News Cut Category Archive: Economy

Why can't job applicants be treated better?

Posted at 1:03 PM on May 7, 2013 by Bob Collins (5 Comments)
Filed under: Economy

Someday, we hope, employers are going to be back where they were in the '90s: desperate for people to hire. And when that day comes, there's going to be a reckoning with the people many treated so poorly during the century so far.

It's a buyer's market, of course, but why should simple courtesies be ignored?

Writing on his blog "Ask the Headhunter" today, Nick Corcodilos suggests a letter like this:

Dear [name]:

My time for our first interview was free, as it was an exploratory meeting. You requested more time for the second round of meetings, which I provided at no cost, contingent on your company fulfilling its commitment to respond with a decision by the date you chose, April 1. You ignored my calls, emails, and your own deadline, without the courtesy of a notice.

I am thus billing you for the eight hours of my professional time spent in the second round of meetings with your team. As a professional, I would never dream of being irresponsible with the time of my clients, my vendors, or my employer. Time is money. I live by the deadlines I commit to, and I expect others to do the same. Anything less would be irresponsible to our industry and to our profession. None of us could operate with integrity if we ignored our commitments. This is not a joke. I expect payment within 10 days.

Yours truly,

Please let the day of reckoning come soon.

Time for farmers to get the message

Posted at 11:30 AM on May 4, 2013 by Bob Collins (7 Comments)
Filed under: Economy, Weather

Maybe it's time to think about doing things differently, farmers.

You can't tell by Minnesota weather, but there's still a drought underway in the country, and that's bad news for many of the nation's farmers.

"We can't take much more of this," the Associated Press quotes farmers as saying in a story today.

"You always know that there's going to be a year when you have a failed crop or some sort of disaster," Walker says. "Normally you can manage one year, but when you go to two or three years, you're left questioning your choice of occupation. It can set you back on your heels."

Still, he remains an optimist. Though as much as 80 percent of his wheat may be damaged from the drought and freeze, he sees any losses as a temporary setback. "We won't shut down," says Walker, who farms with his father. "We will get through this one way or another."

The merciless drought that ravaged large sections of the Midwest and Plains is over, disappearing this spring in a dramatic weather reversal: heavy rains and floods swamping fields with mud in many areas. But some farmers and ranchers in parts of the West and the Plains, including southwest Oklahoma, are pondering the prospect of another year of a desert-like landscape and a disappointing harvest.

But many farmers are going to have their losses covered by government-backed insurance even if things don't go so well. And, Bloomberg News suggests, they'll be right back next year doing the same thing, shielded, the story this week said, from "the full burden of their bad bets."

Drought helped drive the cost of crop insurance to a record $17.2 billion last year, the U.S. Department of Agriculture reported. But there is little effort by authorities to persuade farmers to dial back on crops in an era when weather extremes are more apparent.

We have given farmers incentives to take on more risk rather than give them an incentive to create a permanent solution," said Vincent Smith, a professor of agricultural economics at Montana State University in Bozeman. "You want to move toward programs that allow them to alleviate problems before the fact."

USDA subsidies encouraging farmers to ignore addressing extreme weather are harder to justify, Smith and other analysts insist, when automatic budget cuts remove 5 percent from most U.S. programs and lawmakers prepare to craft a new five-year farm law.

(Photo: Associated Press)

Segregation hurts everyone's wallet, research says

Posted at 11:03 AM on May 3, 2013 by Nate Minor (0 Comments)
Filed under: Economy, Science

The black-white racial segregation of Minneapolis-St. Paul metro area, via the Urban Institute. Blue = higher concentration of whites, red = higher concentration of blacks.

New research suggests that segregation -- by both race and skill set -- drags down economic growth of entire metropolitan areas. Notice I said entire areas.

Segregation doesn't just affect the poor core of a city, the study says, it hurts wealthy families in the suburbs as well.

Harrison Campbell, an associate professor of geography at UNC-Charlotte and one of the studies authors, told Emily Badger of theatlanticcities.com:

"The argument that we're trying to make here is that there is reason for everybody in metropolitan areas to be concerned about skills, about education, about housing, about segregation, about integration."

Nationwide, segregation has been on the decline since the 1970s. But the new research suggests that its impact on metropolitan areas has gotten worse.

There's myriad reasons why, including jobs being geographically distant from segregated communities. Badger writes:

Metropolitan economies rely on labor of all kinds, often side-by-side, with high-end architects alongside plumbers, office towers near cab stands, and biotech inventors with security guards. But when low-wage workers pay an out-sized chunk of their paycheck just getting to work, or when suburban office parks locate beyond the reach of public transit, those inefficient patterns start to affect whole regional economies.

And most interestingly, Badger writes that skill and racial segregation prevents innovations that might occur when people who are not alike interact with each other.

So what's to be done? The study calls for affirmative-action style transportation policies for low-resource communities. That wouldn't necessarily change the underlying segregation, Badger writes, but it could increase access to opportunity.

The selling of 'Boston Strong'

Posted at 1:19 PM on April 25, 2013 by Bob Collins (4 Comments)
Filed under: Disasters, Economy

When companies get involved in causes, it raises occasional eyebrows.

This debuted today.

Yankee Candle, based in western Massachusetts, promises to donate proceeds from the sale of the candle -- which it describes as a heartwarming blend of cinnamon, baking spices, and a hint of freshly poured tea -- to the One Fund Boston.

That should prevent any pushback that the company might receive that it's commercializing a tragedy.

Two people have already filed to trademark the phrase "Boston Strong." One is a T-shirt maker who promises to donate 20-percent of profits to the fund.

Samuel Adams -- the beer company -- has filed for a trademark for "Boston Strong" 26.2 Brew in the beer category. It, too, is promising to donate 100 percent of the profits this year and next.

And OnHand is marketing "Boston Strong" flash drive wristbands. The $19.95 will go to the charity. The company was founded by Andrew Kitzenberg, the Edina native whose Twitter photos out his apartment window captured the final gun battle between police and bombing suspects.

There are also Boston Strong car magnets Boston Strong shoe laces, Boston Strong wristbands, and a Boston Strong candle in which only a portion of the profits go anywhere but into the pocket of the seller.

But maybe branding is more of a reflection of the people who buy the product. If you were inclined to donate to the fund to help the victims of the marathon bombing, why not just do it without expecting something in return?

Hoigaard's sold

Posted at 3:54 PM on April 24, 2013 by Bob Collins (1 Comments)
Filed under: Economy

How many Minnesota businesses founded in 1895 -- 1895! -- do you think are still operating? One of them today became a Colorado business.

Hoigaard's, the sporting good stores, was purchased today by Specialty Sports Venture, which operates 170 sporting goods stores. It'll retain the Hoigaard's name, however.

Specialty Sports Venture is owned by Vail Resorts, which has kindled a new love for Minnesota winter sports. It recently bought Afton Alps.

It's planning millions of dollars in upgrades at the local facility, but business experts suggested that the larger strategy is to further popularize skiing, and get people to Colorado.

Hoigaard's started as a store canvas tents and awnings, serving the needs of the Alaskan Gold Rush. It also manufactured parachutes for the military in World War I and World War II. It got into the sporting goods, camping and ski business in the early '60s.

At the time of its sale today, it was still run by a Hoigaard family member.

What hope for the long-term umemployed?

Posted at 12:59 PM on April 15, 2013 by Bob Collins (3 Comments)
Filed under: Economy

Some stories make you just want to give up on the economy.

The Washington Post has such a story today, reporting that companies don't even look at resumes for people who have been unemployed for a long time. In the United States right now, that's 4.7 million people, and those are just the ones still looking for work.

The Post says the unemployment crisis may simply be here to stay.

Now, it's unclear whether companies are irrationally discriminating against the long-term unemployed or whether they have good reason for screening out these applicants. Privately, many employers worry that someone who's been out of work for six months "may have outdated skills, or may be a short-timer who is desperate enough to take any work now but will leave when something better comes along."

Either way, the broader trend is having disastrous effects. As my colleague Ylan Mui reported earlier, this is partly why Boston Fed President Eric Rosengren worries that our cyclical unemployment problems could become structural and long-lasting. The recession threw many people out of work. Those who stayed unemployed for six months or more can't even get a callback for jobs. Their skills erode further. Eventually they drop out of the labor force. That all weighs down on America's long-term growth prospects.

The farmer's market on wheels

Posted at 2:58 PM on April 4, 2013 by Bob Collins (4 Comments)
Filed under: Economy

Tony Pavelko had an idea one day when he noticed the Schwan's truck in a neighborhood.

"I remembered as a kid when they were in the neighborhood , you could buy ice cream and whatever off the truck," he says. "That spurred the idea of a truck where you could just stop and buy carrots."

Carrots?

"Well, not just carrots, but really good food," he says.

A passion for really good food runs through the veins, apparently, of Pavelko and Gina DiMaggio, who are pursuing the idea of a mobile farmer's market in the Minneapolis St. Paul area.

The Honeybee Mobile Market is getting plenty of support on Kickstarter, where the couple is more than halfway to the goal of $20,000.

Their idea is an extension of the company they run which delivers fresh food from local farmers to the office-bound.

"What we were finding is that a lot of people believe in the idea of community supported agriculture (CSA) and it's great for some people," he says, "if you're up for trying some new vegetable and you have the time to cook. But we were finding that people would start with CSA and realize, 'Oh, shoot, I don't have much time as I thought I did.'"

"We wanted to come up with something that could offer flexibility and more choices, and not have to commit to a whole season and commit a chunk of money up front; something that fits with more how people like to shop and eat," he says.

Pavelko, who was shopping for a trailer for the market when we chatted today, says the mobile farmer's market would make scheduled stops in neighborhoods and businesses.

"We're not going to be able to pull up on a random street. But when we pitched the idea in Minneapolis, I told them, 'it's OK for a truck to drive around selling ice cream, but you can't drive up and sell carrots," he says. "It's crazy, and they were like, 'yeah.'"

The couple was hoping for a May to October season for the idea, but the late spring is going to make that unlikely. Just as well, Pavelko says, because it gives them more time to work out details. Still, he's hoping for a late May start.

Where the baseball is bad and the beer is cheap

Posted at 12:27 PM on March 26, 2013 by Bob Collins (3 Comments)
Filed under: Economy, Sports

We're standing by waiting for the cost of beer to drop more at Target Field following news that the Boston Red Sox are dropping their beer prices this year.

It's a significant move given that Fenway Park has been a license to print money in recent years with fans perfectly willing to shell out the highest average ticket price ($53.38) in all of baseball.

But then the bottom fell out of the team last year and the Red Sox are in the unfamiliar position of having to convince fans to attend games again. The team's sell-out streak will end in April and the team is trying the reduced prices for the month to see if they work.

A 12-ounce cup of beer drops to $5, and hot dogs will be 2-for-1.

It's the second franchise this off-season to announce cuts to the price of concessions -- usually the biggest off-field complaint by fans. The Cleveland Indians dropped the price of beer to $4.

The Twins this year are cutting concession prices by 10 percent, which still puts the price of beer at the park above the average for all of baseball.

Baby steps and the price of your home

Posted at 10:51 AM on March 26, 2013 by Bob Collins (5 Comments)
Filed under: Economy

Jobs increasing. Optimism fading.

Posted at 1:58 PM on March 21, 2013 by Bob Collins (5 Comments)
Filed under: Economy

Here's a graphic from a Pew survey released today to follow up on my question earlier about why -- if Minnesota now is only 1,000 jobs away from the most its ever had -- doesn't it feel so heady?

It shows that our optimism for our economic future is declining

Says Pew...

A year ago, about four-in-ten in all family income groups said they expected the economy to improve over the next year. Today, just 23% of those with incomes of $75,000 or more expect economic conditions to be better a year from now, as do 21% of those with incomes of between $30,000 and $75,000 and 31% of those with family incomes of less than $30,000.

Curiously, a year ago, the level of optimism was the same among all income groups. Now, the survey shows, the most optimistic group are people who make under $30,000 a year. But at the same time, the income group is also the most pessimistic.

And, the survey shows, the one area of economic life that has people most worried: their job.

Why doesn't it feel like the good times?

Posted at 11:12 AM on March 21, 2013 by Bob Collins (4 Comments)
Filed under: Economy

The most interesting statistic -- to me -- from today's news that Minnesota's unemployment rate has held steady at 5.5 percent in February is this one: "The state is just 1,000 jobs short of its previous high point for jobs in February 2008."

Here's the bottom line from the Department of Employment and Economic Development news release:

Professional and business services led all sectors in February with 6,800 new jobs. Other sectors that added jobs were leisure and hospitality (up 3,200), education and health services (up 1,900), financial activities (up 1,700), construction (up 1,400), trade, transportation and utilities (up 1,300), and logging and mining (up 100). Other services held steady.

Job losses occurred in February in government (down 1,000), manufacturing (down 800) and information (down 100).

Over the past year, trade, transportation and utilities added the most jobs, growing by 15,200. The other sectors that added jobs were education and health services (up 13,100), professional and business services (up 12,300), government (up 5,300), financial activities (up 3,600), manufacturing (up 3,400), leisure and hospitality (up 3,300), information (up 2,200), other services (up 1,900), construction (up 1,900), and logging and mining (up 300).

Good times? Then why doesn't it feel like it? It's not a rhetorical question. It may well be that people have taken jobs paying less than what they made before the economy collapsed. But even talking with people who kept their jobs, didn't lose pay or benefits, I sense a feeling that more people are still going to work each day wondering if this is the day it all ends.

The economy is different now, as economists have been telling us for years. Nobody -- or at least not many -- are going to retire with a gold watch anymore. Jobs will come and jobs will go and it's the uncertainty of when that will be and who will be affected that takes some getting accustomed to.

Unemployment can leave a wicked wound of lower self esteem and confidence that going back to work doesn't instantly build.

In the long run, I often wonder whether the relationship between employer and employee has changed forever and whether it's for the better or for the worse. Perhaps a business relationship should just be a business relationship and nothing more. It wasn't always thus.

So it's a different world and while comparing numbers to the old one are interesting, I still long for a decent statistic that does a better job of factoring in the psychology of the working world today.

Discussion point: How's it feel at your workplace compared to the good times?

The 'wealth' video examined

Posted at 11:53 AM on March 4, 2013 by Bob Collins (7 Comments)
Filed under: Economy

This video, already viewed by about 800,000 people since it came out last November is, for some reason, racing around the Internet with new abandon today.

It's not that it's not interesting. It certainly is. It's just that it's not that new. It's based on a study that actually was released in 2010 by Michael Norton, of Harvard Business School. He co-authored the paper.

He talked to Steve Inskeep about it back in 2010.

And almost two years ago, PBS Newshour tried to recreate Norton's (and his colleague's) work. It presented several pie charts of countries' distribution of wealth and asked people which country they'd like to live in.

Pie Chart C, based on Norton's work, was actually the United States, although the country wasn't named. Only 9 percent of people who took the survey said they wanted to live there.

The exercise was done as part of a series on inequality in the United States.

Watch Americans Facing More Inequality, More Debt and Now More Trouble? on PBS. See more from PBS NewsHour.

"It's probably a good thing that the public underestimates how much wealth inequality there is," Bryan D. Caplan of George Mason University told Business Week back in 2010, since "they tend not to understand the ways that wealth inequality is good."

In Harvard Business Review a little over a year ago, Norton's colleague had his own theories -- that the survey reflects how we view ourselves:

Norton and his coauthor, Dan Ariely (author of the popular title Predictably Irrational and a professor of behavioral economics at Duke), believe that one reason perceptions are so skewed is because the easy availability of credit masks people's real financial situation. If your neighbors own the same make and model of car that you own, Norton points out, there's no way to know whether they paid cash for theirs or took out a loan for the full amount. It's easy, he says, to think, "I have a car and you have a car, so I guess wealth is equally distributed." This perception is reinforced by the fact that people tend to interact primarily within their own social stratum.

What is surprising given these circumstances, says Norton, is that Americans at all income levels--the very rich as well as the very poor--said they would like wealth to be more evenly distributed.

Given that there's been so much written and reported about the haves, have-somes, have-most, and have-nots, in the last few years, there seems to be more at work here in people's incorrect perceptions of the distribution of wealth in the U.S. It's about how wealth is redistributed.

Both Republicans and Democrats, Norton said, had roughly the same responses to the original survey and generally agreed on the way wealth should be distributed.

As it makes its way across Viralville today, it's mostly attached as a justification that one way is preferred, but that's not at all what the original paper said.

Still, it's a good starting point -- and an unusual starting point -- in today's public policy debate -- figuring out on what we all agree.

Airline to move headquarters to state with a little life left in it

Posted at 4:12 PM on January 24, 2013 by Bob Collins (0 Comments)
Filed under: Aviation, Economy

It was the battle of the perceived business-friendly state vs. the perceived business-unfriendly state today. And the business unfriendly state won.

Pinnacle Airlines, the corporate head of a group of smaller airlines that fly regional flights for big airlines, announced today it's moving its headquarters from Memphis to Minnesota.

Pinnacle is coming out of bankruptcy.

"We had the responsibility to explore every aspect of our business to find opportunities to reduce costs, including evaluating our property leases, to find the most economical options for Pinnacle," said John Spanjers, president and CEO of Pinnacle Airlines said in the press release. "Our analysis covered everything from the available labor pool and operational alignment to economic incentives. Both Memphis and the State of Minnesota presented very strong cases. In the end, it was an economic decision."

It makes sense. There are many more flights out of MSP than Memphis. Various analysts have suggested Delta is in the process of getting rid of its Memphis hub.

That's got to hurt a state like Tennessee, named last year as the fourth-best state for business. Minnesota finished 36th on that list.

The announcement today comes a little more than a year after Pinnacle moved Mesaba Airlines' headquarters from Minneapolis to Memphis.

Minneapolis housing by the numbers

Posted at 10:59 AM on December 26, 2012 by Bob Collins (0 Comments)
Filed under: Economy

Amazon caves. A little

Posted at 1:30 PM on December 11, 2012 by Bob Collins (2 Comments)
Filed under: Economy

A story out of Massachusetts may be the crack in the dam for collection of Internet sales tax receipts.

Amazon today agreed to start collecting sales taxes on customers in Massachusetts, and it did so without any legislation requiring it to.

"We are thankful Amazon was willing to come to the table and we will continue our conversations with them about creating jobs here," Gov. Deval Patrick said today. "This agreement is a win for all sides, and I am pleased it promises to generate millions in long-term revenue for the Commonwealth."

Like Minnesota, Massachusetts has been under pressure from brick-and-mortar stores to start collecting the tax.

Unlike Minnesota, as far as we know, the state didn't wait for lawmakers to pass legislation. It started negotiating with Amazon, which has a research facility in Cambridge.

In Minnesota, people who order more than $770 of goods over the Internet are required to pay a sales tax, but the sellers aren't required to be the one to collect it. People are supposed to fill out forms online and pay the money, which everyone does. Wink.

Efforts to change the system have gone nowhere in Minnesota.

The inexact science meets the inaccurate expectation

Posted at 11:27 AM on November 29, 2012 by Bob Collins (6 Comments)
Filed under: Economy

I've written in the past about how most economic news seems to revolve around a basic fact that experts got something wrong. They do so with alarming frequency.

If the market collapses today, it's because someone's earnings didn't meet expectations. When the unemployment rate is news, is when it is above or below what was expected. Maybe the problem is the expertise.

In the age of the talking head, news organizations do us no favors by framing stories around things that might happen, but usually don't.

Today provides a perfect example:

Remember how the economy was sinking during the summer and we might end up in another recession?

Today, there's this classic first paragraph of a story from the Associated Press:

The U.S. economy grew at a 2.7 percent annual rate from July through September, much faster than first thought.

A swing and a miss. But don't let that stop you, AP...

The strength is expected to fade in the final months of the year because of the impact of Superstorm Sandy and uncertainty about looming tax increases and government spending cuts.

Today, according to an AP story on the MPR website, there is also disappointment over November retail sales. The experts got their hopes up because of the reports of gargantuan crowds at after-Thanksgiving sales.

The disappointing November sales releases dampened the enthusiasm fueled after reports of strong spending over the Thanksgiving weekend. A record 247 million shoppers visited stores and websites over the four-day weekend starting Thanksgiving, up 9.2 percent of last year, according to a survey of 4,000 shoppers that was conducted by research firm BIGinsight for The National Retail Federation trade group. Americans spent more too: The average holiday shopper spent $423 over the entire weekend, up from $398. Total spending over the four-day weekend totaled $59.1 billion, up 12.8 percent from 2011.

But as Barry Ritholtz at Big Picture noted yesterday -- and I forwarded on 5x8 yesterday -- the yardstick the enthusiasm was based on is a bogus marketing gimmick which the economic reporters ignore for the sake of a story.

It is my assumption that the NRF propaganda is an attempt to create an environment of social pressure: EVERYONE is shopping, so you better get out there and shop too! Only one hopes the media would do a better job of checking that. Only they don't. The media's job should be to inform -- not MISINFORM -- their readership. On Black Friday reporting, they are failing miserably.

Economics, they say, is the inexact science. It's often also the inaccurate story.

The half-full economy

Posted at 11:00 AM on November 27, 2012 by Bob Collins (3 Comments)
Filed under: Economy

Guns, knives, abandoned toddlers and banjos.

Posted at 4:56 PM on November 23, 2012 by Bob Collins
Filed under: Arts, Economy

Boy, there's not much of a faster way to destroy the spirit of Thanksgiving than just about any story involving after-Thanksgiving shopping.

You know the usual ones, so we can fast-forward right past those cliches and get right to...

The San Antonio man who pulled a gun on someone cutting in line.

The Sacramento person who threatened to stab people in the line he was in.

And the Massachusetts man who left his girlfriend's 2-year-old son in a car while he went shopping. He got his new flat-screen TV home but left the kid behind.

I have no answers for this behavior so will provide an antidote instead that has absolutely nothing to do with shopping. It's a new TED video about kids -- mere babes, really -- who play bluegrass.

As long as there are 10-year-olds who can play a banjo, there's hope for the species.

The hurricane boom

Posted at 9:15 AM on November 23, 2012 by Bob Collins (2 Comments)
Filed under: Economy, Tech

There's still plenty of misery to go around in the New Jersey and New York area, thanks to Hurricane Sandy. But economists are often more into numbers than humanity. The Goldman Sachs group says the devastating storm could be quite an economic boon, adding enough money into the economy as a government stimulus program.

All of this is literally cold comfort to people in the Rockaways who still don't have conventional electricity. But ingenuity has taken over. As nature taketh away, it gives, too.

The judges on the trading floor

Posted at 12:05 PM on November 9, 2012 by Bob Collins (1 Comments)
Filed under: Economy

When a president speaks on the economy in the middle of the day, he's often targeting his remarks to calm a jittery market. Presumably, President Obama's speech at the White House had some of this element to it.

Can reaction to it be gauged in real time via the Dow ticker? Let's find out.

Start: Dow up 59.43

Announces meeting with lawmakers and also intends to bring in businesspeople. Dow up 61.

"It's a plan to put folks back to work." Dow up 64.

"I intend to work with both parties to do more, including reforms to bring down the cost of health care. But... we can't just cut our way to prosperity. We have to combine spending cuts with revenue. That means asking the wealthiest Americans to pay a little more in taxes." Dow up 51.

"I want to be clear. I'm not wedded to every detail of my plan. I'm open to compromise. I refuse to accept any approach that isn't balanced. I'm not going to add students and seniors to pay down our deficit while (wealthy people) refuse to pay a dime more in taxes." Dow up 35.

"...nobody, not Republicans, not Democrats, want taxes to go up for people making under $250,000 a year. Let's extend the middle-class tax cuts right now." Dow up 30.

"All we need is action in the House. I've got the pen. I'm ready to sign a bill right away." Down up 33.

"The American people are looking for cooperation... consensus... common sense. Most of all, they want action. Let's get to work. " Dow up 38.

Close of speech: Dow up 39.78

Ten minutes after the speech, the Dow moved into negative territory.

Wall St. sheds its tears

Posted at 4:34 PM on November 7, 2012 by Bob Collins (5 Comments)
Filed under: Economy, Politics

Employment math often ignores people

Posted at 12:02 PM on November 2, 2012 by Bob Collins (1 Comments)
Filed under: Economy

If you want to see a fine example of what economic development is in this economy, you need only look to this story from western Massachusetts today, which documents the sale of a paper company in New England in two cities, one of which has been in tough economic times for decades.

The Crane Paper Company of Dalton, Mass., (they're the company that makes the paper on which money is printed), bought a paper company in Kennebunk, Maine, and intends to move its operations -- designers and craftspeople -- to Crane's North Adams, Ma., factory.

I know North Adams pretty well; I have family there and my father-in-law owned the radio station there for many years. In the '70s, its major employer -- Sprague Electric -- moved its operation South as many manufacturers in New England's milltowns did, leaving people struggling. And, for the most part, they've been struggling ever since.

So the news is good news for that area. But it's this line in the story that's troubling:

The consolidation will result in no job cuts, which employs around 300 in North Adams. Crane will offer William Arthur's 270 Maine employees jobs in western Massachusetts.

This is unemployment mathematics. If you eliminate jobs in one location, but you add jobs in another, nobody has lost a job.

But what are the odds that 270 residents of Maine will decide to pick up their belongings, sell their homes, leave their extended family, and move to a far corner of rural Massachusetts?

Some of them obviously will. But it's a good bet that a lot of them would rather stay where they're comfortable.

In New England particularly, economic development means creating a job by taking it from somewhere else.

Is a reduction of hours a good reason to quit?

Posted at 10:56 AM on October 22, 2012 by Bob Collins (6 Comments)
Filed under: Crime and Justice, Economy

The Minnesota Court of Appeals ruled today that employees whose hours are reduced by employers do not have to complain about the reductions in order to qualify for unemployment benefits when they quit.

The Court reversed a decision by an unemployment law judge that Shouna Thao could not collect unemployment because she failed to give her employer an opportunity to return her to full-time status.

In Minnesota, people who quit are generally not eligible for unemployment benefits, but an exception is made for "adverse working conditions" if the employee calls the conditions to the attention of the employer.

But the Court of Appeals said the "terms" of someone's employment and the "conditions" of employment are not the same thing.

As usual in these sorts of cases, the decision came down to trying to understand what the Legislature intended. In 2004, the Legislature removed "a substantial adverse change in the wages, hours, or other terms of employment by the employer" in the definition of good reasons to quit and replaced it with "a reason for quitting employment shall not be considered a good reason caused by the employer for quitting if the reason for quitting occurred because of the applicant's employment misconduct."

But the court said the Legislature never intended to remove a loss of hours from the reasons to quit that would qualify for unemployment benefits.

It sent the case back to the unemployment law judge for a decision, and invited the Legislature to revisit the issue.

Here's the decision.

Jack Welch's thin skin

Posted at 12:44 PM on October 9, 2012 by Bob Collins (2 Comments)
Filed under: Economy, Politics

For a guy tough enough to shut plants down and ruin many of America's small cities (I'm thinking of you, Pittsfield, Massachusetts, with your GE power transformer plant that once employed 13,000 people), it only took a little Twitter reaction and some fact checking to get under Jack "Neutron Jack" Welch's skin.

Welch, the former GE boss (who got his start in Pittsfield, by the way. It was GE's birthplace) has decided to quit contributing to Fortune magazine, only a few days after his infamous Tweet that the Obama administration was cooking the monthly jobs report.

Fortune's crime was apparently picking apart the validity of Welch's tweet. Today, Fortune picked apart Welch's track record as a jobs creator. Welch quit a few hours later.

The more Welch talked about the conspiracy, the sillier he looked...

Nonetheless, Minnesotans are buying the theory, according to the polling released today by Public Policy Polling.

Given that the numbers released last week actually weren't very good, the poll seems to confirm that quite a few people only believe what people like Jack Welch tell them to believe.

The half-empty unemployment report

Posted at 11:14 AM on October 5, 2012 by Bob Collins (1 Comments)
Filed under: Economy

There's a current of conservative caterwauling today that the Obama administration "cooked" the unemployment report that shows the unemployment rate has dropped to 7.8 percent. The theory is that the figure helps the incumbent on the issue of the economy.

And it could, so long as the media doesn't bother to actually read the tables and numbers in today's report because there's actually very little in there that is much for the nation to be proud.

Here are a few of those things:

* The good news was mostly for white people. But for blacks (13.4 percent) and
Hispanics (9.9 percent) there was no improvement in a bad jobs picture.

* The decline in the rate was mostly because of people who only recently lost their jobs, finding another one. But the picture for those who've been out of work longer than 27 weeks is bleak. Forty-point-one percent of all unemployed people -- about 4.8 million people -- are in this category and their unemployment rate didn't budge.

* The number of people who had to work part-time jobs rose from 8.0 million in August to 8.6 million in September. These people took the jobs because their hours have been cut back or they couldn't find full-time work.

* There were job losses (16,000 of them) in manufacturing. In September, job losses occurred in computer and electronic products (-6,000) and in printing and related activities (-3,000), according to the Bureau of Labor Statistics.

* Almost 10 percent of Iraq war veterans are unemployed.

* The average weekly wage in the transportation sector dropped from $839.64 in August to $833.34 in September.

If the Obama administration cooked the numbers in the unemployment report, it did a fairly bad job of it.

How bad are things? People ready to go to work for company that fired them

Posted at 11:39 AM on September 17, 2012 by Bob Collins (4 Comments)
Filed under: Economy

Forty-five percent of laid-off workers say they'd go back to work for the company that dumped them, a Temple University study says.

