For over a year, cities all over the United States, as well as in Canada and Mexico, have been in a battle to get Amazon’s attention. Two-hundred and thirty-eight entries from states, cities and towns were submitted since the announcement of the search for Amazon’s HQ2, all offering the online retail giant millions of dollars in tax incentives. Local officials all over North America had immense excitement about the possibility of bringing many new, high paying jobs to their city. In the end, Amazon chose to split its second headquarters between two areas that already have the greatest number of Amazon employees other than Seattle and the Bay Area – Long Island City, NY (just outside of Manhattan) and Arlington, VA (just outside of Washington D.C.) The decision is controversial, and has local taxpayers wondering whether or not the benefits outweigh the downsides of the company’s presence.

Amazon has committed to generating 25,000 new jobs in each city, with an average salary of more than $150,000 for those jobs. They have also committed to building community infrastructure and to donate space for a new public school and ““for a tech startup incubator and for use by artists and industrial businesses.” There are many potential benefits on the local economy and individuals as a result of so many new jobs and an investment in the community. Additionally, college students in the surrounding areas are enthusiastic about the number of diverse, high-paying future job opportunities.

But many concerns are also being raised, particularly surrounding the headquarters in Long Island City, in the Queens neighborhood outside of Manhattan. Alexandria Ocasio-Cortez, the representative-elect of New York’s Fourteenth Congressional District said on Twitter, “The idea that [Amazon] will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.” Others have also openly criticized the use of government money for a private corporate government, when that money could be used for so many other things.

There are additional concerns over housing prices rising outside of Long Island City and Arlington. According to senior economist at First American, Odeta Kush, home prices in Seattle have jumped 35 percent since Amazon opened its doors. In the last five years, that jump was 73 percent for homes and 31 percent for rent prices, according to Zillow data.

In places like New York City and Washington D.C., where home and rent prices are already some of the highest in the U.S. these statistics are extremely concerning to many residents. However, some analysts believe price trends will not mirror Seattle’s because of the already established housing markets in the two cities.

As plans for the split HQ2 are being finalized, everyone seems to have an opinion on the decision – including SNL writers.

The recent announcement is another example of how a company that started out as an online bookstore, has become such a powerful force in our society. Amazon has an economic impact that cannot be ignored, and has even manage to seep into popular culture,

Widespread fires burn through thousands of California homes year-over-year. This doesn’t only affect the homeowners and their families but also lays immense pressure on firefighters in these dry areas. Also, insurance companies struggle as they insure these households and properties that are prone to blow up in flames.

In light of the recent fires burning through Northern and Southern California, I am discussing the economic impact that this disaster-prone state has on insurance companies. As one of the driest states in the United States of America, it seems like insurance companies struggle as California officials don’t do much to mitigate these risks. There is not much of a boundary for homeowners to build on land that is so dry that the probability of a wildfire is high. It feels like these fires that happen on a yearly basis are not enough for someone to take a step in the direction for safer housing, which would result in insurance companies saving money, as well. While public resources are spent defending or salvaging what is left of those homes which shouldn’t have been built in the first place, insurance companies must defend themselves or they are at risk for driving themselves out of business.

As California residents sift through the ash and hope to rebuild, funds may be insufficient, as insurance companies don’t need to cover one homeowner’s lost property, but the entire community (if not more). According to a Forbes article discussing insurance and loss of use for the recent victims of the Woolsey and Camp Fire in Los Angeles and Ventura County, “What is often overlooked is loss-of-use coverage. How long will it take to repair or rebuild?” (Gorman). Loss of use, or living expenses during the duration of the recovery process, usually covers living expenses and rental value. Although, not all insurance plans have this, and when a fire causes destruction, Californians may be surprised when their insurance companies don’t fully cover these temporary living costs. Homeowners in these high-risk areas must understand that in cases of natural disasters, they may be left with a much lighter wallet than expected.

According to a Los Angeles Times article discussing fleeing insurers, insurance companies in high-risk areas for natural disasters are no longer agreeing to insure homes. For example, a couple living in Lake County in Northern California is denied insurance. In the area which the couple resides, “50% of the land has been burned by fires in the past several years” (Newberry). With an already expensive premium of $2,100, their rate had skyrocketed to $5,800 in only two years (Newberry). The increase in California wildfires leads to more fleeing insurers. What insurers have continued to do in California is to inflate the price of insurance in high-risk areas to veer builders away from this land, and make home buyers think twice before buying a property with a likelihood to catch fire.

