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Updated: 32 min 52 sec ago

Homeownership rate dips to lowest level in 20 years

Fri, 2015-01-30 12:35

New statistics from the Commerce Department show that the home-ownership rate has fallen to its lowest level in 20 years.

63.9 percent of U.S. households owned their homes in Q4 2014, down from a rate of 65.1% one year earlier. The last time homeownership was that low was in 1994. "We just have homeownership in our DNA and that's why we're so focused on this figure,” says IHS Economist Patrick Newport.

Given the national obsession with home ownership, this may seem like bad news, but the thinking on the importance of home ownership is changing, as well as what it says about the broader health of the U.S. economy.

Newport points out that previous levels of home-ownership were probably too high, due in part to all of the crazy loans and mortgage deals that banks were offering.  Homeownership is kind of a squishy measure of economic health anyway. "It’s not bad news for the economy,” says Newport, “it’s a matter of who owns the paper, the title to the home that you live in, and what we're seeing now is a trend toward landlords owning that piece of paper, not the homeowner."

Newport says the rate may yet dip even farther, since many foreclosures have yet to work their way through the system.

Another explanation for the dip in home-ownership might be because there are just more households  in the U.S. — and by “household,” we're talking about the government definition, meaning a person, or couple, living on their own. 

"Young people are going off on their own, getting out of their parents basements,” says Washington University Economist Steve Fazzari. More households means people are getting jobs. “So, if we have more households for that reason, that's really a sign of some good economic activity," says Fazzari.

The real concern with housing, he says, should be construction and new housing starts, which are lagging, and have been the key to every economic recovery since World War II.

Wages and benefits see highest bump in six years

Fri, 2015-01-30 12:35

The U.S. Bureau of Labor Statistics Employment Cost Index says wages, salaries and benefits grew at an annual rate of 2.2 percent in 2014.

Economists were happy to see improvements in an index regarded as a key reflection of the labor market. “If I were going to pick one measure to look at, it would be this one,” says Mark Zandi, chief economist at Moody’s Analytics. “This is giving us a pretty definitive read on what’s going on in the labor market with regard to wages and compensation.”

Zandi likes the index because it gives a consistent look at compensation over time. The Bureau of Labor Statistics surveys a rotating slate of firms on their employment costs, and unlike another measure of hourly wages, the index doesn’t get skewed as much by shifts in employment into, say, low-wage industries or occupations.

Employer costs are still growing slower than they were before the Great Recession. But the growth rate last year did outpace inflation, which is clocking in around 1.3 percent.

Workers’ compensation is improving as the unemployment rate falls, the available pool of workers shrinks and employers have to start spending more to get new workers in the door. “We're not all the way back to full-employment yet, but we've been for some time moving in that direction, and if we continue to move in that direction we'll see more upward pressure on wages,” says Alan Krueger, Princeton University economist.

The benefits side of the Employment Cost Index grew faster last year than wages and salaries, which breaks with recent trends, Krueger says. “We had seen health care costs growing so slowly – really exceptionally slowly – compared to the history of health care cost growth; benefits were not growing faster than wages [again] until recently,” he says.

Improvements in the benefit side of the equation will matter less to workers in the short-term, says Till von Wachter, a UCLA economist. He says the wage and salary spikes will have more immediate consequences. “Higher wages could lead to higher spending,” he says.

Wages and benefits see highest bump in 6 years

Fri, 2015-01-30 12:35

The U.S. Bureau of Labor Statistics’ Employment Cost Index says wages, salaries and benefits grew at an annual rate of 2.2 percent in 2014.

Economists were happy to see improvements in an index regarded as a key reflection of the labor market. “If I were going to pick one measure to look at, it would be this one,” says Mark Zandi, chief economist at Moody’s Analytics. “This is giving us a pretty definitive read on what’s going on in the labor market with regard to wages and compensation.”

