Marketplace - American Public Media

Restaurants squeezed by high price of limes

Tue, 2014-04-08 07:51

So just how expensive are limes these days?  Danny Herrera manages Fonda San Miguel, one of the priciest Mexican restaurants in Austin.  He says six months ago, he was paying $14 a case.

"Then it kinda went up to $20, and then it slowly started getting higher and higher," he says. "And then as of last week, it was up to $99."

Herrera stopped garnishing his meals with limes, and he's rethinking his Margarita prices. 

Most of the limes we consume come from Mexico - particularly the state of Michoacan, an area dominated by the drug cartels and citizen militias. Producers say they'd rather burn their crops than sell at the pitiful prices the cartels pay. I talked to one of the lime producers in Michoacan. He asked me to change his name to Carlos because he's afraid of the cartels.

Carlos says local lime prices are not high, they've held steady. "I don't understand why the public says the price is too high."

When I tell Carlos that some restauranteurs in the U.S. are paying around $100 per case, he's shocked.

"Son of a… That's a gross exageration."

Carlos says somebody is making a lot of money. But it isn't him. He says floods and plagues have cut citrus production in Mexico by half.

And there's a growing global taste for limes.

"In Asia, it's an important part of their supply and demand," says Dr. Eric Thor from the School of Agribusiness at Arizona State University. He says limes are more expensive now - in part - because there are millions more people using them. "Today we use the fruits in everything from special Margaritas to Asian noodles."

Now, planes full of fruit from the Americas are flown to China. And that has increased the price of everything from limes to cherries. But why do people in the United States pay for what consumers in China want? Thor says, basically, because we're still willing to pay for limes -- no matter the price.

He says the price will come down based on the time of year, and based on production.

As for now, it's hard to find limes in some Austin taco eateries. During my last visit to my favorite taco place, the attendant handed me a lemon instead of a lime. Can you believe that? In my book, that's a "no no." Tacos and lemons don't go together.

 

Why don't we like to talk about our pay?

Tue, 2014-04-08 02:41

President Obama is set to sign an executive order Tuesday prohibiting federal contractors from retaliating against workers who discuss their salaries.

This effort to increase wage transparency has another obstacle: our workplace culture, in which asking your cube-mate what he or she makes is virtually taboo.

"Well, it's said that Americans love to talk about sex, but don't like to talk about their salaries," says Gary Burtless, a labor economist at the Brookings Institution. 

However, many employers also have policies discouraging or prohibiting workers from sharing compensation information. That’s despite the fact that the National Labor Relations Board considers wage discussions a ‘protected’ activity.

Banco Popular retreats toward its home base

Tue, 2014-04-08 02:16

Banco Popular is based in Puerto Rico, but it has operations in mainland U.S. cities like New York and Miami. A recent news report says the bank is looking to sell its branches in Chicago and Los Angeles.

Just four years ago, Banco Popular rebranded itself in those cities as Popular Community Bank, hoping to broaden its customer base. Now it's moving in the opposite direction.

"At some point it makes sense for the company to exit the market," says Mark Palmer, managing director of BTIG, "and focus on its operations in Puerto Rico, where it's gaining market share, gaining deposits." And, making better profits.

At home in Puerto Rico, Banco Popular gets a better spread between the interest it pays depositors and the interest it gets paid on loans. Banco Popular is the island's biggest bank, and even in a weak economy, it's been growing.

Analyst Brian Klock watches Popular for the investment bank Keefe, Bruyette and Woods. He thinks that this move to streamline could be partly intended to please bank regulators.

Popular wants to pay back TARP bailout funds, so it can start paying dividends to shareholders again. Before regulators accept that payment, they require proof that the bank is in good shape, and well-run.

"That's because the regulators are focused on making sure we don't go through this again," he says, referring to the 2008 financial crisis.

Klock thinks that's good news for the rest of us. "The regulator is doing his job," he says, "to try to make sure this is a safe and sound banking system."

*CORRECTION: An earlier version of this story included a photograph of the incorrect bank. The photo has been corrected.

Take our quiz: are you a giver or a taker?

Tue, 2014-04-08 01:00


Are you the type of person that is more likely to give help to a colleague in need? Or are you more likely to take all you can get from everyone you work with?

Wharton professor Adam Grant explores in his book “Give and Take” whether being a giver or a taker makes you more successful in the business world.

Grant found that selfless givers may earn about 14% less than takers, but that ultimately they are in a better position to go farther in their careers and they last longer when they make it to the top.

