Wholesale food prices are soaring and consumers are still struggling in a challenging economy. That puts grocery stores in rather nasty bind.
“Retailers face that challenge as to whether to pass it on to consumers or suck it up and take lower margins,” says Timothy Richards, professor at Arizona State University’s Carey School of Business.
Profit margins in the grocery business aren’t that high in the first place. They’re generally around 1-2 percent. Even with these razor thin margins, grocers work hard to keep prices consumers pay low. With so many Americans unemployed or underemployed, stores that raise prices risk losing shoppers.
“We’re seeing consumers at an all-time high in thriftiness,” says Rich Nanda, principal at Deloitte Consulting. “They’re really trying to stretch every penny.”
Retailers worry that this may be a permanent shift. In Deloitte’s recent survey of food shoppers, 94 percent agreed with the statement “even if the economy improves, I will remain cautious and keep my spending at its current level.”
Mark Garrison: When stores have to pay more for food, something’s gotta give, says Arizona State University business professor Timothy Richards.
Timothy Richards: Retailers face that challenge as to whether to pass it on to consumers or suck it up and take lower margins.
And profit margins aren’t high anyway, says Boston College marketing professor Kathleen Seiders.
Kathleen Seiders: Around 1%, 2%, sometimes even lower.
Even so, stores must keep the price we consumers pay low, or risk losing shoppers.
Rich Nanda: We’re seeing consumers at an all-time high in thriftiness. They’re really trying to stretch every penny.
Rich Nanda with Deloitte Consulting says grocers could try pushing their cheaper store brands harder. They may have to, as the firm’s latest research on shoppers shows this thrift is not temporary.
Nanda: 9 in 10 told us that they’re not gonna change if and when the economy improves.
In any event, food prices will likely rise further this summer, at which point most retailers will have to pass more of the cost onto us. I'm Mark Garrison, for Marketplace.
In Jersey City and other towns along the Hudson, home-grown capitalists have wiped out the urban ritual called waiting for the bus.
Private operators jam commercial streets with mini-buses— and in turn spark new issues. (Think: traffic jams.) Longtime complaints peaked last summer, when a wayward bus killed a baby girl, and the state created new regulations, which take effect next year.
Meanwhile, to hear Haroun Khan tell it, most drivers regulate themselves. He drives part-time, but today he’s a passenger. Sitting near the front of a jitney heading down Bergenline Avenue, he explains to a fellow-rider how drivers keep out of each other’s way.
“They try to keep two or three traffic lights before or ahead," he says. "Wait, see what he did? There’s a bus behind him. So he’ll skip that passenger, try to get the space, and he’ll pick the other passengers up. So that way, they can both make money.”
People call the buses jitneys, collectivos, immi-vans. They’ve got maybe 20 seats. They charge less than New Jersey Transit buses. They stop on any corner when a passenger hails. And they always make change, something New Jersey Transit drivers will not do.
They’ve been driving through towns like Jersey City, Weehawken, and Bergen for decades. And they’re still growing, 40 percent just in the last four years, according to regulators.
Big operators rent out branded buses to drivers like Pasquale Gomez. At the end of his route, he waits in line for a dispatcher to call his turn.
He pays$100 a shift and buys the gas. Asked how much he makes, he says, “Well, it depends, man. Today, I don’t have a dime for me yet.”
He plays by the rules. Waiting for a dispatcher to call his turn, he says, “Sometimes we’re here maybe 20 minutes. Sometimes an hour.”
Nicholas Sacco, the state Senator who sponsored the new regulations, seems surprised when he hears about Gomez’s situation.
“If they were all that organized, maybe we wouldn’t have needed the bill,” he says. “We had no desire to get rid of the omnibuses. Just to make them safe.”
The new regulations include higher insurance minimums— $1 million — and a hotline for riders to report anything unsafe.
Many of the jitneys fall under federal regulation— taking passengers back and forth to Manhattan, that’s interstate commerce. Anne Ferro, who runs the Federal Motor Carrier Safety Administration, doesn’t expect tighter regulation to slow business.
“It’s a supply/demand situation,” she says. "Trucks and buses are like water: They will always find a way through.”
Pasquale Gomez would like to see things more tightly regulated, even if it meant fewer buses.
“We are too many,” he says, “going up and down like crazy. That will make us doing things we don’t want to do.”
Meaning: Not all drivers follow the rules.
“They have three blocks to work on, they want five,” he says. So greedy drivers block the way for other buses, slowing up traffic in the process.
And misbehavior begets misbehavior— or at least, aggressive driving. “I see him doing that to me—playing games— and what am I going to do?” he says. “I’m not going to stay behind him.”
Truth: sometimes we journalists get tired of reporting a story. And I'll admit it -- trying to describe Net Neutrality a different way every day this week hasn't been easy. But most people we talk to about the issue of whether Internet service providers should deliver all data to the user with equal speed agree it's significant -- maybe the most significant Internet issue of the decade.
