That’s a headscratcher

Summary

Marketplace Podcast Episode Summary: "That’s a Headscratcher"

Release Date: January 22, 2025
Host: Kai Ryssdal
Podcast: Marketplace

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1. Trump's Economic Policies and the Automotive Industry

Overview:
The episode opens with a discussion on the latest economic policies introduced by President Trump, particularly focusing on the imposition of 25% import tariffs on goods from Canada and Mexico. These tariffs are poised to significantly impact the automotive industry, which heavily relies on cross-border supply chains.

Key Points:

• Tariffs Announcement: President Trump announced the introduction of 25% import taxes on Canadian and Mexican goods, effective February 1st. This move is expected to disrupt the intricate supply chains of the automotive industry, where parts frequently cross borders multiple times during the manufacturing process.

• Automotive Supply Chain Complexity:

  • Jonathan Smoke, Chief Economist at Cox Automotive, highlighted the complexity: "No vehicle that's assembled in the U.S. has more than 70% of its content coming from the U.S." ([03:18]).
  • James Rubenstein, Professor Emeritus of Geography at Miami University, emphasized the longstanding duty-free trade between the U.S., Canada, and Mexico since 1965, further solidified by NAFTA in 1994.

• Economic Impact:

  • Introduction of tariffs could increase the average cost of a new car by approximately $3,000, according to Wolf Research ([03:57]).
  • The automotive industry, including major players like Magna International and Allison Transmission, may face increased production costs and supply chain disruptions ([04:31]).

Notable Quote:
Jonathan Smoke on the potential tariff complications:
*"Take wiring that might go from Mexico to the US to become a seat harness, then back to Mexico to become a seat, and then back to the US to actually get put in a car. So does that mean 25% gets applied every time it crosses? Unclear." ([03:59])

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2. Europe's Shift in Global Trade and Security

Overview:
At the World Economic Forum in Davos, Ursula von der Leyen, President of the European Commission, delivered a pivotal speech addressing Europe's evolving stance on global trade, energy dependency, and security.

Key Points:

• Economic Dependence:

  • Europe has historically relied on global trade growth and cheap energy from Russia to drive its economy.

• Security and Geostrategic Competition:

  • Von der Leyen stated, "The cooperative world order we imagined 25 years ago has not turned into reality. Instead, we have entered a new era of harsh geostrategic competition." ([04:50]).

• Implications for Global Relations:

  • The shift signals a move away from collaborative global frameworks towards more competitive and strategic alliances, impacting international trade and diplomatic relations.

Notable Quote:
Ursula von der Leyen on Europe's current geopolitical climate:
"The cooperative world order we imagined 25 years ago has not turned into reality. Instead, we have entered a new era of harsh geostrategic competition." ([04:50])

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3. Netflix’s Strategic Shift in the Streaming Wars

Overview:
The episode delves into Netflix's recent strategic changes in response to market saturation and intensifying competition in the streaming industry. With subscriber growth slowing, Netflix is pivoting towards new metrics and content strategies to sustain its market position.

Key Points:

• Shift from Subscriber Growth:

  • Michael Smith, Professor of Information Technology at Carnegie Mellon, explains that "Netflix is trying to change the conversation towards the metrics that advantage them." ([07:42]).

• New Metrics Focus:

  • Emphasis on revenue generation and user engagement over mere subscriber numbers.

• Content Strategy Evolution:

  • Transition from a binge-watching model to weekly releases and live events to foster sustained viewer engagement.
  • Examples include events like "The Roast of Tom Brady" and special NFL games, as highlighted by Charlotte Howell from Boston University ([06:41]).

• Industry Impact:

  • Tim Hanlon, CEO of the Vertaire Group, suggests that focusing on user engagement metrics will be more appealing to Wall Street, especially as the streaming industry consolidates ([07:56]).

Notable Quotes:
Charlotte Howell on viewer preferences:
"It turns out a lot of people want the anticipation of a date with their TV." ([06:41])

Tim Hanlon on future metrics:
"In terms of a growth story, that narrative is probably going to be more appealing to Wall Street." ([07:59])

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4. Rebuilding After Wildfires: Embracing Fire-Resilient Construction

Overview:
Amy Scott reports on the challenges faced by homeowners rebuilding after devastating wildfires, highlighting innovative construction methods aimed at enhancing fire resilience.

