Marketplace - Ringing in 15 years of the $7.25 federal minimum wage

Episode Date: July 24, 2024

The last time Congress raised the federal minimum wage, it went up 70 cents — from $6.55 to $7.25 an hour. That was in 2009. Today, we’ll get into why there hasn’t been a successful push to boost it since then and who suffers as a result. Plus, officials in China promise major tax reform, apartment vacancies in Sun Belt cities rise and the Federal Reserve keeps an eye on GDP estimates.

In which I am required to remind you once again that stocks go down too. From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Rizdall. It is Wednesday today, the 24th of July. Good as always to have you along, everybody. It was not great on Wall Street today. All three major indices, as you probably heard by now, red, red, and more red. And while it is tricky to sum up multi-trillion dollar capital markets with one word, if I had to, which now obviously I do, the word I would use is technology, dragged pretty

much everything else down. But the economic fundamentals, because repeat after me, the stock market is not the economy. The economic fundamentals, as politicians like to say, remain solid. We'll get an update on how solid when the first estimate of gross domestic product for the second quarter, April through June, is shared with us tomorrow. All, by the way, GDP is, all of the goods and services produced in this economy. GDP is, of course, right near the top of the list of things that the Fed is going to be watching closely to figure out whether its higher for for longer interest rate strategy meant yes to control inflation is also somehow pushing the economy

into slow or maybe even no growth. Marketplace's Mitchell Hartman gets us going. Mitchell Hartman At the end of last year, economic growth soared with GDP rising three and a half to nearly 5%. Then in the first quarter of this year, growth cooled way down to just 1.4%. And for the second quarter, says Quincy Crosby at LPL Financial, Right now the expectations are, which means, you know, they take all of the analysts estimates 1.9% GDP. stronger growth than the first quarter, but not nearly as strong as 2023. Crosby says the Fed is worried that growth could keep slowing to a crawl or even a stall

out. 1.92% in that neighborhood would be comfortable for the Fed and brings us to levels that we saw earlier pre-COVID. That would signal an economy that's slowing in a manageable way, says Sam Stovall at CFRA Research, without risk of tipping into recession. Even though we've seen a slight uptick in the unemployment rate, some downticks in the Fed manufacturing surveys, etc., GDP continues to show resilience. What Paul Christopher at the Wells Fargo Investment Institute sees in the underlying data is a broad-based slowdown from last year's torrid growth, which he says worried the Fed because it risked sparking inflation.

Sometimes bad news is good news, and right now a slowing economy is that bad news that's really good news. Seems like a contradiction, I know. Christopher explains it way better than I ever could. Look, we know the economy has to slow in order to get the Fed to lower interest rates so that credit can become cheaper and more available to small businesses and households. What we need is to see the sequence where the economy inflation slow, the economy doesn't go into recession and then the Fed cuts rates and the economy can take off again. And that is how you bring a $28 trillion economy in for a soft landing.

I'm Mitchell Hartman for Marketplace. Should you be looking for a stock bright spot for tomorrow's trading? Might I suggest a steak bowl, no beans, extra cheese, roasted chili corn salsa, tomatoes and extra cheese. It's in there twice, extra cheese, roasted chili corn salsa, tomatoes, and extra cheese. It's in there twice, extra cheese on purpose. Chipotle announced quarterly profits after the bell today. Net income up, same store sales up, looking at 300 new locations this year. Obviously consult your own financial advisor.

We'll have the details when we do the numbers. There are, very broadly speaking, two main categories in the world of real estate. Single family homes and apartments. We learned this morning that the sale of newly built single family homes fell to a seven-month low in June. That's even as mortgage rates eased a little bit. And while the inventory of new homes on the market did increase just a hair, the supply is still low when you compare it to a more normal housing market. It is, however, a different supply-side story in the rental market,

where the national apartment vacancy rate hit 6.7% last month. That's according to ApartmentList.com, and it is the highest that the vacancy rate has been since the early days of the pandemic, and it's higher than what was generally considered normal back in the before times. Marketplace's Matt Levin spent some time looking into why that vacancy rate is up and it's higher than what was generally considered normal back in the before times. Marketplace is Matt Levin, spent some time looking into why that vacancy rate is up and what all of those empty apartments are going to mean for local housing markets. The city of Augusta, Georgia is about 150 miles east of Atlanta, tucked squarely against

the South Carolina border. It has about 200,000 people and a golf course you've probably heard of. Augusta is where they play the Masters. The average one-bedroom apartment costs about $970. You can find one pretty easily. Of all the cities of its size that apartment list tracks, Augusta has the highest vacancy rate in the country. Our property managers are telling me traffic is not what we've seen. We're putting out a lot of half off first months rent, various forms of discounts to try to boost our traffic.

