New College Grads' Wages Are Growing Slower Than Everyone Else's

SAN FRANCISCO, July 21 (Reuters) - New college graduates have seen their wages rise more slowly than the rest of the U.S. workforce since the Great Recession, new research from the San Francisco Federal Reserve Bank shows, a trend that reflects continued weakness in the economy.

"While this post-recession pattern was also present after the 2001 recession, earnings growth following the most recent recession has been held down longer than in the past, which reflects the depth and severity of the recession," wrote San Francisco Fed researchers Bart Hobijn and Lisa Benagali in the regional Fed bank's latest Economic Letter.

Employers can set the hiring conditions and wages of new workers with more freedom than they can change the wages of existing workers, the researchers argued, making the wages of recent college graduates a better indicator of the true price of labor and the underlying strength of the labor market.

"Other signs of the continued weakness in the labor market are the shares of recent graduates not in the labor force, unemployed, or working part-time, which are still elevated compared with the start of the recession," they wrote.

The researchers found that the slow wage growth does not reflect any shift in the types of jobs college grads get, and argued it would be "misguided" to conclude that going to college is a poor investment.

Rather, they argued, new college grads will need more time to earn back the cost of their education than those who graduated during boom years, but they will still end up earning more over their lifetimes than those who did not go to college. (Reporting by Ann Saphir; Editing by Meredith Mazzilli)

NOM Pledges A 'Void Chase' Boycott Following Employee Survey On LGBT Issues

The National Organization for Marriage (NOM) is targeting JP Morgan Chase in its latest boycott, following reports of a survey distributed to international bank employees which included a question in regard to their support of the lesbian, gay, bisexual and transgender (LGBT) community.

NOM President Brian Brown slammed the company in a blog post on the right-wing group's website, arguing that Chase was "clearly pushing an LGBT agenda" with the online questionnaire, which "created an intimidating and threatening atmosphere" for employees who might object to its questions.

NOM's "Void Chase" campaign focuses on two questions found on the survey, an apparent screenshot of which can be found on Breitbart. Employees were asked if they identified as LGBT or as an LGBT ally in the survey.

"We are demanding that the bank issue a formal apology for their offensive conduct and pledge never again to invade the privacy of their employees by attempting to learn their private views about LGBT issues, and -- until they do so -- pledge to take your banking business elsewhere," officials write on the "Void Chase" website. "Chase has refused to answer for this survey, or to apologize and reassure its employees and customers. This is a major violation of trust, the central value in any banking relationship."

A petition on the site currently has over 4,000 signatures.

Meanwhile, Media Matters' Luke Brinker argued against the conservative boycott efforts, saying "there isn't a shred of evidence that Chase is using the internal survey for anything other than basic data collection." The NOM reports, he said, were "an entirely made-up horror story meant to promote the tired narrative that the LGBT movement seeks to persecute anti-LGBT conservatives."

The action, of course, mirrors previous NOM efforts. In 2012, the group announced a "Dump Starbucks" campaign after Starbucks officials pledged their support for same-sex marriage in Washington state.

"We will not tolerate an international company attempting to force its misguided values on citizens," Brown was quoted by The Miami Herald as saying at the time. "The majority of Americans and virtually every consumer in some countries in which Starbucks operates believe that marriage is between one man and one woman. They will not be pleased to learn that their money is being used to advance gay marriage in society."

This Guy Wants $22,000 To Make An iPhone Handle

Your phone is missing a very important accessory. No, it's not an external battery pack or a camera lens. It's a handle.

At least, that's the idea behind Yonatan Assouline's new invention: the Fonhandle.

The Fonhandle is literally a handle for your phone. And this guy wants you to pay for it. You're probably asking yourself, 'Why?' Well in fact, there are a lot of things you can do with a Fonhandle ... some more exciting than others.

First of all, it looks like a spatula. You can probably use it as a spatula if all else fails. Here it is, in all its glory:

The Fonhandle comes in white, black, clear, pink, green and wood. (Is wood a color?)

One thing you can do with Fonhandle is talk on the phone. If you have super short arms or for some reason find holding your phone up to your ear to be intolerable, use Fonhandle. A side effect of using this thing to speak is the loss of friends and increased side-eye from strangers.

