The New Economy

Credit card logos are adhered to a window at the entrance of a shop in Cambridge, Mass., in 2012. Credit card delinquencies are at their lowest level since Fitch began tracking them in 1991. (Steven Senne/AP/File)

Surprise! Consumers are managing their credit cards quite well.

By Bill Hardekopf, Contributor / 03.14.13

A record number of consumers are paying their credit card bills on time as well as paying a greater percentage of their monthly balance. These were some of the findings from the February data from Fitch Ratings.

The delinquency rate on retail credit card accounts declined in February to 1.61 percent, the lowest level since Fitch began its prime index in 1991.Delinquencies are defined as a credit card account over 60 days late. This February figure is 65 percent below the peak delinquency levels reached at the end of 2009.

Another all-time record was reached on the monthly payment rates (MPR) on credit cards. This figure represents the rate at which cardholders are paying back their balances. In February, this MPR climbed 1.09 percent to 24.83 percent, the highest level since Fitch began tracking this number.

Charge-offs reached a six-year low. A charge-off takes place when an issuer stops trying to collect on a delinquent account. Fitch's Prime Credit Card Chargeoff Index declined from 4.18 percent in January to 3.88 percent in February. In addition, this February charge-off rate is 26 percent lower than February 2012 levels.

These encouraging figures are, to some degree, due to the changes made during the economic downturn. At that time, issuers canceled many risky accounts, cut credit limits on millions of others, and made it harder for people with fair or poor credit scores to be approved for new credit cards. In addition, a greater number of cardholders seemed to have learned to not charge more than they can pay off at the end of the month.

– Bill Hardekopf is founder of Lowcards.com, an online credit-card information site.

Sayed Mouawad, right, of Providence, R.I., gestures while speaking to a company representative during a job fair in Boston. US employers ramped up hiring in February, adding 236,000 jobs and pushing the unemployment rate down to 7.7 percent from 7.9 percent in January. (Michael Dwyer/AP/File)

Jobs outlook: Housing growth will trump sequester woes

By Laurent Belsie, Staff writer / 03.09.13

Two-thirds back.

That's how far the United States has come in regaining the jobs it lost during the Great Recession. But it's been a long hard slog, taking nearly twice as long as the so-called "jobless recovery" of the early 2000s. Whether the current recovery speeds up from here depends on whether private sector growth proves stronger than public sector contraction.

So far, the signs are tilting positive.

"The private-sector news on the economy continues to be good, and we would be upgrading our forecast of 2013 growth slightly were it not for the federal spending sequester that began on March 1," wrote Nigel Gault, chief US economist for IHS Global Insight, in an analysis. "The sequester will not derail the recovery, but it does slow it down."  ( Continue… )

In this AP file photo, President Obama delivers his State of the Union address on Feb. 13. The Obama administration came out in support of laws changing the restrictions on unlocking cellphones on Monday. (Charles Dharapak/Pool/AP)

Obama proposes $9/hour minimum wage. OK, says business owner.

By Liz Fuller-Wright, Correspondent / 02.13.13

Many employers cringe at the thought of paying higher salaries, but after hearing President Obama say that the current minimum wage isn't enough to keep workers out of poverty, one businesswoman actually did. On the spot.

"Obama says to raise minimum wage to $9.00/hr. So I did!!!" posted Kelly Wilson, a small business owner in Virginia, on her Facebook wall. " If my little company 3D Sports can do it, maybe some of the big rich companies can do it too!!!"

Raising wages – often the lion's share of expenses for small businesses – won't be easy.

"It's going to pinch us a little bit, there's no two ways about it," Ms. Wilson notes. 3D Sports offers coaching in baseball, basketball, field hockey, softball, and soccer, so in addition to her year-round crew of six to eight, she hires 15 to 20 coaches each summer.  "I already run a pretty tight ship, in terms of the number of people," she adds. ( Continue… )

Chelsea Welch, Applebee's waitress, fired. How do you handle mandatory tipping?

