More stories

  • in

    Top Economist Leaves White House, and an Economy Not Yet ‘Normal’

    Cecilia Rouse says lingering effects of the coronavirus pandemic continue to haunt the recovery from recession — and drag on Americans’ optimism for the economy.WASHINGTON — Cecilia Rouse, the chair of the White House Council of Economic Advisers, stepped down on Friday to return to teaching at Princeton University. As a going-away present fit for an economist, her staff presented her with a chart showing every previous chair of the council, ranked by the number of jobs created during their tenure.Dr. Rouse’s name tops the list. In the two years since she was confirmed to be President Biden’s top economist, becoming the first Black chair of the council, the U.S. economy has created more than 11 million jobs. While that is a record for any presidential administration, it is also a direct result of the unusual circumstances of the fast-moving pandemic recession, which temporarily kicked millions of people out of the labor force before a swift recovery added back most of those jobs.As Dr. Rouse acknowledged in an interview this week, all that job growth has yet to restore a full sense of economic normality. Inflation remains much higher than normal. Consumers are pessimistic. The economy and the people who live and work in it, she said, are still to some degree stuck in the grip of the coronavirus pandemic.That phenomenon has scrambled markets like commercial real estate, Dr. Rouse said, exacerbated price growth and most likely hurt productivity across the economy by encouraging remote work. She said she believed in-person work was more likely to produce innovation that stokes economic growth.The effects have lingered longer than she initially expected.“We still have Covid with us,” Dr. Rouse said in her office at the Eisenhower Executive Office Building. “It is still impacting decisions that we’re making, whether it’s on our personal side, economic decisions.”She later added, “Sometimes I, in this course of the last few years, I wished my Ph.D. was in psychology.”In a wide-ranging interview reflecting on her time at the council, Dr. Rouse defended the Biden administration’s policy choices in responding to the pandemic and to deeper problems in the economy. She also repeatedly emphasized the need for “humility” in evaluating decisions that had been made in response to a wide range of possible risks.She did not directly answer questions about whether she agreed with previous chairs of the council who have argued that direct payments to lower-income Americans included in that legislation helped to inflame an inflation rate that hit a 40-year high last summer.But Dr. Rouse said the plan was an appropriate “insurance policy” in 2021 against the possibility of a double-dip recession. At the time, job growth had slowed and new waves of the coronavirus were colliding with a vaccine rollout that officials hoped would stabilize the economy but were unsure of.She also said that American workers were better off in their current situation — with low unemployment and strong job growth but higher-than-normal price growth — than they would have been if the economy had fallen back into recession and millions of people had been thrown out of work, potentially hurting their ability to find jobs in the future..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.“I believe workers are better off today than they would have been had the federal government not intervened,” Dr. Rouse said. “But you know, some of this will depend on how long we have inflation with us. Because inflation is costly.” Asked when she expected it to return to more normal levels, she replied, “Hopefully by the end of the year.”Fiscal hawks have criticized Mr. Biden for signing a rescue plan that was not offset by spending cuts or tax increases and thus added to the national debt. Dr. Rouse said the plan “may well have” paid for itself in fiscal terms. She explained that possibility in terms of the debt the government incurred to finance the plan, offset by the consumer and business activity generated by the plan’s provisions that sent money to people, which increased gross domestic product.“If we hadn’t really provided that kind of support, G.D.P. would have been much smaller,” she said. “So the federal government might have spent less and so the debt might have been smaller, but G.D.P. might have been much smaller as well.”Previous administrations have claimed their policies will “pay for themselves” by spurring economic growth and higher tax revenues. Those include the tax cuts signed by President Donald J. Trump in 2017, which his administration said would pay for themselves, but which independent evidence showed added trillions to the national debt.Dr. Rouse repeatedly said in the interview that future researchers would have the final say on the impact of Mr. Biden’s policies — particularly on inflation. She and her staff were part of a modeling effort in early 2021 that concluded that even with Mr. Biden’s $1.9 trillion injection into the economy, there was little chance of prices rising so quickly that the Federal Reserve would not be able to control inflation.“I would say that we were all working under uncertainty,” she said on Thursday, when asked about those models. “I think time will tell as to whether that was the right move.”A labor economist at Princeton, Dr. Rouse pledged in the White House to advance Mr. Biden’s efforts to promote racial equity in the economy and American society. That included improving the data the federal government collects on economic outcomes by race and ethnicity.Asked about that work, Dr. Rouse pointed to new data from the Bureau of Labor Statistics that breaks out monthly job figures for Native Americans, along with a handful of other new efforts. “It’s a slow process,” she said.Mr. Biden praised Dr. Rouse and her role in helping to navigate the economic challenges of his administration in a statement issued by the White House on Friday. “No matter the challenge, Cecilia provided insightful analysis, assessed problems in a new way and insisted that we examine the accumulation of evidence in drawing conclusions,” he said. More

