Invest For Progress: Which Type Of Sustainable Investor Are You?

In 2020, inflows into sustainable funds increased to $360 billion, up from just $30 billion in 20161—and this trend is showing no signs of slowing. “We’re starting to see an evolution in how investors think about sustainability,” says Sarah Kjellberg, head of U.S. sustainable ETFs at BlackRock. “It’s gone from niche to necessary, and we’re seeing growing interest from investors around the world.

[According to] our 2020 Global Sustainable Investing Survey, 50% of respondents—across 425 clients with $25 trillion in assets—plan to double their sustainable assets under management in the next five years.”

Sustainable investing combines traditional investment approaches with environmental, social and governance (ESG) insights. And one of the simplest ways to create a more sustainable portfolio is through exchange-traded funds, or ETFs, which are more accessible than ever.

“Sustainable investing used to cater to larger investors and was often considered to have high fees with high minimums, and be only values-focused and indifferent to performance,” says Kjellberg. “But ETFs are helping to upend these perceptions by delivering choice, value and access to all investors—and at a fraction of the cost of traditional mutual funds.”

Why invest sustainably? Consider performance—three in four sustainable equity funds beat their Morningstar category average in 2020.2 And the ability to meet sustainable objectives. Just consider that $1 million invested in iShares ESG Aware MSCI USA ETF implies an annual reduction of carbon emissions equivalent to 43,441 miles driven by an average passenger car.3

SOURCES:

1. BlackRock Sustainable Investing, with data from Broadridge and Simfund. January 1, 2016–September 30, 2020.

2. Morningstar, “Sustainable Equity Funds Outperform Traditional Peers in 2020.” Based on an analysis of 200 U.S. mutual funds and exchange-traded funds. Morningstar, as of December 31, 2020. Comparison of sustainable equity ETFs and mutual funds versus their respective Morningstar categories using rankings based on total return.

Morningstar defines sustainable funds as those that emphasize the use of environmental, social and governance criteria to generate financial return and broader societal impact. Past performance does not guarantee future results.

3. iShares ESG Aware MSCI USA ETF (ESGU) Impact Report. Source for carbon emissions: MSCI ESG Fund Ratings provided by MSCI ESG Research LLC as of July 19, 2021, based on holdings as of May 31, 2021. The carbon emissions reduction for ESGU (98.71% carbon coverage by MSCI ESG Fund Ratings) is calculated relative to the carbon emissions of its parent index, the MSCI USA Index (99.84% carbon coverage by MSCI ESG Research). ESGU’s total carbon emissions are 33.61 tons CO2 per million dollars invested; MSCI USA’s total carbon emissions are 51.11 tons CO2 per million dollars invested.

Total emissions reduction is 17.51 tons CO2 per million dollars invested. Source for equivalents: MSCI ESG Fund Ratings with data from U.S. EPA’s Greenhouse Gas Equivalencies Calculator for CO2 and energy measures. Carbon coverage is the percentage of a portfolio’s market value with Carbon Intensity data. Please refer to the MSCI ESG Fund Ratings Methodology for more information. There may be material differences between the fund’s index and the parent index including without limitation holdings, index provider, methodology and performance.

4. The business involvement screens are based on revenue or percentage of revenue thresholds for certain categories and categorical exclusions for others. Please read the definition for each screen here.

5. Screens are based on revenue or percentage of revenue thresholds for certain categories (e.g., $500 million or 50%) and categorical exclusions for others (e.g., nuclear weapons). MSCI, the fund’s index provider, screens companies with involvement in fossil fuels by excluding any company in the energy sector as per GICS methodology and all companies with an industry tie to fossil fuels such as thermal coal, oil and gas—in particular, reserve ownership, related revenues and power generation.

Companies that meet the fossil fuel involvement screen but that derive more than 50% of revenues from alternative energy and do not have an industry tie to thermal coal or oil sands or have fossil fuel reserves used most likely for energy applications, as determined by MSCI, will be added back.

IMPORTANT INFORMATION: 

Carefully consider the Funds’ investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds’ prospectuses or, if available, the summary prospectuses, which may be obtained by visiting http://www.iShares.com or http://www.blackrock.com. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal.

A fund’s environmental, social and governance (“ESG”) investment strategy limits the types and number of investment opportunities available to the fund and, as a result, the fund may underperform other funds that do not have an ESG focus. A fund’s ESG investment strategy may result in the fund investing in securities or industry sectors that underperform the market as a whole or underperform other funds screened for ESG standards. In addition, companies selected by the index provider may not exhibit positive or favorable ESG characteristics.

International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/developing markets and in concentrations of single countries.

Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. The iShares Global Green Bond fund’s green bond investment strategy limits the types and number of investment opportunities available to the Fund and, as a result, the Fund may underperform other funds that do not have a green bond focus.

The Fund’s green bond investment strategy may result in the Fund investing in securities or industry sectors that underperform the market as a whole or underperform other funds with a green bond focus. In addition, projects funded by green bonds may not result in direct environmental benefits. 

When comparing stocks or bonds and ETFs, it should be remembered that management fees associated with fund investments are not borne by investors in individual stocks or bonds. Buying and selling shares of ETFs may result in brokerage commissions. Diversification and asset allocation may not protect against market risk or loss of principal.