Take the quiz below to find out whether you are a giver or a taker.
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Check out this quiz key below to find out more about your tendencies:
Productively helpful—generous and smart about it (1c/d, 2d, 3c/d, 4b/d, 5b, 6b/d)
Selfless—at risk for burning out or letting others take advantage of you (1a, 2a, 3c, 4a, 5c, 6c)
Transactional—at risk for being seen as selfish (1b, 2b/c, 3a/b, 4c, 5a/d, 6a)

To learn more, see "Give and Take," the New York Times bestselling book by Wharton professor Adam Grant. Get the first chapter for free here.

HBO heads to Silicon Valley

Tue, 2014-04-08 01:00

HBO premiered "Silicon Valley" this week. The show finds the funny side of what it means to struggle to be the next WhatsApp or Instagram. Critics are pointing out that there are few female characters in the show, thus far. Executive producer and writer Alec Berg says some of that is about getting the details of the tech industry right.

"People keep saying, 'There are a lot of women in tech. What about Marissa Mayer? What about Sheryl Sandberg?' Yeah, there are women in tech. We aren't saying there aren't," says Berg. "Do we want to do the perfect satirical riff on women in tech? Of course we do, and that's our intention. If we haven't gotten to it yet, just the fact that that is one of the hot-button issues that everybody brings up, that to me means we owe it to the show, to 'lean in' to that."

And how does Berg measure success of the show?

"The big thing for us was: Does it play for everybody?," he asks. "The realer we make it, the more the enjoyment factor goes up for people who don't know anything about it. You know, it just feels like a real world because ideally it's very true to that world."

Recapping the pilot of HBO's "Silicon Valley"

by Tobin Low

HBO's inaugural venture into Silicon Valley opens with a shot of Kid Rock performing, which is immediately surprising because ... who even knew Kid Rock still makes music? I'd sooner expect to see him on Dancing with the Stars, but I digress. The point is, he's performing for a minimal audience of not-so-excited Silicon Valley techies at a party celebrating the latest startup to be bought for millions of dollars ($200 million, to be exact -- which, in light of recent purchases made in the tech industry, doesn’t seem like that much money). Kudos to Kid for poking fun at his own lack of cache.

The opening sequence is getting at the larger setup for the show: the race to be the next it thing in Silicon Valley. It’s a topic we’ve explored before, and seems increasingly relevant as startups get snatched up for more and more money. The dream of receiving a fate-changing phone call from a Google or a Facebook is what drives Erlich, the founder of the Hacker Hostel, and his startup tenants, Richard, Big Head, Dinesh, and Gilfoyle. They're all at said party, and they're all unhappy to be there witnessing someone else's success.

Take Richard, for example. He and Big Head work for a Google-esque tech conglomerate named Hooli, whose offices look like a mix between UCLA's cafeteria and an REI showroom (i.e. an adult Gymboree with a sushi bar). We see Richard get bullied by two other employees -- apparently the Silicon Valley equivalent of jocks -- as he tries to defend the concept of his music-matching app, Pied Piper. What he wants more than anything is respect, but he doesn’t seem to be getting much from his coworkers or Erlich.

But Richard's luck is about to take a turn. After mumbling his way through an elevator speech to high-powered investor Peter Gregory, Richard gets competing offers for his Pied Piper algorithm from Gregory and Hooli CEO Gavin Belson.

Let's pause for a second to talk about Peter Gregory and Gavin Belson. Peter Gregory is introduced to the show via a TED talk about the virtues of abandoning higher education to pursue one's dreams. He believes in the idea so much that he’s offering $100,000 to any student who follows through on leaving college. Many see parallels to Silicon Valley angel investor Peter Thiel. Gavin Belson is part Steve Jobs, part AOL digital prophet Shingy, which is to say that he's brilliant and filled to the brim with meaningless buzzwords. These characters are a send up of every Steve Ballmer yell, every Steve Jobs powerpoint presentation, and every SXSW panel you’ve ever seen. They are Tech CEO 2.0.

And they offer Richard two different philosophical routes: Belson wants to buy the company outright for millions of dollars, ensuring that Richard's algorithm is used in Hooli's best interest. Belson wants to buy 10 percent of the company for $200,000, leaving Richard in control with the ability to continue to grow his idea as its own company. It's less money, but it also means Richard could become his own Gregory or Belson. 

In the pièce de résistance of the episode, Richard returns home to tell a ramen slurping Erlich (who is sure to be coming to a meme near you) that he has decided to take the modest offer from Belson in exchange for the chance to become his own CEO. Instead of the expected blow-up, Erlich is totally onboard with the idea, admitting that when he sold his own startup, he also sold a piece of his heart.