The following is, by far, the most confusing use of Fonhandle: using it to take selfies. The invention allows you to hold the phone farther away than you could with your arm, though you'll need an app to make the iPhone take a self-timer photo. (Another option is to just hold the phone up with your actual arm, like a regular person.)

You could also use it at the beach, in case you'd rather watch Netflix than look at the ocean:

At the time of writing, the Fonhandle has raised almost $2,000 of its $22,000 Kickstarter goal, with 44 days to go. The end date of the Kickstarter campaign is Aug. 30.

It's a lot of money for an essentially unnecessary gadget. Still, let us never forget The Potato Salad Kickstarter of 2014. What started out as a joke request for money to make potato salad became a $50,000 Internet sensation. You never know where crowdfunding might take you.

Improving Economy Means Less Slack In Men's Waistbands

WASHINGTON -- Economists have been looking at people's underwear for decades and this year things are looking good.

Gross, you say? Perhaps, but underwear sales do happen to be one of quirkiest economic metrics ever created by a Federal Reserve chairman.

According to author Robert Krulwich, former Fed Chair Alan Greenspan said that when he wanted a stripped-down sense of the state of the economy, he would look for answers in men's underwear sales. If purchases of boxers or briefs declined, he posited, the economy might be in serious trouble, since men felt like they didn't have enough money to replace their tattered underwear.

"Your children need clothes. Your wife needs clothes. They have to change. The children grow. You need clothes on the outside," said Krulwich, channeling Greenspan. "But the last purchase that you don't have to make is underpants," he added, noting that most men are willing to wear underwear with holes in it.

During the Obama administration, Greenspan's corollary seemed to apply. Underwear sales were down big time during the aftermath of the recession in 2009. But over time, they have increased, reflecting a stabilizing and then a gradually improving economy. We should know. Like an old, lucky pair of underwear we refuse to throw away, The Huffington Post has been following this story since 2009.

This past year, the NPD Group, Inc., a leading market research company, reported that men's apparel sales were up 5 percent from the year prior, at $60.8 billion instead of $57.8 billion. While there was no specific breakdown for underwear sales, the group did note that sales of socks alone grew by 14 percent to $2.8 billion.

Michael Kleinmann, CEO & Editor-in-Chief of a blog called The Underwear Expert, told The Huffington Post that business in the industry was "going well." He attributed the positive trends to a generally improving economy and fewer barriers for prospective suppliers.

"I remember back in 2008, brands had definitely reacted to market changes, cutting collections colors and quantities," he said. "Now we see brands expanding as much as they possibly can and we see brands launching every week. The barriers to entry are lower ... everyone has realized that they are in the retail business, that all you need is to put a website on and start some marketing."

Kleinmann doesn't subscribe to the theory that underwear sales say a whole lot about the economy. One reason is that it's difficult to get a true sense of how large the industry has become. Currently, he said, there are an estimated 500 different men's underwear brands on the market. The "fashion brands" -- with pairs priced between $10 and $40 -- have experienced the most growth, he said. But the more expensive "luxury" brands are gaining steam too. Frigo's $100 pair of boxer briefs was a media sensation last fall.

Those hit hardest by the recession are in no position to spend that much money on a new pair of drawers. But some men say they're still buying.

Jim Chukalas of Fredon Township, New Jersey, recently started a new career in real estate after a stretch of unemployment, which he previously told HuffPost had restricted his underwear purchases. Now he's back in new boxer briefs after a trip to the outlets.

"I have bought some more, but not many," Chukalas said in an email.

A recent Gallup survey found that about 45 percent of Americans have spent more money this year than they did last year, mostly on necessities like groceries and utilities. Only 25 percent of respondents reported spending more money on clothing, while 30 percent said they'd spent less.

Yet companies that sell men's underwear seem to be having a good year so far.

For the first quarter of 2014, the most recent available data, Hanesbrands Inc. saw net underwear sales for men, women and children increase to $571.2 million, up from $497.0 million in the first quarter of 2013, according to SEC filings. Underwear sales are clearly on the upswing for Hanes after the depths of the recession. In 2009, underwear sales totaled just $1.83 billion. By the end of 2013, that number had climbed to $2.44 billion, up about 5 percent from from $2.33 billion in 2012, and a full 33 percent from the 2009 figure.

