Marketplace - American Public Media
Tuition and fees bring in 32 percent of revenue at private 4-year schools, according to the Department of Education.After tuition, what is the biggest income source for 4-year private colleges and universities?
For context, read on.
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.
America’s natural gas production shows no signs of abating. And increasingly, the question is: What to do with all of it?
One proposed solution is to drive cars on it, which is possible. But likely?
Marketplace’s Scott Tong conducted a test drive on a recent reporting trip to Michigan:
As soon as I land at the airport, the dual-fuel truck is waiting. This Ford F-150 burns gasoline and natural gas. The vehicle drives the same, except there’s just one switch to flip on the alternative fuel.
The benefit of natural gas? Let’s talk a bit of chemistry. Natural gas is one of several hydrocarbons: ethane, propane, butane…
“Natural gas is the simplest one,” says John DeCicco of the University of Michigan Energy Institute. “It’s just one carbon atom with four hydrogen atoms. And because it just has one carbon, it burns very cleanly.”
When it’s burned, natural gas emits half the amount of greenhouse gas CO2 than gasoline.
DeCicco joins me as we drive to a nearby gas station. There, commercial driver John Duffiny is filling up at a special pump for his natural gas van.
“It drives great,” Duffiny says. “Just like a gas motor. You punch it, you get to 80 miles an hour in [a] minute. I shouldn’t say 80 … 70 miles an hour.”
And on this day, the fuel costs 30 percent less than gasoline, per unit of energy.
Now here’s the rub: First, I can’t work the natural gas station hose. It looks different. It goes into a different place in the vehicle. And the pump has a problem with its compressor.
To fill a natural gas tank, the fuel has to be pushed in, or compressed. Hence the term “compressed natural gas,” or CNG. It’s like filling a tire with air. Natural gas is similarly gaseous. It’s not a liquid.
“Think about filling up a balloon,” DeCicco says. “You have to blow it up. And what this pump is doing is the same thing.”
Another trade-off: the tank is really big. See, the fuel is less dense, less concentrated.
“The vast majority of people who want pickup trucks aren’t going to want to lose a bunch of their bed space,” DeCicco says.
Today, many buses and large trucks figure all these trade-offs are indeed worth it. They have space for extra-large fuel tanks. And since they often drive long distances, the savings add up.
But the rest of us, not many are sold on the idea yet. Of a billion vehicles in the world, 1 percent or so burn natural gas.
The polar vortex is back. It hit the northern U.S. on Sunday, is sweeping down through the Midwest, and will then move out to the East Coast. Temperatures could drop by 40 degrees and bring some all-time daily lows.
Directly in the path of this cold air mass is the city of Brainerd, Minnesota. City administrator Patrick Wussow is not panicking. When I called him, he was actually chuckling.
Wussow had not yet heard that the area would be struck by a vortex. The city had not made any special preparations for the cold weather, nor did people in town seem overly concerned. He says: “It's business as usual, preparing for the weather whichever way it comes—cold or warm.”
When similar weather patterns brought on historic cold temperatures in December and January last year, the media popularized the phrase “polar vortex,” and for good reason. It makes for a big weather story, and that buzz creates revenue for weather news outlets. This vortex is a top story on sites like Accuweather.com. CBS News tells readers to prepare for “the sequel.” The NY Daily News calls it a “scary weather phenomenon.”
Dave Changnon is a professor of meteorology at Northern Illinois University. He says one of the reasons forecasters love a good vortex is that it is predictable, so it makes for an easy story. “It's not like a snow storm,” he says “where forecasters sit there and say, 'oh, we are going to get buried with two feet of snow' and then all the sudden it misses.” If the weather patterns show a polar vortex is coming, it is coming.
People have pretty short weather memories says Changnon, so they forget that these vorticies are nothing new. They are a reoccurring and documented part of the weather pattern, and he says people in their 40s should remember similar cold weather in past Novembers.
This vortex is a little unusual, Changnon says, because it is appearing earlier in November than most. But for that reason, he says it won't be anywhere near as cold as last year's vorticies. Changon says people in the affected areas should just prepare for temperatures that feel more like January instead of November.