Zandi likes the index because it gives a consistent look at compensation over time. The BLS surveys a rotating slate of firms on their employment costs, and unlike another measure of hourly wages, the index doesn’t get skewed as much by shifts in employment into, say, low-wage industries or occupations.

Employers costs are still growing slower than they were before the Great Recession. But the growth rate last year did outpace inflation, which is clocking in around 1.3 percent.

Workers’ compensation is improving as the unemployment rate falls, the available pool of workers shrinks and employers have to start spending more to get new workers in the door. “We're not all the way back to full-employment yet, but we've been for some time moving in that direction, and if we continue to move in that direction we'll see more upward pressure on wages,” says Princeton University economist Alan Krueger.

Krueger notes that the benefits side of the Employment Cost Index grew faster last year than wages and salaries. Krueger says that breaks with recent trends, “We had seen health care costs growing so slowly — really exceptionally slowly — compared to the history of health care cost growth; benefits were not growing faster than wages [again] until recently,” he says.

Improvements in the benefit side of the equation will matter less to workers in the short-term, says Till von Wachter, an economist at the University of California Los Angeles. He says the wage and salary spikes will have more immediate consequences. “Higher wages could lead to higher spending,” he says.

The accidental origin of the $15 minimum-wage movement

Fri, 2015-01-30 12:02

President Obama wants lawmakers to raise the federal minimum wage from $7.25 to $10.10 an hour.  But Congress hasn't voted to increase the minimum wage since 2007, and there’s little hope it will now.

It’s a different story at the local level.

In just the last year, Seattle and San Francisco both passed measures to gradually increase their minimum wages to $15.  And the Los Angeles City Council is considering a $15.25 wage.

Those cities are following in the footsteps of SeaTac, Washington, a tiny town just outside Seattle, and home to the region’s biggest airport. A year ago, it became the first city in America to have a $15 minimum wage.

“SeaTac will be viewed someday as the vanguard, as the place where the fight started,” union organizer David Rolf, who led SeaTac’s $15 campaign, said in a victory speech in November 2013.

That day is already here, but the funny thing is Rolf never set out to raise SeaTac’s minimum wage, much less start a national movement. His original goal was to unionize workers at Sea-Tac airport.

When employers – led by Alaska Airlines – played hardball, Rolf put a $15 minimum wage proposition on the city ballot as leverage.

It won by just 77 votes.

“Things could have gone very different had the airlines said we’ll bargain a contract,” Rolf says. “Those workers may have had $15, but it might not have been on the ballot. It would have been in the union contract, and it would have just been for those workers.”

As it turns out, because of a court challenge it’s actually those airport workers who are the only ones in SeaTac not making at least $15 an hour. But the $15 minimum wage movement soon spread, to Seattle last June, and to San Francisco in November.

“It was not yet with an eye on being some sort of domino that fell and leveraged similar victories across the country, but I think people are proud that that’s what happening,” Rolf says.

And surprised, says Peter Dreier, a professor of politics at Occidental College.

“A couple years ago the idea of a $15 minimum wage would have been considered outrageous,” Dreier says.

So what changed?

There’s the $15 number itself, nice and round, easy to fit on a bumper sticker. The figure first came to people’s attention in a series of strikes by fast-food workers that started in 2012. The workers didn’t achieve their goal of unionization, but $15 stuck.

There’s also the fact that post-recession, many voters have become more concerned about income inequality, says Paul Sonn, the National Employment Law Project’s general counsel.

“It’s clearly a response to the economy’s tilt to low-wage jobs, which is hitting cities like L.A. hard, which are seeing wages flat or falling but at the same housing and living costs are continuing to rise,” Sonn says.

Unions say they hope the $15 wage can spread to every state, but labor historian Nelson Lichtenstein is skeptical. “I don’t think having high wages in a few cities will mean it will spread to red state America,” Lichtenstein says.

Oklahoma recently banned any city from setting its own minimum wage, joining at least 12 other states with similar laws.

