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    Who Owns Stocks? Explaining the Rise in Inequality During the Pandemic

    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccine InformationTimelineWuhan, One Year LaterAdvertisementContinue reading the main storyUpshotSupported byContinue reading the main storyWho Owns Stocks? Explaining the Rise in Inequality During the PandemicBad economies usually hurt both workers and investors. Only the first part has been true this time.Jan. 26, 2021, 5:00 a.m. ETLast year featured a devastating public health crisis, an imploding job market, a heavy dose of political tumult and — surprisingly — a roaring stock market.Add it all up, and a major consequence was an expansion of inequality in a nation where economic disparity was already on the rise.It boils down to which groups were hurt most by the sinking parts of the economy and which ones benefited most from the rising share prices.In the brick-and-mortar part of the economy, lower-wage workers were disproportionately affected by the job losses. At the same time, Americans benefited from gains in share prices: both people who own individual stocks in brokerage accounts and those who own stocks in personal retirement accounts, like mutual fund IRAs, or in those offered by employers, such as 401(k)s.Yet that’s where even more disparity kicked in, an analysis of data from the Federal Reserve’s 2019 Survey of Consumer Finances shows. Although the distribution of income is unequal in the United States, ownership of financial assets in general and stocks in particular is even more so.
    [embedded content]The survey, conducted every three years, collects exhaustively detailed financial information from a sample of American “economic units” — we’ll call them families — including income, the types of assets they own and what those assets are worth.An analysis of this data shows that in 2019, the top 1 percent of Americans in wealth controlled about 38 percent of the value of financial accounts holding stocks. Widen the focus to include the top 10 percent, and you’ve found 84 percent of all of Wall Street portfolios’ value.Using the broadest definition of Wall Street involvement, which includes everything from workplace 401(k)s to mutual funds, just over half of American families have at least one financial account tied to the market, while just one in six report direct ownership of stock shares. Wealthier people are far more likely to have these accounts than middle-class families, who in turn are far more likely to be in the market than working-class or poor families.And the wealthy, not surprisingly, are more likely to have larger portfolios.A paper-napkin calculation that assumes all market participants averaged last year’s 16 percent gain in the S&P 500 would mean that American families fattened their portfolios by $4 trillion over all last year. But $3.4 trillion of that would have gone to just 10 percent of families, leaving the other 90 percent to split $600 billion.Beyond the gap in holdings between the very rich and the merely affluent, there is also a gap between the affluent and the middle class. Only half of households in the 40th-to-49th percentiles of net worth have any brokerage or retirement accounts that include stocks. But among households in the 80th-to-89th percentiles, 84 percent are invested in at least one holding.Wealth and the Role of Stock PricesWhen the market surged last year, wealthier families benefited more. Not only do they have larger portfolios than middle-class and poorer investors, but they also are far more likely to be invested in the market in the first place.Percent of families with investments by net worth percentile:
    [embedded content] Poorest group includes unsuccessful or highly leveraged investors with low net worth.Source: The New York TimesMoreover, the median portfolio size for households in that middle group was $13,000 in 2019, and so would have gained about $2,000 in last year’s market. The typical family in the wealthier group had $170,000 in the market and would have gained about $27,000 with a similar portfolio.These wealth differences are far starker than the inequality we usually talk about on the income ladder.The Coronavirus Outbreak More

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    Europe’s Bankruptcies Are Plummeting. That May Be a Problem.

