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    Wholesale prices rose 0.4% in September, more than expected as inflation persists

    The producer price index increased 0.4% for September, compared with the Dow Jones estimate for a 0.2% gain.
    Excluding food, energy and trade services, the index increased 0.4% for the month and 5.6% from a year ago.

    Wholesale prices rose more than expected in September despite Federal Reserve efforts to control inflation, according to a report Wednesday from the Bureau of Labor Statistics.
    The producer price index, a measure of prices that U.S. businesses get for the goods and services they produce, increased 0.4% for the month, compared with the Dow Jones estimate for a 0.2% gain. On a 12-month basis, PPI rose 8.5%, which was a slight deceleration from the 8.7% in August.

    Excluding food, energy and trade services, the index increased 0.4% for the month and 5.6% from a year ago, the latter matching the August increase.
    Inflation has been the economy’s biggest issue over the past year as the cost of living is running near its highest level in more than 40 years.
    The Fed has responded by raising rates five times this year for a total of 3 percentage points and is widely expected to implement a fourth consecutive 0.75 percentage point increase when it meets again in three weeks.

    A worker installs the instrument cluster for the Ford Motor Co. battery powered F-150 Lightning trucks under production at their Rouge Electric Vehicle Center in Dearborn, Michigan on September 20, 2022.
    Jeff Kowalsky | AFP | Getty Images

    However, Wednesday’s data shows the Fed still has work to do. Indeed, Cleveland Fed President Loretta Mester on Tuesday said “there has been no progress on inflation.” Following the PPI release, traders priced in an 81.3% chance of a three-quarter point hike, the same as a day ago.
    Stock market futures trimmed gains following the news, while Treasury yields were little changed on the session.

    The PPI release comes a day ahead of the more closely watched consumer price index. The two measures differ in that PPI measures the prices received at the wholesale level while CPI gauges the prices that consumers pay.
    Some two-thirds of the increase in PPI was attributed to a 0.4% gain in services, the BLS said. A big contributor to that increase was a 6.4% jump in prices received for traveler accommodation services.
    Final demand goods prices also rose 0.4% on the month, pushed by a 15.7% advance in the index for fresh and dry vegetables.

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    Labor Hoarding Could be Good News for the Economy

