Jobs in America

By Porter Stansberry

Saturday, August 21, 2010

I’d like to make you a business offer.

Seriously. This is a real offer. In fact, you really can’t

turn me down, as you’ll come to understand in a moment…

Here’s the deal. You’re going to start a business or expand

the one you’ve got now. It doesn’t really matter what you

do or what you’re going to do. I’ll partner with you no matter

what business you’re in – as long as it’s legal.

But I can’t give you any capital – you have to come up

with that on your own. I won’t give you any labor –

that’s definitely up to you. What I will do, however, is

demand you follow all sorts of rules about what

products and services you can offer, how much (and

how often) you pay your employees, and where and

when you’re allowed to operate your business. That’s

my role in the affair: to tell you what to do.

Now in return for my rules, I’m going to take roughly half

of whatever you make in the business each year. Half

seems fair, doesn’t it? I think so. Of course, that’s

half of your profits.

You’re also going to have to pay me about 12% of

whatever you decide to pay your employees because

you’ve got to cover my expenses for promulgating all of

the rules about who you can employ, when, where, and

how. Come on, you’re my partner. It’s only “fair.”

Now… after you’ve put your hard-earned savings at

risk to start this business, and after you’ve worked hard

at it for a few decades (paying me my 50% or a bit

more along the way each year), you might decide

you’d like to cash out – to finally live the good life.

Whether or not this is “fair” – some people never can

afford to retire – is a different argument. As your

partner, I’m happy for you to sell whenever you’d like…

because our agreement says, if you sell, you have to

pay me an additional 20% of whatever the capitalized

value of the business is at that time.

I know… I know… you put up all the original capital.

You took all the risks. You put in all of the labor. That’s

all true. But I’ve done my part, too. I’ve collected 50%

of the profits each year. And I’ve always come up with

more rules for you to follow each year. Therefore, I

deserve another, final 20% slice of the business.

Oh… and one more thing…

Even after you’ve sold the business and paid all of my

fees… I’d recommend buying lots of life insurance. You

see, even after you’ve been retired for years, when you

die, you’ll have to pay me 50% of whatever your estate

is worth.

After all, I’ve got lots of partners and not all of them are

as successful as you and your family. We don’t think

it’s “fair” for your kids to have such a big advantage.

But if you buy enough life insurance, you can finance

this expense for your children.

All in all, if you’re a very successful entrepreneur… if

you’re one of the rare, lucky, and hard-working people

who can create a new company, employ lots of people,

and satisfy the public… you’ll end up paying me more

than 75% of your income over your life. Thanks so much.

I’m sure you’ll think my offer is reasonable and happily

partner with me… but it doesn’t really matter how you

feel about it because if you ever try to stiff me – or

cheat me on any of my fees or rules – I’ll break down

your door in the middle of the night, threaten you and

your family with heavy, automatic weapons, and throw

you in jail.

We cannot have a prosperous community filled with opportunities without a strong business climate. The Economic Stimulus Committee will build on the Chamber’s business development program in order to help businesses of all sizes find the resources they need to grow.

The Education Committee is focused on the CHOICES program which puts young businesspeople into SFPS classrooms to speak about making good decisions and the consequences of those decisions.

Tourism is our primary business sector and the Tourism Committee allows businesspeople from the industry together regularly to support ways to keep tourism strong and visitors to enjoy a positive experience in Santa Fe.

The Government Affairs Committee is the heart of the Chamber’s mission to be The Voice of Business in Santa Fe. The Committee works to create legislative priorities and be an effective advocate for business in the community.

If you have any interest in joining a committee please contact Marilyn Blessie at marilyn@santafechamber.com or 988-3279. Just come to meeting and see how you can help the community prosper while growing your business network.

Minimum Wage Matters

Increasing the minimum wage may not help low-wage workers

Based on the Research of Ohad Kadan And Jeroen Swinkels

The impact of increases in the minimum wage has long caused controversy in political and management circles. Supporters of regular increases argue that those raises are necessary to keep working people from falling below the poverty line. Opponents contend that the increases actually prevent less qualified workers from entering the labor pool because employers can no longer afford to hire them.

Unfortunately, little data existed to support either side, until now. Recently, a Kellogg professor helped to build a model that gives an unexpected answer to the question in one particular type of situation: the service sector that employs minimum-wage workers who depend on incentive payments as part of their earnings, such as servers who receive tips and retail employees and sales staff who work on commission. In these cases, the model strongly suggests that everyone—employers, customers, employees who lose their jobs, and even those who stay—ends up in a worse situation when the minimum wage increases.