In its annual report for 2013, Hanes attributed the improved performance to "incremental sales from Maidenform brands in the intimate apparel category and stronger net sales in our men’s underwear and socks product categories, partially offset by lower net sales in our children’s underwear product category."

Greenspan's argument that men's underwear is uniquely utilitarian is increasingly obsolete. Women wear plenty of underwear that isn't high-end designer, and one of the most prominent retailers is Victoria's Secret. The company, owned by the L Brands Inc. conglomerate, has seen moderate sales growth this year. Revenue came in at $1.60 billion in the quarter that ended May 3, up slightly from $1.54 billion in the same quarter a year ago, according to its most recent quarterly SEC filing.

For the fiscal year that ended Feb. 1, Victoria's Secret sales were up slightly, bumping to $6.68 billion from $6.57 billion in the prior year. But the company says it's optimistic about the future.

"We see clear opportunities for substantial growth in these categories by focusing on product newness and innovation and expanding into under-penetrated market and price segments," the company said in its most recent annual report.

10 Brands That Will Disappear In 2015: 24/7 Wall St.

Each year, 24/7 Wall St. identifies 10 American brands that we predict will disappear before the end of the next year. This year’s list reflects the fact that mergers and acquisitions are at unprecedented levels. While some of the companies on this list may disappear because they continue to be at the bottom of their industry due to weak products and management, many may disappear because they are doing so well.

Retail continues to be one of the sectors with several troubled companies that may have to be sold to survive. The 24/7 Wall St. list includes Lululemon Athletica Inc. (NASDAQ: LULU) and Aeropostale Inc. (NYSE: ARO). Both specialty retailers are in highly competitive spaces. While Lululemon is battling Gap’s aggressive move into the yoga pants space, Aeropostale’s teen line of branded clothes is losing out to low-cost, fashion-forward brands like Forever 21 and H&M.

Click here to see the 10 brands that will disappear in 2015

The consolidation of the broadband industry may also cause some companies to disappear. Time Warner Cable Inc. (NYSE: TWC) will likely be sold to Comcast Corp. (NASDAQ: CMCSA). DirecTV (NYSE: DTV) will likely be bought by AT&T Inc. (NYSE: T). These transactions are part of a much larger movement to become the exclusive providers of entertainment to American homes.

While telecom companies interested in increasing market share have the option to install a fiber network to take market share from cable, that comes at a great cost. Merger trends in the industry indicate it may be better to buy than to build. Comcast and AT&T certainly believe so. Having a larger market share could also allow these companies greater price leverage with content providers like Netflix and premium cable channels.

Adoption of mobile and the massive size of some of Web 2.0 companies has also contributed to the list. Zynga Inc. (NASDAQ: ZNGA) was well positioned when it was able to market Farmville to Facebook’s users. But it is doing poorly after failing to come up with another hit, moving slowly on mobile and losing its special relationship with the social networking giant.

While Shutterfly Inc. (NASDAQ: SFLY) makes a tidy profit selling photos for greeting cards and calendars, it is also up against free photo sharing services such as Instagram and Facebook Inc. (NASDAQ: FB). The photo printing site is currently looking for a buyer.

A number of the biggest food packaging companies are also in the market. Russell Stover is the third largest chocolate company in America. However, third place is miles behind the leaders, particularly Hershey Co. (NYSE: HSY). Stover’s management has decided to give up operating on its own and has put itself on the market.

Hillshire Brands Co. (NYSE: HSH) will also almost certainly be sold this year. It has already signed an agreement with Tyson Foods Inc. (NYSE: TSN). But Tyson did not get the prize without an expensive fight with Pilgrim’s Pride Corp. (NYSE: PPC), which gives a sense of the value of food companies to their rivals.

In 2012, we predicted that Research In Motion would disappear. Last year, the company changed its name to BlackBerry Ltd. (NASDAQ: BBRY). The company is on the list again this year under the new name. The company continues to be in serious trouble after being wildly successful for many years.

Reviewing last year’s list, we have had some winners and some bad calls. We called Nook and Leap Wireless correctly. Last month, Barnes & Noble announced it would spin off its Nook e-reader as sales continue to plunge. Leap Wireless was acquired by AT&T late last year.

