Starbuck$$$ Coffee Buzz Gets Pricier; JPMorgan Ups the Minimum Pay Game; Drop in Job Openings Bums Out Economists

And then it happened…

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If there’s one thing you can rely on at Starbucks, besides the quality of their coffee, it’s that come July, the company will raise its prices. Today, the company did just that for the third year in a row. What Starbucks dubs as a “small price adjustment” shouldn’t be too bad. Well, that is, depending on what you purchased. Hey, if you don’t like it, blame rising coffee costs. And Starbucks, too, I suppose. The amount of Americans who drink coffee is expected to rise by 1.5%. The more people drink, the more the beans cost. Just another case of supply and demand, my friend. Prices went up between 10 cents to 20 cents on its brewed coffee, and between 10 cents and 30 cents on its espresso beverages and tea lattes. However, the price increases vary depending on which region you find your local Starbucks. In the grand scheme of things, purchases only actually increase by about 1%. Plus, the price went up on only 35% of its beverages. Which means that 65% of its beverages remain unchanged, price-wise, for those of you who shun change. But in all fairness, Starbucks is giving its employees a 5% raise come fall, not to mention doubling stock awards for employees who have been there for two years or more. Not that their raises and stock awards had anything to do with boosting the price of your chai latte, mind you.

Dimon in the rough…

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Starbucks isn’t the only company who is giving its hardworking employees a raise. Enter JPMorgan, the second most profitable company in the United States, who is about to give 18,000 of its employees a much appreciated boost in their paychecks. And this time, the employees aren’t even the ones who regularly rake in big bonuses. JPMorgan CEO Jamie Dimon will be raising the company’s minimum pay by 18% for employees who are mostly bank tellers and customer service representatives. These employees currently receive $10.15 per hour, but over the next three years will see increases of $12 per hour and then $16.50 per hour, depending on several factors. The company is also beefing up its in-house training programs as well, to the tune of $200 million, that will train thousands of entry level employees who work in consumer banking. Mr. Dimon says the new initiative is all about addressing concerns over income inequality, an issue that’s been getting a lot of negative attention, usually directed at Mr. Dimon and his peers. He also says it’s a way to attract and retain talent – an idea that company’s like Walmart, Target and McDonald’s have already started putting into practice. But leave it to the skeptics to whip out their negative spin and question if Dimon’s motives have more to do with a shrinking labor pool, and if JPMorgan is just getting ahead of an issue that might pose a problem in the future. The cost of raising the minimum pay by 18% will cost JPMorgan just about $100 million, which is just $7 million shy of the total 2015 compensation for Jamie Dimon and his four top-named executives.

Book of jobs…

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Even though JPMorgan and Starbucks are giving its employees more money to attract and retain great employees, the Bureau of Labor Statistics paints a very different employment picture. According to its latest report, job openings dropped to a five month low in May, with just 5.5 million jobs up for grabs, even though that same month also saw 5 million people getting hired. Not to be a downer, but that was the lowest rate since November 2014. At least voluntary quits fell to a 4 month low, with just 2.9 million leaving their jobs, presumably for better opportunities. Yet in April, job openings were at an all-time high. All these mixed numbers might just mean that the economy is not as healthy as we think it is. The Job Openings and Labor Turnover Survey, a.k.a JOLTS, is the division of the Bureau of Labor Statistics that tracks job openings, hires and separations. The Labor Department, which reports just on job creation and unemployment, reported that employers only managed to create 11,000 new jobs in May. In case you’re wondering why that’s a bad thing, then consider that those 11,000 jobs were 25 times less than the amount of jobs created in May of 2015. At least the number of layoffs and firings in May fell to a ten month low of 1.67 million. Economists, however, still think these numbers should be taken with a grain of salt. Which is easy for them to say since they seem to be gainfully employed.

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In: Charter Spectrum, Out: Time Warner Cable; So Over-time; Has the Fed Finally Made Up its Mind?