It's an optimistic end to a show that is more than a little bit cynical about the culture of Silicon Valley. What makes it interesting is that the plot of Silicon Valley (at least so far) is distinctly different than the one playing itself out over and over again in the tech industry. From Instagram to WhatsApp, most companies have a great idea, grow it, and then sell it to the Hooli's of the world (which doesn't work out for everyone). Will Richard and company do the same? Will Erlich ever find a t-shirt that fits his body? Will I ever understand what "algorithm" means beyond thinking of it as "fancy math"? At least one of these questions should be answered this season.

If you missed the pilot, watch the full episode below (warning: content is rated TV-MA):

How much is a college championship ring worth?

Tue, 2014-04-08 00:57

The University of  Connecticut beat the University of Kentucky on Monday night during the NCAA championship game.  The Huskies won the glory.  The confetti bath.  The right to star in this year’s “One Shining Moment”. 

 

And, presumably, a few months from now, the players will get a championship ring.  A big, blingy championship ring, like this one (photo courtesy of The Associated Press): 

 

Pretty fancy, right?  Turns out those rings look a lot more expensive than they actually are. Student-athletes who win championships can only receive $415 worth of gifts for the victory, per NCAA rules. (They are allowed additional gifts for participating in post season conference events and for winning their conference championship.)

According to USA Today, Jostens, the company that likely made your high school graduation ring, makes these college championship rings.  In 2013, USA Today spoke to Chris Poitras, from Jostens sport division: 

“In the last 5-10 years, the increase in gold and genuine diamond prices has pretty much priced gold and diamonds out of the scenario for college rings,” Poitras said.

Instead, the rings are decked out in “simulated colored non-genuine stones” and “metals that look exactly the same [as gold], but cost considerably less.”

Just becuase the rings aren't made of actual diamonds and gold doesn't make them cheap for the schools. According to AL.com, after Auburn's football team won the national football championship the school "spent the $75,000-$80,000 for one set of the national championship rings and the SEC title ring, which was slightly less than what was allowed by the NCAA."

Note: The Auburn-designed national championship ring that went to the players and coaches cost $415 each, the exact amount allowed by the NCAA. The SEC championship ring cost $285 each, under the $315 allowed by the NCAA.

Let's say you are one of the student athletes lucky and talented enough to earn a ring. You can't sell it.  According to the NCAA rulebook: "awards received for intercollegiate athletics participation may not be sold, exchanged or assigned for another item of value, even if the student-athlete’s name or picture does not  appear on the award."

China targets U.S. pig imports

Tue, 2014-04-08 00:41

Tougher new restrictions are being placed on imported live pigs from the United States, which represents a small portion of pork products that the U.S. exports to China.

Perhaps more telling, though, is what happened behind the scenes here in China to put some of these measures into place, says Feng Yonghui, chief analyst at Soozhu-dot-com, China’s major web portal on the live pig market: 

"China’s domestic pork prices have been very low for the last two years thanks to imported live pigs from America," said Feng from his office in Beijing, "Domestic farmers have been complaining a lot to China’s government about this, so given all this pressure, it’s understandable the government would take such measures."

China has asked the U.S. Department of Agriculture to conduct testing and provide certification that imported live hogs are from herds that are free of porcine epidemic diarrhea virus, and producers in the states have already noticed that China is already denying permits for live hog imports until the USDA starts to implement this type of testing.

When to trust (cough) financial journalists

Mon, 2014-04-07 14:51

You know how we in the financial press will say "There is word of this big merger being negotiated" or "There are reports of that corporate aquisition in the works"?   Sometimes those stories pan out, sometimes they don't. Now, thanks to researchers at the University of Southern California and the University of Michigan, there is a way to tell which deals are more likely to actually get done.   A key takeaway: Consider the source. Bloomberg has the most accurate reportage of mergers and acquisition: An astounding 80 percent accuracy rate. The New York Times is number six on the list, behind -- get this -- the New York Post.    Another guide: the bigger the company in question, the less likely it is that the story will pan out.    

'The Tech Sector': Growing, and growing vaguer

Mon, 2014-04-07 13:34

Anyone remember when Homer Simpson created "Compu-Global-Hyper-Mega-Net"?  Marge asks him what, exactly, his company does, and he responds, “Eh, this industry moves so fast it's really hard to tell.”

It was emblematic of a time in American economic history where tech and the Internet were exploding – a period that ultimately ended in a deafening "POP" sound when the bubble burst. These days, with social media companies that don't even earn any money valued in the billions, it's worth asking the same question. Especially when tech shares are losing value as they started to do last Friday, and are continuing to do today.

