Evelyn Reynolds

California officials cited failures to disclose productivity requirements at two locations. The company said it would appeal.A California labor regulator said on Tuesday that it had fined Amazon nearly $6 million for thousands of violations of a safety law that took effect in 2022.The measure, known as the Warehouse Quotas Law, lets employees request written explanations of any productivity quotas that apply to them, as well as explanations of any discipline they may face in failing to meet the quotas.The state labor commissioner’s office said Amazon violated the law more than 59,000 times at two Southern California warehouses between October and March.The system that Amazon used in the two warehouses “is exactly the kind of system that the Warehouse Quotas Law was put in place to prevent,” the labor commissioner, Lilia García-Brower, said in a statement.An Amazon spokeswoman said in a statement that the company had appealed the penalties and denied that the company used “fixed quotas.” The spokeswoman, Maureen Lynch Vogel, said that “individual performance is evaluated over a long period of time, in relation to how the entire site’s team is performing,” and that workers can “review their performance whenever they wish.”The California law also proscribes quotas that interfere with employees’ ability to take state-mandated breaks or use the bathroom, or that prevent employers from following state health and safety laws.Experts have said the law was among the first in the country to regulate warehouse quotas that are monitored by algorithms and to require employers to make the quotas transparent to workers. The penalties announced on Tuesday are the largest issued under the law.The labor commissioner’s office said its investigation had been assisted by a labor advocacy group, the Warehouse Worker Resource Center, which issued a statement quoting a worker at one of the penalized Amazon facilities who described significant pressure to hit quotas.“If you don’t scan enough items you will get written up,” said the worker, Carrie Stone. “This happened to me. I got written up for not making rate. They said I missed by one point, but I didn’t even know what the target was.”Other Amazon workers raised similar concerns while the Legislature debated the bill in 2021, and studies by labor advocacy groups have shown that Amazon has significantly higher rates of serious injury than other warehouse employers, like Walmart.The federal Occupational Safety and Health Administration has cited Amazon several times in recent years for exposing workers to ergonomic injuries and over record-keeping for such injuries, and the Justice Department is investigating whether the company made false representations about its safety record when applying for loans.Amazon has cited hundreds of millions of dollars’ worth of investments in safety improvements in recent years, including more than $300 million in 2021.Other states, like New York and Washington, have since enacted similar laws, and Senator Edward J. Markey, Democrat of Massachusetts, introduced a federal version last month. More

Gov. Gavin Newsom announced a deal with business and labor leaders heading off a ballot measure to repeal the law, which has cost companies billions.A last-minute political compromise has headed off an effort to repeal a California law allowing workers to sue employers for workplace violations — a legal tool that has cost companies billions of dollars.The compromise, announced on Tuesday by Gov. Gavin Newsom, followed meetings with business leaders and the powerful California Labor Federation over ways to modify the 2004 law, the Private Attorneys General Act.The law, known as PAGA, lets employees file civil complaints — on their own behalf and for fellow workers — against businesses, sometimes costing them tens of millions of dollars in settlements.“We came to the table and hammered out a deal that works for both businesses and workers, and it will bring needed improvements to this system,” Mr. Newsom said in a statement on Tuesday. “This proposal maintains strong protections for workers, provides incentives for businesses to comply with labor laws and reduces litigation.”A study released in February by a coalition opposing the law found it had cost businesses around $10 billion since 2013. That same report found more than 3,000 proposed settlements under the law in 2022, a tenfold increase from 2016. (In most cases, the state records settlement proposals but not the amount ultimately paid.)In 2023, Google settled for $27 million after employees used the law as their basis for accusing the tech company of unfair labor practices. And in 2018, Walmart employees won a settlement of $65 million after accusing the retailer of not providing sufficient seating for workers.Business groups got a measure to repeal the law on the November ballot. They agreed to withdraw the measure once legislation reflecting the compromise is passed and signed into law.Labor groups have cited the law as a necessary check on corporations.A recent report from the U.C.L.A. Labor Center found that the prospective ballot measure would effectively eliminate “one of California workers’ strongest remaining tools for preventing and correcting wage theft and other workplace abuses,” said Tia Koonse, the center’s legal and policy research manager.The compromise calls for, among other things, creating higher penalties on employers that flout labor laws and increasing the amount of penalty money that goes to employees to 35 percent from 25 percent. Moreover, it stipulates that any legal action must be initiated by the employee who experiences the violations described in the suit.“This package provides meaningful reforms that ensure workers continue to have a strong vehicle to get labor claims resolved, while also limiting the frivolous litigation that has cost employers billions without benefiting workers,” Jennifer Barrera, president of the California Chamber of Commerce, said in a statement.Lorena Gonzalez, the leader of the California Labor Federation, said in a statement that her group was pleased “to have negotiated reforms to PAGA that better ensure abusive practices by employers are cured and that workers are made whole, quicker.”“PAGA is an essential tool to help workers hold corporations accountable for widespread wage theft, safety violations and misclassification,” she said. More

