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Time for 'You've got mail' to get on OKCupid?

Wed, 2014-07-30 11:37

These days, box office hits include explosions, aliens and robots - characters most romantic comedies do not contain.

Megan Garber, staff writer for The Atlantic, says the romantic comedy has been dying a slow death, as studios fail to recognize the evolution of romance itself. Rom-coms are not portraying the reality of dating for people in the digital age.

"The world of Tinder, eHarmony and Match.com is not really well reflected in Hollywood at this point," says Garber. "Right now, there isn’t much on the screen that would sort of tell us how to behave in this crazy world of online dating."

Listen to the full conversation in the audio player above.

Foxconn's newest product: a college degree

Wed, 2014-07-30 11:36

There are a lot of lines at a typical Foxconn factory in China. There’s the assembly line, where thousands of young people – typically high school dropouts – put together each and every part of an iPad. It’s tedious, mind-numbing work, and that’s why assembly line workers usually don’t stick around very long. They quit, and that necessitates another line: The hiring line outside a Foxconn factory is, at any given time, hundreds of applicants long, migrants from the countryside who arrive each day to replace workers who’ve quit. When you consider the manufacturer has a million workers – it’s China’s largest private employer – this labor cycle isn’t surprising.

But it is costly.

“The turnover rate is pretty high and it’s impossible to retain all our workers," says Li Yong Zhong, a manager at Foxconn's Chengdu plant, "But we’d like every employee to be able to develop and improve their knowledge, skills and income so that they’ll want to stay here.”

That’s the rationale behind what the company calls Foxconn University, a company-wide accredited university system that offers employees a chance at earning a high school diploma, a bachelor’s, a master’s or a PhD without leaving the factory campus.

Inside the classroom one afternoon, a professor teaches a computer animation class to students at Foxconn’s plant in Chengdu, a factory devoted to making iPads. Instead of assembling Apple products, each one of these workers is using an Apple computer to follow the professor’s instructions. Thirty-six year-old Ai Guo, an assembly line worker who spends his days inspecting iPads for flaws, sits in front of the class.

“I dropped out of school when I was 16," says Ai during a class break. "My family was very poor, and they needed me to help out on the farm.”

It's a typical story for the hundreds of millions of young rural Chinese who drop out of school to farm or find work at factories like Foxconn. Ai hopes to spend the next six years of his time away from work studying toward the equivalent of a high school diploma and then a bacehlor’s degree in Industrial Engineering. “With that, I’d like to get a promotion to start working on industrial automation and, of course, raise my salary," he says.

Foxconn’s university system offers 25 majors – most of them in engineering. The company has an agreement with more than 50 Chinese universities and colleges that send their professors each day to teach classes at its factories across China.

But it's not only Foxconn – in-house university systems are becoming a trend among China’s state-owned companies, says Richard Brubaker, founder of Collective Responsibility, an organization that trains companies in corporate social responsibility. Brubaker says he’s encouraged by Foxconn University – he says it shows the company sees its line workers as more than machines with 5-year shelf lives. “Many of these individuals could, if they were invested into, come into the organization at a much higher level, and much like a UPS driver becomes a CEO, they could become the future management and executives of the company and who know the company so intimately that they’re the ones who can look at risk, look at decisions very differently than an outsider could,” Brubaker says.

The development of an in-house university system comes at a pivotal moment for Foxconn. CEO Terry Gou is 63, and he’s thinking about his legacy. He’s moving the company away from making products for others and toward developing Foxconn’s own products.

“We want our employees to become more innovative and creative, more entrepreneurial,” says Foxconn’s Li Yong Zhong.

But so far, participation in Foxconn University is low: just 3 percent of Foxconn’s one million Chinese workers. Li assures me that will change. "Someday, every one of our employees will study at Foxconn University – we’ll no longer call them workers," he says. "We’ll call them students."

Foxconn's newest product: a college degree

Wed, 2014-07-30 11:36

There are a lot of lines at a typical Foxconn factory in China. There’s the assembly line, where thousands of young people – typically high school dropouts – put together each and every part of an iPad. It’s tedious, mind-numbing work, and that’s why assembly line workers usually don’t stick around very long. They quit, and that necessitates another line: The hiring line outside a Foxconn factory is, at any given time, hundreds of applicants long, migrants from the countryside who arrive each day to replace workers who’ve quit. When you consider the manufacturer has a million workers – it’s China’s largest private employer – this labor cycle isn’t surprising.

