In March 2018, the U.S. Supreme Court voted to strike down the 1992 Professional and Amateur Sports Protection Act (PAPSA), ending the federal ban on sports betting in every state except Nevada. This allowed states to decide if they wanted to legalize sports gambling. Today, 38 states, Washington D.C., and Puerto Rico have done so.

For many years, the major sports leagues’ concerns with gambling were primarily to do with the integrity of their product. The leagues felt that allowing gambling could compromise their sports and pose as a destructive force. Eventually, they began to realize that gambling could actually increases interest and revenue tremendously. In the 2010’s, the league’s began to change their tune by investing in casinos and gambling companies, putting teams in Las Vegas, and joining the push to end PAPSA. The league’s and the government realized legal gambling would create jobs, generate tax revenue, and lower the rate of crime involved with illegal gambling.

Now that we are five years since legalization, we can look at how sports betting impacted the U.S. economy. According to the American Gaming Association, The legal U.S. sports betting market generated$7.56 billion of total revenue in 2022, an increase of about 75% from 2021. Americans legally wagered $93.73 billion, compared to $57.53 billion in 2021. New York accounted for $1.37 billion of the national revenue total, as their launch of online sports betting in January 2022 saw it become the largest legal sports betting market in the country by a long shot. New York imposes a 51% state tax on gross gaming revenue. Tax rates vary across states, but in 2022, 27 of those states combined for $1.5 billion tax revenue from sports betting.

It’s not just the tax revenue that has positively impacted the economy. According to a report published this May by IBISworld, there are more than 24,000 businesses employing over 200,000 workers related to sports betting. The leagues are also making more money, not just from partnering with the sportsbooks and casinos, but also selling their data to technology companies that work with the casinos, as well as increased viewership and interest. Specifically, the NFL has increased viewership every year since 2018.

Another interesting financial aspect about gambling is that even when the Casinos are on a losing end of a wager, tax is still being paid. If you, as a gambler, made more than $600 for the year, you have to pay income tax on that. What this means is that nearly every wager placed, whether won or lost by the casinos, generates tax revenue.

It’s no secret that gambling has supplied a boost to the U.S. economy in the form of tax revenue, job creation, and consumer spending. However, everything comes with a cost. Gambling addiction has been on the rise each year since legalization. The lack of regulation in the beginning allowed for extremally predatory and misleading ads that lured in people to start betting with promotions described as “risk-free bets” when in fact, you had to risk money in order to get credits that were in the form of bonus bets. While there is very limited data on this subject because it is all so new and hard to quantify, there are probably plenty of people that would never have placed a sports bet prior to 2018 who now have an addiction. It will be interesting to see how regulation evolves over the years and whether or not the monetary gains for the economy are worth the social costs.

Over the past few years, we have experienced a period of high inflation, leading to a rise in interest rates. Although it my sound complicated, having a basic understanding of how they relate to you and your business can help you make more informative decisions, when it comes to borrowing, hiring, spending, expanding, and much more.

The most common challenge small business owners face is the cost and quality of labor, which are directly impacted by inflation. After the pandemic, the labor market began to tighten, meaning that the number of available jobs increased more rapidly than the amount of available workers. When this happens, workers are able to demand higher wages because there is little competition for job openings.

Imagine you are a business owner needing to hire someone. When interest rates are low and the labor market is tight, you may start looking for a candidate and find that there are not many applicants to choose from. Let’s say you finally find someone with just enough qualifications, however, they are demanding a wage of $22/hour which is more than you have offered for a similar position in the past. Due to the lack of applicants, you decide to make the hire anyway. In order to pay your new employee, you go and borrow money from the bank until your sales are able to catch up with the new cost. The bank offers you a loan and charges a 3% interest rate. Now that you have an employee with a higher wage and a loan to pay back, you decide to raise your prices a bit. Inflation.

In order to combat inflation, the Federal Reserve raises interest rates. By doing so, they are essentially trying to slow down the economy by discouraging borrowing, and loosening the labor market, which would lead to a slow down in rising prices.

