Six on History: "Our" Economy
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1) Greased, The Nib by Matt Lubchansky
"Meg Trowbridge’s plans for the week are pretty simple. She’ll take long, meandering walks and explore some new parks and visit the San Francisco Museum of Modern Art for the first time since 2019 — all on company time.
“I’m so excited to take a morning or afternoon walk when I’m not in the crowd of after-work people,” said Trowbridge, a copywriter for Mozilla, which produces the Firefox Web browser. “I’m definitely going to hit SF MOMA and just stroll and see how long I can just get lost in the museum again because it’s been so long, and I feel like just getting inspired.”
In pre-pandemic times, Trowbridge would have joined colleagues from around the world at Mozilla’s annual two-week off-site meeting — last held in Berlin in January 2020 — a mix of creative work and networking that left her both exhilarated and exhausted, she said.
Last week, Bumble, the company behind the dating app, took the week off. LinkedIn shut down for a week in April. Last summer, Canadian e-commerce company Shopify instituted “Rest & Refuel Fridays” globally and will do the same this year from July 2 through August.
Marriott International is adding three paid “TakeCare Days Off” on the Fridays before Memorial Day, July Fourth and Labor Day for non-hotel staffers. The world’s largest hotel chain also “strongly encourages teams” to avoid all meetings on Fridays. If a critical meeting must take place, “we ask that it be concluded by no later than noon, local time,” Sarah Brown, Marriott’s director of corporate media relations wrote in an email.
Gallup polls have found that workers’ life evaluations have declined during the pandemic (regardless of remote/in-person work), and that 61 percent of women and 52 percent of men feel stressed on a typical day, both up from before the pandemic.
Hotel industry emerges from pandemic with new business model, possibly fewer workers
“Expecting people to just ‘return to work’ does not acknowledge the challenges and difficulties employees endured. Employers can’t expect employees to just pretend like we didn’t just live through a social catastrophe — especially as that catastrophe continues to unfold around the world,” Stanford University sociologist Marianne Cooper said. “Employers need to understand the employees returning to the office are not the same people who left last March.”
Any return to the workplace is also likely to affect people differently depending on vaccination status, Cooper said.
For parents who have younger children who are not eligible for vaccines yet, the return to in-person work remains a potentially high-risk activity. For offices that don’t mandate vaccinations, there are bound to be tensions between workers who wonder about their colleagues’ status and how comfortable they feel about sharing space. Others may be wary of divulging medical conditions that affect their vaccination status with their employers or colleagues.
While many companies have increased the number of days or reasons for employees to use paid time off (PTO), even unlimited vacation days don’t necessarily translate into a sense of relief. There’s the pileup of emails to get through before they can even start work upon their return. If you’re on vacation and the rest of your team isn’t, you may still need to monitor developments remotely, making full unplugging nearly impossible.
Hence, this growing trend of companywide shutdowns.
Before the pandemic, 40 percent of Mozilla’s workforce worked remotely, so the corporation thought it was in a decent position to weather the pending storm. It could just send the rest of the employees home and build out its existing infrastructure.
In addition, the company suffered a loss of advertising revenue and laid off about 300 employees, adding to workers’ anxiety. For the 700 remaining, it was taxing, Douglass said. She constantly hears, “ ‘Jesus, I’m exhausted.’ ‘Too many meetings.’ Leaders are coming up to me and saying, ‘Something’s gotta give here.’ ”
As a result, she’s trying to mitigate burnout as a systemwide issue. Because Mozilla is run by a not-for-profit foundation yet competes against the deeper pockets of Google and Facebook, as well as start-ups that dangle potential public offerings for employees, it has to use workplace culture to stand out — which has traditionally been a priority and a source of pride.
Before covid, employees had a “wellness stipend” to spend on gym memberships or other health initiatives. The funds were cut during the pandemic, which understandably upset people.
“Having a day off when the whole company’s also off is actually the thing that makes me feel relaxed. I don’t feel guilty. It’s not piling up. I don’t feel like I’ve been slacking on emails,” Douglass said, relaying a popular sentiment from a companywide survey taken after the September layoffs.
