Marketplace - American Public Media
Despite attaining higher education levels than previous generations, millennials are earning significantly less money, according to the New York Times — and the future looks bleak.
In 2000, 19.5 percent of 18- to 34-year-olds earned a bachelor's degree, according to census data. That number grew nearly three percent between 2009 and 2013. But while this cohort has progressively become more educated, median income has decreased. It was $33,883 in 2009-2013 — a $3472 decrease from 2000, according to The Times.
Steven Rattner, the article's author and a financier, ticks off several factors threatening the current and future economic well-being of millennials, including a “slow economy, high unemployment, stagnant wages and student loans,” along with “rising federal debt payments and increased spending on Social Security and Medicare.”
Who’s to blame for this? Largely baby boomers, Rattner says. (He's a baby boomer himself.)
“We were the children of the Greatest Generation, but we may also be the most irresponsible generation,” he adds.
The Great Recession was a major force behind the higher-education levels/lower-incomes paradox, Rattner says. By extension, he contends, millennials who didn’t attend college have been hit particularly hard. Now, money-managing tactics have changed, he writes.
“Millennials...participate less frequently in 401(k) plans and, scarred by the recession, invest less and keep more than half their money in cash — not a great long-term strategy,” according to Rattner.
Rattner also writes that student debt has been a major blow to millennial finances. Average college tuition has risen by 234 percent since 1993 and, after adjusting for inflation, he says, average college debt has nearly doubled over the past two decades. He says as a likely result of their financial situation, fewer millennials have purchased cars and homes, and more are delaying getting married and having children.
Increasing federal debt levels could also compromise their lifestyles in the future, Rattner says. Projected debt will increase “from less than 80 percent of gross domestic product today to an estimated 181 percent of GDP by 2090.”
Millennials may miss out on Social Security and Medicare benefits as a result, Rattner says.
According to the article, “...only 45 percent expect to receive Social Security benefits during retirement (compared with 68 percent of baby boomers).”
Rattner proposes a series of solutions to reverse the country’s economic plight, which include increased spending on areas such as education and research and development, making student debt more manageable, and decreasing Social Security benefits for the country’s highest earners.
On today's show, we'll talk about the new consumer spending numbers out for June — they were the lowest they've been in four months. Plus, for some years now driving an electric car has been viewed by many as the ultimate badge of environmental consciousness. Yet, a growing body of research now suggests that electric cars might actually produce more pollution than a comparable gasoline-powered car.
The White House is rolling out the nation’s first-ever national standards to limit carbon pollution from power plants.
The new regulations require plants to cut their carbon dioxide emissions from 2005 levels, so they’ll be down by almost a third by the year 2030.
On the losing side of the new rules: coal. The coal industry and coal-producing states have already filed lawsuits, and more are expected.
“It would not shock me if lawsuits get filed by the end of the day," says Ethan Zindler, an analyst with Bloomberg New Energy Finance. "There’s that much violent opposition to this.”
Natural gas appears to be losing some ground in the new rules, too. It may be falling out of favor because of concerns that methane leaks out when natural gas is pumped out of the ground, moved and stored.
“Methane is a greenhouse gas and is much more potent than CO2,” says Rachel Cleetus, lead economist and climate policy manager at the Union of Concerned Scientists.
In a last-minute surprise, the winner in today’s new regulations appears to be renewable energy — solar or wind power. The White House wants 30 percent more renewable energy generation by 2030.
Analysts expect car sales to set ten-year records this summer, part of a trend that is two or three years in the making. Lots of factors contribute, including low interest rates and a decent job market, but one in particular caught our eye: The rise of leasing.
It’s a piece of marketing genius.
As Edmunds.com analyst Jessica Caldwell explains it, "Leasing guarantees that someone’s going to need a new car in two or three years, when their lease expires."
The strategy goes back to the recession, when new car sales were in the toilet.
"As a result there weren’t a lot of used cars," Caldwell says. With supply depressed, used-car prices went up, and car companies realized they could make good money selling used cars— that is, cars with expired leases. Good enough money that they could charge less for the lease itself.
"Lease payments were really cheap, and all of a sudden, everyone started leasing," Caldwell says.
That was 2012. Today, more than a quarter of new cars are leased.
At Perillo BMW in Chicago, salesman Rick Tattoni confirms Caldwell’s analysis.
