Tuesday, November 27, 2018

Promote STEM Education to Reduce Dependence on H1B Foreign Skilled Workers (Part 2 of 2)

Promoting STEM Education in the US   

1. Interest-free Student Loans must be provided to All Qualified STEM Candidates – Instead of enticing foreign STEM graduates with visa adjustments, we must learn to nurture our own. And, it must start with an awareness movement at the middle and high school. At the core of this movement lies the marketing of the awareness to the female students in that they have “equal access” to this career domain. Until and unless our young daughters are convinced of the equal access, we will have no choice but to depend on foreign employees. In promoting STEM education, teachers and counselors must also explain to the students that 10’s of thousands of STEM jobs remain unfilled and, as a result, our “volume” employers are forced to hire foreign employees to fill voids. Interest-free student loans could be a big incentive to entice more students to look into this colossal and unrestricted career domain. Obviously, once accepted, the qualified yet economically disadvantaged students, irrespective of ethnicity, must continue to receive (full) free STEM education, at both public and private institutions.     

2. STEM Students in State Schools must qualify for Financial Aids ahead of all Other Majors – In addition to interest-free student loans, STEM students must receive financial aids ahead of their counterparts. Given the urgent need for STEM graduates in our economy, it does not make much sense anymore to treat all economic needs equally. At this point, college education must be compared with and treated like government services, meaning essential education (like essential government services) must always receive higher weights and protections than the not-so-essential education (like non-essential government services). Simply put, STEM education must be declared, protected and promoted as essential education. Ceteris paribus, the qualified STEM student population must get the first shot at the pool of financial aids and the residual will then be distributed to the other disciplines. To make things clear, it has been assumed that health and mental care education – another market area with critical shortages – is part and parcel of STEM, specifically part of ‘S.’   

3. Ideally, We need a Moratorium on Student Loans for Business and Humanities Majors – Due to the easy access to student loans, far too many students – relative to the aggregate market demand – continue to major in business and humanities, resulting in significant disguised unemployment all across the country, arguably reaching a point of moral hazard. In order to reduce the incidence of disguised unemployment, we need a moratorium on such student loans for a period of time, at least 5 to 7 years, thus allowing enough time to get the excess market supply meaningfully absorbed while the wage level rising back to the equilibrium. This pause will allow Sallie Mae to re-evaluate its existing debt load, meaning if they could use a meaningful stress test to evaluate if they might be approaching the "too big to fail" threshold. Meanwhile, a good chunk of the potential fallout population (business and humanities majors) would be redirected to the STEM universe. Sadly, if this decline is not arrested, the possibility of a bailout would be on the horizon in not too distant future (considering the student loan portfolio in the US has recently eclipsed $1.5T). Absent student loans for business and humanities, only a small percentage of the future student population – mostly from the well-to-do families and foreign students – will opt for these majors. Obviously, neither group would pose any renewed threat to the labor force or contribute to the accentuation of the bailout scenario.  

4. Encourage Ivy League and other Renowned Schools to Eradicate "Legacy" Admission - Though Harvard is a legacy school for my family (my son has graduated from Harvard), I am opposed to the legacy admission system as it tantamounts to a "privileged" quota system. Any quota system is detrimental to overall growth and equality. Yes, applicants from the poorer families must not be discriminated against, but that financial hand-holding must come in the form of added financial aids. Therefore, the better way to handle that event is to increase the family income limit from $60K to $100K for full free-ships. Even a geo-indexed multiplier could be experimented (Case in point: The purchasing power of $100K family income in NYC is significantly lower than that of Wichita, KS, so to say). In a free society, merit must never be compromised. For instance, if a particular ethnic group qualifies for 60% of all admissions at Harvard, they must be admitted as such, unconditionally. Of course, to promote STEM education, Ivys and other major schools should offer financial aids to qualified STEM applicants ahead of the other disciplines, for a period of time, until our home-grown STEMs are well-represented on the labor force.    

Again, in order to reduce our continued dependence on H1B foreign workers, it’s high time that we promote STEM education here by making it significantly cheaper and more labor-force friendly. Our kids deserve better!

- Sid Som, MBA, MIM
President, Homequant, Inc.

