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Thursday, July 31, 2014

MCDONALD'S RULING IGNITES BUSINESS-LABOR FIRESTORM

Original Story:  USAToday.com

Labor advocates are claiming a big victory after a federal agency said Tuesday that McDonald's central, corporate operations can be lumped in with its thousands of franchises for liability purposes.

The world's largest fast-food chain promises to fight a National Labor Relations Board decision that it says "changes the rules for thousands of small businesses."

"HUGE victory for labor & fast food workers!" tweeted the Service Employees International Union. The union was responding to news as relayed in a The New York Times report that McDonald's corporate apparatus must address workers' complaints that they were fired or disciplined for participating in protests calling for higher wages.

U.S. Chamber of Commerce spokesman Randy Johnson says in a news release the NLRB move "upends existing law and is part of a larger agenda at the NLRB to overturn the joint-employer standard."

Another Chamber exec, Glenn Spencer, calls it "a ploy that could threaten nearly 800,000 franchise businesses and the millions of people who work for them."

The key phrase in the NLRB decision is "joint employer" -- that's the term that the agency's general counsel, Richard Griffin Jr., says can apply to the corporate entity, thus linking it to the franchises. Griffin is a former NLRB board member and served on the board of directors for the AFL-CIO lawyers coordinating committee.

The NLRB has determined that 43 of 181 complaints filed since November 2012 have merit to proceed, the agency says on its website. Of those "43 cases where complaint has been authorized, McDonald's franchisees and/or McDonald's, USA, LLC" -- the central, corporate entity -- "will be named as a respondent if parties are unable to reach settlement."

It is not clear from the NRLB statement how many of the cases involve franchised locations. Sixty-eight cases were found to have no merit, while "64 cases are currently pending investigation," the NLRB says.

Protests over pay at McDonald's have gained traction in recent months. SEIU President Mary Kay Henry was among those arrested in a protest preceding McDonald's shareholders meeting in May. Several McDonald's workers -- among a crowd brought in by 32 buses, police said -- were arrested as well.

The Rev. Dr. William Barber II, head of the NAACP's North Carolina chapter, led the protest march onto McDonald's headquarters campus in Oak Brook, Ill., telling USA TODAY that a "living wage is a moral mandate, and it's time for McDonald's to pay fast-food workers their just due now."

McDonald's has about 3,000 franchises in the U.S., according to the company's website. The company has a total of about 14,000 restaurants in the U.S.

"Wrong" is McDonald's way of describing the decision.

"McDonald's also believes that this decision changes the rules for thousands of small businesses, and goes against decades of established law regarding the franchise model in the United States," says Heather Smedstad, speaking on behalf of the company.

Smedstad, senior vice president over human resources in the U.S., says in a release that the fast-food giant "as well as every other company involved in franchising, relies on these existing rules to run successful businesses as part of a system that every day creates significant employment, entrepreneurial and economic opportunities across the country."

UPS INVESTS $175 MILLION IN HOLIDAY SEASON

Original Story:  USAToday.com

After a holiday shipping fiasco that left thousands of customers without packages in time for Christmas last year, United Parcel Service will invest $175 million in peak operations for the rest of 2014, the company announced Tuesday as part of its second quarter earnings statement. Let Hennion Walsh provide you with financial services.

Company shares fell 3.7% on Tuesday to $99.86.

The stock has fallen 2.3% since the beginning of the year, while the Standard & Poor's 500 index has climbed 7.1%. However, the stock has risen 18% in the last 12 months.

UPS said it will increase operating expenses for "capacity and peak related projects," including for operations on Black Friday and software that optimizes delivery routes.

UPS outraged holiday shoppers in December when it couldn't keep up with package shipments and many gifts were delayed Furious customers took to social media and UPS found itself repeatedly apologizing and providing refunds and gift cards to customers.

UPS acknowledged at the time that it was overwhelmed by package volume and wasn't prepared to handle the number of shipments it received.

"Demand was much greater than forecast," UPS spokesperson Natalie Godwin told USA TODAY in December.

CEO Scott Davis said in a release about second quarter earnings that "2014 is the year of investing for the customer. We are providing new capabilities and expanding capacity to ensure UPS meets the rapidly growing needs of the marketplace."

UPS net income declined by nearly 58% in its second quarter, missing analysts' expectations.

UPS reported net income of $454 million, or 49 cents a share, down from $1.07 billion, or $1.13 a share, in the second quarter of 2013. Hennion and Walsh Inc offers a free bond guide.

Earnings, adjusted for non-recurring costs, were $1.21 a share, compared to $1.13 last year. The average per-share estimate of analysts surveyed by Zacks Investment Research was for profit of $1.24.

