Interim Dean Misty Johanson | Photo by Kathy Hillegonds
As an educator, researcher and professional focused on the hospitality industry for the past 20 years, I have gained a deep understanding of what makes organizations successful: the ability to build relationships and provide exceptional service.
The same two factors are important to the success of a business college. That’s why, as interim dean of the Driehaus College of Business for 2017–18, my priorities are to build relationships and to ensure that our programs and people serve our students well.
Our relationship-building goals for this year encompass both fundraising and friend-raising among our alumni and champions in the business community. The support you and the business community provide our college ensures that we can offer our students an enriching, real-world academic experience, as well as mentorships, internships and career opportunities that lead to post-graduation success.
Within the college, we are updating our programs and seeking new ways to improve the student experience. We have expanded our corporate partnerships to offer professionals the convenience of cohort degree programs at their workplaces. We recently moved our weekend MBA program to the Loop Campus to better serve students who want to attend classes downtown, near where they live and work. We also are offering more STEM-designated master’s programs, which are appealing for international students. You can read more about our new academic offerings in College News.
As this issue’s cover story about the experience-driven economy suggests, businesses must continually evolve to adjust to the needs of the marketplace. So must business schools. This year we plan to introduce a new master’s degree focused on data analytics, which responds to the market’s demand for more professionals who can mine business intelligence for actionable insights that enhance organizational performance. In addition, we are exploring an expansion of online programming and plan to introduce a second international MBA program in 2018.
While our program offerings evolve over time, one thing remains constant—our dedication to producing graduates who succeed personally and professionally while bringing value to the business world. DePaul’s most recent Post-graduate Outcomes Survey shows that this commitment is fostering positive results. The DePaul Career Center’s survey of the Class of 2016 found that 94 percent of business majors and the same percentage of Kellstadt graduates were employed, continuing their educations or not seeking employment. Among bachelor’s degree recipients, median salaries increased 3 percent, and marketing and economics majors saw 10 and 8 percent increases, respectively.
With the support of our alumni and the business community, we look forward to building on these gains and ensuring that our graduates continue to achieve success in the future.
Misty Johanson
Interim Dean
Driehaus College of Business
Alumni gather for the DePaul business college’s first reunion and networking event in China.
For DePaul alumna Quen Wang (MSA ’16), attending DePaul University’s first-ever business alumni reunion in China last April felt like “coming home.”
“I saw so many friends and professors,” says Wang, an audit associate in Deloitte’s Suzhou office. “This is a good stage for us to network with new friends to exchange ideas with each other. Everyone was excited and enjoyed it.”
Held at the Fairmont Peace Hotel on The Bund in Shanghai, the reunion and networking event attracted more than 60 alumni who live and work in China. Accountancy professor Hui Lin, DePaul’s associate director of regional initiatives for China, organized the spring gathering through a new WeChat social media group for DePaul alumni in China that she created with Li Jin, director of DePaul’s Chinese studies program. The online group has about 300 followers.
“We haven’t had a formal event like this before in China, and everybody was really excited to be reconnecting with other alumni,” says Lin. “Given the recent increase in our student population from China, this made sense. We’ve received very positive feedback, including interest in DePaul having another event in the future.”
The success of the Shanghai event has already inspired alumni in Shenzhen to organize their own reunion, which took place in May.
Lin hosted the Shanghai event with Associate Professor of Marketing Zafar Iqbal and Elaina Mack, assistant director of recruitment at the Kellstadt Graduate School of Business. While in China, the trio also connected with Chinese students interested in attending DePaul’s graduate business program. They answered questions about international admission, coursework, internships, career support at DePaul and life in Chicago. Lin notes that the growing number of DePaul alumni in China is a great career networking asset for Chinese students should they decide to attend DePaul.
Those alumni include Phoebe Shijun Li (BUS ’14), who traveled 300 miles to attend the April reunion in Shanghai. “I really appreciate Professors Lin and Iqbal for creating this awesome reunion opportunity for Chinese alumni,” says Li, vice president of marketing and sales at Honghai Glass Inc. “The reception brought us together from different industries. With this precious opportunity, we had a chance to (get to) know more people, learn from each other and reunite with our university professors and old friends.”