We have yet to be proven right — or wrong — about the balance of the list. Revenues for Martha Stewart Living and Road & Track magazines continue to be weak, but they also remain in the business. Sales of Mitsubishi and Volvo are among the lowest in the auto industry, but you can still buy their cars. Similarly, LivingSocial continues to offer deals, WNBA to sell tickets and Olympus to make cameras. While these calls haven’t proven right yet, we have until the end of the year.

After five years of making predictions, we are proud of our record. Out of the 49 companies that have made our list, 24 have disappeared. Given that these brands were chosen from a universe of thousands, we think it’s an impressive record.

We continue to use the same methodology in deciding which brands will disappear. The major criteria include:

Declining sales and losses;
Disclosures by the parent of the brand that it might go out of business;
Rising costs that are unlikely to be recouped through higher prices;
Companies that are sold;
Companies that go into bankruptcy;
Companies that have lost the great majority of their customers; and
Operations with withering market share.
Each brand on the list suffers from one or more of these problems. Each of the 10 will be gone, based on our definitions, within 18 months.

This is 24/7 Wall St.’s 10 brands that will disappear in 2014.

 10 Brands That Will Disappear in 2015 of  

• It is not hard to identify when the fortunes of the women’s athletic apparel company changed. On March 18, 2013, Lululemon recalled a large portion of its yoga pants because they were too sheer and as a result too revealing. The problems did not end there and resulted in management changes, revenue drop offs and a collapse of its share price. The fallout cost CEO Christine Day her job in June 2013. Founder and Chairman Chip Wilson announced that he would step down in December of last year. Wilson has since returned as the potential leader of a buyout to take the company private. Wilson believes he can find a private equity backer. He will likely be able to buy Lululemon at a discount price, at least based on what its shares traded for at their peak. Lululemon’s last quarterly financial statement shows the extent of the company’s troubles. Revenue at the previously fast growing company was up only slightly to $385 million from $346 million in the same period a year ago. However, net income collapsed from $47 million to $19 million. The stock is down 50% from its peak set at the start of June 2013. Read more: 10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) - 24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz37HVms45e Follow us: @247wallst on Twitter | 247wallst on Facebook

• AT&T’s plan to buy satellite TV giant DirecTV is an example of a broadband carrier trying to extend its reach into American households. AT&T’s U-verse fiber to the home broadband and TV product has only been modestly successful. It has 5.7 million customers to DirecTV’s 38 million. The $49 billion deal has to clear federal regulation. Some members of Congress have sharply questioned AT&T’s management about the consumer benefits. While the two companies argued their marriage will lower consumers’ costs, some consumer groups believe that prices will go up and the new company will be able to control access to popular programming like NFL games. AT&T has reason to fight for the deal and make sure it closes. Its attempted bid to add wireless broadband capacity via a buyout of T-Mobile was blocked by the government. Beyond that, increasing customers by more than six times makes the business case for the deal even more compelling. Read more: 10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) - 24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz37HVyhzke Follow us: @247wallst on Twitter | 247wallst on Facebook

• Hillshire Brands, which markets Ball Park hot dogs and Jimmy Dean sausages, the top-selling products in their categories, has been on the radar of several food packagers. The company reached an agreement to buy Pinnacle Foods in May for $4.23 billion. But the agreement sparked interest in Hillshire and triggered a bidding war for the company among the largest food packagers in the country, Tyson Foods and Pilgrim’s Pride. Hillshire accepted Tyson’s final offer of $8.5 billion including debt, a nearly $1 billion premium over Pilgrim’s offer and a 50% premium over its share price prior to the bidding war. To close the Tyson deal, Hillshire had to terminate the Pinnacle agreement. Tyson expects the Hillshire buyout to close before the end of its fiscal year, but that does not mean the fight is over. Pilgrim’s Pride may not go away and might still offer a higher bid. Read more: 10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) - 24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz37HW5ACHR Follow us: @247wallst on Twitter | 247wallst on Facebook