He, for one, plans to wear a scarf and coat.
I thought, OK, I'll talk about it. Marketplace Weekend is about how the economy collides with real life. Here's how it collided with mine.
A few years back, I got sick. I have a condition called endometriosis, where uterine tissue grows in places it shouldn't. And it can make it hard to have kids. So, in between surgeries bookending a few years of my life, I froze my eggs.
It cost me $7,000, insurance covered the drugs, which were $1,800. The rest, I paid out of my own pocket. Storage runs about $300 a year.
It was scary. Painful. Expensive. And I still don't know if all that money and effort will ever be worth it, because the science is pretty new.
But, I do know that I bought myself maybe a little confidence to go forward in my career, and not worry late at night that I'm throwing away my chance to be a mother, because I love my job.
And if more companies are going to pay for women to have this expensive chance, what does that mean? Maybe greater freedom to work in your 20s and 30s?
And that brings us to this weekend's number: 4.4 percent. American women's earnings at work decrease 4 percent for every child they have, according to a study at the University of Massachusetts.
And yes, it controls for education, hours, and different types of jobs.
Joining Kai to talk about the week's business and economic news is Nela Richardson from Redfin, and John Carney of the Wall Street Journal. The big topic this week: The unemployment report.
Click play on the audio player above to hear the whole discussion.
The mythology of the early music industry in this country is filled with enterprising A&R men -- that stands for "artists & repertoire"-- men who scoped out new talent all over the country, sign contracts and make a little money. Some made piles of it.
Ralph Peer, whose career started with wax recording cylinders and ended with vinyl LPs, was one of them. Peer was a major force behind popularizing what was then known as roots music: country, gospel, blues, and later, jazz. Those staples of American music weren't really a part of the popular music scene in the early 20th century.
The literature on Peer is thin, though, according to Barry Mazor, limited mostly to brief mentions in the biographies of country greats he helped discover. When Peer's family approached Mazor, he got access for the first time to royalty statements, Peer's papers and letters. His ensuing book is Ralph Peer and the Making of Popular Roots Music.
When he got into the music industry, the focus was on sheet music and songs fresh off Broadway. Genres like blues and gospel got little-to-no attention outside of churches and local dives. Then in 1920, Peer recorded Mamie Smith singing "Crazy Blues."
"It was the first recording of blues sung by an African-American ever," Mazor said. "It hadn't been done."
And the record went on to sell 1 million copies. It bears repeating: this is 1920.
"He saw something early on," Mazor said. "The reason he would bring Jimmie Rodgers or the Carter family... they were strong personalities with songs. The personality would sell the song, and then the song would sell again."
In other words, every new recording of the song, by new artists, benefitted everyone who worked on the originals. They made money off the royalties. Peer set the standard for that game. The blurbs for Mazor's book include everyone from Chuck D to Bob Dylan, Ry Cooder and Donovan.
"Their business wouldn't be there if he hadn't been there first," Mazor said.
President Barack Obama announced Friday that he will send up to 1,500 troops to advise and train forces in Iraq.
Marketplace's David Gura asked former Defense Secretary Robert Gates about the possibility of further deployments. Plus, how another across-the-board spending cut would, in his view, blunt military effectiveness. Listen to the full interview (or read the transcript below):
David Gura: President Obama said today he’s going to deploy up to 1,500 more personnel to Iraq to fight against ISIS. Do you think that move was inevitable? We see these numbers climbing up. Will they keep climbing?
Robert Gates: I understand the President’s desire not to re-fight the Iraq War. I don’t think there are very many Americans who want to do that either. The challenge that I think he faces is to draw a distinction between having a substantial advisory presence there and sending in battalions and brigades who are going to be the primary combat forces. So I think as long as the mission and role of these troops is constrained, I think you can keep the numbers to very small numbers.