Kellstadt Enhances Program Offerings
The Kellstadt Graduate School of Business has made several moves recently to strengthen its programs and meet the evolving needs of its students. They include:
Forming new corporate partnerships through DePaul’s Corporate and Employer Outreach initiative to provide on-site degree programs at area organizations. This fall, Kellstadt added MBA cohort programs at Bosch and Northern Trust, joining existing MBA programs at MB Financial, Fifth Third Bank, Walgreens and CDW.
Relocating the DePaul Weekend MBA program to the Loop Campus this fall to be closer to prospective students, who increasingly work for companies based in the city.
Expanding STEM-designated master’s degree offerings. This Homeland Security designation for science, technology, engineering and math-related degrees allows international students to extend their stays in the United States to pursue education and career opportunities.
Introducing an MBA management concentration, which provides students the flexibility to focus their studies on coaching and talent development, consulting, leadership and change management, managing human capital or supply chain management.
Renaming the Master of Accountancy (MACC) the Master of Science in Audit and Advisory Services (MSAA) to better reflect the expertise that students gain in this degree program.
“We are constantly enhancing our programs to meet the changing needs of our students,” says Assistant Dean Christa Hinton (MBA ’98, EdD ’12), director of the graduate business school. “Kellstadt is committed to providing programs that allow graduates to reach their professional goals and bring value to their employers.”
DePaul also has increased its combined degree offerings, which allow students to earn bachelor’s and master’s degrees together. “Not only do I save time and money by earning two degrees at once,” says student Prima Bautista, who is pursuing a combined bachelor’s and master’s in accountancy, “but also the program will make me eligible to sit for the CPA exam and therefore more marketable and attractive to recruiters.”
Coleman Entrepreneurship Center Forges New Alliance
The Coleman Entrepreneurship Center (CEC) is partnering with the School of Music, College of Law and College of Computing and Digital Media to create a DePaul membership at 2112, a Northwest Side incubator for music, video and creative technology startups.
The membership provides faculty, students and alumni access to workshops, lectures, mentorships and other engagement opportunities with entrepreneurs at 2112’s two-year-old facility in Chicago’s Portage Park neighborhood.
Bruce Leech (MBA ’81), executive director of the CEC, says DePaul is the first university to join 2112, which is named after an album by the rock band Rush.
Coleman Entrepreneurship Center Executive Director Bruce Leech (MBA ’81) and Assistant Director Abigail Ingram (MA ’15) with 2112 Director of Strategic Initiatives Amor Montes de Oca and Director Scott Fetters.
“No matter what business or career you enter, the skill sets of entrepreneurship and innovation are important for sustainable success,” Leech says. “We believe by joining 2112 we will reach a more diverse group of DePaul students and alumni who are interested in starting a business in these areas.”
Scott Fetters, director of 2112, says that “providing DePaul University students with educational resources, physical workspace and real-world industry experience perfectly aligns with 2112’s vision to help define the future of the creative industries. It’s a privilege for 2112 to support DePaul’s long standing commitment to their students.”
The CEC also formed a new internal alliance in July when DePaul’s Center for Innovation (CI) was merged with the CEC.
“Integrating CI’s most successful initiatives into the CEC’s programming creates synergies that will boost engagement among the ideation and entrepreneurship communities they serve,” says Misty Johanson, interim dean of the Driehaus College of Business.
Management Professor Lisa Gundry, who directed CI, will continue to provide oversight for the innovation programs that have moved to the CEC.
Since joining DePaul University more than 30 years ago, Accountancy Professor Mark L. Frigo has taught thousands of students how to create value. Students who take his courses gain a deep understanding of strategy, risk management, accounting and financial analysis, as well as how successful companies achieve sustainable high performance.
“Understanding the pattern of strategic activities of high-performance companies helps our students create value as business professionals, entrepreneurial managers and in managing their careers,” he says. Given his significant contributions to DePaul and its graduates, it’s fitting that the Chicago native has been named the Ezerski Endowed Chair in the School of Accountancy and Management Information Systems. Established by a 2010 gift from Ronald Ezerski (BUS ’68), former vice president of finance at Patterson Co., the endowed professorship recognizes accountancy faculty excellence.
“Being named the Ezerski Chair is a great honor,” Frigo says. “Reflecting on memorable accomplishments at DePaul, there are so many I can recall and most importantly there are many more yet to create in the future.”
