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Another plan to ease the student-loan burden

Mon, 2014-06-09 13:49

President Obama made an announcement Monday about a popular subject. Or unpopular really: student loans. Under the new plan, if you took out a student loan before 2007, you may be able to cap your loan payments at 10 percent of your discretionary income. That'll add millions more students to a pay-as-you go plan that was passed in 2012.

“This might impact, oh, maybe five million borrowers, but there are 40 million people who have federal student loans,” says Richard Vedder, director of the Center for College Affordability and Productivity. Then, he says, there’s the trillion dollars in outstanding student debt, in which  the latest plan will barely make a dent.

Borrowers may see things differently. 

“It could provide for some people, perhaps $50 or $100 a month of relief, which is, for a low income person, is material," he says.

The plan expands an earlier one and will now include students who took out loans as far back as 2007.  It  will also allow borrowers to apply for forgiveness after 20 years of payments.

But it doesn't apply to private loans, says Terry Hartle, senior vice president for the American Council on Education. 

The mount of money that people can borrow for an undergrad education from the federal government has not changed all that much in recent years, and the increase that we’ve seen in borrowing is in part attributable to the large number of private lenders,” he said.

Even so,  Hartle says he's in favor of the new plan. But Vedder says there's a more fundamental problem. The new plan, he says, is "dealing with symptoms, not the disease -- rising tuition fees. 

"What the president is proposing," says Vedders, "might be some help to past borrows,  but it’s going to do nothing to deal with the problem in the future."

Data on our data: 5 billion location records every day

Mon, 2014-06-09 11:46

This month marks the first anniversary of the Edward Snowden leaks that changed our understanding of online privacy. Just like the subject matter of the leaks, the reporting over the last year has offered a deluge of information. So this week, we're posting a short series about all that data. Every day we'll bring you another number that reminds us how much we have learned in the last year about online surveillance and the reach of the NSA.

5,000,000,000

location records every day

According to documents leaked by Edward Snowden, The National Security Agency collects nearly 5 billion location records every day from cellphones around the world. That data comes from mobile devices communicating with nearby cell towers, and the NSA uses it to look for patterns of movement that could link people to known terrorists.

Ashkan Soltani, an independent security researcher who has been working with the Washington Post to report on the leaks, calls this a "big data" approach to surveillance. "The majority of those 5 billion records are going to be innocent people's movements," Soltani says. "And those are still being collected and analyzed by the NSA, and I think that's going to be shocking to most people."

How do restaurants set their buffet prices?

Mon, 2014-06-09 11:13

One of the questions we received from listeners as part of our “I’ve Always Wondered” series is about buffets.  Mike Glatzer wrote to ask:

1)      How do buffets figure out the price to charge customers, in order to still make a profit?

2)      Do they know the average amount that each customer eats?

 Turns out, there’s a careful science to it.

Generally, restaurants figure you’ll eat about a pound of food.  To decide how much to charge, they take the average number of buffet customers per day and divide that into their daily buffet food cost. Then they know their average cost per person. 

But it doesn’t end there, because restaurants only stay in business when they’re making a profit. So restaurants put the cheapest, most filling food at the beginning of the buffet line.

“So we have potatoes au gratin at the beginning,” says Donetta Poisson, who teaches food service management at Georgia State University. “It’s cheese and potatoes but people generally love that.”

Poisson says buffets also use big spoons for those dishes.  The most expensive food is served on small platters. Or carved, one stingy slice at a time.

But fear not buffet fans. There are plenty of tricks you can do.

Mike Glatzer, who wrote in to ask the question about buffets, is actually something of an experienced buffet eater.  And when we met at an all-you-can-eat pizza buffet in Silver Spring, Md., he gave me some tips. Marketplace is pleased to present:

  • Don’t  starve yourself ahead of time.  If you’re going to a lunch buffet, eat a small breakfast. Otherwise, your stomach will shrink and you won’t be able to eat as much. 
  • Don’t get to the buffet right when it opens.  “If you show up when it first opens, they haven’t put out a lot of the best dishes,” Mike says. “They’re still preparing them or they’re saving them for, I guess, when they have the majority of the crowd.”
  • No fizzy drinks. The fizz will make you feel full.
  • Don’t eat the really salty stuff, like French fries. They’ll make you thirsty, and you’ll drink more. Whatever you’re drinking, it’ll fill you up.
  • Don’t be too adventurous.  You don’t want to get full on stuff you’re just trying. Fill up on the food you love, Mike says.
  • Save the cheap, starchy stuff for the end.  Don’t be fooled into loading up on it at the beginning of the buffet.
  • At a pizza buffet, don’t eat the crust. As Mike says, “The crust is just consuming real estate in my stomach that could be used for better purposes.”
  • No breaks. Your stomach will have time to realize it’s full. Mike says, “If you’re stuffing your face, it takes your body a while to realize how much you’ve consumed.”
  • Save a round or two for dessert. On the first round, Mike says, try a little bit of everything.  Decide on your favorites.  Then, “Go back for a second round, and that’s where you really hit them hard.”