Go back to the office? These women would rather quit.
“We’ve always had very flexible hours and encouraged vacations and time off for mental health because those things are important. But early in the pandemic, we realized people needed more — something structural that they didn’t have to ask for,” founder and chief executive Matthew Pierce said.
An unexpected benefit: better meeting attendance.
“People know they can schedule the million other things they have to do in real life for that other Friday. Our chief people officer, Amanda Armour, really championed the policy, and it’s been a huge success,” Pierce said, adding that it has helped with job satisfaction and overall health issues. “Telling external partners that it’s not just you taking off but the whole company has made it easier to implement, too.”
For some companies, remote work and flexible or customized work days are strategies to punch above their weight in accessing talent.
St. Louis-based digital advertising and marketing agency HLK initially offered remote work only to new hires, as part of a strategy to expand nationally. It employs 250 people — about half of whom joined since November 2020 — with 50 or 60 open roles, said Chief People Officer Marlena Edwards.
But the pandemic prompted the agency to offer similar flexibility to all of its employees.
“We went to a fully remote model” during lockdown, Edwards said. Going forward, they’re allowing all employees the choice to stay fully remote or to work out a schedule with their managers, “whether that meant they were in the office five days a week, or three days a week.”
“We would allow them that flexibility and autonomy to work with their managers to figure out what was the best schedule for them. From a talent perspective and a people perspective, that is ultimately what people want, to really have that flexibility of being able to get the job done, being able to deliver, but doing so based on their lifestyle. That is what we rolled out this year, and it has been wildly successful,” she said.
What burnout really means, and what bosses and employees can do about it
“Whether it’s a 9-to-5 or 7-to-3 or noon-to-7, I think that allowing employees to plan their days around what’s happening in their personal lives does help with burnout because they can better manage their time instead of having it mandated,” she said.
In addition, the company offers unlimited wellness days off. For those who don’t fully use the benefit, she said, it’s up to leaders to proactively spot workers or teams who haven’t taken time off in a while and encourage them to do so.
“That’s how we’re going to eliminate burnout — by identifying people who haven’t really taken the time to recalibrate and focus on themselves,” she said.
These changes aren’t just taking place in smaller companies. On June 14, PepsiCo announced a similar flexible schedule.
“There will be no default day-to-day workplace for employees in headquarter locations — associates along with their managers choose what work can be done remotely and what needs to be done in their PepsiCo office. Decisions about the best ways of working will be based on roles, daily activities and team dynamics,” according to a company statement.
The company will move from average office attendance of 65 percent at assigned locations to 50 percent average attendance. This permanent shift comes on the heels of pandemic-specific benefits such as six free professional counseling sessions, a telemedicine option for behavioral health through 2021 at no cost to employees, and last-minute emergency child-care options.
Verizon is also integrating fully remote and hybrid options for some of its employees.
The company focused on pandemic burnout by addressing “the root of the challenge for many of our employees — child care and flexible work arrangements,” said Christy Pambianchi, chief human resources officer at Verizon.
“First, we introduced a covid-19-specific leave of absence policy called the Caregiver Leave program for employees unable to work as they care for loved ones,” Pambianchi said. “Second, we expanded our backup care program for employees balancing work with caregiving responsibilities by providing a reimbursement toward child or elder care and allowing employees to select their own provider.”
For some companies, even small tweaks in corporate culture can make a difference.
At the beginning of the pandemic, Smart Design, a strategic design firm based in New York City, tried to keep up a social atmosphere with weekly Zoom happy hours at 5 p.m. Then executives realized that people were still working or had been on video calls for eight hours straight and dreaded getting on yet another one. So the company shifted them to lunchtime.
“We’re rebranding them as midday mental breaks,” said Sarah Szeflinski, Smart Design’s people operations director. “The thinking was, give people this opportunity to say, ‘Okay, I need to walk away from whatever I’m doing, I need to socialize on something outside of my project. Maybe you went to the [office] kitchen to make a coffee and you have that chitchat, and you’re not getting that if you’re home alone.”
