Marketplace - Women deserve credit

Episode Date: October 21, 2024

Half a century has passed since the Equal Credit Opportunity Act was enacted, guaranteeing women equal access to credit. In this episode, we look back on gender-based credit discrimination and discuss other forms of lending bias that still exist today. Plus: What’s at stake for Boeing as machinists vote on a tentative contract, the tipped minimum wage is on the ballot and the value of the U.S. dollar goes under the microscope during corporate earnings season.

We'll talk about earnings, we'll talk about access to credit, and we'll talk about cute storybook cottages. From American Public Media, this is Marketplace. In New York, I'm Kristin Schwa, Bin for Kyrizzdoll. It's Monday, October 21st. Thanks for joining. This week's corporate earnings calendar is very full. We'll hear from 3M, Coca-Cola, Tesla, IBM, and some 1,600 other companies on how they did in the most recent quarter.

There's always a consumer focus in these reports. Analysts will be listening for whether people are still spending. But another theme that's likely to come up is the value of the U.S. dollar and how that impacts companies' profits. For some foreshadowing, last week Procter & Gamble said it's more optimistic about foreign exchange than it was earlier in the year. And as Marketplace's Justin Ho reports, the dollar's value could help out a lot of companies in the near future. And as Marketplace's Justin Ho reports, the dollar's value could help out a lot of companies in the near future. Companies care about the dollar's value because when it rises, it affects their sales overseas.

Ultimately, a strong dollar makes that weak in terms of revenue. That's Dan Ives, managing director with Wedbush Securities. He says those companies have to bring that revenue back home. And if the dollar is strong, those foreign sales just don't go as far back in the U.S. That's something that ultimately becomes a headwind for companies with a stronger dollar. The dollar's value shot up back when the Federal Reserve started raising interest rates in twenty twenty two. Back then, the U.S. economy was hot and foreign investors were piling in the

government bonds, which you need dollars to buy. But Nick Bannonbrook, international economist with Wells Fargo, says now, We're seeing somewhat slower job growth, somewhat slower economic growth, and the US interest rates have started to come down. So with all of that, we have started to see a gradual decline in the US dollar at this point. That doesn't necessarily mean that the dollar's value will plummet. Christopher Vecchio, head of futures and FX with the research company Tasty Live,

says, remember, the Federal Reserve isn't the only central bank cutting rates. There's the European Central Bank, the Bank of England, Bank of Canada, the Reserve Bank of New Zealand, all moving in lockstep with the Federal Reserve that has begun its rate cut cycle. That probably means you're not going to see one currency, the dollar, otherwise gain too much ground versus its peers. Instead, Vecchio says the dollar's value will likely stabilize in the coming year, which can give companies a better sense of what to expect.

Having the confidence in where exchange rates are going allows a company to project its earnings a little bit more confidently into the near-term future. And at a time when the economy can feel uncertain, having that confidence can be pretty helpful. I'm Justin Ho for Marketplace. Wall Street Today couldn't agree on what the earnings week will look like. Will of the details when out of the mix. Boeing. There's a lot of fodder for company stories during a week when so many companies are reporting earnings. But it was easy to pick this one out of the mix. Boeing. It reports on Wednesday, and there is a lot going on for the company right now. Some of its workers have been on

strike for five weeks, and just this weekend Boeing reached a tentative deal with the International Association of Machinists and Aerospace Workers. The proposed contract includes a 35% pay raise over the next four years, a one-time $7,000 ratification bonus, and higher retirement contributions. It does not bring back pensions, which workers wanted. The vote is set for Wednesday, earnings day, and all of this is against the backdrop of safety problems at Boeing. Marketplace's Samantha Fields has more. Samantha Fields It has been a rough year for Boeing. The first week of January, you might remember, a door plug blew out of an Alaska Airlines 737 Maxjet mid-flight. Not exactly

an auspicious start to a new year. Meghna Maharishi, airline reporter at Skift, says things haven't really improved since. MAGNA MARHARISHI, AIRLINE REPORTER AT SKIFT, SKIFT Boeing has had a ton of other issues with all of its aircraft programs. With production and quality control, delivery delays, federal scrutiny. So many issues that have been causing it to lose money. And I think the strike has just magnified all the other issues at Boeing.