For sufferers of rare diseases, options are rare too

Mon, 2014-06-09 10:35

Doctors have to swear a Hippocratic oath, as you probably know. It’s a promise to do everything required to help the sick. The economy doesn’t have to swear any such oath. So, what do you do when your disease or illness is so rare that few people have financial reason or resources to cure it?  

When Donna Appel’s daughter Ashley was just a year old and learning how to walk, Appel noticed she was bruising a lot. 

“So I brought her to the pediatrician and they said that because her skin is fair, you just see bruises more. I never really understood that,” she recalls.

Ashley kept getting bruises, but nobody thought there was anything majorly wrong. Appell says she felt like a crazy person. That is, until one night when Ashley was three. 

“Three oclock in the morning I heard her whimpering in her crib. I went in and her crib was full of blood.  She was in and out of consciousness, we rushed her to the hospital. She was there for three months,” Appell recounts.   

Ashley had bled so much she had suffered traumatic brain injury.

She had what’s called Hermansky Pudlak syndrome, a rare congenital syndrome caused by genetic mutations that interfere with the body’s ability to break down unwanted cells and material. Because it affects such basic cellular machinery, it has a lot of symptoms.

To be more specific: “Albinism of the eyes and of the skin, a platelet disorder that causes bleeding, a lung complication called pulmonary fibrosis, and that’s a fatal illness,” says Dr. Samuel Seward, Ashley’s primary physician and perhaps one of the only doctors in the country whose practice focuses on HPS patients.

These and other complications kept Ashley Appell in the hospital for much of her childhood.

“I grew up there,” she recounts in a husky, yet still delicate voice. “A lot of the doctors and nurses raised me there. And because of the traumatic brain injury, I had different specialists come to the hospital, and they would have to catch me up with school.”

The disease is incredibly rare -- Just one to two people in a million get it. That’s why Ashley’s doctors had trouble identifying her illness, as people didn’t even know specifically what caused it yet. “There was no treatment out there, there was no gathered data. We felt terribly isolated,” Ashley’s mother remembers.  

The hard reality that the Appells were facing was that no pharmaceutical company thinks it’s going to make billions of dollars off of a disease that affects just a handful of people. In fact, not many researchers had ever heard of Ashley's disease. 

There are government incentives for companies to devote resources to rare diseases, such as the FDA’s Rare Diseases Program. There are also niche companies that don’t need to make billions of dollars. But the quantity of research, attention, and resources is hardly comparable to those devoted to, say, cancer.    

“For those with rare diseases there are obviously additional difficulties,” says Terri Hinkley, Executive Director of the Association of Clinical Research Professionals. “It’s normally a smaller patient population, there may not be the number of pharmaceutical or biotech companies interested in products for these diseases.”

And clinical trials – which are needed both for new drugs and new applications for old drugs – are expensive.  

“There are many different types and phases of clinical trials and research but individually each will cost potentially millions of dollars. The cost to bring one drug to market can be upward of $10 million.”

The Appells didn’t have that. But they did have something else. Numbers.

“Really who’s gonna care about one person,” she says. “I just had this feeling like we needed to create a mob.”  

And that is exactly what she did.  She formed what would eventually become the Hermansky-Pudlak Syndrome Network.  She enlisted her first member by getting in the audience for the Sallie Jesse Raphael show -- Someone contacted her when she made an impassioned plea from the audience. At first it was just two families, then three, then dozens.

Eventually, they would hold conferences to discuss research, meetings where sufferers of HPS would trade makeup tips, and outreach events among New York’s Puerto Rican community, among whom HPS is significantly more prevalent.

While  drug companies may need dollars, researchers often need subjects.  Donna Appell started cold calling scientists. “I told them I had these families and we needed research.”

One of those researchers was Bill Gahl, clinical director of the National Human Genome Research Institute* at the National Institutes of Health. 

“I would not be studying HPS if it weren’t for Donna Appell,” he says.  The early individuals of her group “served as a substrate” for research into the causes of the disease.

“We actually collected 24 hour urine buckets from families with HPS,” recalls Appell. “ We had to do it in the winter cause they all had to be refrigerated so we put them all out on the snow on our deck. I gave awards for the heaviest urine bucket, and a funnel to the family that handed in the lightest urine bucket.”

What Appell didn’t have in money, she made up for with the old Razzle Dazzle.  The families sent cards, they put on performances for the researchers.  And they focused on marketing.

“How are we gonna get people to be interested in Hermansky Pudlak Syndrome – I mean even the name of it!” Appell recalls.

