Evelyn Reynolds

SAN FRANCISCO — Since 1989, Microchip Technology has operated in an unglamorous backwater of the electronics industry, making chips called microcontrollers that add computing power to cars, industrial equipment and many other products.Now a global chip shortage has elevated the company’s profile. Demand for Microchip’s products is running more than 50 percent higher than it can supply. That has put the company, based in Chandler, Ariz., in an unfamiliar position of power, which it began wielding this year.While Microchip normally lets customers cancel a chip order within 90 days of delivery, it began offering shipment priority to clients that signed contracts for 12 months of orders that couldn’t be revoked or rescheduled. These commitments reduced the chances that orders would evaporate when the scarcity ended, giving Microchip more confidence to safely hire workers and buy costly equipment to increase production.“It gives us the ability to not hold back,” said Ganesh Moorthy, president and chief executive of Microchip, which on Thursday reported that profit in the latest quarter tripled and that sales rose 26 percent to $1.65 billion.Such contracts are just one example of how the $500 billion chip industry is changing because of the silicon shortage, with many of the shifts likely to outlive the pandemic-fueled dearth. The lack of the tiny components — which has pinched makers of cars, game consoles, medical devices and many other goods — has been a stark reminder of the foundational nature of chips, which act as the brains of computers and other products.Chief among the changes is a long-term shift in market power from chip buyers to sellers, particularly those that own factories that make the semiconductors. The most visible beneficiaries have been giant chip manufacturers like Taiwan Semiconductor Manufacturing Company, which offer services called foundries that build chips for other companies.But the shortage has also sharply bolstered the influence of lesser-known chip makers such as Microchip, NXP Semiconductors, STMicroelectronics, Onsemi and Infineon, which design and sell thousands of chip varieties to thousands of customers. These companies, which build many products in their own aging factories, now are increasingly able to choose which customers get how many of their scarce chips.Longer-term purchase commitments from customers “gives us the ability to not hold back,” said Ganesh Moorthy, chief executive of Microchip Technology, at the company’s headquarters.Tomás Karmelo Amaya for The New York TimesMany are favoring buyers who act more like partners, by taking steps like signing long-term purchase commitments or investing to help chip makers increase production. Above all, the chip makers are asking clients to share more information earlier about which chips they will need, which helps guide decisions about how to lift manufacturing.“That visibility is what we need,” said Hassane El-Khoury, chief executive of the chip maker Onsemi, a company previously known as ON Semiconductor.Many of the chip makers said they were using their new power with restraint, helping customers avoid problems like factory shutdowns and raising prices modestly. That’s because gouging customers, they said, could cause bad blood that would hurt sales when shortages end.Even so, the power shift has been unmistakable. “Today there is no leverage” for buyers, said Mark Adams, chief executive of Smart Global Holdings, a major user of memory chips.Marvell Technology, a Silicon Valley company that designs chips and outsources the manufacturing, has experienced the change in power. While it used to give foundries estimates of its chip production needs for 12 months, it began providing them with five-year forecasts starting in April.“You need a really good story,” said Matt Murphy, Marvell’s chief executive. “Ultimately the supply chain is going to allocate to who they think are going to be the winners.”It’s a substantial change in psychology for a mature industry where growth has generally been slow. Many chip makers for years sold largely interchangeable products and often struggled to keep their factories running profitably, particularly if sales slumped for items like personal computers and smartphones that drove most chip demand.But the components are essential for more products now, one of many signs that rapid growth may linger. In the third quarter, total chip sales surged nearly 28 percent to $144.8 billion, the Semiconductor Industry Association said.Years of industry consolidation has also wrung out excess manufacturing capacity and left fewer suppliers selling exclusive kinds of chips. So buyers that could once place and cancel orders with little notice — and play one chip maker off another to get lower prices — have less muscle. More

