Wealth & Poverty

Ways to Connect

Five labor market indicators, one minute each. They are:

1) This year, the average number of jobs added to the economy each month has been 215,000, an increase on last year's average of 182,000.

2) The share of adults between the ages of 25 and 54 with a job is now 79.5 percent.

3) The manufacturing sector has added 327,000 jobs in the past year, which represents a faster pace of job creation than the overall economy — a reversal of the trend from a few years ago.

4) The unemployment rate for high school graduates with no college experience has fallen to 4%.

Updated at 9:08 a.m. ET

The economy continued to add jobs at a steady pace last month, and the unemployment rate remained low. Analysts have been looking for signs that wage growth might pick up, but it held steady, too.

Payrolls grew by a lower-than-expected 157,000 in July, and the unemployment rate edged down to 3.9 percent, as projected, the Labor Department said Friday.

In recent decades, income inequality in the United States has been climbing. Scholars and pundits argue about what causes the trend and how problematic it is, but they largely agree that it has happened.

But has the rise in income inequality between rich and poor also been accompanied by a widening cultural distance between the two groups? A new working paper from Marianne Bertrand and Emir Kamenica investigates the question. And its approach to answering it is amost as interesting as what it found. On today's show, we discuss it with Emir.

Tariffs have been dominating the economic news this summer. President Donald Trump has announced new import taxes on goods coming from China, Europe, Mexico and Canada. But what happens then? Today on the show, Stacey and Cardiff go into the belly of the beast: in Newark, New Jersey.

Music by Drop Electric. Find us: Twitter/ Facebook.

When you order stuff online, it may cost less to have it shipped across the world than across the street.

Take the Mighty Mug. It's a travel mug that's almost impossible to knock over, invented by a guy in New Jersey named Jayme Smaldone. A few months ago, Jayme realized he could order a knockoff Mighty Mug from China and get it shipped for less than it would cost him to ship his mug to a neighbor.

The Federal Reserve on Wednesday held off on raising its key interest rate, which plays a role in loans to consumers and businesses.

The Fed is sticking to the script it has been forecasting to financial markets, but it's expected to raise rates twice more this year — on top of the increases it implemented in March and June.

The pace of wage growth is one of the best indicators of economic health. But wage growth can be measured using a number of different methods. Each method has strengths and weaknesses, and each method tells a slightly different story about how the economy, and the labor market, is doing.

We speak with economist Ernie Tedeschi, who suggests three different measures of wage growth that we should all be tracking. In chart form, they are:

1. Average Hourly Earnings for all private sector workers:

No question, Russia is a formidable force in the global political arena. But its economy is smaller than the economy of Texas. Russia's economy was growing like crazy between 1999 and 2008. But it's about the same size now as it was at the end of the Great Recession. Today on the show, we look at what's been holding back Russia's economy.

GDP, OMG!

Jul 27, 2018

The gross domestic product is a measure of all the goods and services an economy produces. For the second quarter of this year, the U.S. economy grew at a stellar rate of 4.1%. Today on the show, we take a deep dive into everybody's favorite economic indicator: How is it measured? Why is it so high? Will it continue?

It's hard to build new housing in cities like San Francisco. There's restrictive zoning that keeps developers from building too high. Plus, neighborhood councils get to object to specific projects they don't like.

These restrictions are a big part of why rents have gotten... too high. So a group of renters is pushing for a simple solution: Let developers build.

Only problem is, almost everybody hates it. In working class neighborhoods, people worry new development means gentrification. In richer areas, homeowners don't want high-rises blocking their million-dollar views.

Mark Twain was a literary giant — but a horrible investor. John Maynard Keynes was one of history's greatest economists, but his genius for economics was less helpful to his own investment choices than his mental flexibility. Warren Buffett's investment track record is almost without equal, but he once made a $6 billion mistake.

On today's show, we speak with Michael Batnick, author of Big Mistakes: The Best Investors and Their Worst Investments, about the mistakes made by these famous investors and the lessons we should all learn from those mistakes.

President Trump is eager to tout a fast-growing economy, boosted by the tax cuts he pushed through Congress. That makes Friday morning's report on gross domestic product a highly anticipated news event.

Did GDP growth top 4 percent in the second quarter — more than double the first-quarter pace — as many economists project?

Forecasts are all over the board, with estimates even among Federal Reserve economists diverging widely.

The events of 10 years ago show why these forecasts are so important.

Adam Smith, the father of economics, had a problem. He believed in the wisdom of markets--that the free market would always settle on the best price for something. That price would be an expression of how valuable that item was. The problem: diamonds are more expensive than water and water is more valuable to us than diamonds.

We talked to Linda Yueh about the paradox and Smith.

Poop is big business in Dakar, Senegal. That's because a lot of the homes have septic tanks, which need to be cleaned out regularly. The best way to clean your tank is by hiring a proper truck, which arrives with a vacuum.

The problem is that for years, the guys who drove the poop trucks operated as a cartel, and they squashed competition and kept prices high. So a lot of people turned to a cheaper alternative: Men who clear out septic tanks by hand, with shovels and buckets, and basically bury the poop in the street. It's terrible work and bad for the environment.

Last week, President Trump told CNBC that he doesn't like the Federal Reserve's policy of gradually raising interest rates. In particular, he laments that rising interest rates will lead to a stronger dollar, potentially exacerbating the U.S. trade deficit.