"That’s a fact," he says. By roping customers into a two- or three-year cycle, "You keep the wheel moving, and that’s why they thought of that."
For some years now, driving an electric car has been viewed by many as the ultimate badge of environmental consciousness. If you just look at the car, electric vehicles are about as clean as they come — no combustion engine, no emissions. But that doesn’t mean they don’t contribute to pollution.
Electric cars run on electricity, and the great majority of electricity is created at power plants. Depending on where you live, generating the electricity for your electric car may create more carbon emissions than a standard gasoline engine.
“It depends on where they're being driven,” Nick Muller says. Muller is a researcher at the National Bureau of Economic Research, where he co-wrote a working paper comparing emissions produced by gasoline cars versus those at power plants. The results produced a mixed bag for electric cars.
“They’re very good where the grid is clean," he says. "They seem to be not so good, in the terms that we track in this paper, where the grid is primarily reliant on coal.”
That means electric cars charged in states with a high percentage of renewables, like California, are greener than gasoline cars — while just the opposite holds true for large sections of the Midwest and Northeast that still rely heavily on electricity from fossil fuels.
Given this new analysis, some say the government should scrap its $7,500 tax incentive for electric cars.
“I don't think policy makers should be subsidizing or promoting electric vehicles at all,” says John DeCicco, a professor at the University of Michigan Energy Institute.
He says the high cost of electric cars, combined with limited range, make them a poor choice for most consumers, and therefore a bad strategy to reduce emissions.
“A more efficient gasoline vehicle, for the vast majority of consumers, is going to be the most economical way to be green, and policies should be consistent with that," DeCicco says.
But sales of electric cars have grown in recent years and don’t show any signs of slowing.
Robert Vogt owns a Tesla p-85D, a performance electric car. He says his decision to buy an electric car had nothing to do with environmentalism.
As far as carbon emissions, Vogt says, the power grid is getting cleaner all the time, and electric vehicles shouldn’t be blamed for outdated technology at the utility company.
“Well, I think it makes the point that we need some different energy sources," he says. "We can fix that end of it, we don't need to use coal.”
Meanwhile the range of electric cars is gradually improving, at the same time costs are coming down. Many new models run around $30,000, before the tax rebate.
Like Twitter, Instagram posts can be a veritable cornucopia for hashtags; from #nofilter, to #instafood, to paragraphs of #tagsforlikes. Recently, # curvy, a hashtag that was popular but effectively invisible due to the photo app's censorship rules, created a controversy for the photo sharing platform.
According to Instagram, the photos on #curvy violated the photo sharing app's terms of service because of nudity. But Molly Mulshine, senior digital culture editor at Tech Insider says, "the really weird thing is you can still find a lot of much more offensive content than nude photos on Instagram."
The ban on #curvy also reveals inconsistencies about what warrants a ban versus a warning. For example, when searching for #skinny and #thin, the app shows a warning that there may be graphic content on the page, but it doesn't remove the content altogether like it has done for #curvy.
Because users self-police on Instagram and report content that they deem inappropriate, Mulshine says, "I think that a lot of people are seeing these photos surface and reporting them to just kind of to be jerks."
Sara Chiwaya from the blog Curvily has talked about how these issues connect to the larger effort to battle cultural biases online. She says that even when equal amounts of skin are showing, curvier bodies tend to be treated as more obscene than thin bodies.
Instagram recently reinstated #curvy after outcry from the plus-sized blogging community, and the rise of hashtags to get around the ban, like #curvee. Mulshine says that it is a rare for the photo sharing app to listen to the community in this way and lift a ban.
Now, the users on #curvy can add #winning to their posts.
President Barack Obama will unveil his final plan for addressing climate change on Monday. White House officials say this version of the Clean Power Plan takes into account some 4 million comments received by the EPA during the public comment period. Among the features of this version of the plan is a marked push towards renewable energy — the plan outlines a prioritization of wind and solar development, and more investment in clean energy with a goal of 30 percent more renewable energy in 2030.
From our partners at the BBC:
The aim of the revised Clean Power Plan is to cut greenhouse gas emissions from U.S. power stations by nearly a third within 15 years. However, opponents in the energy industry have vowed to fight the plan.
They say Mr. Obama has declared "a war on coal." Power plants fired by coal provide more than a third of the U.S. electricity supply.
