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Updated: 39 min 21 sec ago

A possible deal worth billions, but no billionaires

Fri, 2014-05-09 10:00

The sound of a reported $3.2 billion is music to Dr. Dre's ears, and not just because his company, Beats Electronics, deals in high-end headphones and sound equipment. If it happens, it would also make him the richest mogul on the Forbes' list of hip hop's wealthiest artists, surpassing Puff Daddy by $100 million.

Though, Forbes' Zack O'Malley Greenburg points out that while the rappers and producers on the list are very wealthy, none are actually billionaires. The rumored sale of his company to Apple would then bring Dre's net worth up to $880 million.

Here's a look at some of the wealthiest people in hip hop if the Beats buyout were to happen (with accompanying lyrics):

1. Dr. Dre - Net Worth: $880 Million (projected)

Chelsea Lauren/Getty Images for BET

"You gotta get it - get it. Get it playa. Count all the cash up. You gotta get it, get it, get it."

                                                                                                                                      - Dr. Dre, "Get Your Money Right"

2. Puff Daddy - Net Worth: $700 million

Kevin Winter/Getty Images for Clear Channel

"Still got cash to blow, raps that flow. Still them cats that know, pack ya flow. That's fo' sho'"

                                                                                                                                                      - Puff Daddy, “Bad Boy For Life”

3. Jay-Z - Net Worth: $520 million

Frederick M. Brown/Getty Images

"We push the hottest V's, peel fast through the city. Play Monopoly with real cash"

                                                                        -Notorious B.I.G. featuring Jay-Z, “I Love the Dough” 

4. Bryan “Birdman” Williams - Net Worth: $300 million

Amanda Edwards/Getty Images

"Vroom on a Yamaha chromed out 11 hundred. What I'm doin'? Gettin' money. What we doin'? Gettin' money."

                                                                                                                                                 - Bryan "Birdman" Williams, Stuntin' Like My Daddy

5. 50 Cent - Net Worth: $100 million

Jamie McCarthy/Getty Images

 

"Startin to feel like there's nothin left to talk about but the, money, money."

                                                                                                                                               -50 Cent, “Money”

Apple + Beats = More Dr. Dre, less earbud?

Fri, 2014-05-09 09:51

Apple could be on the verge of its first multi-billion dollar acquisition. The Cupertino-based tech goliath is reportedly in talks with Beats about a $3.2 billion purchase of the company.

Beats, founded by Jimmy Iovine and rapper Dr. Dre, is known for its candy colored headphones and its new music streaming service, Beats Music.

If this deal goes through, it would be Apple’s largest acquisition to date. The second biggest was the 1997 purchase of Next software for $400 million -- the deal that brought Steve Jobs back to Apple.

“That is Apple’s history of acquisitions, they always do small, as we call tuck-ins, just to fill gaps in their technology or their product line, says Mike Levin, with Consumer Intelligence Research Partners. “So you would have to ask the question: What kind of gap does Beats fill?”

Levin says it’s highly unlikely Apple is interested in high-end headphones.  It’s the subscription based music streaming service, Beats Music, that’s potentially most valuable to Apple, whose existing music empire is built on 99 cent downloads. “The iTunes store, after growing explosively for several years, has kind of stagnated," says Levin.

Apple did create iTunes radio, but it’s not subscription based, and services like Pandora and Spotify have been much more successful. 

PODCAST: Apple goes shopping

Fri, 2014-05-09 07:36

Apple is not a company that has bought its way to success through big acquitions. But today there's word of a change in strategy. Several published reports today, starting in the Financial Times, suggest Apple's about to buy Beats, the headphones and music streaming company. Beats was founded by record producer Jimmy Iovine and rapper Dr. Dre. Michael Levin is with onsumer Intelligence Research Partners and joined us to discuss.

Meanwhile, this weekend, college seniors and their families will hear a lot of stirring words from commencement speakers as graduation season gets into full swing. What comes next for many will be a little less stirring: the job hunt.

And, the World Economic Forum for Africa wraps up in Abuja, Nigeria today. Energy production was a central was a central theme, which is the frame with today's Marketplace Morning Report Quiz.  In the roll of Quizmaster: Stephan Richter, editor in chief at the Globalist.

What common food buzzwords actually mean

Fri, 2014-05-09 05:56

If you're seeking ways to make your diet just a bit healthier, you've probably heard the classic argument that organic food is better for you, and that you shouldn't touch GMOs with a ten-foot-pole.  

But as New York Times columnist Mark Bittman argues, you're probably focusing on the wrong ideas.

"With 'organic,' I think the word is ill-defined," he says. "There's nothing wrong with the desire to eat organic food, but focusing on the word 'organic' as if it were a panacea is a problem. With GMOs, it's the opposite--there's nothing particularly good about them, but on the other hand, to be afraid of them is a way stronger reaction than necessary."

Bittman argues in his latest column that it's not about how the label describes the food we put in our diets.

"Eating organic food is maybe preferable--whether it's nutritionally superior is questionable--but it's a secondary consideration," he said. "The primary consideration is what's in your diet. It's not about whether you can afford to eat organic, it's about whether you can afford to eat better. And for 80 or 90 percent of the people in the United States, the answer to that is yes."

