Altogether, the value of every outstanding federal student loan and loan guarantee is around $1.2 trillion. That is a staggering number, and many economists say that debt is becoming a drag on the overall economy.
President Obama is expected to take steps toward, as the White House puts it, “reducing the burden of student loan debt."
It is no secret many young Americans – especially recent graduates – are having a tough time. According to Kevin Carey, who directs the New America Foundation’s Education Policy Program, they are having trouble “trying to get jobs in a still-weak economy, and having to make bigger loan payments at the same time.”
The president will direct the Department of Education to work more closely with the companies that service federal loans, and he wants to make more borrowers eligible for something called an “income-based repayment plan,” in which payments are capped at 10 percent of what a borrower makes.
“It could be a very big deal, depending on the number of people who use it,” Carey says.
According to Sandy Baum, a senior fellow with the Urban Institute, that has been a big obstacle so far.
“Lots of people who are eligible for income-based repayment don’t participate in it,” she notes, adding that many aren’t aware the program exists.
There is, of course, only so much the president can do without help from lawmakers. Sen. Elizabeth Warren (D-Mass.) has drafted a bill that would allow borrowers to refinance their student loans, but the Congressional Budget Office estimates that would cost taxpayers about $60 billion over the next decade, which is unpalatable to many Republicans.
Monday, President Obama is expected to ask companies that help borrowers prepare their taxes, including Intuit and H&R Block, to make sure their customers know what tax credits and re-payments plans are out there.
A landmark trial begins today in a long-simmering case involving the National Collegiate Athletic Association, or NCAA.
The anti-trust lawsuit against the NCAA strikes at the heart of the organization's amateurism rules. Under the rules, former and current student athletes can't profit from colleges' commercial use of their names, images, and likenesses in, say, broadcasts of games.
"The plaintiffs would say these rules are not essential to college sports -- that they actually lead to exploitation of student athletes," says Michael McCann, Director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law.
Mark Conrad, Director of the Sports Business Specialization at the Gabelli School of Business at Fordham University, expects the NCAA will argue that not all schools can afford to share revenue with students. Conrad says only a few programs have major media deals to broadcast games.
"Most schools, even though they derive revenues from the system, they have to spend it, and athletic departments are very expensive to run," he says.
You would think from our rapidly obsolete laptops and ever updating phones that all new technology spreads at a breakneck pace.
You would be wrong.
“People who’ve studied technology adoption have often been struck by how slow it is,” says Eric Verhoogen, an Associate Professor at Columbia’s School of International and Public Affairs. “The technologies that make the news are the ones that move fast, but many cases -- including basic industrial technology -- have taken a long time to diffuse.”
Think unsexy things like “continuous annealing lines” for steel, or “lean production” (efficiency-focused manufacturing). One review of 15 industrial technologies found that countries tend to adopt them, on average, 45 years after their invention.
Why? Well, there are many reasons, one of which came to light in a Pakistani manufacturing town called Sialkot.
AN INDUSTRY IN A TEST TUBE
Forty percent of the world’s soccer balls are made in Sialkot at hundreds of factories using fairly uniform methods. The local industry is in a tight battle with competitors elsewhere in Asia, who have driven down Sialkot’s share of the global soccer ball market. Verhoogen and colleagues at the Lahore School of Economics saw an opportunity to use the city as a test tube -- a rare real world experiment -- to test the spread of cost saving innovation.
So the economists offered a group of factories a leg up: a technological innovation.
It was a die to cut pentagons with which to make soccer balls. More specifically, the cutting blades were arranged in such a way so as to create less waste. Nothing as magical as an iPhone, but “we’re talking about something like 12 percent increase in profits from adopting this,” says Verhoogen.
Incidentally, Verhoogen got the idea serendipitously by watching Youtube videos of Chinese competitor factories. “Industrial espionage via Youtube,” he calls it.
The economists gave the die for free to one group of firms, gave the cash equivalent to another group, and a third group received neither. Shamyla Chaudhry, Associate Professor at the Lahore School of Economics, recalls that “initially we thought we had a breakthrough idea and we were very convinced that the minute we give the die to the manufacuters, they will switch on and see the cost advantages.”
In reality, the uptake was slow; 15 months later, only six firms out of 135 in town had adopted the technology.