So they do what companies do and went out and trademarked a brand. “One of our members came up with a slogan ‘Dare to be Rare’.”

They’ve put it on mugs and other merchandise.  The idea is to get a brand that people like even if they have no idea what the disease is.    “Look at Boston Strong and Life is Good,” says Appell, referring to branded themes put to charitable or commercial use.

Between the urine buckets and the fundraising, researchers were eventually able to figure out the genetic mutations that caused HPS, and even run a few clinical trials through the NIH.

“I can’t highilght enough the significant power that these patient advocacy groups have,” says Hinkley with the Association of Clinical Research Professionals. “Their expertise in their disease and the resources and networks they have available to them have become invaluable to the clinical research industry.”

Researchers and drug companies are slowly realizing that studying rare diseases can improve understanding of less rare but more lucrative diseases. “If you study the rare it will lead to the common. There is so much we can learn and generalize,” says Hinkley. 

But Dr. Samuel Seward, Ashley’s primary care doctor, says not enough diseases are approached this way. “Nationally and internationally there does need to be a paradigm shift,” he says. By focusing research on cellular mechanisms or symptoms that rare and prevalent diseases hold in common, everybody wins. “In the sum total, rare diseases are much more common than people want to assume they are,” says Seward. "People like to think about the really common disease – Alzheimers, coronary artery disease, high blood pressure, diabetes. But when you think of the whole spectrum of human illness, rare diseases are important too and people are dying every day of rare diseases and every year of HPS, and we need to think more broadly about how we spend our research dollars.”

*CORRECTION: An earlier version of this story incorrectly identified the National Human Genome Research Institute. The text has been corrected.

 

Slow down, or blow up. 'Speed' turns 20.

Mon, 2014-06-09 10:24

From the Marketplace Datebook, here's a look at what's coming up Tuesday, June 10:

In Washington, the Commerce Department reports on wholesale inventories and sales and the Labor Department issues its job openings and labor turnover survey for April.

It's the 79th anniversary of Doctor Bob and Bill W. founding Alcoholics Anonymous.

A House subcommittee on the Constitution and Civil Justice discusses the state of religious liberty in the U.S.

A House Foreign Affairs subcommittee examines reconstruction efforts in Afghanistan.

And remember that action film with the bus that would blow up if it didn't maintain 50 mph on Los Angeles' freeways? "Speed" was released 20 years ago.

Marketplace Weekend: What we're working on

Mon, 2014-06-09 10:17

If you haven't heard, Marketplace Money is transitioning to Marketplace Weekend. As a special thank you to our newsletter readers, we’re inviting you to give some of our new radio segments on early listen. Let us know what you think!

Tech IRL

Marketplace Weekend host Lizzie O'Leary and Marketplace Tech host Ben Johnson explore the digital world in real life. Listeners get deeper insight into how technology is changing the world around then, beyond smartphones and laptops.

In this edition, Ben and Lizzie look at New York City's plan to convert old public payphone stalls into wi-fi hotspots.

The Number

You might hear Marketplace cover "The Numbers" during the week, looking at the daily state of the stock market. For Marketplace Weekend, we meet the people behind the news, on 'Main Street' instead of 'Wall Street,' and what number is impacting them.

This number? Three, for three percent. As much as three percent of Ukraine's GDP comes from money earned overseas and sent back home. The World Bank says that per capita income in Ukraine is about $3500 in U.S. dollars, so all that extra money can be a big boost. It's common for Ukrainians around the world to send money back to their families and friends.

Is that changing?

My Money Story

There's a moment when money changes lives, either by gaining it, losing it, never having it.

This time, writer Brian Finkelstein shares a story about art and earning, and learning what actually makes you happy. 

Thanks for listening.

Help us build Marketplace Weekend. Here’s how:

Mon, 2014-06-09 09:10

Hi everyone,

I’ve been off working with the Marketplace team, creating a brand new show. Starting the weekend of June 28th, Marketplace Money becomes Marketplace Weekend.

Our mission is simple: Marketplace Weekend will connect you to the world of money.

What does that mean? We’re going to explore all parts of our economic world. What's happening here, around the world, in your wallet and in your life. My philosophy is that money is a prism through which we see ourselves. The choices we make – or have to make – with it, tell us about who we are as individuals, families, countries, societies.

But the show is not just about what I think. It’s a dialogue. In addition to the radio show, we’re also hosting online conversations about what’s happening in the world, and we want those conversations to start with you. What we learn online will be a key part of building the radio show. We want to incorporate your thoughts and your voices.

I’m inviting you to be a charter member of our Marketplace Weekend community. We want your help in building our conversations and testing our new website. Throughout the week, the Marketplace Weekend team will share our thoughts and takes on some of the issues we’re all trying to work through. This week, we want to know, do you still call yourself middle class? What does middle class even mean in 2014?

