TIME Education

This Exclusive Hotel Chain Is Teaching Colleges How To Treat Students

University College students
Getty Images

It's part of an effort to serve students as customers

The audience is rapt as the man in the impeccably tailored black suit describes the secrets that have made his multibillion-dollar company an international leader in customer service.

They’re here to find out how to do a better job of it themselves, in this case from a general manager in the Ritz-Carlton hotel chain, at whose suburban St. Louis location this three-day conference is taking place.

It’s common for business leaders to seek out ideas that can improve their own customer service and employee morale. But the people in this audience are in the business of something that seems far removed from high-end hotels: They’re college presidents and administrators, mostly from community and technical schools. The conference was organized by the Continuous Quality Improvement Network, or CQIN, a small and little-known organization that uses private-sector lessons from companies — including Disney, Kimberly-Clark, Southwest Airlines, and Ritz-Carlton — to improve the notoriously impersonal and bureaucratic front-office student support functions blamed for worsening the already high college dropout rate.

“There’s almost a confrontational relationship with students in some places,” says John Politi, CQIN’s executive director.

Among the examples of higher education’s bad customer service: Registrars, financial-aid offices, and academic advisors are often spread out in separate offices open only during business hours in an era when increasing numbers of students go to school at night or on the weekends. And even when they are on duty, there can be long waits, since there’s an average of only one academic advisor for every 400 students, according to the advocacy organization Complete College America.

Increasing numbers of students who are the first in their families to go to college struggle to cut through this red tape and end up piling up and paying for credits they don’t need. Research by the Community College Research Center at Teachers College, Columbia University, found that half of community-college students don’t even know advising is available to them.

“We’re a people business,” says Gayle Saunders, president of Richland Community College in Illinois and an at-large member of the CQIN executive board. “Yet we found out we had a number of places where it was easy for students to exit our colleges and maybe not ever come back.”

The first hurdle to addressing this is regarding students as customers. That may seem like a minor semantic distinction but Politi says higher education wrestles mightily with it.

“The ‘customer’ issue is alive and well,” he says. “The mindset, particularly from faculty members, is that a customer is always right, and they will not accept the concept that the student is always right.”

Jackson College President Daniel Phelan says it’s possible to cater to customers without compromising students.

“They are customers until the moment they walk into the classroom,” Phelan says of pupils at the Mississippi school. “Then they become students.”

Lee Rasch, president of Western Technical College in Wisconsin and a past president of CQIN, urges his faculty to compare students to members of a health or fitness club.

“Obviously, they need to take their own responsibility for their fitness or wellness regimen,” Rasch says. “But there are also things we can do that make a huge difference for the student — the customer.”

To Laura Helminski, a retired faculty member at Rio Salado College in Arizona who is active in CQIN, this sort hair-splitting misunderstands how many students think. “Our students say, ‘Damn tootin’ I’m a customer,’” she says. “‘I’m paying all this money to go here.’”

It was Helminski who instructed the higher-education types at the conference to pick up their pencils after Ritz-Carlton general manager Doug Chang left the stage (quipping, before he did, “You’re not our usual group”) and make the audacious comparison of their experiences in the elegant hotel with students’ perceptions of their campuses.

“’We’re here to help you,’” she says, summarizing the Ritz staff’s credo. “Translate that back to your own organization. You have places marked, ‘No students.’ ‘Faculty parking only.’ What kind of message does that send?”

The point of all of these exercises seems stunningly self-evident: that students should be at the center of what colleges do.

“My boss is not the board. My boss is not the president. My boss is not the academic vice president,” says Tom Thibodeau, who teaches a management philosophy called “servant leadership” at Viterbo University in Wisconsin, where many students are the children of area farmers. “My boss is a farmer.”

There’s a practical reason for this renewed emphasis on the consumer, says Davis Jenkins, a senior research associate at the Community College Research Center. As states cut the amount they spend on higher education, public universities and colleges have become increasingly dependent on tuition.

“And the more they rely on tuition, the more they’re going to have to have programs that lead somewhere, and to have programs that lead somewhere, they have to be responsive,” Jenkins says.

At Western Technical College, everyone who works on the president’s floor of the administration building holds something akin to the daily employee lineup at Ritz-Carlton hotels. The goal is to be as prepared for problems with students or other employees as the Ritz-Carloton is for upcoming functions and arriving guests.