"The Tech Sector" is of course a very vague term that many economists and the Bureau of Labor Statistics haven't quite settled on, so it's hard to make anything but vague estimates for its actual size. You can play around with the numbers yourself here. By one gauge, the sector employs 1.3 to 2.5 million people. That's out of 138 million people total employed in the U.S.

But its impact is wider than that.

"What the tech sector historically has done, and continues to do today, is come up with new ways of doing business for all companies and all industries," says Matt Slaughter, director of the Center for Global Business and Government at Dartmouth's Tuck School of Business, "in addition to cool technology innovations."

One way an economy becomes more productive is through new technology -- and the tech sector embodies that, of course. 

So, does the fact that tech stocks are taking a beating signify a major problem under the hood of our economic engine?

"It's not unusual," says Stuart Freeman, chief equity strategist with Wells Fargo Advisors.  He says tech stocks did well over the past year, and it's normal that at some point people wanted to cash out. "After a while you see investors take profits in the meat of the tech sector, some of the larger companies."

When that happens, it often nudges other investors to do the same thing, a bit like a run on the bank. Not a catastrophic one, but a distinguishable one nonetheless. 

And what we’re seeing isn’t a rash, he adds.  Friday was bad, but most tech stocks are only down between .7 and 1 percent over the year so far.  And nothing he’s seen changes his estimate that tech stocks will grow 5-6 percent over the next year.

Measuring the tech sector: How big is it, really?

Mon, 2014-04-07 13:34

Anyone remember when Homer Simpson created "Compu-Global-Hyper-Mega-Net?"  Marge asks him what, exactly, his company does, and he responds, “Eh, this industry moves so fast it's really hard to tell.”

It was emblematic of a time in American economic history where tech and the Internet were exploding – a period that ultimately ended in a deafening "POP" sound when the bubble burst. These days, with social media companies that don't even earn any money valued in the billions, it's worth asking the same question. Especially when tech shares are losing value as they started to do last Friday, and are continuing to do today.

"The Tech Sector" is of course a very vague term that many economists and the Bureau of Labor Statistics haven't quite settled on, so it's hard to make anything but vague estimates for its actual size. You can play around with the numbers yourself here. By one gauge, the sector employs 1.3 to 2.5 million people. That's out of 138 million people total employed in the U.S.

But its impact is wider than that.

"What the tech sector historically has done, and continues to do today, is come up with new ways of doing business for all companies and all industries," says Matt Slaughter, director of the Center for Global Business and Government at Dartmouth's Tuck School of Business, "in addition to cool technology innovations."

One way an economy becomes more productive is through new technology -- and the tech sector embodies that, of course. 

So, does the fact that tech stocks are taking a beating signify a major problem under the hood of our economic engine?

"It's not unusual," says Stuart Freeman, chief equity strategist with Wells Fargo Advisors.  He says tech stocks did well over the past year, and it's normal that at some point people wanted to cash out. "After a while you see investors take profits in the meat of the tech sector, some of the larger companies."

When that happens, it often nudges other investors to do the same thing, a bit like a run on the bank. Not a catastrophic one, but a distinguishable one nonetheless. 

And what we’re seeing isn’t a rash, he adds.  Friday was bad, but most tech stocks are only down between .7 and 1 percent over the year so far.  And nothing he’s seen changes his estimate that tech stocks will grow 5-6 percent over the next year.

Can an executive order help close the pay gap?

Mon, 2014-04-07 13:30

President Obama is taking measures to try to close the gender pay gap. On Tuesday, Obama will sign an executive order that bans federal contractors from punishing workers who discuss what they're getting paid.

Although such a measure is already enshrined in law, supporters of the move say many people simply don't know they are legally permitted to talk about wages in the workplace.

Obama will also direct the Labor Department to adopt rules that require those same contractors to provide data on what employees are earning, broken down by race and gender. The orders will only apply to federal contractors, but that's not a small group. 

Samuel Estreicher directs the Center for Labor and Employment Law at the New York University School of Law and jokes - that "federal contractor" is basically a synonym "for multinational corporations, for U.S.-based multinationals."

Companies that have contracts with the federal government include some of the largest corporations in the world, and employ around 26 million people in the U.S.

Home-delivery of groceries isn't new, Amazon

Mon, 2014-04-07 13:12

Amazon has just announced a new service, a device really. Dash. It’s a handheld bar code reader that lets consumers speak into it, or, scan items on their own shelves -- to buy more groceries from Amazon Fresh. Selected customers will begin testing the device this week in Amazon Fresh's handful of test markets.

