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Cable giants call off merger

Fri, 2015-04-24 03:00

Cable giants Comcast Corporation and Time Warner Cable are ditching out of their planned merger amidst a heap of regulatory scrutiny.

Combined, Comcast and Time Warner Cable would have had about 30 percent of the pay TV market and more than 50 percent of the broadband market.

Regulators worried that would thwart competition and mean higher prices for consumers.

“All that scale would give Comcast enormous discretion over what reaches Americans, what Americans pay, information flows, customer service—really unlimited power,” says Susan Crawford is co-director of the Berkman Center for Internet and Society at Harvard University.

Crawford also says President Barack Obama's push to have broadband providers regulated like utilities signaled the government would step up its scrutiny.

But Forrester Research analyst James McQuivey thinks regulators are taking an overly narrow view. He doubts a Comcast/Time Warner Cable merger would've kept other players out of the lucrative broadband market.

“Because broadband is going to generate billions of dollars of revenue and billions of dollars of profit in the next ten years, broadband competition is going to happen,” says McQuivey.

McQuivey says that means companies like Google, Amazon and even Facebook could eventually be motivated to enter the fray.

 

 

 

 

PODCAST: The merger that never was

Fri, 2015-04-24 03:00

The Comcast and Time Warner Cable deal is officially off. More on that. Plus, it's been two years since a terrible collapse of a clothing factory in Bangladesh, killing more than 1,100 workers. Among the findings was that workers there had recognized things were wrong with the building a day before the collapse, but factory owners demanded the workers go back in. There have been various moves to improve working conditions in the years since, and one of the key recommendations was to make it easier to set up unions in Bangladesh. Now, the questions remains: if they had been given a stronger voice, the workers might have been able to refuse to go back into the building.

Silicon Tally: A Whale of a Tail Emoji

Fri, 2015-04-24 03:00

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

This week, we're joined by Fred Benenson, data lead at Kickstarter and the creator of an all-emoji translation of Moby Dick.

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Puerto Rico could run out of money in three months

Fri, 2015-04-24 02:00

Puerto Rico finance officials warn a government shutdown may be only months away. Puerto Rico is saddled with $70 billion in debt and has been unable to sell the billions in bonds it needs to avoid running out of money.

Heidie Calero, a business consultant there, says the question is whether Puerto Rico's lawmakers will overhaul the tax system.

"Right now we have so many suspense stories that it's really terrible," she says.

This crisis didn't happen overnight. Government spending has outpaced revenue for years. U.S. tax breaks made the island attractive for businesses, and Puerto Rico had itself a moment. Those tax credits ended, but spending went on.

"From investment grade that we were before, a very coveted financial paper, we are now the status of junk," Calero says.

Luiz Mesquita, a business professor at Arizona State, blames mismanagement. Take the troubled Puerto Rico Electric Power Authority, which is state run.

"And because of these mismanagements, you see the cost of energy for local businesses to go up significantly," he says.

And when it's expensive to do business in Puerto Rico, companies just don't see the appeal anymore.

Audio for this story is forthcoming.

What's in a $12 minimum wage?

Fri, 2015-04-24 02:00

Senator Patty Murray, Democrat of Washington, is expected to introduce a new proposal to raise the federal minimum wage to $12 an hour by 2020. 

Why $12? President Barack Obama used his 2013 State of the Union address to call for raising it from $7.25, its current rate, to $9 an hour. But in his 2014 address, he bumped that up to $10.10 an hour. "$10.10," the President said. "It's easy to remember $10.10."

In the meantime, a fast food workers' movement has been pushing for a $15 an hour wage, and Chicago and Seattle raised theirs to $13 and $15, respectively.

"The good news is ... we are going to learn more about how local labor markets adjust to higher minimum wages," says Arindrajit Dube, professor of economics at the University of Massachusetts, Amherst.

That's because Chicago and Seattle's hikes will be the highest ever in the U.S.

As for Senator Murray's $12 minimum wage bill: it would increase 75 cents to $8 in 2016, then a dollar more each year until it reaches $12 in 2020. 

Gary Burtless, an economist with the Brookings Institution, says it's unlikely to pass in this congress, but "very large majorities of the public believe the minimum wage is too low and we would be better off if we raised it." 

