Markets in Everything: $40 Foot-Powered Washing Machine That Could Change Millions Of Lives

From Fast Company -- "About a year ago, two students from the Art Center College of Design named Alex Cabunoc and Ji A You traveled from Los Angeles to Cerro Verde, a 30,000 person slum outside of Lima, Peru. Their goal? Develop a commercial product that alleviates issues related to water poverty, targeted at people who earn between $4 and $10 a day." 

Here's what they came up with:  

"The GiraDora (see picture above and video demonstration below) is a blue bucket that conceals a spinning mechanism that washes clothes and then partially dries them. It’s operated by a foot pedal, while the user sits on the lid to stabilize the rapidly churning contents. Sitting alleviates lower-back pain associated with hand-washing clothes, and frees up the washer to pursue other tasks. It’s portable, so it can be placed nearby a water source, or even inside on a rainy day. It reduces health risks like joint problems, skin irritation, and mold inhalation. Most importantly, it uses far less water and cleans clothes faster than conventional hand-washing. This equates to more free time, explains Cabunoc, and the opportunity to 'break the cycle of poverty.'"

Energy Fact of the Day: North Dakota Oil Could Offset All Persian Gulf Imports by 2025

BISMARCK, N.D. (AP) — "A new study says North Dakota's oil production could jump more than threefold by 2025 to more than 2 million barrels a day. 

The study released Wednesday by Bentek Energy LLC of Colorado also says natural gas production could more than quintuple by 2025 in the Williston Basin. The basin includes the Dakotas and Montana."

MP: If oil production in North Dakota increases to 2 million barrels per day from current daily production of 639,000 barrels, that would be more than enough domestic oil to completely offset current daily U.S. imports of 1.86 million barrels from all of the Persian Gulf countries combined (for 2011, EIA data here)!

Peak what?

In a Letter to Congress, Some Economists Refute the Law of Demand and Propose a 35% Increase in the Minimum Wage to Stimulate the Economy

A group of prominent economist including Robert Reich, Jeffrey Sachs, Joseph Stiglitz and Laura Tyson have sent a letter to Congressional leaders recommending a 35% increase in the minimum wage from $7.25 per hour to $9.80 per hour by 2014. 

The group identifies the following benefits from a 35% increase in the minimum wage:

1. "This policy would directly provide higher wages for close to 20 million workers by 2014. Furthermore, another nearly 9 million workers whose wages are just above the new minimum would likely see a wage increase through “spillover” effects, as employers adjust their internal wage ladders."

2. "A minimum wage increase can also serve to stimulate the economy as low-wage workers spend their additional earnings potentially raising demand and job growth. Therefore, pursuing a higher minimum wage at this juncture will not only provide raises for low-wage workers but would provide some help on the jobs front as well."

And what about the costs of artificially raising the minimum wage for unskilled workers? Well, there apparently are none!  Here's the only thing the letter says about costs:

"In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum wage workers, even during times of weakness in the labor market."

MP: Here are some important questions for the group of economists who apparently believe in a perfectly (or nearly) vertical demand curve for unskilled labor:

If a 35% increase in the government-mandated wage for unskilled workers can deliver such a huge stimulus to the economy by directly raising earnings for 29 million workers (almost 22% of payroll employment),  and then creating a secondary stimulus through increases in both spending and jobs throughout the economy, why are you being so stingy? Why not advocate an even larger increase in the government-mandated minimum wage by 50 or 75% to create an even larger economic stimulus?

With U.S. GDP of $15T, Many Large Metro Areas Have Larger Economies Than Entire Countries

From the WSJ:

Inside the $15 trillion machine that is U.S. economy are dozens of metropolitan economies, from New York to Honolulu, that are the real pistons and gears of U.S. growth and prosperity. So how do those individual economies stack up against the world?

Take the quiz below, and for answers see this chart.

