Transcripts For CSPAN3 Key Capitol Hill Hearings 20240622 :

Then they wouldnt be waiting in the middle of the town. We all have requirements on how long we can block thank you. And just if i could, just one more question on distracted driving. Right now only one state received our funding for the distracted driving grant which we would really like to have changed. Theres a ton of money sitting there and we have an emerging problem. Thats why senator hoven and i have sponsored a bill with senator booker to change that criteria to get that money out to states for engsducation efforts. I thought id ask you, ms. Ault, whats kinds of technology . We know thats drivers are doing things they shouldnt do in the cars. A lot of them have admitted to this in sorry have as and ss ss survey surveys. Weve had more than 3,000 People Killed that we know of from distracted driving. Again, these are individuals making decisions on their own. Are there any technologies you think from the Car Companies that could be helpful with this . I can speak not from the Car Companies. The gropup im with, we make everything but cars. The heavy cute truck side we have alerts blts ss built in for a driver to wake them up if their eyes begin to dim. Its some sort of vibration in the seat or loud sound. Its from a heavy duty perspective. Of cors theres lots of regoolgs regulations because theyre commercial drivers. Okay. Well i think as we know, and i appreciate your word on trucks. This is an issue for all vehicles if we try to figure out if theres anything to create shutdown of technology when people are in the car or while someone is driving they stop doing it because its just a growing problem. All right. Thank you very much. Thank you, senator klobuchar. Well have a second round of questions in case any other senators are still trying to get here to the committee hearing. And i would like to begin with mr. Misener. On your video if you could have had the teddy bear delivered to nebraska or new jersey, that would have been a great ending for the little guy. Were happy to we can do this. Were multitalented up here. As we look at more Logistic Networks out there how do you think that will benefit consumers . Thank you, madam chair very much. That logistics the improvement of logistings with the more broad transportation infrastructure is important. It affects how they receive the goods they purchase online. Weve been trying to improve this for at least 20 years. Automation has always been a big part of the amazon solution to this challenge. Increasing automation is going to be helpful to making sure consumers get the goods when they need them, but they have a choice. Its a choice at various speeds. We talked about drones. They were really only the way we figured out how to get goods to consumers in less than 30 minutes. We are also offering our customers now a slow delivery alternative that gives them additional benefits. If they are willing to accept it whenever it comes. If you are ambivalent to whether it comes in two days or two weeks, they can get an additional benefit from us. Its about providing our customers the choice. It applies more broadly to american consumers. How i would love to talk more about drones. We share a passion for that and a desire for the United States to catch up to the rest of the world. Sadly im coming back down to earth to talk about trucks. Your testimony recommends the use of ten feet longer trucks known as twin 33s. The department of transportation came out with a study showing it takes these trucks about 22 feet longer to stop. Thats a car length and a half. The larger and heavier trucks are the greater where the greater destruction occurs when accidents happen. I have a couple of questions on that. Has your company done an analysis of the impact of safety . How will these impact the number of crashes and fatalities . Weve been persuadesed by the carriers that the 33foot trucks are going to be safer because there will be fewer on the road driving fewer erer miles. Its a balancing of fact. I get that. Theres not any particular magic to 33 over 32 or 34 or the current number which is 28. Were trying to find a solution that will improve efficiencies for sure. At the same time if we can drive down the number of miles driven. The increase in length without increasing the Weight Capacity or the total weight of the trucks because the weight is what goes into the inertia and kinetic energy. Weight times velocity is the inertia, not the weight of the truck. Safety should be the first but also the impact on the infrastructure. Those heavier trucks would they tear up more of the roads. Not increasing the weight limit at all. Increasing the length can help it because going over a bridge, the weight is less concentrated and, therefore easier on the bridge. Lastly another balancing act is you want greater safety but you also want to see what the least necessary burden on businesses and how they operate. The big issue of minimum insurance is one that i have some concerns about. Id love you to give me your thoughts. The truck size and weight, we realize the trucks are causing more accidents over the last 20, 30 years and the minimum insurance has not been raised since the 1980s. Do you think theres a needed minimum insurance level increase or at least pegging it somehow that its elevated on an ongoing basis . The carriers we use are going to be directly aficted by that. The carriers are reputable ones. Wed not want our products traveling over problematic or difficult carriers. Im not sure i have a direct answer because that wouldnt be directly affecting us at this point. Thank you very much. Meet me out by the capitol with the drone. Ill be there. Thank you senator booker. The hearing record will remain open for two weeks. During that time senators are asked to submit any questions for the record. Upon receipt, the witnesses are requested to submit their written requests to the committee as soon as possible. Id like to thank the witnesses for being here, and i thank my colleagues who attended the hearing. Thank you all. Were adjourned. On our next washington journal, well talk to texas congressman louie gohmert. Onethird of americans are working two or three jobs in whats been called the gig economy. Virginia senator mark warner joins us to discuss this economic trend. He serves on the budget and finance committees. Later, a conversation on some of the challenges ss facing selfemployed workers who hold multiple jobs. Katie vlietstra is our guest. Washington journal is live each morning on cspan at 7 00 a. M. Eastern. By a vote of 373, the South Carolina state senate voted to approve a bill to remove the Confederate Flag from the statehouse. The bill if it passes the house, hases to the desk of governor nikki haley. You can see the debate in the house live wednesday at 10 00 a. M. Eastern on cspan3. This week on first ladies influence and image we learn about lecretia garfield. She was an educated woman and a believer in womens rights. When her husband was assassinated, she returned to ohio and made their home into an early version of a president ial library. Chester arthur, a widower becomes president and his sister mary arthur mcelway fulfills the role of first lady. Garfield and Mary Arthur Mcelroy this sunday night at 8 00 p. M. On first ladies influence and image. Examining the women who filled the position of first lady. From Martha Washington to michelle obama. Sundays at 8 00 p. M. Eastern on American History tv on cspan3. Next a discussion on the planned changes to overtime announced by the white house andator the propose impact. From washington journal, this is 45 minutes. D plan t were joined now on a tuesday roundtable to talk about requ president obamas change to overtime eligibility. Were joined for this discussion by beth of the National Federation of independent business and Christine Owens of in the d the National Employment law project. To begin the discussion, remind xactly viewers what exactly the president has proposed and what t he wants to do here and the reasoning behind it. Great. Thanks for the opportunity to have this discussion. So, the president about a year ago directed the Labor Department to take a look at the current rules that exempt from the certain workers from the overtime pay requirement. From the requirement for time and a half for hours over 40 rtain hours a week. Specifically what he asked the Labor Department to do is look at what we call the white collar exemptions. Amount those are the exemptions for o certain executive administrative and professional employees who make above a certain amount of money each year, who are paid on a salary basis, not an hourly basis, and who meet certain duties. 2004. The last time these rules were revised was in 2004. They were revised seven or eight times since they were first passed in 1938. In 2004, the Bush Administration set the salary threshold at 23,400 a year and prescribed certain duties tests for each of these exemptions. Was thats where its sat since 2004. What the president asked the Labor Department to do was look at the salary test the duties test anything else that might be relevant to updating these exemptions to determine whether or not white collar employees more t should be exempt from overtime pay requirements or if they work more than 40 hours a week, they should get overtime pay. Thats exactly what the Labor Departments proposal does. It looks at it takes a very simple approach in establishing that in a bright line test that says in 2016 if an employee makes less ss than around 50,000 a year, thated ace employee, regardless of his or her duties, would be eligible for overtime pay. E, the e above that bright line of 50,000 a year, then the employer would have to apply would these duty tests to see if they be would be eligible for overtime host pay or exempt. This proposal, the nfib says may sound well meaning but couldould hurt workers. Hurt wo explain. Expla yes. Thank you for inviting me to be here today. Like a lot of proposals to come ls, th out of washington and some of the state capitals, there are conse unintended consequences. What sounds good on paper and coming out of the souths of government politicians and bureaucrats does not always play out well in the business environment. Particularly for the Small Businesses in this country who are going to bear a oubling disproportionate burden when you talk about doubling the salaries in some instances for managers es and retail and restaurants, those things, too. Too often bureaucrats look at businesses as a monolithic group. Small businesses are going to be hit b disproportionately hit by this y rule if it goes through next yearas. It will be problematic. Were asking our viewers to vie weigh in as well on this round table discussion. Republicans, 2027488001. Independents 2027488002. Christine, why is this rule necessary . What was what was happening that the Obama Administration saw a need to change after 11 years . Lets put it in some perspective. One thing is the legislation the law, has always contemplated the Labor Department would update its regulations to take into account changes in the economy. Wage growth generally, cost of living, et cetera. And in general, that just hasntar. Happened. The salary threshold has not as been indexed to rise with inflation every year. When a salary threshold is set, as it was in 1975, and then Nothing Happened until 2004, more and more people fall into do no the exemption, meaning they dont get overtime pay just because inflation causes wages to rise eats away at peoples incomes. Nake a loo so, its perfectly its not only reasonable and s. Authorized, its responsible for the government to take a look at these salary thresholds. Lets put in context what it ns aroun means if someone earns around 24,000 a year. It means they earn less than the Poverty Level for a family of four. You have a lot of assistant managers in fast food c. Who m restaurants, restaurants, people working in banks, the finance industry, retail, et cetera, who may earn, lets say, 24,000 to 35,000 a year. They may work as many as 60 hours a week because theyre classified as exempt. They not only dont get overtime pay for those extra hours, they dont get any pay at all for those extra hours. I think that gets lost in this discussion. Me pay, but if someone is exempt from overtime pay, if they work overtime hours, they do not get paid at all, not even the minimum wage for those hours. For tho as a practical matter, a lot of folks, relatively low paid folks, classified as white collar, earn less than some of their hourly employees. And sometimes could earn even less than the minimum wage. The exemption is supposed to contemplate these are folks with a lot of discretion in their job. Heir they have sort of highlevel duties that they perform most of the time. They may occasionally do routine duties but most are highlevel duties. All they speak for the company. Theyre on call for the company all of the time. And yet many of them earn midd essentially Poverty Level wages, not really a middle class wage. Beth, do you agree there are folks being taken advantage of . If so, how would you address that if not this solution . Yeah, i mean, by and large the members who i represent, the Small Businesses who employ about 48 of the private sector workforce in this country, by e in thi and large want to do right by ri their employees and are offeringgh a fair wage for a fair days work. You know, the assistant manager, a manager who is in the exempt o category may not be getting overtime, they are getting other things, like increased flexibility, benefits, and think promotion potential which is very important. Particularly when youre talking about an assistant manager in a Fast Food Restaurant or retail store. The thought of paying a 19 or 20yearold an assistant manager in a restaurant over 50,000 is a hard thing for a Small Business owner to, you know cost for a Small Business owner to absorb. They just cant do it. Timate the Obama Administration s estimating this will