• Zynga can be considered the single greatest social media failure among recent IPOs. The leading provider of games on Facebook has been unable to match the success of Farmville, its first hit. Facebook also ended its relationship with the gaming company in 2012, effectively limiting Zynga’s access to the social network’s 1 billion users and making it harder for the company to promote its games. The company moved slowly into the mobile platform, and after it failed to create big hits of its own, it acquired popular titles such as Draw Something and Words With Friends. But new rivals like King Digital, maker of popular mobile game Candy Crush, continue to crowd the market. Similarly, traditional game companies like Electronic Arts have also begun to migrate their titles to mobile devices, challenging the social gaming company’s position. The question is whether Zynga has enough demand for its products to support it as an independent public company. The company reported daily active users in the first quarter of 2014 were down nearly 50% to 28 million, compared to 52 million in the first quarter of 2013. Zynga lost $61 million in the first quarter of the year, against a profit of $4 million in the same period a year ago. Since early March, Zynga stock has dropped 45%, which while indicative of its troubles, also makes it a more attractive takeover target. Read more: 10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) - 24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz37HWGiHrY Follow us: @247wallst on Twitter | 247wallst on Facebook

• Alaska Air Group Inc. (NYSE: ALK) is one of the few remaining independent airlines in the United States that is not owned by one of the four larger carriers. Even larger airlines have been acquired: Northwest was bought by Delta, Continental merged with United and U.S. Airways joined with American Airlines. The recent consolidations in the industry have been successful, leading to significant cost cuts. Alaska Air, with its profits and customer service reputation, is the last real prize left. There has been speculation that Delta might buy Alaska Air for its West Coast routes. The rumors have pushed Alaska Air shares higher. Alaska Air is particularly strong in the busiest West Coast markets, especially in Salt Lake City, Los Angeles and Seattle. It has also begun to challenge carriers in East Coast markets, including several cities in Florida. Revenue and net income have risen steadily over the past five years. And Alaska Air often ranks highest in customer satisfaction among traditional carriers. Read more: 10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) - 24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz37HWPbKVl Follow us: @247wallst on Twitter | 247wallst on Facebook

• Russell Stover is on the auction block. The third largest candy maker in America may sell for as much as $1 billion. Though once publicly traded, the company known for its boxes of assorted chocolates, is now privately held. One of the rumored buyers is Hershey, which would use the acquisition to further increase the size of its chocolate business. With a market cap of $21.6 billion and revenue of $7.1 billion, Hershey would not have much trouble swallowing up Stover. According to estimates, Stover makes around $600 million in revenue with 10% operating margins. However, the list of possible buyers is much longer than that. Large multinational food companies have shown an interest in chocolate companies. Kraft paid about $20.6 billion for Cadbury in 2010. Mars, which owns M&Ms and Milky Way, could also be interested. International food giant Nestlé would also almost certainly take a look at Stover. As is often the case in auctions, private equity companies will consider Stover to see whether they can get a better return than current management. Read more: 10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) - 24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz37HWW7Xrl Follow us: @247wallst on Twitter | 247wallst on Facebook

• Shutterfly is a Web 1.0 business in a social media world. While it continues to dominate the online photo printing industry, the emergence of free sharing and online storage sites such as Instagram, Facebook and Dropbox has compromised the company’s future ability to attract customers. Many of these services are optimized or native to mobile, where Shutterfly falls short. Shutterfly had a modest 2.55 million customers in the first quarter of 2014, compared to 2.25 million the same quarter last year. Even though revenue rose 22% year over year to more than $783 million, it remains a small business. While Facebook does not generate revenue directly from this service, its users uploaded 350 million photos a day last year. Shutterfly shares fell 18% over the past 12 months, against an almost 20% gain in the S&P 500. But with shares down it has become an attractive acquisition target in the online sharing or storage business with limited exposure to paying customers for printed photos, cards or calendars. The deal frenzy in the tech space has public companies such as Amazon and Apple, which have huge cash hordes, looking for new complementary businesses. The company has retained an investment bank to look for a buyer. Read more: 10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) - 24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz37HWgDg74 Follow us: @247wallst on Twitter | 247wallst on Facebook