Signing bonuses, higher wages, even college tuition. Companies are using perks to entice new employees in an industry that has been battered by the pandemic.Macy’s is offering referral bonuses of up to $500 for each friend or family member that employees recruit to join the company. Walmart is paying as much as $17 an hour to start and has begun offering free college tuition to its workers. And some Amazon warehouse jobs now command signing bonuses of up to $3,000.Retailers, expecting the holiday shopping season to be bustling once again this year after being upended by the coronavirus in 2020, are scrambling to find enough workers to staff their stores and distribution centers in a tight labor market. It is not proving easy to entice applicants to an industry that has been battered, more than most, by the pandemic’s many challenges, from fights over mask wearing to high rates of infection among employees. Willing retail workers are likely to earn larger paychecks and work fewer hours, while consumers may be greeted by less inventory and understaffed stores.“Folks looking to work in retail have typically had very little choice — it’s largely been driven by geography and availability of hours,” said Mark A. Cohen, the director of retail studies at Columbia University’s business school. “Now they can pick and choose who’s got the highest, best benefits, bonuses and hourly rates. And as we’ve seen, the escalation has been striking.”Or as Jeff Gennette, the chief executive of Macy’s, which plans to hire 76,000 full- and part-time employees this season, put it in a recent interview: “Everyone’s experiencing this — there’s a war for talent at the front lines. My sense is we all have to raise our game.”While some of the most generous perks, like tuition reimbursement, are being offered mainly to long-term workers, even seasonal workers will see higher pay than usual. It’s especially critical for retailers to hire temporary help this year because existing employees are already strained from nearly two years of pandemic conditions. The National Retail Federation, an industry group, is anticipating record holiday sales and has forecast that retailers will hire 500,000 to 665,000 seasonal workers, significantly more than the 486,000 in 2020.It’s especially critical for retailers to hire temporary help this year to assist existing employees already strained from nearly two years of pandemic conditions.Jeenah Moon for The New York Times“The biggest risk to retailers and distributors is that they are working their current work force too much,” said Scott Mushkin, who founded the financial consultant R5 Capital, based in New Canaan, Conn. “Overtime can only go so far. The work force is tired out.”Mr. Mushkin experienced firsthand just how eager retailers are for workers during a visit last month to a Home Depot in Naperville, Ill.“I was looking at a sign listing open positions at the store when I was basically accosted by a manager asking if I was interested in applying,” Mr. Mushkin said.Mr. Mushkin said he was struck not only by the manager’s desperation but also by the number of positions available. “Basically every job in that store is open,” he said. “So who is doing those jobs now? Who is picking up the slack?”Those pressures may explain why large retailers like Walmart are looking to hire 150,000 additional workers to supplement its current staff this season. For several years leading up to the pandemic, Walmart offered existing workers extra hours at the holidays but did not start a large hiring blitz. (Existing employees can still sign up for additional hours.) It recently raised its minimum wage to $12 an hour, and in some stores it is offering new workers $17 an hour.A recruiter for Amazon at a job fair in Virginia last month. It is looking for an additional 150,000 people this holiday season.Andrew Caballero-Reynolds/Agence France-Presse — Getty ImagesAmazon is also looking for an additional 150,000 people this holiday season, which follows a push to expand its permanent work force by 125,000. With giant retailers gobbling up many of the job candidates, enticing new employees is that much harder for others.Many retailers, like Saks Off 5th, reiterated commitments to remain closed on Thanksgiving this year, a welcome shift for workers after a yearslong trend of shopping invading the holiday. Demanding that employees work in stores that day would probably be a particularly tough sell this year.Nordstrom, which is aiming to hire 28,600 seasonal and regular employees, said it had increased bonus and incentive pay to as much as $650 for hourly and overnight store workers, from as much as $400 last year.Saks Off 5th said in October that it was raising its minimum base wage for hourly store workers to $15 per hour — more than double the federal minimum wage — and that it would not offer extended holiday shopping hours this year so that staff could have more flexibility.Best Buy is allowing job applicants to submit videos rather than coming in physically for a first round of interviews, saying in a recent statement that the videos “can be recorded and reviewed without the need to go back and forth on scheduling.”The scramble by retailers comes as the American economy is gaining strength, adding 531,000 jobs in October, a sharp rebound from the previous month. But even as unemployment dropped to 4.6 percent from 4.8 percent, the labor participation rate — which measures the share of the working-age population employed or looking for a job — was flat last month, at 61.6 percent. That signals that the pool of available workers remains tight.“We’re coming out of a crisis we have no experience in dealing with, in which millions of people were furloughed or laid off or removed from the work force, and to think they’ll all show up on certain date to come back to work is kind of silly,” Mr. Cohen said. “Some people are still fearful about coming back to work, especially in a job in which they would be exposed to large numbers of the public.”While fear of the Delta variant may be keeping some workers away, the retail industry had been loath to impose vaccine mandates for fear that store workers might leave and that it might become even harder to find seasonal employees. A new vaccinate-or-test requirement for companies with 100 or more employees announced by the Biden administration on Thursday essentially forced their hands, though it is not scheduled to take effect until Jan. 4 and was temporarily blocked on Saturday by a federal appeals court in Louisiana. (The mandate does instruct employers to require unvaccinated workers to wear masks by Dec. 5.)The National Retail Federation was critical of the mandate, saying it imposes “burdensome new requirements on retailers during the crucial holiday shopping season.”L.L. Bean’s chief executive said that it has been “incredibly challenging” to hire hourly employees, especially for its 54 stores.Karsten Moran for The New York TimesStephen Smith, the chief executive of L.L. Bean, the outdoor retailer based in Maine, said it has been “incredibly challenging” to hire hourly employees, especially for its more than 50 stores. The chain is not offering bonuses, but it has given priority to new forms of flexibility to attract workers. For example, jobs at its domestic call center are now fully remote.In stores, Mr. Smith said, “we have changed our shift structure so you can do two- or four-hour shifts” in an attempt to “make it a lot easier if you’re juggling family responsibilities.”The company has also sought to emphasize its unique benefits, including several paid days off for employees to pursue outdoor experiences.The challenge of finding workers has put a spotlight on how difficult many retail jobs are and on the short shrift given to many store workers during the worst of the pandemic. They were regularly exposed to Covid-19 and involved in customer conflicts around wearing masks, and they were inconsistently offered hazard pay or other compensation for their efforts. Many retail workers said that they were not properly informed when they were exposed to the virus in stores.Anthony Stropoli, a personal shopper at Bergdorf Goodman, holds one of the lucrative, client-facing jobs that have been fading in retail in recent years and he noted that luxury retail was a different ballgame. He previously worked at Barneys New York, which filed for bankruptcy in 2019.“A lot of people do not want to work in retail right now — I really, really see it,” Mr. Stropoli said. “People are not feeling appreciated or fairly compensated, and I think this whole Covid thing has made them really rethink that. They want to feel valued.”It all means that workers have more leverage this season than they have in the past. Joel Bines, global co-leader of the retail practice at the consulting firm AlixPartners, said if retailers want to find enough workers this season, they need to pay them more and fundamentally improve working conditions.“For retailers, who have treated their workers as dispensable cogs in order to increase the bottom line, to say they are shocked that they can’t find people to work for them is hard to believe,” Mr. Bines said.“The thing that the industry needs to realize is that workers have agency now,” he added. “They have agency in a way they never have before.”Contact Sapna Maheshwari at [email protected] and Michael Corkery at [email protected]. More