    PROVO, Utah — Chad Pritchard and his colleagues are trying everything to staff their pizza shop and bistro, and as they do, they have turned to a new tactic: They avoid firing employees at all costs.Infractions that previously would have led to a quick dismissal no longer do at the chef’s two places, Fat Daddy’s Pizzeria and Bistro Provenance. Consistent transportation issues have ceased to be a deal breaker. Workers who show up drunk these days are sent home to sober up.Employers in Provo, a college town at the base of the Rocky Mountains where unemployment is near the lowest in the nation at 1.9 percent, have no room to lose workers. Bistro Provenance, which opened in September, has been unable to hire enough employees to open for lunch at all, or for dinner on Sundays and Mondays. The workers it has are often new to the industry, or young: On a recent Wednesday night, a 17-year-old could be found torching a crème brûlée.Down the street, Mr. Pritchard’s pizza shop is now relying on an outside cleaner to help his thin staff tidy up. And up and down the wide avenue that separates the two restaurants, storefronts display “Help Wanted” signs or announce that the businesses have had to temporarily reduce their hours.Provo’s desperation for workers is an intense version of the labor crunch that has plagued employers nationwide over the past two years — one that has prompted changes in hiring and layoff practices that could have big implications for the U.S. economy. Policymakers are hoping that after struggling through the worst labor shortages America has experienced in at least several decades, employers will be hesitant to lay off workers even when the economy cools.Mr. Pritchard cannot hire enough employees to open the bistro for lunch at all, or for dinner on Sundays or Mondays.That may help prevent the kind of painful recession the Federal Reserve is hoping to avoid as it tries to combat persistent inflation. America’s economy is facing a marked — and intentional — slowdown as the Fed raises interest rates to chill demand and drive down price increases, the kind of pullback that would usually result in notably higher unemployment. But officials are still hoping to achieve a soft landing in which growth moderates without causing widespread job losses. A few have speculated that today’s staffing woes will help them to pull it off, as companies try harder than they have in the past to weather a slowdown without cutting staff.“Businesses that experienced unprecedented challenges restoring or expanding their work forces following the pandemic may be more inclined to make greater efforts to retain their employees than they normally would when facing a slowdown in economic activity,” Lael Brainard, the Fed’s vice chair, said in a recent speech. “This may mean that slowing aggregate demand will lead to a smaller increase in unemployment than we have seen in previous recessions.”For now, the job market remains strong. Employers added 263,000 workers in September, fewer than in recent months but more than was normal before the pandemic. Unemployment is at 3.5 percent, matching the lowest level in 50 years, and average hourly earnings picked up at a solid 5 percent clip compared with a year earlier.But that is expected to change. When the Fed raises interest rates and slows down the economy, it also weakens the labor market. Wage gains slow, paving the way for inflation to cool down, and in the process, unemployment rises — potentially, significantly.The State of Jobs in the United StatesEconomists have been surprised by recent strength in the labor market, as the Federal Reserve tries to engineer a slowdown and tame inflation.September Jobs Report: Job growth eased slightly in September but remained robust, indicating that the economy was maintaining momentum despite higher interest rates.A Cooling Market?: Unemployment is low and hiring is strong, but there are signs that the red-hot labor market may be coming off its boiling point.Factory Jobs: American manufacturers have now added enough jobs to regain all that they shed during the pandemic — and then some.Missing Workers: The labor market appears hot, but the supply of labor has fallen short, holding back the economy. Here is why.In the 1980s, when inflation was faster than it is now and entrenched, the Fed lifted rates drastically to roughly 20 percent and sent unemployment to above 10 percent. Few economists expect an outcome that severe this time since today’s inflation burst has been shorter-lived and rates are not expected to climb nearly as much.Mr. Pritchard demonstrated how to stretch pizza dough in Fat Daddy’s Pizzeria, his other restaurant in Provo.Many of the workers Mr. Pritchard and his business partner, Janine Coons, have hired are new to the industry or young.Still, Fed officials themselves expect unemployment to rise nearly a full percentage point to 4.4 percent next year — and policymakers have admitted that is a mild estimate, given how much they are trying to slow down the economy. Some economists have penciled in worse outcomes. Deutsche Bank, for instance, predicts 5.6 percent joblessness by the end of 2023.Labor hoarding offers a glimmer of hope that could help the Fed’s more benign unemployment forecast to become reality: Employers who are loath to jettison workers may help the labor market to slow down and wage growth to moderate without a spike in joblessness.“Companies are still confronting this enormous churn and losing people, and they don’t know what to do to hang on to people,” said Julia Pollak, chief economist at the career site ZipRecruiter. “They’re definitely hanging on to workers for dear life just because they’re so scarce.”When the job market slows, employers will have recent, firsthand memories of how expensive it can be to recruit, and train, workers. Many employers may enter the slowdown still severely understaffed, particularly in industries like leisure and hospitality that have struggled to hire and retain workers since the start of the pandemic. Those factors may make them less likely to institute layoffs.And after long months of very tight labor markets — there are still nearly two open jobs for every unemployed worker — companies may be hesitant to believe that any uptick in worker availability will last.“There’s a lot of uncertainty about how big of a downturn are we facing,” said Benjamin Friedrich, an associate professor of strategy at Northwestern University’s Kellogg School of Management. “You kind of want to be ready when opportunities arise. The way I think about labor hoarding is, it has option value.”Employers in Provo, where unemployment is near the lowest in the nation at 1.9 percent, have no room to lose workers.Instead of firing, businesses may look for other ways to trim costs. Mr. Pritchard in Provo and his business partner, Janine Coons, said that if business fell off, their first resort would be to cut hours. Their second would be taking pay cuts themselves. Firing would be a last resort.The pizzeria didn’t lay off workers during the pandemic, but Mr. Pritchard and Ms. Coons witnessed how punishing it can be to hire — and since all of their competitors have been learning the same lesson, they do not expect them to let go of their employees easily even if demand pulls back.“People aren’t going to fire people,” Mr. Pritchard said.But economists warned that what employers think they will do before a slowdown and what they actually do when they start to experience financial pain could be two different things.The idea that a tight labor market may leave businesses gun-shy about layoffs is untested. Some economists said that they could not recall any other downturn where employers broadly resisted culling their work force.“It would be a pretty notable change to how employers responded in the past,” said Nick Bunker, director of North American economic research for the career site Indeed.And even if they do not fire their full-time employees, companies have been making increased use of temporary or just-in-time help in recent months. Gusto, a small-business payroll and benefits platform, conducted an analysis of its clients and found that the ratio of contractors per employee had increased more than 60 percent since 2019.If the economy slows, gigs for those temporary workers could dry up, prompting them to begin searching for full-time jobs — possibly causing unemployment or underemployment to rise even if nobody is officially fired.Policymakers know a soft landing is a long shot. Jerome H. Powell, the Fed chair, acknowledged during his last news conference that the Fed’s own estimate of how much unemployment might rise in a downturn was a “modest increase in the unemployment rate from a historical perspective, given the expected decline in inflation.”But he also added that “we see the current situation as outside of historical experience.”Bistro Provenance opened in September.Dinner service at the restaurant.The reasons for hope extend beyond labor hoarding. Because job openings are so unusually high right now, policymakers hope that workers can move into available positions even if some firms do begin layoffs as the labor market slows. Companies that have been desperate to hire for months — like Utah State Hospital in Provo — may swoop in to pick up anyone who is displaced.Dallas Earnshaw and his colleagues at the psychiatric hospital have been struggling mightily to hire enough nurse’s aides and other workers, though raising pay and loosening recruitment standards have helped around the edges. Because he cannot hire enough people to expand in needed ways, Mr. Earnshaw is poised to snap up employees if the labor market cools.“We’re desperate,” Mr. Earnshaw said.But for the moment, workers remain hard to find. At the bistro and pizza shop in downtown Provo, what worries Mr. Pritchard is that labor will become so expensive that — combined with rapid ingredient inflation — it will be hard or impossible to make a profit without lifting prices on pizzas or prime rib so much that consumers cannot bear the change.“What scares me most is not the economic slowdown,” he said. “It’s the hiring shortage that we have.” More

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    Amazon Labor Union, With Renewed Momentum, Faces Next Test