    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccine InformationTimelineWuhan, One Year LaterRomain Rozier in his empty restaurant in Paris. “We’re at death’s door.” he said.Credit…Sabine Mirlesse for The New York TimesEurope’s Bankruptcies Are Plummeting. That May Be a Problem.Governments have extended national programs to keep troubled businesses afloat, but the aid may only be postponing a painful reckoning.Romain Rozier in his empty restaurant in Paris. “We’re at death’s door.” he said.Credit…Sabine Mirlesse for The New York TimesSupported byContinue reading the main storyJan. 25, 2021, 12:01 a.m. ETPARIS — Romain Rozier’s cafe should be bankrupt by now.Since the coronavirus hit last spring, sales at the once buzzing lunch spot in northern Paris are down 80 percent. The only customers on a recent day were a couple of UberEats couriers and a handful of people spaced far apart at the counter, ordering takeout.“We’re at death’s door,” Mr. Rozier said, tallying the 300 euros ($365) he had made from the lunch shift, well below the €1,200 he used to pull in. “The only reason we haven’t gone under is because of financial aid.”France and other European countries are spending enormous sums to keep businesses afloat during the worst recession since World War II. But some worry they’ve gone too far; bankruptcies are plunging to levels not seen in decades.While the aid has prevented a surge in unemployment, the largess risks turning swaths of the economy into a kind of twilight zone where firms are swamped with debt they cannot pay off but receiving just enough state aid to stay alive — so-called zombie companies. Unable to invest or innovate, these firms could contribute to what the World Bank recently described as a potential “lost decade” of stagnant economic growth caused by the pandemic.“We need to get off of all of these subsidies at some point — otherwise, we’ll have a zombie economy,” said Carl Bildt, co-chair of the European Council on Foreign Relations and a former prime minister of Sweden.Bankruptcies fell 40 percent last year in France and Britain, and were down 25 percent on average in the European Union. Without government intervention, including billions in state-backed loans and subsidized payrolls, European business failures would have almost doubled last year, according to a study by the National Bureau of Economic Research, a private American organization.At the Commercial Court of Paris, Judge Patrick Coupeaud, who has handled bankruptcy cases for nearly a decade, sees the difference. “I have about a third fewer people coming to me, because many troubled businesses are being helped by the state,” he said, gesturing to the court’s nearly empty colonnaded marble halls.Judges Dominique-Paul Vallée, left, and Patrick Coupeaud. “Failure is not a word that the French like to use,” Judge Vallée said.Credit…Sabine Mirlesse for The New York TimesBy contrast, Chapter 11 bankruptcy filings in the United States rose in the third quarter to the highest level since the 2010 financial crisis, a trend that is expected to continue in 2021, according to an index compiled by the U.S. law firm Polsinelli.President Biden has proposed a new $1.9 trillion rescue package to combat the economic downturn and the Covid-19 crisis, and last week, the government reported that 900,000 Americans had filed new unemployment claims.Those statistics are shaping a debate over whether Europe’s strategy of protecting businesses and workers “at all costs” will cement a recovery, or leave economies less competitive and more dependent on government aid when the pandemic recedes.“Parts of the misery have only been delayed,” said Bert Colijn, chief eurozone economist at the Dutch bank ING. He added that there would be “a catch-up in bankruptcies” and a spike in unemployment whenever support measures were withdrawn.Analysts say the government programs are already seeding the economy with thousands of inefficient businesses with low productivity, high debt and a high prospect of default once low interest rates normalize.An estimated 10 percent of companies in France were saved from bankruptcy because of government funds, according to Rexecode, a French economic think tank.Letting unviable businesses go under, while painful, will be essential for allowing competitive sectors to thrive, said Jeffrey Franks, the head of the International Monetary Fund’s mission for France.The Coronavirus Outbreak More

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    Uber, After Buying Postmates, Lays Off More Than 180 Employees