But it is costly.

“The turnover rate is pretty high and it’s impossible to retain all our workers," says Li Yong Zhong, a manager at Foxconn's Chengdu plant, "But we’d like every employee to be able to develop and improve their knowledge, skills and income so that they’ll want to stay here.”

That’s the rationale behind what the company calls Foxconn University, a company-wide accredited university system that offers employees a chance at earning a high school diploma, a bachelor’s, a master’s or a PhD without leaving the factory campus.

Inside the classroom one afternoon, a professor teaches a computer animation class to students at Foxconn’s plant in Chengdu, a factory devoted to making iPads. Instead of assembling Apple products, each one of these workers is using an Apple computer to follow the professor’s instructions. Thirty-six year-old Ai Guo, an assembly line worker who spends his days inspecting iPads for flaws, sits in front of the class.

“I dropped out of school when I was 16," says Ai during a class break. "My family was very poor, and they needed me to help out on the farm.”

It's a typical story for the hundreds of millions of young rural Chinese who drop out of school to farm or find work at factories like Foxconn. Ai hopes to spend the next six years of his time away from work studying toward the equivalent of a high school diploma and then a bacehlor’s degree in Industrial Engineering. “With that, I’d like to get a promotion to start working on industrial automation and, of course, raise my salary," he says.

Foxconn’s university system offers 25 majors – most of them in engineering. The company has an agreement with more than 50 Chinese universities and colleges that send their professors each day to teach classes at its factories across China.

But it's not only Foxconn – in-house university systems are becoming a trend among China’s state-owned companies, says Richard Brubaker, founder of Collective Responsibility, an organization that trains companies in corporate social responsibility. Brubaker says he’s encouraged by Foxconn University – he says it shows the company sees its line workers as more than machines with 5-year shelf lives. “Many of these individuals could, if they were invested into, come into the organization at a much higher level, and much like a UPS driver becomes a CEO, they could become the future management and executives of the company and who know the company so intimately that they’re the ones who can look at risk, look at decisions very differently than an outsider could,” Brubaker says.

The development of an in-house university system comes at a pivotal moment for Foxconn. CEO Terry Gou is 63, and he’s thinking about his legacy. He’s moving the company away from making products for others and toward developing Foxconn’s own products.

“We want our employees to become more innovative and creative, more entrepreneurial,” says Foxconn’s Li Yong Zhong.

But so far, participation in Foxconn University is low: just 3 percent of Foxconn’s one million Chinese workers. Li assures me that will change. "Someday, every one of our employees will study at Foxconn University – we’ll no longer call them workers," he says. "We’ll call them students."

Back-to-school sticker shock

Wed, 2014-07-30 09:52

The annual back-to-school spendathon is almost here. And for public-school parents, it’s going to be pricey.

Huntington Bank is out with its annual "backpack index," which tracks the cost of school supplies. The bad news: elementary school kids will need $642 in extras this year, middle-school kids will spend an additional $918, and high school students will get hit up for an additional $1,284.

Those estimates translate to an 11 percent jump, 20 percent jump, and 5 percent jump, respectively.

The biggest bumps are expected to come from higher standardized-testing fees, and fees for things like school trips, music classes and sports, according to Huntington. Many middle-school kids will also need a graphing calculator, which can run nearly $130.

Huntington didn’t include laptops or tablets in its index. But many parents will be facing extra costs for those, as well.

Since Huntington started tracking the cost of school supplies in 2007, the bank estimates they have increased 83 percent for elementary school students, 73 percent for middle school students and 44 percent for high school students.

Here’s a guide, from the group, on what you can expect this year.

NLRB says McDonald's can be considered joint-employer

Wed, 2014-07-30 06:00

McDonald’s could be held liable for wage-and-hour violations, and for obstructing union organizing, at its thousands of franchise restaurants across the country.

