0:10

Hello! Welcome

0:13

to Slate Money, your guide to the

0:15

business and finance news of the week.

0:17

I'm Felix Hamlin of Axios with Emily

0:19

Peck of Axios. Hey, Felix. I'm

0:22

here with Elizabeth Spires, who writes The

0:24

New York Times, and it's amazing. Hello.

0:27

We're going to talk about the FTC, run

0:29

by Lena Kahn, who has come out

0:32

with a sweeping ban

0:35

nationwide on non-compete clauses. We are

0:37

going to talk about restaurant reservations

0:39

and whether we should start having

0:41

to pay for them. We

0:43

are going to talk about the Biden

0:46

administration's crackdown on airline

0:49

fees and forcing airlines

0:52

to give refunds. It's a good one. It's

0:54

coming up. It's late money.

1:04

Emily, we had massive news this week. What is

1:06

it? So, this week, after

1:08

more than a year of saying it

1:10

would do this, the

1:12

Federal Trade Commission announced a rule

1:15

banning non-compete agreements in employment contracts.

1:17

Those are the agreements that you

1:19

have to sign, or some people

1:21

have to sign, 30 million estimated

1:24

workers have signed, that

1:26

say if you leave your job at your

1:29

current employer, you can't go work for a

1:31

competitor for a certain amount of time, or

1:33

you can't go work for a competitor within

1:36

a 50-mile radius. They used

1:38

to be used mostly for executives,

1:40

but in more recent years, employers

1:43

have really gotten into non-competes using

1:45

them famously for the sandwich

1:48

maker Jimmy John's. Use

1:51

them. A lot of doctors

1:53

are subject to non-competes and nurses and

1:55

other kinds of healthcare workers. As

1:58

the years have gone by, people have really started

2:00

to complain about them. And the

2:02

FTC is saying, you know, they

2:04

make it harder for, you know,

2:07

workers to take new jobs, to

2:09

get raises, they blunt competition between

2:11

firms for workers, and that helps

2:13

keep wages low. So yeah,

2:15

this week, they put out this rule, banning

2:18

them, it's supposed to take effect in 120

2:20

days, which would be in about August. And

2:22

at that time, if you

2:24

have signed one of these agreements, it would be voided,

2:27

unless you are a senior executive making more than things

2:29

$151,000 a year, then you still have to abide by

2:31

your non-compute. But

2:35

going forward, even those executives can't

2:37

be subject to them anymore under

2:40

this rule. And the senior executives who

2:42

are still bound, do they need to

2:44

be executives or do they

2:46

just need to be paid more than $150,000

2:48

a year? Really good question.

2:51

Yeah, they not only do they

2:53

need to be paid more than

2:55

$151,000. They also need to have

2:57

policymaking responsibilities at the company they

2:59

work at. So if I'm

3:01

like a hedge fund trader, or

3:04

a bank trader or something like that,

3:06

banks famously have this thing

3:08

called gardening leave, where you can't start a

3:10

new job for a certain amount of time,

3:12

that all basically goes away if

3:15

those people weren't actual

3:17

executives, which most of the time they're not.

3:20

Yeah, according to this rule, although there's

3:22

a whole separate conversation in the

3:24

finance industry about whether or not this

3:26

rule applies to them because of other

3:28

rules and regulations in the finance industry.

3:31

I'm absolutely it's wild to me

3:33

that like doctors have

3:35

this, you would think that in

3:38

the healthcare industry and among doctors,

3:40

at least normally they pretend that

3:42

they're not competing with each other. But

3:45

they're like, oh, you can't compete. Yeah, it's really

3:47

wild. I mean, I have spoken

3:49

to some doctors and they're basically

3:52

stuck a lot of times because in

3:54

a lot of places in the country, it's maybe one or two

3:56

big companies that own the

4:01

hospitals in an area and these doctors really

4:03

get stuck. Some of them wind up moving

4:05

because the non-competes will restrict you to, you

4:07

know, you can't work for a competitor within

4:09

50 miles or something

4:12

of here. So a lot of people wind

4:14

up moving for new jobs. The doctor use

4:16

case really exposes the extent

4:18

to which non-competes have really just been

4:20

used to lock workers into jobs. You

4:23

know, in theory they exist to keep

4:25

people from walking off with trade secrets,

4:28

but that just doesn't apply to doctors,

4:30

I don't think. Yeah, you don't want doctors to

4:32

have any secrets. The

4:34

counter argument to all of this is

4:36

that the sort of

4:39

free market conservatives like to

4:41

argue that the non-competes are

4:43

somehow good for

4:45

workers in a roundabout way because

4:48

they, you know, incentivize companies

4:52

to invest more in training and

4:54

educating workers, which is

4:56

not an argument I buy at all.

4:58

There was a conservative commentator in Forbes

5:00

who wrote a whole

5:03

column about why non-competes are good for

5:05

workers and also good

5:07

for corporations obviously, but he made

5:09

an argument partly around

5:11

this idea of training and

5:13

suggested that people who were trained by a

5:16

company and then left were free writing on, you

5:19

know, the company's, I

5:22

guess, the sort of educational services that

5:24

they were providing, which

5:26

completely contradicts my understanding of what

5:29

free writing means because there's, in

5:32

theory, the company is getting a higher

5:34

quality of work, a more sophisticated quality

5:36

of work, sensibly without

5:39

paying more for the labor. Right.

