Marketplace - Making waves

Episode Date: February 12, 2025

The sun isn’t always shining and wind isn’t always blowing, but what if there was an always-available renewable energy source? In this episode, we take a trip to the Port of Los Angeles, where scientists are trying to capture energy directly from Pacific Ocean waves. Plus: New England faces a worker shortage brought on by an aging population, the U.S. steel industry’s days of market dominance are over and “AI accelerationists” want the technology to advance ASAP.

How many ways do you suppose can Jay Powell say nothing? From American public media, this is Market Class. In Los Angeles, I'm Kyle Rizdall. It is Tuesday today, the 11th of February. Good as always to have you along, everybody. We begin with the long and the short of it from Fed Chair Jay Powell. Quite literally the long and the short, actually. The head of the central bank went up to Capitol Hill today for one of his regularly scheduled

sessions in front of lawmakers, the Senate today, the House tomorrow. And Jay Powell being Jay Powell, he clearly had every intention of sticking to his monetary policy knitting, saying in his prepared remarks that the economy is strong and that the Fed's still keeping a close eye on inflation and, in turn, what it ought to do with interest rates. Senators though had other ideas about what they wanted to talk about. The vibe was more political than economic. Here's Powell, the longer, after a question about tariffs.

It's not the Fed's job to make or comment on tariff policy. We, you know, really, that's for elected people, and it's not for us to comment. Ours is to try to react to it in a thoughtful, sensible way and make monetary policies so that we can achieve our mandate. Knitting. Sticking to it. Another question, same vibe, just shorter. I'm not going to comment on things that the president says.

This too should be said. Powell did tell senators that the administration's government deficiency group has not yet tried to get into the Fed or its systems. We got an update today on how small businesses are feeling amidst all the economic agita. The National Federation of Independent Business is out with its monthly Small Business Optimism Index, down in January, but those small businesses are still more optimistic than they usually are. The index, though, also measures business uncertainty, which hit its third highest level

ever. And among the biggest challenges? Hiring. More than a third of businesses surveyed said they had job openings they couldn't fill last month. Marketplace's Megan McCarty-Corino has that one. The good news is that small businesses want to hire, says Holly Wade at the NFIB Research Center. The bad news?

It's been a really tough road over the last number of years to find applicants for those high level of job openings that they continue to have. The survey found 90 percent of the small business owners trying to hire in January reported few or no qualified applicants. Federal data show the ratio of open jobs to unemployed workers has been around one to one in recent months, but several industries like construction are struggling with a shortage of skilled labor. You don't even get people to apply anymore. I've pretty much given up. Bruce Jovog owns Norse Construction in St. Louis, Missouri.

His crew of three to four guys do mostly kitchen and bathroom remodels, room additions, and basement finishes. But if you're dreaming of updated cabinets, you'll have to be patient. His waitlist is about four months long. I would love to be able to run a much shorter wait time, but I just simply can't. He says finding specialized workers like carpenters is basically a lost cause. So he turns to subcontractors. I just had an interview recently with a gentleman, but his demands were just astronomical. You

know, health insurance and vacation right away and all this stuff. I can't afford that. There's been a labor shortage in the skilled trades for years, but it's particularly tough for small firms, says Nick Tremper, senior economist at payroll platform Gusto. Small businesses have to compete with the big guys on labor costs. And a lot of times they just, they can't do that. And questions about tariffs and immigration policies are making it even harder to plan for the future. I'm Megan McCarty-Corino for Marketplace. Speaking of which, planning for the future, Wall Street today traders were of mixed minds. We'll have the details when we do the

numbers. I made a quick mention of this at the end of the program yesterday that amid all the stuff that he is doing in Washington, Elon Musk has somehow found time to make a bid to buy open AI for just under $100 billion. Sam Altman, the CEO of OpenAI, not so politely declined the offer, saying, and this is a quote, I think he's probably just trying to slow us down. It can feel in these early days of 2025 like nothing can slow AI down. And there is a group of techno-optimists in Silicon Valley that wants to push even harder on the gas pedal.

