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Supreme Court opens gates for political money

Wed, 2014-04-02 13:23

The Supreme Court says you can put a whole lot of money into politics. Its 5-4 decision Wednesday in McCutcheon v. Federal Election Commission strikes down overall limits on what people can give to candidates and political parties. There are still limits as to what someone can give to a single candidate. But now, theoretically, individuals can max out their giving to every candidate nationwide.

Many expect the ruling to mean an overall increase in how much money goes into politics. And it may also mean some money that goes now to independent political vehicles such as super PACs and 501(c)(4)s may go instead to candidates and parties.

Mark Garrison: Let’s meet two folks on two sides of this issue, who both filed briefs with the Court. Ilya Shapiro of the libertarian Cato Institute is happier of the pair.

Ilya Shapiro: The Supreme Court should free up the arena for political speech.

Trevor Potter is with Campaign Legal Center. You may have seen him on TV in his role as lawyer for Steven Colbert’s many satirical political ventures. The Court did not agree with him.

Trevor Potter: If they read our brief, they apparently didn’t care about the consequences.

This is Marketplace, not Legalplace, so we won’t dwell on their arguments. In short, Potter worries about money causing corruption. Shapiro says restricting campaign spending restrains free speech. But there’s one place they agree. First, Potter.

Potter: I think there will be a net increase in the amount of money going into politics.

And Shapiro.

Shapiro: I think there will be increased contributions in general to the candidates and campaigns.

And it may mean less money given to outside groups. In recent years, dollars have flowed from billionaires to super PACs and 501(c)(4)s. Outside money has been the trendy thing in campaigns. But this ruling may bring a vintage political force back into style. Scott Bland is with National Journal Hotline, a news source for political insiders.

Scott Bland: it’s possible that as a result of this, the parties will be able to exercise a little bit more influence than they have over the last few years.

In a political environment full of new ways to spend money, today’s ruling may help empower a very old one. I'm Mark Garrison, for Marketplace.

Keating's legacy, from John McCain to a camp classic

Wed, 2014-04-02 13:17

Charles Keating, who died this week, is best-known as the poster boy for the savings and loan crisis of the 1980s. More than 1,000 banks failed, and taxpayers spent a quarter-billion dollars bailing them out.

Here are a few of his more colorful legacies:

1. Keating gave birth to John McCain as-we-know-him. By making McCain a figure of shame.

Keating's status as the king of the S&L swindlers rests on his sponsorship of the "Keating Five": a group of five U.S. Senators whose campaigns he supported financially-- and who in turn attempted to dissuade regulators from investigating Keating's shenanigans. The sole Republican in the group was John McCain, then a relatively new U.S. Senator. McCain later called the episode "my asterisk" -- and became better-known as a bi-partisan crusader for campaign-finance reform.

2. Also on Keating's payroll in the 1980s: Alan Greenspan.

As a private economist, Alan Greenspan took on a consulting job for Keating in 1984. His job: Drafting a report to regulators, arguing that Keating's bank, Lincoln Savings and Loan, be exempted from certain rules because it was well-run. 

3. He was good for a shameless quote.  

From the New York Times obituary: "Mr. Keating, a 6-foot-5-inch beanpole who walked with a swagger, never minced words about buying political influence. Asked once whether his payments to politicians had worked, he told reporters, 'I want to say in the most forceful way I can: I certainly hope so.'”

4. He did like to peddle shame. 

In the late 1950s and early 1960s, Keating was a huge anti-pornography crusader. He sponsored a hilarious infomercial The Atlantic called “The Reefer Madness of porn.”

5. We can thank him, in part, for financial tools that later blew up in 2008.

Roy Smith teaches finance at NYU. And he spent much of the 1980s at Goldman Sachs. "You have to remember that the S&L crisis actually spawned two of the financial industry's most lucrative product streams," he says. "One was the securitization of mortgages into mortgage-backed securities. Hello! Those things that blew up in 2008..."

They were created for sale to savings and loans. "The other was the derivatives business."

Smith says it took more deregulation, time, and financial creativity for both products to cause problems. 

An uncertain future for big data in education

Wed, 2014-04-02 13:07

A victory for privacy advocates in New York spells trouble for a national effort to track student data--everything from grades and test scores to disabilities and suspensions. The New York State Education Department has confirmed it will no longer store any student information with the non-profit inBloom. That makes New York the last big customer to drop out of an initiative backed by the Gates Foundation and the Carnegie Corporation. Once boasting nine states as potential customers, the nonprofit group says it’s still talking with individual school districts around the country.