    The Amazon Labor Union has built momentum leading up to an election this week at an 800-person warehouse near Albany, N.Y.A federal labor official recently endorsed the union’s election victory at a Staten Island warehouse in April, which Amazon has challenged, while workers’ frustrations over pay and safety have created an opportunity to add supporters and pressure the company to bargain.But the union faces questions about whether it can translate such opportunities into lasting gains. For months after its victory at the 8,000-person warehouse on Staten Island, the union appeared to be out of its depths. It nearly buckled under a crush of international media attention and lost a vote at a second Staten Island warehouse in May.At times, it has neglected organizing inside the original warehouse, known as JFK8, where high turnover means the union must do constant outreach just to maintain support — to say nothing of expanding. Christian Smalls, the union’s president and a former JFK8 employee, seemed distracted as he traveled widely. There was burnout and infighting in the group, and several core members left or were pushed out.“It wasn’t clear what goal we should be working towards,” said Cassio Mendoza, a JFK8 worker and the union’s communications director, alluding to the sometimes competing priorities of pushing for a contract and organizing more warehouses.The election near Albany, to be spread out over four days between Wednesday and Monday in Castleton-on-Hudson, could help determine whether the earlier problems were natural growing pains or a sign of deeper dysfunction.Amazon employees at the barbecue signed a petition calling on the company to negotiate with the union. DeSean McClinton–Holland for The New York TimesAmazon has cast doubt on the Amazon Labor Union’s experience and says it doesn’t believe that the union represents workers’ views. The company said it was investing $1 billion over the next year to permanently raise hourly pay.Among the union’s biggest diversions in recent months was countering Amazon’s attempt to overturn its victory, which consumed time and resources, as supporters and leaders testified in hearings that dragged across 24 business days beginning in mid-June. The union delayed plans to train more workers as organizers. A national organizing call was put on hold.Just before Labor Day, the National Labor Relations Board official running the hearings recommended rejecting Amazon’s challenge and certifying the union. A regional official must still weigh in.More on Big TechInside Meta’s Struggles: After a rocky year, employees at Meta are expressing skepticism, confusion and frustration over Mark Zuckerberg’s vision for the metaverse.A Deal for Twitter?: In a surprise move, Elon Musk has offered to acquire Twitter at his original price of $44 billion, which could bring to an end the acrimonious legal fight between the billionaire and the company.Hiring Freezes: Amazon is halting corporate hiring in its retail business for the rest of the year, joining Meta as the latest tech companies to pull back amid the economic uncertainty.TikTok Nears Deal with U.S.: The Biden administration and the Chinese-owned video app have drafted a preliminary agreement to resolve national security concerns over the platform, but hurdles remain over the terms.The finding appeared to bolster the union within the Staten Island warehouse, though management responded by sending workers a message saying the company intended to appeal. “We believe a direct relationship with you is best,” the message said.Around the same time, the union began to refocus. It opened an office on Staten Island in late August, hired two full-time staff members and set up a database tracking worker support. “I feel we are in a better place than we have ever been,” Mr. Mendoza said.The union brought in prominent labor organizers to lead regular in-person training on how to push for a contract. It finally held two calls in an effort to recruit and train leaders for organizing drives nationwide.“Your building could be next, and that is why we are having this call,” Madeline Wesley, an Amazon employee who is a lead Amazon Labor Union organizer for the second Staten Island warehouse, said on one call. Workers who indicated they were from facilities in Kentucky, New Jersey, Ohio and Washington took part.The union, which says it has set aside about one-fifth of its more than half-million-dollar budget for expansion, is already backing other organizing campaigns, including the one in Castleton-on-Hudson and another at a warehouse east of Los Angeles. Nannette Plascencia, a self-described “soccer mom” who is the California facility’s lead organizer, met Mr. Smalls at a party in Hollywood and decided that the Amazon Labor Union “understood where we were coming from,” she recalled in an interview.On Tuesday, the union submitted a petition for an election to represent workers at Ms. Plascencia’s warehouse, according to the N.L.R.B. Officials have yet to verify whether the union demonstrated enough support to warrant an election.