Simone Del Rosario: The latest jobs report shows further weakening in the labor market. The US economy added 142,000 jobs in August. That’s lower than the 165,000 jobs expected. That said, the unemployment rate did tick back down to 4.2 % from 4.3 % in July. In July, when it hit that 4.3%, that’s when it triggered a recession indicator known as the Sahm Rule. Markets roiled for a bit after that jobs report. This is more in line with expectations but still shows that the job market is weakening. It still shows that we’re adding fewer and fewer jobs. And in fact, we have some significant revisions that are coming up in this latest August jobs report and that is the July jobs report which came out with 114,000 jobs added is actually being revised down to just 89,000 jobs added. In addition, June’s jobs report is being revised down by another 61,000 jobs. So we’re continuing to see systemic revisions downward on the number of jobs that are being added in the U.S. economy. The unemployment rate is sticking at around 4.2 percent. And we know that the Fed plans to cut in September after hearing from Fed Chair Jerome Powell in Jackson Hole stating that it is time for policy to adjust. As the numbers came out this morning, I spoke to Deputy Editor over at Business Insider, Bartie Scott, to help us break it all down.
Bartie Scott: I think this is a relief. This is a good report. I mean, we’re really happy that unemployment ticked back down from that 4.3% we saw last month to 4.2 now, which, again, historically, we have to remember, is a good, you know, a relatively low unemployment rate. And like you said, 142,000 jobs added is lower than the expected 165 but not that much lower. You know, I don’t think it’s a cause for alarm. A year ago, we were, we were seeing, you know, 200,000 jobs added, but we knew that that was going to slow down after sort of correcting after the pandemic and ramping back up, and this feels like a slowdown, but not, you know, a hole. We’re not falling off the edge of the labor market here.
Simone Del Rosario: Bartie, I want to bring this into like, a bigger perspective here, because we also got a major revision from the year ending in March. So you know, it takes time for these revisions to come through. But it found out that for the year ending in March, jobs added were 818,000 fewer than we had been told, than we had expected. You take the July revision down to 89,000 jobs. That looks pretty terrible you take in the fact that you know, the number of jobs added over the course of the past year and a half just keeps taking these hits. What are we supposed to make of this?
Bartie Scott: I do think that this is a cause for some concern. You know, like you said, the July report really set off alarm bells and made people worry that the labor market was slowing down. And it turns out that maybe that slowdown started earlier than we actually knew. And in some ways, maybe that’s a good thing that people haven’t been shocked by the jobs report over and over, because we did see the stock market go down. People really start to worry. And. We know that these kinds of reports can sometimes, like, create some some fear, and of course, we don’t want that, but it is an indication that the Fed really, again, the Fed really has to step in at this point. It’s under some pressure that maybe it has waited too long, and I think those numbers potentially back that up. You know, it’s the interest rate hikes and keeping them steady for nearly a year has really slowed down the labor market. And yeah, and those numbers are showing us that maybe it’s it started before we knew, and it’s slower than we knew.
Simone Del Rosario: If there’s one thing both presidential candidates know, it’s that the economy is the top issue for voters. And both Kamala Harris and Donald Trump want you to believe they have the optimal economic plan over their opponent.
Kamala Harris: He doesn’t actually fight for the middle class. Instead, he fights for himself and his billionaire friends. And he will give them another round of tax breaks that will add up to $5 trillion to the national debt.
Donald Trump: She’s raising taxes. She’s going to give a tax increase of four to five times what people and companies are paying right now. The country will go into a depression if they do it.
Simone Del Rosario: For months, voters have said they trust Trump more with the economy, but Harris is chipping away at that lead. In the latest Reuters/Ipsos poll, 43% of voters preferred Trump’s approach to the economy compared to 40% who preferred Harris’ approach. That 3-percentage-point difference is within the margin of error. Just a month ago, Trump had an 11-point lead.
Another boost to Harris’ camp is that independent analyses show Trump’s economic proposals will add more to the growing national debt than Harris’. According to the Penn Wharton Budget Model, Harris’ campaign promises would increase deficits by $2 trillion over the next 10 years, while Trump’s promises would add $4.1 trillion in deficits, more than double that of Harris.
That’s not the only source, we’re going to go to another one now. Let’s bring in Marc Goldwein, Senior VP and Senior Policy Director of the Committee for a Responsible Federal Budget.
CRFB is the place to go to know how individual policies and proposals affect the country’s bottom line. Trump says his policies, like his tax cuts, will pay for themselves through economic growth. But are you also finding that the damage to the nation’s deficits is more under Trump’s proposals than Harris’?
Marc Goldwein: Well, I think it’s too soon to tell who’s who is worse on the debt. Vice President Harris actually has not released most of her agenda yet, and so it’s very premature. And for President Trump, we do have a lot of tax cuts, but we also have things like tariffs that raise revenue. What I think we do know is that neither candidate is winning any awards for deficit reduction, right? Both candidates, it does look like they’re likely to be in the red. Neither candidate has put forward a plan that’s going to save Social Security, make Medicare solvent, stop our debt from reaching record levels as a share of the economy, or get our interest cost under control.
Simone Del Rosario: Yeah, really fair point. I was going to bring that up. Both are trying to, you know, vie for this idea that they are the ones who are more fiscally responsible. But at the end of the day, both plans would add to the nation’s debt, which, what is it? $35 trillion now,
Marc Goldwein: yeah, it’s tremendous. I mean, I like to measure debt relative to the economy, and by that measure, we’re at like 100% we’ve only ever been there once in our history, and it was right after World War Two.
Simone Del Rosario: Yeah, okay, the economy will grow under Trump’s policies more than Harris’s, though, right from what we know, from what they’re planning.
Marc Goldwein: President Trump supports a lot of policies that are, I think, probably pro growth. For example, lowering taxes on Social Security benefits and for for businesses and individuals, but he also supports a lot of policies that would shrink economic growth. For example, tariffs, tariffs, I think, are almost universally understood to slow economic growth and deportation, if by no other reason than you’re literally losing the number of workers. So I think if you look at Trump’s plan on the whole, it’s not actually clear which direction it goes. To similar situation with Vice President Harris’s plan. We don’t have all the details. In general, the tax increases she’s talked about are going to try things tend to reduce economic growth, but if she pays for them that that can be a step in the right direction.
Simone Del Rosario: Yeah. These analyses also assume that either candidate gets their way. You know, Harris, like you said, plans to pay for her spending by raising taxes on corporations and the wealthy. Congress has to agree to that, and there’s no guarantee that’s going to happen. How important is that part of her plan to minimize how much the national debt would grow under her spending policies? And you know, what happens if she doesn’t get those tax raises?
Marc Goldwein: Well, look, it’s really important that both candidates be firm here that they’re not going to support their agenda unless it’s fully paid for, right? Because what happens to the campaign, what happens in Congress is obviously always going to be different. What’s important is that you have that bottom line. This is what sort of President Obama did. He said, Look, I’m going to negotiate the details of my health care plan, but it’s got to be fully paid for. This is what you know. I mean, we see similar things from other administrations as well, on the left and right. You got to have that bottom line,
Simone Del Rosario: yeah, talk to me specifically about the main differences between these two candidates and their proposals. What groups stand to benefit the most from each candidate’s economic policies.
Marc Goldwein: Well, actually, what’s interesting to me is maybe a lot of the similarities, there’s a tit for tat here where President Trump says no taxes on tips. And so vice president Harris says, Well, I’m not going to do that either. The Democrats say a $3,000 child tax credit. So vice president so candidate Vance, Senator Vance, says, maybe it’s 6000 $5,000 So Democrats come back and say $6,000 what I’m actually mostly worried about is the commonalities. Is they are trying to outbid each other to see who can cut taxes more and who can increase spending more. And they’re not trying to outbid each other at all on who can reduce the deficit more or save Social Security better.