Thanks for the memories…

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As the Charter Communications $55.1 billion acquisition of Time Warner Cable comes to a close, we can now bid a final adieu to the latter. And that’s no great loss since Time Warner Cable had the dubious distinction of earning the worst customer service score according to a survey done by the American Customer Satisfaction Index. Yet, strangely enough, TWC still managed to pick up some 32,000 video subscribers and another million high-speed internet users in 2015. In any case, this acquisition joins Charter’s other recent acquisition of Bright House Networks LLC to the tune of $10.4 billion. Charter will scrap the Time Warner Cable name, which nobody is likely to miss, and the newly formed company will be named “Charter” while its products and services will be sold under the name “Spectrum.” Catchy, no?  With that, Charter Spectrum becomes the second largest cable operator in the country, picking up 27.5 million new customers and playing second to Comcast Corp. As for Time Warner Cable’s outgoing CEO, Rob Marcus, he can wipe away his tears with his $92 million severance package, while trying to polish up his LinkedIn profile.

Laboring on…

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The Labor Department’s got some new rules headed your way, but you might not want to try breaking these, particularly if you find yourself working plenty of overtime. Because if you earn less than $47,476 a year, then congrats…sort of. You will now qualify for overtime and a half if you work more than forty hours a week. That’s a far cry from the $23,660 that served as the previous threshold. The reason for nearly doubling that threshold, by the way, is that the Labor Department hadn’t changed the rules since 2004. So I guess it’s kind of making up for lost time.and now has plans to change the numbers up every three years. In any case,  4.2 million workers will be positively affected by these new changes, with a big chunk of that being the millennial demographic. The new rules, however, could have unintended negative consequences. For instance, employers might decide to limit the amount of hours employees can work in order to avoid having to pay them overtime. Employers also might wish to start giving out raises. That might, at first, seem like a very good thing. However, it would be so that they can pay employees more than the $47,476 in order to, once again, avoid paying overtime. But then there are the “highly compensated employees” who may become eligible for overtime as well. By highly compensated, I mean getting paid at least $134, 004. In order for these highly compensated employees to get their overtime paid,  they must pass a “minimal duties test.” Problem is the Labor Department isn’t entirely clear about that part and is leaving it to the discretion of the employers. And before you start slaving away on all those extra hours, know that these rules wont take effect until December 1.

To hike or not to hike…

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It’s official. Or not. The minutes of April’s Fed meeting were released and the would-be experts think there will indeed be a rate hike in June of .25%-.50%. Members of the Fed were pinning their hopes and dreams on finding some hard-core data that the economy is growing. It seems they got it. For one, inflation is headed in the right direction towards that 2% target rate the Fed has its sights on. And unlike George Soros, the Fed is not as freaked out by the prospects of an economic slowdown. Throw in a good labor market, respectable consumer spending and even more respectable manufacturing output numbers and you just might be witness to a June rate hike. News of the likely hike sent the dollar to a seven week high and had markets all over the place. But there is that little issue about April’s disappointing jobs data which came out so inconveniently after the Fed had its meeting. Despite the fact that the labor market is looking fairly decent, those April digits can spook even the most optimistic of economists. So it’s still entirely possible that a rate hike might also get nixed.

Elon Musk Sets a Record; Whole Foods Says Sorry; Labor Department’s Mixed Messages

Electrifying…

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Image courtesy of digitalart/FreeDigitalPhotos.net

Elon Musk can sit pretty for the next few minutes and now would be a good time for the Tesla haters – if there are any – to make a run for it. The electric car company scored some rockin’ good digits in its latest quarterly earnings reports brutally beating estimates with a 52% surge over last year’s quarter. But it gets better as the company also set a new record, selling over 11,500 cars during this period. To be exact,11,507 drivers are now tooling around in their brand new $75,000 Model S sedans. Yes, I am jealous. And I am about to get even more jealous as Tesla gets revved up to unveil the Model X – an all-wheel drive SUV.  Elon Musk’s plan is to find new homes for 55,000 Telsas over 2015. Problem is, it’s already July and he isn’t even halfway there, having sold just 21,537 thus far. Even though haters insist that there’s simply a lack of demand for the very swanky electric automobile, Tesla execs blame the company’s limited capacity for production. So there.

Isn’t that a bit much for strawberries?