Tell us what you think by visiting marketplace.org/money (the name stays until the relaunch). There, you’ll see buttons that let you write us, tell us and tweet us. Below those buttons, you can follow the conversation as it goes.

Thanks and I’ll see you online. Let’s chat.

Lizzie

We want YOU for Marketplace Weekend

Mon, 2014-06-09 09:10

Hi everyone,

I’ve been off working with the Marketplace team, creating a brand new show. Starting the weekend of June 28th, Marketplace Money becomes Marketplace Weekend.

Our mission is simple: Marketplace Weekend will connect you to the world of money.

What does that mean? We’re going to explore all parts of our economic world. What happening here, around the world, in your wallet and in your life. My philosophy is that money is a prism though which we see ourselves. The choices we make – or have to make – with it tell us about who we are as individuals, families, countries, societies.

But the show is not just about what I think. It’s a dialogue. In addition to the radio show, we’re also hosting online conversations about what’s happening in the world, and we want those conversations to start with you. What we learn online will be a key part of building the radio show. We want to incorporate your thoughts, and your voices.

I’m inviting you to be a charter member of our Marketplace Weekend community. We want your help in building our conversations and testing our new web site. Throughout the week, the Marketplace Weekend team will share our thoughts and takes on some of the issues we’re all trying to work through. This week, we want to know, do you still call yourself middle class? What does middle class even mean in 2014?

Tell us what you think by visiting marketplace.org/money (the name stays until the relaunch). There, you’ll see buttons that let you write us, tell us and tweet us. Below those buttons, you can follow the conversation as it goes.

Thanks and I’ll see you online. Let’s chat.

Lizzie

We want YOU for Marketplace Weekend

Mon, 2014-06-09 09:10

Hi everyone,

I’ve been off working with the Marketplace team, creating a brand new show. Starting the weekend of June 28th, Marketplace Money becomes Marketplace Weekend.

Our mission is simple: Marketplace Weekend will connect you to the world of money.

What does that mean? We’re going to explore all parts of our economic world. What happening here, around the world, in your wallet and in your life. My philosophy is that money is a prism though which we see ourselves. The choices we make – or have to make – with it tell us about who we are as individuals, families, countries, societies.

But the show is not just about what I think. It’s a dialogue. In addition to the radio show, we’re also hosting online conversations about what’s happening in the world, and we want those conversations to start with you. What we learn online will be a key part of building the radio show. We want to incorporate your thoughts, and your voices.

I’m inviting you to be a charter member of our Marketplace Weekend community. We want your help in building our conversations and testing our new web site. Throughout the week, the Marketplace Weekend team will share our thoughts and takes on some of the issues we’re all trying to work through. This week, we want to know, do you still call yourself middle class? What does middle class even mean in 2014?

Tell us what you think by visiting marketplace.org/money (the name stays until the relaunch). There, you’ll see buttons that let you write us, tell us and tweet us. Below those buttons, you can follow the conversation as it goes.

Thanks and I’ll see you online. Let’s chat.

Lizzie

What Donald Duck tells us about the economy

Mon, 2014-06-09 09:00

A cultural icon turns 80 Monday. Donald Fauntleroy Duck made his debut on June 9, 1934, in a seven-minute short called “The Wise Little Hen.”  The rest, as they say, is history.

But about that history… We wondered what life would have been like for someone who, like Donald Duck, was born eight decades ago. 

When Donald Duck debuted, Franklin Delano Roosevelt was a year into his first term, the New Deal was taking hold, and the U.S. economy had begun to improve.

“There was a certain sense that a recovery was possible,” says Kathy Peiss, the Roy F. and Jeannette P. Nichols Professor of American History at Penn.

Donald and many of his contemporaries – white men, especially – were in what demographer Bill Frey calls “the perfect place to benefit from the American dream.”

“He probably had that traditional family,” Frey says. “Two-point-two ducklings, I would guess he would have had.”

Of course, so far as we know, Donald had no children, though he does have three nephews, Huey, Dewey, and Louie, but we digress.

Someone who is 80 today, or a little younger, probably would not have fought in World War II, but that person would have benefitted from the post-War recovery.

“By the time he was age 40, the time you would have bought a house, the time you would have gotten your job in place, those were really successful years in the United States,” Frey says.

Odds are you would have retired before the bottom fell out – maybe with a full pension. Sounds pretty good, right?

“You know, life was never that simple,” says John Bodnar, co-director of the Center for Study of History and Memory at Indiana University. He says that, depending on your politics, you could have been blacklisted. “I guess you could have theoretically fought as a young man in Korea,” he adds. There were also big domestic conflicts – housing, schools, integration.”