Key Points:

• Case Study - Superior, Colorado:

  • Matteo Rebuschini and his wife, Melanie Glover, lost their home in the Marshall Fire and opted to rebuild using fire-resistant materials.

• Innovative Building Techniques:

  • Use of compressed sand and clay blocks that incorporate perlite, making structures more fire-resistant and energy-efficient.
  • Melanie Glover showcases their new Earth Block home:
    "We need to build a house out of earth because it doesn't burn." ([10:46]).

• Economic and Environmental Benefits:

  • The new construction reduces energy needs by up to 75% and utilizes materials with a low carbon impact.
  • Andrew Mitchler, a passive house designer, notes that while initial construction costs may be higher, long-term energy savings offset these expenses ([10:24]).

• Community and Regulatory Challenges:

  • Carolyn Kuske from the Environmental Defense Fund emphasizes the difficulty of implementing fire-resilient practices during the recovery phase without prior planning ([10:24]).
  • Post-fire waivers on building codes have allowed quicker reconstruction but may overlook resilient building standards ([10:24]).

Notable Quote:
Melanie Glover on rebuilding with resilience:
"We need to build differently, we need to build better." ([10:46])

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5. Market Performance and Economic Indicators

Overview:
A brief segment covers the latest movements in the stock and bond markets, highlighting significant changes and their implications.

Key Points:

• Stock Market Highlights:

  • Dow Industrials surged by 537 points (+1.25%) to 44,025 ([14:26]).
  • NASDAQ increased by 126.6 points (+1.10%) to 19,756.
  • S&P 500 rose by 52 points (+0.9%) to 6,449.
  • Specific industry mentions include automotive companies like Magna International and Allison Transmission experiencing gains.

• Netflix Stock Movement:

  • Following the announcement regarding its new metrics strategy, Netflix's stock rose by 1.1% during the session and an additional 3.10% after hours ([14:31]).

• Bond Market Update:

  • Yields on the 10-year Treasury note decreased by 4.57% before the close ([14:31]).

Notable Quote:
Kai Ryssdal on market dynamics:
"We heard from Sabri earlier about Mexico and Canada in the US Auto industry." ([14:31])

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6. Energy Sector Dynamics and Investor Behavior

Overview:
The podcast examines the current state of the U.S. energy sector, particularly oil production, and explores why investors are cautious about expanding domestic oil and gas production despite presidential incentives.

Key Points:

• Investor Sentiment Shift:

  • Historically, during the shale boom, investors favored aggressive expansion in oil production even at losses. However, the current trend sees investors preferring dividends and share buybacks over new drilling projects.

• Production vs. Investment:

  • Ellen R. Wald from the Atlantic Council notes the shift from expansion-focused investments to profit-oriented strategies, aligning with the Trump administration's regulatory easing and land access promises ([17:22]).

• Oil Prices and Production:

  • Matt Smith from Kepler Analytics indicates that current oil prices (~$75/barrel) are marginally sufficient for incremental production increases but not enough to encourage significant drilling unless prices rise further ([18:05]).

• Consumer Impact:

  • Higher oil prices could lead to increased production costs without benefiting consumers, as Matt Smith cautions ([18:13]).

Notable Quote:
Matt Smith on the relationship between oil prices and production:
"We may not necessarily see the response in production because oil is just too cheap to justify drilling more wells... higher prices wouldn't be ideal for consumers." ([18:05])

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7. U.S. Worker Wages Outpacing Inflation Through Productivity Gains

Overview:
This segment highlights the positive trend of real wage growth in the United States, attributing it to significant gains in labor productivity.

Key Points:

• Wage vs. Inflation:

  • In the previous year, worker pay increased by a full percentage point above inflation. In 2023, wages continued to outpace inflation by 0.9 percentage points ([19:43]).