Prior to joining DePaul, Frigo led a successful career in corporate financial analysis and management consulting at KPMG. He is the author of seven books and more than 100 articles that have been published in leading journals, including the Harvard Business Review. His research on high-performance companies is featured in “Driven: Business Strategy, Human Actions, and the Creation of Wealth,” a book he co-authored with Joel Litman (BUS ’93) to help leaders better analyze and prioritize value-creating strategies. It is the basis of courses he teaches as a professor and director of DePaul’s Center for Strategy, Execution and Valuation.
Frigo has won numerous teaching awards at DePaul and also was named an Outstanding Educator by the Illinois CPA Society. A fourth-degree black belt in Shotokan karate, Frigo has been practicing and teaching martial arts for five decades and incorporates elements of it into his classroom and executive education presentations.
“I try to instill the wisdom, energy and philosophy from martial arts in my courses to reinforce a learning and creative mindset,” says Frigo. This includes creating an atmosphere of mutual respect and trust between teacher and student in the classroom, he says.
“DePaul is a great university with very motivated and driven students, a talented faculty and very successful and loyal alumni,” he says.
My ‘why’ is to help our students to achieve greater success professionally and personally by changing the way they think in a positive and powerful way.”
Occupation: President, Capsim Management Solutions Inc., a Chicago-based company that delivers online business simulations and rich learning environments for both academic and corporate clients. I began working there as a business training analyst in 2007 and have since held a number of positions that have helped me in my current role as president. When Capsim started in the 1980s, it delivered business simulation-based training to corporations. Our first testing ground in the university market was DePaul in the ’90s. I did my first Capsim simulation as a DePaul undergraduate, and I currently use simulations in teaching strategy as an adjunct professor in the college’s Department of Management & Entrepreneurship.
What I like best about my job is: I know many companies say it, but we truly want to make a difference. I think the reason we are still around in this rapidly changing environment is that we are determined to keep making learning more accessible, relevant and applicable.
The biggest challenge I face in my job is: Sifting through all the available opportunities and working out what to say “yes” to and what to say “no” to. Some of the things we reject look so good and tempting, but like every company, we have limited resources—time, people, expertise, cash. It’s my job to allocate the resources to the opportunities that have the best chance of success and best align with our strategy.
My DePaul experience helped me to: Face the different challenges that come with managing teams, making executive decisions and aligning tactical decisions with a strategic direction. What I was taught at business school, and what I teach at business school, is what I do every day at work. It is an amazing opportunity for me, as a teacher and a leader, to see how the theory and the practice work together.
Dimitri Eliopoulos (BUS ’01), managing director of Central Midwest, left, and Benjamin J. Albrecht, CFP, Vice President, Wealth Advisor at RMB Capital, right.
When Dimitri Eliopoulos (BUS ’01) began attending DePaul University to study finance, he knew he wanted to work with money and people. So, at the start of his senior year at the Driehaus College of Business, Eliopoulos began applying for internships in the wealth management industry through the DePaul Career Center. He soon scored a summer internship in Chicago working with a small team at a large financial services firm.
Now, more than a decade later, Eliopoulos is working with the same team of people who founded RMB Capital, an independent firm that specializes in wealth and investment planning for organizations and individuals. Previously a senior wealth manager, Eliopoulos was promoted to managing director of Central Midwest at RMB Capital, overseeing the firm’s wealth management business in the Central Midwest region.
Eliopoulos credits his success to getting his foot in the door through an internship. “My internship was very hands-on,” he says. “The individuals who led the team that I joined years ago are mentors to me and they’re my partners today. I was able to do everything from job shadowing to helping prepare investment and financial planning recommendations for clients or prospective clients. I had the ability to make mistakes and learn from those mistakes.”
Fostering Career Success
According to a report released by the Georgetown University Center on Education and the Workforce, 63 percent of college graduates who completed a paid internship received a job offer, compared to 35 percent who never interned.
“Internships are a crucial component for business students, especially for those who are looking to start their career or make a transition,” says Enrique Guerrero, assistant director at the Kellstadt Career Management Center. “At face value, internships provide beneficial, real-world experience. With that experience comes the chance to get a feel for an industry that may be new for you. It isn’t uncommon for students to complete an internship knowing that it wasn’t something they see themselves doing long-term, and that is okay.”