How to Steadily (and Methodically) Reduce Dependence on H1B Foreign Skilled Workers – A 5-Point Solution (Part 1 of 2)

Studies show that almost 2 million H-1B visas have been distributed between 2000 and 2018. Here are some basic facts about the H1B visa program:

a. The program was created by the Immigration Act of 1990.
b. It allows employers to hire foreigners to work on a temporary basis, for up to 6 years, with two 3-year back-to-back stints.
c. It allows foreigners to work in jobs that require highly specialized knowledge and a bachelor’s degree or higher.
d. Visas are awarded to employers on a first-come, first-served basis, with applications accepted each year beginning in April. 
e. If the number of applications exceeds the annual cap set by Congress (currently at 85,000) during the first five business days of April, visas are awarded through a lottery system.
g. Though it's a temporary non-immigrant visa, many workers have been allowed to adjust to permanent status with greencards (adjustment data are unavailable).  

How to Steadily Reduce Dependence on H1B Skilled Foreign Workers – A 5-Point Solution

 1. Provide Corporations Significant Tax Benefits to Hire Local STEM Graduates - Instead of incentivizing the US corporations to hire more of H1B workers, the federal government should allow them significant tax incentives to hire local STEM (Science, Technology, Engineering and Math) graduates at the prevailing rate. This special tax incentive should last, say, up to five years (or the longevity of the employee, whichever comes first), thus vastly negating the incentive to hire foreign workers at a reduced rate. Of course, in order to neutralize the arbitrage (lower hiring rate vs. additional tax advantage), it must remain effective for the proposed tax incentive period (could be more or less). This tax incentive will also encourage future STEM students, foreseeing a fast levelling playing field. Without this assurance, it would be difficult to entice our students to venture into the STEM field. Today, the qualified American workers are training their far-less qualified foreign counterparts to take their jobs. Hopefully, the tax incentive would force our corporations to hire local STEMs while a renewed interest among future students would reinvigorate the field, the sum of which would reduce the dependence on H1Bs.      
   
2. Introduce Higher Educational Qualifications for H1B Applicants - According to the 2018 Congressional mandate, 65,000 H1B applicants need only bachelor's degrees while another 20,000 require master's or higher. Unfortunately, a bachelor's degree in SE Asia (which accounts for 80%+ applicants) is not equivalent to an US bachelor's. In order to effectively meet our standard, Congress should consider transposing the degree requirements, meaning 65,000 applicants with master's+ and 20,000 with bachelor's. It makes no sense to displace a truly qualified American degree-holder with a much lesser qualified foreign degree-holder. That is why, the replacement wages tend to be much lesser for foreign workers. Since H1B is meant for the highly skilled foreign workers, Congress should gradually move to an all-master's+ requirement, at least levelling the playing field.
      
3. Until Higher Educational Requirements are Established, Congress must Insist on Degree Evaluation by ETS (and Other Entities) - While Congress debates on upping the ante on degree requirements, they must require that the foreign degrees are properly vetted and evaluated, a priori, by well-known education evaluation organizations like Educational Testing Service (ETS), thus forcing the sponsoring organizations to prove that their selected candidates, at least, satisfy the basic educational requirements. This simple yet independent step will surgically (identify and) disqualify many applicants from the export-oriented private schools as they will not meet the US degree requirements. Ideally, Congress must additionally require all applicants to pass a US-administered standardized test (good for 3 years), along the lines of Foreign Medical Graduates Exam (FMGE). Conversely, these requirements will work to the advantage of the truly qualified candidates as they will pre-qualify themselves (by getting their degrees evaluated and passing the exam in advance). Needless to say, the rouge employers will not be able to abuse the truly qualified workers either (by forcing them to work outside of the US labor laws, etc.).
    
   4. Let the Sponsoring Companies Recruit Foreign Students Graduating from the Major US Universities First Foreign students graduating from the major US Colleges and Universities are more valuable candidates for these unfilled jobs than their all-foreign counterparts. There are other advantages to this hiring approach too: (a) No need for the equivalency assessment; (b) Since the vast majority of them undergo internship or practical training in the US, they are already acquainted to the requirements of the American workplace and work ethics; (c) Graduates from the major US schools are at least as good as the best and brightest from foreign nations; (d) They will command the prevailing wages, negating the aforesaid arbitrage that many sponsors have been trading on; (e) Rouge sponsors will be discouraged; (f) Will foster the enrollment of foreign student population, benefiting the US Schools; (g) Better English proficiency (both verbal and written) and so forth.