Paul King is president of Rex Property and Land. The company develops and manages midsize apartment buildings in Augusta. He says part of the city's high vacancy rate is due to the recent completion of a nearby nuclear power plant. The mostly temporary construction workforce is now pretty much gone. But a longer term issue? The shiny new apartment buildings going up just around the corner. I mean, we've got properties we developed as recently as 23, but two blocks up the street is a brand new building that they're not even finished constructing, but have already started leasing. So yeah, that impacts us. And they got hundreds of units. It's a supply side story. Supply has gotten ahead of demand.

Susan Wachter is a professor of real estate at the University of Pennsylvania's Wharton School. Demand increased right after pandemic started and then supply surged. And the supply surge is at this point many markets in the Sunbelt more substantial than the demand growth, which is petering off. Last month, the number of newly constructed apartments hitting the market nationally reached a high not seen since 1986. The groundbreaking ceremonies for those buildings happened a couple years ago,

back when it felt like everyone in the country was relocating to places like Austin and Atlanta. But now that the final touches have been put on the ground floor gym and rooftop pools, that exodus from expensive coastal markets is basically over, says Rick Palacios Jr. at John Burns Research and Consulting. It has definitely cooled down and now returned office has picked up and people are saying, Hey, I want you to be within an hour maybe of the office.

High vacancy rates have caused rents in markets like Austin, Atlanta and Raleigh to decline more than 4% year over year, although they're still higher than they were before the pandemic. Augusta property manager Paul King says for a lot of his competitors who borrowed big money to build those big apartment buildings, lowering rents can be tricky. Generally, the bank is the number one bill, whatever the lender is. They have obligations that they said these will be our price points. If they turn in a rent roll and they're not hitting their price point, they have obligations that they said, these will be our price points. If they turn in a rent roll and they're not hitting their price point, they could have

their loan called. King says he's just trying to get the same rents he got last year, but sometimes he has to settle for less. I'm Matt Levin for Marketplace. You probably have a good idea of what the federal minimum wage is, right? $7.25 an hour. Now, do you know how long the federal minimum wage has been, $7.25 an hour? 15 years today.

That is, should you be curious, the longest the minimum wage has ever gone without getting a raise. You do the obligatory adjustment for inflation and people making that $7.25 an hour now have the least purchasing power they have had since 1949. And yet there is not much talk in the corridors of power about raising it. Marketplace's Kaylee Wells has more now on how we got so stuck.

Over the past decade, Congress has debated raising the minimum wage. In fact, the Raise the Wage Act got reintroduced in the Senate last year. But the idea keeps on going nowhere. Why? The short answer is congressional gridlock. So we are in, you know, an unprecedented situation in terms of, you know, Congress just not taking steps to raise the wage for. Sade Gebrselassie is a senior staff attorney at the National Employment Law Project. She'd like the minimum wage to at least double, in part because Black workers and women are way more likely to hold those jobs. It's like such a common sense solution to so many of the issues

facing working people. Issues like the racial wealth gap and the gender pay disparity. But the reason it hasn't happened, says labor economist Yuxi Chen with the W.E. Upjohn Institute, is because there's concern over what a raise could mean for prices and job opportunities. Whether it's going to be through a reduction in employment or an increase in output price. She also says the federal minimum wage shouldn't be a one-size-fits-all thing. Because the states are very different in their characteristics, such as industry composition and their cost of living. That's why 34 states and dozens of local municipalities have set a higher minimum wage than the federal baseline. Tia Kunz with the UCLA Labor Center says that's good,

but that leaves a lot of workers out. In fact, people aren't talking about it enough. Plus, she pointed to several studies that say raising that wage floor actually stimulates the economy and increases employment. And that's because, you know, it's not a secret. When you put money into people's pockets, they spend it, particularly when you're talking about the poorest people.

With more states and cities establishing their own minimum wages, the number of workers who earn the federal minimum is going down. It's now only about 1.3% of hourly employees. I'm Kayley Wells for Marketplace. The 2024 Olympics officially start Friday in Paris, 329 medal events across 32 sports and 45 disciplines, one of which is equestrian. Perhaps not the most watched, but certainly one of the oldest. Even the ancient Greeks had horses in their games. And that is the starting point for this next installment of our series, My Analog Life, how technology has changed the jobs that we do.

