Marketplace - American Public Media
Scandinavian furniture store Ikea recently announced it will adopt a new, higher wage structure at its U.S. stores in 2015. The company says its average hourly minimum wage in will go up to $10.76, an increase of 17 percent. That's big news, but there was a footnote to that announcement that's worth pausing on.
In this new wage structure, Ikea's lowest wages will be based on something called the MIT Living Wage Calculator. How did one MIT professor's research project become a tool that will affect the wages of thousands of American workers?
The story begins with Amy Glasmeier, a professor of economic geography and regional planning at MIT. Glasmeier is the kind of person who, when she goes on a trip somewhere, is less likely to head to the tourist attractions and more likely to drive to a grocery store where she can squint at price tags to figure out what it costs to live there. Checking out local listings for apartments is also a favorite pastime.
These travel hobbies of hers have to do with one question: Why do certain places have such high poverty rates when others do not?
In her travels and her research, Glasmeier has found that places with higher poverty are often ones where lots of the available jobs pay minimum wage, a wage that she says "absolutely was not paying people enough to live on."
How the Living Wage Calculator works
So what would be enough to live on? That would of course depend on where someone lived, and how much that place costs. And so Glasmeier rounded up some of her best graduate students to create, basically, a giant spreadsheet. They loaded it up with the best regional data available, from government and industry surveys, on costs for housing, food, child care, medical expenses, and transportation. (Plus a category called "other," which includes a modest budget for things like clothes, cleaning supplies and toiletries.)
The spreadsheet adds all these costs up, divides by the number of hours a person typically works in a year, and spits out the hourly rate that, according to all these calculations, an individual must earn to support him or herself (and a family—the wages are adjusted by household size), working full-time.
The "living wages" the calculator produces are not "middle class" wages, cautions Glasmeier. They wouldn't cover a trip to Hawaii once a year or saving for retirement. The living wage is, as she defines it, just enough to pay bills for the necessities of life and not fall behind.
No longer an obscure tool
Since Glasmeier created her calculator, it has had its fans, from policy wonks to unions to the occasional small-business owner. But it was still a relatively obscure tool until one day a few weeks ago, when Glasmeier got a phone call from a reporter, informing her that Ikea was planning to use it to set its own internal minimum wage.
"We truly do see this as the right thing to do for taking care of our co-workers," says Rob Olson, the acting president for Ikea U.S. "An opportunity to increase coworker loyalty, decrease turnover, as well as being able to attract more and more qualified applicants."
Olson says it would be too complicated to pay people different wages based on household size, so Ikea's going to stick with what the Living Wage Calculator comes up with for a single person with no children. (In other words, the lowest wage the calculator offers). Still, starting in January, the minimum hourly pay for an Ikea worker in an expensive suburb of Washington, D.C. will be $13.22 an hour. Over in Pittsburgh, where cost of living is much lower, Ikea's minimum hourly rate will be lower too — $8.29 an hour. But even that is still a dollar more than the federal minimum wage.
Olson says Ikea found out about the MIT Living Wage Calculator through consultants and he didn't know much about who was behind the actual tool.
That's just fine with Glasmeier. With all the political debates over where to set the minimum wage right now, she thinks the anonymity of the tool in some funny way actually makes people feel better.
"As if it was just an MIT robot, somewhere in a closet, crunching the numbers on a daily basis," she says.
Of course, The MIT Living Wage Calculator is not a number-crunching robot in a closet. But you can see why the objectivity the name suggests could make it more attractive to businesses large and small.
Not long ago the calculator caught the attention of Artillery Riewaldt, who owns two Jimmy John's sandwich shops in rural Illinois. Riewaldt says he used to pay all his employees minimum wage. Then, one day, a few years ago, a worker mentioned he was looking for a second job because he couldn't make ends meet.
"It's very difficult knowing that you have a good living for yourself, working right next to someone every day who's trying very hard and helping you grow that business, and knowing that they can't survive the bumps that come up in life," he says. "An employer always needs to make the decision: how much is too much for me at the expense of them?"
Riewaldt says when he found the Living Wage Calculator one night doing research on Google, it felt like a relief. "It's as far as I can tell political-free — it is actual data trying to decide what is that line that has to be met in order to live and be OK."