Let’s go back to your business. A year goes by and you want to hire more employees to keep expanding your business. The labor market has only gotten tighter, but the Fed has begun to raise interest rates. The new candidates are demanding a wage of $25/hour, so you go back to your bank and ask for a bigger loan. But now the bank is charging an 8% interest rate. You figure that it would be too costly between the higher wages and the interest, so you decide to hold off until the interest rates go back down.

Instead of borrowing more money, hiring more people, and selling more product, you are choosing to wait, which is what the Fed’s goal is when they decided to raise interest rates. Other business owner’s facing the same predicament as you also choose to hold off on borrowing and hiring. As less businesses create job openings, the labor market begins to loosen. With fewer openings, more people become unemployed for longer; the competition in the labor market increases.

The person you hired for $22/hour is not panning out, so you decide to replace them. You’re pleased to find that there are plenty of eager applicants and they are only demanding $19/hour. Since your labor cost just got lower, you want to gain an edge on your competition so you decide lower your prices back down. More and more businesses like yours cut their labor costs and lower their prices, while the interest rates are high. Inflation defeated.

Eventually the Fed is happy with the decrease in prices, and can gradually begin to lower their rates. Allowing you to reconsider borrowing money, hiring more people, and selling more product.

Back to reality. Interest rates are still high and the Fed is debating whether or not to raise them even more, as the labor market is still tight. However, It is likely that they will begin to lower them at some point next year.

As you navigate your business over the next couple of years, you’ll want to keep all of this in mind. By understanding economic factors like interest rates, and inflation, make better decisions for your business. It is important to pay attention to what the Fed is planning to do with interest rates in the near future, as you will understand how this will affect your cost of borrowing and labor. If you are planning to borrow money, you may want to consider whether or not you can hold off until interest rates ease up.

Some economists are pointing to Beyoncé’s recent concert in Stockholm as a reason for Sweden’s high inflation. Is this really true?

The theory looks at the subsequent surge in hotel prices and other costs paid by fans. Her ongoing Renaissance World Tour has attracted consumers from across the globe, leading to increased spending on accommodations and restaurants. As a result, Sweden’s inflation rate only decreased by 0.2% in May, which was lower than expected.

While the influx of foreign Beyoncé fans to Sweden, a country with a population similar to North Carolina, contributed to the inflationary pressure, it is realistically just a blip on the measure, and is not the reason of any prolonged inflation the country is experiencing.

Other factors such as rising food prices, pets, and package holidays were also cited as causes of inflation. In fact, the high entertainment and hotel spending in May did not deviate significantly from historical trends. Sweden, which chose not to adopt the euro, has faced inflation and higher household costs (like most of the world) due to disruptions in the wholesale energy market caused by Russia’s invasion of Ukraine. The country fared relatively well during the COVID-19 pandemic compared to its neighbors.

While Beyonce’s tour may cause a temporary surge in pricing and consumer spending in the small country, it is definitely not the reason for high inflation, even though it may temporarily slowdown deflation when comparing May to April.

As I grind through my job, I often wonder how I could possibly make more money than my parents. After all, my parents made more money than their parents, who made more money than their parents.

Being the typical millennial I am, as I scroll through social media, I see plenty of memes and jokes about “boomers” telling their millennial children, that ‘at their age, they were able to afford a house and feed an entire family, all while saving for retirement.’ There is indeed actual data outside of memes that support this notion. So, it’s not just me, but millennials, on average, are less wealthy than their parents at the same stage in life, despite making more money and being more educated. Why?

There are a multitude of factors we can point to, and it’s not because millennials are dumb or lazy (okay some us are but not more so than other generations). Socioeconomic factors like cost of living, economic growth, and overall views on saving money are the real culprits for millennials finding themselves at a financial disadvantage compared to their parents.

Let’s start by taking a look at the cost of living. It costs way more to live as an adult now, that it did 30-50 years ago. Just think about all of the little things you need* to spend on that your parents and grandparents did not. Internet, cable, Wi-Fi, email, and most other tech-related “utilities”, that are so common now, did not exist as little as 25 years ago. In addition, many items that did exist have drastically increased in price, outpacing wages. Increases in college tuition, housing, healthcare, and child care have out paced wages. Simply put, it costs way more to live in this current society and wages have not compensated to the same extent.

