Rising inequality in the U.S.

As Italian, when I first moved to Los Angeles, it was not difficult to realize how much this city was driven on one hand by a great innovation, on the other hand by a very huge inequality. After living here for few days, it was easy for me to having a better sense of the social status of the people living in LA. Basically, you might trace a horizontal line that divides the city between north and south: norther you go, richer the people and neighborhoods you encounter, while southern you go the poorer are the people you encounter. Maybe this could sound a very approximate and stereotyped frame, but nobody can deny that, for someone you just move in LA, the impact with inequality is very strong: too many homeless people living alone in terrible situations along the streets, under the bridges, or in the tents – when they happen to be “lucky”. When I experienced this situation for the first time, honestly my first question was: how is a situation like this be possible in a rich and forward-thinking country as the United States? Yet, after few months living here I realized that, according to the current U.S. economy, unfortunately, it is totally possible. The United States is one of the most unequal country in the world (OECD Income Distribution Database).

According to an article published last week by the New York Times, U.S. elite professionals earn 3.5 times more than the typical (median) worker in all occupations. Its income inequality is testified by the Gini coefficient that, according to the United States Census Bureau, for the 2016 was 0.481. Such a huge different is overcame only by other two countries in the world: Israel and Mexico.

Additionally, when I looked at the NTY chart that refers to the analysis extracted from the World Income Database, I realized that even Italy (my home country) is much less unequal than the United States, where over the last year only the 1 percent’s share of national income has experienced a sharp growth: this information has really blown my mind, because before moving to the U.S. I believed that Italy was one of the worse country for what concerns inequality, because its rate has been rising without control. Actually, it is not.

What it’s really going on in the U.S.? Mr. Trump is taking advantage of the argument on increasing inequality spreading along the country, stating that the main causes of the rising poverty rate have to be referred to: the evil nations oversea, like China, that are responsible for unfair trade negotiations and stealing jobs to U.S. workers, or to the immigrants, who also steal jobs from U.S. workers. Conversely, others believe that the cause of this situation relies on the switch of the type of experts needed in the work place. The number of people employed in the information technology industry is still too tiny, and it has not been contributing to the rise of the average incomes.

Yet, one of the main reason, as the NYT states correctly, is connected to the fact that since 1980 all the norms, both legal or economical, have been shaped by the upper middle class. This factor has led the richer people increasing their influence in the political life so that they could execute their power on the economy, reforming and reshaping the norms according to their interests.

This issue inevitably refers to the recent, and debated, tax plan overhaul, that it does not seem helping to decrease inequality in the country.

As a result, as is shown in this interesting visualization, between 1980 and 2014 the largest income growth has been registered only by the 99.999th percentile, a growth that will keep rising making richer people even more rich.

From The New York Times

A Redesign? Oh, Snap!

Prior to Snap’s IPO in March, it had been evident that Snapchat was on its way to revolutionize the virtual communication process. However, this vision has been a concern for Wall Street. Ever since they went public, the company has lost over $3 billion and has not traded above its IPO price of $17 a share since July, despite the 44% surge during their first day of trade (Yahoo Finance).

On Tuesday, November 7, the California-based company released an earnings report, which included revenue and user growth for the third quarter, that was well below Wall Street expectations. This report was followed by a statement from their billionaire CEO, Evan Spiegel. He startled investors with news that Snapchat will undergo some major changes, indirectly justifying that the mobile app is struggling to compete with its archenemy, Facebook.

Snapchat has never had a strong revenue model. The company has always relied on tailor-made, custom advertising, which has been their primary source of revenue. However, Spiegel announced that they will be implementing a more programmatic method, using automated auctions to bid on a slot. Sounds familiar, right? Yes, Snapchat advertisements may start to feel a lot more like what you see on Facebook and Instagram. This is expected to result in less human involvement and much cheaper ads.

Snap also plans to completely redesign the Snapchat app, which is expected to launch on December 4, 2017. According to Spiegel, the redesign will be focused on responding to the feedback that the app is “difficult to understand or hard to use.” Most Snapchat users, including myself, would agree that the platform can get a bit confusing, especially for the older crowd. Its IPO filings even included a step-by-step tutorial on how to use the application.

