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Walmart draws criticism for its new dress code

Fri, 2014-09-12 02:00

Walmart is introducing a new dress code for its employees, but they’re not calling it a uniform. And that’s got some Walmart employees riled up.

The retailer says customers are having a hard time figuring out who works at the store, so it’s put in place a dress code. Employees have to wear black or khaki pants and a blue or white collared shirt.

Judith Conti of the National Employment Law Project, a nonprofit that advocates for low-wage workers, says employees are upset about this because they have to pay for the clothes.

“Walmart employees are among the lowest paid in the entire country,” Conti says. “And Walmart is asking them to buy new clothes to wear at work.”

Walmart didn’t respond to an interview request, but it has said that most of the feedback about the dress code has been positive.

Reuel Schiller, a professor at UC Hastings Law School, said it’s significant that Walmart isn’t calling this a uniform.

“There’s a legal difference between a uniform and a dress code,” says Schiller. If the cost of the uniform will actually pull your wages below minimum wage for the week that you bought it, then under federal law that’s illegal.  

Schiller said Walmart skirts the issue — and passes on costs — by going with a dress code.

Silicon Tally: Get on the Google bus

Fri, 2014-09-12 02:00

It's time for Silicon Tally! How well have you kept up with the week in tech news?

This week, we're joined by Marketplace reporter Queena Kim in the heart of Silicon Valley.

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Let's inflate like it's 1989

Fri, 2014-09-12 01:30

As Marketplace celebrates its 25th birthday this year, we are looking at the weird, delightful and destructive ways that prices have changed during that quarter century.

For instance, I noticed that the real price of electricity is essentially the same as it was in 1989, adjusted for inflation. In fact, electricity costs the same as it did in 1960, when I was born, adjusting for inflation. Prescription drugs, however, are a different story. The examples we're looking at for the Marketplace Inflation Calculator all have a unique story about how prices have changed since our show got started 25 years ago.

But before our series gets to those, let's get a snapshot on what inflation is, exactly.

Greg Mankiw is chairman of the economics department at Harvard, and if his name sounds familiar it might be because it's on the front of your macroeconomics textbook from college. 

Click the media player above to hear Dr. Greg Mankiw in conversation with Marketplace Morning Report host David Brancaccio.

 

Twitter taps the bond market

Thu, 2014-09-11 13:41

This week, Twitter announced its plan to raise at least $1.3 billion by issuing convertible bonds. Unlike some companies that turn to the debt markets, the company doesn’t appear to be in dire need of cash. So what is their grand strategy?

“I don’t think it’s so much ‘What is the big strategy?’ I think the question many people will be asking is: ‘Is there a really meaningful strategy?’” says Nate Elliott, vice president at Forrester Research. He points out that Twitter’s user base, while large, is still closer to Google+ than Facebook, and the company is not yet profitable.

“If Twitter’s revenues matched its notoriety, it’d be doing just fine,” Elliott says.

But bond market investors are not in a skeptical mood, says David Krause, finance professor at Marquette University. “Companies are raising record amounts of debt right now.” 

The primary reason: With near-zero interest rates, other options are slim pickings — a rather unhappy economic indicator. “It’s the result of an economy that is still struggling, and it’s also due to what we’re seeing globally,” says Brian Rehling, chief fixed income strategist at Wells Fargo Advisors. “We’re seeing very weak if not negative growth over in Europe."

On the positive side, the drive to issue debt now may be motivated by a belief that the macroeconomic picture is going to change. “I think there is a sense from some that this is not going to last,” says Rehling.

“It’s a very opportune time for companies that may not be investment grade to be able to go out and lock in some long-term money at some very attractive rates,” says Krause.

Krause thinks Twitter’s offering will be very attractive to investors.

Even if all it buys Twitter in the short term is more time.

Goodbye, handshake. Hello, fist bump!

Thu, 2014-09-11 13:41

You know how people have started sneezing and coughing into their elbows instead of their hands, because public health people convinced us that would reduce the spread of germs?

im loving how its finally cold BUT I DON'T LIKE HOW EVERYONE IS SPREADING THEIR GERMS. LIKE ITS NOT HARD TO SNEEZE INTO YOUR ELBOW.

— Kate Eslit (@kate_eslit) September 11, 2014

Well, turns out elbows aren't helping all that much. A study in the American Journal of Infection Control compared handshakes to fist bumps to high fives as transmission mechanisms: Turns out we'd all be a lot healthier if there was more fist-bumping.

Why the SEC is all about 'broken windows'

Thu, 2014-09-11 13:41

The Securities and Exchange Commission announced Wednesday that it had charged 34 people and companies for failing to file timely disclosures about their dealings in company stock.

Nearly all the cases settled for fines of up to $150,000.