Another huge factor is the differences in generation population and corresponding economic growth. Boomers are typically the children of the traditionalist/silent generation, those people born between 1928-1945. The traditionalist generation was one that grew up on the heels of the Great Depression and WWII, causing their parents to have less children, yielding a smaller demographic compared to other generations. Boomers get their name because their parents had far more children due to changing mindsets about war and family than their grandparents, thus leading to the “Baby Boom” in the 50s and 60s. Naturally, with more boomers entering a growing workforce, job opportunities were plentiful as they came of age because there were way more of them in a growing economy fill than there were incumbents to block them from filling such roles.

While boomers had more children, on average, than Millennials do now, they still did not have as many as their own parents. This would create less opportunities for millennials in the workforce to replace the boomer incumbents in higher paying jobs, not just because there were less of them to replace their predecessors, but also because the economy came to screeching halt in both 2008 and 2020.

Millennials came of age during The Great Recession of 2008, thus the economy ceased to create the same level of opportunities to out earn their parents. Prior to the financial collapse of 2008, many people were able to buy a house and reasonably expect that property to appreciate significantly over the course of their ownership. Once the housing market collapsed, this was no longer true for millennials, leading to far less of them becoming home owners than their parents were at the same age.

On top of these major factors, millennials have a much different mindset than their parents and grandparents when it comes to saving money. Boomers and their parents were taught to earn and save for retirement, climb corporate ladders, own a home and have children. Millennials on the other hand, are much more influenced by social media to spend, have more of a work life balance, travel, and delay having children. There fore millennials spend way more of their paychecks than their parents did at their age, leading to less investments in their retirement.

The point of all this is not to complain or blame the generations before us, but to understand the financial position we’re in so we can all prepare for our future. It is not impossible to get a mortgage and buy a house as a millennial, our parents faced very high interest rates as well. You can still travel and delay having children thanks to advances in medicine and fertility treatment. There are ways to budget for this and still save, so it is important to think about your retirement and how much you are actually spending, and focus on how you can adjust your budget to accomplish your desired lifestyle to a reasonable degree while also putting some money away for retirement.

While our parents were taught and conditioned to work and save, work and save, work and save, it is OKAY that our generation prefers to actually try and enjoy life to some degree while also trying to make a living wage. Just as every generation before us had jobs that did not exist when they were children, so do millennials and we will keep finding jobs tomorrow that do not exist today. Take me for example.

(Full disclosure: I am a white male raised by an upper-middle class family, so I do recognize that the odds are stacked in my favor, but I think my experience is still valuable.)

I graduated with a bachelor’s degree in finance, and went on to work traditional 9-5 jobs for big companies in my first few years out of college. During the pandemic, and more so the shift to a more virtual workforce, I found that I had a greater opportunity to offer my skills and services by freelancing. This allows me to serve multiple clients, and customize my workload to some degree. I am not relying on a single employer to fund my life, and I can adjust my work and amount of clients to fit my desired work/life balance. I find that an increasing amount of my peers are choosing a similar route, especially those who work in marketing, advertising, PR, and graphic design industries.

So if you are a millennial (or older Gen Zer) concerned with your future retirement and earning potential, the best thing you can do is strategically consider how you can leverage you’re knowledge, education and skills, in way that may be a tad less “traditional”, but one that can allow you to work in an environment that is more suited for your lifestyle and spending habits.

What happened in Uvalde, Texas and, unfortunately, many other places this month, year, decade and entire history of this country, is continuously devastating. How can we ever hope to address this issue with so much divide on something that seems so obvious? Let’s try to look at the problem from an Economist’s perspectives.

No, I am not an economist, but Tim Harford is, and his 2005 book, The Undercover Economist, discusses many aspects of price strategy, taxation, and demand-side economics, that can be directly applied to the topic of gun control.