    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccine InformationTimelineWuhan, One Year LaterAdvertisementContinue reading the main storySupported byContinue reading the main storyUber, After Buying Postmates, Lays Off More Than 180 EmployeesThe layoffs include most of the executive team at Postmates, the food delivery app that Uber bought last year.Uber bought Postmates last year for $2.65 billion. Food delivery has been crucial to Uber as its ride-hailing business has been hurt in the pandemic.Credit…Justin Sullivan/Getty ImagesJan. 23, 2021, 7:42 p.m. ETSAN FRANCISCO — Uber on Thursday laid off roughly 185 people from its Postmates division, or about 15 percent of Postmates’ total work force, said three people with knowledge of the actions, as the ride-hailing giant consolidates its food delivery operations to weather the pandemic.The layoffs affected most of the executive team at Postmates, including Bastian Lehmann, the founder and chief executive of the popular food delivery app, said the people, who spoke on condition they not be named because they were not authorized to speak publicly. Uber bought Postmates last year for $2.65 billion.Some Postmates vice presidents and other executives will leave with multimillion dollar exit packages, the people said. Some employees may also see reduced compensation packages, the people said, while others will be asked to leave or serve out the end of their contract positions, which could lead to more exits in coming months.The cuts are part of a larger integration of Uber’s food delivery division, Uber Eats, with Postmates. While the Postmates brand and app will remain separate, much of the behind-the-scenes infrastructure will be melded with Uber Eats and supported by Uber Eats employees. Pierre Dimitri Gore-Coty, the global head of Uber Eats, will continue running the combined food delivery business, the people said.An Uber spokesman, Matt Kallman, confirmed the cuts. “We are so grateful for the contributions of every Postmates team member,” Mr. Kallman said. “While we are thrilled to officially welcome many of them to Uber, we are sorry to say goodbye to others. We are so excited to continue to build on top of the incredible work this remarkable team has already accomplished.”Food delivery has been crucial to Uber as its ride-hailing business has been severely weakened by the pandemic’s effects on travel. Dara Khosrowshahi, Uber’s chief executive, has pointed to food delivery as a bright spot; last year, Uber Eats’ revenue overtook the revenue from the ride-hailing business for the first time as people ordered more meals delivered to their homes.Uber, which loses money, laid off hundreds of employees in 2019 as it tried to get costs under control. The company currently has more than 21,000 full-time employees; its drivers are independent contractors.While Uber has been strong in food delivery, it has had to fend off deep-pocketed rivals that have sought to gain market share by subsidizing delivery costs with promotions and discounts.DoorDash, which went public in December, has rapidly expanded over the past few years and has acquired the smaller food delivery start-up Caviar. Other significant competitors include Just Eat Takeaway, which beat out Uber to acquire Grubhub last year for more than $7 billion, and Deliveroo, a delivery company that is popular in Europe.Uber has trimmed other businesses in hopes of becoming profitable by the end of this year. In December, it shed its autonomous vehicles division, Uber ATG, and jettisoned its flying car operation, Uber Elevate. Both efforts were costly.AdvertisementContinue reading the main story More

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    Biden Tells OSHA to Issue New Covid-19 Guidance to Employers