As politics-free and data-driven as the calculator may be, it is still made by humans, who have to choose the data and update it. On a professor's research budget that can only happen so often, says Glasmeier. Her calculator is currently based on data from 2010, inflated to 2012. Meaning it doesn't reflect more recent rises in cost of living.
In fact, after Ikea announced it was going to be using the MIT Living Wage Calculator, Professor Glasmeier emailed the company.
First, she thanked Ikea for raising wages. "But then I also told them that we were going to have an update," she says. "And the update was going to have a wage that was going to be higher than the one they were using."
She says the update will be published in September.
For now, Ikea says it will stick with the older, lower calculations, but that it will reevaluate annually.
Amid all the Sturm und Drang of mergers and markets, we like to track compelling ideas on Marketplace.
How about if colleges and universities could grow, rather than subtract, from their endowment money by making their campuses more environmentally friendly?
Mark Orlowski is founder and executive director of the Sustainable Endowments Institute. He has an online system to help schools track ways that they can get financial returns, not just through stock and bond markets, but through energy efficiency.
His project, the Billion Dollar Green Challenge, and online platform (GRITS) help universities take their operating cash or endowment, upgrade the energy efficiency of campus buildings, and get a bigger return in savings than the stock market would earn them.
The Green Revolving Investment Tracking System (GRITS 1.0) is designed to manage every aspect of an institution's green revolving fund (GRF), including aggregate and project-specific financial, energy, and carbon data. It also helps track and manage projects, as well as reports on environmental benefits and financial return.
How's that for compelling?
First up, more on Walgreens' decision not to move its headquarters overseas. It will, however, go through with a purchase of European pharmacy Alliance Boots. Plus, two large merges have fallen apart; Rupert Murdoch has abandoned his bid to purchase Time Warner, and Sprint lets go of its merger with T-Mobile. Also, what if colleges and universities could grow, rather than subtract, from their endowment money by making their campuses more environmentally friendly? The Sustainable Endowments Institute is trying to help them do just that.
A technology called PhotoDNA -- developed by Microsoft and used by Google along with other online companies -- is being credited with leading to the arrest of a man accused of distributing child pornographic images through Gmail.
Google has argued that they were largely complying with the law in notifying police. According to Stephen Balkam, founder and CEO of the Family Online Safety Institute, the company's actions are consistent with the legal understanding.
“They are to report images of child sexual abuse, and they have done so,” he says.
What makes this particular case different from finding evidence of other criminal activity in an email, according to Balkam, is that Google does not scan for illegal content in such a way as to detect things like planned robberies.
But even with these efforts tackling email attachments, there are other methods of disseminating this material, so action by search engines isn’t the end of the story.
But, under its new law, the state is prohibited from collecting information about a kid’s Body Mass Index. It also can’t keep a record about whether she’s pregnant, and it can’t gather kids' email addresses.
And that’s just a small part of what the state’s law covers.
"States have taken a huge step forward in the last two years in really strengthening their capacity to safeguard data," said Aimee Guidera, head of the Data Quality Campaign, a non-profit that is tracking student data laws.
But, as technology advances and students do more work on computers, a lot of states want more.
Idaho, for example, rules out certain biometric data; the kind that are collected by analyzing brain waves and heart rate.
New York calls for a parents bill of rights for data privacy and security.
Kentucky has made it illegal for student data to be used to target ads to kids.
So far, more than 20 states have passed laws. And that’s just the beginning.
States with new student-data laws
(click state for details)
New York North Carolina
"Our sense is that we’re going to see a growth in the number of pieces of legislation introduced next year," said Guidera.
A lot of this legislation is being driven by fear, particularly among parents. They worry about what data is being collected and by whom. They want to know how it's being used and whether it is safe.
The rash of new laws and the push by states to pass more is also creating fear among educational technology companies.
"Some of the requirements provide real practical challenges to their ability to serve their customers," said Mark Schneiderman, Senior Director of Education Policy at the Software & Information Industry Association.
In other words, the privacy push is making it harder for companies who want to get their apps into classrooms across the country, he said. It also makes it harder to for them to cash in on the multi-billion dollar market for educational technology.
"We’ve heard it from developers who are now shying away a little bit from the education sector," said Schneiderman.
