Friday, May 29, 2015

Potential Issues Caused by Inflation Indexing



5/29/15 - The national minimum wage was first created by Congress in 1938, under the Fair Labor Standards Act (FLSA). It was developed to protect workers and ensure that they receive some standard level of pay for their hourly labor. The FLSA banned child labor, set a maximum workweek of 44 hours, and made the minimum rate of pay 25 cents per hour. As inflation has made prices for everything else increase, the minimum wage has increased as well, to its current $7.25 per hour. Many states, however, have their own minimum wages, with some as high as $9 or $10 per hour. In a very controversial decision among business owners and economists, the Los Angeles City Council recently started drafting a plan that would raise the minimum wage annually, raising it to $15 by 2020 and even higher in years to come. Tiffany Hsu and Andrew Khouri, in their LA Times article, address the debate over the wage increase, describing the points made on both sides of the argument.

Raising the minimum wage has always been a difficult undertaking. Through this plan, the minimum wage would go up automatically in response to inflation, which would benefit workers. Unfortunately, inflation also makes rent increase, which will make it more difficult for entrepreneurs, especially owners of small businesses, to be able to afford the higher wages. This would force them to either raise prices or lay off workers. However, prices can only go so high before consumers go elsewhere to make their purchases. This will affect the small businesses most drastically since larger businesses have more flexibility to lower prices without losing as much profit. This competition could potentially lead to a clearing of the market, forcing small businesses out.

This procedure, called inflation indexing, seems to be working well for the twenty-or-so localities with their own wage policies, according to UC Berkeley's Institute for Research on Labor and Employment. Inflation indexing allows the wage to respond directly to increases in the cost of living, without the need for intervention by policy-makers. In an ideal sense, indexing would increase the wage in a gradual manner, rather than shocking the system with large spikes. Int his way, businesses could adjust more easily to changing costs and respond accordingly. Still, consumers and business owners are wary.

Richard LoGuercio, the owner of Town & Country Event Rentals, would only have to raise wages for about 100 of his 430 workers under this policy. However, he fears that he will have to raise wages across the board to keep everyone happy. If minimum-wage laborers are receiving $15 or more per hour, everyone else will want to be paid more for their contributions to the business. As wages increase for the lowest-paid level in a company, wages in the higher levels will likely increase proportionally, which would force price increases and contribute to inflation. Thus, raising the minimum wage continuously in response to inflation could turn into an endless cycle of wage increases.

All in all, the major effects of the minimum wage increase will come down to the actions of consumers. Businesses could lay off workers in response to their increasing costs, but in the end, they will have to raise their prices. Consumers are only willing to spend so much before they decide that a product just isn't worth it. So, as long as consumers are willing to spend a few extra dollars per product, the effects of the wage increases may not be so bad.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Wednesday, May 20, 2015

Santa Monica Council Bans Short-Term Rentals



5/20/15 - Hundreds of property owners, especially those living in vacation destinations, rely on the income that they earn when they rent out their homes, condominiums, or spare bedrooms to short-term visitors. Because of new laws passed in Santa Monica, these individuals may find themselves struggling to find tenants. Tim Logan, in his L.A. Times article, discusses the implications of Santa Monica’s law banning short-term rentals.

Tourists who come to places like Los Angeles, New York, and San Francisco are not generally there for a month at a time, but that is what this law will require. The law, in an effort to deter short-term renters and protect the hotel industry, bans rentals that last less than 30 days, and force individuals renting out a room to pay extra taxes similar to those paid by hotels. This, however, is not to say that the Santa Monica officials are only interested in protecting hotels. The council claims to be introducing these regulations in response to the complaints of annoyed neighbors and advocates for affordable housing in the neighborhood.

Home-sharing, the term given to the practice of renting out a room for a short period of time, has grown exponentially over the past few years. Websites like Airbnb, on which people post their rental listings, have become the place to look for anyone needing a place to live, albeit on a short-term basis. According to Logan, the home-sharing industry is booming and unlikely to slow down anytime soon. Profits are large and demand is high, so even with the new laws, people will likely find some way to keep doing what they are doing.

Some people providing housing through Airbnb are entrepreneurs, managing multiple residences and earning money left and right. Others are elderly and retired, who rent out their apartment when they go out of town to visit family. They encompass two ends of the spectrum, but both feel the same way: the regulations need to be changed. Many understand that home-sharing should be regulated to some extent; they just believe that an all-out ban is the wrong way to do it.

While some people fear that similar laws will be proposed in cities other than Santa Monica, Logan believes that the spread will be limited. Usage of online platforms like Airbnb is hard to keep track of, which is why the government may be afraid of its continued progression toward becoming an integral part of society. Logan recommends wariness when doing business with anyone, but especially with strangers met online. Some feel that laws and governmental oversight would reduce risks. Others believe that the government getting involved would just create hurdles and reduce profit. It's hard to tell which side is correct. Santa Monica may be the guinea pig that the rest of the country needs to test these risky waters.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Tuesday, May 19, 2015

Viewers Dropping Cable for Cheaper Over-the-Air Options




5/10/15 - As many remember quite well, television of the mid-1900s consisted of a few channels for each of the major broadcasting stations: ABC, CBS, and NBC, among some others. Mainly due to the advent of cable and satellite television providers, modern television has hundreds of channels with content ranging from news to information to entertainment. Television has grown exponentially, but the downside of having so many channels is that prices have skyrocketed. Stephen Battaglio, in his L.A. Times article, discusses a recent phenomenon by which many consumers, unable to afford high-priced television packages, have “cut the cord” and gone back to the television choices provided by bunny-ear antennas.