At Richland Community College, new employees go through eight hours of training in practices modeled on principles of customer service from the Disney theme parks, including moderating their tone of voice and never considering a conversation finished until the customer is satisfied.

“It’s a very personal approach,” says Saunders, Richland’s president. “We don’t let you go until we’ve got everything taken care of that you need.”

A monthly performance scorecard the school uses to track things such as the number of students who are on track to degrees and the number getting jobs when they finish was based on a concept used by the Poudre Valley Health System in Colorado. “It’s focused on measuring what we’re doing and continuously trying to improve it every day,” says Saunders.

The presidents say these changes have lowered their number of dropouts and increased their graduation rates—dramatically, in some cases—though CQIN is only now beginning to collect statistics about this.

“We are large businesses and need to be entrepreneurial, even if we are nonprofit,” Saunders says.

Without that urgency, Phelan says, “we’re going to be less and less relevant to more and more people.”

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet affiliated with Teachers College, Columbia University.

TIME legal

Iowa to Tesla: Stop Test-Driving Your Cars in Our State

A logo of Tesla Motors on an electric car model is seen outside a showroom in New York
A logo of Tesla Motors on an electric car model is seen outside a showroom in New York on June 28, 2010. Shannon Stapleton—Reuters

Iowa's DOT recently put the kibosh on a three-day Tesla Motors test drive in the state capital.

If you want to check out one of Tesla’s newfangled electric rides before buying one, you can add Iowa to the list of states to steer clear of.

That’s because Iowa’s transportation department is telling Tesla Motors to stop offering test drives in the state because doing so is illegal, reports the Des Moines Register. Iowa’s DOT apparently said the test drives–conducted by Tesla in West Des Moines earlier this month–were illegal because Tesla isn’t a licensed auto dealer in Iowa, and that state law bans auto manufacturers from selling vehicles directly to consumers.

Trouble is, Tesla doesn’t sell through traditional franchise outlets, and the company has no franchises dealer relationships anywhere in the U.S. If you want to buy one of billionaire Elon Musk’s ballyhooed electric super-cars, you have to transact directly with the company. Unless you’re filthy rich and/or casually profligate, that’s going to be a tall order for most buyers, considering the base price on a Tesla Model S starts in the $70,000 range and surges by tens of thousands from there.

Note that driving Tesla cars in Iowa is perfectly legal. It’s just the test-driving or selling through a storefront part that’s the problem.

Forbidding car makers from selling directly to the public sounds odd, but in fact auto manufacturers are prohibited from selling directly to consumers in nearly every state. In Texas, for instance, Tesla has two show galleries, one in Houston and another in Austin, but as Tesla itself notes on its website:

In an effort to comply with the current laws, employees at these galleries are prevented from discussing pricing and the reservation process. This includes any discussion on financing, leasing, or purchasing options. Also, galleries cannot offer test drives. The store’s interactive kiosks are also amended to remove pricing. Lastly, we are unable to refer the customer to another store out of state. This puts Tesla at a serious disadvantage and inhibits our ability to reduce misconceptions and educate people about Electric Vehicles and the technology. Furthermore, people are forced to leave the gallery frustrated, lacking sufficient information about the car and the brand.

There may be a political element to the kerfuffle as well: the Register notes franchise auto dealers in states around the country have worked with dealers associations to keep Tesla out, presumably threatened by Tesla’s unconventional sales model. In fact, it was Iowa’s Automobile Dealers Association that tipped the DOT off to Tesla’s test drives in West Des Moines, says the Register.

But not allowing auto manufacturers to sell directly to the public may be harming consumers, argues a 2009 competition-related advocacy report on the U.S. Department of Justice’s website. The paper advocates “eliminating state bans on direct manufacturer sales in order to provide automakers with an opportunity to reduce inventories and distribution costs by better matching production with consumer preferences,” and notes that economic arguments for states’ bans on direct auto sales that cite holdup or free-rider issues “are not persuasive because competition among auto manufacturers gives each manufacturer the incentive to refrain from opportunistic behavior and to work with its dealers to resolve any free-rider problems.”

TIME Autos

Auto-Safety Head Admits Major Reform Is Needed

David Friedman, the acting head of the National Highway Traffic Safety Administration, as he testified on Capitol Hill in Washington, April 2014.
David Friedman, the acting head of the National Highway Traffic Safety Administration, as he testified on Capitol Hill in Washington, April 2014. Evan Vucci—AP

He says we need a "new normal" when it comes to assuring human safety in cars

A week after facing blistering criticism for his agency’s handling of the recent General Motors (GM) auto recall, the man charged with running the nation’s auto-safety administration acknowledged that his office needs to improve.