cost between 240 and 255 million if these rules go into place. Who pays that . Do you think that cost estimate is accurate . I think the cost estimate is he cost actually low. Thats something nfib will be commenting on. This is not a final rule. The dol has opened the department of labor has opened we it up for comments for the next 60 days. Well be commenting there. I think the estimate is very on smal low. As i said earlier, its going tontry, have a disproportionate impact on the Small Businesses in this country. Especially rural areas. You cant compare what a Small Business is doing to like a costco or target or walmart. Chri our guests in this roundtable, beth of the National Federation of independent business, and Christine Owens, executive director of National Employment law project. Happy to get your thoughts and questions. Well begin with joe calling in from ohio. Line for independents. Joe, good morning. Mornin caller good morning. My problem with the whole issue is that the whole nation receives receives a 50 rease increase in wages. What is that going to do to y Union Workers or somebody that established a decent wage in a skilled trade . Theyre not going to get a 50 increase. Cut thats going to be like taking a huge wage cut. T thanks for your call, joe. Will s i dont think theres much cause for concern there. Y what the unions in general are s supportive of this proposal, as they have been historically of overtime pay proposals. A generally what happens is Union Contracts contemplate what the overtime pay rates are and then they make some adaptations for Union Members. I dont think there will be a negative impact on Union Members me at all. Be a beth, thoughts . Gues i would disagree. Y i think, you know, theres not a money tree in the backyard of businesses where they can just go out and pick off more money. And i think joe has a valid concern there. Not be that i think employers are not e all of a sudden going to be able to increase their salaries or payrolls 50 . Theyre going to look for ways d ensure to cut. Theyre going to ensure theres not overtime taken by employees. Theyre going to cut the assistant management and supervisory positions. Que lets head up to vermont. Timothy is waiting. Good morning. Youre on the washington journal. Caller good morning. Est let me take it off speaker. Yes. My question, quite simply is, how is this going to affect the eg Seasonal Employee . Do you want to start on this work one . Well, for some of the for e of some categories of workers, this is pointed out in the rule from eady department of labor, too, there are already exemptions in place, so they would not be entitled tompt any additional overtime because theyre exempt from exempt categorically exempt from overtime. Seasonal, recreational, amusement workers. Worker theres a whole host of categories. Teachers, for example, are exempt from the overtime b requirements. I would just add i agree with beth completely, but if a Seasonal Employee is not exempt for some reason, depending on the nature of the work, and if employe that employee is a white color exempt employee, which is not , they always the case or not often the case for Seasonal Employees, but assuming someone is, then they would be covered under the rule if it takes effect or the revised rule. But i think the impact will likely be fairly limited, both because of the exemption of ffect People Killed<\/a> that we know of from distracted driving. Again, these are individuals making decisions on their own. Are there any technologies you think from the Car Companies<\/a> that could be helpful with this . I can speak not from the Car Companies<\/a>. The gropup im with, we make everything but cars. The heavy cute truck side we have alerts blts ss built in for a driver to wake them up if their eyes begin to dim. Its some sort of vibration in the seat or loud sound. Its from a heavy duty perspective. Of cors theres lots of regoolgs regulations because theyre commercial drivers. Okay. Well i think as we know, and i appreciate your word on trucks. This is an issue for all vehicles if we try to figure out if theres anything to create shutdown of technology when people are in the car or while someone is driving they stop doing it because its just a growing problem. All right. Thank you very much. Thank you, senator klobuchar. Well have a second round of questions in case any other senators are still trying to get here to the committee hearing. And i would like to begin with mr. Misener. On your video if you could have had the teddy bear delivered to nebraska or new jersey, that would have been a great ending for the little guy. Were happy to we can do this. Were multitalented up here. As we look at more Logistic Networks<\/a> out there how do you think that will benefit consumers . Thank you, madam chair very much. That logistics the improvement of logistings with the more broad transportation infrastructure is important. It affects how they receive the goods they purchase online. Weve been trying to improve this for at least 20 years. Automation has always been a big part of the amazon solution to this challenge. Increasing automation is going to be helpful to making sure consumers get the goods when they need them, but they have a choice. Its a choice at various speeds. We talked about drones. They were really only the way we figured out how to get goods to consumers in less than 30 minutes. We are also offering our customers now a slow delivery alternative that gives them additional benefits. If they are willing to accept it whenever it comes. If you are ambivalent to whether it comes in two days or two weeks, they can get an additional benefit from us. Its about providing our customers the choice. It applies more broadly to american consumers. How i would love to talk more about drones. We share a passion for that and a desire for the United States<\/a> to catch up to the rest of the world. Sadly im coming back down to earth to talk about trucks. Your testimony recommends the use of ten feet longer trucks known as twin 33s. The department of transportation came out with a study showing it takes these trucks about 22 feet longer to stop. Thats a car length and a half. The larger and heavier trucks are the greater where the greater destruction occurs when accidents happen. I have a couple of questions on that. Has your company done an analysis of the impact of safety . How will these impact the number of crashes and fatalities . Weve been persuadesed by the carriers that the 33foot trucks are going to be safer because there will be fewer on the road driving fewer erer miles. Its a balancing of fact. I get that. Theres not any particular magic to 33 over 32 or 34 or the current number which is 28. Were trying to find a solution that will improve efficiencies for sure. At the same time if we can drive down the number of miles driven. The increase in length without increasing the Weight Capacity<\/a> or the total weight of the trucks because the weight is what goes into the inertia and kinetic energy. Weight times velocity is the inertia, not the weight of the truck. Safety should be the first but also the impact on the infrastructure. Those heavier trucks would they tear up more of the roads. Not increasing the weight limit at all. Increasing the length can help it because going over a bridge, the weight is less concentrated and, therefore easier on the bridge. Lastly another balancing act is you want greater safety but you also want to see what the least necessary burden on businesses and how they operate. The big issue of minimum insurance is one that i have some concerns about. Id love you to give me your thoughts. The truck size and weight, we realize the trucks are causing more accidents over the last 20, 30 years and the minimum insurance has not been raised since the 1980s. Do you think theres a needed minimum insurance level increase or at least pegging it somehow that its elevated on an ongoing basis . The carriers we use are going to be directly aficted by that. The carriers are reputable ones. Wed not want our products traveling over problematic or difficult carriers. Im not sure i have a direct answer because that wouldnt be directly affecting us at this point. Thank you very much. Meet me out by the capitol with the drone. Ill be there. Thank you senator booker. The hearing record will remain open for two weeks. During that time senators are asked to submit any questions for the record. Upon receipt, the witnesses are requested to submit their written requests to the committee as soon as possible. Id like to thank the witnesses for being here, and i thank my colleagues who attended the hearing. Thank you all. Were adjourned. On our next washington journal, well talk to texas congressman louie gohmert. Onethird of americans are working two or three jobs in whats been called the gig economy. Virginia senator mark warner joins us to discuss this economic trend. He serves on the budget and finance committees. Later, a conversation on some of the challenges ss facing selfemployed workers who hold multiple jobs. Katie vlietstra is our guest. Washington journal is live each morning on cspan at 7 00 a. M. Eastern. By a vote of 373, the South Carolina<\/a> state senate voted to approve a bill to remove the Confederate Flag<\/a> from the statehouse. The bill if it passes the house, hases to the desk of governor nikki haley. You can see the debate in the house live wednesday at 10 00 a. M. Eastern on cspan3. This week on first ladies influence and image we learn about lecretia garfield. She was an educated woman and a believer in womens rights. When her husband was assassinated, she returned to ohio and made their home into an early version of a president ial library. Chester arthur, a widower becomes president and his sister mary arthur mcelway fulfills the role of first lady. Garfield and Mary Arthur Mcelroy<\/a> this sunday night at 8 00 p. M. On first ladies influence and image. Examining the women who filled the position of first lady. From Martha Washington<\/a> to michelle obama. Sundays at 8 00 p. M. Eastern on American History<\/a> tv on cspan3. Next a discussion on the planned changes to overtime announced by the white house andator the propose impact. From washington journal, this is 45 minutes. D plan t were joined now on a tuesday roundtable to talk about requ president obamas change to overtime eligibility. Were joined for this discussion by beth of the National Federation<\/a> of independent business and Christine Owens<\/a> of in the d the National Employment<\/a> law project. To begin the discussion, remind xactly viewers what exactly the president has proposed and what t he wants to do here and the reasoning behind it. Great. Thanks for the opportunity to have this discussion. So, the president about a year ago directed the Labor Department<\/a> to take a look at the current rules that exempt from the certain workers from the overtime pay requirement. From the requirement for time and a half for hours over 40 rtain hours a week. Specifically what he asked the Labor Department<\/a> to do is look at what we call the white collar exemptions. Amount those are the exemptions for o certain executive administrative and professional employees who make above a certain amount of money each year, who are paid on a salary basis, not an hourly basis, and who meet certain duties. 2004. The last time these rules were revised was in 2004. They were revised seven or eight times since they were first passed in 1938. In 2004, the Bush Administration<\/a> set the salary threshold at 23,400 a year and prescribed certain duties tests for each of these exemptions. Was thats where its sat since 2004. What the president asked the Labor Department<\/a> to do was look at the salary test the duties test anything else that might be relevant to updating these exemptions to determine whether or not white collar employees more t should be exempt from overtime pay requirements or if they work more than 40 hours a week, they should get overtime pay. Thats exactly what the Labor Department<\/a>s proposal does. It looks at it takes a very simple approach in establishing that in a bright line test that says in 2016 if an employee makes less ss than around 50,000 a year, thated ace employee, regardless of his or her duties, would be eligible for overtime pay. E, the e above that bright line of 50,000 a year, then the employer would have to apply would these duty tests to see if they be would be eligible for overtime host pay or exempt. This proposal, the nfib says may sound well meaning but couldould hurt workers. Hurt wo explain. Expla yes. Thank you for inviting me to be here today. Like a lot of proposals to come ls, th out of washington and some of the state capitals, there are conse unintended consequences. What sounds good on paper and coming out of the souths of government politicians and bureaucrats does not always play out well in the business environment. Particularly for the Small Businesses<\/a> in this country who are going to bear a oubling disproportionate burden when you talk about doubling the salaries in some instances for managers es and retail and restaurants, those things, too. Too often bureaucrats look at businesses as a monolithic group. Small businesses are going to be hit b disproportionately hit by this y rule if it goes through next yearas. It will be problematic. Were asking our viewers to vie weigh in as well on this round table discussion. Republicans, 2027488001. Independents 2027488002. Christine, why is this rule necessary . What was what was happening that the Obama Administration<\/a> saw a need to change after 11 years . Lets put it in some perspective. One thing is the legislation the law, has always contemplated the Labor Department<\/a> would update its regulations to take into account changes in the economy. Wage growth generally, cost of living, et cetera. And in general, that just hasntar. Happened. The salary threshold has not as been indexed to rise with inflation every year. When a salary threshold is set, as it was