“It had a trickle-down effect. It kind of allowed us to say, ‘Look, it’s okay to take time to do nonwork stuff during work hours. It was in the middle of the day; the company is hosting this for you.”
She noted that has had a big impact on morale. Not just the breaks themselves, but also the modeling by leaders, with open calendars to show blocks of time spent not working in the middle of the day.
“For example, an executive design director blocks her calendar every day at 11 o’clock to go for a run outside. I am home with my little pandemic baby and my 4-year-old, and so I am blocking every day for family lunch to feed them and then put them down for naps. One of the managing partners blocks her calendar for a bike ride during the day,” Szeflinski said.
"What’s at the root of modern American consumerism? It might not just be competition among the brands trying to sell us things, but also competition among ourselves.
An easy story to tell is that marketers and advertisers have perfected tactics to convince us to purchase things, some we need, some we don’t. And it’s an important part of the country’s capitalistic, growth-centered economy: The more people spend, the logic goes, the better it is for everybody. (Never mind that they’re sometimes spending money they don’t have, or the implications of all this production and trash for the planet.) People, naturally, want things.
But American consumerism is also built on societal factors that are often overlooked. We have a social impetus to “keep up with the Joneses,” whoever our own version of the Joneses is. And in an increasingly unequal society, the Joneses at the very top are doing a lot of the consuming, while the people at the bottom struggle to keep up or, ultimately, are left fighting for scraps.
I recently spoke with Juliet Schor, a sociologist at Boston College, about the history of modern American consumerism — what it’s rooted in, how it’s evolved, and how different groups of people have experienced it. Schor, who is the author of books on consumerism, wealth, and spending, has a bit of a unique view on the matter. She tends to focus on the roles of work, inequality, and social pressures in determining what people buy and when. In her view, marketers have less to do with what we want than, say, our neighbors, coworkers, or the people we follow on social media.
Our conversation, edited for length and clarity, is below.
When I think of the beginning of what I perceive as modern American consumerism, I tend to go back to the 1950s and post-World War II, people moving to the suburbs in the cookie-cutter homes. But is that the right place to start?
Scholars differ on how to date consumerism. I would say we need to go back a bit earlier to the 1920s, which is when you get the development of mass production, which is what makes mass consumption possible. This perspective differentiates the 20th century from the earlier period, in which you have shopping and you have consumer fads. But what changes beginning in the 1920s is that the production technologies make it possible to produce things cheaply enough that eventually you can get a majority of the population consuming them.
The acquisition of stuff looms large in the American imagination. What is life under consumerism doing to us?
Read more from The Goods’ series.
In addition to the things that are happening in factories, the automobile is the leading industry where you move from stationary production to a moving assembly line and big declines in costs. You also have the beginnings of the modern advertising industry and the beginnings of consumer credit.
Then it stalls out, of course, because of the Depression and the war. What happens in the 1950s is the model gets picked up again, this time with major participation by the federal government to spur housing, road building, the auto industry, education, and income. We get into durable goods and household appliances. As we know, that’s really confined to white people post-war.
I imagine it’s changed across the decades, but why do we buy things, often more than we need?
Scholars have different answers to this question. Economists just assume that goods and services provide well-being, and people want to maximize their well-being. Psychologists root it in universal dimensions of human nature, which some of them tie back to evolutionary dynamics. I don’t think either of those are particularly convincing.
The key impetus for contemporary consumer society has been the growth of inequality, the existence of unequal social structures, and the role that consumption came to play in establishing people’s position in that unequal hierarchy. For many people, it’s about consuming to their social position, and trying to keep up with their social position.
It’s not necessarily experienced by people in that way — it’s experienced more as identity or natural desire. But I think our social and cultural context naturalizes that desire for us.
If you think about the particular things people want, it mostly has to do with being the kind of person that they think they are because there’s a consumption style connected with that. The role of what are called reference groups — the people we compare ourselves to, the people we identify with — is really key in that. It’s why, for example, I’ve found that people who have reference groups that are wealthier than they are tend to save less and spend more, and people who keep more modest reference groups, even as they gain in income and wealth, tend to save more.