5. Let the Annual H1B Quotas Steadily Decline as we Promote STEM Education - If we switch to a merit-based immigration, H1B will be a thing of the past. Whether that comes to pass or not, the rapid and aggressive promotion of STEM education here will help lower the quotas steadily. Hopefully, the current 85,000 level would decline by 10,000 annually, leading to a total phase-out in 8-9 years. In fact, if we are able to promote STEM education the way I envision, this phase-out could take place even sooner. Of course, the promotion (of the positives) of STEM education must start early in high school so the students are always in the know of the unrestricted domain of opportunity the STEM universe offers. 

Just think about it: Producing thousands more of home-grown engineers, scientists and technologists (by far, the best on earth!) every year. Just think about it: We won't need a debate everyday whether the spouses of the H1Bs need work permits or not. Just think about it: Our politicians won't be able to convince us of the need to admit 85,000 (yes, per year!) foreign engineers and scientists at the expense of our own.
      
- Sid Som, MBA, MIM
President, Homequant, Inc.
homequant@gmail.com

Also:

     How to Reduce Dependence on H1B Foreign Workers by Aggressively Promoting STEM Education (Part 2 of 2)



Monday, November 26, 2018

Most Homebuyers do not Understand the Impact of Location on Home Value

(Click on the image to enlarge)

Housing market is primarily about "location, location, location." Most homebuyers do not understand the impact of location on home values; instead, they tend to get carried away by size, age and condition, ignoring the biggest contributor to the value, i.e., location.

In the first graphic above, all others factors remaining constant, a $4.425M home in inland Santa Monica (Zip 90403) becomes $850K in LA South (Zip 90047).


Similarly, in the second graphic, if a house is moved from Zip 32789 to 32810 - across the I-4 freeway - its value goes down from $200K to $82K due to change in location.


(Click on the image on enlarge)

The above spatial graphic shows how the five contiguous Zip Codes have vastly different residential location values, ranging in value between 0.50 and 2.0 -- a whopping factor of four. In other words, a $500K house in Zip 32808 would jump to $1.68M in 32804 and to $2M in 32789 and so forth.

One of the easiest and quickest ways to understand the residential location value is to study the published median home values by the Zip Code. Of course, another step is required to derive (a simplistic form of) location value for the Zip. The Zip-wise median home value needs to be normalized (divided by) by the median heated area (square feet) so the location value comparison becomes apples-to-apples.


I picked the above graphic from LocValu.com as I own and operate it, to avoid having to deal with any unintended copyright issues. My LocValu site is totally self-directed (no modeled values), totally free (no strings), and requires no registration/log-ins whatsoever. Please use the site/system that works best for you.


http://www.locvalu.com/
homequant@gmail.com 

Disclaimer: This analysis is strictly illustrative. Any commercial or legal use of it is totally prohibited.  Always consult a Tax Attorney on statutory requirements.

Tuesday, November 20, 2018

Level-2 Market Analyses -- 25 Major Markets -- Free -- No Registration!

-- Intended for Start-up Analysts and Researchers --

25 major markets are now available as Level-2 analysis. Here is how we define our analysis levels, internally:

a. Level-1: Parcel-level (Sold) data crunch; Analysis of Median Sale Price and Normalized Median Sale Price per SF (SPSF) by month and market (we call it Champ-Challenger analysis); Market Type=Major City (ex: Miami) or County (Orange County, CA). We do not roll up our analysis to the MSA level.

b. Level-2: As above, plus Trend analysis. We apply two trendlines: primary (linear, logarithmic, polynomial, etc. depending on the actual data trend) and 2-Mo. Moving Average to show a slightly smoother line by ironing out monthly median aberrations.

c. Level-3: Sales Ratio (Time-adjusted Sale Price to County Market Value as per tax roll) is available on our TownAnalyst site. In fact, it offers an expanded percentile distribution analysis. It is totally self-directed, thus empowering users to experiment with their own time coefficients (positive or negative) and valuation dates (current, forward or backward).

As we have indicated, our Champ-Challenger analysis is more meaningful than the unchallenged single variable analysis, considering ours offers insights into the market internals as well for more informed business decisions. 

Read this posting for more details: 

We keep our analysis at the local level, instead of rolling it up to the MSA level, which is too large of a geo-node to be a meaningful basis for any informed decision-making. In any case, most people can relate to and appreciate the local level analysis than the broad-based MSA’s.

Our trendlines allow us to extract the equations on-the-fly (from our stored procedures) and apply them on to clients’ datasets (we generally offer these free updates as a standard service). 

FYI New Analysts – Try this approach, to avoid having to redevelop the study over and over. Once you get the new data (monthly or quarterly), just point to the update and refresh.