UPS said a transfer of post-retirement liabilities for some union employees to defined contribution healthcare plans resulted in an after-tax charge of $665 million, contributing to the decline in profits.

Revenue was up 5.6% to $14.3 billion, from $13.5 billion in the same quarter last year. That beat Wall Street forecasts.

UPS said e-commerce and international export growth contributed to a 7.2% increase in global package shipments.

LET DIVORCE BE AN ENTREPRENEURIAL SPRINGBOARD

Original Story:  USAToday.com

Hi Gladys, I am 55 and recently divorced. I have two kids who are both in college. During my marriage I work at various part-time jobs. But I can't say that I really did anything significant. Now I am in a situation where there is nothing to hold me back from really doing something with my life. I would like to start a small business but most of the business magazines I read seem to focus on young entrepreneurs. Sometimes I feel like I have waited to long. My friends keep telling me that it's never too late. But I don't know about that. -- M. L.

I agree with your friends, it's never too late. As long as you are living and breathing there is no reason to avoid venturing into new things.

Arriving at the mid-point in life has many rewards that you can bring to the world. You have gathered information and knowledge as a result of your experience during your life. And you have come to understand many things and most often that understanding leads to wisdom. And how that wisdom can be applied is unlimited.

You say that you haven't done anything significant, but I would say that raising kids, keeping a household running and working at any type of job outside of your home is significant. I often tell people who feel like you to make a list of all of the things that they have learned in life and in nearly every case they have expressed surprise at the things that life has taught. And even more important they have found several gems in their list that can be turned into a successful business

Taking care of a family is not an easy task. Each family member has his or her own personality and traits and must be dealt with individually and yet collectively. Facing divorce or the death of a spouse teaches one to learn to cope with change and uncertainty. And to handle your household while working outside of your home also gives you added skills.

My friend Marta worked in a part-time clerical position for years while raising her two kids and at the age of 59 she decided to enroll in a theological seminary to study theology and religion. After a several years of dedication and hard work she graduated with a degree and soon after was appointed to pastor a small church.

I have another friend who returned to school to get a Masters in Fine Arts so that she could sharpen her acting skills. Also at the age of 59, she received her degree and packed up her Volkswagen after selling her house and headed to California to find her way into acting. And so far she has managed to find quite a few acting jobs and she is often hired to perform in stage plays.

Keep in mind that Margaret Mead's career flourished in her mid-life and after divorce, as did Martha Stewart's.

The important thing is to have confidence in yourself and stop questioning your ability to reinvent yourself.

Monday, July 28, 2014

WALGREENS EYES LOOPHOLE END RUN AROUND TAXES

Original Story:  USAToday.com

DIXON, Ill. — The Walgreens drugstore chain proudly touts itself as "the pharmacy America trusts."

But many here in this small river town where the founder of the company got his start complain that the drugstore chain is on the precipice of turning its back on the USA.

Walgreens, the USA's largest drugstore chain, with more than 8,500 stores, soon will decide whether to take advantage of a loophole in U.S. tax law that would allow it to save billions of dollars by moving its headquarters to Europe, where it is on the verge of acquiring controlling interest in Alliance Boots, a Swiss-based company that operates drugstores in Britain.  A Tulsa Business Tax Lawyer said that giant corporations often look to move overseas for the purpose of cutting there taxes.

From the shareholders' perspective, making the move is a no-brainer: It could save the company roughly $4 billion over the next five years.

But here in this town of 16,000 where just about everybody can tell you about company founder Charles Walgreen's impact on the community, such a move seems out of step with how the Walgreen family conducted business.

"I think he'd be rolling in his grave if he knew what was going on today," says Bill Jones, who runs the Northwest Territory Historic Center in Dixon and worked closely with the Walgreen family on building an exhibit at the museum honoring the founder.

The loophole is known as tax inversion, a controversial tactic that allows a company that does most of its business in the USA to cut its federal tax bill by merging or buying an overseas company in a lower-tax country and then nominally relocating its headquarters there.

Despite years of on-and-off efforts by lawmakers in Washington and the IRS to close the loophole, dozens of American companies have used it — several in recent months.

The first corporate inversion to capture attention occurred in 1982, when oil-and-gas company McDermott moved its headquarters to Panama. It wasn't until 1994, after cosmetics company Helen of Troy moved to Bermuda, that the IRS raised concerns that such restructurings were motivated by the desire to dodge taxes.

This year alone, eight major U.S. companies — including AbbVie, Medtronic and Mylan — have announced plans to shift their headquarters overseas in an effort to trim their corporate tax rate, which hovers around 35% in the U.S. and is among the highest in the world.