But Bittman, who supports going fully vegan before 6 p.m. in his new book, cautions against lumping "veganism" into the same "healthy" category.

"Veganism implies healthy, but you can eat Oreos and Coke and still be vegan," he said.

Class of 2014 isn't celebrating the job market

Fri, 2014-05-09 02:47

This weekend, college seniors and their families will hear a lot of stirring words from commencement speakers as graduation season gets into full swing.

What comes next for many will be a little less stirring: the job hunt.

"The Class of 2014 is a little bit better off than the few classes who came before," says researcher Alyssa Davis, co-author of a report, 'The Class of 2014: The Weak Economy is Idling Too Many Young Graduates,' for the Economic Policy Institute. "Since the recession, this has become the new normal, with a weak job market, stagnant wages, high unemployment and underemployment."

Unemployment for young college graduates is 8.5 percent, compared to 5.5 percent in 2007. For young high school graduates, the comparison is 22.9 percent to 15.9 percent.

Employers do plan to hire more than last year—an increase of 8.6 percent is projected in a survey of employers by the National Association of Colleges and Employers (NACE). But still, rates of involuntary part-time work, unskilled and low-wage work are up for college graduates. And, according to EPI's research, many more young people are now out of the labor force entirely—unemployed and not looking for work or attending school—than before the recession.

Management consulting firm Accenture recently surveyed Class of '14 members about their post-college expectations. Managing director Katherine LaVelle says, at least today's college students are prepared—having come of age as teenagers and early-twenty-somethings in an unforgiving economy that hasn't improved quickly or dramatically. She says many have picked their majors and internships with job prospects in mind.

"They've done their homework, they understand the marketplace they're in, and they're ready to tackle it," says LaVelle.

Still, says LaVelle, they're full of unrealistic expectations. Eighty percent think their first employer will provide a formal training program, and roughly the same percentage think they'll make more than $25,000-a-year. But the Accenture survey finds that only half that many graduates from the classes of 2012 and 2013 actually got training or earned that much.

And 46 percent of recent graduates consider themselves underemployed, working in jobs that don't require the education and training they received in college.

Why China and Vietnam are bumping boats

Fri, 2014-05-09 02:32

There's a battle brewing in the South China Sea. Ownership of territory near the Paracel Islands is disputed, and after China moved an oil drilling rig into the area, Vietnam sent ships to investigate.

The Chinese rammed the Vietnamese crafts and shot them with water cannons, but this fight is a lot bigger than one Chinese oil rig.

"It involves not just China and Vietnam, but also Taiwan, the Philippines, Brunei and Malaysia," says Taylor Fravel, a professor of political science at MIT. Fravel notes that border disputes in the area have been going on for decades and this is China's way of trying to demonstrate its claim to the territory.

"China is desperate for domestic sources of energy," says Ernie Bower, senior adviser for Southeast Asia Studies at the Center for Strategic and International Studies.

Bower says there's potentially more gas under the waters in the disputed territories than in the Gulf of Mexico, and more oil than in Alaska. The U.S. Geological survey says it's likely there are 2.5 billion barrels of oil, yet to be tapped in the area.

"People have been shot at and killed before between these two countries on these very waters," Bower says, noting the fight is also about fish, a source of protein to feed enormous populations.

It's a very real dispute for the Vietnamese, says Bowers, with the location where the Chinese attacked the Vietnamese ships just 120 miles off its shore.

"And the Vietnamese are rightly concerned about their sovereignty."

The best conversations happen over brunch

Fri, 2014-05-09 01:37

Here in the New York Bureau of Marketplace, we're getting ready for brunch. We even have the fixings for mimosas.

Yes, in the middle of the week. And, yes, in the middle of a work day.

But brunch, or really "Marketplace Brunch" is one of the segments we're trying out for our new show, Marketplace Weekend. The idea is to take some of the really smart and creative people inside the Marketplace family, and have the kind of conversation you might have over a meal with your friends... but do it on the radio.

So I'll be gathering in the studio with people like Stacey Vanek Smith, Sabri Ben-Achour and Mark Garrison, to talk about what they're covering. And probably more importantly: what's on their mind as they look ahead to the week that's coming up.

All this is part of how you create a new show: You come up with ideas for segments, try them out, and see how they sound. Earlier, we tried a segment that took responses from Twitter and Facebook, and folded them into a personal finance conversation. I'll let you into a secret: it sounded awful! Nobody (even my mother) wants to listen to me reading a bunch of tweets. So we reworked it, with a listener calling in to talk about her student loan debt. And that version was great!

We want to make sure that Marketplace Weekend is fun and dynamic, and that we never lose sight of where human experiences fit in economic stories.

A while back, we did a story on Marketplace Money that examined gentrification. It's a model for where we want to go with the new show.

We introduced listeners to Britty Krone, a lifelong Harlem resident. She took me on a tour of her neighborhood and told about the changes that were happening, and what it felt like to live through them.

Gentrification is a huge story: it touches on policy, politics, housing prices, race, and the changing nature of our cities. But at its heart, it's really a story about human beings. Brittny's example was a good reminder of that.