Funds that concentrate investments in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes and than the general securities market.

The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective. The information presented does not take into consideration commissions, tax implications, or other transaction costs, which may significantly affect the economic consequences of a given strategy or investment decision.

This material contains general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial advisor before making an investment decision.

Prepared by BlackRock Investments, LLC, member FINRA.

Certain information ©2021 MSCI ESG Research LLC. Reproduced by permission; no further distribution. Certain information contained herein (the “Information”) has been provided by MSCI ESG Research LLC, a RIA under the Investment Advisers Act of 1940, and may include data from its affiliates (including MSCI Inc. and its subsidiaries (“MSCI”)), or third party suppliers (each an “Information Provider”), and it may not be reproduced or disseminated in whole or in part without prior written permission.

The Information has not been submitted to, nor received approval from, the US SEC or any other regulatory body. The Information may not be used to create any derivative works, or in connection with, nor does it constitute, an offer to buy or sell, or a promotion or recommendation of, any security, financial instrument or product or trading strategy, nor should it be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Some funds may be based on or linked to MSCI indexes, and MSCI may be compensated based on the fund’s assets under management or other measures.

MSCI has established an information barrier between equity index research and certain Information. None of the Information in and of itself can be used to determine which securities to buy or sell or when to buy or sell them. The Information is provided “as is” and the user of the Information assumes the entire risk of any use it may make or permit to be made of the Information.

Neither MSCI ESG Research nor any Information Party makes any representations or express or implied warranties (which are expressly disclaimed), nor shall they incur liability for any errors or omissions in the Information, or for any damages related thereto. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited.

iSHARES and BLACKROCK are trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other marks are the property of their respective owners.

By : Suchi Rudra

Source: Invest For Progress: Which Type Of Sustainable Investor Are You?

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Eco Investor Guide” (PDF). Eco Investor Guide, Inc. Archived from the original (PDF) on 25 May 2010. Retrieved 11 June 2010.

“What is green finance and why is it important?”. World Economic Forum. Retrieved 2020-12-28.

The Green Advisor: SRI & Green Investing Grow Up”. Investment Advisor. Archived from the original on 22 July 2012. Retrieved 11 June 2010.

“New Global Climate Prosperity Scoreboard Finds Over $1 Trillion Invested in Green Since 2007”. Green Money Journal. 2010. Archived from the original on 28 May 2010. Retrieved 11 June 2010.

“Firms brace for climate change”. European Investment Bank. Retrieved 2021-10-12.

EIB Investment Report 2020/2021: Building a smart and green Europe in the COVID-19 era. European Investment Bank. ISBN 978-92-861-4811-8.

“Socially Responsible Investing”. Investor Glossary. Archived from the original on 13 July 2011. Retrieved 11 June 2010.

“ESG 101: What is Environmental, Social and Governance?”.

“How to navigate the world of sustainable investing ratings”. CNBC. Retrieved 28 January 2021.

Sustainable Funds Continue to Rake in Assets During the Second Quarter”. Morningstar.com. Retrieved 18 August 2020.

A Broken Record: Flows for U.S. Sustainable Funds Again Reach New Heights”. Morningstar.com. Retrieved 29 January 2021.

Sustainable fund assets hit record $1.7 trln in 2020: Morningstar”. Reuters. Retrieved 28 January 2021.

Coller Capital Global PE Barometer – Winter 2016–17 | Coller Capital”. Collercapital.com. Retrieved 30 October 2017.

“Finding Your ESG Mindset with Invest Europe | Navatar”. Navatar. Retrieved 30 October 2017.

G7 Pensions Roundtable : Les ODD (‘SDGs’) Désormais Incontournables”. Cahiers du Centre des Professions Financières. CPF. SSRN 3545217. Retrieved 17 March 2020.

Group of top CEOs says maximizing shareholder profits no longer can be the primary goal of corporations”. Washington Post. WP. Retrieved 17 March 2020.

Green Technology & Alternative Fuels”. Demand Media, Inc. Retrieved 11 June 2010.

Should Tesla Have Built Its European Gigaplant In The UK Instead Of Germany?

After all, Germany wasn’t the only option on the table. There were rumors last year that Elon Musk was in talks with the UK government to open a Gigafactory in Somerset in the UK. Some years ago, the UK was a preferred manufacturing location for non-European car brands because it had direct access to the EU market but more relaxed labor laws.

Several Japanese manufacturers, including Toyota, allegedly built their manufacturing in the UK for that reason. The country was even dubbed the “Japanese aircraft carrier floating off the coast of Europe” in 1992 by Jacques Calvet, who was then head of PSA Group, a French automaker that was the country’s largest industrial company at the time (and now part of Stellantis).

Sadly, Brexit has reduced the UK’s utility in this respect, so that only the reduced red tape at the manufacturing stage remains. There is now a lot more bureaucracy when it comes to trading with the EU from the UK, and that was reportedly a major factor in Honda closing its Swindon factory after 35 years.