Spiegel agreed that the redesign could be disruptive to their businesses in the short term and that is it unclear how their community will respond to the changes. However, he went on to explain that this is a risk they are willing to take because they believe in the long-term benefits. Ironically, Snapchat needs to do what Facebook did years ago and cater towards different age groups, not just teenagers.

This may be the reason behind Tencent’s decision to acquire a 12% stake in Snap Inc. just hours after Spiegel’s announcements. According to Bloomberg, Tencent, the Chinese company behind WeChat, has developed very successful chat apps through engaging content, integrated services, and advertising (Bloomberg). It is apparent that they are trying to do the same with Snapchat, which has a larger U.S. audience than Tencent.

Will these serious changes help Snap Inc. climb out of its deep hole? As of right now, it is still unclear. Although investors might not be convinced, Spiegel and his team are confident that the long-term benefits will be worth it. I guess we will just have to wait and see.

 

finance.yahoo.com/quote/SNAP

https://www.bloomberg.com/news/articles/2017-11-08/tencent-buys-10-percent-stake-in-social-media-company-snap

https://investor.snap.com/~/media/Files/S/Snap-IR/reports-and-presentations/snap-inc-q3-2017-prepared-remarks.pdf

The Economic Trickery of Black Friday

Every year as Thanksgiving approaches, so does Black Friday. All of sudden our computer screens and TV commercial breaks are filled with exclamations of the best deals of the year. Even in researching this post. I got this black Friday Kohls ad:

Black Friday is more than the headlines and videos of people being trampled to get a cheap TV.

Black Friday tells an economic story of trickery.

A mystery to the average consumer is how stores are able to make money when everything is on sale. First, this idea of “everything” being on sale is false. Retailers in reality use “doorbusters,” like TV, to get you in the door. While the retailers may not make a profit on those items, but you usually don’t just buy that doorbuster. The hope is that when you come in to buy that TV you’ll also buy the full price HDMI cable, mounting bracket and maybe a pair of headphones. They will also hook you into buying a warranty you don’t really need and probably will never use. Retailers rely on you buying not just that tantalizing sale item to make Black Friday successful.

In a 2012 New York Magazine article,  Kevin Roose analyzed some of the behavioral economic theories behind Black Friday. In the article, he calls black Friday “a nationwide experiment in consumer irrationality, dressed up as a cheerful holiday add-on.”  We already discussed the use of doorbusters to get you in the door and ancillary items like a warranty which sound great. The also used implied scarcity to convince you that you of a limited quantity of an item, which makes the deal you are getting seem even more valuable.

Stores also capitalize on consumers irrational escalation. Black Friday is made up of a series of bad decisions on the part of the consumer, including going to the mall before the sun rises. Once a customer is at a store they don’t know when to stop spending. This is known as “sunk cost fallacy,” when people don’t know when to stop something that isn’t profitable. Retailers are using careful and subtle manipulation to make Black Friday a success for them.

Retailers’ behavioral economic magic works. In 2016, according to the National Retail Federation, 99.1 million people shopped in stores over Black Friday weekend and another 108.5 shopped online. They also found that the average person spent $289.19 over the weekend.

Sources: 

http://fortune.com/2016/11/29/cyber-monday-2016-sales/

https://www.theatlantic.com/business/archive/2014/11/11-economic-lessons-to-make-you-a-smarter-shopper-for-black-friday/383236/

https://www.thebalance.com/what-is-black-friday-3305710

http://nymag.com/daily/intelligencer/2012/11/black-friday-a-behavioral-economists-nightmare.html

Taylor Swift’s album can’t be streamed (yet), and that’s the economically smart thing to do

Taylor Swift performs on her 'Speak Now' tour in Sydney, Australia, in March 2012.

Taylor Swift performs on her ‘Speak Now’ tour in Sydney, Australia, in March 2012. (Photo by Eva Rinaldi via Flickr under CC-BY SA 2.0 license).

Last week, Taylor Swift was responsible for one-third of all music sold or streamed in the United States. Her newest album, reputation, on its own sold nearly double the rest of the Billboard 200 combined. And despite releasing only four singles from the album on streaming services, Swift came to dominate those charts as well.