Marketplace's Matt Levin has more now on the AI accelerationists. At parties or conferences or pretty much anywhere in the Bay Area, the AI accelerationists are kind of everywhere. I mean, I think you cannot avoid it in Silicon Valley, I guess. Songyi Yun is managing partner at Principal Venture Partners, which invests in AI companies. She says there's degrees of accelerationism, and most people in tech want AI to get better in one way or another. But for louder and prouder accelerationists, the working definition is something along these lines.

Let's make superhuman intelligence as quickly as possible and... Anything that slows down the adoption of the technology is viewed as word block and negative. It's especially true of regulations and guardrails, which AI accelerationists view as unnecessary and overcautious. Hamza Chowdhury is national security lead at the Future of Life Institute. One thing that's been really interesting to see in the accelerationist discourse is there's a notion

that AI can cause large scale harm. It's not just tech bros on X posting accelerationist memes. Venture capitalist and major Trump donor Mark Andreessen counts himself as an accelerationist. And while Chaudhary says it's too early to tell what President Trump will do on AI, the technology is getting better every day. We're unfortunately much closer to getting to advanced AI than knowing how to control it or to make it work for folks.

This week in Paris, billionaires and policymakers gathered for an AI summit, similar to one held in London a couple years ago. Although Chaudry noticed one important difference in the conference declaration. The complete absence of any language on large scale risks from AI systems. Chaudry says that's not necessarily a sign of acceleration as winning, but things are shifting. I'm Matt Levin for Marketplace.

Five years ago, as the pandemic was really starting to bite, the American labor force was one of the early signs of big trouble at common, specifically the proportion of the population that was either working or actively looking for work. That cratered. And the proportion is officially called the labor force participation rate. And after that sharp drop in the spring of 2020, it has been climbing back pretty steadily, except in the six states of New England. The Federal Reserve Bank of Boston lays it out like this. Between 2019 and 2023, in the country as a whole, the labor force participation rate was down a half a percent.

In New England, it was off 2.3%. The Boston Fed says a big portion of that recovery gap, as they call it, is thanks to the region's aging population, which is a reality that could hurt the area's labor force in the years ahead as well. From Vermont, Marketplace's Henry App reports. Not long after Kelly Krayewski took over as general manager of windows and doors by Brownell in Williston, Vermont last year, she realized something about its employees. We have about a third of our workforce will retire in 10 years, and that's across the

organization. Carpenters, salespeople, lots of long-time employees and all of their institutional knowledge will be heading out the door. It's not like I can hire somebody in and bring them up to speed in six weeks on what these folks are doing. Folks like Charles Pelsu in the sales department. He's been at the company so long he says that he got the job through a classified ad in the newspaper. And it was literally about three eighths of an inch tall by an inch and a quarter wide. And my friend, Tom, had cut that out and he handed it to me. He said, I think you should go talk to this guy. Over 30 years later, he's still here. But he's starting to think about retirement and

how he could help the company find somebody to replace him. I think that's a big piece of the puzzle of not just saying, okay, I just turned 65 and I'm done. Yeah, that's probably not my gig. He expects that finding the right people to fill his role won't be easy. Some recent openings at the company have gone unfilled for months. So Pelsu might eventually cut back his hours and stick around for a while. I would probably spend a little bit of time working a little bit less than a full week before I completely segue into retirement.

If Pelsu decides to stay in the labor force past traditional retirement age, he'd be doing the opposite of what many workers in the region chose to do when the pandemic hit five years ago. There were more people in the right age range who would have been like, oh, I lost my job, I'm age 60, I'm going to retire five years early. Mary Burke is a senior economist at the Boston Fed and co-authored the report on the region's labor force participation rate. Because the population of New England is older, so-called excess retirements in the pandemic had a big impact on its participation

rate. Burke says if more people like Pelsu decide to stay on a bit longer... Then that would offset a little bit of this demographic pressure. It would not be enough to create no drag. Meaning, New England is likely to have a worker shortage, unless the region sees some big demographic changes, which is exactly what Kevin Chu of the Vermont Futures Project thinks needs to happen. Specifically, we set a goal to grow Vermont's population to 802,000 by 2035. It's currently at about 648,000.