  • in

    The Fed’s Preferred Inflation Gauge Cooled Notably in February

    A closely watched measure of price increases provided encouraging news as the Fed considers when to stop raising rates.The measure of inflation most closely watched by the Federal Reserve slowed substantially in February, an encouraging sign for policymakers as they consider whether to raise interest rates further to slow the economy and bring price increases under control.The Personal Consumption Expenditures Index cooled to 5 percent on an annual basis in February, down from 5.3 percent in January and slightly lower than economists in a Bloomberg survey had forecast. It was the lowest reading for the measure since September 2021.After the removal of food and fuel prices, which are volatile from month to month, a “core” measure that tries to gauge underlying inflation trends also cooled more than expected on both an annual and a monthly basis.The data provides the latest evidence that inflation has turned a corner and is decelerating, though the process is gradual and bumpy at times. And the report is one of many that Fed officials will take into account as they approach their next interest rate decision, on May 3.Central bankers are watching how inflation, the labor market and consumer spending shape up. They will be monitoring financial markets and credit measures, too, to get a sense of how significantly recent bank failures are likely to weigh on lending, which could slow the economy.Fed officials have raised rates rapidly over the past year to try to rein in inflation, pushing them from near zero a year ago to just below 5 percent this month. But policymakers have suggested that they are nearing the end, forecasting just one more rate increase this year.Jerome H. Powell, the Fed chair, hinted that officials could stop adjusting policy altogether if the problems in the banking sector weighed on the economy significantly enough, and policymakers this week have reiterated that they are watching closely to see how the banking problems impact the broader economy.“I will be particularly focused on assessing the evolution of credit conditions and their effects on the outlook for growth, employment and inflation,” John C. Williams, the president of the Federal Reserve Bank of New York, said during a speech on Friday.But inflation remains unusually rapid: While it is slowing, it is still more than double the Fed’s 2 percent target. And the turmoil at banks seems to be abating, with government officials in recent days saying that deposit flows have stabilized.“Even with this report, the U.S. macro data is still on a stronger and hotter trajectory than appeared to be the case at the start of this year,” Krishna Guha, head of the global policy and central bank strategy team at Evercore ISI, wrote in a note after the release.In fact, officials speaking this week have suggested that they might need to do more to wrangle price increases, and they have pushed back on market speculation that they could lower rates this year.“Inflation remains too high, and recent indicators reinforce my view that there is more work to do,” Susan Collins, president of the Federal Reserve Bank of Boston, said at a speech on Thursday. Ms. Collins does not vote on policy this year.The report on Friday also showed that consumer spending eased in February from the previous month. A measure of personal spending that is adjusted for inflation fell by 0.1 percent, matching what economists expected. But the data was revised up for January, suggesting that consumer spending climbed more rapidly than previously understood at the start of the year.And when it comes to prices, some economists warned against taking the February slowdown as a sign that the problem of rapid increases was close to being solved. A measure of inflation that excludes housing and energy — which the Fed monitors closely — has been firm in recent months.“That acceleration in underlying inflation measures is what has set off alarm bells at the Federal Reserve and prompted officials to stick to rate hikes, despite the recent credit market volatility,” Diane Swonk, chief economist at KPMG, wrote in an analysis Friday.And Omair Sharif, founder of Inflation Insights, said much of the February slowdown came from price categories that are estimated using statistical techniques — and that can sometimes give a poor signal of the true trend.“I really would not bank on this number,” he said in an interview. “My expectation would be that we’ll probably see some of this bounce back next month.” More