Staring at the wall of glass clawing its way up the unfinished facade of the Winthrop Center in downtown Boston — 53 floors of commercial and residential space soaring 690 feet — Travis Watson isn’t interested in the grandeur of the thing. He wants to know who’s working on it.“It doesn’t pass the eye test,” he scoffs: In a city whose non-Hispanic white population has dwindled to 45 percent, it’s hard to see Black and brown faces on the site.He has more than his eyesight to go by. In 2018, Mayor Martin J. Walsh — now President Biden’s labor secretary — appointed Mr. Watson to lead the Boston Employment Commission, the body created to monitor compliance with the Boston Residents Jobs Policy. The policy mandates giving a minimum share of work to city residents, women and people of color on large private construction projects and those that are publicly funded.The latest version of the ordinance, from 2017, requires that Asian, Black and Latino workers get at least 40 percent of the work hours on sanctioned projects to better reflect the city’s demographics. (It also mandates that 51 percent of the hours go to city residents and 12 percent to women.) Mr. Watson complains that while many projects fail to meet the benchmarks, nobody is penalized.When the commission reviewed the Winthrop Center project in mid-September, when it was roughly halfway done, only 32 percent of the hours worked had gone to people of color. Other downtown projects have similar shortfalls. In September, even a project to renovate City Hall — the building where the targets were written and the Employment Commission meets — was shy of the mark.“We should be going higher,” Mr. Watson said. “This is a floor.”Boston is one of the nation’s most solidly Democratic cities. It just elected Michelle Wu, an outspoken progressive, as mayor by a resounding margin. She campaigned heavily on a promise to expand opportunities for minority businesses and to empower workers and communities of color with the sort of policy proposals that led to the creation of the Employment Commission — proposals aimed at ensuring that lucrative opportunities are fairly distributed. But the projects underway in Boston show how much harder it is to deliver on goals of racial equity than to set them.In Boston and beyond, building is one of the last American industries offering good jobs to workers without a college degree. The prospect of trillions of dollars of new federal funding for infrastructure projects under Mr. Biden’s Build Back Better program is raising hopes that roads, bridges, railways, wind farms, electric grids and water mains could provide millions of good construction jobs for a generation or more.What infuriates Mr. Watson is that, as he views it, unions for the building trades are the main impediment keeping people of color from building sites. He recalls one of his appearances before Boston’s City Council: “A councilor got up to say this is a union city,” he said. “For me, he was saying this is a white city, a city for white workers.”This tension has opened an uncomfortable rift between elements of the nation’s traditional Democratic coalition. Prominent advocates of racial equity push for Black and Hispanic contractors, whose operations are often small and nonunion but hire a lot of workers of color.Unions push back against the charges, sometimes forcefully, arguing that the growing number of apprentices of color indicates an embrace of diversity. In the first three months of this year, for example, nearly 30 percent of apprentices across the building trades in Massachusetts were nonwhite, up from 24 percent six years earlier.The unions also contend that nonunion contractors and their allies are cynically using a discussion of racial diversity to exploit workers.“The most vocal critics of our vigorous, intentional and ongoing efforts to improve our diversity, equity, and inclusion practices are often directly employed, funded, or formally aligned with nonunion special interest groups,” Renee Dozier, business agent of a Boston area local of the International Brotherhood of Electrical Workers, said in a statement. Many critics, she added, “have a direct profit motive to see wage and safety conditions watered down in one of America’s most dangerous industries, construction.”Mr. Watson shrugs off such criticism.The 38-year-old son of a white mother and a Black father, a graduate of Brandeis University with a major in African and African American studies, Mr. Watson is a former community organizer in the predominantly Black neighborhood of Roxbury and North Dorchester, south of downtown.He is employed as a director of racial equity and community engagement at the Massachusetts Housing Investment Corporation, a nonprofit group that offers financing for affordable housing and other community projects.He is deeply frustrated by what he views as the naked discrimination barring Black and Latino workers from the high-paying construction jobs that offer a path into the middle class. He is exasperated that unions generally won’t disclose the racial and ethnic mix of the workers in their halls — aside from apprentices, which they are obliged to report — and suggests that it is because the numbers would show their lack of diversity.He also grew frustrated by the inability of the Employment Commission to do anything about all this. As the law stands, he noted, contractors must only go through the motions to prove they are making an honest effort to comply.By last month, he had had enough. He resigned.Travis Watson, who resigned as the head of the Boston Employment Commission, views unions as the primary obstacle keeping people of color from building sites.The Pipeline IssueUnions for the building trades — laborers and electricians, plumbers and metalworkers — are largely to thank for ensuring that construction work is a middle-class job. The unions have bargained successfully for decent wages, and