Officially, bureaucracy is not why Tesla walked away from the EU money he was being offered, though, even if you can bet there would have been many hoops to jump through to get it. Musk stated that he had turned down the $1.28 billion in EU funding for the Berlin Gigafactory because “It has always been Tesla’s view that all subsidies should be eliminated. But that must include the massive subsidies for oil & gas. For some reason, governments don’t want to do that…”

You should always take such statements from Musk with a pinch of salt, particularly considering his record on labor relations, which isn’t as benevolent as his environmental message. However, he does have a point about subsidies. There are a lot of complaints about governmental assistance for EVs and green energy, but the oil and gas industry hasn’t exactly been free from monetary incentives over the years either.

Activist group Paid to Pollute claims the UK has provided nearly £14 billion ($18.7 billion) in subsidies to oil and gas since 2016 alone. In the US, the figure is more than this every year, with an Oil Change International report in 2017 putting the American total at $20.5 billion annually.

There is also more to attract business than just hassle-free labor, financial kickbacks, and free trade agreements. The UK does have considerable other opportunities in the brave new world of EVs. Start-up Britishvolt broke ground on the UK’s first battery Gigaplant in August, a £2.6 billion ($3.5 billion) project that aims to create 8,000 new jobs and manufacture 30GWh of batteries from 2027 onwards, enough for 300,000 EVs a year.

The UK also has its own supplies of lithium, a key element in most rechargeable battery chemistries, which Cornish Lithium and British Lithium hope to exploit. This is both from mining and brine, geothermal underground water that is high in lithium content. These companies even argue that there will be enough local lithium to electrify the entire UK car fleet. Electric hypercar maker Rimac has its design office in the UK too, because of the talent available in the country.

Tesla does need to think about where it is producing cars for the right-hand-drive market. This doesn’t just include the UK, but also Japan, South Africa (plus several adjacent countries), Australia, New Zealand and (the big ones) India, Indonesia, Pakistan, and Bangladesh. Malaysia and Thailand also drive on the left. In fact, the sum of right-hand-drivers is 2.8 billion people – 36% of the world population.

Right now, the Tesla cars coming into the UK are being made in China, which ironically is considered to be a quality improvement over those manufactured in America. The Chinese Model 3s now also come with LFP batteries, which are cheaper, more tolerant of being charged to 100%, and contain no cobalt, so are free of the moral issues that mining that mineral poses. But even if China is a cost-effective place to produce cars, transporting them around the world is hardly great for the environment.

Tesla will almost certainly iron out its problems in Germany sometime in 2022. But you do have to wonder if Elon Musk is considering it a rather bitter pill dealing with the bureaucracy that he has faced setting up the Gigafactory in Berlin. Even when the plant opens, this is likely to continue, looking at past history in Europe. Perhaps, as the EV market continues to grow, local UK manufacturing could end up back on the table. Brexit or no Brexit, the UK is still a very lucrative automotive market after all.

Follow me on Twitter or LinkedIn. Check out my website.

I am the editor of independent electric vehicle website WhichEV. I have over 25 years’ experience as a technology journalist and a life-long love of cars, so having the two come

Source: Should Tesla Have Built Its European Gigaplant In The UK Instead Of Germany?

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SEC Issues New Guidance on Measuring Cost of ‘Spring-Loaded’ Stock Awards

The Securities and Exchange Commission on Monday issued new guidance on how companies should recognize and disclose compensation costs associated with spring-loaded awards, which are stock options or other awards granted to executives shortly before market-moving news is announced.

The U.S. securities regulator advised companies to fully consider the impact that significant nonpublic news could have on the value of spring-loaded awards when measuring the related cost. The guidance is related to options and other stock awards companies issue just prior to unveiling a sunny earnings forecast, a major acquisition or other information that could cause the awards to gain value.

Companies have for years relied on this practice, often to dole out speedy profits to executives, assuming the announcement lifts the stock price. Investors have long considered it misleading, and the SEC monitors related activity for potential securities violations. Spring-loaded options tend to be priced the same day that companies grant them.

“It is important that companies’ accounting and disclosures reflect the economics and terms of these compensation arrangements,” SEC Chairman Gary Gensler said in a statement. “This gets to the SEC’s remit to protect investors.”

The guidance follows events involving Eastman Kodak Co. ’s stock last year. Rochester, N.Y.-based Kodak’s stock surged in July 2020 to its highest level in six years shortly after the company and a federal agency announced the company was set to receive a $765 million loan to help make drugs to protect against coronavirus.

Kodak handed out options to executives the day before the loan was officially announced. Those options, some of which vested the day they were granted, soared in value with the stock. Executive Chairman Jim Continenza stood to reap more than $95 million from the stock increase if he had exercised options at then-current prices. He did not exercise his options at the time. The company has not been charged with securities violations. Eastman Kodak did not immediately respond to a request for comment.

The SEC said its staff has observed many instances of companies spring loading non-routine stock awards, a practice that merits “particular scrutiny” from executives at public companies tasked with handling compensation and financial-reporting governance issues. Under the guidance, the SEC said companies should consider whether it’s appropriate to adjust the current share price or the expected volatility for the share price when estimating the cost of its share-based payment transactions.

The regulator provided examples of scenarios in which soon-to-be-public companies and businesses accounting for certain financial instruments could measure the cost of these awards. For example, public companies cannot retrospectively apply their method of estimating the costs to awards it granted while they were private. That’s because it would require companies to make estimates of a prior period, which could vary widely from estimates it previously would have made, the SEC said.