5:42

Companies can also keep those well-trained employees

5:44

by offering them more money, you know,

5:47

to stay with them. It just

5:49

will cost a lot more and I think that's

5:51

why employers don't like this change

5:53

because it will cost them more

5:56

to retain workers. That's sort

5:58

of the bottom line. national

6:00

defense is that companies don't want workers

6:02

running off with trade secrets to

6:05

competitors. But I'm not even sure

6:07

that holds up because running off with

6:09

a trade sequence to competitors is still a problem

6:12

even in the absence of non-competes and

6:14

there's still recourse for it. Non-competes

6:17

know. Right. It's still illegal

6:19

to run off with the trade

6:21

secrets. That's why trade secrets and

6:24

IP law exists. And you can also have employees

6:27

sign non-disclosure agreements if there are particular

6:29

things you want them to keep quiet

6:31

about. You can also incentivize people

6:33

to stay with different kinds of compensation

6:36

plans and benefits that

6:38

could also work. There definitely

6:40

are workarounds. The obvious thing to

6:43

note here is that California has

6:45

made non-competes unenforceable forever

6:49

now and it's basically

6:51

the most economically vibrant state

6:53

in the union. So we've

6:56

tried it. We've seen it in California. It

6:58

seems to be fine. It doesn't seem to

7:00

be any problem in California with banning non-competes.

7:02

So in principle, it

7:04

should be fine. Although in practice,

7:06

Emily, there's going to be a

7:09

whole bunch of legal challenge to this. Oh,

7:11

yeah. So the day after, so the

7:14

FTC announced the finalized rule Tuesday. On

7:16

Wednesday, the

7:18

Chamber of Commerce and the Business

7:20

Roundtable filed a lawsuit against the

7:22

FTC in court in Texas, of

7:24

course, before this judge who has

7:26

already like batted down some other

7:28

Biden regulations and such.

7:31

And they are trying to keep

7:33

this rule from ever taking effect.

7:36

And I mean, I think

7:38

they have a shot. The judge, like

7:40

I said, who they're up against has

7:42

already batted down some other Biden stuff.

7:44

The eviction moratorium comes to

7:47

mind, CFPB in

7:49

another case. And even like

7:52

some former FTC people that I've

7:55

spoken to say that this was

7:57

like a really big swing from

7:59

the agency. And yeah, it's

8:02

not really clear. It's going to hold

8:04

up in court. There's this thing now

8:06

called the major questions doctrine, which says

8:08

like, if there's

8:10

like a major question that

8:12

a regulation involves, then Congress

8:15

has to be explicit

8:17

and has to be the one making the

8:19

new rule and that a regulator can't do

8:21

it if it's like a really big thing,

8:23

like the student loan relief that Biden tried

8:26

to pass at the Supreme Court knockdown. So

8:28

the term major questions is in the chamber's

8:30

lawsuit and in a lot of like the

8:33

quotes about this and yeah,

8:35

I don't, I don't know if it's going to make

8:37

it through these court challenges. Yeah, it's a very major

8:39

question. It's a very fuzzy legal concept though.

8:41

And there's a lot of gray area and

8:43

you know, the political impetus behind the agencies

8:45

of power and the executive of power, I don't

8:48

know how it really holds up in practice though. I mean,

8:50

there's not a lot of, I

8:52

think direct precedent for

8:55

something like this, you know, being reversed

8:58

on a major questions basis. Well,

9:01

I mean the major questions doctrine

9:03

is relatively new, but the principle

9:06

that legislation should come

9:09

from the legislature and

9:11

not from the executive branch is

9:14

I think relatively intuitive,

9:17

right? It's relatively intuitive. And in

9:19

places like California, when California wants

9:21

to ban non-competes, it passes legislation

9:23

to that effect. If

9:26

you want to ban evictions,

9:28

you can ban evictions, but you want a law to

9:30

that effect, getting the centers for disease

9:32

control to do it is

9:34

a little bit weird. And

9:37

I think what we're seeing is a

9:39

bunch of these things coming from the

9:41

executive branch because the legislative

9:43

branch is so completely OTOs and they

9:46

can't pass anything. I think this Congress

9:48

has passed fewer laws than any Congress

9:50

since, you know, the 18th century or

9:52

something. And that's, I think, a

9:55

big problem, you know, that we do have a

9:58

Congress that seems to be incapable of passing. anything.

10:01

And that is placing more

10:03

and more onus on the executive branch

10:06

to do stuff. And in an ideal

10:08

world, we would see

10:10

much a much more active legislature debating

10:12

laws and passing laws. And I do

10:14

feel like this solution is the second

10:16

best solution. I would personally prefer to

10:18

see this coming from Congress as well.