Simone Del Rosario: I don’t want to pick on people who you know. Know, make a lot of their living on on tips, but for both parties saying that this is a policy that they want to move forward with. You know, sounds great to get people to vote for you, but, but that’s not a good policy when it comes to the budget, right?
Marc Goldwein: Yeah, I’ve yet to meet an economist that thinks we should have a lower tax rate for somebody that’s a waitress making $15 an hour versus somebody working at McDonald’s making $15 an hour. So I’m not sure this is the right kind of policy. That’s what we see during campaign season. A lot of policies that maybe don’t make sense in the real world because they’re trying to buy votes. And that’s again, why fiscal responsibility is so important. Because if you have to tell the voters Sure, you get this, but in exchange, you’re going to get less of this, you’ve got to pay more on that. That allows people to weigh the trade offs appropriately.
Simone Del Rosario: As voters decide in November who they want to run the economy, who they whose proposals they like the best. What’s your advice for them to look out for? Because you know, we can go over the analyzes all we want, but it’s hard to sift through all this information, especially knowing what may or may not come to fruition once they are elected. What is your advice for voters, as they’re trying to educate themselves?
Marc Goldwein: Yeah, I would say, if something seems too good to be true, it probably is right. I mean, it’s very easy to make promises. It’s very hard to deliver on them, and it’s even harder to sustain them if you don’t have a good plan to pay for your promises.
Simone Del Rosario: Marc Goldwein, Senior VP and Senior Policy Director of the Committee for a Responsible Federal Budget. Thank you so much for that today.
Simone Del Rosario: Have you been paying too much for rent?
Across the country, rent prices skyrocketed in 2022 and 2023, and it could be because of illegal activity.
The Justice Department on Friday filed an antitrust suit against RealPage, a Texas-based software company that’s accused of using algorithms to allow widespread collusion among landlords.
AG Merrick Garland: Everybody knows the rent is too damn high. And we alleged this is one of the reasons why when companies, and in this case, landlords, use a software tool to facilitate cooperation with respect to rents, they violate the antitrust laws, they make rents higher than they would otherwise be, and they prevent rents from going down.
Simone Del Rosario: The federal government joins attorneys general from eight states in suing RealPage.
The company, which has been fighting these allegations for years, says the case lacks merit and will do nothing to bring down rent prices.
“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” RealPage said in a statement.
We have high rents, accusations of collusion and an algorithm in the middle of it. To understand more about the case, I’m joined by Spencer Weber Waller, Professor and Director of the Institute for Consumer Antitrust Studies at Loyola University.
Professor, what is the difference between real page suggesting rent prices and say what we would see from a Zillow or Redfin estimate?
Spencer Waller: Well, as I understand it, I’m only working on publicly available information. RealPage is a software system that has a very high market share among landlords in places like New York and I think some other cities. And the gist of this case, and it’s an interesting, it’s a collusion case, it’s a price fixing case, it’s a cartel case, but it’s not one where the landlords are accused of directly communicating or agreeing among themselves. It’s kind of what we would call a hub and spoke conspiracy, where the people who are the defendants, the landlords are using a common agent, a third party to coordinate their behavior. And the complaint talks about how each of these large landlords feeds a variety of confidential proprietary information. And then the algorithm and real page communicates with them only.
But it’s effectively the same as them communicating with each other because RealPage has access to all of this confidential information, uses it to formulate according to the complaint, common recommendations that are inevitably followed by the landlord. And you end up with essentially the same result as if they had gone into a room or emailed each other and agreed to a common and ever escalating rent for the various apartment buildings and other stuff that they own.
Simone Del Rosario: Yeah, the real page has been obviously fighting these allegations for a couple of years now, ever since this reporting first started to come out and then the allegations and the lawsuits. But real page first off is saying, look, we’re not the ones that are the reason that prices are so high. That’s a lack of housing, which that’s a very fair point. We certainly need more housing in this country. But two, that their customers aren’t required to use this price. And in fact, many of them don’t use the suggested price, that this is an algorithm and it gives them information for them to do what they want with it. So I guess I would say it’s not as if this case is quite cut and dry, right? It’s pretty complex. Where’s the argument here that the DOJ and these other states are gonna have to make in order to prove their case?
Spencer Waller: Yeah. Yeah. And there’s two sets of cases going on. And we can talk about them if you want. One is this government action that was filed late last week. And then there’s separate, some class actions where groups of consumers are saying that they’ve overpaid. So the antitrust laws would not deal with a situation where a landlord had high prices on their own, unless they were a monopoly. And that isn’t at stake here. So high prices by themselves are not a violation of the antitrust laws without something more.
Something more in this case is that real page is being alleged, a civil case, nobody’s going to jail. The government case has no fines, but the government is trying to stop the use of a common platform, a common algorithm, a common kind of coordination point. And this has been done before. If you go all the way back to the 1930s, there was a similar kind of case involving the movie industry where the government won, where they couldn’t really prove that the movie studios were trying to coordinate on price that would be charged in the movie theaters during the Great Depression. They couldn’t really prove that the movie studios talked to each other, but they had each sent sort of a common letter to their distributors talking about the prices that would be set. And that was enough. So this hub and spoke where you use a third party to coordinate is an accepted legal strategy. Of course, the government has to prove this, but the complaint has a solid legal theory. Other countries use similar kinds of coordination. I was an expert for the government of Chile some years ago where supermarkets were coordinating their price through a wholesaler. But again, there was no evidence that they specifically talked to each other. They may have, but the government couldn’t prove it. But to use a common agent to then formulate a plan to set a common price and or raise it, those are illegal under US law. Again, if you can prove it.
Simone Del Rosario: If you can prove it and wondering because this has to do with an algorithm, it has to do with a specific software. We are really entering an era where AI and algorithms are going to be ruling business. How important is it to be, I don’t know, mindful or what sort of things can we take away from the fact that algorithms are gonna be calling a lot of the shots more and more?
Spencer Waller: Yeah, antitrust is grappling with this. We didn’t quite have a chance to talk about this, but the basic requirement for violation of Section 1 in the Sherman Act is some agreement in restraint of trade. It doesn’t have to be a written agreement. It doesn’t even have to be a formal agreement. It can be approved by direct or circumstantial evidence. And if you saw a bunch of people on and you asked them how much for an apple on the street, and they each said $0 .25. And you just said, that would be kind of odd. And you look into it, and you try to see if they had some mechanism by which they coordinated that price. Now, it would be a pretty cut and dried case if each real estate company or anybody else coordinated through an accountant, through a trade association or just like some expert consultant, there are all kinds of cases like this, where if you feed this common, highly proprietary, highly detailed, forward looking information to a third person who formulates recommendations, right? And then the recommendations are followed. That has held in other circumstances, other factual circumstances, to be enough to show an agreement. And that’s what the government is alleging here. And the fact that it’s a permutation involving an algorithm rather than a human or an old fashioned way of coordinating is interesting. But that’s acceptable in a legal theory. And again, the law is reasonably easy. The facts are hard.
Simone Del Rosario: Okay, and what do you expect RealPage to come forward with to say this is absolutely not collusion, it’s not an antitrust violation?