Watchers of recent years have developed their own system by which they are able to watch all of their favorite shows at a fraction of the price for cable. They use “over-the-air” antennas to watch shows on FOX, CBS, ABC, and NBC for free, and use internet streaming programs like HBO Go, Hulu, and Netflix to watch a variety of other content. Since internet is already a necessity in most homes, this method cuts costs significantly.

Already, about 12.3 million homes rely only on over-the-air broadcasting for their television needs. While this is only 11% of total television users, this trend is a warning signal for cable and satellite providers. As television subscriptions go down, internet usage increases dramatically. Battaglio's sources suggest that cable companies recognize this fact and use it to their advantage. Many such companies are beginning to offer broadband internet service to serve as an alternative to customers while more and more households drop television service.

Price seems to be the big issue for most television watchers. Since cable companies are unable or unwilling to offer prices comparable to those of internet providers, the decision is made easy for many consumers. TV-Internet bundles seem to be the way of the future, but this could lead to problems regarding the FCC's ruling about net neutrality. With the new rules, internet providers are forced to give the same internet speeds and connectivity to all users. Unfortunately, this could take away much of the competitiveness between internet providers and reduce their ability to make economically effective partnerships with television providers.

Internet-based television will likely become more common in years to come, as it is the most economically feasible option for most families. What us the point of spending more money to get the same programs? Battaglio predicts that many people will begin to transfer over as they realize that having a cable or satellite connection is not the only way to access their favorite shows.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Maintenance Issues at California's Refineries Lead to Gasoline Price Increase




5/1/15 - Drivers throughout California have been noticing gas prices climbing swiftly over the past few weeks, and they don't like it. In the last week by itself, prices have gone up by almost 34 cents, 6 cents of which happened over the course of a single day. Is this due to the state of the economy, or to supply-and-demand, or due to something much harder to control? Samantha Masunaga and Andrew Khouri, in their L.A. Times article, conclude that the increasing prices are mainly due to mechanical issues in gasoline refineries around the state.

California's refineries produce most of the gasoline used within the state, since production and delivery of California's “cleaner-burning blend” can be too expensive for out-of-state refineries to consider it economically viable. Furthermore, since the refineries produce as much gasoline as possible, any break in the production chain can cause massive issues throughout the system. Even if one factory would have to close down for repairs, the amount of gasoline in California would fall, making the available gasoline that much more expensive. The system leaves very little room for delays.

Unfortunately, refineries have been forced to stop or lessen production in order to perform maintenance work, whether planned or otherwise. After a February explosion at Exxon Mobil Corp.'s refinery in Torrance as well as some other, minor, issues elsewhere, the supply of gasoline is running low, thus forcing up the prices. Although the oil-refining companies are producing less, they still have contracts that obligate them to provide a certain amount of gasoline to customers, such as gas stations. In order to do this, they are forced to pad their supplies with purchases of gasoline from other refineries.

Many are upset about the price increases mainly due to the shock of it. When the price of a tank of gas increases by $20 to $30 in a month, it is hard to see it coming. To make matters worse, companies that purchase gasoline from other refineries during a time of low production try to keep such transactions secret, so as to not case a “pop” in the market. On the other side of the argument are the average Californians, who use gasoline and want some way to be able to predict when prices will go up. When a company has to purchase gasoline from another refinery, it is pretty obvious that they are having some issue with production.

The average person has had to cut down on certain “unnecessary” expenditures in order to put more money toward filling up the tank. Some have been forced to cut items when grocery shopping, and others have stopped eating out at restaurants. While gasoline prices are still, on average, below what they were this time last year, some areas are feeling far worse effects. A big cause of this, as Khouri and Masunaga point out, is that the market full of secrecy. If people know when companies are planning to purchase large amounts of gasoline from other sources, they will be able to more easily predict fluctuations and therefore plan out their gasoline purchases in a more beneficial manner. Gasoline has almost become like stocks, constantly changing and difficult to predict successfully. That could all change if refineries develop some transparency and give customers a fighting chance.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

California Employment Rates Rising, Mainly Due to Temporary Jobs




4/24/15 - While California's Inland Empire suffered many of the harsh consequences that came with the housing market crash, its economy has been coming back over the past few years. The Inland Empire currently contains one of the fastest-growing job markets in the state, aided mainly by growth in the logistics sector, which involves transportation and storage of goods. While jobs have indeed been added, and unemployment rates thereby lowered, Chris Kirkham's L.A. Times article points out that this growth may not actually be the significant shift it appears to be.

As the ports have gained more use in previous years, Riverside and San Bernardino counties have joined the supply chain of international trade. Strategic locations in these counties have become “inland ports” for goods traveling throughout California and to the rest of the country. The Inland Empire, on the other hand, has plenty of affordable land, which has made it the place for warehouses, in which goods are stored until they get shipped out.

Inventory, transportation, and warehouse jobs accounted for 1 in 5 new positions created in the Inland Empire last year. Job growth is great, but these are not of the ideal type to help the average worker and the economy. Positions in this industry usually pay minimum wage, do not include health benefits, and provide no guarantee as to the number of hours an employee might expect to work in any given week. So, while employees are provided with some source of income, they lack job security and can never be fully prepared to adjust to the ever-changing demand for workers.

Temporary jobs like those in this sector have increased by 35% over the span of 5 years, growing faster than almost any other industry. While such jobs are difficult to keep, Kirkham shows that some who work quickly and efficiently are able to climb the corporate ladder and move from positions of warehouse laborer to inventory manager or sales representative. In the aftermath of the Great Recession, companies care more about precision and speed in order to cut inventory costs. This has caused warehouses to be more like short stops between the factory and the customer, rather than long-term storage spaces for goods.

The logistics industry is a necessary part of international and domestic trade. Goods need to be transported, sorted, and kept track of. The industry needs support, but so do the workers. Kirkham concludes the article with the following claim: the workforce is struggling. What changes might be made to keep the industry thriving while also helping laborers to gain some semblance of structure and continuity, rather than uncertainty and worry?

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Major Theater Chains Face Investigations Into Anti-Trust Violations




4/17/15 - Competition is a necessary part of economics. Without competition, a company or group of companies could gain control of a market and charge outrageous prices for goods and services, against which consumers may have no recourse. When competitors arise, such companies are forced to lower prices since consumers will be able to choose. As supply increases, prices must decrease, or the companies risk allowing demand to decrease.

A monopoly is when a single company gains complete control of a market or commodity. A cartel is when a group of companies have control over the market and agree among themselves on what prices to set. A trust is a group of companies that work together to force other, usually smaller, companies out of the market. Each of these is regulated by the federal government and is prevented as much as possible, so as to allow smaller companies the ability to be economically competitive. In his article, Richard Verrier looks into recent investigations into anti-trust violations by several major movie theater chains like AMC, Regal, and Cinemark.

Many complaints and lawsuits have been filed over the years by owners of smaller theaters, who claim that the major theaters have been involved in a practice called “clearance,” in which the smaller theaters are prevented from playing newly released movies. Is this practice considered a violation of anti-trust laws, though? While a Supreme Court decision in 1948 required that movie studios give up ownership in movie theaters, larger theaters still have the financial clout necessary to have some control over where popular movies will be played first.

Thus, the Department of Justice's anti-trust division has been spurred into action in an attempt to determine if clearances are against federal law. To the large chains, it's simply a matter of economic reasoning. The film studios have the supply, and the movie theaters have the demand. If a company like AMC wants a specific movie from the studio, it will effectively be providing more revenue to the studio, because the purchase of the film will involve hundreds of theaters across the country, while the purchase by a small company like IPic Entertainment will only involve a dozen or so. The studio will be more willing to give in to AMC's requests, because AMC provides more business.

With the Department of Justice on the case, we can assume that the matter will eventually be settled. The conclusion of this argument, however, could mean big things for small businesses. If the DoJ concludes that the major theater companies are not breaking any laws, then the small companies will be at a distinct disadvantage. If the DoJ rules that the major companies are breaking anti-trust laws through the use of clearances, then governmental entities may get more involved in economic issues that are out of their jurisdiction. What will it come down to: the natural order of economics, or the imposed order of government regulation?

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Global Economy Feeling the Effects of America's Powerful Dollar




4/13/15 - Over the past nine months, the value of the dollar has increased dramatically, and Americans are loving it. While the average person is now able to get much further in other countries with the same amount of money as in previous years, Tom Petruno's L.A. Times article predicts that the dollar's raised value will have negative repercussions for the global economy and even the American economy in the long run. Devaluation of currency is becoming a trend around the world, and that will be bad for everyone.


The value of a euro has decreased by 25%, now at just $1.09, from $1.37 a year ago. In countries that don't use the euro, the difference is even greater: 30% in Sweden, 40% in Brazil, and 61% in Russia. This causes more Americans to change their vacation plans, leading to a preference for foreign, rather than domestic, travel destinations. While this is helpful in providing revenue for other countries, American tourist destinations like California and New York find it harder to bring in foreign visitors, as costs are rising from their perspective.


Petruno's research shows that the rising value of the dollar may not be due to an improvement in the American economy, but rather a devaluation of comparative currencies. When the currency of a country lowers in value, prices of goods go down, which causes consumers to purchase more of these “on sale” goods. Petruno believes that this phenomenon of devaluing currency is actually being assisted by federal governments in an attempt to increase demand and aid economic growth. Unfortunately, if this continues, each country will have to devalue their currency more and more to compete with each other, and America will be one of the only consumers in a sea of low prices, which will in turn harm the selling power of American companies.


Fortunately for Californian companies, a large amount of foreign investment comes from China. Since the value of China's currency has remained relatively steady compared to that of the dollar, Chinese tourists to the L.A. area have maintained a consistent degree of purchasing power. U.S. imports are up, and although the costs for these imports have lowered, more importing means less investment in domestic production.


U.S. companies lose money by reduced competitiveness against foreign companies, but more immediately, lose money due to the conversion factor between currencies. As the dollar's value goes up, and the value of foreign currency goes down, American companies are forced to accept less money from a sale than would have been earned previously. However, this has a lesser effect on the American economy as a whole, since the U.S. economy does not rely heavily on exports.


Although the value of the dollar is up, businesses are making less money because of the aforementioned competition and reduced foreign sales. Because of this, quarterly earnings are down, and stocks may begin to plunge because of it. Even in the European stock market, which has been on the rise, American investors receive reduced returns on their investments as the falling value of the euro removes some of the value of the stock.


Petruno concludes that the devaluation game is a slippery slope. Best-case scenario is that demand will move to other countries, improving the global economy without hurting American companies enough to start another recession. Worst-case scenario is that the currencies will be forced into a downward spiral, leading to debt defaults by foreign governments and leading to trouble in the economies of every country. Devaluation is a wild card, according to Petruno, and it can be difficult to predict exactly what will happen because of it. He concludes that it all may come down to whatever China decides —whether to give in to devaluation or keep up the value of its currency.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

FICO Introducing Alternative Credit For Those With Poor or Nonexistent Credit History




4/3/15 - Individuals with low credit scores struggle to get a credit card, or to obtain a mortgage or other loan. Some see this as a fair system, especially since a low credit score usually means that the individual has a history of late payments or outstanding balances. It only makes sense that those with sketchy credit history should be trusted with more credit less readily. However, what about people without any credit history? A recent L.A. Times article discusses the options available for such individuals.