1. New York has the highest Gross Metropolitan Product (GMP) of any U.S. metropolitan area — $1.287 trillion. That is bigger than the GDP of all but how many countries (not including the U.S.)?

a) 5

b) 8

c) 10

d) 12 

2. Houston’s GMP is larger than which of the following nations’ GDP?

a) South Africa

b) Venezuela

c) Finland

d) All of the above

3. The implications of Greece’s financial troubles appear woefully larger than its tiny economy. With a $300 billion GDP, what U.S. metro economy is that closest to?

a) Chicago

b) Philadelphia

c) Atlanta

d) Miami

4. Ireland’s GDP is smaller than which of the following U.S. cities’ GMPs?

a) Seattle

b) Minneapolis

c) Detroit

d) None of the above

CEO Won't Hire People Who Use Poor Grammar

Kyle Wiens, CEO of iFixit, the largest online repair community, and founder of Dozuki, a software company dedicated to helping manufacturers publish amazing documentation, explains on the Harvard Business Review blog why "I Wont' Hire People Who Use Poor Grammar. Here's Why":

"I am a grammar "stickler." I have a "zero tolerance approach" to grammar mistakes that make people look stupid.

Everyone who applies for a position at either of my companies, iFixit or Dozuki, takes a mandatory grammar test. If job hopefuls can't distinguish between "to" and "too," their applications go into the bin.

Yes, language is constantly changing, but that doesn't make grammar unimportant. Good grammar is credibility, especially on the internet. In blog posts, on Facebook statuses, in e-mails, and on company websites, your words are all you have. They are a projection of you in your physical absence. And, for better or worse, people judge you if you can't tell the difference between their, there, and they're.

Good grammar makes good business sense — and not just when it comes to hiring writers. Writing isn't in the official job description of most people in our office. Still, we give our grammar test to everybody, including our salespeople, our operations staff, and our programmers.

On the face of it, my zero tolerance approach to grammar errors might seem a little unfair. After all, grammar has nothing to do with job performance, or creativity, or intelligence, right?

Wrong. If it takes someone more than 20 years to notice how to properly use "it's," then that's not a learning curve I'm comfortable with. So, even in this hyper-competitive market, I will pass on a great programmer who cannot write.

Grammar signifies more than just a person's ability to remember high school English. I've found that people who make fewer mistakes on a grammar test also make fewer mistakes when they are doing something completely unrelated to writing — like stocking shelves or labeling parts.

I hire people who care about those details. Applicants who don't think writing is important are likely to think lots of other (important) things also aren't important. And I guarantee that even if other companies aren't issuing grammar tests, they pay attention to sloppy mistakes on résumés. After all, sloppy is as sloppy does.

That's why I grammar test people who walk in the door looking for a job. Grammar is my litmus test. All applicants say they're detail-oriented; I just make my employees prove it."

HT: Chris Matheson

Raising the Minimum Wage by 38% to $10 per Hour Would Be “Economic Malpractice”

In a recent column about the minimum wage titled “Raising the Minimum Wage is Cheap and Easy,” economist Dean Baker writes:  “There are some policies that are pretty much no-brainers.  Most recent research finds that [the minimum wage] has no impact on employment. Even the research that finds job loss shows that the effect is small, suggesting that a 20 percent increase in the minimum wage may reduce employment of young people by around 2 to 3 percent.”

Unlike Baker, and contrary to his assertion that the “minimum wage is non-controversial,” most economists believe in the Law of Demand, which means that there is a non-controversial inverse relationship between wages and the number of workers hired.   

 Artificially raise the required minimum wage for unskilled workers and the employment of unskilled workers will fall according to the non-controversial laws of economics, just as surely as water will run downhill according to the non-controversial laws of physics. 

Baker claims that the “only real issue regarding the minimum wage is how high it should be,” and he then goes on to propose a 38 percent increase in the minimum wage from $7.25 to $10 an hour.  One might wonder why Baker is being so stingy, and ask if it wouldn’t be better to artificially mandate a minimum wage of $20 or $30 per hour, but let’s put that issue aside and consider only the most important issue: how much of an adverse effect on employment and unemployment will result from a 38 percent increase in the minimum wage for young Americans aged 16-19 years old (the group most affected by the minimum wage)?

Let’s use the research cited by Baker that finds only “small” effects of a 2-3 percent reduction in employment from a 20 percent increase in the minimum wage.  Accordingly, a 38 percent increase in the minimum wage to $10 per hour would reduce teenage employment by between 3.8 and 5.7 percent.  And what would that mean for the number of jobs eliminated and the increase in the jobless rate?   

The Department of Labor estimates that there are currently just under six million teenagers currently in the labor market.  About 4.5 million of them are employed, and 1.4 million are unemployed, resulting in a 23.7 percent June jobless rate for that group.   

If the 38 percent increase in the minimum wage to $10 per hour had the minimum effect of reducing teenage employment by “only” 3.8 percent, that would put 171,000 currently-employed teenagers out of work and increase the teen jobless rate almost three full percentage points to 26.6 percent.  At the high end, a 5.7 percent reduction in teen employment would put almost one-quarter million teenagers out of work and drive the teenage jobless rate up to 28.1 percent, the highest rate in history. 

Actually those estimates of the new, higher unemployment rates are conservative because raising the minimum wage by almost $3 per hour would certainly attract new unskilled workers into the labor market.  With thousands of additional job seekers, the jobless rates would be even higher than the static estimates above.

Bottom Line: Raising the minimum wage is always a bad idea, because it harms the very workers whom we want to help -- unskilled, inexperienced teenage workers who desperately need jobs to get the experience, training and work habits that will eventually make their market value much higher than the minimum wage.  But to raise the minimum wage by 38 percent as Baker proposes, during the worst jobless recovery in modern history when the unemployment rate for 16-19 year olds is already 23.7 percent, would be a serious case of  “economic malpractice.”  For the hundreds of thousands of teenagers who would lose their jobs, or not find them in the first place, a 38 percent increase in the minimum wage at this time wouldn’t be “cheap and easy,” but would be more accurately described as “expensive and devastating" for America's unskilled workers.

Evidence Mounts: U.S. Real Estate Market Has Passed Bottom and Entered a Period of Recovery

The Federal Housing Finance Agency (FHFA) released its monthly report today on U.S. home prices in May, based on its House Price Index (HPI) for houses financed or guaranteed by Fannie Mae or Freddie Mac. According to the FHFA, home prices increased in May by 0.8% from April to an index level of 188.06, which was the highest level for home prices since August 2010 (see top chart above).  The April-May increase in the HPI was the fourth back-to-back monthly price increase starting in February, and was the largest four-month increase in home prices (3.47%) since the fall of 2005.

Over the last year, home prices have increased by 3.7% since May 2011, and that annual gain was the largest yearly increase in home prices since September 2006, almost six years ago (see bottom chart).  It was also the first time of four consecutive annual increases since the summer of 2007. 

In related housing news today, leading real-estate information provider Zillow reported that its Home Value Index increased in the second quarter by 0.2% from last year, marking the first annual gain in its measure of home prices since 2007.  Zilllow's chief economist Stan Humphries declared that the increase in home prices for the first time in almost five years means that the U.S. real estate market has finally reached a bottom and has now entered a new period of gradually increasing home values.

Bottom Line: The evidence continues to mount that we've passed the bottom of the U.S. housing market, as we continue to see sales gains for both new and existing homes, and gradual but ongoing increases in home prices according to various sources like the FHFA, Zillow, CoreLogicand the National Association of Realtors (median existing-home price in June was the highest since 2008).  Moreover, home builder confidence reached a five-year high this month, and the S&P Homebuilders Index has gained 20% over the last year (compared to an overall flat stock market), which provides additional evidence of a real estate recovery.  With record-low mortgage rates and pending sales at the highest level in two years, we can look for more improvements in the real estate market going forward through the rest of the year.