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PODCAST: The energy of the midterm elections

Mon, 2014-11-03 08:33

On the subject of tomorrow's elections here: energy companies--from the oil industry to companies that focus on renewables will be watching the results very carefully. We reached out to David Konisky, a public policy professor at Georgetown who focuses on energy, to discuss. And amid lackluster sales, McDonalds is acknowledging that it has to do a better job accounting for regional tastes.

Quiz: Counting students and teachers

Mon, 2014-11-03 04:38

Statewide student-teacher ratios range from 10 students-per-teacher in Vermont to 23 in California, according to the Department of Education.

What was the student-teacher ratio for United States public schools during the 2012-2013 school year?

Is it a news article or malware?

Mon, 2014-11-03 02:00

Back in 2007, the FBI bugged the computer of a 15-year-old student who was suspected to be behind a number of bomb threats that hit Washington State High School.

So how did they do it? The FBI buried malware into a link that resembled a news report. 

"It's not that difficult anymore," says Jonathan Zittrain, Professor of Law at Harvard University.

All you needed to have was an article persuasive enough for the suspect to click on and you're well on your way to delivering a package of tracking malware.

Now, the question is: Where should the government should draw the line? 

Click the media player above to hear Jonathan Zittrain in conversation with Marketplace Tech host Ben Johnson.

Starbucks CEO co-authors book on valuing veterans

Mon, 2014-11-03 02:00

Howard Schultz, CEO of Starbucks, has a new book entitled "For Love of Country: What Our Veterans Can Teach Us About Citizenship, Heroism, and Sacrifice." He and his co-author, Rajiv Chandrasekaran, a Washington Post reporter who covered the wars in Iraq and Afghanistan, stopped by to discuss the book, as well as Starbucks' pledge to hire 10,000 veterans and their spouses within five years.

Schultz says his father's military service was one of the catalysts for this project, as well as getting to know former defense secretary Robert Gates, who is on the Starbucks board.

Says Schultz: "There would be a significant loss if we don't recognize the value that the military can bring to the business community and the American society at large. And this is just good business. This is not charity, this is not pity. This is the right thing to do for them and for us."

Audio from this interview is forthcoming.

McDonald's seeks to tailor menu to regional tastes

Mon, 2014-11-03 02:00

McDonald’s hasn’t been doing so hot lately. Same-store sales dropped in the third quarter of this year, which helped drag profits down 30 percent. Its CEO said the company’s facing “formidable” headwinds.

Large ships don’t turn easily, but one of the changes the company’s announced is a more regional focus, breaking the country into four zones (instead of its old three) to better respond to the individual tastes of customers in different parts of the country.

But for years, McDonald’s succeeded with a "one size fits all" approach.

“When we look at what has made McDonalds a strong brand, it's consistency, convenience, affordability and strong fast service,” says Darren Tristano, with food-research firm Technomic.

However, he says diners today are more interested customization, like choosing what goes in their burrito at Chipotle.  

This is especially important to millennials, says Andy Brennan, a food analyst at IBIS World.

“Millennials want something different,” he says. “They want to feel like things are customized toward them, they want the ability to choose, and they want high quality things, so unfortunately, McDonald’s doesn’t fit the bill for any of these requirements.”

“The marketplace today is increasingly dynamic and diverse,” Mike Andres, McDonald’s USA President said in a statement. “These changes will enable us to better leverage and support our local market management structure so that we are more nimble in response to and anticipation of the local customer needs and market conditions in a relevant and timely way.”

“The same things that worked nationally, don’t work nationally now,” agrees John Gordon, a food industry analyst with Pacific Management Consulting Group. He says a menu item like spicy chicken wings may play well with customers in Detroit, but miss with customers in Salt Lake City.

Gordon says this regional push is a small step for McDonald’s, but symbolic of the way it needs to decentralize—and a sign that bigger changes may be coming.

