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The cost of travel, according to the federal government

Mon, 2014-08-18 13:34

The federal government has released its per diem lodging rates for federal road warriors for the coming fiscal year.

Those rates matter to the hotel industry. After all, the American Hotel & Lodging Association says the government generates billions of dollars in travel spending.

The spending, however large, isn't changing — the standard federal travel per diem is staying flat compared to last year at $83. The federal government is also trying to keep its travel budget down, cutting spending by 30 percent through 2016. 

“We do not include the luxury brands like the Ritz-Carltons or the Four Seasons types,” says Christine Harada, associate administrator of the Office of Government-wide Policy at the General Services Administration. “But we also want to be cognizant of our travelers' safety so we try not to go too, too budget.”

The rate is more flexible in many big cities. For example, it might run up to $300 a night in New York, depending on the time of booking.  Regardless of location, fancy hotels are generally off limits. 

Harada says lodging per diems are determined by market data. They're going up in about 270 areas and falling in 50.

Ryan Meliker, managing director of equity research at MLV & Co, an investment bank, says hotels that get a lot of business from feds will likely set their overall room rates based on the per diem. 

“If you think about a hotel right next to a major Air Force base that's generating a lot of their business from government as a result of the Air Force base, it's going to have a bigger impact on them than it is somebody else,” he says.

Jan Freitag with STR, a hotel research company that provides market data to the federal government, says the federal per diems also have spillover effects at private companies.

“They say, 'Okay, if the U.S. government reimburses this much we just follow suit,’” Freitag says, “especially if they are a consulting company to the U.S. government.”

How much does a per diem get you?

How well can you travel on that federal government per diem? Or the similar one from your employer?

We compared Lawrence, Kansas — one of many small-to-mid-size cities covered by the standard per diem — to our home base, Los Angeles — which, like most larger cities has an adjusted per diem. We checked hotel rates for a single traveler in the first week of September and user-submitted cost-of-living estimates from Numbeo.com.

Lawrence, Kansas
Per Diem: $83 for lodging, $46 for food and incidentals (the standard rate)

Lodging: That allowance gives you (or your boss) a few hotel options in Lawrence, but your best bet is the local Holiday Inn or Baymont Inn and Suites. They both run around $80 a night, and the Baymont touts a free breakfast. Hampton Inn and Comfort Inn are just out of reach at around $100 per night.

Food: A morning cappuccino (or other coffee beverage) will run you about $3 in Lawrence. A lunch averages about $6.25 for fast food and $10 for an inexpensive sit-down restaurant, like local favorite the Burger Stand. Dinner at a mid-range restaurant like the Free State brewery will run you about $20 per person. That leaves something like $15 for incidentals or midnight snacks. Not bad.

Los Angeles, California
Per Diem: $133 for lodging, $71 for food and incidentals

Lodging: If you're a federal employee travelling to LA, you'll get more money for a hotel, but expect to stay pretty far from downtown, the city's hot spot. A room runs around $130 per night at the Holiday or La Quinta Inns by LAX or the Marriott Courtyard in Pasadena. On Airbnb, there are some modest rooms available in Hollywood and Santa Monica for under $100, if your government employer is more the gitz or beach type.

Food: $71 is the most generous per diem the government offers for food and incidentals, and you can eat pretty well with it. A cappuccino in Los Angeles averages just under $4, and a lunch at Mendocino Farms or other restaurant will set you back about $12. A decent dinner out at Baco Mercat, Bottega Louie or other mid-range restaurant will run you about $26 per person. But don't blow that extra money on desserts, because the rest of your per diem could go toward transportation. You could get a cab or rent a car, but you'll be shelling out at least $20 a day.

Who will win the dollar store bidding war?

Mon, 2014-08-18 13:34

Two dollar store chains are competing to buy a third, Family Dollar.

The retailer entertained an $8.5 billion merger deal with Dollar Tree last month, and Dollar General announced Monday it would pay a competitive $9.7 billion for the chain. While all of these discount stores are similar, they have several important differences.  