While the SEC says these charges represent important violations on their own, they’re also part of a larger "broken windows" strategy of enforcement, modeled after a policing theory first coined in the 1980s. The idea is that if you clamp down on little infractions, you're more likely to deter big-time crime.

“Focusing on these violations does keep people on notice that we are going to bring action in connection with violations big and small,” says Andrew Ceresney, the director of enforcement at the SEC. “It does create heightened focus and attention to compliance more generally."

He says the SEC has developed digital tools to allow it to go after these smaller cases without distracting it from bigger ones.  

“It’s an interesting experiment,” says John Coffee, a professor and director of the Center on Corporate Governance at Columbia University Law School.

By enforcing filing deadlines Coffee believes the SEC might head off larger problems, where company officials trade on stock before releasing good or bad company news.

“By forcing stricter disclosure, I think, in turn, you’re going to reduce the prospect of insiders exploiting material nonpublic information,” he explains.

The strategy is part of a wider effort to rehabilitate the SEC's reputation. Tom Gorman, a partner with the law firm Dorsey & Whitney, says the agency was once highly respected for its enforcement abilities. But its image has suffered due to its failure to prevent the Madoff and Stanford Ponzi schemes, and because of the public’s perception that the agency hasn’t netted a big fish in the wake of the financial crisis.

“It’s started to come back, but it still has a long way to go to get back to the days when it was really the most respected enforcement program in town,” says Gorman. “They haven’t really brought, recently, a huge financial fraud case, but they’ve brought some. It’s those kind of cases that are going to build their reputation to what they want it to be.”

Wednesday’s settlements might cause some companies to look at their compliance policies, says Michael Rivera, the chair of the Securities Enforcement and Compliance Practice at Venable LLP. But he doubts they will deter bigger criminals.

“The individuals that are going to engage in massive frauds, I don’t think, are too worried about these smaller cases,” he says. “The real way for the SEC to deter major frauds like that is to go after those major frauds.”

He also notes that these small wins will help the agency report higher numbers of successful actions.

However, the SEC stresses it’s important for the agency to feel omnipresent. Announcing the broken windows approach last October, SEC Chair Mary Jo White said, “Investors in our markets want to know that there is a strong cop on the beat — not just someone sitting in the station house waiting for a call, but patrolling the streets and checking on things.”

The NFL's power extends beyond the game

Thu, 2014-09-11 13:41

This year’s Super Bowl XLVIII was the most-watched event on U.S. television ever, attracting more than 111 million viewers. Its nearest competition? Other Super Bowls.

If a brand wants to play with the big boys in sports, it pretty much has to play with the NFL.

“The NFL stands out in all of the different revenue sources, and not just by a little bit, but by leaps and bounds over the other sports,” says Smith College economist Andrew Zimbalist.

Those NFL revenue streams — from ticket sales, sports stadiums, TV rights, Super Bowl ads, and a lot of merchandising — bring in more than $9 billion annually to the league and team owners. Players endorsing shoes and credit cards generates more revenue, and also generates sales for sporting goods and apparel companies like Nike. Fantasy football betting is taking off, as well.

But the sport is now facing multiple controversies: former Baltimore Ravens running back Ray Rice’s assault on his then-fiancée and how much NFL officials knew about it, last year's bullying scandal and concussions and their consequences.

Zimbalist doesn't see these problems undermining the NFL’s reputational value to sponsoring brands like Gatorade, Marriott or FedEx.

“Because [football] is the most popular spectator sport in the United States, it derives a certain amount of insulation from some of the social criticisms that it receives,” Zimbalist says.

Football’s popularity, especially as a spectator sport, can seem mysterious. The ball is only in play for about 20 minutes of the over-three-hour broadcast.

Jonathan Taplin at the USC Annenberg Innovation Lab says even with the short ball-in-play time, the violence of football appeals to a desirable prime-age male demographic.

The pacing is ideal for broadcast, too.

“Football is actually a perfect collective viewing experience,” Taplin says, “because it’s actually the time between the plays when people can discuss things, get a beer, go over to the guacamole. A basketball game is so intense, if you’re in a room with a bunch of people and someone’s talking, they’ll shout ‘shut up and watch the game.’”

Taplin points out that all the major spectator sports are good for TV networks because fans want to watch in real time, rather than using a DVR and watching later — without the ads. Fans want to know how their team did, and how it affects their chances of making it into postseason play. Pro football teams only play 16 regular-season games, compared to about 80 in basketball or hockey and 162 in baseball. Marketers like that, Taplin says, because football fans form a mass market that’s heavily concentrated in fall weekend time slots.

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The tricky balance of marketing to the affluent

Thu, 2014-09-11 13:29

The rich spend money very differently than the rest of us — or so we mere mortals with middle-class and lower-tiered bank balances imagine. Most of us don't have the first-hand shopping experience of rubbing luxury-garbed shoulders with the sumptuously perfumed rich.

