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America's coal heads overseas

Tue, 2014-07-29 02:00

America is in a slow transition to cleaner energy, which means carbon-spewing coal power plants are high on the hit list. But we still mine lots of coal in America. Energy reporter Dina Cappiello has been looking into what happens to all that coal we're not burning here.

Click the media player above to hear reporter Dina Cappiello in conversation with Marketplace Morning Report guest host Mark Garrison.

A start-up incubator for veterans

Tue, 2014-07-29 02:00

Veterans often face unique challenges getting conventional employment when returning from military service; challenges which can be compounded when trying to found or staff their own business.

The Bunker, an incubator in Chicago opening later this year, looks to close that gap. Joseph Kopser is the CEO of RideScout, a company that has been selected to join.

“The first thing they have to do is learn the language,” he said. In fact, one of the chief benefits of an incubator that is veteran-focused is that it teaches participants the language of the business world, which becomes important when pitching the venture to others.

Additionally, he advised veterans reach out to former colleagues in the military who can vouch for their character. 

Click the media player above to hear Joseph Kosper in conversation with Marketplace Tech guest host Noel King.


CORRECTION: An earlier version of this story incorrectly spelled the name of Joseph Kopser. The text has been corrected.

IPOs - why the frenzy ?

Tue, 2014-07-29 02:00

The 20-plus companies that are looking to go public this week hope to collectively raise about $6.7 billion dollars, with about half of it for General Electric’s consumer lending firm Synchrony Financial.

"That's going to be a $3 billion IPO, the biggest we've seen since the May, 2012 IPO of Facebook," says Kathleen Smith, a principal with the IPO fund manager Renaissance Capital.  She labels Mobileye another one of this week’s "shiny objects." The company makes the technology that tells you when your car might hit the one in front of you. "It has about a 50 percent share of that market, very high growth and very profitable, so all investors are looking at that." 

Smith cautions that this week’s batch of potential IPOs is a big one for the market to digest.  

It’s also the right kind of market, says John E. Fitzgibbon, Jr. of IPOScoop.com.  

"You’ve got to have the bull running down the street and you’ve got to have the wind at its back," he says.  

Fitzgibbon thinks this year might even be the biggest one for IPOs since the dot-com bubble, but he points out that a lot of the offerings are fetching discounted prices. This week's IPO frenzy is an "End of Summer sale" that he predicts is just getting started.

"It’s like Macy’s department store; if it doesn’t sell, mark it down and drop it to the basement."  

Who are all these companies, anyway? We rounded up the most notable IPOs from this record-breaking week and grouped the companies up according to their business.

Consumer finance
Synchrony Financial's IPO is not only the biggest offering of the week by far, but at about $3 billion it's poised to raise more than any IPO this year. Synchrony is GE's consumer finance arm, facilitating store-brand credit cards and financing programs for big-name retailers like Amazon and Wal-Mart.

Medicine
Of the this week's huge group of IPOs, more than half are for biotechnology and pharmaceutical firms. The biggest player is Catalent, a multi-armed drug development and delivery company that's expected to offer 42.5 million shares at $19-$22 a share, according to Renaissance Capital. Catalent's nearly $1 billion deal dwarfs about a dozen other companies focused on everything from gene therapy to medical imaging to epilepsy treatment.

Technology
Mobileye is certainly a "shiny object" this week as it looks to raise half a billion dollars. The Israeli firm is the leading supplier of sensors that detect a potential collision. Investors are keeping a special eye on the company amid rumors of a potential partnership with Tesla to build self-driving cars.

Mobile gaming
It's no secret mobile gaming is big business, and developer IDreamSky has become a leader by adapting existing titles like "Fruit Ninja" and "Temple Run" for Chinese markets. That model has earned IDreamSky 100 million active users and $65 million in the year ending last March. They are looking to raise a little more than $100 million this week.