• Drivers of Productivity:

  • Investments in capital, such as new machinery and software, have enabled workers to accomplish more with less.
  • Edward Hearn, Lead Labor Economist at UKG, explains that automation and efficient management systems contribute to these productivity gains ([21:20]).

• Comparative Global Perspective:

  • Unlike many other countries grappling with post-pandemic productivity slowdowns, the U.S. has maintained robust productivity growth, supporting sustained wage increases.

• Economic Implications:

  • As long as productivity continues to rise, American workers can expect their wages to remain resilient against inflationary pressures.

• Behavioral Impact:

  • Increased productivity may allow consumers more discretionary spending, such as additional leisure activities like movie outings ([21:18]).

Notable Quotes:
Betsy Stevenson, Professor of Economics at the University of Michigan, on productivity's role in wage growth:
"Real wage growth has to come from productivity growth. Because we're doing more with less, we get more in the end." ([21:18])

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8. Innovative Carbon Capture Using Steel Slag in Ohio

Overview:
Kaylee Wells presents a story on an entrepreneurial approach to climate change in Ohio, where steel slag is repurposed to capture and store carbon dioxide, demonstrating a novel method of carbon sequestration.

Key Points:

• Alkali Earth’s Initiative:

  • Sean McCauley and his company, Alkali Earth, utilize steel slag—a byproduct of steel production—to capture CO₂ from the atmosphere.

• Process and Benefits:

  • Steel slag naturally reacts with CO₂, converting it into calcium carbonate, a stable and permanent form of carbon storage.
  • This method accelerates natural carbon capture processes, making it a cost-effective solution.

• Economic Model:

  • Alkali Earth acts as a mediator between steel mills and companies seeking carbon credits, such as Shopify and Stripe, facilitating environmental and financial benefits.

• Logistical Considerations:

  • Transporting steel slag is energy-intensive due to its weight, but proximity to steel mills in the Midwest helps mitigate this issue.

• Scalability:

  • Plans to expand operations to countries like China, India, Japan, and Australia indicate the potential for global impact ([23:10]).

Notable Quote:
Sean McCauley on the effectiveness of steel slag for carbon capture:
"We basically knew that if you want to go back and live there, and... build different, we need to build better." ([10:46])

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9. Conclusion and Final Thoughts

Overview:
Kai Ryssdal wraps up the episode by briefly touching on current market performances and teasing upcoming stories, emphasizing the interconnectedness of economic policies, market dynamics, and innovative solutions shaping today's economy.

Key Points:

• Market Recap:

  • Summary of stock movements, with notable increases in Dow Industrials, NASDAQ, and S&P 500.
  • Highlight of specific companies influenced by economic policies and strategic shifts, such as Magna International and Netflix.

• Looking Ahead:

  • Teasers for future segments on energy policies and economic trends, encouraging listeners to stay informed through Marketplace.

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Notable Listener Feedback

Listener Testimonial:
Julie from Centennial, Colorado, praises Marketplace for providing a "fantastic synopsis of all things business and economics," highlighting the show's accessibility and commitment to featuring knowledgeable women experts ([28:14]).

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Conclusion

This episode of "Marketplace" offers a comprehensive look into the ripple effects of presidential economic policies on the automotive industry, Europe's shifting geopolitical stance, strategic overhauls in the streaming sector, innovative approaches to climate resilience in construction, and groundbreaking methods in carbon sequestration. Coupled with positive trends in U.S. worker wages fueled by productivity gains, the episode underscores the dynamic and multifaceted nature of today's economic landscape.

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Notable Quotes with Timestamps:

• Jonathan Smoke:
  "Take wiring that might go from Mexico to the US to become a seat harness, then back to Mexico to become a seat, and then back to the US to actually get put in a car. So does that mean 25% gets applied every time it crosses? Unclear."
  [03:59]

• Ursula von der Leyen:
  "The cooperative world order we imagined 25 years ago has not turned into reality. Instead, we have entered a new era of harsh geostrategic competition."
  [04:50]

• Charlotte Howell:
  "It turns out a lot of people want the anticipation of a date with their TV."
  [06:41]

