Marketplace - Silence isn’t golden if you’re a TikTok creator

Episode Date: February 1, 2024

Universal Music Group pulled its songs from TikTok after the video platform’s license expired Wednesday. Now, creators will have to avoid using some of today’s biggest hits. Also in this episode: what it means when the BLS says productivity is up, why it matters that wage gains are slowing down and how popular food brands are connected to prison labor.  

More positive economic data, plus the economic concept that has economists scratching their heads. From American Public Media, this is Marketplace. In Washington, D.C., I'm Kimberly Adams, in for Kai Risdahl. It's Thursday, February 1st. Good to have you along. This morning, we got the latest numbers on just how productive we, the worker bees of this economy, have been lately. The Bureau of Labor Statistics reports productivity for the non-farm business sector increased 3.2 percent in the last quarter of 2023. With the caveat that these numbers are volatile and subject to revisions, that's a significant increase in productivity for the third quarter in a row.

Marketplace's Samantha Fields reports on what that means and what might be driving it. It is always a good sign when productivity is rising. When you think about what productivity is, it is the total amount of goods and services produced in our economy divided by the total hours worked in the economy. Heidi Sheerholz at the Economic Policy Institute says another way to think about it is the total amount of income the economy is generating per hour. And when that goes up, the total amount of income the economy is generating per hour. And when that goes up... That's good for the economy.

That actually is what makes rising living standards over time possible. All sorts of different factors can contribute to productivity growth, she says. But... In general, over the long run, changes in productivity are really about changes in technology. Like the invention of computers and the internet. But Keith Hall at the Mercatus Center at George Mason University says the increase in productivity we're seeing right now is actually not because of technological advances. The biggest thing really is the return of a healthy economy.

Having the recession associated with the pandemic and then the struggle with inflation, we're sort of coming out of that now. For the first few years of the pandemic, productivity was all over the map. Now it's about back to where it was in 2019. But in the next few years, Martin Bailey at Brookings thinks we're likely to see a tech-fueled spurt in productivity. With all the developments in technology, including AI, but not just AI, I think I'm pretty optimistic. He says we're not really seeing the impact yet. We're still developing AI. We're still investing heavily in it. People are still learning to use it, myself included. But, he says, it's only a matter of time before it begins to pay off.

I'm Samantha Fields for Marketplace. In addition to those details on productivity of workers from the BLS this morning, we also learned about the cost of those workers. Wages and benefits aren't growing nearly as fast as a couple of years ago, so labor costs barely budged in the last quarter. And 2023 overall saw the slowest rate of labor cost growth of the past three years. So could that mean inflation might slow down too? Marketplace's Henry Epp reports. A couple years ago, as the economy emerged from pandemic shutdowns, the labor market was pretty wild. We had this sort of high-velocity, high-churn economy. Skanda Amarnath heads the research group Employ America.

In 2021 and 2022, there was a ton of hiring going on, but not enough workers to fill all the open positions. When this kind of thing happens, he says, Employers probably have higher search costs, in which there is more of a need to increase wages to protect against turnover. But a lot of turnover happened anyway, as workers' jobs hopped, drawn in by higher salaries and better benefits.

People feared that this could drive up inflation in the long term. That shifted in 2023, says Nicole Smith at Georgetown University. Now more people are back in the job market, so businesses don't have to court them as aggressively, and fewer workers are quitting. They're able to keep the talent that they've cultivated for a longer period of time and continue to increase productivity with that talent pool. And she says while wages are growing more slowly now, they're not falling either. And those fears that rising wages would lead to long-term inflation, the slowdown in labor costs shows that didn't pan out, says Aaron Terrazas, chief economist at Glassdoor. It was short-term shock associated with a momentarily tight labor market in 2020, 2021 and 2022 that was associated with kind of a lot of demand in the economy that passed.

That passed. This year, the labor market could continue to cool, he says. But since the unemployment rate is historically low right now, the economy can probably handle it, and it could keep easing inflation. I'm Henry App for Marketplace. Wall Street today, a bit of a rebound from yesterday's sell-off. We'll have the details when we do the numbers. If you happen to be one of the many millions of people who spend time on TikTok, things may sound a little different on the platform today. You may find some silent videos with captions saying, This sound isn't available.