  • in

    How a Trump-Era Rollback Mattered for Silicon Valley Bank’s Demise

    An under-the-radar change to the way regional banks are supervised may have helped the bank’s rapidly growing risks to go unresolved.WASHINGTON — Silicon Valley Bank was growing steadily in 2018 and 2019 — and supervisors at its primary overseer, the Federal Reserve Bank of San Francisco, were preparing it for a stricter oversight group, one in which specialists from around the Fed system would vet its risks and point out weak spots.But a decision from officials in Washington halted that move.The Federal Reserve Board — which sets the Fed’s standards for banking regulation — was in the process of putting into effect a bipartisan 2018 law that aimed to make regulation less onerous for small and midsize banks. As the board did that, Randal K. Quarles, the Trump-appointed vice chair for supervision, and his colleagues also chose to recalibrate how banks were supervised in line with the new requirements.As a result, Silicon Valley Bank’s move to the more rigorous oversight group would be delayed. The bank would previously have advanced to the Large and Foreign Bank Organization group after its assets had averaged more than $50 billion for a year; now, that shift would not come until it consistently averaged more than $100 billion in assets.The change proved fateful. Silicon Valley Bank did not fully move to the stronger oversight group until late 2021. Its assets had nearly doubled over the course of that year, to about $200 billion, by the time it came under more intense supervision.By that point, many of the issues that would cause its demise had already begun festering. Those included a customer base heavily dependent on the success of the technology industry, an unusually large share of deposits above the $250,000 limit that the government insures in the event of a bank collapse and an executive team that paid little attention to risk management.Those weak spots appear to have gone unresolved when Silicon Valley Bank was being overseen the way that small and regional banks are: by a small team of supervisors who were in some cases generalists.When the bank finally entered more sophisticated supervision for big banks in late 2021, putting it under the purview of a bigger team of specialist bank overseers with input from around the Fed system, it was immediately issued six citations. Those flagged various problems, including how it was managing its ability to raise cash quickly in times of trouble. By the next summer, its management was rated deficient, and by early 2023, intense scrutiny of the bank had stretched to the Fed’s highest reaches.Big questions remain about why supervisors didn’t do more to ensure that shortcomings were addressed once they became alarmed enough to begin issuing citations. The Fed is conducting an internal investigation of what happened, with results expected on May 1.Michael Barr, the Fed’s vice chair for supervision, told lawmakers this week that by the time Silicon Valley Bank came under intense oversight and problems were fully recognized, “in a sense, it was already very late in the process.”Shuran Huang for The New York TimesBut the picture that is emerging is one in which a slow reaction in 2022 was not the sole problem: Silicon Valley Bank’s difficulties also appear to have come to the fore too late to fix them easily, in part because of the Trump-era rollbacks. By deciding to move banks into large-bank oversight much later, Mr. Quarles and his colleagues had created a system that treated even sizable and rapidly ballooning banks with a light touch when it came to how aggressively they were monitored.That has caught the attention of officials from the Fed and the White House as they sort through the fallout left by Silicon Valley Bank’s collapse on March 10 and ask what lessons should be learned.“The way the Federal Reserve’s regulation set up the structure for approach to supervision treated firms in the $50 to $100 billion range with lower levels of requirements,” Michael Barr, the Fed’s vice chair for supervision, told lawmakers this week. By the time Silicon Valley Bank’s problems were fully recognized, he said, “in a sense, it was already very late in the process.”About five people were supervising Silicon Valley Bank in the years before its move up to big-bank oversight, according to a person familiar with the matter. The bank was subject to quarterly reviews, and its overseers could choose to put it through horizontal reviews — thorough check-ins that test for a particular weakness by comparing a bank with firms of similar size. But those would not have been a standard part of its oversight, based on the way the Fed runs supervision for small and regional banks.As the bank grew and moved up to large-bank oversight, the size of the supervisory team dedicated to it swelled. By the time it failed, about 20 people were working on Silicon Valley Bank’s supervision, Mr. Barr said this week. It had been put through horizontal reviews, which had flagged serious risks.But such warnings often take time to translate into action. Although the bank’s overseers started pointing out big issues in late 2021, banks typically get leeway to fix problems before they are penalized.“One of the defining features of supervision is that it is an iterative process,” said Kathryn Judge, a financial regulation expert at Columbia Law School.The Fed’s response to the problems at Silicon Valley Bank seemed to be halting even after it recognized risks. Surprisingly, the firm was given a satisfactory liquidity rating in early 2022, after regulators had begun flagging problems, Mr. Barr acknowledged this week. Several people familiar with how supervising operates found that unusual.“We’re trying to understand how that is consistent with the other material,” Mr. Barr said this week. “The question is, why wasn’t that escalated and why wasn’t further action taken?”Yet the high liquidity rating could also tie back to the bank’s delayed move to the large bank supervision group. Bank supervisors sometimes treat a bank more gently during its first year of tougher oversight, one person said, as it adjusts to more onerous regulator attention.There was also turmoil in the San Francisco Fed’s supervisory ranks around the time that Silicon Valley Bank’s risks were growing.Aaron Wojack for The New York TimesThere was also turmoil in the San Francisco Fed’s supervisory ranks around the time that Silicon Valley Bank’s risks were growing. Mary Daly, the president of the reserve bank, had called a meeting in 2019 with a number of the bank supervisory group’s leaders to insist that they work on improving employee satisfaction scores, according to people with knowledge of the event. The meeting was previously reported by Bloomberg.Of all the San Francisco Fed employees, bank supervisors had the lowest satisfaction ratings, with employees reporting that they might face retribution if they spoke out or had different opinions, according to one person.Several supervision officials departed in the following years, retiring or leaving for other reasons. As a result, relatively new managers were at the wheel as Silicon Valley Bank’s risks grew and became clearer.It’s hard to assess whether supervisors in San Francisco — and staff members at the Fed board, who would have been involved in rating Silicon Valley Bank — were unusually slow to respond to the bank’s problems given the secrecy surrounding bank oversight, Ms. Judge said.“We don’t have a baseline,” she said.Even as the Fed tries to understand why problems were not addressed more promptly, the fact that Silicon Valley Bank remained under less rigorous oversight that may not have tested for its specific weaknesses until relatively late in the game is increasingly in focus.“The Federal Reserve system of supervision and regulation is based on a tailored approach,” Mr. Barr said this week. “That framework, which really focuses on asset size, is not sensitive to the kinds of problems we saw here with respect to rapid growth and a concentrated business model.”Plus, the 2018 law and the Fed’s implementation of it probably affected Silicon Valley Bank’s oversight in other ways. The Fed would probably have begun administering full stress tests on the bank earlier without the changes, and the bank might have had to shore up its ability to raise money in a pinch to comply with the “liquidity coverage ratio,” some research has suggested.The White House called on Thursday for regulators to consider reinstating stronger rules for banks with assets of $100 billion to $250 billion. And the Fed is both re-examining the size cutoffs for stricter bank oversight and working on ways to test for “novel” risks that may not tie back cleanly to size, Mr. Barr said this week.But Mr. Quarles, who carried out the tailoring of the 2018 bank rule, has insisted that the bank’s collapse was not the result of changes that the law required or that he chose to make. Even the simplest rung of supervision should have caught the obvious problems that killed Silicon Valley Bank, he said, including a lack of protection against rising interest rates.“It was the simplest risk imaginable,” he said in interview. More