The study of unemployed college-educated professionals found that while people are still angry about losing their jobs, they're desperate for work.

"People are at a point where they're losing their houses, their wives or husbands are leaving them. They're in a severe hardship," said Tony Petrucci, an assistant professor and managing partner at Gravitas LLC, an executive and board search firm, said in a Temple news release. "People are saying, 'I may not like this employer because of how they handled my layoff. I'm angry, but I would consider going back to work with them.' It's a state of desperation."

H/T:LiveScience.com

Home ownership no longer defines 'middle class'

Posted at 3:31 PM on August 31, 2012 by Paul Tosto
Filed under: Economy

Home values skyrocketed here and across the country in the first half of the 2000s and then imploded spectacularly in the second half.

Things are starting to improve, slowly. But there's evidence the collapse did more than economic damage. It may have reshaped American views on housing and the middle class.

Survey numbers from a Pew Research Center report released today bear that out.

Twenty years ago, 70 percent of Americans saw home ownership as key to what it meant to be middle class in America. Now it's 45 percent.

The belief in home ownership as the symbol of middle class life appears to have been supplanted by the security of work.

The housing recovery is still young. It's possible the sentiment may change as values start to rising again.

Right now, though, there's no doubt that people in their 20s and 30s don't view home ownership like the generations before them -- as the symbol of making it in middle class America.

Bonus chart: The Federal Housing Finance Agency's House Price Index is a "broad measure of the movement of single-family house prices." Here's the index for Minnesota since 1975 (blue line is Minnesota, red is U.S.).

-- Paul Tosto

Our historically bad economy in 2 charts

Posted at 12:47 PM on August 31, 2012 by Paul Tosto (5 Comments)
Filed under: Economy

We swim through so much economic data these days -- housing starts, jobless numbers, mortgage rates, etc. -- that it's easy to lose the long view on what we've lived through in the Great Recession.

Two charts, built and recently updated by the Federal Reserve Bank of Minneapolis, offer a sobering view on just how historically bad it's been and continues to be.

Three years ago, I wrote (bragged?) that conditions during my first recession in 1981 were still worse than in the Great Recession.

The data have proved me very wrong. The total change in employment is really startling. In every other post-war recession, employment was above the pre-recession peak within four years. Not so this time. And most of the employment growth we've seen in the "recovery" are in low wage jobs.

Long road back.

-- Paul Tosto

'What would you do if you lost your job right now?'

Posted at 2:54 PM on August 30, 2012 by Bob Collins (1 Comments)
Filed under: Economy, Politics

You're 56 years old, working in an industry in decline. The realities of unemployment aren't going to change depending on who wins in November because (a) you're 56 years old and (b) you work in an industry in decline.

This latest in a series of short interviews with Americans by CBS pretty well peels through all the politics of a presidential campaign and gets right to the real issue facing millions of Americans: Nobody seems to have a good answer to one person's question. And often, that question gets lost in the noise.

In Minnesota today, state officials said the number of job openings has increased in the state. But many of the openings are low-paying, temporary gigs. And the ones people are losing, are the kind that you could support a family on.

Also today, St. Jude Medical of Saint Paul announced a round of layoffs, including 80 in Minnesota.

Farewell to the Coke bottle

Posted at 1:40 PM on August 30, 2012 by Bob Collins (1 Comments)
Filed under: Economy, Icons

Coca-Cola Bottling Co. - Winona Historic Commerce Tour from Minnesota Historical Society on Vimeo.

When you grow up in a declining New England milltown in the '60s, you had to get your view of exotic lands from the bottom of a Coke bottle.

In those days, Coke plants cranked out Coke only in bottles; there were no cans, and at the bottom of each bottle was stamped the names of far-off locales where the bottles were made and the Coke was poured -- places like Detroit or Cleveland.

Or maybe Winona.

Those days ended a long time ago for all but one sort of bottle, the ones from Winona.

That ended today when the bottler there -- the last bottler to provide 6 oz. returnableCoke bottles -- announced they're quitting the operation.

Economic segregation increasing even as racial segregation eases

Posted at 12:05 PM on August 1, 2012 by Bob Collins
Filed under: Economy

While listening to the Daily Circuit's fascinating discussion yesterday on "diversity" in the suburbs, I kept wondering to myself if the definition of diversity -- that is: race -- creates a somewhat misleading picture of diversity in the region.

It's true that there are more people of color in the suburbs now, for example, but there's still a segregation underway that betrays this notion that the suburbs -- and the cities, too, for that matter -- are truly a diverse place. It's economic segregation.

Today, the Pew Research Center released a study that shows economic segregation where we live is increasing, even as the racial segregation decreases.

These increases are related to the long-term rise in income inequality, which has led to a shrinkage in the share of neighborhoods across the United States that are predominantly middle class or mixed income--to 76% in 2010, down from 85% in 1980--and a rise in the shares that are majority lower income (18% in 2010, up from 12% in 1980) and majority upper income (6% in 2010, up from 3% in 1980).

Despite the long-term rise in residential segregation by income, it remains less pervasive than residential segregation by race, even though black-white segregation has been falling for several decades.

In the South, in particular, economic segregation is pegged on an influx of low-skilled, immigrants and high-priced retirees, each heading for their own economic "neighborhoods."

The Pew report does not break the situation down by city and suburb, but merely documents the 30 largest "metropolitan areas" in the country.

In the Minneapolis metropolitan area, the economic segregation (calculated by the Residential Income Segregation Index, or RISI score) isn't increasing as it is in the south, but it isn't decreasing, either. It dropped only slightly over the 30 years from 1980.

Minneapolis lights up housing scene

Posted at 1:05 PM on July 31, 2012 by Bob Collins
Filed under: Economy

Long-term jobless numbers swell in 'recovery'

Posted at 9:28 AM on July 25, 2012 by Paul Tosto (1 Comments)
Filed under: Economy

It's hard to remember but the economic recovery began officially three years ago. While it's a positive that the most recent data show Minnesota adding jobs, those numbers mask at least one seriously troubling trend: The number of Minnesotans out of work for more than a year has skyrocketed during the "recovery."

According to the state Department of Employment and Economic Development:

While the overall unemployment picture in Minnesota is improving, near normal unemployment rates disguise a hidden trend of people who are underemployed in terms of hours and pay or who are working in jobs that aren't on par with the ones they lost during the recession.

Moreover, the number of people who have been unable to find work for well over a year continues to swell.

Incumbent workers looking to upgrade, new entrants in the labor market and newly laid off workers might find the economy only a little slow, but many others face real and continuing challenges in their personal economic situations.

Here's a look at DEED's chart:

If you've been out of work for a year or more, it's hard to make your way back into the labor force. Job growth here and in the country during the 'recovery' has been tepid.

Things are improving now. But what happens to that population of long-term unemployed -- a population that's leaped from fewer than 10,000 adult Minnesotans in 2007 to nearly 50,000 in 2012?

-- Paul Tosto

How unready are we for retirement?

Posted at 1:07 PM on July 23, 2012 by Paul Tosto (2 Comments)
Filed under: Economy

It's quite a day. The market's tanking because it's expensive for Spain to borrow. The New York Times is launching a new project digging into middle class decline.

It's only a short stroll, then, to some grim, newly published data showing many of the folks near retirement have little savings beyond Social Security.

The Schwartz Center for Economic Policy Analysis writes:

Despite the growing tax breaks and intensive advertising campaigns for retirement accounts ‐‐ most of which are 401(k) plans and Individual Retirement Accounts (IRA) ‐‐ Americans ages 50‐64, 58 million of them in 2010, will likely not have enough retirement assets to maintain their standard of living when they reach their mid‐sixties.

The addition of a weakening labor market for older workers means we are headed for a retirement income security crisis. Three quarters of near retirees (ages 50 to 64) have annual incomes below $52,201, with an average total retirement account balance of $26,3952.

Individuals with incomes over $52,201 per year have more in their retirement accounts, but their balances are not high. Their average retirement account balance for this income group is $105,012.

Teresa Ghilarducci argues for "guaranteed retirement accounts on top of Social Security. These accounts would be required, professionally managed, come with a guaranteed rate of return and pay out annuities."

Her essay doesn't provide detail on how the accounts would be administered or how the money would be spent. And, of course, Americans don't like being told what to do.

"You don't like mandates? Get real," she says. "Just as a voluntary Social Security system would have been a disaster, a voluntary retirement account plan is a disaster."

-- Paul Tosto

(h/t Carpe Diem blog)

Frac sand mining benefits below the radar

Posted at 9:14 AM on July 23, 2012 by Paul Tosto (7 Comments)
Filed under: Economy

There are lots of worries about the environmental effects of the oil and gas drilling practice known as "fracking" and the sand mining in Minnesota and Wisconsin that's key to the drilling.

Right now, though, the economic benefits of that drilling are planting roots throughout the upper Midwest. It's obvious in North Dakota, the epicenter of the oil and gas boom. But it's also showing up in Minnesota in places you might not expect.

The Federal Reserve Bank of Minneapolis notes the sand mining in southern Minnesota and western Wisconsin is triggering a resurgence in local freight rail. The Fed writes:

In Wisconsin, many sand mining companies have built facilities adjacent to rail lines--a cost-effective way to ship raw or processed sand, often in "unit trains" of over 100 cars. In response to increased demand, railroads have ramped up their operations and rehabilitated little-used or dormant lines, at a cost of roughly $1 million to $2 million per mile.

Lakeville, Minn.-based Progressive Rail operates a 62-mile line running north from Chippewa Falls to Rice Lake and Almena, in Barron County (see accompanying map). Freight volume has increased fivefold to about 1,800 cars a month since EOG Resources completed a new sand processing plant in Chippewa Falls last December, said company President Dave Fellon. Over 90 percent of that volume consists of frac sand from the EOG plant and other mining facilities along the route.

Rising revenue has allowed Progressive to invest in human capital (payroll has increased from 65 to 100 workers over the past year) and critical line improvements. Fellon said the firm will spend $30 million to $50 million over the next five years on new railroad ties, bridges, loading facilities and other infrastructure.

Canadian National and Union Pacific have also refurbished long-neglected rail lines linking Wisconsin frac sand operations to distant markets. This summer, CN began clearing brush and laying new ties on a 45-mile section of rail between Cameron and Ladysmith to connect existing and proposed sand mines with a main CN line running north into Canada and south to Texas. The railroad backed out of a pending sale to the state that would have let Progressive operate the line, opting to retain ownership of a potentially profitable sand route.

But as often happens, the economic payoff gets a huge head start in the debate. It's hard to have a discussion about long term stability when there are needed jobs being created and big money to be made in the short-term.

-- Paul Tosto

The 'flash drought'

Posted at 2:55 PM on July 18, 2012 by Bob Collins
Filed under: Economy, Weather

Earlier this week, experts said the nationwide drought is the worst since the '50s, and they're right. It's bad. But LiveScience.com provides some important context today. While it's the worst since the '50s, it's not as severe as then.

How is that possible?

While Texas, Oklahoma and the southeast plains are entering their second year of drought, much of the area affected this summer was not hit last year, (climatologist Mark) Svoboda said.

He refers to the current drought in the Midwest as a "flash drought," because it arrived in a time frame of weeks to months, relatively fast for a drought. The mild winter this year didn't recharge soil moisture and the heat wave that arrived in late June pushed some places over the cliff, Svoboda said.

This drought hit at a critical time for corn, with devastating effects for the future harvest, Svoboda added.

Indeed, corn farmers have been getting hit hard in the Midwest as the interview with farmer Bryn Bird on last evening's All Things Considered attests.

But corn is a big deal for more reasons than the profit margin for farmers. Writing on Prairie Fire, climatologist Robert Oglesby suggests it's one of the reasons why there's moisture on the Plains at all:

Almost certainly of greater consequence are land-use changes, e.g., the amount of land put into agricultural production or the even the nature of the crop. If, for example, a large-scale replacement of corn by switchgrass (tall prairie grass) occurs, this alone might lead to warmer and drier conditions. This is because the extensive irrigation required to grow corn is largely unnecessary for switchgrass. This effect is essentially the same as described above for reduced soil moisture. Put another way, this large-scale irrigation may have helped keep the Great Plains anomalously cool and moist since its advent in the 1960s.

In other "farming vs. nature" news, you may recall the flooding of the farms of Dakota County, a week before the flooding in Duluth, imperiled a lot of farms, including Laughing Loon Farm in Northfield (which I profiled here).

This picture Dayna Burtness posted this week on Facebook says a lot:

And yesterday she started harvesting the eggplants.

At least in some cases, the fields are yielding more than disappointment.

Death of the small-town grocery store

Posted at 11:26 AM on July 16, 2012 by Bob Collins (1 Comments)
Filed under: Economy

Not every story has a happy ending.

This one for example. In 2006, the 17-year-old who saved the grocery store of Truman, Minnesota was a national hero for saving a small town's lifeline.

"I think a grocery store is not the only important asset in the economic center, but it's certainly a vital part of any community development program," Graham said in 2010. "I feel I've had quite some success in fulfilling the need in smaller niche markets that the Hy-Vees and Fareways certainly have no interest in being in."

Truman needs another Nick Graham.

Graham sold the store in 2008 to a gentleman who had a grocery in Elysian and Kiester. Brad Gohla figured adding a third store would increase his buying power.

Now the Truman store, along with the ones in Elysian and Kiester have closed, the Mankato Free Press reports.

The three stores, owned by Brad Gohla of Elysian, abruptly closed June 30, leaving city officials to ponder possible solutions to keep the stores operational.

Last week, bankers with a lien on the Kiester store were selling off its perishable inventory, with similar actions taking place in the other towns.

Brooks and Nusbaum said they hope the stores can remain operational by attracting new buyers or lessees. Brooks said if that doesn't happen in Kiester she'd prefer that the city take over operation, as it did about four years ago before Gohla began leasing the building from the city.

"We've had a grocery store here since at least the 1880s," Elysian city administrator Patricia Nussbaum told me this morning. She and her husband used to be in the grocery business and figure it'll be tough to find someone to reopen a grocery there.

"There's not much markup in groceries," she said. "We're in a little better shape because we have lakes here and people come in during the summer. You have to make your money in the summer."

The nearest grocery now will be a small one in Waterville, seven miles away. Waseca and Mankato are also options. "But this one was open until 7 seven days a week," she said.

Can cities and suburbs ever get along?

Posted at 1:12 PM on June 28, 2012 by Bob Collins (7 Comments)
Filed under: Economy

You can't convince me otherwise. The headline on this Associated Press story was filled with a backhanded slap at people who live in the suburbs, probably from a city slicker editor. I know who you are.

Now that we've settled the health care issue, we can turn to the war between people who live in the 'burbs vs. those who live in the city. Both, we presume, have their advantages and in the end, people are free to live where they want to live. So why is there always the subtext that people in the 'burbs should move to the city, or that some people in the city would find a better life in the 'burbs?

The Associated Press story isn't a lifestyle story that says young people have chosen a life because of its quality, per se; they've chosen it based on economic realities, which has often been the most influential factor in deciding where to live.

College debt, lousy jobs prospects, and available housing has forced many people to choose the city over the suburbs. Their generation is known as Generation Rent.

"I will never live in the suburbs," said Jaclyn King, 28, of Denver told the Associated Press.

"I much prefer living in the city," Symm Vafeades said. "There's just a lot more you can do without having to drive everywhere."

The good news, Symm and Jaclyn, is you don't have to. Nobody's making you move to the suburbs if you don't want to.

But, the story points out, the economics that has made cities attractive again, can just as easily push people back out....

They point to practical considerations such as better schools in the suburbs, continued government tax breaks for home ownership and subsidies for travel in rural areas, as well as rapidly rising downtown rents, that are likely to push young adults to the suburbs once they sort out decisions about jobs, kids and finances.

Some things never change.

Education divides household haves and have-nots

Posted at 11:12 AM on June 26, 2012 by Paul Tosto (7 Comments)
Filed under: Economy

College costs are rising faster than incomes and student loan debt is through the roof. That's led to all kinds of hand wringing about whether college is worth it.

But every time we're ready to ditch that part of the American Dream, it seems that new data surface to tell us to hold on.

Newly released numbers on wealth and asset ownership by the Census Bureau show education still deeply divides the haves and have-nots.

College seniors who graduated in 2010 carried an average of $25,250 in student loan debt, according to the Project on Student Debt.

Minnesota students graduated in 2010 averaging $29,000 in loan debt, about $1,500 more than the previous year.

No one should let debt overwhelm them. The New York Times wrote recently of a generation of students who took on more college debt than they could afford and are struggling badly now in a weak economy.

But that's different than saying college isn't worth it. For most of us who aren't entrepreneurs or super geniuses, college offers a real opportunity to build wealth.

-- Paul Tosto

The expanding workday

Posted at 12:17 PM on June 25, 2012 by Bob Collins (8 Comments)
Filed under: Economy

Does your boss get a little ornery if you're late for work? If not, perhaps it's because you have a smartphone.

A survey by data protection company Mozy, out today says 73 percent of bosses "have a relaxed attitude to time keeping because staffers are working flexible hours beyond 9:00 a.m. to 5:00 p.m."

"Flexible hours" is code for "working more when they should be off work."

One in five employees has checked work email by 7 in the morning and the average employee has spent 46 minutes working before ever getting to the office.

The survey of American, British, German, and Irish workers found that although employees leave their workplace around 5:48 p.m., they don't stop fully working until about 7:19 p.m., Mashable reported.

And yet, even though the survey showed people are working about 12 hours a day, half of those surveyed said they worry their boss will be mad at them if they arrive late for work.

Should banks pay for the cost of foreclosure upkeep?

Posted at 11:14 AM on June 18, 2012 by Bob Collins (5 Comments)
Filed under: Economy

In 2007, at the beginning of the housing crisis, Chula Vista, Calif., was the first city to require banks and mortgage owners to pay the city for the cost of foreclosing on a home. Could the idea spread to more Twin Cities' suburbs?

Tomorrow, the group, Our Future Minnesota, will petition the Coon Rapids City Council to adopt an ordinance, requiring the banks to pay a fee to the city, to offset the cost of foreclosed homes in the city. There's no indication the city is interested in instituting such a fee.

But the cost of an abandoned home is significant, argues Emily Bisek, a spokesperson for the group, which says the typical foreclosure can cost local governments $19,000 for the increased cost of safety inspections, response from police and fire calls, and the trash cleanup of properties.

"Coon Rapids charges only after they've been called out to a property three times, she says. "Then they charge $600. The first two are free."

In a white paper released today, the group said the number of complaints for unkempt properties in Coon Rapids jumped 172 to a high of 1,244, from 2005 to 2009. "The number of times the city had to send out a crew to clean up unkempt properties went from 11 to 374, forcing the city to expend scarce human and fiscal resources. Between 2008 and 2011, the number of unsecured homes in Coon Rapids increased nearly 350%," it said.

She estimates it's cost the suburb $35 million for 3,900 foreclosures in the last four years. She adds that a foreclosed home can lower the value of another home with an eighth of a mile by $2,000.

"What we've seen in other cities, including Minneapolis, is a registry process," Bisek says. The process allows the city to know who owns the abandoned property, which has historically has been a frustrating endeavor for cities. It was too easy to hide who actually owned the mortgage.

Minneapolis charges $6,948 to mortgage owners, an amount that increases each year.

Richfield passed a similar ordinance last year. It assesses mortgage owners a $100 fee for a home that's been vacant less than a year, $200 for those vacant more than a year. Commercial property owners pay anywhere from $500 to $1,250 a year.

Chicago instituted an ordinance last November requiring mortgage holders to pay a one-time fee of $500. The mortgage holder has to keep the yard free of trash, the grass cut and the property secured or face a daily fine of $1,000.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has since filed a federal suit against the ordinance. Since the suit was filed, the city has loosened the ordinance that applied to all vacant properties, not just those in foreclosure.

Mixing business and politics

Posted at 3:00 PM on June 14, 2012 by Bob Collins (8 Comments)
Filed under: Economy, Politics

General Mills showed absolutely no skittishness today when it went public with a call to turn aside the same-sex marriage ban in November's elections.

Ken Charles, General Mills' vice president of global diversity and inclusion acknowledged on his blog today that the same-sex marriage ban is a business issue for the company:

I am proud to see our company join the ranks of local and national employers speaking out for inclusion. We do not believe the proposed constitutional amendment is in the best interests of our employees or our state economy - and as a Minnesota-based company we oppose it.

We value diversity. We value inclusion. We always have ... and we always will.

We're proud of our workplace, and we're proud to be a leader for diversity and inclusion in our community. For decades, General Mills has worked to create an inclusive culture that welcomes and values the contributions of all.

We believe a diverse, inclusive culture produces a stronger, more engaged workforce - and strengthens innovation. Inclusive communities are more successful economically as well. We believe it is important for Minnesota to be viewed as inclusive and welcoming as well.

Obviously, there are strongly held views on both sides. We acknowledge those views, including those on religious grounds. We respect and defend the right of others to disagree. But we truly value diversity and inclusion - and that makes our choice clear.

Is there the possibility of blowback from supporters of the proposed ban who also eat cereal? The National Organization for Marriage certainly hopes so, judging by this press release this afternoon:

The National Organization for Marriage (NOM) today blasted the General Mills Corporation for basically declaring a 'war on marriage' with its own customers. Speaking at a Gay Pride event today, CEO Ken Powell said General Mills opposes an effort to preserve marriage as the union of one man and one woman in Minnesota, where the corporation is headquartered.

"Marriage as the union of one man and one woman is profoundly in the common good, and it is especially important for children," said Brian Brown, NOM's president. "General Mills makes billions marketing cereal to parents of young children. It has now effectively declared a war on marriage with its own customers when it tells the country that it is opposed to preserving traditional marriage, which is what the Minnesota Marriage Protection Amendment does."

A national survey conducted by the Alliance Defense Fund last year showed that 63% of people with children living in their home, 'believe marriage should be defined ONLY as a union between one man and one woman." Just thirty-five percent of people with children at home disagreed with the statement. Overall, the ADF survey found that 62% of adults believe marriage is only the union of a man and a woman.

"This will go down as one of the dumbest corporate PR stunts of all time," said Brown. "It's ludicrous for a big corporation to intentionally inject themselves into a divisive social issue like gay marriage. It's particularly dumb for a corporation that makes billions selling cereal to the very people they just opposed."

I'd like to hear from employees of General Mills. Does a political stance taken by your employer change things in your workplace?

Do teachers have it rougher than the rest of the working class?

Posted at 12:03 PM on June 14, 2012 by Bob Collins (21 Comments)
Filed under: Economy, Schools

MPR reporter Tim Post has a very compelling story today about the burnout experienced by teachers at the end of the school year.

It was, by all accounts, a difficult year for teachers, what with their holding a job that requires them to spend a day with dozens of kids -- could you? -- and having a job that puts them in the public eye and makes them easy targets for criticism.

Just one thing is missing from the complaint: A solution.

Teacher morale is eroding; that's not new. MPR's Daily Circuit did a show on it a few months ago, following a survey from Metropolitan Life that showed almost 1 of every 3 teachers is contemplating doing something else.

"No one wants to think that their work is undervalued or being blamed," Sandi Jacobs, vice president of the National Council on Teacher Quality, said. "The rhetoric has been so heated that it makes it hard for teachers to feel good day in and day out. "

Wait! There are people who feel good about work day in and day out?

The Met Life survey found that fewer than half of those teachers surveyed said they were very satisfied with their jobs. That was described as the worst morale in 20 years.

But the report also said that 81 percent are somewhat or very satisfied. And only 30-some percent said they were somewhat or very unsatisfied.

Curiously, while 81 percent said they were satisfied with their work, only 54% said they were optimistic that student achievement will get any better. What do we make of 27% of teachers being satisfied while being pessimistic about the improved student achievement?

These numbers, if they can be believed, tell another story when compared to the rest of the working world: teachers have it better.

In the broader working world, only 45 percent of workers in the U.S. are satisfied in the job, down 4% from 2008, according to the Conference Board.

The American workplace has become a stressful place with a high burnout factor in the last decade as employers shed workers, and the rest of us pick up the slack, often without the help of other workers pulling their fair share of the load.

Forty-four percent of the teachers in the Met Life survey report their schools have had layoffs in the last year. Forty percent in the workforce overall have had layoffs or announced layoffs in just the last six months, according to the GlassDoor employment confidence survey.

One in every 5 American workers is concerned he/she will be laid off. One in every 3 is concerned a co-worker will be. There's no available data that I can find for teachers in that category, especially since the state this year wrestled with a bill that would have allowed schools to lay off teachers on something other than seniority.

It may well be that low teacher morale and a feeling of being unappreciated will lead to more teachers quitting, too. But the surveys of the non-teacher working world don't suggest that there's a paradise out there.

A survey from the Department of Labor this week found 64% of working Americans leave their jobs because they don't feel appreciated. So it's entirely understandable that the reaction to our story today is, "you, too, pal?"

More proof Wisconsin's not eating our economic lunch

Posted at 11:00 AM on June 7, 2012 by Paul Tosto (3 Comments)
Filed under: Economy

There's a stubborn conventional wisdom that Wisconsin's economy is outgunning Minnesota. Data continue to show that's not the case.

Last year, we pointed out that Minnesota's done better than the Badger State in keeping people employed and adding jobs in the recovery.

Newly released federal data show that when it comes to overall economic growth the past few years, Minnesota and Wisconsin have been nearly equal.

Here's a chart from a Federal Reserve Bank of Minneapolis analysis:

The Minneapolis Fed report focus was on North Dakota's exploding economy compared to the U.S. and to the rest of the states in the bank's region.

But there's also a story in the data for those who worry that Minnesota isn't as business friendly as Wisconsin. No matter how you view the politics and policy of the two states, economy-wise they remain pretty evenly matched.

-- Paul Tosto

The tough decisions

Posted at 1:18 PM on May 29, 2012 by Bob Collins (3 Comments)
Filed under: Economy

The IRS is patting itself on the back today in announcing the closing of 43 small offices, which will save more than $40 million.

"Given today's tight budget environment, we have to be willing to make the tough but responsible calls to save taxpayer dollars," IRS Commissioner Doug Shulman said in a recent news release..

Tough? Hardly. None of the people at the offices are going to his/her job. In fact, many of them are going to be allowed to telecommute now.

In its fiscal year 2013 budget request, the administration requested an 8-percent funding increase for the IRS.

The amount of money being saved by the IRS is the equivalent of the average U.S. household saving $14.67.

Minneapolis home prices drop... again

Posted at 12:03 PM on May 29, 2012 by Bob Collins (4 Comments)
Filed under: Economy

Foreclosures: Better but still not great

Posted at 3:32 PM on May 24, 2012 by Paul Tosto (2 Comments)
Filed under: Economy

Minnesota is starting to recover from the mortgage crisis -- foreclosures are down, as are the number of homes getting pre-foreclosure notices and the number of sheriffs sales, 2011 data released this afternoon by the Minnesota Home Ownership Center show.

That's good news, although it's still a fact that foreclosure numbers have not returned to "normal," 2005 levels and there are still deep pockets of problems -- especially in the metro's northern ex-urb counties.

The report also throws out a fascinating tidbit: The mortgage crisis is no longer about sub-prime madness.

"The vast majority of the homeowners served by foreclosure counseling have fixed-rate prime mortgages," the center's report notes. "This marks the continuation of a pattern that began three years ago, as the foreclosure crisis transitioned from a sub-prime mortgage problem to an unemployment problem."

It's worth reemphasizing that point. Most of the problems now are tied to your typical, conventional mortgage loans, not the any-terms-you-want craziness of a few years ago. It's essentially a jobs issue now.

If nothing else, the center's report shows counseling helps more than perhaps we realize. Some 10,000 families received free foreclosure prevention help and the centers said, "of the closed cases where outcomes are known, 60 percent of these households were able to avoid foreclosure."

Bonus charts

Number of Minnesota home foreclosures:

Rate of foreclosures by county in 2011

Source: Minnesota Home Ownership Center

-- Paul Tosto

We're number 26?

Posted at 9:38 AM on May 21, 2012 by Paul Tosto (2 Comments)
Filed under: Economy

I don't usually put a lot of stock in city rankings. But a new look at the Best Cities for Tech Jobs seems to have some good research behind it. And if you're a tech booster in the Twin Cities, you will not be pleased by the numbers.

NewGeography, a site that's good at telling stories using data and demographics, put together the tech jobs rankings using data crunched by the economics research group EMSI. It counted some 95 federally recognized science, technology, engineering, and mathematics occupations -- yes, the STEM jobs believed to be the keys to our economic future.

No shock that Seattle tops the list. But as you scroll down looking for the Twin Cities, you find Jacksonville, Fla., Cincinnati, Columbus and other smaller cities. Minneapolis-St. Paul is ranked 26 on the list.

The worrisome thing is that Minnesota officials have made STEM education and jobs a priority for years. So if we've made STEM education a priority in Minnesota, pouring resources into building a trained workforce capable of taking these jobs, will the jobs really come?

Here's NewGeography's Top 30:

If it's any consolation to the Wisconsin's-eating-our-economic-lunch crowd, the Milwaukee metro area comes in ranked 50 in the tech jobs list.

-- Paul Tosto

So much for $5 gasoline

Posted at 12:24 PM on May 16, 2012 by Bob Collins (3 Comments)
Filed under: Economy, Energy

Oil prices have hit the lowest level in the last six months, the Associated Press is reporting today.

Just one question: What's taking you so long to get in step, gasoline prices?