How the jet changed air travel

Mon, 2014-06-09 08:24

If you're someone who frequently takes cross-country or even international flights, you have the Boeing 707 to thank for making them shorter and more affordable. It cut travel time from New York to London in half, and opened up jet setting to a new clientele.

"It usually was 14, 15 hours, and you had to stop in places like Gander, Newfoundland, or Reykjavik, Iceland...and you got there nonstop in six hours, which was unbelievable," said William Stadiem, author of the new book Jet Set: The People, the Planes, the Glamour and the Romance in Aviation’s Glory Years.

Although the jet itself didn't take off until the late 1950s, Stadiem says the so-called "jet set" lifestyle was nothing new; other modes of transportation were simply more in vogue at the time.

"They were the yacht set, or the Queen Mary set. They were just rich people who liked to travel Europe and live in high style," he said.

But after 1958--when the Boeing 707 came along--jet setting became much more affordable for your average middle-class American.

"One of the best-selling books of the '60s was Europe on five dollars a day. You could live like a king on five dollars a day," Stadiem said. "And airlines were doing package tours of one month in Europe, including airfare, for under a thousand dollars. That was a bargain."

PODCAST: Exploding student debt

Mon, 2014-06-09 03:00

With student loans at an alltime high, President Obama is expected to push for qualifying more people for income-based repayment plans. Plus, the new tear-jerker "The Fault in Our Stars" had a huge weekend at the box-office, making a case for the newest blockbuster demographic: teenage girls. Also, hear how a tiny town in Pakistan served as a testing ground for why technology takes so long to adopt into industry

NCAA trials

Mon, 2014-06-09 02:42

President Obama aims to reduce burden of student loans

Mon, 2014-06-09 02:00

Altogether, the value of every outstanding federal student loan and loan guarantee is around $1.2 trillion. That is a staggering number, and many economists say that debt is becoming a drag on the overall economy.

President Obama is expected to take steps toward, as the White House puts it, “reducing the burden of student loan debt."

It is no secret many young Americans – especially recent graduates – are having a tough time. According to Kevin Carey, who directs the New America Foundation’s Education Policy Program, they are having trouble “trying to get jobs in a still-weak economy, and having to make bigger loan payments at the same time.”

The president will direct the Department of Education to work more closely with the companies that service federal loans, and he wants to make more borrowers eligible for something called an “income-based repayment plan,” in which payments are capped at 10 percent of what a borrower makes.

“It could be a very big deal, depending on the number of people who use it,” Carey says.

According to Sandy Baum, a senior fellow with the Urban Institute, that has been a big obstacle so far.

“Lots of people who are eligible for income-based repayment don’t participate in it,” she notes, adding that many aren’t aware the program exists.

There is, of course, only so much the president can do without help from lawmakers. Sen. Elizabeth Warren (D-Mass.) has drafted a bill that would allow borrowers to refinance their student loans, but the Congressional Budget Office estimates that would cost taxpayers about $60 billion over the next decade, which is unpalatable to many Republicans.

Monday, President Obama is expected to ask companies that help borrowers prepare their taxes, including Intuit and H&R Block, to make sure their customers know what tax credits and re-payments plans are out there.

Landmark trial begins in NCAA case

Mon, 2014-06-09 01:00

A landmark trial begins today in a long-simmering case involving the National Collegiate Athletic Association, or NCAA.

The anti-trust lawsuit against the NCAA strikes at the heart of the organization's amateurism rules. Under the rules, former and current student athletes can't profit from colleges' commercial use of their names, images, and likenesses in, say, broadcasts of games.

"The plaintiffs would say these rules are not essential to college sports -- that they actually lead to exploitation of student athletes," says Michael McCann, Director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law.

Mark Conrad, Director of the Sports Business Specialization at the Gabelli School of Business at Fordham University, expects the NCAA will argue that not all schools can afford to share revenue with students. Conrad says only a few programs have major media deals to broadcast games.

"Most schools, even though they derive revenues from the system, they have to spend it, and athletic departments are very expensive to run," he says.

We don't hate change, but sometimes change hates us

Mon, 2014-06-09 01:00

You would think from our rapidly obsolete laptops and ever updating phones that all new technology spreads at a breakneck pace. 

You would be wrong.

“People who’ve studied technology adoption have often been struck by how slow it is,” says Eric Verhoogen, an Associate Professor at Columbia’s School of International and Public Affairs. “The technologies that make the news are the ones that move fast, but many cases -- including basic industrial technology -- have taken a long time to diffuse.”

Think unsexy things like “continuous annealing lines” for steel, or “lean production” (efficiency-focused manufacturing).  One review of 15 industrial technologies found that countries tend to adopt them, on average, 45 years after their invention.

Why? Well, there are many reasons, one of which came to light in a Pakistani manufacturing town called Sialkot. 