Spencer Waller: Well, at this stage, a complaint has been filed that I’m to put on my hat as a civil procedure professor rather than an antitrust person. What happens now is the defendant has a choice. They can either file an answer, which just says, you admit, you deny, or you don’t know about the allegation. they would admit that they’re a real page and they’re incorporated wherever they’re incorporated. And they would then admit and deny the key paragraphs of the complaint. And then the case goes into discovery. Most defendants in this situation file a motion to dismiss that says even if the law, even if everything in the complaint is true, it doesn’t amount to a violation of the law. Judge has to decide that. As I understand it, the government’s case is going to be decided by a judge, not a jury. I might be wrong about that. But anyway, the judge has to decide a motion to dismiss and the judge has to accept everything in the complaint as true and then measure it up against the law. And as I was saying, the law is supportive of the government’s case. They’re smart people. They have good lawyers on this. The states are important partners in this case. They have other very gifted antitrust lawyers who work on this in conjunction with the DOJ. And so a little bit’s about the predilections of the judge, but I would expect that this is a strong complaint that’s a good chance of making it through the motion to dismiss. At that point, the defendants have kind of a moment of truth. Do they want to spend the time and money turning over all their documents and depositions and other information to the government, a bunch of which they’ve already had to do. So they sort of know what’s coming. And at that point, given that nobody’s going to jail and the government doesn’t get any money out of this, I would expect them to have some serious conversations about settling this case if, again, they survive that motion to dismiss. If the defendants are successful in their motion to dismiss, cases over and the government would have to appeal.
Simone Del Rosario: Okay, all right, Spencer Weber Waller, professor and director of the Institute for Consumer Antitrust Studies at Loyola University. Thank you so much for breaking this down for us. Like you said, it is a complex case and we’re glad you were here to do it.
Spencer Waller: All right, thanks, Simone.
[JEROME POWELL]
The time has come for policy to adjust.
[SIMONE DEL ROSARIO]
There you have it. For the first time in definitive terms, Federal Reserve Chair Jerome Powell says it’s time to cut rates.
In his keynote speech at Jackson Hole’s economic symposium, he noted the cooling in the labor market is “unmistakable.”
[JEROME POWELL]
The direction of travel is clear in the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks, we will do everything we can to support a strong labor market as we make further progress toward price stability with an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market the current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions.
[SIMONE DEL ROSARIO]
Left open to interpretation are how big those cuts will be and at what pace. But given these remarks, we can almost certainly write down a September rate cut in permanent ink.
After hiking and holding rates higher than they’ve been in more than two decades…
[JEROME POWELL]
My confidence has grown that inflation is on a sustainable path back to 2%
[SIMONE DEL ROSARIO]
It’s the closest he’s gotten to a “mission accomplished” moment.
In his highly-anticipated speech, Powell weaved a story of how the economy got to this point post-pandemic. And he addressed how wrong he and the Fed were in the early days of inflation’s rise. The infamous statements that inflation was “transitory” turned out to be one of the Fed’s biggest missteps.
[JEROME POWELL]
Standard thinking has long been that as long as inflation expectations remain well anchored, it can be appropriate for central banks to look through a temporary rise in inflation. The good ship transitory was a crowded one with most mainstream analysts and advanced economy central bankers on board. I think I see some former former shipmates out there today. (hold for laughs)
The data turned hard against the transitory hypothesis. Inflation rose and broadened out from goods to services, and it became clear that high inflation was not transitory, and that it would require a strong response if inflation expectations were to remain well anchored.
[SIMONE DEL ROSARIO]
There are lessons to take away from how the economy reacted to the shock of the pandemic and its aftermath. And lessons to be learned from how the Fed reacted. What’s missing from Friday’s speech is any definitive direction on how policy may change in the future, though the Fed will do an exhaustive review of monetary policy later this year.
For Straight Arrow News, I’m Simone Del Rosario.
[JACK AYLMER]
A CALIFORNIA HIGHWAY SHUTDOWN FOR 16 HOURS THIS WEEK.
THE CAUSE – BECOMING ALL TOO COMMON.
AN E-V BATTERY FIRE THAT FIRE RESPONDERS STRUGGLED TO EXTINGUISH.
WHILE THE NTSB IS NOW INVESTIGATING, IT’S ANOTHER CONCERNING HEADLINE ASSOCIATED WITH ELECTRIC VEHICLES.
BUT WHAT IF WE COULD MAKE A BATTERY THAT DIDN’T COME WITH THE POTENTIAL FOR A DANGEROUS EXPLOSION.
[SPOKESPERSON]
“It’s not going to explode. You could take a gun and shoot a bullet through it. It doesn’t do anything.”
[JACK AYLMER]
THAT’S DAVID MEE-CHERY, CHAIRMAN OF MULLEN AUTOMOTIVE.
HIS COMPANY HAS BEEN BUILDING THE NEXT GENERATION OF COMMERCIAL EV VANS AND TRUCKS-
WHICH STARTING NEXT YEAR, CAN BE EQUIPPED WITH MULLEN’S SOLID STATE POLYMER BATTERY.
REDUCING THE RISK OF HAZARDOUS FIRES AND NEARLY DOUBLING THE RANGE OF THEIR EVS.
[SPOKESPERSON]
“In order to be competitive, you have to have something that nobody else has, and everybody else has been trying to get to, what they call the Holy Grail, battery technology. And I did the same thing.”
[JACK AYLMER]
SOLID STATE BATTERIES ARE A CONCEPT THE EV INDUSTRY HAS BEEN CHASING FOR YEARS.-
BECAUSE OF THEIR HIGHER ENERGY DENSITY, FASTER CHARGE TIMES, AND MITIGATED SAFETY RISKS.
EXPERTS PREDICTED THIS TECH WOULDN’T START EMERGING IN THE MAINSTREAM MARKET UNTIL AROUND 2030.
BUT MULLEN SAYS THEIR DESIGN WILL BE READY FOR USE BY THE SECOND HALF OF 20-25.
[SPOKESPERSON]
“We will have that pack fully certified by the US government for inclusion and sale in our vehicles and other people’s vehicles by next year, that is three years ahead of Toyota, who said that they’re not going to have a solid state solution for at least until 2027.”
[JACK AYLMER]
THE MAJOR OBSTACLE FACING SOLID STATE BATTERIES IS THE COST.
A RECENT STUDY FOUND THEY CAN BE FOUR TO EIGHT TIMES MORE EXPENSIVE TO BUILD THAN TODAY’S BATTERY SYSTEMS.
HOWEVER, MEE-CHERY CLAIMS HIS COMPANY HAS SPENT A FRACTION OF WHAT THEIR COMPETITORS HAVE IN DEVELOPMENT.
POTENTIALLY MAKING THEM MORE ACCESSIBLE MUCH SOONER THAN PREVIOUSLY BELIEVED POSSIBLE.
[SPOKESPERSON]
“Why is Mullen, a small little company able to do it when a big, gigantic company that has hundreds of billions of dollars can’t do it? Money doesn’t necessarily mean, you know, you can develop something. A lot of it has to do with what you have between your ears.”
[JACK AYLMER]
GOING FORWARD, MULLEN HAS INDICATED ITS OPEN TO WORKING WITH OTHER AUTOMAKERS TO MAKE THEIR SOLID STATE BATTERIES COMPATIBLE WITH DIFFERENT EVS-
AS THE COMPANY PREDICTS DEMAND FOR THIS TECH WILL BE WIDESPREAD.
[SPOKESPERSON]
“The customers will be anyone who wants a much denser, more reliable and cost effective alternative to traditional, dangerous batteries.”
[JACK AYLMER]
JACK AYLMER – STRAIGHT ARROW NEWS.