The revised plan will aim to cut carbon emissions from the power sector by 32 percent by 2030, compared with 2005 levels.
Each state will have an emission-cutting goal assigned to it and must submit a proposal to the Environmental Protection Agency on how it will meet the target.
The BBC's Tom Bateman in Washington says Mr. Obama will be hoping that Monday's announcement secures his legacy on climate change.
The measures would give the president the moral authority he needs to argue for global reductions in greenhouse gases at a major conference in Paris later this year. However, several state governors are already saying they will simply ignore the plans.
In face of the criticism, the White House said the release of the plan was "the starting gun for an all-out climate push" by the president and his cabinet.
In a video released by the White House, Mr. Obama says the new limits were backed up by decades of data showing that without action the world faced more extreme weather and escalating health problems.
"Climate change is not a problem for another generation. Not any more," Mr. Obama says. "My administration will release the final version of America's Clean Power Plan, the biggest, most important step we have ever taken to combat climate change."
Democratic presidential candidate Hillary Clinton says she would defend the plan if she was elected to replace Mr Obama.
"It will need defending. Because Republican doubters and defeatists - including every Republican candidate for president - won't offer any credible solution," she says. "The truth is, they don't want one."
Republican presidential candidate, Marco Rubio, says the plan would be "catastrophic," while former Florida governor Jeb Bush, says the plan is "irresponsible and over-reaching".
Correspondents say the emphasis on renewable energy sources marks a significant shift from the earlier version of the plan that sought to speed up a transition from coal-fired power to natural gas plants, which emit less carbon dioxide.
It is believed the revised plan will aim to keep the share of natural gas in U.S. power generation at current levels.
Power stations are the largest source of greenhouse gases in the U.S. and account for about one third of all such U.S. emissions.
The Athens stockmarket has reopened — having been shut for five weeks — and it has promptly plunged by more than 22 percent.
The selloff is hardly a surprise since bank shares make up 20 percent of the main Athens index, and they’ve been hammered in this crisis. But the sharp fall in share prices also reflects anxiety about the third bailout deal, agreed in principle by the government and its creditors last month.
Over the weekend, the ruling Syriza party postponed an internal vote on whether it should accept the deal. If it doesn’t, there could be another snap election and that could mean more uncertainty for investors around the world.
“Don’t underestimate the power of Greece to rock markets going forward,"says Kathleen Brooks, a currency analyst with Forex.com.
Click the media player above to hear more.
Older workers — those 65 and up — are staying in the workforce in higher percentages than previous recent generations that hit retirement age. Labor force participation of older workers is at a 25 year high. And for many, the reason is economic necessity.
A recent report by AARP finds that nearly half of Americans 50 and over have $25,000 or less saved for retirement. The Great Recession slashed many older workers' savings, retirement accounts (pensions and 401ks) and home equity. AARP reports that nearly half (44 percent) are now planning to work part-time after they reach retirement age, and one-third (33 percent) are delaying the age at which they expect retire.
Many older Americans have little choice in the matter and simply need to continue working as long as they can, if they can. The Economic Policy Institute, which researches labor-force trends, estimates that there are 57,000 men 70 to 74, and 69,000 women 75 and up, who are currently working but would not be in the workforce today if the recession hadn’t hit their savings and earnings so hard. EPI labor economist Elise Gould says that many wealthy households have fully rebounded from the recession as asset values (stocks and high-end homes) have surged back. But for the middle class, income and retirement savings still haven’t recovered.
"In fact, we have seen people losing their wealth," says Gould. "And that can lead to people staying in the workforce longer, because they simply cannot afford to retire.”
Economist Matthew Rutledge at the Boston College Center for Retirement Research says money that people were counting on in retirement won't go as far as people once supposed.
“Social Security benefits aren’t going to be replacing their income at the rates that they used to in previous generations,” Rutledge says. “People’s pensions aren’t as generous as they used to be. In all likelihood, people just haven’t saved all that much, housing values have fallen, as we saw during the recession.”
Rutledge and other economists have looked at the kinds of jobs people in their 60s and 70s tend to land. “It’s a lot of people working retail, people working as night watchmen and security guards — jobs that are stereotypically ‘old’," says Rutledge. "People are sort of shunted into jobs that don’t really pay as well, and may not have as secure a position.”
