Marketplace - American Public Media

The decision not to pursue charges is a rare one

Tue, 2014-11-25 03:00
11 in 162,000

The number of cases in which federal grand juries declined to issue an indictment in 2010, FiveThirtyEight reported. The federal investigation into Michael Brown's death is ongoing, but it's clear the county grand juries decision not to pursue charges is very rare. The site's research showed there was one exception to the trend: when those cases involve law enforcement.

8 years

After 8 years of sponsorship, Sony Corp announced it would not renew its contract with FIFA, the organization behind world soccer. As Reuters reports, Sony says the move is the result of a restructuring of divisions, and a concerted effort to grow its electronic devices division.

80 percent

The portion of cities with populations between 25,000 and 50,000 nationwide that have SWAT teams at their disposal, up from 13 percent since the early 1980s. In light of this summer's protests in Ferguson the New York Times' Retro Report looked back at the proliferation of SWAT teams in the U.S. The squads have their roots in late 1960s shootouts with the Black Panthers, but are now commonly implemented in drug raids.

30 percent

Americans spend about half their food dollars outside the home, and consume around 30 percent of their calories outside. Strikingly, when children eat out, their calorie consumption doubles. On Tuesday, the Food and Drug Administration announced rules requiring an additional set of food merchants to disclose caloric content: theaters, amusement parks, convenience stores, pizza chains, and grocery store prepared food sections. It's significant, especially when you consider that a study found purchased calories fell an average 6 percent in Starbucks with calorie signage.

28

The number of cabinet members President Barack Obama has had so far, Quartz reported. Even with four secretaries of defense, including Chuck Hagel's successor, the Obama administration is in the middle of the pack. Cabinets are rife with turnover; George W. Bush and Harry Truman each at 35 cabinet members.

Does caloric transparency really change behavior?

Tue, 2014-11-25 03:00

On Tuesday, the Food and Drug Administration releases rules requiring an additional set of food merchants to disclose caloric content: theaters, amusement parks, convenience stores, pizza chains, and grocery store prepared food sections.

Today, Americans spend half their food dollars outside the home, and consume around 30 percent of their calories outside. Strikingly, when children eat out, their calorie consumption doubles.

Does transparency change behavior? One of the largest studies on this followed Starbucks users, at stores with calorie signs and without.

“People were systematically underestimating their calories in food items,” says study co-author Bryan Bollinger, who teaches marketing at Duke University. “So when they saw the information on the board, they were surprised and then reacted accordingly. Consumers can and will use this information if it’s useful to them.”

Listen here for more from Bollinger's interview:

The study found purchased calories fell an average 6 percent, and that changes in behavior stuck with Starbucks consumers, even when they visited outlets without calorie signage.

There’s also evidence that merchants required to post calorie counts start to offer more low-fat choices.

These finalized FDA arise from the Affordable Care Act and are scheduled to take effect in one year.

Peter Thiel on keeping salaries low at the top

Tue, 2014-11-25 02:00

Now, a moment of reflection about America's innovation economy. We know that in technology hubs like Silicon Valley, it's cool to fail. That's the mark of a seasoned, risk taking entrepreneur: having tried, failed, and tried again. It may also be cool to draw a mediocre salary.

That's the argument of  one of America's leading technology venture capitalist, who says he looks for low salaries at the top of start ups when he's thinking about investing. Peter Thiel was a co-founder of Paypal and the first outside investor in Facebook. He's also the author of a new book, "Zero to One: Notes on Startups, or How to Build the Future."

Thiel also says monopoly, not competition, is the way to go. His advice to entrepreneurs is to find a niche and dominate it. Actually, he put it more strongly than that.

Click the media player above to hear Peter Thiel in conversation with Marketplace Morning Report host David Brancaccio.

What do foreign investors see in U.S. housing stock?

Tue, 2014-11-25 02:00

The housing sector continues to dig out of the deep, deep hole we call "the Recession."

Some markets are seeing particularly strong growth thanks to foreign investors.

So, what do foreign investors see when they check out U.S. housing stock?

“Affordability, straight up. With multiple exclamation points,” says Stan Humphries, Chief Economist with online real estate firm Zillow.

A report from the National Association of Realtors earlier this year found international investors spent more than $92 billion on U.S. homes, a 35 percent increase over last year.