That's because the platform's license with Universal Music Group expired, and TikTok had to remove any music that belongs to the record company, including tracks from Bad Bunny, Olivia Rodrigo, and Taylor Swift. Marketplace's Christian Schwab looks at the battle happening between Universal and TikTok. TikTok is huge for music discovery and rediscovery. George Howard is a professor of music business management at the Berklee College of Music. Someone goes to TikTok, there's a clip of music in the background. For instance, some guy on a skateboard singing Dreams by Fleetwood Mac. And they hear it and they go, wow, that's a cool song. What is it? Howard's talking about the viral TikTok from

2020, in which user 420dogface208 skateboards while drinking a jug of Ocean Spray Cran Raspberry Juice. Not long after, the 1977 hit Dreams reappeared on the Billboard Hot 100 list. Word is out on whether Cranberry Juice also got a boost. All said, that's great promotion for Fleetwood Mac, and you'd think great promotion for the record label. But over time, that value has to be kind of quantified, and that's where things are breaking down. Universal says TikTok accounts for just 1% of its revenue. TikTok calls itself a free promotional and discovery vehicle for Universal's talent. TikTok has a lot of power here, but so does Universal. It is the largest record company, so this move could tempt other labels to walk away. And Sherry Hu, a music technology analyst, says it leaves TikTok with a

gaping hole. Universal is huge on the platform. They also account for a really good chunk of the top songs that are charting on TikTok at any given time. It means creators now have to avoid some of today's most popular songs. It would just lead to a much worse consumer and fan experience for a lot of people using the apps. Especially on a platform that started as a place

to make and share catchy dances. I'm Kristen Schwab for Marketplace. Earlier this week, the Associated Press published a big two-year investigation linking hundreds of popular food brands to prison labor. Reporters discovered U.S. prisoners produce hundreds of millions of dollars worth of agricultural products that end up in grocery stores and major fast food chains. This is legal under the 13th Amendment, which allows for slavery and involuntary servitude when it's for punishment of a crime, although there are state and federal challenges to this kind of forced labor. Margie Mason is part of the AP's global investigative team and a co-author on this investigation.

Margie, welcome to the show. Thank you so much for having me. What kinds of jobs are these prisoners doing and where do the proceeds from their work end up? Well, it's a variety. end up? Well, it's a variety. So you have, in some cases, a lot of the incarcerated workers are on prison farms, or maybe they're doing general jobs within the prisons, like maintenance type things, like laundry or landscaping. There's that whole sector. And then you have prisons that have contracts with private companies outside. And so they may just be leasing out the incarcerated workers for the labor.

And so they're working at places like, you know, egg farms, or they might be working on other farms. We were mainly focused on agriculture for this story. on other farms. We were mainly focused on agriculture for this story. And then you have the work release folks who, in a lot of cases, they're kind of toward the end of their sentence and they're getting ready to kind of transition back into the world. They could be doing fast food restaurants or working at retail outlets, or in you know, in some cases, they're doing jobs where, you know, they're working at poultry plants or meat processing plants. What did the prisoners that you talked to tell you about what it was like doing some

of these jobs? Well, I mean, I think it was a mixed, it was mixed. And I don't want to say that everybody was saying that this was horrible. Again, the jobs that are on the outside pay more money. And so those are the coveted jobs that are on the outside pay more money. And so those are the coveted jobs that a lot of the incarcerated workers want, but there's not a lot of those. And even when they get those jobs, they face these huge deductions often. So you might have somebody who's getting paid minimum wage, and then there's a part of that that's being taken

off the top by, let's just say, the state prison industries, that organization. And then you're going to have on top of that maybe an additional, let's just say, 30% taken away by the state for things like room and board. And so they would tell us, this is a problem because we're getting so much taken out. us, you know, this is a problem because we're getting so much taken out. But then you also have the workers that are doing things like, again, working in the fields. If they're in a state where, again, they've been sentenced to hard labor, it's required that they work. If they don't do this for, you know, pennies an hour or sometimes nothing at all, they then face some sort of punishment. So they could wind up in solitary confinement, for instance, or they could have privileges pulled away from them.

When you followed some of these agricultural products, where did they end up? And how did those companies respond when you asked them about it? Well, I think, you know, we basically look at the supply chain. And so when you're looking at the supply chain, it's, it's, you know, what, what companies are buying directly. And again, we focused on agriculture and there were big companies like Cargill and Tyson and Arthur Daniels Midland that were buying directly from prison farms or, or directly from state prisons. And then of course, those companies are so large that there's this spider web of all these other companies that they are supplying. And so that trickles down and you see these things going into places like McDonald's and Walmart,

to places like McDonald's and Walmart and then so many other companies that are making and have all of these brands that are iconic that we all know and that are on the shelves in our kitchens. And what do those companies say when you ask them about using prison labor to create their products? Well, I think some of the companies didn't respond at all. Some of them were, I think, they didn't know about it because it was deep into the supply chain. And they said that they would look into it. You know, Cargill got back to us and they said, yes, we've been doing this in, you know, three states. And we are looking at this, and we're going to, you know,