for health and pension benefits. They train workers and monitor safety conditions on building sites.Gatekeeping is also one of their functions, particularly in a union-friendly city like Boston. Unions run apprenticeships, which confer and certify the requisite skills, controlling the pipeline of workers into the profession.Who gets a job at downtown projects like the Winthrop Center or the City Hall renovation, where large unionized contractors and subcontractors do a vast majority of the work, is often decided in the union hall, which handles calls from contractors and makes assignments from a list of out-of-work journeymen and women.City data suggests that workers of color got 38 percent of the hours on projects subject to the ordinance last year. This year, between April and September, the share actually hit the target of 40 percent, it said. But there’s a stark difference in the jobs that whites and nonwhites get: Minority workers in 2020 did 76 percent of the work removing asbestos, where the mandated base wage set for projects like the City Hall renovation is usually around $40 an hour. By contrast, they got only 22 percent of the plumber hours, which pay around $60.“The pipeline issue is a real one, and I do think there’s a lack of diversity in the pipeline,” said Celina Barrios-Millner, the chief of equity and inclusion in Boston’s departing city government. “Any time you see outcomes that are so skewed, you have to understand there is discrimination somewhere down the line.”Some union officials acknowledge the issue. When the City Hall project came up for discussion at the Boston Employment Commission in May, Commissioner Charles Cofield, an organizer for the North Atlantic States Regional Council of Carpenters, which covers New York and New England, argued that “the main part of the pressure needs to go to the people supplying the manpower.” That means the business agents at the union locals.Elmer Castillo, an immigrant from Honduras who rose to be vice president of Local 723 of the carpenters’ union for a couple of years, has long experience with the ways of the building trades unions. “Unions are good if you know how to work with them,” he said. But equality of opportunity between white and minority workers? Mr. Castillo says, “That doesn’t exist.”Workers are supposed to be selected for a job based largely on how long they’ve been unemployed. But nepotism rules in the union hall, Mr. Castillo contends. Business agents trade favors with contractors. They will place their sons, cousins and nephews in the good jobs, and they will make sure that those sons, cousins and nephews follow them up the union ranks.“This builds a chain that never ends, a chain of whites,” Mr. Castillo said. “One will never have the opportunity to achieve what they achieve.”Craig Ransom, now the business manager at Local 346 of the carpenters’ union, offers his career as an example of the glass ceiling Black workers face. After rising to business manager at Local 723, he got stuck — blocked from what he says would be his natural progression to regional manager. “Unions are good for people that look like me,” Mr. Ransom said. “But at the very top level, there is no one that looks like me.”The conflict between white insiders and Black or Hispanic outsiders clamoring for an opportunity has bedeviled unions since the dawn of the labor movement. Even after the Civil Rights Act of 1964 ended officially sanctioned discrimination, race often trumped class solidarity. Many unions discriminated against workers of color, and many employers turned to workers of color to cross union picket lines.A few years later, President Richard M. Nixon leaned into the conflict between unions and African Americans, embracing the so-called Philadelphia Plan, which required federal contractors to prove they were hiring minority workers to match the ethnic composition of the area where work was being done. It would create “a political dilemma for the labor union leaders and civil rights groups,” said John Ehrlichman, a Nixon adviser, driving a wedge between two pillars of Democratic politics.“Unions are good for people that look like me,” said Craig Ransom, the business manager at Local 346 of the carpenters’ union. “But at the very top level, there is no one that looks like me.”Labor unions have come a long way since then. One reason is that far more workers of color are in the labor force, and many unions want to organize them, including the Service Employees International Union and UNITE HERE, which covers leisure and hospitality workers.The other reason is that organized labor doesn’t have the clout it once had. “The old bastions of exclusion with strong seniority systems that favored white workers have been decimated,” said Nelson Lichtenstein, a historian of labor at the University of California, Santa Barbara.In the fiscal year that ended Sept. 30, the Equal Employment Opportunity Commission reported fewer than 100 racial-discrimination complaints against unions, about one-third the number brought a decade before. “They don’t have the power they used to have in being involved in hiring,” said Gwendolyn Young Reams, the commission’s acting general counsel.Unions in the building trades remain something of an exception. They are strong, compared with other unions, and retain control over training and hiring, especially in public projects and the large, more heavily regulated construction in union-friendly urban areas. Nearly 13 percent of construction workers are unionized, about double the overall rate across private industries.‘Driving the Ship’Maven Construction is not a union contractor. It is an open shop, meaning it has not signed a deal to employ only union workers. Its founder and chief executive, JocCole Burton, a Black woman, knows that limits the kind of work she can do. But she also understands the cost of signing up with the unions.