“Any life lost is one too many; anything that we can do to improve in a situation like this, we’ve got to do,” David Friedman, interim head of the National Highway Traffic Safety Administration (NHTSA), tells TIME in his first interview since the hearing. “We need a new normal when it comes to recalls.”

A more combative relationship that keeps “every car company on their toes” is at the heart of Friedman’s “new normal” and carried out through increased financial penalties on car companies and an expanded budget.

“Dropping the ball will not be tolerated,” Friedman said.

In the months since GM announced its first recalls for ignition switch problems, critics have hounded the automaker for taking so long to address an issue that affected millions of cars and killed at least 21 people. More recently, criticism has turned to NHTSA. The agency, created in the 1970s to oversee a powerful industry, is charged with ensuring automakers meet safety standards on everything from brakes to windshields. But its actual authority remains hampered: it can levy a maximum fine of $35 million for a violation and has no power to bring criminal charges.

Friedman wants to change that, and advocates say he should step on it. “This is the best opportunity to reform NHTSA, really, since the original Safety Act was passed in 1966,” says Center for Auto Safety executive director Clarence Ditlow. “When a GM president has to apologize for their safety inaction, that shows you how bad the situation is.”

The reaction centers on faulty ignition switches in millions of GM vehicles that in some cases abruptly shut down the engine and kept airbags from deploying in the subsequent crash. The automaker had been aware of issues with the switch—though perhaps not the extent of the problem—for more than a decade prior to issuing recalls, investigations have shown. NHTSA also received strong evidence of the safety issue in 2007, when Wisconsin officials told the federal agency about what they suspected was a link between ignition switches and airbags. NHTSA officials “either overlooked or failed to understand” the implications of the Wisconsin report and didn’t follow up appropriately, according to a congressional report released last week.

Supporters of reform, both in Congress and among the ranks of safety advocates, say the needed changes are multifaceted: The agency requires expanded enforcement power, increased funding and greater transparency so that the public can hold it accountable.

The agency was granted just over $10 million to investigate defects in 2014, a paltry sum considering the 250 million vehicles on the road in the United States. Overall, the agency devotes about $130 million annually to vehicle safety research—a total that outrages auto-safety advocate Ralph Nader. “It’s about the cost of three months of guarding the US embassy in Baghdad,” Nader tells TIME.

“If Congress would give us another 20 people and $20 million, we could do a lot more for the American public to save lives,” Friedman says.

Increased authority also ranks high on the list of the changes safety advocates say NHTSA needs. Currently, the agency can fine automakers a maximum of $35 million for safety violations, a pittance for an industry that brings in billions each year. Friedman, along with President Obama and transportation secretary Anthony Foxx, wants to raise the cap to $300 million.

But changes to funding or regulatory authority would require Congress to act. A number of legislative proposals have been introduced, but it remains unclear whether this opportunity, as good as it may be, can overcome gridlock.

Friedman says his agency will do its best to improve, even if it doesn’t receive help from Capitol Hill. “If Congress fails to act, we’re a scrappy organization. We punch above our weight,” he says. “We’ll do everything with the resources we can.”

Nader, along with others, says he is skeptical, but ultimately, external pressures may make the question of whether NHTSA officials want to change irrelevant.

“I think the agency will change,” says Joan Claybrook, who ran the agency during Jimmy Carter’s presidency. “If it doesn’t they’re in trouble.”

TIME Workplace & Careers

Here’s How Long It Would Take Most Americans To Earn As Much As The Highest-Paid CEO

Allen & Co. Media And Technology Conference
Rupert Murdoch, chairman of News Corp., arrives to a morning session at the Sun Valley Lodge during the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, U.S., on Wednesday, July 9, 2014. Bloomberg—Bloomberg via Getty Images

Most workers in America would have to work 354 years in order to make what the average CEO makes in one year

Most Americans know that the CEOs of America’s biggest companies rake in piles of wealth, but according to a recent study by Harvard Business School, they have no idea just how much.

“People dramatically underestimate actual pay inequality,” the study said. Americans, for example, estimate that the pay ratio between CEOs and unskilled workers is about 30:1, but the actual ratio is a whopping 354:1.