The Los Angeles Times article also provides statistics on the California Department of Insurance: This department acknowledges that the trend of inflating insurance prices is a rational and fair response on the part of the insurance companies. In 2017 alone, they “received nearly $12 billion in claims from wildfires that destroyed more than 32,000 homes. It makes sense that companies will write fewer – if any – policies in areas where they predict losses will outweigh what they can recoup through premiums.

What’s next? Legislators must take action to protect home buyers and homeowners who have made efforts to reduce wildfire risk.

It is no secret that Uber is more popular in American cities than European cities. However, the company is making attempts to change this. Uber has recently returned to Germany. Previously, Uber had been forced out of Germany due to not following German regulations. This time, the company is trying to make amends. 

Germany requires all drivers to pass health and driving tests, and to receive a business licenses that includes a bookkeeping exam. Additionally drivers must return to a home base between trips, which result in limitations in the number of rides that can be made. Car-pooling services are not allowed. When Uber first arrived in Germany, the company didn’t inform local officials that it was coming and so as soon as the app went live, anybody was able to transform his or her car into a taxi, even if they didn’t have a license. Uber has been trying to make amends since this faulty communication. The CEO, Dara Khosrowshahi, has been to Germany twice in the past year in order to apologize for the company’s past behavior. Uber has also vowed to follow all of Germany’s regulations, as well as incorporating electric cars into Uber’s fleet out of respect for the German government’s fight against air pollution. Uber plans to re-establish its service into Germany by the end of 2018.

Uber will first return to Düsseldorf. The company has chosen this town because customers have logged into the app more than 150,000 times since January and this was a period of time when there weren’t even any cars on the road.

Re-entry will not be especially easy for Uber. The company faces more competition than it did when it started in Germany three years ago. There is now a service owned by BMW called DriveNow that lets people rent a car with an app for short trips around cities. Moia is testing a ride-sharing bus service in Hamburg. MyTaxi is a taxi-dispatch app that is widely used in Germany. Lastly, Taxify also provides rides in European cities. 

In addition to other competing apps, Uber is also facing major backlash from German taxi drivers. Last month dozens of taxi drivers protested outside of Uber’s office. They blasted their horns and stopped traffic. The Düsseldorf police said there have been reports of six incidents between taxis and Uber drivers. These reports include incidents of taxi drivers verbally abusing and harassing Uber drivers. 

If Uber were able to successfully expand into Germany, this would result in great things for the company. Germany is the world’s fourth-largest economy and the largest in Europe. It has multiple densely populated cities and has a wealthy, tech savvy population. Currently, in London, the company is involved in a lawsuit that would require a minimum wage and to provide holiday time to drivers. In Spain, taxi drivers have persuaded politicians to limit the number of Ubers on the road. In Italy, the company has been kept out due to regulations. It seems as though Germany may be Uber’s greatest hope in expanding into European markets. 

Denim has long been referred to as the fabric of American lives, and Levi Strauss & Company’s plan to become publicly traded once again in early 2019 merely reinforces that point.

Although the brand Levi Strauss & Co. was hugely popular throughout the mid to late 20^th century, the denim maker’s clothing started to decline in popularity in the late 1990s, causing the company to go private. Today, however, Levi’s has experienced a full comeback, with the iconic label clearly pronounced on the jeans and jean jackets of many Americans as well as consumers across the globe.

Thanks to the return of Levi’s products to mainstream fashion, the company is well-situated financially to return to public markets. In its most recent quarter, revenue grew 11%, with the entire brand delivering 12% growth over the quarter. Furthermore, the company’s women’s business grew for the 13^th straight quarter. The most recent earnings report also boasted strength in the direct-to-consumer area, thanks in part to the fact that the chain opened 65 new stores over the course of the last year.

 

Levi Strauss & Co.’s 2017 annual report also demonstrated its strong financial position. In addition to strong net revenue, gross margin, earnings before income taxes, and free cash flow, the company reported having its lowest net debt since 2000. Source: 2017 Annual Report

But what propelled Levi Strauss to go from America’s forgotten brand to being set to issue an IPO in 2019 that will purportedly raise between $600 and $800 million, and value the company at $5 billion? First, denim’s fashionableness seems to be back, with jean jackets and bell bottom jeans being worn by many once again. In fact, the denim market is expected to reach $79 million by 2023, thanks in part to the growth and transformation of the Asian retail clothing industry. For Levi’s in particular, however, the money that the company invested in a research and development center in the early 2010s, called Eureka Innovation Lab, seems to be paying off. Levi’s recently unveiled new technology that allows it to automate new parts of the denim-making process, ranging from design to manufacturing, which not only saves time and effort, but also creates less waste and thus is more sustainable.