“We show the increase will reduce the level of service, hurting customers,” says Jeroen Swinkels, a professor of Management and Strategy at the Kellogg School of Management, who developed the model in collaboration with Ohad Kadan, an associate professor at Washington University, St. Louis. “You end up with a smaller number of workers, and even those workers who keep their jobs are less happy, because they’re forced to work harder for less attractive incentive pay. The surprise is that it’s a lose-lose-lose situation—even for people who keep their jobs.”

The surprise is that raising the minimum wage is a lose-lose-lose situation—even for people who keep their jobs.

Swinkels is quick to point out that the result is not an excuse to ignore the plight of the working poor, but that raising the minimum wage may not be the best way to affect change. Swinkels suggests that individual incomes can be lifted by helping workers find new, higher paying jobs, not by legislating higher pay. There are several ways to accomplish this, he says, from improving employer demand, to creating job-training programs, to improving labor market mobility. All help workers advance while insulating them from adverse market changes. As workers climb the ladder, Swinkels’ model shows their movements can also help the well-being of those who remain in their current jobs.

Unanswered Questions
Swinkels developed the model intending to answer a few longstanding questions: How does a firm choose to change incentives in response to a change in the minimum wage? Do the resultant incentives lead workers to work harder than before? What happens to employment? And are workers, even if they keep their job, better off? “The power of the model,” Swinkels says, “is in the way it tells how it’s going to come out in the wash.”

Swinkels and Kadan base their model on the so-called “moral hazard issue,” which itself stems from the “principal-agent problem.” This deals with situations in which the worker who undertakes specific actions—such as selling items in a department store or serving customers in a restaurant—has incentives that are different from those of the employer. In addition, what the worker does is not directly observable. “As an employer, I can’t see whether you work hard as a salesperson,” Swinkels explains. “I can see the sales you make, but I can’t directly observe whether you are doing the right things at the right moments. So the problem is one of how to provide incentives in this world.”

The new model emerged as part of a project to understand incentive pay in the context of a lower limit on what an employer can pay. “We haven’t had a good model for thinking about this before,” Swinkels says. “The standard model doesn’t allow the latitude to answer the question of how many workers the employer should spread the work among.”

To expand on the standard model, the two theorists relied on a couple of technical advances and a different mathematical approach. They also included recognition of the risks that employees experience when they operate in an environment of high incentives, such as working very hard for a sale that can’t be made for various reasons unrelated to the employee’s effort and ability. “The model incorporates thinking through what these contacts look like in the case of the minimum wage, or limited liability, or legal constraints,” Swinkels notes. “Finally, the model incorporates the ability of the firm to decide not only how hard individuals are working, but also to adjust the number of employees.”

That factor recognizes that employers have some flexibility in the face of an increase in the minimum wage. While the increase inevitably causes employees’ total effort to fall, because the minimized cost of the effort rises with the minimum wage, employers can deal with that decrease in effort in more than one way. For example, they can fire some workers and require everyone who remains to work harder. Or, they can continue to employ all their workers but, in order to maintain minimum overall costs, reduce (costly) incentives for extra effort—in effect, asking the employees to put forth a little less effort. Whichever path they choose, the employers have one end in mind. “It does not matter whether the word processing pool of a firm is typing up the notes of auto body claims adjusters or medical researchers,” Swinkels and Kadan write. “The right thing to do is to minimize the cost per page typed accurately.”

A Series of Trade-offs
For many positions, such as rental car clerks or restaurant servers, firms face the issue of finding enough qualified employees for the total pay package of wages and incentive pay that they offer. Raising the minimum wage would make it a little easier for those firms to recruit the right people. But then, Swinkels and Kadan observe, the firms would reshuffle their incentive pay because they are no longer as worried about recruitment.

This is just one of the possible outcomes of the new model. Overall, Swinkels continues, “We show increases in the minimum wage will reduce the level of service, hurting customers. The surprise is that you end up with a smaller number of workers, and even those workers who keep their jobs are less happy, because they’re forced to work harder for lower incentives. Once the firm has adjusted the number of workers and the market in which it operates has balanced, you end up with harder working, more miserable workers.”

Swinkels emphasizes that the model’s results have implications beyond service area firms and their employees. “Many of these factors will apply to relationships between a firm and its suppliers, involving penalties for suppliers’ poor performance,” he explains. “It can also apply to boards of directors’ treatment of CEOs. And the same piece of mathematics says how a firm will adjust when its employees have more attractive outside options.”

So far, the model remains a theoretical pursuit. “It screams for empirical testing,” Swinkels says. “We hope that it will excite empirical activity by people better qualified at that than ourselves.” Nevertheless, he continues, the project carries a strong message. “The implication is that if you want to help the working poor, this is not the way. There are smarter ways of doing so than by raising wages in the service sector.”