What GM's mea culpa could mean for the brand

Wed, 2014-04-02 12:34

Mary Barra, the newly appointed CEO of General Motors spent another day on Capitol Hill, testifying before lawmakers about why it took GM a decade to recall millions of cars with defective ignition switches.

Barra apologized again today, but how well GM will weather public outcry is still a question.  The company’s success at selling cars after this crisis ends “depends on whether this is attributed to the old GM or the new GM” says David Vinjamuri, author of “Accidental Branding”.

Vinjamuri is impressed at how well Barra has handled the recall so far. He says Barra and GM showed they were serious when they brought on Kenneth Feinberg, the attorney known for his work with compensation funds. Feinberg worked with victims of 9/11 and the BP Oil Spill, for example.  

Bringing on Feinberg also shows General Motors is looking for a quick -- rather than inexpensive -- way of putting the recall behind them, and it seems likely they’ll pay the families of crash victims related to the recall.

It’s smart for GM to agree to a large payout early on, says Vinjamuri, because in the long run, they’ll make that money back only if American car-buyers learn to trust the company again.

Supreme Court opens gates for political money

Wed, 2014-04-02 12:25
Wednesday, April 2, 2014 - 16:23 Rod Lamkey/Getty Images

Joan Stallard (L) of Washington DC talks about the issue of the Supreme Court striking down the limit one can donate to political as Scott Dorn (R) of Washington DC looks on in front of the U.S. Supreme Court April 2, 2014, in Washington, DC. The Supreme Court struck down the limits on how much one person can donate overall to political campaigns. The limit to individual candiates is still $2,600 per candidate. 

The Supreme Court says you can put a whole lot of money into politics. Its 5-4 decision Wednesday in McCutcheon v. Federal Election Commission strikes down overall limits on what people can give to candidates and political parties. There are still limits as to what someone can give to a single candidate. But now, theoretically, individuals can max out their giving to every candidate nationwide.

Many expect the ruling to mean an overall increase in how much money goes into politics. And it may also mean some money that goes now to independent political vehicles such as super PACs and 501(c)(4)s may go instead to candidates and parties.

Marketplace for Wednesday April 2, 2014

Mark Garrison: Let’s meet two folks on two sides of this issue, who both filed briefs with the Court. Ilya Shapiro of the libertarian Cato Institute is happier of the pair.

Ilya Shapiro: The Supreme Court should free up the arena for political speech.

Trevor Potter is with Campaign Legal Center. You may have seen him on TV in his role as lawyer for Steven Colbert’s many satirical political ventures. The Court did not agree with him.

Trevor Potter: If they read our brief, they apparently didn’t care about the consequences.

This is Marketplace, not Legalplace, so we won’t dwell on their arguments. In short, Potter worries about money causing corruption. Shapiro says restricting campaign spending restrains free speech. But there’s one place they agree. First, Potter.

Potter: I think there will be a net increase in the amount of money going into politics.

And Shapiro.

Shapiro: I think there will be increased contributions in general to the candidates and campaigns.

And it may mean less money given to outside groups. In recent years, dollars have flowed from billionaires to super PACs and 501(c)(4)s. Outside money has been the trendy thing in campaigns. But this ruling may bring a vintage political force back into style. Scott Bland is with National Journal Hotline, a news source for political insiders.

Scott Bland: it’s possible that as a result of this, the parties will be able to exercise a little bit more influence than they have over the last few years.

In a political environment full of new ways to spend money, today’s ruling may help empower a very old one. I'm Mark Garrison, for Marketplace.

by Mark GarrisonStory Type: News StorySyndication: SlackerSoundcloudStitcherSwellPMPApp Respond: No

It might not lead to a pot of gold, but it could

Wed, 2014-04-02 11:39

From the Marketplace Datebook, here's a look at what's coming up Thursday:

  • 46 years ago Martin Luther King Jr. gave his famous "Mountaintop" speech in Memphis, Tenn. He was assassinated the next day.
  • In Washington, the Commerce Department reports on international trade for February.
  • The Senate Foreign Relations Committee receives a closed briefing on Russia.
  • Actor Marlon Brando was born on April 3, 1924. He would have been 90.
  • And some folks observe National Find a Rainbow Day. Don't want to go outside? Just dig in your box of crayons.

The science of food and sound

Wed, 2014-04-02 11:06

What's the best sound to pair with wafting coffee smells? What's the right song for the tomato sauce on your pizza? What's most ideal aural ambiance for your milkshake?