Humphries says some of the hottest markets in the country are Miami, New York, and Orange County.

He says they can thank their housing recoveries, in part, on this foreign cash.

“We’ve got a lot more international buyers in the U.S. right now than we did eight years ago. And that’s been increasing since 2011,” he says.

Still, all that Chinese and Russian money has a downside, says USC’s Richard Green — Like how it can make it harder on first-time home buyers.

“They are pushing up the price of housing and making less housing available to others,” he says.

Prices are so high in some places — hello, San Francisco — it's forcing some communities to consider workforce housing, which if the price is right may make a good bet for a Canadian or Chinese investor.

Who gets the money made by dead celebrities?

Mon, 2014-11-24 13:07

The latest entry in our “I've Always Wondered” series involves dead celebrities, mythic mansions and legendary kings: the King of Pop and the King of Rock ‘n Roll.

Listener David Rigby, an actuary in Winston-Salem, North Carolina, asked: “We hear about the vast amounts made by the estates of deceased celebrities like Michael Jackson and Elvis Presley. Who enjoys the benefit of all this income, and does the government get any tax revenue from it?”

I started with the king of dead-celebrity lawyers, Mark Roesler of CMG Worldwide. He’s got offices in Indianapolis and, of course, Los Angeles. His client list reads like a "Who’s Who" of Hollywood's departed: James Dean, Ella Fitzgerald, John Belushi, Telly Savalas, Bettie Page, The Andrews Sisters.

When one of these stars checks out, Roesler checks in. He values what’s left and figures out how to make money on it, for the both heirs and his firm. “They have two types of assets," Roesler says of the typical dead celebrity. "Tangible assets — cars, bank accounts, homes; and intangible assets — copyrights, trademarks [and] the right of publicity, which is the right to your name and likeness.”

Roesler says for the heirs of music stars, this is where the big money usually is. It’s the songs: sold on iTunes, played in bars and used in ads. Plus, the celebrity’s name and image, put on products or even back 0n stage in holographic form.

And who gets the profits? The estate lawyers’ cut is typically 10 percent or more. Record labels and marketers also get a slice of the revenue stream. Income tax can grab as much as 40 percent of the profits, and the IRS also takes a one-time Estate Tax payment on the estimated value of the assets at the time of death.

Roesler says that for a complicated estate — when he’s doing licensing deals and he’s in court suing bootleggers using the artist’s image or music in ads or t-shirts — his cut can be 30 percent or more.

Now let’s see what the King of Pop and the King of Rock ‘n' Roll left to their heirs.

Michael Jackson

When Jackson died from a drug overdose in 2009, he didn't have much value to marketers. Numerous scandals had eroded his reputation and value as a product endorser, and he faced massive debts from his lavish lifestyle and the upkeep of Neverland Ranch. He was planning a major comeback and arena residency in London.

Jackson has topped Forbes’ annual dead-celebrities list for five years, bringing in $140 million this year alone. The Forbes list, released in the fall, estimates revenue from all sources from the past 12 months before taxes and management fees. As Beverly Hills entertainment lawyer Joseph Schleimer explains, death often brings a change in a star’s financial fortunes.

“The mansions, yachts, luxury cars, private jets and parasitic entourages are dispensed with,” Schleimer says. “Death ushers in lawyers, accountants and executors, and they usually bring a cold eye for maximizing revenue.”

Jackson’s will was clear: he left the bulk of his estate to his mother, Katherine, and his three children, Prince, Paris and ‘Blanket.’ His father, Joseph, and his siblings inherited nothing.

In the six years since Jackson’s death, the executors designated in his will given Jackson's legacy a complete turnaround, generating more than $600 million in earnings. They've raked in profits from several song catalogs Jackson acquired during his life, Cirque du Soleil shows in Las Vegas, posthumous albums, a documentary, plus numerous marketing and endorsement deals.

Jackson’s estate, meanwhile, is in tax court, fighting a $730 million IRS demand for back-estate taxes and penalties. The executors reportedly pegged the value of Jackson's assets at just $7 million when he died in 2009 and they say the half-billion-dollar turnaround they've engineered came after he died and couldn't have been anticipated. The IRS says the estate was worth at least $1 billion when he passed it on to his heirs, and that’s how much they should have paid taxes on.