The Santa Fe Chamber, in collaboration with Citslinc International Inc, presents the third trade mission to China . The tour will visit historic and modern sites in four different cities and will offer an optional tour to Xian for anyone who wishes to see the Terracotta Warriors. The tour will provide exposure to many points of interests in China and will be an opportunity to gain insight into how the Chinese business and tourist system operates.

The cost is $1899 and includes:

• Round trip airfare from Los Angeles International Airport
• 5-star and 4-star hotel accommodations
• Three full meals daily
• Deluxe tour bus
• Knowledgeable English-speaking tour guide in each city
• Fees for all attractions (based on double occupancy).

With 331 past travelers in 2009 and 100 seats on the new trip, the Chamber hopes that this outreach will potentially encourage entrepreneurs to think of business possibilities locally as well as internationally.

“There is a great deal of enthusiasm from our travelers about the opportunity to see China first-hand and be able to witness the enormous economic growth that is happening in Asia . Another of the opportunities afforded our travelers to China is the chance to network and develop personal and professional relationships with fellow travelers,” Simon Brackley, President and CEO of the SFCOC.

*There is an additional $160 Visa fee that the Chamber will be able to process through Citslinc.

*A $200 deposit is required to book a spot.

988-3279 or kathy@santafechamber.com for more information

Including hotel, meals, day trips, and airfare from Albuquerque

October 5-13, 2010

Buenos Aires , Argentina ‘s largest city is a seductive world capital located on the banks of the Rio de la Plata . Built by European immigrants, Buenos Aires often surprises visitors with its resemblance to the majestic cities of Europe . Locals in outdoor cafés, dancers in tango bars, and passionate citizens discussing government and soccer on the street-corners are all part of the essence of Buenos Aires . The city has one of the greatest entertainment and nightlife scenes in the world. Theaters, tango shows, bars, and clubs all exhibit the great South American flair. Outside the city you will find a land of diversity in the endless grassy horizons of The Pampas. This is Argentina ‘s breadbasket of fertile land where thousands of cattle are raised each year by pampas gauchos, also known as cowboys. Come with us, share the adventure, join in on the fun!

For More Details and Reservations Contact Kathi Odell

at the Santa Fe Chamber of Commerce

E-mail: Kathy@santafechamber.com

Telephone: (505) 988-3279 ext. 18

CST # 2097125-40

From $2549 p.p double occupancy including air from ABQ.

Roundtrip Air Transportation – From Albuquerque on the scheduled services of Delta Airlines or Similar

First-Class Accommodations – One hotel throughout the program for a relaxing seven nights stay at the four star  562             Nogaro Hotel or similar.

Superb Cuisine – Your special rate includes daily breakfasts, two lunches and five dinners (including a farewell dinner with a     Tango show).

Sightseeing/Entertainment Program – City tour of Buenos Aires , Gaucho Ranch and Pampas tour, Eva Peron tour and a Tango lesson. Optional tours available.

Deluxe Motor Coaches – Deluxe motor coaches and experienced drivers escort you for all transfers, tours, and guided         excursions.

Baggage Handling and Transfers – ABC handles your baggage outside of the airport for your arrival and departure,             based on one checked bag per person.

Professional Program Hosts – An experienced professional local host will assist you on the tour upon arrival in Buenos         Aires .

Local Taxes and Service Charges - On all included features.

*contact Chamber for information on pricing and other fees

The Hotel 562 Nogaró (or similar)

The Hotel 562 Nogaró first appeared in Buenos Aires in the 1930’s. Although recently renovated it still keeps its warmth and traditional French   style. This luxury hotel is equipped with staff that is ready to help make Buenos Aires feel like home. The double superior rooms have either one king or twin beds, air conditioning, cable TV, radio, mini bar, safety security box, voice mail and Wi-Fi internet. With only a ten minute walk from the Plaza del Mayo there is always something to do. It is the main plaza in Buenos     Aires , not only does it have great political and historical value but it brings guests many entertainment venues. Here you find, within the Plaza on the east side, la Casa Rosada, which is the official seat of the executive branch of the government in Argentina . Only 200 meters you find yourself in Buenos Aires ’ Financial district. Within the city you also find Puerto Maderos, a trendy spot, which represents the largest wide-scale urban project for the city of Buenos Aires . Nogaró is situated in the center of the hot spots of Buenos Aires .

Please note: Though rare, it may be necessary to substitute hotels and adjust itineraries due to local conditions.

ITINERARY

Day 1 – Depart the U.S: from Albuquerque airport via Delta Airlines (or similar) for Argentina .