• Tim Hanlon:
  "In terms of a growth story, that narrative is probably going to be more appealing to Wall Street."
  [07:59]

• Melanie Glover:
  "We need to build differently, we need to build better."
  [10:46]

• Matt Smith:
  "We may not necessarily see the response in production because oil is just too cheap to justify drilling more wells... higher prices wouldn't be ideal for consumers."
  [18:05]

• Betsy Stevenson:
  "Real wage growth has to come from productivity growth. Because we're doing more with less, we get more in the end."
  [21:18]

• Sean McCauley:
  "We basically knew that if you want to go back and live there, and... build different, we need to build better."
  [10:46]

---

This summary encapsulates the critical discussions and insights presented in the "Marketplace" episode "That’s a Headscratcher," providing listeners with a nuanced understanding of the current economic and business landscape.

Transcript

[Jennifer Garner]

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[Kai Rysdal]

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[Jennifer Garner]

Oh, maybe too close. Trade in an additional terms apply. See verizon.com for details. I'm Jennifer Garner. You may know me from my other job, but I'm a business owner, too.

[Kai Rysdal]

Here at Once Upon a Farm, we.

[Jennifer Garner]

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[Kai Rysdal]

On the program today, the quickly developing Trump economy. Where and how to rebuild after wildfire and then rocks. Just a bunch of rocks. From American public media, this this is Marketplace in Los Angeles. I'm Kai Rysdal. It is Tuesday today, the 21st of January. Good as always to have you along, everybody. The first of the changes that President Trump is going to be bringing to this economy were revealed last night. We're going to talk about energy later on in the program. We're still waiting on his promised immigration crackdowns. That is a labor story, remember. And the first slice of tariffs seems to be on track for February 1st. In the Oval Office last night, the president said he's looking at 25% import taxes on Canada and Mexico, which are not for nothing this country's two biggest trading partners. Countless categories of goods cross our mutual borders, but tariffs would spell particular trouble for one very important industry that is spread across all three countries. Marketplace's Sabri Benishore starts us off. We trade all kinds of things with Canada and Mexico.

[Jennifer Garner]

Milk, timber, meat, minerals. But the biggest out of all of them is cars and their parts. James Rubenstein is professor emeritus of geography at Miami University. One third of the engines that are put in our still in our gas cars cross one of the borders. The automotive supply chain is draped across the three countries like a cluster of spider webs for electric cars, too. Take the Tesla Model 3. Technically, it's 100% assembled in the U.S. but the Model 3 has 20% of its content from Mexico. Jonathan Smoke is chief economist at Cox Automotive. No vehicle that's assembled in the U.S. has more than 70% of its content coming from the U.S. a transmission or an engine can have hundreds or thousands of individual parts that are used to make other parts in multiple places. David Gantz is a fellow at the Baker Institute for Public Policy.

[Kai Rysdal]

It's not unusual for a part to go back and forth seven or eight times.

[Jennifer Garner]

The auto industry is like this because that's how it's developed over 60 years. Trade in autos and auto parts between.

[Kai Rysdal]

Canada and the US has been pretty much duty free since 1965.

[Jennifer Garner]

Mexico was added in 1994 with NAFTA. The supply chain is spread out in part because some factories are just better at doing certain things and those factories are in different places. But it also represents a negotiated sharing of production, says Rubenstein. Take the original free trade agreement with Canada. The deal was that Canada could keep what we might call a fair share.

[Kai Rysdal]

Of production up there.

[Jennifer Garner]

Introducing tariffs of 25% into this decades old byzantine trading system would get difficult and expensive very quickly, says Cox Automotive's Jonathan Smoke. Take wiring that might go from Mexico to the US to become a seat harness, then back to Mexico to become a seat, and then back to the US to actually get put in a car. So does that mean 25% gets applied every time it crosses? Unclear. But according to Wolf Research, 25% tariffs on Canada and Mexico would increase the cost of the average new car by about $3,000. In New York, I'm Sabri Benishore for Marketplace.

[Kai Rysdal]

You know that big gathering of global elites that happens every year in Switzerland? The World Economic Forum in Davos. Plenty of big parties, gorgeous scenery, usually limited substance, though this year's version is happening this week and the economic mood there is grim. Ursula von der Leyen, the president of the European Commission, gave her big speech this morning.