That means that most workers in America would have to work 354 years in order to make what the average CEO makes in one year.

And that’s just compared to the average CEO. According to calculations by research engine FindTheBest, it would take most Americans thousands of years to catch up to the highest-paid CEO—Charif Souki of Cheniere Energy—who made $141,949,280 in 2013.

How many thousands of years, exactly?

We calculated how long it would take people in seven professions, with median salaries from $18,000 to $187,200—which represents the low and high end of U.S. occupational salaries based on data from the Bureau of Labor Statistics—to make as much as Souki does in one year.

For jobs that are most often paid on an hourly basis, workers would need about seven to eight thousand years to make what Souki did in 2013.

Fast food workers: 7,774 years

Cashiers: 7,483 years

The results are still grim for Americans who earn near the median U.S. household income of $51,058 per year.

Telecommunications line installers and repairers: 2,761 years

Elementary school teachers: 2,658 years

And as for those who’ve managed to break into the six-figures?

Computer hardware engineers: 1,407 years

Lawyers: 1,250 years

It would even take professionals with the highest-paid jobs by median salary over half a millennium to amass the kind of wealth Souki did in 2013.

Physicians and Surgeons: 568 years

But keep in mind that $142 million was Souki’s 2013 total compensation, which is different from salary because it includes earnings like bonus, restricted stock awards, and non-equity incentive plans — indeed, some CEOs take a $1 salary, making up the difference with these other earnings. So how long would it take the above professionals to make as much as the highest-paid CEO, just when measuring salary?

The CEO with the highest salary was Rupert Murdoch of Twenty-First Century Fox, who made $8.1 million in 2013.

Although it’s a ways below $142 million, $8.1 million is still more than a lifetime’s work away for Americans making the median salary within their professions. It would take cashiers 427 years, teachers 152 years, and lawyers 71 years to make what Murdoch did in one. Our highest-paid professionals, physicians and surgeons come closer, but it would still take them almost half a century (43 years) to catch up.

FindTheBest is a research website that’s collected all the data on jobs and executives, and put it all in one place so you don’t have to go searching for it. Join FindTheBest to get all the information about jobs, execs, and thousands of other topics.

TIME Morning Must Reads

Morning Must Reads: September 25

Capitol
The early morning sun rises behind the US Capitol Building in Washington, DC. Mark Wilson—Getty Images

GOP Uses Democrats’ Playbook

Two years after Democrats held the White House by painting Mitt Romney as a callous plutocrat, Republicans are using the same playbook in a bid for control of the Senate in the midterms, and Hillary Clinton may find herself on the receiving end of such attacks in 2016

9 Email Rules From a Google Exec

Google executive chairman and former CEO Eric Schmidt shares nine insightful rules for emailing (or gmailing!) like a professional

Apple’s iPhone Headache

The sale of a record 10 million new iPhones quickly gave way to reports of bent phones and a faulty operating system update that Apple had to pull

U.K. Counter-Terrorism Raid Nabs 9 in London

Police arrested nine men on Thursday on suspicion of encouraging terrorism and being members of and supporting banned groups. The arrests were not a response to any immediate public safety risk, but part of an ongoing probe into Islamist-related terrorism

Suspect Captured in Case of Missing Virginia Student

Jesse Leroy Matthew Jr. was arrested in the Texas community of Gilchrist, authorities said Wednesday night, less than a full day after police announced they had probable cause to arrest him on charges of abduction with intent to defile Hannah Graham

Sierra Leone Restricts Travel in Bid to Stop Ebola

More than a third of its population is under quarantine after officials restricted travel into and within three more “hotspots” of Ebola, where 1.5 million people live; Sierra Leone is one of the hardest-hit countries in the outbreak believed to have killed at least 2,900 people

Navajo Nation to Receive $554 Million Settlement From U.S.