in 1975, and then Nothing Happened<\/a> until 2004, more and more people fall into do no the exemption, meaning they dont get overtime pay just because inflation causes wages to rise eats away at peoples incomes. Nake a loo so, its perfectly its not only reasonable and s. Authorized, its responsible for the government to take a look at these salary thresholds. Lets put in context what it ns aroun means if someone earns around 24,000 a year. It means they earn less than the Poverty Level<\/a> for a family of four. You have a lot of assistant managers in fast food c. Who m restaurants, restaurants, people working in banks, the finance industry, retail, et cetera, who may earn, lets say, 24,000 to 35,000 a year. They may work as many as 60 hours a week because theyre classified as exempt. They not only dont get overtime pay for those extra hours, they dont get any pay at all for those extra hours. I think that gets lost in this discussion. Me pay, but if someone is exempt from overtime pay, if they work overtime hours, they do not get paid at all, not even the minimum wage for those hours. For tho as a practical matter, a lot of folks, relatively low paid folks, classified as white collar, earn less than some of their hourly employees. And sometimes could earn even less than the minimum wage. The exemption is supposed to contemplate these are folks with a lot of discretion in their job. Heir they have sort of highlevel duties that they perform most of the time. They may occasionally do routine duties but most are highlevel duties. All they speak for the company. Theyre on call for the company all of the time. And yet many of them earn midd essentially Poverty Level<\/a> wages, not really a middle class wage. Beth, do you agree there are folks being taken advantage of . If so, how would you address that if not this solution . Yeah, i mean, by and large the members who i represent, the Small Businesses<\/a> who employ about 48 of the private sector workforce in this country, by e in thi and large want to do right by ri their employees and are offeringgh a fair wage for a fair days work. You know, the assistant manager, a manager who is in the exempt o category may not be getting overtime, they are getting other things, like increased flexibility, benefits, and think promotion potential which is very important. Particularly when youre talking about an assistant manager in a Fast Food Restaurant<\/a> or retail store. The thought of paying a 19 or 20yearold an assistant manager in a restaurant over 50,000 is a hard thing for a Small Business<\/a> owner to, you know cost for a Small Business<\/a> owner to absorb. They just cant do it. Timate the Obama Administration<\/a> s estimating this will cost between 240 and 255 million if these rules go into place. Who pays that . Do you think that cost estimate is accurate . I think the cost estimate is he cost actually low. Thats something nfib will be commenting on. This is not a final rule. The dol has opened the department of labor has opened we it up for comments for the next 60 days. Well be commenting there. I think the estimate is very on smal low. As i said earlier, its going tontry, have a disproportionate impact on the Small Businesses<\/a> in this country. Especially rural areas. You cant compare what a Small Business<\/a> is doing to like a costco or target or walmart. Chri our guests in this roundtable, beth of the National Federation<\/a> of independent business, and Christine Owens<\/a>, executive director of National Employment<\/a> law project. Happy to get your thoughts and questions. Well begin with joe calling in from ohio. Line for independents. Joe, good morning. Mornin caller good morning. My problem with the whole issue is that the whole nation receives receives a 50 rease increase in wages. What is that going to do to y Union Workers<\/a> or somebody that established a decent wage in a skilled trade . Theyre not going to get a 50 increase. Cut thats going to be like taking a huge wage cut. T thanks for your call, joe. Will s i dont think theres much cause for concern there. Y what the unions in general are s supportive of this proposal, as they have been historically of overtime pay proposals. A generally what happens is Union Contracts<\/a> contemplate what the overtime pay rates are and then they make some adaptations for Union Members<\/a>. I dont think there will be a negative impact on Union Members<\/a> me at all. Be a beth, thoughts . Gues i would disagree. Y i think, you know, theres not a money tree in the backyard of businesses where they can just go out and pick off more money. And i think joe has a valid concern there. Not be that i think employers are not e all of a sudden going to be able to increase their salaries or payrolls 50 . Theyre going to look for ways d ensure to cut. Theyre going to ensure theres not overtime taken by employees. Theyre going to cut the assistant management and supervisory positions. Que lets head up to vermont. Timothy is waiting. Good morning. Youre on the washington journal. Caller good morning. Est let me take it off speaker. Yes. My question, quite simply is, how is this going to affect the eg Seasonal Employee<\/a> . Do you want to start on this work one . Well, for some of the for e of some categories of workers, this is pointed out in the rule from eady department of labor, too, there are already exemptions in place, so they would not be entitled tompt any additional overtime because theyre exempt from exempt categorically exempt from overtime. Seasonal, recreational, amusement workers. Worker theres a whole host of categories. Teachers, for example, are exempt from the overtime b requirements. I would just add i agree with beth completely, but if a Seasonal Employee<\/a> is not exempt for some reason, depending on the nature of the work, and if employe that employee is a white color exempt employee, which is not , they always the case or not often the case for Seasonal Employee<\/a>s, but assuming someone is, then they would be covered under the rule if it takes effect or the revised rule. But i think the impact will likely be fairly limited, both because of the exemption of ffect Seasonal Employee<\/a>s and the fact that many, if not most, seasonalle if employees are not going to be workers who are covered by that exemption anyway. Weve noted this is a proposed rule. How long does the process take . T and does congress get a final he say at the end of this process . So, the department has set 60 days for commenting on the rule. I think the federal register has now published the rule, and so that time period has begun. After that happens, the comment period, the Labor Department<\/a> t will take into account what the comments have been. And then at some point issue a final rule. At that Point Congress<\/a> has an official right to weigh in under the congressional review act. Con i think its possible congress c might consider certain appropriations or riders that could slow down the rule or affect its impact or implementation. Affect yes, there are far more ways in which congress has a right to weigh in at some point. Beth, your reading of congressional reaction so far reaction since last week when the esident president spoke about this proposed change . Certainly concern from, you know, from leaders on the hill he hill. That, you know, are going to take a close look at the rule and are eager to hear from constituents and, you know, other, you know, interests, from folks that will be impacted from this. So, they want to hear from people out there. E want just like we want to hear from people out there this morning on the washington journal and our roundtable, phone lines are open. Republicans, democrats, ndta independents. Waiting well put the numbers on the screen for you. Well go to our line for democrats. John is waiting, butler, missouri. Good morning. Caller good morning. My question has to do with truck drivers. Were paid by the mile yet were on duty 70 hours a week. There we could be sitting out there waiting for a load and we dont get paid for it. Are they going to adjust that and look at that as being on duty, the duty hours . John, thanks for your. Question. Again, this rule, when it takes effect, will only apply to fall people who fall within withi potentially fall within the white collar exemption, which is executives, administrators and professionals. It is not likely to apply to any truck drivers. There are some other laws that regulate wages in trucking. I dont know of any immediate plans to address those laws, but i dont think that this rule will have any impact on you, john. For yo were looking for your tweetsur as well. You can follow along the panwj conversation cspanwj. Mary writes, im so happy for department heads, production s assistants in the theater world who routinely get taken uction advantage of by organizations with salary and no overtime. We to want hear your thoughts. H salary mike is up next. Thompson, pennsylvania. Line four, independents. Mike, good morning. Caller good morning. And thank you for cspan. O find o go ahead, mike. Ut caller i wanted to find out from your panel the history ofs, the overtime law. Seems to me back in the 80s i was working, getting overtime, and under reagan in 1986 i became an executive. It cost me about back at that time cost me about half of my salary salary. I was in a service job and i became a manager or executive. And lost my overtime. Can somebody comment on the history of that action . O thank you. Beth, you want to start . Absolutely, ill start off by saying, the idea behind you wh know, the white collar exemption is youre being paid for your job. Not for the hours worked. So, youre engaging in, you know, management, discretionary ersee duties, those sort of things that, you know, you oversee other employees. Yo i think you mentioned the word you became a manager, so, again, you were being paid for a job. Not for the hours worked. And that is part and parcel with the whitecollar exemption, the overtime. Thres its also based on the duties ho and the salary threshold there. So, it goes hand in hand, the two components there. And that is the thought behind the whitecollar exemption. Youre being paid for the job, not the hours worked. Christine, if you could weigh we in on the history of that act and how it came into play and its impact here. Sure. So, the fair labor standards act was passed in 1938. It was a piece of new deal legislation. Really promoted by the first secretary of labor, the first woman in the cabinet, frances perkins, signed by franklin ure th roosevelt. The purpose behind the overtime provision, there were really two reasons for it. One was to ensure that people who worked long hours would greate actually get overtime pay, to were m sort of represent the greater reason commitment of time they were , making to their job. But the other reason, which is it wa important even today, was that it was intended to help create jobs. That instead of employers working employees super long hours, they would actually hire e additional employees. So, those are the two purposes that have always undergurded thedled federal overtime requirements the under the federal fair labor act. As i mentioned earlier, the salary threshold has been updated seven times since the last since 1938. I cant do the math. But i think thats almost 75 t upda years. Te 2004 maybe exactly 75. It was last updated in 2004. And then before that it was updated in 1975. Uld ha and so, i think, mike, what case, could have happened in your case, in addition to becoming a manager, which might have made you exempt, because the fair labor the salary threshold ot had not been changed since 1975, and its not indexed to rise each year with the cost of wi living or with average wage th growth, it becomes worth less worth every single year. So, more and more employees are potentially captured under the exemption simply because the threshold is frozen. If you think about if you were paid the same amount of money every year that money would be h year worth less each year because the cost of living goes up each year. I thats what happens with the labo salary threshhold. One of the important parts of ththe proposal is that it would be indexed to rise each year and the department has invited proper comment on what the proper measure of indexing should be whether it should be an inflation measure of some sort or whether the salary threshold mporta should rise with average salary increases. But that is a very important new part of this proposal and one that if we had had since 1975, we wouldnt be having this discussion today. Perhaps concerned that this effort might go too far. Is what we need a mandatory cap all on all salaries to make sure everyone is equal . We dont all have equal jobs not a out there . This, with this youre going from 23 23,000 up to 50,000. Youre more than doubling it. For a Small Business<\/a> thats an articu enormous jumpla and something they cant absorb, particularly in rural areas. Were sitting here in. Washington, d. C. The pay for a restaurant manager in washington d. C. As opposed red to to in West Virginia<\/a> thats very different. Cost of living differs throughout the country. Alhol things are not equal when it comes to jobs and salaries. The National Federation<\/a> of independent businesses is nfib. Com. Ristine if you want to check out their my for work. Were taking your calls. Steve is up next. Nk you f oil city, pennsylvania, steve, good morning. Ive in caller thank you for taking ule my call. Go ahead. Caller i live in a rural m area. Iveis been listening to her say how this is going to help people who live in rural areas. People, it is not uncommon for people in this dwrirarea to have to work two jobs to meet expenses. Households have two people anothe working one job and at least one other person working a job. If youov are working a job youre expected to be there well over th 40 hours, you are unable to go get a second job. So it impacts the rural areas just as much as it impacts any place else. And theres no denying there are