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My article for Kogod School of Business
Professor Stacy Merida, Kogod's new assistant dean of diversity, equity, and inclusion, describes her mission to shape a more inclusive Kogod community.
Toni Tileva | October 6, 2021
What do diversity, equity, and inclusion look like in a university setting? Who are the stakeholders of diversity initiatives? These are challenging questions, and the Kogod School of Business's new assistant dean of diversity, equity, and inclusion, Stacy Merida, is finding answers. Merida, who teaches music entertainment industry classes in Kogod's business and entertainment program, accepted the position in January 2021. She is leading the school not only in learning what these terms mean to its students, faculty, and staff but also in implementing meaningful changes based on input from the entire Kogod community.
Merida has a broad view of diversity, equity, and inclusion (DEI) that not only comprises demographic characteristics like gender, race, and ethnicity but all dimensions of a person's identity, such as immigrant and first-generation status, economic background, education, and more. Of course, some of these characteristics are more salient to people's identities, and some, because they are more visible to society, affect how people are treated more than less readily observable traits.
"One of our strategic goals is to cultivate a more diverse, equitable, and inclusive Kogod culture where every individual, regardless of background, has the full opportunity to flourish and thrive," says Merida.
The daughter of a civil rights leader, Merida has been passionate about social justice since her childhood in Alabama. And that passion has driven her throughout her career. Her PhD dissertation examined cultural competency and proficiency in higher education administration. She serves as a board liaison for diversity and inclusion at the Music Entertainment Industry Educators Association (MEIEA) and represents American University as a committee member on the GRAMMY Museum's diversity, equity, inclusion, and accessibility affiliate committee. Her most recent initiative was reaching out to Historically Black Colleges and Universities (HBCUs) and Hispanic and Tribal Universities to join the MEIEA through free membership.
In her new role as assistant dean, she will implement several initiatives that include creating a DEI task force, DEI fellowships, policy and procedure reviews, ongoing training, and surveying faculty, students, and staff. Her goals include ensuring students and staff reflect the diversity of our global society and transforming the faculty's makeup to reflect the diversity of the student body. Another major goal is improving the academic outcomes for students from underrepresented, low-income, and other marginalized groups, in addition to securing transparent and more equitable outcomes for staff and faculty.
Diversity, as the word connotes, is about difference. But it is not about eliding or ignoring that difference. Rather, it is about ensuring that difference doesn't lead to inequitable outcomes.
"There are distinct differences between equality and equity," Merida explains. "Equity involves giving people what they need to be as successful as non-minoritized groups; conversely, equality is to treat everyone the same."
Diversity is valuable in all areas but especially important in business. When a company has a diverse culture, it welcomes more viewpoints, allowing it to reach a wider audience. According to a McKinsey & Company report, "Companies in the top-quartile for ethnic/cultural diversity on executive teams were 33 percent more likely to have industry-leading profitability." Google recently completed a study, Project Aristotle, that identified psychological safety as one of the most important factors of a high-performing team. Employees feeling included and able to be their authentic selves at work frees up their minds and energy to focus on their performance.
"Diversity is extremely important in the business community where different perspectives are and should be highly valued," says Merida. "Organizations that value diversity and inclusion strive to provide a space where all members are respected. If a system or structure perpetuates inequity and inequality, we should encourage one another to challenge this system or structure."
Merida is also acutely aware that no one holds just one identity. The term intersectionality, coined by Black feminist legal scholar Kimberlé Crenshaw in 1989, describes how individual characteristics like race, class, and gender interact with each other to form how someone sees—and is seen by—the world.
"Our students will find themselves working with employers, coworkers, and clients from diverse backgrounds," explains Merida. "By experiencing diversity, we are laying the groundwork for all to be comfortable working and interacting with a variety of individuals of all nationalities.
"However, efforts in this space are nothing new as Kogod is ranked no. 9 by the recent Bloomberg Newsweek Diversity Index for its long-term commitment to diversity. I am exhibit A, as the creation of my position only exemplifies the continuation and broadening of Dean Delaney's and the DEI committee's visionary leadership. We are intentional in being the guiding example for our students, faculty, and staff."