As we create this new show, we want to keep doing stories like that: complex, multi-layered, and demanding a little extra thought and care.

We also want your input. So keep it coming! Tell us what you want in Marketplace Weekend. The kinds of stories and sounds that you want to listen to when you have your own... well... brunch. 

A very tech-y Mother's day! A new Silicon Tally

Fri, 2014-05-09 01:00

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

This week we're joined by Adrienne LaFrance, an editor and technology reporter at The Atlantic. var _polldaddy = [] || _polldaddy; _polldaddy.push( { type: "iframe", auto: "1", domain: "marketplaceapm.polldaddy.com/s/", id: "silicon-tally-may-9", placeholder: "pd_1399585051" } ); (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'));

The tech of DJ-ing with DJ Rekha

Fri, 2014-05-09 01:00

If you head downtown to (le) Poisson Rouge on the first Thursday of the month, you'll find yourself transported to another country. The Punjab region of South Asia, to be exact.

That's because Rekha Malhotra, a.k.a. DJ Rekha, has spent her entire career as a DJ championing the sounds of Bhangra and Bollywood in the states.

These days, you can find her at Basement Bhangra, a monthly dance party that celebrates the music and dance of Bhangra.

Bhangra music is, in and of itself, a kind of remix - a melding of folk tunes with Western styles of music.

It just so happens that the style and form of the music lends itself to having a dance beat added underneath. 

It is this kind of embrace of the new as it relates to the old that Malhotra remembers as being a significant part of the Indian-American community she knew growing up:

“Every Indian American household had a VCR first, because the movies were important, watching the Bollywood films. And in the 90s there was a huge Indian Bollywood remix scene. Taking Bollywood records without getting the original parts and putting beats on them.”

For her part, Malhotra says technology is both a help and a hinderance to her life as a DJ.

She laments the loss of craft when it comes to the art of physically picking out records and matching the rhythms of tracks for seamless transitions. She also points out, however, that the ability to quickly purchase and download a requested song that she doesn't have on a record or a CD is a blessing, and allows her to better serve her audience.

At the end of the day, Malhotra says being a DJ is about being able to read an audience and react, and no amount of technology can give you that talent.

Listen to a Spotify playlist built by Ben Johnson featuring artists from our Playing With Machines series, and others: 

Medicaid's new patients: healthier, and maybe cheaper

Fri, 2014-05-09 00:37

Since the launch of the Affordable Care Act last fall, some five million more Americans have enrolled in the nation's healthcare program for low-income people.

With only half the states expanding their Medicaid programs under the Affordable Care Act, researchers believe that number would double if all 50 states moved ahead, and several new reports suggest it may be cheaper for states to go ahead than previously estimated.

Cost is one of the top reasons politicians cite to explain why they're against expanding the program.

A recent Congressional Budget Office report said the cost for states would be nearly a third less than expected. Why the cut?

The CBO over-estimated the number of people eligible for Medicaid pre-ACA who would come out of the woodwork – an effect known in the industry as "woodworking" – as efforts got underway to recruit newly-eligible folks to sign up for Medicaid. And because fewer of previously-eligible people signed up, the bill for states is lower, because states pay a vastly higher share of costs for the previously eligible.

And there are other signs that Medicaid's expansion may help the bottom line.

"We improved care. We improved outcomes and we reduced costs," says Dr. Randy Cebul, who runs the Center for Health Care Research & Policy. He's also the one keeping tabs on the data from a Medicaid pilot project in Cleveland involving nearly 30,000 low-income residents.

Cebul says in this test case for Medicaid expansion in Ohio, health providers helped cut ER use, increased primary care visits and kept spending 25 percent below projections.

"There are probably half of the states that have not expanded Medicaid," he says, "and I think this should be a reason they want to reconsider their decision."

And new Medicaid patients are generally less depressed and not as heavy as people already enrolled, according to a study from Steven Hill, an economist with the federal Agency for Healthcare Research and Quality.

"I think some people were concerned that the people who will be newly eligible might be very unhealthy," he says. "But that's not what we found. And so they may need even less care than current enrollees," he says.

Edwin Park with the left-leaning Center on Budget and Policy Priorities believes the growing body of information strengthens the proposition that states can afford an expansion.

"All this evidence continues to undermine that it's too costly for the states to take up," he says.

There's just one thing.

Many health policy people, including Park and George Washington health policy professor Sara Rosenbaum say state opposition isn't driven by economics as much as philosophy.

"It's a belief that somehow when you help the poor with governmental assistance you are encouraging bad behavior, laziness," says Rosenbaum.

Josh Archambault with the right-leaning Foundation for Government Accountability says there's some truth to that.

Ultimately though, he says the problem is that you're expanding a broken program that doesn't work for people currently enrolled. And why, he asks, would you just expand something like that?

"Not only does it hurt the people you are adding, but it already hurts people who are on the boat," he says.

But what some conservatives want – and they've begun to get it – is more flexibility in how the expansion program is designed. Even with that, full acceptance could take years. Don't forget, Arizona adopted the original Medicaid program in 1982, 17 years after it was first introduced.