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Image courtesy of zirconicusso/FreeDigitalPhotos.net

Whole Foods might be the business darling of organic food, but some of their business practices were nothing short of toxic. Executives at the company admitted that some customers were overcharged for fresh cut fruits, fresh juices and even sandwiches. But apparently, it had only been happening in New York City where residents are already used to overpaying anyways. Next time you find yourself in the sliced fruit section at Whole Foods, check out the riveting video starring Whole Foods executives John Mackey and Walter Robb, flanked by produce on a television monitor, perhaps hovering over  Kingfisher melons balls and kale shakes. In the video, the gentlemen apologize  for the actions of a small percentage of its employees who “mis-weighed” some items, and priced them higher than what they should have been. In fact, around 80 different items were tested and they all weighed less than their worth. But, apparently there were also some items that were marked lower than what they were supposed to be. That’s how it determined that the errors were unintentional. But the Co-CEO’s apologized for that too. All this comes after a very unflattering investigation by the NYC Department of Consumer Affairs that called it “the worst case of mislabeling they have seen.”

Seven year itch…

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Employers added 223,000 new jobs in June but the remarkable thing about it – I mean besides people getting paychecks – is that the unemployment rate hit a seven year low falling to a somewhat respectable 5.3% from May’s 5.5%. Unfortunately, wages didn’t behave as respectably and stayed put. Nevertheless, these numbers point to an economy that is getting its juice back and may even cause those dudes and dudettes at the Fed to raise interest rates. But before we get all worked up, the Labor Department also warned us that the number of Americas working or simply looking for work fell as well. It’s a problem because it could mean that many folks who would love to have some steady gainful employment are downright discouraged and put the kibosh on their job hunt. At least the folks who did score jobs are helping the economy by spending their hard-earned cash.

The White House Comes After Wall Street Advisors; January’s Frigid Housing Numbers; Target’s New Shipping Policy Gives Cause to Shop

Hard sell…

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Image courtesy of ddpavumba/FreeDigitalPhotos.net

The White House is coming after Wall Street, in particular, financial advisors who might be a little too loose with money saved diligently by America’s middle class. President Obama wants the Labor Department to revamp its rules ensuring that retirement advisors put clients’ fiscal needs before their own bank accounts by putting the kibosh on hidden fees and conflicts of interest. Currently, investment advisors have this practice of suggesting expensive products to their clients that could at best be categorized as “suitable”  – but not “ideal.” In fact, these “suitable” investment products could cost a retiree five years worth of savings. Investment advisors would actually now be required to follow, dare I say it – a “fiduciary standard.” Many Republicans and financial firms, not to mention Republicans who work in financial firms, are just not that into this whole new idea of revamping the rules for two reasons that aren’t likely to elicit any sympathy: 1. They’re worried a new system will considerably shrink all the money they make in compensation fees and 2. They think the current system works just fine. However, the current system, according to White House, anyway, says it has cost unsuspecting working middle-class families an estimated $17 billion a year.  So who is this system working for, exactly? Hmmm.

Bring it home…

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Image courtesy of hywards/FreeDigitalPhoos.net

The number of existing homes that sold in January was 4.82 million. In case you were ready to celebrate…don’t. Those numbers suck. They suck because it’s a 4.9% drop from December and is at the lowest rate it has been in nine months. Nine months ago, (which by the way,  was May  – in case you didn’t feel like doing the math) saw 4.9 million homes sold. The National Association of Realtors provided us with these disappointing figures but all is not lost because, as it turns out, this 4.82 million figure is still 3.2% higher than it was a year ago. Naturally it wouldn’t be right if much of the blame didn’t go to Mother Nature who, it seems, loves nothing more than setting the bitter wintry stage for gloomy fiscal numbers. But with low interest rates and strong jobs numbers, here’s hoping spring will kick winter’s fiscal butt.