In tech-centric California, state legislators have been trying to find a way to keep everybody happy.
"We think we’ve found the sweet spot here," said Senate President pro Tem Darrell Steinberg. He's proposed a law that’ll let app developers use student data to improve their products, but not to market to students.
"We’re not trying to stifle this technology," he said. "To the contrary, we want more apps to help more kids."
But, said Steinberg, there are too many weak privacy polices right now, and there's too much free rein for companies collecting data about kids.
The operating system Android scored a point recently in its ongoing war with Apple. According to the latest data - for the first time ever - the web traffic generated from Android smartphones and tablets was greater than that of Apple’s mobile devices.
The news wasn't entirely a surprise. For some time now, sales of Android smartphones and tablets worldwide have been beating Apple. But Apple’s CEO Tim Cook has waved off any concern by saying Apple dominates when it comes to online traffic. Then he’d ask, where are all those Androids anyway?
"They must be in warehouses, or on store shelves, or maybe in somebody's bottom drawer," Cook would quip.
Cook will have to retire that joke with the news that Android now beats Apple’s mobile devices in web traffic. Tuong Nguyen is an analyst at Gartner and he doesn’t think Apple users will just switch to Android.
"When you talk about the iOS crowd, they tend to be a more self-selecting crowd," he said. "Users who have more income or are more engaged with their technology and devices."
Pai-Ling Yin is the co-founder of the Mobile Innovation Group at Stanford. She says the real turning point will be when greater Android web use turns into more money.
"Just because they’re using it more doesn’t mean you can get them to pay you more," says Yin.
She says Apple users still buy more apps and goods online and so, from a business perspective, can be seen as more valuable.
Fedor Berezin doesn’t look like a warlord. He seems out of place among the beefy, thuggish rebels of eastern Ukraine, but he's their second-in-command.
“He really does look like the stereotypical sci-fi nerd. He’s this guy in glasses and he’s very soft spoken,” says Russian-born commentater Cathy Young. “Berezin is a sci-fi writer. So we have this really fascinating phenomenon of a sci-fi writer playing real war games.”
What makes Berezin’s presence among the violent, pro-Russian separatists fighting in eastern Ukraine even more extraordinary is that he wrote about the conflict four or five years before it happened. And apart from the plasma guns , the exoskeleton suits and the mechanized monsters, Berezin’s lurid sci-fi version of the war has proved prophetic.
“He wrote about eastern Ukraine becoming a battleground between East and West in a way that is eerily similar to what’s going on today,” says Young, who was the first western-based writer to spot a curious literary trend.
Over the past decade there has been a string of Russian and Ukrainian futuristic thrillers harping on a similar theme: noble Russians staunchly resisting the evil encroachment of the West.
Some pro-western Ukrainian politicians have even argued that the Kremlin may be behind this literary outpouring, encouraging a flood of books that make the idea of a war against western Ukraine acceptable.
Sounds far fetched? Oxford University lecturer James Sherr – one of the UK’s leading authorities on Ukraine - says there could be something in this claim.
“This about getting your people and others to adopt a certain narrative. The Russians are past masters at it.” says Sherr. “What people of Putin’s background - security and intelligence – understand is that to achieve your aims in war or peace, you have link all the different dimensions of activity into one narrative.”
Western science fiction buffs are not entirely surprised either, at both the alleged use of sci- fi as a political tool and at the genre’s predictive power. Author and critic Graham Sleight points out that in the past, sci-fi has foreshadowed a number of military innovations and developments.
“In 1903, HG Wells published a story called 'The Land Ironclads', which anticipated the armoured tanks first used in WW1 a decade or more later,” says Sleight. “And one of the founding fathers of American science fiction, Robert Heinlein, wrote a couple of stories in 1940, not only anticipating a world with nuclear weapons but also a nuclear arms race.”
And we would perhaps be wise to note: Berezin has also written a series of novels in which the United States and Russia go to war…. over possession of the Moon.
The Obama Administration wants to strengthen American business investment in Africa. Today, U.S. companies pledged some $14 billion in new business investment. That was in addition to commitments from the U.S. government, the World Bank and other private groups.