Obamacare in the Supreme Court (again)

Mon, 2014-11-03 02:00

The Supreme Court is expected to announce this week whether or not it will hear the latest challenge to the Affordable Care Act—the King versus Burwell case. That case asks whether the Affordable Care Act should be taken literally. UPDATE: The court decided against hearing the challenge.

The ACA specifically grants insurance subsidies for policies bought on state exchanges. Now the question is: “Can the Internal Revenue Service say, 'All right, even for people who’ve purchased insurance through the federal exchange, they can also get the tax credit,'” says Miller Baker, a partner at McDermott, Will and Emery.

Another big ACA case involves something called the Origination Clause, which requires all tax bills have to start in the House of Representatives. This case could face long odds.

“I believe that there has only been one successful Origination Clause case in history, and that was over a century ago,” says Timothy Jost, a professor at Washington and Lee University Law School. Jost says opponents of the healthcare law will have to prove it’s a tax bill. And he says it did originate in the House, but was overhauled in the Senate. 

There are other lawsuits that challenge specific aspects of the healthcare law—from contraception to the delay of the mandate for employers to insure their workers—but these aren't likely to overturn it, experts say.

Why has pumpkin dominated the food market?

Fri, 2014-10-31 13:54

As Gothamist's Jen Carlson found, pumpkin products are everywhere. Here are 10 of the almost 40 pumpkin products currently at her local Trader Joe's grocery store:

Pecan Pumpkin Instant Oatmeal (with "rich pumpkin flavor")
Pumpkin bar baking mix
Pumpkin pancake and waffle mix
Pumpkin cream cheese muffins
Mini ginger pumpkin ice cream mouthfuls
Pumpkin pie mochi ice cream
Pumpkin bread pudding
Pumpkin macarons
Pumpkin cheesecake
Pumpkin cornbread croutons
Have we reached peak pumpkin? How does one flavor take over the marketplace?



Kantha Shelke, a food chemist and principal at Corvus Blue, says that one big reason pumpkin has become popular is the cost.

"Pumpkin spice is an affordable pleasure. Anybody can have it. And it takes you back to the holidays and you don't have to travel anywhere," Shelke says. "You can sit at your desk and go anywhere instantly. And I think that is something that no other food can give us today and that it why pumpkin spice is so popular in the western world."

Flavors like pumpkin have become easier for food companies to re-create as well. "We are becoming more adventurous because food companies have done a tremendous job of delivering exactly the same notes. If you closed your eyes you would actually think there was a pumpkin pie baking right next to you. We couldn't do that a few years ago. We can do that today."

What flavor could be the next pumpkin? Shelke says think spicy.

"I think we're going to see more peppers. Because while people get used to this nice pumpkin pie spice flavoring, they now want a small kick to it. That kick can come from peppers. And peppers are growing in leaps and bounds. People like peppers. People think that the capsaicin, the heat in the pepper, is good for them."

Weekend Brunch: Midterm elections and things we're scared of

Fri, 2014-10-31 13:50

This week, guest host Barbara Bogaev sits down for a virtual brunch with Neil Irwin, a senior economics correspondent at the Upshot for the New York Times, and Shannon Bond, a media correspondent for the Financial Times.

This weekend's reading list:

PBS Newshour: From guns to book, 11 midterm ballot measures to watch

Examiner: Minimum wage increases to be voted on in five states

The Washington Post: America's top fears: public speaking, heights and bugs

Wall Street Journal: U.S. economy grows at steady clip

How the digital divide impacts inequality

Fri, 2014-10-31 13:45

More than 30 million U.S. homes lack high-speed internet, and as David Crow from FT finds, that has a big impact on inequality in the country:

The majority of families in some of the US’s poorest cities do not have a broadband connection, according to a Financial Times analysis of official data that shows how the “digital divide” is exacerbating inequality in the world’s biggest economy.

Barack Obama has pledged to close the digital divide, and in 2010 the president unveiled a national broadband plan with the aim of giving “every American affordable access to robust broadband” by 2020.