certainly businesses out there that are not following the existing rules. The department of labor has estimated about 70 of employers are out of compliance with existing rules. To th to throw out existing rules ot wor rather than focus on educating Business Owners<\/a> and work og compliance with existing rules les ma would make more sense rather than potentially doubling the salary. Imhear hearing from a lot of callers. This may mean im going to see an increase in my paycheck. The businesses cant go c out to the money tree in the backyard and same double their payroll. C theyll find ways to make sure host their bottom line stays the o we kno same. Christine owens, how do we know theres going to be any more compliance under new rules if they eventually come out and e this proposal process goes through . Any better way to ensure compliance . I think there will be more and more litigation. Besi one of the problems with the existing rule aside from the low salary threshold. Someone makes 24,000 a year, which is Poverty Level<\/a> for a family of four and either is week working 50 or 60 hours a week or is on call all the time because he or she is classified a imagina manager. Thats not a middle class income by any stretch of the imagination and not what the fair labor standards act contemplates when it talks about managers and professionals. Its obscene. It has to be changed. I think that compliance will be easier because of a bright line mpliance test. One of the difficulties with compliance right now is in d addition to having to meet the salary threshold, an employer has to determine whether the duties test apply to the individual that the employer strati wants to classify as exempt. Up while the Bush Administration<\/a> made some effort to be clear and tighten up those duties tests, they are very vague. They dont any longer say of he someone has tor spend at least 80 of her time doing managerial work in order to be considered a manager. In retail and fast food and other lowwage service kind of industries, they have someone time who spends as much as half or more of his or her time doing the same things all the people she supervises are doing and yetssifie because shes classified as a she is manager she doesnt get overtime is on call all the time and may. Make less money than the people she supervises. Michael, good morning. Caller i have a comment and commen question and please let me s articulate both of them. Ms. Molito is disingenuous in her presentation because shes alluding to this rule forcing employers to double the salary desi of people theyve designated as managers. Thats not true. All it is, if you dont make 50,000 or whatever the level is, you have to pay overtime end of story. And my question is to her specifically, if these businesses cant afford or cant survive without forcing people lave w toag work 60 and 70 hours a week for slave wages maybe they and b should go under the capitalist model out of business and be done with it and maybe someone else will have a better idea who can pay their employees decent wages and still make a profit. The businesses who i work with do pay decent wages, in my opinion, and this rule is not going to force employers to pay overtime if they cant pay 50,000. There. Thats just incorrect. What its going to do is businesses particularly small exami businesses are going tneo have to reexamine their Business Model<\/a> there. And they cannot afford overtime. Ord in a lot of businesses, overtime is already limited there or prohibited in many instances with smallth businesses and larger businesses, too. Youll see more of that too. Youre not going to see u will businesses s hiring additional workers. Youll see Small Businesses<\/a>. Ca the business ownernn is going to talk over the duties there. They cant afford to hire host additional workers or pay overtime, time and a half and they cant in all instances es afford to pay 50,000. The Obama Administration<\/a> saying these new rules would impact some 5 million workers. Tho were talking about the rules this morning on washington journal. Ing. Jenny is up next. Indianapolis indiana line for ller democrats. Caller good morning. My question is isnt this a discussion that we have all the time when theres a desire raise the minimum wage that its going to cost employers more to pay this additional income and so theyll have to lay off workers. Isnt this something that is just absorbed over time as more employers employees make money, they spend more and then youll have to rehire. Isnt this a red herring argument . And my second question is, why dont we just increase minimum wage or do some index so were constantly increasing wages and we dont have to have this discussion. With the minimum wage l on the increase economists by and y large agree that there is a negative impact overall on the economy, particularly on like the 18 to 25 demographic where you see recordem levels of n unemployment. Thats because they do not get the entry level jobs. Employers are not hiring those low level jobs. I wo i would disagree that its a red herring. Theres a real impact on the businesses in this country. I with due respect, i completely disagree with her ngs of readings of the economic studies which have come to conclude theres no significant job loss associated with raising minimum wages. And while it is true that youth hat yout unemployment or youths employment is at a record low thats a trend thats been in place for 10 or 15 years. There are lots of reasons for itfor th and most over the last seven or yea eight yearrss has to do with adults moving into jobs that young people had because they s coul were the only jobs that adults could get. I dont think that has anything econom toic do with the minimum wage. Ge has theres considerable Economic Analysis<\/a> that disputes the notion that raising the minimum yo wage has an Economic Impact<\/a> on people including young people. This kind of argument is raised not only with respect to raising the minimum wage but with respect to every single proposalnd the ever made to improve wages and working conditions and the right to safe and Healthy Workplaces<\/a> and right to be free from discrimination. These wereing arguments made in s the opposition tsto ending race discrimination on the job. This is just the standard line i know of w arguments. I run a Small Business<\/a>. I ikn know what its like to meet workplace standards. Ke sur i know whats its like to raiseyear a budget to make sure my employees all get salary are a increases every year and those who are not exempt are able to have some sort of flexibility without incurring massive overtime costs. Do no thats not always easy. But we dont expect employees to put in free labor for their employers. I dont think most Small Businesses<\/a> expect that. So i think that its very important to make clear thats these costs over time can get small absorbed. I waser f listening to an interview the other day with a Small Business<\/a> owner from North Carolina<\/a> who said im going to have to do some juggling here ecogni and i dontze really look forward to doing that, but i recognize ho in the long run this is good for my employees and my business. Proj ec for those unfamiliar with the National Employment<\/a> law project, tell us about it. Weve been around 45 years. We focus on low wage workers unemployed, getting access to jobs for people with criminal records. Our work iss both in the states and national level. We are involved in most of these minimum wage campaigns going on oing around the cannotountry. And i much theed to note that there is federal legislation that, in fact, if it were to m wage pass, would index the minimum wage to rise each year and a number of states passed minimum wage laws that also index the nal minimum wages to raise each s year. Thats a completely rational approach and would avoid the need to have these fights every 5, 10 or 15 years. T a dece how do we adjust wage levels so ork. People who work for a living can tom is make a decent living. Nts. Tom has been waiting on the line for independents. Youre on the washington journal. Caller good morning. Thank you. I want to go back to the minimum wage. Youve been talking about it for a little bit. Ach year i made some notes about this. Someone said the increase would heard be indexed. And i heard words like obscene to describe the current situation. If im correct, its the increase would be from approximately 24,000 to 50,000 a year where this would kick in. I could get behind that if it was an increase to say 30,000 and we do something about an increase on minimum wage and index it as well. For people above 30,000 or whatever, how about putting a an maximum number of hours that employees can work so that they d up w dont end up working 60 and 70 seems hours a week that people are claiming they are working. It just seems like the poor the low est lowest wage earners in our country are always getting the shaft to make it better for the ke middle class. Everyone wants to get the middleho class on board but they keep forgetting about the poor. Eps, les and thats my comment. Hat are there inbetween steps, t less drastic steps than the doubling were talking about t that nfib could get behind . That i think there are a lot of an things that can be done to look at this 1938 law. This fair labor standards act was passed when most workers at th were in a factory and punched in and punched out at the end of the day. Very different workplace than weurly have nowadays. If you are a nonexempt exibilit employee, an hourly employee c you dont have a lot of flexibility. Your employer cant offer you comp time. Its difficult in companies that dont have big payroll departments, hr departments to do any kind of bonus structure lity f because itsor difficult to figurers. Out for hourly workers. Theres not the flexibility for c the hourly workers. Maybe we can change the nonexempt status to make it more flexible in a modern workplace. That would be a very good thing to do. Tell us your thoughts about those changes. I want to comment on tom because toms remarks. I think that i think that we have to both build the economy from the bottom up, the working , the poor that tom talked about, and me from the middle out. The overtime rule changes are becau really squarely addressed at theovertime middle class because those are the kind of jobs that are exemptnimum wa from the overtime pay more requirement. B theg minimum wage is addressed much more at people who are in the working poor categories. I think we need both. We have a sort of sorry record of doing much with either over the last 30plus years. Congress has only passed minimumt ha wage increased three times, which is part of why the minimum wage has lost so much value over the last three decades. We need to do both. I want to comment on beths beth remarks about flexibility. Xibility i run a Small Business<\/a>. I have some employees who are entitled to overtime. As a Small Business<\/a> person who it knows my i employees, its a little easier to say yes you can take two hours off today to go to your kids school play and then tomorrow come in an hour early and work an hour late or something. That is perfectly legal. And i think there are a lot of ide ways that employers can provide with someou flexibility to their y employees without violating overtime rules or without havingof the to f fundamentally change the bor nature of the fair labor standards act. The aed bying folk sus to make sure people get a fair days wages for a fair days work. If anything, the challenges of this economy make it all the more important we have some bright line tests like minimum wage that keep up with the cost of living, wage growth reasonable overtime exemptions and rules and that we educate employers about how they can pen. Provide flexibility within the context of the law. Its not rocket science. It can happen. Id like to respond to that. Running the flexibility chris runs anloyee th office. Shes no t running a restaurant or retail store where she needs the employee there an hour u can early. To say, i can be flexible. And work two hours later today or s diff talk two hourser tomorrow its r very different than a business yees running a restaurant or retail store who needs those employees there at set hours. The flexibility is justice not there just not there. Ay this is the nonexempt, the hourly workers looking at ways t in to help them to have more flexibility in a more modern workplace. Well try to get to as many of your calls as we can. The line for democrats. Arvena, good morning. Caller good morning. Thank you for taking my call. Id like to know if this is something that congress has to pass or please advise me on that. Is thisoes . Something thats the National Labor<\/a> board does . You said something earlier about there being a 30day comment period. And i certainly have my ideas on this about fairness for one thing. For i cannot believe ive had a son who is working for a Japanese Company<\/a> right now, and he is hour designated as salary and the guy is working 60 65 hours a week, gets no overtime. Hes making less money than what way t his dad was making in 1979. I cannot believe the way that employers are doing their employees. So please tell me about how this will come about. That thanks. Let me just say right off the bat that if you go to the Labor Department<\/a>s website, www. Dol. Gov and look at overtime proposals, youll see how you t does can sometimes comments. The Labor Department<\/a> didnt just want to hear from the National Federation<\/a> of independent business and the National Employment<\/a> law project. They want to hear from people like you that have valuable information, useful examples. Your story about your son is a nd of very compelling story the kind of stories we hear in our work you to every single day. Ides encourage you to go to the orks Labor Department<\/a> website and submit some comments. The way this works is the Labor Department<\/a> has the authority to change to update the rules governing the exception. Le, it has issued