The major push in this bid? Power (the electric kind). After all, six of the ten fastest growing economies are in Africa. But Ben Leo, a senior fellow with the Center for Global Development, says 600 million people in Africa lack any electricity. That’s a market opportunity, but it’s also a headwind for economic and business growth.
“That’s why every single African leader has affordable electricity at the top of their political and economic agenda,” he says.
That’s also why the private equity firm Blackstone just announced it has teamed up with African billionaire Aliko Dangote to invest $5 billion in energy infrastructure in Sub-Saharan Africa. The Carlyle Group is also getting involved in energy infrastructure.
Aubrey Hruby, a visiting fellow at The Atlantic Council, says other business obstacles remain. Say you want to open a KFC.
“It doesn’t take a genius to know they want to do business in Nigeria or in Lagos,” a huge city will millions of people, she says. The problem is finding good business data.
“The question is on what block? On what corner? And how do you decide that based on traffic patterns, available disposable income, those kind of metrics?” she asks.
Still, Witney Schneidman, senior international advisor for Africa with Covington & Burling LLP, says U.S. businesses have already invested about $31 billion in Africa. Trade goes both ways, he says.
You can walk into a range of clothing stores in the U.S., like “Lands’ End, Old Navy, and you’ll see shirts that say ‘Made in Lesotho.’ You’ll see pants that say ‘Made in Mauritius.’ You’ll see t-shirts that say ‘Made in Kenya,’” he says.
The evidence? Wal-Mart is doing business in Africa. Procter & Gamble is making diapers there. Even China is looking to Africa for cheaper labor.
GM Financial, the unit of General Motors in charge of auto financing, has received a subpoena in a federal investigation of subprime car loans.
The company disclosed the request in a recent regulatory filing. GM said it’s complying and that it believes the request is focused on the subprime auto-finance industry in general, not GM in particular.
While some of these auto loans can look similar to the subprime mortgages that led to the financial crisis, the scale is different, says Lawrence White, an economics professor at New York University's Stern School of Business.
“The magnitudes are nowhere near in subprime auto what they were in subprime mortgage lending,” he says. “So it’s highly unlikely that there will be any significant macro-economic consequences."
But that doesn’t mean lenders and investors won’t feel some pain if the loans go wrong, White says. The set of borrowers who were impacted most by the mortgage crisis are the ones at risk again, says Chris Kukla, senior vice president at the Center for Responsible Lending.
“It’s also the same practices,” he says. “Loans that were being made at higher interest rates, generally to people who had lower credit scores [with] terms and conditions to them that just made them unaffordable.”
Just like a foreclosure, having a car repossessed can devastate a household.
“Access to an automobile is extraordinarily critical to low-income families and working families," says Stuart Rossman, director of litigation at the National Consumer Law Center. “They are reliant on it for their job, they’re reliant upon it for their education.”
Take away access to a car for enough people, he says, and you could have a serious economic problem on your hands.
On July 28, 2014, General Motors Financial Company, Inc. (the “Company”) was served with a subpoena by the U.S. Department of Justice directing it to produce certain documents relating to its and its subsidiaries’ and affiliates’ origination and securitization of subprime automobile loan contracts since 2007 in connection with an investigation by the U.S. Department of Justice in contemplation of a civil proceeding for potential violations of Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Among other matters, the subpoena requests information relating to the underwriting criteria used to originate these automobile loan contracts and the representations and warranties relating to those underwriting criteria that were made in connection with the securitization of the automobile loan contracts.
Media company Gannett announced Tuesday it plans to split in two.
Its newspaper and publishing arm – including USA Today – will split off to become one company, retaining the name Gannett. Its broadcast and digital arm, which has yet to be named, will become its own company. That company also, and not coincidentally, just bought up Cars.com.
It’s the latest example of a decade-old scramble to figure out what to do with newspapers.
In some ways, Gannett is spinning off its publishing side, but you could also say it’s ditching it.
“They’re doing it for the simple reason that newspapers are in a downward spiral that’s irreversible,” says Porter Bibb, managing partner at Media Tech Capital Partners.
The idea is that newspapers drag down earnings, stock prices, and even investment from the broadcast and digital side of the company. Those companies could excel, ostensibly without needing to subsidize their ailing brother.
“The latest number showed that while 70 percent of [Gannett’s] revenues were coming from newspapers, already 60 percent of profits were coming from broadcast,” says Ken Doctor, media analyst at Newsonomics.