“Check out the Amazon 25-cent raise — we’re not falling for that,” Christian Smalls, the union’s president, said at the barbecue.DeSean McClinton–Holland for The New York TimesIn late September, Amazon told workers that it was increasing hourly wages to reflect local market conditions, pledging to raise them by more than $1 in many warehouses. But at JFK8, where pay started at $18.25 an hour, the raise was between 25 cents and 75 cents an hour, depending on level and tenure.“It’s not enough to buy groceries,” said Celia Camasca, an employee of the warehouse there. “It would be better if they would have said nothing.”The union emphasized the slim raise at a barbecue outside the warehouse that had been coincidentally planned for an afternoon shortly after workers learned about it. “Check out the Amazon 25-cent raise — we’re not falling for that,” said Mr. Smalls, the union’s president and the event’s M.C.Union officials circulated a petition demanding that Amazon come to the bargaining table and that it give workers on Staten Island an immediate cost-of-living wage increase. Brandon Wagner, a packer who said that he had worked at the warehouse for about a month and that he previously made $17 an hour at a Wendy’s, signed the petition while waiting in line for food because, he said, workers are underpaid.Paul Flaningan, an Amazon spokesman, said that the national average pay for most frontline jobs was more than $19 an hour and that the company offered “comprehensive benefits” for full-time employees, including health insurance from Day 1, paid parental leave and 401(k) matching.The union still faces numerous obstacles. Amazon could spend years appealing the election result on Staten Island, and the company still has enormous power over JFK8 workers. After workers protested Amazon’s response to a fire at the site last week, the company suspended more than 60 of them with pay while, it said, it investigated what had occurred. The union filed unfair-labor-practice charges over the suspensions; Amazon said most of the workers had returned to work.The voting near Albany presents the union with its most visible immediate test.In interviews outside the warehouse, which handles oversize items like lawn mowers and televisions, many workers cited safety concerns and said pay was too low given the difficulty of the work. New workers made a base wage of $15.70 an hour before an increase of $1.30 this month.Heather Goodall is a leader of the union effort at Amazon’s warehouse in Castleton-on-Hudson, N.Y.DeSean McClinton–Holland for The New York TimesSome also complained that Amazon was too quick to discipline workers for minor infractions.David Bornt, who scans in merchandise before placing it in bins, said a misunderstanding over a quota had recently led to his being written up. He argued that a union could ease such stresses.“It’s someone to have your back,” Mr. Bornt said. “I have four kids, one on the way. I can’t be worried about losing my job at any minute.”Other employees said they opposed the union because they were satisfied with their pay and benefits and didn’t see how a union could improve the situation.“There’s just no need for it,” said Anthony Hough, one of those workers. “We just got a raise.”According to government data, Albany is one of the most unionized metropolitan areas in the country, and many employees expressed positive views about unions. But some said past experience at unionized workplaces made them less eager to join another one. Some also said they distrusted the Amazon Labor Union in particular.“The A.L.U. is new,” said Jacob Carpenter, another employee. “They’re not giving us any information.”The election outcome is likely to shape perceptions of the union. Heather Goodall, the lead organizer at the warehouse, is a member of the Amazon Labor Union’s board, and leaders of the union like Connor Spence, its treasurer, have visited the Albany area regularly. Mr. Smalls has traveled there as well.Ms. Goodall said she was concerned about safety at the warehouse. An Amazon spokesman said the company had a better overall safety record than other retailers. DeSean McClinton–Holland for The New York TimesMs. Goodall said she joined Amazon in February to help unionize the warehouse because she was concerned about unusually high injury rates, among other safety issues. The facility was evacuated after a cardboard compactor caught fire last week, two days after the JFK8 fire, which was similar.“The timeline to fix things is before something tragic happens,” Ms. Goodall said.She accused Amazon of running an aggressive anti-union campaign, including regular meetings with employees in which it questions the union’s credibility and suggests that workers could end up worse off if they unionize.Mr. Flaningan, the company spokesman, said that while injuries increased as Amazon trained hundreds of thousands of new workers in 2021, the company believed that its safety record surpassed that of other retailers over a broader period.“Like many other companies, we hold these meetings because it’s important that everyone understands the facts about joining a union and the election process itself,” he said, adding that the decision to unionize is up to employees. More