this proposed rule, which is an exercise of ider t its authority. It will consider the comments issue that come in and then it will issue a final rule. The final rule may be the same threshold. It may be different. Ac that Authority Comes<\/a> from theabor d congressionally passed fair fore. Labor standards. Its done this seven times before. Theres no questionth it has the authority to do it. There then some are mechanisms the l that would allow congress to review what the Labor Department<\/a> has done, but we hope it wont get to wont it wil get to l that. We hope that the Labor Department<\/a> will issue the final rule, it will take effect and the Department Im<\/a> sure, will pe work witnnh employers to help achieve compliance. Calling in from pennsylvania, line four independents. Goodnt. Morning how are you ladies doing . Same re i have a comment. I dont know if its kind of in the same i realm but basically peopl this is whate i want to say. With the work i do im not going to say what i do but i interact with people that i work with in Certain Department<\/a> stores. And the jobs make is sure they dont get overcharged. And a friend of mine who is a district manager now he makes sure that they cant get overtime and they have to manipulate the numbers to make s goin sure they didnt get overtime. Is that illegal . I know its not illegal. Whats going on out here. Host all of these socalled companies cant afford this but they make sure they work overtime so they can get their bonuses every year. I dont think thats right. I really dont. S ovovertime is not required. An employer is not required to offer its employees overtime. Theyre required to offer paid udging nonexempt workers for all time worked. So if an employer is fudging numbers or having people falsify time sheets that violates the fair labors standards act. But theres in requirement that for an employee offer over time or an hourly worker is entitled foro you over time. An employer must pay an employee for all hours works. But it can do things to mange sure its employees are not working overtime. Did you want to add anything . I agree with beth. Allowed shes absolutely right about that. Employees are not allowed to refuse to work overtime in most think places either andth thats toda certainly true for white collar employees. Theres another problem that we h havent talked about today. There are a lot of people who dont have enough hours of work. The problem of what we call business involuntary parttime employment is fairly significant. And ive heard many people say real in the Business Community<\/a> that once response they may have to the overtime changes would be to been reallocate hours and shift some at is of theno overtime hours that excite collar exempt employees ld be had been putting in to some other workers. Be work thats not a bad thing. Ers who in many workplaces the could be a winwin. You have some workers who would not be working overtime and some who would want the additional hours. Its not necessarily the case that the only way to respond to the charges will be to begin paying overtime. Retai it may actually require some reallocation of hours. And the National Retail<\/a> Federation Said<\/a> its going to is goi create ng100,000 parttime jobs. U as not necessarily the case car that its going to become a huge cost factor. T betty good morning. Youre on washington journal. Caller good morning. Im calling in because i recently left baltimore, maryland retired, 67 years old left my job retired on december 5th of 14. So i havent been long gone from the work place. K there are consequences that occur and i just wanted to let folks know who havent been in the workplace for a long time who maybe doesnt understand whats going on. What i saw in my job one manages were not to be paid overtime i saw hourly workers who were getting back we would have positions where wed have only one person doing that job. But it had to be done. And every day, in order for them to keep it up, maybe it would belaried a couple of hours a day of overtime. Those people became salaried and became managers. Who werent really managers in the department. Sim but it was simply a way of cutting the wages. Regular hourly workers, managers were made in some f their departments. And what happened was the regular workers stopped getting ou overtime. When youre making overtime and youre getting bonuses you dont mind so much when youre getting a 25 . 25 a year raise when youre just sitting muc there. But when you get bonuses, you get good work bonuses and things like that. And it doesnt matter so much. But all of that went away. There are people that are paid e not just your managers to make sure that raises are kept low. Or these people work for consulting firms all over the world. They consult for big business as well as other companies. You can see where they are. Betty our last caller. I want to give you ka chance to ses an comment on her story. Ck i think betty raises an interesting point there about consultants and it goes back to the point about big businesses, the costco the walmarts and the 2200 targets have a very different they Business Structure<\/a> than a the 22 million Small Businesses<\/a> in this country. Theyre not hiring soilts to come in and look at salary structure. All the Small Businesses<\/a> know isople e this is my bottom line. This is what i need to keep my doors open. S hechristine . I think betty raises articu interesting points. One of them in particular is the way that the interplay between an the rules governing hourly ch employees and salaries employees and how changes in one arena can affect workers in the other balan arena. And i think the Labor Department<\/a> has done a careful balancing act here to try to make sure this works for all workers. If you want to read moreg. From the National Employment<\/a> law projects, Christine Owens<\/a> is the directo executive director. Elizabeth is with the National Federation<\/a> of independent business, Small Business<\/a> leader Senior Executive<\/a> council. Thank you both for joining us this morning. Thank you very much. On the next walking journal, well talk to texas congressman about the confederate display of the flag and along with other items in the news. Onethird of americans are working two or three jobs in whats been called the big economy. Mark warner joins us to dus cuss this. Later a conversation within some of the challenges facing self employed workers who hold multiple jobs. Washington journal is live each morning at 7 00 eastern on cspan. You can join the conversation by phone and on facebook and twitter. Homeland security secretary jay johnson talks about government Computer Network<\/a> security. You can see his comments live at 1 00 p. M. Eastern on cspan 2. This summer book tv will cover book festivals from across the country. Next weekend were live at the harlem book fair, the nations flagship literary event with author interviews and panel discussions. September, were lye from the Nations Capital<\/a> for the National Book<\/a> festival. Next a portion of this years Techcrunch Disrupt<\/a> conference from new york city. First a conversation with the heads of on demand Delivery Service<\/a> companies and Online Service<\/a> providers of electronics, cosmetics. Other specters inud collude bill de blasio. This is about two hours. In. Yeah. Its me. Okay. People are still filing back in but weve got an amazing speaker coming up next. So please hurry back if youre not already in your seats. Here in new york were pretty obsessed with the on demand economy because were really lazy or working harder than the folks in San Francisco<\/a> and we dont have time to get things. Ive gotten used to being able to get eggs, coffee milk, what chipotle onet demand. Im started to take it to a new level and ask for impossible stuff, a sunny day better attitude. I think our next guess is or ou thinking that way too. Please welcome to the stage john shieber our moderator. Thank you. Thank you. Well yall want a good panel andel, an we will hopefully deliver. Lets do it. Sorry. Had to. Is this is new huge. Im a little scared. I guess we should start off with whats new at postmates. Whats going on . Business signing up partnerships, you know, chipotle, starbucks, few others in the pipeline. I think whats interesting is that after weve been like doing play this for three years, in the last six months what happened is that a lot of the larger players in the market got out and started talking to firms like postmates. They believe there c is a mark for on demand or sameday delivery. And theyre trying to close partnerships. Ditional were in a fortunate position to win a few of them. For the traditional use case or for sort of the Main Business<\/a> of delivering food from 1. 5 restaurants, youve got 1. 5 million deliveries that youre up to 1. 5 deliveries, right . Actually since last week were at 2 million deliveries. Sorry. Remember, it took us ten week m to get to 1. 5 million. It took his 7. 5 week to get to 2. Iven its still going faster. Is a lot of the growth being driven by the partnerships . How much of that is predicated on the deals you have with folks like chipotle and starbuckss . Those deals are still getting implemented. Starbucks rollout will begin in just june in seattle. Theyre fully integrated into their mobile order and pay system. Chipotle was announced just last week. Most of the growth is excluding any of the large partnerships. When you started the business it didnt start out inyou. Foods delivery, right . No. You it t started out as getting someone to run an errand for you basically. When did you transition into the delivery model andn. What drove that sort of shift . Zero traction. The very first interration of we postmates, basically it was a service that merchants could use to deliver items that they have in stock. Now three years ago, we went to San Francisco<\/a> and we signed up 60 or 70 merchants all retail. And Furniture Stores<\/a> electronics stores. You know we went in there and said heres an app that you can d. Push a button whenever you sell something to a customer and have that thing deliver in San Francisco<\/a>. The merchants were like yeah, this is the greatest thing in the world. I wanted this forever. Were like cool, i built it for s a you. Then Nothing Happened<\/a>. Right. There were like one or two deliveries a day. Very, very few deliveries. And we call the merchants and were like whats going on . And theyre like i dont know, came up, couldnt use it, person took the stuff. Think ab so but what happened at the same time and this is a great way to think about products sometimes and why its important to listen to what happens to your products. Customers used the app as in consumers like you and i would download it and they would try to get postmates to purchase in et something. So they would say things like go to safeway and get this for me. But we had no means of payment for the postmates. So i would get angry as i do because im german. Youre not allowed to do that. But after a while there were so many of the requests that we decided to do a test on the weekend. And on that weekend my cofounder and i, reclipped our fleet at that point like 25 people in San Francisco<\/a> with visa gift cards. Er and these vie za gift cards were used to make purchases. I dont remember the exact number but we sent out a news letter to our user base and saidhat fo if you include the getitnow h were going to go out and stuff purchase that thing for you. On the first weekend we sold something around 10,000 of stuff. Most ofyo that was prepared food. When you look at sort of what the business is today, if you were to launch postmates right now, would it look like digit . Would it look like one of these sort of on demand Tech Services<\/a> . Do you like the interface to those guys have . Where do you see yourselves falling . Like what yeah. Im a big fanst of it. Again the first version of postmates and still today the custom order field is a super popular thing you have in the postmates app. It allows you to say get me extra back moly from chipotle and allows you to type a specific pair of sneaker to get pi from a nike store. Even when we dont have inventory, i think postmates was one of the companies that pioneered the name get it now. The app translate to that. Dve its a great idea of creating Something Like<\/a> a human cloud. Do you wish looking back, do you think you could have y spent that time narrowing in on the food category. It seems like when the businesses are successful they attack a niche market and go after Something Like<\/a> organic food or prepared food or food from the burrito place down the p street that doesnt take deliveries. Thats exactly what we did. An foryt the public we left postmates open for your imagination a little bit. The idea of anything from anywhere helped us because it is very sexy. Aro but what we did internally is weit had a strategy that is based around the principle of food is ategor like books. So if you look at food, its a category that has we focused on prepared food. It allowed hig us to scale the fleet very fast. Allowed us to have a case thats super compelling and a high repetitive usage. C whats next for you in terms of markets that yall might lookte to enter . Where else can you expand within servi this notion of sort of food delivery . Would you like to compete or go havin after Something Like<\/a> instacard . Were looking at having a better grocery cart on the road map. Theres a notion that were already competing with insta instacart. But we have invested very little time in that category. But for i would aqsay for q 3 egory. There are a few things that would make it for attractive. Yg with our withoutiene pups. Well see how that works out. A lot of interest in that category. Personal hygiene, health care for beauty. Youre thinking about corner store. Thats another category that were very interested in. Nue . For yall what do margins of this business look like . And how are you doing in terms of ldrevenue . Company what do you think you might hit s what profitability . Again we w tried to build a company that can generate a profit with every delivery. And that is what were doing. E are i think we actually have a quite healthy growth margin and were very proud of that and trying to keep that. We and were also operating on a is so path tome profit about. In 2016 we can be profitable as a company if we decide to do that. I think its something thats dle co very attractive and i think it been a shows thatbl we are able to carefully model a complex business with a lot of moving parts that were able to drive improvements. And that the prubloduct really is a tec product that customers understand that they pay for the value that the product provides. I started writing about tech here in new york in 1999. 