Even though digital ad spending for newspapers is expected to increase 4.3 percent this year to $3.64 billion, traditional print newspaper ad spending is expected to drop 4 percent to $16.73 billion. That brings the total ad spending down 2.6 percent from last year, according to eMarketer.
The decline of newspapers is intimately tied to why the broadcast and digital side of Gannett will buy Cars.com. Auto advertising used to be the hand that fed newspapers. Now that hand is feeding someone else.
“Print media’s lost billions in ad revenue in the last decade, and a large part of that is from auto dealerships who have shifted spending from print classifieds over to digital,” says Mike Hudson, an analyst with eMarketer.
The broadcast and digital side of Gannett followed the money and it's leaving publishing and newspapers behind in what has become a popular strategy. Time Warner spun out Time Inc. and News Corp split off from 21st Century Fox.
It’s not necessarily leaving print behind to die, just to fend for itself.
“Essentially, the theory goes if you spin off the print piece, the print can have the freedom to focus on the business of print itself,” says Hudson.
There are often crossovers – relationships between TV and print remain. In Gannett’s case, the print company would very likely continue to provide news services to the broadcast side.
But to the extent these spinoffs are independent, they are also vulnerable.
“The companies are left as standalone companies, that means they operate now without a safety net,” Doctor says.
So far the print spinoffs aren’t looking great, either.
“All these publishing companies are still negative on revenue year over year, and for most of them they haven’t grown revenue for seven years really since the recession,” Doctor says. “So we don’t know about the long-term impact of it.”
The broadcast companies appear to be doing better in terms of earnings and stock prices, but that doesn't prove spinning off is a good strategy. Broadcasters have their own battles to fight – think about cable TV and its battles with Aereo and Netflix.
So while the spinoff is a popular move, it’s also a new and unproven one.
Graphic by Shea Huffman/Marketplace
A report today from two bank regulators, the Federal Reserve and the Federal Deposit Insurance Corporation, basically said that "too big to fail" thing.
It was an update on how banks are faring in putting together their living wills, as mandated by the Dodd-Frank law. Basically, it explains how they would handle failure without involving the government.
It's not looking so good. In the words of Thomas Hoenig, the second in command at the FDIC:
"Despite the thousands of pages of material these firms submitted, the plans provide no credible or clear path through bankruptcy that doesn't require unrealistic assumptions and direct or indirect public support."
In other words: Wall Street's totally still going to hose us.
There’s this pretty amazing YouTube video featuring Rafael Dumon at Lake Garda, Italy. Dumon attempts a self-proclaimed world’s first: using a wingsuit to jump off a mountain, gliding onto the lake far below.
“I’m not going to be using my chute, and I will end up skimming on the lake. And instead of bouncing, I will hope to kind of glide in at a trajectory, similar to a plane,” Dumon says.
Believe it or not, he does it, capturing the feat with a GoPro camera:
But what if something had gone wrong? Could GoPro be held liable? After all, the company has its own YouTube channel for users to share extreme videos.
“Well, I would say that they’re certainly at risk for a lawsuit, but not necessarily at risk for losing a lawsuit,” says Jim Underwood, a law professor at Baylor University in Waco, Texas.
He says for GoPro to lose, the plaintiffs would actually need to prove there was something wrong with the camera that caused the accident.
Underwood says another possible lawsuit would be for a plaintiff to blame the risky behavior on the company’s marketing, "and that they failed to provide adequate warnings of those dangers.”
But in the same breath, he says the courts have ruled that when the danger is clear, there’s no need to spell out it.
“In fact, that’s why these videos are so popular - because the danger is so obvious and sometimes shocking,” Underwood says.
Even though it may be difficult for GoPro to lose one of these lawsuits, the company wants would-be investors to know they could be sued.
On page 34 of GoPro’s IPO filing with the Securitites and Exchange Commission under a section entitled “risk,” the company writes:
“Consumers use our cameras and accessories to self-capture their participation in a wide variety of physical activities, including extreme sports, which in many cases carry the risk of significant injury. We may be subject to claims if consumers are injured while using our products.”
GoPro may have reason to be concerned. The workout app Strava, which lets cyclists and runners compete virtually, has been criticized -- and even sued -- for encouraging dangerous biking in busy cities.