Apple Watch makes its fashionable debut

Fri, 2015-04-24 02:00

Apple releases its much-anticipated watch on Friday.

Some customers will start receiving their online orders in the mail. And those willing to pay up to $17,000 for an 18-karat gold version can buy one at one of several high-end fashion boutiques that sell it in just a few cities around the globe, including Paris, London and Los Angeles.

With its price, exclusivity, limited supply and courting of celebrities, Apple has adopted branding techniques from the luxury world.

The company sent watches in advance of the debut to celebrities with fashion influence, including singer Beyonce, who was photographed wearing a gold Apple Watch.

As it has done with other products, Apple is also emphasizing quality. With its high-end gold watch, it's even staking a premium on the gold itself. In a company video, Apple's chief designer Jony Ive said the gold was a special composite.

"Each is a custom alloy, designed to be not only beautiful, but up to twice as hard as standard gold," Ive said.

Even trying on the gold watch at an Apple store is an unusual shopping experience. The expensive watches are kept under lock and key, and are followed around the store by a guard.

Milton Pedraza, who heads the consulting firm Luxury Institute, says Apple has adopted luxury brand techniques in order to further position itself — through its watch — above its competitors and so it won't be forced to compete in price. 

At the same time, associating the Apple Watch with high-end fashion could make it more likely that people will buy the cheaper version to associate with the higher-priced one.

"You create this level of exclusivity ... and therefore it has, what we would call, a halo effect. It makes it more compelling ... more desired," says Pedraza.

In its first week of pre-orders, Apple sold 1.4 million watches online, according to Slice Intelligence, an e-commerce research firm. Less than one percent of those pre-orders were the expensive gold watches.

But Apple's high-fashion positioning also has to do with the tricky nature of wearable technologies.

"It could be the most amazing technology in the world, but if it doesn't look good, it's dead in the water," says James Letourneau, who helps run Design.UX, an online company that sells colorful fabric covers for Fitbit movement trackers.

He says once you wear a device, it becomes intensely personal.

"They can't just be an accelerometer in a little box that people walk around in," Letourneau says. "People want it to look nice. And they don't want it to look like everyone else's."

The cable giant that wasn't

Fri, 2015-04-24 01:59
$45.2 billion

That's what a merger between Comcast and Time Warner Cable would have been worth. But Comcast, in light of scrutiny, abandoned the takeover Friday morning. The deal would have united two largest cable companies in the U.S. and created a telecommunication giant.

18 karat

That's the ratio of gold in the luxury version of the Apple Watch. The price tag? Up to $17,000. Apple officially released its smart watches Friday, and some of customers will start receiving their online orders in the mail. In addition to the regular Apple stores in your local mall, you can also find the wearable technology in select fashion boutiques around the world. Still not sure which model to get? Take our quiz.

4.6 billion

That's how much Amazon's cloud computing business made last year, and they're expecting to rake in $6.23 billion this year. The retailer revealed the numbers behind Amazon Web Services for the first time Tuesday. Wired notes the cloud is high-margin, and growing faster than Amazon's other arms, but plenty of companies are lining up to take a piece of the expanding market.  

Three months

This is how long Puerto Rico has before the government runs out of money. Saddled with $70 billion debt, the U.S. territory faces tough decisions in budget cuts. Finance officials warned that a government shutdown may be in place if the government cannot reduce spending and increase revenue. And unlike Detroit, for example, Puerto Rico doesn't have the luxury of U.S. bankruptcy protection.

2007

That's the year Brian Chesky and Joe Gebbia first conceived Airbnb, the hospitality start-up that has gone on to become a multi-billion dollar business with shared rentals worldwide. We visited company headquarters in San Francisco recently to talk with Chesky about the service's rapid growth, recent controversies and just what kind of company Airbnb is anyway.

$12

That's the new federal minimum wage proposed by Senator Patty Murray of Washington. The bill would up wages 75 cents to $8 in 2016, then a dollar more each year until it reaches $12 in 2020. 

A cable giant falls

Fri, 2015-04-24 01:59
$45.2 billion

That would be the worth Comcast/Time Warner Cable merger. But on Friday morning, Comcast, in light of scrutiny, abandoned the takeover of Time Warner Cable. The deal would have united two largest cable companies in the U.S. and created a telecommunication giant.