Merida's new role is a testament to the hard work she and the Kogod community continue to engage in to create a diverse, equitable, and inclusive business school that prepares students not only for successful careers but to be thoughtful, compassionate, and engaged citizens of the world.
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The Hidden Cost of the Hustle–Faculty and Director of the Kogod Tax Policy Center Caroline Bruckner hones in on the tax consequences of gig work.
February 11, 2020 Toni Tileva
By Toni Tileva | February 6, 2020
In September 2019, California became the first state in the country to pass a labor law aimed primarily at Uber and Lyft drivers that extends wage and benefit protections to about a million gig workers. California Governor Gavin Newsom wrote an op-ed arguing that when workers are classified as independent contractors rather than as employees, they lose basic benefits such as minimum wage, paid sick days, and health insurance. And their employers do not contribute to safety net programs like workers' compensation and unemployment insurance, leaving, as Gov. Newsom pointedly stated, "taxpayers holding the bag."Going a step further to address Social Security shortfalls, on December 19, 2019, Congresswoman Deb Haaland (NM-01), vice chair of the Task Force on Poverty and Opportunity, introduced a groundbreaking bill called the Gig Is Up Act that would require companies that gross at least $100 million and employ at least 10,000 independent contractors to pay the full cost of both the employer contribution and the worker contribution to Social Security and Medicare."My research shows that gig workers can be in a very precarious economic situation, with most of them working gigs as a supplemental source of income," Bruckner says. "For many, their low incomes keep them from having other investment vehicles, and they rely solely on Social Security for their retirement. Not getting their just dessert, so to speak, is an unforeseen and not often discussed consequence of contractor and gig economy work."
The gig economy is notoriously hard to quantify, with estimates stating non-traditional work arrangements account for anywhere between 0.1% of full-time employment to 34%. According to the Freelancing in America survey, there are a reported 57 million American freelancers (counting on-demand and independent contractors) contributing in excess of $1 trillion dollars to the economy each year. Yet, their hustle can perhaps best be characterized as a struggle rather than a success, with little worker rights protection, unpredictable compensation, and intermittent work. The "on demand" nature of the work makes it just that—reliant on the customers' and employers' demands rather than the workers'.
In her recent book Hustle and Gig, sociologist Alexandrea Ravenelle argues that "for all its app-enabled modernity, the gig economy resembles the early industrial age…the sharing economy is truly a movement forward to the past." While much research has been conducted on the size and growth trajectory of the freelancer industry, little scholarship examines the often unintended tax consequences affecting the workers and the economy writ large.
"Self-employed workers already have tax compliance and reporting issues, but the existing reporting rules further precipitate their failure to contribute to Social Security and Medicare through payment of the self-employment tax (SE tax)," explains Bruckner.
The tricky part is that companies that use contract workers aren't required to send out a 1099-MISC unless they have paid that person $600 or more in a given tax year. On-demand workers who are paid by platforms usually get a 1099-K form, which companies use when a contractor has performed at least 200 transactions over the course of the year and has received at least $20,000 in payments. But, often, gig workers don't receive any tax forms at all, leaving them on the hook to figure out how much they've earned over the past year and accurately report it to the IRS.
"Workers who don't get tax forms from their employers need to figure out their earnings on their own. It is not as though they are intending to break tax laws, but many of them are simply not aware of what the self-employment tax covers and are short changing their Social Security earnings upon retirement in this way."
Independent contractors and gig economy workers also do not make tax payments through withholding by their employers during the year and have to figure out estimated quarterly tax payments on their own. Not making those quarterly payments can translate to penalties and increases their audit exposure. "This isn't just about gig workers underreporting their income tax, although this is a way to quantify the tax gap for the IRS and get their attention on the issue," says Bruckner. "The consequences of the shortfall are twofold: it affects the funding and solvency of Social Security and translates to lower Social Security benefits for these workers upon retirement."
In their recent "Failure to Contribute" research project, funded by the Center for Retirement Research at Boston College, Professor Bruckner and economist Thomas L. Hungerford estimate that, in 2014, independent contractors didn't pay $3.9 billion in Social Security contributions that they should have, and on-demand workers didn't pay $2 billion.
