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How much does the stuff we buy actually cost?
Apr 1, 2024
Episode 1130

How much does the stuff we buy actually cost?

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We'll discuss the knock-on effects of California's new fast-food minimum wage.

Starting today, many fast-food workers in California will be paid $20 an hour under a new minimum-wage law. It’s time for a Kimberly rant! We’ll get into the subsidization of low-wage work, the reals costs behind all the stuff we buy — from burgers to clothes — and who’s picking up the tab. Plus, guest host Reema Khrais reminisces about the early years of Google as the company celebrates 20 years of Gmail.

Here’s everything we talked about today:

We love to hear from you. Send your questions and comments to makemesmart@marketplace.org or leave us a voicemail at 508-U-B-SMART.

Make Me Smart April 1, 2024 Transcript

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Reema Khrais 

Yeah, I think we can start.

Kimberly Adams 

Hello everyone, I’m Kimberly Adams, and that sound back near you is Reema Khrais. Welcome back to Make Me Smart, when we make today make sense. Kai’s out this week, so we’ve got Reema here. And she is the host of the Marketplace podcast “This Is Uncomfortable.”

Reema Khrais 

Thanks for having me. It’s good to be here. Thank you for joining us today on this Monday, April 1. The day of fools.

Kimberly Adams 

Yes, just heads up, we are not planning to play any tricks on you on the show.

Reema Khrais 

We don’t have capacity for that.

Kimberly Adams 

Yes. I got off the metro this morning, and this guy and I have headphones in I’m in my audio book, and this guy was like, “you dropped some money on the ground.” And I was like, and you know, and someone’s shouting at me. So, I look. He’s like, “April Fools.” Really? Why? And why me?

Reema Khrais 

That feels like kind of a sitcom like that thing. Like, does that actually happen to people? Apparently so, to you.

Kimberly Adams 

Like I was thinking that, I mean, my guard was up. I was like, is this somebody about to attack me and use a distraction to rob me.

Reema Khrais 

Right, that’s startling. Yeah.

Kimberly Adams 

Instead, it was just like, oh, April Fools, not a fearful attack. Hahaha. Anyway, we’re not doing April Fools’ today. We are just going to do some news and some smiles. So, Reema, what caught your attention?

Reema Khrais 

Okay, I’ll go first. You know, actually, the thing that caught my attention is the thing that you’re going to talk about later, and then I pivoted. We’ll get to yours in a minute. So, my news fix is related to the fast fashion industry, which is something I’ve been thinking about a lot lately because our team over at “This Is Uncomfortable” has been working on some episodes about this multibillion dollar industry and its wildly excessive production and all the ways that feeds overconsumption and the exploitation of garment workers. And so, this morning, I saw this article that piqued my interest about the ultra-fast fashion brand known as Shein and how it is currently awaiting approval for a stock market listing. Well, actually before I keep talking about Shein, how familiar are you with this company?

Kimberly Adams 

I’m very familiar with their ads and with Temu and all those things. I’ve been following mainly the news about how Congress is trying to change the import laws because Shein is getting all of their stuff imported, like under the cap of how much you have to start paying taxes and tariffs and stuff and how they’re exploiting this loophole. And it’s contributing to fast fashion, which I’m sure you all will talk about in the thing.