The National Labor Relations Board’s general counsel has ruled that McDonald’s can be considered a "joint-employer" along with its franchise owners in labor-law complaints, because the parent company plays a significant role in employment practices for fast-food workers at the franchisee-operated stores, which constitute 90 percent of the chain’s restaurants.

If upheld in subsequent NLRB proceedings (and further legal appeals, should there be any, by McDonald’s and its franchisees), the ruling could mean McDonald’s is legally responsible when franchise owners shortchange workers or lay them off after they protest for higher wages. The theory is that McDonald’s in part determines wage levels, work rules and scheduling patterns via the contracts it sets with franchisees, as well as the labor-management software and guidance it provides to maximize store-profitability.

Complaints about worker treatment in the ongoing campaign for $15-an-hour pay at fast-food restaurants, and for union representation, have been brought by the advocacy group Fast Food Forward, which is supported by the Service Employees International Union.

There are also class-action lawsuits being pursued in three states (California, New York and Michigan) over alleged violations by McDonald’s and its franchise owners. A lawyer for the class-action plaintiffs in California, Michael Rubin at Altshuler Berzon in San Francisco, said the NLRB ruling would strengthen those cases, which are also based on ‘joint-employer’ claims.

Meanwhile, a federal court in California has held Wal-Mart to be a joint-employer of temporary warehouse workers in a class-action lawsuit based on a similar argument — that Wal-Mart controls the employment conditions in the supply chain in which subcontractors and temporary staffing agencies operate.

Christine Owens of the National Employment Law Project says the NLRB and some courts are acknowledging the increasing use of contingent and temporary workers in the corporate ecosystem that many large corporations create around them.

These recent interpretations of U.S. labor law, says Owens, may be “catching up with how the economy is changing. So many working people are no longer employed by the company that appears to be the main employer. There’s more than one employer really calling the shots.”

McDonald’s has vowed to fight the NLRB ruling, saying its franchisees set wages and working conditions. A statement from the company says the decision "goes against decades of established law regarding the franchise model in the United States."

Groups representing restaurant owners and franchisees have also blasted the decision, saying it jeopardizes the franchising system.

But former Penn State labor-law professor Ellen Dannin, author of "Taking Back the Workers’ Law," isn’t so sure.

“People seemed a little over the top” in their reactions to the NLRB general counsel’s determination, she said. “Just because the general counsel has issued a complaint doesn’t necessarily lead to the kinds of problems that they’re worried about.”

Dannin also expressed skepticism that the ruling, linking McDonald’s more directly to labor relationships and conditions at its franchises, will necessarily make union organizing against chains like McDonald’s any easier. 

We have a tag for "Sharknado" stories

Wed, 2014-07-30 06:00

It's hard to imagine where the two circles of "Marketplace coverage" and "Sharknado" intersect on a venn diagram. But overlap they do, and in suprisingly relevant ways.

That's because the SyFy network's made-for-tv movie is something of a phenomenon from a financial perspective. With a relatively small budget — around $1-2 million — it grew from a disappointing first airing to internet sensation to big screen flick

"Everybody asks, you know, why did this happen?" says director Anthony C. Ferrante. "You can't ask why; it's 'Sharknado.' It's a movie about sharks and a tornado, and it just hit everybody's sweet spot for whatever reason this summer."

It didn't hit a sweet spot for actor Ian Ziering initially. That is, until health insurance came into play.

Ziering was reluctant to star in the original film, but when his wife urged him to consider the union health insurance he would be eligible for by doing the movie, he reconsidered.

With a pregnant wife, Ziering put down his reservations about the cheesy script, and picked up a shark chainsaw.

So it turns out Sharknado isn't just a story about a tornado dropping sharks from the sky.

It's about financial success, crowdsourced marketing and health care. Go figure.

By the way, Sharknado 2 premieres Wednesday.

PODCAST: Video game lobby

Wed, 2014-07-30 03:00

First up, more on the latest GDP report, which showed a strong 4% growth in the 2nd quarter. Plus, a key ruling against McDonald's gives hope to those looking to force the company's franchisees to raise their wages to $15 an hour. Also, the latest lobbying force to hit Washington comes from an unexpected source: gamers. 

Video game lobby answers 'call of duty' on the Hill

Wed, 2014-07-30 02:00

Meet the voice of  video game makers on Capitol Hill:  Erik Huey.