Simone Del Rosario: They were told with hard work and a good education, they’d get the career of their dreams.
But for many young adults in China, that is simply not the case.
For a couple of years now we’ve been hearing about the “lying flat” or “let it rot” youth in China, a characterization that the kids are lazy and don’t want to work.
But there’s way more to the story in the world’s second-largest economy.
Recent graduates are dishing out, in some cases, more money than they can hope to make in a job, for interview coaches and job agents.
A Bloomberg article said some students are paying $50,000 to try to land a finance job.
And still it’s not enough.
China’s youth unemployment surged to 17.1% in July, up from 13.2% a month earlier. And this new measure of youth unemployment excludes current students.
Remember, last year, China’s jobless rate for 16- to 24-year-olds reached 21.3%, so high the government stopped reporting the data after that. The government agreed on a new method to exclude students which is fine except even without them the rate is above 17%.
Now these young graduates have a new name, “rotten-tail kids.” It comes from the millions of unfinished homes that litter the country known as “rotten-tail buildings,” real estate dreams that never came to fruition.
China scholar and professor of global leadership at Arizona State University Doug Guthrie joins me now.
Doug, what would you say is the primary issue with young graduates landing jobs in China?
Doug Guthrie: I always like to put these things in context as you know, and so China is going through a dramatic transformation, and has been going through that transformation for the last 40 years, and in particular the last decade has been a new era of transformation in terms of where the economy is going and how to move from just a highly industrialized economy to a tier one economy, and an economy that is doing well in things like high end service sector economy, and so they’re still building. But the context that I like to put out here, just to remind people, you know, the one child policy has been in play for about 40 years, and it’s really been kicked in strongly over this time period when it was put into play, China had a serious population problem, and it seemed like a necessary approach to really dealing with the number of people that lived in abject poverty, and really trying to figure out how to move forward with economic growth. When it looked like China was going to go below replacement rate, about a decade ago, they changed the one child policy back,to saying you could have multiple children. This was 2016 and I think what the Chinese leaders didn’t realize, and as a sociologist, I was quite fascinated by this, because you can have laws and policies, but then eventually those laws and policies become culturally embedded. And so, you know, when you open the door and said, Now you can have multiple children because we need more replacement of the population, people thought, well, actually, you know, we’re our ideal notion of what a family is is three people and it’s a child and two parents and four grandparents and and so it just people didn’t start having kids immediately. And so there is an entire generation of children who have grown up under the one child policy. And some people who are experts on studying Chinese society would argue that these kids have developed a different sort of sense of self, and they’re very demanding and have high expectations in what kinds of jobs they want. And so when you graduate from from college and you need to go get a job, and the numbers always spike in July, because you have a group of graduates that come into the labor market in June. And it used to probably be the case that people were urgently thinking about jobs, jobs, jobs. And now those children have two parents and four grandparents who are very much focused on their well being. And maybe they’ve become a little bit more willing to wait and think, Well, if I don’t get the perfect high end service sector economy job that I want. I’ll just continue to live at home. And so people are a little more selective, I think, with how they’re thinking about so I think the one child policy is an issue here that is not to diminish the issue that you know this. This is an economy still in transition, and so I think there’s a lot going on. I’m just less concerned about the numbers right now, because I want to see what happens. You know, we’ve seen a spike from 13% to 17% but I want to see what this looks like two or three months from now.
Simone Del Rosario: But even before these numbers came out, these young graduates were having issues finding jobs that suited their qualifications and the degrees that they had. Are the jobs there. For, you know, students or postgraduates who are qualified for certain tasks, or was this promise to get an education and you’ll have a good paying job at the end of it was, was that not real? Was there no, you know, gold at the end of the rainbow?
Doug Guthrie: Well, here again, I would like to you know, if you divide the labor force up into multiple categories, okay? So you have, you know, the the migrant labor force, which is the sort of menial jobs within factories and in the agricultural economy. But let’s leave the agricultural economy aside for a second. But so you have this one sector of the labor force that kids who go to college are not going to participate in, right? Like these are line workers in factories, right? And then you have a second layer of the labor force, which is the vocational technical education. And the Chinese government, in my opinion, has been very smart at investing in vocational technical education, because that level of the labor force is really necessary for thinking about, okay, you have menial workers, and they are the people that are just putting things together on lines. And then you have people who actually know how to build complex factory systems and manage them. They are not high end managers, but they are the vocational technical labor force. And China has invested heavily on still, college kids probably don’t want those jobs, right? Like those they want to, you know, they’ve sort of learned liberal arts, education or engineering, and they want something that’s in the high end service sector economy. And this is where, you know, you get into general management, managerial labor force and high end service sector economy. And you know, there’s a lot of powerful companies, both in high end service sector economy economy, but also in the management of major manufacturing firms. Most of them have business school degrees, and most of them have really kind of gone beyond their next level of education. And so I do think that there’s just a gap here for this college educated 18 to 24 year old or 16 I guess they’re not doing the school students anymore, and so it’s just the 18 to 24 year olds that are in that category. And so it may be the case that there’s just not enough jobs for what their expectations are in jobs, and they may have to just dial back those expectations a little bit. And again, to this point there is, there’s big differences across cities and provinces, but where we’re really seeing the joblessness is in the high end, tier one and tier two cities. Yeah.
Simone Del Rosario: Okay, so what is the typical graduate doing when they can’t find a job? You know? What makes them this rotten tail kid, as they’re calling it?
Doug Guthrie: So here again, this is where I think things get and, you know, I don’t love the rotten tail kid naming of it, because they’re, you know, the these are kids, again, that are have been catered to through their whole lives, they’re the only child in their family. And their families have said, we’re going to put you, put all of our resources into you getting through high school and then going to college and really having just a great life ahead of you. And so, you know, they’re a little entitled, and so and their families, most of them, have homes and apartments that they can just move back into, and there’s only one child to be worried about, and they’re the focus of the family. And so that entitlement is leading to the set of decisions, well, okay, I’ll wait. I’ll wait for the perfect job. And so I think that is causing a lag in the labor market, rather than people feeling urgent, like, oh my goodness, I need to get out and get a job because I’m out of college, it’s just a different cultural mindset in China about that. So they’re waiting. And, you know, I mean, it’s, you know, the waiting for employment is a category in China, and so, you know, it’s sort of an interesting you have, you have students, and then you have employed people, and then you have unemployed people, but you also have this separate category that’s called diale, which means waiting for employment. And so people just think, Okay, I’m just waiting. And then when you get into this, the more striking thing that about what you’re reporting on is that families are investing so much in these headhunting and coaching firms at this this age. It’s, it’s quite remarkable. I mean, again, it’s, it’s a little bit sort of touching in terms of telling you what the one child families are like, at least at the higher end of the socioeconomic spheres. These families are investing in their children, but it might be that they end up being a little bit spoiled in terms of what they’re waiting for, and not willing to compromise.
Simone Del Rosario: President Xi says that this youth unemployment problem is a priority for him, but it doesn’t seem to really be getting any better. Do you? You know, know what that policy is, what they’re trying to do to improve this situation?