Lucy Hooker is a reporter with the BBC. She has been looking into a field called "neurogastronomy," or, in plain terms, "what your brain does when you eat something."  

She points to one study in which scientists gave people a dessert and played different sounds while they were eating. Depending on which sounds were played, a dessert could taste more bitter or more sweet.

Starbucks liked the idea so much, they asked the scientists behind the research to compile a playlist of songs people should listen when drinking coffee at home. Hooker said Starbucks is not the only major company interested in this research.

“Lots of the really big food companies -- Unilever, Nestlé -- have massive research and development units, and they are putting a lot of effort and a lot of focus into seeing how they can use our different senses," said Hooker. "How they can combine the sound a food makes in our mouth, the sound of the packaging, the sight of it, the smell of it."

Keating's legacy, from John McCain to a camp classic

Wed, 2014-04-02 09:18
Wednesday, April 2, 2014 - 16:17 Nick Ut/Associated Press

Charles H. Keating Jr. in court in Los Angeles in 1992. Convicted of fraud, racketeering and conspiracy in state and federal trials, Mr. Keating went to prison for four and a half years.

Charles Keating, who died this week, is best-known as the poster boy for the savings and loan crisis of the 1980s. More than 1,000 banks failed, and taxpayers spent a quarter-billion dollars bailing them out.

Here are a few of his more colorful legacies:

1. Keating gave birth to John McCain as-we-know-him. By making McCain a figure of shame.

Keating's status as the king of the S&L swindlers rests on his sponsorship of the "Keating Five": a group of five U.S. Senators whose campaigns he supported financially-- and who in turn attempted to dissuade regulators from investigating Keating's shenanigans. The sole Republican in the group was John McCain, then a relatively new U.S. Senator. McCain later called the episode "my asterisk" -- and became better-known as a bi-partisan crusader for campaign-finance reform.

2. Also on Keating's payroll in the 1980s: Alan Greenspan.

As a private economist, Alan Greenspan took on a consulting job for Keating in 1984. His job: Drafting a report to regulators, arguing that Keating's bank, Lincoln Savings and Loan, be exempted from certain rules because it was well-run. 

3. He was good for a shameless quote.  

From the New York Times obituary: "Mr. Keating, a 6-foot-5-inch beanpole who walked with a swagger, never minced words about buying political influence. Asked once whether his payments to politicians had worked, he told reporters, 'I want to say in the most forceful way I can: I certainly hope so.'”

4. He did like to peddle shame. 

In the late 1950s and early 1960s, Keating was a huge anti-pornography crusader. He sponsored a hilarious infomercial The Atlantic called “The Reefer Madness of porn.”

5. We can thank him, in part, for financial tools that later blew up in 2008.

Roy Smith teaches finance at NYU. And he spent much of the 1980s at Goldman Sachs. "You have to remember that the S&L crisis actually spawned two of the financial industry's most lucrative product streams," he says. "One was the securitization of mortgages into mortgage-backed securities. Hello! Those things that blew up in 2008..."

They were created for sale to savings and loans. "The other was the derivatives business."

Smith says it took more deregulation, time, and financial creativity for both products to cause problems. 

Marketplace for Wednesday April 2, 2014by Dan WeissmannPodcast Title: Keating's legacy, from John McCain to a camp classicStory Type: News StorySyndication: SlackerSoundcloudStitcherSwellPMPApp Respond: No

An uncertain future for big data in education

Wed, 2014-04-02 09:13
Wednesday, April 2, 2014 - 16:07 Joe Raedle/Getty Images

Bill Gates sits next to students at Booker T. Washington high school in Miami, FL.

A victory for privacy advocates in New York spells trouble for a national effort to track student data--everything from grades and test scores to disabilities and suspensions. The New York State Education Department has confirmed it will no longer store any student information with the non-profit inBloom. That makes New York the last big customer to drop out of an initiative backed by the Gates Foundation and the Carnegie Corporation. Once boasting nine states as potential customers, the nonprofit group says it’s still talking with individual school districts around the country.

Marketplace for Wednesday April 2, 2014by Amy ScottPodcast Title: An uncertain future for big data in educationStory Type: News StorySyndication: SlackerSoundcloudStitcherSwellPMPApp Respond: No

The dramatic changes in the stock floor trading businesses

Wed, 2014-04-02 08:27

Goldman Sachs Group is reportedly trying to sell one of its stock floor trading businesses (a firm called Spear, Leeds & Kellogg). Goldman paid $6.5 billion dollars in stock and cash for it 14 years ago, but may sell it for a mere $30 million – or less.