I personally believe that you cannot achieve the President’s objective of destroying ISIS without having embedded trainers and advisers with the Iraqis and with peshmerga and some of the Sunni tribal leaders and so on. I think you need forward air controllers, spotters, and we need some special forces. But I think -- I think we’re talking in terms of hundreds of troops, not thousands or tens of thousands. So, I think to be able to achieve his objective we are going to have to be more engaged on the ground, below the brigade level.
But I think that you can constrain this so that it isn’t just an inexorable march back to having significant numbers of combat troops. The key will be, that if we have these embedded advisers, and even that is not working, to be able to say, okay, now what’s the alternative? And the alternative is not going back into Iraq with a large ground force of American troops.
So there’s more here than just a semantic distinction when we’re talking about trainers and advisers. They really are doing something different.
Oh yeah, there’s a difference between being a trainer and adviser at the brigade level, or at the division level – which puts you way back from the front, if you will, from the fighting – and having somebody who’s embedded with an Iraqi company or an Iraqi battalion that is out there on the front lines. There is risk associated with that. There’s no two ways about it. And that’s why you have to limit the forces that are doing that.
But it’s hard for me to see how they retake ground from ISIS – for example, to retake the city of Mosul – without some pretty close-in, Western, including American, assistance, advice and training.
While there’s this ramp up, how hard is it to execute these missions when there’s the threat of these automatic spending cuts due to take effect in 2016?
I’ve said publicly, there may be a more stupid way to cut the federal budget than through sequestration, but I can’t imagine what it might be. This is absolute madness because it requires us to cut the most important things that we are doing at the same level, or at the same percentage you’re cutting the stupidest things we do.
At the same time as we’re cutting perhaps some bureaucracy and overhead, we’re cutting the money that has been set aside to take care of wounded warriors and their families, family counseling programs, as well as modernization programs, maintenance and operations, so I think that this Congress and the President have a “must have,” as a very high priority, getting rid of sequestration.
If they want to cut the budget, then do it through the regular budget process, and set aside this crazy plan that even they didn’t want to enact.
This week, we're exploring how you've tried to make money our of your passion.
Whether the arts, music, theatre, basket-weaving, how'd it go? How much support did you get?
We want to know.
The economy added 214,000 jobs last month, and the unemployment rate ticked down to 5.8 percent, according to Friday's federal jobs report.
The fly in the ointment was the same fly that's been in the labor market ointment for years now: Wages are stuck.
Average hourly pay rose three cents last month. And to some extent this all makes perfect sense. Economists say after a recession there’s a natural order to a recovery.
Wharton economist Kent Smetters says to think of a recession like a monster fire that burns down the forest where,“you get a lot of job growth, that’s the trees growing up. But as they get taller they are competing for sunlight and that’s kind of the wage growth.”
Smetters says in this most recent jobs report wage increases are barely keeping up with inflation. But in some industries that’s changing.
“Trucking and manufacturing as well as some of the professional services like lawyers and accountants you are seeing higher wage growth,” he says.
Smetters thinks wages haven’t come around yet, in part because the recession left so many without a job. Smetters bets it could be another nine months before enough people flood back into the workforce to push wages up. If that does happen, “profits would not rise as fast in the future as they have in this economic recovery,” says Brookings Institution economist Gary Burtless.
And remember, Burtless says, business profits have hit record highs almost every quarter. Maybe it’s time for a bigger share to go to workers, he says.
“If they had more spending power that could boost consumption and boost the reason for employers to add to their pay roles because they can sell more stuff, more easily,” he says.
Burtless says while plenty of folks in Washington keep banging the job growth drum, voters sent an altogether different message when they supported every minimum wage hike on the ballot.
John Shields, who led the grocery company Trader Joe's from 1988 to 2001 and took it from a small Southern California chain to a nationwide retailer, has died. He was 82.
When Shields took over the business from his fraternity friend and company founder Joe Coulombe, Trader Joe's was a chain of 27 stores in Southern California.
He engineered a plan to reinvigorate the company and expand it nationally. There are now some 400 stores across the country, most recently in Idaho and Colorado.
