Tired of Telecom?

Complete list here

    For those of you who don't know about the Better Business Bureau (BBB), their purpose is create a buffer between bad businesses and customers. Complete mission statement here. I think of them as a national customer service agency, when businesses "fail to meet your expectations" you complain to the BBB.  With that said, I would suspect that some serious complaints probably end up in court.  Nonetheless, monitoring the number of complaints may serve as a good barometer of frustration consumers are experiencing when dealing with certain industries.

    The chart above shows the top 12 industries that receive the most complaints.

    One observation, 3 out of the 12 are telecommunications industries:

• Cellular Telephone Service and Equipment - #1
• Ever been frustrated with your cellphone service provider?
• Television - #3
• Does anyone know which sucks less? Cable or Dish?
• Telephone Communications - #7
• Hello? Hellloooo?

    This kind of list tells me that the general public needs to be more informed on these goods and services or maybe we are in need of some new regulation standards.

Why China Does Not Own Us

    Read this article from Krugman this morning and it reminded me of how annoying it is to hear people say things like, "China owns the U.S.".   Xenophobia is no doubt the root cause for this kind of thinking and to clear it up refer to the chart above (mixing economics with art?).

    To be fair, it should be obvious that we barrow the most internationally, but if you believe that China owns us then you must believe that Japan and the United Kingdom own us as well. Why is it we only hear about how China "owns the U.S." while Japan and the U.K. own just as much or more of our debt?

    Probably because we read and hear of how China is growing fast and is poised to become the number one economy in the world, over taking the U.S.  This may sound frightening, but can you tell me why this matters? I hate to sound like a loser, but is being number two in GDP much different than being number one?

Guest Post: The Value of a Higher Education

Guest author Angie Picardo is a staff writer for NerdWallet. Her mission is to help students stay financially savvy and save money with NerdWallet’s student credit cards.

The Value of a Higher Education

    The value of a higher education is, arguably, invaluable. No matter what a student majors in—or how often they change that major—the formal education and social growth that goes along with college life is regarded of high value in the United States. Attending a university of community college after high school brings along a more critical assessment of one’s worldview, a broader education within the arts, humanities and sciences, and formidable virtues acquired from extracurricular activities through college and community organizations. Nevertheless, attaining a higher education institution also means real financial costs, and for many American families, the true financial cost for a higher education (with high tuition and living costs) can trump attaining a degree.

Rising Tuition

    According to a study conducted by the National Association of Colleges and Universities (NACU), “tuition and fees at private colleges and universities edged 3.9% higher for the 2012-13 academic year”. Since the Association has been measuring the costs in 1972, rising an average growth of 5.7% per year has occurred. The latest school year, however, witnessed the lowest average hike since 1972, and was the very first time the figure was less than 4% since then.

    Despite the slightly good news, tuition is still extremely high. Indeed, student load debt in the United States surpassed credit card for the first time in 2011,  indicating that not only is the price of a higher education expensive, it is keeping young people in debt far after they graduate. As a result, nearly 20%, or one-fifth of households in the United States have student loan debt.

Schools vs. Profession

    A CNN Money Report notes that the school students choose matters. The report notes that, “The amount of debt a student has upon graduation can vary dramatically depending on the school they attend. Of the 1,057 colleges in the [NACU] study, average debt per graduate ranged from $3,000 to $55,250. At 114 colleges, graduates had average debt above $35,000, while 64 colleges said that more than 90% of seniors graduate with debt.”

Because business, engineering, and math & science-heavy degrees have an easier time entering the job market—and at often lucrative levels for junior positions—these degrees often find their way out of debt sooner than many of their counterparts. On the other hand, choosing a school with a lower tuition rate can sometimes be just as effective in terms of the value of a degree once on the job market.

    The NACU report found that “While Indiana University of Pennsylvania and Clarion University of Pennsylvania are both public four-year colleges and charge annual tuition and fees of roughly $7,500, for example, graduates of Indiana University of Pennsylvania had average debt of $32,416 while Clarion University graduates had average debt of only $3,815.”