In November, voters in four Republican-leaning states – Alaska, Arkansas, South Dakota, and Nebraska – did approve higher minimum wages, but they weren’t close to $15.

Having a patchwork of local wage standards is bad for workers, Lichtenstein says.

“One of the laws of labor history is that you can’t a strong movement in one place and have the rest of the country hostile to it,” he says. “Eventually the strength of that labor movement will be drained away as employers do in fact move.”

Whether local minimum wages cause businesses to pack up and move somewhere cheaper is hotly debated among economists.

A University of California, Berkeley study predicts small clothing manufactures could leave L.A. if the minimum wage is hiked. But no one really knows, because the $15 wage movement has just gotten started.

The accidental origin of the $15 minimum wage

Fri, 2015-01-30 12:02

President Obama wants lawmakers to raise the federal minimum wage from $7.25 to $10.10 an hour.  But Congress hasn't voted to increase the minimum wage since 2007, and there’s little hope it will now.

It’s a different story at the local level.

In just the last year, Seattle and San Francisco both passed measures to gradually increase their minimum wages to $15.  And Los Angeles’ city council is considering a $15.25 wage.

Those cities are following in the footsteps of SeaTac, Washington, a tiny town just outside Seattle, and home to the region’s biggest airport. A year ago, it became the first city in America to have a $15 minimum wage.

“SeaTac will be viewed someday as the vanguard, as the place where the fight started,” says union organizer David Rolf, who led SeaTac’s $15 campaign, in a victory speech in November 2013.

That day is already here, but the funny thing is Rolf never set out to raise SeaTac’s minimum wage, much less start a national movement. His original goal was to unionize workers at SeaTac airport.

When employers – led by Alaska Airlines - played hardball, Rolf put a $15 minimum wage proposition on the city ballot as leverage.

It won by just 77 votes.

“Things could have gone very different had the airlines said we’ll bargain a contract,” Rolf says. “Those workers may have had $15, but it might not have been on the ballot. It would have been in the union contract, and it would have just been for those workers.”

As it turns out, because of a court challenge it’s actually those airport workers who are the only ones in SeaTac not making at least $15 an hour. But the $15 minimum wage movement soon spread, to Seattle last June, and to San Francisco in November.

“It was not yet with an eye on being some sort of domino that fell and leveraged similar victories across the country, but I think people are proud that that’s what happening,” Rolf says.

And surprised, says Peter Dreier, a professor of politics at Occidental College.

“A couple years ago the idea of a $15 minimum wage would have been considered outrageous,” Dreier says.

So what changed?

There’s the $15 number itself, nice and round, easy to fit on a bumper sticker. The figure first came to people’s attention in a series of strikes by fast food workers that started in 2012. The workers didn’t achieve their goal of unionization, but fifteen dollars stuck.

There’s also the fact that post-recession, many voters have become more concerned about income inequality, says Paul Sonn, The National Employment Law Project’s General Counsel.

“It’s clearly a response to the economy’s tilt to low-wage jobs which is hitting cities like L.A. hard, which are seeing wages flat or falling but at the same housing and living costs are continuing to rise,” Sonn says.

Unions are hopeful the $15 wage can spread to every state, but labor historian Nelson Lichtenstein is skeptical.

“I don’t think having high wages in a few cities will mean it will spread to red state America,” saysLichtenstein.

Oklahoma recently banned any city from setting its own minimum wage, joining at least 12 other states with similar laws.

In November, voters in four Republican leaning states — Alaska, Arkansas, South Dakota, and Nebraska  - did approve higher minimum wages, but they weren’t close to fifteen dollars.

Lichtenstein says having a patchwork of local wage standards is bad for workers.

“One of the laws of labor history is that you can’t a strong movement in one place and have the rest of the country hostile to it,” he says. “Eventually the strength of that labor movement will be drained away as employers do in fact move.”