18 karat

That's the ratio of gold in the luxury version of the Apple Watch. The price tag? A hefty $17,000. Apple officially released its smart watches today, and some of customers will start receiving their online orders in the mail. In addition to the regular Apple stores in your local mall, you can also find the wearable technology in select fashion boutiques around the world. 

4.6 billion

That's how much Amazon's cloud computing business made last year, and they're expecting to rake in $6.23 billion this year. The retailer revealed the numbers behind Amazon Web Services for the first time Tuesday. Wired notes the cloud is high-margin, and growing faster than Amazon's other arms, but plenty of companies are lining up to take a piece of the expanding market.  

three months

This is how long Puerto Rico has before the government runs out of money. Saddled with $70 billion debt, the U.S. territory faces tough decisions in budget cuts. Finance officials warned that a government shutdown may be in place if the government cannot reduce spending and increase revenue. And unlike a city like Detroit, Puerto Rico doesn't have the luxury of U.S. bankruptcy protection.

2007

That's the year Brian Chesky and Joe Gebbia first conceived Airbnb, the hospitality start-up that has gone on to become a multi-billion dollar business with shared rentals worldwide. We visited company headquarters in San Francisco recently to talk with Chesky about the service's rapid growth, recent controversies and just what kind of company Airbnb is anyway.

$12

That's the new federal minimum wage proposed by Senator Patty Murray of Washington. The bill would increase 75 cents to $8 in 2016, then a dollar more each year until it reaches $12 in 2020. 

Time Warner Cable's CEO could be out $80 million

Thu, 2015-04-23 13:25

A couple of details on the likely demise of the Comcast-Time Warner Cable deal.

Item number one: Comcast isn't going to have to pay the usual breakup fee — the 2 to 5 percent of the sale price that the would-be acquire-er normally pays to the would-be acquire-ee if things go south. It just wasn't in the original paperwork, says Fortune Magazine.

Also, Time Warner Cable CEO Robert Marcus would have gotten an $80 million exit package if the deal had gone through. Or, to look at it another way: more than a million dollars a day for the 45 days from the time Marcus took over to the day the merger was announced.

Sorry about that, Mr. Marcus.

Imagining affordable housing in New York

Thu, 2015-04-23 13:00

New York City Mayor Bill de Blasio plans to build or preserve 200,000 affordable housing units over the next decade. And not a moment too soon. An estimated half of New York renters lack affordable housing, meaning they spend more than a third of their salaries on rent. That may be as many as 1 million people.

In unveiling his OneNYC plan this week, de Blasio said he'll attempt to lift 800,000 New Yorkers out of poverty.

His office called it one of the largest urban poverty initiatives in U.S. history, and affordable housing is likely to be one of the major proposals.

De Blasio has also called for the creation of 160,000 units of market-rate housing over the next decade, an acknowledgement, some say, that all New Yorkers are affected by a housing shortage.

The stakes of the failing Comcast-Time Warner merger

Thu, 2015-04-23 13:00

On Thursday, the long-awaited acquisition of Time Warner Cable by Comcast was reported to be on the rocks

But what's truly at stake for consumers in a $45 billion mega-merger between cable providers? 

Peter Carstensen, emeritus professor of law at the University of Wisconsin, says they're not competing for broadband customers—but they are competing when they buy programming.  A merger could have given them sizable market power, and Senator Al Franken says competing TV networks complained to him in private, fearing reprisals.

But industry analyst Ian Olgeirson at SNL Kagan says the effects on the end consumer of this merger — or any merger with Time Warner that takes place — are likely to be subtle.

Pacific trade and the fear of currency manipulation

Thu, 2015-04-23 13:00

A free-trade deal among the United States and 11 Pacific nations called the Trans Pacific Partnership (TPP) is wending its way through Capitol Hill. Opposition seems to deal has been largely united under the threat of currency manipulation.

Generally speaking, a country with a weaker currency is thought to have an advantage in trade, because their stuff is cheaper. So, currency manipulation is when a central bank buys or sells a lot foreign currency in an attempt to influence the exchange rate. 