Swift’s choice to withhold access and force listeners to pay for her music has interesting implications for the streaming music industry, which remains unprofitable despite climbing numbers of paying subscribers. The latest numbers peg market-leader Spotify at 60 million subscribers, with second-place Apple Music coming in at 30 million. The growth of these services has been the primary driver of increasing revenue for record companies, whose U.S. revenues grew 11.4 percent in 2016 to reach $7.7 billion, according to industry association RIAA.

But that figure is still only about half of what it was in 1999, before early music streaming services like Napster entered the market, the RIAA said. As music became widely available online, consumers became less willing to pay for it, driving down revenues. The recent uptick in paid subscriptions has yet to make up for more than a decade of declines.

“We’re no longer running up a down escalator,” Warner Music CEO Stu Bergen told The Guardian, “but that doesn’t mean we can relax.”

The major challenge faced by both streaming services and the music industry is the popularity of YouTube, where songs are often available for free (legally or illegally) and revenues sent back to the music industry are miniscule. Spotify contributes an average of about $20 per user to the industry, according to The Guardian, while YouTube sends less than $1 its way. In 2016, that meant just $553 million in total revenue from YouTube compared to $3.9 billion from Spotify. Both these figures are far lower than comparable music sales revenue would be for the same number of listeners.

Throughout her career, Swift has taken a stance against making music widely available online, defending her copyright on YouTube and withholding her releases from streaming services. Her entire catalog was only available to stream for a few months in 2017, until reputation was released to buy but not to stream.

Swift wrote in 2014 that “music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.”

Free or subscription music can be great for consumers, but it prevents sellers in the marketplace from gauging how much someone values an artist’s creation. In economic terms, Swift’s choice to temporarily withhold her latest album from streaming services and allow interested customers to pay for access enables a kind of price discrimination that can increase efficiency and better match supply and demand. As John Paul Titlow of Fast Company explained:

Many of the people who care most about her music felt compelled to do something that seems rare these days: They bought the album. Others, like me, did nothing.

[…]

And to be sure, many of the diehards who bought a physical copy of Reputation will likely add it to their streaming libraries as well. But by then, Swift will have already smartly extracted maximum value out of the people who care the most. And why shouldn’t she?

Fine Art Auction Sales Reflect Confidence in the Economy

Fine art is a status symbol, both in societal terms and economic terms. The uber-wealthy pull out their wallets at art auctions hosted by Christie’s and Sotheby’s every year and contest for collectable pieces by the world’s greatest artists. The prices naturally fluctuate with the ebbs and flows of the global economy so when buyers up the ante, those price tags can be used as a gauge for confidence in the market. The more money people have, the more likely they will spend it. According to the Washington Post, Christie’s auction house set a record this year by auctioning off the most expensive painting in history. Leonardo da Vinci’s, “Saviour of the World” (Salvador Mundi) was auctioned off for an astounding $450,312,500, shattering the previous record by over $270 million dollars. Spending that kind of money on a collector’s item is a direct result of the economy as a whole and the conviction the wealthy have in it.

Economic indicators come in many forms, but art is one that could be considered unorthodox given only the wealthiest of society participate. Art auctions like Christie’s is an interesting way to look at the health of the economy. Price tags like the one on Leonardo da Vinci’s painting are not small and the growing economy allows for pieces like that to go for hundreds of millions of dollars. Fortune magazine examines the art auction market a little deeper saying “robust sales are a sign the world’s wealthiest people feel bullish—making a recovering art market something that point-one-percenters and the other 99.9% can be equally excited about.” The art industry as a whole has been in a slump since 2015 so the numbers being reflected in this year’s auctions are a good sign for the industry and the shareholders of the auction houses. Confidence in the buyers also creates confidence in the sellers. That confidence stems from a myriad of elements including a sky-high Dow Jones, planned tax cuts from the Trump administration and other indicators that signifying a robust marketplace.
According to the New York Times, the tax cuts also include a provision that restricts “high-end art investors to sell works and quickly replace them with pieces of similar value and [thus] defer paying federal taxes.” If passed, this loophole in the system could potentially halt liquidity in the U.S. market to some extent because people will sell less and not have as much money to spend. With that being said, the current art market is sitting pretty at $60 billion, but is mostly made up of pieces that go for $1 or $2 million, unlike da Vinci’s piece, with buyers who hope to use those “smaller” purchases as an investment that they can gain profit on by resale down the road. The fact that material objects can generate this much revenue is surprising in a time where people are starting to value experiences more and more in society. Although it is not the strongest indicator, the confidence in the art market is very telling in a macro-economic sense. It will be interesting to see how long the confidence remains and if the economy really starts to reflect the experience-leaning consumerist shift or if fine art will continue to be as expensive. In the art world, some of the wealthiest people in the world invest in timeless pieces of art that also help excite a market that only the 1% can participate in. Fine art as an economic indicator is one that you will only see thriving when the economy is hot, and thriving to the extent where a few hundred million dollars is spent on a single work of art. That is not chump change, so when that kind of money is used to purchase a collector’s item, it is easy to assume that the economy is doing well and expected to do so for the near future.