RESISTANCE FROM THE BOTTOM
The economists didn’t have to look far to find a reason:
“I told the owner that it’s not going to work,” says Mohammed Iqlal Urfnana, a worker at one of the soccer ball firms. He is a cutter, meaning he operates a die-press to cut out the hexagons and pentagons that are sewn together to make a soccer ball. Like many workers, Urfnana didn’t like the new die. “For us cutters, this means lower daily wages.”
That's because Urfnana, like most cutters in Sialkot, is paid by the piece. Learning how to use the new die would slow him down, so he would make fewer pieces and therefore less money. While it was in the factory’s interest to save money by cutting the fake leather more efficiently, it was not in the worker’s interest.
GETTING ON THE SAME PAGE
To realign the incentives, Verhoogen, Chaudhry, and their colleagues then offered a bonus for workers who learned the new die. It worked. About half of the firms where employees were offered a bonus adopted the die.
Verhoogen points to one firm in particular when talking about a misalignment of interests and incentives blocking the adoption of new technology. It’s a large firm, employing 1,000 people, and was the only firm to adopt the die technology that had not been given the technology directly. What set it apart was how it paid its workers – not by the piece, but a simple hourly wage (with some bonuses).
“Employers need to think about what incentives are being built into the payment scheme visavis innovation. Do workers have an incentive to adopt innovation or not? That’s the broader message we’re getting out of this study,” says Verhoogen. “Workers have to expect that they will share in the gains of innovation in order to cooperate in the process, and if they don’t cooperate then innovation might not happen.”
NOT A SOCCER BALL PROBLEM, NOT A PAKISTAN PROBLEM
“It’s not unique at all...any time there’s change, we have a natural resistance to change because people are used to doing what they’re doing and they’ve been successful when they were doing it,” says Hal Sirkin, senior partner at Boston Consulting Group.
“You always have to share with the workers” to bring them along, he says. “It can be a small amount but they need to benefit as well otherwise you’ll have even more resistance, and the change won’t work.”
As a management consultant, Sirkin says the incentive mismatch is familiar to him. “In one consumer products business,” Sirkin recalls, “they started to evaluate people by the number of pounds they sold. So people went from looking at the higher margin products to now the things that are the heaviest. Of course that created a very deleterious problem on the bottom line of the company.”
NOT SO SIMPLE EITHER
“Some conflict of interest is a conspicuous and ongoing feature of all organizations,” says Robert Gibbons, professor at MIT’s Sloan School and coeditor of "The Handbook of Organizational Economics." The conflicts can be complex. Senior employees might block a new digital innovation because younger workers would be better at it. Bankers paid by the loan might take more risks than their managers prefer. The sales department might want less inventory on display than the marketing department.
Further complicating the entire question is trust. Do workers or factory managers trust one another? Is the new technology actually more efficient? Will it cost jobs? Unlike the Sialkot experiment, “most of the time it’s not demonstrable,” says Gibbons. “You get to questions, is my boss leading me down the path here, are there unforeseen questions about this new chemical, and so forth.”
"All of these make it enormously more difficult to think you’ll implement a new tech with a simple bonus," he says.
And not all conflicts of interest can be easily resolved with a bonus.
Saturday afternoon, I pedaled my way up a last nasty hill and made for the finish line in Los Angeles of this year's AIDS Lifecycle bike ride. Me and 2,200 other cyclists. My final odometer reading was 545.5 miles over hill and over dale from San Francisco. My 10 year-old bicycle held up nicely. My 54 year-old body did okay, other than losing six pounds and gaining a handlebar-inflected blister at the base of each palm.
Why spend more than 42 hours on a bike seat over seven days, beyond the spectacular scenery and extraordinary sense of comradery? For starters, the AIDS ride last year raised more than $10 million dollars for people in the margins struggling with HIV and AIDS, once expenses were subtracted. The year, the ride is on track to raise even more.
I am still processing the many lessons of this pilgrimage -- and, yes, it was a pilgrimage. Here is just one conclusion, since every one of you is reading this using a digital device: The ride was way better because the organizers of the AIDS ride did not go out of their way to enable our digital addictions.