  • in

    Key Fed inflation gauge rose 0.3% in February, less than expected

    An inflation gauge the Federal Reserve follows closely rose slightly less than anticipated in February, providing some hope that interest rate hikes are helping ease price increases.
    The personal consumption expenditures price index excluding food and energy increased 0.3% for the month, the Commerce Department reported Friday. That was below the 0.4% Dow Jones estimate and lower than the 0.5% January increase.

    On a 12-month basis, core PCE increased 4.6%, a slight deceleration from the level in January.
    Including food and energy, headline PCE increased 0.3% monthly and 5% annually, compared to 0.6% and 5.3% in January.
    The softer than expected data came with monthly energy prices decreasing 0.4% while food prices rose 0.2%. Goods prices rose 0.2% while services increased 0.3%.
    In other data from the report, personal income increased 0.3%, slightly above the 0.2% estimate. Consumer spending increased 0.2%, compared to the 0.3% estimate.
    Stock market futures held higher following the report while longer-duration Treasury yields declined.

    Market pricing Friday morning following the inflation report indicated a slight bias towards the Fed raising its benchmark rate another quarter percentage point in May.
    The Fed’s own unofficial projections released last week pointed to perhaps one more increase this year and no reductions. However, traders expect cuts this year, with end-year pricing for the federal funds rate at 4.25%-4.5%, half a point below the current target range.
    While inflation has ebbed in some areas, it has remained pernicious in others. Shelter costs in particular have risen sharply. Fed officials, though, are looking through that increase and expect rents to decelerate through the year.
    Still, inflation is likely to remain well above the Fed’s 2% target into 2024, and officials have said they remain focused on bringing down prices despite the current bank turmoil.
    Data released Thursday suggests that the problems in banking also may be at least under control. Borrowing through two emergency Fed lending programs decreased slightly last week, indicating that there has been no frantic liquidity dash for banks that may be undercapitalized.
    This is breaking news. Please check back here for updates. More

  • in

    Jobless claims edge up to 198,000, higher than expected

    Jobless claims for the week ended March 25 totaled 198,000, up 7,000 from the previous period and a bit higher than the 195,000 estimate.
    Continuing claims, which run a week behind, edged up 4,000 to 1.689 million.
    The final GDP reading for the fourth quarter of 2022 showed the economy grew at a 2.6% annualized rate in the fourth quarter.