Going into the strike, Mike Dunlop, an aviation analyst, says Boeing was already in a bad financial spot. It hasn't turned a profit since 2018. They've just got a real leaky sieve. The company's in very, very difficult financial state right now. And the strike has now cost it at least a billion dollars, according to one estimate, maybe more. Richard Aboulafia at Aerodynamic Advisory says it's not just costing Boeing. It's been devastating, particularly to the suppliers that have been, well, beaten up badly over recent years. Between Boeing halting production of the Maxjet and COVID-related shutdowns and supply chain

issues. And just when the great cash machine that is 737 production, another production, got going, all of a sudden this happens and further derails things. So it's been very damaging. If workers in the machinist union vote to ratify the new contract and the strike ends after these five or so weeks, Aboulafia says Boeing should have a chance to recover. But if not... They just continue to lose money and that just gets more and more damaging.

Especially for a company that is already in a precarious financial position. I'm Samantha Fields for Marketplace. The federal minimum wage in the United States is $7.25 an hour, with two exceptions. The first is for workers in DC or any of the 30 states that have set a higher minimum wage. The second is for employees who work for tips. In 37 states, the tipped minimum wage is below $7.25 an hour. In 13 of them, it's $2.13. But there's been a lot of buzz lately about changing that. Voters in Arizona and Massachusetts will be deciding on ballot

initiatives that could either enshrine or eliminate the tipped minimum wage. Marketplace's Kimberly Adams reports. Federal law and the law in many states allow certain workers to be paid below the minimum wage because they earn tips. Employers are legally required to ensure that tipped workers tips cover the gap between the tipped minimum wage and the regular minimum wage. But in practice, this is highly difficult to enforce. Sebastian Martinez-Hickey is a state economic analyst at the Economic Policy Institute. He says tipped workers are disproportionately likely to be women and people of color.

Tip workers are very low-paid workers. They earn about a third less than the median worker in the U.S. economy, and they experience poverty at much greater rates than the typical worker. In a handful of states, plus Chicago and the District of Columbia, voters have decided in recent years to phase out the tipped minimum wage. The restaurant industry has vigorously opposed those moves and has been fighting further efforts to get rid of it. Mike Watley is vice president of state affairs and grassroots advocacy at the National Restaurant Association, which has pushed back against

efforts to eliminate the differential in 13 states and three localities. And so in all 13 of those states, that legislation and those localities failed to move forward. The group argues that eliminating the tipped wage raises prices for patrons and increases labor costs for restaurant owners so that they have to cut hours and jobs. Watley points to jobs data revealing changes in Washington, D.C.'s restaurant industry since it began rolling back the tipped minimum wage in 2023. Since that initiative began phasing in last May, over 1,800 full-service restaurant employees

have lost their jobs in D.C. While at the same time, quick-service restaurants have actually added 300 jobs. But neither the National Restaurant Association nor a local DC restaurant group could find a restaurant to publicly acknowledge that they had to cut jobs because of the change. Supporters of eliminating the tipped wage in DC argue it's not clear job losses are because of the wage increase or other industry trends. Meanwhile, this year, there's a ballot initiative to phase out the tipped wage in Massachusetts. The proposal that's on the ballot is to raise that base wage rate from $6.75 up to the full

Massachusetts minimum wage of $15 an hour. It's proposing to do that over five years. Jeanette Wicks-Lym is a research professor at the University of Massachusetts Amherst, and she and a colleague crunched the numbers on what the impact would be in the state. The cost increase to bars and restaurants would be something on the order of about 1% of their sales revenue.

So a pretty modest cost increase. In Arizona, on the other hand, a proposal on November's ballot would do the opposite and preserve the tipped minimum wage. Advocates trying to get rid of the differential are worried if a move like this passes it could be replicated in other states to quash efforts to boost wages for tipped workers. So a group called Raise the Wage Arizona and others are spending millions of dollars to try to defeat it.