Kyle Pierce has some experience of this. She is 67, and retired from a career as a registered nurse at age 62. At the time she was making $42/hour. "I actually went back to work about three years ago — for money,” she says. She's been waitressing at a local coffee shop in her hometown of Monterey in Western Massachusetts. She says the retirement savings she and her husband had put away weren’t covering the bills. "I knew I was a really good waitress, way back," says Pierce. "I have a really good strong work ethic. In fact, some of the summer people that get hired just stand around and it drives me crazy.”
Vicki Bernstein doesn’t believe in standing around either. She’s 64 and teaches a full load of fitness classes to seniors at a medical clinic's health club in Portland, Oregon. Her husband, 63, works full-time as a shoemaker and coffee roaster. They also run a small business out of their home, selling prayer flags online.
"We always played more than we saved money," says Bernstein. "I think it was just something from my generation. I have been working for a long time, and it brings me a lot of satisfaction to see people age well. So I’ll probably do it till I die.”
If you lease a car, that's the amount of time before the auto industry can assume it'll see you again as a repeat customer. It's part of what some analysts call a brilliant marketing move. The rise in leasing started back in 2012 when car sales were way down. With car companies realizing they could sell used cars for a higher profit, they were able to drop the price of leasing, and thus people started to lease cars more frequently.
That's generally how much new electric cars cost. Many consumers are attracted to the energy-efficient vehicles because of the notion that owning and driving one helps the environment. But a new study shows that depending on where you live and where your energy comes from, the power plant generating the electricity to charge your car could be putting out more carbon emissions than a standard gasoline-fueled car.
That's how much the Triple Crown-winning horse American Pharoah took home for winning the Haskell Invitational on Sunday — the largest purse offered in the state of New Jersey. As the Wall Street Journal notes, a record-breaking 60,983 spectators turned out to watch the race.
That's how many McDonald's locations there are in Iran. It's also how many KFC, Burger King and Pizza Hut locations there are, though there's plenty of pent-up demand. The New York Times reports some entrepreneurs in Tehran are capitalizing on that demand, with knock-offs like Mash Donald's, Pizza Hat and Burger House. It's not clear what will happen to these eateries now that there's a nuclear deal in place, and McDonald's is taking Iranian franchise applications.
If the whole idea of creating a new sports entertainment league that will rival the UFC, WWE and NASCAR for sheer dollars, excitement and danger doesn't work out, the MegaBots can always do parties. It turns out that a MegaBot is a really good T-shirt cannon.
MegaBots is a startup, based in Oakland, California, doing the kind of work a lot of kids hope to be doing someday, too: building a 15-foot tall, 15,000-pound fighting robot, and hoping it'll become the centerpiece of a new global entertainment business.
Matt Oehrlein, Gui Cavalcanti and Andrew Stroup, who was later replaced by Brinkley Warren, started the company as a Kickstarter campaign back in 2014. Their goal was to raise $1.8 million, but they managed just over $65,000 — a less than mega haul. That would seem to be the end of it, until earlier this summer when the MegaBots team issued a challenge to a Japanese company called Suidobashi Heavy Industries, which is making its own fighting machines. MegaBots called for a duel, the Japanese accepted, and the company is suddenly back in the spotlight.
MegaBots raised some private funding and got a sponsorship from AutoDesk, and managed to build its roughly $200,000 prototype, which it has taken on the road to build interest and support.
Cavalcanti said the company will take a two-headed approach to building its brand: venture capital funding for the business of creating a fighting robot league, and a second Kickstarter that will hopefully pay for upgrades to the robot, both structural and decorative (think eagle heads on each shoulder, since the robot is now part of "Team America").
I tracked down the MegaBot at the Computer History Museum in Mountain View, California, where it had been summoned to entertain some august members of the tech community. The bot was baking in the summer heat of the museum's parking lot, and Cavalcanti and Warren said they'd recently learned that the MegaBot could perform a new trick: using its missile-launcher left arm to fire T-shirts into the air.
The MegaBot can certainly draw a crowd — people crowded around for selfies and questions. But skepticism abounded, too: one spectator in a Maker Faire T-shirt pointed out that the device couldn't rightfully be called a "robot," since it has to be piloted by humans. The MegaBot, in fact, requires two pilots: a driver and a gunner.