Bruckner has actively raised this issue with the IRS and given testimony on Capitol Hill. The Failure to Contribute report suggests Congress could take steps to modernize information reporting, update quarterly estimated payment requirements, and require better taxpayer education. Ultimately, these strategies should focus on the independent contractor economy generally and the on-demand/gig workforce in particular. "We need strategies to encourage people to buy into the system," says Bruckner. "This is why tax policy needs to be accessible."
With a $50,000 grant from the Wharton School of Business and Pension Research Council, Bruckner plans to continue her research with a study examining how women are using the gig economy to make up for retirement shortfalls. "This next phase of research will be ground-breaking in that it focuses on women specifically, who tend to live longer and have higher healthcare costs," explains Bruckner. "Because women have been subject to the pay gap or had to take time out of the paid work force, considering their retirement needs and how gig economy work is a strategy for shoring up retirement savings shortfalls is the logical extension of my existing work looking at the gig economy and its implications for Social Security."
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What Are the Odds? A computational neuroscientist and Kogod adjunct scores a career as a data scientist with the NBA.
So much of our everyday life involves making predictions—from picking the best route for our morning commute to bringing an umbrella to choosing a partner. "We predict all the time, so the process is natural," says Grant Fiddyment, adjunct professor of predictive analytics at Kogod and data scientist for the NBA's Philadelphia 76ers. "In a lot of ways, it's the same way we interact with technology and the world. For instance, how can I phrase my web search so that the site will match what I'm looking for? How can I pronounce a word so that a virtual assistant will understand what I'm saying? Without knowing the technical details, we implicitly learn how these technologies work."
What is predictive analytics, and how does it offer us a glimpse into the future?
At its most fundamental level, the discipline calculates the likelihood of future events by simply (although many would cry foul at this characterization) counting the possible outcomes. Its foundations were laid in a 1654 letter exchange between French mathematicians Pierre de Fermat and Blaise Pascal discussing how the winnings of a coin-flipping gambling game should be split. And while we all know that the house always wins in Vegas, few would know to credit Jacob Bernoulli's Law of Large Numbers from 1713 as the reason why.
Despite predictive analytics' old roots, it is responsible for many facets of modern-day life we give little thought to—things like credit card fraud detection, virtual chess partners, and, of most interest to Fiddyment, creating professional sports super teams.
As a data scientist on the research and development team for the 76ers, Fiddyment helps frame and analyze the predictive questions that arise in sports—for example, how will signing a new player impact a team's title odds, or how well will a tall lineup play against a smaller, quicker one?
Predictive analytics has long been used in sports, going back to the analog days of yore. Baseball has historically led the movement. One of the most famous success stories is told in the movie Moneyball, which follows 2002 Oakland Athletics general manager Billy Beane as he uses predictive analytics to hire under-valued players and send his team on a crowd-wowing 20-game winning streak. But the methods developed in Oakland have application across all sports.
"Most teams were asking, 'How often does a batter get a hit when they go to bat?' Instead, the A's asked, 'How many bases does a player get when they go to bat?' Looking at total bases turns out to be more predictive of how many runs a team will score," explains Fiddyment. "Similarly, in the NBA, teams used to ask how often a player will make a shot. But this overlooks the fact that all shots are not equal. So now teams are asking, 'How many points will a player get when they take a shot?'"
In the past decade the number of three-point shots in the NBA has increased. Is the rise just due to random luck or is it part of a well-crafted strategy? Fiddyment and other fellow data scientists employed full-time by sports teams work to answer new questions like these. He credits the invention of video tracking as the proverbial game changer. "Chip or camera-based systems will follow players as they actively play a sport, and the data we get is much more nuanced than a single-number summary," says Fiddyment. "For example, we can answer how many pick-and-rolls the team ran last game or how open were the shots they generated. We can analyze the individual and team as a whole."
At the moment, this kind of data collection is limited to professional teams, making it difficult to spot up-and-coming superstars. "College and international teams typically don't have the same camera systems, so projecting which players will become successful remains a very challenging problem," Fiddyment says.
Despite rapid advancements in technology, however, not all data is created equal—or, perhaps, equally useful. The limitations of data translate to limitations in predictive accuracy (as meteorologists can confirm). "We need to be aware of computers' strengths and weaknesses," Fiddyment advises. "Computers can process vast amounts of data much more quickly than humans ever could. But they are restricted to the data they have and operate very literally, so we should never expect them to behave exactly like a human, even if they can match our performance at a given task."