Day 2 – Buenos Aires , Argentina : Upon arrival in Buenos Aires , proceed to baggage claim and after clearing customs, meet your local ABC Destinations host, continue to the hotel for check-in. The balance of the day is at leisure to explore the city on your own. Tonight you will have a welcome dinner at the hotel. (D)

Day 3 – Buenos Aires : Today you will get acquainted with Buenos Aires during a tour highlighting the city’s major neighborhoods and attractions. Buenos Aires , popularly known as “Paris of South America”, has a distinctive European flavour of wide boulevards and stunning architecture; this complex, energetic and seductive port city has been the gateway to Argentina for centuries. In the 19^th century, the port was the arrival point for Europeans including Spanish; Italian, Syrian-Lebanese, Polish and Russian immigrants who provided Buenos Aires with the cultural eclecticism that define the city today. We will stop for lunch at a typical local restaurant. After lunch we will visit the Museum of Evita Peron . The museum was inaugurated on the 50th anniversary of Eva’s death, and is located in the building that housed the ‘Fundación Ayuda Social’ of Eva Peron. The museum’s collection tells of the life and work of one of the most important women in Argentina ’s history. The museum has a modern format, using technology to bring history to the present day. Throughout the thirteen rooms of the permanent collection and one of temporary exhibitions, the museum reviews the history of Eva Duarte from childhood, through her youth as an actress, later her life as the First Lady alongside Juan Perón, her fight for women’s civil rights, her social welfare work developed in the Fundacion, until her retirement and death. Return to the hotel for the remainder of the day. Tonight Dinner is at the hotel. (B, L, D)

Day 4 Buenos Aires : After breakfast enjoy a full day of leisure full free day to explore or depart on an optional tour to Sale de Rio de La Plata River for a 45 minute high speed boat ride via hydrofoil to Colonia ( Uruguay ). Colonia is a small city founded by the Portuguese in 1680, at a time when Spain and Portugal were in the midst of confrontations. For over a hundred years both Empires fought over it, until finally the Treaty of Saint Ildefonso awarded it to Spain . Today the Old City has a lot to say about its Colonial past. Visit the picturesque streets of Colonia del Sacramento, the eldest city in the country, recently declared World Heritage by UNESCO. The streets of Santa Rita, San Gabriel, the Matriz  Church, San Pedro road, the Bastion del Carmen, the famous “ Calle de los Suspiros “ ( Street of Sighs) used so often as a scenery for historical films, Puerta del Campo, Plaza Mayor 25 de Mayo. The past can still be felt, in the city’s cobblestone streets and stone walls. Colonia complements its archaeological values with natural beauty, the permanent company of the Uruguay River and the emblematic monuments that stand out on the horizon, such as the cathedral and the lighthouse, and very nearby, the Real de San Carlos bullring. (B)

Day 5 Buenos Aires : After breakfast enjoy free time or take an optional tour to the El Tigre Delta and rural Argentina . Tigre is one of the biggest Deltas in the world. We will see Tigre Town one of the most beautiful accesses downtown, passing by residential suburban neighborhoods with their calm narrow roads, yacht clubs, and mansions. Departing from Tigre ’s pier, on board of a typical island launch, the green labyrinth of channels and streams will open its doors to let you explore the nature of its islands, enjoying the views of beautiful riverside villas, Victorian docks, English gardens, and traditional rowing and boating clubs. (B, D)

Day 6 Buenos Aires :Today after breakfast meet your guide and driver for a full day tour at a Gaucho Ranch.This tour offers the perfect overview of Argentina ‘s original gaucho, (cowboy) and culture. Visit a beautiful cattle ranch in the pasturelands where you will enjoy an authentic meal and show. Then visit the small charismatic gaucho town of San Antonio del Areco, known as a slice of old Argentina . (B, L)

Day 7 Buenos Aires : After breakfast, enjoy your morning at leisure, you can do some shopping, or just relax. In the afternoon it’s time to kick off our shoes and take Tango lessons at Mansion Dandi Royal. The Tango is part of the typical music of Buenos Aires .  Enjoy two hours of Tango lessons with a top rate instructor.  The La Ventana Academy located in one of the principal streets of the traditional San Telmo, at the historic centre of Buenos Aires city, just minutes away from the colourful La Boca and the famous pedestrian Caminito. (B, D)

Day 8 Buenos Aires : After breakfast today is yours to do as you please. You can explore the city, do some shopping and maybe stop for coffee at Café Tortoni. Cafe Tortoni is one of the city’s most traditional cafes, located on the famous Avenida de Mayo, with its original decoration. Here you could try a traditional “Chocolate con Churros” or coffee or tea with pastry. Tonight visit one of the many restaurants Buenos Aires has to offer. This evening we hit the town to see how the professional do it as we head out for farewell dinner and Tango show at La Ventana. This Tango House, located in San Telmo, offers the possibility of admiring all qualities of tango in its different expressions. Tango dancers and singers as well as tango orchestras, will let you enjoy and feel this particular Buenos Aires music at its utmost while having a drink or a wonderful dinner. Andean music, as well as typical Argentine folk music, will also be performed to fulfill your expectations. (B, D)

Day 9 Buenos Aires / USA After breakfast depart transfer to the airport for your return flight home, taking all of your wonderful memories of the past week with you. (B)

The signs are everywhere you turn. From inflated commodity prices to news reports of job losses, we’re hard pressed to keep a good attitude about the economy. So if you’re one of the many that have begun to see the impact of a struggling economy, I have extremely good news for you. Yep, there’s an easy way to increase your business and be one of the haves in this have-not cycle.