The U.S. will pay the Navajo Nation $554 million, the largest agreement won by an American-Indian tribe, settling a 2006 lawsuit by the Navajo Nation that alleged that the American government improperly handled Indian assets for more than five decades

Marathon Bombing Trial Stays in Boston

A defense request to move the alleged Boston Marathon bomber’s trial outside Massachusetts has been denied by a federal judge in Boston, who did not agree with the contention that finding an impartial jury in the state would be impossible

Surfers Beat Billionaire in Landmark California Beach Case

A California court issued a milestone ruling on Sept. 24 that may restore public access to a beach that requires traveling across privately owned land, the latest turn in a multiyear legal battle that has pitted surfers against venture capitalist Vinod Khosla

AC/DC Has Good News and Bad

A statement on the iconic rock band’s website says that their new album, called Rock or Bust, will be launching on Dec. 2, featuring 11 tracks recorded in Vancouver. The bad news is that founding guitarist Malcolm Young will be retiring permanently because of illness

American Held in North Korea Begins 6 Years of Hard Labor

Matthew Miller of Bakersfield, Calif., was arrested in North Korea in April and sentenced to six years of hard labor for acts “hostile” to the regime. There are no details of where he will serve his sentence or the type of labor he will perform

‘Senior Moments’ Could Be Early Signs of Dementia

So-called senior moments, like failing to recall your missing sunglasses are perched on your head, might not be just benign mishaps but early harbingers of Alzheimer’s disease, reports a new paper. Scientists hope that early detection of signs may help prevent deterioration

We will hold an #AskTIME subscriber Q&A this Friday, September 26, at 1 p.m., with TIME assistant managing editor in charge of economics and business Rana Foroohar, who authored this week’s cover story on the challenges facing General Motors CEO Mary Barra. Her other stories can be found here.

You can submit your questions beforehand on Twitter using the #AskTIME hashtag or in the comments of this post. We depend on smart, interesting questions from readers.

You will need to be a TIME subscriber to read the Q & A. ($30 a year or 8 cents a day for the magazine and all digital content.) Once you’re signed up, you can log in to the site with a username and password.

Get TIME’s The Brief e-mail every morning in your inbox

TIME Workplace & Careers

There’s a Reason You Work Better Some Days

Working at laptop
Hero Images—Getty Images

themuselogo

This post is in partnership with The Muse. The article below was originally published on The Muse.

By Alex Honeysett

During a session with my business coach earlier this year, I was explaining that even though I had a million things to crank through, I felt like doing the opposite—I wanted to stroll around in my own thoughts, quietly observe, and write things down only as they came to me, rather than fight to get things done, like, yesterday.

And my coach said, “Well, that makes sense. It’s part of your process.”

Uh, what process? I know I have a process for doing laundry. I have a process for organizing my desk. I have a process for doing my taxes. But I never considered that I had process for the way I approached work—or life, for that matter.

But in the months since, she has helped me understand that I do. We all do! And the more we can recognize and take ownership of our own unique process, the less frustrated and guilty we’ll feel when we’re in the middle of it. And ironically, the more we’ll get done.

So how do you figure out what your process looks like? For most of us, our process is a mix of “curation mode” and “creation mode.”

When you’re in curation mode, you may be feeling what I described above—more introspective, more observant, and more thoughtful. In this mindset, you’d probably be more interested in digging into some meaty research or a great book and less interested in giving a presentation to a room packed with people. During this part of the process, you’re taking in.

Creation mode is the other side of the coin: You’re hitting the pavement, excited to get things done. Whether you’re growing your business, writing plans, or bringing in new clients, you’re doing it with ease. You’re not dragging your butt out of bed to write that proposal—you’re at your desk early, coffee in head, ready to get it done. Here, you’re pushing out.

Once you identify these processes in your own life, you’ll see how they affect your productivity. For example, I realized that I always feel great writing these articles when I spend a few days paying attention to what’s happening in the industry, tapping into my network, and recognizing what I’m experiencing in my own life—in other words, when I’m in curation mode. I don’t force myself to write anything; I just take a look around. Then, on the third or fourth day, I snap into creation mode. A topic will hit me and I basically need to find a computer that instant to get it all down.

In the times that I haven’t let myself do that initial observing, I often end up staring at a blank screen for hours, writing the same crappy sentence over and over and getting increasingly cranky.

Before understanding this was part of my process, I just thought that some weeks it was easier for me to write than others. Now that I understand how my brain works best, I know that I need to give myself that space to curate—ideas, themes, and experiences—before I can jump into creation mode.

To identify your unique process, start by digging into what you like to do when you’re in curation mode: What do you need to do before you get things done? Take a long walk? Keep a journal in your pocket for any thoughts that pop up?

Then, do the same for creation mode: What’s the ideal environment for you to actually get those things done? A super-organized desk? A noisy coffee shop?