Impact of Holiday Travel on the Economy

Travel is frequently an indicator of the health of the economy. It is often viewed as a luxury or an unnecessary expense and when times are tough, people generally sacrifice their travel to have some extra cash for other expenditures. However, with lower travel costs combined with a growing economy, travel may be placed higher on families’ priority lists. With the holiday season quickly approaching, travel is expected to increase dramatically for the remainder of 2017.

This year, AAA expects nearly 51 million Americans to travel 50 miles or more away from their home for Thanksgiving alone. This number is the highest volume of travelers since 2005 and is a 3.3% increase over last year’s travel numbers.While gas prices generally dip prior to Thanksgiving, this year the prices have continued to rise as the oil and gas industry still works on normalizing post-hurricanes. Even with the increased prices at the pump (as they hit the highest Thanksgiving period prices since 2014) travelers are willing to pay a bit more to visit family and friends for the holiday. Americans are expected to spend $800 million more on fuel for holiday travel this year compared to last year. In South Carolina alone, the price of gasoline is 32.5 cents higher per gallon this year than it was last year at the same time.

While the price of traveling by car has increased this year, the price of travel by air isn’t inexpensive either. The average cost of a Thanksgiving flight is $385 if booked by the end of October. The most congested cities for Thanksgiving travel are expected to be Los Angeles, New York, San Francisco, Atlanta and Miami.

Regardless of the high gas prices, projected travel numbers remain higher than they have been in years. AAA’s senior vice president, Bill Sutherland, credits the strong year for the travel industry to a strong economy and labor market that has fueled higher incomes and consumer confidence.

With this massive increase in holiday travel and spending in 2017, the country’s economy as a whole is bound to reap the rewards as well. The World Travel & Tourism Council noted that travel and tourism directly contributed to GDP growth by 3.1% in 2016. This growth was faster than the economy as a whole, which grew at 2.5% the same year.In addition to GDP growth, travel and tourism contributed to employment growth of 1.8% in 2016, which totals almost 2 million jobs. Looking ahead to 2017, travel and tourism’s contribution to the economy’s GDP is expected to grow even more by 3.5%. Much of that growth will more than likely come from this year’s holiday travel numbers.

Tesla – Redefining the auto industry

Tesla continues to be a topic of conversation. “What is Elon’s next move?” “Is Tesla even making any money?” “Why are they so slow to produce?” A multitude of questions continue to soar in from consumers and business professionals when wondering if they should make a purchase or investment in the infamous sustainable luxury vehicle.

After Tesla’s start in 2003, it’s been slow to hit the ground running and make money. Tesla’s stock continues to have highs and lows — starting at $19 a share and going up and down between $100-$300 dollars. According to Wired, “2017, however, is the formative year to see whether Tesla becomes the unbeatable car company, or just another company that tried to beat the competition but failed.” With excitement surrounding the release of Tesla’s truck in 2019, it could turn out to be a make year rather than a break year after all. Tesla’s stock went up following the announcement of the truck and is up nearly 50% so far this year.