SEC accounting guidance differs from rules in that it is interpretations and practices that the corporate-finance division and office of the chief accountant adhere to in overseeing disclosure requirements.

 Some top executives in recent years have manipulated stock prices to increase their option compensation, including through spring loading and other awards practices, according to academic research by three finance professors published last year tracking 1,500 publicly traded companies from 2007 to 2012.

Spring loading continues to be widespread because companies still have an incentive to release bad news before an options grant and good news after, said Robert Daines, professor of law and business at Stanford University and one of the study’s researchers along with Grant McQueen of Brigham Young University and Rob Schonlau of Colorado State University.

“The stock price is artificially low for a relatively long period of time right around their grant in a predictable way,” he said, referring to spring loading.

The SEC guidance around spring loading doesn’t go far enough, said Paul B.W. Miller, emeritus professor of accounting at the University of Colorado at Colorado Springs. Like other U.S. accounting standards on share-based compensation, it doesn’t convey the true value transferred to companies’ employees, he said.

“Any answer that fails to present the full value of the options as compensation expense when granted is unsuitable,” Mr. Miller said.

Source: SEC Issues New Guidance on Measuring Cost of ‘Spring-Loaded’ Stock Awards – WSJ

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Workers Quit Jobs In Droves To Become Their Own Bosses

The pandemic has unleashed a historic burst in entrepreneurship and self-employment. Hundreds of thousands of Americans are striking out on their own as consultants, retailers and small-business owners.

The move helps explain the ongoing shake-up in the world of work, with more people looking for flexibility, anxious about covid exposure, upset about vaccine mandates or simply disenchanted with pre-pandemic office life. It is also aggravating labor shortages in some industries and adding pressure on companies to revamp their employment policies.

The number of unincorporated self-employed workers has risen by 500,000 since the start of the pandemic, Labor Department data show, to 9.44 million. That is the highest total since the financial-crisis year 2008, except for this summer. The total amounts to an increase of 6% in the self-employed, while the overall U.S. employment total remains nearly 3% lower than before the pandemic.

Entrepreneurs applied for federal tax-identification numbers to register 4.54 million new businesses from January through October this year, up 56% from the same period of 2019, Census Bureau data show. That was the largest number on records that date back to 2004. Two-thirds were for businesses that aren’t expected to hire employees.

This year, the share of U.S. workers who work for a company with at least 1,000 employees has fallen for the first time since 2004, Labor Department data show. Meanwhile, the percentage of U.S. workers who are self-employed has risen to the highest in 11 years. In October, they represented 5.9% of U.S. workers, versus 5.4% in February 2020.

The self-employment increase coincides with complaints by many U.S. companies of difficulties—in some cases extreme—in finding and retaining enough employees. In September, U.S. workers resigned from a record 4.4 million jobs, Labor Department data show.

Kimberly Friddle, 50 years old, quit her job as head of marketing for a regional mortgage company near Dallas in September 2020. Her daughters in the sixth and eighth grade were struggling with attending school virtually, and, months into the pandemic, both were showing signs of anxiety. Although her employer was understanding, she wanted flexibility to provide them help without juggling Zoom meetings and projects.

Ms. Friddle planned to stay home indefinitely with the support of her husband, a pharmaceutical-company executive. But when a friend contacted her the next month, she saw an opportunity.

The friend sold home décor items on Amazon.com from his home in Canada, and Covid-related border restrictions were making it difficult to process returns. When he explained what he needed—primarily, someone to examine returned items for damage and ship them back to Amazon—Ms. Friddle felt the work could be a good challenge and a chance for her older daughter, Samantha, to gain some work experience.

They began processing returns for him steadily. When other Amazon sellers he knew needed help with warehouse-related tasks that were also made harder by the pandemic, he referred them to Ms. Friddle.

Now she runs an Amazon logistics, warehousing and fulfillment business full time from the family’s home outside Houston and rented warehouse space nearby. Her older daughter works with her about 10 hours a week, and Ms. Friddle recently hired an assistant. She hopes to expand her services to Walmart vendors.

In July, the family’s monthly income returned to roughly what it was when she worked in marketing, Ms. Friddle said. Though the decision to leave that job was an emotional one, she said, a change after 27 years has given her new energy and confidence in addition to the flexibility.

“I didn’t have a plan when I left,” she said. “I wasn’t giving enough attention to the needs of my family. I wasn’t giving enough attention to the job that needed to be done. I felt like I was failing everywhere.”

Now, “I feel so successful and I wake up every day like, ‘I wonder what’s going to happen today.’ ”

Through the late 19th century, the majority of Americans worked for themselves, as farmers or artisans. With new technology such as electric lighting, manufacturing expanded, and many people left the field for the factory floor. They landed in an environment of strictly defined work hours and hierarchies—workers overseen by managers overseen by executives.

By the time Covid-19 arrived in the U.S., the advent of apps, websites and companies catering to entrepreneurs and freelancers was already giving employees options.

Then, the pandemic spurred some people to “pause and re-evaluate their priorities,” said Aaron De Smet, a McKinsey & Co. senior partner and consultant on labor trends. “When you have a big event where everybody takes stock, and trends are already in place, people working for an employer never thought of doing freelance but now when [they] think about it, why not?”