The price of gasoline is not directly and immediately tied to the price of crude -- there are plenty of variables in what makes up the cost of a gallon of gasoline -- but it's relatively unusual to have a steep drop in oil in the last few weeks and have gasoline prices still trending in a fairly narrow range.

So much for the $5 gasoline panic, writes Phil Flynn on Inside Futures:

Flynn takes the gamblers' reversal of fortune as, "more proof that whenever somebody blames the speculators for the prices [of energy], they really don't know what they're talking about." Assuming the speculators aren't about to get credit for any decline in crude prices, Flynn says the fundamentals are to blame for the recent sharp decline. Newly Socialist France and the lunacy in Greece are creating uncertainty that weakens demand. In combination with the glut of oil, stockpiled when a military stand-off with Iran seemed inevitable, the price of crude and other forms of energy are dropping due to the laws of economics. Unless Europe is "solved," which is unlikely if not impossible, or a hot war breaks out in the Middle East, Flynn says "sell the rallies" is the dominant strategy. To him the only real question is whether or not a trader should go so far as to short crude or natural gas. With the fast drop below $100 a barrel in WTI crude, Flynn says its new price range is likely to be somewhere between $90 and $95 a barrel, causing him to "be a little careful" going short. For every buyer there's a seller, meaning someone is most likely making money off the drop in energy prices. Whether it's a new breed of speculators driving it lower or the obviously bearish fundamentals is beside the point for a trade. Until further notice, the best way to play crude has gone from "buy the dips" to "sell the rips."

As recently as last Friday I told Tracy Burns and Ashley Webster on the Fox Business Network that oil had not bottomed and was probably on its way to 90. We are already close!

Making the homeless illegal?

Posted at 11:42 AM on May 14, 2012 by Bob Collins (4 Comments)
Filed under: Economy

Denver officials will decide today whether a solution to the problem of homeless people is to make it illegal.

The City Council is voting today on an ordinance that bans eating, sleeping and storing personal possessions on public or private property without permission. It includes using a blanket as shelter.

Says the Associated Press:

Denver's proposed ban reflects a national trend of crackdowns on homeless people and is more sweeping than most because it applies to all public and private land, 24 hours a day, said Maria Foscarinis, executive director of the National Law Center on Homelessness & Poverty.

"This is exactly not the way that cities and governments should be responding to homelessness," she said.

The Law Center estimates as many as 3.5 million people are homeless nationwide.

It costs less to get the homeless into housing than it does to jail them, Foscarinis said. And a ban in Denver could make it harder for people to escape homelessness because an arrest record can shut them out of jobs, she said.

Maybe they can go to St. Louis where this morning Rev. Larry Rice of the New Life Evangelistic Center announced plans for a two-acre tent city. It comes after the city shut down homeless encampments along the Mississippi.

Employers looking for skills that can't be taught in school

Posted at 11:55 AM on May 9, 2012 by Molly Bloom (15 Comments)
Filed under: Economy, Schools

Many employers say they can't find workers with the right skills even though there are plenty of people looking for jobs. Long-term unemployment remains a problem, and recent college graduates are joining the ranks of the unemployed or underemployed. So what's the problem?

Some people doubt employers' claims that there aren't enough skilled workers out there. But the Minnesota State Colleges and Universities system is taking it seriously. MNSCU is surveying employers to find out how they can better prepare students to find work.

We did our own survey by asking employers in the Public Insight Network what they're looking for from employees. Turns out some of the skills they're looking for can't be taught in schools.

Here's a sampling of what we heard:

We are having difficulty finding software testers with database SQL experience and English language skills.
-Dan Dahl, software quality assurance for Questar A.I. They have roughly 300 employees.

We are having some difficulty finding the "hard technical skills." Design. Drafting. Product development. Project management.
-Neil Crocker, president of Schaefer Ventilation

Finding people who want to work and not just collect a paycheck is next to impossible. The skill most lacking is a work ethic. Not to mention, it is nigh on impossible to find a creative mind in today's work place.
-Mark Hayes, head of Research and Development for a small company

We just recently posted an opening. Our last opening was in February of 2011. We haven't had many applicants applying. Today I received a resume through email. The applicant had used a form letter he found online and hadn't "filled in" the blanks. If it wasn't so funny it would be sad.
-Ann Iverson, works for a small manufacturing company

We've hired some terrific people over the years, in a wide range of positions. But one skill is so scarce - and growing more so - that it remains at a premium: The ability to write. I'm not talking about professional copy writing; rather, the simple ability to write a cogent paragraph, to articulate one's ideas in clear, well-crafted sentences. I'm not sure of the reason for this, but as I talk to my peers, we're in agreement that writing is on the decline - at least, the ability to write well.
-Brian Herder, Executive Creative Director for a marketing, PR and research firm

Candidates seem to want a lot of money--more than our small business can afford. We have difficulty finding someone who can be creative, flexible, has a broad skill base, and is mature enough to work with business owners.
-Carol Keyes, owner of an occupational safety and health consulting firm

One of the biggest problems I find when trying to hire qualified staff is that individuals who meet all of the requirements are excluded from eligibility based on past criminal records. This is particularly troubling because public safety/criminal justice fields are some of the most popular associates degrees and many who are taking these courses don't know that they will not be eligible for work based on criminal records.
-Sarah Walker, COO at a large non-profit that working in public safety, corrections, and human services

What we want is a designer with a passion for technology. Since everyone is surrounded by tech, we want people who can solve problems using technology to help make the world a better place, one project at a time. Unfortunately, the schools aren't keeping pace with the industry. A student coming out of school right now with an interest and passion in solving problems for the web or tech get jobs so quickly and easily...yet very few people focus on it. It's shocking to me.
-Jason Rysavy, founder and strategy director of Catalyst Studios

Many of these employers offer some on-the-job training, but a lot of it is supplemental, meaning that the employee can't start without the skills mentioned above.

But a few employers believe in training on the job. Kristen Wasyliszyn, who runs a catering company sums it up, "The best advice I've received about hiring is this: hire nice people, you can train the rest."

Are you an employer? Do you train on the job? Share your experiences here - or in the comments.

We're making stuff

Posted at 12:04 PM on May 1, 2012 by Bob Collins (2 Comments)
Filed under: Economy

Today's economic barometer is manufacturing and the The Institute for Supply Management, a trade group of purchasing managers, is reporting that manufacturing in the U.S. is at its highest level since last June.

It also bucks the trend of some recent reports -- including out of Chicago -- that raised the possibility that the economy is starting to fizzle again.

"We think the latest recovery is made of sterner stuff, although we doubt it will set the world alight," Paul Dales, senior U.S. economist at Capital Economics, wrote in a note, Reuters reports.

Good news? Probably, although it won't help the problem we're having at the gas pump. Speculators pushed the price up today figuring it'll mean a higher demand.

With so many factories shut down and so much work moved overseas, it's easy to think there's little manufacturing taking place in the country anymore.

But a new installment of a PBS series disputes that notion.

Watch Introduction to Manufacturing on PBS. See more from America Revealed.

The series continues tomorrow night on PBS.

The value of your home

Posted at 12:02 PM on April 25, 2012 by Bob Collins (34 Comments)
Filed under: Economy

Expert: Forget about home prices going back up.

Posted at 12:38 PM on April 24, 2012 by Bob Collins (3 Comments)
Filed under: Economy

Today's report showing month-to-month home resale values declining again in the Twin Cities and the country at large has led to a startling analysis by the guy that designed the monthly study.

"We don't have any real story that could lead to another boom like we had earlier in the century," said Robert Shiller, who co-founded the Case-Shiller survey.

In an interview with the Wall St. Journal today, Shiller sounded little but despair.

"Psychology matters," he said. "I don't know if home prices will go up anytime soon."

On CNBC, another analyst said there "really are no bright spots" here.

Fed's largest financial asset?

Posted at 1:28 PM on April 11, 2012 by Paul Tosto
Filed under: Economy

It was eye-opening a few weeks ago when the federal Consumer Financial Protection Bureau took a deep look at private and federal student loans outstanding and concluded that the market had topped $1 trillion.

Equally sobering is a new analysis by financial markets researcher Doug Short. On his blog today, Short offers a pop quiz:

What line item is the largest asset on Uncle Sam's balance sheet?

A) U.S. Official Reserve Assets
B) Total Mortgages
C) Taxes Receivable
D) Student Loans

The correct answer, as of the latest Flow of Funds report for Q4 2011, is ... Student Loans.

Source: Dshort.com

Just in case you're thinking that student debt could help pay off the national debt, Short notes that, "assets are, sadly, the trivial side of Uncle Sam's Flow of Funds balance sheet -- a bit less than 1.36 Trillion. The liability side totaled 12.28 Trillion at the end of Q4."

-- Paul Tosto

Is the good weather masking a weak economy?

Posted at 11:00 AM on April 11, 2012 by Paul Tosto (1 Comments)
Filed under: Economy

It's been a lovely winter and spring here and across the country. Only an economist could find something wrong with it.

Sure enough, there's been a swell of analysis recently that much of the positive economic news we've seen so far in 2012 is a weather-induced mirage.

The easiest read on this comes from the UCLA Anderson Forecast.

Senior economist David Shulman cites temperatures in most of the country averaging 5 to 6 degrees above normal in January and February 2012 as a key factor in the recent improvement in the labor market, with 227,000 and 284,000 net new payroll jobs created in those months, respectively.

In an essay titled "Curb Your Enthusiasm," Shulman details how the unseasonably warm winter weather drove the consumer economy.

The impact of the mild winter manifested in several respects, including an unusually low number of workers being kept away from their jobs and lower home-heating bills (aided by plummeting natural gas prices, which helped offset higher gasoline prices) -- all of which acted as stimulants for the labor markets.

But, Shulman writes, "We suspect that once the weather and the seasonal adjustment factors normalize in March and April, the economic data won't look so ebullient."

Shulman also writes that "the stronger employment data are not appearing to translate into stronger overall GDP growth." He argues that part of the recent gains in employment was a response to prior growth, not expectations for future growth.

Last week, as if on cue, the federal Bureau of Labor Statistics reported disappointing job growth for March.

I've been feeling generally upbeat about the economy this year. I still feel like the worst is behind us in Minnesota and the country.

We'll get a better picture later today when the Federal Reserve releases its Beige Book, an anecdotal report on economic conditions in each of the Fed districts, including Minneapolis.

Here's hoping for a little sunshine.

-- Paul Tosto

The people who fight for their unemployment (continued)

Posted at 12:05 PM on April 2, 2012 by Bob Collins (3 Comments)
Filed under: Crime and Justice, Economy

The Minnesota Court of Appeals ruled today that a woman, who was encouraged by her boss to quit her job and become an independent contractor (self employed) instead, is entitled to unemployment benefits.

It's the case of Heather Rowan of Detroit Lakes, and it's the type of case that makes you wonder how many Heather Rowans are out there who gave up rather than fight the system.

Ms. Rowan was employed as a painter by a general contractor, Dream-It in Detroit Lakes, which cut her hours in 2009 and laid her off. Her employer suggested if she quit and formed her own LLC (limited liability corporation), she could get paid based on the amount of painting she did rather than on a per-hour basis and make back the money her reduced hours took away.

When she refused a job because she thought the per-square-foot painting payment amount -- $180 for a week --was too small, the company offered her no more jobs.

The state Department of Employment and Economic Development ruled her ineligible for unemployment benefit because self-employed workers aren't eligible. An unemployment law judge at first reversed the ruling, then ruled she not only was not eligible, but had to pay back more than $5,000 of unemployment benefits she received.

But today the Court of Appeals ruled she had good reason to quit and, thus, should be allowed to collect unemployment.

"Dream IT was responsible for encouraging Rowan to form her LLC because Herman (her boss) emphasized that she would not have to work as many hours to earn more money, but he did not inform her that, by so proceeding, she would no longer be eligible for unemployment benefits and that Dream It would not be required to offer her work," Judge Roger Klaphake wrote in today's decision.

The court said any reasonable employee would have felt compelled to quit in the same situation.

A penny dies a quiet death

Posted at 12:08 PM on March 30, 2012 by Bob Collins (5 Comments)
Filed under: Economy

Canada has made a bold and obvious decision and life seems to be going on just fine today. Canada is going to get rid of the penny.

It costs 1.6 cents to produce a penny in Canada and if there's one thing Canadians appear to be good at, it's math.

"Some Canadians consider the penny more of a nuisance than a useful coin. We often store them in jars, throw them away in water fountains or refuse them as change," a government report said.

Case closed. No whining. No nostalgia. Just a business decision.

Why can't the United States do that?

The U.S. penny costs 2.4 cents to make but a few congressional moves to get rid of the penny never got started because Americans are more emotional about these things, apparently. For one thing, Lincoln, one of the most beloved presidents, is on the penny. For another, Illinois, the land of Lincoln, takes these efforts as a personal attack.

In bankruptcy data, signs of better economy

Posted at 4:15 PM on March 29, 2012 by Paul Tosto
Filed under: Economy

I double-clutch these days whenever I see hopeful data on the economy. Nearly three years since the "recovery" began, Minnesota's recovered only about half the jobs lost in the Great Recession. If you don't have a job, things are not great.

Still, there are positive signs that shouldn't be ignored. The Federal Reserve Bank of Minneapolis recently spotted some green shoots in the region's bankruptcy data.

"Consumers and businesses in district states saw a fairly significant decline in the number of bankruptcy filings last year," the Fed's Ron Wirtz writes. " Every state saw a drop..."

Here are the Fed's charts:

Chapter 7 is a liquidation where the trustee sells the debtor's assets.

Chapter 13 gives people the opportunity to save their homes from foreclosure while working out a repayment plan.

The best news in the data is that Chapter 7 bankruptcies in Minnesota and in the region ebbed in 2011 after swelling in the recession.

There's still a long road back to "normal" levels of bankruptcy, a destination we might not see until Minnesota gets back all the jobs lost during the past four years.

Still, the Fed analysis shows the corner was turned in 2011. For now, that will do.

-- Paul Tosto

In Minnesota, housing prices may have hit bottom

Posted at 11:42 AM on March 27, 2012 by Bob Collins
Filed under: Economy

Saint Paul's Block E

Posted at 1:15 PM on March 26, 2012 by Bob Collins (2 Comments)
Filed under: Economy

Saint Paul Mayor Chris Coleman gave his State of the City Address today. The mayor cited the bulk of the most disruptive light-rail construction being over as an example of the city being on the "right track." Get it?

For those of us who love nostalgia, though, this is the highlight:

It is also why we have not stopped our pursuit of the Penfield project. We are, perhaps, only months away from breaking ground on that project, thanks in large part to the work of Planning and Economic Development Director Cecile Bedor and Councilmember Dave Thune. When completed, it will bring 260 units of market-rate housing along the Central Corridor and a first-rate grocery store to the center of our town. It will join the Lofts at Farmers Market as the newest housing in downtown. That project, completed only a few weeks ago, is already 72 percent leased - far exceeding projections.

Give the mayor some credit for the pluck it takes to talk up a project that's been a bit of an embarrassment. The city took over as developer last year.

The Penfield's billboards advertising the high-rise view of the condos still stand more than five years after they went up.

The reconfigured project got a shot in the arm more than two years ago when Lund's announced it would have a grocery store at the site. That never happened, either.

Today, the site's glitzy showroom is still abandoned...

The railings on its ramp have rotted...

..and a tree has grown through it, ironic since a couple of trees the developer planted are dead.

The phone books have been delivered...

The mayor may well be right that the project could start in a few months (the city has approved finance). Who's taking bets?

Feeling better about the housing market?

Posted at 12:47 PM on March 19, 2012 by Paul Tosto (8 Comments)
Filed under: Economy

A couple of interesting stories popped up last week suggesting both hope and despair about the housing markets. The positive: Twin Cities home sales appear to be moving off the bottom. The negative: Young adults nationally seem increasingly unwilling or unable to buy a home.

We decided to cast a wider net, asking Minnesotans in the MPR News Public Insight Network to share some thoughts about the housing market in their towns and neighborhoods. What are they seeing? Are there concerns about young people buying homes?

Click on the map icons below to read what others told us, then add your voice.

View Feeling better about the housing market? in a full screen map

Carlos Gutierrez is a mortgage broker in Plymouth who sees home sales on the upswing but adds that his 28-year old son "does note see a reason to buy a home at this time."

Kari Denissen Cunnien wrotes us that she was in early 30s, married and with a toddler but that she and her husband were still renting while lots of their friends bought homes.

Cunnien's husband is in grad school and although they have income through her job and would love to buy a house, "we could not afford the added expenses on top of a mortgage. The garbage pick-up, water, taxes and responsibility to replace the roof or water heater.

"We are of the generation with huge student loan debt and now a large daycare bill," she adds. "It's just not in the cards."

The 'boomerang' kids are alright

Posted at 4:30 PM on March 15, 2012 by Paul Tosto (4 Comments)
Filed under: Economy

The Great Recession changed a lot of things, including our basic notion of what's supposed to happen when your kids graduate from high school.

We used to expect them to leave the house and be on their own after graduating high school.

But in 2010 more than one in 5 adults ages 25 to 34 lived in multi-generational households, mostly living with parents. In 1980 it was about 1 in 10 but the the percentage rose steadily in the 2000s and spiked in the Great Recession.

The data comes from Pew Research Center.

Equally interesting, Pew reports today that most of the young adults who've returned to live with their parents (or never left) are pretty satisfied with the situation. "If there's supposed to be a stigma attached to living with mom and dad through one's late twenties or early thirties," the group notes, "today's 'boomerang generation' didn't get that memo."

Some excerpts from the study:

48 percent of boomerang children report that they have paid rent to their parents and 89 percent say they have helped with household expenses.

Twenty-five percent say the living arrangement has been bad for their relationship with their parents.

78 percent say they don't currently have enough money to lead the kind of life they want, compared to 55 percent of their same-aged peers who aren't living with their parents.

By the way, MPR News has been on the "moving back home" story all through the recession.

-- Paul Tosto

Take this job ....

Posted at 1:30 PM on March 15, 2012 by Paul Tosto (1 Comments)
Filed under: Economy

I can't resist the satire that's followed yesterday's eye-opening New York Times op-ed by an executive at the investment firm Goldman Sachs, who takes a rhetorical flame thrower to his ex-employer while walking out the door.

Titled "Why I am leaving Goldman Sachs," Greg Smith detailed outrageous attitudes of the higher-ups at Goldman toward clients and how the once-great culture of Goldman Sachs now lies in ruins.

Does he come across a little sanctimonious and self-serving? Oh, yeah.

The best part, though, is how social media co-opted Smith's writing style and structure to produce some pretty fun parodies.

The best one was The Daily Mash's "Why I am leaving the Empire," by Darth Vader. Vader, equally disillusioned by how things have turned out with his employer, writes:

The Empire is one of the galaxy's largest and most important oppressive regimes and it is too integral to galactic murder to continue to act this way. The firm has veered so far from the place I joined right out of Yoda College that I can no longer in good conscience point menacingly and say that I identify with what it stands for.

How did we get here? The Empire changed the way it thought about leadership. Leadership used to be about ideas, setting an example and killing your former mentor with a light sabre. Today, if you make enough money you will be promoted into a position of influence, even if you have a disturbing lack of faith.

Those of us who were young business degree graduates in the "greed is good" years of the mid-1980s might argue that the finance industry falls from its virtuous path every 10 years or so. But that's another story.

For now, it's fun to read the op-ed and enjoy the "Why I am leaving..." parlor game.

-- Paul Tosto

MN's new grad job market tougher than you thought

Posted at 11:19 AM on March 15, 2012 by Paul Tosto (5 Comments)
Filed under: Economy

MPR News has written a ton during the Great Recession and not-so-Great Recovery about the plight of new college graduates. We regularly reported the stories young adults told us of their struggles to find work in Minnesota coming out of college the past few years.

New data analyzed by the Federal Reserve Bank of Minneapolis give us a sense of just how bad it's been.

Fed writer Ron Wirtz examined survey data from the Minnesota State Universities and Colleges system. MnSCU surveys its graduates every year to see if they are gainfully employed during the subsequent year in a job related to the program or major they studied in school.

"Survey data across these institutions show that graduates were having a tougher time landing a job in their field of study," Wirtz wrote.

The Fed's key chart:

As Wirtz notes, the data come with caveats: It's self reported. The averages mask big differences among schools. There's no distinction between full- and part-time. And the data don't reflect the recently improving jobless picture in Minnesota.

Still, the trends show the reversal of fortune for recession-era graduates compared to those who earned degrees a couple of years earlier. Those problems will continue to surface in the form of greater student loan defaults even as the economy slowly improves.

-- Paul Tosto

North Dakota's Bakken oil boom in one image

Posted at 9:56 AM on March 15, 2012 by Paul Tosto (1 Comments)
Filed under: Economy, Science

The drilling boom in the Bakken oil fields is remaking the landscape of western North Dakota. If you need more convincing, take a look at this image from space.

It's a composite of satellite pictures taken in 1992, 2000 and 2010 that show a big, red blob over the Bakken. The SkyTruth blog posted the image, writing:

1992 is shown in blue, 2000 in green, and 2010 in red.

Places that had lots of light in all three years show up bright white (equal amounts of blue, green and red) -- that basically shows established cities and towns that haven't changed much over that time period.

But whoa, check out that big patch of red in the northwest corner of North Dakota. That indicates an area of bright lights in 2010 that was dark in 2000 and 1992.

The 20-year time lapsed image, though, helps us understand how dramatically things have changed in western North Dakota. Expect the red blob to grow until the oil runs out.

-- Paul Tosto

Banks preparing another run at fees

Posted at 10:26 AM on March 1, 2012 by Bob Collins (5 Comments)
Filed under: Economy

Bank fees are like sports stadium efforts. You never really kill them, eventually the proposals come back until they're accepted.

Bank of America, which was roundly criticized last year until it rescinded plans to impose a monthly fee on debit-card customers, is back with a new fee structure, the Wall St. Journal reports today.

The bank is testing a $6 to $9 a month fee for an "Essentials" account in three states. The bank will waive some of the fees for checking account customers if they agree to bank online, which should be another step in the idea of putting the bank teller in the same category as the telephone operator someday.

Does 13,000 matter?

Posted at 11:54 AM on February 21, 2012 by Bob Collins (6 Comments)
Filed under: Economy

The Dow Jones 30 Industrials hit the 13,000 market today, and most experts say traders don't care.

So why do we see these people plastered on newspapers and websites if they don't care?

"One reason that the Dow thousand-point barriers generally don't move the market is that Wall Street traders really don't pay much attention to the index," CNBCs Jeff Cox says. "The public uses the Dow as a guideline both to market and economic health, but traders focus far more on the Standard & Poor's 500, which has a much broader reach than the Dow and its 30 components."

It's also 13 points below last year's closing high.

Cox says 13,000 might lure people back to the stock market. If so, that might be just in time to watch it fall, The Street says:

Market participants are likely take some profits when the index reaches this psychological level. The last time the index closed above 13,000 was in May of 2008. Analysts have been speculating since January that equities are due to cool off after a steep run up this year. The 13,000 level might provide a key opportunity for investors to take money off the table.

But it's not just that market prices are nearly back to pre-crisis levels, say advisers -- the market climate has also started to improve. "In the last few years, the market has been so much more news-driven, we've had short-term wild and random volatility that makes the markets much more difficult to anticipate," says Mike McGervey, the president and founder of McGervey Wealth Management. In 2012, that volatility has dropped significantly, with daily market moves being much smaller. McGervey says his technical analysis of recent chart patterns suggests that if the Dow does break through 13,000, stocks will likely post gains in the next quarter, too.

How did the Dow get to 13,000? A confluence of good news, of course, writes Jill Schlesinger on MarketWatch:

The answer is three-fold: (1) Greece/Europe didn't collapse, (2) the economic data in the U.S. has improved and (3) central banks across the world have turned on the spigots to make money abundant.

That might also indicate the problem. Many a stock market rally, buoyed by encouraging news from Greece, has succumbed to a subsequent piece of bad news from Greece. And oil prices are shooting up, threatening to stall a recovery.

If there's one thing people who follow these things closely know how to do, it's worry. But stocks started this week just 1% from their all-time high, a confirmation that the experts were right who preach ignoring the Dow and worrying about Joe Mauer's health instead.

New car affordability best in years?

Posted at 1:11 PM on February 14, 2012 by Paul Tosto (2 Comments)
Filed under: Economy

Too late for the St. Paul Ford plant, but...

It's been more than four years since the Great Recession officially began and the economy is still pretty lousy. But there are some signs that -- if you have a job -- your economic picture is starting to improve.

Today's semi-bright spot comes courtesy of Comerica Bank, which reports that the "purchase and financing of an average-priced new vehicle took 23.1 weeks of median family income in the fourth quarter of 2011, the best affordability reading since the third quarter of 2009. Consumers on average spent $1,050 less (a decrease of 4.0 percent) on new cars in the fourth quarter."

Banks, of course, have a vested interest in people taking out loans to buy cars. Still, the data show evidence that job gains nationally are starting to push up incomes again.

"Household credit conditions are also improving, as shown by the low household financial obligations ratio, which measures total debt payments as a percentage of income," Robert Dye, Chief Economist of Comerica Bank in Dallas, said in a prepared statement. "When you put those two concepts together, it means that households are increasingly willing to take on a reasonable amount of debt by purchasing an attractively priced automobile."

The index isn't very comforting if you don't have a job or your income is declining. Still, there are signs Americans are working to make their financial lives manageable again.

University of Minnesota grad Mark Perry highlighted the Comerica data in his Carpe Diem blog today and noted that household financial obligations are at their lowest point since 1993.

-Paul Tosto

In struggling economy, record Valentine's Day spending?

Posted at 11:00 AM on February 14, 2012 by Paul Tosto (2 Comments)
Filed under: Economy, Life

Each holiday, the National Retail Federation is kind enough to tell consumers exactly what that day's merriment will cost them.

Today is Valentine's Day (yes, it is too late). And despite a struggling economy, the federation's surveys predict Americans will spend an average $126.03, "up 8.5 percent over last year's $116.21 and the highest in the survey's 10-year history."

Total spending on the day is expected to reach $17.6 billion, larger than the entire economies of Laos, Tajikistan and 90 other countries.

Chocolates and flowers are gigantic on the day, of course. Highlights from the survey show you'll spend an average $168.74 on clothing, jewelry, greeting cards and more this year -- if you're an "average male." Women will spend $85.76 on average, or about half the "average male."

Also:

-19 percent will buy jewelry, the highest percent in the survey's history. That works out to $4.1 billion, $600 million more than last year.

-13.3 percent will hand their beloved a gift card, up from 12.6 percent last year. Very smooth.

While it's all great fun, we feel the need to go Calvin Coolidge for a moment and remind you that your disposable income -- the money you can afford to throw around -- hasn't yet rebounded from the Great Recession.

We'll be showing this chart later to loved ones. We're sure they'll understand that we did not forget Valentine's Day but are simply waiting until real per capita disposable income rebounds. Yeah.

-Paul Tosto

Is it halftime in America?

Posted at 10:45 AM on February 6, 2012 by Bob Collins (2 Comments)
Filed under: Economy, Marketing and advertising

No ad in yesterday's Super Bowl has been more talked about than the one in which Clint Eastwood pitches for Chrysler, declaring it's "halftime in America." Forget that Eastwood opposed bailouts and has little love for Barack Obama, some say the ad is a re-election ad for the president, sounding as it does the same themes of Ronald Reagan's "morning in America" ad:

Unemployment in the U.S. is about 1 percent higher than it was when Reagan (whose birthday is today) sounded the "comeback" theme in his famous commercial.

But this latest ad is another in a long line of attempts to hold Detroit up as a model for sticking to it through time times.

A success story? Don't tell Comerica Bank chief economist Robert Dye, who issued his forecast for the Detroit area just last week. One of the reasons the unemployment rate has fallen is 150,000 people have moved out of the area. Dye says that trend may continue and for those staying, "prospects for near-term re-employment of most of the unemployed look dim,"

The ad also ignores another truth: There's more to an economy than making cars in Detroit.

True, Detroit may no longer be the nation's basket case. That distinction belongs to El Centro, California, where the unemployment rate -- the official unemployment rate -- is 26.8 percent.

Even Harry Callahan can't put lipstick on that one.

Examining Lake Elmo

Posted at 12:04 PM on February 1, 2012 by Bob Collins
Filed under: Economy

Urban planner Nathaniel Hood, writing at Streets.mn, is asking whether a city like Lake Elmo can be "pro-business" and for "organized growth" at the same time.

The discussion is sparked by a weekend article in the Pioneer Press in which business interests lamented the city's approach to growth by removing their parcels of land on the border to get them out of the control of the city.

Says Hood:

Lake Elmo saved itself at the expense of others, of whom now struggle with growth in an age of economic austerity. It's hard to feel bad for those communities though, they welcomed "growth" with open arms.

It doesn't appear if stopping sprawl was ever one of Lake Elmo's primary goals; the town merely wants to maintain rural character and charm. Over the last two decades, Lake Elmo seems unfazed by sprawl happening elsewhere - they just didn't want it in their backyard. In reading the article, you'll discover that Lake Elmo did created an unfortunate zoning code that favors one home per 2 acres, which can be classified as 'rural sprawl'. Yet, this sprawl never really happened because of the municipality's unwillingness to extend sewerage lines and more difficult and rigorous approval process. Now , as it stands today, Lake Elmo revised its master plan to promote development near its existing downtown-village-like infrastructure.