Next, spend a few weeks being mindful of which mode you’re in. Sometimes, we can circle through them both several times a week—other times, we may sit in one for a few weeks before we switch to the next.

Finally, it’s important to recognize that you can’t always map out the balance of your internal process in a perfect 1:1 ratio. There will be some days when you’ll be on a deadline to finish a presentation when you’d much rather be curled up on the couch with a stack of research learning quietly.

On those days, your focus should be on bringing the balance back. If you’re in curation mode and need to be creating, for example, what activities or experiences do you most enjoying when you’re curating? Are there any of them, however brief, that you can bring into your day? You may find that going for short walk or drinking a quiet coffee before you begin may put yourself in the right mindset to start creating.

That may be all you need to snap back into getting things done, like, yesterday.

More from The Muse:

TIME

In The Latest Issue

Mary Barra’s Bumpy Ride at the Wheel of GM
The General Motors CEO has already faced a devastating recall. Now she must reinvent the company—and its cars

The 3% Economy
Yes, 3% growth is better than 2%. But, for most Americans, it’s actually more worrisome

After the Revolution: Sitting Down With Egyptian President Abdul Fattah al-Sisi
In one of his first interviews with the U.S. press, Egypt’s President pushes for a wider war on terror in the Middle East

Syria’s Jihadis Should Be Confronted, Not Feared
We are far from being the country we were on 9/11. The dangers we face are more modest and our ability to respond to them are improved

White House’s Weak Security
A deranged intruder exposes shows risks facing nation’s most exclusive address

Meet Alibaba’s Jack Ma
The man leading China’s online shopping giant to America

Police ‘Body Cams’ Shine New Spotlight
What will new police video surveillance show us?

Why the Anti-Vaccine Crowd Won’t Fade Away
People who are reluctant to vaccinate their kids often think they know better than the doctors

The Politics of Nothing
Both conservatives and Liberals have accomplished much of what they set out to do a generation or more ago. So, now what?

A Virtual Cycle
Nobody wins when voters only experience politics second hand

The Culture

Lena Dunham: A Generation’s Gutsy, Ambitious Voice
The Girls star takes on Hollywood, friendship, rape culture, and more—with humor and tenderness—in her new memoir

Gillian Flynn’s Marriage Plot
How the author of ‘Gone Girl’ changed the way you look at your spouse

David Fincher’s Subtle and Wild Gone Girl
Amazing Amy and slick Nick survive the transition from print to film

Stromae’s Lost Generation
The Belgian pop star comes to the U.S.

André Benjamin’s Next Act
‘Hey Ya!’s most outlandish half looks to the future

Denzel Goes Old Testament
A sick city gets its ‘Equalizer’

Stalkers Cheap Thrills
Avert your eyes from this voyeur cop show

10 Questions With Sylvia Earle
The oceanographer on why she keeps diving, being granted a wish, and why the ocean needs parks

Kenny Loggins and Joel Stein’s Greatest Hit
This is what I learned when I collaborated on the best song ever written

World

Pop Chart

Briefing

In Need of Repairs

Shining Bright

TIME China

Meet Alibaba’s Jack Ma

The man leading China’s online shopping giant to America

Ma’s Alibaba, China’s online-shopping giant, completed the largest initial public offering in history–$25 billion–on the New York Stock Exchange. The shares started trading on Sept. 19, and the value of the company exceeded that of Facebook, Coca-Cola or IBM.

• CLAIMS TO FAME

Fifteen years ago, Ma, a former English teacher, started Alibaba in an apartment in the Chinese city of Hangzhou. Today Alibaba is the undisputed champion of online retailing, handling twice as much merchandise as Amazon. An indifferent student, Ma built his empire without the top diploma or political connections usually needed to succeed in China.

• BIGGEST CHALLENGES

Ma will be under pressure from his new investors to deliver ever larger profits. He must expand outside his home market while also fighting off opponents at home. Chinese Internet giants Baidu and Tencent and property group Wanda recently joined forces to start a rival e-commerce firm.

• BIGGEST THREAT

China’s authoritarian rulers still wield tremendous control over business. A big wild card in Alibaba’s future will be Ma’s ability to stay in the good graces of the Communist Party while building trust with consumers in the West.

• BIGGEST CRITIC

The investor Peter Thiel passed on Alibaba’s IPO, arguing that a bet on the company was ultimately a bet on Beijing–with the political uncertainty that implied.

• CAN HE DO IT?