An insider's look into Alibaba and its quirky founder

Thu, 2014-05-08 23:55

In 1995, Alibaba founder Jack Ma was an English teacher. He was visiting Seattle when a friend introduced him to the internet. Ma quickly typed "China" into the search engine. The result? "No data found" appeared on the screen.

Weeks later, Ma was in Beijing, on a Quixotic quest to convince China's government to create the country's first internet site.

The film "Crocodile in the Yangtze" shows grainy footage of a floppy-haired Ma delivering his pitch to a skeptical bureaucrat: "Nowadays, foreigners can use computers from any desktop to find products from around the world," says Ma to a confused-looking senior level official. "They can order directly from Hong Kong, Taiwan, Singapore. But they can't order anything from China, because right now there's nothing from China on the Internet."

The official politely asked Ma to take a hike. The film's director Porter Erisman says none of the officials Ma visited on that trip had even heard about the Internet. "You can just see in the footage, the people who are looking at him, they just think he's crazy."

Erisman got the footage from a reporter for state-run television, who thought it'd be funny to follow Ma around as he got kicked out of one government office after another. "The reason the woman was filming Jack was because she thought here's this crazy guy who's clearly not going to go anywhere -- we should record this as an example of how not to behave."

Five years later, Ma started Alibaba, which would become the world's largest online marketplace, and Porter Erisman was hired as the company's first American employee.

At the time, eBay set its sights on China – and Erisman said Jack Ma used his background as a student of martial arts to engage the Western giant.

"One of the key principles in martial arts is you can use an opponents strength against them," says Erisman. "So when we looked at eBay with their big advertising campaign, we realized we could use that campaign to help promote Taobao."

Taobao, Alibaba's shopping site, was launched to fend off eBay.

Alibaba embarked on an aggressive media campaign, attacking eBay and questioning which company was better for China. The strategy worked -- every time eBay ran a local ad, it got people thinking about this new Chinese shopping site Taobao. eBay eventually pulled out of China, and Taobao -- with its hundreds of millions of users -- is a big reason Alibaba is expected to raise billions from investors when it goes public.

That's despite Jack Ma's attitude towards Wall Street, which he shared with Alibaba empoyees at a company gala in Porter Erisman's film.

"Let the Wall Street investors curse us if they want," Ma shouts from a stage in front of thousands of employees, "We will still follow the principle of customers first, employees second, and investors third."

The nuances of the "1 percent"

Thu, 2014-05-08 15:33

Last week, we did a story about how likely it is that anyone in the United States will spend even a little part of their lives in the 1 percent. We got a lot of feedback —comments, questions and discussion about income inequality vs. wealth inequality, about the 1 percent vs. the 0.1 percent and about economic mobility. There's so much interesting stuff to talk about, we decided to dive back in to the issue and answer some of the questions you raised.

Q. The story looked at some new research by Mark Rank and Thomas Hirschl that suggests one in eight americans will make it in to the "1 percent" of earners for at least a year of their lives, to which Andrew Tong responded on Facebook: "Perhaps in income. But most certainly not based on net worth!" 

So what’s the difference between income and net worth?

Andrew brings up a good point. Rank and Hirschl's research looks at the 1 percent in terms of income. In this case “income” means the money a household makes in the course of a year, mainly through working a job and getting a paycheck.  (The data did also count money a family might have inherited in a given year. It did not include capital gains.) 

In dollar terms, a household would be in the 1 percent of earners today if it makes more than about $360,000 in a year. 

But as Andrew and others pointed out--- income is just part of the story. If you’re interested in the way economic resources in the U.S. are distributed, you have to look at income but also about wealth or net worth. That is, the total money you have in the bank, plus the value of your home(s), car(s), investments; minus all your debts.

To be in the top 1 percent in terms of wealth there is a much higher bar. You'd have to be worth more than roughly $8.4 million. 

Q. What do we know about wealth inequality versus income inequality?

@Marketplace So income inequality isn't so much the problem. It's WEALTH inequality.

— Sammy Saber (@SammySaber) May 5, 2014

The short story is that wealth inequality is growing right along with income inequality, especially at the very top. The Economic Policy Institute estimates that in the early 1960s, the wealthiest 1 percent in the U.S. had 125 times the wealth of a median household. In 2010, that ratio had doubled, reaching 288 to 1.

It’s worth noting that data on wealth and wealth inequality is harder to come by than data on incomes. The census measures income, not wealth. Tax returns don’t paint a full picture of a person’s net holdings. Surveys like the Federal Reserve’s Survey of Consumer Finances have trouble capturing the super-rich.

Part of what makes the work of Thomas Piketty and his colleagues Emmanuel Saez and Gabriel Zucman so ground-breaking is that they have developed new ways to measure private wealth and wealth inequality over time.  Their method involves taking tax returns, which record the income generated from assets (in dividends, interest payments or rental income), and teasing out the underlying value of those assets.

Q. Does the 1 percent even matter? Or, as Kevin Tyler put it on Facebook, “The 1 percent people are complaining about are probably only about the .01 percent!”

Yes, “We are the 99.99%" might have been a less catchy but more accurate chant for Occupy Wall Street. (Shout out to Carl Swanson for making this point on Facebook). 