Chu is the executive director of the project affiliated with the state's chamber of commerce. He says the state needs to attract more working-age people and add to its housing stock. Because Chu says if it doesn't, it's going to be harder to find medical appointments. It's going to be harder to dine out because restaurants are only open three days a week. And it's going to be harder for businesses here to grow. That's already apparent at OnLogic, a company that makes computers built to withstand harsh environments. It opened new headquarters last year in South Burlington with growth in mind. In part of its building, it has three assembly lines set up.

But there's room for more, says Lisa Gruneveld, the company's co-founder. We can push these lines closer to each other and add in, I believe we have planned six lines total to fit in this space. But finding qualified local workers is challenging, she says. So is attracting people from out of state, mostly, she says, due to Vermont's high cost of housing. Some of the more recent recruits we've had, they've had to be very high paid in order to feel like they could make Vermont swing. And so those are our, you know, executives.

But people in the middle, it's just, Vermont's just not working for middle income Americans. So a few years ago, the company opened a second US location in North Carolina, and it's already found it easier to fill some positions there. Ultimately, OnLogic is going to do what's right for the overall corporation. And if that means we need to shift hiring to North Carolina, that's what we're going to do. As a native Vermonter, she says, it breaks her heart. I'm Henry App for Marketplace. At the peak, 90 some odd years ago, there were 6.8 million farms in this country. Today, just under two.

Fewer but far bigger farms growing more grains, more produce, and more meat. Kenny Torello wrote about the rise of the mega factory farm for Vox the other day. Kenny, thanks for coming on. Thanks for having me. We all know the phrase, I think, factory farms, but mega factory farms was a new one for me. Give me a sense of scale here, would you? Yeah. So a sense of scale is seven and a half million egg lane hens at one farm in Malcolm,

Iowa, that is 90 times larger than what the U.S. Environmental Protection Agency considers a large egg farm. The thrust of this piece is the people living near these farms, and we'll get there in a second. I do want to talk though about regulation of these things because with all 50 states as you say having right to farm laws, regulation becomes a little challenging. Yes. That's right. Yeah. The agricultural industry kind of benefits from something called agricultural exceptionalism where they've been carved out of a lot of key laws. So just as an example, the EPA enforces the Clean Air Act, and yet the agricultural industry is generally exempt.

And when it comes to the Clean Water Act, only about one-third of large animal farms have to get clean water permits. So the laws that we should have in place to prevent agricultural pollution just aren't doing the trick. Let's get then to the air and the water part of this. You spend a good amount of time I gather meandering around sort of the Midwest and the upper Midwest near some of these farms. First of all, you get close to one, give me a sense what it smells like.

It's overwhelming, especially on days when they're moving the manure. It just stings your nose, and you want to get inside as fast as you can. And in fact, there are people you talk to who basically stay inside. This one woman bought a grill and can't use it because she doesn't want to go outside.

Tell me about her. Yeah, that's Jennifer McNeely in Decatur County, Indiana. And she has one farm near her that has 8,000 cows. And then she has about 13,000 hogs on a number of different farms around her. And for her, the stench is just overwhelming. When she gets home from work, she many days has to cover her nose with her t-shirt or with a scarf and run indoors.