Earlier this week, President Obama called inversion an "unpatriotic tax loophole" and pressed Congress to pass legislation to stem the flow of corporations that are effectively renouncing their U.S. citizenship. Inversion could cost the Treasury nearly $19.5 billion over the next decade, according to Congress' Joint Committee on Taxation.

Analysts say perhaps no company with a Main Street profile that matches Walgreens' — the country's largest pharmaceutical chain, with $72 billion in annual sales — has used the loophole, and Walgreens' pending decision is bringing unprecedented attention to the issue.

"I don't know how this inversion doesn't happen," says Christopher Geier, of the Chicago-based investment banking firm Sikich. "They'll get some bad press, but I don't see a big enough reaction from consumers on this to change where this appears to be heading."

Here in Dixon, the talk of Walgreens moving to Switzerland resonates in a personal way.

Charles Walgreen moved to Dixon as a teenager and got his start in the business working at a pharmacy, a job he took after injuring himself working at a shoe factory in town. Residents here recall Walgreen taking Boy Scouts up on his Sikorsky S-38 amphibian aircraft, which he would fly back and forth from the Chicago area and land on the Rock River, near the family's estate here.

As a young man, he moved to Chicago to seek his fortunes and eventually started his drugstore chain. But he opened his second pharmacy here in his adopted hometown — where he became revered as the city's second-favorite son. (President Ronald Reagan, who grew up here and caddied for Walgreen at the Timber Creek Country Club, is Dixon's most celebrated hometown boy.)

Walgreen, who died in 1939, saved the Dixon National Bank from going out of business during the Great Depression. The family also led fundraising for a statute erected in 1930 along the Rock River depicting a young volunteer named Abraham Lincoln, who spent time here during the Black Hawk War.

Charles Walgreen Jr., the founder's son, won the bid during World War II to open a store at the newly built Pentagon by giving all store profits to the Pentagon Post Restaurant Council, which supervised food service in the complex.

"Walgreens' attitude was so patriotically generous that no competitor could possibly better it," declared a weekly publication from the War Department.

Myrtle Walgreen, the wife of the company's founder, also was a good friend of the people of Dixon. James Burke, Dixon's mayor, says legend has it that at one of the regular coffee klatches at Dixon's Walgreens, she offered an extraordinary stock tip to some of the city's most prominent citizens.

"She told them we are getting ready to introduce a new line of product that you might consider investing in," says Burke, who has called on Walgreens to ditch the tax inversion plan. "That product was the tampon."

TRADING WALGREENS FOR CVS?

Larry Dunphy, who owns an independent bookstore in Dixon, says he takes pride in buying stocks in Illinois companies such as McDonald's, John Deere and Walgreens. But he says he's told his financial adviser to dump his stock in Walgreens and buy CVS if the company goes through with the inversion.

In the end, Dunphy says the public outcry may not have an impact on Walgreens' decision, but it could have a long-term effect on how companies approach inversion in the future and spur Congress to change laws to give companies an incentive to stay put.

"Will there be enough people who go to CVS or the local pharmacy that will offset the $4 billion that Walgreens will make by moving?" Dunphy says. "Maybe not. But I hope the damage this is doing to Walgreens' image is something that companies in the future will consider before moving to cut their share of taxes."

Walgreens CEO Gregory Wasson, who, along with his board, has come under intense pressure from shareholders to move the headquarters to Switzerland, says the company will decide soon whether to move its headquarters.

Early in 2014, Wasson said publicly that an inversion wasn't under consideration. The Deerfield, Ill., company bought 45% of Switzerland-based Alliance Boots in 2012 and has an option to buy the rest of the company next year, which would create the opportunity to make the move.

But after a private meeting in France with a shareholder group — including Goldman Sachs Investment Partners and hedge funds Jana Partners, Corvex and Och-Ziff — Wasson began to change his tune.

He made clear in a call with Wall Street analysts last month that an inversion was very much a possibility as Walgreens restructures the company ahead of completing the Alliance Boots deal.

Michael Polzin, a company spokesman, says Walgreens will do "what is in the best long-term interests of our customers, employees and shareholders."

Polzin won't comment about the impact a tax inversion would have on the company's image. The company also declined to make Kevin Walgreen, the great-grandson of the company's founder and the only member Walgreen family currently involved in day-to-day operations, available for an interview.

"Whether we do an inversion or not, we're still going to pay over $2 billion a year in federal, state, employer and property taxes," Polzin says. "We will still be one of the top job providers in America, with roughly 250,000 employees. We're going to continue to make capital investments in the U.S. and expand our business here for decades to come."

That argument hasn't assuaged some Illinois lawmakers.  A Tax Lawyer Tulsa representative is actively watching the case unfold.