Sounds very high tech. But not many web retailers have managed to succeed in the low tech business of delivering bread and milk. Programming chops don't help, if what you're trying to do is pack milk and eggs.

Pixar: From 'Toy Story' to today

Mon, 2014-04-07 11:56

In 1995, a relatively unknown company called Pixar released the first animated movie made entirely on a computer. The movie was called "Toy Story" and one of the guys at the head of that company was Ed Catmull.

But Catmull downplays the importance of the computer in "Toy Story's" success.

“It’s not about the technology,” he says.  “We use the technology, we develop it, we love it, [but] it’s about the story.”

Catmull’s new book, “Creativity Inc: Overcoming the Unseen Forces That Stand in the Way of True Inspiration” takes a look at the company’s history and their creative process.

The key, says Catmull, is being prepared to deviate from the plan: "Every one of our films, when we start off, they suck... our job is to take it from something that sucks to something that doesn’t suck. That’s the hard part.”

Sometimes, those "deviations" are more like "overhauls": “Almost half our movies have gone through complete restarts.”

He cites "Ratatouille" as an example where of a dramtic reboot. The original version follows a rat who wants to be a chef -- and it also followed the rat’s mentor, a French chef whose star has faded in the culinary world. The Pixar team found themselves stuck. Who was the story really about? The rat or the chef? They brought in Brad Bird of “The Incredibles” who killed the chef. Literally. Catmull credits Bird with saving the film.

“The trick is, in everything we do, there are things we love. And sometimes the things we love get us stuck. And it’s only if we let go of some of those things that we free the movie up to become greater.”

External forces also helped make Pixar successful – including Steve Jobs and the sale of Pixar to Disney, their longtime partner.

“As we developed, we needed to have other resources,” says Catmull, about how Disney got involved. Jobs at this point knew he had cancer, and was trying to set Pixar up for long term success.

Jobs already had a good relationship with Disney’s Bob Iger. Catmull says he felt Iger “was the right guy to go with” after Disney and Apple made a groundbreaking deal to release episodes of "Lost" and "Desperate Housewives" on iTunes, back when most people felt uneasy about putting their content on the web. Catmull says he realized Iger was someone who could take risks – something he values at Pixar.

When asked to summarize Pixar's theory on innovation, Catmull says: “Everything’s interconnected. That’s the way life is.”

Delayed foreclosures: drawing out the agony?

Mon, 2014-04-07 10:56

The townhouse where Robert Witherspoon and his eight-year-old son live is in a quiet cul-de-sac in Prince George’s County, Maryland. Witherspoon greets me as I drive up, telling me he’s lived here for 10 years. 

The brick townhouse is solidly built, like Witherspoon, a 52-year-old Navy veteran who now manages a small IT company and works from home.

This house is lived in, but it was sold in a foreclosure auction last September. Witherspoon says his bank bought the house, and that he hasn’t paid his mortgage in a couple of years. 

Witherspoon first fell behind on his mortgage payments when he was laid off in 2009. Now, he’s squatting – not so unusual in Maryland, which has the second-highest foreclosure rate in the country, the forefront of a second wave of foreclosures across the U.S.

Approximately one out of every 540 homes is in foreclosure in Maryland, says Marceline White, the executive director of the Maryland Consumer Rights Coalition. 

She says it’s not that unusual for people to keep living in foreclosed homes, since the foreclosure process takes so long. On a recent afternoon in Prince George’s County, she pointed to one example.

“It’s clearly occupied,” she said, pointing out a jet ski. “There are cars in the driveway.“

At one point, while banks were negotiating a national settlement, they stopped foreclosing in some states. And still, the average foreclosure in Maryland takes almost two years. That’s because Maryland requires foreclosures to be approved by a judge. And new laws slowed things down even more by allowing things like mediation.

Opinions vary on whether that's helpful for homeowners.

“The longer process has definitely helped,” says Lisa Butler-McDougal, executive director of Sowing Empowerment and Economic Development, a group that helps homeowners avoid foreclosure.

Butler-McDougal says foreclosures in Maryland used to be rushed.

“Some people’s homes were being foreclosed in 15 days, 30 days," she says. "Where before they could even understand the notice of intent to foreclose, they were receiving notice of a sheriff’s sale.”

But there's a flip side.

“There’s so many people that come in here that have medical issues as a result of the stress of trying to hold onto a house, that isn’t worth it,” says Manny Montero, an attorney who represents homeowners in foreclosures.