Current price of Tesla Stock via Google

On top of that, Musk is already seeing pre orders roll in from WalMart, Meijer, and J.B. Hunt to name a few. The first issue that comes to mind, though, is how are these trucks going to be of much use beyond small routes? As an electric car, especially a self driving car, it will run out of energy after a couple hundred miles. That means that on long truck hauls a lot of time ends up being added to the commute. Essentially, the truck will only be able to add  value to routes that are local. While this does still reduce emissions, it still doesn’t fix the issue of long commuter hauls unless Musk has a new idea on charging station efficiency and productivity — this could take even more money and more time. Considering the lack of charging stations on these commutes and the slow history of Tesla production, will Elon Musk even be able to roll out this truck by 2019? In the past, Musk has fallen short on lots of promises and production has been late up to two years past the publicly announced date of release. There is a lot of pressure on Tesla Motors and especially Elon to perform. So many people are rooting for Tesla, especially the sustainability behind it, but at the end of the day its hard to know if the sustainability model behind Tesla is worth fighting for, or profitable. The headlines are saying one thing, yet the sales of Tesla are saying another. They are reaching record high’s with profit margins equivalent to that of Apple (25% margins) — this is huge for the auto industry when it usually sees a break even number or a loss in profit.

So, what’s the big idea behind this truck? In order to understand and predict the future of yet another Tesla hyped release, one must know what makes this truck so amazing. Tech Crunch says that the Tesla Semi, “will go 0 to 60 mph in just 5 seconds, which is incredibly fast compared to a diesel truck. It can go 0 to 60 mph towing 80,000 lbs, its max tow load, in just 20 seconds. It can go 65 mph up a 5 percent grade, which is way better than the 45 mph max that a diesel competitor can do. And for range, it can go 500 miles at highway speed, and less than 80 percent trips are at 250 miles. It also has a better drag coefficient than a super car thanks to its extremely aerodynamic design.” Now, I am sure that all of that sounded like a bunch of numbers and words that made no sense, to me too. The most important thing to note, however, behind all these facts is that it truly is bigger, better, faster, stronger. The Tesla Semi will get the job done, according to Musk, because of it’s aerodynamic design. The features of the truck are like nothing we have seen before and its deemed safer than any other normal diesel truck we see on the highway. It’s capabilities are endless and all outlined in the TechCrunch article here.

The new Tesla truck via Google

While consumers and investors continue to feel good and bad about Tesla, it is still being talked about and stirring up controversy and at the end of the day, that means you’re doing something right. The innovation and ability behind Elon Musk is unprecedented and has the ability to truly change the world. If accomplished right, we could be looking at a game changer for our economy and the longevity of our planet. It’s time to continue to sit back, relax, and see what these automatic driving cars can achieve.

https://www.wired.com/2016/12/2017-will-year-tesla-reigns-supreme-finally-flops/

http://money.cnn.com/2017/11/17/investing/tesla-semi-orders/index.html

This is Tesla’s big new all-electric truck – the Tesla Semi

http://www.businessinsider.com/what-tesla-is-doing-right-2017-11

 

Revised Project 1: “America first” immigration reform may put America last, economically

The RASIE Act, immigration reform proposed by U.S. Senator for Arkansas, Tom Cotton, and back by President Donald Trump, was introduced to diminish the number of low-skilled, unskilled and non-citizen immigrants taking American jobs. The sectors that have highest number of foreign workers are seen in agriculture, construction and services. It is no coincidence that low- to medium-skilled jobs are dominated by immigrants. The high number of foreign workers in these sectors is not due to non-citizens taking Americans’ jobs. Rather, it is because of the work conditions.

“Low-skilled jobs are low status, pay low wages, and are physically challenging,” Dean and Professor of Public Interest Law and Chicano/o Studies at the University of California, Davis, Kevin Johnson said. “Employers often say that they cannot get U.S. citizens to fill these kinds of jobs.”

The main aim of the RAISE ACT is to protect American taxpayer workers, taxpayers, and the economy. However, the repercussions of this reform could instead worsen the U.S. economy. If enacted, a rise in low- to medium-skilled job openings will occur. This will put a strain on businesses to operate with fewer employees. An attempt to operate with fewer employees working longer hours or increasing the wage to attract workers will in turn increase the cost of goods and services. This could potentially send many companies out of business. If the government decides to offer incentives to encourage Americans to take low- to medium-skilled jobs, it will be out of their pocket, or the Americans taxpayers’ pockets. Neither is desirable. Nor is this reform.

The proposed merit-based immigration system will prioritize immigrants based purely on the skills and knowledge they bring to the U.S. The proposed merit-based immigration proposal is modeled on the current Canadian and Australian systems. The reason behind modeling these two countries is that Canada and Australia attract highly skilled workers and see healthy growth, productivity and income per capita.