In practice however, Carl Weinberg , with the firm High Frequency Economics, says the threat posed by this kind of tinker tends to be over stated.

"Quite frankly, domestic monetary policy usually has more important things to do to help the economy than focusing on trade," Weinberg says.

While some countries such as Japan and South Korea may dabble in this area, Weinberg says the broader impacts of the Pacific trade deal outweigh the risk.

"The trade treaty has values and merits of its own, independent of anything that is happening on the currency side, at any exchange rate," he says.

The Treasury Department already has the ability to take action during cases of currency manipulation, which currency analyst Marc Chandler of Brown, Brothers Harriman says is an authority it rarely uses, even if some members of Congress think it should.

"The U.S. Treasury has not cited another country of currency-market manipulation in over a decade," Chandler says.

Free-trade agreements tend to be controversial, especially leading up to election years, and Chandler points out that if the Pacific deal does go through, together with NAFTA, roughly 40 percent of world GDP would be subject to free trade agreements.

And if it doesn’t? 

"It would look like the U.S. is retreating from the global international leadership space."

China, the country that is most often accused of manipulation isn’t part of this deal, and the yuan has been gradually gaining against the euro and the dollar for some time.

Rhode Island, hard hit by recession, slow to recover

Thu, 2015-04-23 11:09

When she was younger, Carolyn Rafaelian used to work in her dad’s jewelry factory as punishment if she misbehaved. Now, she and her sister run it.

“I love that factory smell,” she says, walking onto the factory floor. To her left are rows of waist-high cabinets, their drawers filled with beads. Some are yellow and orange like candy corns, others pink as grapefruit. To Rafaelian’s right, women sit at long tables, each working on a different task.

Alex and Ani founder and CEO Carolyn Rafaelian surveys vintage beads in the factory. 

Tracey Samuelson/Marketplace

Her dad started this factory in 1966, when Rhode Island was considered a global capital of jewelry manufacturing. During the 1980s, the state produced an estimated 80 percent of costume jewelry made in the U.S.

Much of that business has now moved overseas, but not Rafaelian. Instead of selling to wholesalers, who’d sell to stores, as her father had, Rafaelian launched her own line of jewelry called Alex and Ani, which specializes in thin metal bangles strung with charms. By 2009, the factory was making Alex and Ani products exclusively. In 2013, annual revenue hit $230 million (the company no longer releases revenue data).

“This is what you can’t find in China or anywhere else in the world, archives of stones,” Rafaelian says. “The sizes the shapes, the settings. They don’t even make this stuff anymore.”

The factory, Cinerama, holds drawers and drawers of vintage beads. 

Tracey Samuelson/Marketplace

Rafaelian insists that she can’t make her products in China — that part of their appeal is their story and their Rhode Island origins.

“There’s machines that would do it automatic, but that would probably take away 15 jobs, 20 jobs,” she says. “I like it this way. Everything’s being touched.”

But where she’s thrived, many other companies have folded. Rhode Island’s manufacturing sector, already struggling before the recession, is one reason economists believe the country’s smallest state has been one of the hardest hit by the economic downtown, as well as one of the slowest to return to pre-recession employment levels.

“Rhode Island’s manufacturing sector has essentially been cut in half in the past couple of decades,” says Gina Raimondo, Rhode Island’s governor. “We lost more than 80,000 manufacturing jobs.”

Governor Raimondo is just a couple months into the gig and very, very aware of the big structural problems her state’s economy faces. Like Rafaelian, Raimondo's dad also worked in the jewelry industry.

“My father made his career at the old Bulova watch factory in Providence,” she says. “At one time, Bulova employed over a thousand people. Those jobs are not coming back. My dad’s manufacturing, that is gone and I don’t see that coming back to America, much less Rhode Island.”

The jewelry and textiles and other labor-intensive products that Rhode Island historically made were more vulnerable to competition from China than other states, says Mary Burke, a senior economist with the Federal Reserve Bank of Boston who recently published a paper on Rhode Island's recession and recovery.

She says by 2000, “the manufacturing sector was doing very poorly and in a lot of ways, that was hidden by the housing boom because the housing boom was creating jobs in construction and retail, [as well as] boosting spending in a lot of other things.”