Marcus Grimm, a 50-year-old in Lancaster, Pa., worked at advertising agencies from the time he finished college. For years, he toyed with freelancing. “I had always considered it, but literally just never had the guts to make the move,” he said. “I was scared I would lose sleep every night worrying about my next dollar.”

Early in the pandemic, Mr. Grimm, a married father of two grown children, was laid off. He logged onto Upwork, a website that connects freelance workers from a wide range of industries with potential clients. He fielded several assignments doing ad campaigns for big companies, charging a low hourly rate.

Business flowed in. He has steadily raised his rate, to $150 an hour. Mr. Grimm said he now earns more than in his old job, which paid $130,000 a year.

His favorite part is not having to deal with corporate politics or any bureaucracy. He can go kayaking in the middle of the day.

“I’m the one who finds the client, I’m the one who does the work, and I’m the one who deals with any of the problems that come up,” he said.

One client offered to hire him full-time, but he declined, Mr. Grimm said. “I told them, ‘I’ve seen the light.’”

Etsy Inc., an online marketplace for individuals to buy and sell items, says it had 7.5 million active sellers as of Sept. 30—up 2.6 million from that time in 2019. Eight in 10 are women. Its surveys indicate more than 4 in 10 of the new sellers started their businesses for reasons related to the pandemic, including for some the need to stay home to care for family members.

On a recent investor call, Upwork Inc. Chief Executive Hayden Brown, citing a September 2020 survey, said: “A new type of career path has emerged, with half of the Gen Z [age 18 to 22] talent pool actually choosing to start their careers in freelance rather than full-time employment.”

Based on a summer 2021 survey, Upwork concluded that 20% of people working remotely during the pandemic were considering leaving their jobs for freelance work.

At LinkedIn, the number of members who indicate they are self-employed by listing services from a field called “Open to Business” has quadrupled since the pandemic began, to 2.2 million, the company said. Nearly half of the new entrepreneurs have a college degree and nearly 4 in 10 a postgraduate degree.

Enterprises founded by women have grown by 27% and male-founded ones by 17% since the pandemic started, according to a LinkedIn analysis of user profiles. Meanwhile, Labor Department data show that in the two years through July, the number of self-employed female workers actively at work has grown 4.3%, while the number of self-employed male workers is down 1%, according to a Pew Research analysis.

Limited child-care or commuting options have helped spur some of the moves.

Matt Parrish of Raleigh, N.C., worked for a company that built retaining walls since graduating from the University of Florida roughly a decade ago. An engineer who managed projects, Mr. Parrish, 31, grew tired of dealing with the bureaucracy, such as when he wanted to hire someone.

“I enjoyed the work I was doing, but I definitely felt like I was getting more and more pigeonholed because it was such a large company,” he said.

He also wanted a schedule allowing more time with his newborn daughter. His employer provided just two weeks of paid parental leave, he said.

Mr. Parrish resigned in August and went into business as a consultant to homeowners and commercial-building owners on building retaining walls for construction projects. Being able to work from home and care for his daughter throughout the day was a primary reason, he said.

Instagram, YouTube and TikTok have provided new avenues to raise cash for aspiring entrepreneurs. Meanwhile, Robinhood Markets Inc. and cryptocurrencies such as bitcoin have spurred a new generation of traders, some so successful they have quit their jobs to trade.

Josh Dorgan, who is 32, started trading cryptocurrencies in 2017 with a straightforward goal: to pay off the mortgage on a house he and his wife had bought in Omaha, Neb., as fast as possible.

Mr. Dorgan continued working as a pediatric nurse while trading litecoin, ether and XRP. His trading, plus advisory roles he took on with crypto companies, started taking more time, hard to balance with his job managing the dialysis unit at Children’s Hospital & Medical Center in Omaha.

When he told his wife, also a nurse, he wanted to quit and focus just on investing, she insisted they talk to a financial adviser first. With a professional’s signoff, he quit the hospital job in August 2020. He said his trading profits the following week equaled his previous full-year salary.

He tries to confine his work—including advising digital-currency firms and creating content for his nearly 200,000 Twitter followers—to between 8:30 a.m. and noon, leaving time to spend with his 10-month-old son, golfing and visiting a lake house he and his wife bought recently.

“You don’t just get into the markets and make money out of thin air,” said Mr. Dorgan. Yet even in volatile trading conditions, he said, he feels far less pressure than when he was juggling investing with a full-time job: “When I’m at a red light, I don’t feel like I’m rushed to get home anymore.”

Share Your Thoughts

Are you tempted to quit your job and start your own business? Join the conversation below.

Part of the current shift to self-employment might prove temporary. The boom in self-employed day traders during the dot-com hoopla of the late 1990s deflated along with the stock bubble.

A sharp rise in savings—boosted by a federal supplement to unemployment benefits, most recently $300 a week, that was paid for as long as 18 months of the pandemic—provides some individuals a financial cushion to pursue self-employment. As they run down those savings, some might again want a regular paycheck, economists say.

In addition, if labor shortages ease, freelancers could face stiffer competition from companies in landing clients. Finally, if the pandemic recedes, so might one piece of the impetus to leave regular work in favor of self-employment. Five percent of unvaccinated adults say they left a job because of a vaccine requirement they opposed, according to a Kaiser Family Foundation survey in October.