Levi’s now uses lasers to distress its jeans, not people. Source: Wall Street Journal

Levi’s also diversified its products by expanding its women’s wear recently, causing sales for women’s clothing to rise from $800 million a year in 2015 to over $1 billion in 2018. On top of all of those factors, it certainly helps that celebrities have come to love Levi’s, with the Kardashian family all wearing different pairs of Levi’s in their 2017 Christmas card.

 

The company continues to diversify its products, focusing less on men’s wear and pants. Source: Quartzy

But beyond those factors, something that has undoubtedly attracted consumers to Levi Strauss & Co. products over those of their competitors has been the company’s values. Self-described as “values-driven,” the CEO of Levi’s, Chip Bergh, has been an outspoken supporter of various highly politicized and relevant issues. In November 2016, he wrote an open letter asking gun owners not to bring their weapons into Levi’s stores after a customer was accidentally shot. Bergh has since defended the company’s gun policy and asked other business leaders to stand up against gun violence, while also taking a variety of steps including establishing the Safer Tomorrow Fund earlier this year which directs money to support nonprofits working to end gun violence. The company has also partnered with like-minded clothing maker Patagonia to create MakeTimeToVote.org, an initiative that gave employees time off to vote in the recent midterm elections also encouraged other large corporations to follow in suit. Furthermore, in late summer of 2018, the company announced its 2025 Climate Action Strategy, an aggressive and detailed plan that includes achieving 100% renewable electricity and a 90% reduction in greenhouse gas emissions at all of its factories in less than a decade.

At a time when consumers care not just about how their clothes look but also about how they were made, where the materials were sourced from, and what the seller believes in, Levi’s has managed to cultivate an ethically-minded fashion brand supported by aggressive values-driven initiatives. At the same time, the company has found increased cultural relevance, and has willingly taken the plunge into the world of automation in order to improve its processes and create better products. While other companies fear mechanization or stagnate as they try to figure out how meaningfully decrease environmental impact, Levi’s has forged a unique path for itself by embracing the current challenges posed to businesses in the modern economy. Given their carefully-devised and multi-faceted approach, it seems highly likely that Levi’s will easily raise its projected $600 million—and perhaps even more—when the time comes in 2019.

With the $1.8 billion donation from the former New York City Mayor Michael Bloomberg, students at Johns Hopkins University could enjoy greater access to financial-aid packages and scholarships starting next fall. This billion dollar’s worth of gift would allow the University to permanently adopt a “need-blind admission”, meaning that the admission board will not take into consideration students’ financial ability during the selection process, a report from Bloomberg says.

Even though the contribution has marked a record high in the U.S. education realm, it only accounts for a tiny share in the overall amount of student debt in the country when we look at the bigger picture. According to the 2018 student loan debt statistics from Make Lemonade, a free personal finance website, student debt has ballooned to more than $1.5 trillion with over 44 million borrowers in the U.S.

Source: The New York Times

Students in the Class of 2017 owe an average of $40,000 in student loan debt, up from $37,172 for the Class of 2016. It has become the second-largest consumer debt, following mortgages. At the same time, more than 10 percent of the mounting student loans were at least 90 days overdue.

Students have borne the brunt of the drop in house values, as it becomes tougher for parents to take out mortgages to pay for their children’s education, an article published by The New York Times says. Students have no choice but to shoulder the financial burden in exchange for a college degree.

So is this borrowing sign pointing to a grim picture of the future economy, or is it reminiscent of the decade-old financial crisis?

While the student loan market is smaller and less complicated than the mortgage market, it is less likely to create ripple effects across the world as the mortgage market did 10 years ago. The housing crisis in 2008 was unstoppable because a slew of financial institutions was involved in the mortgage world, with fledging crackdown on lending activities. As the federal government is the biggest lender of student debt, it gives people more confidence that the student loan market is better shielded from a debt explosion.

Although the speculation about the next economic recession is in gradual crescendo, the student debt market is expected to have limited impacts on the overall economy.