High Hopes

When Goldman first purchased Spear, Leeds & Kellogg, it was acquiring what’s known as a “market maker” and a “specialist”.  You can think of specialists as the auctioneers and market supervisors for a certain type of stock.  Much like the person who runs the butcher section of the bazaar that is the stock market, it’s the place on the trading floor you go to buy and sell a certain type of stocks. 

Specialists would be the auctioneers of certain stocks, they would help bring interested buyers and sellers together, and they could put in electronic  instructions for orders (don’t buy or sell  X stock until it hits Y price). 

Goldman Sachs announced that with its purchase of such a specialist firm, it was now “at the forefront of advanced technology.”

Unfortunately for them, that was not the case. 

What happened?  Computers happened.

“The way we visualize the stock markets has completely changed,” explains Eugene White, professor of economics at Rutgers University. No longer are swarms of brokers scurrying across the trading floor to a specialist’s post. “That’s gone right now pretty much.” 

Many orders are now akin to sizeable parking lot deals, done not in one central clearing house for a stock category but rather on any number of servers, says White.  Around half of all stock trades are done this way --  electronically through high speed trading. Computers implement orders and react to prices on their own, and on different electronic exchanges. And the volumes are enormous – often larger than any specialist could reasonably accommodate.   

“What’s happened is that there are huge orders now that come in and which are negotiated directly between different parties,” says White.

These deals are done millions of times a second and automatically. In fact, computers have gotten so  good at doing this they’ve driven down profits for all middle men – computers and humans alike. 

“The spreads have narrowed enormously,” says White, referring to the profits that specialists would make as middle men. It’s a long term trend dating back 50 years, but the rise of high speed trading  has accelerated it apace. 

It’s one other reason why a company that Goldman Sachs Group bought for $6.5 billion may sell for just a fraction of that - reportedly just $30 million --  “not even really the price of a trophy apartment” for a Goldman executive in New York, says White.

PODCAST: Private sector warms up

Wed, 2014-04-02 06:48

Ahead of the official jobs report late in the week, the ADP payroll company tallies up paychecks. The news from them is that private sector payrolls went up a strong 191,000 jobs in March. David Kelly is chief investment strategist at JP Morgan Funds and joined us to discuss the report.

Microsoft is feeling better lately: It has a brand new CEO, Satya Nadella, its stock is up 11 percent since the start of the year and Office for iPad is finally here. Word is Microsoft is coming out with a digital personal assistant, named Cortana. It will be Microsoft's own version of Apple's Siri. Sally Herships tells us what Cortana means for Microsoft.

Tax experts will tell you if your tax return is mainly based on that W2 form you get for wages, tips, and salary from your employer, there's not much wiggle room. Sure you, you take the deductions you are entitled to, but opportunities for clever savings are slim. Too bad you're not a big corporation. Marketpalce contributor Alan Sloan is a senior editor at Fortune Magazine and joined us with a fine example of the sometimes strange US tax code.

Tax-avoidance deal saves millions

Wed, 2014-04-02 02:52

If your tax return is based primarily on the W2 form you get for wages, tips and salary from your employer, there's not much wiggle room. You can take the deductions you're entitled to, but chances for savings are slim. 

That's not the case for big corporations, though. Allan Sloan, senior editor-at-large for Fortune Magazine and frequent Marketplace contributer, talks to host David Brancaccio about how our strange U.S. tax code makes it possible for some companies to legally avoid paying hundreds of millions of dollars. 

Are homes in a mudslide covered by insurance?

Wed, 2014-04-02 02:47

The death toll from the massive mudslide in March in Oso, Wash., stood at 27 as of April 1, according to the Snohomish County Medical Examiner’s Office.

More than 40 structures may have been swept away or damaged. Coverage for hazards like mudslide can cost an extra $1,000 per year, and fewer than 1 percent of Washington State homeowners carry it, according to the NW Insurance Council.

The financial risk of homeownership might have been heightened for some in the area. Local television station King 5 has identified one homeowner who bought a foreclosed property in the slide zone. At the height of the recession, 40 percent of sales in the county were foreclosures.

Herbert Burkart, owner of a RE/MAX realty office in nearby Arlington, Washington, says purchase contracts for foreclosures often don’t include a Seller’s Disclosure Statement (known in Washington State as Form 17) listing problems like landslide.