To build up a credit score, someone gets a credit card or loan, then pays back the loan on time, so as to show the credit company that they can be trusted. The length of a person's credit history is a substantial factor in determining how much money a bank or credit company would be willing to lend them. Unfortunately, without credit history, it can be difficult to get a loan in the first place. Without that first loan, the aspiring borrower can't build up a history of timely payments, and will therefore be unable to get a loan. This seemingly endless cycle has many newcomers wondering what to do.

Fortunately for young, first-time borrowers, Fair Isaac Corporation, known for its FICO credit score, has been working together with LexisNexis Risk Solutions and Equifax to create an alternative system for determining credit scores for individuals with little to no credit history. According to their research, someone with a good record of paying utility bills on time would also likely pay credit card bills in much the same pay. Using payment history instead of credit history, this system will create alternative credit scores and provide them to the top credit card issuers. Fair Isaac has yet to release information as to which banks have decided to participate in this program.

This currently unnamed new program is not meant to replace the FICO credit score. Instead, it will provide information only to credit card companies, in order to give credit-less consumers, usually young people, the opportunity to get a credit card and start building up their credit. Once credit has been built up through a history of timely payments, the consumer will be able to rely on the standard FICO credit score in order to get a mortgage or other loan.

According to a representative of LexisNexis, all collected data will be protected under the Fair Credit Reporting Act, so everyone involved will be able to dispute negative events on their credit reports, such as disputed bills. This system appears to have positive effects for all involved. New borrowers will be able to get credit cards with much less of a struggle. Banks will gain access to millions of previously non-existent customers and their interest payments. It's a win-win situation for everyone.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Longshore Unions Provide Rich Benefits for Members




3/20/15 - If you were asked to list some types of people with jobs that pay over $100,000 per year, you might mention doctors, lawyers, and software engineers. Would you think to name dock workers? While many transit employees throughout the West Coast have been laid off or have seen their wages cut due to a recent increase in global trade, longshoremen (the laborers who move goods from the ship to the shore) have generally been able to protect their wages. In their article, Chris Kirkham and Andrew Khouri investigate the ways by which half of longshoremen on the West Coast make over $100,000 per year.

Not only do these many of these longshoremen make about $20 per hour on the low end, they earn even more on overtime and night shifts. It all comes down to the power of the International Longshore and Warehouse Union. As witnessed during last month's shutdowns up and down the West Coast, those who control the ports seem to control international trade. Even now that contract negotiations have been completed and the ports are open once again, it is predicted that the docks won't be back to normal for up to three months, and many businesses may never get back the money they lost during the port closure.

Although many members of the longshoremen union make well over $100,000 and all members receive free healthcare benefits, union spokesman Craig Merrilees claims that there are thousands of “casual workers” who are unable to get full-time work and don't get the benefits provided for union members. Merrilees states that these workers often spend years, without such benefits, trying to become a member of the union. Unfortunately, the Pacific Maritime Association, through which the wage statistics for union longshoremen were received, refused Kirkham's and Khouri's requests for the wage statistics of non-members, so Merrilees' assertions could be neither confirmed nor denied.

Longshoremen and the ILWU have a kind of monopoly on the ports. Not only did the port union leaders successfully create a contract in 1930 that linked most of the West Coast ports together, the unions have over the years been able to negotiate for better pay and benefits in the midst of technological improvements. Even the advent of such innovations as shipping containers, which require far fewer workers to transport, have led to better pensions and richer buyouts for those workers who are laid off due to the new technology.

The ILWU knows how to work the system. That appears to be how longshoremen are making so much money in a field where most workers make $10 - $11 per hour. When billions of dollars worth of goods pass through a set of ports each year, those people working the ports control the goods. The unions seem to be able to negotiate whatever contract they want, because companies need the ports in order to have any kind of international trade.

Slowly but surely, the unions may be losing their control. As computers systems and machines come in and replace employees, especially those doing clerical work, the unions may have trouble keeping benefits and high wages. While goods can be produced in other countries, and manufacturing can be easily outsourced, ports are a constant, unable to be moved somewhere with lower wages. Despite this, Kirkham's and Khouri's sources are confident that the high wages in the current low-wage transportation industry will not last. It's only a matter of time before technology and innovation force a change.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Wal-Mart To Increase Minimum Wage to $9 Per Hour




3/13/15 - Statistics show that six out of ten Americans believe that the federal minimum wage should be raised. Many believe the raise is necessary, as a wage of $7.25 per hour is not necessarily enough to live on, especially for individuals trying to support their family. Others believe that if the minimum wage is raised, companies will be forced to lay off some workers, or raise prices on goods, in order to compensate for the extra money being payed to employees. In their L.A. Times articlerticle, Jim Puzzanghera, Shan Li, and Sarah Parvini discuss a recent decision by Wal-Mart to raise their minimum wage and what this decision means for them and their workers in the long run.

After facing intense protests and rallies led by labor groups and increases in state minimum wages throughout the country, Wal-Mart decided to protect its public image and raise its minimum wage to $9 per hour, $1.75 per hour above the federal minimum wage, for around 40% of its employees, starting in April. This will provide about 500,000 Wal-Mart employees a substantial pay increase, and the company plans to raise the minimum wage even more, to $10 per hour, by February 2016.

According to Doug McMillon, a Chief Executive at Wal-Mart, these changes are to help build a stronger business while also providing for the needs of their employees. While the pay raises do place the company in a better light, prevent the federal government from having to propose higher minimum wages, and lower costs incurred by having to continuously train new hires, they will also cost over $1 billion in extra costs during this fiscal year. Shares in Wal-Mart fell 3.2% since the beginning of the fiscal year, but economist Justin Wolfers is confident that the benefits will far outweigh the added costs.

By Wolfers' argument, as an employee's salary increases, so does their productivity. Several companies, including Costco, Trader Joe's, and the Gap, have illustrated this point of view, showing a correlation between happy customers and employee wages well above the federal minimum. Could this just be a matter of correlation versus causation, however?

It makes financial sense for Wal-Mart to increase their wages, and some believe that this may force similar businesses like Target, Safeway, and Kroger to raise wages or risk losing employees. Craig Johnson, president of Consumer Growth Partners, believes that Wal-Mart's changes may convince Target employees to change teams, but he doubts that others will give up good jobs at other stores to join Wal-Mart.

For some, the wage increases are not enough. “Ten dollars is pocket change,” says Sanders Mosley, a current Wal-Mart employee. Many feel that companies can afford to and should pay their employees $15 per hour, rather than the ten to thirteen dollar per hour wages on the high end of the spectrum. Is $10 enough to live on, with the rising cost of living and the improving economy? Maybe, maybe not. Can companies really afford to a minimum of $15 per hour and still keep workers employed and shareholders happy? Probably not. While Wal-Mart and many others are raising their wages, they are careful not to go too far, and thus make sure that happy employees are a benefit, not a net financial loss.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Decreased Chinese Demand Harmful to American Exporters



3/6/15 - Labor strikes at ports on the West Coast and the current strength of the American dollar are both contributing greatly to exporters and other businesses that rely on exports. However, Don Lee claims in his Los Angeles Time article that China's slowing economy is causing even more damage to the American market. The strong dollar is not a good thing for most exporters because it makes their products more expensive overseas, in their target market.

While the U.S. economy as a whole seems to be pretty steady, many worry about the effects of significant Chinese withdrawal from American imports. Last year, American exports to China grew only 1.6% while American imports from China grew 5.7%. This trade deficit is bad news for scrap-metal exporters in California, Midwestern manufacturers, and cotton farmers in the Mississippi Delta.

As China's economic growth slows, amid increasing production around the world, China is forced to reduce foreign imports and focus instead on domestic businesses. Even American companies with locations in China are finding it difficult to compete with private Chinese contractors. Fortunately for America, the decrease in trade with China is being somewhat balanced out by increased exports to other countries, including Mexico and Canada. Trade, which has been involved in about one-third of America's economy in recent years, has started to become less-viable as an economic practice.

China is switching from a majorly goods-based economy to more service-based, and according to some of Lee's sources, this may not be a bad thing. Yes, it will have negative effects on businesses and companies reliant on imports and exports, but as a whole, the American economy does better off with services, like finance, accounting, and entertainment. Such service-based businesses are affected to a much lesser extent by the strength of the dollar, which is beneficial for everyone involved.

Besides the slowdown of China's economy, the Chinese president has been cracking down on corruption, forcing government officials to cut back on gifts and parties. Because of this, exporters of such products as fine wines and premium fruits have lost a sizable number of their usual customers. A combination of the new strength of the dollar and an increase in productivity by many countries has driven the prices of commodities down, which could hurt goods-based economies.

According to Lee, the export of agricultural products by California fell 9% last year, due greatly to China's changing economy. Farm shipments on their own plunged by 30%, and other products like grapes and nuts felt dramatic drops in price. The economy as a whole seems to be holding up, but it looks like it is just a matter of time before we are forced to make changes to our economy, or face devastating consequences.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

FCC Introduces Rules Promoting Net Neutrality




2/27/15 - One of the most controversial topics in recent discussion is net neutrality. Net neutrality is the principle by which Internet providers provide equal access to all online materials, without favoring particular websites. The push for net neutrality comes from a common practice among Internet providers by which certain online content has slower speeds than others. This “speed discrimination” leaves users with two options: wait extra time to access certain data, or pay to use “faster lanes.” The FCC has, as of Thursday, passed a set of rules that provide for the government's regulation of Internet speeds. Jim Puzzanghera, in his L.A. Times article, discusses what this means, economically and otherwise.

While the Federal Communications Commission claims that these regulations will not be anywhere near as tough as the provisions in other industries, these net neutrality rules mean that the government will have some semblance of control over the Internet. Conservatives and telecommunications companies fear governmental intrusion in a system that is already working well, and liberals applaud the FCC for promoting free and equal access to all legal online materials.

Broadband, just like water and electricity, has become a commodity, a necessity in the everyday life of an average American. However, like with water and electricity, there may be some sense in the government regulating broadband, since it would give everyone access. Quoting similarities to freedom of speech, supporters of net neutrality feel that it is the best way to give everyone equal ability to acquire information.

Generally, neither side of the argument disagrees that Internet providers should have some sort of checks and balances. It is the extent of these regulations that worry many. The Internet, if treated as a commodity, should be as it is now. People can pay more money for a better product, just as people can pay more money for access to a better Internet connection. The two seem very similar. On the other hand, if treated as a utility, like water or electricity or telephone service, broadband seemingly should be equally available to all potential consumers.