10:20

Yeah, all that said, the Federal

10:23

Trade Commission is supposed to regulate

10:25

competition. And when there's unfair competition,

10:27

it's supposed to combat it. And

10:29

literally, this thing is

10:31

called a non-compete, non-competition

10:34

clause. Like, it couldn't

10:36

be more squarely in the purview of

10:38

the FTC, right? But yeah, the Chamber

10:40

and the Business Roundtable are like, this

10:43

is too broad. This should be

10:46

lawmaking. But I mean, regulators have

10:48

long taken whatever their agenda

10:50

or mission is and created rules around

10:52

their agenda or mission. It's actually not

10:55

like outside the bounds. I think it's

10:57

just in this new environment, this new

10:59

very conservative environment, where there's

11:01

a lot of, you know, moaning about

11:03

regulatory overreach that we're now like, maybe

11:05

it is a regulatory overreach. Also,

11:08

Lina Kana has really used the

11:10

limits of the agency, you know,

11:12

to great effect. I think, yeah,

11:14

historically, the FTC has not been

11:16

this aggressive or, you know, in

11:18

some ways this powerful. Yeah,

11:21

it's been, I think, 50 years since

11:23

they've set any kind of, like, nationwide

11:25

rule in this proactive way, rather than

11:27

just, you know, going after individual

11:29

deals as anti-competitive. They have

11:31

taken action against companies for

11:33

abuse of non-compete clauses in

11:36

the past, but nothing this

11:38

broad, obviously. So this is very

11:40

much Lina Khan flexing her

11:42

muscles. Yeah, oh yeah, this is.

11:44

And I was just doing some reporting maybe for

11:46

a story next week,

11:48

looking at, you know, how the FTC

11:50

and the Department of Justice, both, and

11:52

we've talked about this before as part

11:54

of, you know, Lina Khan and Hipster

11:56

antitrust, they're looking at what

11:59

mergers happen. or anything

12:01

happens, they're not just looking for

12:03

what are the harms to consumers,

12:05

but how does this lack of

12:07

competition harm other kinds of classes

12:10

of people and things? How does

12:12

it harm specifically workers?

12:14

Because non-competes, I

12:16

mean, you could argue that they harm consumers,

12:18

but they definitely harm workers.

12:21

Or like we talked about the Penguin House,

12:23

Simon & Schuster deal that the

12:26

FTC sued to stop. And the argument

12:28

there was that it harmed authors, also

12:30

trying to stop Kroger & Albertsons, the

12:32

grocery stores from merging. And there's an

12:35

argument there also that this would harm

12:37

workers because there'd be fewer employers,

12:39

you know, try not hire them, so

12:42

they won't have to compete as much

12:44

on wages anymore. Isn't this an

12:46

argument that applies to literally every

12:49

merger? Like, how does this

12:51

not apply to every single

12:53

merger? In the sense that every

12:56

single merger reduces the number of

12:58

employers who are competing for workers,

13:00

and therefore it's bad for workers?

13:03

That's a good question. And one thing, I don't know how

13:05

to answer it, but I can

13:08

tell you that unions, which we

13:10

think of as, you know, organizations

13:12

that have workers' interests, you know,

13:15

forefront, right? They don't always mergers.

13:18

They sometimes support mergers because they

13:20

think if their employer is bigger

13:22

and on more

13:25

solid financial footing, then they're

13:27

better off. So there

13:29

are people who think that mergers are

13:32

good for workers, actually. Or

13:34

can be. Yeah, as an employee of Axios,

13:36

I can say, I am happy that we

13:38

were acquired by Cox, and Cox has lots

13:41

of money. And I feel like that places

13:43

Axios on a stronger financial footing, and it's

13:45

probably good for us as employees. Yeah.

13:47

Or I mean, there was a JetBlue

13:50

Spirit merger that did not happen. And

13:52

I think the Spirit employees wanted the

13:55

merger to happen because

13:57

they were like, if it doesn't, we will lose

13:59

our jobs. So it's good for us. Just

14:02

to go back to the non-compete issue,

14:04

though, the FTC does

14:06

have a good business case for

14:08

eliminating non-competes. And they've tried to

14:11

quantify it by noting that elimination

14:13

of non-competes would increase

14:15

new business formation. And

14:17

I don't know if that

14:20

would happen in such an explosive

14:22

way that it would satisfy

14:24

the conservative opponents of

14:26

abolishing non-competes. But it is a good

14:29

other side of the coin, where

14:31

not everything about abolishing non-competes is

14:33

just about preserving

14:36

what's good for workers. It's

14:39

also good for more competition in

14:42

the economy in general. Another argument

14:44

against the broadband is that

14:46

it's too broad. I've

14:48

seen some people say, even one of the

14:50

FTC commissioners who voted against was like, I'm

14:52

not against. I'm all for restricting the use

14:54

of non-competes. But this goes too far. There

14:56

are some cases where we need them. This

14:59

doesn't give us any flexibility for higher-paid employees

15:01

and things like that. What do you say

15:03

to that? I think that there are other

15:05

ways to thread that needle. What

15:08

are the concerns there? If it's

15:10

people leaking trade secrets, that can

15:12

be enforced by things that are

15:14

not non-competes. What would

15:17

be the argument for non-competes

15:19

as opposed to narrower instruments?