A "Donkey Kong" champion and "Madden" addict, he's now chief lobbyist for the Entertainment Software Association, the main trade group for the gaming business in Washington.

“I feel like Mario the fix-it man, the plumber, making sure things flow correctly. But I think more often than not, I feel like Sonic the Hedgehog, running around with frenetic energy," he says.

Huey and his staff have just finished discussing a plan to highlight gaming industry jobs in congressional districts. 

Now, Huey is off to the corridors of Capitol Hill, first to visit Rep. Joe Garcia, then Rep. Jim McGovern.

Members of Congress listen to Huey. The Center for Responsive Politics says the Entertainment Software Association spent almost $5.5 million on lobbying in 2013. 

“That’s pretty serious lobbying money,” says Viveca Novak, a spokeswoman for the Center.

Scrolling through spending reports, Novak says there was a spike in the video game lobby’s spending as Congress considered a bill mandating research into whether violent video games cause actual violence.   

“Almost half of their reports in 2013 mentioned the Violent Content Research Act. It’s clearly something they were very concerned about,” says Novak.

The bill is now stalled in the Senate.

The video game industry has lobbied on online piracy and privacy, too. And it's not just relying on shoe leather. The lobbyists are trying to get gamers to help make their case online. But it’s not easy. 

“It’s a little bit like herding cats with a dog in the room,” says Andrew Rasiej, the founder of  Personal Democracy Media, and chairman of an annual conference on politics and technology.

(Courtesy:OpenSecrets.org)

Gamers don’t always support the tech lobby’s positions. Still, Erik Huey says his association has organized about 600,000 gamers into a group called the Video Game Voters Network.

When a congressman recently made disparaging remarks about gaming, Huey says thousands of group members responded.

“Four thousand constituents calling in — that’s quite powerful,” he says.

Huey says when it works, the Video Game Voters Network can be a potent weapon. Most other lobbyists don’t have such an active, online base that's used to combat. Or, at least virtual combat.

Drop in uninsured is a mixed blessing for hospitals

Wed, 2014-07-30 02:00

Some of the big, urban hospitals around the country – the "safety net" hospitals that serve the poor – are getting hit with a dose of good news.

Under the Affordable Care Act, the number of uninsured patients is dropping sharply. Hospitals like Our Lady of Lourdes in Camden, New Jersey, are now spending millions less on providing charity care.

William Castro is one of thousands of patients Lourdes had treated for free. A car accident in 2010 left him suffering with chronic back pain. 

“You know what it is... you’re a grown man and it’s so bad you have to take hot showers, you are crying at night,” says Castro.

Without health insurance, Castro made monthly visits to the hospitals where doctors scribbled out prescriptions.

The 46-year-old says he struggled to scrape up the money to buy his meds.

“You are talking about $300-$350 a month. And a person that’s not able to work... can you imagine, having zero? Needing this medication, and have to count on your family, loved ones, friends... then next month you have to do it all over again?” he says.

Now on Medicaid, Castro has his prescriptions covered – no co-pays – and is hoping to enroll in a pain management course.

One by one, Lourdes CEO Alexander Hatala has watched his uninsured patient population fall from 8.5 percent of patients last year to 3 percent.

That’s a $3.5 million of savings at the Camden hospital.

“$3.5 million can make a difference between breaking even or operating in the red,” Hatala says.

What’s happening in Camden is happening around the country – at least for hospitals in states that expanded Medicaid under Obamacare.

This summer the Colorado Hospital Association – looking at stats from 30 states – found a 30 percent jump in Medicaid charges, and a 30 percent drop in charity care costs.

That puts hospitals on track to save billions this year.

“Yeah, there’s more money. But it also comes with a caveat,” says Ellen Kugler, Executive Director of the National Association of Urban Hospitals. “There are a number of federal cuts coming and many more that are coming.”

Federal, state, and local government funding currently covers about 65 percent of charity care costs. Under the ACA, the plan has been to reduce that funding  - at least at the federal level - as more Americans gain insurance coverage.