Doug Guthrie: Well, so here again, and you and I have talked before, so I’ve given me, if I’m repeating my the hobby horse I’d like to get on. But you know, the China works in a very interesting way, in terms of President Xi will say, this is a priority for me. So youth unemployment is a priority. And that sort of comes out of the five year plan, and it comes out of the yearly state council meetings. But the way the economy is set up is local officials and my group. We like to call them local governments as industrial firms, and so the heads of provinces, the governors of provinces, but more importantly, the mayors of cities. It’s their job to really think about creative ways to do things like build industrial clusters or create different economic circumstances. And you know, this is really the engine behind what has made China’s economic growth so strong is because you have these very entrepreneurial leaders, and Xi Jinping was one of them. I mean, he was, you know, part of the reason he became president was because he led Zhejiang province, and Zhejiang Province was just a masterpiece of economic development and innovation. And so these players at these local levels are very aggressive, and they’ve become very, very good at doing things like building high tech industrial clusters, you know, like Jiangsu Province leads the world in both photovoltaic arrays and technology around that, but also electric vehicle batteries and and so they’re very good at that. But my sense is they and this comes from, directly from some interviews I’ve done in recent visits to China. You know, when Xi Jinping says, Oh, the big problem now is youth unemployment, they need to spend a little time thinking about, like, how are we going to solve that problem? So for Xi Jinping, he said it’s a priority, and he has it, but they don’t have a national policy on this. What they’re waiting for is the local officials to do their job and be innovative around it. And people are still trying to catch up.
Simone Del Rosario: All right, Doug Guthrie, China scholar and professor of global leadership at Arizona State University, it’s always good to talk to you about what’s going on in China.
Doug Guthrie: Thank you so much. Wonderful to talk to you. Thanks for having me.
Simone Del Rosario: Inflation may be cooling, but eggflation is on the rise again. The price of a dozen eggs is up 19.1% compared to the same period last year. Now that’s a far cry from the 70% annual increase in January of last year, but grocery prices as a whole only rose 1.1% annually in July, still a package of what is this, Brent, sorry, I’m reading it’s fine, but still a package of this food staple will run you a full dollar more today than it did last year, but still nearly two bucks below inflation. Highs. Why? Well, it’s the same reason prices have spiked at times in the last few years. The bird flu, according to the USDA, more than 18 million birds have been affected by the outbreak. In turn, millions of chickens have been cold. Joining us now to discuss is host of the business of agriculture podcast, Damian Mason. Damien, what do we need to know about the status of the bird flu today. I thought this was a problem from, you know, years past, but we’re still in it this summer.
Damian Mason: It’s interesting, because they generally will tell you, people in poultry [that is], I’m an ag guy, I’m not going to be the poultry expert here, because there’s people that spend their entire careers in chicken barns, but I work with them. I’ve worked for them. I’ve consulted and spoke to their audiences, and I try to learn as much as I can. The one thing that they’ll tell you is winter is actually good because it generally kills bugs. However, it also creates migration. And then all of a sudden, when you have migrating waterfowl, migrating birds, they spread this stuff. And it’s like, Wait a minute. How does that get into a confined, modern day production facility? Well, generally, that’s why they have such amazing biosecurity on these modern poultry operations. But they still do have leaks, and that’s the tough part. You gave a number 18 million hens, and people might be listening to saying, okay, so you got some sick hens. Why does that increase the price of eggs? Well, the tough part is, there’s really no cure for bird flu, and even if there were, it would be so cost prohibitive. So prevention is really what these farms have to do Simone. They’ve got to keep the bird flu out of the facility. And when you’re talking about a barn that maybe has 1 million hens in it, these things are massive. They’re big, they’re modern. That’s why our eggs are generally so cheap and sanitary, etc, because it’s [a] very modern facility. But if you get bird flu in that building, you have to kill [or] cull off the entire barn, and that way it keeps the spread from going to the next barn, the next barn, the next barn. So that’s a really tough situation. There’s more than 300 laying hens, so if we lose a million of them, we’re still going to make it up. But the thing that a lot of people don’t realize is the tightness of the supply chain in egg production. It’s a perishable product. It’s not like you can have these things warehoused for the last year or so, and then bring them out when there’s a slowdown. So that’s why you’ll see these moves like this [in price].
Simone Del Rosario: Okay, given what you’re talking about with the conditions in which these hens are. We’re getting these bird flu outbreaks. It kind of doesn’t seem to leave the news, it feels like. Is it time to rethink the structures that these hens are being kept in, are the conditions too crowded when it comes to having diseases like this spread throughout an entire community of hens?
Damian Mason: Yeah, that could be an argument. I’m sure the Humane Society the United States or the PETAs would make that argument. The thing is that would then predispose that say cage free facilities don’t have the same risk. The truth is, bird flu is more prevalent in smaller, outdoor penned type birds because they have more exposure to wild birds that then can spread the avian influenza and the bird flu. I get it where that sounds appealing, and then let’s bring up the other part of it. So first off, there’s not a lot of proof that that would be the case from a sanitation standpoint. Then there’s the other one. If you had 1/4 amount of birds per barn space, that means that barn still has an 8% loan on it, and that worker that goes out there and work still wants to make $18 an hour, and that truck still burns $3.89 cent diesel fuel, but they’re hauling 1/4 the eggs and producing 1/4 the eggs per unit of building. And so then you start talking about a $3 dozen egg, maybe becoming a $6 for a dozen eggs. And that’s, that’s something that’s the harsh reality of modern production, that we’re we’re massively efficient, and we are pretty stacked in there.
Simone Del Rosario: Would you say bird flu is the sole reason for the recent increase in egg prices?
Damian Mason: That’s what the headlines scream, we just spiked over $3 so I’m holding up this wonderful egg right here and $3 is where we just spiked. So you know, I love my visuals, when I talk to you, we just spiked $3 a dozen. And they’re going to say it’s because of bird flu. But again, some of those other reasons we just talked about labor’s still a little bit tight. If you read the Wall Street Journal, you’ll hear that white collar workers are less in demand now than they were. But those that want to show up and work at a chicken facility and go out and take care of hens and make sure the eggs are being gathered, washed, packaged into the crates, they’re still a little bit hard to come by. And like I said, there’s a big cost on energy. You look at what your energy bill has done, even in your home, Well, imagine now if you’re doing this across the whole entire supply chain. Eggs have to be refrigerated because they’re a perishable product, so there’s energy. They have to be transported, obviously, in a pretty timely manner, so there’s a lot of energy that goes into a price of egg also.
Simone Del Rosario: We know that eggs are like this really low price source of protein, right? When we talk about people trading down when prices get high, eggs are, you know, the cheapest bottom of the barrel, great protein for a low price. So given that information, does this dollar spike in a price of a dozen eggs, is that going to change consumer habits at all? Are people just spending the extra money knowing it’s still the cheapest way to get protein?
Damian Mason: The term that we use in agricultural economics, or in any economics, is inelasticity or elasticity of demand, something that if suntan lotion doubles in price, you can probably just not use it right. You can say, ‘Oh, hey, I’ll take my chances about getting skin cancer. I won’t have as beautiful of a tan.’ When eggs double in price, you still want to feed your babies. You still want to make sure that your family has food, so they tend to be fairly inelastic, meaning you’re going to pay up. You’re going to pay for the price of eggs. And as you pointed out, and this is the thing that I think is heartbreaking, we know that this is about the most affordable protein that there is this egg that I’m holding my hand right here. So if you’re talking about who gets hurt by $3 per dozen eggs, it’s maybe not you or me, but it’s the mother with two or three children. It’s very digestible product. It’s very convenient. You can cook an egg in about two minutes and feed your kids. There’s a lot of downside to expensive eggs. And I should point out that when we hear things like what’s going on politically right now, that there’s talk of price gouging, or we need to have price controls. You hear one of the political candidates saying that. I know poultry producers. I know large scale poultry producers. I do business with them. I can tell you that they’re still making, you know, a penny an egg, so you’re not talking about $3 a dozen. I can tell you that the farms that are producing these by the 10s of 1000s per day. There’s a big poultry farm that eggs just, you know, 20 miles from my property here in Indiana. They’re not making that money. So the spread is generally somewhere else, especially now, when you figure disease mitigation practices that they have to put in because of the pressure of bird flu, they don’t want to lose their flock.
Simone Del Rosario: All right. Damian Mason, host of the business of agriculture podcast. Thank you so much, Damian.
Damian Mason: Thank you have me.
Simone Del Rosario: Everything seemingly went right for growing soybeans this year. Which is why it’s all going wrong now.
Soybean futures are near 4-year lows, down about 45% from its 2022 peak. Corn is also in a similar boat.
We’re in the midst of an American farm slump right now, despite very high yields for the country’s two biggest crops.
Earlier this year, the U.S. Department of Ag projected net farm income would drop 26% in 2024, affecting not only the farmer but the businesses that rely on the farmer’s income, like John Deere and Kinze. Deere expects its North America sales to continue to slump. This summer, the company has laid off hundreds of salaried employees.
I want to bring in Damian Mason, host of the business of agriculture podcast, Damian, why do we have such high soybean yields this year? What’s going on specifically?
Damian Mason: Well, first off, farmers in America are very, very good at doing what they do, which is produce commodities. We’re remarkable at it on a trend line Now, granted, there’s been some down years. We’re on a trend line. Every year, our soybean production goes up about a bushel per acre, okay, eight tenths to one bushel per acre. And if you put that over time, it’s kind of like the old thing. Remember that, that little mathematical thing they did when you’re young, if I gave you a penny today, but I doubled every day for the next month, would you take that deal or $20 every day and you say, oh, $20 every day, not realizing there’s like a there’s like a that same thing about exponential growth is just remarkable. So we’re going to put out about 53 bushels per acre. Say, when I was in high school, we were at half that. Okay, so 53 bushels per acre put on 86 million acres, means a whole heck of a lot of soybeans. We’re going to be around 4.6 billion bushels of soybeans produced in the United States of America this year. Favorable weather patterns, technological advances. The machinery is so good. You mentioned John Deere, the ability for us to get the right seeding population, to get it at the right soil, planted depth, to use the right fertility at the right time. It’s just amazing compared to where we were just a long time ago. And as an agricultural person, farm boy, I always point out, remember, environmentally, we’re doing this with less, less units of natural resources per bushel produced than we ever have. So we’re just really good at making bushels. The problem, of course, is we don’t need all these bushels. I mean, it’s just a it’s just a situation where we’re probably in an oversupply situation. And that’s what happens with commodity production. The cure for low prices is low prices. The cure for high prices, high prices. You’re kind of seeing that this year.
Simone Del Rosario: Yeah, and exports are go they’re going higher. So it’s not that we’re not exporting as much. It’s just simply, as you said, these yields are pretty incredible. And the fact that we have these really favorable weather conditions that we’ve seen this year. How are farmers adjusting to this reality?
Damian Mason: Well, some are going to, unfortunately, put their head in the sand and say, Oh, well, you know what? This will all be fine. It’s just a blip. Some people like me out here at the Agricultural Economics angle, have pointed out, I just pulled something. I printed this off almost a year and a half ago. This is a stat from the United States Department of Agriculture, and it’s from at the end of year 2022 the end of year 2022 China was our number one agricultural customer in 2022 with $36 billion of agricultural products bought from the United States. They’re going to be about half that this year. So what we’ve got now is a very ascending productive capacity in soybeans, 86 million bushels, I’m sorry, acres planted and harvested, whereas just a, you know, 3040, years ago, we might have been in like 60 or 70 million. So we’ve got a bunch more acres growing a bunch more bushels per acre. And we did that. We were conditioned to that in agriculture, to supply the new China. You know, tiger, this whole, this whole thing about China over the last 20 years. Well, the problem is, China’s plenty supplied. Brazil ramped up production. Argentina ramped up production. Other Asian countries ramped up production, as well as as us. So we’re in this situation. What are farmers doing to adapt? Well, they could switch acres to something else, but with 86 million acres planted, it tells me they didn’t switch off of many acres. They could also figure out new ways to sell their product, and that’s where the biodiesel. Going to come into effect, although that’s more government driven than farmer driven.
Simone Del Rosario: You were on a farm recently where they had said, Forget about the soybeans. We’re going to be grazing cattle on this land. And said, can you tell me about that? I saw that on your Twitter, and I knew I wanted to talk to you about soybeans, because I was just super intrigued by what was happening there on the ground.
Damian Mason: So think about this. Simone soybeans, essentially, were not really much of a crop until post World War Two in the United States. They were grown in Asia, you know, 1000 years ago. But they didn’t really come into mass acreage, broad acre production here in the United States until really the 1950s so we’re going to have 86 million acres. That’s almost 1/4 of our total cropland acres in the United States. Just to put that in perspective, corn is about 90 million is about 90 million, soybeans are about 90 million. They those two commodities occupy about one half of all cropland, food producing acres, not counting rangeland and grassland. So the intriguing part of that episode, of that that video that you saw my friend Kelly Garrett in Iowa, large scale farmer also has cattle as well as a cropland and he ran the numbers with his consultant, financial advisor on the farm, and he said, we’ve retooled what we think our cost of production is on these soybeans, and at $9 soybeans, which is where we’re hovering right now, a little over $9 per bushel, we think we can make More money by putting a mix of cover crops and forage crops on these fields and putting cattle on them. And if you keep up right now, beef prices are still pretty high. The consumer’s still paying for steaks and cheeseburgers and so there’s a little bit of a shortage of cattle. So he says, What if I took some of my acres out of soybean production and plant it to an array of forage crops, and then turn the cattle in there, intensively grazing it. I mean, you’re not talking about one cow breaker. You’re talking about a bunch of cows per acre and moving them, maybe, maybe two times a day, moving them and really maximizing that. And it looks like that’s going to work. Most people Simone wouldn’t think that you could do that in Iowa. They would say, oh, soybeans in Iowa all day long Trump cattle. But you know, it looks like the cattle are going to make more money per acre on some of his fields than soybeans. Well, that’s
Simone Del Rosario: Certainly economic innovation on the farmers part to to make that type of dramatic transformation there. But to your point, a lot of other farmers are holding out hope. Do you think that this this four year low in prices. Do you think there will be a turnaround? Obviously, low prices cure low prices. We’re going to see fewer acres of soybeans planted in the following crops Correct?
Damian Mason: Most of the hope is hinged on this. I pulled up a couple of things in some agricultural media. This one right here is a big one. United States Department of Agriculture announces 99 point 6 million, almost $100 million for biofuels and clean energy projects. You’ve heard about ethanol. Ethanol is in its 20th year, now generally derived from corn. We invented the Renewable Fuel Standard under the George Bush administration 20 years ago. There are approximately 190 ethanol plants that use corn as their feed stuff to make as their supply to make ethanol. Ethanol then goes into your gas tank about 10% 11% of everything that you burn in your tank, on average, is ethanol derived from corn. Well, we’re kind of looking at doing that with soy. For soy, diesel, biodiesel. We’ve had biodiesel products before. The new angle is to use the oil. If you crush a soybean, 80% of it ends up as soybean meal, which is best used to feed to a pig or a cow to make a pork chop or a steak. The 20% becomes oil. That oil would be required then to go straight into a refining process to make diesel. So there’s a lot of hope for a cleaner diesel, a less emission, a less pollutive diesel derived from using soybean oil, of course, then you’re going to have a little bit of a glut of soybean meal, that which makes a very cheap feed, which also might help bring down the cattle prices, because that would go then to the beef. So I think that’s the biggest hope right there, the idea that farmers are going to produce less. No farmer that you will ever meet says, You know what I want to do next year? I want to decrease my yields by 10% by doing a crappy job. Most of them are saying I want to go ahead and get more bushels per acre, and I want to be more efficient. I want to be a star producer. Yeah.
Simone Del Rosario: But as these prices are so low right now, 45% down, like I said, from 2022, highs. And it’s not just the soybeans. Corn prices are low too. Wheat prices are low as well. We I talked about it a little bit off the top, but how does this kind of ripple out through the whole farm country? You were in Iowa, Iowa is struggling.
Damian Mason: Yeah, yeah. And so this is an election year. So there’s going to be, there’s that angle, there’s the political as well as the economic angle of it. But your answer, I guess, the question you really want to know is, what can a farmer do to adjust? You can switch off acres. What has historically happened? And trust you, some of us are old. Must remember the 80s. You know you’re you go to town and get a job, and you really. Have to buckle down on some of your finances. Are we there yet? Well, we’re not. We’re not covering 18% borrowed money interest rates, so we’re not quite there yet. Simone, what we would do, we will switch to makers, is more specialty crops. There is a new chance at some increased revenue through sustainability programs, companies like one of my sponsors, true Terra, that will pay you if you can do cover crops and reduce tillage. So maybe you break even on your soybeans, but you pick up $25 an acre of the sustainability program, and that becomes your margin, which is poultry, I admit, but a break even or positive margin certainly keeps you in business longer than losing money per acre. But no, it’s a tough situation right now, and it’s it’s a story that we’ve heard a lot in in agriculture and in economics as it pertains to American agriculture, we were amazing at our productive capacity, and then we always have to look for somewhere to go with our bushels.
Simone Del Rosario: Damian Mason, host of the business of agriculture podcast, thank you so much for your time.
Damian Mason: Thanks for having me on, Simone.
Simone Del Rosario: New rules are coming August 17 that will rock the real estate world.
The conventional way of buying and selling a home is over. And anyone planning to work with a real estate agent at any capacity needs to be aware of the new landscape. Even realtors are still trying to figure it out.
The change is how real estate agents get paid, and it’s part of a legal settlement between the National Association of Realtors and home sellers.
If you’re hoping to buy a home with mortgage rates dropping, this is definitely something that will affect your bottom line.
So let’s sort through it with Doug Miller, Real Estate Attorney and Executive Director of Consumer Advocates in American Real Estate.
Okay, Doug, when my husband and I were buying our home, we knew that we had to put down the down payment, pay our closing costs, but what didn’t come out of our pockets were the agent fees I didn’t pay my buyer’s agent that came out of the seller’s pot. Tell me how that’s changing, because that was a big bonus for buyers.
Doug Miller: Well, it appeared to be a bonus, and in actuality, it wasn’t, if, if you were, if you had been allowed to see the seller’s side of the settlement agreement, you would have, said, seen a secret transaction between the seller and your buyer’s broker. It’s always been problematic for anybody to pay someone else’s agent, whether it be their attorney or a realtor or any advocate, it’s just plain wrong. In fact, it’s usually described as commercial bribery when that happens. And so what was going on for a very long time was a very complex pricing scheme. Realtors would charge the seller for the buyer’s agent, and sellers would ask, Well, why in the world should I be paying the buyer’s agent? That’s just the way it’s done. And if you don’t pay the buyer’s agent, you can expect that you will your house will not be shown. And so sellers would say, 6% that seems like a lot. And the realtors would say, Well, I have to share my fee with a buyer’s agent. So sellers were forced into it. Buyer agents loved it, because, like here in Minnesota, the split is typically 2.7% goes to the buyer agent, regardless of their experience expertise. There’s absolutely no negotiation. You hear the standard talking point by realtors that the all buyer broker or all brokerage fees have always been negotiable, and they have all these great talking points that actually are nonsense. The buyer broker fee has never been negotiable between the buyer and the buyer broker. And it’s never really been negotiable between the buyer broker and the listing broker. It’s been artificially high.
Simone Del Rosario: What do buyers have to do now that these changes are coming? What do they need to know when they’re going out to buy a house and picking an agent?
Doug Miller: Buyers who negotiate with their buyer agent and negotiate a lower fee with their buyer agent, are much more likely to be successful in negotiating a transaction with a seller. And the reason for that is most buyers can’t afford a buyer broker fee or an attorney’s fee, and what they’ll typically do is ask for a credit from the seller. It’s really no different. The money is coming out of the seller’s pocket and going to the buyer broker, perhaps eventually, and so it affects the seller’s net the same way. The difference is, the buyer who negotiates a better fee is going to have an offer that’s much more appealing than a buyer who just lets the buyer broker collect their standard 3% or whatever it might be. So if you have somebody who negotiated on a $500,000 house, for example, let’s say a $5,000 fee with a buyer broker, which I still think is high, versus someone who negotiated a 3% or $15,000 fee, and they both ask for seller credits. One’s asking for 5000 one’s asking for 15,000 it’s pretty easy to you know, guess which offer, assuming all else is the same, which offer the seller is going to accept.
Simone Del Rosario: Okay, so in your mind, the way that this will typically shake out is that sellers will still end up covering the cost by way of, you know, a negotiation between the two sides.
Doug Miller: When the buyer writes an offer, they should include a seller credit if they want their some of their closing fees, or the buyer brokerage fee or an attorney’s fees covered. So it should work out exactly the same, except that the amount of the commissions will be lower, and it has always driven me crazy when I see these talking points that somehow, by lowering commissions, it’s going to cost consumers more. That’s the heart of their argument. And and they’re coming up with some pretty crazy arguments to try and stand by this, this price fixing scheme that they have.
Simone Del Rosario: Well, depending on where you are in the country, if you’ve bought a home in the last five, six years, there’s a lot of situations where the competition has been so high that people are, you know, waiving contingencies left and right. Wouldn’t this be something else that would be waived? A seller would say, you know, I have this buyer who’s saying they’re gonna pay their own agent, so I’m gonna accept that offer instead.
Doug Miller: And again, it will come down to the situation where the buyer who negotiates the best deal with their buyer agent is going to have a much more competitive offer.
Simone Del Rosario: So the way that it was working before. Obviously, as we’ve alluded to, home sellers were basically tied to this five to 6% commission that they were responsible for. It was on them, sellers feeling unfairly burdened by, like you said, paying the expenses of both agents, agents on both sides of the transaction. So what do sellers have to look forward to now?
Doug Miller: Well, they’re not going to hear the reason why my commission is 6% is because I have to share with a buyer broker that’s gone. They’re not going to hear, Well, my fee, my section or half of this commission, is 3% because, look, we’re paying the buyer broker 3% they were using that 3% to jack up their fee. And so now, if somebody is paying $5,000 on the buyer side, I think you’re going to see a lot of sellers question the value of listing agents as well. So maybe what we will see going forward, it might take a year or two, but my hope is that we’re going to see fees to sell a home drop to maybe what we see in other countries, one or 2% it makes no sense that if you have a $4 million house that you’re paying $240,000 in commissions, and I’ve done transactions in that, in that realm, and I just give the entire feedback to my clients. When that happens, it’s, it’s, it’s outrageous for the services you’re getting, and it causes all kinds of other problems as well. These, these fees, that there’s admin fees, there’s they, they capture these buyers and sellers in a way that they can’t get out. And and the that’s the other. One of the other changes, by the way, is buyers are going to be need to sign buyer broker contracts with the buyers before they start working with them. And buyers need to be very, very, very careful. And so to sellers. For that matter, most of the fee agreements in this country are drafted by a bunch of competitors behind closed doors and show me another industry where that happens. It’s completely wrong. It’s it’s anti competitive by definition.