In the past, two attempts by the FCC to introduce net neutrality rules have been blocked by federal judges as illegal in some way. Tom Wheeler, Democratic member of the FCC and architect of this net neutrality plan, seems confident that it will be successful. Wheeler decided to classify Internet as a “utility-like” product, which may or may not help his cause. There are sure to be many attempts to throw out the proposed FCC rules, and so, none are quite sure whether net neutrality will be a lasting phenomenon in our future.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Costco - American Express, Partnership to End in 2016




2/20/15 - For years, American Express was the exclusive credit card of Costco shopping centers throughout North America. Costco's most recent contract with American Express is set to expire in March 2016, and the companies have been unable to come to a mutually beneficial agreement for renewal of that contract. Costco Wholesale Corporation has since announced the upcoming split, and according to an article by E. Scott Reckard and Dean Starkman, of the L.A Times, Costco is close to finding a replacement as their sole credit card provider.

Since Costco only accepts one type of credit card, customers are forced to either pay via cash/check or use that type of credit card. This gives that credit card company a huge amount of business, since shoppers at Costco generally buy products in bulk and don't usually carry enough cash to pay for such a large quantity of goods. One of the big reasons for Costco's break with American Express, according to Reckard and Starkman, is a desire for lower swipe fees. If Costco, or any other company for that matter, is able to get cheaper rates from one credit card company versus another, they will almost always choose the one with lower prices.

Even though the partnership with Costco accounted for about $94 billion in revenue for AmEx, analysts state that based on Costco's new terms, the economics did not make a renewal the sensible move. Some of that money comes from interest on pending credit card balances, but the vast majority comes from actual spending by credit card holders.

Over the years, in an attempt to keep up with other companies, AmEx has offered rewards, special deals, and even lower fees, which has kept it relatively competitive. Unfortunately, AmEx's stock has been on a decline recently, a trend which has not been helped by the upcoming break with Costco. On the plus side, American Express claims that it has plans to reinvest in other companies, as well as to focus on its current partnerships.

The split is having a far worse effect on American Express than it is on Costco. Costco pretty much has the ability to choose its own rates, since the company that gets the partnership will be gaining much more business. A year ago, Costco switched to the Capital One Master Card in its Canadian branches, and has felt little ill effect from it. The only issue seems to be customers' reactions. How difficult will it be to change cards? Would it become easier for shoppers to simply pay in cash, which might reduce the benefit to the new credit card company? Only time will tell.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

IRS to Undergo Changes Regarding "Structuring"



2/13/15 - The Internal Revenue Service (IRS) is responsible for making sure people pay their taxes. As such, the IRS has many procedures they follow to uphold federal laws. Unfortunately, some of these procedures are flawed in that they can lead to unfair treatment of law-abiding taxpayers. In a recent Los Angeles Times article, the process by which the IRS deals with a practice called “structuring” is addressed.

Under federal law, all bank transactions over $10,000 have to be reported to the IRS. This law is meant to help federal officials catch drug dealers and money launderers. However, it is possible to avoid reporting all transactions to the IRS through “structuring,” by which large deposits are split up in such a way that less than $10,000 is deposited at any given time. The reason structuring is illegal is the assumption that the only people who would need to hide their income from the IRS are those earning money through illegal avenues. It is this practice on which the IRS has been cracking down in past years.

If a trend in your financial history shows many such deposits, which seemingly correspond to a structuring scheme, the IRS has the authority to seize your accounts, with no charges filed, for years on end in some situations. It hardly seems fair.

According to IRS Commissioner, John Koskinen, 60% of the 200 or so cases per year are not pursued by the owners of the seized accounts. This leads many to conclude that those individuals were in fact involved in illegal money practices, which could show that the practice is successful in some respects. But, what about the other 40%?

The problem with the current system is that the IRS doesn't need any proof. They don't have to know that the account holder is doing anything illegal. They just have to see that many deposits of less than $10,000 have been made in any given account. In many cases, there is very little for the law-abiding account-holder to do in response, to try to get their money back.

Some deposit smaller amounts into their accounts so as to not carry around large amounts of money between their place of business and the bank. Others simply make deposits at given times, and happen to deposit less than $10,000 at any given time. No matter what the reason, under current IRS practice, accounts can be seized under mere suspicions of possible wrongdoing. Some victims of the system eventually get their money back, but not after plenty of wasted time, stress, and legal fees.

Although the current way in which structuring is addressed has its major flaws, Koskinen assures the public that changes will be made. Congress and the IRS are working together to make sure that taxpayers are treated fairly, and to make sure that accounts will no longer be seized as long as the money in those accounts was earned legally. Although the changes may take some time to fully come to bear, it appears that when these changes are complete, the IRS will have lost some of its ability to seize money without reasonable cause.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Hackers Gain Access To Anthem Database




2/6/15 - Over the past year, several major retailers, including Target, Home Depot, and Michael's have been victim to the cyber-attacks of hackers. The most recent target on a lengthy list of such data breaches was Anthem Blue Cross, a major health insurance provider. Chad Terhune discusses the consequences of this hack in his article in the Los Angeles Times.

While Anthem states that hackers did not gain access to credit card information and health records, they were able to access much more. From name to date of birth to Social Security number, it appears that these hackers now know most of the personal information belonging to up to 80 million individuals who have health insurance through Blue Cross.

The sheer amount of personal information gathered by the hackers is enough to be quite certain that identity theft is a likely outcome. The personal information could be used by the hackers or others to open new lines of credit, or possibly even to access and empty existing accounts. Anthem warns any who have had coverage in the past and any who are currently covered by Blue Cross to keep a watchful eye on their financial accounts, in case identity theft is the main goal of these hackers.