Ma has a proven track record of competing with global e-commerce titans–and winning. He’s shoved aside eBay and Amazon in China. And with his post-IPO war chest, Ma has the financial muscle to invest heavily and acquire other firms. The question is, Will he shop wisely?

–MICHAEL SCHUMAN

TIME Economy

The 3% Economy

Yes, 3% growth is better than 2%. But, for most Americans, it’s actually more worrisome

A little over three years ago, I wrote a column titled “The 2% Economy,” explaining how a recovery with only 2% GDP growth, no new middle-class jobs and stagnant wages wasn’t really a recovery after all. Like everyone, I hoped that once growth kicked up to about 3%, middle-class jobs and wages would finally revive.

But we’re now in a 3% economy, and I’m writing the same column. Only this time, the message is more disturbing. Growth is back. Unemployment is down. But only a fraction of the jobs lost during the Great Recession that pay more than $15 per hour have been found. And wage growth is still hovering near zero, where it’s been for the past decade. Something is very, very broken in our economy.

It’s a change that’s been coming for 20 years. From World War II to the 1980s, according to data from the McKinsey Global Institute, it took roughly six months after GDP rebounded from a recession for employment to recovery fully. But in the 1990–91 recession and recovery, it took 15 months, and in 2001 it took 39 months. This time around, it’s taken 41 months–more than three years–to replace the jobs lost in the Great Recession. And while the quantity has come back, the quality hasn’t. The job market, as everyone knows, is extremely bifurcated: there are jobs for Ph.D.s and burger flippers but not enough in between. That’s a problem in an economy that’s made up chiefly of consumer spending. When the majority of people don’t have more money, they can’t spend more, and companies can’t create more jobs higher up the food chain. This backstory is laid out in an interim Organisation for Economic Co-operation and Development report cautioning that poor job creation and flat wages are “holding back a stronger recovery in consumer spending.” If this trend is left unchecked, we are looking at a generation that will be permanently less well off than their parents.

There are so many signs of this around us already. The decline in August home sales–a result of wealthy cash buyers and investors stepping back from the market–shows how what little recovery in housing we’ve seen so far has been driven by the rich; anyone who actually needs a mortgage has been slower to jump in. The real estate recovery too is very bifurcated, with much of the gains concentrated in a few more affluent, fast-growing cities. (Plenty of places in the Rust and Sun Belts are still underwater.) While overall consumer debt is down, it is still high by international standards, and student debt is off the charts. When I asked one smart investor where he expected the next financial crisis to come from, he said, “Student debt.” Interest rates on tuition loans are high and fixed, and the loans can’t be refinanced, meaning they’re a trap that’s hard to escape. And student debt continues to grow fast. History shows that the speed of increase in debt, more than the sheer amount, is a predictor of bubbles. By that measure, student debt is blinking red: it has tripled over the past decade and now outstrips credit-card debt and auto loans.

It’s easy to understand why. Much of the population is desperately trying to educate its way out of a terrifying cycle of downward mobility. But students are fighting strong structural shifts in the economy. While technology-driven productivity used to be what economists said would save us from jobless recoveries, technology these days removes jobs from the economy. Just think of companies like Facebook and Twitter, which create a fraction of the jobs the last generation of big tech firms like Apple or Microsoft did, not to mention the multitude of middle-class positions created by the industrial giants of old.

And we’re just getting started: consider the outcry in certain cities over companies like Zillow, Uber and Airbnb, which are fostering “creative destruction” in new sectors like real estate, transportation and hotels. McKinsey estimates that new technologies will put up to 140 million service jobs at risk in the next decade. Critics of this estimate say we’re underestimating the opportunities that will come with everyone having a smartphone. All I can say is, I hope so. What’s clear is that development isn’t yet reflected in stronger consumption or official economic statistics.

What I do see is growing discontent with the economic status quo. In my 2011 column I wrote, “It’s clear that the 2% economy heralds an era of even more divisive, populist politics–at home and abroad.” Ditto the 3% economy. Witness outrage over displaced lower-income workers in the Bay Area, or the fact that the Fed is keeping interest rates low in part because gridlock has prevented Washington from doing more to stimulate the real economy, or the Treasury Department’s new rules limiting American companies’ ability to move outside U.S. tax jurisdiction. Whatever number you put on growth, a recovery that doesn’t feel like a recovery is, yet again, no recovery at all.

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser