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Amazon DroneBefore you tune in to the big World Cup final this weekend, check out some of these stories from the week’s economic news: 

  • Amazon this week formally requested an exemption from the FAA’s ban on unmanned commercial aircraft in order to extend testing on its drone delivery program. Amazon claims that its drones, traveling more than 50 miles per hour, will be able to deliver up to 5-pound packages to consumers within a 10-mile radius of warehouses in less than 30 minutes. It’s part of an effort to cut down on the expense of delivery—the so-called “last mile problem.” Could this revolutionize the retail landscape, as well as the skies above? The Wall Street Journal reports that the plan faces numerous legal and logistical obstacles, so don’t expect to see an army of drones overhead just yet. For those concerned about safety issues, Amazon plans to “self-regulate,” exceeding FAA guidelines for model aircraft, to which the online retailer compares its drones. Perhaps that’s not such a good comparison. Earlier this week, two men were arrested after a remote-control helicopter they were flying nearly collided with an NYPD helicopter. While Amazon’s stock jumped in response to its announcement this week, the New York Times reports that the FAA does not seem inclined to grant Amazon an exception from its commercial drone ban. Meanwhile, law professor Gregory McNeal argues in Forbes that the FAA’s regulatory distinction between commercial and non-commercial drone use is “inane.” Instead, he says the rules should be set based on weight, with drones of 4.4 pounds or less permitted. What about a 4.4-pound drone carrying a 5-pound package?
  • In addition to lagging behind other developed nations in math and science education, the U.S. is falling behind on financial literacy as well. That’s according to a study from the OECD that measured 15 year olds’ performance in 18 countries. U.S. students did no better than average, falling behind nations such as Belgium, Estonia, and Latvia. China came out on top, and U.S. Today reports that with only 50 percent of Chinese students in schools with financial literacy programs, most of them are obtaining their money skills elsewhere. Within the U.S., students who had at least one parent in a skilled occupation did better, and those with a bank account also exceeded their peers. In the Wall Street Journal, Jim Peniston, executive director for the Foundation for Financial Planning, lamented, “I don’t put it on the school system, I put it on our generation.” He added, kids “learn from what they see at home.”
  • A new front on the minimum-wage debate has opened up: the subminimum wage. On Wednesday, restaurant workers in Manhattan called on Governor Cuomo to effectively abolish the lower minimum wage for tipped workers, raising the floor on their pay from $5 dollars per hour to $9 by December next year. Many would be happy to see tipping abolished altogether. The Washington Post this week reported a study by the Economic Policy Institute showing that since the 1980s, the subminimum wage has not kept up with increases in the minimum wage, so the “employer tip credit”—what customers have to chip in directly to cover workers’ wages—has risen to 71 percent from 40 percent. The law requires employers to make up any shortfall, but the report’s authors claim that employees do not typically make the request. The report also says that workers who rely on tips are more likely to end up on government assistance. But it’s not just tipped workers who face a lower base wage: disabled workers are also exempt from the minimum wage. Some say that helps disabled workers find a job, but others says it’s exploitative—Goodwill came under pressure last year for paying its disabled workers as little as 22 cents per hour. President Obama initially left disabled workers out of his executive order to raise the federal minimum wage, but he later added them under pressure from advocacy groups.

[Photo: Amazon]

2 Comments Post a comment
  1. Katy Delay #

    “The Washington Post this week reported a study by the Economic Policy Institute showing that since the 1980s, the subminimum wage has not kept up with increases in the minimum wage, so the “employer tip credit”—what customers have to chip in directly to cover workers’ wages—has risen to 71 percent from 40 percent.”

    From personal experience in Los Angeles, I can tell you this is bunk. I was a restaurant owner for thirteen years. My waiters and waitresses always earned much more than the minimum wage. They earned, in fact, over and above the minimum-wage salary I was forced to pay (California), an average of 18 percent of my gross. Think about this for a minute. That’s 18 percent of my total turnover, before I deduct all salaries, rent, taxes, fees, food cost, maintenance and repairs, advertising, insurance, and everything else I had to deduct before calculating my own take-home pay. Believe me, my California customers did NOT “have to chip in directly to cover workers’ wages”. Customers of sit-down restaurants have simply gotten into the habit of tipping generously as a general rule, with a little variation depending upon the quality of the service and the total experience. Has no one at the Economic Policy Institute ever been to a restaurant and tipped a waiter? Do they really stop and think, to take into consideration the hourly wage before tipping? Come on now, be honest. And even if they did, they would realize that waiters in other than counter-service establishments make a much-more-than-decent living, especially in California.

    Liked by 1 person

    July 12, 2014
  2. No one will ever accuse the Economic Policy Institute of being objective.

    It is unfortunate that workers who want to improve there working conditions don’t seem to be able to organize and negotiate with owners rather than rely on politicians, who have no economic stake in the success of the businesses.

    Private sector unions have largely come to understand that their future rests with the competitive position of their employer. So they tend to shape their demands around the profitability of the firm.


    July 12, 2014

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