Warren declares that the presence of humans inside the fighting robots (or, uh, exoskeletons, if we're being specific) adds the crucial element of danger and excitement that will make a fighting league a big draw. It's like NASCAR or hockey, he says. These aren't purely mechanical, remote-controlled gadgets like BattleBots — there are people in there, and the blood lust, as it were, is real.
Critics charge that the MegaBot won't actually do what other high-profile robotics projects have done, which is to spur innovation and development that could further the field overall and lead to breakthroughs that could save lives, make work more efficient or even do a better job cleaning our houses. Instead, noted the Washington Post, MegaBots is merely violent fantasy, leading to a vision of robotics that bristles with guns and will only militarize robotic development.
After a few hours with the MegaBots crew, it's clear that their motives aren't particularly altruistic, and to expect otherwise would be like asking Vince McMahon whether his wrestling empire had led to training breakthroughs for Olympic athletes. It's just not the point.
And after my own brief ride in the gunner's seat, and the opportunity to rapid-fire about 80 T-shirts across a parking lot into the foliage above a group of excited children, I admit that if and when the MegaBots duel actually occurs (the team is hoping for summer of 2016), I'd probably watch it. Sometimes, robots are just fun.
Next weekend on Marketplace, guest host David Lazarus will take a look at the debate behind the minimum wage across the U.S. Does the minimum wage force companies to layoff low-paid employees? Or is a living wage fair to employees?
This Friday marks the 10th anniversary of Kai Ryssdal hosting Marketplace.
To celebrate, Marketplace Senior Producer Sitara Nieves and and Executive Producer and Vice President Deborah Clark surprised him with a pop quiz:
What was his lead story 10 years ago?
What was the music for the numbers?
What was his personal admission on the broadcast?
To hear the answers, click on the audio player above.
Hollywood studio Relativity Media has filed for bankruptcy after reportedly amassing more than $1 billion in debts. The company's assets amount to half of that, according to reports. Relativity founder Ryan Kavanaugh wanted to move away from the blockbuster-centric economy that rules the big studios and concentrate on smaller films that could be spun into additional revenue streams on television and the web. But "absent any significant hits, it's hard to maintain this kind of enterprise for a long period of time," says John Sloss, an entertainment industry lawyer and film producer. Relativity's creditors will now have to get in line to get paid.
Click the above audio to hear the full conversation.
The Labor Department reports that employee compensation — wages, salaries and benefits — increased 0.2 percent in the second quarter of 2015. The employment cost index increased 0.7 percent in the first quarter, and economists expected about the same pace of growth for the second quarter. The annual rate of compensation inflation was 2 percent in the second quarter, compared to 2.6 percent for the first quarter. Compensation for private-sector employees was unchanged in the quarter; compensation for government workers rose 0.6 percent.
A separate measure of employment income from the Bureau of Labor Statistics’ monthly employment situation report has shown hourly earnings increasing at 2 percent (the annual rate for June 2015), the same anemic growth rate as reported in the second quarter employment cost index.
These labor-cost measures inform an ongoing debate as to whether the job market has largely returned to health after the Great Recession or if it is still weak, leaving behind millions of people who want to work or earn a better income.
Economist Ozlem Yaylaci at IHS Global Insight says the weak second quarter ECI report contradicts evidence of an employment market that has mostly returned to health.
“It’s a big shock,” says Yaylaci, “because we see employment numbers very solid month to month, and the unemployment rate has been declining. We are now close to full employment.” The unemployment rate fell to 5.3 percent in June.
Labor economist Jesse Rothstein at University of California, Berkeley says in such a positive labor-market scenario, it would be easier for people to find jobs and harder for employers to attract and hire qualified workers. He says employers could be expected to lower their requirements for job applicants and to offer new hires more training, rather than expecting them to have job-specific skills and capabilities when they apply.
“We’d also be looking for evidence that wages are increasing as employers need to pay more to attract workers to jobs,” Rothstein says. “We’re not seeing evidence of any of these, which suggests that we really are still in a situation with a lot of slack in the labor market.”
Rothstein believes there is a shadow labor pool that isn’t showing up in the standard unemployment data but is strengthening employers' bargaining power and helping them maintain lower wages without suffering labor shortages. This shadow labor pool includes people who have dropped out of the labor force or never entered because of poor job prospects, but who might start job hunting if their prospects improved. Labor market slack is also fed by people working part time who can’t find full-time work, and people working in jobs below their training, education or experience level.