• Time Warner Cable accepted an offer from Comcast for $45.2 billion at the beginning of this year. The acquisition would create the largest cable company in the United States with a combined total of 30 million subscribers. The deal is valuable because there is very little market overlap. Many, however, oppose it, including wireless carriers, online video providers like Netflix, and consumer advocacy groups that believe the combination will create a monopoly and result in higher rates. The single biggest hurdle to the deal is federal government approval. The Justice Department and Federal Trade Commission will lead the government’s assessment of the deal. Some members of Congress have also expressed doubts about whether the transaction would be fair to consumers. In 2011, the Justice Department blocked a similar deal involving AT&T’s buyout of T-Mobile because of antitrust concerns. The deal would be one in a series of anticipated mega-mergers that would leave wired and wireless broadband in fewer hands. The market has speculated for some time that Sprint will buy out T-Mobile to better compete with industry leaders AT&T and Verizon. Most experts believe Time Warner Cable will be gone by the end of 2014. Read more: 10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) - 24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz37HWnTfJa Follow us: @247wallst on Twitter | 247wallst on Facebook

• BlackBerry is about to run out of its nine lives. As recently as 2008, BlackBerry, then operating as Research In Motion, had 19.5% of the global smartphone market. However, following Apple’s introduction of the iPhone in 2007 and Google’s release of the Android mobile operating system in 2008, that figure fell to less than 1% by late 2013. Despite the fanfare surrounding the release of two new phones last year, sales of the Z10 and Q10 were abysmal. At the end of last year, BlackBerry outsourced its hardware to Foxconn to focus on its software offerings. The company has positioned its QNX platform as the most secure operating system for mobile communication, and it is now a leading OS in the auto and health care industries. While these are attractive businesses for potential buyers, they are inadequate on their own to make the company viable. Revenue has continued its multiyear slide, confirming the belief that BlackBerry cannot survive on its own. In the most recently reported quarter, revenue dropped to $966 million from $3.1 billion in the same quarter the year before. Read more: 10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) - 24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz37HX1b84w Follow us: @247wallst on Twitter | 247wallst on Facebook

• Aeropostale competes with Abercrombie & Fitch and American Eagle Outfitters. Like those competitors, Aeropostale makes and markets inexpensive, casual clothes for teenagers, which it sells through company stores. The entire category is in trouble because teens are choosing inexpensive fashion-forward retailers like Forever 21 and H&M over branded apparel. Out of the three largest teen-retailers, Aeropostale is in the most trouble. In the most recently reported quarter, revenue fell 12% to $396 million from the same period last year. Same-store sales were off 13%. The retailer’s loss also widened to $77 million from $12 million in the same period a year earlier. The company’s stock price plunged by more than 85% in the past five years. The company ended its first quarter with only $24.5 million in cash, its lowest since 2000, according to Cowen and Co. analyst John Kernan. Following the first quarter’s results, the company announced that it had secured $150 million in financing from private equity firm Sycamore Partners, which is expected to keep it afloat at least until the end of the year. Read more: 10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) - 24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz37HX6jvZB Follow us: @247wallst on Twitter | 247wallst on Facebook

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Why Drone Enthusiasts All Over The Country Are Getting Arrested

Last fall, a Brooklyn man was arrested after his drone struck two Manhattan skyscrapers and crashed 20 feet away from a pedestrian.

In April, an Ohio man was arrested while filming the scene of a car crash because his drone blocked a medical helicopter from landing, police say.

And on Monday, two men were arrested in New York City on charges of flying a drone too close to a police helicopter.

As drones have gone from military weapons to recreational toys -- even Martha Stewart is a fan -- several hobbyists have found themselves in handcuffs, charged with recklessly flying unmanned vehicles near aircraft or crowds of people.

The arrests reflect both the growing popularity of recreational drones and the confusion over what rules, if any, their pilots must follow, said Michael Toscano, president of the Association for Unmanned Vehicle Systems International, a drone industry trade group.

“It’s the Wild, Wild West right now,” Toscano said. "You could go right now and buy one of these things and start flying it without having any proper training or know what's legal or not legal."

The Federal Aviation Administration estimates about 7,500 drones will be flying across the sky for commercial use by 2018. The agency plans to issue rules by the end of this year governing the flight of drones weighing less than 55 pounds. In the meantime, the FAA says it advises drone hobbyists to follow the same rules as operators of other model aircraft.

That means no flying higher than 400 feet or within five miles of an airport without special permission. Drone operators who ignore the rules have been arrested and fined as much as $10,000.

Last month, the agency restated those guidelines after what it said were “recent incidents involving the reckless use of unmanned model aircraft near airports and involving large crowds of people.”