Montero says many homeowners don’t realize that living rent-free in a foreclosed house could eventually cost them, because it makes it much tougher for them to file for bankruptcy and wipe out their debts. 

The pace of foreclosure proceedings in Maryland appears to be picking up, says Daren Blomquist, vice president at RealtyTrac. 

“I would guess sometime this year Maryland would turn the corner and we’d see the numbers go back down,”

Back in his townhouse, Robert Witherspoon says he doesn’t want to file for bankruptcy, and he says he’s tried to start making mortgage payments again. He couldn’t because the bank wanted a lump sum up front, which he didn’t have. Witherspoon’s bank, JP Morgan Chase, wouldn’t comment other than to say it made several attempts to reach out to him. Now, Witherspoon is afraid he’ll get an eviction notice.

Witherspoon says he plans to move after the end of the school year, but he’s hoping to avoid being evicted – something that happened to him as a teenager.

“When you’re in high school and you come home and you see your bed outside the house and not in the house – I was totally embarrassed by that,” he says.

Of course, Witherspoon says his current situation is embarrassing, too. But even after the pain of foreclosure, he still wants to – someday – buy again.

Coal country starts to ask 'What comes after coal?'

Mon, 2014-04-07 10:20

It’s no secret that coal is on the outs in the United States. The country’s natural gas boom and environmental regulations are dethroning King Coal after decades of rule in the electricity market. That should be good for the climate, but the transition to natural gas and renewables has human costs. Right now Central Appalachians are taking the hit, forcing communities there to contemplate a future beyond coal.

In eastern Kentucky, coal mining has been the lifeblood of the economy for well over a century. Now it's facing what might be termed a “low coal” future. Much of the easy-to-get coal has already been mined out. What’s left is harder to get, so production costs are higher. “The coal seams, they’re getting smaller,” says 30-year-old Ryan Trent, a laid-off miner who started at age 19. “You’ve got strata in between it, which is not full coal. So the more rock you cut,  the less coal you’re getting.”

That’s partly why Appalachian coal is having a hard time competing, not just against cheap and cleaner natural gas, but against newer, more efficient coal mines in the West’s Powder River Basin and the Midwest’s Illinois Basin. Coal companies also blame stricter EPA water quality standards, which they argue has effectively halted permits for Appalachian strip mining. 

The overall effect has been a wave of production slowdowns, mine closures and rising unemployment in the last two years. The median unemployment rate for eastern Kentucky’s top 10 coal-producing counties is 15.05 percent. That statistic includes Trent, who was earning $24.50 an hour, non-union, and says coal mining “is in his blood.” He’s been looking for another mining job since he was laid off in December 2012. “I’ve got the softest hands in eastern Kentucky, I’ve been doing so many dishes,” he jokes.

Trent and other miners are used to the ups and downs of the coal business, but Justin Maxson, president of the Mountain Association for Community Economic Development, says this time is different. “To lose almost 7,000 jobs in almost 18 months is a catastrophe,” he says. “It’s a huge economic collapse. Folks to some degree feel like they’re under cultural assault.”

The realization that this could be a permanent decline in what’s been the lifeblood of the region is just now beginning to settle in, after years of warnings and, some would say, denial. John Haywood, owner of a tattoo parlor in Whitesburg, called The Parlor Room, says some of his more regular customers were coal miners, but many have stopped coming in.  “They used to come in once a month, even twice a month,” Haywood says. “Tattoo collectors that were willing to sit for a long time and get covered up.”

“Coal miners are our middle class.” That’s a common refrain in eastern Kentucky, where more than a quarter of the people live in poverty. According to Bill Bissett, president of the Kentucky Coal Association, starting salaries in the mines average $65,000 and the jobs don’t require a high school education.

Communities are just now beginning to seriously discuss economic alternatives. Some blame the slow start on the “War on Coal” rhetoric, saying it’s distracted attention from preparing for a “low coal” future. Others say political leaders have spent coal severance tax money on basic services instead of diversifying the economy. 

Regional leaders who gathered in the mining town of Hazard to talk to Marketplace stressed they didn’t believe there was one single thing that could “replace” coal. They hope a new bi-partisan effort called SOAR (Shaping Our Appalachian Region) will come up with some alternatives. The region has already been targeted for special assistance from the federal and state government, but residents fear the money won’t be enough.  

“I mean, what happened in Detroit when that industry was threatened,” says Jeff Whitehead, executive director of the Eastern Kentucky Concentrated Employment Program.  “There was a lot of government support. Lots of it.”