[Jennifer Garner]

In the last 25 years, Europe has relied on the rising tide of global trade to drive its growth. It has relied on cheap energy from Russia. And Europe has too often outsourced its own security. But those days are gone.

[Kai Rysdal]

And that was not all.

[Jennifer Garner]

The cooperative world order we imagined 25 years ago has not turned into reality. Instead, we have entered a new era of harsh geostrategic competition.

[Kai Rysdal]

The competition on Wall street today? Not that harsh. Traders were just in a buy in mood. We will have the details when we do the numbers. The streaming wars are a changing and that change is being driven by the OG. Netflix reported earnings today. They did find 10 billion in revenue October through December. 19 million new subscribers. But this is likely to be the last time the company publicly releases that key and very proprietary piece of data. Streaming companies have to date touted how many viewers they have and how many of them they add every quarter. But no more. Marketplace's Kristen Schwab looks at what kind of data Netflix might likely brag about instead and what that says about the aforementioned streaming wars.

[Jennifer Garner]

In one of Charlotte Howell's classes at Boston University, she gives students an assignment to reimagine streaming and a bunch of them are like, how do we incentivize weekly releases? They are nostalgic for a way of viewing television that they barely remember. Turns out a lot of people want the anticipation of a date with their tv. And that's what Netflix has been leaning into as it becomes less about binge watching and more about live events. There was the Roast of Tom Brady and two NFL games on Christmas Day. It's branching out into new kinds of content, howell says. It's a shift that reflects how Netflix is thinking about growth. We are nearing or maybe have approached a kind of a saturation point of subscribers, or at least a turning point potentially. Netflix doesn't have a lot of room to grow subscribers. It already has more than 300 million, while Hulu, for comparison, has around 50 million. Michael Smith is a professor of information technology at Carnegie Mellon.

[Kai Rysdal]

Netflix is trying to change the conversation towards the metrics that advantage them.

[Jennifer Garner]

A few million new subscribers per quarter no longer looks impressive. Instead, Smith thinks Netflix will focus on different data points. How much revenue are we bringing in?

[Kai Rysdal]

So that's what they want to talk about. And then the second thing they want.

[Jennifer Garner]

To talk about is user engagement, because long term streaming profits are about how eyeballs translate into ad dollars, says Tim Hanlon, CEO of the Vertaire Group. So in terms of a growth story, that narrative is probably going to be more appealing to Wall street, hanlon says. As the industry consolidates, this kind of information is going to become more crucial. The reality is that it's still very much a black box, and I think Netflix has a long way to go to convince the media industry that the numbers are what they are and that they're accurate, which is increasingly important as investors search for clues about which companies are winning the streaming wars. I'm Kristen Schwab for Marketplace.

[Kai Rysdal]

So here's an idea for something else you can subscribe to. Actually, you can just follow us. Follow our podcast, would you? You can get it on the platform of your Choice, obviously, or marketplace.org.

[Jennifer Garner]

The.

[Kai Rysdal]

Weather forecast for the Los Angeles area for the next couple of days is better, not too much Wind, even a chance of a little bit of rain. We'll see if that actually shows up. But the thousands of people who lost their homes now have some decisions to make. Whether to rebuild first of all, and then if so, how? So that they might stand a better chance of against the wildfire next time. Marketplace's Amy Scott has been talking to some people with hard earned experience.

[Jennifer Garner]

When the Marshall fire tore through their neighborhood in Superior, Colorado, near Boulder three years ago, Matteo Rebuschini was at home with his two kids.

[Kai Rysdal]

Very quickly it became dark outside and.

[Jennifer Garner]

The smoke started coming through the walls. They were rescued by a passing police officer, but their house was destroyed and he and his wife, Melanie Glover, had to decide what to do. At first.

[Kai Rysdal]

You are in survival mode, right?

[Jennifer Garner]

So you're displaced.

[Kai Rysdal]

You have lost everything. You have a lot to process.