“Every single college or university in the region, every hospital and all public work requires union labor,” said Ms. Burton, who founded Maven in Atlanta and moved it to Boston four years ago. “Anything that is downtown and most work in the Boston metro is going to require union labor.”The exception is affordable-housing projects, which bring in nonunion contractors to keep costs down, Ms. Burton said. Still, open-shop contractors are mostly limited to smaller projects. “The largest project we’ve done is $35 million,” she said, with jobs worth $5 million to $10 million more typical.She is seeking to make Maven a “signatory” contractor, to have a shot at more lucrative work. But the arrangement is expensive: The benefits and other obligations add up, and they are hard to afford if you don’t have a steady stream of big projects.More problematic for Ms. Burton is that she expects unions to provide few workers of color. “The unions are in the business of making sure that the union halls get all the work, but they don’t have enough Black and brown bodies in their halls,” she said.Ms. Burton says she is shocked by what she sees as overt discrimination in such a liberal city. “The racism experienced 50 years ago in Atlanta is the same we see in Boston today,” she said. “It’s subtle — not as overt — but it is the same.” A crucial problem, she argues, “is the unions are driving the ship when it comes to equity.”Union officials contend that much of the criticism is unfair. A report from Local 103 of the International Brotherhood of Electrical Workers noted that while people of color made up only 4 percent of retired electricians drawing a pension in the last five years, they accounted for almost 30 percent of their apprentices, a testament to how much it has evolved.“There is no denying that unions in many industries, including construction, just like corporations in many industries, have a troubling past when it comes to diversity, equity and inclusion,” said Ms. Dozier, the business agent for Local 103. “But we are doing more every day to increase the diversity of our membership than almost any other industry — and frankly, it is unethical of the nonunion lobbyists and their mouthpieces to try and turn that important work into an excuse to further their own exploitative practices.”The site of the City Hall renovation project. In Boston and beyond, building is one of the last American industries offering good jobs to workers without a college degree. Mark Erlich, who retired in 2017 as executive secretary-treasurer of the New England Regional Council of Carpenters and is now a research fellow with the Labor and Worklife Program at Harvard Law School, argues that construction unions have become more welcoming to nonwhites in the last few decades.Mr. Erlich is one of the authors of a book addressing the history of racial exclusion in the building trades. He notes that the original Boston Residents Jobs Policy in 1983 came out of the fight by Black workers for jobs on building sites. But it had to include residents and women to gain white political support and overcome the opposition of union leadership.“There is a legacy of racism, which by no means has been eliminated,” Mr. Erlich said. “I respect folks in the community that complain that things are not changing fast enough. And they are not changing fast enough.” Still, he argues, unions realize that “they need to become less homogeneous and reflect the demographics of the city.”And he warns that the nonunion contractors that will hire workers of color do not generally provide training or a career path, as unions do. The work is often more dangerous, he says, and it pays nothing like the wages in union shops.The Limits of PatienceWorkers of color who make it into the unions acknowledge the opportunities that membership provides. On a sunny October afternoon in Dorchester, a roomful of apprentices and journeymen and women, assembled by Local 103 to talk to a reporter, lauded the union’s efforts to broaden its ranks and called for patience.“Diversity doesn’t happen overnight,” said Sam Quaratiello, a recent graduate of the apprenticeship program who is of Asian descent. Walter Cowhan, a Black journeyman, argued that the union had become far more diverse in his 20 years of experience. Still, he said, if workers of color are to become more prominent on job sites, training is essential. “If you don’t prepare the work force, directly bringing in Black and brown workers could undermine the whole process,” he said.But among some of those pushing for racial equity, patience is wearing thin. Mr. Watson offered the words of the Black author and activist James Baldwin: “You’ve always told me it takes time,” Mr. Baldwin said in the 1989 documentary “The Price of a Ticket.” “How much time do you want, for your progress?”The building unions are “huge obstacles” to that progress, said Angela Williams-Mitchell, who heads the Boston Jobs Coalition, a community organization dedicated to increasing opportunities for people of color. “They do not open their doors to create access for communities that have historically been excluded.”If they are so committed to diversity, she says, why do unions refuse to provide data on the share of minority journeymen and women, even as they disclose the racial and ethnic breakdown of apprentices? “Break it down for us so we know what needs to be done,” she urges.Unions remain essential to maintain construction’s track record of lifting workers up, Mr. Erlich says. He recalls one of Mr. Watson’s heroes, the late Chuck Turner, a community activist who fought to increase Black employment in the building trades. “He was the ultimate radical — his attitude was, let’s drive the unions into the sea,” Mr. Erlich said. “But he came around to the position that without unions, construction would become a low-wage job.”Mr. Watson, in fact, agrees. “Unions are great,” he said. “But they have to give us an opportunity.” More