Congressional Budget Office projections released on Tuesday show a grim fiscal backdrop ahead of tax and debt limit fights.The United States is on a pace to add trillions of dollars to its national debt over the next decade, borrowing money more quickly than previously expected, at a time when big legislative fights loom over taxes and spending.The Congressional Budget Office said on Tuesday that the U.S. national debt is poised to top $56 trillion by 2034, as rising spending and interest expenses outpace tax revenues. The mounting costs of Social Security and Medicare continue to weigh on the nation’s finances, along with rising interest rates, which have made it more costly for the federal government to borrow huge sums of money.As a result, the United States is expected to continue running large budget deficits, which are the gap between what America spends and what it receives through taxes and other revenue. The budget deficit in 2024 is projected to be $1.9 trillion, up from a forecast earlier this year of $1.6 trillion. Over the next 10 years, the annual deficit is projected to swell to $2.9 trillion. As a share of the economy, debt held by the public in 2034 will be 122 percent of gross domestic product, up from 99 percent in 2024.The new projections come as lawmakers are gearing up for a big tax and spending battle. Most of the 2017 Trump tax cuts will expire in 2025, forcing lawmakers to decide whether to renew them and, if so, how to pay for them. The United States will also again have to deal with a statutory cap on how much it can borrow. Congress agreed last year to suspend the debt limit and allow the federal government to keep borrowing until next January.Those fights over tax and spending will be taking place at a time when the country’s fiscal backdrop is increasingly grim. An aging population continues to weigh on America’s old-age and retirement programs, which are facing long-term shortfalls that could result in reduced retirement and medical benefits.Both Democrats and Republicans expressed concern about the national debt as inflation and interest rates soared over the last few years, but spending has been difficult to corral. The C.B.O. report assumes that the 2017 tax cuts are not extended, but that is highly unlikely. President Biden has said he will extend some of the tax cuts, including those for low- and middle-income earners, and former President Donald J. Trump has said he will extend all of them if he wins in November. Fully extending the tax cuts could cost around about $5 trillion over 10 years.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Economist Claudia Sahm has shown that when the unemployment rate’s three-month average is half a percentage point higher than its 12-month low, the economy is in recession.
Sahm said the Fed is taking a big risk by not moving now with gradual cuts.
Fed officials last week sharply lowered their individual forecasts for rate cuts this year, going from three expected reductions at the March meeting to one this time around.

Economist Claudia Sahm on CNBC’s The Exchange.

The Federal Reserve is risking tipping the economy into contraction by not cutting interest rates now, according to the author of a time-tested rule for when recessions happen.
Economist Claudia Sahm has shown that when the unemployment rate’s three-month average is half a percentage point higher than its 12-month low, the economy is in recession.

As the jobless level has ticked up in recent months, the “Sahm Rule” has generated increasing talk on Wall Street that what has been a strong labor market is showing cracks and pointing to potential trouble ahead. That in turn has generated speculation over when the Fed finally will start reducing interest rates.
Sahm, chief economist at New Century Advisors, said the central bank is taking a big risk by not moving now with gradual cuts: By not taking action, the Fed risks the Sahm Rule kicking in and, with it, a recession that potentially could force policymakers to take more drastic action.
“My baseline is not recession,” Sahm said. “But it’s a real risk, and I do not understand why the Fed is pushing that risk. I’m not sure what they’re waiting for.”
“The worst possible outcome at this point is for the Fed to cause an unnecessary recession,” she added.

Flashing a warning sign

As a numeric reading, the Sahm Rule stood at 0.37 following the May employment report from the Bureau of Labor Statistics that showed the unemployment rate rising to 4% for the first time since January 2022. That’s the highest the Sahm reading has been on an ascending basis since the early days of the Covid pandemic.