    #masthead-section-label, #masthead-bar-one { display: none }The Biden AdministrationliveLatest UpdatesBiden Takes OfficePandemic Response17 Executive Orders SignedAdvertisementContinue reading the main storySupported byContinue reading the main storyBiden Tells OSHA to Issue New Covid-19 Guidance to EmployersUnions, which largely support the new president, had complained that the Trump administration did little to protect workers from the coronavirus.Carolina Sanchez, left, whose husband died after contracting Covid-19 while working at a meatpacking plant, is comforted at a protest outside the Occupational Safety and Health Administration office in Denver last September.Credit…David Zalubowski/Associated PressJan. 21, 2021Updated 6:37 p.m. ETPresident Biden directed the Occupational Safety and Health Administration on Thursday to release new guidance to employers on protecting workers from Covid-19.In one of 10 executive orders that he signed Thursday, the president asked the agency to step up enforcement of existing rules to help stop the spread of the coronavirus in the workplace and to explore issuing a new rule requiring employers to take additional precautions.The other executive orders also relate to the pandemic, including orders directing federal agencies to issue guidance for the reopening of schools and to use their powers to accelerate the production of protective equipment and expand access to testing.Critics accused OSHA, which is part of the Labor Department, of weak oversight under former President Donald J. Trump, especially in the last year, when it relaxed record-keeping and reporting requirements related to Covid-19 cases.Under Mr. Trump, the agency also announced that it would mostly refrain from inspecting workplaces outside of a few high-risk industries like health care and emergency response. And critics complained that its appetite for fining employers was limited. Mr. Biden’s executive order urges the agency to target “the worst violators,” according to a White House fact sheet.Union officials and labor advocacy groups have long pleaded with the agency to issue a rule, known as an emergency temporary standard, laying out steps that employers must take to protect workers from the coronavirus. The agency declined to do so under Mr. Trump, but Mr. Biden supported the approach during the campaign.“We talked about a national standardized strategy for working men and women in this country to function under this cloud of the pandemic,” Rory Gamble, the president of the United Automobile Workers union, said after a meeting with Mr. Biden in mid-November. “He indicated he would do whatever it took.”OSHA’s oversight of the meatpacking industry under Mr. Trump attracted particular scrutiny from labor groups and scholars. A study published in the fall in the Proceedings of the National Academy of Sciences connected between 236,000 and 310,000 Covid-19 cases to livestock processing plants through late July, or between 6 percent and 8 percent of the national total at that point.That figure is roughly 50 times the 0.15 percent of the U.S. population that works in meatpacking plants, according to the study, suggesting that the industry played an outsized role in spreading the illness.The study found that a majority of the Covid-19 cases linked to meatpacking plants had likely originated in the plants and then spread through surrounding communities.The Biden AdministrationLive UpdatesUpdated Jan. 21, 2021, 7:22 p.m. ETFauci offers reassurances on vaccines, but warns that virus variants pose a risk.Biden is invoking the Defense Production Act. Here’s what that means.The No. 2 official at the F.B.I. is departing.Despite the problems identified by the study, the Trump administration did not include meatpacking plants in the category of workplaces that OSHA should regularly inspect. Only a small fraction of the roughly $4 million in coronavirus-related penalties that the agency proposed under Mr. Trump targeted the industry. Fines for any given plant were generally below $30,000.The Labor Department under Mr. Trump said it had assessed the maximum fines allowed under the law. But former OSHA officials have said that the agency can impose bigger fines by citing facilities for multiple violations, which could raise proposed penalties to over $100,000.Even when it did inspect meatpacking plants and propose fines, OSHA rarely required these employers to place workers six feet apart, the distance recommended by its own guidance.During a court case involving a plant in Pennsylvania whose workers complained last year that they were in imminent danger because of the risk of infection, OSHA wrote in a letter on Jan. 12 that it was OK with spacing at the plant, even though some workers were spaced less than six feet apart. Separately, union officials at two other plants where OSHA issued citations said workers continued to stand close to one another after the citations.Debbie Berkowitz, a senior OSHA official during the Obama administration who is now at the National Employment Law Project, a worker advocacy group, said she expected the Biden administration to issue a rule requiring meatpacking facilities to space workers six feet apart and mandating other safety measures, such as providing high-quality masks and improving ventilation and sanitation at their facilities.“OSHA had been sidelined under Trump,” said Ms. Berkowitz. “This is a signal they’re going to play a significant role in mitigating the spread of Covid-19,” she added, alluding to Mr. Biden’s executive order.The Biden administration is likely to revisit a wide variety of labor and employment issues from the Trump era, including a rule that would make it harder for employees of franchises and contractors to recover wages that were improperly withheld from them, and another rule that would likely classify Uber drivers and other gig workers as contractors rather than employees.On Wednesday, the new administration fired the general counsel of the National Labor Relations Board, a Senate-confirmed official who has wide latitude over which labor law violations the board pursues. The official, Peter B. Robb, was appointed by Mr. Trump and clashed frequently with unions.AdvertisementContinue reading the main story More

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    Is Inflation About to Take Off? That’s the Wrong Question

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    Is Inflation About to Rise? That's the Wrong Question

    @media (pointer: coarse) { .at-home-nav__outerContainer { overflow-x: scroll; -webkit-overflow-scrolling: touch; } } .at-home-nav__outerContainer { position: relative; display: flex; align-items: center; /* Fixes IE */ overflow-x: auto; box-shadow: -6px 0 white, 6px 0 white, 1px 3px 6px rgba(0, 0, 0, 0.15); padding: 10px 1.25em 10px; transition: all 250ms; margin-bottom: 20px; -ms-overflow-style: none; /* IE 10+ */ […] More

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    Biden Outlines $1.9 Trillion Spending Package to Combat Virus and Downturn

    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesA Future With CoronavirusVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyBiden Outlines $1.9 Trillion Spending Package to Combat Virus and DownturnThe president-elect detailed plans for an initial effort to fight the coronavirus and a subsequent one to address economic recovery.President-elect Joseph R. Biden Jr. on Thursday unveiled a $1.9 trillion spending package aimed at combating the health and economic crises of the coronavirus pandemic.Credit…Amr Alfiky/The New York TimesJim Tankersley and Published More