Imagine arriving at a place where everyone (or at least nearly everyone) knows your name. You are welcomed by friends and acquaintances who are happy you’re there. Better still, most of them are ready to help you build your business and are even referring you to their family and friends. And you experience this environment several times a month.

But there’s more. This is a place where you can hone your skills as well. You’ll have the opportunity to attend educational programming at a fraction of the cost available to the public. Often you meet people here who have experiences you can learn from. You’re introduced to the movers and shakers. You can even demonstrate your commitment to the community by serving as a leader. Your only limit is you.

Sure, this may appear to be a thinly veined cover of a shameless plug for your local chamber of commerce. And it is. But here’s why I’ve dedicated this article to the idea that you must be a member of the chamber in these challenging times.

1. You need to share your message with as many people as possible for the lowest investment of dollars. For a couple hundred bucks you’ll be a member of a business organization where you can communicate to a closed group of hundreds, if not thousands of potential customers and networking partners.

2. You need to build a network of people who are thinking of you first when they are asked by their customers, friends, family and vendors who they would recommend to provide what you’re selling. By the law of averages the best opportunity you have to fill your networking base is in a big crowd of business people. That is your local chamber of commerce.

3. You need to be in the know about current events and what changes may be coming that could affect future business. The chamber is the epicenter of business trends.

4. You need to be able to prove your worthiness to potential partners, vendors, customers and networking partners. The chamber affords you the opportunity to serve and thereby demonstrate your skills. What’s more, a recent survey by the Atlanta-based Shapiro Group states:

*Consumers are 63% more likely to buy goods and services in the future from a company that they believe is a member of the local chamber

*When consumers know that a business is a member of the local chamber they are 44% more likely to think favorably about it.

*Consumers who are told that a business is a chamber member are 51% more likely to be highly aware of it and 57% more likely to think positively of its reputation.

5. You need to be in a supportive atmosphere where you can see that others are still doing well and you can too. Again, the chamber stands alone as a positive voice for business.

If you’re not a member of the local chamber you owe it to yourself to join today. When you join, get involved. Volunteer to serve, attend meetings regularly and be willing to meet new people. Then you can begin to build your trusted resource network and soon you’ll reap the benefit of being a part of the best business-building network in town.

Regardless of the community, group, or event, there always seems to be someone who meets just the right people at just the right time. While others spend years attending events hoping to meet someone, these seemingly chosen few find it easy to connect and grow their network (and their business). Why?

Here are seven simple steps to become more like those “chosen few”.

First. Remember that you are not there to sell anything right now. Everyone has come to the event or group with the desire to grow their business. And that is why so many people fail to connect. Since everyone expects everyone else to be selling, they naturally put up their protective wall. It’s hard to connect with people through a wall.

Second: Remember that everyone is thinking about themselves most of the time. You must be aware that people love to hear their own name and things about them. That’s why so many people verbally vomit all over others when they meet them. It’s not because they think others want to hear about them, it’s because they want to hear about themselves.

Third: Smile! It’s proven that smiling, seemingly happy people are more attractive to us than people who do not smile. People who smile more are more successful. The simple act of smiling can make you happier. What’s more, smiling leaves evidence on your face in “smiling lines” that make you appear to be smiling even when you are not. Smiling tells others that you are warm and inviting, and most of all, fun!

Fourth: Seek to meet people. Here’s a secret: Everyone is scared just like you. It’s natural to be apprehensive when in a crowd of strangers. When you take the first step and engage others in conversation, you will subliminally be easing the pain that the other person is experiencing. Everyone is there to meet people. You should make it easy for others to meet you by taking the first step.

Fifth: Have a warm handshake, literally and figuratively. If your hands are cold, rub them together to warm them up. Shake hands with people being sure to get a good web-to-web grip. See my previous article ” Success in Sales and in Life Depends on a Great Handshake” to learn how to do this.

Sixth: Ask questions that show a genuine interest in the other person. One great example is, “how did you get into the work that you are in right now?” Asking questions that go beyond what you do and how you do it will go a long way to building rapport and that leads to a better connection.