AFP/Getty Images

Elvis Presley

When Elvis Presley died of a heart attack in August 1977, his finances were a wreck. His personal life, his music and his movie career had been in decline for years. Graceland was expensive to keep up.

Today, Elvis Presley is the second highest-earning dead celebrity, according to Forbes, with his estate pulling in about $55 million each year.

Presley’s longtime manager, Colonel Tom Parker, let Presley into several ill-advised business deals. In 1973, they sold off Elvis’s rights to all future royalties from songs he had recorded up to that date. RCA Records paid the pair $5.4 million, which they split 50-50. After multiple lawsuits over Parker’s handling of Presley’s finances before and after his death, Parker was removed from involvement in the estate altogether.

Elvis never sold off control of his hundreds of published songs, and they continued to generate revenue for him and for the estate after his death.

Presley’s will left his estate to his father, Vernon, his grandmother, Minnie Mae, and his nine-year-old daughter, Lisa Marie. Mounting debts led to a recommendation that the estate sell Graceland, but the heirs decided to keep the mansion, eventually opening it to the public in 1982. It is now listed on the National Register of Historic Places and receives 600,000 visitors per year. The estate has also since opened the Heartbreak Hotel and operates a Memphis shopping mall selling Elvis memorabilia.

Today, the Elvis Presley Estate owns a vast collection of photos, album covers, movie posters, archive video footage, as well as the Presley's catalog. It protects and markets Presley's name and image.

But the estate isn’t controlled by Presleys anymore. In 2005, Lisa Marie Presley sold an 85 percent stake to Robert Sillerman’s CKX media company. The estate was sold to Authentic Brands in 2013. The company also manages the Marilyn Monroe and Juicy Couture brands. Lisa Marie Presley retains a 15 percent stake in the estate, as well as owning Graceland and her father’s personal effects, which she manages with her mother, Priscilla Presley.

Immigration policy could change the education equation

Mon, 2014-11-24 11:00

We're only beginning to grasp the implications of President Obama's executive action on immigration, announced last week. With millions of undocumented immigrants free to work legally, and deportation no longer a risk (at least for a few years), there will be better-paying jobs for many – and a lot less stress.

For some, there may be another opportunity: education.

In some states, undocumented workers who qualify for deportation relief will become eligible for in-state tuition. They'll be able to get driver's licenses, making it easier to get to school. They also may be eligible for work-study jobs and internships.

Some may enroll in professional programs to become lawyers, teachers and pharmacists, says Michael Olivas, who teaches immigration law at the University of Houston, "because many of them just hadn't been able to afford it before."

Under the new policy, as many as 3.7 million parents of children who were born in the U.S. — or are legal residents — will become eligible for temporary relief from deportation, according to the nonpartisan Migration Policy Institute. Another 290,000 undocumented immigrants whose parents brought them here illegally could also qualify. The action lifts the age requirement for the 2012 Deferred Action for Childhood Arrivals program, which applied only to people 30 and under.

The new policy won't mean a flood of new college students, says Michael Fix, president of the Migration Policy Institute.

That's partly because most who qualify are older than the traditional college-going age. Also, undocumented students still won't qualify for federal financial aid. Most of those who are eligible live in states that already offer in-state tuition to undocumented students, Fix says.

But the new policy will help the school-age children of many who qualify, he says.

"What you could see among some of the U.S. citizen children is more persistence in school, better attendance, you could see maybe better grades, and you might well see better health," he says.

A recent study from the nonprofit group Human Impact Partners found that children in families under the threat of detention or deportation end up with less education than children of citizens.

"Undocumented parents are really struggling with poor job conditions, with economic hardship and stress, and it can limit their participation in learning activities," says Lili Farhang, one of the study's authors.

Undocumented parents who have shied away from institutions, for fear of being found out, might now be more involved in their children's schools, Farhang says.

An immigrant from Peru, Lorella Praeli didn't discover that she was undocumented until her senior year in high school, but her sister found out at a much younger age.

"I could see how it affected her so much in both how she performed in school and how she related to others," says Praeli, director of advocacy with the United We Dream network, which advocates for immigrant youth and families. 

Two years ago, Praeli's sister qualified for the Deferred Action for Childhood Arrivals program and has blossomed in college, Praeli says.

