MDIA – Employment: Socio-Economic Linkages (140602)

147 views
119 views

Published on

MDIA – Employment: Socio-Economic Linkages (140602)
Payroll is a business cost, but payroll is one of the most important linkages in the society and the economy. Conventional money accounting profit metrics have a singular focus on the cost of the payroll. MDIA brings into account the very important socio-economic benefits that arise from the payroll.

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
147
On SlideShare
0
From Embeds
0
Number of Embeds
20
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

MDIA – Employment: Socio-Economic Linkages (140602)

  1. 1. 7:46 PM peterbnyc@gmail.com www.truevaluemetrics.org MULTI DIMENSION IMPACT ACCOUNTING (MDIA) Employment Socio-Economic Linkage @truevaluemetric
  2. 2. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp 'Manpower' was the driver of economic activity for most of history. As recently as a couple of hundred years ago, horses were a big part of power in the modern economy. Economic 'progress' has been achieved over the last 200 years or so by making it possible for labor to be more productive. A big part of this has been by using new types of engines to convert energy into useful work. EMPLOYMENT - Socio-Economic Linkage
  3. 3. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp As people became more productive, more economic product was produced. More productivity, more production, more profit and the potential to pay workers more money. Workers earning more money enable an improvement in the quality of life and the standard of living of PEOPLE During the course of the industrial revolution, there was a very impressive improvement in the quality of life and the standard of living for working people in industrialized countries. EMPLOYMENT - Socio-Economic Linkage
  4. 4. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp The same cannot be said for people in non-industrialized countries. The labor market conditions were different, with many people seeking few jobs. In this situation PROFIT could be maximized with low wages, poor working conditions that had the least cost. EMPLOYMENT - Socio-Economic Linkage
  5. 5. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp As long as the market for the product is an export market, there is no business incentive to pay higher wages. This changes when the market for the product is driven by the buying power of local people. In this situation, better pay starts to result in better sales of the products. EMPLOYMENT – The Market for Labor
  6. 6. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp In the industrialized countries, with rich customers, and high labor costs, it was possible to increase profits by moving production to low cost locations and importing the product into the market. This approach grew rapidly from the 1970s until now. When the rich customers ran out of money, the banking system obliged by creating all sorts of ways for potential customers to get credit. Initially there was store credit, that morphed into credit cards and then home equity. In the end, however, it is wages that enable products to be purchased and quality of life to be maintained and improved. In the end 'Wages Are Aggregate Demand!' EMPLOYMENT – Wages Are Aggregate Demand
  7. 7. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp A flourishing society is one where there is a healthy balance between PEOPLE (employment and wages) and PROFIT (production and sales). The amazing improvement in productivity that has been possible in large part because of our greater knowledge of science and technology should be the foundation for a society better than anything that has ever been possible before. EMPLOYMENT – Flourishing Society
  8. 8. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp There is a VALUE CHAIN that links what is going on in a business with what is going on with the employees, their families and their communities. When payroll goes down, there is a big impact on the individual employees, their families and their communities. (1) there is impact on the individual (2) there is impact on the family (3) there is impact on the community EMPLOYMENT – The Benefits
  9. 9. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp The impact on the individual may be thought of as the money that is earned from employment … a money measure. But in fact the value measure is more complex. For individuals with little 'wealth' the income from employment is very important. For individuals whose income flow is quite small, the value of income is very high. The value of incremental income drops down as income increases. For very high incomes, the only value of incremental income comes 'bragging rights' EMPLOYMENT – Benefit for the Individual