Robert Spencer, 55, repaired bridges for Washington state’s government for nearly a decade as a welder and fabricator. Mr. Spencer, who had a bout of Covid-19 early in the pandemic, left the job in October because he wasn’t willing to comply with a vaccine mandate for state employees.

As his end-date approached, Mr. Spencer, who had worked for himself before joining the state, began buying supplies to run his own fencing business and lining up residential projects.

His wife now handles billing and accounts payable and receivable. He says the two will need to make financial adjustments in anticipation of a winter slowdown in home improvement.

If the state should change its rules and let everybody come back, “then obviously I would, because of the benefits,” Mr. Spencer said. “But until then—I’m not counting on it—I plan on doing what I’m doing now. I enjoy it.”

By: Josh Mitchell & Kathryn Dill

Source: Workers Quit Jobs in Droves to Become Their Own Bosses – WSJ

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The Push For Equity In Education Hurts Vulnerable Children The Most

America has always had an uneasy relationship with brilliance. Cultural tropes, like the mad scientist or the nerdy computer whiz, show both a respect for high accomplishment and an anxiety about how smart people fit into society.

This cultural uneasiness is most apparent in the educational realm. Schools recognized the existence of students with high academic aptitude by providing them with gifted programs and advanced classes. Outside of school hours, many sponsor honor societies or academic competitions. And the old tradition of publicly recognizing a graduating class’s valedictorian remains strong.

However, the educational industry has never let these programs shake the field’s commitment to egalitarianism. The spending on education in the United States is disproportionately directed towards struggling children. Sometimes this policy is explicit, such as earmarking billions of federal dollars annually for special education and little or nothing for advanced academics.

Other policies implicitly support struggling learners more than students who excel, such as the No Child Left Behind Act and its successor, the Every Student Succeeds Act, which encouraged states to reward schools that help struggling students reach basic proficiency levels. These laws, though, did not incentivize or reward schools for helping students reach high levels of academic accomplishment. As a result, the numbers of high achievers stagnated.

Equity over excellence

This truce of carving out a few advanced programs and classes from a system concentrated on educating the lowest performing students worked reasonably well for decades. However, that arrangement was shattered within the past few years in the United States as districts and states embraced “equity” initiatives with the goal of achieving equal outcomes across individuals as well as groups. The policies inevitably sacrifice bright and high achieving students to the social goals of activists.

The push to hobble high performing students in order to achieve equity can take many forms. In Oregon, the state legislature eliminated the requirement that students pass a high school exit exam to demonstrate proficiency in reading, mathematics, and writing for two years until the state can re-evaluate its graduation requirements. The reason: the testing requirement was “inequitable” because higher percentages of black and Hispanic students were failing the test.

The impetus to eliminate tests that show differing levels of academic success is also apparent in admissions tests. At the Thomas Jefferson High School for Science and Technology, a magnet high school in Virginia often touted as the best high school in the country, admission is no longer based on high test performance. Instead, a new system assigns seats at the prestigious school so that each region in the school district is evenly represented, and then all students that meet basic criteria (a 3.5 middle school grade-point average) are entered into the lottery.

The result is a student body that is more racially diverse (from 73 percent Asian to 53 percent Asian, from one percent black to seven percent, and from three percent Hispanic to 25 percent Hispanic), but much less academically elite. Magnet schools in Philadelphia and Boston also revamped their admissions procedures to de-emphasize tests and to improve the admission chances for Hispanic and black students.

Reducing or eliminating the impact of admissions tests is not unique to high schools. Concerns about equity have also caused universities to make college admissions tests optional for applicants. College admissions tests show well-known differences in average scores, and applying the same admissions standard to all groups will inevitably admit higher scoring groups at higher rates than lower scoring groups. This mathematical reality makes admissions tests a target of equity advocates.

The test-optional movement has been underway for many years, mostly at small liberal arts colleges. Making standardized tests optional seems like a good idea to counteract the unequal admissions rates across groups. However, research shows that it does not improve the socioeconomic or racial diversity of a student body. It does, however, raise a college’s reported test score average (because low performing applicants choose not to report scores), which improves the school’s rankings. Test-optional universities also increased tuition at higher rates than universities that required test scores. None of these developments help disadvantaged students.

The test-optional movement accelerated recently during the COVID-19 pandemic and in response to growing concerns about equity. The movement to drop testing requirements reached its greatest success when the regents of the University of California system voted to make admissions tests optional for applicants—despite their own faculty making a strong recommendation against a test-optional policy.

Even this move towards lowering standards was not enough. Advocacy groups sued the University of California system, which settled the lawsuit by agreeing to ban the consideration of any test scores in the admissions process. This outcome was exactly what university president Janet Napolitano had previously proposed and what many California politicians had wanted for years. What an amazing coincidence!

Even when admissions tests remain in place, institutions often apply different admissions standards across racial groups in order to improve the diversity of the student body. A prominent example of this can be found in the lawsuit alleging anti-Asian discrimination in Harvard admissions.

According to the plaintiff’s expert analysis of Harvard admissions data conducted by economist Peter S. Arcidiacono, an Asian student with a 25 percent chance of admission to Harvard would have their chances of admission increase to 36 percent if they were white and had the same academic qualifications. Hispanic students with the same academic qualifications have a 75 percent probability of admission. An equivalent black student would have a 95 percent chance of admission.