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    IMF Warns Rate Increases Could Spur A Global Recession

    The International Monetary Fund lowered its growth outlook for 2023 and suggested that interest rate increases could spur a harsh global recession.The International Monetary Fund said on Tuesday that the world economy was headed for “stormy waters” as it downgraded its global growth projections for next year and warned of a harsh worldwide recession if policymakers mishandled the fight against inflation.The grim assessment was detailed in the fund’s closely watched World Economic Outlook report, which was published as the world’s top economic officials traveled to Washington for the annual meetings of the World Bank and the I.M.F.The gathering arrives at a fraught time, as persistent supply chain disruptions and Russia’s war in Ukraine have led to a surge in energy and food prices over the last year, forcing central bankers to raise interest rates sharply to cool off their economies. Raising borrowing costs will probably tame inflation by slowing business investment and consumer spending, but higher rates could also yield a new set of problems: a cascade of recessions in rich nations and debt crises in poor ones.There are growing fears among policymakers that a so-called soft landing will elude the global economy.“In short, the worst is yet to come, and for many people 2023 will feel like a recession,” the International Monetary Fund report said.The organization maintained its most recent forecast that the global economy will grow 3.2 percent this year but now projects that will slow to 2.7 percent in 2023, slightly lower than the fund’s previous estimate. Both figures are big comedowns from the start of the year, when the fund projected global growth of 4.4 percent in 2022 and 3.8 percent in 2023, highlighting how the outlook has darkened in recent months.Inflation is expected to peak later this year and decline to 6.5 percent in 2023 from 8.8 percent in 2022.“The risks are accumulating,” Pierre-Olivier Gourinchas, the International Monetary Fund’s chief economist, said during an interview in which he described the global economy as weakening. “We’re expecting about a third of the global economy to be in a technical recession.”The fund defines a “technical recession” as an economy that contracts for two consecutive quarters.Corporate America and Wall Street are already bracing for a downturn. Jamie Dimon, the chief executive of JPMorgan Chase, told CNBC on Monday that the United States was likely to be “in some kind of recession six to nine months from now.”Despite the dire tone of the International Monetary Fund’s forecasts, some private forecasters are predicting worse. The median economist in a Bloomberg survey expects 2.9 percent global growth this year and 2.5 percent next, as the euro area posts 0.2 percent growth in 2023 and Eastern Europe sees output fall.The I.M.F. report detailed how the economies of the United States, China and the 19 nations that use the euro are in various states of slowing, with effects rippling around the world.In the United States, inflation and rising interest rates are sapping consumer spending power, and housing activity is slowing as mortgage rates rise. A recent three-month dip in gasoline prices gave consumers some relief from inflation, but prices have started to rise again. There are concerns that trend could continue after the oil production cut announced last week by the international cartel known as OPEC Plus.The fund forecast that the U.S. economy would grow 1.6 percent this year, a downgrade from its previous projection, and 1 percent in 2023.In China, lockdowns to prevent the spread of Covid-19 continue to drag on its economy, which is projected to grow 3.2 percent this year after expanding 8.1 percent in 2021. Beyond its pandemic restrictions, China is facing a crisis in its property sector as cash-constrained homeowners refuse to repay loans on unfinished properties. The International Monetary Fund warned that China’s housing crunch would spill into the country’s domestic banking sector.Europe has been heavily reliant on Russia for energy and is facing sharp increases in oil and gas prices as additional sanctions go into effect later this year, just as the weather turns colder. Tourism has buttressed many of the economies of Europe in 2022, but uncertainty about energy prices has slowed manufacturing activity.Efforts to respond to inflation have led to policy proposals that have caused their own upheaval. Britain’s financial markets have faced turmoil after investors rebuffed the tax and spending policies of Prime Minister Liz Truss and her new government. The Bank of England stepped up its intervention in Britain’s bond market on Tuesday, the second expansion of its emergency measures in two days, as it warned of a “material risk” to the nation’s financial stability.Although Russia is responsible for much of the jump in food and energy prices, its economy is holding up better than previously projected even in the face of robust international sanctions. Russia’s economy is expected to contract 3.4 percent this year and 2.3 percent in 2023, much less than many economists believed earlier in the year.International Monetary Fund officials attributed that to the resilience of its energy exports, which have allowed Russia to stimulate its economy and prop up its labor market. Still, Russia is facing a deep recession, and its economic output is far lower than before the war.The impact of Russia’s invasion of Ukraine was top of mind as policymakers gathered in Washington.Janet L. Yellen, the Treasury secretary, condemned Russia’s actions during a meeting on Tuesday of finance ministers who convened to discuss the global food crisis. Russia’s finance minister, Anton Siluanov, attended the meeting virtually.“Putin’s regime and the officials who serve it — including those representing Russia at these gatherings — bear responsibility for the immense human suffering this war has caused,” Ms. Yellen said, according to a copy of her remarks provided by a Treasury Department official.Ms. Yellen called on the Group of 20, which represents the world’s major economies, to step up financial assistance to nations facing food shortages and said she would support a freeze on debt repayment for countries that needed it.The slowdowns in advanced economies are putting pressure on emerging markets, many of which were already fragile and facing high debt burdens as they recovered from the pandemic. Higher interest rates, soaring food costs and diminished demand for exports threaten to push millions of people into poverty. And low vaccination rates in places such as Africa mean that the health effects of the pandemic are persistent.“The poor are hurt the most,” David Malpass, the president of the World Bank, told reporters before this week’s meetings. “We’re in the midst of a crisis-facing development.”The rapid appreciation of the U.S. dollar, which is the strongest it has been since the early 2000s, also represents a threat to emerging markets. The International Monetary Fund urged policymakers in those countries to “batten down the hatches” and conserve their reserves of foreign currencies for when financial conditions worsen.As the pain piles up in rich and poor countries alike, policymakers are under increasing pressure to blunt the fallout, with central bankers — including those at the Federal Reserve — facing calls to curtail interest rate increases.Still, the fund warned that doing too little to combat inflation would make the fight more costly later. It also said governments should avoid enacting fiscal policies that would make inflation worse.In its report, the fund acknowledged that its forecasts faced considerable uncertainty. The further withdrawal of Russian gas supplies to Europe could depress the continent’s economies, debt crises in developing countries could worsen, and the pandemic could come roaring back.“Risks to the outlook remain unusually large and to the downside,” the report said.Jeanna Smialek More

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    Biden Proposal Could Lead to Employee Status for Gig Workers