Reema Khrais 

Yeah, we don’t go so deep into Shein in particular, but yeah, that’s whole other story in some ways. It’s a fascinating company like, it’s been all over the news for years now. So yeah, it’s an online brand founded in China more than a decade ago, I believe. And it’s known for selling very cheap clothes, like I’m talking $5 bathing suits, and you know, $20 floor length gowns. If you’re Gen Z, there’s a good chance you know about Shein. The brand is very popular among younger people. I feel like I was first introduced to it through social media, like you see, these Shein haul were basically young influencers are usually in their bedrooms, and they’ve got this like huge bag of clothes from Shein that they’ve just bought, and they dump the items all out, and they try them on, and they rate them and you know, try to inspire people to also buy these things. Anyway so, Shein has become one of the most profitable fashion companies in the world. Last year it recorded sales of about $45 billion. And like I said, it’s now awaiting IPO approval. The company is thought to be considering a listing on the London Stock Exchange because it does not think the US Securities and Exchange Commission will approve its IPO for several reasons, but you know, because of the company’s heavy presence in China. And I should say even though Shein was founded in China, it eventually moved its headquarters to Singapore. And it makes all of its sales outside of China now, but lawmakers have said that the company would need to disclose more about its operations in China because, you know, if you’re not familiar with this IPO news, there’s still a good chance. Like I said, you’ve seen Shein in the headlines for something else. The company has faced allegations over the use of forced labor, specifically exploiting the labor of Uighurs. It’s also dealt with allegations of stealing designs from independent designers, and also using toxic chemicals in their clothing. It’s a messy company in a lot of ways, which obviously contributes to the skepticism of lawmakers to allow a public offering here in the US. So that’s, you know, it’s been in the news for a little bit but made headlines today, so we’ll see what happens Yeah, it’s fascinating and honestly, kind of scary to think about, just like how massive a lot of these fast fashion companies have become. And you know how much that contributes to unsustainable practices, both for the environment and for labor, which again, we’ll get into in our, you know, our two part series that we’re doing, which actually starts this Thursday on “This Is Uncomfortable,” so, you know, I would recommend checking that out.

Kimberly Adams 

I bought a fast fashion dress a couple of weeks ago and didn’t realize that I was buying a fast fashion dress because I was looking for an outfit for my cherry blossom party. And I found this dress, and I don’t usually buy clothes on Amazon because I’m always suspicious of where like, where it’s coming from and everything. But the price more or less seemed to align with like, the type of product I thought I was getting. And, you know, it looked well-made and whatever. And I’ve ordered it only to get notified afterwards that it’s going to take like multiple, multiple weeks to get here. It’s being shipped directly from China for free shipping. And I was like, okay, I just bought a fast fashion item.

Reema Khrais

Yeah. Yeah.

Kimberly Adams

It still hasn’t arrived yet. And so, this dress did not arrive in time for the party. So, it may make an appearance next year depending on how it looks. But this does tie in to one of my two news fix items, which is about like just how much things really cost. And one of the reasons I generally try to avoid fast fashion is because I had a friend of mine when I used to work back at NPR, who was in fashion school as well, and would talk about how much effort and labor it takes to make a piece of clothing. Right? And ever since then in watching her Twitter feed when we were still on Twitter, you know, she would talk about fast fashion quite a bit and how it’s just like. And one of her points was like, if you are buying a piece of clothing that costs $5, it is guaranteed, the person making that piece of clothing is not making a livable wage. The end.

Reema Khrais

They aren’t. They’re not.

Kimberly Adams

Like this is just that. Yeah. And so, I am always, and I say this from a place of privilege, where I can afford to buy clothes that cost more than $5. I try to avoid fast fashion when I can. This really ties into some stories that I was looking at today. We covered it on Marketplace. It’s everywhere else about California’s new fast-food minimum-wage kicking in today. And so, for people who haven’t been following this. In California, they passed a law so that fast-food workers will have to make at least $20 an hour. I’m reading for the New York Times here. “Significantly above the general statewide minimum of $16 an hour. The law takes effect today propelling California’s fast-food workers to near the top of what minimum wage earners make anywhere in the country, second only to the $20.29 an hour minimum for many employees in Tukwila, Washington, a small city outside of Seattle.” Now, there’s all sorts of interesting things about this law and who’s covered and who isn’t. But if you look over at The Wall Street Journal and many other conservative commentators, they’re talking about how bad this is going to be. How it’s going to mean franchises might shut down and how, you know, challenging the argument that raising the minimum wage actually does anything to address poverty. There’s a lot of different research about that. Most of the time saying that the increases to minimum wage does alleviate poverty. But, you know, I’ll let the economist debate that one out. But one of the things they point out in The Journal is that there is some research showing that the increase in fast food prices that are likely to come as a result of this will be borne disproportionately by low income families, people who rely on fast food because it is cheaper than going to a restaurant or because you’re working a bunch of jobs and you don’t have time to make a meal. There are all sorts of economic knock-on effects of this, but what it makes me think about is how much stuff actually costs, right? And who pays for us not paying for the full price of something. So, in the example of clothing that you were bringing up. If you’re paying $5 for a piece of clothing, who is paying the difference? And in that case, it’s the worker not making a livable wage and suffering, or the United States Government losing out on the tariffs because they’re exploiting a loophole to get this product into the United States without paying, you know, the relevant tariffs or taxes or whatever. When you’re talking about fast food, you know, was it ever really a $2 hamburger? Or was it a $2 hamburger subsidized by the person making that hamburger not making a livable wage and therefore relying on government assistance, whether it be Medicaid because their employer wasn’t paying for health care, or food stamps, or SNAP benefits or welfare or cash assistance from the federal government. Somebody was filling that gap, right?

