Week in Review: Crumbling American Rail, Verizon Buys AOL, Facebook Goes for $15, WalMart Guzzles California’s Water

By Alexis Fitts     May 15, 2015

Facebook Raises Wages

In recent weeks, the ‘Fight for $15’ movement has gained momentum across the country, as workers and labor activists protest in favor of an increased minimum wage. Increasingly, the protests have been directed at specific companies—namely large employers. Last Friday the demonstrations blocked the train and bus stations in San Francisco where tech workers commute to Silicon Valley jobs at large companies like Facebook, Google and Apple.

This week, Facebook became the first of those companies to respond to the call, announcing a baseline wage increase to $15 an hour for all employees—including, importantly, the freelance and contracted workers who don’t necessarily fall under Facebook’s cushy full-time benefits. This will include 15 vacation days and a $4,000 bonus for having a child. In a blog post, COO Sheryl Sandberg tied the move to gender equality. “Women, because they comprise about two-thirds of minimum wage workers nationally, are particularly affected by wage adjustments,” she wrote.

Amtrak Crash Puts American Rail Under Scrutiny

Just hours after an Amtrak train derailed outside of Philadelphia, killing six passengers and injuring dozens more, the house appropriations committee heard a proposal that would cut funding to the rail service by 18%. Despite President Barack Obama’s request that a full $2.45 billion be invested in the country’s passenger rail services, the bill would cut investment from the $1.4 billion spent last year by over $250 million.

Amtrak officials say the funding cuts would drastically affect an already crumbling rail system in the U.S. In March, Amtrak’s president and chief executive, Joe Boardman, warned federal legislators that unless the company received more funding, the Northeast Corridor railroad would “fall apart.” Boardman has been warning of a coming crisis for rail service in the Northeast since at least 2012, when he predicted that regional population growth would, by 2050, strain already struggling services. This comes as the United States rail technology is being left behind internationally. “The current Acela Express service travels at an average speed of just 84mph, which decreases to 72mph including stopping time,” reports The Guardian.  “Last month a Japanese bullet train achieved a top speed of 375mph.”

Funding cuts have also slowed the installation of “positive train control,” a technology which slows or stops a train to prevent accidents. Though Amtrak has installed it along some of its tracks, it had not been installed in the stretch of track in Philadelphia where a train derailed on Tuesday night.  The train derailed after rounding a curve limited to speeds of 50 miles per hour while traveling at 106 miles per hour. “We feel that had such a system been installed in this section of track, this accident would not have occurred,” Robert Sumwalt, a member of the National Transportation Safety Board, told reporters in a news conference.

WalMart’s Got a Water Problem

On Friday, an investigation by CBS News in Sacramento found that nationwide, WalMart’s gallon jugs of bottled water are sourced from the waters of drought-stricken Sacramento. Just last week, Starbucks was forced to move production of its Ethos bottled water from California to Pennsylvania, due to pressure from activists. California residents are already facing strict water limitations, which may become stricter after state governor Jerry Brown signed an executive order last week to cut water use across the state by 25%.

Yet there is little government oversight of state bottling plants in the region, which are run by large corporations like Nestle and Coca-Cola. Though industry use accounts for only 1 percent of water use in the state—and bottled water only a small slice of that—the juxtaposition looks bad considering the state’s water struggles. A Walmart spokesperson told The Guardian that the company is “very concerned” about the effects of the drought.

“Our commitment to sustainability includes efforts to minimize water use in our facilities.”

Verizon Buys AOL, Bets on Communications

This week Verizon Communications purchased AOL in a $4.4 billion all-cash deal, a move that signals a reinvention of the century-old telephone company and a move towards digital communications across platforms. For Verizon, AOL’s digital ad platforms allow the company to take on the digital advertising market, dominated currently by Google and Facebook. Just last month, Verizon made the innovative move to un-bundle the traditional cable packages into groupings tailored to the consumer, called “skinny bundles.”

Verizon has been revamping its media game, purchasing the mobile rights to N.F.L broadcasts for $1 billion and signing a deal with YouTube programmer Awesomeness TV for 200 hours of programming. Financially, the AOL purchase is a small one for Verizon, which paid $130 billion last year to buy out its partner Vodaphone. Yet it’s a powerful sign of the increasing overlaps between the communications, technology and media businesses and a hint of the company’s future.

The Future of Blue Bell

In Texas Monthly, Mimi Swartz writes of the precarious future of Blue Bell, the most famous brand of ice cream in the state, and Brenham, Texas, where the icy dessert is manufactured. Known as “The Little Creamery in Brenham,” Blue Bell and Brenham are indisputably linked to one another, “both capitalizing on the safe, sweet, old-timey identity of the other,” Swartz writes. But, after Listeria monocytogenes, a dangerous bacteria, was found in Blue Bell products, leaving three dead, and confirmed cases across Texas, Oklahoma, Kansas, and Arizona, the 108-year-old company is in a state of crisis.

The third-largest American ice cream maker, Blue Bell has issued a full recall and faces continuing legal troubles from individuals affected by the outbreak. But the effect on the citizens of Brenham, where the company is responsible for fueling tourism, funding public works projects and providing about 4,000 job, has been profound. “The freezer compartments at local convenience stores remain empty and forlorn, because no Brenham retailer would dream of substituting any other ice cream for Blue Bell,” writes Swartz.

This entry was posted on Friday, May 15th, 2015 at 2:33 pm. It is filed under Week in Review and tagged with Amtrak, AOL, Blue Bell, California drought, Facebook, Fight for $15, Starbucks water, Verizon, Wal-Mart water. You can follow any responses to this entry through the RSS 2.0 feed.