  10. 10. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp For the purpose of demonstration, using the US as the benchmark: For annual income up to $15,000 … there is a value multiplier of 2 For annual income from $15,000 to $30,000 … there is a value multiplier of 1.5 For annual income from $30,000 to $60,000 … there is a value multiplier of 1.0 For annual income up to $60,000 to $200,000 … there is a value multiplier of 0.5 For annual income higher than $200,000 … there is a value multiplier of 0 EMPLOYMENT – Benefit for the Individual
  11. 11. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp The impact on the family may also be thought of as the money that is earned from employment … a money measure. For families with little 'wealth' the income from the employment of a single family member is very important. For families whose income flow is quite small, the value of income is very high. The value of incremental income drops down as income increases. For very high incomes, the only value of incremental income comes 'bragging rights' EMPLOYMENT – Benefit for the Family
  12. 12. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp For the purpose of demonstration, using the US as the benchmark: For annual family income up to $25,000 … there is a value multiplier of 2 For annual family income from $25,000 to $50,000 … there is a value multiplier of 1.5 For annual family income from $50,000 to $100,000 … there is a value multiplier of 1.0 For annual family income up to $100,000 to $350,000 … there is a value multiplier of 0.5 For annual family income higher than $350,000 … there is a value multiplier of 0 EMPLOYMENT – Benefit for the Family
  13. 13. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp In addition to BENEFIT for an individual and the family, there is also a benefit for the COMMUNITY. There is a 'multiplier effect' that results from people in a community spending their money in their community to buy things that they need. The value of this 'multiplier' depends on the state of the families and the state of the community. EMPLOYMENT – Benefit for Community
  14. 14. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp Globalization has been very 'profitable' for large scale business organizations. There have been benefits arising in these global supply chains that should not be overlooked, but the 'multiplier effect' in local communities has been diminished significantly. The value of this 'multiplier' varies significantly depending on how much of what is purchased by individuals and families is being produced locally. There was a time when the multiplier would be anywhere in the broad range from 2 to 10. Now, it is more likely in most communities with almost complete dependence on remote production that the multiplier may be less than 2! EMPLOYMENT – Benefit for Community
  15. 15. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp The value of this 'multiplier' also varies significantly depending on the 'wealth' and 'income' of the individual and the family. For annual family income under $100,000 … the local multiplier needs not be adjusted For annual family income between $100,000 and $350,000 … the local multiplier should be discounted by 50% For annual family income between in excess of $350,000 and up to $1,000,000 … the local multiplier should be discounted by 90% For annual family income exceeding $1,000,000 … the local multiplier should be discounted by 100% EMPLOYMENT – Benefit for Community
  16. 16. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp The theme of this presentation is that employment is an important socio-economic BENEFIT while also being a COST to the ORGANIZATION. This COST is reflected in the dynamic of the supply chain and the eventual COST of the PRODUCT. In MDIA analysis, there is also a BENEFIT that is embedded in the PRODUCT profit and supply chain history. Multi Dimension and Multi Perspective optimization of socio-economic decisions using MDIA type thinking is going to have very different outcomes than the prevailing decision making that uses conventional accounting and profit centric optimization. EMPLOYMENT – Benefit in the Supply Chain
  17. 17. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp The New Economics Foundation (NEF) has popularized the Local Multiplier 3 (LM3) as a tool of economic analysis. MDIA brings the results of a tool like LM3 into a closer integration of all the socio-economic factors that are in play all the time. EMPLOYMENT – Local Multiplier 3 (LM3)
  18. 18. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp In the end, the goal of MDIA analysis is better decision making that is using all of the important factors of performance in a manner that is easy and reliable. This presentation is part of a set of presentations that aim to inform about MDIA … and set the stage for ongoing development and deployment of the system. Feedback is welcome. EMPLOYMENT - Socio-Economic Linkage
  19. 19. 7:46 PM MULTI DIMENSION IMPACT ACCOUNTING (MDIA) May 2014 QUESTIONS? FEEDBACK? peterbnyc@gmail.com www.truevaluemetrics.org @truevaluemetric C:TVMwebsiteWebsiteTrueValueMetricsOrgTVM-papersMDIA-DiagramsMDIA-Pres-B-Employment-140602.odp

×