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    Fed President Backs Slowdown as Support Mounts for Smaller Rate Move

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    Susan M. Collins, president of the Federal Reserve Bank of Boston, said she was leaning toward a quarter-point move at the central bank’s Feb. 1 meeting.Susan M. Collins, the president of the Federal Reserve Bank of Boston, said she was leaning toward a quarter-point interest rate increase at the central bank’s next meeting — a slowdown that would signal a return to a normal pace of monetary policy adjustment after a year in which officials took rapid action to slow the economy and contain inflation.Fed policymakers raised interest rates to a range of 4.25 to 4.5 percent in 2022 from near zero, an aggressive path that included four consecutive three-quarter point adjustments. Officials slowed down with a half-point rate move in December, and a few of the Fed’s regional presidents have in recent days suggested that an even smaller adjustment could be possible when the Fed releases its next decision on Feb. 1.Ms. Collins added her voice to that chorus — but even more declaratively, making it clear that she would at this point support slowing to rate adjustments of 25 basis points, or a quarter point. Changing policy more gradually would give the central bank more time to see how its actions affect the economy and whether they were working to contain rapid inflation.“I think 25 or 50 would be reasonable; I’d lean at this stage to 25, but it’s very data-dependent,” Ms. Collins said in an interview with The New York Times on Wednesday. “Adjusting slowly gives more time to assess the incoming data before we make each decision, as we get close to where we’re going to hold. Smaller changes give us more flexibility.”Ms. Collins is one of the Fed’s 12 regional bank presidents and among its 19 policymakers. She does not have a formal vote on rate changes this year, but she will join in deliberations as the decision is made.Ms. Collins said she favored raising interest rates to just above 5 percent this year, potentially in three quarter-point moves in February, March and May.“If we’ve gone to slower, more judicious rate increases, it could take us three rate increases to get there — and then holding through the end of 2023, that still seems like a reasonable outlook to me,” she said.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    As Infrastructure Money Lands, the Job Dividends Begin

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    It has never exactly been boom times for the archaeology profession, but this past year comes close — thanks to Congress.Kim Redman runs Alpine Archaeological Consultants, a firm that searches for historically or culturally valuable artifacts in the path of construction — an essential step for federally assisted projects. For decades, she has hired temporary workers (affectionately known as “shovel bums”) to comb the ground.These days, she’s bringing on as many full-timers as she can, as billions of dollars in infrastructure appropriations make their way down through the states.“If you’re going to build a road, we’re at the beginning of the process,” Ms. Redman said. “The opportunities in archaeology are immense right now — everybody’s trying to hire so we can meet the demand.”Archaeologists are on the leading edge of a wave of jobs that will result from $1.2 trillion in direct government spending from the 2021 Infrastructure Investment and Jobs Act. Two subsequent initiatives — $370 billion in incentives and grants for lower-emissions energy projects provided by the Inflation Reduction Act, and $53 billion in subsidies for semiconductor manufacturing funded by the CHIPS Act — are expected to leverage tens of billions more in private capital.An archaeological crew excavating an Ancestral Pueblo pit house in southwestern Colorado in advance of a highway project.Rand Greubel/Alpine Archaeological ConsultantsThe primary purpose of the three laws isn’t to stimulate the economy; they are mainly intended to combat climate change, rebuild infrastructure and reduce dependence on foreign semiconductors. But they will affect the labor market, including a reallocation of workers across sectors.The funding comes as the economy is decelerating, and it may avert a sharper dip in employment brought on by the Federal Reserve’s attempts to contain inflation by raising interest rates. The construction industry, in particular, has been buffeted by a slowdown in new-home sales and stagnant demand for new offices.“By spring or summer, the job market will basically go flat,” said Mark Zandi, chief economist for Moody’s Analytics. “The infrastructure spending won’t kick in until late 2023, going into 2024. It feels like the handoff here could be reasonably graceful.”Nevertheless, the exact number of jobs produced by the three pieces of legislation is uncertain and may be difficult to notice in the aggregate.