“A lot of banks did not want to provide the disclosure statement at all,” said Burkart, “because they don’t know anything about these properties that they’re foreclosing on.”

Washington’s governor has requested federal disaster assistance—which may be all that many survivors get to help pay off their mortgages and rebuild.

FTC wants stronger rules on consumer data

Wed, 2014-04-02 02:39

Massive security breaches at Target and Neiman Marcus last year put millions of customers at risk of identity theft and credit card fraud. In light of these major rifts in consumer secuity, Federal Trade Commission chair Edith Ramirez is urging Congress to adopt several new rules to better protect consumer data such as credit card information, usernames and passwords.

"What we are seeking is that there are robust security requirements as well as a national breach notice requirement," said Ramirez. "We'd also like any national legislation to include FTC enforcement with a civil penalty."

States currently enforce their own regulations when it comes to notifying customers of a breach in security. According to Ramirez, a federal requirement would benefit shoppers across state lines as well as aid law enforcement in prosecuting cybercrime.

"It's critical that consumers receive reasonably prompt notification so that they can take whatever steps they need if there has been a breach and their consumer information has been exposed," said Ramirez.

Several senators have introduced similar legislation to congress, but the bill has not moved out of committee. In the meantime, Ramirez says she hopes the FTC can fill the void of Congress. She added that the market also plays a significant role in determining privacy measures.

"Consumers are increasingly demanding adequate protection for their information both in terms of data security and larger privacy questions," said Ramirez.

'Save money, live better'

Wed, 2014-04-02 02:27

This story is part of a collaboration with Slate called “The Secret Life of a Food Stamp.” 

When Stephanie Ballam finishes her shift at a Walmart Super Center near Columbus, Ohio, she sometimes picks up a few groceries—items she might have put on the shelves herself hours before: a box of oatmeal, a can or two of mini ravioli.

At the checkout, first she swipes her Walmart employee card to get her store discount. Then, because she doesn’t earn enough money at her job to make ends meet, she will often pay for the groceries with food stamps, using her Electronic Benefits Transfer card. Eventually, that money will show up in Walmart’s annual earnings report as sales.

Ballam, 31, is glad to have her job at Walmart. She currently works there full-time and just recently got a raise to $9.10 an hour; she thinks the raise might be enough to disqualify her from the food stamp program, though the state hasn’t processed the paperwork yet. For now—and for the last three years since she’s worked at Walmart, plus a few months before that when she was unemployed—food stamps have helped her survive. Back when Walmart first hired her and she found out how much she would be making, hearing the number was “like being punched,” Ballam says. Her starting hourly wage was $7.25. As for food stamps, “I knew that I would still need those services,” Ballam says.

So how typical is Stephanie Ballam's situation? The federal government doesn't keep nationwide data on how many workers at Walmart—or any other company—are on food stamps, which are officially known as the Supplemental Nutrition Assistance Program (SNAP). SNAP is available to people living at or near the poverty line; for a single person like Stephanie Ballam, that means an annual income less than about $15,000 a year.

Walmart is the largest employer in the U.S., so its work force is bound to reflect the country’s economic realities.

Although there are no federal numbers on where employed SNAP participants work, the state of Ohio, where Ballam lives, does keep a list of the top 50 companies with the most workers and their family members on food stamps. Ohio’s list includes lots of fast food chains, discount and big-box stores: McDonalds, Target, Kroger Supermarket, Dollar General. At the very top is Walmart, which had a monthly average of more than 14,500 workers and family members on food stamps last year. If you take into account the average size of a family on food stamps, as many as 7,000 individual Walmart employees were on food stamps last year—nearly 15 percent of the company’s work force across Ohio.

That means the same company that brings in the most food stamp dollars in revenue—an estimated $13 billion last year—also likely has the most employees using food stamps.

“I think it's troubling that any American has to turn to a program like that, but the fact is, they do,” says David Tovar, Walmart’s vice president of communications. I met him at the company headquarters in Bentonville, Ark. where the wall behind the front desk has giant painted letters that spell out the company motto: Save money. Live better.

The front desk at Wal-mart's corporate headquarters in Benton, Ark.

“We would love nothing more than a day when we didn't have to have programs like that,” Tovar continues. “But for now, with the economy the way it is, with customers continuing to struggle the way they are, I think it's really important to be able to help people along the way.”

When looking at the number of Walmart employees on food stamps in Ohio and elsewhere, Tovar stresses the importance of perspective: Walmart is the largest employer in Ohio, and the country, he points out, so its work force is bound to reflect the country’s current economic realities, including growing rates of food stamp use.