But some drone pilots have successfully argued they don’t have to follow the FAA's rules. In March, a judge dismissed a $10,000 fine against a videographer who was accused of recklessly flying a drone with a camera around the University of Virginia campus, ruling the agency did not have authority over civilian drones.

The FAA appealed the judge’s ruling to the National Transportation Safety Board. Toscano said the outcome of the case will set the first legal precedent on the civilian use of unmanned aircraft.

Drones are growing in popularity for several reasons. For one, their prices have dropped. You can now buy one on Amazon for as little as $300. One drone, which is made by a company called Parrot and looks like a giant spider, can be controlled by smartphone or tablet and comes equipped with a high-definition camera.

Drones have also been catching on among hobbyists because they are easier to use, according to Brendan Schulman, an attorney who represents drone pilots who face FAA fines.

“You just buy them and they’re ready to fly right out of the box without any technical expertise or training,” he said. Many come with high-definition cameras that “have increased the cool factor,” Schulman said.

“Now you have people who can take these amazing videos,” he added. “It’s turning into more of a photography hobby.”

But recreational drones are also causing problems in the sky and on the ground. Over the past two years, pilots have reported 15 close calls with small drones near airports, according to the Washington Post. Smaller drones often don’t show up on air traffic controllers' radar screens or on collision avoidance system installed on planes, the newspaper found.

Earlier this year, a drone filming a triathlon in Australia fell from the sky, striking a runner in the head and sending her to the hospital. Last August, a drone crashed into the stands at Virginia Motorsports Park, causing minor injuries to several spectators.

In April, Kele Stanley was flying his drone over a car crash scene in Ohio, hoping to give the footage to a local TV station to bring more exposure to his film company.

But police say Stanley ignored their orders to land his drone to make way for a medical helicopter that was going to transport an injured driver. He was charged with a felony for obstructing official business and misdemeanor charges of misconduct at an emergency and disorderly conduct.

In an interview, Stanley, a 31-year-old who also works as a copy-machine repairman, said police never mentioned to him that a medical helicopter was on its way before they arrested him.

“Had I been told that, I definitely would have brought it down,” he told HuffPost.

The Clark County Sheriff’s office in Ohio did not respond to a request for comment.

Stanley said he understands that drones can pose dangers to aircraft or cause privacy concerns, but said he needs his drone, a hexacopter that cost him about $2,000, to set himself apart as a videographer.

“I’m not some pervert trying to stare into somebody’s window,” Stanley said. “I’m just out there to get a professional video shot.”

One-Quarter Of Washington's Towns Still Ban Marijuana

The small group of Christian protesters first showed up outside Tim Thompson's new marijuana shop in rural Washington about three weeks ago, holding signs that declared "Just Say No To Pot" and "God Judges Sinners."

Their leader, Dale Brown, is a proselytizing author and musician living in Prosser, Washington. He thinks opening a legal weed shop in the small town of 5,800 is a terrible idea.

"I have spent over 30 years as a minister of the gospel and I have plenty friends and relatives whose lives have been destroyed by drug abuse usually starting with the easiest to get, which is usually pot," he told The Huffington Post in a Facebook message. "Having a retail recreation store sends the wrong message to kids."

Tim Thompson said he found these fliers posted around the neighborhood after getting approval to open a recreational weed shop in Prosser, Washington. A local group of protesters has picketed his store, but Dale Brown, the group's leader, said he's not behind the fliers.

Brown, 61, and his small group of allies have failed so far: The retail marijuana store they've been picketing, called Altitude, opened its doors on Tuesday morning. Thompson, a 42-year-old local chiropractor who co-owns the store, said he is looking forward to brisk business. Despite reported weed shortages, Thompson said he expects to sell about 15 pounds of weed in the first two days he's open.

On Tuesday, Washington state launched itself into the recreational marijuana business, allowing anyone over 21 to buy up to an ounce of pot, even if they have no medical need for it. The state is following on the heels of Colorado, which first put recreational weed on sale Jan. 1.

Despite the fact that the state has legalized the drug, about one-quarter of all the towns and cities in Washington have bans or temporary moratoria on retail weed sales, according to the Municipal Research and Services Center, a nonprofit in Seattle that consults local governments in the state. Many of these locales say that weed should be illegal because it is still listed as a Schedule I drug under federal law, meaning the feds believe it has no medicinal value and a high potential for abuse. Under federal law, getting caught with weed, even if it's a first offense, can earn a year in prison and a $1,000 fine.