The skills-based system rewards applicants points based on individual merit. The system rewards points in areas such as higher education, English language ability, high paying jobs, and past achievements. The various ways that migration and population growth can be linked to Canada and Australia’s productivity and income per capita growth include, supply of labor; capital, investment; government expenditure on services and taxation; competition; natural resources, land and environmental externalities; and international trade.

The RAISE act doesn’t take into consideration the aging population. The U.S. population is aging rapidly as baby boomers enter old age and retirement. The Population Reference Bureau reported the number of Americans aged 65 years and older is projected to more than double from 46 million today, to over 98 million by 2060. The 65 years and older group share of the total population will rise to nearly 24 percent from 15 percent. An aging population has a direct impact on the labor force. This will result in a dependence on immigrants to replace current workers and fill new jobs.

In fact, The Raise Act would have the opposite desired effect of what the Trump administration propose the legislation will do, and sharply reduce legal immigration, and increase illegal immigration. The graphs below show legal immigration as a percentage of population since 1850.

Both graphs demonstrate The RAISE Act would be a significant reeducation in total legal immigration, and it would have no direct impact on illegal immigration. It is almost certain that more restricted access to legal immigration for family members of current immigrants would result in higher levels of illegal immigrations by those family members.

Deputy Dean and Director of the Public Law and Policy Research Unit at Adelaide Law School at the University of Adelaide in Australia, Alexander Reilly, said increasing skilled migration at the expense of family migration can impact on the desires for family reunion of existing U.S. citizens.

“In Australia, parent migration is very difficult,” Reilly said. “It may be that partner and child migration, which is currently considered a matter of right here, will have quotas or waiting lists imposed.”

A problem Reilly sees in Australia with independent skilled migration is that migrants find it hard to get jobs in their area of expertise and end up unemployed.

“Skilled migrants’ success is better if they have family support, so merit-based migration definitely needs a strong family component.”

Johnson agrees, believing a merit-based immigration system that halves the number of legal immigrants entering the country will unintentionally increase the number of undocumented immigrants.

“The goal of the U.S. government is to reduce legal immigration from one million a year to 500,000 a year, and this reduction will be seen in family immigrant visas,” Johnson said. “With the current limits on legal immigration, this has bought in roughly 11 million undocumented immigrants to the U.S.”

“Making legal immigration even more restrictive will increase the likelihood that those who want to immigrate lawfully will resort to doing so illegally.”

In 2015 to 2016, Australia accepted 189,770 permanent migrants through its skilled and family immigration streams, and settled 18,000 refugees and humanitarian migrants. Sixty-seven percent of migrants came through the skilled stream, and 30.8 percent through the family stream. These numbers add almost one percent to the Australian population each year, a much larger proportion than the U.S. admits through its migration program.

Immigration is the largest contributor to population growth in Canada since the early 2000s. Canada’s permanent immigration program is divided into three main streams: economic, family and humanitarian. In 2015 to 2016, Canada admitted 271,845 permanent immigrants. Of this number, the economic stream accounted for 60 percent of migrants, family made up 24 percent, and the remaining were humanitarian migrants. These proportions have remained fairly stable over the past 15 years.

In Australia, there are two pathways for skilled migration. The first, general skilled migration, requires applicants’ occupations to appear on a skilled occupations list. Most of these occupations are in professional areas such as medicine, engineering, or trades. The list is updated regularly based on an assessment of Australia’s economic needs at the time. The second pathway is for skilled migrants with an employer sponsor. This pathway is open to migrants with a wider range of skills. Employers must demonstrate they have a skilled position available and there are no Australians willing or able to take up the position.

A merit-based immigration system will transform the U.S. immigration system from primarily family-based to employment-based. Under the U.S.’s current system, most employment-based immigrants are highly skilled, but make up only 14 percent of those who receive green cards. Under the RAISE Act, employment-based immigrants would make up the majority of those who receive green cards.

In the proposed points system for the U.S., applicants would earn points for meeting criteria to do with age (preference for persons between ages 26 and 30) and having a degree. Extra points would be awarded for degrees earned in the U.S. and in a STEM (science, technology, engineering and mathematics) field. Nobel Prize winners, professional athletes and English language speakers would also receive extra points.