"I was able to see it firsthand in my family, how this piece of paper this identification card and a nine-digit Social Security number – just changed who Maria was," she says.

Praeli now has her green card. And under the new policy, their mom will qualify for one, too.

Help wanted: Versatile executive to lead Department of Defense

Mon, 2014-11-24 11:00

When Chuck Hagel was appointed secretary of defense in early 2013, the military was winding down from the wars in Afghanistan and Iraq. But new overseas conflicts have changed the job's requirements.

Today's secretary of defense needs to possess management experience, the ability to oversee shrinking budgets and be skilled at dealing with conflict at home and abroad. Military experience is a plus but not required. Must be a strong policy adviser.

 

Clydesdales go missing from Budweiser's holiday ads

Mon, 2014-11-24 11:00

Budweiser has been using Clydesdales in its holiday advertisements since 1987. But this year the brewing company is saying goodbye to the horses and hello to Jay-Z.

With the help of Jay-Z, the brewing company hopes to appeal to untapped potential customers. According to the Wall Street Journal, 44 percent of 21 to 27-year-old beer drinkers have never tried Budweiser.  

To add some context, Jay-Z has appeared in a few Budweiser advertisements in the past, like this one from 2012:

And in case you are a huge Budweiser Clydesdale fan, give thanks for the Internet. You can watch this Budweiser holiday commercial from the 1980s here:

Or the 2014 Super Bowl commercial here:

 

 

The hidden dangers of low oil prices

Mon, 2014-11-24 11:00

If OPEC doesn't decide to cut oil production when it meets in Vienna this week, some say oil could fall to $60 a barrel. Lower costs sound like bad news for the oil industry and good news for the rest of us.

But it's not that simple. There are other losers – and a chance that $60 oil could end up being bad news for all of us down the line.

Other losers

The oil boom has produced one big set of winners outside of the traditional oil business: the whole economies of oil-producer states like North Dakota and Texas. 

"The places where the booms have been occurring have largely benefited from increases in land and housing prices," says economist Michael Greenstone, director of the University of Chicago's Energy Policy Institute. "They’re now going to give some of that back."

Broader risks

When oil prices collapsed all of a sudden in the late 1980s, it blew back on the rest of us, says Michael Webber, deputy director of the Energy Institute at the University of Texas at Austin.

First, he says, oil producers in Texas and Oklahoma went bankrupt, "which caused a lot of land deals to go bad— because the land had been overvalued, which caused tens of thousands of savings and loans to go bankrupt and belly up, which caused a nationwide S&L scandal, which eventually led to recession."

That particular set of dominoes isn’t likely to fall this time, Webber says. But it’s an example of what can happen.

Wild cards

Nobody knows for sure whether we’re looking at a long stretch of low oil prices. Maybe we’re looking at a stretch of volatility – prices that go up and down.

That can slow down the economy, says economist Christopher Knittel, director of the Center for Energy and Environmental Policy Research at MIT.

He starts with household example:  Gas prices are high, so a family buys a Prius instead of an SUV. "Now, if oil prices fall, then they wish they had bought the more-powerful car instead of the more fuel-efficient car," he says.  

But it’s too late, the money’s been sunk. Companies can also get caught with the wrong big-ticket items. Airlines, railroads, shippers. "When they bet wrong, then their prices have to increase," says Knittel. "And we pay those prices."

The really big picture

Lower gas prices could have another cost: More driving, which leads to more carbon emissions and more global warming. Economists are still struggling to calculate the price, but they expect it to be high.

The problem with fracking

Mon, 2014-11-24 05:31

Slumping oil prices are wrecking life for drillers around the world, particularly high-cost producers now struggling to make a profit ... like the U.S.

American oil from shale, which comes out of the ground through fracking, is pricey to extract. On top of that, sources of oil become mere trickles within a year or two.

The notion of oil wells tailing off and aging isn’t new. In the late 50s, a Hollywood celebrity famously joked that actors are, “about as short-lived as an oil well and twice as pretty.”

The issue is, for the new so-called shale wells, production falls like a stone in the first year.

“Let’s say you produce 500 barrels in the first month of production,” says James Burkhard, head of oil market research for IHS Energy. “Twelve months later you could be producing around 250 barrels. So a decline rate of about 50 percent. In a conventional well, the decline rate is much less steep.”

