Slate Money – "The Time's Up Edition" (April 2, 2016)

Episode Overview

In this episode, Felix Salmon (host, Fusion), Cathy O’Neil (data scientist, blogger at Mathbabe.org), and Jordan Weissmann (Moneybox columnist at Slate) dissect the week's biggest stories in business and finance. Major topics include the rise of alternative work arrangements in the U.S. labor market, the state of unicorn financing as spotlighted by Spotify’s latest funding maneuver, and the failed acquisition of Starwood by China's mysterious Anbang Insurance. The team rounds off the episode with their signature Numbers Round, highlighting news on gender pay gaps and minimum wage policy.

Key Discussion Points and Insights

1. The Changing U.S. Labor Market: Alternative Work Arrangements

[01:55–15:34]

Discussion Kickoff

• Cathy O’Neil introduces a new study by Lawrence Katz and Alan Krueger, which revives a long-dormant government survey to analyze "alternative work arrangements."
• “Way more people are, are doing alternative work arrangements. So what does that mean? It means things like consulting...temporary servicing or on call work.” – Cathy O’Neil [02:45]

Findings of the Katz & Krueger Study

• Share of Americans in alternative work has jumped from 10% (2005) to 15.8% (2015).
  • Breakdown: 8.4% are independent contractors; 0.5% are app-based gig workers (Uber et al.); growing segments include contract firm employees supporting companies like Apple or Facebook [04:46–09:06].
  • “...actual like app type stuff...only 0.5% doing actual like app type stuff.” – Jordan Weissmann [05:30]

Labor Market Nuances

• Growth mostly in traditional contracting/subcontracting (cafeteria workers, bus drivers in tech companies), not "Uberification."
• Outsourcing makes unionizing and labor protections harder; this disproportionately affects racial minorities: 58% of subcontractors in Silicon Valley are Black or Latino, vs. only 10% of tech workers [10:13].

"A New Class of Workers"

• The team discusses how this segmentation creates new inequalities and hollowed-out labor protections.
  • “You might be working for Apple technically, but you’re not actually working for Apple.” – Cathy O’Neil [09:58]

Gig Economy's Real Size and Risks

• App-based gig work, including Uber and Instacart, is relatively small but rapidly rising.
• Most growth is in more conventional forms of contingent work (contractors, temps), not digital gig apps.
• Commentary on “mom replacement” companies (apps replacing traditional household/parental services), and tensions between labor fungibility and service quality.

“...this labor is much less fungible than the app companies thought that it would be.” – Felix Salmon [14:35]

Legal Considerations

• Companies face lawsuits over whether workers are misclassified as independent contractors, especially when they are trained or controlled in ways resembling employment.

2. Spotify’s Convertible Debt Round: What’s Really Going On?

[17:02–26:42]

The "Debt" That Isn't Really Debt

• Spotify, with $572 million cash on hand, raises $1 billion through convertible debt, not equity.
  • “Because this idea that it’s debt that you have to pay back is not really true because there’s no maturity date...there’s no amount of money that you have to pay back at the end of the day.” – Felix Salmon [18:14]

Why Avoid Equity?

• Raising equity now would mean admitting to a "down round" (a lower valuation than before—previously $8.5B).
  • "If they raised equity, then they would have had to admit that it was a down round." – Felix Salmon [19:18]
• The convertible debt sidesteps this embarrassment and keeps the $8.5B valuation optics.

How Does the Convertible Debt Work?

• Investors get rights to convert the debt to equity at a big discount (20% off the IPO price), with the discount increasing the longer the IPO is delayed.
• “That discount is where all of the juice is in this deal and that is a huge discount...” – Felix Salmon [23:05]
• If Spotify never IPOs, investors pile up more bonds, but liquidity only comes at IPO or acquisition.

Speculation on Spotify's Motives

• Some funds may actually be used to buy out existing shareholders, not invest in operations.
• Raises questions about the stability of the "unicorn" ecosystem in Silicon Valley.

3. The Starwood–Anbang–Marriott Saga: Chinese Acquisition Drama

[28:51–39:01]

Recap of the Bidding War

• Starwood Hotels (Sheraton, Westin, etc.) accepted a merger offer from Marriott, then received a higher all-cash bid from China's Anbang Insurance.
• “Anbang is a highly opaque but enormous Chinese insurance company with $219 billion in assets...” – Felix Salmon [28:51]
• A bidding war ensued; Anbang kept upping its offer until asked to prove it had the cash on hand.