I found this expressed in different ways. Very sensibly, everyone was banned from using any digital device while actually riding the bike. No video tracking shots destined for Youtube were allowed while blasting down the stunning 7 percent downgrade of the Gaviota Pass. Plus, no still photos while on the bike, no checking texts, no phone calls. If you wanted to check a text, the rule was pull the bike well off the road and hold the thumb of one hand up to indicate to others you were not in any trouble. The thumb thing alone was enough to keep me from wanting to deal with the phone at any place other than a formal rest stop.
There were other ways the ride's organizers seemed to keep a lid on our compulsion to stay connected. The camps could have had wifi set up. They do this at outdoor concert venues, but if you wanted connectivity on the AIDS ride you had to bring your own 3G or LTE.
Lastly -- and this was the biggee -- they didn't make it that easy to recharge devices. There was a recharging tent each evening, but its existence wasn't heavily promoted and only phones, not tablets or laptops, were allowed. Plus, the limited number of outlets always seemed full to capacity. My friend Richard rode fast and hard through a grueling 84 mile day just so he could get to a recharge station for a boost. When he arrived, again the recharging stations were full to capacity.
Let me emphasize that I am describing a feature of the ride, not a bug. Some people got some love from solar chargers, others brought extra batteries, but by and large, folks knew they had to conserve power. That meant there was less social media socializing and more actual socializing among real human beings. There was less tweeting and more learning -- Like my interaction with an AIDS ride veteran named Michael who broke into tears when he told me about the candlelight vigil on the beach to commemorate people who died from AIDS-related diseases that occurs each year on the sixth night of the ride. And, I am here to tell you after seven days on a bicycle, there was more time for looking, appreciating, and thinking.
After all, what are the features that turn a trip into a pilgrimage? Sociologists and historians say a pilgrimage involves some kind of lengthy, physical undertaking in the service of some kind of higher purpose. Another key feature of a pilgrimage is that pilgrims cut themselves off temporarily from the normal bonds of society and family.
The first few days of the ride, mindful of the limited recharging capacity, I still kept an occasional eye on the news wires, my Facebook feed, and even work email, truth be told.
Then on day four, the fates intervened. I was just cresting a nasty hill within Vandenberg Air Force Base territory when the velcro flap on my backpack flew open, launching my smartphone in a delicate arc through the air like artillery shell gone awry. It shattered on the pavement and was run over by fellow cyclists and became, along with three flat tires, the only equipment failures of the trip. The phone was barely usable: It still connected, but my finger tip ran into slivers of glass when I tried to manipulate the screen.
So for the rest of day four -- and over days five, six, and seven -- I found myself less connected to the digital universe and more connected to the diverse set of folks pedaling around me. I saw the scenery more vividly; I engaged in conversations at camp with greater focus. It was then that I felt that I had both feet and a full brain in the ride and in its purpose. You may not be biking 545 miles this summer, but you may get a chance to get away, to experience something fresh, to consider new ideas. If you are lucky enough to have this kind of opportunity, you might think about whether turning down or turning off the digital while you are away might enhance your experience.
This weekend at the box office, “The Fault in Our Stars” brought in $48.2 million dollars.
It’s Hollywood's latest movie adaptation of a book that appeals largely to young women.
It's part of a string of successful movies aimed at this very demographic -- The box-office success of Twilight, Hunger Games and Malificent shows the movie business is moving past its traditional audience (men aged 13 to 34) and found another, new way to make money.
“It’s like they looked under a rock and found this great big core audience that they didn’t know was there, which is young women,” says Sharon Waxman, CEO of The Wrap, which covers the business of Hollywood.
According to Waxman, instead of relying on broader appeal, studios are aiming for a stronger following with smaller slices of the audience; in this case, young women.
“Don’t forget that when you do that, you’re driving all kinds of other engagement," Waxman says. "They come back and see the movie more than once ... They’ll buy the DVD ... If they ever do a theme park ride around it, they’ll go to that too.”
Kathryn Arnold, an independent film producer, says that movies based on books keep appearing because Hollywood is making a lot of money.
“They’re realizing that they can have more confidence to actually go ahead and make these kinds of movies for young girls because they’re proving themselves at the box office,” she says.
Though, Arnold says that while this may seem like a feel-good Hollywood moment, the trend will only last as long as ticket sales keep coming in.