"They have almost a cult-like following," says David Livingston of DJL Research. "They don't try to compete with big chains, ... they grow very slow and methodically, because they're very conservative financially and they're extremely cautious."
Those are values John Shields instilled in the company. But he also invested heavily in the Trader Joe's brand by asking his small team of buyers to becoming Research & Development experts - to travel the world seeking out new and interesting foods. He also branded those foods with the Trader Joe's logo.
"Much of what they sell is their own... label stuff," says Jon Springer, retail editor at the trade publication Supermarket News, "You can't buy Trader Joe's brand tortilla chips in any store."
That exclusivity has given the grocery chain an edge and it was very much a deliberate part of John Shields' strategy.
"We set our own rules on how we were going to run our company. We were going to develop the product, put our names on them. And these are the kinds of decisions that differentiate yourself from your competition," Shields said in a 2010 speech at the Corporate Leaders Breakfast Series at California Lutheran University.
In the last decade, the expansion that Shields began has continued. The company — which is private and notoriously secretive — is estimated to generate about $11 billion in revenue, according to Supermarket News.
"Today, they're the kind of company that... communities that don't have Trader Joe's have Facebook pages urging them to come," says Springer, "there's a lot of excitement when they do come to a city."
After all, how many grocery chains do you know with their own fan-written song?
The jobs report today announced 214,000 new jobs last month. The unemployment rate dropped to 5.8 percent.
Except maybe not.
The Bureau of Labor Statistics tells us the jobs report is accurate to within 90 thousand jobs plus or minus, and 0.2 percentage points on the rate.
So maybe it's 124,000 new jobs and a 6 percent unemployment rate. Probably not, but maybe.
As economic actors, we all act in accordance with costs and benefits, right? Gas prices are down 30 percent, there’s benefit there.
But what of the long-term environmental costs of climate change? We tend not to be urgent about that. And economists and social scientists are entirely not surprised by this.
There are countless examples of people failing to plan long-term: smoking, grabbing that third doughnut, failing to save for retirement, burning fossil fuels.
The cost or benefit is too far away.
“Imagine somebody offered you some investment,” says behavioral economist Dan Ariely of Duke, author of Predictably Irrational. “And they say here’s an investment you can pay now. And you can win 1,000 times more. But in 200 years. Would you invest in that? And people are just not designed to do this."
People do react when emotions are stirred. Imagine an enemy burning the globe.
“If we thought that the Martians were trying to bake us, imagine there was a conspiracy theory that global warming was not manmade but these Martians were really trying to cook us and they have these devices,” Ariely says. “We would have spent a tremendous amount of money creating spaceships and so on to fight them back, because there was a way to direct our emotions.”
It’s not that scientists aren’t loud about climate change. The latest report warns of “irreversible impacts” of global warming, and 95 percent confidence that humans are the main cause.Courtesy of IPCC
We just don’t listen to them.Courtesy of Yale/George Mason University
Global Warming's Six Americas.
“If you’re green, you’ll trust Bill McKibben. And if you’re brown, you’ll trust George Will,” says risk perception consultant David Ropeik, author of “How Risky Is It, Really?” “It doesn’t matter what the facts are. It matters whether you trust who is giving them to you, because you want to be true to the tribe.
In fact, some go so far as to argue there’s too much science out there.
“We’re well past the point where messaging the science or trying to communicate about the science more effectively is going to change anyone’s opinions,” says Northeastern University communication scholar Matthew Nisbet. “If anything, that’s going to move people to the poles.”
That’s poles, not polls. In this year’s midterm, climate was hardly an issue. According to a Pew poll, voters ranked it eighth in importance out of 11 issues.
Many people have written it off as faraway problem.
“People have been hearing about climate change for a couple decades now,” says environmental scientist Ezra Markowitz of the University of Massachusetts Amherst. “The earliest messages that were put out there about this issue was it was an issue that was going to affect other people, other species, not us today. It’s very difficult, if not impossible, to just get rid of the things that people already know and think about an issue, especially a complex issue like climate change.”