In this new landscape, the Urban Institute’s Teresa Coughlin says these hospitals will now have to fight to keep their newly-insured patients: “Do they have contracts with [insurers]? Are they able to retain patients who became newly insured and still continue to come to their facility? Or will they go elsewhere now that they have a choice?”

Coughlin says some of these hospitals are considered second-tier facilities, and to keep their doors open, they must build relationships with insurers and convince consumers they offer excellent service for a fair price. 

A whole new world, says Coughlin - a world where not all safety net hospitals may survive.

What the time of day says about your earnings report

Wed, 2014-07-30 02:00

Humana is among the companies reporting its quarterly numbers on Wednesday as earnings season continues. The health insurance giant always releases its earnings before the markets open. Whole Foods reports the same day, but the grocery chain always waits until after the closing bell.

If you've ever wondered why companies go one way or the other, it's worth noting the Securities and Exchange Commission doesn’t care what time of day companies report their quarterly earnings.

So it comes down to factors like: what’s the best time to put the CEO on the phone with investors and analysts?  

"Some people are morning people and some people are afternoon people," says Jeff Morgan, president of the National Investor Relations Institute. He adds that once a company picks a time, it sticks. "We want to be sure that whatever we do every quarter, we do the same thing the next quarter, so that there’s not anybody wondering why we’re making changes."

A recent study found that 66 percent of companies hold earnings calls at the same time every quarter. Co-author Elizabeth Demers, an associate professor of accounting at the University of Virginia's Darden School of Business, says executives should avoid afternoon calls, when they might be hungry and cranky.

"What we find is that as the tone of the calls becomes more negative, the share price returns are also more negative," Demers says. "In other words, the stock price responds to the negativity that's being emitted on the calls." 

Demers says size matters, too; a lot of small companies reporting earnings have to take whatever slot they can get. 

The contents of the internet, via satellite

Wed, 2014-07-30 01:00

Outernet is a new project aims to deliver online content, but not the internet itself—only its information. The method? Large satellites and simple radio waves.

If it works, it might be a useful way to deliver information to people who don't have regular access.

“Instead of providing direct internet access to everyone, we’re providing the content that exists on the internet,” says Syed Karim, founder of the project. 

The satellites will broadcast the data to anyone with a receiver who can then turn them into files viewable in a browser.

Currently, the site will only be updating pages such as Wikipedia on a weekly or biweekly basis. As bandwidth increases, a page can be “rebroadcast” — re-transmitted — and it can be locally updated for those who are “listening” to it.

The project expects to launch in a few weeks.

Our big fat American refrigerators

Tue, 2014-07-29 13:29

Apropos of my discussion with Nichola Twilley about refrigerators in China, Gawker reported today that a fridge in the U.S. is, on average, many cubic feet bigger than fridges in other countries.

Some are even twice the size of your average fridge in Europe.

Not only do big refrigerators cost us more money because they take more power to cool, but they also may "encourage unhealthy eating habits," says Gawker reporter Dan Nosowitz.

He cites a couple of studies including one that says, "families that have more food in the house eat more food."

Another one says that "the average American throws out about 25 percent of food and beverages purchased."

What happens if Argentina defaults?

Tue, 2014-07-29 13:29

It’s looking increasingly likely that Argentina will default on some of its bonds.

How could that happen and what happens next? Here's what we know:

Argentina has defaulted before. After Argentina defaulted in 2001, it told its creditors: "We’ll give you 30 cents on the dollar: take it or leave it." Back then, 93 percent of those creditors took it and 7 percent left it. A tiny percentage of those holdouts  — who, incidentally, were not the original lenders, but rather funds that had purchased the distressed debt from the original creditors — sued.

They claimed they hadn't agreed to anything, telling Argentina that the terms of the contract (a term called “parity”) say 'if you pay those other guys, you have to pay us. And you have to pay us the whole amount on the dollar.' They won. Argentina now has to pay.

An Argentine default won’t cause a domino effect. Just like with people, for one country to catch another country’s economic bug, it has to be exposed to it.  

Stephen Kaplan, assistant professor of political science at George Washington University explains: “In Argentina’s case, they’ve been shut out of global capital markets for quite some time.”