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.Noncompete Agreements: A sweeping proposal by the Federal Trade Commission would block companies from limiting their employees’ ability to work for a rival.Retirees: About 3.5 million people are missing from the U.S. labor force. A large number of them, roughly two million, have simply retired.Switching Jobs: A hallmark of the pandemic era has been the surge in employee turnover. The wave of job-switching may be taking a toll on productivity.Delivery Workers: Food app services are warning that a proposed wage increase for New York City workers could mean higher delivery costs.The only jobs that are possible to count precisely are those created directly by the federal government. The Office of Personnel Management, which set up a handy filter for jobs associated with the infrastructure law, aims to hire 7,000 people by the end of September.The Taiwan Semiconductor Manufacturing Company, one of the largest chip-makers in the world, is planning to expand and upgrade a factory in Arizona.Adriana Zehbrauskas for The New York TimesThe actual number, of course, is larger. Dr. Zandi’s analysis of the infrastructure law found that it would add nearly 360,000 jobs by the end of this year, and 660,000 jobs at its peak employment impact at the end of 2025. He does not expect the Inflation Reduction Act to affect employment significantly, given its lower public expenditure.A group at the University of Massachusetts Amherst disagreed, forecasting the Inflation Reduction Act’s impact at 900,000 additional people employed on average each year for a decade. Betony Jones, director of energy jobs at the Department of Energy, thinks the number could be even higher because the bill includes incentives for domestic sourcing of materials that may create more jobs along the supply chain than traditional economic models account for.“It will change those assumptions in significant ways,” Ms. Jones said.But a number of mitigating forces make that number less powerful than it appears.Some of the jobs already exist, for example, since much of the money will go to extend tax credits that would have expired. The estimate includes jobs that are supported by infrastructure workers’ wages, from hairdressers to plumbers.It’s also a gross number, not accounting for the employment that the Inflation Reduction Act could subtract through the taxes it imposes on corporations, or the fossil fuel jobs that might disappear as renewable energy capacity increases. And plenty of the new infrastructure jobs will be filled by people who might otherwise be working in other sectors, especially if they’re better paid.At the same time, inflation has made construction materials more expensive, decreasing the purchasing power of public agencies. For the first portion of money from the infrastructure law, which was allocated to states by a formula in the first half of 2022, that largely meant salvaging large projects already underway that might otherwise have been stymied by rising costs.For all of those reasons, said Alec Phillips, chief political economist for Goldman Sachs, the infusions of cash haven’t increased his payroll employment projections for the coming year.The archaeological crew at a prehistoric campsite in the Colorado Rockies. Archaeologists are on the leading edge of a wave of jobs that will be created from federal infrastructure spending.Rand Greubel/Alpine Archaeological Consultants“This is not happening in a vacuum,” Mr. Phillips said. “Once you go through all those factors, it’s one of those things that wouldn’t influence our employment forecast all that much.”Nonetheless, the industry-level impact will be significant. The nation will need more people working in construction and manufacturing in the next few years — even if they come from other professions or, ideally, the ranks of people who aren’t working.That has given organized labor a rare opportunity to expand. In a policy reversal, the infrastructure law allows federally funded transportation projects to require hiring from the local community, which can aid union organizing. The Biden administration also issued an executive order in early 2022 favoring collective bargaining agreements with unions.The infrastructure law includes $42.5 billion for expanding broadband access — part of about $100 billion provided across several measures — and the agency running the program expects work on the cables and cellphone towers to start in 2024. The Government Accountability Office estimated that 23,000 more people would be needed when deployment peaked. The Communications Workers of America, a union that represents about 130,000 telecommunications workers, said that members had often left for other occupations as industry conditions deteriorated and that many would come back for the right salary and benefits.“There’s a lot of people sitting on the sidelines,” said Nell Geiser, the union’s research director. “They are not willing to take what’s on offer.”It’s clear, however, that new workers will be needed to meet the demand.A piece of an adobe wall from an Ancestral Pueblo pit house that has the 1,200-year-old handprint of a builder.Kristin Braga Wright for The New York TimesA reconstructed pot, found during excavation of an Ancestral Pueblo hamlet in Colorado, being prepared for curation.Kristin Braga Wright for The New York TimesThat’s why unions are gearing up training programs and recruiting apprentices, or even “preapprentices,” some directly out of high school or prison — times when people sometimes struggle to find work.Mike Hellstrom, Eastern regional manager of the Laborers’ International Union of North America, said the union’s apprenticeship applications had been snapped up within minutes of release. His region — New York, New Jersey, Delaware and Puerto Rico — stands to get $45 billion just from the infrastructure law.