15:22

I don't know. I feel

15:24

like non-competes, they're not that

15:26

common globally. And

15:29

it's entirely possible to have

15:31

a vibrant capitalist economy without

15:33

them. So I'm not

15:35

super worried. I do understand that it's natural

15:38

to me that the Chamber of Commerce and

15:40

people like that will oppose it because it's

15:44

a way that they keep wages down. But I think

15:46

that's really, ultimately,

15:49

the fight here is that employers

15:52

like it because it's down

15:54

with pressure on wages, and the FTC doesn't

15:56

like them because it's down with pressure on

15:58

wages. Yeah. Yeah,

16:00

Betsy Stevenson had a good column in Bloomberg and

16:02

she's basically like the reason companies

16:05

want Noncompetes is that they give them more

16:07

bargaining power and without them they have less bargaining

16:09

power So

16:18

before we get to the break I want

16:20

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Wondery means business. Guys,

18:39

enough policy wonkery. I want to

18:42

talk about restaurants. I

18:44

want to talk about this wonderful New

18:46

Yorker article about the

18:48

secondary market in restaurant reservations

18:51

and specifically I want to talk about one

18:53

number which I was going to have in a numbers round

18:55

and I was like, no, we have to make an entire

18:57

segment about this. Which

19:01

is $1,050 which is

19:03

the amount that a

19:05

restaurant reservation at Carbone in

19:07

Greenwich Village in New York traded

19:10

hands for recently and this is quite normal.

19:12

This happens all the time and

19:14

just to be clear, this is just the reservation. This

19:17

is just so you can get in and sit down

19:19

at the table. Then

19:21

once you're there, you then pay however many

19:23

hundred dollars for your meal. Tell

19:26

people what Carbone serves. It's not

19:28

like some exotic cuisine. It's

19:30

like lasagna. It's a high end

19:33

red sauce restaurant. Unbelievable. It's

19:35

an Italian restaurant serving good

19:38

Italian food. I think we

19:40

have to explain here for people

19:43

who don't live in New York that Carbone

19:45

is also a very seany place. They have

19:47

turned away Justin Bieber and Haley

19:49

Bieber because they didn't have a reservation and

19:52

it's a place where I think of it

19:54

as sort of junior investment maker of land

19:56

where people with a lot of money

19:58

and a late night social. life like

20:01

to go. And it's really, the food is

20:03

good, but it's not about the food really.

20:06

I just, it adds to the

20:08

ridiculousness. The first thing we need to

20:10

do is really underscore, especially in the case

20:12

of carbon, I think other ones I'm not

20:14

sure, certainly in the case of carbon, it's

20:17

not about the food. It's not about the food

20:19

at Rao's where, you know, it's another place that's

20:21

famously impossible to get into. Like, I'm sure the

20:23

food is good, but that is not the reason

20:25

you go there. There are plenty of incredibly good

20:28

Italian restaurants in New York

20:30

where you can go, you can get a reservation,

20:32

they are no problem, have a delicious meal, probably

20:34

spend a lot of money, but at least you

20:36

don't need to worry about, can I get the

20:38

table? And this is

20:41

the fundamental reason why I

20:43

think ultimately this

20:45

whole secondary market and this whole meshogas is

20:47

good. I think that if

20:50

there's a whole scene around

20:52

a place like carbon, fine. Like, let the

20:54

people who want to be in the scene

20:56

buy and sell their reservations and play a

20:59

game like that. And then the people

21:01

who have no interest in that scene and just want

21:03

to have a decent meal, they can

21:05

still get a decent meal at any number of

21:07

places without any problem. And this is a great

21:09

way of separating the two and

21:11

then the people who really care about

21:14

being part of the scene are the ones who become

21:16

part of the scene and it

21:18

works. Like, I think it's all good. I

21:20

don't know. I think it's kind of

21:22

not great because should

21:25

we explain how it kind of works? Basically,

21:27

there are these reservation sites

21:30

where sites that are quote

21:32

democratic like open table and

21:34

rezi and you can go there and get

21:36

reservations. But what happens is people

21:40

basically like hack those sites. So as soon

21:42

as reservations become available for a restaurant, a

21:44

trendy restaurant like carbon, they swoop

21:46

in and book all the tables and

21:49

then sell them on the secondary market for

21:51

like what Felix said for like a thousand

21:54

dollars, hundreds of dollars. That just seems like,

21:57

is that a good market? Is that a

21:59

productive market? I think you've got a

22:01

little bit of a discomfort with it because it's kind of like

22:03

scalping, you know? And we

22:05

think of like ticket scalping as being unethical.

22:08

It's exactly what's happened in the concert

22:10

ticket space, right? Or what's happened there for

22:12

years and years. Right, right.

22:15

So Emily, the answer to your question is like, yeah,

22:17

no, this is a really suboptimal way of doing things.