[Jennifer Garner]

They thought about selling the lot and starting over somewhere else, but they loved the area. Right next to acres of open space, but with easy access to Target and downtown. And then they found out their insurance would pay less if they didn't rebuild on the same site. We basically knew that if you want.

[Kai Rysdal]

To go back and live there, and.

[Jennifer Garner]

That'S what we wanted, we need to build differently, we need to build better. Glover is an avid gardener and she'd noticed that while the fire had destroyed the big plastic planters in the yard, the dirt inside the pots was still sitting there intact. And I was like, I need to build a house out of earth because it doesn't burn. She found a local company that makes blocks out of compressed sand and clay. As we're talking on Zoom, she shows me what looks like a brick wall behind her covered with fire resistant plaster. So you've got two sets of these blocks with a space in the middle. That space in the middle is filled with perlite. It doesn't catch fire because the blocks are air dried, not fired. They have a low carbon impact. The company says they also reduce the energy needed to heat and cool the home by up to 75%. The new house also has triple pane windows and a ventless roof to prevent fire from getting inside. Sadly, there's not such thing as a fireproof house, but what we like to think of is loading the dice in our favor. Andrew Mitchler designs passive houses, low energy buildings that are also fire resilient. His firm designed several after the fire in Superior. The basic principles are making the home as airtight as possible. Make the home more simple so there's less places for embers to go in. Mitchler says it can cost up to 10% more to build this way, though that's offset by the lower energy bills he got into building after his father lost his house to a firestorm in Oakland, California, in 1991. In the aftermath, people built much bigger houses, making it easier for wildfire to spread. We've seen a lot of these fires, one big house next to another big house. It's like dominoes. One leads to another, mitchler says. Ideally, whole communities would follow fire resilient building practices, but every house makes a difference. We remove one or two of those dominoes, meaning that we harden a few of those projects that that protects their neighbors. But rethinking where and how we build is difficult in the midst of recovery, says Carolyn Kuske with Environmental Defense Fund. And unless we do that work ahead of time, it's very hard to make those changes at the moment of rebuilding, when people really just want to get back to any degree of normalcy as fast as they can. After the Marshall fire in Colorado, officials waived stricter building codes for fire victims so they could rebuild more quickly and affordably. I think that most people did the best job that they could. Melanie Glover's family moved into their new Earth Block home last July, and she says it feels solid, quiet and safe in a way their previous drafty woodhouse never did. Would it survive another fire? I don't really want to say that. But she does feel confident that if it happened again, they would be safe until they could evacuate. I'm Amy Scott for Marketplace.

[Kai Rysdal]

Coming up.

[Jennifer Garner]

So far we've removed probably at least 100 tons of CO2 from the atmosphere.

[Kai Rysdal]

With rocks, no less. But first, let's do the numbers. Dow industrials up 537points today, one and a quarter percent 44,025 for the blue chips. The NASDAQ rose 126.6 10% 19,756. The S&P 552 points to the good nine. 10% 6,449. We heard from Sabri earlier about Mexico and Canada in the US Auto industry. Magna International, based in Ontario, Canada, supplies auto parts to General Motors, Tesla and Ford, among others. It accelerated 1.1% today. Indianapolis based Allison Transmission, which makes parts for everything from emergency vehicles to school buses to tanks, charged up about a half percent today. Chris, who was telling us about Netflix and not reporting subscriber Data. Netflix up 1:1 and 3:10% during the session, 14% after hours. After those numbers came out, bonds were up Yield on the 10 year T note down 4.57%. You're listening to Marketplace.

[Jennifer Garner]

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[Kai Rysdal]

I'm Kai Rysdal. You have heard perhaps that there's an energy emergency in this country. That's what the President says, even though the United States is pumping more crude oil right now than any other country on the planet. And by a good measure too. Nevertheless, the White House wants more. Catch is, as Marketplace's Henry Epp reports, that oil and gas investors are not exactly clamoring for a big expansion of domestic production.