I want to dig into this idea of competitive consumption. How are we competing with each other to consume?
We have a society which is structured so that social esteem or value is connected to what we can consume. And so the inability to consume affects the kind of social value that we have. Money displayed in terms of consumer goods just becomes a measure of worth, and that’s really important to people.
How do we pick our “reference groups” if it’s not necessarily by wealth?
We don’t know too much about it. The argument that I made in [my book] The Overspent American was that in the postwar period, we had residentially-based reference groups. So it was really your neighborhood. People moved to the suburbs, and they interacted with people in the suburbs. Those were reference groups of people of similar economic standing because housing is the biggest thing that people buy, and houses tend to cost the same amount roughly within a neighborhood. Family and friends and social networks have always been really important.
Then the next big thing that happens is that you get more and more married women going into the workforce. That really changes reference groups, because they go from a flat social structure in the suburbs to a hierarchy in the workplace, particularly if you’re talking about better-remunerated work and white-collar work. People interact with people above and below them in the hierarchy. So people were exposed to the lifestyles of the people above them in the informal socialization that goes on in the workplace.
Then there is the impact of media, and increasingly now, social media. It’s the friends that you don’t actually know, the Friends on TV.
The reference groups change under different socioeconomic dynamics, but it mostly has to do with who you’re in contact with — what you’re seeing in front of you, so your neighbors, your coworkers, what you’re seeing on TV, in movies, on social media.
I think the key point here that differentiates this approach from that of many people who think about consumption is that it is not saying that it’s primarily driven by advertising. It’s not a process of creating desire where it didn’t exist. Critics of advertising say it’s just making people want stuff they don’t need and doesn’t have value to them. And you have to think, “Okay, why do they keep doing that? Why do they keep falling for the advertisements?” Many of the things that people desperately want are not particularly advertised. My approach is rooted in really deep social logic.
"Billionaire Peter Thiel, a founder of PayPal, has publicly condemned “confiscatory taxes.” He’s been a major funder of one of the most prominent anti-tax political action committees in the country. And he’s bankrolled a group that promotes building floating nations that would impose no compulsory income taxes.
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To put that into perspective, here’s how much the average Roth was worth at the end of 2018: $39,108.
What’s more, as long as Thiel waits to withdraw his money until April 2027, when he is six months shy of his 60th birthday, he will never have to pay a penny of tax on those billions.
ProPublica has obtained a trove of IRS tax return data on thousands of the country’s wealthiest people, covering more than 15 years. This data provides, for the first time, an inside look at the financial lives of the richest Americans, those whose stratospheric fortunes put them among history’s wealthiest individuals.
What this secret information reveals is that while most Americans are dutifully paying taxes — chipping in their part to fund the military, highways and safety-net programs — the country’s richest citizens are finding ways to sidestep the tax system.
One of the most surprising of these techniques involves the Roth IRA, which limits most people to contributing just $6,000 each year.
The late Sen. William Roth Jr., a Delaware Republican, pushed through a law establishing the Roth IRA in 1997 to allow “hard-working, middle-class Americans” to stow money away, tax-free, for retirement. The Clinton administration didn’t want to give a fat tax break to wealthy people who were likely to save anyway, so it blocked Americans making more than $110,000 ($160,000 for a couple) per year from using them and capped annual contributions back then at $2,000.
About a decade after the creation of the Roth, Congress made it even easier to turn the accounts into mammoth tax shelters. It allowed everyone — including the very richest Americans — to take money they’d stowed in less favorable traditional retirement accounts and, after paying a one-time tax, shift them to a Roth where their money could grow unchecked by Uncle Sam — a Bermuda-style tax haven right here in the U.S.
To identify those who have amassed fortunes in retirement accounts, ProPublica scoured the tax return data of the ultrawealthy for IRA accounts valued at more than $20 million. Reporters also examined Securities and Exchange Commission filings, court documents and other records, including a memo detailing Thiel’s wealth that was included in his 2005 application for residency in New Zealand.