One of the more upsetting parts of this situation for many is the fact that the stolen information wasn't even encrypted. It's bad enough that the databases got broken into, but a lack of encryption on the stored information means that cyber-criminals have easy access to the data within those databases. In fact, Anthem was even forced to pay a fine of $1.7 million in connection to allegations by the federal government that a weakness in their security left clients' personal information open to attack. Why hasn't Anthem learned its lesson?

Anthem, along with many other companies, need to develop better safeguards and protection mechanisms to make sure that only authorized parties are able to access personal information. For a company as large as Anthem to have left data unprotected multiple times in less than two years is just irresponsible. Sure, there are hackers that can make their way past any defenses, but better protections will at least slow them down, maybe even enough to stop some of them altogether.

This is a crucial time for Anthem, due to the thousands of people trying to enroll in coverage under the Affordable Care Act. They will have to be very careful dealing with this issue, in order to convince their clients not to look elsewhere for a health insurance provider. While Anthem has dealt with the attack through the proper channels, by contacting the FBI immediately, most people would still be more comfortable trusting the large company with their information if Anthem underwent a massive overhaul of their security systems. Such a project could prevent future breaches and make all involved parties much happier.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Plunging Gas Prices May Not Last Long




1/30/15 - Drivers throughout the state and the country have noticed the recent decline in gasoline prices and are hoping that this trend continues for as long as possible. While gasoline was over $3 in most areas a year ago, the cost of gasoline is now at $2 or even less, a nice change for everyone filling up at the pump. Unfortunately, says Don Lee, in his article in the Los Angeles Times, these low prices are unlikely to last long. In fact, he predicts that they will begin to climb within the next few months.

Lee first addresses the main question: why did the oil prices fall in the first place? One of the main answers involves development and usage of new technologies. A somewhat new process called hydraulic fracturing, also known as “fracking,” has become increasingly prevalent in the industry for use in forcing extra oil out of otherwise dry wells. Furthermore, the development of shale oil techniques, which allow for the conversion of organic matter within rocks into synthetic fuels, helps to increase supply.

Following the laws of supply and demand, the increased supply will likely lead to increased demand. This increased demand can give producers of gasoline a reason to increase their prices, which is why Lee expects the price of crude oil to be back on the rise before the year is half-over. Lee does admit, however, that it is possible for prices to stay low, if oil production continues to increase. Otherwise, waning supplies would force prices higher, just as they have done in previous years.

Reduced gasoline prices could have dramatic effects on economies around the world. Countries that produce and export oil, like Iran, Russia, Venezuela, and Nigeria, are likely to suffer because reduced prices mean less income. On the other hand, countries that don't rely on the export of crude oil, like the United States, Japan, South Korea, and China, are predicted to benefit because they pay less for the crude oil they import. Also, their citizens will pay less for gasoline, and will have more money to contribute to the economy in other ways.

Some states in the U.S. Will benefit more than others. Similarly to the situation in the global setting, oil-producing states like North Dakota and Texas will be harmed by low prices, while other states, and the companies within those states, will be unhurt. In fact, the low prices could even lead to an boost in job growth. Even with increases in employment, lowered gas prices could be disastrous in the long run. A lowered price of gas could lower prices for all commodities, which could force the Federal Reserve to increase interest rates. Inflation is a huge risk when dealing with drastic price decreases.

Lee concludes that the huge quantities of oil being produced in Saudi Arabia, which is another factor in the price decrease, may be an attempt by the Organization of Petroleum Exporting Countries (OPEC) to force the United States out of the picture. If Saudi oil prices stay low enough for long enough, it could become economically illogical for the United States to continue producing via shale and fracking. Whatever the true reason for the decline in prices, people are enjoying it for however long it may last.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Each Year, Thousands Mistakenly Declared Dead




1/23/15 - How would you feel if the Social Security Administration and the world's top credit reporting companies proclaim you dead? Well, about 1,000 people per month are mistakenly declared dead by such organizations, leading to a great amount of stress and wasted time in order to reverse such decisions. In his L.A. Times article, David Lazarus describes the tale of George Sledge, a 58-year-old man who has been forced to file a lawsuit in an attempt to force the credit reporting companies to bring him back to life.

While many of the mistakenly listed individuals on Social Security Administration's “Death Master File” are there due to typographical mistakes and other such human errors, a sizable number could be avoided by simple fact-checking on the part of the credit reporting companies. Besides the amount of time you might spend convincing and arguing that you're is still alive, there are much worse consequences.

One such consequence is in regards to your credit score. When anyone is marked as dead, their credit score is automatically set to zero. While this helps to prevent identity theft, it also makes it impossible for a someone like Sledge to get a loan or sign up for a credit card, or even, in some cases, get a job. Furthermore, credit reporting companies have databases full of information that they sell or share with other companies. When someone has been declared dead in one database, it is almost as if they have been simultaneously declared dead in all other databases.

So, even if a person like Sledge were able to get a single company to take him off of the “Death Master File,” all of the other companies would still have him marked as dead. To go through the same rigorous process with every possible company would be straining, if not completely impossible. So, what could an individual in Sledge's position do?

Lazarus suggests that everyone should keep a close eye on their credit information. There are ways to report incorrect information, and if such information is found, you should take care of it sooner rather than later. Most of all, though, Lazarus states that these errors would happen much less often if companies would do their due diligence. A simple phone call might be enough to prevent a living person from being mistakenly marked as deceased, and that could make all the difference.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Where Have All the Workers Gone?




