Employers pay up for health care too

Honestly, you all decide. Tariffs, inflation, the Fed.
What do you want to hear about?

From American public media, this is Marketplace.

In Los Angeles, I'm Kyle Rizdahl.

It is Friday today, mercifully, the 31st of January.

Good as always to have you along, everybody. All right, here we go.
Lots to get to, not lots of time. Courtney Brown's at Axios.
Heather Long is at The Washington Post. Hey, you two.
Hi, Kai. Hey, Kai.
Heather, I would like to begin with you, and I would like to begin with the size and the growth of this economy. Gross domestic product came out this week, 2.8 percent in 2024, which is good.
And yet you wrote in the pages of The Washington Post a week or so ago that this economy is weird. What does that mean and why does it matter? Well, the way I'd say it is there's a lot of great factors, low unemployment, pretty strong growth, as you have pointed out.
But what I think is a little bit weird and people are really starting to notice is we have an anemic hiring rate. Hiring has been very low, particularly you've probably heard the white collar recession.
There's also a bit of a blue collar recession, manufacturing shed jobs in 2024. And people kind of, if I look at it in a big picture, they feel stuck.
Like if you're happy in your job, this is a great scenario because people aren't getting laid off that much, but they're also not getting hired. But if you're someone who's not happy in your job or unemployed right now, it's really hard to find a new path.
And of course, as you all have been covering, there's very few people who are moving. You know, this housing market in 2024 was some of the lowest home sales, existing home sales in 30 years.
And so when you start, it's just this weird feeling of Americans being stuck. You know, we're a dynamic country.
We like to be on the move. We like to be dreaming about that next job.
And right now, that's really hard to get. All of that said, Courtney Brown, Jay Powell, the chairman of the Federal Reserve, said this week that this economy is strong.
He said, of course, as he always does, he's waiting for more data before they decide what to do on rates. And then he was asked about sort of the current, and I'm gesturing wildly here, everything going on.
And he said this.

Uncertainty is with us all the time. It is human nature, apparently, to underestimate

how fat the tails are in a way that, you know, the possibility. We think of things in a normal

distribution and in the economy, it's not a normal distribution. The tails are very fat,

meaning things can happen way out of your expectation. It's never not that way.
You were in the room, Courtney. What do you think he meant by that? I always laugh when I hear fat tails.
It just sounds kind of funny. Now I'm going to laugh too.
I like that too. It is actually a serious thing, right? When you think about the distribution of probabilities, you have on both ends, the

probability of outliers. And so what Powell is saying is that, you know, the outliers are huge, the unknowns are huge.
And so it's hard to, for Powell, or quite frankly, anyone, to predict how anything will play out in the economy. I mean, we've had a few shocks in recent years that have not been predicted by anyone.
So it's hard for him to say what's going to happen next year. It's hard for him to say what's going to happen next month.
Do you think, though, just, Courtney, between you, me, and the fence post, and of course nobody else is listening to this, you know, Powell was asked a number of times about President Trump and what his policies might do and, you know, demand for lower rates and all this jazz. And Powell said, as we all knew he was going to, I am absolutely not talking about that.
You've got to believe that there are people in the Fed doing some back of the envelope calculations here on what's going to happen with tariffs, which we'll get to in a minute, and immigration policy and all that jazz. Yes? Yes, that's right.
We got a little hint, not this Fed meeting, but the Fed meeting before in December. Powell did concede that some of the Fed officials were incorporating what they anticipate will happen with inflation and the labor market as a result of different immigration and trade policies.
So we know that Fed officials are doing that math. I think what's tricky is something Powell said later in the press conference this week, which is just, you know, you can't really use the last Trump administration as an exact template for what will happen this time.
The economy is different. It's in a different place.
It's recovering from a huge, unprecedented shock. Who knows how the economy will respond to tariffs or aggressive deportation? Right.
So, Heather, let's go there. Tariffs.
We are told by the president of the United States that they will start tomorrow on Canada and Mexico and China. One cannot know until the peace paper is signed, I suppose, what happens.
But it's worth pointing out here that not only is there an inflation concern with these tariffs, right, because tariffs are, of course, import taxes paid by American consumers, no matter what the White House says. There is also a growth challenge for this economy.
yes? Yes, I think so. I mean, we just saw that latest GDP report come out this week, and it was striking that business investment had really tapered off.
Obviously, I think that's a sign that a lot of businesses are looking around, how much more should I invest? How much more should I hire if I'm about to face this tariff shock that might totally have to redo my supply chain? I might not get the parts in tomorrow for the factory that I need to come in. It's huge amounts of uncertainty.
And it was really something that we just heard this afternoon, President Trump and the Oval Office say, tariffs don't cause inflation, they cause success. And you just have to shake your head.
Almost no one

wants these tariffs except Donald Trump. And it's just really hard to understand why Canada is in the crosshairs here.
Let me get in the last minute here, Courtney, and you're going to split this with Heather. Your general sense of agita about this economy, scale of one to 10.
considering

policies that are in place now

or policies that could be

in place Ajita about this economy, scale of one to 10? Considering

policies that are in place now or

policies that could be in place

tomorrow morning? I mean, you know.

Okay.

I'm going to rate it a seven.

I am

really nervous about

the aggressive trade agenda

that President Trump

wants to put into place, and so are my sources.

Inflation is a

huge risk, and it seems like we're on a good, though slower path in beating it. And this could stir up problems all over again.
Heather? Yeah, I'd say it's a seven with a strong possibility of going to a three pretty soon as these tariffs come on. And the really hard thing to understand is why are we doing this? You sort of understand the competition against China.
I mean, we just had deep seek this week. Remember that? But again, what are we doing with Europe and Canada and Mexico? There just doesn't seem to be a good grand strategy here.
What are we doing? Heather Long at the Washington Post and Courtney Brown at Axios on a Friday afternoon. Thanks, you two.
Thanks, Kai.

Thanks, Kai.

Traders on Wall Street had some thoughts about tariffs today, none of which are repeatable

on a family radio broadcast.

We will have the cleaned up details when we do the numbers. We got the Federal Reserve's favorite number on inflation today, the PCE price index 2.8% year- year on year at a core.
And we were also provided some

more granular numbers on the big input to the prices that we're seeing on store shelves.

That, of course, would be the cost of our labor. The aptly named Employment Cost Index

says wages and salaries went up 3.8% over the course of 2024, which doing a little math here,

3.8 minus 2.8, wages and salaries outpaced inflation, which means workers did okay. According to that same employment cost index, employer benefit costs, your health insurance and your retirement benefits, those employee assistance helplines, those went up 3.6 percent over the course of last year, also outpacing inflation, which means...
I'm going to let Matt Levin tell you what that means. There are two broad categories of employer benefits, and one is pretty directly tied to how tight or lax the labor market is.
Retirement benefits, 401k benefits, as wages increase, which is directly determined to the cost of maintaining employees, they go up. And

so there's a correlation. Sue Toronto is a consulting actuary for Milliman.
But the bigger employee benefit costs, about 8% of total compensation, is health insurance. And in 2024, the premiums your employer paid went up faster than most other things, except eggs.
So health care costs were four to five percent higher than general inflation. Big chunk of that is driven by prescription drugs.
The Fed may have some influence on the labor market and by extension wages, but it can't control when Ozempic and other expensive weight loss drugs get put on health plans formularies. Chairman J-PAL also can't tell big unions not to go on strike and force employers to offer higher benefits.
And that's happened a good amount the past few years. Doc workers, the UAW, Linda Barrington is at Cornell's Institute for Compensation Studies.
There were a number of contracts that came due, and all of that bargaining is now starting to show up in these numbers. Healthcare inflation has typically outpaced regular inflation for decades now, and healthcare cost increases are actually a bit lower than they used to be.
But Neil Mulville at the benefits consulting company Aon says rising premiums will impact other parts of the corporate budget. So it's actually leaving employers in a really uncomfortable position of being held hostage by what's happening in health care.
And as we know, a dollar spent on health care essentially means a dollar not spent on a salary increase. Aon is projecting a 9% increase in employer

health care costs in 2025. I'm Matt Levin for Marketplace.

Every time there's a major wildfire out here in California, this state is reminded of a perennial problem.

It doesn't have enough firefighters.

There are more than a thousand people in California state prisons who fight fires, though.

And once those people who are trained in firefighting are released, they are looking for work in a state that needs firefighters. Supply meet demand, yes? Well, yes, except no, because it's not that easy.
Getting certified to work as a firefighter can cost thousands of dollars and take years less than ideal for somebody who's just out of prison. Marketplace's Kaylee Wells spoke with a couple of firefighters who managed to make that leap from a prison fire camp to a firehouse and who are now trying to make the transition easier for the people coming up behind them.
To become a firefighter, an incarcerated person in California needs to demonstrate good behavior and fit into the prison system's lowest security category. Anthony Pedro managed to meet those standards and spent three years of his sentence as a firefighter in one of the state's fire camps.
And when he got released, he got dropped off at the local fire department. Because I didn't have transportation and just knocked on the door.
By a stroke of sheer luck, a fire chief who believed in second chances was working that day and gave him an internship. Pedro worked his way up as a seasonal firefighter.
In the off-season, he slept in his car and volunteered for the local fire department where he got his start. So that volunteer department was my way to like shower and wash clothes and things like that.
That was my home. But in order to land a full-time job as a firefighter, Pedro had to pay for training and certification tests.
In prison, he learned how to run hose lines and actually extinguish flames. But there's a lot more to the job that he had to learn and get certified for.
You got to be able to drive the engine, but when you get to the scene, you got to know how to pump the water. And then also the EMT, that's a huge part.
The whole process cost him thousands of dollars and took two years before he finally landed the full-time job he wanted. Pedro says he realizes he's one of the lucky ones who actually made it through the whole process.
He started a non-profit called the Future Fire Academy to help aspiring firefighters figure out what they need to do and fund their training courses. Helpful, but there are more roadblocks for formerly incarcerated aspiring firefighters.
Sarah Loggason teaches in Northeastern University's School of Criminology and Criminal Justice. She says once you've got a criminal record, it shows up everywhere, sometimes where it doesn't belong.
Your charges might be very serious, but then they're reduced when you make a plea bargain. Or you enter into a diversion program and that record is later dismissed.
But because these companies are grabbing data from different places at different points in time, they're not always refreshing their data. And then there are more barriers that come with occupational licensing.
There are hundreds and hundreds of laws on the books that limit the ability to access a license for all sorts of jobs, ranging from working in a funeral home or cutting hair, and also for things like health care, emergency services. You know who provides emergency health care? Firefighters.
Formerly incarcerated firefighter Royal Ramey says the EMT test is perhaps one of the biggest problems. Once you complete the course, then you have to go and take a national registry test.
And in order for you to take the test, you can't have two or more felonies. It'll automatically disqualify you.
That happened to Ramey himself. And since most firefighter calls are medical, not runaway wildfires, lots of firefighter jobs require an EMT certification.
Since Ramey was released, the state of California has tried to make the job hiring process easier for formerly incarcerated people. Gavin Newsom passed that bill called AB 2147.
That expunges the records of incarcerated firefighters once they come home. Ramey also founded a non-profit called the Forestry and Fire Recruitment Program, which trains formerly incarcerated firefighters and helps them apply for jobs.
We wanted to, you know, give people opportunities so they can be able to thrive and have a family-winning career. There are fewer people coming out of fire camps vying for jobs now.
During the pandemic, California released some prisoners to curb COVID spread. So the nearly 2,800 incarcerated firefighters in 2019 has dwindled to fewer than 1,900 today.

I'm Kaylee Wells for Marketplace. coming up juggling two new stores all under like a year old it's the business version of having a couple of newborns right first though let's do the numbers the Dow Industrial is off 337.
Today, that's points. The percentage is three quarters of 1%, ended at 44,544.
The Nasdaq down 54 points, three-tenths percent, 19,627. The S&P 500 gave back 30 points, about a half percent, 60-40 there, 6,044.
The five days gone by, the Dow up three-tenths percent. The Nasdaq went the other way, down 1.2 percent.
Sorry, one and two-thirds percent. S&P 500 eased about one percent.
Walgreens Boots Alliance dropped 10 and three-tenths percent today after announcing it would suspend its quarterly cash dividend. Rival CVS Health slid about six-tenths of one percent.
Bonds down, yield on the 10-year T-note. Rows to 4.54 percent.
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This is Marketplace. I'm Kyle Rizdahl.
Transportation accounts for, give or take, about a third of all greenhouse gas emissions in this economy. That's according to the Environmental Protection Agency as of 2024, and it includes planes, trains, trucks and ships.
In 2023, the federal government rolled out a plan to eliminate almost all of those emissions over the next couple of decades. And whatever the future of that plan might be now, some parts of the transportation sector are trying to decarbonize their slice of the supply chain.
Marketplace's Justin Ho got a sense of how that might work. I'm standing on a loading dock at the port of Wainimi, about 65 miles northwest of downtown Los Angeles.
Right now, workers are offloading a container ship full of bananas. We receive bananas from Del Monte Chiquita, and they come up here, are offloaded, and then distributed it out to 13 western U.S.
states and some western Canadian provinces. That's Giles Pettifor, the Port of Wainimi's Director of Sustainability.
He's showing me the entire unloading process. Huge cranes lift refrigerated containers full of bananas off the ship.
Forklifts put those on the trailer chassis. And then trucks move those to the other side of the port, where workers will plug the containers in so the bananas can stay cold.
The next step in the process will be a truck that will connect to that chassis and pull that container off of the port. And that truck will take it out to a processing center, a warehouse, a cold storage facility for further distribution into the supply chain.
Pettafore says every step of this process is almost entirely powered by fossil fuels. Over the last few years, the port's been working on overhauling its entire operation so that almost everything that happens within its gates can run on electricity.
That includes shore power for the large vessels. That includes full zero emission electrification of all the cargo handling equipment and all of the light duty fleets that operate on port.
Petifor says the port's already invested upwards of 70 million dollars in this project and is in the process of lining up hundreds of millions of state, federal, and private funding. Electrifying much bigger ports, like those in L.A.
and Long Beach, would be a much bigger undertaking, says Alex Scott, a professor of supply chain management at the University of Tennessee. They have thousands and thousands of containers sitting around yards, a lot of different cranes and terminals, and there's all this existing infrastructure that how are you going to change that existing

infrastructure?

It's very, very expensive and hard to do.

Scott says there are things that bigger ports can focus on to meaningfully reduce emissions.

For instance, he says they can upgrade one of the dirtiest links in any supply chain,

trucks.

Because those not only emit higher rates of CO2, but they also have the local pollutants at vastly higher rates. Meaning soot and nitrogen oxides.
And trucks have made massive advances over the last 10 years by federal regulation on all of those metrics. For the last few years, the ports of LA and Long Beach have required that any new trucks that service the port be less than 10 years old.
Another solution is to cut trucks out of the equation as much as possible.

Wang Fung-Wong, a professor at the University of Oregon,

says one way to do that is to move more goods by rail.

Rail is less polluting because trucks emit eight times more carbon dioxide

for the same ton of goods going the same mile compared to rail.

Wang recently found that ports can encourage companies to use more rail by making themselves more efficient. For instance, adding a new crane that makes it quicker and cheaper to load containers on the freight trains.
At the port of Wainimi, Giles Pettifor, the director of sustainability, says making the port's entire operation more efficient is a big part of its decarbonization plan. Just a few hundred feet from where workers are unloading bananas, a construction crew is tearing up what used to be a cold storage warehouse.
For about a year and a half now, we have been working on making the port ready to have more open working cargo spaces. This kind of work isn't as flashy as buying a new fleet of electric cranes or forklifts.
But Petitfor says it's aligned with the same goal of eliminating emissions. We have an opportunity to cut holes in the wharf and put in new charging facilities or align traffic to take a different route around the port in a manner that is more efficient.
The port's goal is to eliminate fossil fuels from most of its operations by 2030.

But Pettifor says the port doesn't have the resources to do it on its own,

so reaching the goal will depend on getting money from Washington.

And if that's not forthcoming, he says the port will do its best to make the changes it can with the resources it has.

I'm Justin Ho for Marketplace. Opening a business is hard.
Opening a second business within a year of opening that first one? Harder, but not impossible. Lea Anton is the co-owner of Crane Games in Aurora and now Thornton, Colorado.
We just opened our second location in Thornton, Colorado. The grand opening was on January 11th.
So leading up to the grand opening, you would think after the first location, we'd kind of have some type of formula going into the second, but it was still just as messy. We build and ship our claw machines from overseas.

And the country that we get them from had a holiday that shut down the entire country for two weeks. By the time we actually received it in the United States, it was maybe a month, like a month and a half delayed from when we originally expected the package.
It wasn't as smooth sailing as I had hoped, but it still turned out really well. It's been so busy.
I don't know how else to explain this. busy chaos juggling two new stores, all under like a year old and, you know, four kids.
I've been running around, you know, doing drop-offs at school and then going to one location to just ensure everything's okay there, then going to the second location. It's just a lot of driving.
My kids asked me to open a location for each one of them. So that means that's two more locations.
I just want to go on vacation by myself, really. That's my outlook.
But, you know, for my business, I just wanted to have an upwards trajectory. I just want to be almost like a household name.
After the second location,

I want to slow down a little bit, but, you know, again, who knows?

Lea Anton, owner, co-owner rather, of Crane Games in Aurora and Thornton, Colorado. As a final note on the way out today, just because it's been a really long week in this economy, we are going to go out on the lighter side.
In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the...

Anyone? Anyone?

The Great Depression, passed the...

Anyone? Anyone?

A tariff bill, the Hawley-Smoot Tariff Act, which...

Anyone raised or lowered?

Raised tariffs in an effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression.
Ferris Bueller's Day off, 1986, an all-time classic. We are not, repeat, not even remotely near a recession, let alone anything worse.
But pretty spot on otherwise.

No?

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Marketplace's executive producer is Nancy Farghali. Donna Tam is the executive editor.
Neil Scarborough is vice president and general manager. And I'm Kyle Rizdahl.
Have yourselves a great weekend, everybody. We will see you again on Monday, alright?