Energy
There are a handful of energy companies up for offering next week, but the largest is another big spin-off. Transocean Partners, LLC is a small portion of oil rig giant Transocean, which hopes to sell $350 million in shares. Spinning off Transocean Partner's three rigs in the Gulf of Mexico will reportedly offer Transocean more financial flexibility, but the Wall Street Journal notes this practice can be a tax dodge

Graphic by Shea Huffman/Marketplace

The latest acquisition for tech companies? Lobbyists

Tue, 2014-07-29 02:00

Tech companies are growing up. And, like a lot of teenagers, they want more control over how they’re treated. Now, those companies are taking steps to make sure they’re heard.

Last month, drivers for ride-sharing companies Uber and Lyft flooded the California Capitol building. They were there to protest a bill that would toughen regulations on their industry. Senator Alex Padilla noted the discussion was one that wouldn’t have happened a few years ago.

“The wonderful challenge that we have on complex issues like this is, in large part, driven by technology and innovation and things that 50 years ago people wouldn’t have imagined, forcing important public policy questions,” Padilla said.

Now tech companies want to influence how these questions are answered.

Robert Callahan is the Executive Director of the California branch of the Internet Association. That’s a relatively new lobbying group that represents many large tech companies such as Google, Amazon, Facebook, eBay, Twitter, Yahoo, Yelp, Uber and Lyft.   

The Association also lobbies on issues at the federal level. Callahan said there’s plenty to work on, like net neutrality and patent reform.

“But also just issues that you would never have thought about,” he said. “Like, what are the decedent rights to a social media account after the account holder passes away?”

But as tech companies start to pay expensive lobbyists, some are asking what that will ultimately cost their customers.

Timothy Karr is with Free Press, a group that works for what it calls a “free and open Internet.”  

“You know, in general, I don’t think corporate lobbyists are serving the interest of consumers,” Karr said.

He’s especially concerned with how media use is being regulated.

“People are listening to music, they are sharing video files. And because it’s become much more prominent in the way people use, share, and consume media, it also has a much higher profile in policy discussions,” he said.

And the growing clout of tech companies means they’ll likely have a larger role in future legislative discussions.

TSA crowdsources crowd problems

Tue, 2014-07-29 01:00

There’s a contest underway you may not know about. The Transportation Security Administration is offering $15,000 in prize money to anyone who can help it come up with a faster check-in system.

Some 1.8 million passengers fly daily across the U.S., and as the TSA knows all too well, many of them complain about long security lines and time-consuming pat-downs.

So, for three weeks, anyone can submit a proposal to help solve expected problems with TSA’s fast lane or “PreCheck” program, which the TSA "allows low-risk travelers to experience expedited, more efficient security screening." It seems to be doing well so far at Raleigh-Durham International Airport, says spokesman Andrew Sawyer.

“We’ve noticed that since PreCheck came to RDU a little over a year ago, we do see a lot of our customers using it,” said Sawyer.

As more people register for the pre-check system, it’s bound to get as clogged as the regular one that leaves travelers with no shoes and open laptops. 

Duke University Professor David Schanzer is director of the Triangle Center on Terrorism and Homeland Security. He says getting ideas from the public could be a winning strategy.

“While $15,000 seems like a lot to win in a contest, in the scheme of federal contracting if you come up with some really good ideas and solutions, it could be a bargain,” said Schanzer.

It’s a bargain for the federal government which, by the way, charges $85 just to apply for that pre check-in program.

This isn't the TSA's first time reaching out online. While airport security might be crowded and brusque, the TSA's web presence is affable, helpful, and surprisingly self-aware.

Their blog (yes, they have a blog) features tips for any kind of traveler imaginable.

Pregnant? Transporting gun parts? Got bear repellent in your carry-on? All three? They have a guide for you. There's also a kids section, wherein an adorable dog family shows youngsters how to go through a checkpoint — or at least gives them a picture of a checkpoint to color while mom and dad put their shoes, belts and jackets back on.

But the best thing about the TSA's online footprint, by far, is its Instagram account. There, under the hashtag #TSACatch, the organization documents the strangest confiscated items. Each photo contains a detailed and sometimes irreverent explanation for the confiscation and how you can avoid having your own lipstick taser taken away. Ditto for grenades, two (2!) different sets of Batarangs, novelty alarm clocks that look like bombs, and more.