Seventh: Ask for their business card. When you get their card write down a few notes to remind you about the conversation. Be sure to ask the Million Dollar Question: “As I meet people, how will I know a perfect referral for you?” Write this down and then follow up with a phone call or note.

Every group has the chosen few who seem to have the inside track. They know everyone and everyone knows them. Meeting new people comes naturally for them. Follow these seven steps and you will soon be among the chosen few who meet all the right people at just the right time.

DEFINITION

A chamber of commerce is an organization of businesses seeking to further their collective interests, while advancing their community, region, state or nation. Business owners in towns, cities and other territories voluntarily form these local societies/networks to advocate on behalf of the community at large, economic prosperity and business interests. Chambers have existed in the US for more than two centuries, with many having been established before the jurisdictions they represent.  A business-led civic and economic advancement entity operating in a specific space may call itself any number of things – board of trade, business council, etc. – but for the purposes of this primer, they are all chambers of commerce.

Chamber missions vary, but they all tend to focus to some degree on five primary goals: Building communities (regions/states/nations) to which residents, visitors and investors are attracted; Promoting those communities; Striving to ensure future prosperity via a pro-business climate; Representing the unified voice of the employer community; and Reducing transactional friction through well-functioning networks.  Chambers have other features in common.  Most are led by private-sector employers, self-funded, organized around boards/committees of volunteers and independent.  They share a common ambition for sustained prosperity of their community/region, built on thriving employers.   Most are ardent proponents of the free market system, resisting attempts to overly burden private sector enterprise and investment.

Local businesses are voluntary paying members of a chamber (non-profits, quasi-public and even public sector employers also sometimes pay dues to belong).  The membership, acting collectively, elects a board of directors and/or executive council to set policy for, and guide the workings of, the chamber. The board or executive committee then hires a chief executive (various titles), plus an appropriate and affordable number of staff to run the organization.

In the majority of countries, the use of the term “chamber of commerce” is regulated by statute, though this is not the case in the US.  Only trademark, copyright and domain name rules protect a chamber’s identity – only state corporation law defines their existence and reason for being. While most chambers work closely with government, they are not part of government and many consider the process of appropriately influencing elected/appointed officials to be one of their most important functions.

Currently, there are about 13,000 chambers registered in the official Worldchambers Network registry.  There are roughly 3,000 chambers of commerce in the US with at least one full-time staff person and thousands more established as strictly volunteer entities.

MEMBERSHIP

Under the private, volunteer membership model, which exists in the USA and many other nations, companies are not obligated to become chamber members.  Membership rolls in a given North American chamber can range from a few dozen firms to more than 20,000, so there is no real “average” or typical chamber of commerce.

Chambers do not operate in the same manner as a Better Business Bureau or trade association, which can bind its members under a formal operations doctrine (and, thus, can remove them).  Businesses and other employers pay dues to belong and expect to receive the benefits of membership as long as they continue to invest in the organization.  They usually accept any reputable business as a member, though dues investment schedules can sometimes result in intended or unintended exclusivity.

It is important to note that in most cases it is the company that is the member, not an individual.  A member company is then encouraged to involve numerous senior level employees in the work of the chamber.  While five, ten or more individuals from a given company will identify themselves as “members” of the chamber, only the organization they work for is counted when a chamber states its size.   A company is free to join (pay dues to) multiple chambers and many mid-size to large firms do so (especially neighbors), in order to further advance their companies’ market or policy interests.

Dues amounts are typically determined by the size of the member company (employee count or annual revenue), rather than by the number of people engaged in the chamber from that company.  Some chambers have adopted pay-as-you-go or funding models based on specific categories or quantity of services provided to member companies.

Occasionally, chambers will “bundle” memberships, allowing a single dues investment in one organization to qualify a company for membership in a group of chambers.  This is sometimes referred to “federation” membership and it can even extend to the national level.

SERVICE TERRITORY

The geography of any one chamber of commerce – often referred to as “service territory” – is seldom defined by any political or legal jurisdiction.  More likely, the territory is defined by the catchment area of a chamber’s membership.  The locations of the businesses that compose the membership tend to define the chamber’s footprint and “claim” to a territory.  Adjoining organizations often establish formal or informal understandings about borders.

Minority chambers – Hispanic, African-American, Asian – exist in many larger markets.  Women’s chambers, gay chambers, German heritage and other demographically focused business groups have been established around the country.

While a chamber’s name (usually trademarked) is usually drawn from its approximate territory (The Greater Lehigh Valley Chamber, or the Chicagoland Chamber), there are no rules governing the number of business-led economic advancement groups (chambers) that may exist in, or serve, a given plot of land.  Just within the city limits of Chicago, there are more than 20 chambers of commerce and similar organizations.  Even where a county or regional chamber has been incorporated and established over generations, there may be dozens of local and town chambers operating independently within that same turf.

