The Top 10 Stories of 2006
David Batstone on Business
I chose not to review the top stories of 2005. Any hack can do that. It's much more fun to feature what I project will be front page news in 2006. Ok now, look deep into the crystal ball...
1) More Boomers will stay on the job
Fully 43% of the workforce is eligible to retire in the next ten years according to Business Week. But I anticipate that many boomers will want to stay engaged at work. In equal fashion, companies will beg boomers to delay their retirement as experienced managers and skilled workers become more scarce. Imagine...gray will be hip again.
2) Shareholders with a conscience will make waves\n\nGeneral Motors could not ignore Kurt Kerkorian in 2005 when he took nearly 10% stake in GM and took target at its dysfunctions. With less toned muscles, expect a rising swell of social investors to use shareholder leverage to lobby management to make changes. Example: Green Century Capital Management, formed to put equity behind environmental ideals, owns shares of ConocoPhilips and ExxonMobil with the intention to keep management at the respective oil companies accountable.\n\n3) The reason Y \n\nCompanies will be eager to discover what drives 20-somethings today. It's not just how much generation Y spend, but how much they influence what other people spend - one in three consumer dollars according to one UK study. If I may cut to the chase, Generation Y cares about experiences, participation, and living for the Now. Delayed gratification does not resonate for a generation with an uncertain future.\n\n4) White collar workers will tread water...and grow restive\n\nIn 2005 corporate profits grew nearly 15 percent from the previous year. That is twice the pace of growth in compensation for employees. And what growth there has been in compensation has mostly concentrated at the top of the management food chain. Put simply, the salaries of most white collar workers are treading water, growing roughly at the same rate as inflation. While jobs were being cut, white collar workers kept quiet. As the economy grows, expect more boldness.\n\n5) Corporate investment gets its groove back\n\nOne financial theme dominated business over the past four years: cost-cutting. That trend will change in 2006. Capital spending will increase dramatically, especially in the areas of research-and-development and technology capacity. A survey of CFOs conducted by Barron's business review shows that 66% of CFOs plan to increase capital spending in 2006 by and average of 9% above 2005. Nearly half of the CFOs plan to increase their R&D investments. Caveat: Don't expect these investments to lead to a big jump in new jobs.\n\n6) Healthcare benefits will stay sick\n\nMore companies will demand that employees take control of their health care spending in much the same way employees took over management of their retirement funds. Healthy young people are ideally suited for these plans; of course, they are not the ones who usually need health care. I anticipate more corporate executives to join a growing movement of health care reform activists. Unfortunately lobbyists have bought the farm already, and the sheep won't say a bleating thing. Sadly, I expect nothing to change in 2006...only rising frustration.\n\n7) Sweating out sweatshops\n\nLast April, Nike, Gap and Patagonia joined with five other clothing retailers and six grassroots anti-sweatshop groups to form the Joint Initiative on Corporate Accountability & Workers' Rights. The project establishes a single set of labor standards for apparel factories around the globe. Although a living minimal wage for each locale still may be far off, history is moving toward more universal guidelines. That trend will gain more momentum in 2006.\n\n8) Ma Bell may have to live in a shoe\n\nTraditional telecom companies are in deep trouble. I am turning to the cable company for my high-speed internet access. I make most of my U.S. calls on cell phone, and I use Skype for my international calls. I may even get a Skype phone this year and then the cost of my calls will approach zero. I am THIS close to dropping phone service into my home. I don't see a glimmer of hope for the telcos.\n\n9) Excessive executive pay...enough already\n\nShareholder activists will target excess executive pay big time in 2006. Nearly 90 percent of institutional investors believe that U.S. executives are vastly overpaid, according to the survey results of a recent study by Watson Wyatt Worldwide. The final straw may be the latest exposÃ© that many U.S. companies are secretly reimbursing executives for taxes they incur on salary, perks, and stock awards. Governing boards are starting to understand that executive greed damages employee morale and shareholder return. Expect a spate of boardroom conflicts.\n\n10) Everything China\n\nA billion people can't be wrong. China will pop up everywhere in 2006. No matter what the industry - venture capital, electronics, entertainment, apparel, food - all roads lead East. Expect most Western pioneers to lose their entrepreneurial shirt.\n