But the new figures from the Census Bureau, which collected data on internet use at a sub-state level for the first time last year, show how hard it will be to hit that target in the next five years. There are still 31m households in the US without a home or mobile broadband subscription.

 

Why are sticks of butter long and skinny in the East, but short and fat in the West?

Fri, 2014-10-31 13:42

Bonnie Robinson Beck from Larchmont, New York, has always wondered why butter cubes are long and skinny in the east, and short and squat in the west. Where do the two sizes meet, and why did this come about?

Until we got this question I had no idea this was a thing. But then I moved to Los Angeles, and it's true: I grew up with long, skinny sticks of butter in the east… and out here they are short and fat…

Why?

As we've learned, there is an expert out there for absolutely everything. The University of California Davis used to have a Dairy Research and Information Center. I say "used to have" because it was basically one guy who's now retired. His name is John Bruhn, and I called him up.

He said that the West Coast used to be very far behind in terms of dairy production. In his words, "In the 1960s the West Coast was [deficient] in terms of milk production to make...dairy bi-products like cheeses – and butter in particular. All our milk went to fluid needs. Whole milks, low fat milks and non-fat milks, for example."

Basically there was enough milk to drink, and that was about it. But it changed quickly – in fact, California was on its way to becoming the number one dairy producing state.

However, because the butter industry started so much earlier in the east than it did in the West....

 "...the size of the cube you see is a result of newer equipment purchased at the time to package the butter," Bruhn says.

Now, that kind of answers the question, but when you stumble upon the nation's foremost dairy research institution, you've got to go further. So I did some digging deep in the annals of UC Davis's archives, and I found this old research paper written in 1948 by a researcher named Milton E. Parker. Turns out, the reason so many items in the grocery store come in a sealed bag inside of a cardboard carton is because of a guy named Frank Peters. He created that design for a line of crackers called "Uneedas" back in 1889.

Amazon

It was revolutionary. It kept the crackers fresh and stopped them from breaking.

Like everyone else, the butter industry thought the "Peter's package" idea was great. For a long time, butter had been shipped in wooden tubs and scooped out into cheese cloth dipped in ice water, then handed to customers in a ball – not the most appetizing sell. This new packaging made it clean and more appealing. Plus, customers could tell they were getting the right amount.

Butter was traditionally sold a pound at a time, so they made the box to fit a pound. A restauranteur in New Orleans wrote a letter to his butter supplier, Swift and Company in Hutchinson, Kansas, and asked if he could get ¼ pound sticks. He was a big buyer so they complied, the idea caught on, and that's when the stick as we know it was born.

Wikimedia Commons

A lot of people continue to be passionate about butter. In fact, since 2007, Land O' Lakes actually started making both sizes to sell in different parts of the country. 

And finally, for the record: The long and skinny sticks of butter are called Elgin, because that's the company that made the machines. The other ones are called "Western Stubbies."

Fishermen: Patiently waiting for something to bite

Fri, 2014-10-31 13:33

Eric Hesse is a fisherman based in Cape Cod. Here's how he describes his job:

When I started, there were hundreds of boats that would go out especially in the winter chasing codfish. But there aren’t really any codfish left.

They were severely depleted by overfishing and it’s made for kind of a bleak picture. There’s no telling when it’s going to come back. We’ve started to look for alternatives and the dogfish is one of those that’s really hard to ignore since the ocean is full of them.

Dogfish is a good tasting fish but a hard one for us to market. The name isn’t particularly attractive and right now the only market for dogfish is in Europe. In Italy, it’s spinarolo and in Britain and Spain and France, it’s fish and chips…or fish and chips.

It’s great that we have a market. It’s unfortunate that the market we have results in a very low price to the boats here on the order of 15 to 20 cents a pound to the boat. It’s hard to make a go with those prices.