To prepare graduate students for post-graduation employment, the Career Management Center hosts career strategy sessions and recruiting and networking events, and connects students to Kellstadt’s extensive employer and alumni network. The DePaul Career Center helps undergraduate students by providing similar career coaching services.
Courtney Hubbard’s (MBA ’17) transfer pricing internship at Ernst & Young led to a full-time job.
For Courtney Hubbard (MBA ’17), taking advantage of Kellstadt’s resources played a large role in determining her career goals. Hubbard enrolled in Kellstadt’s full-time MBA program after working in public affairs in Washington, D.C., for more than six years. The Career Management Center connected Hubbard to an alumnus working in transfer pricing at a large accounting firm through DePaul’s Alumni Sharing Knowledge (ASK) alumni mentor program. The connections eventually confirmed Hubbard’s interest in transfer pricing and led to a summer internship in transfer pricing with EY, one of the Big Four accounting firms. Following her internship, Hubbard landed a full-time position with EY.
“The good thing about transfer pricing is that people come from a lot of different backgrounds,” says Hubbard. “It was a great place for me to use my experience in an area that was open to someone with a unique set of skills.
“Utilizing the Kellstadt Career Management Center and using the DePaul ASK network were crucial for me,” she continues. “I would not have gotten this job if the Career Management Center had not had my back (when) I came in and asked for help.”
Persistence, Communication and Networking
Eliopoulos, who is the first in his family to graduate from college, says, “One of the skills that I think is critical and necessary, in addition to learning a trade and getting a degree in a specific field, is to learn how to be a great communicator. You could be the smartest person and have the greatest idea, but if you can’t communicate or articulate it, you’re not going to be as successful.”
Being intentional about expanding your network and utilizing professional development events and workshops are keys to securing an internship and full-time employment. Hubbard advises students to use Handshake, DePaul’s job portal, research connections on LinkedIn and be persistent.
“It’s a commitment to get an internship. You have to be hungry, do what it takes and do the work yourself,” she says. “No one is going to come to you offering you an internship. You have to go look for them.”
What skills do financial executives need to manage risk successfully in a rapidly changing business environment? To answer this question, Ezerski Chair Mark L. Frigo of DePaul’s Driehaus College of Business and Paul L. Walker, Schiro/Zurich Chair in Enterprise Risk Management at St. John’s University, conducted interviews with financial executives from top companies.
“The scope of CFOs’ responsibilities toward enterprise risk management has been expanding,” Frigo says. “We wanted to identify the capabilities that CFOs need to have today, as well as tomorrow, to manage risk and anticipate disruptions before they impact organizations.”
CFOs and other executives from Microsoft, Oracle, Boeing, Dow Chemical, Martin Marietta, Coca-Cola and Pitney Bowes were among the leaders interviewed. Based on these interviews, the researchers identified four things financial executives must be able to do:
Proactively recognize the sources of enterprise
Develop insights and an enterprise-wide understanding of their organizations’ risk profiles and capabilities to manage risk.
Think and communicate strategically.
Create a forward-thinking, strategic finance organization.
Frigo and Walker’s research report, “The Strategic Financial Executive: Managing Enterprise Risk in a Disruptive World,” was sponsored by Grant Thornton and published by the Financial Executives Research Foundation.
Science fiction is full of stories about robots that become so lifelike that people can’t tell they’re not human. As our digital products increasingly take on the characteristics of people, researchers are looking to see whether science fiction may be morphing into science fact.
“We are anthropomorphizing more and more of our products,” says James Mourey, assistant professor of marketing. “The best examples are Amazon’s Alexa or Siri on your iPhone. The theory we had is that if we make these increasingly humanized, to what extent do they start potentially replacing human-to-human interaction? And through a series of studies we show that, yes, scarily enough, products that do have humanized qualities can fulfill social needs, like the feeling that you belong, that are typically fulfilled by interpersonal interaction.”
But don’t worry—these “robots” are not really replacing your friends and loved ones. “Most people immediately jump to the doomsday scenario in which we are not going to be interacting with humans anymore. But what we find is that once you are told that your device is not human these effects go away.