On July 6^th, 2018, Donald Trump challenged Chinese President Xi to an economic chess match. Trump, however, may have underestimated Xi when he decided to make the first move. Both sides have made considerable dents in each other’s key industries. Engaging in tit-for-tat trade disputes may seem like it will yield results, but in the long-term, it damages crucial relationships that could hurt America’s biggest industries. For the U.S, soybeans are what’s at stake.

 

The United States’ biggest export is food, beverage, and feed according to a U.S Commerce report in 2017. Soybeans make up the largest part of that industry, and 60% of them were exported to China last year. The Asian country typically buys around 7-10 million tons from the U.S annually. Last Friday, November 2^nd, soybean prices even fell to around $448 a ton, which is the lowest it’s been in 6 years.

Though China is the U.S soybean producer’s biggest buyer, it may not be that way for long. The economic impact of tariffs on U.S. exports and a protectionist trade policy may damage the Chinese economy in the short term, but will eventually just push China to find alternative ways to avoid importing such high amounts of this product from America.

China does receive most of its soybeans from the United States, but it also gets them from Brazil. South America may be Xi’s best option if Trump doesn’t step down.

Though Brazil consistently runs out of soybeans at the end of each cycle, it could likely ramp up production efforts if need be. In the last 20 years, the country has increased its soybean production by 266%, whereas the United States’ production has only increased by 63%. However, production costs for Brazilian farmers may end up being too high to keep up with Chinese demand.

Another option would be for Chinese investors to buy and develop land to produce soybeans in a country with the same comparative advantage, even Brazil. Some experts say Brazil is not reaching its full potential, and has a lot of untapped land. Again, if this is a viable option in the long term, it could take away China’s need to rely on American soybean farmers.

President Xi’s Belt and Road Initiative (BRI) is also a key player in reducing reliance on U.S agriculture throughout this trade war. The Initiative is an effort to connect Asia, Africa, and Europe for mutually beneficial economic opportunities. China wants a “belt” of overland corridors and a “road” of shipping lanes between 71 countries. That means the BRI streamlines trade between half of the world’s population and a fourth of the global GDP.

The BRI brings an increased level of economic interaction to China, making it that much easier to locate untapped areas equipped to produce soybeans other than the United States.

If China resorts to any of these options, U.S soybean farmers are going to take a long-term hit. While America can refocus its efforts to shipping out the product to other countries, if China manages to get Brazil to ramp up production levels or invests in agricultural land in other countries, it would lower the need for U.S trade partners to exclusively import soybeans from America.

 

China is now taking short term measures to deal with Trump’s tariffs. The China Feed Industry Association proposed in September to ration out soybean feed to pigs. The Xi administration is also maintaining a positive attitude by looking to increase domestic soybean production.

“Unilateralism and trade protectionism are rising, forcing us to adopt a self-reliant approach. This is not a bad thing,” Xi said in September.

In a retaliatory statement, the Vice Agriculture Minister Han Jun warned that Trump is playing with fire.

“Many countries have the willingness and they totally have the capacity to take over the market share the U.S. is enjoying in China. If other countries become reliable suppliers for China, it will be very difficult for the U.S. to regain the market,” Han Jun told the Xinhua news agency in August.

Soybean producers in China are already benefiting from the conflict. Yang Guiyin, the sales manager of an agricultural company in the Heilongjiang Province, said that soybean profits are on the rise.

“Our farmers really hope that China will import less soybeans so that domestic soybean production and soybean-related businesses will flourish,” Guiyin told NBC News in July.

The Chinese Government is pushing its domestic agenda even further as it aims to add $1.6 million acres of land to its existing soybean production. It is also subsidizing $190 to $320 per acre instead of the previous $150.

 

Looking ahead, the future of U.S soybean farmers will be determined by conversation between Trump and Xi. The world leaders have planned to meet on several occasions, but due to rising tensions, have not been ready to negotiate quite yet. The White House decided recently to move forward with conversation. Trump and Xi are planning to discuss the escalating situation at the Group of 20 leaders’ summit in Buenos Aires at the end of November.

For the Trump administration, the pressure is on. President Xi purposely targeted the soybean industry because the farmers primarily reside in states that elected Trump to office. China is looking to hit his weak spots. If Trump’s support system loses faith, it could have detrimental effects for republicans come November’s elections.

Iowa, Minnesota, Nebraska, North Dakota, and Indiana are all major soybean producing states and all voted for Trump in 2016.