That’s because the most intense rise in incomes the U.S. has seen in the last forty years isn’t among the top 1 percent, but the top 0.1 and 0.01 percent.  Check out this graph, that the Atlantic’s Derek Thompson built out of data from Thomas Piketty and friends’ World Top Incomes Database:

 Chart by Derek Thompson, Data from World Top Incomes Database

It’s also important to note that the kind of income the tippy top of the 1 percent is earning is mostly not the wage or salary kind that most Americans earn. It’s capital gains-- money made from investments in real estate or in the stock market. And that money is taxed at a lower rate than the plain old “income” you get from a pay check at a job.

There are also growing disparities within the 1 percent of households as measured by wealth (as opposed to income).  The rise over the last few decades in the share of total wealth these households own has been almost completely driven by a rise in the wealth of the top 0.1 percent (households with a net worth of more than $20 million today). Those at the “bottom” of the 1 percent have seen their wealth relatively stagnant.

And yet, as critical as the 0.1 and 0.01 percent are to our understanding of wealth and income inequality, we shouldn’t entirely ignore the plain old 1 percent. Even if people at the bottom of this percentile don’t always “feel” rich, it’s worth remembering that if your household makes more than $360,000 in a year—even just a single year—you’ve got things pretty darn good compared to 99 percent of the rest of America. 

Q.  What about economic mobility? How does the fact that one in eight Americans might join the 1 percent of earners for a year at some point in their lives fit in to the larger question of how possible it is to move up the economic ladder over the course of your life?

This is a really important question.  We love our rags to riches stories, but it's a mixed bag here in America. Rank and Hirschl’s research suggests that more Americans than you might expect jump in to the 1 percent of income distribution at some point in their lives, but very few stay there for very long. And it’s more than seven times more likely for a white person to reach the 1 percent than for a person of color. 

Then there’s the fact that Americans have a greater chance of living in poverty for a year than living for a year in the 1 percent.  In earlier research, Rank found that  40 percent of American adults will spend at least a year below the official poverty line. 

When it comes to overall rates of economic mobility, new research from Harvard economist Raj Chetty shows that it’s about as hard to climb the economic ladder in the U.S. as it was 20 years ago. The good news is that today most Americans will live in households with higher incomes than their parents (even after adjusting for inflation).  But that’s largely due to the rise in two-earner homes. 

And when you look at economic mobility in the U.S. compared to other industrialized democracies, we don’t fare so well.  It’s harder for Americans to climb in to a different part of the income distribution than the one their parents were in— say, from the bottom 20 percent to the top 20 percent.   If you were born in to poverty in America, the chances of escaping it are half as good as they are in a country like Denmark.  

If the housing market can't find its mojo...

Thu, 2014-05-08 13:11

Federal Reserve Chair Janet Yellen feels alright about most of the economy, she told Congress’ Joint Economic Committee yesterday, saying that “many recent indicators suggest a rebound in spending and production is already underway.” 

But keep an eye, she advised, on one sector:

“One cautionary note though is that readings on housing activity, a sector that has been recovering since 2011 have remained disappointing so far this year and will bear watching.”

Stephanie Rizk didn’t need to hear it from Ms Yellen though. Two years after the housing market bottomed out, she can see it from the window of her house in Laurel, Maryland. 

“On my street there are three abandoned or foreclosed properties that are empty,” she says. “There’s a decaying speedboat in the back yard of one. I can’t do anything about that as a homeowner.” 

Rizk put her house up for sale last year because she wanted to move closer to work and school. The house didn’t sell, even after six months on the market.

“It’s really hard to sell a house when there are literally no neighbors because the houses are empty,” she says. Luckily, Rizk found renters. She and her family were able to move...but not buy. 

Buying a home new home was a whole other ordeal involving disputes over appraisals and stubborn sellers. “It was very frustrating,” she says.  

Chris Mayer, professor of real estate at Columbia School of Business says this is not terribly surprising. “Sales activity of new and existing homes have not recovered anywhere near the levels in a normal recovery,” says Mayer. 

Whereas we would expect to see maybe 2 million housing starts a month, says Mayer, we’re seeing less than a million.

Malcolm Hollensteiner, who directs retail lending and sales at TD Bank, says from his vantage point “the concern we have in the industry is that the first time homebuyer has not resurfaced during this recovery.” Rather, “In many markets, 30-40 percent of home buyers are all cash buyers – this means that a high percentage are investors instead of first time homebuyers.”

One reason for this is that Federal Housing Authority has increased the cost of loans for first time home buyers, charging more for mortgage insurance. 

“In typical years,” says Hollensteiner, “the FHA share of the first time homebuyer market was as high as 60 or 70 percent -- it’s dropped to the 30 percent range as of today.”

Another, less structural factor behind the current flatness of housing sales compared to last year is that “some sales a year ago were leftover foreclosures,” says Nicholas Retsinas, senior lecturer on real estate at Harvard Business School. “Some is left but a lot went by the wayside,” he says. Additionally, last year there were even more investors buying homes. Now that prices have risen modestly, “investors can’t find that low hanging fruit anymore,” further reducing sales.  