“While there’s no replacing people with products,” Mourey says, “tech companies do need to be aware of the effect that these products can have on interpersonal relationships.” Mourey and two co-authors published their findings in the Journal of Consumer Research last January.|
There is no such thing as a one-size fits-all approach to career education at business schools. While some students are just entering the workforce and need help with résumé building and interview skills, others are looking for career coaching to help them advance on the path to the C-suite.
The Kellstadt Career Management Center offers a variety of programming for students and alumni at all career stages, though career advancers make up the majority of requests for its coaching, says Jennifer Kopczynski (MED ’08, BUS MS ’17), director of the center. “They have an idea of what they want to do with their careers, whether it is staying in the same company, function or industry, and are looking for additional career education to help them advance.”
The Career Management Center created the Executive Career and Leadership (EXCEL) workshop series for working professionals who have at least three to five years’ experience. The quarterly workshops have tackled such subjects as “How to Build a Personal Brand,” “Building a Business Case to Hire You” and “Take Charge of Your Career.”
Naeem Morris (MBA ’17)
Naeem Morris (MBA ’17) attended every EXCEL workshop offered during his time at DePaul.
“I like to get to workshops a few minutes early and stay a little later to exchange business cards,” says Morris, who works in sales management. “I found EXCEL to be a great opportunity to network with other MBA students and alumni and come away with tactics and information to help with career goals.”
Morris’s goal is to be a chief marketing officer (CMO). The EXCEL workshop that he felt was most effective for him was “Advancing Your Career While Employed.” This seminar taught participants how to leverage their MBA within their organizations to move ahead in their careers.
“I always come away with a new tool or tip that has helped me in my career,” says Morris, who recently started a new position at LeasePlan USA. “In this particular workshop, I learned the ROI of advancing internally or externally, and how to identify and develop special skills, create corporate capital and understand the importance of having advocates on your team.”
In addition to the EXCEL workshops, the Kellstadt Career Management Center offers BUILD workshops for early career development and a BOOST webinar series for ongoing career management. Alumni are welcome at any workshop series and can take advantage of the center’s unlimited career coaching.
Learn more
For more information about the EXCEL workshops, email cmc@depaul.edu.
Jim Ryan (MBA ’87), chair of DePaul’s Board of Trustees, is full of gratitude to the university. “Both of my parents attended DePaul. That’s where they met. I like to tell people I’m eternally grateful for DePaul, because if it were not for (the university), I probably wouldn’t be around,” Ryan says.
Ryan credits his parents’ strong work ethic and values as driving forces in his life and his successful 37-year career at W.W. Grainger, an industrial supply company based in Lake Forest, Ill., where he served as president, CEO and board chairman. “Both of my parents grew up in Chicago. They were both first- generation college students, which is very much a big part of the profile of students at DePaul,” says Ryan. “My parents, like a lot of students at DePaul, worked to put themselves through school.”
His father, the late James Ryan Jr. (BUS ’53), had a long career in labor relations and human resources, working for companies such as General Dynamics and Freeman United. His mother, Patricia Ryan (BUS ’53), served as an assistant for many years to a number of different executives at Chicago-based companies.
Ryan took many of his DePaul MBA classes while he was working at Grainger in the 1980s. Ryan says that he was attracted to the program’s practical approach. “There were theories, concepts and ideas that I got to explore during my MBA that were directly applicable to the things I was doing during the day at work,” he says.
Dr. Gabriel Esteban and Jim Ryan, trustee and chair of the Presidential Search Committee, share a laugh as they chat about tie colors on stage Thursday, Feb. 16, 2017, at the Student Center on the Lincoln Park Campus. (DePaul University/Jamie Moncrief)
In May, Ryan was elected chair of the DePaul Board of Trustees, which he has served on since 2007. Playing an active part in the DePaul community is important to both him and his wife, Michelle. “My wife and I have been blessed in a lot of ways, and I feel like it’s a responsibility for us to give back to organizations like DePaul that have such a worthwhile and honorable mission.
DePaul transforms people’s lives, not only by providing a high-quality education, but also by providing access to that education to people who might otherwise not have access to it,” says Ryan.
The Ryans established the James T. and Michelle A. Ryan Family Scholarship earlier this year to fund tuition and expenses for graduates of the Chicago Jesuit Academy, a middle school in Chicago’s Austin neighborhood where Michelle is a volunteer teacher and board member. “Education will help the trajectory of these kids’ lives,” says Ryan. “This is great opportunity to (make) a very positive impact.”