President Joe Biden lauded the October jobs report on Friday, saying the strong gains in employment and the falling unemployment rate are evidence that his economic plan is working.
The U.S. job market snapped back in October, with nonfarm payrolls rising more than expected while the unemployment rate fell to 4.6%, the Labor Department reported Friday.
In spite of the recent job gains, inflation and a global supply chain crisis continue to dominate many Americans’ sentiments about the economy.

US President Joe Biden delivers remarks on the October jobs report from the State Dining Room of the White House in Washington, DC on November 5, 2021.
Brendan Smialowski | AFP | Getty Images

WASHINGTON – President Joe Biden lauded the October jobs report Friday, saying the strong gains in employment and the falling unemployment rate are evidence that his economic plan is working.
The positive jobs news came as the House worked to potentially pass Biden’s signature domestic legislation Friday: a $1.75 trillion social spending and clean energy bill and a $1 trillion infrastructure package.

The strong jobs growth and the potential legislative win could hardly come at a more important time for the president. Despite the recent job gains, inflation and a global supply chain crisis continue to dominate many Americans’ sentiments about the economy.
“There’s a lot more to be done. We still have to tackle the costs that American families are facing. But this recovery is faster, stronger and fairer and wider than almost anyone would have predicted,” Biden said from the White House.
The U.S. job market snapped back in October, with nonfarm payrolls rising more than expected while the unemployment rate fell to 4.6%, the Labor Department reported Friday.
Nonfarm payrolls increased by 531,000 for the month, compared with the Dow Jones estimate of 450,000. The jobless rate had been expected to edge down to 4.7%.
“Before we passed the American Rescue Plan, forecasters said it would take until the end of 2023 to get to the 4.6 unemployment rate,” Biden said, referring to the Covid-19 relief bill Congress passed earlier this year. “Today, we’ve reached that rate two years before forecasters thought it was possible.”

Private payrolls were even stronger, rising 604,000 as a loss of 73,000 government jobs pulled down the headline number. October’s gains represented a sharp pickup from September, which gained 312,000 jobs after the initial Bureau of Labor Statistics estimate of 194,000 saw a substantial upward revision in Friday’s report.

CNBC Politics

Read more of CNBC’s politics coverage:

The unexpectedly strong employment numbers also reflect the continuing rise in U.S. Covid vaccination rates. As of mid-October, 77% of eligible Americans had received at least one dose of the vaccine, according to the White House.
“For our economy to fully recover, we need to keep driving vaccinations up and Covid down,” Biden said.
As vaccination rates have increased this fall, the spread of the highly contagious delta variant has slowed, from an average of 153,000 new cases daily in late July to about 67,000 at the start of November, according to data from the Centers for Disease Control and Prevention.
On Friday, Biden argued that his bills will lower inflation, which has clouded Americans’ view of the economy despite other positive developments.
“If your number one issue is the cost of living, your number one priority should be seeing Congress pass these bills,” he said.
But many economists are doubtful that the legislation will have an immediate impact on either inflation or the stalled supply chain. Rising costs and goods shortages are being driven by a complex set of intertwined factors, many of them beyond the control of any government.
Despite the good economic news, polls show that voters are losing confidence in Biden and Democrats’ handling of the economy.
The passage of Biden’s signature bills coupled with several more months of job gains could go far towards improving the president’s approval ratings.
—- CNBC’s Jeff Cox contributed to this report from New York.

WATCH LIVEWATCH IN THE APP More

Help Wanted

Retailers are staring down a triple whammy of challenges this season including labor shortages, supply chain woes and inflation.
The National Retail Federation projects sales between November and December will rise between 8.5% and 10.5% for a total of between $843.4 billion and $859 billion. The projection tops last year’s numbers and would mark a new all-time high.
Businesses large and small are hiking pay, offering bonuses and looking to meet customer demand with thin staffing.

My Secret Stash in Traverse City, Mich., is thinly-staffed ahead of the holiday rush. Owner Karen Hilt is gearing up for a strong shopping season.
Courtesy: My Secret Stach

Karen Hilt owns My Secret Stash in Traverse City, Michigan, retailing products from local artists and sellers— and business has been booming. Hilt’s feeling optimistic about the upcoming holiday season, so much so that she’s gearing up to open a second location.
But like many small business owners, she’s staring down an ongoing labor crunch, and staffing the new store remains a challenge.

A recent poll from the National Federation of Independent Business found nearly half of owners it surveyed were experiencing either significant or moderate staffing challenges.
“Between both locations I have six, and I would love to have 10 or 12 workers. That would make me a lot happier,” Hilt said.
To take up the slack she added, “I’m working pretty much seven days a week, morning, noon and night.”
Hilt’s upbeat holiday sales outlook is echoed by the National Retail Federation, which expects a roaring season, with sales during November and December projected to rise between 8.5% and 10.5% for a total of between $843.4 billion and $859 billion of sales. The projection tops last year’s numbers and would mark a new all-time high, even as a triple whammy of labor shortages, supply chain woes and inflation hit companies nationwide.
“If retailers can keep things on their shelves, and that shippers can get the goods delivered to people’s homes by Christmas, it’ll be really a banner year for holiday spending,” said Jack Kleinhenz, chief economist at the NRF, who noted the staffing issue hits not only retailers in stores and online, but in the supply chain.