She even has to take the long way to work because she doesn't want to drive by these factory farms and get a whiff of them. She and others call and complain, and yet it doesn't seem that they get much traction. How come? From really the local to the state to the federal level, regulators have really dropped the ball, whether it's at public health authorities or environmental regulators or departments of agriculture. And that's not across the board. There are some exceptions. There are some states that are trying to do better on this. But generally, the problem is one, that the industry is exempt from a lot of key environmental regulation laws, so regulators' hands are tied. But the other problem is that policymakers have really enabled kind of the growth of

these mega factory farms by not putting safeguards in place to protect people from this pollution. The ag industry has put an incredible amount of money into getting ag-friendly candidates elected and as a result that means that people who live near these factory farms and suffer from the pollution, the air and water pollution, they don't really have a lot of people standing up for them. Yeah. One is obliged to point out here that we American food eaters, we like our eggs, we like our chicken, we like our pork, and we like our beef, yeah? That's right. Yeah.

This is not just all on the corporations or on the policymakers. Some of it comes back to us. You know, Americans have been pretty quickly increasing their consumption of meat, milk, and dairy, and eggs over the years. And that has helped give way to these mega factory farms in order to meet the demand. Kenny Torella at Vox who covers livestock there, writes about it too. Kenny, thanks a bunch. Appreciate it.

Thanks for having me. Coming up... It is really, really difficult to work in the ocean and to have things operate in the ocean. Riding the green energy waves, but first let's do the numbers. Dow Industrials up 123 points today. 3 tenths percent close to 44,593. The Nasdaq dipped 70 points. A third percent, 19,643. The S&P 500 inched up two points.

Less than a tenth percent, 6,068. Gold hit another record high in the past 24 hours. The OG safe haven asset topped $2,950 an ounce at its peak. Bonds fell yield on the 10-year T-note. Also another safe haven asset, by the way, rose to 4.54%. You're listening to Marketplace. This economy can be complicated.

That's why the Marketplace newsletter makes understanding it all simple. Get smart takes on the week's biggest stories delivered to your inbox every Friday. No jargon, no hype, just economics you can use. Sign up today at Marketplace.org slash subscribe. Hi, I'm Kai Rizdal, the host of How We Survive. and subscribe. wildfires devastated Los Angeles and that the US withdrew from the Paris agreement again. And while all that might feel pretty terrible, the climate crisis is not an inevitable reality. From simulated climate emergencies to microgrids and sustainable aviation fuel, we look at how the military is investing part of its $850 billion budget in a greener, more resilient

future. Listen to How We Survive wherever you get your podcasts. This is Marketplace. I'm Kyle Rizdal. It's going to take a while to figure out all of the downstream effects of President Trump's new 25% steel tariffs. As a reminder, that is steel from every other country in the world coming into the United States. No exemptions or excuses. Domestic steel producers do have something to celebrate in the short term,

but even if these import taxes do help the American steel industry, the United States is far from the dominant force in the global steel market it once was, and steel is far from the great American employer that it once was. And as Marketplace Elizabeth Troval reports, there is not much that's gonna change that. US Steel once dominated the global market. Raymond Monroe with the Steel Founders Society of America says before the 1970s.

We made more steel than anybody else in the world. Then other countries started to lead the pack, like Russia, Japan, and nowadays, China. This year we'll make 90 million tons. They'll make one billion tons. They make more steel than the rest of the world combined. China really needs steel, says Purdue's Amy David. China has been using a lot of that steel as China rapidly, rapidly industrialized. But Philip Bell with the Steel Manufacturers Association says the problem is... China makes so much steel and doesn't really have a domestic market for all of it.

So it exports it for cheap in an oversupplied market. And the US does depend on some foreign steel. Dartmouth's Doug Irwin. The import market share was about 25 percent. Most of it comes from political allies like... Canada, Germany, Japan, Korea, who were not going to cut us off from the steel if there was a national emergency. The U.S. was still the fourth biggest producer globally in 2023, according to the World Steel

Association. It's just production hasn't grown much and US steel employment has shrunk significantly, which Tom Pruska with Rutgers attributes to technology. Yes, there's a lot fewer workers. Is that because of imports or is that because they've gotten way better at producing steel? I think it's the latter. Bruschia says American steel just takes a lot fewer people to make than it used to, which helps it stay competitive. I'm Elizabeth Troval for Marketplace.