It could still make things difficult for other countries trying to get out of debt. There’s no such thing as bankruptcy court in the world of sovereign debt. So there’s not an orderly system when countries can’t pay up. Many countries had been working on the assumption that if they got most of their creditors to say it's OK to be paid back less than they were owed, then the matter would be settled and they could move on. 

What the Argentine case means is that unless it’s spelled out in the contract, that assumption doesn’t work, and a minority creditor can squelch a deal.  

“It says to all investors, 'instead of settling after a country is facing financial crisis... hold out and [don't] allow a debt restructuring to take place,'” says Eric LeCompte, executive director of Jubilee USA, a religious group that promotes international financial reform.

Argentina is damned if it defaults... Argentina has been trying hard recently to get back into the good graces of the international financial community and a default would dash those efforts.

As Henry Weisburg, a partner at law firm Shearman & Sterling who specializes in cross-border financial disputes, says “they have a large number of different kinds of bonds and instruments out there and virtually all of them are going to have cross default provisions.”

That means if the country defaults on one piece of debt, it defaults on another piece of debt, and those creditors can call in their loans. That results in a difficulty when Argentina wants to find money for financing trade and “in certain circumstances even commercial borrowers in Argentina will have a hard time raising money.” Lawyers for Argentina have suggested defaulting would allow them to restructure their debt in Europe or Argentina, and avoid the laws in the U.S. that made restructuring difficult in this situation.   

...but it's also damned if it doesn’t.  Argentina’s fear is that if it pays these creditors, it will encourage all the other holdout creditors to sue as well. 

“The UN Conference on Trade and Development noted that if Argentina paid these holdout creditors in full, it would essentially leave them open to another $135 billion in liabilities,” says LeCompte. “The entire Argentine reserve is less than $30 billion at this point.”

1 in 3 Americans has past due debt

Tue, 2014-07-29 13:29

This just in from the Department of Phone-Calls-You’d-Rather-Not-Get: one in three Americans with credit files had some kind of debt in collection last year, according to a new report.  All told, that's about 77 million consumers who are poised to get one of those inherently stressful calls from a debt collector.

The Urban Institute partnered with Encore Capital Group, the country's largest publicly traded consumer debt buyer, on the study. To understand the significance of these findings, here’s a little context:

When a debt goes into collection, it basically means the original people you owe money to (maybe a bank or a credit card company or a doctor's office) have given up trying to get it back on their own and a third party is now involved. In some cases, the original creditor sends the debt to an internal collections department to handle it. In other cases, they hire an outside agency to collect for them. In still other cases, the debt is sold to another company altogether. 

The collector is usually paid on commission, based on how much of the debt can be recovered. Meaning, if you have a debt that's sent in to collection, you basically become a name on a spreadsheet for the debt collector.

Gustavo Montoya, an emergency room nursing assistant in San Diego, ended up on one of these debtor spreadsheets a few years ago. He'd taken a loan for $3,000 from Wells Fargo to help pay for living expenses while he was in school. Then, in 2011, he was contacted by a different company, one he'd never heard of, who had bought his debt. 

For two years, the new company called him every day, until another one started calling instead. Montoya, who was unemployed at the time, says he tried to explain his situation to the collectors that called him. 

“The economy was still bad," Montoya said, "I was finding difficulty getting employment. It was really stressful."

Graphic courtesy of the Urban Institute.

Beyond the stress, falling into collection can have big repercussions, says Suzanne Martindale, a staff attorney with Consumers Union. It can affect your credit score, your ability to get a loan in the future, even your ability to get a job. The growing practice of passing debt from one collector to another, or selling it to another debt buyer, means that in a matter of months there can be several different people from different companies claiming you owe debt to them.

“Many consumers I’ve spoken with are just utterly confused — 'who’s telling me the truth here, what are my rights, and how can I resolve the problem and just get on with my life?'”

Mark Schiffman, with the Association of Credit and Collection Professionals, an industry group, says the collections process can be stressful. but it can also be an important step in keeping the economy moving.

“Businesses use those moneys to pay their bills, to pay rent, to keep operational costs, to pay salaries.”

Even once the original creditor has written off a debt as a loss, and sold it to a third party, the act of debt collection itself can be big business too.