A large portion of the book focuses on an economic concept called negative externalities. Simply put, a negative externality is the harm passed on to others by another person’s own economic decision. For instance, if I choose to drive my SUV, I am causing air and noise pollution to the people around me. I also run the risk of crashing into another car or pedestrian, or adding to a traffic jam. The result of my seemingly innocent decision leads to negative consequences to my neighbors who have no control over my decision-making process.

Harford suggests that, in order to effectively deal with negative externalities, is to either charge people for the risk they are passing onto others, or to reward those who do not cause them. Of course, as we see so often, given the political landscape of this country, getting economic solutions passed is always met with hesitation by both ends of the political spectrum.

In wake of the latest terrible news out of Uvalde, Texas, I believe Harford’s logic can be attributed to the ever-present gun violence issue in America. The negative externalities of purchasing a gun and lobbying to keep guns as a constitutional right are quite obvious. If you don’t think so, let me briefly elaborate. By purchasing a gun you impose various risks onto others in one way or another. Perhaps your gun can be stolen and fall into the hands of someone with worse intentions, maybe you accidentally misuse it and injure somebody else. By purchasing a gun you are also providing gun manufactures with revenue they use to spend on lobbying to keep background checks flimsy. We can go on and on about the societal repercussions of the availability of guns in this country, but we’re still here in the same spot after another horrible tragedy: a stale mate.

How do we get both sides to come together? Is it even possible? Let’s think about this from economist, Tim Harford’s perspective.

It has been proven that even such a despicable tragedy as what happened in Texas won’t yield to any compromise from the pro-gun side of the argument (in this country). As I mentioned, Harford’s logic probably suggest that in order to address this issue, we should find and economic solution that makes nobody worse off. This can be attempted by either a charge on gun owners for the negative externalities they impose on society by merely purchasing and possessing guns and ammo, or we reward those who do not cause them.

Let’s say we take the first route and place a substantially large tax on certain guns. What would happen? The amount of people buying guns would surely go down, but those with enough money would still be able to buy them, once they pay the tax there is nothing stopping them from buying more bullets. What if we taxed bullets? This would make it not just more expensive to buy the initial gun but also more expensive for each use of the gun. Again, only the people who could afford to would be buying and using guns and the poor gun-owners, the demographic that mass shooters typically fall into would either not be able to purchase them or they would have to find other means to purchase them, like a black market. Of course, this isn’t a brand new idea I just thought of, gun-lobbyists would do and have done everything in their power to prevent such taxes as they have successfully for the better part of three centuries.

When considering economic solutions, Harford suggests the only plausible one’s are those that do not make any party worse off. In the first attempt above, the poor gun owners are worse off because they have to pay more money. So what if we came from the other angle? What if people were incentivized to not own guns in the form of a sizeable tax deduction? Say that if you do not own a gun, you were to get a $10,000 tax deduction; this does not harm the pro-gun community as they do not have to pay anymore for their guns, and it pays an economic benefit to those who do not own guns. Gun owners are not worse off financially, and non-gun owners are better off financially. So far so good. But what about the government? They will initially receive less tax revenue due to the deductions handed out, but they can eventually recoup the loss in way of the rewarded taxpayers using that extra savings to make other purchases which would both boost the economy and provide alternate sales tax revenue for the government. Not only that, but if gun purchases go down so would gun-related deaths, which is not only a positive because it saves lives, but those spared lives keep on living and making purchases that add to the economy’s benefit and sales tax revenue down the line as well. In this scenario, all three parties are either unharmed or better off, something Harford would consider a plausible solution. But does this method really stop the root of the problem we are really trying to address: mass shootings?

It would be safe to assume that a casual gun owner would decide that they’d rather have the tax deduction than hold onto their guns. Basic market theory suggests that eventually gun demand would diminish as a result of the incentive, dropping the profitability for gun manufacturers. As their profits decline they have less money to spend on lobbying, and perhaps more significant legislature can get passed as a result. They would also have to raise the prices for guns to recoup the losses from their diminished demand making it even more difficult for people to legally purchase guns. Obviously, the lobbyists aren’t dumb and would see this coming from a mile away, even if it is in the disguise of a benefit for the non-gun owner. However, surely it is harder to argue against a solution that is not directly taxing their consumers or manufacturer, but rather merely incentivizing those who are not creating these negative externalities onto society.