Here's a look:

Dollar General

  • Size: Biggest of the three.
  • Products: A lot of brand names, a mix of food and discretionary items like clothing and beauty products.
  • Placement in the Fortune 500: 164.
  • Locations: More than 11,500 locations in more than 40 states. Primarily in smaller towns, located in the southern and eastern U.S., as well as the Midwest and the Southwest.
  • Prices: About a fourth of their items are $1 or less.
  • How are they doing? Chain is thriving with $17.5 billion in revenue and $5.4 billion in profits.

Dollar Tree

  • Size: Smallest of the three.
  • Products: Mostly imported from China, focused on discretionary items like party supplies, beauty products, etc.
  • Placement in the Fortune 500: 342.
  • Locations: More than 5,000 locations in 48 states, mostly located in strip malls in small towns.
  • Prices: Most items cost $1 or less.
  • How are they doing? The chain is thriving and growing with $7.8 billion in revenue and $2.7 billion in profits.

The target of the bids: Family Dollar

  • Size: The takeover target, and second-largest of the three.
  • Products: A lot of brand names; focuses on food, also carries some linens and other products.
  • Placement in the Fortune 500: 271.
  • Locations: More than 8,200 stores in 45 states, mainly in urban and rural areas.
  • Prices: Most items are under $10.
  • How are they doing? Family Dollar has been struggling and closing stores. It tried raising prices and the plan back-fired. It has recently been closing stores. They have about $10.3 billion in revenue and $3.5 billion in profits.

What makes a good writer at Sports Illustrated?

Mon, 2014-08-18 13:32

This is an observation, I guess, about the state of journalism today.

Gawker has published a spreadsheet prepared by Time Inc., which publishes Sports Illustrated, ranking a number of writers and editors on a scale from one to 10 on quality of writing, productivity, social media prowess, enthusiasm and whether the content they create is beneficial to the company's relationship with advertisers.

Think about that for a second.

A Time spokesperson said SI's editorial content is uncompromised.

Won't you please take a vacation?

Mon, 2014-08-18 11:52

Chances are you know someone in your workplace who refuses to take a vacation. Or maybe it’s you. Research shows that one out of seven workers entitled to paid vacation time didn’t use it this past year.

Some managers prefer when their employees don’t take a vacation.

"Somewhere around 13 percent of U.S. managers are more likely to promote people who don’t take all of their vacation days," says Nancy Koehn, historian at the Harvard Business School.

Other companies want to fix this problem - so, they’re paying for their employees’ vacation expenses. In 2012, the company FullContact began offering their employees about $7,000 a year for a vacation.

"The perception of managers and workers is that somehow people who never take any vacation, or are always doing their job, are somehow better team members and are more productive," says Koehn. "But the evidence on all of that is unambiguous. People who take time off are actually less stressed, more focused and more productive."

'No medical student goes to...become a businessperson'

Mon, 2014-08-18 11:05

When Dr. Sandeep Jauhar was growing up, his mother held doctors in high esteem. 

"She always told us she wanted us to become doctors because she wanted people to stand when we walked into a room," says Jauhar, who went on to become a cardiologist.

Upon donning that hallowed white coat, however, Jauhar says he started to get uncomfortable. He felt like he was compromising some of the ideals of his youth to fit the business model of the American healthcare system. His new book, "Doctored: The Disillusionment of an American Physician", voices his frustrations with today's changing medical landscape.

"What the system has done is forced physicians to behave in ways that they don't want to behave," he says. "No medical student goes to become a doctor to become a businessperson, but the system is so dysfunctional today that it has created this business mentality among doctors."

Jauhar says the system needs to be fixed to accommodate the needs of more ordinary patients.

"The system is wonderful if you have a rare disease or if you require very high-tech care, but if you're a run-of-the-mill patient who has a chronic disease that needs to be managed by multiple doctors, the level of coordination and communication in the American system is so weak, so lacking," he says. "Today, if a politician says, 'we have the best medical system in the world,' he doesn't sound patriotic, he just sounds clueless."