Oil from shale is not a pool of liquid, but rather small amounts trapped in tight rock. That requires drillers to fracture, or frac, the shale rock to release the oil. Quickly, though, output slows and pressure falls. And the driller has to drill and frac again, in a new spot. That’s expensive — in many places, each well costs $8 million.

“I’ve seen it personally firsthand,” says Ed Hirs, managing director of the Houston-based oil and gas firm Hillhouse Resources. He also teaches economics at the University of Houston. “We’ve had wells on production since 2009, 2010 that have been plugged and abandoned here in 2014, because they are not producing enough to cover their cost.”

Hirs says his firm barely profited in shale. So it returned to drilling old-school conventional oil, where a good well returns five, even 10 dollars for each one invested.

Fracking for shale oil, he says, is a fad, like that scene where the cruise ship tilts to one side.

“They all ran to the shale side of the boat,” Hirs says. “That was the fashion of the day. We see this in other industries as well.”  

Fast-declining wells also require continuous drilling and investing to increase production. Before one tails off, you have to drill the second. And then before that tails off, you drill the third. It’s a treadmill, which may be speeding up as the most productive drilling spots are taken.

Some call this the 'Red Queen' race. Remember Alice, from the Wonderland books? In one scene, she runs and runs and gets nowhere, at which point the Red Queen chimes in.

“Now here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”  

Constant drilling means constant spending, and according to the U.S. Department of Energy, production revenues are not keeping up with expenditures. Some shale investors are edgy, analysts say.

“If you’re giving money to somebody, you eventually want to get something back,” says Virendra Chauhan of Energy Aspects in London. “If that’s not happening, then there seems to be something wrong with the business model.”

To which shale optimists shake their collective heads. Looking back more than a century, drilling technology has repeatedly proven skeptics wrong. “Until we hit peak knowledge, until the human race hits peak knowledge, we won’t hit peak oil supply,” Burkhard of IHS Energy says.

Companies now drill and frack wells deeper, closer together and more efficiently. So, can technology improve faster than shale wells fall off? “If today the wells you’re drilling are twice as good as the wells you drilled two years ago, then that goes a long way toward addressing that decline,” says geologist Allen Gilmer, CEO of oil and gas database firm Drillinginfo.

Today, the U.S. produces more than 3 million barrels a day, from shale alone. That’s more than the total output of Iran, or Iraq, or Venezuela. “I think it’s very unlikely to ramp down,” Gilmer says, “unless operators really start pulling back on drilling. And as long as a well is economic, I don’t see that happening.”       

Ed Hirs at Hillhouse Resources does see that happening. With oil prices low, and investors antsy, exuberance could go bust. “The challenge with these fast-declining wells is this pace of drilling needs to continue,” Hirs says. “Without the pace of drilling continuing, that three and a half million barrels a day will peter out to zero in the next three to five years.”

That’s the debate: whether shale oil production declines the way its wells do, the way movie stars come and go. Bullish types will note the actor who compared short careers to oil wells decades ago. That actor's name? Ronald Reagan

Quiz: The best-connected state in the nation

Mon, 2014-11-24 04:43

More than 70 percent of American households have a high-speed internet connection, according to a Census Bureau report.

var _polldaddy = [] || _polldaddy; _polldaddy.push( { type: "iframe", auto: "1", domain: "marketplaceapm.polldaddy.com/s/", id: "which-state-has-highest-percentage-of-residents-living-in-a-house-with-high-speed-internet", placeholder: "pd_1416836388" } ); (function(d,c,j){if(!document.getElementById(j)){var pd=d.createElement(c),s;pd.id=j;pd.src=('https:'==document.location.protocol)?'https://polldaddy.com/survey.js':'http://i0.poll.fm/survey.js';s=document.getElementsByTagName(c)[0];s.parentNode.insertBefore(pd,s);}}(document,'script','pd-embed'));

PODCAST: Saying "I do" to a bigger income

Mon, 2014-11-24 03:00

First up, there's news the World Bank is moving away from funding coal projects, according to the bank's president. There will be exceptions made in the poorest places, but observers say the banks' rhetoric is becoming increasingly clear about climate change. More on that. Plus, the rise of single-parent households is a social, cultural, and economic phenomenon. This is at the center of a new study put out by the conservative-leaning American Enterprise Institute, which argues that stronger marriages could help bridge the widening wealth and poverty divide. We look into the challenge of pinning down causes of America's wealth gap. And imagine a country being able to double the size of its economy, using swipes of a tablet or clicks of a mouse. The small Baltic state of Estonia aims to do just that.  