“It’s going to be a really unique time of our lives of being construction workers and watching this building boom we’re about to come into,” Mr. Hellstrom said.Recognizing the need for new workers, the infrastructure law in particular allows state agencies enormous flexibility in using funds for work force development. So far, they’ve been slow to take advantage of it. One reason: You can train people, but if you’re not able to compensate them competitively because of limits set by the state legislature, they’ll go somewhere else.“I think the biggest challenge for state departments of transportation on the work force side are what wages they’re able to pay,” said Jim Tymon, executive director for the American Association of State Highway and Transportation Officials. “That really isn’t tied to the federal dollars as much as it is to the restrictions that each individual state has because of their government employee pay scales.”Partly for that reason, as has long been the case, much of the work will be awarded to construction firms, which have more flexibility to offer higher wages. Their capacity isn’t infinite, however. Already, the wave of impending business has prompted concerns that some projects may not attract enough bids to ensure competition.President Biden was in Kentucky this month to highlight funding for infrastructure projects, including building and rehabilitating bridges.Pete Marovich for The New York TimesThat may not be a problem for huge undertakings, like a $935 million award to rebuild two locks on the upper Ohio River, a project that the Army Corps of Engineers expects to directly support 8,900 jobs. But it can prove more difficult for smaller jurisdictions that may lack the staff to solicit bids.Emily Feenstra, chief policy and external affairs officer for the American Society of Civil Engineers, said more coordination would be needed to ensure that all the money that Congress allocated was spent.“On that smaller scale, it’s almost like matchmaking — finding the firm, finding the agency and seeing where the needs are,” she said.All of that is good news for people doing the work, like Roger Oberdier, 33, who was hired at Alpine Archaeological Consultants in October. He was happy to find a staff position after picking up jobs all over the country and is applying to Ph.D. programs to advance his career, in which he plans to specialize in zooarchaeology (which means a lot of digging up butchered animals).And the increasing demand for talent affects the whole field. Even friends who don’t want permanent jobs are doing pretty well, hopscotching the country looking for evidence of ancient human activity, Mr. Oberdier said. Job websites like archaeologyfieldwork.com are stacked with listings at pay rates significantly higher than they were in previous years.“Right now, the job market is in favor of the job seeker,” Mr. Oberdier said. “My friends who are committed shovel bums — who never want to sit in an office and write a report, they just want to travel the world and hike to new places and be the first person to see something in 10,000 years — they are taking the jobs they want right now.” More

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    Britain’s Economic Health Is Withering With Sick Workers on the Sidelines

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    Many people who want to work can’t because of long-term health problems, a persistent issue that is causing Britain’s economy to go “into reverse.”Christina Barratt was used to the 12- to 14-hour days. For years, she would get into her car each morning and set out to department stores and other retailers all over northwest England, selling greeting cards for a large manufacturer.“It’s a very demanding, busy job,” she said, recalling how she had to make sales, manage client accounts and grow the business, while often traveling long distances.In March 2020, at the age of 50, Ms. Barratt got Covid. She hasn’t been able to work since.Ms. Barratt is among 3.5 million people — or about one in 12 working-age adults in Britain — who have long-term health conditions and are not working or looking for work. The number ballooned during the first two years of the pandemic when more than half a million more people reported they were long-term sick, with physical and mental health conditions, according to analysis by economists at the Bank of England. The sharp rise in ill health is a startling problem itself, but there has also been a growing awareness in Britain about the negative effects on the economy of having so many people unable to work.Sickness is adding to the growing sense of malaise in a country troubled by high inflation and the economic costs of Brexit, where the National Health Service is overwhelmed and workers across industries are striking in ever larger numbers, coming after a year of severe political upheaval.With the unemployment rate near its lowest point in half a century, businesses have loudly complained that they have been unable to hire enough workers, leaving the government grappling with how to expand the labor market. Before the pandemic, a growing labor market had been “the single cylinder of growth in the economic engine,” Andy Haldane, the former chief economist of the Bank of England, said in November during a lecture at the Health Foundation, a nonprofit organization. It “has now gone into reverse gear.”Britain is in “a situation