In other words, what is an iffy one-in-four chance of admission for an Asian student is almost a sure bet for a black student with the same admissions qualifications. Among admitted black students, 45 percent had academic qualifications in the bottom half of all applicants, while only eight percent of admitted Asian students had similar academic qualifications. The admission rate for a student with academic qualifications in the top 10 percent of all applicants is 4.25 times higher for black applicants, 2.61 times higher for Hispanic applicants, and 1.37 times higher for white applicants than for Asian applicants.

Differing admissions standards across racial groups also occurs for law schools and medical schools. Indeed, it is likely that admissions standards vary for different racial and ethnic groups at most American institutions of higher education, except for open enrollment institutions. Data for any particular university is often unavailable, though.

When differing standards are not equitable enough, one proposal to advance equity is to eliminate admissions standards completely. That is what the journalism school at UNC Chapel Hill did when eliminating the minimum GPA for admission to its programs (previously a 3.1 college GPA was required). A more revolutionary change is the proposal for the NCAA—which governs college athletics—to remove its minimum high school GPA and test scores for student athletes.

The minimum standard is a sliding scale, but for Division I universities, a 2.3 high school GPA in core subjects is a required minimum. Students with this GPA must earn an SAT score of at least 980 points. Students with lower test scores can compensate with a higher GPA in high school core classes. A student with a 3.0 high school GPA in core subjects, for example, needs to obtain an SAT score of only 720 points to play intercollegiate sports. For most college students, these standards are easily met; but for advocates of equity, even these standards are too high because a disproportionate number of African American students fail to reach them.

Back in the K-12 world, another popular strategy for achieving “equity” in education is to eliminate advanced classes and programs, such as gifted programs or accelerated classes. New York City mayor Bill de Blasio eliminated the city’s gifted program. In Charlottesville, Virginia, the standards for being labeled as “gifted” were lowered so much that 86 percent of school children qualified for the label, and the district eliminated any specialized classes for high performers.

California’s proposed K-12 math guidelines states, “… we reject ideas of natural gifts and talents …” and encourages a lockstep math sequence for all students to take the same classes through the end of 10th grade. Lest any students try to escape from a lockstep program, the guidelines explicitly discourage grade skipping individual students, even though there is absolutely no evidence showing negative effects of grade skips.

Avoiding—not solving—the problem

The problem of disproportionate representation of different racial and ethnic groups in educational programs is fundamentally caused by the achievement gap among groups. It is a mathematical fact that when groups differ in their average scores, then the percentage of group members exceeding a cutoff will be higher for groups with a higher average and lower for groups with a lower average. If all groups had equal average academic performance, then students in elite academic programs would much more resemble the demographics of the general student population.

What all these “equity” strategies have in common is that none of them achieve their equity goals by improving the academic performance of low-performing groups. Instead, “equity” almost invariably requires hiding deficiencies of low-performing groups, lowering standards, or eliminating or watering down programs that encourage excellence. These proposed policies are, at best, stopgap solutions. At worst, they hide the problem and allow it to fester.

Instead, solving the equity problem permanently would require closing the achievement gap by lifting the performance of lower-performing groups. The causes of achievement gaps among groups are hotly debated in the educational world. What is not debated is that meaningfully increasing the performance of low-performing groups will not be easy. There are some experts who have proposed policies and practices to increase achievement in low-performing groups.

School psychologist Craig Frisby, for example, has found that successful schools that teach large proportions of minority students focus on core achievement, provide strict discipline, and base policies on the science of learning—and not on trendy sociopolitical ideas.

Some projects to increase achievement of Hispanic and African American students have had promising results in increasing the number of these students who qualify for gifted programs. Another reason for optimism is that achievement gaps are narrower in the 21st century than they were in 1971, according to the National Assessment for Educational Progress reading and mathematics tests. (However, achievement gap sizes have stagnated since 2012.)

Equity advocates seem unwilling to do the long, hard work of improving the academic performance of the very children they claim to be concerned about—black, Hispanic, and low-income children. Instead, the equity policies are generally a quick fix that makes the demographic makeup of an academic program more palatable while allowing the underlying problem to remain.

Indeed, many of the newly popular equity policies imply that equity advocates have given up on increasing the achievement in low-performing groups. Anyone who thought that struggling students could perform as well as high-achieving groups would not try to lower or eliminate admissions standards, force students into lockstep programs, water down the curriculum, or eliminate advanced academic programs. All of these equity strategies are prime examples of what George W. Bush called “the soft bigotry of low expectations,” and they are coming from a postmodern ideology that claims to protect and fight for marginalized students.

Unintended consequences

The students that are most hurt by equity policies are the ones that the activists claim to be helping. Wealthy students who have a gifted program eliminated from their school have parents who can transfer them to a private school or pay for after-school educational opportunities. However, the child from a poor family does not have this option. They are stuck in their neighborhood public school, unchallenged and ignored.

Likewise, a policy that eliminates or de-emphasizes standardized tests closes off the easiest pathway to a challenging educational program for bright students from low-income families and under-privileged backgrounds. When many selective grammar schools and the 11+ admissions examination were eliminated in the UK, the percentage of students from working-class backgrounds who attended prestigious schools decreased. In other words, eliminating the standardized test favored the wealthy and well-connected.