As the housing boom turned into a housing bubble, the national economy suffered. Burke says the impact was magnified in Rhode Island because it had larger housing price increases during the boom years and deeper declines during the bust than other states in the region. 

During the recession, the state began earning the wrong kind of superlatives – its job losses were the worst in the region and it’s still 3.4 percent below its pre-recession peak in 2006. It had highest unemployment rate in the country for parts of 2013 and 2014.

But Burke says state’s economy is gradually recovering.

“It’s not going to happen overnight,” Raimondo says. “The decline has been over decades and it’s going to take time to turn the ship.”

To help make that turn, Raimondo recently proposed wide-ranging jobs plan, including everything from initiatives that seek to streamline the cost of doing business in the state to a new tourism campaign. She also wants manufacturing to play a role in the state’s future, but thinks the state needs to transition into high-tech manufacturing with better-paying jobs, even though she knows Rhode Island residents may not currently have the skills fill those positions. Another feature of her plan? Training programs — both for the jobs the state already has and the ones it hopes to create. 

Checking in with Airbnb CEO Brian Chesky

Thu, 2015-04-23 09:12

Brian Chesky is the 33-year-old co-founder and CEO of Airbnb, a company that he says may very well be “the worst idea that ever worked.” The website allows users to rent rooms, apartments, houses, and even yurts from people they’ve never met, all around the world.

Chesky and his roommate and co-founder, Joe Gebbia, came up with the idea in 2007. The pair couldn’t make rent and needed to come up with an idea fast. Luckily, a design conference was in town, something the two RISD graduates knew a little something about, and all the area hotels had been booked up. Chesky and Gebbia inflated a few air mattresses and rented them out to three people — the first three Airbnb customers.

Photos of the first three Airbnb guests to stay in Brian Chesky and Joe Gebbia’s San Francisco apartment. 

Bridget Bodnar/Marketplace

Since then, the company’s grown rapidly. Chesky explained some of the company’s future plans while giving Kai Ryssdal, a tour of their San Francisco headquarters.

Chesky on whether Airbnb is a tech company, a hospitality company, or a social media company:
“I define the company as whatever the customer or person’s buying. I think our guests are buying hospitality. Now, I don’t think of us as a hospitality company the way these 100 year old companies are. In those ways, we look and feel a lot like a technology company. But I think we are a hospitality company powered by design and technology.”

Bridget Bodnar/Marketplace

On who Airbnb’s competition is, and isn’t:

“We are primarily a new form of travel. As we’ve grown, hotels have grown. Hotels have record occupancy rates. And a lot of people, when we launched, thought we couldn’t coexist. But we are fundamentally a different way to travel. People stay in Airbnbs almost twice as long so it’s almost like a whole new behavior.”

On making mainstream partnerships:

“We’re definitely leaning more mainstream … now we’re one of the official housing providers for the Rio Olympics next year.”

On criticisms about Airbnb’s effect on rent prices:

“I’m totally sympathetic to the complaints. Ultimately, we want to enrich the cities we’re in. When we launch, these other externalities happen. That being said, I fundamentally believe Airbnb is a really good thing for the city of San Francisco, New York, many other cities.”

The Airbnb offices consist of a mix of open work spaces and private conference rooms designed to look like real-life Airbnb rentals. 

Bridget Bodnar/Marketplace

On how long he plans to stay at Airbnb:

Chesky names two people he admires – Walt Disney and Steve Jobs. “I think really great entrepreneurs, they do one thing and that one thing is so significant that that’s how they’re remembered and that’s what they do for a very long period of time.”

 Airbnb uses one wall in their office as a timeline for major events in the company. 

Bridget Bodnar/Marketplace

Earlier this month, Chesky was named one of TIME's 100 Most Influential People. His profile was written by Jonathan Ive, senior vice president of design at Apple.

Pine Beetle timber boom could soon bust

Thu, 2015-04-23 08:51

When you hear the word “boom” in the West, you usually think of the energy industry, but in the last 15 years, a timber boom has taken over.

Thanks to the mountain pine beetle, a tiny ravenous bug that’s now chomped its way through over 40 million acres of forest in the U.S., forest managers have turned to the timber industry to clean up all that dead wood, leading to a surge in jobs and enterprise. 