“Trial lawyers will never miss an opportunity to try to open a new avenue for litigation. Certainly the world of apps is one of those," says Bob Hartwig, president of the Insurance Information Institute.
He says unless laws start to change, the way litigation works in this country -- lawyers are actually encouraged to file a lawsuit against everything and everyone involved in an accident. Even a GoPro camera.
Should the public know how much money Wal-Mart, or that convenience store down the street, takes in through the federal food stamp program? Or does that amount to a retail trade secret? Those are the questions at the heart of a request for public comment announced Monday by the U.S. Department of Agriculture, which runs the food stamp program.
Here’s the background: Last year we spent $76 billion tax payer dollars on the food stamp program (officially known as the Supplemental Nutrition Assistance Program or SNAP). That money goes to about 47 million low-income Americans, who use it to buy food at more than 250,000 retail stores across the country.
But, as I have reported here before, exactly which stores and which companies benefit most from those food stamp dollars is something the federal government has never disclosed. Officials have long argued they are required by law to keep the information secret, in order to protect retailers.
A few years ago the Argus Leader, a newspaper in South Dakota, sued the USDA, arguing the public has a right to see this data. The issue is still tied up in court. Last spring, when I interviewed Agriculture Under Secretary Kevin Concannon about the issue in March, he told me that in his opinion, greater transparency would be a good thing.
“I think personally it’s in the interest of the American public,” he said. “These are public benefits that are moving through the economy.”
Yet when I asked him if he would push his agency to disclose the information he said he needed to “talk to the lawyers.”
Judging from the USDA’s announcement Monday, the lawyers have been consulted.
In the press release announcing the agency’s request for public input, Concannon said: “Our goal is to provide more transparency so that people can have access to basic information about the amount of SNAP benefits that individual grocery stores and retailers are redeeming. We hope that this public comment period will be informative as to how we can do that in the most thoughtful and appropriate way possible."
The USDA will take public comment until Sept. 8. As for what kind of comments might come in over the next month, we have some clues already.
When I asked Wal-Mart spokesman David Tovar last spring about how much revenue his company took in from food stamps, he told me it was proprietary information.
“We don’t provide our market-share data on any categories like that,” he said, pointing out that knowing how much a particular Wal-Mart in a particular location makes in food stamps could be helpful to competitors. “I think any information that a retailer shares about how they’re serving customers and how they’re going to market would be interesting to lots of other retailers.”
It’s worth pointing out that aside from being the nation’s largest retailer, Wal-Mart likely takes in the most food stamp dollars, an estimated 18 percent last year, according to leaked comments from a company vice president at a private dinner last fall, which Walmart later confirmed. That sum would amount to $13 billion, or about 4 percent of Wal-Mart’s total U.S. sales.
Wal-Mart is also one of several retailers that have a significant number of employees who make little enough that they rely on food stamps to get by. In Ohio, up to 15 percent of Wal-Mart’s workforce uses SNAP, based on our analysis of state food stamp enrollment data.
Outside the retail community, there are voices advocating for making the data public, arguing that it could help citizens and policy makers better understand which stores profit the most from food stamps, what kinds of foods they promote and sell, and what their business practices are.
“It could be used to improve SNAP and make it more accessible to poor families,” writes Stacy Cloyd, the Senior Domestic Policy Analyst at Bread for the World Institute, an anti-hunger organization. Knowing which stores attract the most SNAP customers would “allow hunger advocates to learn from successful businesses and share best practices. It would also help them identify the highest-volume vendors so that they can offer the stores information and recommendations on how they can supply a variety of nutritious foods,” she writes.
As Jonathan Ellis, the South Dakota journalist who sued the USDA to make food stamp data public, points out: “Typically, if a business participates in a government program, you can get a copy of their contract and find out how much they’re being paid.”
That’s how it works when the government pays a construction company to build a bridge, or a defense contractor to build a fighter plane.
But that’s not how it works when the government reimburses retail companies that participate in the federal food stamp program, at least for now.
There was a point not all that long ago when schools taught the metric system because it was "just a matter of time" until the United States ditched pounds, miles and inches.
Well, this adaptation has yet to happen, and who knows if it ever will?