Allyson Murphy (BUS ’15) is front office manager at Hotel EMC2, a boutique hotel that features two robots, Leo & Cleo, who work as personalized assistants to guests. The new art-and-technology theme of the hotel appeals to millennials.
Millennials are predicted to become 50 percent of all travelers in the Unites States by 2025, according to study by the Cornell Center for Hospitality Research. When they do travel, members of this generation are increasingly staying at boutique hotels in their quest for personalized, authentic and technology-driven experiences.
To find out more about this trend, we talked with Allyson Murphy (BUS ’15), front office manager, and Alexander Foster, director of rooms at Hotel EMC2, a boutique hotel that opened in the Streeterville neighborhood of Chicago in May. Founded by Lincolnshire-based SMASHotels and part of Marriott’s Autograph Collection, EMC2 has a millennial-appealing, art-and-technology theme that is inspired by scientist Albert Einstein.
In addition to working at EMC2, Murphy and Foster, who both previously worked for Starwood Hotels & Resorts, share their knowledge of the lodging industry as mentors for students in DePaul’s School of Hospitality Leadership.
Q: About what percentage of your clientele are millennials, aged roughly 20 to 35?
Foster: Almost half of our guests are millennials. We find that we attract a wide variety of travelers from all walks of life.
Q: How does the hotel’s theme and decor appeal to experience-seeking millennials?
Foster: Our guest rooms feature many different touch points for experience-seeking travelers. My favorite is the phonogram, which allows our guests to amplify music from their phones.
Murphy: Our hotel tells a story the minute you walk in the door. Guests are welcomed by Leonardo Da Vinci’s wisdom: ‘Study the science of art, study the art of science. Learn how to see. Realize that everything connects to everything else.’
Q: Millennials are technology savvy and socially connected, and they expect the same from the hotels where they stay. How does EMC2 address their expectations?
Foster: No one has time for phone calls anymore, our guests included. We implemented a text-messaging platform that we found makes communication less intrusive for our guests and allows for a quicker connection.
Alexander Foster, director of rooms (left) and Allyson Murphy (BUS ’15), front office manager at Hotel EMC2, a Chicago boutique hotel. The hotel has an art-and-technology theme that appeals to millennials.
Murphy: Each guest room features an Amazon Dot (Alexa) that can connect to our Guest Services team. You can ask her almost anything, including restaurant recommendations, for any forgotten items, or even just to say ‘hi’ to our robots, Leo & Cleo.
Q:What services does EMC2 offer that appeals to millennials’ desire for unique, authentic and personalized experiences?
Foster: Our property features two robots, Leo & Cleo, that work as personal assistants. The experience of having a robot come right to your door with towels or welcome amenities is truly unlike anything else.
Murphy: One of the most authentic elements of Hotel EMC2 is our staff. Our Door Attendant team starts out guests’ experience from the minute they walk in the door. They tell the story of the hotel and show off each unique feature of our guest rooms. Our team is also knowledgeable about local art and science exhibits in the city.
Q: How is food and beverage at EMC2 designed to meet the preferences of the millennial market?
Foster: Our restaurant, the Albert, features globally inspired food, crafted by Executive Chef Brandon Brumback. His ever evolving menu consists of only the freshest local ingredients that are currently in season.
Murphy: Not only can our guests dine in our beautiful, library-esque dining room, but they can have that same experience in the comfort of their own guest room. Our guests can view the menu with ease on our interactive TV platform.
Q: Social consciousness and sustainable practices are important to many millennials. How does EMC2 support this?
Foster: With a focus on building the best possible team to deliver the best possible service, we partnered with Heartland Alliance, which actively helps refugees from all over the world. They have an incredible hospitality program, which trains their students to work in hotel operations and prepares them for a future in hospitality.
Murphy: Hotel EMC2 believes that creating is universal and innovation is the key to the future. Our team fulfills this vision through its partnership with Project SYNCERE, with a percentage of each reservation booked going directly to students studying in the STEM field.
Q: As student mentors at the School for Hospitality Leadership, what advice do you have for students and recent alumni who are entering the hospitality field?