“You don’t really typically see movie stars walking into the grocery store to pick up milk. They have a handler, they have a housekeeper,” says Kirby Rosplock, author of “The Complete Family Office Handbook,” and a fourth-generation member of a family business.

Rosplock, whom it might be accurate to categorize as wealthy, says, “I guess it depends on who’s categorizing me, because I’m not wealthy compared to a Warren Buffett or Carl Icahn.”

While you and I might be worried about our retirement, she says, the ultra-wealthy are saving their money for something else altogether — the future-future.

“They have to determine what they want for their lifestyle today," she says, "and what they want for their legacy when they’re not here.”

Like money for their grandchildren, a charity or an alma mater. After the recession, Rosplock says the wealthy are also likely to be more conservative with spending. 

She says it's easy for marketers to get the rich wrong.

“The biggest mistake I see is marketers trying to play into the stereotype of who they think these people are," she says. "They’re not necessarily wooed by those strategies of showing the chic, sexy model wearing the bedazzled necklace."

Andrew Sacks, president of AGENCYSACKS and The Affluence Collaborative, two companies that help brands target affluent consumers, says marketers need to learn to dissect the wealthy, correctly breaking them down into subgroups, each with their own unique characteristics.

“To try and appeal to the wealthy as a group is not a winning strategy,” he says.

About 90 percent of rich Americans, notes Sacks, didn’t grow up wealthy. So affluent shoppers can also be intimidated by fancy-schmancy stores.

"There’s a lot on the line," Sacks says. "When you’re buying a $500,000 diamond, you really don’t want to be the fool and buy the thing that’s the wrong thing."

Which is one reason it’s important for luxury brands to educate consumers on the brand’s history and product quality. When you buy a luxury product with a high price tag, he says, it can start to feel all too normal.

“So you might buy Tom Ford shoes for the first time and feel like 'holy cow, I just spent $1,600 on these shoes... I really went overboard!'" But that threshold, he says, "becomes your new floor.”

In case you're wondering, $1,600 is how much Tom Ford shoes cost.

“I’m embarrassed to say it is,” says Sacks, noting his own feet, clad in the designer's footwear.

It's become increasingly more important for brands to learn how to connect with consumers on a personal level.  They can begin, Sacks says, by saying thank you to their customers. Affluent consumers are spending a ton of money on products, and they’re not getting what they would expect in return.

For example, the time when Sacks and his wife bought a German car — for $80,000.

"We got nothing," he says. "We didn’t get a baseball cap. We didn’t get a letter. We really got nothing. Think about — could they have spent one-tenth of one percent, $80, on a gift to say thank you? I think they could have."

People are living longer than ever, says Sacks. "They’ve been wealthy for quite some time," he says. "At some point you run out of a need for stuff and you realize that your deepest human needs are not fulfilled by stuff."

Allentown bets big to shed its former image

Thu, 2014-09-11 13:02

Downtown Allentown, Pennsylvania, was once home to the most popular department store in the nation.

“Hess’s here did $190 million worth of retail sales in 1970,” says the city’s mayor Ed Pawlowski. “Think about that. They were the highest grossing retailer in the country, and they were here in Allentown. We were the major retail hub for the entire region.”

A city's troubled past

There’s a good chance the first thing that pops into your head when you think about Allentown is the song Billy Joel wrote about it. It’s a song about the coal and steel industries drying up and the city bleeding out.

But most folks in Allentown will tell you that song isn’t even about their city. It’s about neighboring Bethlehem, where there was a massive steel mill. If an autopsy was performed on Allentown, globalization and deindustrialization would just be footnotes.

The real cause of death would be the mall.

“When the malls got built, it sucked everything out like a giant vacuum,” Mayor Pawlowski says. Retail left downtown and people moved to the suburbs in hoards. “This city was like any other Rust Belt city in the Northeast and Midwest. Our economy was in the tank, we weren’t seeing growth and we weren’t seeing development. In fact, we would probably end up as the next Detroit, in bankruptcy.”

But in a span of only five years, that has all changed, the mayor says.

“We went from a multimillion-dollar deficit to a multimillion-dollar surplus. We’re seeing 4,000 new jobs come into the urban core and a billion dollars of new development," he said. "We’re now the fastest growing city in the commonwealth of Pennsylvania, and we haven’t raised property taxes in nine years.”

Allentown’s story of revitalization starts in 2008, when the gates of a brand new $50 million baseball stadium opened. Despite the city’s financial struggles and decades-long economic decline, Allentown has remained the third largest city in Pennsylvania, and because it’s less than 90 miles from the major media markets of Philadelphia and New York, Allentown city officials were able to lure in the Phillies minor league baseball team with some financial incentives.