Why are there so many chambers?  Historical circumstances, population fluctuations, differing ambitions and the needs of employers have all played a role in the formation of chambers.  At the time many chambers were established geographic isolation underscored the need for separate organizations to represent local business and community issues.  While developments in infrastructure, transportation and communications over the past century have better linked businesses with their peers in neighboring communities and even foreign countries, the chambers that represent those businesses have remained viable and vital institutions.  Without a valid purpose, chamber’s boards, members and funders would have abandoned them long ago.

As suburban and exurban populations blossomed, new chambers sprung up to promote the interests of business in those communities.  In some cases, a crisis, like a hurricane, or an opportunity, like attracting a rail connection or promoting an airport expansion, has led to the formation of a chamber that remains viable for decades.  New chambers have also been formed out of disagreements or disgruntlement about the direction, position or focus of an existing chamber.

Like other businesses, chambers also dissolve and merge based on economic or other conditions.  Both the economic recession and increased focus on regionalism appear to be driving increased examination of the benefits of mergers.

RELATIONSHIPS

The chambers in the US and Canada are not bound together under contracts or government regulations.  There is no chapter or franchise arrangement between or among them.  There can be very strong relationships between neighboring organizations, but those relationships are voluntary and informal rather than required or written.  Chambers interact with each other across the nation and the globe – many even maintain formal memberships in other chambers – but the network is informal.  In the chamber world, nobody is “in charge” of anybody; a local chamber does not answer to a state or national chamber.

Local chambers are often, but not always, paying members of their state and national chambers of commerce.  This connection is one of voluntary membership and does not extend to control or governance.  A significant number of chamber executives also choose to join professional associations of their peers, such as the American Chamber of Commerce Executives, the Western Association of Chamber Executives, State Chamber Executive Associations, or the World Chambers Federation.  These memberships are for professional development purposes similar to those of any trade association and, once again, the relationships do not involve the abdication of self-determination.

POLICY INDEPENDENCE AND COOPERATION

The most difficult aspect for the general public, media, government officials and even some businesses to understand is that there is literally no inherent hierarchical structure in the chamber world.  This can be extremely confusing to those who naturally assume that a few thousand entities sharing the same name must be related and that some ordered lineage must exist among them.  That is simply not the case in the US.  When business and economic policy priorities align, which is usually the case, chambers of all sizes attempt to work together and speak with a unified voice.  Inevitably, conflicting positions will arise about some issues, or about strong positions (or lack thereof) of chambers at various levels.

To illustrate, the head of a community-based organization like a retired citizen group may wrongly assume that a position taken by a state chamber is shared and endorsed by their local chamber.  Likewise, a large metropolitan chamber of commerce could take a strong position in favor of an infrastructure project or educational reform initiative, which will not be embraced or supported by suburban chambers operating within the same metro region.

Or, a coalition of chambers might unite under the leadership of the United States Chamber (the national business advocacy organization representing hundreds of thousands of member corporations) to advocate for/against a bill affecting border crossings, but the coalition may include only a few dozen of the thousands of chambers in the US.  Any individual chamber may take a very visible, contradictory stand on that same international visitor policy. On certain issues at certain times, the US Chamber can organize thousands of its member chambers and associations into a unified grassroots lobbying force.  Many chambers have also voluntarily entered into a “Federation” relationship with the United States Chamber, which involves more consistent engagement in federal policy activities by both the local chamber and its members.

Since businesses are not required to join a chamber (penetration levels vary widely), and because territories overlap, it can be difficult for any one organization, regardless of size, to state that it “speaks for business,” but they do.  They earn that privilege by attracting numerous and large heterogeneous employers to their membership and leadership, as well as by utilizing their collective voice on meaningful policy initiatives.  In general, the smaller the chamber (and community it represents), the less active the organization will be on the policy/advocacy front.  Even small organizations, however, take stands on regional issues ranging from school funding to road development.

The processes of choosing and articulating specific policy positions vary by organization and issue.  For the most part, a vote (or expression of consensus) of a chamber board of directors determines the stand to be taken in the name of that chamber on any issue.  In recent years, with the increased involvement of public sector and non-profit employers in chambers, consensus-building has become more difficult at all levels.  Chamber boards are independent, but they usually take into account the recommendations of state and national organizations when larger issues are considered.

The US Chamber and state chambers provide local counterparts with extensive background and adaptable sample documents.  Local chambers then debate, adopt, adapt or reject the larger entities’ recommendations.  Likewise, local, regional and state chambers express their opinions about legislation specific to them, in hopes that their views will be shared, embraced and supported by others.  The American Chamber of Commerce Executives provides access to a Policy Clearinghouse, which enables member chambers to share knowledge about state and local public policy issues and strategies being employed in various regions to deal with those issues.