All the photos are culled from the TSA's comprehensive week-in-review blog posts, which are interesting reads themselves. The TSA also realizes the importance of pets on Instagram, and regularly features its K-9 unit. Check out some of our favorite posts below:

[<a href="//storify.com/Marketplace/the-tsa-s-amazing-instagram" target="_blank">View the story "The TSA's amazing Instagram" on Storify</a>]

What's happened since Detroit turned off delinquent residents' taps

Mon, 2014-07-28 13:33

Detroit threatened residents behind on their water bills in March: Pay up, or we’ll shut you off. The story has been building up ever since. 

Here's what you need to know:

The threat applies to about half the city's water customers. Before declaring a 15-day moratorium last week, the city did turn off the taps on thousands of households, setting off protests, official condemnation from human-rights experts at the U.N., and grumbling from the judge overseeing the city’s ongoing bankruptcy case that the city already has enough public-relations problems.

It's a scare tactic, but it's working. Latimer says the residential shutoffs were always intended as a scare tactic, to combat what he calls "a culture that’s developed: 'Since you’re not cutting me off, I’m not going to pay you.' And what we’ve found when we shut residents off is that 60 percent are coming in and paying."

It's not just private citizens. Corporate customers— including both private companies and branches of the government— have also fallen behind on their bills, to the tune of millions of dollars. Why didn’t the city shut them down first? Officials say they have turned off close to 19,000 residential accounts, but could not provide a number for corporate customers.

Darryl Latimer, the Water and Sewage Department’s deputy director says he’s been going after corporate deadbeats, too. Often, they’re disputing part of their bill, and negotiating takes time. He says that paid off with Chrysler Group: The company gave Detriot a check for $2.9 million— and the city recognized that Chrylser no longer owns some of the properties that were in dispute. The Detroit Public Schools, he says, have paid off about three quarters of a $12 million tab.

Customers are reporting difficulties in dealing with the water department. Shea Howell, a volunteer with the People’s Water Board Coalition, says residential customers do not get similar treatment. "Many, many resident also have problems with their bills," she says. "They also have problems they’d like to talk with the water department about, and they can’t even get through on the water department’s service lines." She says customers report wait times of up to four hours on hold.

What makes this unique? The scale of Detroit’s problems make it unusual, says Janice Beecher, director of the Institute for Public Utilities at Michigan State University. "What we don’t have in the water sector is a really clear policy for coping with something like this, so in some ways it’s a learn-as-you-go process," she says. "I do think it will go down as a case study in this sort of problem."

Residential shutoffs are due to resume next week.

An interesting campaign spawned from Twitter. Detroit’s water shutoffs also prompted some Twitter users to create an online platform where donors can directly pay off the water bill for a Detroiter in need.

If you know someone who could use assistance w/a water bill of $250 or less, we want to connect them to a donor here http://t.co/CEu7jojx51

— Tiffani Ashley Bell (@tiffani) July 18, 2014

You all are straight helping knock down water bills for folks. DIRECT. For ex: http://t.co/FDD6ZoRySZ #DetroitWater pic.twitter.com/CexEaON4uV

— Tiffani Ashley Bell (@tiffani) July 22, 2014

Three more accounts with 0 balances this morning #DetroitWater pic.twitter.com/HldO544JlE

— Kristy Tillman (@KristyT) July 23, 2014

Detroit turns off taps of delinquent residents, mainly

Mon, 2014-07-28 13:33

Detroit threatened residents behind on their water bills in March: Pay up, or we’ll shut you off. What made the threat especially noteworthy was that it applied to about half of the city’s water customers. Before declaring a 15-day moratorium last week, the city did turn off the taps on thousands of households, setting off protests, official condemnation from human-rights experts at the U.N., and grumbling from the judge overseeing the city’s ongoing bankruptcy case that the city already has enough public-relations problems.

Meanwhile, one question has come up repeatedly: Corporate customers— including both private companies and branches of the government— have also fallen behind on their bills, to the tune of millions of dollars. Why didn’t the city shut them down first? Officials say they have turned off close to 19,000 residential accounts, but could not provide a number for corporate customers.

