Colleges Try to Head Off a Coming Enrollment Crisis

SPEAKER_1 (0:00)

The thing about AI for business, it may not automatically fit the way your business works.

At IBM, we've seen this firsthand. But by embedding AI across HR, IT and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smart to business, IBM.

Alex Ossola (0:33)

American workers are already spending a lot on health care. Next year, it's likely to be even more. Plus, Walmart reports its weakest sales growth in more than six years, sending its stock tumbling.

The number of kids in America is shrinking. That's an existential threat to some colleges. But getting into Harvard may be harder than ever.

Doug Belkin (0:54)

So, there's sort of a flight to quality as students have begun to doubt the ROI on the degree, the return on investment of a degree. Folks want to get the biggest bang for the buck.

Alex Ossola (1:05)

It's Thursday, August 20th. I'm Alex Ossola for the Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

Think you're already paying a lot for health care? Well, it's only going to get worse. An estimate from benefits consulting firm Aon shows that Americans who get health insurance through their employers are expected to spend an average of almost $5,300 this year on it. And next year, US employers expect their health care costs to go up by more than 11%.

That's according to a separate survey from benefits consultant WTW. It would be the steepest rise in more than 20 years. And that's not some anomaly. It would be the fifth straight year of escalating increases. When companies pay more for insurance, so do workers, because employees' costs are rising roughly in tandem with their employers' costs. Plus, federal data shows that Americans are paying more out of pocket for health care, things like deductibles and co-pays, as well as expenses not covered by their health insurance.

And in California, the AI boom has led to a record-breaking wave of investment. Data provider Pitchbook says companies based in the state have drawn around $366 billion of venture capital since the beginning of the year. That's more than triple the VC funding that has gone into the other 49 states combined. The flow of money into California is having some interesting effects. It's created a bunch of new millionaires, it's supercharged housing prices in San Francisco, and it's also helped improve the state's fiscal situation. All that funding is boosting income tax revenue well above forecasts.

Walmart shares tumbled more than 9% today after the company reported its earnings. In the second quarter, it saw same store sales growth of 2.6 percent, its smallest gain in more than six years. But as we reported on yesterday's show, another big box retailer, Target, saw its same store sales rise 3.8 percent, sending its stock soaring. I asked WSJ retail reporter Sarah Nassauer what drove the differences in the retailer's performance. She says, Walmart is coming off a pretty strong period.

Sarah Nassauer (3:15)

Their comparable sales in the US, the growth was muted compared to what we've seen from them in recent quarters. Part of that is the wonky effect of pharmacy pricing, the impact that had on sales, and part of it is the transitions that they're making to more e-com sales, and part of it is consumer behavior. Yeah, we saw higher percentage growth number from Target, but you have to remember Target is number one, a much smaller company. This is a smaller base. Target is also lapping a time when they had very weak sales for an extended period of time, where Walmart sales have been stronger.

There's this difference. It's maybe not as extreme as it looks on the surface of it, but certainly we're seeing Walmart stock react to an uncharacteristically low number from them.

Alex Ossola (4:10)

Some consumers are still watching their spending closely. Both Walmart and Target said they plan to lower prices to get people shopping. Sarah says they're doing that in part because they can afford to.

Sarah Nassauer (4:20)

They have the money to do it because they both received huge tariff refunds. Target was close to a billion dollars. Walmart's refund was $2.9 billion.

Both have said, we're going to invest some of that back into prices because prices are still elevated and we want people to shop with us and not other places. So it means that the pricing environment is pretty competitive and that they're both trying to make sure that their prices are low enough to keep shoppers shopping.