Aw’ ship…

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Image courtesy of digitalart/FreeDigitalPhotos.net

Target has graciously decided to offer free shipping for online orders on just a $25 minimum purchase – with no exclusions, allegedly. Be still my beating consumer heart. If you recall – as I certainly do – Target was offering “free shipping” with a minimum $50 order. The retailer was inspired by the success it had when it offered free holiday season shipping through December 20, this past holiday season. It was an effort to compete with the slew of online retailers, but it payed off in more ways than one.  The company set new sales records for Thanksgiving and cyber-Monday and saw 60% of its website traffic come from mobile users. Once upon a time Amazon also offered free shipping with a $25 minimum purchase but alas, its investors got their way and Amazon was forced to up its minimum to $35. In the meantime, Walmart, while raising its minimum wage, has yet to change their free shipping policy, which offers the perk on only certain “eligible orders,” which seems a little too open to interpretation, as far as I’m concerned. Target also has big gigantic plans to open online fulfillment centers and if that doesn’t bode a Target/Amazon smack down then I don’t know what does. Target’s inventive digital app has also been doing particularly well in the popularity contest picking up a couple new million users and shooting past that pesky $1 billion promo sales mark.

 

Bill Gates’ Unappetizing New Venture; Have I Got a Jobs Report For You; Keurig Scores Dr. Pepper Snapple Exclusive

I’ll poop to that…

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Image courtesy of artur84/FreeDigitalPhotos.net

Bill Gates latest philanthropic endeavor is nothing short of crappy as the Microsoft founder plans to take human waste and turn it into…potable drinking water. And electricity too. But clearly it’s the water part that’s got people scrambling for their bottled water. With the help of the Omniprocessor, conveniently designed and built by Janicki Bioenergy, the Bill and Melinda Gates Foundation wants to help prevent the spread of diseases caused by water contamination and improve the quality of life in many underdeveloped countries. Oh the irony. With Senegal getting first dibs on a plant, the process can take waste from 100,000 people and convert it into 86,000 liters of potable water and a net 250 kilowatts of electricity. Be sure to see the pic of Bill Gates drinking a glass of the poop water. “Having studied the engineering behind it, I would happily drink it every day. It’s that safe.” That’s just…lovely.

Good Economic Synes…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

ADP graciously informs us today that 241,000 jobs were created in the private sector in December, smashing conservative estimates of 235,000 and making it the fourth straight month of job growth over 200,000. And while unemployment is expected to stubbornly stay at its 5.8% perch, but perhaps dip ever so slightly to 5.7%, signs still point to an expanding economy and a positive report from the Labor Department, expected Friday. But what’s even better, is that for the year, the private sector added more than 2.5 million jobs. Would it be overly optimistic to hope that the economy might return to full employment next year? Hmmm.

I’m a pepper?

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Image courtesy of tiverylucky/FreeDigitalPhotos.net

Keurig Green Mountain just scored a sweet bubbly deal with Dr. Pepper Snapple to make individual capsules that will be used on Keurig’s cold beverage system, due out in the fall. The deal makes Keurig Green Mountain the exclusive provider in the US and Canada. Dr. Pepper Snapple, which also makes Sunkist and Hawaiian Punch, has been struggling along with its rival/competition soda makers to stay relevant in a market that is shifting away from sodas…and in some cases apparently, towards poop water. In fact, volume sales of carbonated soft drinks fell 3% in 2013. But for Keurig, based in Waterbury, Vermont, this was clearly seen as a positive move by Wall Street as shares of the company bubbled up more than 3% in pre-market trading.

Happy Über New Year; DOJ: You’re Up, Morgan Stanley; Labor Department Jobless Claims are New Year’s Bummer

Year end surge…

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

A heads up to all of you located in cities where Über is actually allowed to operate: Über is getting ready to ring in the New Year with some price surging. Of course, Über prefers the less obvious term, “dynamic pricing.” Just don’t expect to see any dynamic pricing for the rider, who might very well be paying as much as seven times the usual fare if the service is used between 12:30 am and 2:30 am. New Year’s is expected to be the busiest night of the year for the ride-sharing app, and many other services similar to it, due to the heightened demand on this particularly auspicious day. On its blog, the folks at Über said they are expecting to give more than 2 million rides in a 24 hour period and you’re best bet for the service is to call right when the ball drops or if riders are feeling especially adventurous, they should wait until after 2:30 am. Über also offered to graciously  – and economically – text riders to let them know when surge pricing – excuse me, I meant to say “dynamic pricing”  – ends.