Markowitz and others say the key is to bring a long-term issue closer to people’s lives and everyday thoughts. One bank website even takes your photo and ages you electronically, to make your future more real.
If that doesn’t work, events will eventually focus people’s minds, perhaps first in low-lying areas and those with more irregular weather patterns.
“In the summer of 2010 there was a horrible heat wave in Moscow,” says Matthew Kahn, UCLA economist and author of Climatopolis. “And it killed thousands. Nobody in Moscow had an air conditioner. In the aftermath of that event, thousands of people have purchased air conditioners there. The people have adapted and changed their lifestyle to be ready for the next shock.”
Adaptation may come too late for some. But self-interest is a true climate-change motivator.
Social scientists weigh in on why we don't care about climate change
A crash course in climate change sociology
Social scientists understand that people aren't that concerned about climate change. And yet they still see climate change as a huge issue. Here are some tools to help get inside the mind of a social scientist and see things from their perspective starting with some key concepts and terms.
Availability heuristic: people think of immediate examples when evaluating a topic, concept, method or decision. Things that come to mind easily are thought to be more common and accurate reflections of the world. This can cause people to make bad assessments of risk.
Free-rider effect: individuals in a population who consume more than their fair share of a common resource, or pay less than their fair share. Or a person who gets something without effort or cost.
Cultural Cognition: the tendency of individuals to conform beliefs about disputed matters to values that define a cultural identity. People conform their beliefs with the group they are in.
Identifiable Perpetrators: the tendency of individuals to offer aid or punishment when a specific identifiable person is observed, rather than a large, vague group.
Population of Mister Spocks v. Homer Simpsons: I think this one speaks for itself.
Kevin Ashton created an internet celebrity named Santiago Swallow for 68 dollars.
He blended three faces from portraits from Google images to create Swallow’s face using a free trial of Adobe Lightroom. He made a website. He bought Swallow 90 thousand Twitter followers online.
As part of his social experiment, Ashton used an online application called Status People. The website claims to tell you how many of your Twitter followers are real, inactive or what they call fakers, also known as Twitterbots.
I was suspicious. How can Status People actually differentiate between a bot and a real person?
For example, according to Status People only about 40 percent of Justin Bieber’s Twitter followers are real. So that would mean 33.6 million (give or take a point million) of his 56 million followers are fake or inactive.
Social status today is defined in part by social media. The difference of a few million or even a few thousand Twitter followers is huge. It determines your Twittersphere hierarchy, your social media power ranking, your on and offline reputation.
So I started thinking: who else? What about Lizzie O’Leary?
Turns out, according to Status People, Lizzie’s Twitter followers are 21 percent fake, 29 percent inactive and 50 percent real, active, contributing members.
And what about the official Marketplace Weekend account?
And of course, what about me?
I am far from a Twitter celebrity: At 188 followers (more or less depending on the day) and only about 300 tweets, I realize that by Twitter standards I’m not exactly a big deal. But come on, I had to know.
According to Status People only 1 percent of my followers are fakers and 23 percent are inactive. That’s pretty good—or at the very least better than Bieber. But mid-gloat I hit a snag.
When the site analyzed my followers, its metric determined that two of them were fakers. This whole time, I thought this app was weeding out robots, but both of my “fakers” are real people. Like, I-know-them-in-real-life, real people. One of them is my grandma.
So my suspicions were confirmed: Status People isn’t guaranteed to differentiate between bots and humans.
On Status People’s website, they list part of their methodology like this: “On a very basic level spam accounts tend to have few or no followers and few or no tweets. But in contrast they tend to follow a lot of other accounts.”
So it makes sense why Status People thought my grandma was a bot. She has zero tweets, zero followers and she is following one person—me.
The process of telling the difference is tricky, according to Dr. Steven Gianvecchio, co-author of the paper “Detecting Automation of Twitter Accounts: Are You a Human, Bot, or Cyborg?”
“I think that one of the problems you run into with Twitter is there are a lot of shades of grey,” he said.