Because the chamber world is not structured around an affiliate or chapter model, such disagreements cannot be solved by a controlling authority.  Sometimes the disagreements cause destructive friction and bonds between chambers are broken.  More often, chambers issue differing position statements and agree to disagree, knowing that the opportunity for cooperation on future issues will be critical for them all.

STRUCTURE

Chambers of commerce in the US operate almost exclusively as non-profit entities known as 501(c)(6) corporations.  Unlike charities, these 501(c)(6) non-profits have the authority under state and federal tax rules to represent their members in public policy debates.  They may lobby and take positions on actual or proposed legislation, subject to local, state and federal laws.  Chambers may legally endorse candidates for public office and/or ballot propositions (but most do not).  The use of general fund revenues for chamber political and lobbying purposes is strictly regulated.  The chief executive or another member of the staff is sometimes a state-registered lobbyist. The portion of any member’s dues investment allocated to direct lobbying is not deductible as a business expense.

Chamber business models and organizational missions vary significantly.  Some chambers may offer services and products that appear to compete with businesses operating within their own territories.  One group of chambers may affiliate with a service provider to offer discounts or other benefits to chamber members (from low-cost office products to health insurance), while another group aligns with a completely different vendor.  As a rule, larger chambers tend to rely less on membership dues revenue than their smaller counterparts.  About one-third of the chambers of commerce in the US also include economic development corporations and/or tourism and visitors bureaus.  Virtually all chambers have revenue sources other than dues; event income is the most common.

Although a chamber is a non-profit entity under federal tax law, such a 501(c)(6) is free to undertake supporting business activities (referred to as “unrelated business income) – publishing, trade shows, insurance programs, etc.  In many cases, these activities are subject to business income taxes.

Many chambers establish charitable/educational foundations, known as 501(c)(3) corporations, to support specific, eligible parts of the chamber’s agenda.  The allowable purposes and rules related to such supporting foundations are different than those that have been established for 501(c)(6) organizations.

(NOTE:  In a few cases, for-profit chambers have been established in some communities.  These business ventures are routinely shunned and fought by traditional non-profit chambers.)

The largest metro or state chambers may employ up to 100 people.  The vast majority, however, have staffs numbering fewer than five and budgets under half a million dollars.  Chamber professionals serve in jobs covering most of the disciplines found in other small businesses – communications, finance, marketing, customer service and event planning.  Some chambers specialize in certain activities, such as economic development, tourism, research, and/or advocacy.  Some provide staffing and management to development-related government agencies on a contract basis.

IF YOU’VE SEEN ONE . . .

The term “chamber of commerce” is one of the oldest and most well-recognized brands in the world, but there is significant public misunderstanding of its meaning.  There is an old adage in the chamber world:  “If you’ve seen one chamber, you’ve seen one.”  Others who find themselves frustrated with a desire to apply universal truths to chamber of commerce models point to the Chinese parable of the seven blind men touching different parts of an elephant and coming away describing it differently (“It’s a snake . . . no it’s a tree . . . no it’s a brush on a rope . . .”).  In all cases, the whole of a chamber of commerce is greater than the sum of its parts, programs, people and participants.

ADDITIONAL NOTES ON INTERNATIONAL CHAMBERS

In many countries around the world, membership in the chamber of commerce is mandatory under national laws, with fees collected under some part of the business permit or taxation process.  These organizations are referred to as “public law” chambers.  Many of them boast memberships in hundreds of thousands, since literally all legitimate businesses must belong. Chambers in the UK, Canada, Australia and Eastern Europe tend to operate on a voluntary membership basis like the US.  In the European Union and much of Asia, public law chambers are more prevalent

The government advocacy activities of these chambers are, of course, substantially different than those in the US, but many of the issues addressed by these public law chambers would seem familiar to chambers of commerce in North America – i.e.: workforce, infrastructure, economic development, education, community image, etc.  The issues are similar, but the business models are dramatically different, since they have government-sanctioned status, rather than corporate identities.

Many chambers around the globe belong to regional associations i.e. Eurochambres and the Mediterranean Chambers of Commerce.  The World Chambers Federation ties a few thousand chambers from around the world together into one loose association, which operates under the auspices of the International Chamber of Commerce in Paris.  The WCF meets every other year for a World Chambers Congress.

Entities nicknamed “Am-Chams” exist in many large markets around the world – i.e.: The American Chamber of Commerce of Singapore, or the Egyptian Am-Cham.  These organizations involve the American companies operating in these locales, as well as the local firms doing business with US firms.  They focus on trade issues, but also on regulatory climates in the host countries.

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