[Jennifer Garner]

There was a time when investors wanted to see oil companies invest a lot of money in more production. Back in the shale oil and fracking boom of the 2010s, there was this attitude and this outlook that if you weren't expanding drilling, then there was no way you're going to make any any money. Ellen R. Wald is a non resident fellow at the Atlantic Council. She says this was the case during much of President Trump's first term and so firms were producing more even at a loss, mostly because they were getting a lot of investment for that. Today, investors want something totally different. Tom Sang at Texas Christian University says, ever since oil prices recovered from the pandemic lockdowns, their message to oil companies.

[Kai Rysdal]

Has been we've been supporting you for a long time. We want some reward now for doing that, you're going to pay us dividends and you're going to do share buybacks.

[Jennifer Garner]

And obviously the formula for doing that is to have net positive cash flow. Translation, don't spend your money on new drilling projects. Give it to us so the Trump administration can go ahead and ease regulations and permitting requirements and open more federal land to oil and gas exploration, as the executive order promises. But, says Matt Smith at the analytics firm Kepler, we may not necessarily see the response in production because oil is just too cheap to justify drilling more wells. But Smith says all bets are off. If oil prices go up, that would be the thing that would drive on production and that would likely be in the shale plays, right? They're kind of short cycle investments, meaning more drilling in the Permian Basin in West Texas and New Mexico, not so much in Alaska or offshore. But higher prices wouldn't be ideal for consumers, Smith says. Right now, he says, around $75 a barrel is high enough for producers to expand their output incrementally, but low enough to keep prices down at the pump. I'm Henry Epp for MarketPL.

[Kai Rysdal]

What I'm about to say is in fact, true conventional wisdom to the contrary. Last year, worker pay outpaced inflation by a full percentage point. In 2023, pay beat prices by 9/10 of 1 percentage point. Even with prices still elevated as they are, that is good news for the American worker. Now, why is that happening? Here's Daniel Ackerman.

[Jennifer Garner]

Elizabeth Heilig runs the Wes Newton Cinema in Newton, Massachusetts. Before the afternoon's films start to roll, she's doing one of the key chores around here. I'm tossing popcorn right now, which is an important part of the popcorn making procedure. Tossing makes the kernel y bits no one wants fall to the bottom. And while scooping popcorn in the front of house is still done by hand, Heilig says other employee tasks are getting automated thanks to some new tech upgrades. The theater Management System, or tms, was literally installed on Wednesday of last week and we've been working the kinks out, so it is currently up and running. You know, fingers crossed the new software will let a single worker keep tabs on all six cinema screens at once. It will just eliminate a lot of running around and troubleshooting. If we're aware of what's going on in every theater from a central location. That means more films running on time without more employees, in other words, a productivity gain, which is happening all over the economy right now, says Edward Hearn, lead labor economist at UKG Labor Productivity is not everybody's like leading metric they.

[Kai Rysdal]

Want to talk about because it's kind of wonkish.

[Jennifer Garner]

But I do think it really is kind of the engine that's driving things forward. Hearn says businesses have made lots of capital investment in recent years. Think new factory machines or cinema management software to help workers get more done. Plus, some firms are still letting employees work from home, meaning people don't have to commute into the office or they have to, you know, travel a lot or anything like that. That sort of saps their hours from doing actual productive work. And all this productivity is why wage growth keeps beating inflation, says Betsy Stevenson, a professor of economics at the University of Michigan. Real wage growth has to come from productivity growth. Because we're doing more with less, we get more in the end. American workers have been doing more with less for two straight years, says Stevenson. That's not the case in other countries, and that's been the miracle of the US Economy. Americans don't realize how much other countries coming out of the pandemic have had productivity slowdowns and therefore have had real wage declines. Stevenson says as long as productivity in the US Keeps climbing, workers can expect their paychecks to keep outpacing inflation. So maybe an extra trip to the movies this month. I'm Daniel Ackerman for Marketplace.

[Kai Rysdal]

Okay, here's a story about climate change, steel, industrial byproduct, entrepreneurship, a little bit of thinking outside the box, and a dirt bike track. Here's Marketplace's Kaylee Wells.