In Washington, I'm Kimberly Adams for Marketplace. If you've had any wild sockeye salmon recently, there's a growing chance that it came from Alaska. Bristol Bay is home to the largest wild sockeye salmon run in the world. Historically, almost all of its commercial fishing catch was exported to Japan. But now some fishermen and companies are focused on markets in the US. And landlocked foodies here in the lower 48? They're buying hundreds of thousands of pounds of salmon from Alaska. The Mountain West News Bureau's Hannah Merzbach has more. Kirsten Sterling spends every summer fishing for salmon at the mouth of Bristol Bay in Alaska with her husband

and two little kids. They're nine and five, but they've been going out on fishing boats since before they could walk. They're kind of wild, feral children running around. The fish they catch is barged and trucked to Salt Lake City, where the family spends the rest of the year hiking, skiing, and delivering sockeye salmon direct to customers or restaurants. We all started out with this because it was like, oh, you're a fisherman in Alaska, so how do we get fish?

Sterling is a bit of a wild salmon evangelist. If you're an expecting mother, this is like the most perfect food for you ever. If you are a little baby, this is the most perfect food for you ever. If you are a little baby, this is the most perfect food for you ever. If you're a dog, this is the most perfect food for you ever." But she says you pay more for her sockeye, which is ruby red from eating plankton and krill in the open ocean. It's about $16 a pound, nearly twice as much as the farm raised grocery stuff. But buying salmon in bulk through these direct to consumer fish businesses can cut down on

costs for customers. In Teton Valley, Idaho, dozens of customers are doing just that. They're lined up in a parking lot to pick up 10, 20, and 40 pound boxes of filets and ground sockeye. This is it right here. So see? It just looks so beautiful. Karlyn Hurvig unwraps the paper around a vacuum-sealed bag of ground sockeye. She's also getting a box of filets to serve at dinner parties. As you see, it's a pretty big piece. So once you're going to thaw one out, you kind of want to know, okay, I'm having friends

over or I can serve this many portions. Amanda Lashusky with Key Jack Fish Company is handing out today's fish. I think the first year we delivered seven boxes and we thought that was a huge deal. Now it's grown into what, 70 people? Or 3,600 pounds of salmon. She processed it all in Bristol Bay, then shipped it by barge to Seattle and trucked it 700 miles to where she lives in Montana. From there, she loads all the salmon into a bright blue freezer cold trailer and once a year delivers it to rural communities like this. Many of our

customers put in orders months in advance. They care about knowing where it comes from because the economy around here is focused around agriculture and food and just a desire to support small producers because a lot of them are small producers themselves. One customer, Kyle Barris, works at a nearby ranch. He's cramming 15 boxes of salmon into his Subaru Outback, some for him, some for neighbors. He says it's special to get Alaskan salmon from a local Mountain West business. I've come to just really like these guys. I like supporting, yeah, small business. And just like having a deer or elk in the freezer, Barrett says he's excited to have

all this wild salmon stored up for the long winter ahead. In Driggs, Idaho, I'm Hannah Merzbock for Marketplace. Coming up… People just always have a longing for the past and nostalgia and whimsy. I mean, why else would cargo pants become cool again? But first, let's do the numbers. The Dow Jones Industrial Average lost 344 points, 8 tenths percent, to finish at 42,931. The Nasdaq gained 50 points, 3 tenths percent, to close at 18,540. And the S&P 500 shed 10 points, 2 tenths percent, to end at 5853. Gold hit a record high of $2,723 per ounce earlier today. In some gold-related stocks, Harmony Gold Mining Company shined up 2 and 2 tenths percent. Newmont Corporation lost almost 1 tenth percent. Barrick Gold Corporation lost

3 tenths percent. Disney announced it will hire a new CEO in early 2026 following the end of current CEO Bob Iger's contract, while Disney Company fell 0.7%. Bonds fell, the yield on the 10-year T-note rose to 4.19%. You're listening to Marketplace. This podcast is supported by Fundrise. Buy low, sell high. It's easy to say, hard to do. For example, high interest rates are crushing the real estate market right now. Demand is dropping and prices are falling, even for many of the best assets. It's no wonder the Fundrise flagship fund plans to go on a buying spree, expanding its

billion-dollar real estate portfolio over the next few months. You can add the Fundrise flagship fund to your portfolio in just minutes and with as little as $10 by visiting fundrise.com slash marketplace. That's F-U-N-D-R-I-S-E dot com slash marketplace. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise flagship fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement.