Darryl Latimer, the Water and Sewerage Department’s deputy director,  says the residential shutoffs were always intended as a scare tactic, to combat what he calls "a culture that’s developed: 'Since you’re not cutting me off, I’m not going to pay you.' And what we’ve found when we shut residents off is that 60 percent are coming in and paying."

Latimer says he’s been going after corporate deadbeats, too. Often, they’re disputing part of their bill, and negotiating takes time. He says that paid off with Chrysler Group: The company gave Detriot a check for $2.9 million— and the city recognized that Chrylser no longer owns some of the properties that were in dispute. The Detroit Public Schools, he says, have paid off about three quarters of a $12 million tab.

Shea Howell, a volunteer with the People’s Water Board Coalition, says residential customers do not get similar treatment. "Many, many resident also have problems with their bills," she says. "They also have problems they’d like to talk with the water department about, and they can’t even get through on the water department’s service lines." She says customers report wait times of up to four hours on hold.

The scale of Detroit’s problems make it unusual, says Janice Beecher, director of the Institute for Public Utilities at Michigan State University. "What we don’t have in the water sector is a really clear policy for coping with something like this, so in some ways it’s a learn-as-you-go process," she says. "I do think it will go down as a case study in this sort of problem."

Residential shutoffs are due to resume next week.

Detroit’s water shutoffs also prompted some Twitter users to create an online platform where donors can directly pay off the water bill for a Detroiter in need.

Dollar stores adapt to an improving economy

Mon, 2014-07-28 13:33

There's really only one reason consumers shop at the dollar store. 

Joe Feldman,  Senior Managing Director and Assistant Director of research with Telsey Advisory group, says Family Dollar played around with its raison d'etre more than was wise: “One would think that a dollar store would be at an everyday low price." But, Feldman notes, its name notwithstanding, Family Dollar has been embracing a multipricing strategy - which wasn't a hit with consumers. 

“Maybe they’re not shopping at Family Dollar, they may be shopping at Dollar General,” he says, referring to one of the store's competitors.

The entire dollar store industry has slowed down this year. One reason — middle and upper middle class consumers can now afford to shop somewhere else.

Robert Campagnino, head of consumer research at SSR, says dollar stores have started selling higher-margin discretionary items which can prove to be problematic.  If there is a recovery, says Campagnino,  lower income consumers are not feeling it.

“So what’s happened when their consumer has been under pressure is that higher margin category has been where the sales weakness has been,” he says.

Even some staples are a hard sell. Like food, which Sandeep Dahiya, a professor of finance at Georgetown University’s McDonough School of Business, says dollar stores have been increasingly getting into.

“The operations involved in selling something that has low shelf life is very different than selling soap. Soap doesn’t go bad... If that three pound chuck doesn’t get sold today tomorrow it will be thrown out,” he says.

Family Dollar says its sale means a good deal for shareholders, employees and shoppers. Joe Feldman says Dollar Stores, all of them, need to continue to make sure they have the right price.

What the Zillow-Trulia deal means for real estate

Mon, 2014-07-28 13:33

During the housing bubble, websites focused on the real estate sector sprung up like "for sale" signs in a hot neighborhood. Over the past couple of years, out of sight of the headlines, those companies have been merging and buying each other out. It's called "a roll-up," and it happens when a sector begins to mature.

In the last couple years, Zillow snapped up New York apartment site StreetEasy and HotPads. Trulia bought Market Leader and last month was rumored to be close to buying Realtor.com. Today came the biggest deal yet: Zillow said it agreed to buy rival Trulia for about $3.5 billion. The pair will create the proverbial 800-pound gorilla for online real estate. Part of the reason for the merger-mania is that when it comes to online real estate, bigger is pretty much always better.

"In internet-based economies, scale matters a lot," says Nic Retsinas, a professor of real estate at the Harvard Business School. "And as the two largest players in this marketplace, the possibility of them coming together gave them advantages of scale."

Together Zillow and Trulia will command more than 60 percent of online real estate traffic. That mega-market share is a big part of the reason we’re seeing this deal.

"As one company takes a leadership position, it amasses enormous capital," says Glenn Kelman, CEO of real estate site Redfin. "So you see Wall Street really rewarding the number-one player in the space and that gives them the capital to buy other companies."