[Jennifer Garner]

This patch of northwest Ohio is a quiet, sparse grid of farms. Right in the middle of it, just seven miles south of the Michigan border, is Delta Raceway. It claims to be the state's premier motocross track, but now in the off season, it's under a dusting of snow. Sean McCauley isn't here for dirt bikes anyway. On this 20 degree day in January, he's here for the small rocks we're walking on under the snow. They've been spread out to cover the surrounding campground and pathways, and he's interested in what those rocks are doing for him. So far we've removed probably as at least 100 tons of CO2 from the atmosphere and hope to remove over 1000 tons by the time the process is complete. Macaulay's background is in geochemistry and he's created his own business around these rocks. They're a man made byproduct of steel production called slag, which just by lying here can capture and store carbon. That's where Macaulay's company, Alkali Earth comes in. What we're doing is accelerating the natural processes that the earth uses to remove excess carbon dioxide with minerals. The company is a middleman connecting the steel mills that make this slag with the places that want to use it. So when you create steel, you can kind of think of it as like a massive soup. Yale University's Ella Milliken studies carbon storage. She says steel gets made by dumping all the reactive ingredients in a giant pot and making it really, really hot. The steel slag is essentially like, you can think of it as like this fat skim on top that you pour off that's just full of all of the reactive, really good stuff that you don't want in, like a steel bar. Then all that steel slag goes into a pit to cool the steel mill crushes it up into these little rocks, and then they sit there as inconvenient piles of byproduct frequently destined for landfill. But Millikan says slag is great at capturing carbon. She works with Yale professor Noah Plinofsky. The steel slag has calcium in its most reactive form. That calcium is going to rapidly react with CO2, CO2 from the atmosphere and eventually convert it to calcium carbonate. The gravel esque slag rocks around the racetrack are covered with an ashy brown substance. That's the calcium carbonate. That's what the carbon turns into. The carbon is removed from the atmosphere and is irreversible on a thousand, even a million year time scale. Natural rocks capture carbon dioxide, too. Steel slag does it many times faster, and it's really cheap, actually. Sean McCauley of Alkali Earth says steel mills will pay people to take it away. Macaulay and his company also subsidize the steel slag for buyers like Delta Raceway by selling carbon credits to companies that have carbon reduction climate goals. Businesses that bought carbon credits to help pay for the slag on the Delta raceway include Shopify, the e commerce platform, and Stripe, the digital payment firm. So it might be cheap, but the other thing about steel slag is that it's heavy and annoying to haul. There's over 1,200 truckloads that were delivered to the site. But the good thing is it was very close to the steel mill, and so the energy penalty wasn't that large in this case. For now, all of Alkali Earth's projects are in the Midwest, where the steel mills are. But Macaulay plans to scale up his business and thinks he won't have a problem doing it. Right now, we're the only ones we know of working with Steel Slag in this way. Now he's looking to China, India, Japan and Australia for his next expansion in Delta, Ohio. I'm Kayleigh Wells for Marketplace.

[Kai Rysdal]

This final note on the way out today. What pays $45,000 a year with benefits, offers extensive travel opportunities and lets you enjoy the open road? If you said driving the Planter's Peanut Nut mobile, this job is for you. 26ft of a giant fiberglass peanut on wheels. Hormel, which I learned today owns Planters, is accepting applications. I think you do have to wear that Mr. Peanut costume though. That is true. Our Digital and On Demand team includes Kerry Barber, Jordan Manji, Dylan Mietonen, Janet Wynn, Olga Oxman, Ellen Rolfus, Virginia K. Smith and Tony Wagner. Francesca Levy is the Executive Director of Digital and On Demand and I'm Kai Rysdal. We will see you tomorrow. Everybody, this is Marketplace apm.

[Jennifer Garner]

Hi, this is Julie from Centennial, Colorado. I listen to Marketplace on my drive home from all my 3 to midnight ER shifts. Kai and the gang keep me awake and interested for my 30 minute drive. For someone not in the financial field, it's a fantastic synopsis of all things business and economics. I love the commitment to showcasing a steady stream of brilliant and articulate women who are experts in their field field. Join me in supporting Marketplace with a gift today. Go to marketplace. Org Donate.