22:20

There are much better ways of doing

22:22

this. And the first is by using

22:24

the price mechanism, which is to... It

22:27

is undeniable that a

22:29

reservation for two people

22:31

at 8 p.m. on a Saturday is a

22:34

more valuable thing than a reservation

22:37

for two people at 5 p.m. on

22:39

a Monday, right? And yet both

22:42

are priced at exactly the same price on

22:44

Resi or OpenTable, which is zero. So

22:47

what we should do, and I know that Resi

22:49

tried to do this when it launched, and then

22:51

there was a bunch of sort of blowback, and

22:53

they wound up not doing it after a while.

22:56

But like what we should do for

22:58

restaurants which are regularly

23:00

selling out their reservations and

23:02

have no problem filling up

23:05

is just embrace reality and say, look,

23:07

the reservations at hard times you have

23:10

to pay for. Like there's no

23:12

shame in that. Yeah, and then the

23:14

money would at least go to the restaurants

23:16

who presumably are operating

23:18

at pretty thin margins, right? I mean,

23:20

instead of going to these kind of

23:23

these scalpers and this whole roundabout, would

23:25

you do Wajidi system? There

23:27

was one restaurateur who argued that it helped

23:29

them turn over tables faster. Their

23:32

argument was that it cut down on

23:34

time between turning tables because people were

23:36

willing to pay more for

23:38

reservations and they were less likely to bail

23:40

on them or something like that. Well,

23:43

no, so wait, Elizabeth,

23:45

you're saying that, yes, we should be

23:47

selling reservations. Restaurants should be selling

23:49

reservations. I'm saying there's a, it's

23:52

not totally disadvantageous to the restaurants

23:55

for this to happen. Even if they're not getting

23:57

the money for the reservations, they're still benefiting turn

24:00

over on the table? No,

24:02

I think that's wrong. I think that

24:04

if the restaurant is selling the reservations

24:06

directly, then that's absolutely right. It cuts

24:09

down on no-shows and stuff. If

24:11

the restaurant reservations are being sniped

24:14

up and then sold on the

24:16

secondary market, that's bad because if

24:19

they don't sell on the secondary market, then

24:21

that is a reservation that is made and

24:23

no one turns up and that's really bad

24:25

for the restaurant. You want to make

24:28

sure that the reservation

24:30

gets used and if people are making

24:32

free reservations, I'm expired. I

24:35

get your argument. I think that

24:37

the article at least was really

24:39

focusing on places like Carbone where

24:41

the demand is so enormous that

24:43

that scenario of people making a reservation,

24:45

not showing up, it's

24:47

more this kind of thing that

24:50

happens at a normal restaurant that doesn't have

24:52

that kind of demand and then it happens

24:54

just by people are making reservations over open

24:56

table or whatever. Broadly in

24:58

alignment here that selling reservations is a

25:00

good thing because if you have paid

25:03

for your reservation, then you

25:05

are more likely to turn up. Then the

25:08

only question becomes who should

25:10

be selling the reservations and the obvious answer

25:12

to Emily's point is the restaurant.

25:14

They need the revenue. It's a great new revenue

25:16

source for them. Any restaurant that finds

25:19

itself booking out at

25:21

certain times of day on certain days of

25:23

the week, yeah, charge for

25:26

the reservation. Go for it people. The

25:28

other downside of the restaurant

25:30

not making reservations anymore

25:32

because they're getting hijacked by these third parties

25:35

is that, and I don't know if this holds

25:37

up for a restaurant like Carbone,

25:40

but the author of the New Yorker piece was pointing out

25:42

like back in the day when you used to have to

25:44

call a restaurant to get a reservation and restaurants had

25:47

regulars that did this. They keep like

25:49

a little file about their regulars and

25:52

they'd be like, they like this wine or they

25:54

order a lot of this thing or

25:56

whatever and they cater to them. But

26:00

if you're selling reservations under like dummy

26:02

names to random people all that kind

26:04

of service is sort of out the

26:07

window exactly a high-end restaurant really want to

26:09

know who's coming to dinner so they can prepare

26:11

for that person and you can't do

26:13

that if those people are buying. On

26:15

the second market but if they buy the reservation on the

26:18

primary market it's fine and

26:20

the other way to do it by the way you don't need to

26:23

sell the reservation directly the other way

26:25

you can do it is what talk

26:27

does. Which is you sell tickets

26:29

basically and you pay for the meal in advance

26:33

and a meal at. It's

26:35

not gonna Saturday is gonna cost more than the

26:37

same meal at five o'clock on a Monday

26:39

and that also works you just need to know

26:42

who's coming when they need to pay gonna

26:44

say what about the Wendy's methodology you know

26:46

where you do search pricing for the meals

26:48

what when we see more of that i

26:50

mean i guess we see that with like

26:52

happy hours and yeah. That's exactly it

26:54

is that it's a pricing and

26:57

people hate so pricing and but that's exactly

26:59

what it is. One of

27:01

the more fascinating things about this piece to me

27:03

was the sort of vein of

27:05

entrepreneurship of people who were just sort of

27:08

in their spare time. Nothing

27:10

up these reservations and then reselling them

27:12

yes there's a guy who is and i refuse

27:14

to believe that this is not a totally made

27:16

up name because it sounds just a little too

27:19

new yorky the magic

27:21

who otherwise in his day job owns

27:23

a waste management company with like forty

27:26

garbage truck and he apparently just makes

27:28

tons of money now. Getting

27:30

reservations for you know dealer celebrities

27:32

and rich people so

27:34

it actually encourages new business formation. But

27:41

yes support your local restaurants folks and

27:43

if there's a restaurant that's constantly booked

27:45

out by a bunch of overpaid.