take action if need be. And some of the some of them also had said we had been doing this in the past, but we have stopped and we're no longer doing that. So, so yeah, we had kind of a mixed response from various companies. You tell the story in your piece about Frank Ellington, who was killed on the job. Why did that story stand out to you? So Frank Ellington was in Alabama and he was on as part of a work release program and he was working for a poultry plant. a work release program and he was working for a poultry plant and he was cleaning a machine and he got his arm stuck in this machine and it, you know, pulled him inside and he ended up dying as a result of that. You know, oftentimes for incarcerated workers, they're not covered by the same protections that we all, you know,

the rights and protections that we all have and just kind of expect to be there. Things like workers' compensation or disability benefits, or, you know, if things go wrong and you're seriously hurt or killed on the job, it's not as easy for them to sue. And so it creates this kind of gray area where they're in almost like a separate category and no one really even knows how to kind of handle their cases or their claims. And a lot of lawyers, because of that, don't even want to take it up.

Margie Mason is an investigative reporter for the Associated Press looking at prison labor in the United States. Thank you for coming on. Thank you so much for having me. Coming up. Half the problem when you talk to a lot of kids today is they don't have the self-confidence. So maybe we can give them a little boost. But first, let's do the numbers.

As I said, up from the rebound. The Dow Jones Industrial Average rose 369 points, just under 1%, to finish at 38,519. The Nasdaq ascended 197 points, 1.3% to close at 15,361. And the S&P 500 lifted 60 points, 1.25% to end at 49.06. Today's a big day for tech earnings, with Apple, Amazon and Meta all reporting after market close. Apple beat estimates for earnings and revenue, but saw its sales in China decline. Apple was up one and one third percent today before that news. Amazon beat analysts expected sales for the fourth quarter.

Shares added two and nine tenths percent. And Meta beat expectations, too, and rang up one and two tenths percent. Competitor Alphabet, parent company of Google, added three quarters of a percent. And Microsoft increased one and sixenths percent. Competitor Alphabet, parent company of Google, added three-quarters of a percent, and Microsoft increased one and six-tenths percent. Bonds rose, the yield on the 10-year T-note fell to 3.87 percent, and you're listening to Marketplace. This is Marketplace. I'm Kimberly Adams. At the top of the show, we heard how worker productivity has increased and how the rise in the cost of labor has slowed. Both of these, according to economists, are signs of a stabilizing economy. But like many experts, economists don't agree on everything. And lately, what's going on in this economy has sparked quite

the debate. The fight is over something called the beverage curve, and it looks at the relationship between employment and job openings. Inda Curran recently wrote about this model for Bloomberg. Inda, welcome to the program. Thank you, Kimberley. For listeners who don't know, and many of us who probably don't know, what is the beverage curve? The beverage curve is an academic theory that essentially looks at the relationship between job vacancies in the economy and the unemployment rate. And the correlation is simple, basically the higher the vacancies, the higher the unemployment rate and vice versa. And it was a

study that economists have debated a lot during the pandemic and post-pandemic years to understand what is happening with inflation and what is happening with unemployment. How do economists usually deploy the beverage curve and why is that giving them troubles now? Well, the central thinking during the inflation crisis of the past few years was that you cannot have inflation coming down without a big hit to the jobs market. So the point is unemployment would have to soar in order to get inflation down. And the beverage curve was at the center of that debate. There was another group of economists who said, you know what, this time feels a little bit different. You don't have to have that big painful hit to employment

without bringing inflation down, because the reasons are mostly on the supply-sided economy, we'll say shortage of goods and the like, and that's why inflation can't come down without hitting workers. Where we are now, it's proving that the latter camp was broadly right. Inflation has come a long way back, and the unemployment rate has remained low, which is quite an outcome. Step back and give me an economics 101 lesson as simply as you can.

Why is it just the assumption that to bring inflation down, you have to lose jobs, maybe even to the point of a recession? I guess it's born by past experience, Kimberly, to some extent. In past inflation crisis, a lot of it has been driven, say, by wage demands. So workers have looked for higher wages because prices of goods are going up, and that creates this circle whereby inflation continues to spiral. But there's now a school of thought saying, wait a minute, when you look back at what's happened over the past few years there were a lot of factors at play here including a supply side crunch which basically means shortages of goods shortages of services shortages of people and