My kids are about to go off to college. And from the time they were about 4 years old, they said 'we’re going to be the best fishermen ever!' They haven’t said that the last few years because they’ve seen that it’s been getting harder and harder and there’s not a lot of excitement or great moments anymore. I think the next generation probably enjoys fishing as much as I did or any other generation did. I think if the dogfish took off and we had domestic markets, there is room for younger people to get involved.

It’s one of the greatest jobs you can have. You can’t beat the view, nobody tells you what to do, and the harder you work, historically, the better you do. It’s a great way to go about making a living when there’s something to catch. 

Hear more stories in our Disappearing Jobs series:

Your Wallet: Money and vice

Fri, 2014-10-31 13:08

This week, we want to hear how things that could be considered vices have affected your financial life. Cigarettes, video games, pot...whatever your predilection, we want to know.

Send us an email, or reach us on Twitter, @MarketplaceWKND

When it comes to rugby, the US is a developing market

Fri, 2014-10-31 12:28

In a no-frills gym, on 16th street in Manhattan, a group of young athletes is getting down to lifting some serious weights. The guys here are strength training, and amidst the concentration, sweat and grunting, as legs and arms are clenched and unfurled, you can practically feel the tiny muscle fibers tearing. The teenagers here are part of Xavier High School's rugby team, and they are serious about their workout.

If they work hard enough, some of them could end up at the Olympics one day playing rugby.

Rob Spenser, dressed for Halloween outside his job at a café serving Australian food. Until recently, rugby has been seen as something of a novelty in the U.S.

Sally Herships

For the first time since 1924 (when the USA beat France to take the gold) rugby is going to the Olympics. And in case you suffer from American-itis when it comes to the world of international sports, i.e, your knowledge of rugby does exist, but is abstract – then let us offer you a description from 16-year-old, Jack Palillo, a junior at Xavier High School:

“It’s a game played by gentlemen, but it’s a ruthless game,” he says. "The people that play the game, they’re pretty scary and mean. But after every single game, usually you have some kind of reception. And the people who are your enemies five minutes ago, you’re eating lunch with them."

Palillo plays 15-a-side rugby. The teams playing at the Olympics will use seven players. But either way, rugby is a cross between football and soccer. You can’t throw the ball forward, and the players don’t wear helmets. And for American Pro athletes there’s another difference, which even high-schooler Palillio is aware of:

“You’re definitely not getting paid as much,” he says.

Sixteen-year-old Jack Palillo, sweating after his workout calls rugby players “animals.”Sally Herships

While it packs stadiums elsewhere, rugby simply isn't a big deal in the U.S. Since the announcement that the sport would be played in Rio de Janeiro in 2016, tiny bubbles of anticipation and excitement have started to percolate through the industry, but depending on whom you ask, it can be hard to tell what kind of difference the news has made. At the Times Square office of Michael Principe, CEO of The Legacy Agency, a sports marketing and management company, the decor is all-American. Football, basketball, and baseball memorabilia fill his office, but there's only one rugby item - a lone jersey, framed and hung on the wall.

"Candidly, we didn’t spend a ton of time thinking about rugby five years ago. We didn’t spend a ton of time thinking about it three years ago,” says Principe.

But now the Legacy Agency is thinking about rugby. When a sport goes to the Olympics, "it's a big deal."

Notes Principe, when the Olympics goes out to TV viewers around the world,  NBC and other sponsors will spend ungodly amounts of money on broadcast rights and commercials – "billions of dollars." 

And this is an extra-special case.

"It’s not often that the United States is considered a developing market," says Principe, "an emerging market, but with rugby, it is."

But ask the folks who run the national rugby team, and they say finding funding is a different story.

“There was a perception around the world that the minute the game went Olympic, suddenly everybody would be throwing tons and tons of dollars at all the big Olympic countries,” says Nigel Melville, CEO of USA Rugby, the national governing body for the sport.

Melville says the Russians and Chinese both threw government money at their rugby teams, but in the U.S., not so much.

"The biggest challenge over here is there is no government funding," says Melville of finding money to subsidize an Olympic team, "it’s reliant on sponsors and fundraising.”