The value essentially represents the percentage point difference from the three-month unemployment rate average compared to its 12-month low, which in this case is 3.5%. A reading of 0.5 would represent an official trigger for the rule; a couple more months of 4% or better readings on the unemployment rate would make that happen.
The rule has applied for every recession dating back to at least 1948 and thus works as an effective warning sign when the value starts to increase.
Even with the rising jobless level, Fed officials have expressed little concern about the labor market. Following its meeting last week, the rate-setting Federal Open Market Committee labeled the jobs market as “strong,” and Chair Jerome Powell at his press conference said conditions “have returned to about where they stood on the eve of the pandemic — relatively tight but not overheated.”
In fact, officials sharply lowered their individual forecasts for rate cuts this year, going from three expected reductions at the March meeting to one this time around.
The move surprised markets, which still are pricing in two cuts this year, according to the CME Group’s FedWatch measure of fed funds futures market contracts.
“The bad outcomes here could be pretty bad,” Sahm said. “From a risk management perspective, I have a hard time understanding the Fed’s unwillingness to cut and their just ceaseless tough talk on inflation.”

‘Playing with fire’

Sahm said Powell and his colleagues “are playing with fire” and should be paying attention to the rate of change in the labor market as a potential harbinger of danger ahead. Waiting for a “deterioration” in job gains, as Powell spoke of last week, is dangerous, she added.
“The recession indicator is based on changes for a reason. We’ve gone into recession with all different levels of unemployment,” Sahm said. “These dynamics feed on themselves. If people lose their jobs, they stop spending, [and] more people lose jobs.”
The Fed, though, finds itself at a bit of a crossroads.
Tracking a recession where the unemployment rate starts this low requires a trip all the way back to the latter part of 1969 into 1970. Moreover, the Fed rarely has cut rates with unemployment at this level. Central bankers in recent days, including on several occasions Tuesday, have said they see inflation moving in the right direction but don’t feel confident enough to start cutting yet.
By the Fed’s preferred barometer, inflation ran at 2.7% in April, or 2.8% when excluding food energy prices for the core reading that policymakers especially zero in on. The Fed targets inflation at 2%.
“Inflation has come down a lot. It’s not where you want it to be, but it is pointed in the right direction. Unemployment is pointed in the wrong direction,” Sahm said. “Balancing these two out, you get closer and closer to the danger zone on the labor market and further away from it on the inflation side. It’s pretty obvious what the Fed should do.” More

Retail sales rose 0.1% in May, below the 0.2% the Dow Jones estimate. Excluding autos, sales declined 0.1%.
Moderating gas prices helped hurt receipts at gas stations, which reported a 2.2% monthly decline.
Following the retail data, traders in the fed funds futures market upped their bets that the Fed would cut interest rates this year.

A worker assists with check-out at a Costco store in Teterboro, New Jersey, US, on Wednesday, Feb. 28, 2024. 
Stephanie Keith | Bloomberg | Getty Images

Retail spending was weaker than expected in May as consumers continued to wrestle with stubbornly higher levels of inflation.
Sales rose just 0.1% on the month, one-tenth of a percentage point below the Dow Jones estimate, according to a Commerce Department report Tuesday that is adjusted for seasonality but not inflation. However, the result was slightly better than the downwardly revised 0.2% decline In April.

On a year-over-year basis, sales rose 2.3%.
The sales number was worse when excluding autos, with a decline of 0.1% against the estimate for a 0.2% increase.
Moderating gas prices helped hurt receipts at gas stations, which reported a 2.2% monthly decline. That was offset somewhat by a 2.8% increase at sports goods, music and book stores.
Online outlets reported a 0.8% increase, while bars and restaurants saw a 0.4% decline. Furniture and home furnishing stores also reported a 1.1% drop.
Stock market futures were around flat following the report while Treasury yields declined.

The report comes with investors on edge about the direction of the economy and what that will mean for the future of monetary policy at the Federal Reserve. Consumer spending is responsible for about two-thirds of all economic activity, so any weakness could signal both a retrenchment in growth while also pushing the Fed to begin cutting interest rates.
Inflation numbers of late have been somewhat encouraging, but spending is showing signs of weakening as consumers have been under pressure from rising prices for more than two years.
A Commerce Department measure that the Fed uses as its main gauge for inflation showed an annual rate of 2.7% in April, or 2.8% when excluding food and energy. The Fed targets 2% inflation.
Market pricing is pointing to the equivalent of two interest rate reductions this year of a quarter percentage point each, though Fed officials at their meeting last week indicated the likelihood of just one. Following the retail data, traders in the fed funds futures market upped their bets that the Fed would be easing, even pricing in about a 23% chance of three cuts this year, according to the CME Group’s FedWatch gauge.
Philadelphia Fed President Patrick Harker said Monday that it would be appropriate to cut rates later this year only if the data cooperate, and said he envisions the likelihood of just one move lower. More