Reema Khrais

Such a fair point.

Kimberly Adams

And so, even if you’re paying $2 for your burger, you were paying for that in some other way because your tax dollars or some other social structure was filling in for what you weren’t paying for in that burger. And more than likely, the worker was also paying for it by having a less than livable structure in their life. And so as wages increase, especially in these sort of low income, traditionally low income jobs, low paid jobs, products will get more expensive. So, does that mean that we as consumers are eating more of that costs and the federal government and the social safety net programs are eating less of it? Does it mean that it’s just that the workers are getting some gains, and companies are going to use that as an excuse to raise prices even further, and more of that profit is going to just go into for shareholders and things like that. But I think it’s important, as we talk about prices, to recognize that for a lot of these goods that have historically been very, very cheap. We have not been paying the full cost of them all along. And I’m almost done with this rant because the Washington Post had a story a couple of weeks ago about how so many people are complaining at the skyrocketing cost of getting your hair done, whereas you might remember, when you were younger, being able to pay $20, $40, $50 to get your hair cut, and now it is literally hundreds of dollars.

Reema Khrais

200.

Kimberly Adams.

200, right. All these things. And so, just reading a section of this piece. You know that hairstylists. Let me scroll down to this part that I wanted to read, right. “Social media has provided a way for stylists to share prices and techniques, creating an online community that stretches from small towns to big cities, and when they started talking to one another, they realized they could look at their business differently. They were barely making any money. The median annual salary for a hairstylist in 2022 was $33,400 a year, or about $16 an hour. Pre-COVID, it was even worse, about $12.54 an hour or $26,090 annually. They didn’t have any money saved for vacation, and if they got sick, they didn’t get paid and had to work overtime to get back on track. Charging more or going hourly allows for stylists to create a safety net for themselves.” So, were we ever really paying the actual cost of getting your hair done? And so, anyway, this has just been on my mind, you know, because I too complain about high prices. I’m going out less. I’m eating out less. In general, I am consuming less because things are more expensive. But if the tradeoff is that the people providing these goods and services are making a livable wage, you know, great. And, you know, here in DC, restaurants have really been struggling because we increased the tip minimum wage here in DC. And a lot of restaurants say they can’t do it, and they’re shutting down. It’s like, okay, that really sucks. But does this mean the beginning of an end of a business model that was designed to be untenable or to never pay people livable wages. Anyhow.

Reema Khrais 

That was beautifully said, so much nuance that I feel like I missed in a lot of the coverage reading about this this morning, but to your point.

Kimberly Adams

I’ve been thinking about this for a long time.

Reema Khrais

Yeah, yeah. Anyway.

Kimberly Adams 

I had another story, which is about how there’s not going to be any real wealth transfer from the boomers to younger generations because they’re going to spend it all on health care, but we can talk about that later in the week. Let’s move onto to the smiles.

Reema Khrais 

All right let’s do smiles.

Kimberly Adams 

All right. What’s your smile since I just ranted.

Reema Khrais 

Dude, I really struggled with a smile today.

Kimberly Adams 

It’s like that sometimes.

Reema Khrais 

Yeah. I did see something a few minutes ago that made me smile. Okay, there was this. Well, there’s like a sobering reality to it too, but I’ll focus on the positive. So, there was an article in CNN about how scientists discovered the fossilized skull of a giant river dolphin, a species that has thought to have fled the ocean and found refuge and peruse Amazon rivers, I believe. Yes, peruse Amazon rivers 16 million years ago. And so, there was this really beautiful picture on the CNN article of what this dolphin may have looked like. And according to the fossils, these dolphins are huge, like twice the size of a person, 11 feet long. And the discovery apparently gives some insight into the evolutionary history of freshwater dolphins because these creatures apparently are extremely rare in the fossil record because there just aren’t a lot of dolphins in freshwater ecosystems and the strong water currents have made it hard to preserve fossils over time. Anyway, it’s fascinating because, you know, it’s this remarkable discovery and it’s making scientists wonder how many other records of extinct river dolphins are waiting to be discovered. And I guess the not so happy news is that it also highlights, this discovery highlights the looming risks of the world’s remaining river dolphins, which apparently faces similar extension. Extension threats.