Jennifer Bergman, JobSight Services Director at the program, says the region should develop an “entrepreneurial” economy, “but we need people with money to spend to have that entrepreneurial base.”

Many here say the region should take advantage of its cultural distinctness and build an economy based on central Appalachian folk arts and crafts. Previous efforts to develop that have fallen victim to politics and lack of funding. Doug Naselroad, master artist in residence at the Appalachian Artisan Center in Hindman, says the incomes generated might not rival coal’s, but that’s not the point. “What we’re trying to create is something sustainable and that’s rooted in the culture and tradition of the people here, instead of something which just plunders the land and moves on.”

Dan Estep, 56, a former coal miner, is experimenting with that idea. He’s teaching blacksmithing and knife-making at the Kentucky School of Craft and selling his wares at craft fares. He doesn’t make much money, but says he’s happy to have a skill that’s “marketable.” “I’m grateful to live in this country,” Estep says.  “Every day’s an opportunity.”

Biofuels, beer and Boardwalk Empire

Mon, 2014-04-07 10:10

From the Marketplace datebook, here's what's coming up April 8:

Is this town the Luxembourg of Illinois sales tax?

Mon, 2014-04-07 08:06

The Chicago area’s public transit agency says it’s been bilked of hundreds of millions of dollars over the last 15 years, a penny or two at a time. The culprits: towns in outlying parts of Illinois. Like Kankakee, population 27,000. Channohan, population 13,000. Sycamore, population 17,000. The agency says dozens of companies, including Target, AT&T and American Airlines, have used the towns as tax havens.

MTS consulting keeps an office in a faceless little building off Schuyler Avenue in Kankakee, about an hour south of Chicago. When no one answers, I look in the mail slot. No lights are on. A desk is visible, but no computer or phone. Later, MTS CEO David Polush tells me both are just out of view.

Down the hall, I ask a woman at Pinnacle Opportunities about MTS: Have you ever met anybody who’s been there?

"I haven’t. Sorry."  She's been working there for more than a year.

 In a court filing, Chicago’s Regional Transportation Authority says MTS records significant sales here, on behalf of clients based in the Chicago area. It’s one of several companies with offices like this in towns like Kankakee.

They’re here to save on sales tax. Illinois sets a statewide sales tax, but in Chicago the tax is higher because it adds levies for the city, the county and the RTA.

Carol Portman, executive director of the Illinois Taxpayers Federation, says peculiarities in Illinois sales tax law forced the Department of Revenue to write rules about where sales take place. "In some instances," she says, "it led to some rather unexpected results."

That is, some companies have been able to run their business one place— like Chicago— but, for tax purposes, book their sales someplace with a lower rate— like Kankakee. In some cases, it’s consultants like MTS that book the sales.

Additionally, towns like Kankakee offer an extra incentive to companies. Under state law, Kankakee gets a penny of the sales tax it collects— and the village gives 85 percent of that penny back to these companies.

The remaining sliver adds up to $2.5 million dollars a year for Kankakee. Ten percent of the village’s budget.

Portman sees nothing unusual about the arrangement. "That really isn’t any different from the income tax credits, or the property tax abatements that we’re giving people to come here," she says.

For instance, Boeing got tens of millions of dollars in city and state tax breaks when it moved its headquarters from Seattle to Chicago in 2001.

Jordan Matyas, the RTA's chief of staff, sees things differently. He’s suing companies like MTS and towns like Kankakee.

He says there are reasons companies base their operations in Chicago: Amenities like transit make it easier for them to do business.

"If they want to move somewhere else that has less resources, that’s their decision," he says. "But as long as they’re taking advantage of all our government services, they need to be paying the appropriate sales tax."

Kankakee’s mayor, Nina Epstein, makes no apologies.  "There are other parts of the state than the RTA district," she says.

Epstein says some of these companies don’t have Chicago offices at all. Some are Internet companies with no other physical presence in the state. Others simply don’t need full time staff to fulfill orders.

"This has helped fund police and fire services, public works," she says. "But now, it’s going to be taken away."

Last fall, the Illinois Supreme Court ordered a rewrite of tax regulation, to eliminate some of these arrangements.  That’s underway.

Meanwhile, some companies have ended their presence in Kankakee, and Epstein has zeroed out income from the tax deals for her next budget.

Tax expert Carol Portman says this is how tax policy works:  There are winners and losers.

"It’s easy for someone like the RTA to feel like they’ve been the loser and they want changes that make them the winner," she says. "But the problem is: There’s a loser then."

PODCAST: Tech bubble bursting?

