous feedback.” It has rules and boundaries and situations that repeat themselves and clear patterns that develop—and when a player makes a mistake of overconfidence he or she learns of the consequences of that mistake almost immediately. In other words, it’s a game. But running an investment bank is not, in this sense, a game: it is not a closed world with a limited set of possibilities. It is an open world where one day a calamity can happen that no one had dreamed could happen, and where you can make a mistake of overconfidence and not personally feel the consequences for years and years—if at all. Perhaps this is part of why we play games: there is something intoxicating about pure expertise, and the real mastery we can attain around a card table or behind the wheel of a race car emboldens us when we move into the more complex realms. “I’m good at that. I must be good at this, too,” we tell ourselves, forgetting that in wars and on Wall Street there is no such thing as absolute expertise, that every step taken toward mastery brings with it an increased risk of mastery’s curse. Cayne must have come back from the Spingold bridge tournament fortified in his belief in his own infallibility. And the striking thing about his conversations with Cohan is that nothing that had happened since seemed to have shaken that belief.

“When I left,” Cayne told Cohan, speaking of his final day at Bear Stearns, “I had three different meetings. The first was with the president’s advisory group, which was about eighty people. There wasn’t a dry eye. Standing ovation. I was crying.” Until the very end, he evidently saw the world that he wanted to see. “The second meeting was with the retail sales force on the Web,” he goes on. “Standing ovation. And the third was a partners’ meeting that night for me to tell them that I was stepping down. Standing ovation, of the whole auditorium.”

The New Joblessness.

The U.S. economy is not only shedding jobs at a record rate; it is shedding more jobs than it is supposed to. It’s bad enough that the unemployment rate has doubled in only a year and a half and one out of six construction workers is out of work. By Roger Lowenstein From The New York Times Magazine.

What truly troubles President Obama’s economic advisers is that, even adjusting for the recession, the contraction in employment seems way too high. As one administration official said, “This has been a very steep job loss.” One proof, he added, is that the country is deviating from the standard (among economists) jobs predictor known as Okun’s Law.

In the 1960s, Arthur Okun, a prominent economist, claimed to have discovered a mathematical relationship between the decline in output (that is, goods and services produced) and the rise in unemployment. It held up pretty well until recently. But this time around, although the decline in output would have predicted a rise in unemployment to 8 percent, the actual jobless rate has soared to 9.5 percent. So this recession is killing off jobs even faster than the things — like automobiles, houses, computers and newspapers — that jobholders produce.

The Federal Reserve now expects unemployment to surpass 10 percent (the postwar high was 10.8 percent in 1982). By almost every other measure, ours is already the worst job environment since the Great Depression. The economy has shed 6.5 million jobs — nearly 5 percent of the total, far outstripping the 3 percent that were lost in the early ’80s. Economists fear that even when the economy turns around, the job market will be stagnant. Keith Hall, the commissioner of the Bureau of Labor Statistics, sums it up as “an ugly picture out there.”

Explanations for the collapse of the great American job machine begin with the marked absence of what is called labor hoarding. Usually during recessions, firms keep most of their employees on the payroll even as business slows, in effect stockpiling them for better days. In the current downturn, hoarding seems to have gone into reverse. Not only are firms laying off redundant workers, but they seem to be cutting into the bone. Hall says the absence of hoarding means that firms do not expect business to pick up soon. This is supported by other evidence, like a doubling in the number of involuntary part-time workers (there are nine million of them) and the shrinking workweek, now 33 hours — the shortest ever recorded. Presumably, before companies start to rehire laid-off workers, they will ask their current employees to work more.

Those who hope for a rebound argue that employers, frightened by the financial shocks and the credit crisis of last fall, effectively panicked. That is, they cut deeper than necessary. And that may be.

But layoffs are only part of the story. The problem isn’t just that so many workers have received pink slips but also that companies are failing to hire. And this, unfortunately, has been a trend for most of the past decade (unnoticed, perhaps, because the mortgage bubble was papering over latent weaknesses). At the end of the Clinton era, which also marked the end of a decade-long boom, companies that were opening or expanding operations added nearly 8 workers for every 100 already on the payroll. During the recession of 2001, the figure dropped to 7 per 100: optimistic firms were a bit less optimistic. The surprising fact is that when the recession ended, the percentage stayed at 7. “We never got our groove back,” asserts Mark Zandi of Moody’s Economy.com. In the current recession, the rate has fallen to 6 per 100.