In case you didn't know, our national league rugby team, both men's and women's are called the Eagles. The men's team hosts New Zealand's All Blacks Saturday in Chicago.

Melville says the athletes training for the Olympics get a stipend – but it's only about $20,000 a year. As for the Eagles, there’s a donate button on the team's website.

There is a small payment for team members, but it's not enough to live on, says Mike Petri, who, when he's not working as a science teacher, or coaching Xavier High's rugby team, plays scrum-half. Petri says he considers himself a professional athlete in the way he approaches the game, but not in the financial sense, but he says, he's very hopeful for the future of the sport in the states. Being part of rugby now, he says, is like working for NASA.

"Realizing that we could send people to Mars," he says. "Personally, I’m probably not going to be the person that goes to Mars, but if I were in NASA I'd be really excited and really pumped for the guys who did get to go."

But there's another draw beyond salary for 16-year-old Xavier High School team member John Patterson to playing rugby.

“It’s kind of associated with [the] foreign, but yet manliness, so, that’s always good,” he says.

Rugby, while exotic to some Americans, still possesses a familiar allure. 

"When we play," says Patterson, "we're right by the bus stop, and everyone stops and watches."

Your Wallet: Guilty Pleasures

Fri, 2014-10-31 12:28

No matter how bad or good your financial situation is, what's one thing you will always spend money on? Do you feel guilty? 

According to a poll released this week by Bankrate.com. Two-thirds of Americans are watching what they spend each month. 

Last week we asked listener’s to tell us their stories of what they will not give up – even when their budgets are tight. Many listeners wrote in. 

Nanette Karapetian, a Psychoanalyst in Los Angeles, spoke to Marketplace Weekend about your guilty pleasures.

How seasonal hiring really works

Fri, 2014-10-31 11:21

Retailers, who were expected to hire more than 700,000 seasonal workers this holiday season, are increasingly relying on online outreach to reach potential workers.

FedEx, which combined with UPS planned to hire 150,000, says it’s relied heavily on social media this season.

“Word of mouth is always a popular way to get more people on board,” says FedEx spokesperson Bonny Harrison. “We also highly target on… various career websites, and you’ll see this year that we’re using social media very heavily to try to promote and advertise the fact that we have these jobs open.”

Companies looking for holiday seasonal workers are casting a wide net and getting creative with their recruiting efforts this year, says Ellen Davis with the National Retail Federation. That’s because unemployment is down, and there are fewer people looking for seasonal or temporary work.

“What we’ve seen on a national level is retailers really using their recruiting efforts by email and even leveraging their own social media channels,” Davis says. 

Companies are also getting creative. Retailers, for instance, may approach potential candidates who might be looking for a second part-time job or who can be enticed by the  potential of getting employee discounts during the holiday shopping season. 

But once the applications start flowing in, much of the work heads to the local and regional levels, Davis says. “And what you then start to see happening is on the local level… managers will collect applications, go through them, interview and hire candidates.” 

It’s a divide-and-conquer strategy. If you have to hire lots of people at once, empower local managers to hire a few each. 

"Meeting the person who’s going to make the decision, in this case it’s often the store manager, is critical,” says John Challenger of the Chicago-based job placement firm Challenger, Gray & Christmas. 

But for those big hiring drives, such as UPS which has held regional recruiting and interviewing events in Chicago in which it processed hundreds of applicants at a time, Challenger says it’s still mostly about matching up open positions with applicants' past experiences.

 

Internet in the U.S: High cost, slow service

Fri, 2014-10-31 11:00

There’s a new study out by the New America Foundation that ranks 24 cities around the world for their broadband offerings. That is, how much bang do we get from our buck?  

The study ranks Internet service providers in a few ways, says Nick Russo, a policy analyst at the Foundation. But the most interesting for consumers is the speed you can get for $40 in the cities.

“Seoul, Hong Kong and Tokyo rank in the top three,” Russo says.

