The company owner's guide to laws, news, trends, and regulations.
Retailers Blow it with Girls
For years marketers had chased youth dollars, but when the 1997 movie Titanic became the top grosser of all time, they became convinced that the teenage girls who bought all those movie tickets were America's choicest target market. As a result, retailers started pitching teens everything from eyewear to iMacs. Which is why they're shocked to find that the once-profligate demographic group is suddenly cutting back on its spending.
According to a study done by NPDFashionworld, teenage girls trimmed their aggregate clothing spending by 8% during the first eight months of 2002. As a result, businesses that sell principally to that cohort were reporting declining same-store sales. The drop-off came as a surprise, especially since teen-apparel sales grew by 16% in recessionary 2001.
Why the slippage? Fashion experts point to a lack of new styles galvanizing the market. Plus, discounters like Target and Wal-Mart are gaining market share at the expense of mall-based retailers, which have responded by slashing their prices. And the most profound issue: there are simply fewer girls entering their teen years, since the U.S. birthrate fell from 1990 to 1997. --Mike Hofman
Where Wages Are Rising
Grassroots activists across the country are turning U.S. pay scales into a pressing political issue. Their crusade: to get low-income workers to earn a "living wage" above and beyond the federal minimum wage. City contractors and companies that receive economic-development funds are the primary targets for living-wage proponents. Now campaigns in New York City and Santa Monica, Calif., are rallying to get coverage for workers in much larger fields, including health care and tourism.
Most people first heard of the living-wage crusade in 2001, when a bunch of Harvard students barricaded themselves in an administration building and demanded that the school's janitors earn better pay. In fact, private-sector employers are more likely to be affected by living-wage provisions than academic institutions are, as activists have lobbied more than 90 municipalities to adopt some form of living-wage legislation.
The two new initiatives seek to up the ante. In Santa Monica, proponents are trying to sustain through ballot initiative a city-council resolution requiring that all businesses in the city's bustling waterfront tourist district pay salaries above the minimum wage. A similar law covering all private companies in New Orleans was rejected by the Louisiana Supreme Court in September.
Meanwhile, in New York City, a new proposal would cover approximately 50,000 home-health-care workers whose employers receive some revenue from the city. Opponents fear the salary increases could exhaust finite Medicare and Medicaid budgets. --Mike Hofman
If soaring insurance costs are making you sick, you're not alone. In 2001, premiums for small companies jumped 14.5% on average, according to the Center for Studying Health System Change, a nonpartisan group in Washington, D.C.
As a result, many entrepreneurs have curtailed their benefit plans, some by eliminating coverage for dependents. Indeed, recent census data attribute the increase in the number of uninsured people to the loss of coverage at companies that have 25 or fewer employees. "Small employers are kind of the canary in the mine shaft," says the Center's Alwyn Cassil. "When you see a rapid rise in health-insurance premiums, the effects are going to be felt first and hardest by them." --Kate O'Sullivan