    A proposed rule, long awaited by labor activists, would make it harder for companies to classify workers as independent contractors.The Labor Department on Tuesday unveiled a proposal that would make it more likely for millions of janitors, home-care and construction workers and gig drivers to be classified as employees rather than independent contractors.Companies are required to provide certain benefits and protections to employees but not to contractors, such as paying a minimum wage, overtime, a portion of a worker’s Social Security taxes and contributions to unemployment insurance.The proposed rule is essentially a test that the Labor Department will apply to determine whether workers are contractors or employees for companies. The test considers factors such as how much control workers have over how they do their jobs and how much opportunity they have to increase their earnings by doing things like offering new services. Workers who have little of either are often considered employees.The new version of the test lowers the bar for that employee classification from the current test, which the Trump administration’s Labor Department created.The proposal would apply only to laws that the department enforced, such as the federal minimum wage. States and other federal agencies, like the Internal Revenue Service, set their own criteria for employment status. But many employers and regulators in other jurisdictions are likely to consider the department’s interpretation when making decisions about worker classification, and many judges are likely to use it as a guide.As a result, the proposal is a potential blow to gig companies and other service providers that argue their workers are contractors, though it would not immediately affect the status of those workers.Uber and Lyft have said in federal filings that having to treat drivers as employees could force them to alter their business models, and some gig economy officials have estimated that their labor costs would rise 20 to 30 percent. The companies have repeatedly fought similar efforts by regulators and legislatures in states across the country.Share prices for both companies dropped more than 10 percent Tuesday.In a statement, Uber sounded optimistic that the proposal would not endanger the gig-economy model, at least if the administration heeded additional input.“Today’s proposed rule takes a measured approach, essentially returning us to the Obama era, during which our industry grew exponentially,” said CR Wooters, the company’s head of federal affairs. “In a time of deep economic uncertainty, it’s crucial that the Biden administration continues to hear from the more than 50 million people who have found an earning opportunity with companies like ours.”Read More About the Gig EconomyWaiting for Action: The Biden administration’s plans to strengthen labor protections have been slowed by Congress, the courts and a lobbying blitz. The delay has frustrated gig workers.A Thriving Sector: Conventional employment opportunities abound, but gig work continues to be a popular choice for people seeking flexibility and additional income.Para App: A former Uber employee created an app to help gig workers maximize their earnings. But the platforms that hire them are fighting back.Covid Risks: New York City’s gig workers risked their lives during the pandemic. A survey illustrates the hazards they faced.Lyft likewise noted that the proposal would restore the approach under President Barack Obama, when drivers were generally classified as contractors, and emphasized that it would not force the company to alter its business model. The company said the proposal was merely the beginning of a longer process.Companies, unions, workers and other members of the public will have a month and a half to formally comment on the proposal before the department incorporates feedback into a final rule. After that, the department will have considerable discretion over whether or not to enforce the rule at particular companies.“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors,” Labor Secretary Martin J. Walsh said in a statement. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.”David Weil, who oversaw the Obama Labor Department’s approach to classifying workers, cautioned that just because the department didn’t bring an enforcement action against Uber and Lyft didn’t mean it couldn’t have. He noted that the Obama rule had been adopted late in that administration.“I think it is true that there are lots of gray areas in the platform world, but with the caveats that you always have to go deep into the facts, Uber and Lyft do not strike me as that difficult,” Mr. Weil said in an interview, adding: “There is a lot about the relationship that looks like one of employees.”The proposal helps defuse growing pressure from activists supporting gig workers, who complained that the administration had been too slow to intervene to protect ride-hail drivers and other app-based workers.Lorena Gonzalez Fletcher, a former leader on workers’ issues in the California Assembly who is now head of the state’s labor federation, said in an interview that the action demonstrated the Biden administration’s strong pro-worker stance but that the effect of the new rule would come down to how aggressively the administration enforced it.“Companies just continue to break labor law,” Ms. Gonzalez Fletcher said. “They break it at the local level, the state level and federally, and there are no consequences. Everything is about enforcement.”The Biden Labor Department delayed and then scrapped the Trump rule on worker classification before a federal judge reinstated it. The new proposal would formally rescind and replace the Trump rule when made final in the coming months.Opponents could ask a federal judge to block the new rule temporarily or strike it down, but administration officials expressed confidence that it would withstand judicial scrutiny. They said they were merely returning to a standard that federal courts had repeatedly upheld over the decades.Uber and other gig companies say changes to how some of their workers are classified could force them to change their business models.Jim Wilson/The New York TimesUnder President Donald J. Trump, the department argued that two factors should predominate in determinations of whether a worker is an employee or a contractor, even if other factors are relevant: the degree of control a company has over the worker, and the extent to which a worker can increase his or her income by taking entrepreneurial initiative, like marketing his or her services.The Trump Labor Department suggested that gig workers like Uber drivers would probably be considered contractors under these criteria. Proponents argued that the Trump approach was necessary so enforcement didn’t snuff out new ways of doing business, such as the gig economy.But in an interview, Seema Nanda, the Biden Labor Department’s top lawyer, said the Trump rule “threatens to actually increase rather than decrease misclassification.”The proposal by the Biden Labor Department argues that several factors must be weighed when assessing whether a worker is a contractor or an employee, and that none of them are necessarily more important than the others. Among the additional factors are whether the work being performed is central to a company’s business, and what kind of investments workers make to do their jobs, such as buying equipment.Administration officials cautioned that determining whether or not gig workers like Uber drivers are employees would hinge on applying the test laid out in the proposal to individual cases and that they were not prejudging the outcome of any one of them. They also emphasized that the proposal did not target a particular industry.“We make a determination based on the specific facts in any case that we look at,” Ms. Nanda said. “Misclassification harms workers across a wide range of industries.”Gig companies like Uber and Lyft have sought for years to influence laws and regulations on worker classification. After the California Legislature passed a bill proposed by Ms. Gonzalez Fletcher that effectively classified gig drivers as employees in 2019, gig companies spent roughly $200 million helping to pass a ballot measure that would exempt their workers from employee status while granting them limited benefits.A state judge later ruled that the measure was unconstitutional. The decision is being appealed.Gig companies have tried and failed to enact similar measures in other liberal states, like New York and Massachusetts, but did help pass a contractor measure in Washington State.Uber and Lyft have often argued that drivers prefer the flexibility that independent contractor status affords them, such as the ability to work when, where and however long they choose to. They have cited polling data that appears to affirm this.Legal scholars point out that there is nothing inherent about employment status that would forbid companies to grant workers similar flexibility.Mr. Walsh, the labor secretary, has sometimes appeared open to the idea that gig workers could be classified as independent contractors.But when asked in an interview this summer whether he thought drivers would prefer to be independent contractors or employees if the trade-offs were made clear, he argued that “95 percent of people would say yes” to being classified as employees. More

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    Inflation expectations ease, while spending outlook tumbles, Fed consumer survey shows

    Consumers expect the inflation rate a year from now to be 5.4%, the lowest number in a year and a decline from 5.75% in August, according to a New York Fed survey.
    Respondents also indicated that they see household spending growth of 6%. That’s the lowest level since January and the biggest one-month decline ever.