Tovar also quotes a line other Walmart executives have used before him: “It’s really not where you start; it's where you end up.”

But there was a time not so long ago when where you started—even in an entry-level job—could afford you a much different life right at the outset. And that brings us to the Hudson family.

Let's start with Adam Hudson, age 21. Last summer he got a job at a Walmart Super Center in Dayton as a hardware associate, stocking shelves, organizing displays and helping customers, making $8.25 an hour.

Adam Hudson works at Walmart for $8.25 an hour. He brought home $488.60 for 75.5 hours worth of work.

Adam Hudson, 21, at his mobile home in Ohio.

Until then, he had a pretty low opinion of the food stamp program. “I'd always considered people who use food stamps as just taking advantage of the government,” Hudson says, because they “weren't working hard enough to be able to afford for themselves.”

But at Walmart, Hudson saw lots of his co-workers working hard and still needing SNAP. One day after he returned home from work, he was talking with his fiancée, who was pregnant. “She had mentioned that she was hungry—hadn't been able to eat that day,” he told me. “I kept trying to suggest things we could do, like calling my mom or my dad for a little bit of help…It dawned on us that we can't afford to feed ourselves and make sure all of our bills are paid and have a car with gas to get to work every day.” A few weeks after Walmart hired him, Hudson enrolled in the food stamp program.

Compare Adam’s situation to that of his father, Jim Hudson, who has never been on food stamps in his life. Back when Jim was a young man, his life was in many ways very similar to his son’s: He was starting a family and looking for a job he could get with no college degree. The plentiful work was not in retail, but manufacturing. Jim got hired at what was, back then, the largest employer in Ohio and the country: not Walmart, but General Motors.

Jim Hudson says his starting wage in 1991 at a GM factory near Dayton, building Trail Blazers, was $9.35 an hour, which in inflation-adjusted 2014 dollars comes out to $16.12 per hour—almost twice what his son makes now. Adam Hudson says he would love a job at the GM plant where his dad worked. It shut down in 2008.

Adam and Jim Hudson at Adam's home in Ohio.

Back when GM was still Ohio's largest employer, it would not have ranked as a top food stamp employer. It may not have had any workers—even entry-level workers—on food stamps at all.

“Those workers would have earned too much to qualify for the program,” says James Ziliak, an economist at the University of Kentucky who has been looking at the way food stamp enrollment has changed in the last 30 years. One of the starkest changes is the increase in people who have steady jobs, either part-time or full-time, but still use food stamps because they earn so little. According to Ziliak’s analysis of census data, these days about 24 percent of households on food stamps are headed by people working year-round. That’s up from just 15 percent in 1980.

Put another way, one of the big drivers of food stamp growth in the last few decades is the difference between Jim Hudson’s job at GM and his son’s job at Walmart.

Back when manufacturing was still king, “wages would grow, prices would grow, but wages would grow faster than prices,” Ziliak says. “So people were actually making real increases in their standard of living.” Those increases drove the consumer economy.

Today, in an economy fueled by the retail and service industries, companies try to stay competitive by keeping prices down. “One way to do that is to make sure their wages are kept in control,” Ziliak told me. “But that also has a feedback effect, because if wages aren't rising, that means many families have less spending money, which means they have less cash to spend, maybe even at their own employers' stores.” Food stamps help fill that spending gap for Walmart and other companies.

But as helpful as food stamps may be—as an economic stimulus and a support for low-wage jobs—when you talk to workers who have used them to supplement their income, their feelings can be complicated.

“I’m not proud that I was on assistance, but I had to provide for my family—and I am so thankful for my job now, because I’m off of it” says Mary Burkett, 26, who until recently was a store manager at Dollar General. At that job, she made about $28,500 a year—little enough that she and her husband, who is unemployed, and their two children qualified for food stamps. (Based on state numbers from Ohio,  nearly 40% of Dollar General workers there are enrolled in SNAP.) But then Burkett was hired as an assistant manager for a Walmart supercenter in the Dayton suburb of Huber Heights, where she earns $43,000 a year. When she found out her new salary, Burkett says, she literally cut up her food stamp card.

“I was so happy,” she told me. “I knew with the amount I was making that I would be able to provide insurance for my kids, and put food on the table, and I wouldn't need everything I was on before.”

But not everyone is able to work their way off food stamps. Tera, who asked not to use her last name for fear of risking her job, has been at an Ohio Walmart for four years and now makes $10 an hour. She lives with her son and his father, who was laid off from the industrial adhesives factory where he used to work and has not yet found a new job. Tera’s family was on food stamps when she started at Walmart, and they are still are on food stamps now.