    Initial filings for unemployment insurance ticked higher last week but remained generally low in a tight labor market.
    Jobless claims for the week ended March 25 totaled 198,000, up 7,000 from the previous period and a bit higher than the 195,000 estimate, the Labor Department reported Thursday.

    Though the number was slightly higher than expectations, the total indicates that companies are slow to lay off workers despite expectations that the unemployment rate will rise through the year.
    Continuing claims, which run a week behind, edged up 4,000 to 1.689 million. That was below the FactSet estimate for 1.6935 million.
    The four-week moving average of weekly claims, which smoothes volatility in the numbers, edged up to 198,250, but has been below 200,000 since mid-January.
    The relatively benign claims numbers come despite aggressive Federal Reserve efforts to slow down inflation. In large part, the central bank is targeting a labor market beset by a sharp supply-demand imbalance in which there are nearly two open jobs for every available workers.
    According to estimates last week, central bankers expect the unemployment rate to rise to 4.5% this year, from its current 3.6% level. Doing so would require the loss of more than 540,000 jobs, according to an Atlanta Fed calculator.

    A separate economic report Thursday showed that growth was a bit less strong to close 2022 than previously thought.
    The final Commerce Department reading for gross domestic product showed the economy grew at a 2.6% annualized rate in the fourth quarter, slightly below the previous estimate of 2.7%. That change came primarily due to downward revisions in consumer spending and exports, the department said.
    Growth likely accelerated for the first three months of 2023, according to the Atlanta Fed’s GDPNow tracker. That gauge shows GDP rising at a 3.2% pace.
    Markets reacted little to the fresh batch of data, with futures pointing to a higher open on Wall Street. More

  • in

    Do We Know How Many People Are Working From Home?