An affiliation agreement between the Amazon Labor Union and the 1.3 million-member Teamsters signals an escalation in challenging the online retailer.After years of organizing Amazon workers and pressuring the company to bargain over wages and working conditions, two prominent unions are teaming up to challenge the online retailer.The partnership was made final in voting that ended on Monday after members of the Amazon Labor Union, the only union formally representing Amazon warehouse workers in the United States, voted overwhelmingly to affiliate with the 1.3-million-member International Brotherhood of Teamsters. The vote was overseen by the Amazon union.The A.L.U. scored a surprise victory in an election at a Staten Island warehouse in 2022. But it has yet to begin bargaining with Amazon, which continues to contest the election outcome. Leaders of both unions said the affiliation agreement would put them in a better position to challenge Amazon and would provide the A.L.U. with more money and staff support.“The Teamsters and A.L.U. will fight fearlessly to ensure Amazon workers secure the good jobs and safe working conditions they deserve in a union contract,” Sean O’Brien, the Teamsters president, said in a statement early Tuesday.Amazon declined to comment on the affiliation.The Teamsters are ramping up their efforts to organize Amazon workers nationwide. The union voted to create an Amazon division in 2021, and Mr. O’Brien was elected that year partly on a platform of making inroads at the company.The Teamsters told the A.L.U. that they had allocated $8 million to support organizing at Amazon, according to Christian Smalls, the A.L.U. president, and that the larger union was prepared to tap its more than $300 million strike and defense fund to aid in the effort. The Teamsters did not comment on their budget for organizing at Amazon.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Some voters blame the American Rescue Plan for fueling price increases. But the growth it unleashed may be helping the president stay more popular than counterparts in Europe.The $1.9 trillion economic stimulus package that President Biden signed shortly after taking office has become both an anchor and a buoy for his re-election campaign.The American Rescue Plan, which the Biden administration created and Democrats passed in March 2021, has fueled discontent among voters, in sometimes paradoxical ways. Some Americans blame the law, which included direct checks to individuals, for helping to fuel rapid inflation.Others appear upset that its relief to people, businesses and school districts was short-lived. The Federal Reserve Bank of Dallas reported recently that several business contacts in its district “expressed concern about the winding down of American Rescue Plan Act dollars and whether nonprofits and K-12 schools will be able to sustain certain programs without that funding.”Polls show that Americans continue to favor Mr. Biden’s opponent, former President Donald J. Trump, on economic issues. Often, they indicate that only relatively small slices of the electorate believe Mr. Biden’s policies have helped them or their family financially.At the same time, though, the stimulus may be lifting Mr. Biden’s chances for November in ways that pollsters rarely ask about.Economists say the relief package, along with stimulus measures Mr. Trump signed into law in 2020, has helped accelerate America’s recovery from the pandemic recession. The United States has grown and added jobs in a way that no other wealthy nation has experienced after the pandemic.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Artificial intelligence tools like ChatGPT are finding widest use at big companies, but there is wide expectation that the impact will spread.The Nashville Area Chamber of Commerce has convened an annual meeting of local business leaders since the 1800s, but the most recent gathering had a decidedly modern theme: artificial intelligence.The goal was to demystify the technology for the chamber’s roughly 2,000 members, especially its small businesses.“My sense is not that people are wary,” said Ralph Schulz, the chamber’s chief executive. “They’re just unclear as to its potential use for them.”When generative A.I. surged into the public consciousness in late 2022, it captured the imagination of businesses and workers with its ability to answer questions, compose paragraphs, write code and create images. Analysts projected that the technology would transform the economy by driving a boom in productivity.Yet so far, the impact has been limited. Although adoption of A.I. is rising, only about 5 percent of companies nationwide are using the technology, according to a survey of businesses from the Census Bureau. Many economists predict that generative A.I. is years away from measurably affecting economic activity — but they say change will come.“To me, this is a story of five years, not five quarters,” said Philipp Carlsson-Szlezak, the global chief economist at Boston Consulting Group. “Over a five-year horizon, am I going to see something measurable? I think so.”Tell us how your workplace is using A.I.

We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More