For as long as we've all been online, we've basically been able to access web pages with equal speed -- no matter what web page we're trying to get to and what company is helping us get there. But that could be changing; today's Federal Communications Commission vote on new Open Internet Rules could allow for so-called "fast lane" deals, where a company like Netflix pays a company like Verizon or Comcast to make sure you don't get the spinning pinwheel of sadness. Many people say these deals would stifle innovation (making it hard for the next Netflix-like startup to get off the ground without forking over money it doesn't have yet), and allow service providers to degrade the quality of our connections. Others say that more oversight from the FCC would do the same. It's always super helpful when two sides in a debate use the exact same potentialities to argue their case, isn't it?
But the real question is this: what analogy is best for this big, hot mess? Because a hot mess it is. And part of the mess is that it's so hard to describe and understand. On Wednesday, Sen. Al Franken told me Internet service providers should be considered common carriers -- just like the companies that have covered the country in a web of phone lines. He's even made a video to promote his position:
On today's show, University of Pennsylvania professor Christopher Yoo explains his opposition to that idea by comparing the Internet to the postal service. Sometimes, Yoo says, you should be allowed to pay extra for FedEx or Priority Mail Express, so that your package gets to its destination faster than it would with regular old snail mail. Maybe it's like electricity?
I was arguing with Stacey Vanek Smith a few weeks back about Netflix making a deal with Comcast and trying to use the highway analogy -- but I got fouled up trying to decide who the toll booth operators were. I was talking with Vox managing editor Nilay Patel this week -- he thinks the FCC is about to turn the Internet into airport security.
The idea I keep coming back to is that of the Gordian knot -- an intractible problem that seems like it should have a simple solution. But a simple solution isn't in sight, so that doesn't work. So I put it to you: how would you describe the movement of information on the Internet? And what does that say about your position in the debate?
The recently-announced plans by chairman Tom Wheeler and the FCC to create an internet "fast lane" have been met by a great deal of skepticism from those who worry that large companies could pay to speed past the competition. But Christopher Yoo, professor of Law, Communication, and Computer and Information Science at the University of Pennsylvania, argues that offering a pricing system for internet speed makes sense.
Yoo points to the varying services one can pay for when sending a package. If a package can take longer to get somewhere, you pay less. But if the arrival date is imperative, then you should pay more.
"If you force everything into a single class of service, you would force people who would have been willing to take slower service to pay more, and you would deny people really fast service the ability to get it at any price."
Others believe that the internet should be re-classified by the FCC as a common carrier. Yoo argues that in light of recent Supreme Court rulings, it would be difficult for the FCC to claim authority to do so.
To Yoo, its also a moot point. He says that even services defined as common carriers are allowed to create different tiers of service as long as they don't have rules explicitly prohibiting anyone from paying for the better service.
"The 'Common Carrier' regime has always acknolwedged that providers can create different classes of service as long as they charge everyone who wants that class of service the same amount....it wouldn’t prevent internet service providers from creating a fast lane in the first place."
Prosecutors indicted the captain of the ferry and 3 crew members on homicide charges Thursday. Less serious indictments were issued against the 11 other crew members.
The suggestion last month that the FCC might let Internet providers charge companies more for faster service prompted a firestorm of protest. The commission votes Thursday to begin debate on the plan.
Bicyclists account for a just a small percentage of commuters in the U.S., but their numbers have grown by nearly 60 percent over the past decade as cities have become more bike-friendly.
After 53 years on television, ABC's Barbara Walters is retiring from her work on camera. Steve Inskeep talks to the groundbreaking broadcaster about her life, career and impact on television news.
If an agent kills a Mexican across the border, what happens? Some argue not enough. It's hard to sue in these cases, and reports show the Border Patrol is rarely holding its own people accountable.
The move signals concerns over problems at the VA, particularly reports that hospital administrators in Phoenix kept a secret list to conceal delays as 40 veterans died waiting to get an appointment.
Explosions and gunfire rocked an anti-government protest in Bangkok, Thai officials say.
The defense secretary confirmed that unmanned reconnaissance aircraft were being used to look for 270 girls abducted by Islamic militants last month.
Last fall, a University of Kansas professor criticized the National Rifle Association in a tweet. Wednesday, the Kansas Board of Regents approved a strict social media policy for university employees.
The Mine Safety and Health Administration says it had no authority to shut down the W.Va. mine where two people were killed this week, despite having cited it for numerous violations.
The 9/11 Memorial Museum opens to the public this week, but the journey to its unveiling has not been without controversy. Questions over the purpose of the museum have been well-reported, but recent concerns have been raised over the relatively high cost of admission.
Those wishing to visit the memorial will have to pay a $24 admission fee.
At a recent press conference, former Mayor Michael Bloomberg said that those upset by the high cost should write to Congress. His point? While the U.S. government has provided $250 million towards the contruction of the 9/11 Memorial, more financial resources are needed to maintain security and its high operating costs.