AN INDUSTRY IN A TEST TUBE

Forty percent of the world’s soccer balls are made in Sialkot at hundreds of factories using fairly uniform methods. The local industry is in a tight battle with competitors elsewhere in Asia, who have driven down Sialkot’s share of the global soccer ball market. Verhoogen and colleagues at the Lahore School of Economics saw an opportunity to use the city as a test tube -- a rare real world experiment -- to test the spread of cost saving innovation. 

So the economists offered a group of factories a leg up: a technological innovation.   

It was a die to cut pentagons with which to make soccer balls. More specifically, the cutting blades were arranged in such a way so as to create less waste. Nothing as magical as an iPhone, but  “we’re talking about something like 12 percent increase in profits from adopting this,” says Verhoogen.

Incidentally, Verhoogen got the idea serendipitously by watching Youtube videos of Chinese competitor factories. “Industrial espionage via Youtube,” he calls it.

The economists gave the die for free to one group of firms, gave the cash equivalent to another group, and a third group received neither. Shamyla Chaudhry, Associate Professor at the Lahore School of Economics, recalls that “initially we thought we had a breakthrough idea and we were very convinced that the minute we give the die to the manufacuters, they will switch on and see the cost advantages.”

In reality, the uptake was slow; 15 months later, only six firms out of 135 in town had adopted the technology. 

RESISTANCE FROM THE BOTTOM

The economists didn’t have to look far to find a reason:

“I told the owner that it’s not going to work,” says Mohammed Iqlal Urfnana, a worker at one of the soccer ball firms. He is a cutter, meaning he operates a die-press to cut out the hexagons and pentagons that are sewn together to make a soccer ball. Like many workers, Urfnana didn’t like the new die. “For us cutters, this means lower daily wages.”

That's because Urfnana, like most cutters in Sialkot, is paid by the piece. Learning how to use the new die would slow him down, so he would make fewer pieces and therefore less money. While it was in the factory’s interest to save money by cutting the fake leather more efficiently, it was not in the worker’s interest. 

GETTING ON THE SAME PAGE

To realign the incentives, Verhoogen, Chaudhry, and their colleagues then offered a bonus for workers who learned the new die. It worked. About half of the firms where employees were offered a bonus adopted the die.

Verhoogen points to one firm in particular when talking about a misalignment of interests and incentives blocking the adoption of new technology. It’s a large firm, employing 1,000 people, and was the only firm to adopt the die technology that had not been given the technology directly. What set it apart was how it paid its workers – not by the piece, but a simple hourly wage (with some bonuses). 

“Employers need to think about what incentives are being built into the payment scheme visavis innovation. Do workers have an incentive to adopt innovation or not? That’s the broader message we’re getting out of this study,” says Verhoogen. “Workers have to expect that they will share in the gains of innovation in order to cooperate in the process, and if they don’t cooperate then innovation might not happen.”

NOT A SOCCER BALL PROBLEM, NOT A PAKISTAN PROBLEM

“It’s not unique at all...any time there’s change, we have a natural resistance to change because people are used to doing what they’re doing and they’ve been successful when they were doing it,” says Hal Sirkin, senior partner at Boston Consulting Group.

“You always have to share with the workers” to bring them along, he says. “It can be a small amount but they need to benefit as well otherwise you’ll have even more resistance, and the change won’t work.”

As a management consultant, Sirkin says the incentive mismatch is familiar to him. “In one consumer products business,” Sirkin recalls, “they started to evaluate people by the number of pounds they sold. So people went from looking at the higher margin products to now the things that are the heaviest. Of course that created a very deleterious problem on the bottom line of the company.” 

NOT SO SIMPLE EITHER

“Some conflict of interest is a conspicuous and ongoing feature of all organizations,” says Robert Gibbons, professor at MIT’s Sloan School and coeditor of "The Handbook of Organizational Economics." The conflicts can be complex. Senior employees might block a new digital innovation because younger workers would be better at it. Bankers paid by the loan might take more risks than their managers prefer. The sales department might want less inventory on display than the marketing department. 

Further complicating the entire question is trust. Do workers or factory managers trust one another? Is the new technology actually more efficient? Will it cost jobs? Unlike the Sialkot experiment, “most of the time it’s not demonstrable,” says Gibbons. “You get to questions, is my boss leading me down the path here, are there unforeseen questions about this new chemical, and so forth.”

"All of these make it enormously more difficult to think you’ll implement a new tech with a simple bonus," he says.

And not all conflicts of interest can be easily resolved with a bonus.