San Francisco is number six but LA, New York and Washington are at the bottom of the list. That means a lot of Americans are basically paying more money for slower service. Why is that?

Christopher Yoo, a professor at the University of Pennsylvania’s Law School, says it’s simple.

“Seoul, Hong Kong and Tokyo are all the result of massive government subsidies,” he says.

Those countries have invested about $300 million for that fast, affordable service, Yoo says. But that’s not going to happen in the U.S., where Congress is looking to makes cuts in the budget for internet services

Al Hammond, a professor at Santa Clara University’s School of Law, says there’s another force at play.

“I think it’s the lack of competition,” he says.  

Hammond says, unlike other countries, the big Internet service providers in the U.S. aren’t required to rent out their broadband pipes to smaller ISPs. That means people in some cities are limited to one or two choices for internet service. And Hammond says some smaller cities are trying to provide cheaper, faster service to their citizens but the big ISPs are fighting that effort.

Soon you will be able to get Starbucks delivered

Fri, 2014-10-31 11:00

If you're craving a pumpkin spice latte but are tired of waiting in line to get one, you're in luck.

Howard Schultz, the CEO of Starbucks, said world's biggest coffee company is going to roll out a delivery service. The service will be available through the Starbucks mobile app starting in the fall of 2015.

"Imagine the ability to create a standing order that Starbucks delivered hot or iced to your desk daily," Schultz said.

We are, Mr. Schultz. We are.

Weekly Wrap: Elections, inflation and GDP

Fri, 2014-10-31 11:00

Leigh Gallagher, an Assistant Managing Editor at Fortune magazine, and Cardiff Garcia, from the blog FT Alphaville join Kai to talk about the week in review.

Listen to the full conversation using the audio player above.

The music of politics

Fri, 2014-10-31 10:56

Just days away from midterm elections, depending on where you live, you might be getting bombarded by political ads on TV and radio. Meet one of the people behind the curtain.

Jeff Trueman runs a company called High Gravity Sounds. He works with producers and post production houses to create custom sound design. This time of year, he's busy producing music for campaign ads.

Listen to the full story in the audio player above.

Why inflation is a central banker's goal

Fri, 2014-10-31 10:49

It used to be that if you really wanted to scare economists and the public, you need only mention one terrifying word: inflation. But really, inflation is a lot like candy. A little bit here and there makes your life so much better, and — as millions of kids are bound to find out this weekend — too much leads to ruin.

One of the goals of Quantitative Easings I through III was to stimulate inflation up to a point; 2 percent was the Federal Reserve's stated goal.  And even though inflation never quite reached that target, QE is ending.

Now Japan is picking up the torch. For decades, the once booming economic powerhouse has been suffering from stagnation, or to put it another way, a lack of inflation.

“Japan wants inflation,” says economist Justin Wolfers.  “Last night they announced that they were going to buy even more bonds because they aren’t getting as much inflation as they wanted.”

So why do Japan, the U.S. and Europe want to stimulate inflation? Because inflation, in the right amount, is a sign of economic growth. In a healthy economy, wages increase steadily. In turn, businesses raise prices and that leads to inflation.

At the moment, wages in the U.S. and Japan are down when adjusted for inflation and lots of people are still looking for work. “Those of us that have jobs probably don’t feel comfortable asking for a raise, and all those people looking for work are willing to accept work at fairly low wages,” says Wolfers. “So all of that puts downward pressure on wages.”

Typically the first thing a government can do to boost the economy, cut unemployment and raise inflation is lower interest rates. But, says economist Josh Bivens, “the short term interest rates that the Fed controls directly, have been stuck at zero since about 2008 and interest rates can’t go below zero.”

Which is why the Federal Reserve and now Japan have turned to the more unconventional tool, buying trillions of dollars in bonds. 

But these tools don’t get used in a political vacuum. People disagree about how much stimulus to inject into the economy.  That makes finding the right amount of stimulus harder than getting a kid to sit still after eating a bag of candy.

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