In Q1-2019, we will introduce Level-4 analysis. It will comprise Sales AVM (Challenger Model) values. In addition to being part of our future market analysis, this value will be available inside Homequant as an optional comp value (5th comp). In TownAnalyst, this value will help define AVM Ratios (ASP to Sales AVM and County MV to Sales AVM), aiding homeowners and appeal consultants to get a more surgical view of assessment inequity on the tax roll.

In our next go around, we will cover other major markets like Austin, Cleveland, DC, Fairfax, Indianapolis, Kansas City, Milwaukee, Pittsburg, Salt Lake City, San Francisco, etc.
           
Links to our current 25 Major Markets:
AZ-Phoenix
CA-Los Angeles
CA-Orange County
CA-San Diego
CA-Silicon Valley
CO-Denver
FL-Broward County
FL-Miami
FL-Orlando
FL-Pinellas County
FL-Tampa
GA-Atlanta
IL-Chicago
MN-Minneapolis
NC-Charlotte
NJ-Bergen County
NV-Las Vegas
NY-Nassau County
OR-Portland
PA-Philadelphia
TN-Memphis
TX-Dallas
TX-Houston
TX-San Antonio
WA-Seattle

Monday, November 19, 2018

A 3D Contour Diagram is an Excellent Way to Present Location Values

(Click on the image to enlarge)

A 3D Contour Diagram is an excellent way to present location values. One picture tells the story, without having to toggle around the map. It can be rotated to see the peaks and valleys from different angles and perspective. Moreover, it can be enhanced to build full visual location econometrics with live modeling on the screen.

The top diagram represents the Los Angeles County – some of the highest location values along the Pacific Coast, with Malibu-Santa Monica-Manhattan Beach corridor leading the way, followed by Beverly Hills-Westwood-Century City triangle and Pasadena-San Marino-Arcadia stretch on the east (inland).  

The bottom diagram represents the Miami-Dade County. Again, some of the highest location values are along the Miami Beach-Key Biscayne (Atlantic) shores, followed by Coconut Grove-Coral Gables-South Miami on the west (inland). The value curve declines fast further west past University Park.

I picked the above contours from LocValu.com as I own and operate it, to avoid having to deal with any unintended copyright issues. My LocValu site is totally self-directed (no modeled values), totally free (no strings), and requires no registration/log-ins whatsoever. Please use the site/system that works best for you.

Saturday, November 17, 2018

How to Turn LinkedIn into an Effective B2B Marketing Tool

How to Turn LinkedIn into an Effective B2B Marketing Tool

1. Choose contacts very carefully (no family and friends here), zeroing in on the decision-makers. For example, if you offer financial services to banks and other financial institutions, constrain your re/search to the decision-making vertical, i.e., VP-SVP-EVP

    2. Expect 20-30% effectiveness. Could be higher or lower depending on the mutual interest and compatibility. Regardless, try to align with the decision-makers. 

3. Contribute frequently, preferably daily. Content is king so do not waste time on unrelated issues/themes (stick to your business and competition). Instead of sharing articles from various news agencies, place your own articles and commentaries so your business stands out. Originality is greatly rewarded. 

 4. Unless specifically requested, avoid all direct marketing. Do not spam your contacts with unsolicitated literature. It's a serious turn-off for the busy business people.  

 5. Define the target population you would like to achieve within a specified timeframe. High-water mark is critical. Quality is more important than quantity; for instance, 1,000 vertical-level decision-makers (quality) are more valuable than 2,000 random bankers (just quantity), most of whom are non-decision makers. Set a timeframe, say within 6 months, to achieve this goal. Spend an hour each night – religiously – reviewing candidate profiles and sending out invites.

 6. As liquidity increases, intensify your marketing efforts. At the end of the day, it's a numbers game. 1-2% effectiveness becomes significant when the underlying population is large and impactful. In other words, if you have a contact population of 3,000 decision-makers, 1% response rate (or 30 leads per day) is significant – initially!

 7. Considering it's a "100% targeted" environment, minimize the use of automated or impersonal campaigns. Instead of placing a marketing flyer in front of your contacts, write a meaningful introductory piece, followed by a set of links to your flyers. When leads are self-enticed (after having read your piece), they are already half-sold.     
     
          8. Just the way you would grow your business, keep your LinkedIn base growing as well. The growth pattern must be collinear, meaning they must grow in tandem (as they complement each other). As your base grows, you will receive more requests. Remember, it’s your business so do not unnecessarily relax your acceptance rules. On the contrary, now that your base is liquid, try to tighten it a bit. For example, roll up your original VP-SVP-EVP vertical to SVP-EVP now.