    New Labor Department numbers indicate that fewer Americans worked remotely last year. But many experts criticize the government’s data collection.Millions of workers, employers, square feet of real estate and dollars of downtown economic retail are wrapped up in the question of how many people are working from home — yet there remain large discrepancies in how remote work is measured.The Labor Department, last week, released data indicating a decline in remote work: 72.5 percent of businesses said their employees rarely or never teleworked last year, up from 60.1 percent in 2021 and quite close to the 76.7 percent that had no such work before the pandemic. But while the Labor Department found that remote work was almost back to prepandemic levels, many other surveys show it is up four- to fivefold.Outside research, including a monthly survey of workers from researchers at Stanford University and the Census Bureau’s household survey, indicate that remote work remains prevalent, with Stanford’s finding that it accounts for over a quarter of paid full-time workdays in the United States, just slightly down from 33 percent in 2021. Some scholars suggested that the Labor Department’s survey may overcount fully in-person work, though the comparisons among the various surveys aren’t direct.“I see this survey as an outlier and not the most reliable measure,” said Adam Ozimek, chief economist of the Economic Innovation Group, a public policy organization, describing the Labor Department’s survey. “We need to think hard as we try to develop better measures of working from home.”Remote work is having profound effects on nearly every dimension of the economy: foot traffic to downtown businesses, housing markets in big cities and far-flung areas, methods of assessing productivity and child care. Public transportation ridership sank during the pandemic, and suburban real estate values rose.Nearly one billion square feet of office real estate was available but in search of a tenant at the end of 2022. People refashioned their lives and routines, working 28 percent more after traditional hours, according to Microsoft.The stakes of measuring remote work’s prevalence are high. And researchers said the wording of the Bureau of Labor Statistics survey on remote work, which was distributed to businesses, might have caused some confusion among respondents.“Telework is a work arrangement that allows an employee to work at home, or from another remote location, by using the internet or a computer linked to one’s place of employment, as well as digital communications, such as email and phone,” the survey read. “Do any employees at this location CURRENTLY telework in any amount?”By defining telework so broadly — as any worker sending an email or making a call outside the office — the Labor Department’s survey question should most likely have turned up a fully in-person figure lower than the one released last week, said Nick Bloom, an economist at Stanford, suggesting that some businesses may have been confused by the question.This particular Labor Department figure on telework also combines fully remote work with hybrid arrangements. But hybrid work has eclipsed fully remote policies, with just over half of the workers who can do their jobs from home combining in-person and remote work, according to Gallup.A spokeswoman for the Labor Department said the survey most likely did not reflect informal work-from-home arrangements.“Taking into account that the self-employed and the public sector are not included in the sample, and that this is a survey of establishments rather than individuals, our estimates do not appear out of line with other estimates,” the spokeswoman said.Stanford’s monthly study on working from home, which surveys 10,000 workers across cities and industries, found that 27 percent of paid full-time days were worked from home in early 2023.Much of that remote work came from hybrid setups. Last month, the survey found that 12 percent of workers were fully remote, roughly 60 percent fully in person and 28 percent hybrid.Other sources of data confirm that working-from-home patterns remain entrenched in certain industries. The building security firm Kastle, for example, tracks data on office badge swipes and reported this month that offices remained at roughly 48 percent of their prepandemic occupancy.A closer look at New York, from the Partnership for New York City, found that 52 percent of Manhattan office workers were working in person on an average day at the start of this year, up from 49 percent in September. But only 9 percent of employees were in the office five days a week, underscoring the reach of hybrid arrangements. And Square, the retail technology company, which tracks payments at food and drink establishments, found that sales growth at bars and restaurants in Brooklyn had recently outpaced growth of those in Manhattan.“It’s clear that the work-from-home trends induced by the pandemic have transformed the food and drink scene in the city,” said Ara Kharazian, an economist at Square.The Partnership for New York City’s data indicated that financial service firms were back in the office in greater numbers than many other companies. Financial service firms reported 59 percent daily office attendance in late January, according to the partnership. The tech industry, by contrast, was at 43 percent.All this data is emerging as hundreds of companies formalize their policies on hybrid work, with many trying to persuade their employees to spend more time at the office.Amazon told corporate workers last month that they had to be in the office three days a week starting in May, and Starbucks called its 3,750 corporate workers back three days a week as well. Disney asked employees to return to the office four days a week. Its chief executive, Robert A. Iger, cited the need for in-person creative collaborations.Other chief executives have also begun to question the merits of remote work. Even Marc Benioff, chief executive of Salesforce, which told all its employees that they could go permanently remote, began voicing concern this year that productivity among some employees has been lower.As executives clamp down on in-person work, worker resistance has become more vocal. At Amazon, more than 29,000 employees joined a Slack channel, called Remote Advocacy, protesting the shift to in-person work. At Starbucks, more than 40 corporate employees signed an open letter opposing the new return-to-office policy.Wherever people are doing the jobs they already have, mostly in person per the Labor Department or over a quarter of the time at home per others, one metric does indicate that hybrid work is here to stay: job postings.A study from researchers at Stanford, Harvard and other institutions analyzing over 50 million job postings last month found that postings explicitly mentioning remote work are at 12.2 percent — a fourfold increase since before the pandemic. More