But now, the bugs have almost eaten up all the host trees. And that raises the question, what’s next for the industry?

Hank Lucido looks just like a lumberjack out of a fairy tale with the big burly beard, the stocking cap and the boisterous laugh. Today, the company he manages, West Range Reclamations, is harvesting beetle-killed ponderosa pines on the Colorado-Wyoming border. He gives a holler and a log loader’s giant metal claw starts grabbing up several logs at a time and stacking them on a logging truck to ship for processing — even smaller branches and rotting logs.

“With a lot of our byproduct, we grind it up and we make the colored bark mulch. Then there are other places, such as dairies and horse barns that like to have wood shavings. We sell that product too,” Lucido says.

Lucido's company also supplies wood for products never before manufactured in the region, like pellets for heating stoves and biofuel for the energy grid. Timber industry jobs in Wyoming have increased by 25 percent in the last 10 years, but Lucido says all this work could soon come to an end. That’s because the quality of the wood available to the industry is deteriorating, fast. The pine beetle has killed all its best host trees and what’s left is rotting from the inside out.

Standing next to a pile of wood, Lucido jabs his finger into the pulpy center of one log.

“Some of this, when it gets this red rot to it, if you were to grind that, it would turn to dust. When you go to grab it and it crumbles, it’s not worth anything to us.”    

And it’s not worth anything to other businesses that depend on the lumber from pines, either, like Rich Arbour’s. He manufactures rustic furniture and sells it in his store, Mountain Woods in Laramie, Wyoming. He used to sell lots of dining tables and bunk beds made from blue stain, a unique-looking wood made from beetle-killed trees.

But now?

“We only have one, and it’s a particularly nice piece, and that’s this entertainment center here.”

He points at the streaks of reds and blues on the cabinet’s door.

“The beetles have infected the wood,” Arbour says, “the tree is trying to preserve itself, and it’s emitting enzymes. And the enzymes are what makes that color in the wood. It makes for pretty woods.”

He says when the pine beetle was a big deal in the news, people couldn’t get enough of blue stain furniture. But with the epidemic on the decline, he says, “The interest in it has waned, in a big way.”

It will likely continue to wane as the forest turns green again. And timber manager Mark Westfahl says the U.S. Forest Service will likely manage that next generation of young trees with a tight fist until they’re mature enough to harvest.

“How long will we be offering traditional timber sales?” Westfahl asks. “That’s kind of to be seen. It really depends on how long the trees continue to stand.”

Westfahl is the guy issuing the Forest Service contracts to loggers like Hank Lucido, but with fewer and fewer trees left, Westfahl says they’ll have to start weighing the health of the timber industry against the health of the forest.

Logger Lucido says that means the timber industry is running out of time to harvest what’s left.

“If we don’t get into this wood in the next five years, it’s going be blown over or burned up. And once it falls onto the ground, it’s done,” says Lucido.

But he says, when the pine beetle boom is over, he trusts the timber industry will still have a role to play, managing a healthier forest less prone to such epidemics in the future.

Tidal's wave is breaking

Thu, 2015-04-23 08:15
$1.7 billion

That's the budget for a planned NFL stadium, approved by the city of Carson, California Tuesday. Similar plans went through in Inglewood earlier this year. There are a few franchises weighing a move to Los Angeles after about 20 years with no NFL presence in the city. While a team could make a killing on luxe suites and skyboxes, moving to LA is a big expense, and teams in smaller markets like Green Bay enjoy devoted fans and healthy profits.

$56 million

That's what Jay Z paid for Aspiro and its streaming music service Tidal. Despite the massive star-power behind it and a promise to pay artists more than rival services, Tidal seems to be failing after about a month, the Guardian reported, dropping off the top-700 App Store chart. Meanwhile, Spotify and Pandora are still going strong.

September 10, 1963

The date Marvel Comics published Avengers #1, and the world first met the super-team. Before "Avengers: Age of Ultron" hits theaters next week, the Wall Street Journal has analyzed 50 years of Avengers comic book covers, showing how color palettes, technique and printing technology have evolved. 