Tera has heard the criticisms of food stamps—that they're a drain on taxpayer dollars. “I don’t really pay attention to them,” she says, “because I work for my food stamps.”

 

Tera brings her Walmart groceries inside.

All photos by Krissy Clark.

Additional reporting and production on this story from Jolie Myers and Martha Little.

Microsoft's Siri: What took so long?

Wed, 2014-04-02 02:10

Microsoft, what took you so long? 

“It’s a question,” David Smith, an analyst at Gartner says, “you could ask about an awful lot about Microsoft in the past ten years.”

But what is clear, says Smith, is that now Microsoft is working to stay competitive with Apple and Google. Which is why Microsoft's voice-recognition system may be significant.

"I don't think it will make a big difference, but I think it's more if it was missing, it's a noticeable difference," says Norman Young, an equity analyst with Morningstar.

Young says although Microsoft's product, called Cortana, may look and work a little differently than Siri. But both interfaces use Bing,  Microsoft’s search engine, so developers should have an easy time making Window’s new digital assistant better and better.

Here's a supposedly leaked video of the product:

Shrinking Middle Class? Not in Latin America

Wed, 2014-04-02 02:04

A growing economy doesn't always help everyone.

"One thing is a society where the middle class is growing," says economist Julian Messina, with the World Bank. "And a different thing is a society where inequality is falling."

The middle class is on the agenda of the World Economic Forum on Latin America, now underway in Panama. But unlike in the U.S., the gap between rich and poor in Latin America has narrowed. And the middle class has grown.

That’s largely due to economic growth, with help from assistance programs that promote social advancement. 

"And these are notable because they give subsidies to poor families, but they're conditional upon sending children to school and vaccinating children," says Barbara Kotschwar with the Peterson Institute for International Economics.

Hungry for Savings

Tue, 2014-04-01 23:18
Thursday, April 3, 2014 - 04:57 Chris Hondros/Getty Images

An employee restocks a shelf in the grocery section of a Walmart Supercenter in Troy, Ohio.

This story is part of collaboration with Slate called “The Secret Life of a Food Stamp.” 

Karrie Denniston is standing in the meat department of a Walmart Supercenter peering at the sell-by dates on a stack of pork chops. Denniston, director of hunger relief and nutrition programs at the Walmart Foundation, is at Walmart’s “Store 100,” the showcase Supercenter across the street from company headquarters in Bentonville, Ark. Store 100 is one of thousands of Walmart locations where the company collects billions of pounds of vegetables, dry goods, and other items for its food-donation program. Every day, as part of its anti-hunger initiative, Walmart associates scour the shelves looking for food that falls into a donation sweet spot: just past its sell-by date but still safe to eat. 

Karrie Denniston of the Walmart foundation.

Walmart—which in 2012 made a five-year pledge to donate $2 billion in cash and food to fight hunger—works with local food banks to distribute the meat, in a system of carefully temperature-controlled steps. Denniston holds up a family pack of pork chops. If no one buys it before its sell-by date, “that meat may end up as part of a stew at a local soup kitchen, or it may end up being distributed at a food pantry to a mom so that she can make tacos for her kids,” she says. 

Some of Walmart’s donations end up on the shelves of the Lutheran Social Services food pantry in Columbus, Ohio. “Walmart, Save-a-Lot, Giant Eagle, Kroger, they all send a lot of food back here,” volunteer Jordan Moore says. The donations are “a blessing,” he says. 

But there can be moments that throw him. Recently, a shopper at the food pantry took an item off a shelf and told Moore, “I put this on the shelf, too.” The shopper was a Walmart worker. 

“It’s this cycle that keeps going around and around,” says Jason Elchert, deputy director for the Ohio Association of Foodbanks. “We need to take a deep breath and think about how can we move our country forward.” Elchert says that over the past few years more and more working people in need of food assistance have been showing up at the charities his group serves. These include workers whose food stamps have run out before the end of the month as well as people who still can’t make ends meet even though they make too much to qualify for government food assistance.  (The Supplemental Nutrition Assistance Program, the formal name for food stamps, has an annual gross income cap of just under $25,400 for a household of three.)

Like many anti-hunger advocates who receive donations from corporate retailers known for low wages, Elchert is in a tricky spot when it comes to addressing the paradoxes of the food stamp economy. His group gets financial support from Walmart and other food retailers. “When we’re talking a lot with corporations,” he says, “it’s one of those situations where, well, let's talk about this in some way where we’re not offending them.” 