PODCAST: Freeing franchises from their companies

Mon, 2014-08-18 03:00

The Grand Tetons are self-evidently majestic. But there are other reasons that anyone connected to economic policy around the world will keep an eye on Jackson Hole, Wyoming later this week. The top brass at the Federal Reserve will be there, along with their central banking counterparts from across the globe. Plus, Franchises -- everything from fast-food restaurants to plumbing companies -- are getting a lot of attention from lawmakers in California right now. A bill that would make it harder for parent companies to sever agreements with their franchisees, just passed in the state assembly and could soon pass the state senate. More on what the bill could mean for franchise owners, and the workers they employ. Also happening today, Steve Ballmer of Microsoft fame and the new owner of the LA Clippers, is hosting a rally. The first 2,500 fans to arrive at the arena will receive a free Clipper Nation t-shirt. Beyond little free shirts, what does the 2 billion dollar purchase price, a record for a basketball team, mean?

The emotional and economic toll on Ferguson, Missouri

Mon, 2014-08-18 02:00

When the man with the trumpet finished his rendition of “My Country ‘Tis of Thee,” he lowered his head and raised his arms in a gesture that everyone here -- and across the country -- now realizes means: “don’t shoot.” The posture matched that of others in the crowd of demonstrators that gather daily in a parking lot across from the Ferguson, Missouri Police Station. 

Noel King/Lindsay Thomas

Despite the rain, about a hundred of them turned out for a prayer vigil on Saturday, eyes closed, heads lowered, arms raised.

The demonstrations in this part of historic downtown Ferguson have been peaceful. Traffic flows normally, punctuated by occasional bursts of sound from the car horns of passing drivers honking to show support. The weekend farmers’ market is open, and bustling.

The city has made efforts to attract new businesses to this part of town, and the efforts seem to be paying off. South Florissant Street boasts a new wine bar, a bike shop, and a handful of new restaurants. On the outdoor patio of the Ferguson Brewing Company, diners chatter over their meals.

This economic revival, however, doesn't define Ferguson. Like a lot of cities across the U.S., it also has neighborhoods presently experiencing little or no financial investment. Here, those areas have been characterized by different types of protests.

Noel King/Lindsay Thomas

Less than two miles away, not far from where Michael Brown was killed, there are more demonstrations taking place outside of a QuikTrip convenience store that was gutted by fire when looting erupted.

Traffic is thick, business owners are boarding up their windows, and those in attendance seem to want something other than prayer: they want to be heard. 

23-year-old Jamieko Rich, a friend of Michael Brown’s, is clutching a pack of skinny cigars, the item the Ferguson Police Department said Brown stole from a convenience store, making him a robbery suspect. The timing of that announcement and the deep well of mistrust between people here and the authorities, has made many suspicious.

Noel King/Lindsay Thomas

“His life was worth more than this,” Rich said. “He still didn’t deserve to get shot. It don’t matter if he stole a million of these [cigarillos]. His life wasn’t worth it.”

The unrest has disrupted life in this part of Ferguson. Protesters and police have clashed in the evenings, sometimes violently. Residents charge the authorities with disproportionate use of force. This weekend, Missouri Governor Jay Nixon ordered a night-time curfew to be put in place, and many businesses closed early. 

Noel King/Lindsay Thomas

Rich, who works three jobs, says he’s lost shifts at the nearby McDonald’s since the unrest started.

“The day before yesterday, the police stormed in there while I was on the clock and told everybody we had a minute to get the [expletive] out of there,” Rich said. “The manager told everybody, ‘clock out.'”

He's lost money, but what's more, the situation has reinforced his belief that the police here don’t value the lives of young, Black men like him.

“They value dogs way more than they value us,” Rich said. “We’re a level beneath the dogs to them. I really believe that.”

He wants better from the police, not just because he’s a part of this community, but because their salaries are funded by taxpayer dollars.

And, he says, “I’m a taxpayer, right?”

Owners of franchises may get more control

Mon, 2014-08-18 02:00

Franchises, from fast-food restaurants to plumbing chains, are getting a lot of attention from lawmakers in California right now. A bill that would make it harder for parent companies to sever agreements with their franchisees passed in the state Assembly last week. It is headed to the state Senate next, where it is also expected to pass.

Keith Miller, who owns three Subway sandwich shops in northern California, supports the bill. He bristles at the power his parent company has over his business under current California law, which allows a franchisor to terminate a contract if franchisees stray from even the tiniest details.