"One thing that shocked me was that the first measure that was completely decimalized was the U.S dollar," says John Bemelmans Marciano, author of "Whatever Happened to the Metric System?". "And we largely have Thomas Jefferson to thank for that."
President Jefferson suggested the use of a decimal currency in 1782.
"It took about 100 years for decimals to catch on for everyday transactions," says Bemelmans Marciano.
Hear the full conversation in the audio player above.
In the early 2000s, Intel was named the most valuable manufacturing company in the world.
Michael Malone, author of the book, "The Intel Trinity: How Robert Noyce, Gordon Moore and Andy Grove Built the World’s Most Important Company", told us "at one point, Intel was one of the best known brand names in the world, which is insane if you think about it... this is a company wasn’t selling to consumers, it was selling chips to go onto motherboards, to go into somebody else’s personal computer, to be sold at Costco."
Intel has since been overshadowed by newer tech companies. Malone says techology has become so pervasive, the microprocessors fueling daily lives are taken for granted.
"For most of the 21st Century, it’s been all about Facebook, Twitter, LinkedIn and apps. And we forget, because we are so used to them now, that all that stuff rests upon hardware," says Malone. "Without the hardware, devices, chips, and especially the microprocessors it all grinds to a halt."
On Tuesday, Missouri voters are headed to the ballot booth to decide on whether to increase the state’s sales tax. The additional revenue would be used to fund the maintenance and construction of roads and bridges.
The state of disrepair of the nation’s transportation infrastructure has been a known problem for quite a while now. What isn't known is who's going to pay to fix it.
Phil Oliff, who researches infrastructure issues for the Pew Charitable Trust, says traditionally, “states get a lot of money that they spend on highway and transit infrastructure from the federal government.” Most of that money comes from the Federal Highway Trust Fund, but the fund is running out of money, and Congress has been doling out funding in short-term increments. That's bad news for states, who need more certainty about their financial situation when they commit to long term projects. Many states are taking it upon themseves to raise the money independently.
That could mean tolls on roads and bridges. It could mean borrowing from the bond market. In Missouri, lawmakers are proposing a three-quarter-of-a-cent increase in the sales tax.
Tom Shrout, of the advocacy group Missourians for Better Transportation, says says the tax is unfair to locals.
“Big trucks passing through Missouri, they would be asked to pay nothing while a senior citizen who doesn’t use the roads much will be asked to pay more,” he points out.
As Missourians head to the polls, the Associated Press says nearly a quarter of the states have already instituted similar taxes, fees or fines to pay for infrastructure projects.
Last week was a pretty crummy stretch for stocks, and today doesn't look much better. So how is the stock market really doing? Plus, does the public have the right to know how much a retailer takes in through the federal food stamp program, or is it a trade secret? More on that debate. Also, Missouri voters are headed to the polls today to decide whether to increase sales tax. Money raised would be used to fund roads and bridges. We tell you why your state might be next.
Terri Still has lived in Camden, New Jersey since she was in second grade. But these days, as she walks around her neighborhood, she tries not to look around her to avoid seeing the blight that surrounds her.
“It’s depressing seeing it all constantly,” she says. “You try not to think about it.”
Across the street, Christopher Toepfer pokes around inside an abandoned warehouse. There are stacks of broken palettes and scattered food wrappers, evidence of squatters. The building used to house a porta-potty company, but it’s been vacant for several decades.
“We call [these] ‘abando-miniums’ in the vacant building business,” he says.
But outside, the warehouse is getting a facelift. A small crew is painting the exterior dove grey, covering up years of graffiti. They're employed by Toepfer’s nonprofit, The Neighborhood Foundation, and the warehouse is one of about 40 buildings the Foundation has boarded up and painted in Camden this summer. Across the country, they’ve done about 1,500 similar projects, focusing primarily on residential buildings in 21 different cities.
Local officials who have to deal with large tracts of vacant and abandoned buildings often resort to one of two options: fix 'em up or tear 'em down.
Toepfer represents middle ground. His foundation paints the boarded-up buildings to look as though they have real, working windows and doors. Occasionally the painters even draw plants or pets in the window.
“Sometimes, we even do facades of trees, like silhouettes of trees, to cover graffiti,” he says.