where for the first time, probably since the Industrial Revolution, where health and well-being are in retreat” and acting as a brake on economic growth, said Mr. Haldane, who currently serves as the chief executive of the Royal Society of Arts, an organization in London that seeks practical solutions to social issues.The economy is probably already in a recession, according to forecasts by the Bank of England and others, and is expected to return to only meager growth in 2024. Some economists have warned that shortages of workers could deepen the cost-of-living crisis if it causes employers to raise wages to attract workers in a way that threatens to entrench high inflation into the economy. That could prompt the central bank to keep interest rates high, pushing up borrowing costs and restraining the economy.At the heart of the problem is a high economic inactivity rate that has barely budged despite the end of pandemic lockdowns, a boom in labor demand and a high cost of living. As of October, over half a million more people were counted as inactive than before the pandemic, according to the Office for National Statistics. In a separate study looking at data for the first two years of the pandemic, Jonathan Haskel and Josh Martin, economists at the Bank of England, found that nearly 90 percent of the increase in economic inactivity could be attributed to people who were long-term sick.The extent to which sickness is forcing people to leave the work force is still being debated among researchers in Britain because the reasons for not working can change over time. But there is little disagreement that the economy is being held back by having so many people who say ill health has kept them from working.A sign outside a pub in Hampshire, Britain, that takes a creative tack in advertising for workers.Chine Nouvelle, via ShutterstockBusinesses have loudly complained that they have been unable to hire enough employees.Paul Ellis/Agence France-Presse — Getty ImagesContributing to the rise in sickness are not only tens of thousands of cases of long Covid, which Ms. Barratt is suffering from, but also a vast backlog of people — about seven million — with a variety of health problems who are on waiting lists for N.H.S. care. The latest numbers add to a longer-term trend. In the 25 years before the pandemic, the tally of people reporting long-term sickness grew about half a percent a year. Since then, it accelerated to 4 percent a year, according to the study by Mr. Haskel and Mr. Martin.Britain’s aging population means there are more sick people, but “the prevalence of poor health has been growing” as well, said David Finch of the Health Foundation, which has studied links between illness and economic inactivity. In the past few years, the foundation found, there has been a large increase in the number of people with cardiovascular problems, mental illness, and a range of other ailments, which would include respiratory conditions and long Covid symptoms.Britain is one of just seven countries in the Organization for Economic Cooperation and Development that still has a higher rate of economic inactivity than it did before the pandemic, the Office for National Statistics reported. The United States is also in this group, but its missing workers are mostly explained by retirement and a decline in participation by middle-aged men without college degrees, rather than sickness. The increase in the rate of economic inactivity in Britain is more than twice as large as the increase in the United States. These missing workers face a number of barriers in returning to work. For some, the severity of their health condition prevents them from working, while others are unable to return to the job they used to do. . Ms. Barratt, the greeting card saleswoman, has no illusions about going back to a similar job.“There’s no way I could do that kind of role any more,” Ms. Barratt said. “I’m just not well enough to sustain any kind of level of energy.” Just getting up and down the stairs at home is a challenge, she said.She is feeling the strain of living on government benefits for more than two years and would like to return to work. “If I continue to have this condition, which can go up and down in severity, I’d have to find some kind of employment that was very flexible,” she added.Although there has been a worrying increase in the number of economically inactive people — sick or not — who don’t want to work, there are still 1.7 million who do but are unable to look for a job and start work soon, according to the Office for National Statistics.Kirsty Stanley said the transition back to work for people with long Covid can be difficult. “They basically expect people to go from potentially zero to 100” within four to six weeks, she said.Nicholas White for The New York Times“This has been a long-term issue in keeping people with disabilities in the workplace,” said Kirsty Stanley, an occupational therapist. There are a lot of challenges, including some employers not understanding legal requirements to make reasonable accommodations for employees with health problems, Ms. Stanley said. She is an associate for Long Covid Work, a group that works with unions and employment groups to improve access to work for people with long Covid. Mr. Haskel and Mr. Martin estimate that there are 96,000 people who are economically inactive because of long Covid.Ms. Stanley, who also suffers from long Covid, said one problem was that the gradual period for returning to work that employers offer to people after a long absence doesn’t work well for those with long Covid.