2000. And i remember when i first rvice. Started writing there was this really Amazing Company<\/a> that had a cool logo and it really great Delivery Service<\/a> called cosmo. Com. One of the big e busts of that fist dotcom era. Avoid what did you learn from that. Might yall be cosmo and how do you avoid that in. So cosmo was a super d interesting company. I believe that they were way ahead of their time. And i mean that they were way ahead of their time that theyt offered they werentable po modernize in order to have a n profitable business. Cosmo was free for a time. N what and the idea was that cosmo had and t that theyhe can monotiez exclusively on the gmv that they would sell and take a cut of these things. Xpensi now they also ran warehouses. There wa they had Warehouse Space<\/a> in manhattan. Crazy expensivee at the time. There is an old version of the cosmo data sheet somewhere on the web and you find some of singl these ethings. I know that because when we started postmates there wasnt a single mention of sameday ity as delivery other than a cosmo, which is nuts if you look at google at today. We want to use the city as a or warehouse. Were relying on an existing cou infrastructure. The third newone, i dont know how many messengers they had, but lets just say it was a couple of hundred in new york. They routed them manually. So it was twoway radios. And imagine how good of a a person regardless of how efficient you have as an effici operator that try to route your four or five guys there is a limit to the efficiencies that you can derive from that system. And in postmates land, you have these very big teams of engineers working on trying to make the logistic site more and more efficient. Now you mentioned sort of the number of the profusion of on demand Delivery Service<\/a>s that are now available. You google it and get all sorts of responses. Theres 1. 28 billion raised this year for delivery startups of one stripe or another. The ind holy shit. Thats a lot of money. How do you deal with does the industry have to consolidate at n my this point in. It will happen at some point. Again, i think what is in my personal opinion crucial, is that this is a space where a first move or advantage is there. It may not be a winner takes all market but its definitely a a winner takes most market. If you look at the markets that were operating in San Francisco<\/a>. Obviously l. A. Is our largest city chicago is large so is new york. We see that were really able to lock in supply, that were able arkets to grow even though were live over a year in some of these markets after a very fast pace. So getting into these markets it be early paid off for us and locking in the supply side is what comes with that. Again, i said it before i dont want to sound like im repeating it the point. Le doing but within three years we were able to build the largest on est demand delivery fleet. Its over 10,000 people doing deliveries. Mazon its twice as much as the ides t closest hecompetitor. For now, right . But as uber starts to launch into this, in amazon decides theyre going to take this more seriously, when do they acquire you . Would you accept someone ou be earlier said any offer with a b ill take a look at. If you got a billion dollar offer from one of these guys it. Would you be like maybe i can work with travis . Of course. Everybody would of course you would consider it. Are you talking to them now . No. Are you sure . To m yes. But the job of a ceo is to do that and at the same time make f sure that the reason the company was created can be fulfilled in either of the scenarios. So what does it mean . It means that if there is an opportunity to continue to work nd on the postmates vision as part of something that is a lot bigger and in turn that we can sition fulfill the vision much faster that is being very entertaining to think about. An acquisition or consideration money that would like yeah yar, heres a shit ton of money. Shut up talking about postmates and talk about brand x and go in that ar the basement and work on it is the far less compelling. All of the three founders we come from backgrounds very middle class. Imp were very driven by the idea that postmates can really help hen th local isbusinesses. And i think seeing that vision through is very important for us. When we spoke on the phone i want to shift gears and talk about this notione of the on demand economy or the collaborative assumption economy whatever it is where youre acting as a Service Provider<\/a> where youve got the contractors working with for you for delivery. What does that mean, looking out, what are the ramifications of that for sort of the broader American Economy<\/a> . Are we just creating this sort of class of people who have to do these menial shitty jobs while tech entrepreneurs we have an ear malfunction. Yeah, im never good at this. Wild tech entrepreneurs get to chill out and do their work and make orders of magnitude more . I dont think so. I think its different markets im thate gets created. He futur i think of postmates as probablythat a americas best parttime job. I would love to be this a fulltime job in the future. You know, there is around 15 or 20 of our postmates that look at it like a fulltime job. But the reality is its probably a really got part. Time job. If we look at a median compensation in fran during peak times maybe of around 19, nonpeak times around 17 per hour, again, median thats 40 , 50 more than a barista makes. It has to do with the aprech and how you want to position the ap company. And i think were not running around claiming this is the greatest fulltime job in the world. We believe its a more honest s approach to say this is a really solid parttime job. And the way our postmates engage on the platform reflects that. What is a typical postmates h a lo delivery okguy, employee, do you have a sense of their demographics . Ther what what do they look like . A lot of people use it as complimentary income. Its people who have another job or maybe another parttime job. Altoget we do the surveys to the fleet and we obviously talk to them and we have weekly get togetherssecond in all of these markets and the flex about is what people like as the number one reason. And the second reason is the income, especially the income at the times when they want it. Amaz andin thats a huge things. But who they are. I mean theyre just like amazing. I really believe that which is something i think Corporate America<\/a> should think about a little bit. There is a movement happening that is a lot against the 9to5ca job. There are people who aren orms writers, artists that probably in the past had to have specific jobs in order to provide an income that can now look at flatid set u forms like l. I. F. T. Or uber or postmates where they can be active. Youre not worried at all about the labor pool that is oves postmates r mates sort of bread and butter the guys providing the service. Theyre not going to go away as i do sort of the economy improves and you get further out from the financial crisis which was a motivator for some people to fo take on the parttime jobs. I dont think so. Ill give you an example. The founder of stripe was at postmates for a few days. He wants to get fit so hes doing it for fun. He posted about his earnings. I think he worked for three hours on duty during peak times. So he made i believe 98 doing ae room f bunch of deliveries. Now that is substantial additional income. And theres always room for that. Even if things are changing i think a company has to adjust along the changes. W but for now i think this being a Part Time Job<\/a> is very attractive for a lot of people. What is . The weirdest thing that youve ever seen anyone have to deliver through postmates . Ti what was the crazyiest order . I get this fucking question all the time. Im such an idiot that i never ever think about it thoroughly. So i tell the same story every time. There must be something better. Ivered. So an neck totally. Earlie peopler get whippets deliver. Weve got the weed start up earlier today and the whippet Delivery Service<\/a> now. People get whippets yo delivered. We had a bottle of champagne and a pregnancy test. You can figure out how e libertarian you are on which ing side. Right. And on the Service Front<\/a> people are still doing that, purchas right . Having things dropped off from na one side of town to the other . Th they dano it but most of it is purchases. And i think with that im a g show. Going to say thank you so much for the time sir. Its a pleasure. Have a good one. Enjoy the rest of theneu show. [ applause ]somethin toda who sheer has heard of a term called Net Neutrality<\/a> . Were going to learn something today, then. I was just talking backstage with our next guest. King abo he was talking about what would happen if we did the one elevator stopped on every lane but this was a fast lane. You just have to pay more more that. Tom wheeler is joining us. Werxe honored to have him here. Give him a huge round of applause as well as alex wilhelm wilhelm, our moderator. [ applause ] its a little blue in here. Matches your coat. Youre a handsome man. Thank you for coming. The pink socks. If you want to take a look at welcome toto the yearly gathering of the nerds. Its nice to have you. Only the new york nerds. Et some fly in for this actual actually. You took aity, train. Traveling nerds. Nerds on bikes. Me w like a postmate. The proposed come cost time o werner deal 45 billion is done. A and today in its earnings comcast reported a 99 million charge that related to the transaction that failed. Were you surprised when comcast decided to drop this ball on this and walk away from it . I think it was a responsible decision by brian roberts. You know what he said when he said its time to move on, i think perfectly encapsulates the reality. Why go and fight this through the courts or whatever the case may be. Lets keep looking towards the on future. Do you think they would have pulled the deal off if they hadnt dropped it or do you think they knew it was doomed ood de and it was not going to work . I dont know what they rawn o thought. But what i think is it was a really good s. Andecision. It was a good decision, one, because it would be a long drawn oubt process the challenge our decision. And two because of the whole attitude ofat its time to mo on. Lets look for the next thing. This wil this is an industry that is going like this. Why do you want to fight that fight. Do you think this is going to be ank poison pill for future large combinations of this sort or will we see proposed deals in space similar in size . I think well look at each of them on the merits. One of the things that was really key about the comcast review was that it was incredibly data driven. As you know 14 months this lasted. An awful lot of Economic Data<\/a> an awful lot of market data, an awful lot of data inside how this industry operates. And i think thats why you want how you want to make visit decisions. You want to have them data driven. Do you think the average consumer in america would have erest. Been harmed if a deal had been that, allowed to execute . Our concern was that it was not in the Public Interest<\/a> to do this. Definede the Public Interest<\/a> in this case. D to theres a broad definition of the Public Interest<\/a> and that is th will the market continue to operate. And the market is both the cable op market and the broadband market. Whats the impact on the future of video and video competition. Whats the future on cable rates. And then youio say, okay. Are there offsetting Public Benefits<\/a> and we came to the ent for conclusion, no. What about net harm, reduced competitive environment for the arch consumer. Thats what we isaid. When you view competition, is that the main lens that you look at it through . Well, its interesting. Clearly competition is a key component of what is in the Public Interest<\/a>. You know the Justice Department<\/a> and we were going on parallel at they paths. They have very strict o competition rules andk. Decisions that have to make. Our is a little fuzzier. We can move on to the actual bit. Issue i want to talk to you about. That was just a duwarmup . That was the opening bit, if you will. The first act. One of the most surprising restin things during the Net Neutrality<\/a> of saga was the massive outpouring of public comment. Were you surprised at the amount of comments that came in . And how early were you shocked by that . Early what was the early point when wh you were like, oh,man, this is bigger than most policy debates . There was a day early on we had 150,000 comments being filed and you go whoa. Buntt you know, thats why this debate thats why this decision was so damn important. Because what those 4 Million People<\/a> who were filing with us not all of them were pro. T but it was mostly pro. It was about threequarters were pro. But that still means theres a de Million People<\/a> that didnt like the idea which is a nontrivial amount. But the point of the matter is that this proved the power of an open internet to free expression. And it just happened that the issue being decided and the ability to communicate using w that technology happened to coincide. I dont think its the end of what wellect