“Fingerprints on the window — that’s in the operations manual that you must have windows and a front door that are clean and fingerprint free,” Miller says.

The bill moving through the California legislature right now, SB 610, would allow contracts to be severed only for “substantial and material breaches."

Miller, who is chairman of the Coalition of Franchisee Associations, says he hopes the bill will give franchisees like him a little more power in the franchisee-franchisor relationship.

That hope is shared by one of the nation's big labor unions, the Service Employees International Union, which has been paying for radio ads and digital media campaigns supporting the bill. As Christopher Calhoun, spokesman for SEIU California, told the Huffington Post: "Increasingly we are seeing franchisees and workers facing a similar challenge. Fundamental power imbalance enables multinational corporations to haul down billions at the expense of both workers and franchise owners."

But the bill could do damage to corporate brands and the franchisees who profit from those brands, argues Matt Haller with the International Franchise Association, an industry group that represents both corporate franchisors and franchisees.

“If franchisors can't maintain that brand integrity across their system,” Haller says, “then that's really going to be detrimental to the overall growth of franchising.”

A big day for the Clippers and the NBA

Mon, 2014-08-18 02:00

The $2 billion deal to sell the Los Angeles Clippers is a record price for a basketball team. It also makes for a happy story because the sale of the Clippers means there are a lot of winners:

“Well, certainly, Donald and Rochelle Sterling,” the team’s original owners who bought the Clippers decades ago for $12 million dollars, says Andy Zimbalist, a sports economist at Smith College. He says the team and the NBA are also winners.

“Because having a retrograde embarrassing owner who won’t spend money on the team is not good for the whole league either,” he says.

Kevin Zanni, a manager with Willamette Management Associates, a valuation firm, notes that even the NBA commissioner comes out looking good. 

“Because he gets rid of Sterling without having to force him out through the legal means to do it,” he says.

Finally, there’s the team’s new owner, Microsoft billionaire Steve Ballmer, another winner, says Smith's Andy Zimbalist: “If Mr. Ballmer didn’t have $20 billion of net worth, I would say that this is an awful purchase for him.“

But he does. He doesn’t have to worry about getting a return on this investment. #Win.

 

 

The first smartphone turns 20

Mon, 2014-08-18 02:00

20 years ago this past Saturday, IBM's Simon Personal Communicator went on sale. It had a screen, calendar, and could send email, making it by some measures the world's first smartphone. The phone was not exceptionally well received when it was released. BBC Tech Reporter Claire Brennan joined us to explain exactly what it was.

“It looked and felt very different from the modern iPhones and Androids we are used to,” Brennan said.

It got its name from the game Simon says, a marketing attempt to emphasize the apparent usefulness of the device.

The phone was rather large and heavy, weighing half a kilogram, and was priced at the extreme high end of the market, costing $899 at launch.

The model, which was only sold in the US, was not commercially successful, a victim of its size, expense, and a lack of the digital infrastructure taken for granted today, such as wi-fi hotspots and cellular data.

My money story: Synthpop band Future Islands

Fri, 2014-08-15 13:52

Everybody has one, a moment or a story where money changes your life. This week, the band Future Islands and the unexpected financial side of making it. 

“I think a big turning point was when we got picked up by a booking agent," says band member William Cashion. "That was the first allegiance in the music industry. We always felt like we were kind of on the outside. I booked our shows for about seven years, and we all just did everything, especially the first five or six years. We were going to Kinko's, making black and white Xerox copies and cutting them out in the van and burning CDRs."

"As soon as we brought on a booking agent it was like somebody waved a magic wand and we were just getting guarantees everywhere we went," Cashion says. "Which wasn’t a lot of money but it was like a door deal, it was like a pre-arranged amount of what we would get paid which totally changed the game for us as far as the kind of money we were making.”

But even when the band started making more money on the road, there were other unexpected financial problems.

“We were pretty far in the red at the end of last year," says Samuel Herring. We pretty much sunk everything into the music as well as getting hit with 2012 taxes in the middle of producing the album and we were just like, 'Oh, we forgot about that.' We got hit really hard with taxes last year. Our accountant called us in one day and [said], ‘Umm … well first off you guys have very high taxes, because you made a lot of money last year, a lot more than I expected. And because you’re an LLC you’re in the highest tax bracket.’ I was kind of looking at the guys, ' Should we high five? We made it! Highest tax bracket!' And we got destroyed. We got destroyed by the US Government. Maybe they’ll come after us.”