Graphic by Shea Huffman/Marketplace

1 in 3 Americans have past due debt

Tue, 2014-07-29 13:29

This just in from the Department of Phone-Calls-You’d-Rather-Not-Get: one in three Americans with credit files had some kind of debt in collection last year, according to a new report.  All told, that's about 77 million consumers who are poised to get one of those inherently stressful calls from a debt collector.

The Urban Institute partnered with Encore Capital Group, the country's largest publicly traded consumer debt buyer, on the study. To understand the significance of these findings, here’s a little context:

When a debt goes into collection, it basically means the original people you owe money to (maybe a bank or a credit card company or a doctor's office) have given up trying to get it back on their own and a third party is now involved. In some cases, the original creditor sends the debt to an internal collections department to handle it. In other cases, they hire an outside agency to collect for them. In still other cases, the debt is sold to another company altogether. 

The collector is usually paid on commission, based on how much of the debt can be recovered. Meaning, if you have a debt that's sent in to collection, you basically become a name on a spreadsheet for the debt collector.

Gustavo Montoya, an emergency room nursing assistant in San Diego, ended up on one of these debtor spreadsheets a few years ago. He'd taken a loan for $3,000 from Wells Fargo to help pay for living expenses while he was in school. Then, in 2011, he was contacted by a different company, one he'd never heard of, who had bought his debt. 

For two years, the new company called him every day, until another one started calling instead. Montoya, who was unemployed at the time, says he tried to explain his situation to the collectors that called him. 

“The economy was still bad," Montoya said, "I was finding difficulty getting employment. It was really stressful."

Graphic courtesy of the Urban Institute.

Beyond the stress, falling into collection can have big repercussions, says Suzanne Martindale, a staff attorney with Consumers Union. It can affect your credit score, your ability to get a loan in the future, even your ability to get a job. The growing practice of passing debt from one collector to another, or selling it to another debt buyer, means that in a matter of months there can be several different people from different companies claiming you owe debt to them.

“Many consumers I’ve spoken with are just utterly confused — 'who’s telling me the truth here, what are my rights, and how can I resolve the problem and just get on with my life?'”

Mark Schiffman, with the Association of Credit and Collection Professionals, an industry group, says the collections process can be stressful. but it can also be an important step in keeping the economy moving.

“Businesses use those moneys to pay their bills, to pay rent, to keep operational costs, to pay salaries.”

Even once the original creditor has written off a debt as a loss, and sold it to a third party, the act of debt collection itself can be big business too.

Graphic by Shea Huffman/Marketplace

1 in 3 Americans have past due debt. What this means.

Tue, 2014-07-29 13:29

This just in from the Department of Phone-Calls-You’d-Rather-Not-Get: one in three Americans with credit files had some kind of debt in collection last year, according to a new report.  All told that's about 77 million consumers who were poised to get one of those inherently stressful calls from a debt collector.

The Urban Institute partnered with Encore Capital Group, the country's largest publicly traded consumer debt buyer, on the study. To understand the significance of these findings, here’s a little context:

When a debt goes in to collection, it basically means the original people you owe money to — maybe a bank or a credit card company or a doctor's office — have given up trying to get it back on their own and a third party is now involved. In some cases, the original creditor sends the debt to an internal collections department to handle it. In other cases, they hire an outside agency to collect for them. In still other cases, the debt is sold to another company altogether. 

The collector is usually paid on commission, based on how much of the debt can be recovered. Meaning, if you have a debt that's sent in to collection, you basically become for the debt collector, a name on a spreadsheet.

Gustavo Montoya, an emergency room nursing assistant in San Diego, ended up on one of these debtor spread sheets a few years ago. He'd taken a loan for $3,000 from Wells Fargo to help pay for living expenses while he was in school. Then, in 2011, he was contacted by a different company, one he'd never heard of, who had bought his debt. 

For two years, the new company called him every day, until another one started calling instead.  Montoya, who was unemployed at the time, says he tried to explain his situation to the collectors that called him.  “The economy was still bad," Montoya said, "I was finding difficulty getting employment. It was really stressful."