In a letter to Walgreens' board of directors this week, Rep. Jan Schakowsky, D-Ill., warned that the company was in danger of sullying its reputation as a community-minded corporation. She also sought to remind the Walgreens board that roughly a quarter of its $2.5 billion in profits last year were directly connected to federal programs — such as Medicare, Medicaid and the Affordable Care Act.

"Everywhere you look, the success of Walgreens is tied to the opportunities it has been afforded by this country," she wrote. "To benefit from those resources and then to refuse to pay your fair share of taxes needed to fund them is inexcusable."

In a separate letter, Sen. Dick Durbin, D-Ill., took a shot at Walgreens' folksy motto. "Is 'the corner of happy and healthy' somewhere in the Swiss Alps?" Durbin wrote. He added, "I believe you will find that your customers are deeply patriotic and will not support Walgreens' decision to turn its back on the United States."

Burke, the Dixon mayor, says he hopes Walgreens will stay put. But if it pushes ahead with the inversion, Burke notes there are three other drugstores in his town.

"I think Walgreens will see that a lot of Americans will take their business elsewhere," Burke says. "At some point, how much profit is enough?"

Monday, July 21, 2014

STATES WITH HIGHER MINIMUM WAGE GAIN MORE JOBS

Original Story: Freep.com

WASHINGTON — Maybe a higher minimum wage isn't so bad for job growth after all.

The 13 states that raised their minimum wages at the beginning of this year are adding jobs at a faster pace than those that did not, providing some counter-intuitive fuel to the debate over what impact a higher minimum has on hiring trends.

Many business groups argue that raising the minimum wage discourages job growth by increasing the cost of hiring. A Congressional Budget Office report earlier this year lent some support for that view. It found that a minimum wage of $10.10 an hour, as President Obama supports, could cost 500,000 jobs nationwide.

But the state-by-state hiring data, released Friday by the Labor Department, provides ammunition to those who disagree. Economists who support a higher minimum say the figures are encouraging, though they acknowledge they don't establish a cause and effect. There are many possible reasons hiring might accelerate in a particular state.

"It raises serious questions about the claims that a raise in the minimum wage is a jobs disaster," said John Schmitt, a senior economist at the liberal Center for Economic and Policy Research. The job data "isn't definitive," he added, but is "probably a reasonable first cut at what's going on."

Just last week, Obama cited the better performance by the 13 states in support of his proposal for boosting the minimum wage nationwide.

"When ... you raise the minimum wage, you give a bigger chance to folks who are climbing the ladder, working hard.... And the whole economy does better, including businesses," Obama said in Denver.

In the 13 states that boosted their minimums at the beginning of the year, the number of jobs grew an average of 0.85% from January through June. The average for the other 37 states was 0.61%.

Nine of the 13 states increased their minimum wages automatically in line with inflation: Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont and Washington. Four more states -- Connecticut, New Jersey, New York and Rhode Island -- approved legislation mandating the increases.

Twelve of those states have seen job growth this year, while employment in Vermont has been flat. The number of jobs in Florida has risen 1.6% this year, the most of the 13 states with higher minimums. Its minimum rose to $7.93 an hour from $7.79 last year.

Some economists argue that six months of data isn't enough to draw conclusions.

"It's too early to tell," said Stan Veuger, a scholar at the American Enterprise Institute. "These states are very different along all kinds of dimensions."

For example, the number of jobs in North Dakota -- which didn't raise the minimum wage and has prospered because of a boom in oil and gas drilling -- rose 2.8% since the start of this year, the most of any state.

But job growth in the aging industrial state of Ohio was just 0.7% after its minimum rose to $7.95 from $7.85. The federal minimum wage is $7.25.

Veuger, one of the 500 economists who signed a letter in March opposed to an increase in the federal minimum, said the higher wages should over time cause employers to hire fewer workers. They may also replace them with new technologies.

The Congressional Budget Office cited those factors in its February report. But in addition to job losses, the CBO also said a higher minimum could boost paychecks for another 16.5 million workers.

Sylvia Allegretto, an economist at the University of California, Berkeley, said that research comparing counties in states that raised their minimums with neighboring counties in states that did not has found no negative impact on employment.

Restaurants and other low-wage employers may have other ways of offsetting the cost of higher wages, aside from cutting back on hiring, she said. Higher pay can reduce staff turnover and save on hiring and training costs.

State and local governments have become increasingly active on the issue as the federal minimum wage has remained unchanged for five years. Twenty-two states currently have higher minimums than the federal requirement.

And 38 states have considered minimum wage legislation this year, the most on record, according to the National Conference of State Legislatures. At least 16 will boost their minimums starting next year, the NCSL says.