1/16/15 - Unemployment rates have been found to be decreasing throughout the country. The labor force participation rate, on the other hand, which shows the number of people working or not working, rather than just those classified as “unemployed,” has also been shown to be on a downward slope. So, what causes the seeming paradox between these two measurements. According to Michael Hiltzik, in his Los Angeles Times article, this discrepancy is due to a significant number of “missing” workers: those workers who are not working, and at the same time are not considered “unemployed.” Where have these so-called “missing workers” really gone?

How is it possible for both participation rates and unemployment rates to go down? Some economists believe that this phenomenon is due to a lack of effectiveness in current governmental policies meant to create and fill necessary jobs. Such economists theorize that the extreme difficulty many people are having in finding work has led them to stop searching altogether, to drop out of the labor force completely. Hiltzik, on the other hand, disagrees with this conclusion, preferring an alternative explanation.

Hiltzik presents sources in the article that seem to show that up to three-quarters of the perceived decline in participation rate is actually due to such factors as the retirement of baby boomers and the enrollment of workers in universities and other institutions of higher learning, both of which have little to do with the state of the economy. Over the past few decades, participation rates have been steadily declining, for both men and women. Statistics show that as the economy improves, the participation rate should improve as well.

Whatever the reason for the current employment trends, it is evident that the economy needs to get better. Hiltzik concludes his article as such: while the participation rate is declining, there is still room for it to recover. Workers may be out of the labor force due to the Great Recession, or lowering wages, or a variety of other possible reasons, but as the economy improves, workers should return.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Holiday Shioppers Spending Confidently




1/2/15 - According to a retail analytics firm called ShopperTrak, the biggest shopping day of the year is the Saturday before Christmas. But, what is the second-biggest shopping day? Statistics show, at least for 2014, that the second-biggest shopping day of the year is not Black Friday, as some might expect, but rather the Friday following Christmas. As stated in an article by Tiffany Hsu, Andrew Khouri, and Ronald D. White, of the Los Angeles Times, a combination of post-Christmas sales, optimism regarding the slowly-recovering economy, and even the calendar's placement of Christmas on a Thursday, come together to make the day after Christmas the perfect time to shop.

Christmas falling on a Thursday can have quite an impact on retail sales. For many, this turns into a four-day weekend, which could give consumers a full three days to shop. Such a “blockbuster” weekend could end the year with a bang, ensuring the National Retail Federation's prediction that this season's revenue would pull in approximately $616.9 billion.

Even more effective than the holiday's placement on the calendar, though, is the slowly-returning faith of the general population in our local and national economies. With a lowering of gas prices and a slow increase in employment, people find that they have more money to spend on those items they want, not just what they need. Consumers are beginning to have more faith in the continuity of their employment; they feel a good degree of job security. With that sense of job security comes increased spending, as consumers are more willing to make purchases when they feel sure of a steady income.

Retail stores have done well in predicting the amount of inventory they need this year. Instead of purchasing too little inventory and running out, or purchasing too much and having to cut into their bottom lines, it appears that the retailers have done well with their inventory, thus maximizing revenue. Online retailers have improved their on-time deliveries, compared with previous years, thus giving consumers more confidence in ordering gifts through the internet.

The days following Christmas are great for gift card redemption. Knowing this, retailers provide extra discounts, hoping that such gift cards will be used to purchase excess inventory. Store prices are down after Christmas, and wallets tend to be fatter, both of which prod consumers to spend. People seem to be happier with the current direction of the economy, and that is helping the economy even more.

While current discounts will certainly bleed over to the next year, retailers are accepting it as a positive trade-off. The first quarter of the coming year may not bring in as much money as retailers would like, but sources show that the second and third quarters are quite likely to bring great improvement for the economy in the coming year.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************

Labor Force Participation Rates Declining




12/19/14 - To the average observer, it would appear that California’s economy is steadily recovering. Unemployment rates are down, and new jobs are being introduced at a constant pace. Yet, in Tiffany Hsu’s L.A. Times article, it is revealed that the labor force is much smaller than it may seem.

Unemployment rates are measured based on the number of people receiving unemployment benefits from the government, not necessarily based on the number of people actually without work. Once someone has given up and stopped looking for work altogether, they are no longer considered “unemployed,” since they no longer qualify for unemployment benefits. So, “unemployment rates” tend to be quite misleading.

According to Hsu’s sources, the more accurate measurement of the labor force’s stability is the “labor force participation rate” – the number of people working or actively looking for work in proportion to the number of working-age individuals in the population. This, compared to the “unemployment rate” is more accurate in that it takes into account individuals who have given up on finding employment. The currently falling labor force participation rate has dramatic implications on the state of the economy.

A drop in the participation rate could mean that the jobs available are not the jobs people need. For many with college degrees and experience in well-paying fields, a plethora of jobs in the fast food industry means very little. Even for those who are willing to “lower their standards” and accept jobs for which they are “overqualified,” like a barista or salesperson, such positions have so much competition that the odds of gaining employment are slight. In the end, many individuals simply prefer to stay unemployed rather than risk losing such government benefits as Supplemental Security Income or Social Security Disability Insurance.

No matter what the reason, a decrease in the participation rate can’t be a good thing. With more seniors continuing to work well into their sixties and seventies, and new graduates looking for work straight out of school, only so many positions are available to recently laid-off workers. If higher-paying positions are unavailable in California, job-seekers will look elsewhere for employment, and that can have consequences.

While a decline in unemployment rates may seem like a positive sign, Hsu shows why this positive impact is limited. Statistics are misleading, but the bottom line is this: we need to get people back into the labor force. The state has been creating new jobs, but mainly in lower-paying fields. Workers, especially those with college degrees, want to work in jobs “worthy” of their skills. Thus, to bring the workers back in, the creation of better jobs must be a priority.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
***************************************************************************************************