Johnson said that while the Australia and Canada case studies were worth reviewing, the U.S. has its own history and political, social and economic forces that contribute to immigration pressures and flows that may not exist in Canada or Australia.

“Australia and Canada don’t operate in the same context as the U.S., so those main factors must be considered in any reform of U.S. immigration law,” Johnson said.

When asked if the RAISE Act will reduce poverty, increase wages and save taxpayers millions of dollars, as stated by President Trump, Johnson replied, “There is no empirical evidence to support this claim.”

 

References

Camarota, S. A. (2015, September 10). Welfare Use by Immigrant and Native Households: An Analysis of Medicaid, Cash, Food, and Housing Programs (Report.). Center for Immigration Studies. Retrieved October 4, 2017, from Center for Immigration Studies website: https://cis.org/Report/Welfare-Use-Immigrant-and-Native-Households

Infographic: Annual average growth rate, natural increase and migratory increase per intercensal period, Canada, 1851 to 2056. (2017, March 30). Government of Canada. Retrieved October 04, 2017, from http://www.statcan.gc.ca/daily-quotidien/170208/g-a001-eng.htm

Mather, M. (2016, January). Fact Sheet: Aging in the United States. Population Reference Bureau. Retrieved October 04, 2017, from http://www.prb.org/Publications/Media-Guides/2016/aging-unitedstates-fact-sheet.aspx

Reilly, A., Paquet, M., & Johnson, K. (2017, September 17). RAISE Act: Global panel of scholars explains ‘merit-based’ immigration. The Conversation. Retrieved October 04, 2017, from http://theconversation.com/raise-act-global-panel-of-scholars-explains-merit-based-immigration-82062

Salerian, J. (2006, May 17). Economic Impacts of Migration and Population Growth (Report.). Retrieved October 4, 2017, from the Australian Government, Productivity Commission website: https://www.pc.gov.au/inquiries/completed/migration-population/report

Singer, A. (2016, August 02). Immigrant Workers in the U.S. Labor Force. The Brookings Institution. Retrieved October 04, 2017, from https://www.brookings.edu/research/immigrant-workers-in-the-u-s-labor-force/

Stone, L. (2017, August 3). Everything You Need To Know About The RAISE Act Without Reading It. The Federalist. Retrieved October 4, 2017, from http://thefederalist.com/2017/08/03/everything-need-know-raise-act-without-reading/

The White House, Office of the Press Secretary. (2017, August 2). President Donald J. Trump Backs RAISE Act [Press release]. Retrieved October 4, 2017, from President Donald J. Trump Backs RAISE Act

U.S. Congress, Senate – Judiciary. (2017, February 13). Congress.gov (T. Cotton Sen., Author) [Cong. S.354 from 115th Cong., 1st sess.]. Retrieved October 4, 2017, from https://www.congress.gov/bill/115th-congress/senate-bill/354/text

How millennials are changing the economy

As baby boomers reach retirement, millennials are now reaching their prime working and spending years. Over the next five years, the purchasing power of millennials is projected to increase 133% from $600 billion to $1.4 trillion. With the millennial generation being the largest of the generations in U.S. history, their impact on the economy will be significant.

Millennials grew up during a time of major technological advances, globalization and economic disruption. Because of this, they have a very different set of behaviors and experiences.

Millennials came of age in the midst of a lagging economy, and many carry large debt loads, largely from college tuition. Consequently, this is why millennials tend to focus on fulfillment and meaning in their lives. The also prefer to sacrifice money for convenience, too.

The effects the 2008 subprime crisis had on the economy delayed millennials’ ability to “grow up”—many have delayed buying houses, having children and making large purchases, such as a car. For the first wave of millennials (those born before 1990) who could find jobs, those jobs were less than well-paid. Due to the lack of financial autonomy, for the first time since 1960, 31.6 percent of people aged 18 to 34 are still living with their parents.

Millennials, also known as Gen Y, are moving to cities straight after college. For the first time since the 1920s, U.S. cities are growing faster than everywhere else on the country combined. This migration is driving the success of the economy.

The trend is impacting transportation, housing, and home ownership. Millennials are using public transit 40 percent more and cars 23 percent less. They are twice as likely to participate in the “sharing economy”, like ride-sharing and apartment rentals.