Among this rarefied group, ProPublica found, the term “individual retirement account” has become a misnomer. Rather than a way to build a nest egg for old age, the accounts have morphed into supercharged investment vehicles subsidized by American taxpayers. Ted Weschler, a deputy of Warren Buffett at Berkshire Hathaway, had $264.4 million in his Roth account at the end of 2018. Hedge fund manager Randall Smith, whose Alden Global Capital has gutted newspapers around the country, had $252.6 million in his.
Buffett, one of the richest men in the world and a vocal supporter of higher taxes on the rich, also is making use of a Roth. At the end of 2018, Buffett had $20.2 million in it. Former Renaissance Technologies hedge fund manager Robert Mercer had $31.5 million in his Roth, the records show.
Buffett didn’t respond to questions sent by email. Mercer couldn’t be reached for comment, and his accountants and attorneys didn’t respond to requests to accept questions on his behalf. Smith also couldn’t be reached for comment, and an employee at his hedge fund repeatedly hung up when ProPublica reporters identified themselves. Other representatives for Smith and his hedge fund didn’t respond.
In a written statement, Weschler said his retirement account relied on publicly traded investments and strategies available to all taxpayers. Nevertheless, he said he supports reforming the system.
“Although I have been an enormous beneficiary of the IRA mechanism, I personally do not feel the tax shield afforded me by my IRA is necessarily good tax policy,” he wrote. “To this end, I am openly supportive of modifying the benefit afforded to retirement accounts once they exceed a certain threshold.”
A spokesman for Thiel accepted detailed questions on Thiel’s behalf, then never responded to phone calls or emails. Messages left at Thiel’s venture capital fund were not returned.
While the scope and scale of such accounts has never been publicly documented, Congress has long been aware of their existence — and the ballooning tax breaks they were garnering for the ultrawealthy. The Government Accountability Office, the investigative arm of Congress, for years has warned that the wealthiest Americans were accumulating massive retirement accounts in ways federal lawmakers never intended.
At the same time, Congress has slashed the IRS’ budget so severely that the agency’s ability to ferret out abuses has been stymied. Money was so tight that at one point in 2015 the agency couldn’t afford to enter critical data about IRAs from paper tax filings into its computer system.
In four of those years, however, Thiel managed to cut his federal income tax bill to zero.
In 2011, Thiel caught the attention of the IRS. The agency launched an audit, tax records show. The records don’t spell out what the IRS was looking at or if it involved Thiel’s Roth. Whatever the case, the audit was closed years later and Thiel didn’t owe any more taxes, tax records show.
By 2012, large IRAs began to attract scrutiny, falling under the klieg lights of presidential politics.
That January, The Wall Street Journal reported that Mitt Romney, the former private equity executive running for the GOP nomination, had listed on a financial disclosure form that he had amassed an IRA worth between $20 million and $102 million. The story ran on the front page and launched waves of coverage in other publications. Romney had a traditional IRA, not a Roth. But how, people wondered, could the account have grown so large, given that the government imposed strict limits on how much money could be put into one of the tax-deferred accounts?
ProPublica’s analysis of the tax records show that by the end of 2018, at least seven other current or former Bain executives had amassed IRAs worth $25 million or more, with three exceeding $90 million.
Other financiers also found ways to supersize their retirement accounts. Michael Milken, for example, the 1980s junk bond king who went to prison for fraud and was later pardoned by President Donald Trump, had traditional IRAs valued at $509 million.
A senior adviser to Milken declined to answer questions, “since it’s not our practice to publish or discuss Mike Milken’s private financial information, I can’t help you on this one.”
Romney lost the 2012 election, but the IRA revelation provoked a lasting backlash. Wyden asked the investigative arm of Congress to look into the matter. In a landmark report issued in 2014, the Government Accountability Office sounded the alarm, finding the mega IRAs stood “in contrast to Congress’s aim.”