Lee Butz is the president of Alvin H. Butz, Inc., a construction company named after his grandfather. The company built Coca-Cola Park, home of the team now named the Lehigh Valley IronPigs. The Butz family operated out of Allentown for generations, but when downtown drained, they left too.

“In 1972 we moved from Allentown to the suburbs,” Butz says. “At that time, it seemed like not that important of a move. It was convenient and closer to our homes. But the problem was, almost everyone was moving out of the center city and in a couple of decades it became so severe that many people thought Allentown would never survive.”

But when the city got the IronPigs, Butz says there was a shift in mentality. Suddenly a town that had gotten used to losing felt what it was like to win. “There were a lot of people who said the Lehigh Valley will never support minor league baseball,” Butz says. “Not only did the people support it, it has been the best attended minor league ballpark in the country for several years.”

Butz says the success of the IronPigs proved that Allentown could be a viable market, and it drew him back to downtown. Just after the stadium went up, his company built a new office in the city and moved in.

“We came back because the community has been so good to us. We just felt, what’s the best way we can pay the community back? Let’s go to downtown Allentown and see if it makes a difference, see whether a lot of people will follow us downtown.”

The first several years were rough. “We thought maybe we’d made a terrible mistake,” Butz says. “We occupied two floors of our six story building and we hardly had any other tenants. We thought, oh, gosh, we can’t make this work. But then along came the NIZ. It changed everything.”

The turning point

The NIZ is the whimsical shorthand folks in Allentown use for a plan called the Neighborhood Improvement Zone. The plan is the brainchild of Pennsylvania state senator Pat Browne. It gives developers who chose to build in downtown Allentown a special incentive.  

“Any taxes they generate as a result of their operations in Allentown can be used by the developer to offset the costs of that investment,” Browne says.

The general concept of using state tax incentives and incremental financing is not new. Browne says the American railroads were built on the model back in the 1860s.

Construction workers put the finishing touches on the entrance way of the PPL Center in preparation for the arena’s first event, a sold out Eagles concert.

Tommy Andres/Marketplace

What makes the NIZ unique is the word "any." “We’ve never been able to pull together an incentive that uses the entire state tax portfolio,” Browne says. 

Here’s how it works: If a building is built in the NIZ, the developer can get back the sales tax on any purchase made in that building for 30 years. That developer can also collect state income tax from any employee who works in that building. Even the corporate tax on businesses can be tapped. The state and city oversee the distribution, and if the kickbacks exceed what the developer spent on the building, the rest of the money goes to the state.

The NIZ went into effect in 2012, and swept up around $14 million for developers that first year.

J.B. Reilly is one of those developers. He grew up in Allentown, then made his fortune in the suburban sprawl that led to Allentown’s demise. Now, he has come back to invest in downtown. “Not only did we see a financial opportunity,” he says, “We saw a community development opportunity.”

When it was commissioned for $50 million, Coca-Cola Park felt like a risky bet. But Reilly has raised the stakes immensely, putting down nearly a billion dollars on another sport: hockey. Reilly’s company, The City Center Management Company, is building the new home of the Philadelphia Flyers' minor league team, the Phantoms. His hope is that it will become the heart of a new city.

“There’s a million square feet of development in the arena block between the hotel, the office retail, the arena itself and around 900 parking spaces,” Reilly says.

Reilly says Coca-Cola Park may have helped the city’s outlook and image, but it didn’t do much to spur growth. “It ended up being built on the fringes of Allentown and really didn’t have a benefit to downtown.” Reilly is confident the new PPL Center hockey arena downtown will be different because it’s more than just an arena. The stadium is encapsulated by the new offices of the region’s largest employer, the Lehigh Valley Health Network. It also houses a membership gym and a brand new Marriott Renaissance hotel.

“We really had to approach this differently,” Reilly says. “We had to look at this as a kind of master-planned opportunity to redevelop an urban area and really started thinking about this as creating a place.”

The NIZ allows Reilly to charge cheaper rent, which has been attractive to prospective tenants. Reilly’s office is across the street in a new building called Two City Center, which is also the new headquarters of National Penn Bank, the first bank to call Allentown home in four decades. A new upscale restaurant called The Hamilton — one that never could have survived in the area five years ago — opened on the ground floor in July.

“There will be 3,000 more people working here [in September] than there were a year ago,” Reilly says. “And for a city like Allentown, that’s just extraordinary. Some may say it’s an expensive project, and there’s a lot of state subsidy in it. And there is, but what’s it worth to turn around the third largest city in the state of Pennsylvania?”

Still a tough road

In the shadows of all that new development, just four blocks up 7th Street, is the neighborhood where Julio Guridy grew up. Guridy was born in the Dominican Republic and was among the first of several waves of immigrants to move to Allentown almost four decades ago.

Row houses on 7th Street in downtown Allentown are now mostly home to first and second generation immigrants. At the end of the street is one of The NIZ’s new buildings.