Once an urban area falls into decline, there is a spiral effect. Abandonded houses fall into disrepair and are often used by vagrants or criminals. That depresses the value of occupied homes and makes the neighborhood less desirable. Property values decline, the remaining residents sell up or move out, and landlords find it difficult to rent the housing stock. Those houses fall into disrepair, and the downcycle continues.
The idea is that a makeover, even one that’s just skin deep, can stop this spiral and stabilize a neighborhood. The Neighborhood Foundation charges $500 to paint and secure a house or $2,500 for a larger commercial building. It's a lot cheaper than a renovation, or even a demolition, which could cost $10,000 or $15,000.
It's not just that a paint job can have a beneficial economic effect; it can raise peoples' spirits, too.
“I think when they fix things up, it gives people more encouragement,” says Terri Still, the Camden resident. “It makes them want to take pride in where they live.”
Beautification does work, agrees Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School. “Small investments can have large returns."
It’s a strategy realtors and developers have long used.
“In the 'burbs, when you’re selling a property that hasn’t been lived in for a while, the first thing the realtor will say is 'mow the lawn',” says Wachter, adding that simple fix can boost property values as much as 20 percent.
Of course, securing and painting a property isn’t a permanent solution — it’s a Band-Aid, literally plastering over the wounds of a city.
But hopefully, that Band-Aid gives it the chance to heal.
The suburb of San Leandro sits just east of Oakland, California, within striking distance of San Francisco and Silicon Valley. Underneath the city lies a loop of ultrafast fiber optic cable known as Lit San Leandro. Data speeds through these cables about 2,000 times faster than a typical internet hookup.
The cable exists because of one guy: Pat Kennedy.
Kennedy runs OSIsoft, a company based in San Leandro. A few years ago, he was looking to expand, but he wanted the kind of infrastructure he saw in towns like Palo Alto. So he put down $3 million of his own money to make it happen in his backyard.
“The reason I did it is that I’ve actually been a 40-year resident of San Leandro," Kennedy says.
It became clear to him that industrial cities like his were never going to be top picks for things like broadband or fiber. "We’re really going to suffer as a result,” Kennedy says.
Can broadband speed up the economic of industrial towns?
San Leandro was already struggling. It used to be a manufacturing town, but those jobs dried up in the '70s and '80s.
At one time, there were more than 20,000 manufacturing jobs in San Leandro. In 2013, fewer than 7,000 of those remained. Industrial-zoned land, much of it now used for storage, makes up nearly a quarter of the city. A 2013 report calls these areas “neither memorable nor particularly pleasant to get around.”
On the other hand, a presentation by City Manager Chris Zapata calls broadband “a laser cheetah with explosive power accelerating economic growth.”
Deborah Acosta, San Leandro’s new Chief Innovation Officer, frames the issue differently: “How do we re-energize this industrial space to actually become alive again?” Her job is to convince businesses that San Leandro is the place to be.
That starts with the bright red streaks running through her hair. They put people on notice, Acosta says.
“When they see my red hair, they’re going, ‘Holy smokes! Something’s different here, I think I need to pay attention,’” she says.
Investment in fiber and infrastructure — now at more than $13 million — wouldn’t have happened if Pat Kennedy hadn’t put down that initial money, Acosta says.
Analyst Craig Settles says private investment, like Kennedy's, is one way for cities to get broadband.
“The idea of going to local businesses and saying ‘can you contribute to the network?’ is one of the more viable options, in my book,” Settles says. Local businesspeople have helped get broadband off the ground in places far away from tech centers, like Emporia, Kansas; Fredericton, New Brunswick; Keene, New York.
In San Leandro, Pat Kennedy’s investment has paid off with buzzing and whirring on the second floor of the West Gate shopping mall. The sound comes from 3-D printers, manufactured by Type A Machines.
Based in San Francisco, Type A moved its manufacturing operations to San Leandro earlier this year. They’re currently based above a Sports Authority at the mall, a massive building that was once a Dodge auto plant. If all goes well this year, Type A’s workforce here could more than double, to about 50.
Since San Leandro first installed broadband a couple of years ago, the initiative has created about 90 jobs. But Acosta and Kennedy think they’re on to something. They’re doubling down, and point to half a million square feet of office space going up, with those ultrafast connections.