Cost of Tuition vs. Debt

    According to SavingForCollege.com, the average cost of tuition breaks down accordingly:

·         

• Private college in 2012: $127,100 
• Public University (in-state resident): $37,800
• 2 Year Community College & Two Years Private College (combined): $73,700

    If costs are expected to increase by 4-6% each year, these figures are set to triple by 2030. As a result, the average student loan debt as of 2012 is $23,829. This figure is often more than half of a yearly salary of some of the low-to- mid tier salaries that graduates are set to earn after they graduate. StudentsReview.com has a more detailed list of these majors, how much a graduate or entry level employee will earn on average, and what they are set to make after 10 years within the industry. Some of these are as follows:

Major	Entry Level Salary ($)	Current ($)	10 Year Average ($)
Accounting	54,738	127,181	97,351
Biology	56,482	179,682	133,482
Chemical Engineering	66,750	138,786	106,770
Pre-Med and Medical	108,097	322,706	234,337
English	40,448	99,186	75,000
Music Education	33,611	64,762	47,770
Pharmacy	82,087	162,245	135,526
Social Work	41,932	76,408	63,480
Telecommunications	44,278	135,577	101,340

    While these salaries may look good at first glance, a 4-6% increase in tuition each year means it will take longer for employees in all sectors to pay off student loans. Coupled with a heightened unemployment rate, students that do not immediately find salaried positions after graduation will be forced to defer payment on the student loan debt. This is already happening, and as of the end of 2012, more than half of student loans are now in deferral or are delinquent.

    This has set the stage for many negatives in an already troubled economy. Indeed, a CNN report analyzed the situation, finding that:

Unlike credit card debt or automobile loans, student loans are virtually impossible to liquidate, even after declaring bankruptcy. So 20- and 30-year-olds buried under student loan debt are forced to put off other purchases crucial to the health of the economy, like buying a car or home or investing in the markets. Many are moving back in with their parents and delaying marriage and starting a family, two of the most vital building blocks to a healthy and prosperous economy. Valuable human capital is withering before it can even set its roots.

Alternatives

    Obtaining a higher education is something that everyone should strive for, but only if it makes sound financial sense. Other forms of schooling are available for students, and many American students are looking abroad to obtain Masters-level diplomas at a fraction of the cost of prices found in the United States. Others have opted to hold off on university and instead find work so that they can save for schooling and get a real-world experience in the job market right after high school. There are pros and cons to many of these alternatives, but it is important for students and parents alike to consider the true cost and value of higher education.

Angie Picardo is a staff writer for NerdWallet. Her mission is to help students stay financially savvy and save money with NerdWallet’s student credit cards.

Raising the Minimum Wage: The Impact On Unemployment (Wonky)

    "If you raise the minimum wage, it will cause unemployment to rise".

    Intuitively, this makes sense.  Raising the minimum wage increases a businesses expenses, so much so, that  they may have to let some of their employees go. The question then is, "if businesses have to let employees go due to a minimum wage increase, how many people will be let go?"

    As I've noted before, no one has an answer for this yet. But there is some insight into the impacts of the minimum wage on unemployment.

    Alan Krueger, the chair of the Council of Economic Advisers for President Obama and a Princeton labor economist, recently had an interview with PBS's Paul Solmon.  In the interview Krueger cites research he had done with a colleague on a widely talked about study of the fast food industry and the impact of a minimum wage increase.

    Their conclusion was raising the minimum wage had no impact on employment and the prices of the goods being sold.

    Pretty bold statement to make but there are a few things to keep in mind.  The study was only done on one industry (fast food), would the study hold up across multiple industries? Also, in the study they mention stores closed while they were carrying out their survey, unless I missed it, they don't say why they closed.

    Krueger is not naive, in the PBS interview he speaks of finding a "tipping point".  That is to say, at what point does raising the minimum wage begin to harm the economy, specifically businesses.

    Based on the fast food study results, and this is extremely hypothetical, I would expect to see a relationship between minimum wage and unemployment as follows:

    In my opinion, it would seem there is still room for raising the minimum wage without substantially raising unemployment (in the vicinity of 'A').  At some point unemployment will begin to rise as a result of minimum wage increases, but again, the "tipping point" is unknown.