Tommy Andres/Marketplace

Allentown is now nearly 50 percent Hispanic and Latino. Most of those residents are from Puerto Rico or the Dominican Republic, and most moved from New York and New Jersey, not because of job prospects, but to escape rising costs of living.

"The big influx came about ten years ago,”Guridy says. “It's still a fairly new community. Many of them transferred from some other place with a Section 8 voucher. Some of them transferred with a welfare check."

Allentown’s population never stopped growing. As suburban sprawl drew the locals away, immigrants moved into downtown. Many are first generation and don’t speak much English. The result is a poverty rate in Allentown that is nearly ten times the national average.

So how will the NIZ help this burgeoning portion of the city?

“That’s the multimillion-dollar question,” Guridy says.

The residents on Guridy’s old street have all seen the new development and most have heard about the NIZ. And most believe it will bring in more people and more foot traffic. Zack Alali is from Syria and moved to Allentown from New York in the wake of September 11. He says the city knows what it's doing when it comes to big business.

“You think they’re going to spend $200 million on nothing? They’re not stupid,” he says.

But Alali also believes the city is ignoring small business owners in favor of the big developers, and says the feeling that he is an underdog is palpable.

“I applied for a loading zone in front of my shop. It took them three years to approve it,” he says. “The arena people changed the collection of the trash for the whole city in one week. So that tells you everything.”

Edis Farmin moved to Allentown from New York a decade ago. She owns a building and runs a salon in it called Dominican Beauty, just up the road from Alali’s store. She says the development that’s going on at the end of her street is for other people, not for her. She’s also upset because today she got a letter saying her taxes are going up. They aren’t city taxes — they’re state and county taxes — but she sees the new development and can’t help but link the two.

“That’s not fair,” she says. “They want Hispanic people to go back to New York. That’s all they want.”

Guridy says he’s not surprised at the mixed response from the changing neighborhood. “I think there has to be an opportunity for all,” he says. “And I think that opportunity is open. I think the issue is, are we as a Hispanic community and a small business community prepared to take on those projects? It’s going to be difficult at the beginning. It’s not impossible.”

Mayor Pawlowski says his city will never be able to build away all of its problems, but he’s happy with the city’s success so far. “Before, we were dealing with not being able to get anyone to invest in the city of Allentown,” he says. “It was a place where no one wanted to be. Now we’re dealing with the issue of maybe we’re gentrifying our community too fast. I’d rather have that problem. That’s a problem I can deal with and we can address.”

The mayor says that because of the NIZ, his city has pushed forward 20 years in two. “For years, I was like Sisyphus, just pushing that boulder up the hill. And every time we seemed to be getting to the top, it would roll back down. I think the boulder is now over the top of the hill.”

Allentown as a trend-setter?

It's too early to gauge success in Allentown. The city is only two years into a 30-year plan. But whether six square blocks of development can ripple through a city of 18 square miles doesn't seem to matter to Allentown's neighbors. The cities of Lancaster and Bethlehem each have their own state-funded development plans in the works. They call theirs "The City Revitalization & Improvement Zone," or CRIZ. 

If all goes according to plan, Allentown’s change in tune will debut on Sept. 12, when The Eagles open up the city’s brand new hockey arena with a sold-out concert. Sen. Pat Browne says he’s got tickets, but he’s more interested in the show outside.

“Leading up to the event, I’m not going to spend my time in the arena,” Browne says. “I’m going to spend my time outside looking at the waves of people coming downtown and seeing something I haven’t seen in 30 years. And it’s going to feel real good.”

Detroit has the most expensive car insurance in the U.S.

Thu, 2014-09-11 08:10

Drivers in Detroit, Michigan, pay the highest auto insurance rates in the country, with annual premiums costing 165 percent more than the national average, according to a new study by InsuranceQuotes.com.

The study claims Michigan's unique regulations on how insurers cover medical expenses are the cause for the state's higher rates.

From the study:

The reason for this is quite simple, says Lori Conarton, communications director for the Insurance Institute of Michigan.

According to Conarton, Michigan is a no-fault auto insurance state, which means each insurance company compensates its own policyholders for the cost of injuries regardless of who's at fault in the accident. This benefit is known as personal injury protection (PIP).

What's wholly unique about Michigan, however, is that state law provides unlimited lifetime coverage for medical expenses resulting from auto accidents, making insurance very expensive.

"No other state in the country provides lifetime medical benefits, which means the cost of medical treatment plays a big role in what people pay for auto insurance in Michigan," Conarton says.

Other factors that could contribute to Detroit's higher premiums include the large number of uninsured drivers in the region, with 20 percent of drivers lacking car insurance in the state of Michigan, and 60 percent of drivers in Detroit driving without insurance, according to estimates from a different study earlier this year by Quadrant Information Services.