The problem for economists including those at the Federal Reserve is that when people don’t buy homes, they don’t buy a lot of other things. “When you buy a home one of the first things you do is go out and get new furniture, talk to contractors, supply companies,” says Columbia’s Mayer. And don’t forget the real estate agents and the lawyers.

In the past, economic recovery depended on this, depended on housing.

Retsinas says “if you go back to the last six or seven recessions, it was the secret sauce.” 

No longer, he says. It’s a smaller part of the economy now, and it’s just not recovering quickly.

“It still has some punch, but the punch may not be what it once was.”

If housing isn’t the main driver of the economy, what is? Retsinas says he doesn’t know. Maybe there isn’t just one, or maybe there just isn’t one. 

Size does matter for FedEx

Thu, 2014-05-08 12:34

Heads up if you buy lots of diapers, paper towels or shoes online. FedEx has announced starting next year all ground packages will be priced according to size.

Analysts believe this could mean a price spike on 30 percent of the company's shipments, primarily the bulky, lightweight stuff. Yes prices will go up, but people in the shipping business say there may be a way around me and my pillow retailer paying it, especially if cost – not speed – is the primary consideration.

Local couriers – and even USPS – are ready and willing says Kent Smith with Ursa Major Associates.

"Sophisticated ecommerce mailers will manage it in stride because they are not tied to a single deliverer," he says.

Another potential change to watch for: box sizes. Supply chain consultant Marc Wulfratt with MWPVL International says he expects to see companies tailor box size to the precise dimensions of what's being shipped.

"Today if you put an item in a box and it doesn't fill the full height they add air bags, paper. Well that space in the box is costing them money," he says.

by Shea Huffman

But when thinking about how this change will affect shipping items and online shopping, what items can you order, say from Amazon, that push the boundaries or are otherwise unsusal in terms size and weight?

In an attempt to answer that question, we put together a wish list on Amazon of things that are bulky, heavy and dense, or light, fluffy and compact. You can see a few selections below, but we are most certainly only scratching the surface.

The heaviest thing on Amazon

The honor for the heaviest item on Amazon famously used to belong to this three-quarter ton gun safe, but it has since been overtaken, as far as we can tell, by a 4.5 ton industrial-grade lathe, which Amazon will ship to you for free.

The most dense element on earth

Osmium has the highest density of any naturally occuring element and in certain forms, particularly the kind you can order from Amazon, it can become toxic when exposed to the air. Hazardous materials fees are included in the pricing.

Feathers

What springs to mind when thinking of things that are light? Feathers of course. Certain packages of them are so light and small that its apparently not even worth if for Amazon to ship them on their own.

Our wish list is by no means exhaustive, so if you have any suggestions about light, heavy or unsually voluminous items you can find on Amazon, we'd love to hear about them.

And while we're on the subject, if anyone is feeling like making a generous contribution to public radio, there is a handy wish list available...

Go to college, wash your own clothes. Right?

Thu, 2014-05-08 12:04

When I was growing up in North Carolina, I'd heard about this, but it sounded like a myth.

According to The Charlotte Observer, however, the rumors were true: For more than 90 years, Davidson College, a liberal arts college in Western North Carolina, has offered students this perk: They've "washed, dried, folded, and ironed students' clothes for free."

 

Well, no more.

Davidson College's president says that starting next year on May 15, students will have to use washers and dryers themselves.

She's decided the $400,000 that  pays for the laundry service could be better spent on things like research. And keeping the library open 24/7.

Why books always seem to have a discounted price

Thu, 2014-05-08 12:01

If you want to get a sense of just how dramatic online book pricing can be, it helps to go to a local bookstore. Like Eight Cousins Books in Falmouth, Massachusetts.

Carol Chittenden is the owner there. She lets me play price-check. Her price for Michael Lewis's "Flash Boys"? $22.36. And Amazon's price that day? $16.77.

“I think that's a little less than we could buy it for from the publisher,” Chittenden says.

We look another bestseller. "The Goldfinch". Eight Cousins sells it for $24. Amazon sells it for $17. So far, online's looking like the way better deal.

We move onto notebooks. And that's when things get interesting. The store's notebooks are pretty much the same price as Amazon's. Same with the store's totebags. In fact, it turns out just about everything Eight Cousins Books sells that isn't a book is pretty much the same price as on Amazon.

Online has way cheaper book prices . But compare other products, and that price difference goes away.  So what is it about books as products that leads to these steep price cuts by discounters?

Oren Teicher's CEO of the American Booksellers Association says "Books are the one significant product left in the marketplace today in which the manufacturer actually prints the suggested retail price on the product.”

This means book markdowns are extremely visible. Sellers can tout their low prices compared to what's on the back of book covers, the price publishers want to sell it for. And that can be a convenient psychological device -- especially if you're a big retailer with lots of other stuff to sell.

“When the customer sees a book at 40, 50 percent off,” Teicher says, “the presumption is that everything else that that retailer is selling is also equally inexpensive.”

And books bring in some pretty attractive consumers.

“Book buyers are good customers,” Teicher adds. “They tend to be slightly more affluent, they tend to be consumers who shop and therefore are always in the marketplace for other products.”