Mon, 2014-04-07 06:36

At the end of the first week of April, tech stocks had their worst day in two months with the technology-suffused Nasdaq Composite Index falling 2.6 percent. In early trading in the next week, they aren't doing much better. Carl Riccadonna is Senior U.S. Economist at Deutsche Bank Securities, and joined us to discuss,

President Barack Obama is expected to issue two executive orders this week, in an effort to close the pay gap between men and women. The first would prohibit federal contractors from retaliating against workers who talk about how much they are paid. The second would require federal contractors to give the government pay information broken down by race and gender. But it is unclear exactly how these orders will be meaningful.

The University of Baltimore is like a lot of urban, public campuses. Most students here work, and more than half need to take remedial courses. That's partly why just 12 to 15 percent of students graduate in four years. So starting in the fall, the University of Baltimore will offer new freshmen a deal. If they finish in four years, the last semester's tuition is on the house.

The best and worst states on closing the gender pay gap

Mon, 2014-04-07 04:00

President Barack Obama is expected to issue two executive orders this week, in an effort to close the pay gap between men and women. The first would prohibit federal contractors from retaliating against workers who talk about how much they are paid.  The second would require federal contractors to give the government pay information broken down by race and gender. 

"Federal contractors employee almost a quarter of the workforce, so it’s going to be a really meaningful thing for many workers around the country" - Fatima Goss Graves, with the National Women’s Law Center

But it is unclear exactly how these orders will be meaningful. "I think they are much more symbolic, to get us talking about the wage gap," Linda Barrington with the Institute for Compensation Studies at Cornell noted, adding that "if we don’t do that, we can’t reduce the wage gap."

The American Association of University Women estimates that women make 77% of what men do.  The median annual salary for men is $49,398.  The median annual salary for women is $37,791. 

However, there are significant variations in the wage gap between states. To get some more context around how states compare to each other, take a look at the states where the pay gap is lowest (as calculated by the earnings ratio between men and women, in parentheses): 

  1. Washington, D.C.  (90%)
  2. Maryland (85%)
  3. Nevada (85%)
  4. Vermont (85%)
  5. New York (84%)
  6. California (84%)
  7. Florida (84%)
  8. Hawaii (83%)
  9. Maine (83%)
  10. Arizona (82%)
  11. North Carolina (82%)

And here are the states where the the gap between what men and women earn compared to each other is the highest:

  1. Wyoming (64%)
  2. Louisiana (67%)
  3. West Virginia (70%)
  4. Utah (70%)
  5. Alabama (71%)
  6. Indiana (73%)
  7. Michigan (74%)
  8. North Dakota (74%)
  9. Alaska (74%)
  10. Idaho (75%)

 How does the legal system apply to equal pay standards? According to the National Conference of State Legislatures, 45 states have equal pay laws on the books.  Five states, including Alabama, Mississippi, South Carolina, Utah, and Wisconsin have none.

A free semester for finishing within four years

Mon, 2014-04-07 02:53

Samantha Peterson is what you might call a "typical student" at the University of Baltimore.

"I am a junior-ish," she says, in between bites of a sandwich at the student center. "That means that I've been in school for a very long time."

Peterson has been in school—studying criminal justice—five or six years now, she says. Because she works, full-time, at a school cafeteria.

The University of Baltimore is like a lot of urban, public campuses. Most students here work, and more than half need to take remedial courses. That's partly why just 12 to 15 percent of students graduate in four years.

"The longer it takes for students to complete college, the more life gets in the way, and the less likely they are to graduate," says Dominique Raymond with the advocacy group Complete College America.

So starting in the fall, the University of Baltimore will offer new freshmen a deal. If they finish in four years, the last semester's tuition is on the house. At today's prices that's worth about $3,300 for in-state students.

President Bob Bogomolny expects the university to save money by getting students through faster. It could also attract more full-time students.

"If we can motivate a few students to have the advantage of finishing in four, to have less loans, to get into the workforce sooner, it's worth it to us," he says.

Nationally, just over half of college students finish in six years. Other schools are trying incentives like scholarships and loan forgiveness to encourage more students to attend full-time. The University of North Texas just approved a plan that gives students a fixed tuition rate and $4,000 discount if they finish in four years.

At the University of Baltimore, junior Blair Lee wishes the free semester deal had been around when he started.

"I was actually kind of excited when I heard that—a little jealous," he says. "I think it will give more people an incentive to finish faster and go on to possibly pursue graduate studies."

Lee is proof that money can be a powerful motivator. He's one of the rare students who expects to finish in four years—while working full time. He wants to avoid paying out-of-state tuition any longer than he has to.

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