  • in

    Former Starbucks CEO Howard Schultz Spars With Democrats at Senate Hearing

    Howard Schultz faced rancor from Senate Democrats at a hearing where he chafed at “propaganda that is floating around” about company labor practices.Howard Schultz was the star witness, but the hearing revealed almost as much about the party in power as it did about the longtime Starbucks chief executive.When Mr. Schultz appeared Wednesday before the Senate Committee on Health, Education, Labor and Pensions, at a session titled “No Company Is Above the Law: The Need to End Illegal Union Busting at Starbucks,” he encountered a Democratic Party much changed since some of his earlier trips to Washington.In 1994, President Bill Clinton invited Mr. Schultz to the White House for a private briefing on the company’s health care benefits. Two years later, the president praised Starbucks when introducing Mr. Schultz at a conference on corporate responsibility. At the time, Bernie Sanders was a backbencher in the House of Representatives.On Wednesday, Mr. Sanders, now chairman of the Senate committee, appeared to regard Mr. Schultz with something bordering on disdain.Before a question, Mr. Sanders, a Vermont independent who caucuses with the Democrats, felt the need to remind Mr. Schultz that federal law prohibits a witness from “knowingly and willfully making” a false statement relevant to an inquiry. The chairman then asked him if he had participated in decisions to fire or discipline workers involved in a union campaign. (Mr. Schultz said he had not.)Mr. Sanders noted that an administrative law judge had found “egregious and widespread misconduct” by Starbucks in its response to the campaign, in which nearly 300 of the roughly 9,300 corporate-owned stores in the United States have voted to unionize. And he chided Mr. Schultz for what he said was the company’s “calculated and intentional efforts to stall, to stall and to stall” rather than bargain with the union in good faith.Senator Bernie Sanders accused Starbucks of “calculated and intentional efforts to stall, to stall and to stall” in contract talks.Kenny Holston/The New York TimesThe hearing was held on the same day Starbucks reported that its shareholders had backed a proposal asking the company to commission an independent assessment of its practices as they relate to worker rights, including the right to bargain collectively and to form a union without interference.Though the proposal is nonbinding, the 52 percent vote in its favor suggests unease among investors over Starbucks’s response to the union campaign.Mr. Schultz, who recently ended his third tour as the company’s chief executive and remains a board member and major shareholder, seemed as mystified as anyone by his personal change of fortune in the capital. He chafed at what he described as “the propaganda that is floating around” the hearing and told Senator Bob Casey, Democrat of Pennsylvania, that “I take offense with you categorizing me or Starbucks as a union-buster.”When another Democrat, Senator Patty Murray of Washington — the home state of Starbucks — said she had heard from constituents about “widespread anti-union efforts,” Mr. Schultz reminded her that they had known each other for years and that she had “many times actually talked about Starbucks as a model employer.”He responded to Mr. Sanders’s accusation that Starbucks was not bargaining in good faith by noting that the company had met with the union over 85 times. (The union points out that most of these sessions ended within 15 minutes; Starbucks says this is because union members sought to take part remotely.) And he denied that Starbucks had broken the law; it has appealed the rulings against it.Aside from the accusations of labor law violations, the question at the heart of the hearing was: Can chief executives be trusted to treat their workers fairly?Mr. Schultz’s answer was an emphatic yes, at least in his case. He highlighted the company’s wide-ranging benefits — not just health care, including for part-time employees, but stock grants, paid sick leave, paid parental leave and free tuition at Arizona State University. He said that the average wage for hourly workers at Starbucks was $17.50, and that total compensation, including benefits, approached $27 an hour.“My vision for Starbucks Coffee Company has always been steeped in humanity, respect and shared success,” he said near the outset of the hearing.Some attending the hearing wore T-shirts signaling their support for the Starbucks union.Kenny Holston/The New York TimesRepublicans on the committee were quick to agree. Senator Rand Paul of Kentucky called Starbucks an “extraordinary tale of a company that started out of nothing and employs tens of thousands of people all making great wages.”Senator Mitt Romney of Utah, a former chief executive, said it was “somewhat rich that you’re being grilled by people who have never had the opportunity to create a single job.” He suggested that while a union might be necessary at companies “that are not good employers,” that was not the case at Starbucks.Democrats’ response came at two levels of elevation. First, they said the company was excluding unionized stores from the benefits that Starbucks had introduced since the union campaign began, such as faster accrual of sick leave and a credit-card tipping option for customers, showing that its commitment to such benefits was tenuous.The National Labor Relations Board has issued complaints calling the denial of benefits to union stores an attempt to discourage workers from organizing. Mr. Schultz said at the hearing that the company couldn’t offer the new benefits at union stores because the law said it must bargain over them first; legal experts have cast doubt on that interpretation.More broadly, Democrats argued that unions acted as a corrective to a basic power imbalance between workers and management. A company might treat workers generously under one chief executive, then harshly under another. Only a union can ensure that the favorable treatment persists, said Senator Edward J. Markey of Massachusetts.Yet in illustrating how far the politics of labor have changed in Washington in recent decades, there was perhaps no better bellwether than Senator John Hickenlooper of Colorado, a former business owner and self-described “extreme moderate.”Mr. Hickenlooper conducted himself more respectfully and deferentially than most of his Democratic colleagues, applauding Mr. Schultz for “creating one of the most successful brands in American history” and declaring that “you know more about economics than I will ever know.” But in his questioning he aligned himself squarely with his party, pointing out that the rise of inequality in recent decades had coincided with the weakening of unions.“I certainly respect the desire to be directly connected with all your employees,” he told Mr. Schultz. “But in many ways that right to organize, and that opportunity for people to be part of a union, is a crucial building block for the middle class and, I think, gave this country stability.” More

