Economics in the News – Aug. 5-11, 2024 

Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.

o   The 2024 Summer Olympic Games concluded in Paris, passing the torch to Los Angeles as hosts for the 2028 Summer Olympics. It will mark the third time that Los Angeles has hosted the Olympics, with the 1932 and 1984 Olympics coming to the LA area. Preparations are already underway, with plans to bolster the city’s infrastructure to accommodate hundreds of thousands of visitors.

Several projects for the city include expanding the rail system, revamping the airport and a renovation of the convention center that is expected to host the competition for five sports. The projects are being funded by a combination of federal and city tax dollars. Former LA mayor Eric Garcetti said the expectation for the city was to turn a $1 billion profit. The last Summer Olympics the LA area hosted in 1984 is widely considered the most financially successful Olympics in history, in part, due to the already existing facilities. Many politicians advocating for a bid to host the Olympics often cite the economic boom it will bring, but many times, the host city spends over budget due to having to build facilities from scratch. LA has the opportunity to avoid that by emphasizing sustainability. [The New York Times]

o   Is Disney pricing out their most loyal fans at their theme parks? The price to go to Disney has climbed significantly in recent years, so much so that regular park goers are questioning whether or not the price is worth it. Disney’s leaders have acknowledged a slowdown at the parks because of financial stress for lower-income earners and alternative travel for high-income earners.

Data suggests that the average cost of a trip to Disney has risen 25 percent since 2019, including 70 percent for services that used to be complimentary. Between 2014 and 2025, the base price for tickets has climbed 32 percent, including a 90 percent increase for the highest priced tickets. In 2025, the cost for an adult one-day ticket will be $119, with higher ticket prices at $199. Accommodations for hotels also cost an average of $187 per night. [The New York Times]

o   There is bad news for workers seeking a hefty raise. Companies are making plans to trim pay raises next year, ending a period where workers have lost much of their leverage. With hiring slowing, employers are controlling payroll costs by cutting or freezing bonuses, and doling out fewer and smaller merit increases. Some companies are also trying to fill roles in lower-cost cities, offering smaller salaries than what the previous person was receiving.

A cooling job market means that managers have their pick of hires, helping to rein in the pay. Fewer new hires are having success in negotiating a salary, down five percent compared to last year. Some of the biggest drops have been in white-collar roles, including in finance, where new hire pay rates have fallen 9.2 percent since last year. [The Wall Street Journal]

o   South Korea recycles 98 percent of its food waste, banning food scraps from landfills and mandating that all residents separate their food waste from their trash and recycling. It is one of a few countries with a nationwide system for food-waste management. By comparison, 60 percent of food waste in the United States goes to landfills, while only five percent is composted and 15 percent is turned into energy, according to the 2019 Environmental Protection Agency.

Globally, the United Nations Food and Agriculture Organization says that up to 31 percent of all food gets wasted – enough to feed more than one billion people. A typical person creates about 265 pounds of food leftovers every year. In South Korea, mixing food with regular trash may result in a fine. There’s even a small fee for customers who leave leftovers on their plates at restaurants. Sorting the food waste has proven to be difficult and expensive. [The Washington Post]

o   Politicians and many in the middle and lower classes have pushed to tax the rich via a wealth tax. The argument being that billionaires are accumulating massive amounts of money while paying less in taxes. The Brazilian government has a proposal to levy a two percent global wealth tax on the uber-rich, impacting the 3,000 wealthiest people in the world.

According to economists, a two percent wealth tax would create an extra $250 billion per year which could go toward addressing issues such as climate change or global poverty. The Brazilian proposal has issues, mostly that key countries like the United States and Germany expressing opposition. [NPR]