27:49

27 year olds just support somewhere else

27:51

that serves better food and that needs

27:53

your customer don't pay a thousand dollars

27:55

just for the privilege of eating lasagna

27:57

us just bananas you

27:59

know cheap it is. to make lasagna. This

28:01

is called the Olive Garden. It's a

28:03

new Italian restaurant and it is so popular that they

28:05

have had 45 minute wait for

28:07

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31:58

Let's talk about Airlines. We

32:00

now have a new rule, not from the

32:03

FTC, but from the Department of Transport saying

32:05

basically that, well, what does it do?

32:08

Elizabeth, bring me up to speed. So

32:10

it basically ensures that airlines

32:12

have to give cash rebates

32:14

or cash refunds for flights

32:16

that are delayed over

32:18

three hours if they're domestic, over six

32:20

hours if they're international, and

32:23

for cancellation. And they also have

32:25

to disclose things like change fees up front.

32:28

And this feels like a very smart policy

32:30

move because if you think about something

32:33

that's maybe bipartisan and universally

32:36

popular, it's not having

32:38

to deal with hidden fees from companies.

32:41

So, and airlines are not, you

32:43

know, generally not people's favorite kind

32:46

of customer-facing business to begin

32:48

with. So, yeah, this is broadly

32:51

popular with everyone except the

32:53

airlines. And the thing that I like about

32:55

it is the refunds have

32:57

to come automatically. You don't need to

32:59

ask for it. And that's even better

33:02

than the European law. The European rules

33:05

are relatively strict about you have to

33:07

give refunds if this happens and if

33:09

that happens. But the customers still have

33:11

to know about that and ask the

33:13

airline for the refund. In this case,

33:16

the refund just has to automatically appear

33:18

on your credit card, you know, whether you

33:21

ask for it or not. And I really

33:23

like that because you basically lose the ignorance

33:26

tax for people who don't know about the

33:28

rule. Yeah, it seems like a real no-brainer.

33:30

The only thing I would say to

33:33

Elizabeth's point about it's good politics is

33:35

that it's the kind of thing

33:37

that people won't even really notice

33:39

or credit to the

33:41

administration because it's kind of small

33:43

ball, right? Yeah, this is right. I mean,

33:46

Democrats should like just run a whole

33:48

ad on it, but they won't. There's

33:51

a lot of assumption that when the administration

33:53

does stuff like this, that people just know.

33:56

And I think it's something that people kind of notice

33:58

in the background. but

34:00

not really think too hard about, you know, why

34:03

it's happening or who gets credit for it or

34:05

anything like that. So

34:07

is this one also going to face legal

34:10

challenge in Texas? Probably.

34:13

Really? I mean,

34:16

a lot of the Republican strategy right

34:18

now is just obstructing everything that Democrats

34:20

do that might be popular. I

34:22

don't think that there's a lot of political

34:24

capital for people to obstruct it in

34:27

order to, you know, publicly demonstrate that they

34:29

are, but, you know, there is a

34:31

strategic reason to do it. It's

34:34

harder to confuse people about this.

34:36

Like, there is a new rule

34:38

from the Consumer Financial Protection Bureau

34:40

that would limit credit card late fees, limit

34:42

them to $8 from what they are

34:45

now, which is like around $31. And

34:48

the financial industry is fighting it like tooth

34:50

and nail. And they did file suit in

34:52

Texas, I believe, on that. And they're trying

34:54

to argue that it's worse for

34:56

consumers somehow to have the lower late fees.

34:59

And I feel like just the way these

35:01

financial regulation battles work

35:04

is that they will convince some people

35:06

that it is somehow better to have

35:09

higher late fees. But on the airline

35:11

junk fees, I think because

35:13

people are so familiar with just the

35:15

whole rigor removal of fees and flying,

35:17

that it would be harder to sort

35:19

of confuse the issue, right? I think

35:21

also people are so frustrated with

35:23

customer service, with airlines and telecoms

35:26

and so on. Just

35:28

not having to call anyone when these

35:30

things happen, I think is a big

35:32

relief for a lot of people. But

35:34

it's going to cause inflation, right? Like,

35:36

the whole point is that we're now

35:38

going to be more

35:41

likely to be bundling the fees

35:43

into the price of the ticket

35:45

since it's all, since it's all

35:48

for its official airline price inflation

35:50

does not include fees and only includes the

35:53

price, then suddenly it's going to

35:55

look like airline tickets

35:58

cost more. And yeah. insofar

36:00

as airlines have to start paying significant

36:02

cash refunds to thousands of passengers who

36:04

are delayed that they never used to

36:07

pay anymore, that too is

36:09

going to increase their costs and that

36:11

is probably going to increase ticket prices.