  • in

    Biden Highlights Economic Investments Ahead of Expected 2024 Announcement

    The president has warned that a strong economy could be weakened under Republican leadership, a point he and a host of advisers will make at 20 events across the country in the coming weeks.DURHAM, N.C. — President Biden visited North Carolina on Tuesday and said Republicans would undermine his administration’s gains on American manufacturing, as the president began to sharpen his political message ahead of an expected re-election announcement.Mr. Biden spoke at Wolfspeed, a semiconductor manufacturer that recently announced a $5 billion investment to expand operations in the state, a move that would create about 1,800 jobs, according to the White House. The company, based in North Carolina, has deals to supply the material to General Motors, among other buyers.But Mr. Biden’s visit was less about semiconductors than it was about making an argument that he sees as key to a re-election bid — essentially, that the American economy has recovered since the coronavirus pandemic, his administration has helped keep it strong and Republican policies would undo that progress.“I’ve got news for you and for MAGA Republicans in Congress: Not on my watch,” Mr. Biden said, referring to the far-right wing of the party that is loyal to former President Donald J. Trump.The White House has argued for months that Mr. Biden has presided over a steady economy and strong job growth, but the data presents a more complicated reality: The high pace of job creation is undercut by a continued deceleration in wage increases, and there are growing concerns that the Federal Reserve may move to raise interest rates. The Biden administration has also tried to assuage fears of instability after the collapse of Silicon Valley Bank this month.Mr. Biden’s visit to North Carolina was the start of three weeks of related events to be held across the country by the president and Vice President Kamala Harris, plus their spouses and a host of cabinet officials. The group plans to visit 20 states and will highlight investments in American manufacturing, supply chains and job-creation efforts, according to a summary of efforts sent by the White House.During his trip to Durham, Mr. Biden highlighted legislation passed last year, including the CHIPS and Science Act, which contains $52 billion in subsidies and tax credits for companies that manufacture chips in the United States. More than half of the amount is dedicated to helping companies build facilities for making, assembling and packaging some of the world’s more advanced chips. In his remarks, the president said that over $435 billion had been invested in American companies since he took office.“America’s coming back,” Mr. Biden said, standing beside Gina Raimondo, the commerce secretary, who traveled with him to Durham. “We are determined to lead the world in manufacturing semiconductors.”Ms. Raimondo, who is expected to participate in the tour over the coming weeks, told a crowd gathered at Wolfspeed that the pandemic had “opened all of our eyes” to the importance of maintaining the global supply chain and protecting competitive advantages in technology.“The truth of it is the United States was for a long time a manufacturing powerhouse,” she said. “Still is, but for a long time we took our eye off the ball, and we watched manufacturing leave our shores in search of cheap labor in Asia.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.The president spoke directly to people he said might feel “left behind” by technological changes, but said his administration would focus on programs that could train workers to produce technological projects without a college degree. Mr. Biden said the “vast majority” of jobs created by Wolfspeed would not require college degrees and could pay around $80,000.Events like the one held on Tuesday will provide Mr. Biden and his surrogates with an opportunity to hone his argument against Republicans.At the same time, a collision course looms in Washington over the debt ceiling.On Tuesday, Speaker Kevin McCarthy, Republican of California, wrote a letter urging the president to negotiate on the federal debt limit. “With each passing day,” Mr. McCarthy wrote, “I am incredibly concerned that you are putting an already fragile economy in jeopardy by insisting upon your extreme position of refusing to negotiate any meaningful changes to out-of-control government spending.”Mr. Biden has said he will refuse to negotiate on the debt limit, pointing out that Republicans voted to raise the ceiling several times under his predecessor, Mr. Trump.“It’s time for Republicans to stop playing games, pass a clean debt ceiling bill and quit threatening our economic recovery,” Karine Jean-Pierre said in a statement responding to Mr. McCarthy’s letter.In his own letter sent on Tuesday evening, Mr. Biden urged Mr. McCarthy and congressional Republicans to present a full budget proposal before Congress leaves for Easter recess.The president and his advisers have signaled that the situation would be worse under Republican leadership, a point he underscored in North Carolina. The White House says that companies have made $16 billion in private sector investment commitments since Mr. Biden took office, a development they have attributed to corporations taking advantage of tax breaks and federal funding that bolsters innovation.Mr. Biden has argued that the flow of money would be at stake if Republicans tried to repeal policies passed under his administration, including the Inflation Reduction Act. He has also said that individual Americans are at risk of losing access to lower health care, energy and internet costs that are provided for in the bills that were passed by a Democratic-majority Congress.“We’re not going to let them undo all the progress,” Mr. Biden said. More