The real estate market is recovering slowly, but the online real estate space is booming. Redfin is growing by 50 percent a year.

Growth is likely to continue as more people get online and the internet generation comes of home-buying age. "People do love to look at what their house is worth," says Richard Green, director of the USC Lusk Center for Real Estate. "And, let’s face it, they want to look at what their neighbor’s house is worth."

Still, Green doesn’t think we’ll see many more mergers of this kind. He says most of the deals that could be done have been done.

Sending 57,000 kids back to their home country costs

Mon, 2014-07-28 12:30

From October 2013 to June 2014, more than 57,000 unaccompanied minors have migrated to the United States, most from El Salvador, Guatemala and Honduras. One solution for dealing with these children is to send them back home, a plan both President Obama and congressional Republicans endorse.

But with that many kids and toddlers being juggled around the system, that simple-sounding solution could actually create an even bigger strain on resources.

"Money would help deal with the influx now," says Esme Deprez, U.S Border Reporter for Bloomberg Businessweek. "We’re seeing shelters overwhelmed, we’re seeing processing centers that are run by border patrol agents completely overwhelmed, courts overwhelmed as well. The system is being stretched at every turn."

The White House has asked Congress for $3.7 billion in emergency funds, but Deprez says there is not a lot of hope that Congress will act.

"They’re going on break for five weeks on July 31," says Deprez. "So, even if they do pass separate bills in the House and Senate, we don’t know if they’re going to come to an agreement and reconcile the two."

If Congress were to approve the emergency funds requested, it would include $879 million to pay for the minors’ prosecution, deportation and to help expedite their court hearings.

"The bulk of the money would go to care for the newly-arrived children and the shelters," says Deprez.

Listen to the full conversation in the audio player above.

Gag rules: illegal, but alive and well

Mon, 2014-07-28 12:15

The National Labor Relations Act of 1935 (NLRA) "guarantees basic rights of private sector employees to organize into trade unions, engage in collective bargaining for better terms and conditions at work, and take collective action including strike if necessary."

Despite the NLRA, some companies still threaten their employees with lowering their pay or hours and even with termination if they discuss their pay with other employees.

"Gag rules are illegal," says Nancy Koehn of the Harvard Business School. "But there is no question that they are alive and well in America."

There are many disadvantages for workers who don’t know if they’re getting paid fairly or not, says Koehn.

"If you have no sense of what your pay is on some kid of latter of compensation across the organization, you have no sense of what kind of organization this is in terms of how they reward people for a job well done," says Koehn.

Listen to the full conversation in the audio player above.

Russia ordered to pay $50 billion to oil shareholders

Mon, 2014-07-28 12:03

There was more bad news for Russia today. The Hague, an international arbitration court, ruled the country acted improperly when it confiscated the assets of the oil company Yukos back in 2003.

The court’s ruling requires Russia to pay $50 billion to former Yukos shareholders but “there’s no likelihood that they will simply roll over and hand the cash over” says the BBC’s Andrew Walker.

Russia has already says it will appeal the ruling but Walker says shareholders of Yukos could fight back. They could get a court order to seize some of Russia’s commercial assets but that would likely take years.

The ruling probably won’t mean much to other companies with an eye to invest in Russia. Walker says Russia already has a poor reputation when it comes to creating a good climate for business.

“Investors that get involved in Russia are typically doing it because they think that the energy resources there are so large that there must ultimately be the potential to make money. “

Walker notes that tomorrow, EU officials will meet to consider sanctions against the energy, arms, and financial sectors in Russia.

A small UK company with big graphene dreams

Mon, 2014-07-28 11:05

It’s not often that anyone speaks highly of carbon, given the part that element plays in climate change. But a growing number of companies are eagerly promoting carbon in one specific form: It’s called graphene, and it is said to be the strongest, thinnest and most flexible material ever discovered.

First isolated by a British university in 2004, this so-called "wonder product" has sparked a multi-million dollar corporate scramble to exploit the breakthrough.

“This is akin to the invention of silicon or plastics,” says Jon Mabbit of Applied Graphene Materials (AGM), a small start-up in northeast England that has joined the great graphene rush. “This is a disruptive technology. It has the potential to revolutionize countless markets.”