The dollar has strengthened this year, but if President Trump wants to assign blame for the stronger dollar, then he should save most of it for his own agenda.

Josh Barro of Business Insider joins us to discuss.

Links:

The European Union has fined Google more than $5 billion for abusing the near-ubiquity of its Android operating system. Regulations said Google forced phone makers to pre-install Google apps on their phones or else they wouldn't get Google's operating system for free. Today on the show, we look at Google's Android operating system.

Three years ago, the Democratic Socialists of America had about 6,000 members across the country--fewer than the American Racing Pigeon Union.

Since then, DSA membership has shot up more than 600 percent. And Democratic Socialist candidates are popping up across the country. One of them, Alexandria Ocasio-Cortez, is likely to land a seat in the House of Representatives this fall.

The Market For Air

Jul 20, 2018

Jake Dell is the 5th generation owner of Katz's Delicatessen — America's oldest Jewish deli. A few years ago Jake had a problem. The neighborhood was changing, his overhead and his property taxes were skyrocketing, and he started to wonder, can a family-owned deli survive in one of the world's most expensive cities?

And then he realized he had something he could sell, something worth more than sandwiches and coleslaw, something that had been right under his nose the whole time... or rather right above his head.

The U.S. economy is doing pretty well. Jobs continue opening, unemployment is low, and growth appears robust.

But that's no reason to be complacent. Today on the show, Stacey and Cardiff present three indicators that make them feel a bit queasy.

None of these indicators guarantees that an economic slowdown is on the way, but they could be doing a little better — and all of them will make you sound smarter around the water cooler.

Updated at 3:19 p.m. ET

The Federal Reserve got a rare piece of advice from the president Thursday. The central bank is an independent agency and presidents usually don't comment directly on Fed policy.

Climate change seems like this complicated, intractable problem. But maybe it doesn't have to be.

In 2013, we talked to a couple economists about a very simple idea that could solve the climate change problem: Tax carbon emissions. A carbon tax could be paired with cuts in the income tax. It would drive down emissions without picking winners or losers, and without creating complicated regulations. It all seemed so elegant. So doable. At the time they made a bold prediction.

The United States and China have started their trade war, and it's not clear how long it will last or how it will end.

Economists largely agree that the tariffs used to fight trade wars are destructive, and that the destruction is amplified by the retaliations and escalations of each side.

What if there had been a way to avoid this trade war well before it started, a strategy that would have addressed the conditions that led to the trade war before they became problematic.

A trade war with China, the European Union and other trading partners is casting some doubts about the U.S. economic future, Federal Reserve Chairman Jerome Powell said Tuesday.

And the longer it goes, the more potential harm it could cause, Powell told the Senate Banking Committee at a hearing about the Fed's monetary policy and the economy.

Saving Women

Jul 17, 2018

Sallie Krawcheck spent her career on Wall Street and she says the gender investment gap is a problem we need to solve and a problem we can solve.

Music by Drop Electric. Find us: Twitter/ Facebook.

Iga, a small Japanese city and the birthplace of the ninja, is facing a serious problem. Today on the show, Sally Herships goes to Iga to discuss the city's plan to use ninjas to fight depopulation.

A few years ago, an entire beach in a remote area of Jamaica vanished. Thieves dug up hundreds of tons of sand and hauled it away in dump trucks in the middle of the night. The sand--white, powdery, Caribbean sand--was worth about a million dollars.

It was an early sign that the world was facing a growing problem. Sand is a key ingredient in all kinds of things. It's in concrete, in glass, in your cell phone. But there isn't enough sand in the world for everyone, and we're starting to run out. So people are stealing it, smuggling it, and getting killed over it.

We Hear You

Jul 13, 2018

The Indicator comes out every day, and every day we tackle a different topic: Venezuela, interest rates, plastic straws. And every day, we are lucky enough to get letters from you. Today on the show: We hear you! We respond to some comments, answer a few listener questions and ponder one of life's great mysteries: How, exactly, do you pronounce Hyundai?

The Last Straw

Jul 12, 2018

There's a global movement right now to get rid of the plastic straw. Scotland, Vancouver and Taiwan have all put bans in place. So have companies like IKEA, Alaska Airlines and Starbucks. The idea is to start reducing the amount of plastic waste in our oceans. Straws are far from the biggest source of plastic pollution, but it's a start, right? Well... maybe. New research shows that the straw ban could really help the global plastic problem, or could really backfire.

Episode 427: LeBron James Is Still Underpaid

Jul 11, 2018

The best player in basketball is getting a raise. LeBron James just signed a contract to switch teams to the Los Angeles Lakers with a four-year, $154 million contract. But he may still be the most underpaid sports star in the world.

Back in 2013, when LeBron was making a paltry $17.5 million per year, economists told us he was very underpaid. And we found out why the NBA team owners, the players, the fans and even LeBron James himself want to keep it that way. Today on the show, we call some of them back to see if LeBron is still getting hosed.

Your bank has its own bank account — with the Federal Reserve. That account pays interest of nearly two percent and offers instantaneous payment clearning.

We, on the other hand, get much less than two percent on our own bank accounts, and clearing a check or money transfer can take days. The problems are worse for the large unbanked population in the United States, which faces burdensome costs and inconveniences because they lack access to basic banking services.

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