    A gasoline nozzle pumps gas into a vehicle in Los Angeles, California on August 23, 2022.
    Frederic J. Brown | AFP | Getty Images

    Inflation expectations and the outlook for household spending growth fell sharply in September as the Federal Reserve’s rate increases take hold in the U.S. economy.
    Consumers expect the inflation rate a year from now to be 5.4%, the lowest number in a year and a decline from 5.75% in August, according to the latest New York Fed Survey of Consumer Expectations.

    That level peaked at 6.8% in June and has been coming down since as the central bank has instituted a series of rate hikes totaling 3 percentage points. Markets largely expect the Fed to continue raising rates until it brings inflation down to its long-run target of 2%.
    While the near-term outlook for inflation was improving, respondents also indicated that they see household spending growth of 6% for the next year, a steep fall from August’s 7.8% projection. That’s the lowest level since January and the biggest one-month decline ever in a data series going back to June 2013.

    Consumers have been somewhat constrained by price increases moving near their fastest level in more than 40 years. Personal consumption expenditures in inflation-adjusted dollars rose just 0.1% in August while the savings rate declined, according to the Bureau of Economic Analysis.
    Respondents did put a slightly higher number on their outlook for three-year inflation, moving that forecast to 2.9%, up 0.1 percentage point from August. Median five-year expectations rose to 2.2%, an increase of 0.2 percentage point but much closer to the Fed’s goal.
    Elsewhere in the survey, respondents said they expect home prices to increase by just 2%, the lowest reading since June 2020 and reflective of a slowing real estate market. Consumers see gas prices rising by half a percentage point, and food to surge by 6.9%, a full percentage point increase from August’s survey.
    The numbers come as the central bank is looking to arrest a cost-of-living surge pushed by Covid pandemic-related factors such as supply chain clogs. Unprecedented levels of fiscal and monetary stimulus also coincided with the inflation surge. The Fed has pulled back on its efforts, raising rates and beginning to reduce the size of the bond portfolio on its mammoth $8.8 trillion balance sheet.

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    U.S. should pump more oil to avert war-level energy crisis, says JPMorgan’s Jamie Dimon

    JPMorgan Chase CEO Jamie Dimon told CNBC Monday that the U.S. should forge ahead in pumping more oil and gas to help alleviate the global energy crisis.
    Likening the situation to a national security risk of war-level proportions, Dimon said Western allies should support the U.S. in shoring up supply.
    “”America needs to play a real leadership role. America is the swing producer, not Saudi Arabia,” Dimon told CNBC’s Julianna Tatelbaum.

    Dimon said in June that he was preparing the bank for an economic “hurricane” caused by the Federal Reserve and Russia’s war in Ukraine.
    Al Drago | Bloomberg | Getty Images

    JPMorgan Chase CEO Jamie Dimon said Monday that the U.S. should forge ahead in pumping more oil and gas to help alleviate the global energy crisis, likening the situation to a national security risk of war-level proportions.
    Speaking to CNBC, Dimon dubbed the crisis “pretty predictable” — occurring as it has from Europe’s historic overdependence on Russian energy — and urged Western allies to support the U.S. in taking a lead role in international energy security.

    “In my view, America should have been pumping more oil and gas and it should have been supported,” Dimon told CNBC’s Julianna Tatelbaum at the JPM Techstars conference in London.
    “America needs to play a real leadership role. America is the swing producer, not Saudi Arabia. We should have gotten that right starting in March,” he continued, referring to the onset of the energy crisis following Russia’s invasion of Ukraine on Feb. 24.

    This should be treated almost as a matter of war at this point, nothing short of that.

    Jamie Dimon
    CEO, JPMorgan Chase

    Europe — once a major importer of Russian energy, relying on the country for up to 45% of its natural gas needs — has been at the forefront of that crisis; facing higher prices and dwindling supply as a result of sanctions levied against the Kremlin.
    And while EU nations have hit targets to shore up gas supplies over the coming winter months, Dimon said leaders should now be looking ahead to future energy security concerns.
    “We have a longer-term problem now, which is the world is not producing enough oil and gas to reduce coal, make the transition [to green energy], produce security for people,” he said.

    “I would put it in the critical category. This should be treated almost as a matter of war at this point, nothing short of that,” he added.

    ‘It’s Pearl Harbor’

    Referring to the war in Ukraine more broadly, Dimon dubbed it an attack of similar magnitude to that of Pearl Harbor or the invasion of Czechoslovakia in 1968.
    “It’s Pearl Harbor, it’s Czechoslovakia, and it’s really an attack on the Western world,” he said.
    However, the CEO said it also presented an opportunity for the West to “get its act together” and defend its values in the face of autocratic regimes.
    “The autocratic world thinks that the Western world is a little lazy and incompetent — and there’s a little bit of truth to that,” said Dimon.
    “This is the chance to get our act together and to solidify the Western, free, democratic, capitalist, free people, free movements, freedom of speech, free religion for the next century,” he continued.
    “Because if we don’t get this one right, that kind of chaos you can see around the world for the next 50 years.”