Where in the world are the important financial centers?

Mon, 2014-11-24 03:00
$64

That’s how much the tiny Baltic state of Estonia will charge foreigners to become an “e-resident” of the country. E-residents will be able to open up an Estonian bank account, and even start and run a company in the country. They just won’t be able to live there.

32 percent

A new study by the conservative-leaning American Enterprise Institute says that the rise of single-parent households accounts for a 32 percent growth in family-income inequality between 1979 and 2012. Others point towards the growth in incomes of the “one percent” as a more likely cause for the widening gap.

400 feet

Commercial drone regulations are taking off. As reported by the Wall Street Journal, new federal regulations will require operators to have a license, and will limit commercial drone flights to daylight hours, and below 400 feet.

53 percent

That’s the percentage of respondents who named Shanghai as the leading global financial center by 2019 in a survey conducted by Kinetic Partners. Bloomberg News also reports that among the some 300 finance professionals surveyed, New York was named the world’s most important financial center, overtaking London for the second year in a row.

300 sellers

That’s how many legal marijuana sellers currently exist in Colorado. And just like every other retailer, they’re gearing up for Black Friday, with deals on joints, vape-pen cartridges, and plain old ounces of marijuana. Some have even nicknamed the event “Green Friday.”

Doubling a country's economy with the click of a mouse

Mon, 2014-11-24 02:00

Imagine a country being able to double the size of its economy, almost at the touch of a button, or the click of a mouse. The tiny Baltic state of Estonia aims to do just that. Next month, Estonia will become the first country in the world to offer foreigners so-called “ e-residency,” which could hugely expand its customer base without increasing the size of its physical population of 1.3 million people.  

Estonia is trying to cash in on what it calls its digital infrastructure. It’s one of the most e-connected places on the planet with almost every home, office, factory and classroom hooked up to the internet, and most government business conducted online; Estonia even uses e-voting in its general elections. 

Now, foreigners will be invited to sign up, pay $64, and become an e-resident of Estonia.

“E-residency is basically a government-guaranteed digital identity,” explains Siret Schutting, Estonia’s e-ambassador. “We are allowing foreigners to acquire what every Estonian already has: a digital signature. This means they can securely sign documents online. It’s legally the same as a handwritten signature.”

You “sign” by using a unique code along with your own smartcard and reader. E-residency won’t give you right to live in Estonia or even to visit the country, but Taavi Kotka of the Ministry for Economic Affairs in the capital Tallinn says it will let you do business there. 

“You can open up a bank account, start a company, run a company, all that stuff," he says. "We’re aiming to sign up 10 million e-residents. That would give a big boost to the Estonian economy. More customers for our banks, for telecom companies ... for everybody.”

Kotka claims e-residency will be totally secure. To qualify, you must supply biometric data — like finger prints — and be vetted. However, Ian Bond, a former British ambassador to neighboring Latvia, is not entirely reassured.

“I would have some concerns about who exactly would be getting e-residency. With Russia on its doorstep, there is a risk of money laundering. There is a risk of exploitation by organized crime. $64 won’t pay for much in-depth vetting,” he says.

Estonia knows all about cyber problems from its mighty neighbor; the country suffered a massive attack from Russian hackers in 2007, apparently because it planned to relocate a Soviet-era war memorial. Estonian government, bank, police and other emergency websites crashed under a bombardment of service denial messages. But the Baltic state weathered the storm and it is now host to NATO’s cyber security headquarters. Estonia reckons that although it is small, it can defend itself — and its residents — in cyberspace.   

What might happen after Iran sanctions are lifted

Mon, 2014-11-24 02:00

Monday is the deadline for Iran nuclear talks. Negotiators are considering a deal that would limit Tehran’s nuclear enrichment ability, in return for lifting international oil and banking sanctions.

These sanctions helped bring Iran to the talks in the first place—Its markets were cut off, oil exports fell, recession came.