Untethering the Road Warrior

Mon, 2014-06-09 01:00

Saturday afternoon, I pedaled my way up a last nasty hill and made for the finish line in Los Angeles of this year's AIDS Lifecycle bike ride. Me and 2,200 other cyclists. My final odometer reading was 545.5 miles over hill and over dale from San Francisco. My 10 year-old bicycle held up nicely. My 54 year-old body did okay, other than losing six pounds and gaining a handlebar-inflected blister at the base of each palm.

Why spend more than 42 hours on a bike seat over seven days, beyond the spectacular scenery and extraordinary sense of comradery? For starters, the AIDS ride last year raised more than $10 million dollars for people in the margins struggling with HIV and AIDS, once expenses were subtracted. The year, the ride is on track to raise even more.

I am still processing the many lessons of this pilgrimage -- and, yes, it was a pilgrimage. Here is just one conclusion, since every one of you is reading this using a digital device: The ride was way better because the organizers of the AIDS ride did not go out of their way to enable our digital addictions.  

I found this expressed in different ways. Very sensibly, everyone was banned from using any digital device while actually riding the bike. No video tracking shots destined for Youtube were allowed while blasting down the stunning 7 percent downgrade of the Gaviota Pass. Plus, no still photos while on the bike, no checking texts, no phone calls. If you wanted to check a text, the rule was pull the bike well off the road and hold the thumb of one hand up to indicate to others you were not in any trouble. The thumb thing alone was enough to keep me from wanting to deal with the phone at any place other than a formal rest stop.

There were other ways the ride's organizers seemed to keep a lid on our compulsion to stay connected. The camps could have had wifi set up. They do this at outdoor concert venues, but if you wanted connectivity on the AIDS ride you had to bring your own 3G or LTE.

Lastly -- and this was the biggee -- they didn't make it that easy to recharge devices. There was a recharging tent each evening, but its existence wasn't heavily promoted and only phones, not tablets or laptops, were allowed. Plus, the limited number of outlets always seemed full to capacity. My friend Richard rode fast and hard through a grueling 84 mile day just so he could get to a recharge station for a boost. When he arrived, again the recharging stations were full to capacity.

Let me emphasize that I am describing a feature of the ride, not a bug. Some people got some love from solar chargers, others brought extra batteries, but by and large, folks knew they had to conserve power. That meant there was less social media socializing and more actual socializing among real human beings.  There was less tweeting and more learning -- Like my interaction with an AIDS ride veteran named Michael who broke into tears when he told me about the candlelight vigil on the beach to commemorate people who died from AIDS-related diseases that occurs each year on the sixth night of the ride. And, I am here to tell you after seven days on a bicycle, there was more time for looking, appreciating, and thinking.

After all, what are the features that turn a trip into a pilgrimage? Sociologists and historians say a pilgrimage involves some kind of lengthy, physical undertaking in the service of some kind of higher purpose. Another key feature of a pilgrimage is that pilgrims cut themselves off temporarily from the normal bonds of society and family.

The first few days of the ride, mindful of the limited recharging capacity, I still kept an occasional eye on the news wires, my Facebook feed, and even work email, truth be told.

Then on day four, the fates intervened. I was just cresting a nasty hill within Vandenberg Air Force Base territory when the velcro flap on my backpack flew open, launching my smartphone in a delicate arc through the air like artillery shell gone awry. It shattered on the pavement and was run over by fellow cyclists and became, along with three flat tires, the only equipment failures of the trip. The phone was barely usable: It still connected, but my finger tip ran into slivers of glass when I tried to manipulate the screen.

So for the rest of day four -- and over days five, six, and seven -- I found myself less connected to the digital universe and more connected to the diverse set of folks pedaling around me. I saw the scenery more vividly; I engaged in conversations at camp with greater focus. It was then that I felt that I had both feet and a full brain in the ride and in its purpose. You may not be biking 545 miles this summer, but you may get a chance to get away, to experience something fresh, to consider new ideas. If you are lucky enough to have this kind of opportunity, you might think about whether turning down or turning off the digital while you are away might enhance your experience.

Movies aimed at teenage girls bring box office bank

Mon, 2014-06-09 01:00

This weekend at the box office, “The Fault in Our Stars” brought in $48.2 million dollars.

It’s Hollywood's latest movie adaptation of a book that appeals largely to young women.

It's part of a string of successful movies aimed at this very demographic -- The box-office success of Twilight, Hunger Games and Malificent shows the movie business is moving past its traditional audience (men aged 13  to 34) and found another, new way to make money.

“It’s like they looked under a rock and found this great big core audience that they didn’t know was there, which is young women,” says Sharon Waxman, CEO of The Wrap, which covers the business of Hollywood.

According to Waxman, instead of relying on broader appeal, studios are aiming for a stronger following with smaller slices of the audience; in this case, young women.

“Don’t forget that when you do that, you’re driving all kinds of other engagement," Waxman says. "They come back and see the movie more than once ... They’ll buy the DVD ... If they ever do a theme park ride around it, they’ll go to that too.”