Unsettled business…

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Image courtesy of digitalart/FreeDigitalPhotos.net

It’s Morgan Stanley’s turn to tangle with the DOJ in an effort to reach a settlement for Morgan Stanley’s role in the 2008 financial crisis. Like its peers, including JPMorganChase, Bank of America, Citigroup, etc…Morgan Stanley is also staring down the wrong end of a DOJ investigation for its role in getting New Century Financial Corp to issue subpime mortgages. Apparently, the bank knew that homeowners would have a hard time paying mortgages but still issued them anyways. Well, that didn’t work out for anyone, now did it? Incidentally, New Century went bust following a bankruptcy filing back in 2007.

Wishing you an employment-filled New Year…

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Image courtesy of nonicknamephoto/FreeDigitalPhotos.net

Leave it to the Labor Department to help ring in the new year with some disappointing news: namely that the number of people filing jobless claims rose last week by 17,000. While the total number of people still remains below the 300,000 mark (just barely), we are still left with 298,000 making a New Year’s resolution to get a job (we hope, anyways). Analysts actually only expected that number to hit 290,000, but, oh well. Can’t accurately predict ’em all. But we are supposed to be reassured by the fact that this time of year brings with it good tidings of volatile claims and all fiscal signs still point to a decent economic recovery and climate. Also, the four-week average, which tends to be more accurate, was only up by 250. So maybe it’s okay to breathe a little little sigh of relief.

South Korea Puts Brakes on Über With Indictment; Walmart Raises Spirits and Paychecks; Jolly Jobless Claims Numbers

U-bummer….

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

In what is yet another roadblock in the tech saga we call Über, South Korea has now entered the fray. Except this time there’s a twist because South Korea actually indicted Über CEO Travis Kalanick along with his local Korean business partner MK Korea Co. instead of just ceasing operations of the ride-sharing app, like all the other locales have been doing.  And like all the other countries, states and cities that have been putting the kibosh on the service, South Korean officials argue that Über is violating transportation law  – only this time, by allegedly using rental cars to run its business, apparently a major no-no in those parts. This latest snarl only adds to Über’s growing list of infractions, lawsuits, infringements, etc. The penalty for this latest hiccup, assuming Kalanick and his business partner are found guilty, is up to two years in prison or an $18,000 fine. Ironically, that $1.2 billion Über just got to help expand into Asia ought to help cover that fine, not to mention the legal expenses that are about to mount in China, where law enforcement officials raided an Über “training” facility. But at least back in the states things are looking up in Portland, Oregon, sort of. Even though Über operations were almost immediately halted after its launch there, the company was told to sit tight for three months while the city revamps its taxi rules, presumably to allow Über to fit right in.

And to all a good raise…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Over 1.3 million Walmart employees can expect a few more dollars in their paychecks, provided they are among the retailer’s minimum-waged. The biggest private employer in the US will be giving wage increases in nearly a third of its stores, located in 21 states, effective January 1, to comply with new federal guidelines. The three lowest pay grades, including cashiers, cart pushers and maintenance workers will now be combined into one base-level and the gap between the premium paid for higher-skilled workers and the minimum wage will become that much smaller. Walmart has taken a lot of slack for the low wages it has been known to pay and not for nothing as low-paid Walmart employees already collect $2.66 billion annually in government assistance.

Jolly jobless numbers…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

While the previously-owned housing market provided us with a very unwelcome and December buzz-killing decrease, the drop in the number of jobless claims filed almost makes up for that. In fact, 9,000 less people filed applications for jobless claims, bringing the total to 280,000 applicants –  making it the lowest number in seven weeks. Not only are employers not firing but they are hiring – even adding 321,000 jobs to the labor force. If that’s not merry, then I don’t know what is. By the way, a number under 300,000 is cause for celebration.  So take that, previously owned housing market! What this means for you, me and your neighbors who outdid you with their Christmas lights display is that the job market and the economy are both steadily improving. So let us all thank the Labor Department for doing its part to shame those housing numbers and giving us some good fiscal cheer.