“They basically expect people to go from potentially zero to 100” within four to six weeks, she said. “What happens is people crash.”A little over two years ago, Michael Borlase did a four-week phased return to work after being sick with Covid. But at the end of the period, after getting back to an eight-hour shift, he got sick again and could not go back to work.He was a newly qualified nurse working in a psychiatric ward for men with mental health issues who have committed a crime. He was there for just eight months before he got Covid in April 2020.Michael Borlase used to be a nurse in a psychiatric ward. Now he’s not sure he could go back to that work. Nicholas White for The New York Times“I’d been so poor for so long as a student nurse,” he said. “I was thrilled to be working, work for the N.H.S. and felt very proud of the work I was doing. And then Covid hit.”“I was very early on in my career,” he added. “And now I don’t know if I can ever go back again.”At age 36, he said he felt “stuck in a professional limbo,” where he could not do the job he spent years training for but was too unwell to train for something else. Until September, Mr. Borlase received full pay because of a provision for N.H.S. workers with Covid. Since then, Mr. Borlase has been receiving reduced wages from sick pay, which will expire in April.Delays in getting health treatment have made it difficult for Andrea Slivkova, 43, to return to work. A Czech native who came to Britain 10 years ago, she left her job cleaning offices in mid-2021 because of pain from a prolapsed pelvic organ. It was more than a year before she could have the surgery to address the problem. Since then, she said, she is still unwell but has not been able to have a follow-up appointment with a specialist. Last summer, she was told it would be a five-month wait.“They told me that the waiting list is long because other people are waiting, too,” Ms. Slivkova said, with her daughter, Kristyna Dudyova, translating from Czech.Ms. Slivkova still hasn’t returned to work. She described the strain of having a physical health condition but also the struggle to navigate the health care system and the financial stress of relying on government benefits.Ms. Dudyova recalled how her mother used to be a workaholic, who found time to bake, go to the gym, work multiple jobs if necessary, all while raising her and her younger brother.“But now everything is just gone,” she said. More

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    Fed Officials Ask How to Better Understand Inflation After Surprises

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    Federal Reserve officials, including Lisa Cook, a board member, are wrestling with how to think about price increases after 18 months of rapid change.NEW ORLEANS — Federal Reserve officials kicked off 2023 by addressing a thorny question that is poised to bedevil the central bank throughout the year: How should central bankers understand inflation after 18 months of repeatedly misjudging it?Lisa D. Cook, one of the Fed’s seven Washington-based governors, used a speech at the American Economic Association’s annual gathering in New Orleans to talk about how officials could do a better job of predicting price increases in the future. Her voice was part of a growing chorus at the conference, where economists spent time soul-searching about why they misjudged inflation and how they could do a better job next time.Fed officials must “continue to advance our understanding of inflation” and “our ability to forecast risks,” Ms. Cook said during her remarks, suggesting that central bankers could update their models to better incorporate unexpected shocks and to better predict moments at which inflation might take off.Her comments underscored the challenge confronting monetary policymakers this year. Officials have rapidly raised rates to try to cool the economy and bring inflation back under control, and they must now determine not only when to stop those moves but also how long they should hold borrowing costs high enough to substantially restrict economic activity.Those judgments will be difficult to make. Although inflation is now slowing, it is hard to know how quickly and how fully it will fade. The Fed wants to avoid retreating too soon, but keeping rates too high for too long would come at a cost — harming the economy and labor market more than is necessary. Adding to the challenge: Policymakers are making those decisions at a moment when they still don’t know what the economy will look like after the pandemic and are using data that is being skewed by its lasting effects.“The pandemic has triggered a lot of changes in terms of how our economy operates,” Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, said during a panel on Friday. “We’re very much in flux, and it’s hard to know for sure how things are going to evolve on a week-to-week or month-to-month basis.”Understanding inflation is key to the thorny policy questions facing the Fed. But determining what causes and what perpetuates price increases is a complicated economic question, as recent experience has demonstrated.Officials have raised rates rapidly to try to slow the economy and bring inflation back under control.Jim Wilson/The New York TimesFed officials and economists more broadly have had a dismal track record of predicting inflation since the onset of the pandemic. In 2021, as prices first began to take off, officials predicted that they would be “transitory.” When they lasted longer than expected, both policymakers and many forecasters on Wall Street and in academia spent 2022 predicting that they would begin to fade faster than they actually did.Given those mistakes, policymakers have begun to suggest that the central bank needs to reassess how it looks at inflation.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    US Added 223,000 Jobs in December, a Slight Easing in Pace