Supply chain disruptions and worker shortages could put a crimp in the party. According to the NFIB, 48% of small businesses say supply chain disruptions are having a significant impact. Of those who rely on holiday sales for a significant part of yearly revenue, 38% anticipate such shortages will impact sales.
“We are seeing a shortage of workers in distribution and warehouse. Part of that is the timing of getting the products, even from the port, to the timing of these of these products getting into a distribution and warehouse area. They’re juggling hours, they’re juggling people, and people are working long hours,” Kleinhenz said.
Retail job openings hit 1.3 million in August according to data from the Bureau of Labor Statistics, and Challenger, Gray & Christmas projects 700,000 workers will be hired this season. The retail sector added 35,000 jobs in October according to BLS. Amazon, Target and Walmart and others are looking for hundreds of thousands of workers and bumping wages, offering bonuses and more to recruit.
Baltimore-based Under Armour said it’s entering the holiday season with more teammates than it’s had in years past in its retail stores. The company has hired 1,000 seasonal workers and is seeking 1,000 more workers to be brought on over the next few months.
UA credits a new in-store incentive program for all retail employees, seasonal, full-time and part-time, that allows for bonuses monthly that can equate to 8% or more of their take-home pay— in addition to a $15 an hour starting pay, up from $10 an hour this summer, to its staffing success so far.
“We are in one of the most competitive environments that we’ve seen in a very long time, particularly in retail stores. I think that our decision earlier on in the year to increase that starting wage from $10 to $15, certainly helped us get ahead of the holiday hiring that we’re in right now,” Stephanie Pugliese, UA President of the Americas.
“The holiday season is always a big peak time for any retailer to hire and make sure that we have enough teammates to satisfy the consumer demand, it really is a long-term investment that we have in the talent of our business. We’ve built our plans around investing in that talent on the go forward.”

My Secret Stash in Traverse City, Mich., is thinly-staffed ahead of the holiday rush. Owner Karen Hilt is gearing up for a strong shopping season.
Courtesy: My Secret Stach

Back in Michigan, Hilt said she isn’t immune to the supply chain hiccups rippling through the industry, but as bigger retailers face a lack of product, she’s positioned herself to succeed by selling local goods like house plants. Sales of plants really took off during the pandemic as homebound customers sought to spruce up their environments – and their zoom meetings.
“We are definitely beating our projections from years prior, and our customers are happy—we love that everybody’s putting that focus into shopping local,” Hilt said. “I don’t have a lot of product hung up on a ship anywhere.”
Still, she’s paying well above minimum wage and offering extra perks like free lunches to workers. And most of all, she’s hoping small changes will help make the customer experience better in the face of thin staffing.
“I feel like here’s some lemons and let’s make a whole bunch of lemonade,” Hilt said. “Having some people come in and do the stock before or after we’re closed, because if we do that when we’re open, that is detrimental to the experience for our customers who are in front of us, who did take the time to come out and want to do some fun shopping. They want us to be present for them, so we’re trying to just look a little more creatively.”
CNBC’s Betsy Spring contributed to this story. More

President Joe Biden met with Federal Reserve Chairman Jerome Powell and Governor Lael Brainard this week.
The Democrat-controlled Senate would likely confirm either as Fed chief, though Republican Powell could face resistance from progressives and Democrat Brainard would face opposition from the GOP.
Brainard is widely considered the top candidate for the open vice chair for supervision post if she is not tapped for chair.

Lael Brainard, governor of the U.S. Federal Reserve with Fed Governors, Jerome Powell and Stanley Fischer.
Andrew Harrer | Bloomberg | Getty Images

President Joe Biden met with Federal Reserve Chairman Jerome Powell and Governor Lael Brainard on this week as the administration decides whom to nominate to lead the central bank for the next four years, according to a person familiar with the matter.
Powell and Brainard, who met with Biden separately, are seen as the two most likely candidates to lead the globe’s most powerful central bank, which sets interest rates, works to control inflation and oversees the country’s largest banks.

The person told CNBC that the president has not made a final decision on who will lead the Fed. Washington and Wall Street expect a choice in the coming days.
The Democrat-controlled Senate would likely confirm either candidate as Fed chief. The Republican Powell could face resistance from progressives, and the Democrat Brainard would face opposition from the GOP.
At least a handful of moderate Democrats, and virtually every Senate Republican, would be expected to support Powell as an endorsement of his steady hand at the Fed.

CNBC Politics

Read more of CNBC’s politics coverage:

The central bank flooded the U.S. economy with cash in the spring of 2020 to combat the spike in unemployment and recession sparked by the Covid-19 outbreak in the U.S. Wall Street credits the big-ticket monetary policy for stabilizing financial markets and keeping interest rates low.
Brainard is widely considered the top candidate for the open vice chair for supervision post if she is not tapped as chair. In that role, Brainard would become one of the nation’s top banking regulators and a key deputy to the chair.

Some progressive Democrats support her candidacy, arguing that Powell hasn’t pushed the Fed hard enough on issues like the economic effects of climate change or income inequality.
One progressive, Sen. Elizabeth Warren of Massachusetts, said in September that to leave Powell as chair would be a mistake. She added that the Fed’s recent rollback of banking regulations makes the central bank chief a “dangerous man.”
Earlier this week, the Fed announced that it will begin to taper its regular asset purchases used to help stimulate the economy during the pandemic.
The central bank has been buying $120 billion in Treasury bonds and mortgage-backed securities since spring of 2020 in an effort to ensure markets have easy access to liquidity and keep interest rates repressed.
It hasn’t said when it will begin to raise interest rates, and isn’t expected to do so for at least several months.
— CNBC’s Kayla Tausche contributed reporting.