The study also looked at car insurance rates that were significantly higher or lower than the national average in other metropolitan regions throughout the country, including New York, Miami and Los Angeles, which all had higher-than-average premiums.

On the opposite end of the spectrum, Charlotte, North Carolina, and Cleveland, Ohio, have the lowest insurance premiums in the country, compared to the national average.

Data table courtesy of InsuranceQuotes.com.

The numbers for September 11, 2014

Thu, 2014-09-11 07:31

Per tradition, the 2,983 names of the people who died in the terrorist attacks on September 11, 2001, were read at the World Trade Center site Thursday morning. The 9/11 Museum has attracted nearly a million visitors since opening in May. 

Here are some other stories we're reading and some numbers we're watching Thursday:

$363.8 million

That's RadioShack's revenue for its second quarter, which ended last month — a 22 percent drop from a year ago, as The New York Times reported. The troubled electronics retailer has tried rebranding and closing stores, but most analysts say it's headed for bankruptcy nonetheless.

6

The number of college and university police departments that have received mine-resistant vehicles from the Department of Defense since 1998, according to data published by the Chronicle of Higher Education. That total could still grow: The Chronicle's data isn't complete; they're still waiting on information from 11 states and the District of Columbia.

800 million

The estimated number of iTunes accounts that "purchased" the new U2 album, "Songs of Innocence," as part of an Apple promotion announced Tuesday. Many users were not pleased at the record's sudden appearance on their phones and computers. For comparison: Business Insider pegs U2's total album sales before this week at a measly 150 million.

$62 million

That's how much cash Los Angeles police seized during a raid in the city's Fashion District on Wednesday. The "fast fashion" industry provides an easy route for drug cartels to launder money, Quartz reported, and L.A. is a hot spot.

FDA approves new weight-loss drug

Thu, 2014-09-11 06:00

The Food and Drug Administration has approved a new weight-loss drug therapy. The drug, Contrave, is a combination of drugs used to treat depression (bupropion) and addiction (naltrexone). 

It’s approved for adults with a body mass index of 30 or higher (considered the threshold for obesity) and adults who are overweight (BMI of 27) but who also have a weight-related health condition.

In one trial cited by the FDA, 42 percent of patients treated with Contrave lost at least 5 percent of their body weight, while 17 percent of patients treated with a placebo did.

It has taken two attempts, four years, and several delays to get Contrave approved. In 2011, an FDA panel voted to approve the drug, but the agency declined and asked Orexigen, the drug’s maker, to pursue longer-term cardiovascular studies. When those studies were completed, the agency delayed approval again as it reviewed labeling and marketing requirements. 

“I don’t know what’s tougher, losing weight or getting an anti-obesity drug passed by the FDA,” says Robert Goldberg with the Center for Medicine in the Public Interest. Goldberg says obesity is linked to the central nervous system, and so are the drugs that treat it, so the FDA is extra-cautious. “The FDA is also worried that people will take these medicines and use them just to get an eight pack after their insanity workout,” when they are otherwise healthy. “Does it have a different bar? Absolutely.”

And yet, despite concerns about widespread use or abuse, sales of existing drugs on the market have proven disappointing. 

“The weight-loss drugs are not completely accepted as standard therapy, even for patients who are obese,” says Dan Mendelson, CEO of Avalere Health. He says getting doctors and patients comfortable with these drugs has proven difficult.

Another challenge for any weight-loss drug is how and whether insurance companies cover it. 

“If a drug is approved and not widely covered, it’s not gonna get adopted,” says Mendelson.

There are at least three more weight-loss drugs under development. 

 

PODCAST: Kroger is hiring

Thu, 2014-09-11 03:00

Let's start with a sign of weakness in the job market that may have an acute cause; we'll consult Diane Swonk, chief economist at Mesirow Financial in Chicago. Plus, one of the oldest of America's supermarket chains has figured out how to stay ahead of the fresh-faced competition. Kroger of Cincinnati reported today that its profits went up 9 percent last quarter and its stock is up about 1 percent. Kroger recently bought Harris Teeter and already owned Ralphs and Food 4 Less. The company's also doing a lot of hiring. And by one projection, the United States needs about a million new teachers in the next five years or so, as more Baby Boomer–aged instructors retire. A national recruiting campaign is underway, but holding on to those budding teachers may be tough.

The teaching profession gets a makeover

Thu, 2014-09-11 02:30

Outside the Newseum in Washington, D.C., high school students and their teachers check out a bright green RV parked on the sidewalk.

“What do you do, you just kind of bring your knees up?” one woman comments, eyeing a small bunk where passengers sleep.

Three aspiring teachers have spent the last four weeks in these close quarters, traveling cross-country. Along the way they talked to educators, policymakers and entrepreneurs to learn about the many forms a career in education can take.