Foster: Network! You never know who will become your next potential boss or coworker. The hospitality world is incredibly small and well-connected. Take advantage of every opportunity to interact with industry professionals as everyone has a unique piece of knowledge that they can share with you.
Murphy: Have an open mind and be willing to take on any role! Each experience is a unique opportunity for you to learn something new.
Q: Anything else you would like to add?
Foster: With all of our technology, it’s easy to forget our beautiful art that is everywhere in the hotel. Each of our meeting rooms, Emmy Noether (named for the German mathematician) and Symmetry, feature a unique custom piece created by our Resident Scientist Eugenia Chang. In Emmy Noether, Eugenia brought Emmy’s theory to life with a visual representation of her conservation of movement theory. In Symmetry, the concept and real-life instances of symmetry are displayed across the front of the room.
Murphy: From the novel we leave on the night stand in each guest room to the zoetrope in the lobby displaying artistry and angular momentum, we give travelers “Instramagable” moments throughout the entire hotel. The hotel encourages our guests to come together to appreciate art and science in a non-traditional way.
DePaul’ Universitys Mike Miller (right), associate professor of economics, and Tom Mondschean, professor of economics, discuss current issues facing the economy.
Mike Miller and Tom Mondschean are two long-time DePaul economics professors who are often interviewed by the media about current economic debates. Last fall, they teamed up to share their varying perspectives on economic issues shaping the 2016 Presidential Election as guest lecturers in a DePaul political science class. Business Exchange checked in with them again this fall to find out their views on five big economic questions that are dominating current national and local headlines. The questions include two submitted by alumni via the DePaul business school’s LinkedIn page. Below is an excerpt of this conversation.
Q: Do tax breaks stimulate growth in the economy?
Mondschean: Tax breaks can be an effective stimulus depending on the type of tax break. But I don’t think generally cutting taxes across the board necessarily stimulates the economy any more than any other kind of fiscal stimulus. For Instance, tax breaks to encourage more investment or research and development would be more useful than other types of tax breaks.
Miller: I agree, but would add a few other things. Many people on my political side think that all tax breaks always lead to growth. They point to two other cases (of leaders who implemented tax breaks): John F. Kennedy and Ronald Reagan. What they are missing is that the rates that were changed (then) were excessively high and they were dramatic reductions. However, if you are talking about reducing taxes, which are already low, there is not any empirical evidence that this will lead to higher employment or higher incomes and so forth.
Mondschean: You also have to consider the offsetting factor of the deficit and how often people tie high tax cuts with government spending cuts to make the revenue deficit neutral.
Miller: There is research that asks the question: can you starve the government in order to cut taxes, and the answer is no. Cutting spending is not the number one way to get things to work. The most contractionary action a government can take is to raise taxes. The effect of a tax hike is much greater than a commensurate decrease in government spending.
Mondschean: It is not asymmetric in that way. Tax increases could potentially be beneficial if they cut the deficit. We already under fund our government given the amount of spending the people want to have and we push that responsibility onto future generations. The true level of taxation on the economy is the level of spending, not the level of taxes. Shifting the cost onto future generations by not taxing enough to pay for the spending is what we are doing and it is harmful.
Miller: According to the works of economic researchers David and Christina Romer, the most contractionary action you can take is increasing taxes, not cutting spending. Tom and I mostly agree that raising taxes can be bad. Overall, we agree, but you can actually make things better if you fund the government properly.
Q: How does Illinois’ pension crisis affect Chicago?
Mondschean: In some ways, it has not affected our city yet. The economy keeps chugging along. Illinois has been a cheaper place in which to do business in the last few years in part because it has not adequately funded its pension plan. I don’t think people fully understand the magnitude of the crisis that we’re facing. As of Dec. 31, 2016, the Chicago firefighters’ pension fund is about 21 percent funded; the police fund is just under 30 percent, and those are based on fairly generous actuarial assumptions about the underlying liabilities. Those funds will eventually run out. And what happens when they do? What do we tell the firefighters and police who have put their lives on the line for their whole careers to help the city when their pension funds run out? This is a crisis Chicago will face 15 to 25 years down the road. It is hanging over our heads and no one has a real sense of the issue. Chicago’s mayor raised taxes quite a bit to put money into the pension fund, but that was a small portion of what is needed. This has been a problem that will have an effect on the business climate in the long term.