Federal and state support are issues that factor into the price of admission at other memorials in the U.S. and around the world.Brandi Simons/Getty Images
The Oklahoma City National Memorial, for example, does not receive any federal funding to contribute to the cost of its annual operation. Though, like the 9/11 Memorial, the museum did receive funding for the initial construction costs. Along with the $10 entrance fee paid by visitors, the self-sustaining museum covers its expenses using "store sales, the OKC Memorial Marathon, [and] earnings from an endowment and private fundraising."Getty Images
The Anne Frank House in Amsterdam also charges an admission fee -- a practice it began in the early 1970s when the Anne Frank Foundation began having diffuclty shouldering the costs of maintaining the house. Revenue from visitors to the museum now covers 95 percent of the organization's annual budget. While it does receive funding from the EU and the Dutch government, the money is reserved exclusively for projects not involved in running the museum.
Back in the U.S, while legislation was introduced in 2011 to set up a regular subsidy for the 9/11 Memorial, it was basically shelved. It would seem that for now, the price of admission remains.
As Federal Communications Commission chair Tom Wheeler moves closer to releasing new rules on net neutrality and internet "fast lanes," many open internet advocates have been calling for the FCC to reclassify internet service providers as "common carriers."
Doing so would effectively turn them into public utilities like power, gas and water services, and thereby subject them to more strict regulation.
But some of those utilities themselves started out as products sold on the open market, just like internet service. So how did they get regulated as public utilities? For the best comparison with the internet's current situation, look at how another "new" technology went from market good to public good: electricity.
In the case of electricity, it starts with Edison.
With a patent for the first practical light bulb in 1879, Thomas Edison needed an actual market of people who could use his invention, meaning a way to get power to his customers. In 1882 his Edison Illuminating Company constructed the first central power plant in the United States, the Pearl Street Station in New York.
The catch with early direct current power plants, however, was that they couldn't generate power at very high voltages. The power couldn't travel that far along the copper wires without weakening the further it went. But as electricity gained popularity and more appliances were created to use it, numerous companies began building power plants to supply electricity to individual neighborhoods, each station selling power to customers within a small radius.
This is where goverment regulation entered the picture, in the form of municipal franchise agreements. Those agreements allowed the companies to dig up streets and build infrastructure. In exchange, they had to meet certain price caps and service standards. These controls, usually administered by city governments, were in fact very weak.
The large investment costs usually prohibited one company from owning all the power stations in a single city at first, but the different firms would often compete over customers in areas where their services overlapped. As companies were able to expand their reach, customers in large cities like New York and Chicago actually experienced a sort of golden age of price wars with many local companies competing against each other.
The competition was short lived, however, as single companies gained monopolies over large cities and increasingly advancing technology made for high barriers of investment in infrastructure needed for a new competitor to enter a market. The market for internet service providers is kind of at the same point right now in terms of barriers to entry, as telecom and cable companies have consolidated to a certain extent, buying up smaller regional ISPs. This has made it pretty much unfeasable for new competitors to get in the the game without considerable resources.
The old municipal franchises that governed electric companies also became prone to corruption from city politicians. In the early 1900s, an entrepreneur named Samuel Insull who had exploited the economies of scale to dominate the Chicago market argued along with other electric utilites that they were "natural monopolies," that resulted from the inherent barriers to competition in large markets.
State governments attempted to regulate these monopolies with legislation, but power barons like Insull were able to outmaneuver the efforts by restructuring their businesses with holding companies that were not covered by the reforms. By the late 1920s, the Federal Trade Commission was investigating the holding companies for market manipulations.
It wasn't until the onset of the Great Depression, and the strong reforms of the New Deal that power over electric utilites was taken away from the holding companies in the form of the Public Utility Holding Company Act and the Federal Power Act of 1935, transferring much of the regulatory power over eletricity over to the federal goverment.
This was significant not because power utility monopolies were split up, but that the "natural monopolies" were in fact legitimated; they could exist, but they had to be under government control. The federal legislation, along with other New Deal legislation, actually provided for the creation of a number of government monopolies over public goods.
As it stands now, internet service providers are sort of stuck in between being a wholly private good or a heavily-regulated public utility. Until recently, the FCC has successfully imposed on ISPs to treat all content the same in terms of speed of access, but they haven't set caps on how much they can charge or set standards for quality of service as are required of utilites like water and power.
The federal government has also subsidized ISPs to the tune of $200 billion to build a fiber broadband infrastructure for schools and low-income regions, which many activists contend they never completed. Following the model of electic utilites, further government investment could hypothetically result in internet infrastructure owned by the government itself.
It's unclear whether the internet will go along the same route to regulation as a utility, but with nearly a third of Americans having no choice for their internet service provider, the circumstances are starting to look very similar.
Residents of eastern Ukraine are trying to figure out what happens next, now that pro-Russian separatists have claimed independence. But there's even disagreement over what's feasible.
With a bipartisan vote in April, the Senate Intelligence Committee told the CIA to declassify and make public parts of the "Torture Report." The agency isn't exactly rushing to do so.
Corporate sponsorship of professional events for nutritionists has been on the rise. But should the gatekeepers of nutrition information be taking free meals and snacks from McDonald's and Hershey's?
— David Gura (@davidgura) May 14, 2014