Whether local minimum wages cause businesses to pack up and move somewhere cheaper is hotly debated among economists.

A University of California, Berkeley study predicted small clothing manufactures could leave L.A. if the minimum wage is hiked.  But no one really knows, because the $15 wage movement has just gotten started.

Fun fact Friday: How green are thy Super Bowl advertisers

Fri, 2015-01-30 11:47

Fun fact: Sunday’s Super Bowl commercials include 15 first-time advertisers.

Among the newcomers: Avocados From Mexico, the first fresh produce brand to advertise during the Super Bowl, and Always, a brand of feminine hygiene products.

New brands take a chance with Super Bowl ads

Fun fact: You’ve heard of leap year, but soon you will experience a tinier, shorter, more adorable time-adjustment: the leap second.

On June 30, clocks around the world will add one second to their time.

The leap second, deep space and how we keep time

Fun fact: The Federal Communications Commission is ruling on net neutrality in less than a month.

Marketplace’s Paddy Hirsch breaks down everything you need to know about the formally incomprehensible issue with just a few markers, a whiteboard and a delightful Irish accent.

Net neutrality: Whole lot of drama in those two words

Fun fact: Havard University raised $1.16 billion last year.

Yes, that’s a record.

Schools rake in record donations ... unequally

Fun fact: For the first time, the Sundance Film festival showed a film made with the help of virtual reality technology.

A consumer version may be around the corner, according to Brendan Iribe, CEO of Oculus VR.

The movie (literally) in my mind

Tech IRL: The trouble with bubbles? They pop.

Fri, 2015-01-30 11:22

Are we in a bubble, or are we not in a bubble? That is the question — at least if we're talking tech stocks. Recently, tech startups are getting valuations of epic proportions, which could cause individual investors to question if his or her 401k and pension funds are safe.

Katie Benner, a tech columnist with Bloomberg View, says that if you're one of those individual investors, you probably shouldn't worry.

"Most of it is not happening in the public stock markets. It's happening in the private company markets," she says.

Companies that are experiencing an influx of money from investors, like Airbnb, Uber and Square, aren't publicly traded.

Here's partial list of recent startup valuations, courtesy of the Wall Street Journal:

  • Xiaomi: $46 billion
  • Uber: $41.2 billion
  • Snapchat: $10 billion
  • Airbnb: $10 billion
  • Dropbox: $10 billion
  • Square: $6 billion
  • Pinterest: $5 billion
  • Spotify: $4 billion

Tech IRL: The problem with tech bubbles? They pop

Fri, 2015-01-30 11:22

Are we in a bubble, or are we not in a bubble? That is the question ... at least if we're talking tech stocks. 

Recently, tech startups are getting valuations of epic proportions, which could cause individual investors to question if his of her 401k and pension funds are safe.

Katie Benner, a tech columnist with Bloomberg View, says that if you're one of those individual investors, you probably shouldn't worry.

"Most of it is not happening in the public stock markets. It's happening in the private company markets," she says.

Companies that are experiencing an influx of money from investors, like Airbnb, Uber and Square, aren't publicly traded.

Here's partial list of recent startup valuations, courtesy of the Wall Street Journal:

Xiaomi: $46 billion

Uber: $41.2 billion

Snapchat: $10 billion

Airbnb: $10 billion

Dropbox: $10 billion

Square: $6 billion

Pinterest: $5 billion

Spotify: $4 billion

Hidden homeless left out of the economic recovery

Fri, 2015-01-30 09:34

The economy looks like it's rebounding. Stocks are up, corporate earnings are rising, but not everyone feels the effects. 

The Department of Housing and Urban Development says the most common length of time that someone is homeless is one or two days, and half of the people who enter a homeless shelter will leave within 30 days, never to return. 