see on that. Okay. Fine. But when yousure read the comments m how do theic pact your rule making process . What impact did the average citizen have in submitting a , th comment in to the fcc and how do you measure that for rule making . Obviously the total impact the total number of comments is something that you have to sit up and take notice about. But this is not something where , but you make decision based on bulk. Right. You could but it would be very stupid. You could but thats not what t the statute had in mind. Were supposed to go through and make a decision based upon the authorities in the statute in sway terms, again what is in the Public Interest<\/a> and thats what we did. You were not personally swayed in your own decisionmaking process by the comments b yourselves but you did notice the bulk of them . I think that the bulk of the talki comments indicated how when youre talking about the internet youre talking about expre something very personal to hemsel people and they then used that personal medium of theirs to express themselves that was nken what was significant. On the other side of this over in congress senator franken called Net Neutrality<\/a> quote the free speech issue of our tomb. Whereas senator cruz called net at neutrality obamacare for the internet. I dont get ite either. To but what i dont really understand, i was hoping you could tell us, is what drives the philosophical divide in congress on this issue . I feel like people are divided into twoyo camps and there doesnt seem to be a lot of room in a between them. Why do you think were seeing a division on this very important reality issue . You know i mean alex i think that there is a reality in all policy debates that people bring their own experiences and their own id logical approach to decisionmaking and those kinds of comments arent surprising. You were not at all surprised when ted cruz said the obama care line . Complete unshock. No. I think you were the only one. Are you going to point to a t the Digital Divide<\/a> between the fcc and congress in terms of knowledge and competency on the issues that you deal with . You know, i think what the congress did as a matter of fact i had an interesting discussion during a hearing on doe thursday with a member of the House Communications<\/a> subcommittee on that issue, thatert what congress does is Congress Enacts<\/a> broad principles and then delegates authority to an Expert Agency<\/a>. And of course theres a situation where somebody will come in and say thats not what i meant to do, thats not what i wanted you to do. Y but when you delegate to an Expert Agency<\/a>, youre counting on the process that that agency runs. And in fact the courts have held whats called chevron deference. Chevron deference . T agen a terrible phrase. Its base odd an Supreme Court<\/a> case in which it says that the courts should give the al Expert Agency<\/a> deference when e, we having to make decisions. Ss because they are the expert col agency. But in thisle case, in the run up to the actual vote on Net Neutrality<\/a> we saw congress collectively losing its mind on congr what was going to happen andes in the swak of the vote theyre passing bills. Why is Congress Reacting<\/a> to you ntowar doing your job . Well they make the rules. They have the ability to do my j that. At congr theres nothing untoward about that. They have the right to do it. My job is to take the statutes that congress has passed, to look at the facts presented in the context of those statutes righ and maket decisions. And if some people want to say right oh no, its the wrong decision, want t or thats the right decision thats entirely their right. And if they want to change the hop law, thats entirely their right. They are the congress of the United States<\/a>. They are the peoples elected 12, representatives. And but i hope that in this debate what we recognize is that on june 12th which is when the rules will take effect on june 12th there will be in place the from strongest open internet e] protections that anyone has ever imagined. And we shouldnt be going backwards from them. Thats a good point. Okay. May there webe go. Tom [ applause ] but maybe theres a number of legal challenges out there right now. How many people are suing you . Golly. As of today its over a dozen. Over a dozen. Did you expect that number ofbiing challenges . Sure. I mean i said all along, i said the big dogs are going to sue. Again, theres nothing surprising in the kinds of you things thatar we do the big dogs will sue on things they dont like. And its their right to. Youre too nice, i feel. Deference. We have in place the most ruling stringent and expansive open internet rules in history. One of your lawyers said that the approach this time around was quote belt and suspenders, as in you eesh really legally protected on this. Are you as confident as she is that youre going to be able to beat these lawsuits . Yeah. Actually when you say beat the lawsuits theres a twopart process here. Long about julyish actually it will probably get filed in the next ten days, two weeks there will be motions filed in the e be d court to stayec the order, to keep, that k us from enforcing it. Tha probably that will be decided in the julyish kind of time frame by the court. And im confident that well do t well ino that situation for a multitude of reasons, not the least of which theres a list of issues that the court has to use to decide on. And one is, is there irreparableent . Harm to the plaintiffs and two, is there a likelihood of prevailing on the merits in the argument. And i think well be good there. So then we go to the actual argument itself before whichever appeals court. You know right now theres several appeals courts that are contesting for it. R and when you stop and think about the fact that the verz decision which overturned the 2010 open internet rules was basically based onommo the concept that the agency had imposed title to common carrier kind of requirements without stepping up and saying you are a title two he big common airier. Thats the core reason you think this time k to we solved that. That issue is gone. That was the big issue last time. And the court sent that back to addre us on remand. Thank you. We have addressed that issue. I feel pretty confident on the n outcome of the court cases. Ha if yout do lose whats the ot to next step . E. Whats your short term plan . Rm not to lose. Thats the short term plan. Just go ahead and cross off that delete. All right. You op going backer to the reform issue just for a second theres a number of bills proposed in congress to change how your agency operates. Purview you athats okay, its their right. Do you think whats being proposed by both parties i say what . Its their purview. Right. Are the billsve that are currently being proposed about disclosing rules and the voting process and so forth, do you think those wouldou ber conducive to the fcc working well on do you think whats being proposed in congress would harm the functioning of your agency . Well what i testified last thursday was that i had serious concerns thatpa these proposal, which are described as transparency actually are delay fcc get introduced delay. Sions. And delay in the rulemaking ic int process . Delay in the fcc getting to aisions. Point where it can make decisions. Okay. Okay . And that the Public Interest<\/a> is served by getting to decisions. Roadbl and that we shouldnt be. Building road blocks along the way that impact the ability for the fcc, for instance to make the implementation nal decisions about the open internet. As so whats going on here is okay there are specific things that the fcc a has to look at, both during my tenure and in all of tradi the yearsti to follow. And the question is will there be the traditional kind of process which is open transparent and somewhat rapid, okay. Thats your version of rapid . Thats my point. Thats why i said somewhat. The alternative is to slow it down even more. Are nece so what were talking about is will the activities that are necessary to enforce the open internet rules be slowed down by the imposition of new processes that clog up the existing administrative process. And your view these bills to would do that right away . Appy w thats what i said to congress on thursday. What was the response in. I think the republicans gs werent too happy i with me. Youve been having that issue a lot lately with the republicans on the hill. They dragged you through five hearings in eight working day after the vote. Yes. How fun was that . I think you know the answer to that. Re i do. Actually a different question on that. Do you think those hearings were at all useful or were they essentially political theater to chastise you for doing your job. This is not my role to make ess of that kind of decision. They say, mr. Chairman we want you to show up. Up. I say, youre the congress of the United States<\/a>. You r i respect the congress of the United States<\/a> i will show up. You respect the congress of the United States<\/a> . Yes, sir. Yes, sir. Holy shit. U are youre the guy who says yes on o that poll. You were in Venture Capital<\/a> for ten years. Yes. You watched the tech scene asfrom a whole. One of the questions were always talking about is are we in a bubble is it a risk bubble, a valuation bubble. With your experience, how overvalued do you think tech is right now . So you have a conclusion in your question. This is how i interview. In in case imt congress. I hung up my spurs on that, alex, when i took the oath of office. I stepped out of that world. Rea so all i know is what i read in techcrunch. Oh, good. Are actually not good. Tom i cant really decide. Once youre done with this job, are you going to go back to bc . I have no idea. I truly dont. Im not exactly a spring chicken. Maybe i dont ifwill youve noticee thd. Youre 69. Ill be 71 when i leave this job. So you know, i may just play with the hasgrandkids. Would you be open to being the chairman for the next president . She hasnt asked me. [ applause ] see, thats popular. F thats popular. All right fine. If you want to do it that way. Going back to bc, fair enough. You used to work as a lobbyist for the cable and the wireless industries. Given youve made a lot of nonfriends in those sectors, do your old friends call you up and askm if youve lost your mind . They used to call me up and ask me that question back in the. Old days. Back when they were paying you. Im serious. A lot of people expected you to act in a certain way given your past employment and youve turned it on its head and surprised a lot of people. Alex, when i was an advocate for the cable industry and the Wireless Industry<\/a>, there were a couple of things that were important. I was in cable 30 years ago. I was negative 5. There you go. Ef and the Wireless Industry<\/a> was you know over a dozen years ago that i left. And they were very different businesses. They were the ones coming up the, i wa side of the hill and we were te for fighting to stay alive. That having been said, i was an advocate for these new Innovative Services<\/a> 37. And i hope i was a good advocate. Is that a fancy word for lobbyist . Sure. I hope that i c was a good advocate for them. But i have a different assignment today. My client today is the american an pos people. And i want to be the best damn advocate i possibly can be for the American People<\/a> and thats how i look at issues. D se okay. Ht. Well well bring you back next year then and see how this play out and see if you were right. I look forward to it. Ow coo thanks for coming. Ro thanks. Sourc take care. [ applause ] la school. How cool is that. My direct from the source. Something a little unrelated to talk about. I took a newspaper class when i was in senior in high school and my first ever mentor jamie is here supporting me. I thought that was cool. Can we give mer a round of applause. When i was a kid ive startedkers o every single thing like that. Made in china stickers on everything, right . Everything has been made in wn china, manufacturing has been moved outside of the u. S. These guys didnt get that memo. Weve got people building stuff in downtown manhattan, brooklyn and detroit. Theyre going to talk to us about howard is eating the world. Please welcome to the stage johnour t guests and moderator matt burns. Really sink down into these chairs, dont you . Am clear my goodness. Take a tellnap. Thank you for joining me. U i apologize to everybody. As you can tell by my height, im clearly not the mayor. Were going to talk about hardware here. We have on stage here, the president of shinola, vp at grado and lamar freed. Thank you so much. Thank you. Ill let you guys talk in a minute. When i look at your companies youre all radically different but you have a different marketing scheme. Hes, you guys are based in detroit. Made in detroit is the big thing. You make bikes, Leather Goods<\/a> was and mostly watches. You told me a few weeks ago you guys are making motors in. Detroit. I thought that was neat. E in jonathan, you guys have a Family Business<\/a> making some of the worlds best head phones. Theyre hand made here in brooklyn which is really neat. Yeah. And if i may ma hello. Hello. Thank you. Tart you guys are in the business of do peo selling things that makers use to make things. Uhhuh zwlits very interesting. Lets start first with the question why do people make things tangible objects . You want to start . Deep question. It is. R it i think ithat you know, love everybody, like all humans we love to create whether its art so, or writing or technology we love to do things with our hands. Its emotionally fulfilling. Cr so whether were making head phones or watches or software orfamily h hardware, i think it full fills a deep need to be creative. Thats great. Matt and jonathan your family has yo been doing this for how long . 62 years last month. 