In the college admissions scene, eliminating admissions tests benefits the moderately talented from wealthy families because they have more resources to make their child into an attractive applicant. Students from wealthy families can afford to have an impressive list of extracurricular activities, and these parents can manipulate other components of a college admissions application, such as grade-point averages (e.g., by pressuring a teacher, or transferring a child to a school with lenient grading standards).

Even admission preferences for student-athletes often benefit the wealthy. When was the last time an elite college’s sailing, lacrosse, or water polo teams consisted of students from working-class backgrounds?

Other equity policies hurt poor students in profound ways, even if a child does not qualify for an advanced academic program. When standards are lowered in a school district, or the curriculum becomes politicized, then the basics are neglected. A school year consists of a finite amount of time, and it is impossible to teach every topic.

When politicized classes are required (as has happened with California’s new ethnic studies high school requirement), foundational knowledge must be de-emphasized. Students trapped in ideological classrooms have less instruction time to develop strong skills in the core subjects of math, reading, and science, thereby stunting their academic and employment prospects in the future.

No help from the educational establishment

Don’t expect the educational establishment to fight against equity initiatives. For example, the only American advocacy organization in gifted education, the National Association for Gifted Children (NAGC), has committed itself to social justice orthodoxy. In June and July of 2020, NAGC released multiple statements committing itself to diversity and equity, as a response to the death of George Floyd at the hands of a Minneapolis police officer. What George Floyd had to do with gifted programs was never explained. No matter! NAGC has recently reaffirmed that it intends on incorporating equity in all its future work.

As a result, NAGC is paralyzed when gifted programs come under attack. The organization has done nothing to respond to the proposed California math guidelines, and it did nothing to mobilize support for gifted programs in New York City. The best it could do was issue a feeble statement on the day of Mayor de Blasio’s announcement saying that NAGC was “deeply disappointed.”

Simply put, bright students cannot count on education bureaucrats to fight for their educational needs. Most people with power in the education industry are already committed to social justice causes. This is apparent, for example, at the college level. In a 2019 Pew Center poll, 73 percent of Americans were against race having any influence in college admissions decisions. Even 56 percent of voters in California last year preferred race-neutral procedures in college admissions.

Yet, college administrators consistently buck public opinion on this point and implement racial preferences (often covertly) and vigorously fight for affirmative action in the courts. Fighting an anti-Asian discrimination lawsuit to preserve its affirmative action practices has cost Harvard University over $25 million in legal expenses. K-12 controversies tend to be less prominent, but in many parts of the country, the commitment to “equity” and other leftist values is common in many school districts.

With gifted programs under attack and no professional advocates to fight for them, bright students are at the mercy of the winds of politics. A few weeks after de Blasio announced that gifted programs would be eliminated, Eric Adams was elected as New York City mayor. During the campaign, Adams had promised to reinstate gifted programs (though the details are unclear). Bright children corralled into slowly-paced math courses in California will likely not be so lucky if the proposed mathematics guidelines are implemented in their district. The progressive worldview is entrenched in Californian politics, and that seems unlikely to change.

It is too early to tell how a shift in the political winds will impact other students. In the recent Virginia elections, education was a top issue for many voters, and there seems to be a backlash against critical race theory in schools in that state and other parts of the country. However, gifted programs rarely rally the voters because they tend to serve a small percentage of students and are easily branded—sometimes correctly—as elitist. Thus, gifted programs are unlikely to be a sole source of populist sentiment.

A new 6–3 conservative majority on the U.S. Supreme Court gives affirmative action opponents hope in eliminating race considerations from college admissions and the varying admissions standards for different racial groups. Until a case reaches the court, though, it is unknown whether the justices will be willing to overturn more than four decades of consistent precedent supporting affirmative action in higher education.

Lessons from history

While the focus on “equity” may be dismaying for advocates of excellence and individual merit, America has been down this path before. When the cultural zeitgeist of the 1960s and 1970s prioritized equity, academic standards and performance decayed. In the early 1980s, the nation’s political class—not the education establishment—led a pivot towards encouraging high achievement in America’s schools. This was most clearly seen in the 1983 report A Nation at Risk, which stated:

If an unfriendly foreign power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war. As it stands, we have allowed this to happen to ourselves.

The 1980s saw the birth of the accountability movement, higher academic standards, and massive growth of the Advanced Placement program. As happened a generation ago, the focus on equity will likely diminish as political leaders and the American people become dissatisfied with the mediocrity that results from an emphasis on equity.

Unfortunately for bright students stuck in lockstep academic programs, the change in political priorities may come too late—if it comes at all to their state or community. Implementation of newly popular equity policies will hinder the learning of many students before those policies are weakened or reversed. Perhaps one day the mad scientist trope will be replaced by the stereotype of the unchallenged gifted child, wiling away years of boredom in the classroom. At least the activists can feel good about the mediocre equity they have achieved.

Russell T. Warne

By: Russell T. Warne

Russell T. Warne is associate professor of psychology at Utah Valley University. He is the author of In the Know: Debunking 35 Myths About Human Intelligence and Statistics for the Social Sciences.

Source: The Push for Equity in Education Hurts Vulnerable Children the Most

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