A blog about business and economics.

May 20 2016 5:42 PM

California’s Housing Crisis Is Drowning Renters. Houston’s Housing Boom Is Flooding Everything.

Million-dollar homes are popping up across coastal cities like a case of golden chicken pox.

According to an analysis by Trulia, San Francisco made the most dramatic vault into the seven-figures. One in five SF homes were worth $1 million in 2012; today it’s three in five. In San Jose, the percentage of million-dollar homes rose from 17 to 46. Rounding out the top 10 cities where the percentage jumped: Oakland, Orange County, Los Angeles, San Diego, Ventura County, New York, Seattle, and Honolulu. It’s a good group of cities to support the argument for geography’s influence on housing prices.

Or, equally, California’s influence on housing prices: Of the 10 housing markets with the greatest percentage increase in million-dollar homes, seven are in California.

May 20 2016 5:34 PM

Apple Stores Are Replacing the Genius Bar With a “Genius Grove”

On Saturday, 15 years after Apple opened its first two retail stores, the newest flagship Apple Store will open its doors in San Francisco’s Union Square.

Those doors are not messing around: They’re 42 feet high and they open 40 feet wide, at both the front and back of the building. (The back opens onto a public plaza, open 24 hours, where Apple will host acoustic music concerts.) TechCrunch’s Matthew Panzarino tweeted some of the company’s illustrations:

But the doors aren’t the only change represented by the new Union Square location, whose design is meant to point the way for future Apple Stores around the world. The most surprising might be the replacement of the company’s iconic Genius Bar with what it calls a Genius Grove. I can think of an even more accurate name, based on my recent experiences at Apple Stores in New York, but I guess “Genius Cattle Pen” wouldn’t focus-group very well.

Here's how Apple described the new concept in a press release: "'Genius Grove' invites customers to get support working side-by-side with Geniuses under the comfortable canopy of local trees in the heart of the store."

The ficus-studded grove will offer “more room to sit and more Apple customer service specialists,” according to the New York Times. Each tree is “encircled by a leather bench, where customers can wait or sit next to Apple’s ‘geniuses’ as they work on the customers’ gadgets.”

It sounds lovely, really. As successful as the Genius Bar concept was, bars in general are more suited to activities that can be accomplished in a matter of a few minutes, such as, I don’t know, buying a drink. Anything more involved than that, and you’re probably going to be more comfortable sitting in an actual seat.

That said, if Apple really has figured out a way to make a space less crowded without either adding space or subtracting people, I think its triumph over the laws of physics is the real story here. Maybe it can file a patent for that, right alongside the one for the gold in the Apple Watch that’s twice as hard as normal gold.

Other noteworthy features of the new store include the Forum, a “vibrant gathering place” centered around a giant video screen, and the Boardroom, where Apple will host groups of developers and business customers. Many of these features will likely be replicated in other Apple Stores, although some will be reserved for the company’s “most significant” locations.

The point of all the design tweaks is to make Apple Stores feel less like a place to shop and more like a destination, Apple executive Angela Ahrendts told the Times. “We didn’t want it to feel like a store. We wanted it to feel like a town square—very open, and everyone invited.”

I can still think of some differences between Apple Stores and town squares, such as how tolerant they tend to be of protesters and how much lighter they’re likely to make your wallet. That said, Apple Stores have always been more than just a place to buy stuff, especially early on when the concept was still novel and the stores themselves relatively rare. It’ll probably take more than super-tall doors and some ficus trees to get people as excited about the experience as they once were, but at least it’s a start.

May 19 2016 2:42 PM

Some Uber Drivers Can Now Talk to Actual Humans if They Need Assistance

This post originally appeared on Inc

Uber is testing out an in-app phone line that allows drivers to connect with support workers in the event of routine issues such as payment problems. The pilot launched in the San Francisco Bay Area on Tuesday and will first be available to several hundred drivers before access is expanded to the roughly 40,000 drivers in the region within the next couple of months, according to the company. As part of the pilot, drivers in the region will also have the option of being routed to a new emergency hotline that Uber is trying out in other parts of the country.