But Dennis Johnson, the founder of the Brooklyn publisher Melville House, says books are getting used as a vehicle here.

“It really devalues the whole concept of the book,” he says. “And the book is very important to our culture.”

Johnson is worried about these discounts in the book industry. But he's not about to stop selling his books to Amazon.

“That would be very stupid business,” he explains. “They're the biggest part of our sales, and my core job as a publisher is to sell books.”

Hardcover sales are actually on the rise, they're growing faster than ebooks. And despite all the online discounts, Oren Teicher at the American Booksellers Association says sales at independent bookstores are growing too. He explains that the localism trend – shopping at local farmers markets, drinking local microbrews – has also driven sales at independent booksellers.

“I feel that booksellers are very powerful in fact,” says Carol Chittenden at Eight Cousins Books, "because we're very involved in our communities, and our customers are so loyal.”

A short history of the billionaire

Thu, 2014-05-08 11:51

The following is part of a collection of essays in "But Enough About You."

Cassius Binocularius Anthrax
Residence: Capri, 3 B.C.
Net Worth: 90 million aureii.  
Source of Wealth: Off-circus betting, slave trading.

Nickname "Buddy" bestowed on him by the emperor Tiberius during a three day Lupercal drinking binge.

Said to have fixed the 1 B.C. chariot race at the Circus Maximus between Ben Hur and his rival Messala. Pocketed enormous winnings after Messala (favored 50-1) was trampled under Ben Hur's chariot.

Parlayed windfall into franchise betting operations in Parthia, Dacia, Iberia and Germania, using a highly controversial system of reporting Roman chariot race results.

Forced to shut down Germania operations after tribes torched his betting shops (with the concessionaires inside) following years of consistent losing.

Bounced back; established a slave-trading network (Jeevus Dottus Commus) that kept patrician homes from Rome to the Amalfi Coast supplied with prized Britannic butlers.

Gilead (Sam) Starbuck
Residence: Boston, 1775.
Net Worth:140,000 dollars to 160,000 dollars (silver)
Source of Wealth: Tea

In December 1773 Starbuck was purser on the New Bedford whaleship Incontinent when it put into Boston Harbor to offload. Observing a crowd of Bostonians oddly dressed as Native Americans and hurling bricks of valuable English tea into the harbor, he lowered one of Incontinent's whaleboats and rescued some of the 45 tons of jettisoned tea.

Opened his first tea shop in Braintree several days later, serving a beverage called "Sal-Tea." When Sal-Tea failed to catch on, he rebranded it "Patrio-Tea," which did eventually find acceptance with Boston's tea-starved public.

Subsequently struck a deal with the East India Company to supply (that is, smuggle) non-salty tea to Massachusetts.

His string of tea shops prospered, but scholars argue that Starbuck made a mistake calling them "Gileads" instead of some other catchier name.

Why the Beverly Hills Hotel boycott could backfire

Thu, 2014-05-08 11:40

Hollywood's concerns over the enactment of strict Islamic law in Brunei may fall on deaf ears.

Demonstrators gathered across the street from the historic Beverly Hills Hotel to protest against Hassanal Bolkiah, the Sultan of Brunei, who announced strict sharia law in his country would go into effect on May 1. Reports indicate the penal code provides for the imprisonment of those who miss Friday prayer, amputation of the limbs of robbers, and stoning to death of homosexuals.

The sultan owns the Dorchester Collection, a British company that runs--along with other hotels across Europe--the Beverly Hills Hotel and Hotel Bel-Air.

The Bel-Air Hotel in Los Angeles, owned by the Dorchester Collection.

David McNew/Getty Images

"When this law became known, it started to spread on social media and within the celebrity community," says Sharon Waxman, founder of The Wrap. "What has happened is that this has boomeranged against the hotel."

Celebrity protestors include Ellen DeGeneres, Richard Branson, and Jay Leno. But despite all this star power backing the cause, the CEO of the Dorchester Group, Christopher Cowdray, released a statement saying that this boycott is misguided.

"He's trying to defend the interests of his hotel and his employees, which has nothing to do with the policy and laws being passed in Brunei," Waxman said. "And he has no power over that. That's his boss, that's his owner."

But the economic plea on Cowdray's part appears to have had no effect on the efforts of the boycott. As for the sultan himself, he has said nothing so far.

"He's in the economic position where he can say, 'I don't care,'" Waxman said.

Double charged: The true cost of juvenile justice

Thu, 2014-05-08 10:50

Double Charged is a special investigation into the U.S. Juvenile Justice system, produced by Youth Radio. This is part one of a two-part series:

Standing in the hallway outside a hearing room at the Alameda County Juvenile Justice Center, you see benches filled with teenagers and their families--waiting to appear in court-- many dressed up in button down shirts and ties, looking their Sunday best. There are a lot of moms, too, and little brothers and sisters who’d clearly rather be elsewhere.

Families and youth wait in the hallway outside juvenile courtrooms, San Leandro, California. 

Brett Myers/Youth Radio

Many teens are here for trials and probation hearings, but on any given day, others are trying to negotiate fines and fees.