One atom thick, the substance is so thin that it’s regarded as two-dimensional. And it has an impressive list of other properties: 100 times stronger than steel; far more flexible than rubber; the world’s best conductor of heat and electricity; almost totally transparent and yet completely impermeable. Among the uses touted: super-fast computer chips; cellphones you can roll up like a piece of paper and stuff into your pocket; and super-thin condoms.

But the graphene “prospectors” face some major hurdles.

“There’s an enormous leap between what you can do in the laboratory and having a product that is technologically ready," says Valerie Jamieson of New Scientist magazine. "Graphene’s been stymied by the difficulty of making large sheets of the stuff. A tiny flaw can impair the product’s conductivity, making it useless in electronics."

Jamieson is also concerned about cost. Graphene sheets cost $60 per square inch to produce but that needs to come down to $1 a square inch for use in computer chips, and 10 cents for touch screen displays. And there’s another, strategic worry: the vast bulk of the graphite from which graphene naturally derives would have to be mined in China.

But Mabbitt of AGM reckons that his company has cracked some of those problems. He and his colleagues have developed a method of synthesizing the substance out of cheap alcohol, so there is no need to dig it out of the ground at great expense. The company claims it can grow a ton of graphene a year with one relatively small piece of equipment. And they’re not turning out sheets for use in consumer electronics, so tiny flaws don’t matter. They aim to use their graphene as an additive to paints and lubricants.

"The impermeability of graphene makes it fantastic for stopping moisture attacking a ship’s hull," says Mabbitt. "It also prevents sea-life from building up on the hull. So potentially you have a rust and barnacle-free vessel. That gives you a double whammy: low-maintenance and improved efficiency through water, which equates to fuel-saving."

Graphene-coated aircraft – he says – would be both lighter and lightning proof. He believes the range of industrial applications for graphene is enormous. Not as sexy as roll-up cell phones and ultra-thin condoms, perhaps, but a wonder material nevertheless.

Midwestern college dilemma: fewer local kids to tap

Mon, 2014-07-28 10:22

Tom Crady wants high school kids across the country to think about attending Gustavus Adolphus College, even if they mangle the name.

"Some won't say the name at all. They just say, 'Tell me how you pronounce the college's name,'" says Crady, vice president of enrollment at the college, which is pronounced gus-TAY-vus uh-DOLPH-us.

The liberal arts college, perched on a bluff in southern Minnesota, is seeing fewer applicants from its home state, as well as other Midwestern states. So Crady is courting potential students from far-flung places like Texas and even India.

"We go farther and longer distances than ever before," Crady says.

Crady says the changes are occasioned by big demographic shifts. In the '90s, birth rates fell nationally. On top of that, lots of people migrated south and west. That all spells a decline in high school graduates in the Northeast and Midwest today. That's according to Brian Prescott, who directs research at the Western Interstate Commission for Higher Education.

"You can't grow 18-year-olds or high school graduates in a laboratory," Prescott says.

Prescott estimates there's been a 7 percent drop in high school grads in the middle of the country just over the past six years.

Colleges as far away as Dartmouth and Harvard have noticed fewer Midwestern applicants. But experts say the demographic changes are not a big deal for elite institutions with fat endowments and kids lined up at the door. Small, liberal arts colleges that are not household names will likely suffer more as tuition dollars shrink.

"It's very tough right now not only finding the number of your potential applicants dropping but knowing that there are others competing with you to try to get those graduates," says Diane Viacava, vice president in the higher education division at the credit rating agency Moody's Investors Service.

Viacava says many small Midwestern colleges are struggling with the shifting demographics. Among those rated by Moody's rates, a couple dozen have seen two consecutive years of declining enrollments.

Many are bumping up their recruiting budgets and offering big discounts on tuition.

"What we're finding is that some of the Midwest colleges are discounting over 50 percent to get a student to come to the college," Viacava says.

That's true at Gustavus Adolphus. On average, the college cuts its $40,000 annual tuition by about half.

But, Viacava says, as revenue falls, colleges have to figure out how to cut costs in other areas, like faculty.