Economists want more Americans to quit their jobs.
That's because more voluntary quitting by people who have jobs — whether it be to get a better, higher-paying job, or to go back to school for additional skills or credentials — is a sure sign the job market is getting stronger and workers’ confidence is on the mend.
The rate of voluntary quitting — called the ‘quits rate’ by the Bureau of Labor Statistics — has been rising in fits and starts ever since bottoming out after the recession ended in early 2010. But the rate (at 1.8 percent in March 2014), is still approximately 20 percent below its level before the recession hit, says labor economist Heidi Shierholz at the Economic Policy Institute.
“There is a big backlog of people who would probably like to quit their jobs,” says Shierholz. “Someone who got their job before the recession in 2007 — over the last seven years they might have really benefited from changing jobs, but instead they’ve been locked in.”
The problem of ‘failure to quit’ is especially acute for younger workers in this economy, says Shierholz. “Mobility — the ability to move jobs — is really important for people who are at the beginning of their careers,” says Shierholz. “They’re still trying to figure out what their interests are, what their skills are, where they want to live.”
Three young people who have taken this plunge were milling around on a recent Sunday in Portland after an electronic dance party.
“I wasn’t planning on staying a paralegal forever — work felt like a bit of a grind,” said Will Petillo, 28. He quit recently, after working at an intellectual property lawfirm, to pursue post-graduate study in electrical engineering.
“I was working at a bakery,” said Rachel Maddox, 27. “And every time I went to the bakery my entire insides were on fire and I didn’t want to be there. I’ve been ready to get back into my own business and I just quit.” She’s now launching a life-coaching business.
Jesse Allen just quit the last of a series of manufacturing jobs he’s had over the past few years. “I was manufacturing saw chain,” he said. “The air inside the factory was nasty, there were failures from OSHA — I decided I’m just giving up on manufacturing altogether.” He wants to try to support himself by teaching dance classes.
These kinds of life and career choices are exactly what economists are hoping young people will make more often as the economy improves. More to the point, they're hoping that this generation will get bored in lower-skilled, less-interesting jobs, and try something new.
Nedah Zamani, 26, is now on that path. She graduated from Cornell College, a small liberal arts college in Iowa, in 2010. A speaker at her commencement sent a chill through the graduates, says Zamani: “A third of us were going to move home and live with our parents, and that was very scary.”
Zamani had done the perfect internship during college at a nonprofit arts organization in Southern California. But by the time she graduated, there was a hiring freeze at the organization due to budget cuts, and her promised job evaporated. Eventually, she ended up back at her alma mater working in the admissions office.
Now, she’s packing up and about to start an MBA program in arts management at the University of Southern California. She’s saved to pay for school, and will also incur some debt to complete the degree.
“Even though it’s a certain level of unknown,” said Zamani, “I’m able to see it as a return on investment, in a way that I don’t know that I could have a couple of years ago.” Zamani said the improving economy gave her the confidence to go back to school to develop her career. “I think I will be better equipped for the market, and the market will be better equipped for me.”
There's still a lot of hesitation among middle-aged workers, though, to take career and income risks like these young people are taking. Fear of unemployment, of downward mobility, of only finding short-term employment after leaving a steady job — all of these drive people to stay in jobs longer than might be good for them, says Dan Finnigan, CEO of online recruiting site Jobvite.
“The last recession actually frightened the workforce,” says Finnigan. “You’re not going to take the chance of moving your whole family for a new job unless you believe it’s a job that’s going to stick. And most companies now have a difficult time convincing prospective employees that they’re going to be able to stick with them for a long career.”
Still, career counselors will say, it’s ever-more difficult to advance one’s career — to get a higher salary or more job responsibilities — without moving from one employer to another. That opportunity for advancement is what employees have sacrificed over the past decade. That is, if they’ve stuck with jobs they don’t like or that don’t allow for upward mobility within the organization.
“Don't be afraid to go in and take a job that is lower level and less pay the what you have, in order to get into that organization, to learn the field, to network and move up,” advises Jean Erickson Walker, an executive coach in Portland, Oregon. “We didn't say that before. Years ago we said you want to stay in one company and work your way up. Now that's not very appealing. Most employers don't want someone who has been in one company for more than ten years.”