WATCH LIVEWATCH IN THE APP More

The strong October employment report, with 531,000 jobs added, signals that the economy is shaking off the impact of the Covid delta variant.
Hiring was broad based, with many sectors gaining sharply. It’s a positive sign for an economy struggling with supply chain issues and worker shortages.
Economists said if employment continues to make such solid gains, the Federal Reserve could speed up its timetable to end its bond-buying program.

Workers at Stellantis’ Detroit Assembly plant which produces the new 2021 Grand Cherokee L, a new three-row SUV.
Michael Wayland | CNBC

Broad-based strength in hiring in October signals the economy is shaking off the Covid-related slump of the third quarter and could grow faster than expected in the fourth quarter.
Employment increased by 531,000 in the month, with gains in many categories, including manufacturing, hospitality, professional and business services. The unemployment rate fell to 4.6%. Revisions to prior months’ data also added a total of 235,000 more payrolls in August and September.

“We’re reaccelerating as the delta wave abates and given the revisions, we’ve weathered the storm,” said Diane Swonk, chief economist at Grant Thornton. “It suppressed spending as people were afraid of the contagion during the delta wave, but it didn’t derail underlying employment, and now we’re picking up again.”
The economy slowed in the third quarter, as supply chain disruptions and Covid hampered activity. Gross domestic product grew by just 2%. Swonk had expected growth of 5% in the fourth quarter, but now she says it could be higher.

“It could be a little stronger with these numbers. There’s no question we’re going to end on a high note,” she said.
Economists had expected 450,000 jobs were created in October, up from September’s revised 312,000. There were some disappointments, including a decline in local and state government education jobs of nearly 65,000. Labor force participation also did not make expected gains and was unchanged at 61.6%.

But overall, economists saw the report as positive. “These numbers were great. The private sector is picking up the baton from the public sector,” said Swonk.

“The education losses really reflect the inability of schools to lure back staff workers and deal with the tsunami of retirements,” she added. “Public sector wages are just not going up at the pace of private sector. There’s no way they can compete. They really need to raise wages. These are low-paid jobs that are now competing with Amazon and Walmart.”
Michael Gapen, chief U.S. economist at Barclays, said the employment report shows the economy is back on track after the dip in third-quarter growth. “We’re not going to see what we saw in the first half of the year, but we’re not a 2% economy,” he said.
Wages continued to rise sharply, the latest sign that inflationary pressures are not abating. Gains in average hourly wages were again elevated, rising by 0.4% from the prior month, or 4.9% over the past 12 months.

While the wage component was hot and job growth strong, economists say the report does not change the dynamic yet for the Federal Reserve. However, a few more months of strong jobs growth could cause the central bank to reassess its timetable on winding down its bond program.
The Fed announced Wednesday that it would begin paring its bond purchases, ending the $120 billion monthly program by the middle of next year. Swonk expects the Fed will begin raising interest rates once it ends the program. She said the central bank could re-evaluate its timetable when it meets in December, if job growth remains strong.
Inflation is also a concern of the Fed. A worsening outlook for inflation could also lead policymakers to act faster to end the bond purchases, and begin battling high prices with higher interest rates, economists said.
Stephen Stanley, chief economist at Amherst Pierpont, notes the Fed could be forced to adjust its timing. “A few more reports like this one will bring the economy within hailing distance of full employment. This report is a significant step toward the [Federal Open Market Committee] needing to accelerate the pace of tapering early next year and ultimately having to raise rates earlier than policy makers currently anticipate,” he wrote, adding he expects the Fed to begin hiking interest rates in June.
Economists say the fact that job growth was broad-based was a positive for the economic reopening.
Professional and business services added 100,000 jobs, while manufacturing was also strong with a 60,000 gain. Transportation and warehousing workers increased by 54,400 and retail employment grew by 35,300. Construction jobs increased by 44,000.
Employment in leisure and hospitality increased by 164,000 and is now up 2.4 million in 2021. But the sector is still down 1.4 million jobs, or 8.2%, compared to February 2020.

WATCH LIVEWATCH IN THE APP More

Millions of employees remain on the job market’s sidelines and are only slowly trickling back — posing a serious challenge for the Federal Reserve as its policymakers try to assess how far the United States economy remains from their full employment goal.The labor force participation rate, a measure of how many people work or are actively looking for jobs, has been holding steady for months at 61.6 percent, down 1.7 percentage points from its February 2020 level.Participation of people in their prime working years is ticking up gradually, rising to 81.7 percent in October from 81.6 percent in September, but that too remains depressed compared with the rate before the pandemic. In February 2020, 82.9 percent of those 25 to 54 years old were in the labor force.Prime-age labor force participation improved slightly.Share of those ages 25 to 54 who are in the labor force (employed, unemployed but looking for work or on temporary layoff) More