"Given that many of them could have a somewhat inflexible expense structure, that can prove very challenging for operations," Viacava says.

Even some public institutions are feeling the pain. Minnesota State University Moorhead recently blamed changing demographics when it announced plans to eliminate several low-enrollment programs.

If there are any winners in this scenario, they may be the Midwestern high school students who are in such short supply. Brayden Yel begins her senior year of high school in a St. Paul suburb this fall. On a recent visit to Gustavus Adolphus, Yel said she's received a lot of emails and letters from Midwestern Colleges.

"Absolutely," Yel says. "Lots of asking for tours and stuff like that."

So far Yel doesn't seem to mind all the attention.

Region Class of 2008 (actual) Class of 2014 (projected) % change Midwest (IL, IN, IA, KS, MI, MN, MO, NE, OH, WI) 705,639 656,022 -7 Northeast (CT, ME, MA, NH, NJ, NY, PA, RI, VT) 552,289 526,820 -4.6 South (AL, AR, DE, DC, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, WV) 1,031,773 1,051,890 2 West (AK, AZ, CA, CO, HI, MT, NV, NM, ND, OR, SD, UT, WA, WY) 711,636 700,086 -1.6

Source: Western Interstate Commission for Higher Education

Midwestern college dilemma: fewer local kids to tap

Mon, 2014-07-28 10:22

Tom Crady wants high school kids across the country to think about attending Gustavus Adolphus College, even if they mangle the name.

"Some won't say the name at all. They just say, 'Tell me how you pronounce the college's name,'" says Crady, vice president of enrollment at the college, which is pronounced gus-TAY-vus uh-DOLPH-us.

The liberal arts college, perched on a bluff in southern Minnesota, is seeing fewer applicants from its home state, as well as other Midwestern states. So Crady is courting potential students from far-flung places like Texas and even India.

"We go farther and longer distances than ever before," Crady says.

Crady says the changes are occasioned by big demographic shifts. In the '90s, birth rates fell nationally. On top of that, lots of people migrated south and west. That all spells a decline in high school graduates in the Northeast and Midwest today. That's according to Brian Prescott, who directs research at the Western Interstate Commission for Higher Education.

"You can't grow 18-year-olds or high school graduates in a laboratory," Prescott says.

Prescott estimates there's been a 7 percent drop in high school grads in the middle of the country just over the past six years.

Colleges as far away as Dartmouth and Harvard have noticed fewer Midwestern applicants. But experts say the demographic changes are not a big deal for elite institutions with fat endowments and kids lined up at the door. Small, liberal arts colleges that are not household names will likely suffer more as tuition dollars shrink.

"It's very tough right now not only finding the number of your potential applicants dropping but knowing that there are others competing with you to try to get those graduates," says Diane Viacava, vice president in the higher education division at the credit rating agency Moody's Investors Service.

Viacava says many small Midwestern colleges are struggling with the shifting demographics. Among those rated by Moody's rates, a couple dozen have seen two consecutive years of declining enrollments.

Many are bumping up their recruiting budgets and offering big discounts on tuition.

"What we're finding is that some of the Midwest colleges are discounting over 50 percent to get a student to come to the college," Viacava says.

That's true at Gustavus Adolphus. On average, the college cuts its $40,000 annual tuition by about half.

But, Viacava says, as revenue falls, colleges have to figure out how to cut costs in other areas, like faculty.

"Given that many of them could have a somewhat inflexible expense structure, that can prove very challenging for operations," Viacava says.

Even some public institutions are feeling the pain. Minnesota State University Moorhead recently blamed changing demographics when it announced plans to eliminate several low-enrollment programs.

If there are any winners in this scenario, they may be the Midwestern high school students who are in such short supply. Brayden Yel begins her senior year of high school in a St. Paul suburb this fall. On a recent visit to Gustavus Adolphus, Yel said she's received a lot of emails and letters from Midwestern Colleges.

"Absolutely," Yel says. "Lots of asking for tours and stuff like that."

So far Yel doesn't seem to mind all the attention.