The economic downturn has its advantages. It halted the breakneck speed of sprawl long enough for communities to assess what they want to be. Can a metropolitan city maintain its rural charm and grow at the same time? If so, how?

Find the entire article here. It's well worth reading.

The Super Bowl and economic superstition

Posted at 12:09 PM on January 30, 2012 by Bob Collins
Filed under: Economy, Sports

Well, now, this is a problem. If you're a New England Patriots fan with money in the stock market, you have to decide which is more important: another Super Bowl trophy or the ability to retire.

The Boston Globe takes apart a superstition -- that the market and economy do better when the NFC wins a Super Bowl -- and finds that it's true. Sort of:

Since the first Super Bowl in 1967, this superstition has held true 80 percent of the time (36 for 45); prior to 1997, the indicator was correct 28 times in 31 years, including going 12 for 13 between 1984 and 1996. Lucky for investors, in 40-plus years of Super Bowls, AFC teams that were not originally part of the NFL have won just a dozen times.

Still, whether or not a Patriots win historically hurts the economy is debatable. Of the six seasons the Pats have made it to the Super Bowl, the theory has held true four times; Brady & Co. beat Carolina in 2004, a bull year, and lost to the Giants in 2008, the third-worst year on record. In the four years where the Super Bowl indicator has held up, New England is 2-2, and stocks have gained a net total of 27.8 percent. But if you count all six Super Bowl seasons, stocks have lost a net total of 7.94 percent.

Despite new rules, airline fare advertising is still 'sneaky'

Posted at 11:34 AM on January 26, 2012 by Bob Collins (2 Comments)
Filed under: Aviation, Economy

New rules for airline fares began today and, predictably, the airlines don't like them much.

Gone, at least by design, are the low fares that are advertised because all the fees and taxes aren't mentioned. Consumers consistently have thought of the tactic as "sneaky."

So there was some irony today when the head of one airline called the new rules "sneaky," because the taxes and fees are now hidden in the advertised price.

But there's actually nothing to prevent the airlines from revealing what those taxes and fees are.

Check out the fare search on US Airways for a flight from Minneapolis to Boston this afternoon:

Simple. The entire fare is listed, and the part of the fare that is taxes and fees is also listed.

But the rules don't eliminate one of the "sneakiest" of all airline fare advertising tactics: There's usually only one seat on sale at the advertised price.

Watch what happens when you want to travel with a second person.

A big threat to Target: Shoppers with smartphones

Posted at 11:25 AM on January 23, 2012 by Bob Collins (10 Comments)
Filed under: Economy

Smartphones, you're killing Target, apparently.

It's becoming an increasing practice that people patrol brick-and-mortar stores, check the prices, see the cheaper price online, and order it via their phone. This is reducing the stores to little more than showrooms for an online store.

Target, the Wall St. Journal reports, wants to stop it, and has sent a letter to vendors with a plea for products that can't be found online, or lower prices to compete:

"What we aren't willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands," according to the letter, which was signed by Target Chief Executive Gregg Steinhafel and Kathee Tesija, Target's executive vice president of merchandising.

Showrooming is an increasing problem for chains ranging from Best Buy Co. to Barnes & Noble Inc., at the same time that it's a boon for Amazon.com Inc. and other online retailers. This year store sales overall edged up 4.1% during the holiday shopping season, while online sales jumped 15%. And while online sales represent only 8% of total sales, that is up from just 2% in 2000.

Some analysts in the story say Target won't succeed since it's using an old business model to compete with online sites that have reinvented the game.

The Kodak picture

Posted at 1:08 PM on January 19, 2012 by Bob Collins (5 Comments)
Filed under: Economy, Icons

It was a Kodak moment today when the company filed for bankruptcy and there's a pretty good chance few people get the pun. It wasn't always that way, of course. Probably millions of homes have shoeboxes full of unsorted pictures, all taken with Kodak film and printed on Kodak paper.

The writing has been on the digital wall for years; it's hard to believe there was anyone still working at the company who didn't know they were on the good ship Titanic.

Nonetheless, its history alone documents the way the country once was, the same way its products preserved how our families once were. In the '20s, for example, the company started the Eastman Savings and Loan Association to help employees finance home purchases.

A look at some of the historic Kodak commercials not only tells the tale of the company, but how much a commercial product can influence the culture and lives we lead.

Take the '50s, for example, when Kodak offered "easy payment terms" on a camera that cost $29.95 ($230 in today's dollars). .

The '60s brought the concept of cartridge-loading film, which eliminated the need to manually load film through reels and sprockets. And it ended the era of fumbling for a flash bulb for every shot.

In 1975, Kodak engineer Steven Sasson invents the world's first digital camera. It recorded black-and-white images at .01 megapixels.

In the '70s, this jingle became so popular, it later became a pop radio hit:

In the '80s, however, popular music migrated from the radio to the commercials:

And, being the '80s, throwing cameras away became acceptable when Kodak introduced the Fling Camera.

By the 1990s, Kodak was trying to keep up with technology by getting into other businesses. It bought a pharmaceutical business. And it manufactured batteries.

It tried a digital makeover in 1994:

But by the mid-'90s, Kodak had a ton of debt, and began selling off its assets. It sold its office products division and non-imaging health divisions. In '99, the digital printer business was sold to a German firm.

Late in the '90s, the company joined with America Online to deliver processed film via your computer.

By the new millennium, the company was still embracing the idea that your pictures would be printed on paper:

But in 2004, Kodak was dropped from the Dow 30, it shed thousands of jobs, and its digital camera line was sold.

In 2010, it sued Apple, claiming the smartphone technology belonged to it.

In recent years, Kodak tried to be hip, the same way any person in decline tries to be hip. Embarrassingly.

Last year, the company tried to raise money by selling about ,100 digital-imaging patents. But a judge delayed decisions on the patents, and Kodak's shares dropped below $1. The stench of economic death was in the air.

The companies digital and printing technologies, which last year accounted for 75 percent of its revenue, may be one of the few specialties left if and when Kodak emerges from bankruptcy.

Report: Somali cabbies learn price of protest

Posted at 3:29 PM on January 18, 2012 by Bob Collins (5 Comments)
Filed under: Economy

Two-hundred Somali cabdrivers in the Twin Cities found out what happens when you protest. They were fired from their jobs at Airport Taxi, Twin Cities Daily Planet is reporting.

The drivers were involved in a protest that reportedly has been going on for at least a decade, lately centering on the amount the drivers are paid for ferrying clients of UCare and Medicaid.

Fisseha Guanje, who's been driving a cab for 13 years and has two kids, said the drivers don't want to join a union. "We just want to sit down and talk to the company owner," he said. Instead, they all got fired for showing up to protest. Guanje is particularly concerned about the $1,000 deposit he made when starting with the company. He's not sure he'll get it back -- and in any case, there is no interest. "They kick you out - no interest!" he said.

Taxis that showed up to protest were slapped with fliers that said, ""Your lease has been terminated and your auto insurance has been cancelled effective immediately."

Greece in the third world?

Posted at 10:40 AM on January 12, 2012 by Bob Collins (2 Comments)
Filed under: Economy

For the most part, economic jargon and complicated debt restructuring stories are Greece to us. Today, for example, the U.S. business media is previewing debt talks, which begin tomorrow. It's an ongoing dance between private creditors and Greece's "economic partners," other countries with skin in the game.

What about the Greek people?

There is belt tightening, and then there's strangling in a noose. Greece is about to join the Third World, if reports of the effects of its austerity measures are any indication.

The Daily Mail says parents are abandoning children they can no longer afford, and the country is running out of medicine, including aspirin.

It's a terrible situation based on the Daily Mail account, but it's difficult for people here to know where it fits in the big picture, especially when considering this BBC story, which says Greece is adding new categories of behavior to the definition of "disabled."

The new government "disability" list also includes compulsive gamblers, fetishists, exhibitionists and sado-masochists, the Associated Press news agency reports.

The Greek Labour Ministry said a panel of medical experts had decided to include such behavioural disorders on the list, but the new categories did not signify benefit entitlement.

But some people in Greece are fretting that it will lead to state payments to the new categories.

Are the ethics of a landlord 'our' business?

Posted at 10:09 AM on January 11, 2012 by Bob Collins (20 Comments)
Filed under: Economy, Politics

Question (Note: This is not a rhetorical question): Should an employee of the House of Representatives be held to a higher standard in private business dealings? Is the recent inspection of legislators' private lives more or less serious than an employee of the Legislature owning a couple of buildings that would earn most anyone else the slumlord epithet?

I've seen firsthand the problems at the Westminster Court apartments in Saint Paul when I dropped in to interview this couple a few years ago. Squalor is the perfect word for the "problem property" that every housing expert in Saint Paul has known about for years.

"Your clients paid a lot of money and let the buildings go to heck," a judge told the landlords at a hearing taking place at this hour (the Pioneer Press' Fred Melo is tweeting it).

MPR's Curtis Gilbert got an up-close view of the place for his story today:

The radiators in the unit are unreliable, James said. And that's just one of the problems. She opens a cupboard, and little brown beetles go scurrying.

"Look. Crawling all out everywhere."

She charges into the bathroom. The toilet doesn't flush.

"I gotta flush it like this," James said, reaching her hand into the toilet tank to pull the drain plug.

The sink is clogged. Cloudy water fills the basin.

"Won't even go down, this water. It's been like that for the longest."

James said she's reported all these problems to her landlord, but nothing's been fixed. Late last year, city inspections found some 600 code violations between this building and the one next door.

The families, many of whom spend their days on the edge of homelessness anyway, face eviction because the landlord stopped paying the mortgage and the buildings are in foreclosure.

The "she" in this story is Peggy Chun, who told the Star Tribune that Saint Paul's housing code "has caused landlords and low-income tenants hardship for many years."

"She takes the money from the government and she doesn't do anything," tenant Adade Kuegah said of Mrs. Chun.

But it's the he in the story who gives it a different twist, as revealed by the newspaper:

Randall Chun earns $99,400 as a researcher in the state House of Representatives. Neither he nor his wife returned several calls to home and office.

Based on the House Research website, Chun's area of expertise in his research is services for low-income Minnesotans.

Does it make a difference that he's an employee of the House of Representatives? Should his side businesses be held to a higher standard? Or is it none of the people's business?

A return to the good times?

Posted at 2:41 PM on January 9, 2012 by Bob Collins (4 Comments)
Filed under: Economy

We haven't asked this question in awhile and today seems like an appropriate day to do so: Are you confident that your economic life is getting better and heading in the right direction?

A lot of people clearly are.

The Associated Press reports today that Americans increased their borrowing in November by the largest amount in 10 years. The Federal Reserve says total consumer borrowing rose $20.4 billion in November, the largest increase since a $28 billion gain in November 2001. A category that measures credit card debt rose by $5.6 billion, the most since March 2008.

Auto loans also took a big jump.

The total increase works out to about $65 per person in the U.S.

For all accounts that accrued interest, the new debt has an average annual interest rate of 13.67 percent.

Have your good times returned? Or are you just replacing the things that have worn out from a decade of trying to make do.

The price of convenience

Posted at 1:31 PM on December 30, 2011 by Bob Collins (1 Comments)
Filed under: Economy

The FCC reportedly will investigate Verizon's plan to start charging $2 to some people to pay their bills.

Verizon will start charging the fee to people who make a one-time payment online with a credit or debit card over the phone or online.

"On behalf of American consumers, we're concerned about Verizon's actions and are looking into the matter," the statement from the FCC said.

It's an obnoxious idea, of course, this notion of paying money as a convenience charge to pay money, but it's hardly new.

A few weeks ago, for example, I wrote about Ticketmaster's "convenience fees." The Twins and others charge a "convenience fee" for the convenience of using your ink, and your paper, and your Internet connection to print out their tickets, thus saving them the cost of paper, ink, and postage to send them to you.

State Farm, for example, charges me a $1 "fee" each month for the convenience of extracting about $400 automatically from my checking account, a process that occurs between banks every day for pennies.

But Verizon's plan that's drawing so much consumer outrage mirrors most closely the policy of Xcel Energy, which charges a fee if you pay the bill online. The company, however, makes clear it doesn't benefit from the transaction. It says payments go to NCO Financial Systems, a call center and collection agency.

More than likely, that's what the FCC will find is behind Verizon's convenience fee; it pays for some third party's work.

"Customers have a number of alternatives to pay their bill and not incur the convenience fee," A Verizon spokeswoman told Bloomberg this afternoon. "Paying the fee is an option, not an absolute."

Update 2:31 p.m. - Verizon says it will drop the fee.

A hero's last day

Posted at 10:50 AM on December 30, 2011 by Bob Collins (16 Comments)
Filed under: Economy, Health

In the four years of writing NewsCut, I've only encountered a conflict of interest once. It was this post -- the story of a couple forced into homelessness because of a health crisis. They were my wife's "clients." She's a "health care navigator" for an innovative program called the East Metro Crisis Stabilization Program, founded by HealthPartners and Regions Hospital in 2002 "to address the unmet needs of adults who experience a mental health crisis."

My wife, Carolie, and the people who work in the program, were the answer to the prayers of the most desperate people among us, people who were in no position to navigate the byzantine world of human services and health care in Minnesota. Its goal was what everyone said they wanted: early intervention and help to prevent high costs later.

For years, she's come home with stories of the people she helped -- saved, really -- one at a time. In the morning, she'd pick up the homeless, mentally-ill teen who'd been sexually abused, and get her health care, food, and a home by nightfall, for example. The program team then focused on long-term help.

When she told her stories, I'd confide my inadequacy by saying, "I wrote a blog today."

When the bureaucrats slammed the doors in the face of people who needed a hand (and they did, often by ignoring the rights and rules they knew the downtrodden wouldn't know), she knew all the angles to open them again. She was the Radar O'Reilly for the helpless.

"I'm off to do battle with the forces of evil," she'd joke when she left the house each day.

Dakota, Ramsey, and Washington counties, the Department of Human Service, social service groups all joined the program. Other counties in the state wanted to know how she -- and they -- did it because it made so much sense, got help for the most vulnerable people few cared about, and saved money in the process.

Today, she went to work the way she always does, a little mischief in her heart, a plan to help people who need help, and a smile on her face, even though it's the last day she'll have the job.

Officials pulled the plug on the program and the "mobile crisis team" and it closes it down today.

They are the heroes who walk among us, make a difference, and deserve a few minutes of recognition for the work they did in relative obscurity.

They're the people who gave a damn about someone other than themselves.

Grocery shopping like a man

Posted at 11:24 AM on December 27, 2011 by Bob Collins (10 Comments)
Filed under: Economy

Men are taking over grocery stores.

The Chicago Tribune today reports on a movement to make it easier for men, now that surveys suggest they're doing more grocery shopping. The paper cites surveys showing 31 percent of men are the principal grocery shopper now, more than double what it was in 1985.

So merchandisers, like Proctor & Gamble, are creating "man aisles."

The man aisle puts all men's products, including P&G competitors, in one place, with shelf displays and even small TV screens to guide men to the appropriate skin-care items. Jones said the tests have gone well, with men spending more time in the aisles and, ultimately, more money.

On the food side, Barry Calpino, vice president of breakthrough innovation at Kraft Foods, said the company selected several products to market to men in 2011, with solid results. The Northfield-based company developed, packaged and marketed MiO, bottles of liquid flavor droplets to make water more enticing.

"Guys, when it comes to shopping and cooking, they love to customize and add their own personal touch," Calpino said, adding that the interest also extends to beverages.

Bottles of flavored droplets to make water "more enticing?" Guys!

Apparently, men simply shop differently -- more slowly, less organized.

The mindset has been that she shops, she really knows every inch of the store, she is really organized, has a list, is in a huge hurry," Calpino said. "We talk to a lot of these millennial guys about shopping, and the biggest headline is they're not as structured, not as hurried, much more experimental, more adventurous."

Men are more likely to buy on impulse, one expert says, because. "they have a little brighter outlook on the economy and their finances..."

That's a somewhat surprising analysis given that the paper says one of the reasons more men are grocery shopping these days is because they've lost their jobs and have more time to do so.

The $180 sneakers

Posted at 2:41 PM on December 23, 2011 by Bob Collins
Filed under: Economy

Today's news story that indicates some people have more money to spend than we've been led to believe.

The "attitude gap" and unemployment

Posted at 12:16 PM on December 16, 2011 by Molly Bloom (4 Comments)
Filed under: Economy

When he hears discussion in the news of long-term unemployment, Paul Jensen grows frustrated. He owns Jensales, a small business a few miles outside Albert Lea in southern Minnesota. The business prints and sells technical manuals -- and it does commercial printing as well. Jensen also owns the local newspaper, The Alden Advance. He currently employs 12 people and has two more openings he's trying to fill: a bookkeeper and a printing assistant. The problem is he can't find anyone.

These aren't entry-level jobs, but they don't require a lot of experience either. It's these mid-level jobs that he's found particularly hard to fill. He's worked with placement agencies and the Minnesota Workforce Center, and he's posted ads in the newspapers to no avail.

The root of the problem, as he sees it, is both a skills gap and an attitude gap. Jensen's seen the skill gap addressed in discussions of unemployment in the media and among employers, but he wants to see community colleges and workforce centers react more quickly to the problem. He doesn't expect people to have all the skills necessary to do the job. All he's looking for is a base level of knowledge that he can build on with on-the-job training.

The more worrying problem to Jensen, however, is what he calls "the attitude gap." Jensen says, "People come in wanting the same job they had in 2008. The fact is, those jobs are gone."

As a small business owner, Jensen can't afford to offer health benefits. He tries to compensate employees in other ways, by allowing flexibility with family commitments and allowing them to work from home. He points to the fact that over half of his employees have worked for him for more than 10 years as a sign that they are satisfied.

Jensen also sees an unwillingness to move to a smaller town like Albert Lea. "People aren't thinking outside the bubble. But living down here is cheap, schools are good and there's almost no crime."

And he says the problem is not just here in Minnesota. He's a commanding officer of a naval reserve unit out of San Diego, made up of 150 people from across the country. He's seen many of them struggle with job loss and several of them have that same "attitude gap." One of the men in his unit had been unemployed for two years but had turned down a number of jobs.

"It's frustrating. At a certain point you have to accept the fact that the jobs are different and you can't have the same job you had a few years ago. And you can't be so specialized. You have to do a little of everything."

If you're an employer, what are you seeing? Have you seen a skill or attitude gap?

To look at it from the employee side, check out this map that my colleague Paul Tosto put together yesterday. We asked people in the Public Insight Network who have dealt with unemployment to tell us about their search for work in this economy and what they've learned. Many of the people who responded did indeed take jobs that were not the same as the ones they had in 2008, some even taking significant pay cuts in order to find work.

View How's it going in Minnesota's job market? in a full screen map

Dismantling Occupy

Posted at 9:27 AM on December 10, 2011 by Bob Collins (11 Comments)
Filed under: Economy

Of all the cities where officials have dismantled the Occupy protesters, Boston may be the most symbolic, it being the home of the Freedom Trail and the place where patriots took a stand against a system they considered unjust.

But irony wasn't much of a concern when the cops moved in this morning, after informing the media they'd be allowed to watch.

As the Boston Globe tells it...

As police entered the site, they forced most members of the media to stand on the sidewalk on Atlantic Avenue, on the outskirts of Dewey Square. A line of about a dozen uniformed officers stood between them and the square, where at least 46 people were arrested.

Boston Police Superintendent William Evans said this was done so members of the media wouldn't interfere with the operation.

If there's one thing that the police around the country have discovered in the Occupy protests, it's that letting people see what's going on -- peaceful or not -- is not in their best interests.

What did the Occupy protests accomplish? Nothing, a Globe columnist contends:

The Occupiers, and many in the media, will argue that at a minimum they provoked discussion about the concentration of wealth in the hands of a few and the decline of the middle class. I'm not sure that's correct. The debate was already under way. Democrats have been harping on tax cuts for the wealthy over the last couple of years. Occupy was more a consequence of that discussion than its provocateur.

But whether one gives the Occupiers credit for the conversation or not, it's hard to see how they've played any role in figuring out a solution. The principal impact of the Occupiers' leaderless, agenda-free movement was pretty much to persuade everyone else that leaderless, agenda-free movements don't work. The Tea Party activists, with whom the Occupiers are often compared, turned their anger into political action. But much of the rhetoric from the Occupiers specifically rejected participation in voting and politics, leaving one puzzled as to how anything meaningful was to be accomplished.

The columnist complained the protests were making it impossible for anyone else to use the park. After the raids this morning, police erected metal barricades around the park.

Fracking pollutes, EPA discovers

Posted at 2:33 PM on December 8, 2011 by Bob Collins (11 Comments)
Filed under: Economy, Energy

An announcement from the Environmental Protection Agency could mortally wound the drilling practice known as 'fracking."

The EPA says it has proven that groundwater in Wyoming was polluted with chemicals injected into the ground to release oil and gas.

The draft report counters the claims by the mining industry that fracking does not pollute groundwater, the CBC reported today:

As part of the investigation, the EPA drilled two deep monitoring wells in the local aquifer and found synthetic chemicals, like glycols and alcohols consistent with gas production and hydraulic fracturing fluids. It also found benzene concentrations well above Safe Drinking Water Act standards and high methane levels in the deep wells.

The EPA also sampled drinking water from area wells and found chemicals consistent with migrations from areas of gas production in the drinking water, but stll below established health and safety levels. Nevertheless, health officials advised residents not to drink their water or use it for cooking.

"Given the area's complex geology and the proximity of drinking water wells to ground water contamination, EPA is concerned about the movement of contaminants within the aquifer and the safety of drinking water wells over time," said the draft report on the investigation released on Thursday.

This, of course, will not surprise groups in North Dakota (and elsewhere), who have battled frac operations...

In Texas, some well owners e don't need the EPA to tell them what they already know. They say when a frac mining operation split into a gas deposit, their water became flammable.

But the process also has increased domestic oil production and provided thousands of jobs, especially in North Dakota. In Duluth last week, a local newspaper heralded the process as a boost to the shipping industry.

And there's the battle. In one corner: damage to water and the environment. In the other corner: jobs.

The power of the penny

Posted at 4:06 PM on December 2, 2011 by Bob Collins (2 Comments)
Filed under: Economy

If we got rid of pennies, what would we put on our bedroom bureaus to replace the old milk bottle full of pennies?

These are the many questions that are surfacing as this video, posted this week, zips around the Internet. Another: How will we raise sales taxes -- as we have for the arts, outdoors, gasoline, and maybe the Vikings -- if we can't raise them by an amount that provides a round-up to the nickel? That would raise all sales taxes to at least a dime.

Here's another question: What would happen to fundraising ideas like the one? In Peterborough, Ontario, a kid started raising money for a Christmas charity. Noah Leslie only asked for pennies "because it's the least you can ask for." Today, he announced he's raised $1,229.36 in pennies, which a bank is matching.

The same thing happened, more or less, over in New Richmond. Kids in a middle school last month held a "penny war," raising about $700 for a food pantry:

The rules were: Each homeroom competed against other homerooms in the same grade. All silver and bills counted as negative toward their totals and pennies were counted as positive. The team with the highest positive amount (or closest to zero if they were all negative) was the winning homeroom, explained NRMS physical education teacher and Student Council co-advisor Karen Stellrecht.

The teacher said she wanted to teach the young people that every penny counts.

The 'processing fee' money grab

Posted at 1:48 PM on December 2, 2011 by Bob Collins (7 Comments)
Filed under: Economy

It's a typical result of a big class action settlement. By the time the damaged parties get compensated, there's not much money left.

Ticketmaster announced today it's giving $1.50 refunds to people who ordered tickets from the service between Oct. 21, 1999 and Oct. 19, 2011.

Business Insider reports the settlement of a class action suit comes because Ticketmaster did not tell anyone that they make a profit off "processing fees." In other words, it wasn't really a "fee," it was just a money grab.

The settlement doesn't ban Ticketmaster from doing this in the future, it just has to say on its website that it's doing it. People will also get an additional $5 if they used "expedited delivery" because Ticketmaster was apparently adding a profit margin to the actual cost of UPS delivery, too.

Coincidentally, tickets for next March's Buddy Guy concert in Minneapolis went on sale this afternoon. Here's the breakdown of what people are forced to pay on a typical Ticketmaster order:

Ticket price: $54.50
Facility charge: $4.00
Convenience charge: $12.55
Taxes: $1.36
Order processing fee: $7.21

So what good did the lawsuit against Ticketmaster do? This line in the story answers the question:

Also, the Counsel attorneys plan to ask for an award of up to $16,500,000 in attorneys' fees and expenses, as well as $20,000 to the two plaintiffs who brought forward the class action in the first place.

103-year old remains in home; officials refuse foreclosure orders

Posted at 1:44 PM on November 30, 2011 by Bob Collins (2 Comments)
Filed under: Economy

There's no limit, apparently, to who banks will foreclose upon, but at least in Atlanta, there's a limit for the people who actually have to do the dirty work.

A 103-year old woman was allowed to stay in her home, after the movers and the sheriff's deputies refused to carry her out.

Life in a shipping container

Posted at 11:36 AM on November 30, 2011 by Bob Collins (4 Comments)
Filed under: Economy

We were driving home from Aitkin last Friday afternoon and spotted a "home" on Mille Lacs -- I think it was in the Garrison area -- made of a shipping container. Maybe they're at the front of a parade.

Today, for example, Fair Companies reports on a single mother in California who didn't want to add a mortgage to her student loan debt. She was offered a shipping container for free, and made a home out of it.

Good luck trying the idea in most communities in Minnesota, though. It'd be against many local zoning laws.

Can retail survive in Saint Paul?

Posted at 12:32 PM on November 28, 2011 by Bob Collins (11 Comments)
Filed under: Economy

If you ever have an urge to get away from the crowd in downtown St. Paul, there are fewer places with more solitude than Macy's. Since it's days as a stripped-down Dayton's, to Marshall Field's, to Macy's, it's always been a little bit sad to stroll through downtown's last department store.

The Pioneer Press reports today that store executives say the store is making money, which is hard to believe given how few people seem to shop there. Still, it's hard to find people who think the store will remain open after its obligation to do so expires at the end of next year.

"I think the handwriting is pretty much on the wall for the St. Paul store," David Brennan, co-director of the Institute for Retailing Excellence at the University of St. Thomas, told the newspaper.

Macy's has to stay open until next December in order to satisfy the terms of a city subsidy in 2001 to revamp what was then Dayton's. Many people think it's the only reason the store is still open at all. Light-rail construction has made it impossible to drive near the area, even if people wanted to, which they clearly don't.

Other plans for retail downtown have stalled badly. The plan for the Penfield, a large condo project around the old police station, were downsized and nothing has happened on the site. In 2008, Lund's announced it would open a grocery store at the project with construction scheduled to start in 2009. It never happened. The site looks pretty much like what it looked like three years ago. I took this picture three years ago Thursday.

The Lowertown section of the city was just getting vibrant -- and to a degree, still is -- when light-rail construction started last year.

But even so, downtown Saint Paul remains the Bermuda Triangle of retail.

Show me your property tax bill

Posted at 1:35 PM on November 18, 2011 by Bob Collins (31 Comments)
Filed under: Economy

If I said my property taxes went up $75, would that be a lot? What if I said they went up 3 percent?

My property tax statement came in the mail yesterday and it shows they're going up $75, or 3 percent. To me, 3 percent sounds worse than $75, which, of course is only $6.25 a month. I probably can swing it.

In a story about Floodwood earlier this week, we noted that property taxes on one business have gone up 36 percent the last 10 years. Is that a lot? It's hard to say without actual numbers. For example, if the typical tax bill was $1,500 a year, that's an average increase of about $57 a year. Is that out of line? Inflation alone would have increased that $37 a year.

Every year, I invite people to add their particulars in the comments section below. How much -- in actual dollars -- is your property tax bill rising -- or falling?

Also, the Public Insight Network is gathering data on the subject here.

Minnesota sells the good china

Posted at 1:38 PM on November 17, 2011 by Bob Collins (6 Comments)
Filed under: Economy, Politics

As part of the quick-fix solution to Minnesota's budget shortfall, lawmakers last spring decided to sell the state's tobacco settlement -- the windfall it made from its lawsuit against the tobacco industry in 1998 -- in the form of bonds. The state has now sold its windfall.

Basically, the state is playing the part of the people yelling out the window.

Anytime you sell future earnings, you're going to lose in the long run. The companies that bought the "bonds" have agreed to give the state a pile of cash now, in exchange for the state giving them two piles of cash later. The state will apply $640 million of the sale to erasing part of the state's budget deficit. For that, it will pay over $1.2 billion over 20 years, MPR's Tom Scheck reports.

Almost from the time the tobacco case was settled, politicians have fought over how the money would be used. Originally, Gov. Ventura and DFLers wanted to set up a public health endowment with $1 billion. The Republicans wanted to give it to taxpayers with a one-time tax cut.

The payments were to come from the tobacco companies into perpetuity and go into the state's General Fund. The first payment was about $100 million. By halfway through the last decade, it was estimated to be twice that. The state got about $169 million in 2011.

There were also six one-time payments between September 1998 and January 2003. They were to go to two endowment funds and one legislative account. They funded the Tobacco Use Prevention and Local Public Health Endowment, the Medical Education Endowment, and an Academic Health Center Account within the Medical Education Endowment, according to the House Research Department.

Over that time, adult smoking in Minnesota dropped from about 22 percent immediately after the tobacco settlement, to about 17% in 2007.