Dr. Gianvecchio said sometimes accounts are partially automated, like if someone auto-tweets their blog. And most people don’t have a problem with that sort of automation.
Profiles like my grandma’s, however, would be considered unwanted, according to Gianvecchio.
“Those accounts, most people would consider to be unwanted because for the most part you really want to be interacting with other people,” Gianvecchio said.
So while Status People isn’t perfect at differentiating between bots and humans, it does weed out these unwanted followers who aren't interacting.
This is what I labeled the “grandma paradox.”
On one hand, my grandma serves no purpose on Twitter. She’s not a contributing member of social media, so there’s really no reason for her profile to exist. Sorry grandma, you might as well be a robot.
But on the other hand, my inner narcissist says, go ahead, grandma! In fact, tell all your grandma friends to make useless profiles and follow me too. The more the merrier, as long as my follower account is high.
And that’s probably how Justin Bieber feels too. It doesn’t matter that millions of his followers are robots, or might as well be, as long as some of his followers are real and interacting.
Gianvecchio emphasized quality over quantity. “I think that the number of followers that someone has is a meaningless metric at this point,” he said.
This week, we spotted the technology to test who you are and where you come from, parked across the street from New York's Grand Central Station. It's a mobile DNA truck, offering access to a technology that, not too long ago, wasn't readily available.
Lizzie O'Leary met the owner, Jared Rosenthal, outside his truck.
After two recent high profile accidents: the crash of Virgin Galactic's spaceshiptwo, which killed the pilot and injured the copilot, and the explosion of Orbital Sciences Antares rocket, we wanted to know more about the future of commercial space.
Mike Gold, the chairman of the FAA's Commercial Space Transportation Advisory Committee also works extensively with Bigelow Aerospace as their Director of DC Operations. Bigelow is a space start-up planning to launch their own space station in the future.
"I don't think anybody sees these failures and says, 'Well, that's a great thing.' I can certainly assure you it wasn't beneficial. But what was extraordinary to us was the success, the amazing consecutive successes that the Falcon 9 and the Antares had up to this point," Gold says. "Not that there was a failure. So if anything the performance, particularly of the pace X systems, have exceeded our expectations."
"We hear far too often that commercial entities will be less safe than government programs when exactly the opposite is the case. You talk about Mercury and Apollo and other programs. They to an extent could suffer failure more easily than a commercial program because if you look at the activities of these purely commercial entities, such as Virgin Galactic, it's their own money, their own investors, and they don't necessarily have the depth of resources," Gold says. "Which is why, quite frankly I think there is at least an equal if not a stronger focus by these commercial and private sector companies on safety and success because if we fail, our jobs go away, the programs go away. And that's not necessarily the cause with government programs."
The Labor Department just released the jobs report for October. It says the economy added 214,000 new jobs last month.
The unemployment rate fell to 5.8 percent, from 5.9 percent.
But there's more to the jobs picture than just those numbers:
There's a missing piece of the puzzle - and it's wage growth. Pay checks aren't going up much.
Today's jobs report showed average hourly earnings up by 3 cents last month. Wages were flat in September.
Part of the reason for that may be that there's still some slack in the job market.
Employers aren't having to raise pay to attract workers. They have plenty to choose from.
"The fact that wages have not really moved suggests that there is a lot of slack and that employers are still holding all the cards," says Elise Gould, senior economist at the Economic Policy Institute. "There are still many workers out there for every job opening."
The Federal Reserve is watching these numbers closely, as it tries to decide when to raise interest rates.
It's not going to be in any rush to raise interest rates, as long as there's still that slack in the labor market.
When we start to see the slack going away - when wages start going up more - then the Fed will start thinking it may be time to hike interest rates.
Which, by the way, have hovered near zero for almost six years.
As part of our program's 25th anniversary, we've been tracking the odd ways prices have changed over that period. According to a cellular phone industry group, the average monthly cell phone bill has dropped from an inflation adjusted $151 back in 1989, to $47 today.
A 69 percent drop? How is that possible?
Michael Grubb is an economics professor at Boston College who has studied the cell phone market.