“I’m being educated right now and I hope that we can educate other people and really change the perspective of what being an educator means,” says Nadia Bercovich, a recent graduate of the University of Massachusetts and one of the road-trippers.

The road trip is part of a national campaign to elevate the status of teaching. A study a few years ago by consulting firm McKinsey & Company found that most top college students simply aren’t interested in teaching, because of the lack of prestige and low pay. High school teachers make, on average, about $55,000 a year.

In a panel with the road-trippers, U.S. Education Secretary Arne Duncan urged high school and college students to consider the other rewards.

“If you want to have real impact, if you want to have meaning in your life, I can’t think of a better place to do it than in a classroom,” he said.

But even those who choose teaching often don’t stay. Nearly half of new teachers leave the profession within five years, says Liam Goldrick, policy director of the nonprofit New Teacher Center. He says many don’t feel respected or supported at work. Tenure is under attack and performance standards keep changing.

“I think some folks want to make it a lot about compensation, and while that certainly is an issue and a concern, if you listen to what the teachers are saying, it’s these other factors,” says Goldrick.

Rafael Silva, a 21-year-old UCLA student, ended the road trip certain he wants to start out in teaching, but he’s not sure for how long.

“It hasn’t confirmed — and I don't think this road trip was meant to do this — that it would be something that I would do for the rest of my life,” he says. “Obviously that’s not something that people really do anymore with careers.”

If he’s right, raising the status of teaching won’t be enough to keep teachers in the classroom.  

Anxieties of flying have waned... for the most part

Thu, 2014-09-11 02:00

Thirteen years ago Thursday, the world was rocked by the terrorist attacks on New York City and Washington, D.C. While none of us will ever forget that day, for one industry the anniversary casts a shadow on the bottom line: the airlines.  

“In the immediate aftermath of the 9/11 attacks, air travel dropped dramatically, and that’s not surprising,” says David Clark, a professor of economics at Marquette University who studied the economic impact of the attacks on U.S. airlines. According to his model, domestic air travel in September 2001 was down by more than half.

As the months passed, fear of another attack faded and people began to return to the air. “But as you got closer to the one-year anniversary there was a rather substantial decline,” says Clark. According to his model, 24.4 percent fewer people were flying than expected.

This kind of anniversary effect appears to have dissipated. Airlines for America, the trade association of the largest U.S. airlines, says it doesn’t see any particular 9/11-related changes in flights this year.

“I figure it’s probably the safest day to fly now,” says Bianca Cribbs, who is flying from Toronto to New York on September 11. The main reason she thought about the date was a line on her receipt: “The September 11th U.S. Security Tax which is $5.44.”

That’s the tax that helps pay for the biggest post-9/11 change to air travel: the Transportation Security Administration, which screens and scans the millions of passengers and bags that fly each day.

Spokesman Ross Feinstein says that from the TSA’s perspective, “The 13th anniversary is no different than any other day.” 

You'll be amazed at how big Kroger is

Thu, 2014-09-11 02:00

Cincinnati-based Kroger, the world’s fourth-largest retailer, is firing on all cylinders these days.

The stock price is way up, and so are sales. Last year, Kroger pulled in $98 billion in sales. That’s almost double the business it was doing in the early 2000s.

Business is so good the supermarket chain is hiring 20,000 more workers.

Jim Hertel, managing partner at Willard Bishop, says that’s quite a feat, considering the fierce competition in the grocery business.

“They are surviving better than any of the traditional supermarket competitors relative to Wal-Mart,” says Hertel.

Kroger owns a number of grocery chains, like high-end Harris Teeter stores in the Southeast. It also has no-frills outfits like Food 4 Less.

The company has kept pace with the competition by cutting prices on grocery staples, building its own private brand “Simple Truth” into a near $1 billion business and boosting customer loyalty with personalized coupons, thanks to its sophisticated data analytics.

Kroger’s chairman, Dave Dillon, has even called data analytics the company’s “secret weapon.”

Overdraft charges and fees aren't as profitable as they used to be

Wed, 2014-09-10 13:54

The commercial banking industry made $32.5 billion in fees last year, according to data from the Federal Deposit Insurance Corporation. But the banking industry isn't making as much off overdraft charges and other fees as it used to. 

“The banks are making lots of money on their fees, but it’s significantly less than it was a handful of years ago,” says Jefferson Harralson, associate director of research at the investment banking firm Keefe, Bruyette & Wood.

In 2009, banks made almost $8 billion more in fees. 

Harralson says financial regulation played a big role. "There’s been new rules to limit when you bounce a check," he says. "If you go slightly below zero, you don’t bounce now.”

Banks also don’t charge as much for debit card transactions these days.

But not everyone agree that banks are making that much less.

“The perception is there’s been this massive decline in service charges. I don’t think that’s been the case. I think the growth has slowed down,” says Christoper Marinac, a research analysts at FIG Partners. “What’s happening is that banks are finding other ways to make fee income.”