Patrick Markee, deputy executive director of advocacy for the Coalition for the Homeless, says while the federal government reports 600,000 people sleep on the streets every night, they know the actual number is bigger than that. "The problem is big and by all accounts getting worse," he says. "Homelessness has always been incredibly difficult to measure accurately, for kind of obvious reasons." 

Darlene Bel Grayson, who was temporarily homeless, says she never expected to find herself in a situation without housing, especially with her careful planning and savings. “I’m not the homeless person you see and think is homeless," she says. 

Click play above to hear more from this story

Hidden homeless left out of the count

Fri, 2015-01-30 09:34

The economy is on the mend: stocks are up, corporate profits are up. But not for everyone.

A number of people have crashed through the safety net, and are out on the streets.

The Department of Housing and Urban Development says the most common length of time that someone is homeless is one or two days, and half of the people who enter a homeless shelter will leave within 30 days, never to return. But that impression may not be shared by everyone.

Patrick Markee, deputy executive director of advocacy for the Coalition for the Homeless, says while the federal government reports 600,000 people sleep on the streets every night, they know the actual number is bigger than that.

"The problem is big and by all accounts getting worse," he says. "Homelessness has always been incredibly difficult to measure accurately, for kind of obvious reasons."

Darlene Bel Grayson, who was temporarily homeless, says she never expected to find herself in a situation without housing, especially with her careful planning and savings. 

“I’m not the homeless person you see and think is homeless," she says.

For more on this story, listen to the audio player above.

Who is homeless?

Fri, 2015-01-30 09:34

The economy is clearly on the mend, stocks are up, corporate profits are up. But not for everybody.

If you look around it seems like a number of people have crashed through the safety net and are out on the street

The Department of Housing and Urban Development says the most common length of time that someone is homeless is one or two days,

and half the people who enter the homeless shelter system will leave within 30 days, never to return. But that impression may not be shared by everyone.

To find out more about the state of homelessness in 2015, we turn to Patrick Markee, Deputy Executive Director of Advocacy for The Coalition for The Homeless.

Marketplace weekend also speaks with Darlene Bell Grason on what it's like to be temporarily homeless.

Your Wallet: Cheating and Money

Fri, 2015-01-30 09:26

Next week, we're talking about cheating. Have you ever financially cheated? Did you cheat on someone you love? Maybe you cheated yourself in some way. 

We want to hear your stories of cheating and money. How did it change your outlook? 

Tell us your story HERE, on the Marketplace Facebook page, or on Twitter: we're @MarketplaceWKND.

My money story: Boom and bust, at the blackjack table

Fri, 2015-01-30 09:16

Josh Axelrad used to be a professional gambler, (illegally) counting cards. Now, he's a writer and a dad. 

Once he stopped playing blackjack professionally, and started playing poker badly, he lost $50,000.

“I thought it was impossible that the 50 Gs I’d succeeded in vaporizing would ever come my way again,” he says.

This is the story of his crash, and how he was made whole again.

You can listen to Josh's crash story in the audio player above. To hear a longer version, visit The Moth.

Money Story: Crash and recovery at the blackjack table

Fri, 2015-01-30 09:16

Josh Axelrad used to be a professional gambler (a card counter), now he's a writer and dad.

He told Marketplace Weekend about what happened when he stopped playing blackjack professionally and started playing poker badly...he lost $50,000. This is the story of his crash, and how he was made whole again.

You can listen to Josh's crash story in the audio player above. To hear a longer version, visit The Moth.

Global crashes in an interconnected economy

Fri, 2015-01-30 08:59

People crash. So do companies. And stock markets. And, occasionally, entire countries.

We live in an increasingly interconnected world, which means that when one country crashes financially, there's a genuine risk that we could end up with a regional, or even a world-wide pileup.

We wanted to find out how likely a crash of epic proportions is, so we turned Paddy Hirsch, Senior Editor and resident explainer at Marketplace. He spoke with Marketplace Weekend about the global economy. So is it really all that fragile?