By David Clark Scott, Staff writer / 02.01.13

You've been hit with a mandatory gratuity of 18 percent. What do you do?

Well, Pastor Alois Bell left a biting note on her Applebee's receipt: "I give God 10% Why do you get 18?"

At Applebee's and many other restaurants, a gratuity becomes mandatory if the party is more than six or eight people. Do you have to pay it?

An Applebee's waitress posted a photo of Pastor Bell's receipt and it went viral online. The St. Louis pastor called the Applebee's manager to complain. Bell reportedly said her notation on the receipt was a “lapse in judgment that has been blown out of proportion.” “My heart is really broken,” said the 37-year-old Bell. “I’ve brought embarrassment to my church and ministry," she told The Smoking Gun.

Applebee's responded Jan. 30 by firing Chelsea Welch, the waitress who posted a photo of the receipt. In a statement, Applebee’s spokesperson Dan Smith reported that, “Our franchisee has apologized to the Guest” for violating the patron’s “right to privacy.” The individual responsible for the leak “is no longer employed by the franchise,” Smith added.

Chelsea Welch told Yahoo News that she was surprised that Applebee's fired her, "especially because there was nothing specific in the employee handbook admonishing this behavior."

"I had no intention of starting a witch hunt or hurting anyone. I just wanted to share a picture I found interesting," she said. “I come home exhausted, sore, burnt, dirty, and blistered on a good day. And after all that, I can be fired for ‘embarrassing’ someone who directly insults their server on religious grounds.”

Obviously, Chelsea Welch might have handled the pastor's snub differently, especially if she'd known that her job was on the line. But how else might Pastor Bell have handled the mandatory tip? When did a tip become something that a customer had to pay, instead of a reward for good service?

The legality of mandatory tipping varies from state to state, depending on how the tax code treats tips. But there have been at least two recent cases where restaurant customers have refused to pay a mandatory gratuity. In both cases, the restaurant management called the police and had the customers arrested. And in both cases, the prosecuting attorney's chose not to press charges, saying that any gratuity is by its nature discretionary or voluntary.

But are there other options when faced with a restaurant's mandatory tipping policy?

Personal finance blogger Len Penzo offers 5 ways to avoid the mandatory tip, including:

What do you think of Chelsea Welch's response to Pastor Bell's note? What do you think of mandatory tipping?

Read entire post | Comments

Prospective job seekers talk with employers during a job fair in Cuyahoga Falls, Ohio, last month. The economy added 157,000 new jobs in January, which is not enough to bring down unemployment. (Tony Dejak/AP/File)

US job growth like 'Groundhog Day' – all over again

By Laurent Belsie, Staff writer / 02.01.13

T-E-P-I-D.

That's how one spells job growth in the United States today.

In the first key economic report since Congress's fiscal cliff deal, employment in January didn't fall off a cliff. But it didn't set any growth records, either.

Instead, the economy produced 157,000 net new jobs, the Department of Labor reported on Friday. That was slightly below the consensus expectation among economists and well below the 175,600 average that the economy had been producing over the previous 27 months. The unemployment rate ticked up from 7.8 percent in December to 7.9 percent in January. ( Continue… )

The Rev. Martin Luther King Jr. speaks at a meeting of the United Neighborhood Houses of New York in the Biltmore Hotel in this 1966 file photo. (John Littlewood/The Christian Science Monitor/File)

Martin Luther King: His 'dream' is great business strategy

By Dave Lavinsky / 01.21.13

“I have a dream that one day, down in Alabama … little black boys and black girls will be able to join hands with little white boys and white girls as sisters and brothers.”

– Martin Luther King Jr.

Dr. King had a dream in 1963 – and while it took many years, eventually it came true. Today in Alabama and across the United States, boys and girls of all religions and races hold hands, play together, and are taught the perils of discrimination.

The reasons for King’s success were simple. First, he defined his dream, and then, he created a plan for how his dream could be realized. This same strategy can be applied with great success to businesses.