It’s hard to give a definitive explanation for this trend, but among the reasons are a decline in innovation in the aftermath of the tech boom, leading to fewer new businesses, and the aging of the population. More people have dropped out of the work force, and a smaller work force tends to dampen job totals. The percentage of adults who are working has fallen from 64 at the end of the Clinton era to only 59.5 now. Some of those dropouts are retirees, but some may be responding to the economy’s declining dynamism. Traditionally, it was a mark of Americans’ resiliency that, when times were tough, they relocated from state to state and region to region. Now, according to the Census Bureau, mobility is at an all-time recorded low. Perhaps people with underwater mortgages cannot afford to move. Perhaps the areas they used to move to, typically the Sun Belt, are too devastated by foreclosures. But the vaunted ability of the U.S. economy to renew itself seems a little tarnished. Maybe it’s no accident that this time around, folks on the unemployment line are staying there longer.

In terms of its impact on society, a dearth of hiring is far more troubling than an excess of layoffs. Job losses have to end sooner or later. Even if they persist (as, say, in the auto industry), the government can intervene. But the government cannot force firms to hire. Ultimately, each new job depends on the boss’s belief — or hope — that sufficient work will materialize. It’s a bit of black magic also described as confidence. Over the years, it is why America has not only attracted immigrants (whose arrivals are now slowing) but also generated more opportunities and — favorite word of politicians — hope for those born here.

The administration’s tilt toward so-called sustainable new jobs, in green energy and such, shows that it understands what is at stake, both for the country and for its political fortunes. Whether its plans will bear fruit is, of course, another matter. Along with double-digit unemployment, the country is facing a second potential scare headline: falling wages. Even during recessions, businesses don’t like to lower pay, because it reduces morale. But layoffs are also a downer. And in this recession, employers ranging from the State of California to publishers (including this newspaper) have cut back on pay. In effect, job losses have been so severe that businesses have been forced to spread the pain. In June, overall wage growth was zero. Zandi thinks the United States could see negative wage growth.

How would Obama, not to mention Congress, respond to declining employment and falling wages? The pressure for another stimulus (and greater deficits) would be intense. So would that for demagogic solutions like trade barriers. Robert Reich, the former labor secretary, says most lost jobs are not coming back. The huge question is when — or whether — new ones will take their place. Roger Lowenstein, an outside director of the Sequoia Fund, is a contributing writer for the magazine.

CEO's Must Trash Short-Term Thinking & Embrace Long-Term Strategy. Now.

I'm tired. And angry. And I'm not alone. For too long, the stewards of our most cherished institutions have been acting less than ethical. I call it "short term thinking for short term gain" — get in, make a quick buck, and move on to the next sucker. Not the best behavior for supposedly the best executives in this nation.

Now don't get me wrong — not all CEO's are like this. Unfortunately, many are. On the flip side, some are forced into this situation by unscrupulous board members and irrational investors. But as I frequently say to my clients: "This isn't Russia, if you ethically disagree with what your company is doing, move on."

Over the next few months, I will be focusing in on why CEO's do this and what they can do to re-focus and reset their behaviors to produce solid companies that deliver great products for a reasonable price and treat their employees and investors with respect. I'll be interviewing those CEO's that are thinking long-term and really care about their company, the shareholders, their employees and not their pockets.

To begin and see where my thinking is grounded, catch my earlier post: "Do You Trust This Man?"

The era of short term thinking is over. The era of ego is over. It's time to focus on doing the right thing.

The Future of Work: Yes, We'll Still Make Stuff.

Presenting Part Nine of a Ten-Part Series on The Future of Work from Time Magazine. By David Von Drehle at Time.

The death of American manufacturing has been greatly exaggerated. According to U.N. statistics, the U.S. remains by far the world's largest manufacturer, producing nearly twice as much value as No. 2 China. Since 1990, U.S. manufacturing output has grown by nearly $800 billion — an amount larger than the entire manufacturing economy of Germany, a global powerhouse.