Yaylaci says this economic scenario worries Federal Reserve Chair Janet Yellen as she steers the Fed toward higher interest rates.
“She’s concerned because measures of the labor market, such as the unemployment rate, sometimes don’t measure the slack in the labor market correctly,” Yaylaci says. If that diagnosis is correct, the economy might not be strong enough yet to take the medicine of lower interest rates.
Joining us to talk about the week's business and economic news are Linette Lopez of Business Insider and Fusion's Felix Salmon. The big topics this week: the possibility of an interest rate hike this year, Federal Reserve Chair Janet Yellen's dependence on data and corporate profits in the tech world.
Another surprise in the IPO-announcement department: SoulCycle, a boutique cycling studio with locations concentrated around New York and California. It's been doing well, especially with the celebrity set, tripling its studios from 2012 to last year to 36. Profits more than tripled during that time to $26 million in 2014.
Here's a riddle for you: What do Chelsea Clinton, Lady Gaga, and Kelly Ripa have in common? They all love SoulCycle. This company doesn't have to advertise.
"They've done a great job of branding themselves and marketing themselves," says Jim Thomas, of Fitness Management and Consulting. He says one of the biggest challenges facing fitness studios is that they eventually fade into obscurity. That's not likely to happen with SoulCycle anytime soon, he says.
Just ask Ryan Michael Shaw, a former dancer in New York City. Two or three times a week, Shaw elbows his way past people to make sure he gets into a class. Forty-five minutes later, "I leave those classes and I feel amazing," he says.
Shaw says when the music and the energy are right, class is like a religious experience. An expensive religious experience.
"Oh, I drink the juice," he says. "Let's be clear, I walk out and buy the $80 Lululemon SoulCycle tank top."
The question is, how much longer will people drink the juice, asks John Atwood, managing director of the Atwood Consulting Group.
"This kind of enthusiasm is very hard to maintain with the American public, and especially the city American public," he says.
Big cities are where SoulCycle does best. Ninety-five percent of its revenue comes from New York, Los Angeles and San Francisco.
"Then the question is, what about Peioria, Illinois, you know, and all these other towns?" Atwood says.
People there might be wowed, he says, but that doesn't mean they'll pay $32 for one session.
In Athens, Greek government ministers have met with their international creditors to start hammering out the details of the third bailout package agreed on in principle three weeks ago. The prospect of another round of austerity measures has left many Greeks deeply disillusioned with the European single currency — the euro. Funnily enough, many of their main adversaries within the monetary union — the Germans — feel the same.
“The euro is bad for every country, “ says Nico Rolle, a 30-year-old software engineer from Berlin. “ When you look at Italy, France or Spain, they’re all suffering because of the euro. I don’t think it was a good thing.”
Uwe Grunebast, a 52-year-old cook from Hamburg, is furious that euro membership means that once again, Germany will be pouring “billions and billions” into Greece.
“Where’s the money coming from?” he asks. “We the German taxpayers have to foot the bill and we don’t see any benefit.”
Hardly anyone in Germany is calling for the country to pull out of the euro, however. The losses the country would suffer in the default on loans and other cross border liabilities run into the trillions. But many Germans would like to see one or two other countries leave. The fact that the finance minister Wolfgang Schäuble called for Grexit is significant, says Christian Schmidt, a eurosceptic entrepreneur from Berlin.
“I think Schäuble deep down believes that indeed it would be the best if Greece were to leave the euro and that we’d all be better off,” Schmidt says. “I would like to see a smaller, leaner currency union without the likes of fiscally irresponsible countries like Greece. And it will happen eventually. I don’t think Germany will be prepared to bail out Greece again."
At its launch 15 years ago, the euro was greeted with wild enthusiasm in some member states. That ardor has now cooled. For some member states, the downside of living within the straitjacket of a German-dominated currency union is now painfully apparent. And so is the downside for Germany. The euro is still intact, but Michael Wohlgemuth of the Open Europe think tank in Berlin wonders for how much longer.
“The real question for me is: will the eurozone survive the next recession which may come in one or two years? This could be the beginning of the end of the euro in its current form,” he says.