Region Class of 2008 (actual) Class of 2014 (projected) % change Midwest (IL, IN, IA, KS, MI, MN, MO, NE, OH, WI) 705,639 656,022 -7 Northeast (CT, ME, MA, NH, NJ, NY, PA, RI, VT) 552,289 526,820 -4.6 South (AL, AR, DE, DC, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, WV) 1,031,773 1,051,890 2 West (AK, AZ, CA, CO, HI, MT, NV, NM, ND, OR, SD, UT, WA, WY) 711,636 700,086 -1.6

Source: Western Interstate Commission for Higher Education

Your Wallet: The rising costs of childcare

Mon, 2014-07-28 10:15

According to the U.S. Census Bureau, the cost of child care in America has nearly doubled since the mid-1980s: 

 We want to know: How did you made it work? Does a family member watch your kids? Do you pay for daycare? 

Tell us about your childcare sacrifices and solutions, either in the comments below or through email. We'd love to chat.

Uber ranks drivers... and passengers

Mon, 2014-07-28 09:33

Uber, the ride sharing service in business in major cities around the world, lets you use a smart phone to hail a car.

When you use the service, at the end of the trip, you rank your driver on a five-point scale. A driver's ranking determines how much business he gets. Even if he can stay in business, drivers live in fear of too many low ratings.

It turns out Uber drivers can also rank Uber passengers on a scale of one to five. Uber keeps that number secret. But, over the weekend, the website Medium posted a work-around. With a few keystrokes and some copy and pasting, you could find out how you rank.

Unfortunately, Uber got wind of it all and quickly closed the loophole.

I did this last night, though. And not to brag, but I'm a 4.9.

Dollar Tree buys Family Dollar (yes, for more than $1)

Mon, 2014-07-28 06:00

Dollar Tree announced on Monday that it is buying rival discount chain Family Dollar for approximately $8.5 billion in cash and stock. The combined company will have 13,000 stores in the U.S. and Canada.

The deal promises big cost-savings as operations are consolidated. Both companies have reported earnings that underperformed analysts’ predictions in recent quarters. Family Dollar has also been under pressure from investor/activist Carl Icahn, who has called for the chain to be sold.

During the recession, consumers flocked to these super-discount stores. But now, says economist Chris Christopher at IHS Global Insight, consumers’ balance sheets are improving, and moderate to middle income families may be drifting away from the deepest discounts.

“Wages are starting to gain a bit of traction,” says Christopher. “And in addition, there is a little bit of migration of people from the discount stores to the middle-tier retailers.”

Christopher says the super-discount stores — all of Dollar Tree’s items sell for $1 or less; Family Dollar has a wider range of goods reaching slightly higher price-points — can’t raise prices very much. So their margins are being squeezed as inflation starts to pick up at the wholesale and retail level.

PODCAST: Turning over a new Leaf

Mon, 2014-07-28 03:00

More on the news that Dollar Tree will purchase Family Dollar for $8.5 billion, and what it means for both businesses moving forward. Plus, Nissan is hoping to turn over a new Leaf; While the company most likely loses money on its electric car, it hopes that it will see profits in the longrun. Also, the Muslim American community adds billions to the U.S. economy, especially during Eid Al Fitr, which follows Ramadan. So why haven't marketers caught on?

Mobile payments app offers a window on intimacy

Mon, 2014-07-28 02:00

Venmo is an app that allows users to exchange money easily with the click of a few buttons, which makes it particularly useful when it comes to everything from going to the movies to splitting the dinner check. The app is also a kind of social network, where both the parties involved in a transaction and the purpose of that transaction can be publicly available, sometimes in humorous ways. Freelance writer and author Chiara Atik recently published an article in Medium’s “Matter" on the topic.

One of the major issues with using more established platforms to see what people are doing is that users are pretty savvy at this point to social media — they know not to post about things they don’t want publicly consumed. However, Venmo currently exists outside of that frame of mind.

“Because Venmo has this utilitarian aspect to it, people are a little bit looser,” Chiara said. 

Even so, money has the power to be a large window into how people interact.

Said Chiara, "It’s a snippet of people’s relationships with each other."

However, as with Facebook and other social networks, this period won’t last. Once enough people are using the app — especially parents — most users will likely make their transactions private. 

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