Karim Sadjadpour at the Carnegie Endowment for International Peace has tallied the cost of Iran’s nuclear program, in terms of sanctions, lost revenue and lost investment. His number: $100 billion dollars.

Separately, a former Iranian foreign minister put the cost at $450 billion.

“When you look at these enormous costs and you weigh it against what Iran’s nuclear program can really provide in terms of energy, it’s an economic catastrophe,” Sadjadpour says. “This is a nuclear program which can at best provide only two percent of Iran’s energy needs, and in the process of building this nuclear program, they’ve cannibalized their main source of revenue, which is oil and gas.”

And yet, Sadjadpour notes, Iran’s supreme leader does not make decisions based on economics. It’s politics.

Click below to hear more of Sadjadpour's interview:

 

If there is a deal, Iran will want to sell more oil and return to previous levels. This despite today’s global glut, and despite the fact that Iran and other OPEC members are considering overall production cuts. That would put upward pressure on oil prices, currently down some 30 percent from June.

So, which OPEC member would bear the pain of lost business? Likely not Iran, says analyst Amrita Sen of Energy Aspects in London.

“They have already lost out on so many billions of dollars of revenues,” she says. “That’s really where it becomes a challenge for OPEC.”

The group meets on Thanksgiving day.

 

 

 

 

Marriage and the class divide

Mon, 2014-11-24 02:00

The rise of single-parent households isn’t just a social and cultural phenomena—it has import economic implications. That’s the gist of a new study put out by the conservative-leaning American Enterprise Institute, who argues that stronger marriages could help bridge the ever-growing class divide. But trying to pin down the root causes of the gulf between the haves and have-nots is a bit like hitting a moving target.

In 1980, approximately 78 percent of families with children were headed by married parents. In 2012, married parents account for only 66 percent of families with children.

Bradford Wilcox is the Director of the National Marriage Project and a co-author of the AEI study, which is titled "For Richer, For Poorer." He says this retreat from marriage accounts for 32 percent of the growth in family-income inequality between 1979 and 2012, and falls particularly hard on the poor and working class.

“So, not only are they earning less, comparatively speaking," says Wilcox, "but they’re also less likely to pool their incomes and to build common assets as married families."

On average, Wilcox says the data show married men earn about $16,000 more than their single peers. Likewise, children from married families are much more likely to get a college degree. But others say this marriage effect is a bit overblown.

“The big changes in distribution of income since 2000 have been near the top,” says Christopher Jencks, a professor of Social Policy at Harvard’s Kennedy School of Government. He says the massive growth in incomes by the "one percent" is a more plausible explanation for inequality.

“It’s a little hard to think that, 'well, that’s all driven by single parent families.' That’s a big factor at the bottom [of the income scale], but the bottom hasn’t changed much," explains Jencks.

He points to wage stagnation and fewer manufacturing jobs as other explanations for growing economic inequality.

Weekly Wrap: Immigration and the New York Fed

Fri, 2014-11-21 16:21

Joining Kai to talk about the week's business and economic news is Business Insider's Linette Lopez and Sudeep Reddy of the Wall Street Journal. The big topics this week: Obama's immigration plan, the Fed's relationship with Wall Street and more stimulus in the eurozone and China.

Macy's new target: Millennials

Fri, 2014-11-21 14:42

As Black Friday nears, we're looking at the strategies big brands are making.

“It’s always a fight to the finish as we get through this season. My sensibility is that shoppers are going to go out there and spend like they always do: Load up their credit cards with things that they don’t need," says Teri Agins, author of "Hijacking the Runway"  (2014).

"Of course, retailers will come up with all kinds of gimmicks to get people shopping," Agins says.

In the Black Friday sale game, Macy's stands as a juggernaut, according to Agins. “They are the big Goliath and they really have a big footprint.”

The reason for this success? Millennials, a demographic not typically associated with department stores.

Macy's is targeting 13- to 30-year-olds by teaming up with celebrities to draw shoppers into stores. Celebrity fragrances by Katy Perry, One Direction, Taylor Swift, and even Justin Bieber are offered in Macy's stores around the country.

These celebrity collaborations are meant to create a buzz similar to that which surrounds fast-fashion, and that’s just to get people into the store. Even if the targeted millennials don’t buy the fragrance they walked in for, it’s likely they’ll buy something else.