But with the band's recent success, Future Islands is learning to balance their DIY upbringing. 

“We’ve always worked solely out of necessity with what we could do, and I think that’s one of the reasons we’ve survived," says Herring. "It’s funny because now it’s at the point where we’re realizing we do need these certain crew members. And I’m fiercely shacking my head like, no, like I don’t want to do that! Even though it is time to give the reigns over because it’s too much for us now.”

Future Islands' latest album is "Singles." They're touring the U.S. this summer and fall.

Celebrities get out of the prepaid card business

Fri, 2014-08-15 13:39

When it comes to celebrity endorsements, there are plenty of success stories. Michael Jordan’s name brought in more than $2 billion for Nike last year, and back in May, Apple paid $3 billion to snap up rapper Dr. Dre’s Beats

But there are some things a famous name just can’t seem to sell.  Case in point: prepaid debit cards.

Magic Johnson and financial adviser Suze Orman pulled their prepaid cards about a month ago. Lil Wayne appears to be the latest celebrity to bow out. Try applying online for the Young Money card he endorsed, and you get an error page.

"This was sort of low-hanging fruit," says Matt Britton, CEO of the marketing agency MRY.  "Prepaid cards is a growing phenomenon, so I think celebrities initially saw this as a great opportunity for 'me to be able to leverage my fan base.'"

Consumer spending with prepaid cards jumped 6 percent last year to more than $118 billion, according to the Nilson Report. The cards are increasingly popular with people who don’t want traditional checking accounts - and those who can't get them.

"A lot of these - particularly newer prepaid card offerings that have more transparent fee structures - make a pretty compelling option for them," says Greg McBride, chief financial analyst at Bankrate.com.

Hidden fees helped tank the Kardashian family’s attempt at a prepaid card a few years ago, and more cards now disclose their costs.  

"The lack of regulation is the downside," says Susan Weinstock, director of consumer banking for the Pew Charitable Trusts.  "These cards do not have any protection should you lose the card or it gets stolen."

Weinstock says federal regulators plan to weigh in on prepaid cards this summer. As for whether celebrities should keep endorsing them, Britton says it takes a star with a "pristine brand" and a broad enough fan base to make it work.  

"LeBron James, maybe, especially since his move to Cleveland," she says. 

Coke gets an energy jolt from Monster, and vice versa

Fri, 2014-08-15 13:37

Coca-Cola is buying a nearly 17 percent stake in Monster Beverage for $2.15 billion. Reaction can be summed up as such: It’s been a long-time coming, and it’s a win-win for both companies.

As part of the deal, Coca-Cola will transfer its existing energy drinks to Monster, and Monster will transfer its non-energy drinks to Coca-Cola. 

“It really is well-suited for both organizations to focus on what they do, what they’re known for and what they do best,” says Darren Tristano, executive vice president with Technomic.

Consumers have been cutting back on sugary drinks lately, but the energy business has been growing. So while Tristano says these types of brand swaps are rare, it’ll allow each company to focus its strengths.

Coca-Cola was late to the energy drink game and its own brands haven’t been nearly as successful as Monster or its main competitor, Red Bull, says Ross Colbert, a global strategist for beverages at Rabobank International. Both companies have been successful at targeting younger, highly-active ­­consumers.

“The category is very competitive,” he says. “It takes a lot of merchandizing.”

By clearing the decks of its other brands, Monster can focus on its core energy drinks, fed by the help of Coca-Cola’s huge distribution network. Coca-Cola will get some popular brands, too, like Hansen’s Natural Sodas.

“It adds some flesh to their portfolio, too,” says Tom Pirko, the president of the food and beverage consulting company Bevmark. “So we have a nice division of labor.”

Starbucks brews changes to its scheduling algorithm

Fri, 2014-08-15 13:37

Chalk one up for old media.

There was an article in the New York Times Thursday detailing the struggles of a woman working irregular hours at Starbucks. Really irregular, like working late into the night, then starting at 4 the next morning.