Meteorologist Gary Dobbs: Living through a tornado

Fri, 2015-01-30 08:40

A traumatic crash can be a very personal, deeply transformative moment, an event where life's momentum stops and your reality is changed.

How do you move forward? How does it affect the way you look at things? Gary Dobbs dealt with that first hand.

For 31 years, he worked as a meteorologist at ABC's affiliate in Huntsville Alabama.

In April of 2011, Gary had just gotten home after a long day of covering a tornado outbreak.

With storm warnings still in effect, he laid down to take a nap.

Listen to the full story in the audio player above.

Quiz: Reading, writing and citizenship

Fri, 2015-01-30 07:44

A new state law requires high school students to pass the U.S. citizenship test in order to graduate.

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PODCAST: You've got mail

Fri, 2015-01-30 03:00

Low oil prices just sucked some life out of GDP. More on that. Plus, with gas prices nearing $2 a gallon, mass transit authorities are worried about ridership dropping. But gas might not be the deciding factor when it comes to choosing bus or train. And a new postmaster general takes over the U.S.P.S. We look at the challenges ahead of her.

I submit before the court: Exhibit Smiley Face

Fri, 2015-01-30 02:30

Ross Ulbricht is currently on trial for allegedly running the underground marketplace Silk Road. Thus far, there's been a lot of intrigue about who exactly was involved in running the site, and it hasn't been all smiley faces. Well, sort of.

Recently, the prosecutor read a text that ended with a smiley face in court. How would you say that? Well, the prosecutor didn't. Ulbricht's lawyers objected, and the judge agreed that the emoticon was important. 

So should emojis be factored into understanding the intent of communication? Anne Curzan, English Professor at the University of Michigan, certainly thinks so.

Click the media player above to hear more.

New USPS boss faces old problems

Fri, 2015-01-30 02:00

The United States Postal Services prides itself on its ability to handle snow and rain and heat – and also “gloom of night,” but it’s had a tougher time with employee pensions and health benefits.

Saturday is Patrick Donahoe’s last day as postmaster general. He has spent his entire career – almost 40 years – with the U.S.P.S., and his successor, Megan Brennan, is likely to push for many of the reforms Donahoe has.

The postmaster general makes about $275,000 a year, but earns it, say people who follow the agency.

“It should come with free therapy sessions,” jokes David Hendel, an attorney with Husch Blackwell, who specializes in Postal Service contracting. “It’s a huge enterprise.  If it was a corporation, it would probably be a top-25 company.”

Bureaucracy may be one of the biggest problems that besets the agency, and presumably the incoming postmaster general knows that. Brennan started out as a letter carrier in Lancaster, Pa.  According to Hendel, the head of the Postal Service has a lot of people to please.

“You have got so many different constituencies, it is just so hard to gather up,” he says. “And couple that with limited powers.”

There are very few decisions you can make without approval, says Gene Del Polito, who heads a trade group called the Association for Postal Commerce. “When you are postmaster general, you really have 535 members of your board of governors – they are all members of the U.S. Congress, and they all think they know your job better than you do.”

In a farewell speech a few weeks ago, Donahue said lawmakers need to find new ways to build consensus. “The narrow interests can’t continue to get in the way of the broader national interest,” he said.

Donahoe singled out retiree healthcare benefits. The Postal Service is required to pre-fund them – something it has not been able to do for years now. And according to Hendel, pensions are a growing problem. “People are living longer and longer lives, and therefore, you can’t really put enough away today for the liability later, or they haven't," he says.

On the one hand, there is this expectation the U.S.P.S. should be run like a business, but Rick Geddes, who teaches policy analysis and management at Cornell University, says the postmaster general’s lack of autonomy has kept the organization from being as nimble as it has needed to be.

“We need to have fundamental postal reform at the legislative level that allows the Postal Service to adapt better to the realities of the communications marketplace,” he argues, predicting that will be something the new postmaster general will push for, just as her predecessor had.

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