In any trade war, just like in real wars, people are hurt. Trump stands by his belief that the United States will beat China, but if Xi continues to match Trump’s level of tariffs, it could get very ugly. Americans have no choice but to wait and see if Trump is correct in tweeting that “we win big.”

 

 

 

 

There are about 6.6 million job openings in the United States right now, according to the Bureau of Labor Statistics. Despite these opportunities, however, an increasing number of individuals are moving towards the “gig economy.” 42 million workers are anticipated to be self-employed by 2020. More than 36% of the workforce currently works freelance, latest estimates project. This trend towards an increasingly independent workforce, a workforce not tied to any employer restraints or benefits, presents promising opportunities in industries that need the most innovation.

With the healthcare industry constantly under scrutiny for excessive costs, mismanagement, and poor patient outcomes, this new trend in labor preference may prove to be a promising opportunity for providers to cut costs. The United States currently faces a dramatic shortages of healthcare workers from the home care level to the operating room, and the country is currently on track to face a shortage of between 40,000 to 104,000 physicians by 2030.

By connecting the gig economy to the healthcare industry, the result appears to be win-win. Workers have more flexibility, can negotiate their own contracts, and can select opportunities most appealing to them. Employers, like hospitals, can dramatically reduce costs and more nimbly respond to varying demand. In an industry that is the poster-child for egregious costs, treating health aids and doctors like Uber drivers starts to look appealing for the bottom line, particularly when labor accounts for 60% of spending.

Before we quickly begin allocating freelance workers into the healthcare (or any other) industry, we must consider the broader implications of incentivizing such volatile jobs. The irony of suggesting that freelancers, members of the gig economy, enter the healthcare workforce is that one central tenant of working project-to-project, operation-to-operation, is that employers do not offer healthcare benefits to these temporary workers. As Reuters points out, freelancers’ income is constantly in flux, making coverage options ever-changing as well. This makes finding health insurance a particularly perplexing problem. “If you are a freelancer facing the pure retail cost of healthcare, then it is horrifying,” notes Kathy Hempstead, senior advisor of the Robert Wood Johnson Foundation.

This dilemma affects more than just freelancers, however. Without a critical mass of individuals insured through traditional insurance plans, we may face a new problem of not having enough enrolled individuals to pool risk, making our health insurance program obsolete. While programs like the Affordable Care Act has attempted to address this growing problem, legislation is too slow and resistance too large to address the evolving problem’s rapid growth.

While we should be finding ways to innovate the labor market as we innovate industry, we must also be futurists, considering not merely the short-term benefits of our actions, but also long-term implications. The main problem with this employment shift may be, like so many others, not the evolution itself, but the rate at which it is occurring.

The U.S. economy is witnessing a tightening labor market as unemployment rate fell to a 49-year low of 3.7 percent in Oct. 2018, according to the U.S. Bureau of Labor Statistics. However, the labor force participation rate, which measures the percent of prime-age workers (aged 25-54) who are employed or actively seeking work, remained relatively low at 62.9 percent in Oct. 2018.

The U.S. Bureau of Labor Statistics estimated that the number of employed American aged 65 to 74 will rise 4.5 percent, while the participation rate for people aged 16 to 24 will drop 1.4 percent over the 2014-2024 decade. By 2024, the labor force ages 65 or older is expected to grow about 13 million people.

Source: U.S. Bureau of Labor Statistics

When it becomes harder for fast-food chains to recruit young people, restaurants like McDonald’s and Bob Evans are shifting their hiring focus to senior citizens – who are willing to work even part-time to earn some extra income in retirement.

Restaurants are actively posting recruitment ads at centers, churches and websites targeting senior citizens. This fast-food employment trend is the consequence of a tight labor market and the ageing population.

With their years of experience in the job market and purpose of work, seniors are competitive in these workplaces, a report from Bloomberg said.

The industry’s median hourly wage is $9.81 in 2017, according to the U.S. Bureau of Labor Statistics. With the same labor cost, chains could run their businesses by hiring seasoned workers who have spent decades in the job market. The senior workforce tends to possess well-developed interpersonal skills compared to the younger generation – a boon to employers as this could help reduce workplace conflicts.

The longer life expectancy and the elderly’s propensity to work would alter the employment landscape going forward. With the holiday season around the corner, the job market is expected to see a growing presence of senior workers.

Source:
https://www.bls.gov/careeroutlook/2017/article/older-workers.htm
https://www.bloomberg.com/news/articles/2018-11-05/senior-citizens-are-replacing-teenagers-at-fast-food-joints