$1.5 trillion

That's the estimated buying power of Latinos in the U.S., and big brands are taking notice. Target has begun reaching out to millennial Latinos with a new campaign called "#SinTraduccion," focused on words and ideas that don't always translate.

8 million

That's how many taxpayers were disconnected from the IRS phone lines this season, up from 360,000 last year, the Washington Post reported. Agency officials say budget cuts and additional expenses from enforcing the health care bill were to blame. According to a report by House Republicans, the IRS spent $134 million less on customer service this year, all told.

PODCAST: A huge quarterly loss for Brazilian oil company

Thu, 2015-04-23 03:00

Gas is cheap, but what about the cost of putting a roof over your head? We look at the trend towards skyrocketing rent. Plus, Petrobras, the government-run oil company in Brazil today posted the worse quarterly loss in its history. We'll talk to the BBC's South America business correspondent Daniel Gallas from Sao Paolo, Brazil, to find out why. And by one estimate, the buying power of U.S. Latinos is three times what it was in the year 2000: that's $1.5 trillion. Big retailers are trying to keep pace. Target says Hispanic millennials are now their core demographic. And now, they've got an ad campaign to go with the shift.

 

In a sharing economy, labor laws fall short

Thu, 2015-04-23 02:01

When it comes to the future of the growing “sharing economy,” things are far from clear. Two California juries are set to decide cases that could have wide-ranging implications on the industry that has grown up around Uber, Lyft, and other car-hire services.

Plaintiffs allege that the companies treat drivers as independent contractors even though they should be considered full employees, which would require Uber to provide sick days, health insurance and other benefits. Judge Vince Chhabria, who is presiding over the Lyft case, wrote that the jurors “will be handed a square peg and asked to choose between two round holes.”

Chhabria wrote that because he believes the labor laws, which employ legal tests to determine whether a worker is a contractor or an employee, are outdated.

For some workers, it’s clear.

Drew Bathe drives for Uber in Richmond, Virginia. He’s an EMT, and he’s usually in his car. “Uber was just a perfect opportunity to continue to use my car,” Bathe says. He says he can “sign on when I want and sign off when I want.”

He usually drives around during periods of high demand, in what's known as “surge pricing.” Bathe says he can make about $40 an hour. But other workers use Uber, Lyft, TaskRabbit and Mechanical Turk much more frequently, and they more closely resemble full time workers.

Wilma Liebman, former chair of the National Labor Relations Board, says that’s because “we now have work opportunities that no one would have thought of a few years ago.”

“Back when the labor laws were enacted,” Liebman says, “what we generally saw were large, vertically integrated corporations that did all aspects of the work.” Think Standard Oil and U.S. Steel.

Applying the employee/contractor test back then would yield clear results. The person who paints your house is an independent contractor. They have control over the tools, the means to do the job, how the complete the job. Employees are subject to employer-imposed restriction dress, appearance, tools and so on.

In recent years, some corporations have been accused of deliberately miscategorizing their workers as independent contractors in order to avoid the costs of hiring an employee, such as social security and payroll taxes, as well as health benefits. Fedex is appealing a Kansas supreme court ruling that said its drivers are actually employees.

Robert Reich, who was Labor Secretary during the Clinton Administration, says it’s a trend that's been going on for years.

“As I looked on a case-by-case basis, it was clear to me that some employers were doing it purely to save money and they were doing it as a way of circumventing all of these labor laws,” Reich says.

But what’s going on with sharing economy companies is a bit different, according to Elizabeth Kennedy, a professor of law at Loyola University Maryland.

She agrees with the statement by Judge Edward M. Chen, who is presiding over the Uber case, that it “strains credulity” for Uber to argue it is a tech company and not a car company. But, Kennedy says, it’s important to remember that apps like Uber started out small.

“How do we find this middle ground that recognizes the economic reality of the worker performing the service and also recognizes these businesses can scale up and reach a point where that relationship perhaps changes over time,” she says.

But there might be another way. Back in 2005, Kennedy wrote about how other countries had dealt with this pool of workers who fall between clear-cut employees and independent contractors: a third way, called “dependent contractor.”

 

In a sharing economy, labor laws fall short

Thu, 2015-04-23 02:01

When it comes to the future of the growing “sharing economy,” things are far from clear. Two California juries are set to decide cases that could have wide-ranging implications on the industry that has grown up around Uber, Lyft, and other car-hire services.