“This is kind of the next step as we pilot different things,” says Uber's global operations lead, Michael Mizrahi, commenting on the company's ongoing shift from email to in-app messaging for customer service and driver communication with the company. Uber also operates centers where drivers can visit with support workers in person.

The help line, which is separate from the emergency line, is intended to make it easier for drivers to work through issues such as problems with their pay and questions about trip charges. Drivers will also be able to discuss issues around deactivation if they have reason to believe they may lose access to the driver app.

Uber was required to clarify its deactivation policy as part of the settlement of a recent lawsuit and has faced criticism for a lack of transparency surrounding why it bans certain drivers. The company as part of its policy informs drivers if they are at risk for deactivation due to not meeting certain driver requirements.

Michael Sheppard, project manager for the pilot, says the initiative does not relate to the recent settlement. "This was in the works before [the lawsuit]. It's been something we were talking about for a while," she says.

Mizrahi says no new support workers are being hired or contracted for the pilot. He says Uber thinks the phone option may expedite solutions to problems in some cases, and that the company is waiting to see the volume of calls that pour in before deciding how to proceed.

A difference between the latest pilot and Uber's pilot of an emergency line that started in October: The company says it will notify drivers if they have access to the line through the app. In the emergency line pilot, drivers were not informed if they were part of the test. The company said in March it had been testing findability of the in-app call button. 

May 18 2016 2:22 PM

Enjoy That Sweet Class-Action Settlement With Ticketmaster. We Won’t See the Likes of It Again. 

They put the lie in nightlife. Red Bull didn’t really give you wings. And Ticketmaster wasn’t really charging you for “delivery” or “order processing.”

This year, Americans who had overpriced fun a decade ago are entitled to small settlements from class-action lawsuits brought against the two companies. Red Bull settlement checks were mailed out earlier this year. (I got one. Thanks, Red Bull!) Instructions for reclaiming Ticketmaster credits are being sent out now.

May 18 2016 10:30 AM

Millions More Americans Are About to Be Eligible for Overtime Pay. (Thanks, Obama.)

Millions of Americans will get a raise beginning Dec. 1, and not because their employers will have a sudden outbreak of Christmas generosity. Rather, it will come courtesy of the Obama administration, which on Tuesday evening released the final version of a long-planned update to the nation’s overtime regulations.

Under the new Department of Labor rules, salaried employees earning less than $47,476 annually will automatically receive overtime pay when they work more than 40 hours in a week, double the current $23,660 ceiling. Administration officials estimate that more than 4 million workers will be impacted by the change, which will increase their pay by an estimated $12 billion over the next decade. “It is based on a simple proposition. If you work overtime, you should actually get paid for working overtime,” Vice President Joe Biden said on a press call.

The change in overtime eligibility rules was first proposed by the Obama administration two years ago and immediately ran into opposition from pro-business groups like the Chamber of Commerce, the National Retail Federation, and the National Restaurant Association. Opponents claim the change will be a job- and income-killer, forcing many businesses to either cut their employees’ hours, make do with less workers, or even switch more work over to automated technology that minimizes or eliminates the need for human involvement. 

It’s no surprise that some of the most entrenched opposition to the rule came from the relatively low-wage retail and dining sectors. Here’s why: Hourly workers are almost always entitled to receive overtime pay. But salaried workers—that is, those in managerial or professional roles who are paid not by the hour, but at a flat rate—aren’t automatically eligible unless they earn under the threshold. 

The result? Companies have been sued by current or former employees claiming that their fancy-sounding manager titles don’t match their lowly job responsibilities. Instead their résumé-boosting positions, which paid more than the $23,660 ceiling, were effectively a corporate dodge that permitted their employers to deny them overtime no matter how many hours they worked a week. Chipotle is the current target of one such suit. A franchisee for Waffle House lost another. An operator of more than 50 Massachusetts Dunkin Donuts is fighting a lawsuit in the same genre. 