From the glitz of Vegas to the life-saving powers of storm forecasts to the way opinion polls affect voters, predictive analytics is ever-present in our lives. Advances in machine learning and big data models are improving our ability to look into the future, but they are also raising some thorny issues, one of the most notable being the boundaries of data privacy. For now, however, Fiddyment has scored a slam dunk for the NBA.
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From Veteran to Venture: Kogod alum-turned-professor helps veteran entrepreneurs launch their businesses
August 1, 2019 Toni Tileva
My story for Kogod School of Business
Each year, roughly 200,000 US service members transition from the military to the private sector. Although veterans are twice as likely as non-veterans to be self-employed, their rate of business ownership has dropped precipitously from the entrepreneurial high of their predecessors in the last century.
Half of World War II veterans went on to own or operate a business—a similar rate to the 40% of Korean War vets who did the same almost a decade later. Of the more than 3.6 million people who have served in the military since September 11, 2001, only 4.5% have started a business. What has led to such an enormous gap in veteran entrepreneurship?
In short, more challenges—and fewer resources to overcome them.
Although 25% of veterans say they want to start their own businesses, they face more obstacles securing the capital needed to get their ideas off the ground than in the past. Unlike the GI Bill of 1944, the updated 2008 version does not include access to low-interest loans to start a business. The financing needs of veteran and non-veteran businesses are similar, research shows, but even though would-be veteran business owners submitted more loan applications and reached out to a wider variety of lenders, they typically obtained less financing and got lower approval rates.
Because of frequent travel and work abroad, some veterans are also struggling with building a credit history and amassing collateral. And while previous military drafts drew from all segments of society, this century's all-volunteer armed forces are more likely to come from military families, making them increasingly isolated from the non-military community and the networks that facilitate business success.
Seda Goff—a Kogod adjunct professor and MBA alumna—is helping veteran entrepreneurs overcome these challenges in her role as the director of veteran entrepreneurship at the PenFed Foundation. Through the foundation's Veteran Entrepreneur Investment Program (VEIP), veterans can get the seed capital and mentorship they need to build and grow their ventures.
"Veterans have given a lot to serve and protect us, and the skill sets that they gained in the process lend themselves perfectly to entrepreneurship," Goff says. "This new generation of entrepreneurs feel that same desire to serve and to make a difference and be bigger than themselves."
After graduating from Kogod, Goff worked for the US Department of Veterans Affairs before moving to PenFed, where she was able to build the nonprofit investment program from the ground up. Her passion for helping veterans stems from growing up in close contact with service members.
"My father was in the Turkish Navy. He worked for the navy for almost 30 years after we came to the US," Goff recalls. "I loved being around service members and their families. Everybody is very mission- and service-oriented."
Since launching in March 2018, the Veteran Entrepreneur Investment Program has invested in and offered resources to veteran entrepreneurs. And because veterans are 30% more likely to hire other veterans, the program's benefits extend to the entire veteran community.
VEIP is funded by outside donors, with PenFed Credit Union matching up to $1 million in contributions. Returns on all investments go back into the program to support future veteran-owned ventures. "The success of veteran entrepreneurs allows the program to exist," Goff explains. "The dividends go right back into investing in more entrepreneurs. The multiplier effect translates to growth for businesses that are ready to launch, established businesses that want to grow, and those that are still in the exploratory stages."
In the future, the PenFed Foundation aims to develop new resources for veteran entrepreneurs in all stages of the business cycle, with a focus on women veteran entrepreneurs—who have grown from owning 2.5% of veteran-owned businesses in 2008 to 4.4% in 2012.
Goff, who works with the American University Entrepreneurship Incubator, hopes to one day launch an incubator for veteran entrepreneurs at Kogod, too.
"I feel like the majority of entrepreneurs are just problem solvers. And if you point them in a direction, they're going to solve problems," Goff says. "In my work, I have seen how a military career is not something that you need to transition away from to be successful. Serving already has given vets the tools for success."