Plaintiffs allege that the companies treat drivers as independent contractors even though they should be considered full employees, which would require Uber to provide sick days, health insurance and other benefits. Judge Vince Chhabria, who is presiding over the Lyft case, wrote that the jurors “will be handed a square peg and asked to choose between two round holes.”

Chhabria wrote that because he believes the labor laws, which employ legal tests to determine whether a worker is a contractor or an employee, are outdated.

For some workers, it’s clear.

Drew Bathe drives for Uber in Richmond, Virginia. He’s an EMT, and he’s usually in his car. “Uber was just a perfect opportunity to continue to use my car,” Bathe says. He says he can “sign on when I want and sign off when I want.”

He usually drives around during periods of high demand, in what's known as “surge pricing.” Bathe says he can make about $40 an hour. But other workers use Uber, Lyft, TaskRabbit and Mechanical Turk much more frequently, and they more closely resemble full time workers.

Wilma Liebman, former chair of the National Labor Relations Board, says that’s because “we now have work opportunities that no one would have thought of a few years ago.”

“Back when the labor laws were enacted,” Liebman says, “what we generally saw were large, vertically integrated corporations that did all aspects of the work.” Think Standard Oil and U.S. Steel.

Applying the employee/contractor test back then would yield clear results. The person who paints your house is an independent contractor. They have control over the tools, the means to do the job, how the complete the job. Employees are subject to employer-imposed restriction dress, appearance, tools and so on.

In recent years, some corporations have been accused of deliberately miscategorizing their workers as independent contractors in order to avoid the costs of hiring an employee, such as social security and payroll taxes, as well as health benefits. Fedex is appealing a Kansas supreme court ruling that said its drivers are actually employees.

Robert Reich, who was Labor Secretary during the Clinton Administration, says it’s a trend that's been going on for years.

“As I looked on a case-by-case basis, it was clear to me that some employers were doing it purely to save money and they were doing it as a way of circumventing all of these labor laws,” Reich says.

But what’s going on with sharing economy companies is a bit different, according to Elizabeth Kennedy, a professor of law at Loyola University Maryland.

She agrees with the statement by Judge Edward M. Chen, who is presiding over the Uber case, that it “strains credulity” for Uber to argue it is a tech company and not a car company. But, Kennedy says, it’s important to remember that apps like Uber started out small.

“How do we find this middle ground that recognizes the economic reality of the worker performing the service and also recognizes these businesses can scale up and reach a point where that relationship perhaps changes over time,” she says.

But there might be another way. Back in 2005, Kennedy wrote about how other countries had dealt with this pool of workers who fall between clear-cut employees and independent contractors: a third way, called “dependent contractor.”

 

Coke and Pepsi face headwinds

Thu, 2015-04-23 02:00

Despite the fact that consumers are consuming sodas less frequently after lots of headlines about sugary drinks and the obesity epidemic, Coca-Cola managed to post better-than-expected earnings on Wednesday. 

But the celebration may be short-lived if Coke and its main rival Pepsi focus heavily on promoting their namesake soda brands. 

Consumer analyst Nik Modi of RBC Capital Markets says soda sales have been declining industry-wide, and among the reasons why is "the mom veto."

"Mothers are not buying these products for their kids, like the prior generation," says Modi, adding that consumers are not only paying more attention to the number of calories in the products they consume, but also to the number of ingredients and kinds of ingredients. 

He says one way Coca-Cola has combated this trend is by selling smaller cans of its sodas. "If you give a child an 8-ounce can of coke, that's much more tolerable than a 12-ounce can or a 20-ounce can," says Modi.

Coke has also raised prices and cut costs by doing things like laying off 1,800 employees. But industry consultant Tom Pirko is pessimistic about the future for both Coca-Cola and Pepsi, because the majority of sales for both companies come from foreign countries.

"Brazil, the rest of Latin America, Europe, Russia: the economies are in trouble and this is all directly affecting Coca-Cola," says Pirko, adding that both Coke and Pepsi should focus more on promoting and selling their non-soda brands.

Coca-Cola recently even got into the milk business.

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