The small, local fights highlight the challenges legalization advocates face in trying to grow support for recreational marijuana state by state. Even as Washington allows for the sale of marijuana, the fight over the drug is far from settled.

A Christian protester voices opposition to a marijuana dispensary in Prosser, Washington.

A protester outside Thompson's chiropractor practice.

While Colorado made it simple for local governments to ban the sale of marijuana, it's much less clear in Washington whether municipalities have the power to keep weed out of their towns. There's confusion over whether Washington's law permits localities to ban recreational marijuana. Pro-marijuana groups argue that localities can't override state law. Even the Washington state constitution has a provision saying local jurisdictions can't prohibit any activity that state law authorizes, said Alison Holcomb, an attorney at ACLU Washington who helped craft Initiative 502, the 2012 law that legalized weed in the state.

Yet, Washington's attorney general issued an opinion in January saying local bans were permissible. That opinion isn't binding, but it does put the weight of the state's top legal officer behind any towns and counties that choose to ban pot sellers.

Tim Thompson's retail pot shop, Altitude, being built last month. The shop will open July 8.

The two sides have taken their battle to the courts. At least two lawsuits were filed last month in Washington courts by citizens frustrated that their city is blocking them from the potentially lucrative business opportunity in marijuana.

Shaun Preder, 24, sued the central Washington city of Wenatchee (population 32,500) last month after trying unsuccessfully to get a license to operate a retail marijuana dispensary there, said his lawyer, Hilary Bricken with the Canna Law Group. Wenatchee voted last year not to allow marijuana businesses in the city, saying that no licenses will be given to businesses that aren't compliant with federal law.

Tim Thompson is the co-owner of Altitude, a legal marijuana shop in Prosser, Washington.

Weed advocates argue that local economies can see huge benefits by opening themselves up to the marijuana business. Altitude, for example, already employs 40 people, Thompson said, which made it one of the largest employers in Prosser before it even opened its doors. And Thompson expects to hire more employees soon.

Washington as a whole is expected to make about $190 million from the taxes and fees associated with legal pot during the first four years of sales, according to the Economic and Revenue Forecast Council, an independent agency that advises the state government on the budget and tax revenue.

Of the roughly 77 cities in Washington that have suspended or banned legal pot sales, only eight or so have enacted outright bans, according to the Municipal Research and Services Center.

The other 70 or so have only initiated temporary bans, and they've done so for a variety of reasons -- not just because they want to be compliant with federal law, said Brittany Sill of the Washington Association of Cities, a corporation that represents Washington's cities and towns to the state's legislature.

"Each one of those cities has different methods and a different direction they’re headed," Sill said. "It's kind of like hitting a pause button while they figure out what they want."

Many towns are waiting to see how the state government will share revenues with them, something that still hasn't been ironed out in Washington, Sill said. Others are just trying to figure out if they even have space for a marijuana dispensary: Because of strict zoning regulations, including rules prohibiting pot businesses from operating within 1,000 feet of certain places like daycare centers, schools, libraries, parks and transit centers, finding a workable spot for a grower or retailer can be tough.

Even though Altitude is now open for business, Brown plans to keep up the fight to ban legal marijuana.

"We can put pressure on the chiropractors, contractors and anyone else who is supporting this," he said. "As Christians, we are trying to reach the hearts of people, not simply create laws."

For his part, Thompson said he doesn't mind the protesters exercising their right to free speech. He admits that he too was once against legalization and thought marijuana was "a destructive drug," just as bad as cocaine or heroin. But now that he's come around, he recognizes that legalization could be a boon for the economy.

"The protesters seem to speak with emotion, not with facts," he said. "The facts are that legalizing marijuana makes good sense. It has many uses beyond recreational use. And lots of people will come to Prosser, to use our store, and to use all the other businesses in town. It's really a no-brainer."

Dale Brown has produced videos like this one that advocate against legal weed coming to his hometown.

CORRECTION: A previous version of this story stated that Dale Brown was behind the anti-marijuana signs posted around the neighborhood near Tim Thompson's store. He has no connection to the signs.