Kimberly Adams

Extinction.

Reema Khrais 

Anyway.

Kimberly Adams 

Um, I have to say, as soon as I saw this story, all I could think of was that scene from Hitchhiker’s Guide to the Galaxy. The dolphins are like jumping out of the water saying so long, thanks for the fish right before the Earth gets destroyed, which, you know, if you’ve never seen the movie, it’s not funny, but it’s funny if you’ve seen it. Speaking of funny, my smile, sort of April Fool’s related, it is not actually an April Fool’s thing. But it was a great story in the Associated Press about how Gmail, which had its anniversary today. What is it? The 20th anniversary of Gmail, I think. When Gmail launched apparently, it was so stunning that people thought it was an April Fool’s joke because they launched it on April 1. And Google at the time had sort of a record of doing kind of pretty significant April Fool’s Day pranks on people. And they’ve been doing them for a couple of years. And Gmail, which seems sort of basic in the Internet right now was really astonishing back in the day. Just reading here from the AP, “it was a free service boasting 1 gigabyte of storage per account, an amount that sounds almost pedestrian in an age of one-terabyte iPhones. But it sounded like a preposterous amount of email capacity back then, enough to store about 13,500 emails before running out of space compared to just 30 to 60 emails in the then-leading webmail services run by Yahoo and Microsoft. That translated into 250 to 500 times more email storage space.” And to the point that apparently, when they launched it, the Google engineers highlighted to the reporters that there wasn’t a delete button easily accessible on the main screen because people wouldn’t need to delete email as much because there was so much storage. But, yeah, people thought it was an April Fool’s Day joke because it was so groundbreaking at the time in 2004.

Reema Khrais 

Yeah, I came across that article this morning too that made me smile. They, I remember, there was a line in that article that said, to your point, is they had a history of pulling off these pranks that one year they said they were going to roll out a scratch and sniff feature on its search engine.

Kimberly Adams 

I remember that. I remember that prank, actually.

Reema Khrais

Oh, you do?

Kimberly Adams

I remember that prank. Yes, I’m old enough to remember the Google pranks. I’m old enough to remember the launch of Facebook.

Reema Khrais 

Oh, yeah. Now, I remember that. Well, I remember even when they rolled out Gmail, I was in high school. And I remember ditching my Yahoo account, sweetandsour435@yahoo, and adopting a more mature adult Gmail account.

Kimberly Adams

I love that you remember it. I love that you remember that.

Reema Khrais

And it was a big day. Yeah. I’d religiously check my Gmail every day after school even though no one would send me anything because I was 13.

Kimberly Adams

And now you wish no one would send you an email.

Reema Khrais 

I know right. I’m like, please stop

Kimberly Adams 

All right, that is it for us today. Tomorrow, instead of our usual deep dive, we’re going to bring you an episode from another one of our amazing Marketplace podcasts. It’s from the latest season of Marketplace’s climate solutions podcast “How We Survive.” And Amy Scott and the “How We Survive” crew are going to go on a road trip to check out some high-tech water solutions that are helping the southwestern US hopefully adapt to the hotter and drier climate, which I know in much of the country will not be very dry this week with the storms coming through. Anyhow look out for that in your feeds. Make Me Smart is produced by Courtney Bergsieker. Today’s program was engineered by Charlton Thorp. Ellen Rolfes writes our newsletter. Our intern is Thalia Menchaca.

Reema Khrais 

Marissa Cabrera is our senior producer. Bridget Bodnar is the director of podcasts. And Francesca Levy is the executive director of Digital. I feel inspired now to go to my Gmail and just delete, delete, delete, delete.

Kimberly Adams 

I’m scared to look at it.

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