I am not an economist, nor a politician, but hey, it’s just a thought or worth throwing out there. I see a lot of posts as I do each time a tragedy happens. Posts are well and good, and I don’t mean to offend anyone for showing their support, but how do we actually make a difference? We stop fighting about who’s right and who’s wrong and we negotiate. We deal with the situation we are given and we try to figure out a plan that is for everyone’s greater good. I’m not proposing a bullet-proof idea (no pun intended), I am trying to start a progressive conversation that both sides can listen to.

Feel free to let me know your thoughts. Email me at brandon@skyviewcfo.com.

Forbes recently released an article highlighting many key trends that are signifying, what is becoming known as, The Freelance Revolution. Although, COVID-19 has definitely accelerated the shift to more freelancing opportunities, it was only a matter of time before the global workforce started to head in this direction.

The pandemic did indeed show workers that a lot of jobs can be achieved remotely. There is no longer a blanket necessity for all jobs to require being in person for 5 days every week. As someone who decided to take the freelance route, there were many pros and cons that weighed on my decision to take the leap…

The major con was that it took me several months to build up my credibility and profitability. This meant several months of minimum income, no paid health insurance, and of course, no paid time off. A sick day, meant a day with no sales. Another big deterrent that can weigh on you is the constant need to maintain and build your reputation. When it comes to freelancing, reputation is everything. A single bad review could set you back months.

For me, the pros ended up outweighed the cons. As a CFO for a small business, I was limited to whatever salary and bonus/equity I was offered by my employer. As a full-time employee, it is generally frowned upon to spend time on “side-hustles” as the kids call them, especially if it eats into your workday that your employer is paying you for. As a freelancer, there is virtually no limit on the revenue I could generate by offering my CFO services as both fractional and virtual.

Another benefit of establishing yourself as an independent contractor, is that you decide how to go about completing your jobs and assignments. While your clients may give you deadlines and certain guidelines, it is ultimately up to your discretion on the best methods of how to achieve your client’s requests. Rather than try to find another full-time job, I calculated that it would be in my best interest to take the freelance route by offering my services through my consulting brand, Skyview CFO.

In addition to the cons I mentioned above, there have been certain roadblocks that curtailed the overall drive to freelancing in the past. For one, chasing payments had been cumbersome due to a lack of suitable platforms and payment processors designed for a freelance business model. Freelancers could wind up spending more hours chasing payments than the actual hours they worked to earn them. In addition, there was a general hesitance to hiring remote work by business owners.

The good news for freelancers is that early trends from 2022 suggest that these roadblocks will soon be a thing of the past. As the pros continue to outweigh the cons, a Freelance Revolution has begun and will continue into the foreseeable future.

Mckinsey estimates that there will be roughly 500 MILLION freelancers working on platforms before 2030. Each day, it seems that there are more and more platforms being built to accommodate various freelance business models, making it easier to focus on their strengths, stay organized, and get paid.

According to Forbes, in 2021 venture capital firms invested north of $600 BILLION in freelance startups, more than double what they had in 2020.

In regards to the whole work-life balance thing… Employees are resisting the return to the office. The four day work week and other welcome initiatives companies tried to implement on the heels of the pandemic have not caught on. According to Forbes, Nearly half of US corporate staff say they will leave if their company lacks a hybrid option.

The opportunity is growing tremendously with the availability of more online courses, coaching gigs, and podcasts. These new ways can help freelancers build their income, network and brand.

Educational institutions are catching onto the trend as well. For instance, Conestoga College’s Gig Lab in Canada is putting emphasis on “solopreneurial” skills into its entrepreneurial programs. There are also more “micro-internships” offered that give students real organizational experience.

Don’t get me wrong, I am not here saying that the freelance route is an easy, get-rich quick route to your career goals. In fact, it is anything but. However, if you are unhappy in your current role and think your skills can translate to the freelance world, there is more and more opportunity now and tomorrow than ever before.