Renewable energy, solar and wind here specifically, for all their many virtues have a big drawback. The wind doesn't always blow and the sun don't always shine. Yes, batteries, but you know what I mean. The holy green energy grail is a source that's always available. Ocean waves, for instance. There's a steady supply of those, in particular here in Southern California. And there's a company down at the Port of Los Angeles aiming to harness all that power. Marketplace's Kelly Wells went to check it out.

The Port of Los Angeles is a giant maze of birds and keys and channels. And Terry Tamminen weaves through them to get to work every day. The view outside his office has been consistent for more than a century. These are the boats that come in from Central and South America with fruit during the winter. But the pier Tammonen and I are standing on has changed a lot. He is president and CEO of AltaSea, which is a nonprofit that develops the sustainable ocean economy. And right now, he's really excited about this blue, sedan-sized

piece of metal sitting on the pier waiting to get put in the water. Its whole purpose is to bob up and down on the ocean's waves. The top of it is connected to a giant piston. That acts like a bicycle pump. So as the float goes up and down, so does this bicycle pump arm. When a bunch of these floats sit next to each other, they look like a series of piano keys that move up and down like scales every time a wave comes in.

And then the pressure created by that, instead of going into a bicycle tire, goes in here into these accumulator tanks. Behind the piano keys are a series of what look like really long, bright red scuba diving tanks. They're just holding the pressurized air that gets shoved in there every time a wave comes in. And when you want the energy, you release the pressure from here, it spins the turbine,

and now you have stored intermittent renewables without a battery. These floats are designed to attach to a breakwater or a jetty. They'll be mounted to a concrete pier on the port's main channel. They come from a company called EcoWave Power. Its founder, Ina Braverman, says most wave energy companies so far have failed because they've set up installations way out at sea. That was extremely expensive because you need chips, you need divers, you need underwater mooring, you need cables. It was breaking down all the time because in the offshore you get extremely high waves like tsunami waves.

In other words, Samantha Quinn with the Climate Solutions nonprofit Pacific Ocean Energy says there is a lot of breaking and fixing in wave energy. It is really, really difficult to work in the ocean and to have things operate in the ocean, especially things that have to move. Because yes, the ocean moves floats up and down, but it also jostles them side to side and the saltwater corrodes them. On top of all that, different states and countries have different environmental regulations. And so then you sometimes have to like redesign parts of your devices to be able to go into

a specific location. So it's expensive, it can only be built in specific spots, it's prone to breaking, and this pilot project will generate enough energy to power about 80 households. So it's not even close to competing with, say, wind and solar. But Quinn says that's not a fair comparison. Those technologies are decades ahead in this race. Solar and wind didn't just happen overnight. It really did take a long time for those to be developed. And we are following a very similar innovation path that solar and wind

did. The floaters at the Port of Los Angeles will get dropped in the ocean and brought online next month. There isn't a penny of federal money going into the pilot project. In fact, it was paid for in part by Shell, the oil company. In Los Angeles, I'm Kaylee Wells for Marketplace. This final note on the way out today. Economists call it the substitution effect. Companies call it, gotta keep our margins up. This item today from the Coca-Cola company on its earnings call this morning. If one package suffers some increase in input costs, CEO James Quincy said, we continue to have other packaging offerings.

For example, he went on, if aluminum cans become more expensive, we can put more emphasis on PET bottles, that is plastic FYI tariffs. Of course, we're the subject at hand. Companies are thinking about it. Our Digital and On Demand team includes Carrie Barber, Jordan Mangy, Dylan Mietinen, Jana Nguyen, Olga Oxman, Ellen Rolfus, Virginia K. Smith, and Tony Wagner. Francesca Levy is the Executive Director of Digital and On Demand. And I'm Kai Rizdal. We will see you tomorrow, everybody. This is APM.