'Anywhere but Minot'

Posted at 1:48 PM on November 15, 2011 by Bob Collins (8 Comments)
Filed under: Economy

In western North Dakota, the oil boom is making a lot of people rich. It's also making it enticing to kick members of the military out of a place to live.

Minot has never been on the dance card of many people in the military. It's a missile base on a flat piece of prairie with a wicked wind chill. But at least the people who served in the Air Force could find a place to live there. What with the expanding oil boom and this year's Souris River flood, those days are over.

"It's a war zone," says Stacy Baldus, a native of Grand Meadow, Minnesota.

Next June, she and Lt. John Nordstrom will be married and be that much closer to putting Minot in the rear-view mirror. For now, however, they have no idea where they're going to live, nor how they can afford the good times in North Dakota on military pay.

Single people in the Air Force are not allowed to live on base and have to fend for themselves in the real estate market. Lt. Nordstrom was renting a small house for about $1,000 a month when the flood hit.

"His landlord was going to rebuild, the rent would be the same, and we'd finish up his stint," Ms. Baldus told me this afternoon. Then, with a FEMA loan to help rebuild, and the housing market tight, and an influx of oil patch workers, the owner decided he needed to make more money and raised the rent to nearly $2,000 a month. There's a lot of that going on in North Dakota.

"He was trying to be as nice as he could ," she says. "We didn't need anything fantastic; it's just a small house."

It's even worse to the west. In Williston, 125 miles away, a one-bedroom living area is going for $3,000 a month.

An Air Force lieutenant can't afford that kind of money. With living on the base off-limits for single people, and a waiting list for those who are married, many airmen are essentially homeless, she says.

"Many of the apartments in Minot are owned by real estate companies outside of North Dakota, and they have found an easy way to boost profits by exploiting the very real housing shortage," Lt. Nordstrom said in an e-mail this afternoon. "Many people on fixed incomes, such as retirees, teachers, and military personnel, cannot afford to stay in their place. The lack of any kind of protective legislation for these people is causing serious pain to those affected, and it finds its roots in the oil boom."

Lt. Nordsrom has been "bouncing between friends." for six months. "It's definitely been tough on a number of different people, those who live on base and weren't directly impacted by the flood, a lot of them have opened up homes to people," Stacy Baldus says. "Initially, it's an easy commitment to make, but it goes on."

"We can't sign up on the waiting list until two months before we're married, and then the wait is about a year and a half," Ms. Baldus said. "But we're going to be out of here in a year and a half."

It's a crisis, she says, and one that's going unnoticed in the boom times. "It's added a lot of stress. Minot's a little isolated. They just recently had a suicide on base, and this puts a lot of added strain. We get the national news, and we hear about all these wonderful opportunities in North Dakota, but not about the downside."

Black Friday is now 'black Thursday'

Posted at 1:20 PM on November 10, 2011 by Bob Collins (12 Comments)
Filed under: Economy

It's done. WalMart has killed Thanksgiving -- as expected. The giant retailer has responded to other stores following its lead by opening at midnight on the Friday after Thanksgiving, by announcing today it will open at 10 p.m. on Thanksgiving, the Pioneer Press reports.

Can't we all just make bagels?

Posted at 10:51 AM on November 4, 2011 by Bob Collins (6 Comments)
Filed under: Economy, Religion

In New York, Coney Island Bialys and Bagels, which Morris Rosenzweig, a Jewish immigrant from Poland founded in 1920, was about to go out of business.

Zafaryab Ali and Peerzada Shah first tasted bagels when they arrived from Pakistan 16 years ago.

The New York Daily News has the compelling story today of Ali and Shah's -- two Muslims -- effort to keep the place going, and keep it kosher.

"I felt I had to save this store," said Ali, 54, who worked for Rozenzweig's grandson Steve Ross for 11 years, making bagels and bialys by hand, committing to memory the recipes Rosenzweig brought over from the old country.

Ali, a married father of two young girls, said he quit five years ago to earn a bigger paycheck as a cabbie.

"I'm happy I can take care of this store, turn a profit and make customers happy," Ali said.

Ali and Shah said geopolitics that divide Muslims and Jews have no bearing on making 95-cent bagels and their flatter, oniony cousins, the bialys.

The Jewish Daily Forward, which first reported the story, had a fitting conclusion to it:

When asked about the patchwork of neighborhood ethnicities that makes possible the Muslim ownership of a landmark kosher Jewish bialys store, Ali said with a smile, "That's America."

(h/t: Ken Paulman)

America's disaster

Posted at 3:18 PM on November 3, 2011 by Bob Collins (5 Comments)
Filed under: Economy

The longer the economy remains a disaster, the more people may start wondering whether some of America's cities are anything but a lost cause and, if so, what does that mean?

In Highland Park, Michigan -- Detroit -- the city can't even pay its electric bill, anymore, so the city is turning off street lights.

"How can you darken any city?" the Associated Press quotes Victoria Dowdell asking as she stood in the halo of a light in her front yard. "I think that was a disgrace. She said the decision endangers everyone, especially people who have to walk around at night or catch the bus.

In 1980, the census counted 27,000 people living in Highland Park. By 2010, that number had fallen to 11,776.

The median household income is $18,700, compared with $48,700 statewide. And 42 percent of the city's residents live in poverty.

"It's pretty ghetto," Cassandra Cabil said from her front yard. Voices drift in the darkness from down the street, but the speakers can't be seen.

It was an auto city, of course, and nobody thinks the jobs are ever coming back.

Yesterday on Twitter, actor Denis Leary called attention to this documentary being made about Detroit.

BURN: One Year on the Frontlines of the Battle to Save Detroit (Kickstarter sneak peek) from BURN on Vimeo.

In Washington state, the governor is thinking about getting rid of school buses.

For the most part, it's not that dire -- yet -- in Minnesota, where MPR's Ground Level project has been documenting the cuts that cities are making: Foley, for example, is cutting police protection, Nowthen is about to decide whether to also give up all but emergency services, libraries are being closed, and businesses are closing and cutting back.

Street lights, cops, libraries, school buses. These were once the "core services" of government and their demise signals a new phase of deterioration.

The unanswered question is: Can it ever change or is this the new America in which we try to "save" only those whom we believe can be saved?

More shopping, less Thanksgiving

Posted at 11:45 AM on November 1, 2011 by Bob Collins (15 Comments)
Filed under: Economy

Just about every major retailer is going on "all in" now on opening at midnight on the Friday after Thanksgiving.

"People want to shop through the night," Martine Reardon, Macy's executive vice president of marketing told the Associated Press. She said the expanded hours were in response to customers' requests.

Really? People were asking to be able to go shopping at midnight? Were store employees begging to go to work at midnight, too?

Kohl's announced today it, too, will open at midnight. In a press release, company chairman Kevin Mansell said. "We are making shopping easy and even more convenient this holiday season." Just one question: What's convenient about shopping for slippers for Uncle Andy at 1 in the morning?

The next step in retailing seems obvious: Destroy Thanksgiving Day. Target, for example, will experiment with Thanksgiving Day openings in Denver, matching some of the other discount store competition.

That makes it less convenient to get the family together on one day of the year without having to be distracted by going to work or going shopping. But perhaps people aren't requesting that.

A day in the life of the harvest

Posted at 10:50 AM on October 25, 2011 by Bob Collins (9 Comments)
Filed under: Economy, Life

"Can you watch that gate and make sure none of the cows walks through?" Mena Kaehler asked as she drove by with a bucketloader full of silage for some of the heifers and bulls on her and her husband's 163-acre farm in St. Charles last week. It's a little after 7 a.m. -- morning chores time.

It was a reasonable request of two public radio city slickers -- me and photographer Jeff Thompson -- who were anxious to show our agricultural chops, minutes into spending the day with the Kaehlers in southeast Minnesota farm country.

While Thompson and I chatted at the gate, at least one heifer walked by us undetected and into the no-cow zone. The escapee was Miss Hoya Saxa, who was scheduled to be picked up in an hour or so by her new owner, having been sold at an online auction a few days ago for more than $24,000.

"No!" the anguished voice from the returning bucketloader shouted. Mena Kaehler recognized that the family's big payday was heading for the running of the bulls, and not needing to acknowledge that public radio city slickers make lousy gate guards.

It didn't take much for her to steer the bank account back to safer ground, and she didn't have to tell us the lesson we just learned: Every detail matters on the farm, and inattention can cost you plenty.

Mena and Ralph Kaehler are the fifth generation of Kaehlers working this farm, and with any luck, there'll be a sixth someday. One of their sons is working in New York, trying to get a bankroll started to buy a farm. The other is a student at Ridgewater College in Willmar. They hope to be partners one day.

(Ralph Kaehler leaves early for a work assignment at a farm in Mabel, MN. He asks his wife, Mena, to take a corn sample to the grain elevator to have its moisture content checked.)

But there's a rite of passage on the farm. "You don't come here to get into farming," Ralph Kaehler says. "You go somewhere else first, and then you come back." Ralph went to Colorado to get a Masters degree, where he met Mena, and came back to Minnesota to take over his part of the farm from his mother 20 years ago. His dad died in 1984.

You also go to college. All seven children of Kaehler's mother, Maxine, went to college. "I did it," she says proudly when I asked her how.

"We want to be able to give them this farm; we've told them that from day one," Mena says of her own sons. But, she adds, there's no family pressure to continue the farm.

It'll be a challenge if they do, though. The farm, on which the Kaehlers raise cattle, is small at 163 acres. "We wouldn't be able to farm 163 acres if Ralph didn't have an outside job, too," Mena says. Ralph is district sales manager for Quality Liquid Feeds.

There's little room for the expansion that keeps most farms in business by necessity. Cattle raised for breeding and beef need space, but pastureland is hard to come by these days in Minnesota.

Mena Kaehler brings a plate of cookies to her brother in law, Ed, who is harvesting corn on property he rents from the Kaehlers

It's harvest time, a chance to recalibrate the rhythm of rural Minnesota. Ralph's brother, Ed -- 12 years older -- has moved his combine onto Ralph and Mena's property. He rents the land from his brother to plant corn, and when he's done, the Kaehlers will graze their cattle on the corn flotsam over the winter.

"You have to treat this like a business, even though family is involved," Mena says. "And it is a business, but you still have to sit at the table at Thanksgiving."

"Ralph got a good deal," brother Ed says of the lease on the land from which he's pulling a season's worth of corn, sounding more business partner than brother.

"It's a good time to be a farmer and anyone who says different isn't telling the truth," he says while waiting for the combine to disgorge its pickings into a bin that a tractor will take to a semi parked nearby, and then take it to Ed's farm where it will be dried and stored until the price is right.

( From an office in his 1800's farmhouse, Ralph Kaehler sells cattle to the world and manages his feed business.)

These days, the price is right. Corn is selling for nearly $6 a bushel. But farmers are as concerned about its moisture content during harvest as the price it fetches. The summer dry spell has created fairly dry corn, which should minimize the amount of time and energy required to dry it.

On this day, a computer in the combine tells Ed the corn he's picking has 17 percent moisture content. The shipper at the river in Winona won't accept anything over 15 percent. The ethanol plant farther away will not only take corn with a higher moisture content, it'll pay a little more than "taking it to the river." But the river is closer.

Details.

From his perch in the combine at the top of a hill, Kaehler can see the past and, maybe, the future. He points out four or five neighboring farms and recites the number of dairy cows each raised at one time. Then he points out the farms that still have dairy cows. He points to one farm.

People are moving out here from St. Charles and buying farmhouses. "They just want their five acres," he says. He laments that he doesn't know half the people who live in the county, anymore.

He says every farm used to raise at least one pig. "Now, you can't find a pig in Winona County," he says. Apparently, the family pig is the agricultural canary in the coal mine.

He describes a litany of challenges to farmers of smaller operations. "It's not a fair playing field," he says. Monsanto sells seed to larger operations at a fraction of the price it'll sell to him and other small farms. When land comes on the market, it's snapped up for far more than a local farmer can afford to pay.

Cropland prices are about 20 percent higher this year from a year ago, according to the Federal Reserve Bank of Chicago. When the price of corn goes up in farm country, the price of everything else goes up, too.

"The owner of that property lives in Chicago," Ed Kaehler says, gesturing toward a neighboring field. "They can never make enough off it" considering the price paid, but with the differing tax laws, owners can write the difference off against other parts of their operations.

Ironically, those big operations might be his ticket to a nicer combine. This one -- 12 years old -- is reaching the end of its life. Government incentives and a big spike in the farm income have made it likely the bigger operations can afford the price of a new combine. That should lead to a glut of used combines for the smaller operation to buy.

It's big money on the farm these days. "How do you get into farming if you don't grow up on a farm?" I ask.

"You don't," Ed says.

It's a debatable point. Earlier, Ralph Kaehler said young people willing to "start at the bottom and work their way up" on a farm can advance to managing or owning one. But that, he acknowledges, isn't a strong suit for young people. Many employees of larger farm operations in Minnesota are recent immigrants.

Kaehler halts his combine; the semi is now full of corn and has to be taken to his farm 10 miles away. His cousin, Bob Larkin, has arrived from Redding, California to help bring in the harvest. While Kaehler waits, Larkin drives 10 miles to Eyota to unload the morning's bounty.

Larkin, a retired truck driver, returns to Minnesota in the spring to help Kaehler plant, and in the fall to help harvest. "I have the best of both worlds," he says. He avoids a Minnesota winter. While here, he spends a fair amount of time in the truck. If he's not hauling corn to the dryer at Ed's house, he's taking it to Winona, and waiting two hours to unload it. It takes seven minutes for the ubiquitous grain trucks to unload a full load of corn if all goes well.

On this day, things don't go well. An attachment on a tractor -- called a power take off -- snaps as it powers the auger, which carries the corn to a silo and dryer. Corn starts spilling everywhere.

"This is going to take longer than I thought," Ed says after also driving the 10 miles to answer Larkin's call for help. The harvest of 2011 grinds to a stop while he figures out what's causing the shear bolt on the attachment to snap repeatedly.

Back at the Kaehlers, Miss Hoya Saxa has been loaded into a trailer and is on her way to her new home. Ralph, back from a morning feed tank construction job in Mabel, MN., is trying to get a veterinarian to stop by for a round of vaccinations before a cattle show at the State Fairgrounds. But eight is too much for the vet to make time for the next day. He'll work out the details later.

(After lunch with his wife, 90-year-old mother, and a man who has worked for the family for 43 years, Ralph Kaehler stops to mail letters in the small town of Utica, Minnesota. Many small town Post Offices are closing, but Kaehler says everyone ends up in another town everyday anyway, so he doesn't think it'll cause big problems )

Kaehler is, unsurprisingly, as animated a booster of Minnesota agriculture as the state has. If there's a conflict between the types of farming done around the St. Charles area -- large, small, Amish, cattle, dairy, swine -- it doesn't show when he surveys the region.

He's clearly proud of the good times the industry is experiencing, but mindful that there's a yin and yang to agriculture. "It wasn't long ago I'd get up in the morning knowing I'd make less than the day before and there wasn't a damn thing I could do about it," he says while driving to the giant Daley Farm of Lewiston, a family-run farm with 1,500 cows, and a stack of employment applications on a counter in the office.

He points out the environmental benefits of the large-scale operation, answering criticism of the industry not yet stated. The family has spent $1.5 million on a new technology that reclaims the bedding sand from manure from four huge barns. The cows appear to be well pampered, and a younger generation of farmer seems well established.

(At the Daley Farm, cows stand on a moving platform while being milked. Computers monitor the health and production of the cow.)

The manure lagoons at the farm are being replaced by two large ponds of mostly-liquid fertilizer that will be injected into the cropland rather than spread by tossing it through the air, as is the practice at most farms.

At the dairy where the cows are milked for all but three hours a day, the harvest ended a little more than a week ago. But it's not shipped elsewhere. "It's a self-sustaining operation," Kaehler points out. Most of what the cows eat is grown on the property, which is picture tidy and oozes "professional."

Throughout the valley, there's a "newness" surrounding agriculture. Across from the Kaehlers, Twin Valley Ag Coop has opened a gleaming new grain elevator and farm services facility. Its owners -- farmers -- deemed the time right to move from downtown. In Utica, the old grain elevator with its traditional Purina Checkerboard Square sign has been replaced by a more modern facility. The farm implements dealer appears to be selling and the sheen on the valley proclaims that while the rest of the nation's economy tanks, this is agriculture's time.

Kaehler seems to know everybody in St. Charles, Lewiston, and nearby Utica, all stops during his day. He knows Fidel Castro, too, and may be the only person ever to upstage Jesse Ventura. During a trade mission, the then-governor played second fiddle to Kaehler and his family while negotiating to sell beef to Cuba.

Farming and politics are often joined at the hip. As darkness falls, lights of the combines dot the black fields along U.S. 14. Mena Kaehler is driving to Winona for a meeting of the Winona County Planning Commission, which is holding a public hearing on frac sand mining. Ralph is off to a Farm Bureau meeting.

Mena isn't planning to say anything at the hearing, but she's the chairperson of the Winona County Board of Commissioners and there's a fair chance she'll have to decide on a proposed moratorium in a matter of weeks.

By close to 10 p.m., the commission still has only tackled one of the three proposals when it takes a break. She notices commission members are stocking up on rations of Mountain Dew and figures it'll be a long night before the next early morning on the farms of Winona County, where the harvest doesn't sleep in.

Harvest fun

Posted at 7:56 AM on October 22, 2011 by Bob Collins (4 Comments)
Filed under: Economy

Bob Larkin, of Redding California, comes to Minnesota twice a year -- planting time and harvest time -- to help his cousin, Ed Kaehler of Eyota, MN. "I get the best of both worlds," he says, returning to California during Minnesota's winter to enjoy retirement.

He's unloading corn that his cousin just picked with the combine, but before it goes to market, it has to be dried. Each truck holds about 1,000 bushels of corn -- worth close to $6,000 on the grain market this week.

The roads of rural Minnesota are full of grain trucks this week; the fields are being transformed by combines before the winter comes.

It's a good time to be a farmer in Minnesota, so long as you've got a cousin to help, and don't mind working weekends.

I'll have a post about NewsCut's visit to the farms next week.

What money can buy at Christmas

Posted at 12:36 PM on October 18, 2011 by Bob Collins (1 Comments)
Filed under: Economy

At a time when 99% and 1% are feuding, this might not be the best time to make a big splash out of extravagant and wasteful wealth.

No matter, if you're Neiman Marcus, which unveiled its annual Christmas "catalog" today in Dallas.

John E. Koryl, president of Neiman Marcus Direct, tried to put a working class spin on the unveiling, pointing out half of the 600 items are under $250.

These are not among them:

His and her dancing fountains: When you spend $1 million on these, the store will done $10,000 to an organization that works to provide safe drinking water to people in developing countries.

For the job creator who has everything, this $20,000 weekend for two at a farm in upstate New York will help you plot your own garden. Too busy for a weekend. Just spend the day for only $9,500.

You and nine friends can jet -- of course it's a private jet -- to the International Flower Show. Cost: $420,000.

Apparently, this tent's interior is designed to look like the inside of the genie's bottle in the TV series, I Dream of Jeannie. Cost: $75,000.

For Wells Fargo, record profits not good enough

Posted at 10:35 AM on October 17, 2011 by Bob Collins (8 Comments)
Filed under: Economy

Wall Street is one tough taskmaster.

It is being characterized as "disappointed" in the earnings reported today by Wells Fargo bank and, as a result, the Dow industrials are dropping.

What did Wells Fargo do to warrant such scorn? It reported a $4.1 billion profit in the third quarter, a 21-percent increase over a year ago.

But while its profit increased, the amount of revenue the bank generates did not.

Still, more people are putting money in the bank than taking it out -- deposits are up 8 percent, and the total amount of "bad" loans dropped.

How can Wells Fargo increase its revenue? The company has dropped all of its reward programs for credit cards and is "testing" a monthly fee in some markets, mostly in the south.

What's good for banks and Wall Street isn't always so hot for customers.

Occupying prison

Posted at 10:39 AM on October 13, 2011 by Bob Collins
Filed under: Economy

Away from the bright lights surrounding protesters on Wall Street, Raj Rajaratnam continued his relative anonymity outside of the financial world, even though he is, as the Wall Street Journal said today, "the face of the biggest trading scandal in a generation."

He was sentenced today to 11 years in prison, although prosecutors want a near 20-year sentence for insider trading.

Federal prosecutors in Manhattan had accused Mr. Rajaratnam of persuading fellow hedge-fund traders, industry consultants and even corporate directors to provide him with confidential corporate information as he searched for an "edge" over the investing public. Prosecutors alleged Mr. Rajaratnam made profits or avoided losses of $72 million through his trading.

He got caught, but judging from this "debate" with financial insiders on CNBC today, he won't be the last to get rich illegally. Not with the assertion that insider trading is a "victimless crime." (Note the unusual spine displayed by a show host in this video.)

Why some 'job creators' don't get 'it'

Posted at 12:30 PM on October 12, 2011 by Bob Collins (28 Comments)
Filed under: Economy

I've been thinking a lot these days about the local hardware store that ran Home Depot out of town in Brattleboro, Vermont a few years ago. It couldn't compete in all of the areas where 'big" dominates, so it competed in a way "little" dominates -- friendly, customer service.

It's the sort of lesson that American business should have learned going into a recession and, obviously, some have. But good customer service remains a vanishing experience.

Over the weekend, I received a package I'd ordered from a big chain -- auger belts for the snowblower that bears the company's name. But inside were two engine pulleys, not rubber belts.

If you've ever ordered anything online, you know that you search for a part number, get a listing with pictures and then click "add to cart." It's pretty hard to mess it up, especially if (a) the page doesn't include engine pulleys and (b) you can spot the difference between an engine pulley and a rubber belt.

And yet, when the box was opened, there were the engine pulleys.

"There's no place in our system where that mistake could have been made," the customer service woman on the phone said when I called. "So you are responsible for the cost of sending them back."

It wasn't so much that she was so clearly wrong -- I've coded a web page or two in my day and I can tell you eight different ways an online ordering system could introduce errors -- it was the sweet voice that did little to mask the underlying derision. A sweet voice in customer serviceland acts like the word "alleged" in news stories about crime. It's not meant to indicate that maybe the guy didn't do it, it's meant to keep the lawyers out of the newsroom. But that's a story for another day.

I'm not much of a consumerist. I don't argue with customer service people. But I had a hard time hearing this one because next to her cubicle, a group of her colleagues were laughing and carrying on, perhaps regaling each other with their phony sweet voices while actually saying, "You should die."

"I can hardly hear you, could you please tell your colleagues to keep it down?" I said.

"No, sir," she said sweetly. "I can't do that."

Message received: "Your business doesn't mean anything near as much to me as me letting you know how much I dislike you and your engine pulley story." Allegedly.

After telling me it would cost $7 to send the package back, she offered to send me the items I actually ordered. "It will be $32. $48 after the shipping charges," she said.

I let it go. It would be pointless to ask why sending a package back to the company (a package of engine pulleys weighs more than a package of rubber belts) would be half the cost of sending a package to me. And, besides, by then I didn't want to give this company any more business.

A consumer today has but one option during times like this. Shop elsewhere and tell Twitter. So I did, and yesterday a person in the company's executive offices called and offered me a $40 gift certificate for my trouble.

Continue reading "Why some 'job creators' don't get 'it'"

A city goes toes up

Posted at 11:27 AM on October 12, 2011 by Bob Collins (1 Comments)
Filed under: Economy, Politics

You don't often see a capital city of a state declare bankruptcy. I'm not sure we've ever seen it before.

We've seen it now, a possible indication of the growing dysfunction of state and local governments.

Harrisburg, Pennsylvania is filing bankruptcy papers today, owing to a project to renovate a city incinerator.

The move also will be a test of who pays when a city goes belly up: The institutions who lent the money or the people who work for the city?

"The people who lent us money were in the business of lending money; they knew the risk," Harrisburg controller Dan Miller told CNBC, sounding unapologetic about becoming a municipal deadbeat.

"What have you done to the unions?" CNBC's Jim Cramer asked.

"We haven't done anything," Miller said. "In bankruptcy we'll have leverage. Our prior mayor signed five-year extensions just before he left office. They're supposed to get 4 to 5 percent raises a year."

It's been a long-time coming. The city has been trying to sell assets -- parking garages, for example -- to pay the bills, but now the state is threatening to take over the city.

On a wider scale, the move signals worry that municipal bonds, the engine that finances local government projects, may not be much of a safe bet anymore.

The revolution will be Tumbld

Posted at 1:16 PM on October 11, 2011 by Bob Collins (18 Comments)
Filed under: Economy

There is now an organized anti-Occupy Wall Street social networking effort. "We Are the 53%" is a tumblr blog

The site was started by Erick Erickson, and refers to studies showing the number of people who do not pay federal income tax.

The Occupy groups have a tumblr blog too: We are the 99%:

This is how we discuss issues in 2011.

Economic signs

Posted at 3:21 PM on October 4, 2011 by Bob Collins (2 Comments)
Filed under: Economy

We're always looking for economic signs and signals in this business. Here are some of the favorites we've spotted from the Occupy Wall Street protest in the last two days.

(via Flickr. David Shankbone)

(Emmanuel Dunand/Getty Images)

The economy in headlines

Posted at 1:07 PM on October 3, 2011 by Bob Collins (2 Comments)
Filed under: Economy

As usual, figuring out the state of the economy and where it's heading is a matter of interpretation. Here are three stories to help:

Survey suggests region's economy continues to grow (AP)

Layoffs coming to Minn. factories, survey predicts (MPR)

Reports show Iowa, Midwest economies could face challenges (Des Moines Register)

By the way, those headlines are all describing the same survey.

The death of the debit card?

Posted at 2:07 PM on September 29, 2011 by Bob Collins (25 Comments)
Filed under: Economy

Unlike when I first moved to the state almost 20 years ago, you don't see many people with their checkbooks in hand at the checkout line anymore, thanks to the debit/ATM card. Minnesota, more than any other place I'd visited, had a love affair with the checkbook.

Cup of coffee? Hang on while I write this check. Minnesotans seemed to write checks for everything.

That all ended when the debit/credit card replaced it, but are the heady days of checkbooks in the back pocket about to return?

Bank of America announced today that it's going to start charging $5 a month for its customers who use debit cards.

The announcement coincides with the October 1 start of the Dodd-Frank Act's Durbin amendment, which caps fees banks can charge merchants for processing debit cards to 21 cents per transaction, potentially costing banks billions of dollars in fee income.

Plug a leak somewhere, it'll sprout somewhere else. There's a reason why banks have the biggest buildings in most cities.

Wells Fargo has been testing a $3-a-month fee in some states to see if people will rebel against it. The test markets do not include Minnesota, however.

It's not just the banks that are causing a big jump in plastic. VISA and Mastercard are planning to sharply raise the debit card transaction fees for small purchases for merchants, according to an analyst note today.

As the Associated Press reported, it's going to change the way you pay for things...

Such a hike could pose problems for the operators of self-service kiosks like DVD rentals, which would have to deal with a big increase without alienating customers, the analyst said. It also risks alienating important merchants like Starbucks Corp. that rely on small purchases, he said. "These operators will be violently opposed to this price change," and could slow down their investments in new technology needed to accept mobile payments in response, Janney Capital Markets analyst Thomas McCrohan said. It will also "reinforce merchants' view that the networks are not friends of merchants."

And the increased costs of transactions undoubtedly will be passed along to consumers. Will gas stations again have a two-tiered pricing system -- one for debit/credit and one for cash? Will your $1.84 coffee go to $2?

And, most important, are you the consumer going to accept the cost of debit cards or change the way you pay for things? Will cash make a comeback? Is the checkbook still alive?

Well?

Word of job openings causes crush of applicants

Posted at 10:57 AM on September 28, 2011 by Bob Collins (1 Comments)
Filed under: Economy

We got another on-the-street glimpse of what a dying economy looks like today.

In Louisville, General Electric's Appliances & Lighting unit had 480 openings and planned to begin taking applications today, calculating that it would probably have enough online applications by Friday to find 480 people to hire for a planned expansion in February.

It shut down the application process today after 1 hour when it amassed 6,000 applications.

The jobs will pay about $13 an hour.

What's spooked Wall Street?

Posted at 12:40 PM on September 22, 2011 by Bob Collins (6 Comments)
Filed under: Economy

The word "panic" was used generously today to describe a big sell-off on Wall St. By the time I made it to the website to view what that meant, the Dow was already down about 300 points. Bad, indeed, but certainly less than I expected when I heard the "p" word.

Matt Nesto of Yahoo Finance noticed it, too:

Three little words within a six paragraph statement released yesterday afternoon by the Federal Reserve have global markets in panic mode. The key phrase "significant downside risks" used by the Fed is an observation that in and of itself is not breaking news. Aside from the forecasters at the White House, no one was expecting an optimistic view on economic growth.

The same could be said for the Fed acknowledging "strains in global financial markets." Again - who hasn't noticed that Europe has some issues?

I am not trying to trivialize this sell-off, or suggest anything other than (my longstanding) angst for the US and global economies. I am trying to draw a line between selling and panicking. When basically every market and asset class in the world drops 3% to 10% (with exception to Treasuries and the US dollar), it suggests that something major just caught the market by surprise.

The Dow, as I write this, is down 419 points. I'm ruined. Worst it's ever been. Panic, indeed. The Dow stands at 10,697.69. You'd have to go all the way back to August 10 to find a lower point.

If it closes that low, it will be the lowest the Dow has closed since one year ago tomorrow, when the recovery seemed to be holding, things were looking up, and our cups seemed half full.