IRS officials told investigators that the federal government was losing more and more money to “IRA abuses.” The GAO investigators flagged “aggressive” valuation tactics by private equity. And while it didn’t mention Thiel or his PayPal co-founders, the report laid out how startup founders’ shares could be used to render IRA contribution limits irrelevant. “Individuals can manipulate contribution limits by grossly undervaluing investments at the time the individual uses an IRA to purchase them,” the congressional investigators wrote.
The report estimated that, as of 2011, there were around 300 taxpayers with IRAs worth more than $25 million. That detail reverberated around the media and Capitol Hill. Few knew that most of those accounts were minuscule compared to Thiel’s, which that year was valued at nearly $1.6 billion.
A series of reform proposals followed. Wyden, who now holds Roth’s old position as chair of the Senate Finance Committee, has become the leading proponent of rolling back what he calls “unfair strategies used by the privileged to rake in subsidies and dodge tax bills with so-called ‘mega Roth IRAs.’” In 2016, he released a plan that would require owners of Roth IRAs worth more than $5 million to take money out of the accounts. Amid howls of protest from the retirement industry and a Senate and House controlled by Republicans, Wyden’s proposal went nowhere.
The IRS, meanwhile, was floundering in its efforts to police retirement accounts. At one point the agency recommended Congress prohibit IRA accounts from buying investments that aren’t traded on a public market, such as founders’ shares. That went nowhere, too. Instead, Congress began slashing the IRS’ budget, kneecapping the agency for more than a decade.
In 2009, an internal team had recommended the agency at least collect data on unorthodox assets held in IRAs. But it took more than five years for the agency to mandate disclosure of those investments. Even then, the agency simply required tax forms to say whether an IRA held stock in a private company, not the name of the company or the price per share.
By 2015, the agency was struggling to handle the paper forms sent in by the companies that administer IRAs. The agency couldn’t afford to digitize them. Another two years went by before the IRS started electronically transcribing the forms.
The IRS did not respond to detailed questions. But as ProPublica has reported, in tax disputes with the superrich, the IRS is completely outmatched.
In his book “Zero to One,” Thiel argues that fortunes are built not by luck or unfair advantage, but by discerning investors and founders who are more courageous than their peers, leaders who zig when the crowd zags. Thiel devotes an entire chapter to the importance of keeping secrets, writing that “every great business is built around a secret that’s hidden from the outside.”
A secret of Thiel’s is that his fortune was built not just with brains but also with massive tax breaks. By 2019, Thiel’s holdings had grown so vast and diverse that his $5 billion was spread across 96 subaccounts inside his Roth.
As his wealth grew, Thiel showered millions of dollars on Republican politicians and groups with an anti-tax agenda, including Club for Growth Action. In 2016, he became the rare Silicon Valley titan to endorse Donald Trump.
The Trump years, which fueled a market boom, were good for Thiel and his Roth. In 2018, he moved his Roth from Pensco to Rivendell, the family trust company named after Tolkien’s elven sanctuary.
In Tolkien’s fantasy world, elves can be killed in battle or succumb to grief, but they don’t die of old age or disease. Thiel has told people he hopes to live to be 120 years old. That might be a bit optimistic, but he is not taking any chances and is investing in anti-aging technology companies. He’s even tucked some of those shares into his Roth, SEC and tax records show.
Assuming a modest 6% annual return and no withdrawals, his tax-free golden egg could be worth about $263 billion in 2087, when Thiel plans to celebrate his 120th birthday. That’s larger than the current gross domestic product of New Zealand, his adopted homeland.
“There is good news and bad news,” Thiel told The Washington Post when asked about living more than a century. “The bad news is: If you don’t believe in the good news, you’re not saving enough for retirement and likely to spend much of your old age in poverty.”
“The financial planning,” Thiel said, “takes on a very different character.”
Note: We calculated the values for an S&P 500 Roth IRA assuming a hypothetical account owner of the same age as Thiel, who contributes the maximum allowable amount each year starting in 1999 in a standard S&P 500 index fund. Thiel’s Roth IRA values are as of Dec. 31 each year. Credit:Agnes Chang/ProPublica