Listen to the full conversation in the audio player above.
As part of our program's 25th anniversary, we've been tracking the odd ways prices have changed over that period. According to a cellular phone industry group, the average monthly cell phone bill has dropped from an inflation adjusted 151 dollars back in 1989 to 47 dollars now. Plus: Chris Low of FTN Financial gives us some perspective on the 214,000 jobs added to payrolls this month.
UPDATE: October's numbers are in from the Bureau of Labor Statistics: 214,000 jobs added, and the unemployment rate "edged down" to 5.8 percent.
The monthly employment report from the Department of Labor will likely show the economy added approximately 240,000 jobs in October, and unemployment held steady at 5.9 percent, after falling below 6.0 percent in September for the first time since mid-2008.
Economists can point to steady improvement over the past several years in those two statistics—job creation, and the unemployment rate (which was 7.2 percent in September 2013, and 9 percent two years earlier).
Yet, this ‘official’ unemployment rate doesn’t accurately characterize many aspects of the labor market right now—in particular, how hard it still is to land a middle-income job; how easy it is for employers to find qualified candidates; and how little those employers have to compete with each other over wage and benefit offers, in order to hire the workers they want.
The ‘official’ unemployment rate—called the U-3 by the Bureau of Labor Statistics—only counts how many people are actively unemployed. They’re looking for work and actually applied for a job in the past four weeks.
But right now, the number of people who are not working, but would like to work, is unprecedentedly high. These people have given up looking—possibly because they don’t think any jobs are available for them, or perhaps to attend school and upgrade their skills, or to go into semi-retirement. They’ve pushed down the labor force participation rate to its lowest level (62.7 percent in September) since the late 1970s.
Combine these discouraged and marginally attached workers with the ‘underemployed’—people who would like to find better-paying full-time jobs but can only find part-time jobs—and total unemployment (the U-6 rate), as measured by the BLS, is averaging well over 12 percent in 2014 (it was 11.8 percent in September).
Economists have anticipated that some attrition in the labor market would occur when the Baby Boomers began retiring earlier this decade. But in fact, after the recession, older workers have stayed on the job longer than was predicted, on average. With retirement savings and home equity depleted by the recession, older Americans are holding on to jobs if they can.
“Where we’re seeing large declines in labor force participation is actually among prime-age workers,” explains University of California-Berkeley economist Jesse Rothstein, “especially among people in their early twenties. It’s hard for me to believe that there’s this enormous group of people in their early twenties who have decided that they’re never going to work.”
Rothstein and many other economists believe the economy hasn’t changed structurally so that fewer people want to work or feel the financial need to work. Rather, they think the labor market is simply too weak, and demand in the economy too anemic, to employ all the potential workers who want and need jobs. They believe if the economy strengthens significantly, many of those potential workers will come out of the woodwork and begin job-hunting again.
Absent such improvement, the labor market is likely to remain slack, even if the official unemployment rate continues to decline steadily and eventually dips below the Federal Reserve’s target of 5.5 percent. Fed policymakers, led by chair Janet Yellen, have said they are looking at other labor market indicators in addition to the unemployment rate, to make sure they don’t withdraw economic stimulus and kill the nascent recovery before it’s helped the hard-core and long-term unemployed, the underemployed, and discouraged workers.
Rising wages are now considered a key harbinger of labor-market tightening by market participants and Fed policymakers, explains economist John Canally at LPL Financial.
“I think that’s the ultimate indicator—to get wage growth back to normal, back to the 3.5-percent-to-4.5-percent gains we saw prior to the Great Recession,” said Canally. “Then I think there’ll be confidence that businesses are finding it more and more difficult to fill jobs.”
In recent years, average hourly earnings have been rising in the 2-percent-per-year range, just keeping pace with inflation.
Another indicator of a tightening labor market would be a reverse in recent declines in labor force participation, especially among prime-age workers. If more people who have dropped out of the workforce, or never entered it after high school or college, started looking for work again, that might raise the unemployment rate temporarily. But it would be another sign the economy is truly on the mend.