Now the company says it’ll do better.

Among other things, it has promised work hours will be posted a week ahead of time. And that it'll make its scheduling software more flexible.

Starbucks is far from the only company that uses workers when, and only when, it needs them.  S0-called "just-in-time hiring" is a widespread practice in retail, hospitality and healthcare. There aren’t exact numbers on how many part-time workers fall into this category, but the number of people working part-time jobs, when they would rather be working full-time ones, was about 7.5 million in July. 

The practice has caught on because employers don’t want to pay employees to sit around. And, thanks to computers, with all their fancy data and algorithms and software, employers can more easily figure out when all the sitting around might happen. Software scheduling programs ensure people are booked to work only when they are needed.

“They look at ongoing trends, they look at what a store or restaurant or whatever it is, did last year at this hour,” said Susan Lambert, a professor at the University of Chicago.

These predictive programs then factor in specifics. “In Chicago it might be whether there is going to be a Bears game, or what the weather is likely to be,” Lambert said. 

And then they spit out a work schedule that can be tweaked again depending on how busy a place gets.

“It’s all about the cost-cutting,” said Peter Cappelli, a professor of management at the Wharton School of Business.

To make sure they have the staff they need, some businesses require employees to be on call 40 hours a week for part-time jobs.

“Sometimes they make them show up,” said Cappelli, “and you’ve got to commute and drive a fair bit, and then you discover whether or not they need you, but they require that you show up.”

All of which can make it very, very difficult to manage your life. To arrange daycare. Go to school. Work a second job.

There are companies out there staring to take these issues seriously, said Joan C. Williams, director of the center for WorkLife Law at the University of California Hastings College of Law.

Right now she’s working with the Gap on a pilot program to stabilize schedules.

In a statement, a Gap spokesperson said of the program: “We know that consistent and reliable scheduling is important to our employees. We are exploring ways to increase scheduling stability and flexibility across our fleet of stores.”

“If you want to be a high-road employer, who employs low-wage workers," says Williams, "'just-in-time' scheduling has begun to seem inconsistent.” 

Williams said the focus on cutting costs by matching labor supply and labor demand ignores other business costs. 

It also hurts a company’s bottom line, she said, when employees quit or don’t show up because they can’t balance their unpredictable work schedules with the rest of their lives.  

Jawbone tracks big cities' 'Zzz's

Fri, 2014-08-15 13:37

Here's a neat confluence of my lousy night's sleep last night and the rise of big data and wearable technology.

Thanks to the Wall Street Journal and data provided by Jawbone, makers of one of those fitness bracelets, we now know all kinds of stuff.  Like which city's residents get the most sleep: that'd be Melbourne, Australia at seven hours and five minutes a night.

The least? Tokyo at five hours and 45 minutes.

Do consumers have to shop to save the economy?

Fri, 2014-08-15 13:37

Kai looks back on this week, chatting with Linette Lopez from Business Insider and the Wall Street Journal’s Sudeep Reddy about the world economy and the spending power of the American consumer.

The NCAA lawsuit in context

Fri, 2014-08-15 13:32

Imagine that you go to play a video game, and all of a sudden you see yourself – basically your face is put on a motion capture animation. And the thing is, you didn’t give anyone permission to use your face—make money off your face – and so you get mad and decide to sue.

The NCAA is the organization behind college sports, but it's also a massive business, one that makes nearly $1 billion a year in revenue through TV, video games, and merchandising.

All that is up in the air right now, the NCAA just lost a huge court case that could hamper its ability to make money.

The ruling could lead to college athletes being compensated in some way, more court cases are looming, and we wanted to put that in context.

'Las Patronas' and the journey north

Fri, 2014-08-15 13:25

A group of Mexican women, "Las Patronas," are helping migrants on their journey north. The BBC's Will Grant explains:

That simple, instinctive act of kindness by the young girls was to lead to the creation of Las Patronas, a charitable organisation which has helped tens of thousands of Central American migrants over the past two decades and which was awarded Mexico's most prestigious human rights prize last year.

The village of La Patrona lies in an otherwise forgettable corner of the eastern state of Veracruz.

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