What do they say? More money, more problems, and way more questions? From your kids, right? But not to worry, Million Bazillion, a podcast from Marketplace, has you covered. I'm Bridget Bodner, and with my co-host, Ryan Perez, we take you and your young ones on grand adventures and comedic sing-alongs to answer all the questions

your little ones have about money. Join us as we explain how banks work, why name brands are more expensive, and what happened to Black Friday sales. Listen to Million Bazillion wherever you get your podcasts. This is Marketplace. I'm Kristin Schwab. Some of you listeners might be surprised by this next story. Some of you may have personally experienced it.

Believe it or not, as recently as the 1970s, it was perfectly legal for lenders to require a male cosigner before extending credit to a woman. Also legal to disregard a woman's income on a mortgage application. Well, 50 years ago, President Gerald Ford signed off on the 1974 Equal Credit Opportunity Act, which guarantees women equal access to credit markets. Marketplace's Savannah Marr has more on the landmark law and its legacy. In the early 70s, feminist activists were trying to mobilize American women against sexism and lending. So they put out calls in a couple of popular women's magazines for

testimonials like these. When I requested my name be changed on my credit card, I received a form letter stating that normal procedures are to complete an application in my husband's name. It didn't matter that he hadn't worked during our marriage. The card had to be in his name. I was told I would have to show written proof from a doctor that I was on birth control pills to the real estate agent before he would show us any homes. It infuriates me that I can't get any action done unless a man represents me and my business interests. Those are a few excerpts that Chloe Thurston, a professor of political science at Northwestern,

gathered for her book called At the Boundaries of Homeownership. Hundreds of women ended up writing in to recount their own tales of being discriminated against. Tales of banks refusing to extend married women credit in their own names, then erasing those women's credit histories if they happen to get divorced, and requiring what were known as baby letters before considering a woman's income to get a mortgage. Which was basically a letter from your doctor saying that you were on birth control. As assurance, you wouldn't leave your job to take care of a baby.

You can just imagine the humiliation, and a lot of women use that exact term, of being sort of regarded as someone whose main purpose was to get pregnant and to raise kids and just not trusted as a financial operator. These stories made their way into the press and helped make the case for the Equal Credit Opportunity Act, or ECOA, which just 50 years ago made it illegal for creditors to discriminate on the basis of sex or marital status, and paved the way for American women to build their own economic footprint. Economic independence for women is a bedrock for every other form of human flourishing.

Greta Kripner, a sociologist at the University of Michigan, says the ECOA gave women new choices and not just on the lending market. Career choices, relationship choices, choices over parenting, everything that determines a life. Another legacy of this law is that it forced lenders to find new systems of evaluating credit worthiness. Jennifer Chen, with Consumer Reports Digital Marketplace team, says the ECOA pushed us more quickly toward modern credit scores.

Which in theory should be much more objective and unbiased. In reality, there's historic bias baked into credit scoring. In reality, there's historic bias baked into credit scoring. Because of past redlining and discrimination, Chen says applicants of color can have thinner files and lower scores. And even though the ECOA has rooted out the most overt bias in lending, The remaining forms of discrimination show up in different ways and can be hard to pinpoint. Like marketing that covertly targets borrowers of color with predatory loans. And Chen says new threats to equal credit access are emerging.