Beyond the stress, falling into collection can have big repercussions, says Suzanne Martindale, a staff attorney with Consumers Union. It can affect your credit score, your ability to get a loan in the future, even your ability to get a job.  And the growing practice of passing debt from one collector to another, or selling it to another debt buyer, means that in a matter of months there can be several different people from different companies claiming you owe debt to them.

“Many consumers I’ve spoken with are just utterly confused—who’s telling me the truth here, what are my rights, and how can I resolve the problem and just get on with my life?”

Mark Schiffman, with the Association of Credit and Collection Professionals, an industry group, says the collections process can be stressful. But that it can also be an important step in keeping the economy moving.

“Businesses use those moneys to pay their bills, to pay rent, to keep operational costs, to pay salaries.”

But even once the original creditor has written off a debt as a loss, and sold it to a third party, the act of debt collection itself can be big business too.

New sanctions against Russia could hurt US firms

Tue, 2014-07-29 13:29

The European Union is joining the U.S. in imposing tough, new sanctions against Russia, which continues to support separatists in eastern Ukraine.

The new measures include an arms embargo and restricted sales of technology and equipment for Russia's oil industry.

In a big change, the new sanctions target sectors rather than just individuals in President Vladimir Putin's inner circle.

“The shootdown of the Malaysian aircraft I think has changed the equation,” says Kenneth Yalowitz, a former U.S. ambassador to Belarus and Georgia, and now a global fellow with the Woodrow Wilson Center.

But the new EU sanctions and the U.S. ones already in place haven’t hit American businesses as badly as some feared.

“U.S. companies, if anything, breathed a little sigh of relief today that they’re not going to be held out relative to their European counterparts,” says Doug Rediker, a visiting fellow at the Peterson Institute for International Economics.

Russia is not a big trading partner with the U.S. Some companies like ExxonMobil and Citigroup might suffer a bit, but the biggest risk is Russian retaliation against big brands like McDonalds, claiming things like "'some health concerns' — in quotes — that were expressed by Russian authorities,” says Rediker.

Other potential targets include companies like Visa, MasterCard, and big U.S. accounting firms.

Others see little damage to U.S. companies so far.

“Retaliatory sanctions against businesses in the West, to the extent there have been any, they haven’t been very impactful,” says David Levine, partner with the law firm McDermott, Will & Emery.

A big question now is whether Western governments will have the stomach to continue sanctions for moral reasons, or whether trade and commercial interests will win out.

Competitive swimming struggles to stay afloat

Tue, 2014-07-29 12:42

During these hot summer days, lots of kids are taking advantage of the closest swimming pool, but only a few are diving in for the local swim team. That’s why USA Swimming has kicked off an aggressive campaign to remind kids that swimming is, in their words, “the funnest sport there is.”

One of the ads in the SwimToday campaign shows a girl wearing goggles, dropping into a pool of blue water in slow motion. Then, you hear a voice saying, “Basketball... softball... cannonball... Which sounds the most fun to you?”

Matt Farrell is Chief Marketing Officer of USA Swimming. He says he wants kids to know there are other sports to consider. Farrell says their survey shows parents are one major problem when it comes to getting kids in the pool - 80 percent of parents overlook swimming as an organized sport.

“It was as if parents said, 'I’ve taught my kid to swim, I’ve checked the box, I’m a good parent, I’ve made them safe. Now let’s go play soccer, let’s play basketball,'” says Farrell.

Misha Neal, 15, of Durham, North Carolina swims for her high school team and for the YMCA. She remembers when it was time to make that big decision.

“I was doing a lot of sports at the time... I was also in gymnastics and track, and I had to pick. I remember Daddy telling me that I was better at swimming,” she says.

Misha has thrived, often coming in number one in the 50 Freestyle. USA Swimming is working to remind more kids of all the positives the sport has to offer, like teamwork, confidence, health and fitness. 

Mark Anthony Neal, Misha’s dad, says Misha adores her teammates and has overcome the obstacles of swimming competitively.

Even the hair issue: "We knew that our daughter was serious about swimming, you know, when she was told matter of factly she wouldn’t be able to get a perm, she wouldn’t be able to put any chemicals in her hair, [and] she said 'That’s fine.'”

 The SwimToday ads are making the rounds on social media. They first television airing will be during the upcoming Phillips 66 National Championships.

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