My name is L.A. Berry and I live here in Albany, New York and for 40 years I have been an equestrian sports journalist and writing and photographing the greatest horses and riders in the world. The biggest change for me has been in 35 millimeter film. The de rigore uniform of the equestrian photographer was a fishing vest. Each tiny pocket I could cram three or four cartridges in and front and back and then you'd have the zipper down the back so you could slide the horse show program, another analog device. So I carried a whole village on that vest.

What I see today in the digital indulgence is even a blind squirrel can find a nut once in a while. You hold your thumb down long enough, you're going to get a good frame. But with 35 millimeter film, you only had 24 chances to get it right. And even then, you didn't know if you'd gotten it right, because there are things like horses blink.

So for a week or two weeks, you didn't even know if you had captured what you had put in front of your lens. What saddens me is the loss in 35 millimeter film has taken away a human connection. I really enjoyed getting to know the people that worked behind the film counters. They were always smart, kind of geeky, creative people that you could have a great conversation with.

Especially if I counted on them for turning around film during a horse show season, they were on my Christmas pierogi list at the end of the year. I miss that. How do I get on her Christmas pierogi list though, right? Come on, you're thinking that. L.A. Berrien, Albany, New York. You can tell us about something you miss about your job from the you're thinking that. L.A. Baryon, Albany, New York. You can tell us about something you miss about your job from the analog age at marketplace.org slash

my analog life. Coming up. I just expect people to do dumb things because it's New York City and I choose to ride on a bike. Low expectations lead to less disappointment, I suppose. But first, let's do the numbers. Yeah, the wah-wah has been a while, I think. Dow Industrial is off 504, 1.25%, 39,853. The Nasdaq gave back 654 points, that's 3.23%. 17,342.

The S&P 500 off 128 points, about 2.3%. 5427 there. Alphabet down 5%. Today's second quarter results show disappointing advertising revenue on YouTube. Meta down 5.6% after it released a free version of its artificial intelligence model. Wow, it's called. Credit card company Visa gave back 4% on worse than expected revenue in the fiscal third quarter. It said consumers with lower incomes were starting to cut back on spending. Bellwether is what you call that. MasterCard subtracted 2.1%.

Bond prices fell. Yield on the 10-year T-note nudged up just a bit. Bending bellwethers which call that MasterCard subtracted two and a tenth percent bond prices fail Yield on the ten your T note nudged up just a bit four point two eight percent. You're listening to Marketplace This is Marketplace I'm Kai Rizdal we're gonna do a little politics now politics of the economy as is our want Not here though, in China. There was a big meeting in Beijing last week, four days of talks to chart the course for the next five years in the second biggest economy in the world. It's not like there was a whole lot of debate because China, but one of the key decisions made was to give local governments the power to collect more in taxes. That's a big deal because hard-pressed local and provincial governments over there

have been struggling to find new revenue, as Marketplace Jennifer Pak reports. Wanna see something impressive in China? Take a bullet train from Shanghai. It goes over 180 miles an hour and tickets are affordable. Five hours and $76 later, you arrive in central China's Ganzhou. It's a small city, but still has a newish six-lane highway.

They've been building highways like crazy here, the taxi driver told me. How's this all paid for? Mostly land. All urban land is owned by the state and local authorities lease it to real estate developers. But the housing bubble popped. Add on non-stop COVID tests during the pandemic and local governments are low on money. At last week's meeting in Beijing, senior officials said they'd let local authorities raise more taxes. The problem is not enough people are paying tax.

Most people like these food vendors at a night market, don't earn enough to pay income tax. Or they get paid in cash. So it's easy to evade the taxmen. And so far, Chinese officials have backed off a nationwide property tax. Too unpopular. Companies also find all sorts of ways to dodge taxes, though that might be changing. In June, news reports said some cities had asked companies to pay taxes dating back years, in one case to 1994.

Many private businesses got spooked. China's state administration of taxation came out to assure companies there is no nationwide campaign to catch tax dodgers. For now the change is on indirect taxes. When you walk through a supermarket there's a consumption tax on tobacco and alcohol along with 13 other categories of luxury products. That's news to people like e-commerce worker Sam Sun. When I buy a five5 pack of cigarettes, I guess the tax is included,

but it's not shown on the receipt, unlike in the U.S. So people in China are not that aware about taxes. Right now, when people buy cigarettes and beer, the consumption tax goes to the central government. But soon, more of the money will go to local governments. And how the tax is collected may shift from producers to maybe wholesalers. Experts say that could mean higher prices for consumers. Again, Sam Sun.