when some of those supply problems were unwound and unknotted it meant that inflation could cool without people losing their jobs. And that's more or less where we are now. The jury remains out in terms of what has caused the inflation crisis. One thread that's become evident is that people didn't have to lose their job for inflation to come down. So just to give a concrete example of that, make sure that I understand. Like I was looking for a new dishwasher during the pandemic and because of the supply side issues, not only was it really expensive, but I could barely get one. And so the price of that dishwasher was high. That's going to lead to higher inflation in the dishwasher category. But now that those supply chain issues have been resolved, that price can go down without really affecting anybody's job along the way. That's exactly part of it. This idea that goods and services that you wanted, you couldn't get, demand was high, so prices could go high. Now, you know, as those supply problems have become

unwound, the flow of goods and services has helped offset inflation pressures. It is important to remember, though, that prices still do remain higher than they were, say, two or three years ago. That price margin that came along during the inflation crisis, that's still very much in the system. What kind of precedent is there for this sort of well-established economic theory like the beverage curve sort of really getting challenged in this way? I think this has been a fairly unique economic debate. The economy has been pretty complicated over the past few years, difficult to understand, and has defied a lot of the norms and understood kind of textbook practices like you mentioned. You know, now, as I say, it's becoming clearer

that there are a lot of different factors at play. And that's why there's been such a pronounced debate and at times a fairly testy debate over what's caused inflation and how would you get inflation under control. You know, this is a once in a century pandemic. This requires a once in a century way of thinking about how it impacts the economy. And a lot of people will put their hands up and say, we didn't understand it. We got it wrong. We need to think about how we

get this right the next time. Inda Curran is a reporter at Bloomberg, writing about the beverage curve. Thank you so much. Thank you very much, Kimberly. One last item today on jobs and what's available to you as a career. Certain areas of this economy have often felt closed off. The reason can be a lot of things. Your race, your gender, your access to educational opportunities. And sometimes it just takes one person to introduce you to the idea that this is something you can do. And that brings us to this installment

of our series, My Economy. Davin Jackson, I am from Sewanee, Georgia, and geez, I do a lot of things, but mainly I am the owner of Alpha Esports and Technology. I teach gaming or healthy gaming, esports, competitive esports. I've always been a gamer. I've always been the type to kind of tinker and just wonder how things work. My earliest memories was sitting in my grandmother's house trying to get things to work, you know, running wires from one thing to something else.

So, you know, we were trying to think of different ways of how we can approach the younger audience. If you walk into a room full of teenagers right now and say, hey, let's work on your written and verbal communication. They may look at you like you got three heads. They may look at you like, I'm not trying to hear that right now. I consider esports the cheat code, right? I consider esports the cheat code, right? Because for those who don't know, esports is just competitive video games. So with all of that knowledge, now it's using the gaming to teach them not just how to do well with the controllers, but how to market yourself.

controllers, but how to market yourself. Half the problem when you talk to a lot of kids today is they don't have the self-confidence or they don't see themselves in that role. They don't believe that they can be in that role. They don't think that they're smart enough or well-equipped or what have you. Trying to find ways to get them to see that and to build that confidence in them is half the battle. Once you get them to actually see themselves, that they can actually do it and using things that they already do, like gaming and tech and stuff like that, half the battle is won. Now it's just a matter of getting them to hone in those skills and figure out which path they want to go. It's in those programs where they come to me and say, hey, you know, coach,

I am interested in learning more about cybersecurity. I am interested about game design or software development. Okay, fine. Now let's point you in the direction of how we can get you to proper training so that you can do it. It takes a village, right? I'm trying to be that marquee place in the village where they can come and talk to me. come and talk to me. That's Davin Jackson, owner of Alpha Esports and Technology in Sewanee, Georgia. We can't do this without you. So tell us what's going on in your economy at marketplace.org slash my economy. This final note on the way out today, another installment of you gotta read the room. The beauty chain Sephora was trying to celebrate hitting $10 billion in North American revenue last year, and company leaders wanted to share the joy, it seems.

Well, as reported by Business Insider, some employees were less than thrilled with their reward for the success, which was cookies with sprinkles and a wrapper that said, We did it! $10 billion. and a rapper that said, we did it, $10 billion. John Buckley, John Gordon, Rick Carr, Diantha Parker, Amanda Peacher, and Stephanie Seek are the Marketplace editing staff. Amir Babawi is the managing editor.

I'm Kimberly Adams. We will see you tomorrow. This is APN. All over the country. We need to improve reading in Wisconsin. Schools are changing the way they teach reading. I'm calling for a renewed focus on literacy. We have gotten this wrong in New York and all across the nation. And it's happening because of a podcast.

I think your podcast has changed my life. And I'm going to share this podcast with everyone I meet. Sold a Story investigates how teaching kids to read went wrong. New episodes of Sold a Story are available now.