 9. Finally, here is an optional consideration – an exception (to the stringent acceptance rule) I personally follow. Now and then, when I receive requests from certain rule-breaking yet deserving candidates like the mothers trying to return to work, new STEM graduates looking for jobs, etc., I wholeheartedly welcome them into the network.

    Good Luck!

    Sid Som, MBA, MIM
    President, Homequant, Inc.

How to Bail out the Ailing Local Governments

Bailing out the Ailing Local Governments

In order to bail out the ailing ones (and prevent it from snowballing through the system in the future) we need a total re-invention of the Local Government System, in line with the private sector.
1. Replace the existing Pension system with a 403 Matching System (match up to 6%), thereby preventing any unfunded liability. Unfunded liability poses serious financial threats to many state and local governments.
2. ​All Paid Time (Vacation, Sick, Personal days, etc.) must be reset each year (use it or lose it). No carry over! Though sounds trivial, this causes a serious problem to many large municipalities, especially when the exit door gets crowded.
3. All Overtime and Comp Time must also carry the same annual reset, with no cash conversion whatsoever! This adds more fuel to the regulation (#3) fire. At least, the carryover needs to be nipped in the bud. 
4. Introduce Mandatory Retirement at age 67 (when Social Security and Medicare come into effect), with an incentive to retire early at age 62 (as the first SS qualification). Make cheaper forms of healthcare (e.g., HMO) free for the retirees, upping the ante (retiree contributions) for the non-HMO healthcare insurances. Unions must co-share retiree (who contributed to the unions for a period of time) premiums with the government. 
5. Minimize Civil Service hiring. Use "Temps" to fill seasonal requirements and "Leased" employees to cater to the long-term requirements.
6. Outsource! Outsource! Outsource! Start outsourcing all non-essential services including analytics/modeling, research, assessment, appeals review, data collection, etc. (those private vendors face true competition in the marketplace so they are forced to hire the best and the brightest, hence much better value to the taxpayers!).
7. Take away all decision-making powers from the senior Government employees (pertaining to high value projects, outsourcing, etc.) in order to minimize fraud, nepotism and post-retirement revolving door options. Establish and empower public-private committees to vet and award such projects and contracts. 
8. All Civil Service Interviews must be conducted by a duly elected/selected external body (Professors, CEOs, Industry Experts at the EVP/SVP level, Trade Association Chiefs, etc.), with right to reject ALL (needed!).
9. All Civil Service jobs requiring a college degree must have two-part tests: Part-1: College level Math & English, leading to Part-2: Regulation. Even re-qualification exams (say every five years) could be considered (Civil Service must not be a lifetime entitlement). 
Of course, the counter case could be equally compelling. As long as these governments have unrestricted access to the "eternal" cash cow called homeowners, none of this might matter. Yet, the local governments must fight to institute these changes. For too many, it's already a race against time!  


-- Sid Som, MBA, MIM
President, Homequant, Inc.
homequant@gmail.com

Friday, November 16, 2018

Five Contiguous Zip Codes May Have Vastly Different Location Values

(Click on the image on enlarge)

Housing market is primarily about "location, location, location." Most first-time homebuyers do not understand the impact of location on home values; instead, they tend to get carried away by the size, age, grade and condition, ignoring the biggest contributor to the value, i.e., location.

The above spatial graphic shows how the five contiguous Zip Codes have vastly different residential location values, ranging in value between 0.50 and 2.0 -- a whopping factor of four. In other words, a $500K house in Zip 32808 would jump to $1.68M in 32804 and to $2M in 32789 and so forth.

One of the easiest and quickest ways to understand the residential location value is to study the published median home values by the Zip Code. Of course, another step is required to derive (a simplistic form of) location value for the Zip. The Zip-wise median home value needs to be normalized (divided by) by the median heated area (square feet) so the location value comparison becomes apples-to-apples.

I picked the above graphic from LocValu.com as I own and operate it, to avoid having to deal with any unintended copyright issues. My LocValu site is totally self-directed (no modeled values), totally free (no strings), and requires no registration/log-ins whatsoever. Please use the site/system that works best for you.

http://www.locvalu.com/
homequant@gmail.com 

Disclaimer: This analysis is strictly illustrative. Any commercial or legal use of it is totally prohibited.  Always consult a Tax Attorney on statutory requirements.