Analysts say that’s why some banks have scaled back on things like free checking accounts.

Richard Hunt, CEO of the Consumer Banking Association, argues some financial regulation was needed. But he says Congress went too far when it decided how much banks can charge for services.

“Yes, we’re in the business of making money. Yes, we should charge for our services, as long as it is reasonable and transparent," Hunt says.

In other words, bank fees are here to stay.

How to grow lettuce and fish indoors, all year long

Wed, 2014-09-10 13:42

Tony Beran is standing in the kitchen at the Lake Avenue Restaurant in Duluth, Minnesota, with a head of romaine lettuce in one hand and a clump of curly lettuce in the other. 

"They're beautiful," he says.

Beran's the executive chef, and one thing he likes about these bunches of lettuce is how clean they are. "They're grown aquaponically instead of in dirt," he says. "Which is wonderful in the kitchen. It's less labor for us."

Another thing he likes about this lettuce is that it was grown just up the road. The restaurant features local ingredients, and Beran serves locally grown lettuce all year, which is a bit of a trick in a place like Duluth. Last winter, the temperature was below zero 23 days in a row.

But it's always warm in the greenhouse at Victus Farms, where Beran's lettuce came from. It's about an hour's drive from Duluth in a little mining town called Silver Bay.

"These are all our babies," says Mike Mageau, as he shows off his latest lettuce crop. He runs the place, and he's an unlikely looking farmer. He's wearing cargo shorts and a backwards ball cap and he's barefoot. He's an unlikely looking professor, too, but that's his job: professor of geography at the University of Minnesota Duluth. He runs a program in environment and sustainability, and this indoor farm is a research project.

Universities and private businesses across the country are experimenting with aquaponics.

"It's kind of fun," Mageau says. "It's like the electric car. It's almost a race to come up with the method or the model that really works well."

Most of Mageau's lettuce is floating. Each plant is stuck into a hole in an inch-and-a-half-thick sheet of polystyrene foam. The foam rafts float in pools in the greenhouse, and the lettuce roots dangle through the foam into the water.

The fish live in a neighboring room. They're tilapia, and they swim in nine round plastic tanks, each one about six feet tall. Waste from the fish gets pumped over to fertilize the plants in the greenhouse, and some of the pools in the greenhouse grow algae and duckweed that come back into this room to feed the fish. 

"Which means you grow fish and plants sort of in concert, one living off the other," Mageau says.

Two years into the project, Victus Farms sells all the fish and vegetables it can produce to local restaurants and stores. Now the goal is to get more efficient.

Mageau and his crew built floor-to-ceiling racks made of PVC pipe, an idea they got online and spent six months refining. Each rack looks sort of like a ladder. On the horizontal pipes, they drill holes in the top and stick a plant in each hole. Then they run nutrient-rich water from the fish tanks through the pipes, bathing the roots of the plants.

"It's all trial and error," Mageau says. "You know, 'I wonder if we can grow tomatoes in four-inch pipe?' Yes! You try it, and it works! I mean, look at these tomatoes, there's millions of them."

One wall of the greenhouse is covered with ripening tomatoes and strawberries growing out of white, plastic pipes. And the fruit looks good. 

Mageau's banking on this vertical gardening scheme for the future. It will let them make use of some of the empty vertical space, and it will allow them to move the fish into the ponds in the greenhouse, making the second room for fish unnecessary.

"Then we can grow probably 10 times the plants per unit surface area, which means our greenhouse needs to be one-tenth the size, " Mageau says.

He wants to pilot a small, hyperefficient version of Victus. 

"Every small town could have one or two or three of them," he says. "And the food could literally be produced in the backyard of the restaurants or whatever."

Mageau says aquaponic operations will never replace farming in dirt, but they could give a big boost to the amount of local food that's available, especially in places with short growing seasons.

The Victus building cost about $2 million, but Mageau thinks a self-sustaining version could be built for a small fraction of that. It really could be built in someone's yard.

So that's what he's doing next.

Mageau's right-hand man at Victus is Baylor Radtke, a former student. The two of them pooled their money and on their own they're building a much smaller and simpler fish and vegetable operation in Radtke's yard in Duluth.

"The whole point of it is to allow people to grow as much as we did in that $2 million facility in a facility that costs under $100,000," Radtke says.

The cost has come out way under. Radtke and Mageau say the new operation will take only $20,000 to build because they're doing all the labor. The annual energy costs will be comparable to a single-family house, and they're cutting those even further with solar panels on the roof of the greenhouse.

They figure they'll bring in $50,000 in the first year, from a building the size of a four-car garage, about 24-by-52 feet. They plan to be completely up and running by this fall. 

If it works in northern Minnesota, they say, imagine how well it could work someplace warm. Like Iowa.

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