Most businesses start with a dream. Entrepreneurs and founders generally dream of a new product or service they will introduce – and the riches that will follow. The problem is that most businesses don’t realize the success they initially envisioned. ( Continue… )

Journalists surround the Ford Atlas concept pickup at the North American International Auto Show in Detroit, Tuesday, Jan. 15, 2013. After strong gains in 2012, auto sales are expected to pick up even more in 2013, although a return to normal probably will have to wait until 2014. (Carlos Osorio/AP)

Home, car sales getting back their groove

By Laurent Belsie, Staff writer / 01.15.13

Cars and homes. If those two sectors of the US economy can get back to normal, there's hope that the United States can shake off the sluggishness of the current recovery and begin to grow at a faster pace.

There are positive signs in both sectors, although a full recovery probably will have to wait until next year. Home and car sales lost so much ground during the Great Recession that it will take time to get back to normal.

The momentum is certainly building.

As the world’s auto industry descends upon Detroit this week for the North American International Auto Show, there are notes of optimism that the industry is poised to complete its comeback from the dark days of the Great Recession. ( Continue… )

Facebook founder and CEO Mark Zuckerberg speaks to reporters at Harvard University in Cambridge, Mass., in this 2011 file photograph. Most entrepreneurs won't be the next the next Zuckerberg, but all entrepreneurs share this one key trait. (Brian Snyder/Reuters/File)

The one thing it takes to be an entrepreneur

By Rich Enos, Contributor / 01.06.13

This article was supposed to be about why you should consider starting a company in a sluggish economy, but let's face it – there is never a perfect time to start a company. For those of us who have considered hanging out a shingle for a new venture, the decision and the process are usually fraught with concerns, trade-offs, and uncertainty.

That's why you should ignore the broader macroeconomic factors and instead focus your energy on building the nerve to take the leap. I've talked with hundreds of other entrepreneurs over the years, and I'm convinced that the single defining factor of entrepreneurs is that they have the gumption (or foolhardiness) to step across that threshold and enter the world of being self-employed. Once you take that step, there is no looking back – you'll pour your heart and soul into making your venture successful.

It's always going to be hard to take the leap to be an entrepreneur, and if you let yourself go down the wrong path, there are a million ways to talk yourself out of starting a business. The list goes on and on. So the simple truth is if you want it badly enough you simply need to overcome that fear. ( Continue… )

In this February 2012 photo, protestors wearing Guy Fawks masks hold the logos of the international hacker group Anonymous during a demonstration against the Anti-Counterfeiting Trade Agreement, ACTA, in Budapest, Hungary. The shadowy world of Internet hackers and pranksters is emerging as an important counter to government attempts to regulate cyberspace. (Janos Marjai/MTI/AP/File)

Why we need pirates in cyberspace

By Jean-Philippe Vergne, Contributor / 01.05.13

 Russia and China recently submitted a proposal to renew the regulation of the Internet at the World Conference on International Communications (WCIT).

In a nutshell, the two countries suggested bringing the Internet under the control of the United Nations’ International Telecommunications Union. By proposing multinational control over the Internet, including over its numbering and naming system, China and Russia upset a few governments, especially the Obama administration. Why?

First, because the numbering and naming system is currently supervised by ICANN, a non-profit organization closely tied to the US government. And second, because the United States is the home of the most powerful private players that shape the norms of cyberspace – while conducting a very profitable business (think of Google, Twitter, Apple, Cisco, Facebook, and Amazon). Quite understandably, the US would rather let these friendly corporations run their businesses without the interference of foreign powers.

If we consider cyberspace a common good for humankind, providing equal power and voting rights to all sovereign states represented at the United Nations seems appealing at first sight. But think about the implications: the US, one vote; Saudi Arabia, one vote; Iran, one vote; Zimbabwe, one vote. As it turns out, a large proportion of UN member states are undemocratic or outright dictatorial. So it may not be not such a good idea to let the UN regulate cyberspace. ( Continue… )