36:13

So I think it is intuitive to

36:15

me that this rule will

36:18

make it more expensive to fly. It'll

36:20

just be more transparent and

36:22

less annoying. Well, in

36:24

theory, it also make it more reliable

36:26

to fly because that heavily incentivizes

36:28

the airlines to really fix their

36:30

delay and cancellation problems. I'm

36:35

not sure I buy that

36:37

one. Airlines have a massive

36:40

cost to delays anyway, even

36:42

without refunds. If

36:44

an airline has a flight that is five hours

36:46

delayed, that winds up costing them

36:48

a huge amount of money in labor and

36:50

in the planes being in the wrong place

36:52

to them. The efficient airlines

36:55

try to save money by not

36:57

doing that. At the margin, this

37:00

will make it even more expensive. They'll

37:03

have even more of an incentive not to do it. But

37:06

yeah, delays happen and

37:08

they just wind up getting built

37:11

into the price now because they are going to

37:13

be even more expensive for the airlines. So would

37:15

you guys rather see ticket prices just

37:18

go up and fees go away? We've

37:21

had this discussion on the pod when

37:23

we were talking about Danny Mayer

37:25

and his move to all-inclusive

37:27

pricing in restaurants. It seemed like a

37:30

great idea and then everyone complained about

37:32

it and he rolled it back and

37:34

he said, oh, never mind. In

37:37

principle, that's not good. You want to be

37:39

able to know how much something costs before

37:42

you pay for it. But

37:45

we live in a country

37:48

where the convention very

37:50

much in almost everything is that

37:52

everything winds up, not

37:54

everything. Airlines don't generally, but

37:56

most things in stores

37:58

show a pre-tax price and then

38:01

the price you actually pay is more than the

38:03

price that is on the sticker. And

38:05

that whole sort of weird bait and

38:07

switch is so internalized in the American

38:09

psyche that I think people, I like

38:12

to think that it's cheaper than it

38:14

actually is because then it feels cheaper

38:16

or something. I also think people

38:18

are pretty infuriated when they look at their

38:20

you know cable or cell phone bill

38:22

and see fees tacked on or like

38:24

20 bucks for something that is

38:27

inexplicable. And I do think they sort

38:29

of do think

38:31

about you know the cost of these things even

38:33

if they're not explicated in

38:36

the total price. The Biden

38:38

administration is also going after the resort fees. I

38:40

don't know if they've passed any rules around that

38:42

yet but I know that last

38:44

year there was talk of not only restricting

38:47

the airline junk fees but also the hotel

38:49

junk fees. The hotels

38:51

pushed back and they said resort fees are

38:53

meaningful. Yeah the resort fees at

38:55

hotels, people really hate those. So

38:58

I do think there's a distinction to be made

39:01

between fees, taxes, and

39:03

tips. And the Biden

39:06

administration seems to be going after the

39:08

fees and not like the taxes and

39:10

the tips. But in like in my

39:13

mind they're all similar but convention

39:16

is yeah we will pay the

39:19

tips separately, we'll pay the tax separately but just don't

39:21

do fees. Right but if what you were saying earlier

39:23

that like we say we don't like fees

39:25

but we also don't like when the prices

39:27

are higher and kind of prefer to live

39:29

in this like illusion fantasy world

39:31

where we think the prices are lower so that

39:34

when the fees get tacked on it's like a

39:36

whole different mental thing. That sounds a lot like

39:38

the girl math that was like a thing a

39:40

few months ago. Right

39:42

where like you know you say like oh

39:45

I just returned these pants that I didn't

39:47

want now I have an extra hundred dollars.

39:49

It's like a bonus you know stuff like

39:51

that girl math it was called. It

39:53

kind of feels like the whole economy runs on girl math

39:55

when you think about it. It really does. I was

39:58

just looking for a hotel room in San Francisco. go

40:00

on a website which does a

40:02

pretty good job of showing like the all-in cost,

40:04

but it also shows the headline cost in all

40:06

of these hotel rooms. They're like $117 after tax

40:08

and fee is 290. And

40:12

you're like, what? It makes

40:14

no sense. We

40:16

should have a numbers round. Elizabeth, what's your

40:18

number? My number is five and

40:20

that's the number of euros that it's going

40:22

to cost you to visit Venice for the

40:24

day now because Venice is dealing with

40:27

over, I think somebody referred

40:30

to it as over touristing. There

40:32

are 20 million tourists in Venice last

40:34

year. And there's

40:36

just not, I guess, infrastructure or

40:38

the capacity to deal with

40:40

that kind of influence influx. So now

40:43

they're charging a fee to visit. And

40:45

I guess this is kind of like congestion

40:48

pricing in Manhattan, where the

40:50

idea is that maybe people will not

40:52

just show up spontaneously if they know they have to

40:54

pay something for it. Experiences

40:56

in person are just becoming more

40:58

and more expensive because the demand

41:00

is so high like concert tickets,

41:03

cool restaurants, going to Venice,

41:05

surge pricing. I mean, Manhattan's

41:07

doing it now, right? With

41:09

charging cars, higher fees to

41:12

come into Manhattan during rush hour, everything

41:14

surge pricing. It's crazy. Well,

41:17

yeah. And I'm in favor of this.