Cigarettes and alcohol are not daily necessities. It's okay if they cost a bit more. Besides, many people in China say that the more cigarettes we buy, the more military aircraft carriers the government will make. So it's fine. But patriotism aside, it depends how much prices increase, says salesman Yu Zhihang. He started smoking two years ago, after his food business went bust. If the price increases, like, under a dollar,

then I won't change my habits. But then again, I might smoke less. Already, tobacco and alcohol seller Mr. Zhou says he's struggling. The business this year is terrible. It's at least 30 to 40 percent less than last year and the year before that." Which is why taxes likely won't be imposed on more goods, while consumption is still weak.

In Shanghai, I'm Jennifer Pak for Marketplace. New York City, Manhattan specifically, can be chaotic. Loud, crowded, unruly. That is the general state of things. It applies equally to traffic in Manhattan as well. And it's being made all the worse by DIY vehicles that are taken to the streets and to the sidewalks. Christopher Maug wrote about it in The New York Times the other day. Christopher, welcome to the program.

Thank you, Kai. It is quite the assortment of vehicles, I guess you'd call them, that you point out in this column. I guess the first question is, why are we seeing so many now? Sure. I think that we're really seeing this change on the streets in New York City and cities around the world because these batteries have gotten so small, so light, and so cheap. So you really can strap them to anything you like if you're a backyard engineer, all the way up to if you have lots of investment dollars to engineer a new complex vehicle from scratch, you can do that too. One hates to channel the nanny state here, but we regulate traffic and those sorts of

things fairly extensively in cities and states around this country. These things that you highlight in the column are well nigh unregulatable. Yes. There are some attempts to regulate them with the more standard electric bicycles. There's a large movement afoot to try to get them to be registered and to have large, easily visible license plates so that everybody can see them, including video cameras and surveillance cameras if one should commit a crime. These smaller vehicles, if you're riding a skateboard that you hack together in your garage or one of these

one wheels, those are illegal already to ride in places like many bridges and bike paths, but regulating them is difficult in part because catching them is difficult. They're fast and maneuverable. Which is, I chuckle, but that's sort of a recipe for disaster if you're a pedestrian, right? Definitely. There are a lot of people with complaints about these kinds of vehicles. Most of the complaints are about the electric bicycles because those are the most numerous.

Occasionally, somebody like the New York Post will come out with a more targeted story about especially these electric unicycles, which seem to be particularly precarious. All the people who ride them, love them and say they're safe. Yeah. Yeah.

Yeah. Sorry, I was just chuckling at the electric unicycle thing because unicycles are tricky to begin with Yeah, I don't really know how they feel safe, but they ride them all over on all types of roads Without trying to bring up the the specter of congestion pricing and governor Hockel The infrastructure of New York City is already crowded It's my guess is that these folks don't stay in bike lanes. What's the roadway safety issue here? I think that's a real issue.

I think that many of these people have no protection. They're going at such speeds and their vehicles are so hard to see that they're really putting themselves at risk and also pedestrians at risk. In their favor, they are making most use of available space. And I bike on the streets all the time, I bike most days. And I do think that one argument would be to have lower expectations.

I just expect people to do dumb things because it's New York City and I choose to ride on a bike. Yeah, right. Drive defensively out there. What's the weirdest one you saw? The weirdest one was the one that I led with. It was Jimmy Cho's Hacked Together Jitney where he took a stand-up scooter and took it apart and welded it to a wheelchair and used it to be vaguely menacing in the center of Herald Square.

What could possibly go wrong? Chris Vermaugh, he writes, he's a Metro reporter at the New York Times. Chris, thanks a lot. I appreciate your time. Really appreciate it. Thank you. This final note on the way out today, 10 bucks, 10 American dollars. Saw this on TechCrunch that by way of apology for triggering a global technology apocalypse, CrowdStrike has been sending, wait for it, $10 Uber Eats gift cards to its partner companies and employees. We send our heartfelt thanks and apologies for the inconvenience," the accompanying email said.

I am not, by the way, making that up. Our Media Production team, which is priceless, includes Brian Ellison, Jake Cherry, Jessyn Dooler, Drew Jostette, Gary O'Keefe, Charlton Thorpe, Juan Carlos Torrado, and Becca Weinman. Jeff Peters is the manager of Media Production. I'm Kyle Rizdall. We will see you tomorrow, everybody. This is APM.