Algorithms can also discriminate. There's already evidence of AI amplifying human bias in the financial sector. Chen says the Equal Credit Opportunity Act and other anti-discrimination laws don't address that problem because they're decades old. In an ideal world, these laws would be updated. Updated to also address the negative impact of discrimination in lending. Chloe Thurston at Northwestern says the days of women being openly locked out of credit markets feel impossibly distant. In some ways, the legacy of the law is that we've forgotten.

Forgotten how pervasively lenders discriminated and how recently. I'm Savannah Marr for Marketplace. A lot of news about the housing market over the past few years has been kinda blah. With recently falling but still relatively high mortgage rates and low housing supply, it's been hard out there for buyers. So let's take a minute to relish in some housing delight. According to data from the U.S. Census Bureau's survey of construction, around 18% of homes built last year were custom designed. And custom houses, they often come with a vision, sometimes a vision fit for a storybook. Here's the latest installment in our series, Adventures in Housing History. My name is Annalee Waterman. I'm a residential

and interior designer in Dallas, Texas. In storybook style houses, you're going to see quite a bit of variation. But if you're walking down the street and wondering if you're seeing a storybook house, you would look for characteristics such as maybe a swooping roof, exposed timbered stained glass, wrought iron. They're typically small cottage style houses. they're not going to be big mansions and they're going to have a nod to some sort of historical style. The earliest storybook style cottage that is considered kind of the start of the movement is Marie Antoinette's Petite Trianon on Versailles. It is lovely.

It's a little exposed timber frame, French style cottage. And then it's got like the big water wheel on the side and it's got a huge garden in the front. And so those were popular in the 16th, 17th, 18th century. And then in the early 20th century, soldiers coming home from World War II, they'd been in Europe, they'd seen the colloquial architecture. They'd seen thatched cottages and the castles and the cathedrals and all these things.

And then simultaneously, it was the explosion of the film industry. And of course, Disney was a big part of that. So that's where the storybook style really started coming together in America. Harry Oliver, who was a prominent tower director at the time, he built what's considered the first storybook style house in the United States. It's called the Spanetta House. It looks like a little witch's cottage. You wouldn't believe it's just right in the middle of LA.

You can just walk right by it. And then it just really took off from there. There's all sorts of neighborhoods sprung up. Probably one of the most famous neighborhoods is Carmel by the Sea. It's just a whole neighborhood of little cottages. But there's little neighborhoods like that scattered all over America. It would be definitely bucket list of mine to get to visit all of them in my lifetime. It would be so fun. definitely bucket list of mine to get to visit all of them in my lifetime.

It would be so fun. I would love it to have a big full blown revival, but it's not the least expensive way to build. A lot of it is very unique and it's not materials that you can buy at Home Depot or things like that. But I think there's always going to be people that love it and that keep it alive. People just always had a longing for the past and nostalgia and whimsy and I think that has a lot to do with it.

That's Annalee Waterman, a residential designer in Dallas, Texas. Whether you're looking for your starter cottage or a forever gingerbread house, tell us about it at marketplace.org slash adventures in housing. This final note on the way out today, saw this in the Wall Street Journal. This year, restaurant chains and operators are on track to declare the most bankruptcies in decades, aside from 2020, when the pandemic turned eating out upside down. There are a bunch of reasons. People aren't dining out quite as much, costs have risen for operators, and private

equity firms are less willing to back risky food and drink businesses. As these things go, smaller companies, chains with 50 locations or less, will have a harder time staying afloat. So will older sit-down chains, a la Red Lobster. Our daily production team includes Andy Corbin, Elise Hasson, Maria Hollenhorst, Sarah Leeson, Sean McHenry, and Sophia Terenzio. And I'm Kristin Schwab. We'll see you tomorrow. This is APM. What do they say? More money, more problems, and way more questions? From your kids, right?

But not to worry. Million Basilion, a podcast from Marketplace, has you covered. I'm Bridget Bodner and with my co-host, Ryan Perez, we take you and your young ones on grand adventures and comedic sing-alongs to answer all the questions your little ones have about money. Join us as we explain how banks work, why name brands are more expensive, and what happened to Black Friday sales. Listen to Million Bazillion wherever you get your podcasts.