The new overtime threshold won’t end this chicanery, but it will almost certainly curb it. In fact, it’s likely employers will handle the overtime increase in a variety of ways, including raising wages of some employees so they earn more than $47,600 and aren’t automatically eligible for overtime, and more rigorously monitoring the hours of others, so they ultimately see their time on the job reduced. On the other hand, as Biden pointed out, those workers will gain free time, which isn’t a bad thing.

One aspect that was dropped from the plan: A reform of the standards determining what makes an employee eligible for overtime if he or she earns more than the ceiling, something that would have done an even better job addressing the practice of deeming employees managers to avoid paying them overtime. A number of administrative and professional job categories, including engineers and, uh, journalists, would likely have become candidates for mandatory overtime as well, even if they were salaried and paid more than $47,476 a year.

The Obama administration initially planned to tackle this exemption, but retreated in the face of fierce opposition from business groups. This loophole traces back to the last time the overtime rules were adjusted—in 2004, when the threshold jumped from $8,060 to the current $23,660. But in exchange for that leap, the Bush administration tightened up the regulations governing who must receive overtime if they earned more than the new income standard, effectively leaving overtime pay for white-collar employees to the discretion of management. Labor interests squawked at the time, but it didn’t matter.  

One heartening thing about the new rules: Never again where there be a 12-year gap between raises in the overtime threshold. It will now update on a three-year cycle, using the 40th percentile for a full-time, salaried employee in the lowest income region in the United States as a baseline. 

The importance of that final change can’t be overestimated. When we talk about the causes of worsening income inequality, we often attribute it to things like skyrocketing pay for CEOs while salaries for most jobs stagnate. We don’t think so much about how regulations like mandatory overtime can play a role in raising households’ incomes, and how its gradual withering over the past four decades contributed to the increasing precariousness of middle-class life. 

Think about it this way: Biden claims 62 percent of workers automatically qualified for overtime in 1975. Today, that number is about 7 percent. No wonder middle-class households found themselves falling further and further behind. 

This change was way overdue. Thanks, Obama.  

May 17 2016 1:14 PM

Money Monster Is Wish Fulfillment for Anyone Burned by the Economic Crash. It Doesn’t Go Far Enough.

Lee Gates, the cable-news host played by George Clooney in Jodie Foster’s fine but forgettable movie Money Monster, is plainly a fictionalized version of Jim Cramer, even though both the star and director have denied the parallel. He hosts a show called Money Monster on a business news network; Cramer’s nightly CNBC show is Mad Money. Like Cramer’s show, Money Monster is replete with sound effects, flashing lights, and catchphrases.

But more significantly, Mad Money and Money Monster recommend specific stock purchases to their less-than-sophisticated audiences. This is what sets the plot of the film into motion. Gates, you see, told his viewers to purchase shares in a company called Ibis, a high flyer in the world of high-frequency trading. But the share price of Ibis tumbled. As a result, Kyle Budwell, a 24-year-old package deliverer who lost his life savings following Gates’ advice, bursts into the studio and takes the celebrity stock-picker hostage.

Before opening this past weekend, box-office projections for Money Monster weren’t exactly optimistic. “Ten years ago, Money Monster would probably have had moviegoers lining up,” opined Deadline Hollywood last week, nodding to the fading star wattage of Clooney and co-star Julia Roberts and its competition from Captain America: Civil War. But as it turns out, a lot of people did want to see this suspenseful, slightly dated-feeling drama. Money Monster emerged with a respectable $15 million opening weekend gross.

Money Monster’s premise wouldn’t appear to sit well in 2016. Who cares about cable business news? CNBC’s viewership is so down that network executives are claiming captive audiences in airports should count as viewers.