This upcoming Black Friday will probably be like the ones in the past – long lines, doorbusters and big savings – but the crowd might turn out to be a little younger.

Good at video games? That could land you a job.

Fri, 2014-11-21 11:10

Workplace personality tests are a multi-million-dollar business for the companies that make them. Basically these are screening tools: online tests a candidate takes before they get to the interview stage.  They’re designed to find out what makes you tick. But as they’ve gotten more popular they’ve also come in for criticism – some candidates have even sued, saying the tests discriminate.  

Recently New Yorker Jorli Peña interviewed for a job at a startup out of state. Before the company flew her out to meet with them, she was asked to take a couple of short online tests.  The second test asked her to assess the way others saw her, and how she saw herself. She had to pick from a bunch of adjectives, and spent a few minutes on the task.

Soon the results came back. Peña was shocked.

“I started scanning it and I just thought…this isn’t me,” she says.

Peña, normally an outgoing marketing specialist, was described as ill-at-ease in social situations, formal and reserved. She was afraid she wouldn’t land an interview.  But maybe because she knew the company’s founder, she did. Others have fallen at that first hurdle.

These tests have been around a long time, says Barbara Marder with HR consulting firm Mercer. She says they may be adequate indicators for some jobs, but for others, it may be much more important to look at a candidate’s cognitive makeup.

One way to do that is through gaming. Marder says when someone plays a game, you can see his or her potential through studying what they do during play.

“You’re really figuring out how someone thinks,” she says, “how they make decisions, how they problem solve.”

Her company recently created a prototype 3-D video game for the oil and gas industry. In this game, the candidate has to simulate their role on an offshore oil rig. At one point, an alarm on the rig goes off and the candidate has to work out what caused the alarm and how to respond to the emergency. All the while, their potential employer is judging their performance.

Simulation is one route to an employee’s potential. But there are plenty of other ways games can reveal your strengths and weaknesses, as I found when I began to play a bunch of games designed by a startup called Pymetrics.

One game measures how well I read other people’s emotions just from looking at the expression in their eyes. I have to pick the word that best describes what they’re feeling. It was quite tricky but also fun.

MIT graduate Frida Polli is Pymetrics’ CEO. She says these games are aimed at millennials.  

“We’d like to be the Netflix of careers,” she says. "Where you play the 12 games, maybe at some point we add some additional data about you, and then we really give you a very tailored, very precise and very good set of recommendations for what you could be good at.”

Pymetrics works with candidates to compile profiles based on their play, and lets them know which companies are looking for people like them.  It then tells the companies, "Hey, check this person out – they have the kinds of qualities you’re looking for."

And Polli says these games can help companies diversify their workforce.

“There are a lot of companies in that realm," she says, "but they don’t know exactly how to solve that problem."

She says the algorithms behind the games can help, because they make the platform blind to race and gender.

But perhaps they’re not blind to an aging brain. Some of the games I play have me sweating as the clock ticks down. In one game I barely have time to register the direction of an on-screen arrow before it disappears.

If I’m being judged on this game, I fear for my employment prospects.

Polli says I shouldn’t worry.

“The main point of this is there is no right or wrong,” she insists.

She says I look skeptical, which I do, and assures me she’s totally serious.

Well, my test results did did tell me I was 70 percent skeptical, which I think is quite appropriate for a journalist.

Playing this hiring game may just take a bit of practice for some of us.

The economic impact of Obama's immigration reform

Fri, 2014-11-21 11:00

Stymied by a Congress that has been unable to pass comprehensive immigration reform, President Obama issued a set of executive actions on Thursday.

Its centerpiece is a new program providing protection from deportation and a possible work permit for unauthorized immigrants who have lived in the United States for at least five years who have children who are citizens or have green cards. 

Patrick Oakford at the Center for American Progress says this will impact all the sectors of the economy where unauthorized immigrants work, from construction to restaurants.

Economist Giovanni Peri says work permits will allow workers to apply for higher-wage jobs, and give employers a larger pool of workers.

The White House's Council of Economic Advisors says this could generate an increase in productivity that will boost GDP by 0.2% over the next decade. But that depends on employers and employees alike having confidence that the temporary status will be extended. Kristi Boswell at the American Farm Bureau Federation says it doesn't go far enough. 

Pages