41:20

Like, yeah, use the price mechanism

41:22

to reduce the overcrowding. Venice

41:25

does a relatively good job of limiting the number

41:27

of hotel rooms. But yeah, a whole bunch of

41:29

people just come in from out of town for

41:32

the day, often on cruise ships,

41:34

although they're also doing a pretty good job of

41:36

reducing the number of cruise ships. And

41:39

it's those people who aren't staying in the Venice hotels

41:42

who are causing most of the crowding and asking

41:44

them to pay five euros. And if that helps

41:47

to pay for the

41:49

very expensive project

41:51

of keeping Venice above

41:53

water and defraying some of the costs with all

41:55

of the tourism, yeah, I'm all in favor. Yeah,

41:58

but if you keep using the price. Mechanism

42:00

for everything. I feel like you're creating

42:02

a roar of worlds and that's really

42:04

geared. I mean it is already, but

42:06

really really geared to the higher income

42:08

people in it's just making things more

42:10

unequal. You know if for they have

42:12

within a surge pricing like a city

42:14

or parks or he you know, where

42:16

does it and see. Like. It's

42:20

a slippery slope is a slippery. Slope

42:23

People are saying that. More more

42:25

people. my number is. One

42:27

point six percent which was first

42:30

quarter gdp growth which was we

42:32

lowered and we've been seeing and

42:34

bust couple of quarters in in

42:37

que three was four point nine

42:39

in queue for it was three

42:41

point four know at some point

42:44

six like. I. Dunno

42:46

maybe all of these. Rate.

42:48

Hikes of finally having an effect

42:50

pretty. Neil Irwin have access says under

42:52

the hood it's not as bad as it seems.

42:55

I will trust me on this one in as

42:57

much were both has inflated and we will heal

43:00

number. Of.

43:02

Had bit this might be unconventional.

43:04

But my number is nineteen

43:06

O Six l. If had

43:09

a license plate said. And Elon musk, kid.

43:12

That's a good guess. It's the

43:14

name of a new New Balance

43:16

shoe coming out in August that

43:18

has gone viral. And that

43:20

is because it is. It looks like

43:22

a penny loafer crossed with a sneaker.

43:25

Sake! Of Gallagher in the Wall Street Journal calls it

43:27

a snow first. Know for a snow for. Gq.

43:31

Closet deceptively normal. And it

43:33

is, I guess the latest

43:35

example of. To. Trends

43:37

ugly sneakers which are popular.

43:40

And work appropriate sneakers

43:42

which. Is a thing and ethically

43:45

talked about. but how it's obscene out.

43:47

Or. Sneakers to work, right? So.

43:50

Anyways, it's kind of ugly at people can go

43:52

look at it online and tell me what they

43:54

think about The Snuffer. How much is it?

43:56

the throne and know. It's unclear, doesn't say

43:58

none of the marketing materials. to

44:01

tell me the price, so I don't

44:03

know. There's a similar suede loafer from

44:05

Laura O'Piana that costs like $7. But

44:07

knowing new balance, it's probably costing a

44:10

lot less. I don't think there's an

44:12

actual. The new balance one looks so much like a

44:14

sneaker in terms of the materials. It just looks like

44:16

a sneaker mated with a boat shoe

44:18

and then mutated into something. I can't

44:20

imagine wearing it with a really nice

44:22

workout fit or suit or something like

44:24

that. It's very dad shoe is what the

44:27

people are saying. But I think that's pretty insulting

44:29

to dads. I don't know. Some of them dress

44:31

well. I just looked

44:33

this up on the internet on a site called

44:35

kicksonfire.com and I have no

44:38

idea whether they're reliable,

44:40

but they reckon it's going to have a retail price

44:42

of $150. Very

44:45

reasonable for a snow for. Can you

44:47

find a snow for less than $150? No, you can't. I

44:52

doubt it. Okay.

44:54

On that note, I think we're going to

44:56

wrap it up for this week. Many thanks

44:58

to Jaren Downing and

45:00

Shannon Roth for producing. Many

45:02

thanks for sending us your

45:04

emails on sleepmoneyatsleep.com. And

45:07

we will be back on Tuesday with

45:09

Money Talks with Emily. Tell me who.

45:12

I talked to Jen Murphy. She's a longtime

45:14

columnist for the Wall Street Journal who writes

45:17

about the

45:19

world's workouts. So she has been for

45:22

20 years, she's had this column for the journal

45:24

where she talks to executives and

45:26

all kinds of people about how they

45:28

fit exercise into their daily lives. And

45:30

it's a really good conversation for anyone

45:33

who loves to work out

45:35

or wishes they love to work out. Jen

45:37

is awesome and you should listen.

45:39

Oh yeah. Mm-hmm.