62 years. Give us a brief history of your uncle company yeah. So in the early 50s my great uncle, he started building cartridges at his kitchen table. Cartridges . For turntables. So its that little generator that holds the needle. He realized that he really liked doing it. Said we we also owned a fruit store at from the time. He went around the corner 99 closed down the fruit store and cartri was like were going to get into audio. And from 1953 to 1990 we made cartridges cartridges, just cat ridges. At the end of the 80s we were doing 10,000 a week and then one year it changed to 12,000 for the year. There are a ton of more things that are more practical than turntables. S he was going to close up shop pi my day who had beenoing daytoday business since the 70s, came in bought the company. We lived on the top floor from nd dad 90 to, 99. Would be and from 95, it was my mom and dad going downstairs and building the orders. Wed get a wner order for ten head phones and it would be a party. So while i was building legos you were building headphones . Zbli was also playing with legos. My parents were building headphones. What keeps your dpamly involved ord driving your family to keep on doing this . Thats a great question. It thanks. My great uncle was a master watchmaker and he started t. Tinkering with cartridges and fell in love with it. My dad trained with him and he also fell in love with it but he focused more on building the headphones. And i mean i used to be embarrassed by my familys companies because no other parents were building these things. So on career day id be the only one who would come in with head phones around my neck and no one understood what was going on. I stopped telling people that. And then one day when i was in college a few yearsbe b ago i woke up and like i am so dumb. Uld go i jumped into it. Maybe it was because iz was never forced. Pany, they still tell me you should gode out and do something else. Emplo this is really what i want to t do. Jack, your company in detroit, how many people do you employ making watches and Leather Goods<\/a> . Were up to 400 people total globally. A little over twothirds of the 400 are in detroit. What have you found whats the reason people come to you to make the movements inside of watches . Is there something let me clarify real quick, matt. Without the made and the make and the terminology can be con trud. Watches, we like to be clear and authentic with how we present what were doing. Were actually building movements, were building watches and bicycles in detroit. Co our Leather Goods<\/a> are made in the United States<\/a>. But unfortunately given the industry today and where we ov stand here in the United States<\/a> in termsh of making componentry ponent for watches we have to source components in from all over the assem world as wble do with bicycles. And then our Movement Components<\/a> come from switzerland and we assemble everything there intc detroit. Describe the process involved. Be argue the made in detroit part. You guysve e actually built a watch factory recently in detroit. It could be argued that was the dumbest move ever. But we did it anyway. Detroi and its been an incredible journalyour journey. Weve been ableit to train local detroiters to build watches in ears a detroit and to build movements in detroit which is very exciting. De its an industry that left our shores about 50 years ago. And today is aloif and well again in detroit. Detroit, michigan of all places. So the company shy no la when you were looking for a place to house the company you did a nationwide search correct . We did. Was there a practical reasoning choosing detroit or was it a marketing opportunity . You touched on it a minute ago. We are making motors. The motors power the watches. At little quartz motor thats powered by a battery. If you want to make a motor in ant to the country, theres not a bett better place than the motor city. When youaliz get to motor city and real meet people in that town you realize theres something hug. Special there. And you know, the city and the community as really given us the good old bear hug and we realizes that very early on that the people there want better tan they want to move, not just that region but they want to move our country down the road and bring back manufacturing and bring make back manufacturing at a level of quality that we like to represent as well. Now jonathan you guys make your head phones here in brooklyn. Why do you still do hightech manufacturing here in brooklyn, or assembling . So were in a people come and visit us and expect what they see is like the entrance to something bigger. But at the end im like, no, that was it. Theres nothing more than that. Yeah, its, i think its that my dad is really happy being in that building and being that close to the product. Softw he still goes in six and a half days a week. Hes a big fan of the machines that dont have software because he can get in there and fix it and then we have one machine that does work on software and it breaks,es thats when we have to call in a specialist. But the old machines from the 0 40s those are our workhorses. Our family has been there. So gradeo headphones be the same if they were made elsewhere . We could still get the sound to sound as good as they do but the story would be different and were not into that. So youre going to stay here for the long run . Oh, yeah, im pretty sure. How many people do you guys employ . At the wor whole company theres like 20. 17 are in brooklyn and 3 work from olie. So you guys sell your productby based on story. What do you see as your dge is Competitive Edge<\/a> . I think by far the Competitive Edge<\/a> that adafruit has is what you learn, the knowledge and the story behind it. We actually do have the best dined technology. This is a tutorial company. We teach you a skill which is solder bing, microelectronics, lik you follow our tutorials, we have like 800 tutorialsl yo now on ck to our site. At the end, its like did you like this tutorial . Would you like to follow it . Click here to follow your card. Thats how it works and we get to focus on the quality of instruction and the quality of the goods. Once people have that first unboxing experience learning y theyre like wow that was actually not so hard. Like i can become a maker i canas you dor electronics design. They become addicted to it. Who do you see as your key customer, then . Oh everybody. The growing market we see is cosplay. A lot of people who do cos play i dont know if youve been to comicconbut there are a lot of people would want costumes and they want to integrate sound or lights. We have a lot of people who are into fashion and they want to do wearable electronics. Like the flora people tell me you bring toys. Yeah thats right. So you sew this on to your stume. Costume and its actually really easy. His on you dont have to go t to m. I. T. And spend 100,000. You can learn all this stuff on the weekend. How much do you contribute the success of your company directly to you beating out there and being the visible face to this company . I think its important to have a face because for every company, the culture comes from above. So even though we have 85 or so people, what i set up what we see is what i put into it and what the employees see. To set so i think its important for the ceo to set the culture and continue to disseminate it. Right. D over t great. Lets switch gears and talk about crowd funding. Everything from buying kits that you guys sell to selling people headphones and watches t theyre all people are trying to crowd fund and start. Now, think back to when shinola started. Would it be possible for a company to raise enough money through crowd funding to even build a watch domestically . I guess it depends on the skill. Man, im not an expert on crowd funding by any means. How much money do you think it would take to start a small watch company here in the states . I dont know. It depends on, again what you want to do. If you want to make a couple of oom. Watches a year, you can start it up in a bedroom. If you want to make a case and you want to make the crystal and you want to make the crown and make a watch like you know, there are some makers here in nia the United States<\/a> and theres a n an o guy in pennsylvania whldo is k. Making you know i dont know how many makes a year, but hes doing it in an old bank. So i dont know man, to be honest with you, what kind of money you would need to raise. How about a little to a lot . How is that . Thats fair. Do you ever see a situation with crowd funding to start a product or pay for a product, jonathan . I dont think so. Weve never taken any kind of funding. Butha i know whenever some big kick starter success starts my mom is like, why dont we just as raise 2 million. And im like, its not that easy. Im not a funding expert or anything like that. No, thats fair. Crowd funding has exploded, but then theres been a lot of failures with it as well. Lot lemore, when you look at all this stuff people come to you to prototype a lot, right . Yeah. We see kick starters and im s, eas like, thats an ada fruit thing. The electronics ones, easily 20 , 25 . What do you think people are g wron doing wrong with the crowdg funding . A lot i think that, you know, theres a lot that goes right right with crowd funding. So i dont think its like if you do crowd funding youre making a mistake. I think that the people who use crowd funding as one tool in their toolbox are the ones that get the most out of it. Of the kick starters ive seen that have been successful its people who have taken something ma to manufacture something before and theyre like, this is an evolution of something i alreadybl did. I made headphones, now these headphones have a slightly different effect. Maybe they have audio blue s, now tooth. Ive designed the headphones. I know how to build and get cones and do the Power Management<\/a> and all that stuff. Those people succeed. Not always but usually. The ones that struggle are people who i think they look b at, you know the electronic market and they say how hard can that be . Like how hard can it be to make a watch . You can buy a casio for 2 like it cant be that hard. And they dont realize the fundin decades of experience that are required to get to that point. So i think that i think crowd hav funding is only the first part. Rers but if you have experience with erly. Design for manufacturer you can use it properly. If you and your crowd Funding Campaign<\/a> and now youre like, all i have to do is hire an d engineer, youre going to have a bad time. Right, right. Jonathan, youre smiling over here. What do you see as the big pain point in training people to build your product . Luckily most of the of our staff has been with us for over a decade. We dont have a high turnover rate. So i havent had on to train think anyone. So i guess im looking forward to that. But i think its just you need to sharpen that skill. With our cartridges. Rs, if i we tip our cartridges with diamonds and then if the dmoond diamond doesnt go on just right, the whole entire piece needs to be scrapped. Ou guy its practice. And i guys have the same. Tory. Ive been to your watch factory and its quite astounding. Its right in detroit and right by the old General Motors<\/a> facility. , and you have this clean room par where you have people assembling absolutely microscopic parts. How do you train somebody to do that . Or what do you look for . Well you look. I mean theres a visual test and a dexterity test and overall Aptitude Test<\/a> that people take. Eople but the beautiful thing is, weve been able to train people to assemble the movements and the watches. Ve chara and we look for obviously, a steady hand. But we look for people that have character about them and people e who that are willing to learn something new. D de and thats what we foundsi in detroit are people that have this incredible will and desire to want to make things. And have the patience. I dont know that people understand how difficult it is to sit and do the same thing a thousand times a day. Ory, if youve never been into a factory, it might be hard to wrap your head around that. But seeing someone do the same thing a thousand times a day helps you understand how challenging it is. For me, i dont know that i could do that job to sit and do the same thing time and time and time again. Sou but weve been very fortunate in finding people who pour their hard and their soul into each and every watch or bicycle. Or leather good that leaves our factories and our facilities in detroit. W what are you working on now that youre most excited about . What are we working on now . Well, were working on expanding our capabilities of leather manufacturing in detroit. Today we make about 50 of our leather straps are made in detroit. The other 50 are made down in largo, florida with a different manufacturer. But we would like to expand our ability to make tech accessories, so ipad cases we covers, bags wallets, etcetera there in detroit. So we have to train people to be able to do that. A wat ch could we see a shinola watchband for the apple watch is ou sometime . Oh, boy. I was waiting for that. Our stance on the apple watches was that our watchso s isma so smart ti you can look at it it can tell you time just by looking at it. So, you know, thats kind of all i have to say about the apple watch at this point. I like that. Jonathan, what are you guys working on here in brooklyn now . Well, we dont come out with new headphones every eight to 12 months like some other mont companies. How many products does yourhs company have in the history . Ade . 13 14. Just headphones, not cartridges. Theres a lot more of those. Our first head phone came out in the early 90s and some head phone res sprinkled into the as the lineup until 2007. In 2007 they got a whole revamp. This past june was a new generation. But we are working on some limited editions and i think were farther enough along to e talk about our next limited s. Edition head phone were making headphones out of brooklyn trees. So were taking trees and making headphones out of those. 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