The bill starts adding up as soon as you're arrested, before anyone reaches the courtroom. Even if you’re innocent, in Alameda County, the investigation alone will cost you $250.

“You get fined for the public defender,” said Debra Mendoza, probation officer-turned-advocate, who can list fees off the top of her head. “You get charged for incarceration. There’s a fee for being in juvenile hall. There’s a daily fee if you’re on GPS.”

Add the fees together for a juvenile who’s been incarcerated for an average amount of time in this county, and the total bill will be close to $2,000. 

It’s parents who are responsible for the bill. And that’s the trend across states. 

“There are more and more criminal justice fees that are added every year in this country,” said Lauren-Brooke Eisen, legal scholar at NYU’s Brennan Center for Justice. “In recent years, about 20 state legislatures passed laws holding parents responsible for their children’s crimes,” said Eisen. 

In California, parents have the right to negotiate fees, but it’s not easy. If they don’t pay, officials can garnish parents’ wages, take their tax refunds or place liens against property. In Alameda County, one of the poorest counties in the San Francisco Bay Area, half of the fees charged to parents remain unpaid. That’s according to the county’s own data, based on a recent five-year period.

“And sometimes it is more expensive administratively to collect these fees than the money you are actually receiving in revenue.” said Eisen. “That’s the great irony of the situation.”

At the Juvenile Justice Center in San Leandro, California, Joshua Hopkins is sitting on a bench waiting to be called into a hearing. Hopkins is 13, but he looks a lot older.

“People mess with me and then they get me frustrated, and then they just like to push my buttons. And when they push my buttons, I get very upset and I fight,” Hopkins said .

The fighting has led to time in juvenile detention. And that adds up to a lot of fees, according to his mom, LaPorscha John.

“So basically this is my statement of account. So I owe a total of $736,” she said.

Because of a mental health issue, Joshua lives in a private group home. But his mom is still responsible for the court fees when he messes up. So LaPorscha John owes the money, even though her son is not in her care.

“He is my son… But I’m getting hurt, because it’s financially creating hardship,” she said.

Terry Wiley, Assistant District Attorney for Alameda County’s Juvenile Division, said, “That’s part of being a parent. You’re responsible for your kids and their actions.”

If young people and their families have a problem paying, Wiley said there’s a straightforward solution: “Don’t be committing crimes and you won’t owe any money. Very simple.”

For Zoe Mathews, it’s not simple at all.

In 2010, her son DeShawn Morris was incarcerated for the better part of a year. Months after being released from jail, he was shot and killed. Her son was dead, but the debt lived on, including ongoing calls from county collections.

“It's a constant reminder that, no -- he's not here anymore,” she said.

Mathews’ son was locked up for 208 days at a cost of almost $30 per day.

Zoe Mathews (right) and her mother Jackie stand in front of a wall of family photos, including childhood pictures of Zoe's son DeShawn Morris. DeShawn was killed several months after being released from Juvenile Hall and years later, his mother is still paying the fees for his incarceration.

Teresa Chin/Youth Radio

“By being incarcerated, you're paying your debt back to society. So then they're going to charge you an additional per-night stay as if there were some options?” said Mathews. “The bills are additional stress to already a very painful situation that I will be dealing with for the rest of my life.”

Mathews said the county has agreed to reduce her monthly payment, but won’t reduce the total bill: More than $7,500 for her deceased son’s fees.

Infographics by: Teresa Chin and Jenny Lei Bolario of Youth Radio.

Everything else you wanted to know about olives

Thu, 2014-05-08 10:04

Turns out a lot of people had always wondered why black olives come in cans, but green olives come in jars. Since, of course, one wondering leads to another, our Facebook and Twitter have been alight with questions...

The science: What made black olives in jars so good for botulism?  Why don’t green olives have the same problem?

 Yes, we skipped this part. Here’s the basic deal: Acid and salt retard botulism’s growth. California Ripe Olives are lower in acid than other olives, and the brine isn’t as salty.

 That, plus the low-oxygen environment, makes a black olive in a sealed-up jar so good for botulism. Unless you kill the bacteria with high heat.

 Hey, wait a minute! You can heat up a glass jar to 240 degrees. Home canners do it all the time.

 True! Thanks for pointing that out. I bet I know what you’re asking next…   

 So, why don't the black olives come in jars?

 Turns out, we may owe Mort Rosenblum an apology. He guessed that it was because green olives are prettier. He was half-right.

 We turned here to Kristin Daley, vice president for corporate development at the Musco Family Olive Co.-- one of the two big olive canneries in California.

 Daley says black olives are darn cute. Their brine, not so much.

 “The brine is so dark that it’s barely translucent,” she says. “It’s not very attractive. So there’s not a huge benefit to putting the product into a glass jar.”

And, she says, there are costs: Jars are heavier, so shipping them is more expensive. And there’s more waste from breakage.

At this point, you may be wondering: Why is the brine so dark?

Because the olives got cooked in it, says Eric A. Johnson, a bacteriologist at the University of Wisconsin who specializes in botulism — or, as he calls it for short, “bot.”

“The heat treatment for bot spores is gonna decay some of the tissue,” he says.  

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