Kathryn Arnold, an independent film producer, says that movies based on books keep appearing because Hollywood is making a lot of money.

“They’re realizing that they can have more confidence to actually go ahead and make these kinds of movies for young girls because they’re proving themselves at the box office,” she says.

Though, Arnold says that while this may seem like a feel-good Hollywood moment, the trend will only last as long as ticket sales keep coming in.

Hey, 20-somethings: Quit your job!

Mon, 2014-06-09 01:00

Economists want more Americans to quit their jobs.

That's because more voluntary quitting by people who have jobs — whether it be to get a better, higher-paying job, or to go back to school for additional skills or credentials — is a sure sign the job market is getting stronger and workers’ confidence is on the mend.

The rate of voluntary quitting — called the ‘quits rate’ by the Bureau of Labor Statistics — has been rising in fits and starts ever since bottoming out after the recession ended in early 2010. But the rate (at 1.8 percent in March 2014), is still approximately 20 percent below its level before the recession hit, says labor economist Heidi Shierholz at the Economic Policy Institute.

“There is a big backlog of people who would probably like to quit their jobs,” says Shierholz. “Someone who got their job before the recession in 2007 — over the last seven years they might have really benefited from changing jobs, but instead they’ve been locked in.”

The problem of ‘failure to quit’ is especially acute for younger workers in this economy, says Shierholz. “Mobility — the ability to move jobs — is really important for people who are at the beginning of their careers,” says Shierholz. “They’re still trying to figure out what their interests are, what their skills are, where they want to live.”

Three young people who have taken this plunge were milling around on a recent Sunday in Portland after an electronic dance party.

“I wasn’t planning on staying a paralegal forever — work felt like a bit of a grind,” said Will Petillo, 28. He quit recently, after working at an intellectual property lawfirm, to pursue post-graduate study in electrical engineering.

“I was working at a bakery,” said Rachel Maddox, 27. “And every time I went to the bakery my entire insides were on fire and I didn’t want to be there. I’ve been ready to get back into my own business and I just quit.” She’s now launching a life-coaching business.

Jesse Allen just quit the last of a series of manufacturing jobs he’s had over the past few years. “I was manufacturing saw chain,” he said. “The air inside the factory was nasty, there were failures from OSHA — I decided I’m just giving up on manufacturing altogether.” He wants to try to support himself by teaching dance classes.

These kinds of life and career choices are exactly what economists are hoping young people will make more often as the economy improves. More to the point, they're hoping that this generation will get bored in lower-skilled, less-interesting jobs, and try something new. 

Nedah Zamani, 26, is now on that path. She graduated from Cornell College, a small liberal arts college in Iowa, in 2010. A speaker at her commencement sent a chill through the graduates, says Zamani: “A third of us were going to move home and live with our parents, and that was very scary.”

Zamani had done the perfect internship during college at a nonprofit arts organization in Southern California. But by the time she graduated, there was a hiring freeze at the organization due to budget cuts, and her promised job evaporated. Eventually, she ended up back at her alma mater working in the admissions office.

Now, she’s packing up and about to start an MBA program in arts management at the University of Southern California. She’s saved to pay for school, and will also incur some debt to complete the degree.

“Even though it’s a certain level of unknown,” said Zamani, “I’m able to see it as a return on investment, in a way that I don’t know that I could have a couple of years ago.” Zamani said the improving economy gave her the confidence to go back to school to develop her career. “I think I will be better equipped for the market, and the market will be better equipped for me.”

There's still a lot of hesitation among middle-aged workers, though, to take career and income risks like these young people are taking. Fear of unemployment, of downward mobility, of only finding short-term employment after leaving a steady job — all of these drive people to stay in jobs longer than might be good for them, says Dan Finnigan, CEO of online recruiting site Jobvite.

“The last recession actually frightened the workforce,” says Finnigan. “You’re not going to take the chance of moving your whole family for a new job unless you believe it’s a job that’s going to stick. And most companies now have a difficult time convincing prospective employees that they’re going to be able to stick with them for a long career.”

Still, career counselors will say, it’s ever-more difficult to advance one’s career — to get a higher salary or more job responsibilities — without moving from one employer to another. That opportunity for advancement is what employees have sacrificed over the past decade. That is, if they’ve stuck with jobs they don’t like or that don’t allow for upward mobility within the organization. 

“Don't be afraid to go in and take a job that is lower level and less pay the what you have, in order to get into that organization, to learn the field, to network and move up,” advises Jean Erickson Walker, an executive coach in Portland, Oregon. “We didn't say that before. Years ago we said you want to stay in one company and work your way up. Now that's not very appealing. Most employers don't want someone who has been in one company for more than ten years.”

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Sun, 2014-06-08 15:53
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