Still, it makes sense that the film is resonating: It offers gauzy wish fulfillment for anyone with the ambient feeling that someone, somewhere in this still-lagging economy, has done them wrong and got away with—especially anyone specifically still seeking a villain to punish for the financial crisis. Unfortunately, while Money Monster draws plenty of allegorical power from the 2008 crash, it doesn’t seem very serious about reckoning with it.

In the view of Money Monster, the issue isn’t that Gates is offering stock picks in what even the movie calls a “rigged” system—that he’s prodding people to gamble their savings in the name of entertainment. It’s that he was misled into making the wrong recommendation. So with a hostage-taker in the studio and cameras rolling, Gates and his producer Patty Fenn (Roberts) gamely set out to discover how Ibis went from sure thing to money loser. No surprise: In the end, a miscreant is called to account. Justice is sort of done.

Needless to say, it would be nice to believe that something similar went wrong in 2008—that isolated and individual mischief, not systemic failures and upper-upper-strata malfeasance, caused the economic crash—and that the bad guys did indeed receive their comeuppance. Alas. No top Wall Street figure was ever convicted of any crime. Even the settlements the United States government has made with financial services firms for various misbehaviors haven’t always been as significant as advertised. As David Dayen wrote last month in the New Republic about Goldman Sachs’ much-ballyhooed $5 billion settlement with the feds over the improper labeling of risky mortgages before the crash, “Even if you think Goldman is paying some kind of penalty, at best it’s a cut of the profits.”

A more ambitious film than Money Monster—or maybe one less concerned about being liked—might have taken a different route. It’s worth noting that the media cognoscenti never held Cramer’s Mad Money in high regard, even before Jon Stewart famously took off after it and CNBC it in 2009. And little wonder. You don’t have to think too hard to realize that anyone who actually has the stock market figured out probably has better things to do than tell people with a few spare bucks about his insights. As Henry Blodgett wrote in Slate back in 2007, about a year after the show first went on the air, “The more I thought about Cramer, the more I realized that pointing out that he gives terrible investment advice would be like pointing out that the sun rises. Worse, I would be dismissed as a wet blanket who didn’t get that the point of Mad Money was just to have a bit of ironic fun.”

Stock pickers forever claim to be on the side of the individual investor. The movie appears to take this belief at face value. Describing the struggle between Budwell and Gates, Foster told Yahoo the movie was about “two men who feel like failures”—a comparison that only stands up if you believe calling a stock wrong is as awful as losing all your money on it.  

What Stewart made clear to anyone who wasn’t paying attention was that Cramer—not to mention his network—was playing for patsies the portion of his audience that actually bought his shtick. No doubt Mad Money never meant to lead anyone astray—that was merely an inevitable impact. If, say, Cramer had begged his audience to stay away from individual stocks because they would likely do better with index funds, he wouldn’t have a show and CNBC wouldn’t have a business model.

Money Monster might have made for a pointed media satire had it gone to the heart of that problem—had it explored how large economic headwinds can subsume the everyman with the help of supposed saviors who in reality are enabling systemic dysfunction. Instead, it takes the fuzzy, feel-good, and morally righteous position. In the end it offers Gates a bit of redemption, which might explain Money Monster’s appeal: It nails a villain and ties a bow on things—atrocity over. Meanwhile, the rest of us are still waiting for someone to take the fall—someone other than us, I mean.

May 17 2016 9:09 AM

Even the Rent for Warehouses Is Too Damn High Now

Rents in the Bay Area are rising so fast that the Oakland City Council voted last month to impose a 90-day moratorium on rent increases, an emergency ordinance intended to counter the city’s second straight year of double-digit rent growth. And yet that’s nothing compared to the surge in East Bay warehouse rents, which are up 30 percent this year, according to a new report from real-estate group CBRE. On the outskirts of New York and Los Angeles, the trend is similar: Rents for big, modern warehouses are up 15 percent in New Jersey, 13.5 percent in the Inland Empire, and 10 percent in Los Angeles-Orange County.