But growth does not mean jobs. While sales soared (at least until the recession), manufacturing employment sank. Using constantly improving technology to make more-valuable goods, American workers doubled their productivity in less than a generation — which, paradoxically, rendered millions of them obsolete. (See pictures of retailers which have gone out of business.)

This new manufacturing workforce can be seen in the gleaming and antiseptic room in Southern California where Edwards Lifesciences produces artificial-heart valves. You could say the small group of workers at the Edwards plant, most of them Asian women, are seamstresses. Unlike the thousands of U.S. textile workers whose jobs have migrated to low-wage countries, however, these highly skilled women occupy a niche in which U.S. firms are dominant and growing. Each replacement valve requires eight to 12 hours of meticulous hand-sewing — some 1,800 stitches so tiny that the work is done under a microscope. Up to a year of training goes into preparing a new hire to join the operation.

Highly skilled workers creating high-value products in high-stakes industries — that's the sweet spot for manufacturing workers in coming years. After an initial surge of enthusiasm for shipping jobs of all kinds to low-wage countries, many U.S. companies are making a distinction between exportable jobs and jobs that should stay home. Edwards, for example, has moved its rote assembly work — building electronic monitoring machines — to such lower-wage and -tax locales as Puerto Rico. But when quality is a matter of life or death and production processes involve trade secrets worth billions, the U.S. wins, says the company's head of global operations, Corinne Lyle. "We like to keep close tabs on our processes."

Recent corner-cutting scandals in China — lead-paint-tainted children's toys, melamine-laced milk — have underlined the advantages of manufacturing at home. A botched toy is one thing; a botched batch of heparin or a faulty aircraft component is quite another. According to Clemson University's Aleda Roth, who studies quality control in global supply chains, the successful companies of coming years will be the ones that make product safety — not just price — a "big factor in their decisions about where to locate jobs."

Innovative companies will also stay home thanks to America's superior network of universities and its relatively stringent intellectual-property laws. Consider, for instance, the secretive and successful South Carolina textilemaker Milliken & Co. While the rest of the region's low-tech, backward-looking textile industry was fading away, Milliken pushed ahead, investing heavily in research and becoming a hive of new patents.

U.S. manufacturing will also be buoyed by a third source of power: the American consumer. Even in our current battered condition, the U.S. is the world's most prosperous marketplace. As global economic activity rebounds, so will energy prices. The cost of shipping foreign-made goods to the U.S. market will begin to offset overseas wage advantages. We saw that last year when oil prices zoomed toward $200 per barrel.

Thus, even if fewer cars are built by America's wounded automakers, there will still be plenty of car factories in the U.S. They will be owned by Japanese and Chinese and Korean and German and Italian firms, but they will employ American workers. It just makes sense to build the cars near the people you expect to buy them.

Raised on images of Carnegie and Ford, we rue the loss of once smoky, now silent megaplants but are blind to the small and midsize companies replacing them. Ultimately, what's endangered is not U.S. manufacturing. It is our deeply ingrained cultural image of the factory and its workers.

Losing Your Job & Breaking Shovels.

I broke two shovels today. This weekend, my family and I spent the day digging forsythia bush roots out of the ground. If you've ever done this before — it's not easy. There is a lot of effort with shovels, pick-axes, crowbars, pitchforks, saws and just about every other tool I own. In combination, you try to dig under the main mass of roots and slowly cut/sever each main root from the root ball so it will eventually come out. But enough of removing roots. What did happen during this process is that I broke two shovel handles trying to pry the root ball out of the ground. The first one was a surprise to all of us — honestly, we're pretty lucky that no one got hurt. The shovel gave way when it broke and part of the handle flipped into the air, giving everyone a quick jolt of adrenalin. We then stepped back, took a quick breather, and then attacked it again with another shovel.

And then the second one broke. The funny thing is that we were not as surprised — and frankly — we all started laughing. I probably had too many Wheaties for breakfast this morning. We then didn't give up — we just attacked the root ball with even more vigor (and more robust tools) and eventually got all four root balls out.

It's a lot like losing your job. The first time it happens, people are pretty shell-shocked. They do a lot of soul searching (why me?), denial, hatred of their company, boss, etc. — you know the drill. Ultimately, when the adrenaline dissipates, they get down to business and look for a new job. The second time someone loses a job (and this happens more often that you realize in this economy), they tend to almost laugh about it, pick themselves up quickly, and go after that next job.