When it comes to consumerism, millennials are skeptical of advertising, and don’t rely on traditional marketing. Trust is vital to earning their business. Many conduct research through the internet and social media to learn about a product.

By 2020, 30 percent all retail sales will be to millennials, said CEO of “The Robin Report” and co-author of “The New Rules of Retail”, Robin Lewis.

With changing spending behaviors and habit, retailers have been forced to approach the millennial market differently to baby boomers. Convenience and flexibility are important to millennials. In response, many retailers are implementing news ways of payment and providing unique experiences to cater for Gen Y. Examples of this are self-checkout kiosks and paying with their mobile device instead of having to take out their wallets.

Another aspect that millennials want from retailers is a personalized experience. To cater for millennials shoppers, retailers have had to get creative. Some well-known examples include Coca-Cola replacing their logo with the most common names, and Nordstrom opening a store with no merchandise. Instead, stylists pull stock from other mall-anchored stores and its website.

If one thing is clear from analyzing millennials’ spending habits, it’s that their love for technology, convenience and experiences will help grow the economy. These factors will be drive competition within many sectors and industries, and if companies don’t keep up, they risk going out of business. This is the new reality for producers of goods and services.

References
http://www.businessinsider.com/top-brands-are-marketing-to-millennials-2013-8?op=1
http://fortune.com/2015/05/27/7-facts-every-business-should-know-about-millennials/
https://investors-corner.bnpparibas-am.com/investment-themes/please-mind-generation-gap/

Buenos Aires’ Port is Getting a Makeover

Ports are obviously a very important aspect of trade. Having large ports in big trade cities makes the process of importing and exporting a whole lot easier. Since ports are a big factor in economic value, they have become increasingly important. So important, in fact, that the main port in Buenos Aires, Argentina just got cleared for a revamping project of $200 million dollars to help improve the conditions, size, and value of the port.

Source: Los Angeles Times

Because the port of Buenos Aires is in a heavily populated area, they continue to receive more and more trade imports to keep up with their economy. This revamping project will not only allow Argentina’s ships to get access to more trade countries, but also increase capital during cruise season. A win win situation. That being said, they are using a lot of their revamping money to turn their port into an experience for consumers. They are now offering a variety of services including but not limited to transportation services and restaurants (there are no further details on what these services will do besides cater to cruise ship goers). Argentina is utilizing their port in a really strategic and effective way so that they can garner more trade access as well as appeal to tourists coming in and out during cruise season.

Soure: http://www.cruisemapper.com/ports/buenos-aires-port-103

A big part of the improvement plan, according to Gonzalo Mórtola, the head of the General Ports Administration (AGP), “is to make ports self-financing so that the state no longer has to provide any money for them” (portstrategy.com) The way he will do that, however, is still not announced to the public.

Before the improvement plan was announced, Argentina was already known for having a very strong port system. It is one of the strongest port contenders in Latin America and the Caribbean. In fact, in 2013 it joined the Green Awards ports program: “The Green Award is well-known in the maritime world for its reputable certification of ships that apply the best practices and exceed the industry statutory regulations in terms of safety, quality and environmental stewardship.” Argentina earned the first Green Award port in South America, and continues to ensure that they effectively maintain their Green Award efforts. Because they are a part of this, they receive a 10% discount on vessel dues for their Green Award ships. For Argentina, and Buenos Aires especially, this a big feat considering that where the port is located is a very metropolitan area. The port is putting forth its best efforts to maintain the greater good of the population within that area, and the country as a whole, and ensuring a clever and strong revamp in order to gain more global capital.

With the improvement plan set in place it will be interesting to see what this does for Argentina’s economy. In fact, seeing as European trade and Latin American trade don’t even compete, they should consider banning together and coming up with ways to innovate and ensure the utmost efficient level of import and export trade. After all, with the approval of a plan such as this, Argentina should get all the advice it can get to ensure it makes the right moves and builds out the right strategies.

http://www.latimes.com/travel/cruises/la-tr-cruises-argentina-port-improvements-20171029-story.html

http://www.portstrategy.com/news101/world/south-america/all-change-for-buenos-aires

http://www.greenaward.org/greenaward/703-buenos-aires-is-the-first-green-award-port-in-south-america.html