It's the movies, stupid

Posted at 10:36 AM on September 19, 2011 by Bob Collins (25 Comments)
Filed under: Economy

Not having a masters -- or anything else -- in business, it's hard for me to see the wisdom of the announcement that Netflix is separating itself into two companies -- one that will mail you DVDs, and one that will sell you streaming video. Still, one easily gets the feeling we're watching how a CEO can take a company and drive it into the ground.

Reed Hastings, the co-founder of Netflix, must've had that feeling too, because his announcement that Qwikster will now handle DVD mailing as a separate company started this way...

I messed up. I owe everyone an explanation.

"It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology. I'll try to explain how this happened.

Over the summer, Hastings had announced a huge price increase for Netflix (the DVD Netflix, I mean, Qwikster. Or whatever), which caused people to drop the DVD portion and stay with streaming, a service that has a much smaller film library. The stock plunged.

In his apology today, Hastings announced his company's -- companies -- new direction:

Continue reading "It's the movies, stupid"

Thirty thousand people pay for bank's sins

Posted at 11:00 AM on September 12, 2011 by Bob Collins (1 Comments)
Filed under: Economy

(Source: Mother Jones)

It was all so clinical. Just like that, 30,000 jobs were wiped away from Bank of America today when it vowed to save about $5 billion a year. If you're "doing the numbers," that's about $167,000 saved for every job eliminated.

The bad news, which was anticipated, was delivered with typical corporate efficiency:

The first result of New BAC was the recently announced management reorganization, removing a layer of management and streamlining the company by aligning its businesses with the customer groups.

This reorganization follows on work that started in January 2010. The company continues to sell non-core business units and assets that don't support its strategy, thereby strengthening the balance sheet, and improving capital and liquidity.

One of the people losing their job, however, is not Ken Lewis. He already has, largely because he thought it would be a swell idea if Bank of America bought Countrywide Financial back in early 2008 for $4 billion. It's been a huge money-loser ever since.

When he was forced out some months later, he walked away with an $83 million "goodbye package" from the bank.

Somewhere, there's a person wondering how they're going to pay the mortgage, send the kids to college, and put food on the table when the unemployment checks run out.

That person is not named Ken Lewis.

The search for big ideas

Posted at 1:23 PM on September 8, 2011 by Bob Collins (6 Comments)
Filed under: Economy, Politics

Mike Dukakis is firing back at Gov. Rick Perry for his jab at Mitt Romney last night.

Perhaps you remember the moment:

Former Gov. Dukakis tells the Boston Globe "All I know is that Perry was nice enough to compare my economic record with Romney's. But then, it would be very difficult not to do better than Romney's."

The reality? Politicians take too much credit -- and dish too much blame -- for things.

The early 1980s were a great time for Dukakis' home state but not because of anything Dukakis did. It was more the ebb and flow of an economy.

True, the state had lost lots of jobs in the '60s and '70s as the state's textile mills moved to the Carolinas.

But the explosion in jobs during the "Masschusetts Miracle," as it was called, had more to do with luck. Dukakis and other politicians rode the coattails of some small companies that struck it big with a nation entering the computer age. Digital Equipment, Apollo, Data General, Lotus Wang Labs, Prime Computer, and Polaroid were the big employers of the time.

The unemployment rate in Massachusetts then was 2.7%

Why those companies were there in the first place, however, offers a more instructional view of the economy -- and how jobs are created (rather than stolen from somewhere else) -- than punch lines at political debates attest.

The answer: That's where MIT was. And Harvard. That's where the smart people were. If they'd been in Texas, maybe the companies would've been located in Texas, too.

Today, however, only four companies in the top 10 list of employers in the state have anything to do with technology. The rest are mostly headquarters of retailers who provide low-level wages -- TJ Maxx (1) Staples (#2, that's Romney's company), BJ's Wholesale.

There is one health-care industry in the list, spawned, perhaps, by the Boston-area's hospital industry.

How much did a governor have to do with any of that? Not much, really.

Texas at the moment is hot, and part of it may have to do with political policies. Low housing prices and low taxes have encouraged companies to move there. Minnesota, for example, lost a fair number of high-paying railroad jobs when Burlington Northern merged with Santa Fe and everything moved south.

But that's not really creating jobs; that's moving jobs and while that distinction might be downplayed at the gubernatorial level, it can't be ignored at the presidential level. Taking a job from Minnesota, for example, and putting it in Texas hasn't created a job.

Lost in the assessment of the economy from the 1980s, is that its success depended on smart people with big ideas.

To the extent we're running short of jobs right now, perhaps it's because we're tapped out on big ideas.

Anybody got one?

Are we making 'bad' worse?

Posted at 9:02 AM on August 30, 2011 by Bob Collins (4 Comments)
Filed under: Economy, Media

"That's really incredible," a CNBC anchor said this morning, seconds after the Conference Board reported that consumer confidence dropped to its lowest level since April 2009.

Incredible? Not really. People are influenced by reality and also the perception of reality. They may have the same income they had last month. They may have the same jobs. They may have even been able to sock away a few dollars. But if you keep up a steady drumbeat of, "things are getting worse and we may be heading for another perception," how reasonable is it to expect people not to lose confidence?

Clearly, fear is not the only thing we have to fear. But fear plays a big part in increasing worry. And worry is what makes people stop spending and people not spending is what creates recessions and recessions are what gives people more fear, which increases worry, which makes people..... well, you get the picture, right?

"A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade. Consumers' assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.

Those expecting business conditions to improve over the next six months decreased to 11.8 percent from 17.9 percent, while those expecting business conditions to worsen surged to 24.6 percent from 16.1 percent, the Conference Board said. Those anticipating more jobs in the months ahead decreased to 11.4 percent from 16.9 percent, while those expecting fewer jobs increased to 31.5 percent from 22.2 percent. The proportion of consumers anticipating an increase in their incomes declined to 14.3 percent from 15.9 percent.

But the people surveyed aren't economists. It's regular consumers. And what those consumers think about the future makes up 60 percent of the survey results.Their view of the jobs outlook depends on what the people they listen to say is the outlook on jobs.

Sometimes those are the TV and radio business reporters. Sometimes it's the presidential and congressional candidates who point out how horrible things are and how worse they're going to get if you don't elect them a year from now.

More often than not, we think what we're told we should think. So the emotional component of a country's economy certainly presents a problem for politicians and reporters -- how to portray reality without contributing to a worse reality.

So far, few have mastered it.

American Public Media's Marketplace is taking a stab at it with it's new "Index," which purports to quantify the state of things on a daily basis via point system. It's unclear -- at least to me -- whether that's a step in the right direction of balanced economic assessment, or a step toward making the emotional component of the economy even worse.

What do you think?

Fed provided $1.2 trillion in loans to big banks

Posted at 10:29 AM on August 22, 2011 by Michael Olson (5 Comments)
Filed under: Economy

"The U.S. Federal Reserve mounted an unprecedented campaign to head off a depression by providing as much as $1.2 trillion in public money to banks and other companies from August 2007 through April 2010," reports Bloomberg News.

The staggering amount far surpasses the $160 billion given in public bailouts to large banks after the 2008 housing market collapse.

How much is 1.2 trillion?

Denominated in $1 bills, the $1.2 trillion would fill 539 Olympic-size swimming pools.

To wake or not to wake

Posted at 11:45 AM on August 15, 2011 by Michael Olson
Filed under: Economy

Elected leaders in Sterns County are being asked to enact no-wake restrictions as high water swamps area lakes.

A group of lakeshore property owners grind their teeth every time they see a boat speed by their property and the high water waves slowly erode their land. Property owners have erected handmade "no-wake" signs that plead with boaters to slowdown without much success. Now they are heading to the county to request that wakes be curtailed until the water recedes.

The St Cloud Times reports that the request is being met with opposition from resort owners who rely on tourists that like to feel the breeze blow in their hair and drag their kids on tubes behind speed boats.

Jim DeRose owns Riverside Resort on Cedar Island Lake near Richmond. He said when Stearns County adopted a temporary no-wake zone for five days in July, some customers canceled their reservations.

DeRose said many of his customers look forward to boating, water skiing and tubing.

"They're not going to book a vacation if there's a chance they can't use their boat," DeRose said. That has an economic impact on the whole county, he said.

The paper points out that it's unclear if a no-wake zone is enacted if it would include all area lakes or just those hardest hit by flooding.

Bootstraps for breakfast

Posted at 8:49 AM on August 15, 2011 by Michael Olson (3 Comments)
Filed under: Economy

Prime Minister David Cameron echoed the sentiment of many in the United Kingdom when he put the riots that spread across Britain in context.

"This has been a wake-up call for our country," he declared.

Cameron continued, "Social problems that have been festering for decades have exploded in our face. ... Do we have the determination to confront the slow-motion moral collapse that has taken place in parts of our country these past few generations?"

Cameron said senior ministers of his 2-year-old coalition government would spend the next few weeks formulating new policies designed to reverse what he described as a country being dragged down by many citizens' laziness, irresponsibility and selfishness. He said "the responsible majority" was demanding that the government build "a stronger society." (AP)

The BBC reports that Cameron's approach is expected to mirror that which was pursued in Los Angeles after the 1992 riots post-Rodney King verdict.

The LAPD learned tactics like bringing in large numbers of police officers, and the national guard, making a huge number of arrests to show their strength.

But the police also went through a long period of soul-searching after the riots.

"Across the board we made changes in our police department, adding more officers - more women, more minorities, a lot more Hispanic officers to match the community make up," said the LAPD's Commander Smith.

PR battle for the face of a strike

Posted at 2:35 PM on August 12, 2011 by Bob Collins (2 Comments)
Filed under: Economy, Marketing and advertising

A Fargo marketing firm this afternoon posted this video promoting the people at American Crystal Sugar company.

Yesterday, many of those faces may have been standing on the bridge that separates Fargo from Moorhead.

Workday Minnesota has posted its own "faces" of the company's workers, 1,300 of whom have been locked out of the Moorhead plant since workers rejected a contract offer that they say increases health care costs and makes it easier for the company to hire subcontractors instead of union workers.

What do the faces of stock traders tell us?

Posted at 12:43 PM on August 10, 2011 by Bob Collins (1 Comments)
Filed under: Economy

Until the nation's news media figures out how to photographically depict the effect of the stock market on the majority of people -- and it must have an effect; it's been leading the news for several days -- we'll have to live with the daily front page photograph of the the faces of stock traders.

Once we know the outcome, it's easy to see the "this can't be happening!" look on the face of the trader.

Or is it?

Pick the stock traders below who were working on days the market dropped. The answer is below "the fold." You can click on the image for a slightly bigger version.

Continue reading "What do the faces of stock traders tell us?"

How to embarrass a looter

Posted at 3:04 PM on August 9, 2011 by Michael Olson
Filed under: Disasters, Economy

Looters in London have been going strong for days. Police presence is being stepped up. Police also are seeking public assistance in identifying alleged looters in images captured by surveillance cameras. Another, seemingly grassroots, strategy is being deployed: sarcasm.

Enter Photoshoplooter, a Tumblr blog of crowd-sourced images edited to make looters look even more ridiculous.

Decision time for little cogs in the big global economic machine?

Posted at 12:04 PM on August 9, 2011 by Jon Gordon
Filed under: Economy

From Jeff Jones of APM's Public Insight Network:

There's a sense this week that everything's changing again with the economy, and it's either time to make a big decision or put off that big decision.

MPR's Public Insight Network is hearing from people reacting to the stock market turmoil.

Here's an audio montage they produced of three people reacting to yesterday's 5.6% drop in the Dow in very different ways. One woman decides this isn't the time to reconsider her work/life balance after all. A corporate actuary is consciously deciding to do nothing because weeks like this are exactly what diversification is for. And a small business owner actually spent the weekend advising a customer not to buy a truck from her for at least a week, until things calm down.

Why context matters

Posted at 2:19 PM on August 8, 2011 by Bob Collins (3 Comments)
Filed under: Economy, Media

Finding examples of poor journalism is like shooting fish in a barrel today, what with the stock market meltdown and all.

Here's a headline from the front page of CNN.

It rather looks like advice, doesn't it?

It's not.

Five paragraphs into the story, we get the real context of the quote:

"Investors are having one reaction to the downgrade: sell first and ask questions later," said Paul Zemsky, head of asset allocation with ING Investment Management.

Market meltdown: Stock traders looking worried

Posted at 11:24 AM on August 8, 2011 by Bob Collins (7 Comments)
Filed under: Economy, Media

One question: If the stock market is so all-fire important to everyone, how come news organizations can only figure out one kind of photograph when covering it?

A few examples:

Washington Post

Los Angeles Times

FoxNews

CNN

BBC

This is all, of course, quite depressing. Bring us back to the reality of what people really care about, Texas!

Is the news media making the market meltdown worse?

Posted at 11:05 AM on August 8, 2011 by Bob Collins (6 Comments)
Filed under: Economy, Media

Faced with an overwhelming assault by news organization headlines warning of the market catastrophe that lay minutes ahead, there was a moment this morning that I almost cashed out all of my retirement portfolio that's in equity markets and joined who knows how many others on the sideline.

This goes against everything I've learned firsthand in 40 year of working for a living, but in the absence of even a decent nugget of information telling me what I should do, I felt no choice but to give in to the gloom. Only laziness prevented me from acting, but I wonder how many millions of Americans, more energetic than I, are reacting to the steady drumbeat of news organizations in addition to whatever market savvy they have?

So it was interesting to hear a caller on Midmorning today who insisted the media isn't, as alleged, "making things worse."

"I absolutely think that's true," Ross Levine, a financial planner said in response. "If you look at what's really going on as far as how companies are reporting their earnings, and if you look at the fact the dividend yield in the S&P is close to what 10-year Treasuries are paying, it's almost obscene that the markets are continuing to sell off at this level, and I think market short-term is very emotional. Market short term look like the weather forecasts; you have no idea what they're going to do in the short term. But long term, we have a pretty good sense of market valuation and that's going to be based on earnings, and it's going to be based on dividends, and it's going to be based on getting the economy going again."

"There's been a theme throughout this thing of 'shoot the messenger,' said Heidi Moore, the New York bureau chief for American Public Media's Marketplace program. "You see it with S&P and you see it with journalism. What we're trying to do here is inform people for the most part about what's going on. If those people are telling us that they're expecting a crisis, that they're expecting a panic, that they're expecting the Apocalypse, then of course we're going to reflect that. And when those people don't say that, we reflect that as well. It's important to note that it's not the press creating this; the press and S&P did not spend us into a $14 trillion deficit. So we have to kind of focus here on the issues, and I think people put way too much emphasis on what words are used, and they read stories to see which political parties they support. It's not really about that; it's about are we keeping you informed enough so you can do your duty as a citizen? And that means you have to read the financial news and be able to filter that."

"Words are important," Levine countered. "If you take two situations and you look at the stock market and you say, 'stocks are having a major sell-off,' or 'stocks are trading at the lowest valuations we've seen in three years,' people will interpret that differently. I think that the words shape the context of the story. I'm not saying it's the press' fault because the press is reporting and I think they're doing a good job... but I do think words matter and the interpretations of those words matter even more."

Ms. Moore acknowledged the market is emotional and a reflection of the psychology in it. "I do think the words matter, but for daily market movements, that doesn't tell us so much about what's going on in the economy."

And it doesn't tell me what I'm supposed to do about any of this.

How to lose a quick $1.5 million

Posted at 3:05 PM on August 4, 2011 by Bob Collins (4 Comments)
Filed under: Economy

Timing is everything.

3M boss George Buckley told the Securities and Exchange Commission in a filing that he plans to sell a third of his shares in his company by the end of the year.

The filing said Buckley could sell up to 376,037 shares, worth about $32.4 million based on the stock's Wednesday closing price of $86.18 a share, the Star Tribune reported this morning.

In the egg Wall Street laid today, 3M's stock dropped almost 5% in value, to $82.23 a share. Buckley's value of the shares he intends to sell dropped $1.5 million. It lost $364,000 in the last 20 minutes of trading.

He'll probably be OK, anyway.

The view from the ledge

Posted at 1:30 PM on August 4, 2011 by Bob Collins (3 Comments)
Filed under: Economy

The stock market, you may have heard or felt in your portfolio, is having a lousy time of it.

The last time I checked, the Dow Jones Industrial Average was down 372 points to stand at 11,501. That's a big drop, of course. The Dow is down more than 1,000 points from its recent high, which means you don't want to be hitting "one step update" on Quicken anytime soon. Oh, and you don't want to retire.

Clearly, there's lousy economic news to feed the bear. But the "lousy economic news" is also a media narrative that creates even more lousy economic news. To feed the narrative, you have to work harder for new angles to explain just how lousy the economy is. That's simply the way it works in the news business.

That's not saying things aren't lousy; they obviously are.

But you see that picture up there? We're using it to accompany the story today about how lousy things are and it's clearly captioned as a file photo from May 25, 2010 (No sense buying a new one; all pictures of stock market traders look the same). Things were perceived as lousy on that date, too, apparently.

Those panicked traders had no idea what August 4, 2011 would bring. On May 25, 2010, the Dow lost 22 points and closed about 1,500 points lower than it will today.

Everyone come in off the ledge. There's something terribly wrong if I'm the half-full guy around here.

First world problems

Posted at 1:00 PM on August 4, 2011 by Bob Collins (5 Comments)
Filed under: Economy

(If you don't see the WCCO story above, go here)

It's a good life when the worst that can happen is Caribou Coffee runs out of cards for its summer sticker promotion that gives people a free cup of joe every so often.

In other news....

The economy in four acts

Posted at 10:53 AM on August 4, 2011 by Bob Collins (10 Comments)
Filed under: Economy

The economy is beyond the means of mortal people to understand, which doesn't prevent me from trying.

Let's take a look, for example, of this morning's economic reporting, in the order I consumed. it.

Act 1: I heard this on Marketplace last evening....

Right now about 75 percent of companies have reported, and we're on pace to have record earnings. You know, that beats 2007, when the earnings were all phony banking profits.

Act 2: - Unemployment dips in sign of improved job market

The number of people seeking unemployment benefits dipped last week, a sign the job market may be improving slowly.

Sweet.

Act 3: Target reported its earnings this morning. Phil Picardi reported on them as I drove in this monring...

Minneapolis-based Target says a key sales figure rose more than 4 percent last month as shoppers bought groceries and health and beauty products. Target says overall sales for the four-week period climbed 6 percent from the same quarter last year to 4-point-8 billion dollars.

Six percent? That's great, right?

Over to you, Wall Street. Bring it on home!

Act 4:

Ruh roh.

Financial community to politicians: 'Your deal stinks.'

Posted at 3:30 PM on August 2, 2011 by Bob Collins (11 Comments)
Filed under: Economy

Did the politicians ever talk to the financial "experts" before coming up with the "solution" to the debt crisis?

It wouldn't seem so. For a second day, the financial community is weighing in on the debt solution signed into law by President Obama today. Financial community to politicians: "Your deal stinks."

The Dow, at last check , is down almost 300 points. The S&P 500 has turned negative for the year, and those aren't even the indicators that matter to the experts. For the Dow, it's been the longest losing streak -- 8 days -- since the fall of 2008, which was also the fall of the American economy.

Economist Ed Yardeni, quoted in the Wall Street Journal, said "One especially negative PM told me: 'This is the 1930s on Prozac!' That's a very clever turn of phrase. In other words, we are in a depression, but thanks to very stimulative monetary and fiscal policies, it hasn't been another Great Depression so far."

Mohamed El-Erian, chief executive officer and co-CIO of Pacific Investment Management Co., says the politicians not only didn't make the future any better, they made it worse.

"We're out of the woods in the sense that we will avert this real threat of the technical default," Mr. El-Erian says. "However if you judge it in terms of the broader objectives, which is to put the country on the path of medium-term growth and medium-term fiscal viability, we may have made things worse rather than better," he said.

That's just the kind of pick-me-up the financial markets need.

U.S. Treasuries -- that is the indicator people in the know pay attention to -- rose for a fourth straight day today. They're considered a safe-haven when the economy tanks.

Or, as Neil Irwin, the economics reporter for the Washington Post put it...

In his subsequent article, Irwin describes the problem faced by the Fed.

The basic challenge for the Fed is this: It is charged by Congress with maintaining stable prices and maximum employment. But when those goals are in conflict with each other, the options are difficult to decide. That's the circumstance the nation faces now: It's adding jobs too slowly to reduce unemployment. Yet prices are rising at about the 2 percent or so annual pace that the Fed considers to be stable. Anything Fed leaders do to try to address the dire job market could push inflation above their comfort level.

Many politicians playing chicken with the economy last week said they didn't believe the tales of woe about the economy would happen if the debt crisis persisted.

It's happening, presumably because the solution is no solution.

Long-term unemployment in Minnesota

Posted at 12:14 PM on July 25, 2011 by Bob Collins
Filed under: Economy

The Wall St. Journal has today's most sobering graphic: An interactive map that documents the percentage of unemployed people who have been out of work for at least a year. Minnesota, with a comparatively low unemployment rate, ranks 41st in the category. Nevertheless, one out of five people unemployed in Minnesota, has been jobless for at least a year.

The majority of out-of-work Minnesotans are unemployed for between five and 14 weeks.

Find all the data and play with the map here.

Be a federal budget hero

Posted at 3:02 PM on July 15, 2011 by Jon Gordon (1 Comments)
Filed under: Economy

While the Minnesota state budget battle is moving toward a final resolution, the federal fight is moving into high gear.

A new tool might help you make sense of a complicated issue.

"If you ever wanted to control where your tax dollars go, here's your chance to decide," begins the Budget Hero game from American Public Media's Marketplace.

"A new Web game has finally brought every American taxpayer's fantasy to life," writes CNET.com. "Budget Hero 2.0, a timely update to an earlier title, gives players the chance to choose where their tax dollars are spent while simultaneously working to save our ailing economy."

Play it, and let us know what you think.

The magic trick the economy can't do

Posted at 12:09 PM on July 8, 2011 by Bob Collins (14 Comments)
Filed under: Economy

When the monthly unemployment figures come out, we become a nation of economists. But it doesn't take a degree in economics to realize that things are bad in the economy right now.

Unemployment last month reached 9.2%, and those are just the people who still want to be in the labor force. The actual percentage of people without jobs might be almost twice that.

Third District Rep. Erik Paulsen took to the floor of an empty U.S. House of Representatives this morning to offer his solution...

A close look at the economic argument reveals a complexity -- in the sense that a chicken-and-egg scenario is complex -- that most politicians' speeches don't address. Lower taxes and lower spending by government means smaller government. Smaller government requires fewer employees. Fewer employees requires more unemployment.

That's the reality behind the numbers released today.

According to the Labor Department, private businesses added jobs last month (though it was the fewest number in a year):

Within professional and business services, employment in professional and technical services increased in June (+24,000). This industry has added 245,000 jobs since a recent low in March 2010. Employment in temporary help services changed little over the month and has shown little movement on net so far this year.

Health care employment continued to trend up in June (+14,000), with the largest gain in ambulatory health care services. Over the prior 12 months, health care had added an average of 24,000 jobs per month.

In June, employment in mining rose by 8,000, with most of the gain occurring in support activities for mining. Employment in mining has increased by 128,000 since a recent low in October 2009.

Employment in leisure and hospitality edged up (+34,000) in June and has grown by 279,000 since a recent low in January 2010.

What sector of the economy is shedding jobs like there's no tomorrow? Government. According to the Labor Department:

Employment in government continued to trend down over the month (-39,000). Federal employment declined by 14,000 in June. Employment in both state government and local government continued to trend down over the month and has been falling since the second half of 2008.

There's no question that private hiring could be much better than it is. But at a time when Congress is debating whether to increase the national debt, it's difficult to see how the private sector is going to add jobs, government spending is going to drop, and taxes are going to be lower, all while avoiding enough pink slips for government workers to make the unemployment rate in the nation climb.

It didn't happen in June.

Minneapolis housing prices: One of the worst and one of the best in U.S.

Posted at 8:53 AM on June 28, 2011 by Bob Collins (1 Comments)
Filed under: Economy

The politics of oil

Posted at 11:32 AM on June 23, 2011 by Bob Collins (2 Comments)
Filed under: Economy, Energy

Gasoline prices have been falling lately -- almost 50-cents a gallon -- so it was a surprise today when the Energy Department announced its tapping the strategic petroleum supply in an effort to push the price of gasoline down.

Energy analysts expect the move will mean lower gasoline prices for consumers this summer. That would give Americans more discretionary spending power, helping businesses ranging from grocery stores to ice cream parlors. It will also give manufacturers and truckers a break, because the price of diesel fuel is expected to drop as well.

What will it mean? It means the price of gasoline will drop, then it will go back up again.

Some data earlier this week helps to explain why.

MasterCard reported that the demand for gasoline rose .4 percent from a year ago because the price has fallen...

"As prices continue to fall, gasoline demand seems to have climbed into barely positive territory in year-over-year terms, after the 1 percent to 2 percent declines recorded throughout most of April and May," John Gamel, director of economic analysis for SpendingPulse, said in the report.

It's an intriguing cycle. As prices rise, mostly because of demand, consumption falls, which creates more of a supply with less of a demand, causing prices to fall.

There's no question, of course, that the high price of energy threatens the global economy and the weak recovery from the economic collapse. The blog, The Oil Drum today said that should be enough for governments "to wake up and introduce serious energy policies to deal with the clear and present dangers posed by peak oil."

Christopher Helman at Forbes.com says Americans weren't going to feel the effect of the Libyan oil cut until later this summer, and today's move -- coordinated with OPEC -- indicates a longer term view of what's coming than merely the price of gasoline today.

Markets move based on today's fundamentals and expectations of future supply and demand. The coming months, as we head into the driving season, would likely see the impact of the Libyan crisis felt most keenly; this is why the IEA is acting now. Some producer countries have announced their intentions to raise production, but it takes time for these incremental barrels to be produced and shipped to consuming markets. The use of IEA strategic stocks now will help bridge the gap until these new supplies are available. The IEA will continue to monitor the situation. If supply remains disrupted and markets remain tight in the future, the IEA does not exclude another decision to make additional supplies available to the market.

There's another angle to all of this, of course. Politics. Jay Hancock's economic blog at the Baltimore Sun smells something that's not oil.

This isn't what many people believe the petroleum reserve is for. It's widely thought of as being there for true emergencies such as war and severe supply shocks. This isn't as nakedly political as if reserves had bene tapped in summer 2012. Nevertheless, the political overtones could hurt Obama

Life after the 'mancession'

Posted at 12:02 PM on June 17, 2011 by Bob Collins (15 Comments)
Filed under: Economy, The jobs we do

Bernie Ockuly, of Cleveland, fairly well bristled last January when he read an MIT professor's suggestion (by way of News Cut) that people who have been unemployed for 99 weeks probably aren't trying hard enough to get a job. He knows better.

Workers ages 45 and over make up a disproportionate share of the long-term unemployed -- those who have been out of work for six months or longer, according to the Bureau of Labor Statistics.

Ockuly, who is now driving as a long-haul trucker and stopped during a run through the Twin Cities on Thursday, is the "mancession" up close. He had a long career as a salesman and manager in the truck leasing business, survived 10 mergers, takeovers and countless management changes.

"Except for one," he said. The one that left him unemployed at age 56.

He started with the giant Fruehauf Corporation and his career ended 33 years later -- November 2006 -- with XTRA Lease. "I got an award for $2.5 million in sales in March, the company changed hands in July, and they gave me a cardboard box to pack up and get out in November," he said.

It was a devastating moment, but not as devastating as a year earlier, when a doctor told him he had prostate cancer. When the company's "hatchet man," told him he was being let go, he told him, "I've gotten worse news from smarter people than you."

He beat cancer, then unemployment. A friend's offer to help out as a salesman ended after six months in a collapsing economy. Then, though the managers of a distillation plant told him he was overqualified, he told them "I'll do a good job for you and show up every day." They hired him. But the plant, owned by Veolia, closed last May. Bernie Ockuly was unemployed again. It wasn't for lack of trying.

He was willing to work for much less than what he was used to making, but found no offers. "I was turned down left and right for $10- to $12-an-hour gigs," he said. With no jobs to be had, he helped a friend in Illinois bring in last fall's harvest, blogged about the experience, and showed the side of him that apparently can turn any task into fun.

That's when the idea of driving a truck for a living was born. The 65% subsidy for continuing his COBRA medical coverage (from the economic stimulus bill) was soon going to end, and he couldn't afford a $1,500 a month payment for health care. So he found a work retraining grant and learned how to drive a truck commercially.

There was a job to be had, but it involved leaving home and hitting the road.

A few months ago, he was hired by an Oregon trucking company and has been seeing the United States since. Being away from home has its drawbacks, although his children are mostly grown now. He says of his wife in Cleveland, "we've never gotten along better."

He went into the business eyes wide open, researching the lifestyle and business aspects of it on the Internet. "There's about a 100-percent turnover in it," he said, as he took his cheeseburger out of the bun and chewed on fresh vegetables at a cafe in White Bear Lake. Since starting his new career, he's lost weight by not eating like his new career generally dictates.

He writes about his experiences on Facebook and still shows wide-eyed wonder at the road that lies, literally, ahead. "Crossing the Continental Divide has a whole new meaning when one is struggling to pull 80,000 pounds up a mountain pass, even with 450 horses under the hood," he said. He rates the Columbia River Gorge and a lonely, two-lane highway in Nevada as favorites so far. His stop this week in Fargo gave him the opportunity learn some history.