Moral of the story — losing your job is not a life or career ending experience. In fact, the faster that you move forward, the faster you will find that next position. The more that you sit and question yourself (and procrastinate) - the less likely you will climb back on that horse and ride into the sunset.

So pick up that shovel and start digging that root ball out!

Want to keep your job? Be happy.

Study shows that a bright disposition helps workers navigate darker times. By Becky Fleischauer

Does the recession with its rampant layoffs and cutbacks make your job look better all the time? Believe it or not, donning a pair of "recession goggles" can be good for your career and your mental health. Research shows that an attitude of gratitude in trying times can not only help you keep your job, but get you the job you want.

It's a counterintuitive concept, for sure. In today's economic maelstrom, the most common responses are panic, fear, anger, distrust, and even hostility. But a Harvard Business Review article "How to Protect Your Job in a Recession" studied the characteristics of recession survivors and found that those who avoided being cut were cheerful, likable, generous contributors, and not necessarily the most skilled and proficient.

"Just don't be the guy who's always in a bad mood, reminding colleagues how vulnerable everyone is. Who wants to be in the trenches with him?" caution authors Janet Banks and Diane Coutu.

Workplace relationship expert Courtney Anderson agrees, and observes that tolerance for bad actors – particularly those higher up the food chain – is shrinking.

"The handwriting is on the wall for them in a lot of organizations," says Ms. Anderson, founder of Courtney Anderson & Associates, a human resources firm in Austin, Texas. "When times are good, companies will tolerate a lot. But in this economy, every single decision is double- and triple-checked. It will be tough for the really poor managers to make it through,"

This could explain why the ax is falling higher up the management chain. Companies are looking to save more money, and bigger salaries yield larger savings. Today's unemployment rate for college-educated workers, 4.1 percent, is the highest it's been since the US Bureau of Labor Statistics began tracking the data in 1992. It is more than twice its prerecession level, according to the Center for Economic and Policy Research, putting the risk of being unemployed proportionately higher for college-educated workers than for less-educated ones.

When productivity is in decline, Anderson says, other factors gain more value in the decisionmaking process about who stays and who goes. "I used to go to organizations," Anderson says, "and they would describe a horrible situation: 'Felicia curses people out, she yells and is mean, but she delivers.' They would want me to figure out how to keep the person and be flexible because the person delivered. Now, with the current macroeconomic picture, they won't put up with it. There is a financial opportunity to get rid of the people who create problems."

Anderson says corporate leaders are now placing more value on workers who add positive energy to the atmosphere beyond increasing sales and visibility. She says that includes placing those who are grouchy and unpleasant on the layoff list, but also the person who never says anything, the colleague who is invisible and flies under the radar.

"All variations of not contributing and making it a positive, efficient workplace are being considered," Anderson says. If striking a cheerful pose in tough times doesn't come naturally, consider that it does require conscious effort. And even the act of trying to be happy can make a difference.

"If you stay positive, you'll have more influence on how things play out," advise Ms. Banks and Ms. Coutu. Banks is a veteran of at least a dozen corporate downsizings, and Coutu has studied resilience in many settings. They say survivors and those who leverage layoffs to their advantage focus on anticipating the needs of customers and those above and below them inside the office.

During periods of numerous layoffs, vacuums occur at all levels, leaving many opportunities to help your boss and the company get more accomplished. "Prove your value to the firm by showing your relevance to the work at hand," Banks and Coutu note, "which may have shifted since the economy softened."

The key to donning recession goggles is to make decisions you won't regret when the recession fades and more prosperous times return.

"We should affirm to ourselves each day why we are doing what we do," Anderson says. "If you are truly, truly miserable, even in a bad economy, you may be better off doing something else: taking a break, going back to school, or working part time. It's valid to ask ourselves: 'Do I enjoy this? Why am I here?' Reevaluate."

She reminds us that if you find you are in a job exclusively for the paycheck – that is, uh, OK. It is a superb reason to go to work and be satisfied in this economy.

"You can still go to work and have a good day," Anderson says. Especially pay day. "Bad times remind us all of the basics.... We shouldn't take things for granted."