Groups of federal contract workers have been walking off the job and holding protests every few months.
It’s part of a campaign called Good Jobs Nation, backed by organized labor. It's pushing for a $15 an hour minimum wage for federal contract workers and union representation. The most recent demonstration was in Washington, in late July.
Sontia Bailey is one of the government contract workers speaking out at the rallies. She’s a cashier in a Senate cafeteria, working for a contractor hired by the government. It pays her $10.59 per hour.
Sontia BaileyGood Jobs Nation
I met her recently in a park down the hill from the Capitol.
“I’ve worked at the Capitol for two years and seven months,” she told me.
Bailey says her Capitol paycheck didn’t pay all of her bills. So, two years ago, she got a second job at Kentucky Fried Chicken.
She says she had a miscarriage recently because she was working so much.
“I do, probably like 40 hours plus at the Capitol, then 30 plus hours at KFC," she says. "So I really didn’t have time to rest, because I never had a day off.”
The government started replacing full-time federal workers with contract employees back in the '80s, under the Reagan administration. The idea has had bipartisan support over the years and is part of initiatives to control government spending.
Supporters of privatization say it does save the government money. Among them: Adrian Moore, vice president of the free-market Reason Foundation, says contractors are more efficient than the federal government.
“Contractors don’t use as many workers to do the same work," he says. "They run with leaner workforces.”
But Moore also says contracting has to be done well to save money. Contractors have to be supervised.
Jeffrey Miron is an economist at Harvard and the libertarian Cato Institute. He says supervision is needed from the moment contractors submit bids to the federal government.
“The bidding process can be somewhat messy and complicated," he says. "It can sometimes be rigged, it can sometimes be manipulated. So it’s not a completely fail-safe approach.”
That’s led to a backlash against privatization, and assertions that it doesn’t save the government money. Tara Young is an organizer with Good Jobs Nation.
I met Young in the park with the Senate cashier, Sontia Bailey. Young says the contractor employees make so little, they end up on government programs for the poor. Bailey is on Medicaid.
“Workers are on Section 8, they use food stamps," she says. "So we’re paying workers extra money, really, to help them with their low pay.”
Young says taxpayers get hit up twice: once to pay for the contract workers’ salaries and again to pay for government programs they need to get by.
This past week, Elon Musk, Stephen Hawking and about a thousand other artificial intelligence researchers signed a letter calling for a ban on autonomous weapons.
The remote-operated drones that we use in modern warfare can already fly virtually undetected and use advanced targeting systems to drop bombs on buildings and people below — but the key phrase is "remote-operated." A human is usually controlling the weapon from afar.
Professor Noel Sharkey teaches robotics and artificial intelligence at the University of Sheffield in the U.K. and is also chairman of the International Committee for Robot Arms Control. He signed the letter and told us why:
"What the big concern is the step where we delegate the decision to kill people to the machine, and that hasn't been used yet. In the U.K., we have the Taranis, which is a fully autonomous combat aircraft. And that has been tested in Australia, searching for targets on its own. You've got the X-47B in the United States, which looks like something Batman would fly. And that's had very advanced testing. But then China and Russia have developments, and so have South Korea. But America's still the leader here, as far as we know. You've got DARPA there developing things like an autonomous submarine, now in Phase 2 or 3 of testing, which hunts other submarines and sinks them. Then you've got the Crusher, which is a fully autonomous 7.5 ton truck with a machine gun on board.... The developments could escalate at any time and take off depending on the type of conflict."
Ready to build yourself a fallout bunker?
Daniela Hernandez, who writes about AI and autonomous weapons for Fusion, says the debate over AI ethics has been carried on before this letter:
Although the debate has gotten more press lately, thanks to high-profile figures like Musk and Hawking taking notice, it’s been ongoing for some time now. Earlier this year, the United Nations called for an international treaty that would ban fully autonomous weapons. In 2012, Human Rights Watch published a report stating “that such revolutionary weapons would not be consistent with international humanitarian law and would increase the risk of death or injury to civilians during armed conflict."
Part of that “risk of death or injury” comes from the fact that AI systems make mistakes. Earlier this month, for instance, Google Photos mistook images of black people for gorillas. That’s offensive and awful, but no one died as a result of the software flaw. In military scenarios ... people’s lives are on the line.