Simone Del Rosario: Okay, how is this going to affect real estate agents? What is the world of real estate and the people who make money off of this. You know, what’s that going to look like when this change takes effect?
Doug Miller: For realtors, it’s going to be the realtors who are more experienced, the realtors who have a better education and the realtors who really understand what it means to be a fiduciary, an agent of someone else, they’re going to put themselves in your shoes. Agents at big companies can’t do that, and they engage in things like dual agency or designated agency, where the brokerage firm represents the buyer and the seller in the same deal. Those kind of relationships should never exist. And so realtors who are really taking to heart that they now have to compete, not just on service, but on price, I think they’re going to see that consumers are going to be a lot more careful. A buyer who is hiring a buyer’s agent isn’t going to pick someone who’s a dual agent and can’t negotiate on their behalf, because that’s what happens. They can’t. They’re not going to pick a buyer agent who is with a big company and the broker has access to the confidential negotiating information of the buyer and seller. Why would you expose yourself to that kind of risk? Instead, I think buyers, before they spend all this money on a buyer agent, are going to want to know that that agent is truly in their corner. So I think we’re going to see agents moving to smaller firms. I think the agents who really know what they’re doing are going to do well, and agents who are new and don’t know what they’re doing. Well, I’ll tell you what this this is where internships or apprenticeships might come in really handy getting more education in real estate right now, in my state, you don’t even need a kindergarten education to to sell real estate. It’s take a 30 hour class on how to pass the exam. So agents who really differentiate themselves by getting more education, getting more experience and pledging absolute fidelity to their clients are going to be the agents who succeed.
Simone Del Rosario: Doug Miller, real estate attorney and executive director over at care, consumer advocates in American real estate. Thank you so much, Doug. We really appreciate your time.
Doug Miller: Thank you. I really appreciate it.
Simone Del Rosario: We won’t say they’re on death’s doorstep, but these days, dating apps are critically ill.
Bumble’s the latest to lose its wings, its share price dropped 29% after it slashed its revenue outlook for the rest of the year. The stock is down 65% in the past year, while Match Group, which owns Tinder, Match.com, OkCupid, etc., is down about 24%.
Are daters just sick of swiping?
In one survey, Gen Zers much preferred meeting someone IRL than online. But is that reality? And how can companies adjust to keep growing customers.
I’m joined by Liesel Sharabi, associate professor and Director of the Relationships and Technology Lab at Arizona State University.
Liesel, this isn’t the death of dating apps, right?
Liesel Sharabi: I don’t think it is, but I do think that there is a lot of growing frustration in this space, but at the same time, we still have people using them, right? So I think this is really an opportunity to reflect and ask ourselves what’s working well and also what can we do to make this a better experience for people going forward.
Simone Del Rosario: Is the growth and the surge that these dating companies have seen. Could this really be tied back to a post pandemic life in the immediate after effect, like, you 2021 being a big boost for them probably, and a need to adjust to what the new reality is now where people are out living their life, we’re no longer, you know, under lock and key.
Liesel Sharabi: Sure, I mean, during the pandemic, people spent a lot of time at home. We had a lot of people using dating apps, trying dating apps for the first time. But I think when people started to get back out there and things started to open up, there was really this urge to connect face to face. And so I think that some of this is definitely coming off of a period of time where people were feeling very isolated. And so now I think they’re hungry for a face to face interaction in a lot of ways.
Simone Del Rosario: So what are the newer or well, maybe older ways that the dating pool is hoping to meet today?
Liesel Sharabi: Yeah, so I think it’s really interesting, especially when you look at Gen Z because they are now, you know, younger than a lot of online dating platforms. They’ve really grown up in this environment. And I think for them, they’re starting to ask themselves, okay, what else is out there? So beyond dating apps, how else can I go about meeting people? And so you hear from a lot of them that they’re really excited to connect in person.
And they’re looking for other opportunities. And I think in some ways that just has to do with the fact that the apps have been around for a really long time. And, you know, they are not the only way to meet people. And I think there’s some exploration happening there as well.
Simone Del Rosario: So how can these companies behind these apps, behind online dating, transform in an age where people are hungry for in -person dating, for in -person meeting?
Liesel Sharabi: Yeah, I mean, yeah, it’s a great question. And there really hasn’t been, in my view, a lot of big innovation in the dating app space and like the past decade. And so I think for some people they’ve been on the apps for a while. It’s starting to get a little bit stale. And so they’re looking for something different. And I think as we look to the future and AI and how that might be integrated into the online dating experience.
There’s a lot of room to change and to make improvements to maybe make the experience more beneficial and more exciting for people. But I think the way that it is currently, know, people have a lot of options. They’re spending a lot of time swiping. It’s not necessarily leading to the outcomes that they want. And so I think that’s where some of this fatigue and this burnout is coming from.
Simone Del Rosario: I want to talk a little bit more about this because I was thinking about this. Online dating used to be a website first off, not an app where you’re constantly swiping and looking through people in your area, but a website that people would go to and pay for when they were really serious about finding someone, when they weren’t meeting the people they wanted to meet in real life and they were really hungry and searching for that connection. You just mentioned this, that the swiping culture doesn’t bring that same mentality to the table. Is that an area of improvement? People are going to these services, not finding the results they want and kind of giving them up.
Liesel Sharabi: Yeah, absolutely. And some of it is about people’s goals too. Like not everyone who’s on a dating app is actually looking for relationships. Some people aren’t even necessarily looking for an in -person date. They just want to match and message and have fun. And so I think if you are somebody who’s serious, if you’re getting matched with those sorts of people, that can also be a pretty frustrating experience because, you know, if your goals aren’t compatible, then it’s not really going to be able to go anywhere. And so I think that also helping people match with partners that are more aligned with what they’re looking for, making sure that they’re on the same page is really important. And I think for a lot of people, it’s hard. It’s hard to know what somebody’s motivations are and why they signed up in the first place.
Simone Del Rosario: And is that an area where AI can help these companies improve their product to try to sort through the pool a little bit better for people?
Liesel Sharabi: Yeah, I mean, I think a big part of the fatigue that people are experiencing is that, you know, they’re overwhelmed with choice. There are a lot of options, but trying to find quality options and the people that they’re looking for can be really tough. And so I think that there’s room to improve the matchmaking process. And that’s a place where AI could end up being really valuable going forward.
Simone Del Rosario: I’m wondering if dating companies, online dating companies need to branch into the in -person relationship functions. I’m not even gonna say that speed dating is gonna make a comeback, but do they need to have a level beyond the online?
Liesel Sharabi: Yeah, I mean, there are startups that are also doing this currently, like trying to find a way to help people bypass some of the back and forth messaging that they’re spending a lot of time on and getting them out there, just meeting people face to face. You know, I think that’s really important. And I think especially with AI, you know, people are using it to help them create profiles, to write messages, they’re relying on chat GPT already. I anticipate that’s going to be even more of a thing going forward.
It does make me wonder, that going to compel people to then meet face to face because then you know who you’re actually interacting with. So it’ll be really interesting to see how it plays out.
Simone Del Rosario: Liesel Sharabi, Associate Professor and Director of the Relationships and Technology Lab at Arizona State University. Thank you so much for your thoughts today on this. We’ll be looking forward to seeing what this innovation that is so desperately needed in this space turns out to be.
Liesel Sharabi: Thanks for having me.