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Islamic Finance—A Centuries-Old Approach Providing Modern Solutions
Could a system of finance dating back to the seventh century offer modern solutions to problems like college debt and crumbling infrastructure? Dr. Ghiyath Nakshbendi, chair and founder of the graduate certificate in Islamic finance at the Kogod School of Business, believes so.
"In America, millennials are growing tired of the system of interest, especially when it comes to student loans. They are looking for something that is different," Dr. Nakshbendi explains. "We also have big problems with infrastructure. More than 54,000 bridges need repairing, for example. Islamic finance could be a way to fund these projects."
Kogod's graduate certificate in Islamic finance is the first of its kind in the US. Although Islamic finance has been practiced for over a millennium in Muslim countries, it is relatively new to the US, with the Office of the Comptroller of Currency approving its use for home lending in 1997. It has taken strong root in Europe, with nations like the United Kingdom, Germany, and Luxembourg at the forefront. In 2018, the UK's largest Islamic bank, Al Rayan Bank, said about one-third of its customers were non-Muslim, up from one-eighth in 2010. So what is driving Western interest in this ancient approach?
"Islamic finance is not for Muslims only," Dr. Nakshbendi states. "It is for humanity."
Islamic finance is an alternative to conventional finance. Sharia law—Islamic law based on the religious principles of the Quran and the Hadith—forbids the charging of interest. Because money is only a way of defining value, making money from money is not permissible, rendering financial products like options, futures, and derivatives moot. In Islamic finance, lending can only occur in the context of a sale or exchange of some sort, meaning investments must result in something tangible.
If interest is forbidden, how do Islamic institutions interact with conventional financial markets? Profit-and-loss sharing contracts are one way, where an Islamic bank pools investors' money and assumes a share of the profits and losses. Another way is renting or leasing products and services. Or a bank can form a partnership with the company it is sponsoring, reaping some of the benefits once the company produces its product. There are also sukuk—Islamic bonds.
Malaysia, a leader in Islamic banking, has been at the forefront of using Islamic finance to fund environmental sustainability projects. In 2018, Malaysia's Securities Commission debuted the world's first green sukuk, an Islamic bond used to fund environmentally sustainable infrastructure projects. Two Malaysian investment companies have already issued green sukuk to fund the construction of large-scale solar power plants in multiple districts.
Islamic finance is even finding its way into cryptocurrency. Rain, a Bahrain-based cryptocurrency exchange, announced in February that it had passed a Sharia compliance certification and bills itself as "the most regulated and secure digital currency exchange in the Middle East."
"Malaysia and Bahrain are setting global best practice standards of Islamic finance. Business juggernauts like Kuwait and Saudi Arabia have been relying on this system, and they are at the forefront of all sorts of innovations," says Dr. Nakshbendi.
The Islamic finance program attracts a wide variety of students who are eager to learn an alternative way of doing business, from creating community-minded, sustainable development to avoiding predatory lending and promoting inclusive growth.
Recent graduate Bianca Tardio sees Islamic finance as an avenue for positive societal change. "A lot of conventional finance funding provides more of a debt problem, which people obviously have trouble getting out of," Tardio says. "Islamic finance would be an alternative to benefit not just companies or corporations but actually the people."
Many students see Islamic finance gaining traction in the world economy and want to make sure they're prepared to be a part of this growing global branch of finance. For them, the certificate opens up a world of career prospects.
"If one of the regular banking institutions wants to open an Islamic finance branch, someone with this certificate will be the first they will ask to get involved," Dr. Nakshbendi says. "Even though the figure is from 2016, a study found that there are more than 50,000 jobs in Islamic finance worldwide."
In 2017, total worldwide Islamic finance assets were estimated at $2 trillion. By 2021, they are expected to grow to $3.5 trillion. In the US, banks like Standard Chartered and JP Morgan—alongside several smaller banking institutions—are already offering Islamic personal and business banking services.
Students graduating from the certificate program are positioned to be at the forefront of Islamic finance's growth in the US and around the world. From infrastructure development to climate-friendly investments to cryptocurrency, Islamic finance's inherent innovation invites further exploring.
Though it has ancient roots, Islamic finance is far from irrelevant or antiquated; it offers solutions to some of the world's most entrenched modern problems. Rather than focusing on wealth generation, Islamic finance offers an avenue to community-focused development and socially responsible investing.
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