ALSO.. if you are a business owner, the rise in freelance talent can make labor more affordable. For instance, if you are a startup in need of financial management, instead of having to hire a full-time CFO for a healthy salary, you can utilize services like Skyview at a fraction of the cost to save you time and money. Perhaps five years ago it could have been nearly impossible to build a virtual CFO practice, but as these trends have shown, the future of freelancing is on the rise.

If you are interested in freelance help or want advise on starting your own freelance career drop me an email at brandon@skyviewcfo.com.

Sources https://www.forbes.com/sites/jonyounger/2022/02/01/the-freelance-revolution-is-just-getting-started-key-trends-in-2022/?sh=3ef813dd118b

Spring ahead, but no more falling back? Changing clocks twice a year could soon be a thing of the past.

I feel that my future grandkids will think I’m insane when I try to tell them that we literally just changed the time twice a year. (That, and actually manually driving cars powered by gasoline which was the cause of many wars).

On March 15th, the Senate unanimously passed a bill that would make daylight savings time permanent in 2023. The next step is for the house to aprove it in order for President Biden to sign it into law, and all signs are looking like this will be a bipartisan* passing.

*Bipartisan means both parties agreeing on the same thing, yes, it’s a real thing.

If you’re a normal person, you probably hate daylight savings. Changing the clocks is not only annoying but messes with your sleep schedule. Look me in the eyes and find me someone who likes when it gets dark at 4:00PM.

However, it’s not just me ranting and complaining. Research actually does prove that the elimination of this semi-annual nuisance could prove beneficial for the economy.

Although previous studies found that very few businesses get a sales boost from shopping and spending during the later daylight savings time hours, there are certain industries that do see a benefit. Specifically, businesses that specialize in outdoor recreation realize more demand while it is light outside. Duh.

But aside from the few businesses that will see a gain in sales, the bigger economic gain will likely come from eliminating the worker productivity levels that drop as a result of the clocks changing. Studies have shown that most Americans lose an average of 40 minutes of sleep in the spring when the clocks change. This lack of sleep contributes to a decline in productivity in the days that follow. According to some estimates, the dollar value tied to this loss in worker productivity equates to more than $400 million each year.

But it’s not just losing the hour that leads to a lack of production. Adding an hour back in the fall also has leads to an 11% increase in depressive episodes, which contributes to a loss of productivity as well.

References: https://www.gobankingrates.com/money/economy/daylight-savings-time-become-permanent-economic-benefits/

As a small business owner, rapid inflation can be detrimental, but there are some ways to combat some of its negative side effects

Buy In Bulk

In periods when inflation is rapidly rising, the main notion is that something today will be a lot more expensive tomorrow. Therefore, as a business owner, if you are sitting on some free cash, you would be better off buying more supplies or raw materials than you normally would, because they will end up costing more as you continue to wait.

Raise Your Rates

If the price of everything else is rising, your products/services should too. Of course, you want to be wary as you do. Depending on your industry or clientele you may not have the luxury to raise your prices and maintain demand.

Fill Up Your Tank

If you travel by car a lot to conduct business, you want to fill your tank up as much as possible even if it is not empty. Gas prices are continuing to soar, especially with the escalating Russia-Ukraine conflict. By buying gas before you need it you are staving off the more expensive prices that will continue to rise in the near future.

Earn Interest

While it is best not to sit on cash, as rising inflation will continue to lower its value, banks tend to pay more interest on savings accounts when rates are high. Compare your bank account’s APY with other options and make sure you are getting the highest interest reward possible on your idle cash.

Utilize Freelancers

As inflation rises, so does the cost of living. As the cost of living rises, so does the cost for labor. If you are trying to expand but find it too expensive to bring on full time employees with high salary demands too large for your budget, an alternative is utilizing freelancers and independent contractors to fill in the gaps. For example, instead of hiring a full time bookkeeper for $60,000/year you can hire a virtual CFO… like Skyview… for as low as $150/month.