This week he dropped off Coors Beer in Washington state and picked up french fries that will be delivered today in Plover, Wisconsin.

With time on his hands before his scheduled arrival in Wisconsin, he spent last evening with local friends boating at sunset on Bald Eagle Lake.

"Life is good," he says. From high up on his perch in the cab of his truck, one almost can't see the mancession.

Food prices changing global consumption behaviors

Posted at 11:00 AM on June 15, 2011 by Michael Olson (1 Comments)
Filed under: Economy

Global food prices have increased 37 percent in the past year. Researchers at the United Nations expect prices to stay high.

Roughly two-fifths of people in 17 countries say high food prices have changed what they eat. People in poorer nations are hit hardest by increased costs according to Bloomberg.

A survey conducted for Oxfam International indicates that more than half of the 16,000 respondents are eating different food than they were two years ago.

"Huge numbers of people, especially in the world's poorest countries, are cutting back on the quantity or quality of the food they eat because of rising food prices," Raymond Offenheiser, the president of the U.S. affiliate of Oxford, UK- based Oxfam, said in a report. (PDF)

The Guardian has an interactive graphic that provides detail on price changes of the global food supply. Take a look at how wild sugar prices have been.

Is your family feeling the pinch? What are you doing differently in the kitchen?

A bad case of bad

Posted at 2:03 PM on June 8, 2011 by Bob Collins (3 Comments)
Filed under: Economy

Pew Research is out with a survey this afternoon that says "46% say they are hearing mostly bad news about the nation's economy." What's the story there? That 54% of people apparently aren't.

It's not, however, as if most people are finding things pretty cheery; most are finding a mix of good and bad news on the economy. This is a big deal because economies are notoriously emotional things. A 9-percent jump in people who say they're hearing mostly bad news probably means most people believe what they're hearing and are likely to make some decisions because of it. That's the kind of thing that starts recessions.

This is one of the challenges facing presidential candidates. They will hammer the Obama administration mercilessly in the coming months, potentially causing consumers to pull back, stuff the nation into a recession, which -- if they're successful with their strategy -- they get to inherit.

The dismal science, indeed.

Maybe the economy needs more people in search of instant gratification. A separate study says if that's the case, young people are the answer. The survey said the more credit card debt and college loans young adults had, the higher their self-esteem and the more they felt in control of their lives.

Until they turn 30, according to the Discover Disco Blog.

Right around that fateful 30th birthday, however, the stress of owing tons and tons of money seemed to kick in. Starting at age 28, the more debt people had, the bigger a hit their self-esteem took. This may be because if you ask an 18-year-old with a credit card how much money they expect to making by the time they reach the distant age of 30, they'll probably put the figure at around a bajillion dollars. By their late 20′s, these folks "may be realizing that they overestimated how much money they were going to earn in their jobs," as Dwyer puts it. "When they took out the loans, they may have thought they would pay off their debts easily, and it is turning out that it is not as easy as they had hoped.".

The world's top incomes

Posted at 10:56 AM on June 6, 2011 by Bob Collins (6 Comments)
Filed under: Economy

Barry Ritholtz at The Big Picture has an intriguing graphic posted today. It's a historical comparison of the top 1% of income owners in major countries.

It comes from the Paris School of Economics, which is also building an online database to allow you to crunch the numbers some more. Unfortunately, it's not entirely built out yet, although you can do a little playing on it.

Minneapolis housing market: Busted, again

Posted at 10:52 AM on May 31, 2011 by Bob Collins (10 Comments)
Filed under: Economy

The day the Dow died

Posted at 1:31 PM on May 6, 2011 by Bob Collins (1 Comments)
Filed under: Economy

I'll be honest with you. I still struggle to understand exactly what was going on in the last scene of Trading Places, but I at least I knew it was entertaining.

Floor trading is like that, apparently, even if you don't know what's going on. It is soon to be a relic as more trading is taking place online. The day of the floor trader is numbered.

It was one year ago today that the Dow dropped 1,000 points before it recovered before the close. It turned out to be a mistake because someone entered some numbers wrong in a -- and isn't this ironic? -- a computer. But the traders didn't know that.

This floor trader, who works for a Web site that broadcasts him live each day, provided a great "call" of the disaster, rivaling the greatest of horse racing announcers.

Shortly before the close today, the Dow was up about 35 points, in an entirely non-entertaining session.

(h/t: The Big Picture)

Do most people still want to own their home?

Posted at 8:48 AM on April 26, 2011 by Bob Collins (11 Comments)
Filed under: Economy

Waiting on Lawson

Posted at 1:34 PM on April 25, 2011 by Bob Collins (2 Comments)
Filed under: Economy, Tech

Lawson Software is about to be sold, according to the Wall St. Journal. Infor, a Georgia-based software company, is said to be the winning suitor.

But the bigger question is what happens to Lawson's St. Paul presence? Nobody, so far, is talking about that because the deal hasn't been announced yet. But downtown St. Paul watchers are like Vikings fans; thinking that things like this are bound to end badly.

But maybe not. The Georgia company has dozens of companies and offices spread around the world and doesn't appear to be the type to close out-of-town properties and move everyone to Georgia. The company already has one facility in Minneapolis (SoftBrands).

As of last fall, the company had 700-800 employees working at its St. Paul headquarters. Any economies of scale in a takeover may cut into the Minnesota workforce.

By most accounts, the Lawson addition to St. Paul has been a decent investment. Former Mayor Norm Coleman lured Lawson to downtown St. Paul, offering to build the company's headquarters for $101 million, then selling it to a real estate firm for about half that in 2000, keeping the retail space -- known as Lawson Commons --and the parking ramp in city hands.

Although one parcel on the sidewalk property has been problematic, most of the rest of the retail space seems to be relatively full with a mixture of chain and high-end restaurants. The area around Landmark Center, where Lawson is located, is among the downtown's brightest spots.

The city is already facing a likely challenge downtown in late 2012. Macy's committed to staying downtown when taxpayers paid for a $6.3 million loan to renovate the store. The loan is forgiven if the store stays downtown through Dec. 31, 2012. After that, the company is free to leave.

With the economy, divorce rebounds too

Posted at 3:45 PM on April 22, 2011 by Bob Collins
Filed under: Economy

Now that the economy is rebounding, more people are shedding their spouses, the Financial Times reports (registration required)

During the recession, couples who were out of work or unable to sell their house stayed married to save money. The percentage of the population 15 years and older who counted themselves divorced dropped to 9.7 in 2009, from 9.9 three years earlier, according to the Census Bureau. More than half of the 1,600 attorneys who are members of the American Academy of Matrimonial Lawyers reported a downturn in their business in 2009, the most recent year for which survey data are available.

Divorce hasn't become any less bitter, some of the divorce lawyers contacted said, but the issues are changing. Before the economic collapse, couples argued about who gets the house, now they're arguing about who gets stuck with it.

What should be done with vacant property?

Posted at 11:54 AM on April 20, 2011 by Bob Collins (7 Comments)
Filed under: Economy

MinnPost's Jeff Severns Guntzel is mapping every vacant property in Minneapolis, a worthy effort in light of a shift in attention from the mortgage market meltdown to what will happen with all of these empty buildings in Minneapolis and elsewhere.

On CNBC, this morning, one "analyst" had this idea: knock them down, says Joseph LaVorgna, Deutsche Bank's chief economist.

"If we have excess housing, why not pay to remove the excess supply from the market, the marginal supply goes up, people feel wealthier, and it deals with the problem, "LaVorna said.

"It shouldn't count on taxpayer dollars to do any of it, " CNBC's trader/ranter Rick Santelli countered. " He says if the idea has merit, the owners of record -- usually a bank -- should pay.

Most experts figure the housing market won't rebound until the "excess supply" of foreclosed houses are off the market, either because someone buys them or someone destroys them.

(Video: Craig Stellmacher)

Economic jitters

Posted at 10:08 AM on April 18, 2011 by Bob Collins (1 Comments)
Filed under: Economy

What was your favorite economic recovery moment?

It all went up in a cloud of uncertainty today when Standard & Poor's said there's a 1 in 3 chance it will lower its credit rating on the United States. That's fancy talk for the U.S. isn't a trustworthy debtor, a hard pill to swallow for the country once seen as the most stable economic power in the world.

It raises the possibility of the country defaulting on its obligations.

On CNBC this morning, analysts talked about ending "the big party we're having," while ignoring the elephant in the room...

MPR's Midmorning today considered the nation's debt with a guest from the left and a guest from the right.

What's the elephant in the room? Let's put it this way:You have a much better chance of hearing an "expert" utter the phrase "we can't keep kicking the can down the road" than you do the phrase "the cost of fighting three wars at once."

How to get rich(er)

Posted at 11:16 AM on April 13, 2011 by Bob Collins (7 Comments)
Filed under: Economy

Rolling Stone's Matt Taibbi, in an article due in the next issue, is making waves by casting light on part of the financial bailout he says gave away billions of dollars to financial fatcats -- and their spouses -- who gamed a system designed to free up allegedly frozen credit markets.

In his article, Taibbi describes the TALF program -- Term Asset-Backed Securities Loan Facility -- in which "investors" put 10 percent down, the government puts up the other 90%, and assumes most of the liability.

Cue your Billy Mays voice, because wait, there's more! A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even.

This is the deal of a lifetime. Think about it: You borrow millions, buy a bunch of crap securities and stash them on the Fed's books. If the securities lose money, you leave them on the Fed's lap and the public eats the loss. But if they make money, you take them back, cash them in and repay the funds you borrowed from the Fed. "Remember that crazy guy in the commercials who ran around covered in dollar bills shouting, 'The government is giving out free money!' " says Black. "As crazy as he was, this is making it real."

But a comment attached to Taibbi's article attempts to shift the discussion back to where it always seems to go. The meltdown wasn't the fault of the "big" people, it was the fault of the "little" ones.

The article is very slanted. What really happened: greedy irresponsible Main Street got caught up in a real estate frenzy thanks to easy credit, predatory mortgage brokers, and the naive notion that "real estate never goes down". Americans thought they could buy and flip homes forever with no doc loans. Wall Street didn't underwrite or default on these subprime mortgages, but was only guilty of packaging and reselling them to greedy investors who thought that real estate never goes down. When the bottom inevitably fell out, investment banks like Goldman and Morgan took a hit but still had billions on their relatively healthy balance sheets. They reluctantly became commercial banks at the government's urging so they could borrow from the Federal Reserve window, to improve consumer confidence and prevent a panic. The author's reference to "billions in emergency loans" is actually what they borrowed at the Federal Reserve Bank Discount window, just like all commercial banks have routinely done since 1913. The TALF was open to everybody and without such government lending, Main Street wouldn't have been able to get credit since 2008 when they started defaulting on mortgages and walking away from foreclosures. John Mack earned $41 million in 2006 and thus could easily afford a $13.5 million home in 2009 without government help. Once the crisis hit, he paid himself almost nothing for a couple of years before retiring as CEO. With the exception of Madoff, almost nobody from Wall Street is in jail, because almost nobody on Wall Street broke the law. Question is: why isn't Main Street held responsible for defaulting on mortgages, credit cards, and student loans? Americans' credit ratings go down but at the end of the day, unlike Wall Street, they don't have to repay their loans.

An end to the mortgage deduction?

Posted at 2:45 PM on April 11, 2011 by Bob Collins (23 Comments)
Filed under: Economy

Is it time to get rid of the home mortgage interest deduction?

LiveScience.com reports today on a study from Kansas State University that says because most of the tax break goes to people making more than $100,000 a year, it doesn't adequately help the more dense urban cities.

Turner's study, based on household data collected from 1984 to 2007 by the Panel Study of Income Dynamics, showed that in denser, urban cities with limited available housing, the deduction has a negative impact because it both reduces homeownership and inflates housing prices.

"It's just driving up prices, which makes it harder to come up with the down payment," she said.

Believing in the theory that homeowners have more of a stake in the success of their community, Turner noted it's those urban areas where homeownership is needed the most to improve the community as a whole.

The mortgage deduction has been termed "America's favorite deduction," but as tax day approaches, it seems harder to find its friends.

ING Direct boss Arkadi Kuhlman, writing in the Wall St. Journal today, theorizes that it allows borrowers to spread their home payments out over too many years. He favors a deduction based, instead, on principal payments, rather than interest.

Must the U.S. government remove itself entirely from the mortgage market--or take away every family's favorite tax deduction--to fix it? Not necessarily. Congress could as easily create an incentive for consumers to pay down their mortgages by letting them deduct payments on principal, rather than on interest.

A successful model exists to our north. In Canada, the interest on mortgages is not tax deductible, which gives homeowners good reason to pay down their principal as quickly as possible. Canadian banks also hold about 75% of their loans on their books, which encourages more prudent lending. Thanks to such policies, just 1% of Canadian mortgages are currently in foreclosure or delinquent, compared to about 14% of American mortgages. The Canadian real estate market has already rebounded above pre-recession levels.

Employee mistake not enough to lose unemployment

Posted at 1:47 PM on April 5, 2011 by Bob Collins (3 Comments)
Filed under: Economy

Being fired for making an inadvertent mistake at work is not a reason for losing the right to unemployment benefits, the Minnesota Court of Appeals ruled today.

The court settled the case of Joan Dourney, who was fired from Panino's Restaurant in Shoreview, where she'd worked for 11 years, because she served alcohol to a minor (see update below). Dourney said she thought a woman, who was accompanying a man she knew was over 21, was old enough to drink.

Her boss ordered her to card the woman, Dourney removed the drink, and then she was fired. But the restaurant objected to her unemployment claim , saying she was guilty of employment misconduct and, therefore, ineligible for unemployment benefits.It appealed the unemployment claim that was approved by the state.

Today, the court said "even if a reasonable person would have carded the customer whom Dourney failed to card and Dourney's conduct could be considered negligent, (state law) expressly provides that inadvertence is not employment misconduct... Because Dourney's forgetting to card the customer was conduct marked by unintentional lack of care, the conduct was inadvertence." (Decision here)

The case, however, shows the extent to which a worker occasionally has to go to get unemployment

Update 10:29 a.m. 4/11 - The Department of Employment and Economic Development disputes two items in this post. Lee Nelson, an attorney for the department writes.

(1) The applicant, Joan Dourney, did not serve alcohol to a minor. A Department Unemployment Law Judge found, adn the Court of Appeals agreed on page six of its decision, that "We have no evidence that the individual was actually too young [to drink]." This would have been a very different case indeed had Dourney served a minor, and certainly a more sensational one, particular in light of the recent "Wally the Beer Man" verdict. But by all accounts the woman that Dourney served was at least 23 years old, and Dourney broke no law by serving her.

The "Wally the Beer Man" story is irrelevant to the context of the case regardless of whether Ms. Dourney did or did not serve a minor. The assertion that the woman was a minor was based on the reading that the server removed the drinks. I neglected to note that it was because the woman could not produce identification.

(2) Dourney was not involved in the case pending before the Court of Appeals. While Dourney was a seconday respondent, the Department was the primary responding party to the case under Minn. State. 268.1056 subd. 7(e), as unemployment benefits are paid from state funds. The Department drafted the brief defending Dourney's receipts of benefits, and argued the case in front of the Court of Appeals. Dourney played no role at all in this process. The "extent" wo which Dourney had to go to get benefits was actually quite minimal; a year ago she filled out the questionnaires that the Department sent to her, and participated in a brief telephone hearing before an Unemployment Law Judge.

The characterization of the difficulty an employee often has to go to get unemployment is based on the assertions of the establishment, not the work the Department has to go to at the Court of Appeals. The initial post stated, in fact, that the department approved her unemployment claim.

Cravaack throws in with Ryan on budget plan

Posted at 11:12 AM on April 5, 2011 by Bob Collins (2 Comments)
Filed under: Economy, Politics

Eighth District Congressman Chip Cravaack has apparently signed on to Wisconsin Rep. Paul Ryan's budget-cutting plan that constitutes the line in the sand some Republicans are drawing in Washington.

Ryan unveiled his proposal in a Wall Street Journal column this morning (and a very spiffy Web site here), calling for cuts in domestic spending, Social Security (it's called reform, however), welfare, Medicare, the health care law, alternative energy programs etc.

Says Ryan:

A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage's analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.

It also says the unemployment rate will be 2.8% by the next decade. "It's an assumption, in other words, that's unrealistic enough to be considered somewhat bizarre," The Economist says. "Everyone puts a positive spin on their policy proposals. But fundamentally worthy policies shouldn't need to promise laughably overoptimistic outcomes to win support."

For the record, the unemployment rate has only been that low once -- 1953.

The study is not from a non-partial source. It's from the Heritage Foundation, "whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense."

The Economic Policy Institute leans in the other direction and -- funny -- has a different view:

"This budget is impressive in its ability to not only inflict maximum harm on the economy, but to concentrate that harm on those most in need," its director, John Irons, said today. "This will not only cost the economy hundreds of thousands (and perhaps millions) of jobs over the next five years, it will also destroy the social safety net and undermine policies that support the middle class."

It's just the kind of debate that demands the curmudgeonly hand of CNBC's Mark Haines

Sizing up the McConomy

Posted at 12:41 PM on April 4, 2011 by Bob Collins (3 Comments)
Filed under: Economy

Fifty-thousand people will get jobs in one day later this month.

The jobs will be at McDonald's, which announced today that it will hire the workers on April 19.

On the surface, it's quite a numbers story in the company news release:

* McDonald's and its franchisees will spend more than $518 million more in wages and salaries in the coming year, an average of more than $1.4 million every day.

* More than $41.5 million in training will be invested in the company's new workforce - instilling life-long business and customer service skills as well as setting employees up for success in current and future opportunities.

* The addition of 50,000 potential hires translates into $54 million more in payroll taxes contributed to the broader economy.

* Using a statistical multiplier effect, 50,000 new workers will generate almost $1.4 billion in annual spending - more than $3.5 million per day.

$1.4 billion works out to $28,000 per year.

The angle that the McDonald's president is pushing is this one:

..the average pay for the new positions will be $8.30 per hour, higher than the federal minimum wage of $7.25 per hour.

The natural conclusion is that McDonald's is paying more than minimum wage to its people, the bulk of whom are the customer service people and cooks. But the figure includes the restaurant managers who will also be hired and, according to McDonald's, they can make up to $50,000 a year.

The company doesn't say how many of the 50,000 jobs are managers.

Are 50,000 fast-food jobs a sign of a recovering economy, or a sign that it's not recovering very fast?

The company's national hiring day mirrors one it had on the West Coast last summer.

"It's hard to be choosy right now," Serena DiPiero, 48, of Sacramento, told the Sacramento Bee at the time.

The future: What if this is as good as it gets?

Posted at 11:37 AM on April 1, 2011 by Bob Collins (17 Comments)
Filed under: Economy

It's hard to listen to experts and people living in the real world and not hear the famous words of Jack Nicholson, "What if this is as good as it gets?"

What if my generation -- Baby Boomers -- are the last generation in the history of the United States to have a better standard of living than the previous one? What if the national dialogue started including that as a possibility?

The prediction that the war in Libya could last for years, a story that Minnesota is losing its young teachers, and today's announcement that a lower unemployment rate masks the reality that the majority of the lost jobs may not return in this generation, feed the gloom.

But nothing matched this caller -- James, from Bloomington -- on today's Midmorning segment on how student loan debt, heaped on students by colleges inflating the job prospects of graduates, may never disappear for our generation of the future.

He has $250,000 in debt, he makes $30,000 a year in a public-service job and he says, "every dream I've ever had of doing anything in my life is gone."

The News Cut psyche can use some better individual stories. Have you got one?

Minneapolis, basket case

Posted at 9:17 AM on March 29, 2011 by Bob Collins (28 Comments)
Filed under: Economy

Budget analysis: What's Plan B?

Posted at 2:07 PM on March 18, 2011 by Bob Collins (2 Comments)
Filed under: Economy, Politics

The Congressional Budget Office -- as in the non-partisan Congressional Budget Office -- threw cold water on the notion that President Obama's proposed budget is going to do anything to lower the budget deficit. One reason? Lower taxes.

Here's what the CBO has to say:

Of the various initiatives that the President is proposing, tax provisions would have by far the largest budgetary impact. The 2010 tax act (officially the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Public Law 111-312) extended through December 2012 many of the tax reductions originally enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). The President proposes to extend those reductions permanently, with some modifications, and to permanently index for inflation the amounts of income exempt from the alternative minimum tax (AMT), starting at their 2011 levels. In addition, the President proposes that, beginning in January 2013, estate and gift taxes return permanently to the rates and exemption levels that were in effect in calendar year 2009. Those policies would reduce tax revenues and boost outlays for refundable tax credits by a total of more than $3.0 trillion over the next decade relative to the amounts projected in CBO's baseline. That total exceeds the $2.7 trillion net increase in the deficit over the next 10 years that would result from the President's budget as a whole; the President's other proposals would reduce the deficit, on balance, over 10 years.

Theoretically, the tax cuts would boost economic activity to make up for their cost to the Treasury. That doesn't appear to be the prediction.

Both sides, of course, will point to the other side in this debate to indicate who's causing this reality. But it's this chart, supplied by the CBO, that shows the fallacy of just about every campaign speech ever given on the subject.

How will you deal with the rising price of gas?

Posted at 2:25 PM on February 28, 2011 by Jon Gordon (6 Comments)
Filed under: Economy, Energy

Gloom returns to TC housing market

Posted at 11:40 AM on February 22, 2011 by Bob Collins (4 Comments)
Filed under: Economy

Should the nation build high-speed rail?

Posted at 11:10 AM on February 18, 2011 by Bob Collins (5 Comments)
Filed under: Economy

The coming brain drain

Posted at 11:18 AM on February 10, 2011 by Bob Collins (1 Comments)
Filed under: Economy

Here. Watch this. Here's a Kleenex.

Ella Chou, who is subbing for James Fallow this week, writes about this ad today on The Atlantic's site.

She says the "best and the brightest" may not necessarily be the ones who were born here, and increasingly, they're not the ones staying here:

The video spread like a wild fire among the oversea Chinese communities because it tells the typical story of a young Chinese with a "dream" (as mentioned in the ad): prep hard for the exam; wave goodbye to family in the airport (Beijing Airport in this case); pursue study at a top American University (this video shows, as many would recognize, Columbia University); get a job in a big American city (looks like a consulting job in New York). Last year alone, 128,000 Chinese students came to the U.S., pursuing more or less the same dream. They make up of the largest percentage (nearly 18%)of the international student body in the U.S..

Is U.S. still going to be the place where young people around the world dream to learn, to make their career and realize their potential? Is it going to keep the openness?

Around me among the Chinese community at Harvard, I've already begun to hear people saying they'll probably go back to China after graduation because of the difficulty in getting a job and the required work visa in the U.S. and also because the potential for growth they are seeing back at home. How is U.S. going to maintain its attractiveness to world talent? Ten years from now, will we see a different version of this ad?

A little prayer for Bernanke

Posted at 10:33 AM on February 9, 2011 by Bob Collins (4 Comments)
Filed under: Economy

Some pictures just scream "caption contest."

Like this one of Federal Reserve chair Ben Bernanke

Bernanke went to Capitol Hill today to say what he and his predecessor have been saying for several years now: It'll be several more years before things return to what used to be normal.

Mapping foreclosures

Posted at 2:53 PM on January 28, 2011 by Bob Collins (1 Comments)
Filed under: Economy

Google Maps has been tracking foreclosed houses for sale for a few years now, but more recently has made its application a little more robust as a way to show the pattern of foreclosures in particular neighborhoods.

Business Insider just mapped some of the worst cities in America. It's a great slideshow. Take Las Vegas, for instance:

Let's take a little tour around our state.

MINNEAPOLIS
Hennepin County foreclosures were up 26% in the 3rd qtr of '10 compared to '09

ST. PAUL
Ramsey County foreclosures were up 12% in the 3rd qtr of '10 compared to '09

ROCHESTER
Olmstead County foreclosures were up 33% in the 3rd qtr of '10 compared to '09

MANKATO
Brown County foreclosures were up 60% in the 3rd qtr of '10 compared to '09

FARGO MOORHEAD
Clay County (Mn) foreclosures were unchanged in the 3rd qtr of '10 compared to '09

LAKES REGION
Crow Wing County foreclosures were up 15% in the 3rd qtr of '10 compared to '09

DULUTH
St. Louis County foreclosures were up 36% in the 3rd qtr of '10 compared to '09

Want to play with this yourself, just go to Google Maps in your browser...

1. Punch in any US address into Google Maps.

2. Your options are Earth, Satellite, Map, Traffic and . . . More. (Select "More")

3. The drop down menu gives you a check box option for "Real Estate."

4. The left column will give you several options (You may have to select "Show Options")

5. Check the box marked "Foreclosure."

Air continues to leak out of housing market

Posted at 4:18 PM on January 25, 2011 by Bob Collins (1 Comments)
Filed under: Economy

The recovery in the resale price of homes in the Twin Cities last year apparently was a mirage.

The Case Shiller Index from Standard & Poors, which measures the resale price of a home, has fallen for a fifth consecutive month in the Minneapolis area. It dropped 1.4% in November. It's the longest slide in prices since the index showed almost two consecutive years of declining home prices (month-to-month), which started in 2007.

Prices dropped 4.5% from a year earlier. After a near 18% decline in 2008, prices recovered slightly in 2009 (up a little over 1%).

Has stimulus money helped the Minnesota economy?

Posted at 11:37 AM on January 24, 2011 by Bob Collins (1 Comments)
Filed under: Economy

Like the stimulus program itself, there's a little something for everyone in an investigation of what the stimulus program has brought to Minnesota and individual counties here. ProPublica's tracking shows $430 billion in stimulus funds have been dispersed through last September.

In the counties with the largest per-capita amount of stimulus funds, much of the money went to "broadband initiatives." In Lake County, for example, that was $56 million of the overall $69 million spent in the county.

That was the case in Cook County, too, where unemployment has gone steadily up -- from 6.6% to 7.8%.

The report, which is based partly on data from the recovery.gov Web site, does little to prove that the stimulus created or saved jobs... or that it didn't. In Minnesota as a whole, the unemployment rate dropped only .4 percent from November '09 to November '10.

Overall, comparison of the numbers is deceiving. Ramsey County, for example, is listed as having the largest per-capita share of the stimulus ($8,772), but that's because St. Paul is the state Capitol and much of the money went to state agencies.

Is high-tech business friendly?

Posted at 11:28 AM on January 18, 2011 by Bob Collins (5 Comments)
Filed under: Economy

Comparing business tax climate from state to state is a dicey proposition. Tax laws in each state are so different, sometimes a direct comparison is difficult. Today's report that Minnesota has to hustle to close a "high-tech" jobs gap, however certainly invites some comparison of "business-friendly" climate vs. high-tech economic activity.

The Tax Foundation annually releases this map, which names the best and worst "business tax climate." Minnesota annually appears as one of the 10 worst. 2011 is no exception. It comes in #43. Click the image for a larger version. The darker the color, the less business friendly, according to the Tax Foundation:

The Minnesota report on high-tech job growth uses data from the State New Economy Index.

Here's the overall scorecard. The darker the state's color, the higher the score:

There appears to be comparatively little association between "business friendly" and the overall score.

"Knowledge jobs" presents an even murkier picture. Several of the Tax Foundation's "best" states for business appear in the top 10. But so do several of the "worst," including Minnesota.

Ditto for jobs in information technology:

According to the report, issued in November, Massachusetts, Washington, Maryland, New Jersey and Connecticut "are the top five states at the forefront of the nation's movement toward a global, innovation-based new economy. On the business-friendly survey, that's #32, #11, #44, #48, and #47.

The bottom five states were unchanged from 2008. Mississippi and West Virginia have lagged most in making the transition to the New Economy, the report said. The other lowest-scoring states include, in reverse order, Arkansas, Alabama and Wyoming. On the business-friendly scale, in order, that's #21, #37. #39. #28, and #3.

Sign wars: What's your sign?

Posted at 10:15 AM on January 18, 2011 by Bob Collins (4 Comments)
Filed under: Economy

So, it's a fight you want, Wisconsin? Maybe you didn't know when you decided to erect those "open for business" signs on your borders that our state signs once said "the brainpower state."

We'll come up with a response. Just watch what News Cut readers can do. Here's a blank sign. Click on it to open the larger image, save it to your computer, come up with a proper response to Wisconsin, then send it back to me (you can also use this form).

I'll post them here. Like so:

"Karen E" of St. Paul cited data from The Daily Beast for her entry.

From Steve McPherson:

From reader Mark Anderson of Plymouth:

Kevin Whinnery's submission:

Charles Johnson is Wisconsin's new junior senator.

Is there a relationship between presidents and gasoline prices?

Posted at 4:00 PM on January 7, 2011 by Bob Collins (1 Comments)
Filed under: Economy, Energy, Politics

The unemployed: Moira gets a gig

Posted at 4:04 PM on January 6, 2011 by Bob Collins (3 Comments)
Filed under: Economy

It's been quite awhile since I wrote News Cut's The Unemployed series, in which I interviewed people who were, as the name implies, unemployed (I'm not opposed to doing this again if you're unemployed and would like to tell me your story. Contact me.)

Moira Webster-Larranaga, of Burnsville, was a human resources manager who got laid off around the time she also got cancer in 2009.

