Economics in the News – March 25-31, 2024
Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o Companies are hopeful that artificial intelligence (AI) will make their businesses more efficient. However, economists aren’t so sure. Companies, such as Wendy’s, Ben & Jerry’s, and Abercrombie & Fitch, have recently announced new initiatives that rely on AI. Some economists believe that productivity increases due to AI could be less broad than the 1990s when computer manufacturing and technology improved to help most businesses become more efficient.
Other economists believe that AI will spur a rapid boost in productivity later this decade. That’s what many companies are hoping for, as they begin to use the technology to write marketing emails to assist in setting prices to assisting human resources with employee questions and concerns. [The New York Times]
o Nearly eight million customers at AT&T had to reset their passwords after it was determined that their customer data had been compromised during the Feb. 22 widespread company outage. During the outage, AT&T customers throughout the United States experienced a temporary down connection for several hours. In addition to those nearly eight million customers, 65.4 million former account holders were also affected.
TechCrunch reported the passcode reset first, said that it informed AT&T that the leaked data contained encrypted passcodes that could be used to access AT&T customer accounts. AT&T has previously said that it did not know whether the leaked data “originated from AT&T or one of its vendors.” [The New York Times]
o Early Tuesday morning a cargo ship slammed into the Francis Scott Key bridge in Baltimore, causing the bridge to collapse and killing six construction workers on the bridge. The ship, named The Dali, was built in 2015 and was loaded with 4,700 40-foot shipping containers. The Dali isn’t the first shipping vessel to topple a US bridge. In 1980, The Summit Venture slammed into the Sunshine Skyway Bridge near Tampa, Fla., killing 35 people.
Ships have become supersized in recent decades as owners seek to reduce costs, lower fuel emissions, and maximize capacity on the most popular routes. Workers have accommodated the larger ships too. The Panama Canal was expanded in 2016, making it possible for larger ships to cross from Asia to the United States East Coast. The Dali was barely eligible to cross the Panama Canal, before unloading in Baltimore. The biggest vessels require large shipping channels, large berths, and supersize cranes that only the world’s largest ports can accommodate. [The Wall Street Journal]
o Brookdale Senior Living -- the nation’s largest assisted-living chain – uses an algorithm-based system to set its staffing at properties across the country. The system, known as “Service Alignment” is supposed to aid in providing the care necessary to seniors, but managers say that the system fails to capture the nuances of caring for seniors’ needs. Experts believe the approach is not suited to caring for seniors. Businesses are constantly timing tasks to improve efficiency, helping companies gain a clearer picture of the total labor needed to build a product or perform a service.
While many assisted-living facilities market themselves as all-inclusive resorts for seniors, many employ low-wage workers to perform a series of discrete, predictable tasks. Brookdale began using the algorithm-based system in 2013 with the goal of making sure the facilities weren’t overstaffed. Brookdale has said that its algorithm is set to staffing levels above statutory minimums in states that require them. But data covering the seven facilities in North Carolina show that the facilities failed to meet the state’s clinical care staffing minimums during at least 10 percent of shifts from 2016 to 2022. The problems are larger than Brookdale, but since 2018, more than 100 residents have died after wandering away from assisted-living facilities or being left unattended outside. [The Washington Post]
o Chocolate Easter Bunny’s and eggs were more expensive this year. That’s because cocoa prices have surged to the point where the bean is more valuable than some precious metals. It’s even surged faster than Bitcoin. Cocoa topped $10,000 per metric ton last week, more than doubling in the first three months of the year and tripling over the last 12 months.
The reason is due to a steep decrease in supply. Most of the world’s cocoa beans are grown in West Africa, where extreme weather patterns have heavily impacted harvests. As a result, harvests this year are expected to fall short of demand for the third consecutive year. [NPR]