Miller: I have nothing to disagree about this, but I would add that the only way around it—given that you can’t change the agreements—is to raise taxes. You have to fund it properly. When you compare our relative tax rates to others states around us, it’s clear that raising our taxes again can only be extremely damaging. When you combine income taxes with real estate taxes and sales taxes, we have a relatively high tax rate. The trouble is Chicago is so close to the border. If it were in the middle of the state, it wouldn’t be the same situation. All the surrounding states have a better business atmosphere than we do, which allows capital to move not that far and keep their customers.
The pensions have to be funded. It will be immoral to not pay these people their pensions that they have been promised. They’ve made their plans for retirement with these pensions in mind. But, how do we pay for them? We make assumptions that these funds will have a 7 percent rate of return—but the state hasn’t made their contributions. That is why our credit rating is the second lowest in the country—if not the lowest. Anything that you borrow, you are going to have to borrow at a higher rate.
Mondschean: This definitely affects the finances of the state and local government. Illinois is in a mess not only because of pensions, but also because we have huge backlog of unpaid bills.
Miller: Around $15 billion.
Mondschean: That’s a huge problem and the lack of any kind of consensus in Springfield to come to terms with this in a meaningful way is troubling. Chicago is a net revenue producer. We send more revenue to Springfield than we receive. This unfairness has never been addressed.
Q: Does globalization hurt U.S. economy? (alumnus reader question)
Miller: No, globalization helps, but it helps unevenly. There are going to be winners and losers. Some of my conservative colleagues and I split in this opinion. Some people are ruined by globalization. It is my opinion that if the government is going to impose such policies, it behooves them to then help these people be retrained to get into something else given what their policy has done. Are we better off getting the product with the lowest possible price, with the most efficient allocation of the world’s resources? But there are people who are clearly ruined by it and they have to be helped and given a chance?
Mondschean: I basically agree. But I’m not sure that retraining will be the panacea to help these people. It is a hard issue. I think if resources could be more efficiently allocated and it would strengthen the economy, but it requires new entrepreneurial activity to use the resources released by globalization. Companies can become more productive through globalization and then those companies become more efficient. Producing more goods and services with the same resources is how the economy and standard of living improve. We have not been doing a good job of improving entrepreneurial activity. That is one of the big issues facing the economy today: how can we increase the level of entrepreneurial activity especially in the poorer areas in the city?
Miller: The number one creator of new jobs is startups. The entrepreneurial activity in the country has started to fall before the recent recession and it has not recovered. People are becoming more risk averse. Something is not clicking in the entrepreneurship sector.
Q: What is the reason for stagnant wage growth? (alumnus reader question)
Mondschean: This is a complicated issue. I think that there have been changes in the way corporations are governed, which have changed the relationships between labor and capital. This has, in effect, reduced the bargaining power of labor. Most people get cost of living increases, but do not receive the benefits of productivity growth. Since the end of World War II until 1990, real wages and productivity have roughly followed the same upward trajectory. But since 1990, productivity has been rising and real wages have not. What I believe happened is that corporations became so fixated on raising their share price at the expense of everything else, that this has led to a transferring of value from certain stakeholders, like employees, to shareholders. We need to reward true value creation as opposed to value transfer or diversion. Value diversion should not be supported by government policy, but value creation should be. How to distinguish between those two is really hard.
Miller: The one thing I would add to that is that there seems to be a belief within corporate world that the returns you get on investing in new capital simply do not justify buying the new capital. If you have all this money, it can just sit there or you can use it to manipulate your stock prices. It could be that they have nowhere else to spend their money. The issue is that wages paid to workers are not keeping up with worker productivity. And we, as economists, teach that in an economy that is functioning properly, workers should be paid in relation to their productivity. The more you produce per hour worked, all else constant, the more you should be paid per hour. In no other expansion between the end of a recession and the beginning of the next recession has income not risen above where it was before. And we are in that situation today.
Mondschean: I think there is another simple explanation for this. The vast majority of CEO compensation is tied to the stock price.
Miller: Why did Mr. Trump win? Wages have not gone up. It becomes frustrating as a worker. What allows you to move up if you are born into the middle class? It’s harder and harder to move up. Those who do essentially take risks.
Mondschean: This is the age of shareholder capitalism in the U.S.