Matt Habash, president of the Mid-Ohio Foodbank—which has representatives from retail companies including Kroger and Giant Eagle supermarkets on its board—has tried to broach the issue of low wages with his corporate supporters. At a recent board meeting, Habash brought up the idea of promoting a living wage as part of the food bank’s mission. “Some of the folks in that room were employers who knew their wages were not” living wages, Habash says. “They were willing to engage in the conversation,” he says. “But no one employer can do it on their own.” 

Wages might be a sensitive issue to tackle, but there is one cause many big retailers have already come together on: protecting funding for SNAP. The program, which gives low-income families an average of $130 a month in food assistance, is lucrative for stores; food stamps accounted for $76 billion in store revenue in 2013.

But spending on the program has become the subject of protracted debates in recent years as food stamp rolls have soared, largely in response to the poor economy. Congress voted earlier this year to cut $8 billion from SNAP over the next decade, after House Republicans gave up their fight for much larger cuts (that would have reached nearly $40 billion).

In the middle of the battles over food stamp funding, the Ohio Grocers Association sent Congress a joint letter with the state’s Association of Food Banks. They wrote, "Cutting SNAP doesn't just hurt the poor, it hurts business too."

Food banks receive a sizeable proportion of their donations from big stores like Walmart.

“You tend to think that larger retail chains, with their corporate culture and perspective, might be less inclined to support a large, federal program, but certainly on the other side, these programs benefit them tremendously,” says Julie Paradis, former administrator of the Food and Nutrition Service at the Department of Agriculture, which oversees the food stamp program.

Toward the end of the SNAP funding debates in January, I met with Rep. Marcy Kaptur, a Democrat from Ohio (and the daughter of a grocer) who was working to persuade her Republican colleagues to minimize the food stamp cuts. “Walmart is a helpful force, as well as many other retail stores. All the big retailers, the grocers, make a great deal of money” from SNAP, she said. 

Walmart confirms it takes in about 18 percent of U.S. food stamp dollars, a share that would have amounted to more than $13 billion last year. Walmart spokesman David Tovar told me the company did not take a position on the recent food stamp funding cuts but that it likes to be “part of the dialogue” to help elected officials consider the issue of food stamp funding. “We oftentimes will provide useful information about our business, some of the trends we’re seeing, how it’s impacting customers,” Tovar says.

But public lobbying records suggest Walmart is playing a more active role in those discussions. Disclosure forms for the end of 2013, when debate over SNAP funding was in full swing, show that Walmart paid in-house lobbyists $1.9 million. The report itemizes lobbying activity on a broad range of issues, among them SNAP, the farm bill legislation that determines SNAP funding levels, and “discussions regarding Federal Nutrition programs from the consumer and retail perspective.”

Further down the lobbying form, Walmart also disclosed discussing the minimum wage. (Walmart says that it has not taken a stand on the proposed raise to the federal minimum wage to $10.10 but that it’s looking into the effect it would have on its business.)

If you go to Walmart’s headquarters in Bentonville, in a drab brick building that looks more like a public school than a corporate HQ, you will probably hear at least one person quote a certain Walmart aphorism: “EDLC equals EDLP.” Translation: “Every Day Low Costs” equal “Every Day Low Prices.” That’s part of why discount retailers like Walmart take in so many food stamp dollars in the first place, as low-income customers look to get the most bang for their food stamp bucks.

You can think about that equation two different ways. Walmart sees its low prices as a chief force in fighting hunger, says Denniston of the Walmart Foundation. “We want to take the best of what Walmart as a business has to offer and build on that,” she says, “and so one of the greatest assets that we provide to local communities is being a grocer that can bring safe, affordable, nutritious products.”

But one of the Every Day Low Costs that Walmart needs to keep in check is the price of labor. In the EDLC = EDLP equation, low wages help make low prices possible—and if that means some companies don’t pay their workers enough to make ends meet, it’s the government that makes up the difference. 

Additional reporting and production on this story from Jolie Myers and Martha Little.

Part Two: The Secret Life of a Food Stamp

Marketplace Morning Report for Wednesday, April 2, 2014Marketplace Morning Report for Thursday April 3, 2014 by Krissy ClarkPodcast Title: The anti-hunger movement's strange bedfellowsStory Type: FeatureSyndication: SlackerSoundcloudStitcherSwellPMPApp Respond: No
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