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    U.K. Government Plans an Update to Its Tax and Spending Agenda

    After an earlier announcement sent markets into a tailspin, the prime minister and the chancellor are under pressure to restore fiscal credibility.After days of confusion, Britain’s government said on Monday that the date for its next fiscal policy announcement would be moved up nearly a month and that it would provide, at the same time, a much-anticipated independent assessment of the policies’ impact on the nation’s economy and public finances.The chancellor of the Exchequer, Kwasi Kwarteng, said he would publish his “medium-term fiscal plan” on Oct. 31, which would show how the government, under the new prime minister, Liz Truss, would bring down debt levels despite large spending plans and tax cuts that would be funded by borrowing.New economic and fiscal forecasts from the Office for Budget Responsibility, a government watchdog, are to be published the same day.The move is aimed to reassure financial markets and the public of the new government’s fiscal credibility. Its first major economic announcement, a speech by Mr. Kwarteng on Sept. 23, was dominated by unfunded tax cuts at a time of high inflation, and it quickly sent markets into a tailspin: The British pound hit a record low against the dollar, and turmoil in the bond market led to higher mortgage rates and intervention from the Bank of England to protect pension funds.Since then, the government has canceled its plan to abolish the top income tax rate for the highest earners — the most surprising tax-cutting measure announced last month — and tried to restore its fiscal credibility, while maintaining its commitment to an agenda of using tax cuts and deregulation to speed economic growth.Rising Inflation in BritainInflation Slows Slightly: Consumer prices are still rising at about the fastest pace in 40 years, despite a small drop to 9.9 percent in August.Interest Rates: On Sept. 22, the Bank of England raised its key rate by another half a percentage point, to 2.25 percent, as it tries to keep high inflation from becoming embedded in the nation’s economy.Truss’s Experiment Stumbles: Prime Minister Liz Truss says a mix of tax cuts and deregulation is needed to jump-start Britain’s sluggish economy. Investors, economists and some in her own party disagree.Mortgage Market: The uptick in interest rates roiled Britain’s mortgage market, leaving many homeowners calculating their potential future mortgage payments with alarm.Part of this rehabilitation effort included a promise to publish a more detailed fiscal plan focused on reducing debt and provide an independent analysis by the Office for Budget Responsibility. But the date was set for Nov. 23 — too long to wait, said fellow Conservative Party members, opposition lawmakers and investors.Liz Truss, the prime minister, with Mr. Kwarteng visiting a construction site last week. Pool photo by Stefan RousseauLast week, it was widely reported that the date would be moved forward, and Mr. Kwarteng denied this. On Monday, he confirmed that the announcement would indeed arrive on Oct. 31.Two weeks ago, in the immediate aftermath of Mr. Kwarteng’s policy speech, the pound plummeted to $1.035 and speculation grew that it could reach parity with the dollar. The cancellation of the top tax rate cut, which the government argued had become a distraction from its overall growth plan, helped the currency rebound a bit.But that recovery has stalled. On Monday, the pound was trading around $1.10 amid skepticism that the government’s plan would expand the economy as promised, and that instead large public spending cuts would be necessary.Fitch Ratings said on Monday that it expected the British economy to contract 1 percent next year, after “extreme volatility” in British financial markets and the prospect of “sharply higher” interest rates. Last month, it forecast a 0.2 percent decline for next year.“Rising funding costs, tighter financing conditions, including for mortgage borrowers, and increased uncertainty will outweigh the impact of looser fiscal policy” next year, analysts at the ratings agency wrote. They expect Britain’s economy to enter a recession in this quarter. The agency has already changed its ratings outlook for Britain to negative.That was just one of many rebukes of the government’s plans. For example, the International Monetary Fund encouraged the government to re-evaluate the tax cuts, which it said would increase inequality.But Ms. Truss, seeking to reverse years of sluggish growth and weak productivity, has been clear that she wants to run the economy differently than her predecessors. One early decision was to fire the top civil servant in the Treasury, Tom Scholar, a move that rattled some analysts. On Monday, the government announced his successor, James Bowler, who will transfer from the international trade department but spent two decades at the Treasury previously.Even as the government makes conciliatory moves, there are signs of distress in financial markets. On Monday, the Bank of England said it would expand its intervention in the bond market. The bank will increase the size of the daily auctions in a bond-buying program that was set up to support pensions funds, after tumult in this market threatened Britain’s financial stability.Over the last eight trading days, the bank bought only about 5 billion pounds of long-dated government bonds in total, despite setting a limit of £5 billion a day. With markets wondering what will happen when the bond-buying operation ends on Friday, the central bank announced that it would expand its support. As well as increasing the auction sizes, it will set up a new collateral facility to try to ease liquidity problems faced by the pension funds. That facility will continue beyond this week.The announcement appeared to do little to ease the markets. On Monday, Britain’s bond prices kept falling, while the yield on 30-year bonds rose to 4.72 percent, once again approaching highs seen during the worst of the bond rout after the last fiscal statement.The financial district in London. The new government’s first major economic announcement, on Sept. 23, quickly sent markets into a tailspin.Alex Ingram for The New York Times More