The mail bag today, however, brings good news:

I am not sure if you are still looking for follow-ups on the unemployed series, but in case you are, here's mine. I started my new job today, as the HR Manager for the Wedge Natural Foods Co-op. That's right, it took 22 months, 335 resumes and 26 interviews, but I finally got a job. And, it's a GREAT job. It's more responsibility than I've had before, and with a terrific organization that helps make our community a better place to live.

The news is bittersweet, however. Moira's sister, who came out to Minnesota in 2009 to help her sister through her cancer treatment, was diagnosed last February with cancer and died last summer.

"As I wasn't working, I was able to travel several times to see her and her family last spring," Moira says.

Battle continues in home loan modification effort

Posted at 2:13 PM on January 5, 2011 by Bob Collins (1 Comments)
Filed under: Economy

When last we left Vicki Hugen of Eden Prairie, she was trying to convince the bank that services the mortgage on her home to modify the mortgage. Wells Fargo had initially agreed to about a $2,000 a month mortgage, so she accepted her ex-husband's offer to take his share of the house in lieu of alimony. Then, the bank dropped her from the loan modification program and offered her a monthly payment over $3,000, which she couldn't afford. (Find the whole story here)

Things haven't changed much since I wrote about it last fall. The Minnesota attorney general's office said there wasn't much they could do other than send a letter to the bank suggesting it do something. The bank hasn't changed its offer, and thousands of dollars in late fees and penalties are piling up.

"I really don't have much of a plan now," she told me today. "Now I'm just getting random offers (from the bank). Each one starts out, 'this is to confirm the modification we discussed.' But I haven't talked to anyone. "

She says if her mortgage can be modified (she says she can afford about $2,300 a month), the fees and penalties would be removed, she could put the house on the market, sell it, and much of her mortgage could be paid off and she could "get out."

"I thought I was taking a reasonable settlement after the divorce. I'd like to be able to sell the house and end up not owing them 30 grand (in fees," she said. Filing bankruptcy is an option.

Hugen's story, of course, is being repeated thousands and thousands of times all over the United States. These aren't the old days when one could sit down with the banker who owns the mortgage. In Hugen's case, Bank of America actually owns her mortgage. Or does it?

Consider this chart, which popped up online in November when a homeowner "reverse engineered" who owned the mortgage:

Somewhere in there, something may make sense.

Homeless man gets job, house

Posted at 11:43 AM on January 5, 2011 by Bob Collins (2 Comments)
Filed under: Economy

Updating the morning mention of Ted Williams, the former DJ turned homeless person: The Cleveland Cavaliers basketball team has hired him fulltime and, he says, given him a house.

Here's video of his appearance on an Ohio radio station this morning.

The optimism gap

Posted at 10:06 AM on January 4, 2011 by Bob Collins (1 Comments)
Filed under: Economy

A Pew Research survey reignites an old debate -- at least for me: Are we more glum about the future because the future is more bleak than it was in the Depression? Or are we more glum about the future because we are connected to more information that tells us we should be glum about the future?

During the Depression, the Pew survey says, only 29% thought business conditions would get worse. Fifty percent figured things would get better.

Compare that to an October 2010 survey. Only 35% expect things to get better by this October.

Even in the Reagan recession -- when unemployment peaked at 11% -- Americans were more hopeful than they are today.

Is water the next oil?

Posted at 3:29 PM on January 3, 2011 by Bob Collins (4 Comments)
Filed under: Economy

What the airline-online reservation war means

Posted at 10:58 AM on January 3, 2011 by Bob Collins (4 Comments)
Filed under: Aviation, Economy

This is the kind of thing that could put travel agents back in business. Airlines are getting tough with online ticket booking sites. They're the sites who saved travelers money by allowing people to comparison shop for airfares. Who needed travel agents?

Expedia has stopped selling American Airlines tickets after American stopped selling on Orbitz. The airline wants people to go to its Web site, instead.

Might this cost you money? Maybe. Consider this: If you wanted to book a flight to Chicago and went to the American Airlines Web site, a Monday flight later this month (and a return flight a week later) would cost you $353. Booked via Expedia, many flights on United pop up with a round trip price of $139.40. Ouch.

Delta is doing the same, though with smaller sites. Delta stopped allowing three websites -- CheapOAir.com, OneTravel.com, and BookIt.com -- to list its flights.

If you've got the time to check every possible site, you'll probably be able to find the cheapest fare. Prism Money, the personal finance column, recommends this:

>>Check the sites that follow the other sites. Start a search with Kayak and Sidestep.com, both of which monitor several other airline ticket websites, and see what turns up.

>> Surf to individual airline sites for quotes, once you've seen the best that the aggregators and online agents are offering.

>> Call the airline of your choice and ask them what extra fees would apply before you buy your ticket. Factor that into your decision.

>> Join all the frequent flyer programs and email lists that you can, even if you're not really a frequent flyer. It's typically free to join. Airlines trying to gain tighter control of their customer relationships may start offering deals directly to consumers who are already on their list.

What will you do with your tax break?

Posted at 2:24 PM on December 29, 2010 by Bob Collins (9 Comments)
Filed under: Economy

Alfred Kahn's bananas

Posted at 1:08 PM on December 28, 2010 by Bob Collins
Filed under: Economy

Economist Alfred Kahn has died at 93. The long-time Cornell University economics professor is considered the architect of airline deregulation. Say what you will about the joy of flying these days, but the fact airlines are now what long-distance bus service was generations ago is due primarily to him.

But Kahn was also memorable for one of the best economics lessons ever for someone trying to understand what makes recessions worse: emotion.

As an economic adviser to President Jimmy Carter, he warned lawmakers that if they didn't get inflation under control in the '70s, the nation was heading for a recession or a depression.

But, as we've seen since 2008, if you even say the "R" word, let alone the "D" word, consumers shut the spigot off, more companies lay off workers, which makes more people stop spending, which makes more companies lay off more workers and on and on it goes until you're where we pretty much are today.

Only Kahn introduced this concept by invoking a new economic term: "banana." When he was giving testimony at the Capitol, whenever he needed to say recession or depression, he'd simply say banana instead.

It even inspired the late William Safire to write an essay on why people find the word banana so darned funny.

In old American slang, banana oil means "nonsense" (its humorous connotation far different from snake oil , meaning "fraudulent"). A top banana is a leading comedian. To go bananas is to go crazy, and the nonsensical meaning is reflected in the verse of another 1930's song, "But Not for Me," from the Gershwins' "Girl Crazy": "I never want to hear/From any cheerful Pollyannas/Who tell you fate/Supplies a mate;/It's all bananas !"

A banana republic was not just a country that produced profits for the United Fruit Company; it was a country with a rinky-dink government, having "backwardness" as its hallmark (until the name was adopted by an American retailer; now it has a yuppie connotation). A banana boat is a very slow boat.

Of course Kahn's strategy did not work. It was funny and all, but Americans could easily figure out what was going on, they stopped spending, and we had a heck of a banana shortly thereafter.

Reports of a housing rebound have been greatly exaggerated

Posted at 8:29 AM on December 28, 2010 by Bob Collins (4 Comments)
Filed under: Economy

Look out, below! The Twin Cities housing prices are in a nosedive. Again. The Case Shiller Index, which measures the resale values of homes, dropped another 1.9% in October from September, according to the report released this morning.

The drop wipes out all of the gains in prices the Minneapolis area made in 2010, most of which came in the late spring. Resale prices are down 1 percent on the year, and are down almost 3 percent from one year ago.

Housing rebound? It ain't happening. We may not have reached bottom yet.

It could be worse; we could be Chicago, where prices have dropped 6.5% in the last year, the survey said. Of the 20 metropolitan areas surveyed, only Los Angeles (3.3%), San Diego (3.2%), San Francisco (2%), and Washington (3.7%) recorded an increase in housing prices from a year ago.

Click on the table below to see a bigger image.

More analysis here.

For the older and unemployed, the news is not good

Posted at 8:55 AM on December 10, 2010 by Jon Gordon (1 Comments)
Filed under: Economy, The jobs we do

A recent Labor Department report found that older people who lose their jobs take longer to find work, and that more than 2 million people without work are over 50, according to Midmorning. The first hour of the show featured a discussion about the challenges facing educated, experienced workers looking for a jobs.

It was a harsh dose of reality.

The guests were Katherine Newman of The Johns Hopkins University, and Carl Van Horn of Rutgers.

Here are some highlights gleaned from the program:

-Older workers who've left the workforce are adapting to being rejected by employers, but not in a willing way. They just don't see the opportunity. We have to be careful to conclude they are just closing the book on themselves. What's really bad: They are at risk of losing their skills so that even when the economy revives, they will not be able to find work. Fifty-five is way too young for this to happen. (Newman)

-Prospects for improvement in the short term are not great. The recession is just too deep. (Van Horn)

-Older, unemployed workers are chewing through whatever resources available to them, just like Roger, a 57-year-old caller who burned through his 401(k) after submitting 400 resumes and two and a half years with no response. Workers are trying to get disability, spending their savings, and retiring early to get Social Security benefits. (Van Horn)

-Forced early retirement will expose older Americans to poverty. People will be having "a much poorer old age." Some people will be on Social Security for 25 years. This has huge consequences for the whole country, not just for those who are unemployed. (Newman)

-Going back to college for an older America can be both help and hurt job prospects. Some employers think salary demands from an applicant with an advanced degree will be too high so the applicant gets passed by. On the other hand, many employers will see an opportunity to get a very qualified person for much less money than during a healthy economy. Job seekers must be prepared to lower their salary expectations. (Van Horn)

-More education is a very good thing in aggregate, but we should recognize that as a country it will be hard to keep educating people when public higher education institutions are in terrible shape, fiscally speaking, especially when we need them most. (Newman)

-Before you chase a new degree, do extensive research into the real job prospects for the field you want to enter, as well as proof that the school you want to attend is good at job placement. School is expensive, results in lost income, and takes you out of the labor market. (Van Horn)

-The situation for older, unemployed Americans is not impossible. But it will take an extraordinary injection of economic growth to make things better for older workers. (Newman)

-Some employers feel freer to behave badly toward their older employees because they can more easily find replacements. (Van Horn)

-Part time jobs are almost as hard to find as full time jobs but if you can get one, because there is an opportunity for it to expand to full time. Any foot in the door is good. (Newman)

Fargo's odor problem

Posted at 2:00 PM on December 8, 2010 by Nate Minor (2 Comments)
Filed under: Economy

A methane well at the Fargo landfill. (Photo courtesy the City of Fargo.)

The Forum of Fargo-Moorhead reports this morning on a stinky problem: The city's landfill has lately been, shall we say, more odorous than usual:

"We kind of get used to it," said Paul Hanson, the Fargo landfill supervisor. "So when we can tell it's stronger than normal, then you know it's pretty bad."

The city isn't sure what the precise cause of the new stench is, but the likely culprit is wet weather this summer and fall, Hanson said.

Heavy rains washed away some of the landfill's dirt cover at 45th Street and Seventh Avenue North, exposing decomposing garbage and the smelly gases that come with it, he said.

The money line, for me anyway, is when the landfill supervisor says "Our biggest problem is that the city grew around us." If you've ever been to Fargo, you know it is not the most vertical of cities. 2,631 people per square mile in Fargo compared to 28,852 per square mile in NYC, according to US Census data.

The story as to why Fargo built out instead of up is similar to many American cities: cheap land. In the late 1960s, an urban renewal project in Fargo failed when a developer (who, ironically, was one of the original promoters of Fargo urban renewal), announced plans to build a shopping mall on the outskirts of town. The Forum dubbed it the "$15 million Bazaar on the Prairie."

The mall now anchors Fargo's retail industry, which attracts many Canadians and has turned the city into something of a regional shopping hub. New schools, restaurants and homes followed the trend out of building out of the old neighborhoods.

Let's just hope shoppers remember to plug their noses, in certain parts of town anyway, on their way to the mall.

7 personal finance tips from Ruth Hayden

Posted at 9:18 AM on December 3, 2010 by Jon Gordon (3 Comments)
Filed under: Economy

In case you missed Midmorning's financial educator Ruth Hadyen on the radio today, here is some of the advice she offered to listeners:

1) What's considered a good credit score is creeping up. The high-600s used to be considered good, but now you need to be in the 720-760 range.

2) The two most important factors in achieving a good credit score are on-time payment of bills and the relationship between your credit use and credit limits. The more headroom the better.

3) Eighty percent of credit reports have errors, according to some reports. You need to visit AnnualCreditReport.com to check for errors. First, make sure all your personal information is correct -- spelling of your name, accuracy of address, etc. Then, check your actual financial records for errors. If you find errors in your personal info, contact the credit reporting bureau. For errors in your financial records, contact the creditor first. If you get no satisfaction, you can add the disputed information to your credit report.

4) One way to build good credit: Take out a small loan from a bank or credit union but don't spend the money. Make regular payments from that pool of money.

5) Think of the credit report as a picture of you being passed around. How can you make it look better? Change the things over which you have control. You can't change the system, so how do you work within it?

6) It's better to have two cards or stay well under the limit on one card, then to just have one card that's close to being maxed out.

7) Credit card balance transfers can be a good way to help pay off debt if you're not just moving debt around. Playing a debt shell game doesn't look good to credit bureaus. Consolidate to lower rates but then begin chipping away at the balance.

How much is $6.2 billion?

Posted at 12:12 PM on December 2, 2010 by Bob Collins (9 Comments)
Filed under: Economy, Politics

The new budget deficit is $6.2 billion in Minnesota.

How much is that?

$6.2 billion is....

... the total payroll for legislators if the Minnesota House of Representatives had 199,100 state representatives, or one state rep for every 26 people who live in Minnesota.

... the cost to use the state airplane to ferry the governor hunting every weekend (weather permitting) until December 2, 2739.

... how much you would have counted out if you started now and counted out dollar bills every second and don't stop for the next 196 years.

... roughly the amount it would take to build one new fully-loaded high school in every county in Minnesota.

... approximately the entire year's income for everyone in St. Paul.

... enough to pay unemployment benefits for the next three years for all of those currently receiving them in Minnesota.

... what it would cost to build 62 miles of light rail.

... all the license tab fees paid in this state for the next 12 years.

... the cost of running a radio ad on a Sioux Falls radio station every 20 minutes for the next 2,359 years, urging businesses there to move to Minnesota.

Go ahead! Add your own here.

The economy: Hot or not?

Posted at 12:31 PM on December 1, 2010 by Bob Collins
Filed under: Economy

This month marks the third anniversary of the start of the Great Recession. It's officially over now, according to the economic statistics, but the economy is still horrible for many people. Remember back in 2008 how far away it seemed when the economists said things wouldn't improve significantly until late 2010?

It's late 2010 and an analysis from the liberal think tank Economic Policy Institute suggests it's getting worse, at least for people looking for meaningful work. It says the "underemployment rate" is going up, not down.

The large numbers of workers who have stopped looking for jobs or can only find part-time work suggest that high rates of unemployment will likely persist even when more jobs are created. Moreover, even the 17% underemployment rate does not include people who are working full-time but have had to take jobs below their skills, training or experience level.

Or is it?

Black Friday drew big crowds, CyberMonday sales were up 19 percent, consumer confidence is at the highest point since the beginning of the summer, and today the stock market is having its best day in three months.

Wisconsin jeweler urges diamond purchases before Second Coming

Posted at 3:27 PM on November 30, 2010 by Bob Collins (4 Comments)
Filed under: Economy, Religion

Christmas is over-the-top season for jewelry store advertising. There's still a lot of the holiday season left to go, but a Superior, Wisconsin jeweler has already won this year's award for most-memorable TV commercial.

Larry Falter of LTD Jewelers is running a "Second Coming Sale," based on the belief that Jesus is returning to earth very soon. In the meantime, his diamonds are half off.

"I've had people come in and want to talk about Jesus Christ and I've had people come and say, 'Where are those diamond earrings? I want to buy them for half off," Mr. Falter told me this afternoon.

Falter has been running TV ads "for years and years," but this is the first time he's brought his religious beliefs into the mix. He recently returned from a visit to Israel as part of Jews for Jesus. "I just thought we would have some fun with it all," he said. "I haven't had any negative comments, but there could be some I don't know about. People are not responding because to them it's a negative. But I'm OK with it. We have signs in the store that talk about having a 50-percent-off Second Coming sale."

The need for diamonds and the Second Coming generally don't go together very well. "They don't," he acknowledges. "But my point is in the here and now if you're looking to do this or that, here we are. People can hear one message and maybe do something with that or not with regard to the Lord, and the other thing they can do something with -- or not -- is where to shop."

Falter doesn't see the ad, currently running on two Duluth TV stations, as being the beginning of a series on the Second Coming, but he's not ruling it out. "I'm a little more out there right now as a Christian businessman. Will I find I want to do more like this in the future? I don't know. It's just something that was timely for me right now, maybe because of my own personal convictions and having those reinforced by the trip to Israel, and also by the fourth quarter in any jewelry business being the most important to do business in. What will I do next year? I couldn't honestly give you a truthful answer."

For now, he's more concerned with the economy. "I think people are going to shop more strongly than in recent years," he said. But he's worried the publicity surrounding Friday's meeting of a presidential commission charged with finding ways to cut the U.S. deficit will kill consumer enthusiasm.

"If they hit the hammer on this really hard, it could set a shock wave of 'Maybe, I should hold back a little bit,'" he said.

Update 8:36 a.m. Wed. - I wasn't aware of this yesterday but Aaron J. Brown has written about this ad. Find it on his excellent blog.

Big gas price jump in Minnesota

Posted at 11:50 AM on November 30, 2010 by Bob Collins (14 Comments)
Filed under: Economy, Energy

General Motors picked a great day to roll its first Chevy Volt off the assembly line. The price of gasoline in the Twin Cities jumped overnight to near $3 a gallon. This is the highest price we've seen since the economy collapsed in 2008.

Is the Volt the answer to higher gas prices? Maybe. But when it came off the assembly line today -- it'll be in showrooms in a few weeks -- it came with a price tag of about $41,000.

It also came with broken promises. The EPA says the car will get about 60 miles per gallon when it's using its electrical and gas systems. But after about 50 miles or so, it's a pretty ordinary car, according to PC World:

According to the EPA, Volt drivers will only be able to get around 35 total miles of operation before the car's battery goes kaput and the gas engine takes over. After that, you'll be able to continue on for around 344 miles gas-only, but the car's fuel economy drops to around 37 miles per gallon sans electrical assistance.

That's a substantial drop in performance from the promises GM made about the Volt. Early predictions were it would get more than 200 miles per gallon. And it still might if you drive only short trips and are able to tool around town on battery-only.

But don't expect to negotiate much with the dealer. GM will only make about $1,000 on each car.

Gas mileage hasn't been a big concern for a few years now, but from the indications on the signpost today, that's about to change.

Is Minneapolis the new Cleveland?

Posted at 8:37 AM on November 30, 2010 by Bob Collins (5 Comments)
Filed under: Economy

Pay freeze?

Posted at 11:45 AM on November 29, 2010 by Bob Collins (9 Comments)
Filed under: Economy, Politics

President Obama today proposed a pay freeze for federal employees for the next two years. It's a pre-emptive strike in advance of Republicans taking control of Congress. Many in the GOP have vowed to reduce the federal workforce by 10 percent.

Obama says his move will save $5 billion over the next two years. The pay freeze will not apply to the military.

There are about 2.1 million federal employees (including the military). The number has grown in recent years. Nextgov.com analyzed why:

There were fewer federal workers in 2009 than in 1990, 1980 and 1970. Now take a closer look at the OPM table. Much of the growth, understandably, occurred in Homeland Security agencies, increasing from 70,000 to 180,000 - a jump of 110,000. Justice Department jobs went from 98,000 to 113,000 -- more than 15,000 new jobs added. (Again, crime and more Homeland Security related.) Jobs at the Veterans Department increased from 220,000 to 297,000 -- that's 77,000 more federal workers. Again, a result of Homeland Security, or rather staffing up to take care of thousands of veterans coming home from two wars. And there's a lot of information technology jobs in there.

Almost all of the new jobs created were as a result of 9/11, the analysis said. Compared to the 1980s, federal jobs in agriculture, education, and the Treasury have all declined.

But back to the freeze. Will it work? Here's some napkin math:

There are (and this is debatable) 1.43 million federal workers.

A savings of $5 billion per year is the goal.

The average amount being forfeited by a federal worker is $3,496.

The current deficit is about $1 trillion.

On a per-dollar basis, the president's move cuts one-half cent for every dollar of the federal deficit. That doesn't quite reach the level of a drop in the bucket. It also assumes that the cost of benefits doesn't rise.

Would the Republican plan do much more? The average federal salary is about $68,000. Annual benefits, reportedly, cost $40,785 (this may include benefits under the GI Bill). The total saving from cutting 10 percent of the civilian workforce would be $15.5 billion or a penny and a half per dollar of the deficit. That, however, doesn't factor in the cost of lost income taxes and the cost of firing employees.

What else needs to be cut?

The things you've just got to have

Posted at 9:02 AM on November 26, 2010 by Bob Collins
Filed under: Economy

We understand the way evolution has made shopping after Thanksgiving instinctive, but we haven't seen anything this year in the "I've gotta have it" category that makes getting up early worth it.

Until now.

(h/t: Boing Boing)

Here's one from the Museum of Possibilities that's not yet available (maybe next year, better start sleeping out at the store now): The mobile motorcycle office.

Motorcycle and workplace angst sold separately.

Here's something we actually saw at Oshkosh this year. Probably not practical for a Minnesota winter. But still...

By the way, if you're not interested in the gizmo, zip ahead to the 5 minute mark and learn about this guy's background. You might have heard of his dad.

Show us your tax bill

Posted at 11:31 AM on November 19, 2010 by Bob Collins (76 Comments)
Filed under: Economy

This is the time of the year when the proposed property tax bill statements are arriving in area households and early signs are there's a wide disparity in these bills.

The market value of homes is dropping universally, but some tax bills are going up, some are going down. What's your situation?

Last night, homeowners in Minneapolis flooded a hearing to protest the huge jump in their property tax bills.

Some said their total property tax bill is going up 18 percent.

By contrast, I opened my statement with some trepidation last evening, only to find out that my total tax bill is going down 3.8 percent. The taxable market value of my home has dropped about 12 percent.

I want to create a map showing the varying degrees of property tax bills. So please comment below and pass along your data. you don't have to reveal personal data such as market value. Just indicate the percent change of your total property tax bill and what city (and neighborhood, if applicable) you're in.

Update 11:59 a.m. - Ed Kohler at The Deets has an interesting look at Minneapolis property taxes.

Simple conclusions hard to find in wake of Lockheed Martin announcement

Posted at 12:53 PM on November 18, 2010 by Bob Collins (5 Comments)
Filed under: Economy

Today's surprise announcement that Eagan is going to lose 650 jobs is certainly an invitation to revisit the simple proverbs of the recently completed campaign season.

Six-hundred-and-fifty jobs? That's a lot of people working and spending money. Is the impact of losing them going to be any less just because they were jobs created with government money?

Lockheed Martin, the largest defense contractor in the world, makes the avionics systems for the P-1 marine surveillance plane. It's a private company, of course, that employs the people because the U.S. and other nations wage wars and/or have huge defense budgets.

There's a little something for everyone in today's announcement. Except for the people losing their jobs.

The reality of how intertwined jobs are with government spending becomes more clear, and more confusing. Liberals, for example, might point out that conservatives are for less government spending and this is what happens when government spends less; that the claim that "government doesn't create jobs" is wrong. They could even point out that the jobs are going to three states, two of which are rated in the top 10 of business-unfriendly states.

But conservatives could equally point out that liberals who want the U.S. to cut its defense budget will cost people their jobs. And that peace thing? War employs people even as it bankrupts a treasury.

In the complex nature of the economy, where does the government part end and the private part begin?

In other unemployment news today, Republicans in the House have blocked a bill
that would have extended jobless benefits for the long-term unemployed beyond the holiday season.Two million people will lose benefits averaging $310 a week nationwide by the end of the year.

What's the love for St. Paul, Duluth? It's not the economy

Posted at 8:58 AM on November 15, 2010 by Bob Collins
Filed under: Economy

Knight Soul of the Community 2010 - National from Knight Foundation on Vimeo.

St. Paulites and Duluthians, what draws you to the city and makes you want to call it home?

The Knight Foundation and Gallup have completed three years of polling in 26 communities in the United States in which Knight owns newspapers-- Duluth and St. Paul were chosen in Minnesota. The goal was to find what creates an emotional bond between people and the community in which they live.

For all the talk about the economy and the importance of jobs, the economy wasn't much of a factor in either St. Paul or Duluth. Nationwide, however, the bond was related to economic growth.

In the St. Paul area, social offerings (entertainment infrastructure, places to meet people, community events), aesthetics (an area's physical beauty and green spaces) and openness (how welcoming the place is) are the most important factors emotionally connecting residents to where they live.

Aesthetics was perceived as a community strength, particularly the area's parks, playgrounds and trails. All aspects of aesthetics were rated significantly higher in 2010.

Social offering and openness need improvement to further attach residents to the area, however both were rated significantly higher in 2010. Nightlife was rated significantly higher. Gays and lesbians are seen as significantly more welcome in 2010 - all positive momentum that helped to improve these challenge areas for the community.

The study said the economy isn't rated very highly as a "bonding agent" for people. "Leadership" was rated even lower. Here's the St. Paul findings.

The findings for the Duluth area aren't much different:

In the Duluth area, social offerings (entertainment infrastructure, places to meet people, community events), openness (how welcoming a place is) and aesthetics (an area's physical beauty and green spaces) are the most important factors in emotionally connecting residents to where they live.

Aesthetics, particularly the natural beauty of the area is perceived as a community strength.

Social offerings, particularly the cultural opportunities, and openness, particularly to young talent needs improvement to increase resident attachment. However, nightlife is rated significantly higher in 2010. The area is perceived to be most welcoming to seniors and least welcoming to young talent, although both groups are seen as significantly more welcome in the area in 2010. Residents 55 and older are the most attached of all age groups, whereas 18-34 year old residents are least attached.

Duluth, why don't you welcome "young talent?" Here are the Duluth findings.

As of 9 a.m., a live presentation on the findings can be found here.

Tales from the tough times

Posted at 3:39 PM on November 8, 2010 by Bob Collins (3 Comments)
Filed under: Economy

The Associated Press says old stigmas of shopping for price have faded away in tight economic times. People are buying store brand items in the grocery stores, and shopping Goodwill stores for clothing.

But the article might've missed when it tried to show that even the wealthy are "slumming it," too:

Jaime Palmer of Dallas used to go to Neiman Marcus and spend as much as $300 on dress shirts by such high-end designers as Hugo Boss and Thomas Pink.
Now, Palmer, a 36-year-old a managing partner at an investment boutique, buys from a new label called J. Hilburn, which customizes dress shirts for a much lower price - $120. As for his suits, he's turning to outlets.
"You don't get the service. They don't bring you coffee," he concedes. "It did have a bit of a stigma for me." But living through the Great Recession has made him reassess how he shops, he says.

How have you changed your shopping habits? Aside from giving up coffee, of course.

Plenty of questions, no easy answers in Pipestone

Posted at 3:35 PM on November 3, 2010 by Bob Collins (1 Comments)
Filed under: Economy

If tax breaks and a "business friendly" atmosphere are what it takes to keep businesses in Minnesota, you sure can't tell by Pipestone, Minnesota.

Gov. Pawlenty's JOBZ program, which gives tax breaks to businesses in economically-distressed areas of the state, has always been controversial. It's also been a good laboratory to see to what extent tax breaks will keep big business satisfied.

This week, Suzlon, the India-based manufacturer of wind turbines announced it's shutting down what's left of its plant in Pipestone. The Worthington Daily Globe reports the action comes despite the fact local and state officials bent over backwards to keep the company happy:

The JOBZ program designation was for more than 80 acres of land, making Suzlon eligible for hundred of thousand of dollars in tax incentives such as no property, sales or state income tax, no corporate franchise tax and a tax credit for high-paying jobs.

More than $250,000 was invested in the land, and $1 million was put into the infrastructure. The land was sold back the Suzlon for $1. In October 2005, Gov. Tim Pawlenty was on hand to scoop a shovelful of dirt at the groundbreaking ceremony.

Then, in June 2009, half of the workforce at Suzlon was laid off, leaving the community shaken. At one time, there was a peak workforce of more than 500 employees. With Monday's notice, the plant will employee about 30 people by Jan. 1, 2011.

In the aftermath of the election, Pipestone may serve as a cautionary tale: It's a long way -- and a long time -- between a change in economic theory and the effect on the person who wants a job.

On CNBC this morning, curmudgeonly Mark Haines noted a conversation with small business owners, and said two of the three he talked to said "it doesn't matter what you do with my taxes, I don't have any demand for my product."

Suzlon's announcement comes not long after state and local officials in St. Paul made one last pitch to Ford to keep St. Paul's truck assembly plant open. They offered a blank check to Ford. Ford said "no thanks."

The rejection of Minnesota by two large industries is a perfect example of the economy of Minnesota being more complicated than political campaigns would have us believe.

If government can't create jobs, if tax incentives for Pipestone can't keep jobs, if nobody wants to buy a wind turbine in Minnesota or a small pickup in St. Paul, what are hundreds of people supposed to do for work, and how long should they wait?

Are you better off than you were two years ago?

Posted at 12:23 PM on November 1, 2010 by Bob Collins (7 Comments)
Filed under: Economy, Politics

Home resale prices drop in Twin Cities

Posted at 8:53 AM on October 26, 2010 by Bob Collins
Filed under: Economy