Why Did Anbang Walk Away?

• Uncertainty around whether the company could actually deliver payment; Anbang’s ownership structure is obscure (“37 interlocking holding companies”), and prior cases (Forbes sale) show risk of payments failing to materialize [32:30–34:21].
• Regulatory/political issues: both U.S. (security concerns about Chinese ownership, especially near White House) and Chinese regulators possibly uneasy with the scale and nature of the deal [35:35–37:09].

Motivations for Chinese Buying Spree

• Chinese companies, flush with cash and facing currency devaluation at home, seek hard-assets abroad [34:38].

Stakeholder Perspectives

• Starwood loyalists hoped for Anbang to save their reward perks; Marriott's takeover would likely diminish these [38:03].

  “We just want late checkout and free wifi.” – Felix Salmon [38:40]

4. Numbers Round

[41:55–49:04]

Pay Inequality in U.S. Soccer

• Women's national soccer team players earn only 40% of men's; female coach is paid less than a rounding error compared to men's coach Jurgen Klinsmann ($3.2 million/year) [41:57–44:27].

  “She is literally making a rounding error on Jurgen Klinsmann’s $3 million salary.” – Felix Salmon [43:59]

• Despite superior popularity and TV ratings for women’s soccer, pay disparities remain stark [44:47–45:00].

$15 Minimum Wage in California

• California and parts of New York raise minimum wage to $15 (by 2022), a major labor win but with economic unknowns.
  • “600,000” = number of California manufacturing workers making less than $15/hour [45:22].
  • Debate centers on potential job losses and the complexity of attributing effects to the wage hike.

“If California doesn’t fall into the ocean economically, you know, people are probably going to think it’s a good idea to imitate it.” – Jordan Weissmann [48:22]

Notable Quotes & Memorable Moments (with Timestamps)

• “What they found was that the number had gone up from about 10% of the labor market in 2025up to about 15.8% depending on how you measure this stuff now. And so that's significant. I mean it's a 50% jump...” – Cathy O’Neil [04:26]
• “This labor is much less fungible than the app companies thought it would be.” – Felix Salmon [14:35]
• “It makes it really hard to unionize...because you’re ...not actually working for Apple.” – Cathy O’Neil [09:58]
• “If they raised equity, then they would have had to admit that it was a down round.” – Felix Salmon [19:18]
• “Anbang is a highly opaque but enormous Chinese insurance company with $219 billion in assets...” – Felix Salmon [28:51]
• “We just want late checkout and free wifi.” – Felix Salmon (on hotel loyalty program die-hards) [38:40]
• “She is literally making a rounding error on Jurgen Klinsmann’s $3 million salary.” – Felix Salmon (on U.S. women’s soccer coach) [43:59]
• “If California doesn’t fall into the ocean economically...people are probably going to think it’s a good idea to imitate it.” – Jordan Weissmann [48:22]

Important Segment Timestamps

• [01:55–15:34] — Alternative work arrangements and the true story of the U.S. labor market
• [17:02–26:42] — Spotify convertible debt funding scheme and implications for unicorns
• [28:51–39:01] — Starwood/Marriott/Anbang bidding saga and Chinese cross-border investments
• [41:55–49:04] — Numbers Round: U.S. soccer pay inequality and California’s minimum wage experiment

Summary Tone and Style

The discussion is witty, incisive, a touch self-deprecating, and grounded in a blend of data-driven commentary and lived professional experience. The hosts challenge conventions around buzzy economic trends, call out industry euphemisms, and dissect high-finance maneuvers with approachable analogies and humor.

For Listeners Who Haven’t Heard the Episode

This Slate Money episode is essential listening if you want to understand:

• The real drivers of America's gig/contingent work economy (hint: it's not just Uber).
• How Silicon Valley unicorns use financial engineering to avoid unpleasant truths about their valuations.
• The potential hazards and politics of Chinese companies buying up major U.S. assets.
• How policy debates, like minimum wage increases, are more complex—and less easily measured—than politicians claim.

With a sharp, conversational style, the hosts bring clarity to fast-evolving economic issues and inject solid numbers, memorable data points, and sharp one-liners along the way.