Who’s driving up the price of reliable, unsexy, traditionally cheap, and unapologetically purpose-built warehouses?

May 12 2016 5:22 PM

New York City Is More Crowded Than Ever—Except in Its Gentrifying Neighborhoods

New York City smashed its all-time population record last year, topping 8.5 million for the first time ever. It’s another step in a remarkable run of growth. Since 1990, the city has added more than 1.2 million people.

But some New York neighborhoods have yet to regain the population they lost during the urban crisis of the 1970s. Which are these desolate parts of our city?

Williamsburg, the Lower East Side, Astoria, and Upper Manhattan—and other New York neighborhoods where Labor is a place to buy a skateboard and the beer is measured out in mason jars.

May 12 2016 12:12 PM

Trump Campaign: Maybe We’ll Cut Social Security After All

Donald Trump doesn’t really have policy positions these days. He has policy moods. Humors. Flirtations, perhaps. He's revised his stance on the minimum wage, obliquely suggested that he'd maybe consider defaulting on the U.S. debt before walking it back, and asked for assistance rewriting his tax plan. Now it appears he's getting a little wobbly on entitlements.

Throughout his campaign, Trump has promised not to cut Social Security and Medicare. This has been smart and fruitful. The only people who get excited about entitlement reform are crusty think-tankers and wealthy Republican donors who want their taxes slashed. Actual living, breathing voters, especially the older ones who show up for GOP primaries, don't want to see their retirement benefits slashed.

You would think that having conquered the Republican Party while rejecting one of its most cherished yet least popular policy obsessions, Trump would stay the course against Hillary Clinton. After all, he has said outright that anybody who promises to tear the stuffing out of Medicare and Social Security will “lose the election.” Donald Trump does not like to lose. Not one bit.

And yet! On Wednesday, at an event in Washington, Trump's chief policy adviser Sam Clovis suggested that the candidate would, in fact, be open to curbing entitlements if his $10 trillion in proposed tax cuts didn't somehow supercharge growth enough to create a budget surplus. “After the administration has been in place, then we will start to take a look at all of the programs, including entitlement programs like Social Security and Medicare,” he said, according to the Wall Street Journal. “We’ll start taking a hard look at those to start seeing what we can do in a bipartisan way.” Clovis later explained that a Trump administration wouldn't start slicing and dicing immediately, “because we can’t predict the growth” from tax cuts. However, he added that, “We have to start taking a look not just at Medicare and Social Security but every program we have out there, because the budgetary discipline that we’ve shown over the last 84 years has been horrible.”

Has Trump really had a Paul-Ryan-on-the-Road-to-Damascus moment and decided he wants to cut Social Security down to size? I don't know. His campaign seems worried about the story, considering that his typically taciturn spokeswoman, Hope Hicks, told the Journal it had not in fact heard what it obviously heard. “Sam Clovis did not remotely suggest anything having to do with cuts,” she said. “I read his statements as though we need to examine budgetary discipline to protect programs like Social Security and Medicare, which is exactly what Mr. Trump intends to do.” Still, much like his decision to solicit tax policy advice from some of the conservative establishment's favorite supply-side hacks, this suggests that Trump and his people really are worried about party (and perhaps donor) support and are thus trying to make him a slightly more palatable, traditional GOP candidate.

But anyway, there's probably nothing to worry about. Clovis says that Trump's policies, including the tax cuts, are going to create a $7 trillion budget surplus. Everything's gonna be cool, guys.

May 12 2016 9:39 AM

Brazil Is in a Political Crisis. Why Is Miami Feeling It?

Miami didn’t get a vote in the Brazilian Senate’s decision Wednesday to impeach President Dilma Rouseff, who was removed from office following accusations of financial mismanagement. 

But the agonies of the vote, and the corruption scandal at large, have been felt and followed in the so-called Capital of Latin America, which functions as a barometer of the continent’s troubles.

Nobody spends more time in Miami than Brazilians.