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    The Federal Reserve’s moves to cool the economy with higher interest rates seem to be taking gentle hold. Wage growth lost momentum.The U.S. economy produced jobs at a slower but still comfortable rate at the end of 2022, as higher interest rates and changing consumer habits downshifted the labor market without bringing it to a halt.Employers added 223,000 jobs in December on a seasonally adjusted basis, the Labor Department reported on Friday, in line with economists’ expectations although the smallest gain since President Biden took office.The gradual cooling indicates that the economy may be coming back into balance after years of pandemic-era disruptions — so far with limited pain for workers. The unemployment rate ticked down to 3.5 percent, back to its level from early 2020, which matched a low last seen in 1969.“If the U.S. economy is slipping into recession, nobody told the labor market,” said Chris Varvares, co-head of U.S. economics for S&P Global Market Intelligence, noting that the December number is still nearly double the approximately 100,000 jobs needed to keep up with population growth.Monthly change in jobs More

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    U.S. Moves to Bar Noncompete Agreements in Labor Contracts

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    A sweeping proposal by the Federal Trade Commission would block companies from limiting their employees’ ability to work for a rival.In a far-reaching move that could raise wages and increase competition among businesses, the Federal Trade Commission on Thursday unveiled a rule that would block companies from limiting their employees’ ability to work for a rival.The proposed rule would ban provisions of labor contracts known as noncompete agreements, which prevent workers from leaving for a competitor or starting a competing business for months or years after their employment, often within a certain geographic area. The agreements have applied to workers as varied as sandwich makers, hairstylists, doctors and software engineers.Studies show that noncompetes, which appear to directly affect roughly 20 percent to 45 percent of U.S. workers in the private sector, hold down pay because job switching is one of the more reliable ways of securing a raise. Many economists believe they help explain why pay for middle-income workers has stagnated in recent decades.Other studies show that noncompetes protect established companies from start-ups, reducing competition within industries. The arrangements may also harm productivity by making it hard for companies to hire workers who best fit their needs.The F.T.C. proposal is the latest in a series of aggressive and sometimes unorthodox moves to rein in the power of large companies under the agency’s chair, Lina Khan.President Biden hailed the proposal on Thursday, saying that noncompete clauses “are designed simply to lower people’s wages.”“These agreements block millions of retail workers, construction workers and other working folks from taking a better job, getting better pay and benefits, in the same field,” he said at a cabinet meeting.The public will be allowed to submit comments on the proposal for 60 days, at which point the agency will move to make it final. An F.T.C. document said the rule would take effect 180 days after the final version was published, but experts said it could face legal challenges.The agency estimated that the rule could increase wages by nearly $300 billion a year across the economy. Evan Starr, an economist at the University of Maryland who has studied noncompetes, said that was a plausible wage increase after their elimination.Dr. Starr said noncompetes appeared to lower wages both for workers directly covered by them and for other workers, partly by making the hiring process more costly for employers, who must spend time figuring out whom they can hire and whom they can’t.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.Retirees: About 3.5 million people are missing from the U.S. labor force. A large number of them, roughly two million, have simply retired.Switching Jobs: A hallmark of the pandemic era has been the surge in employee turnover. The wave of job-switching may be taking a toll on productivity.Delivery Workers: Food app services are warning that a proposed wage increase for New York City workers could mean higher delivery costs.A Self-Fulfilling Prophecy?: Employees seeking wage increases to cover their costs of living amid rising prices could set off a cycle in which fast inflation today begets fast inflation tomorrow.He pointed to research showing that wages tended to be higher in states that restrict noncompetes. One study found that wages for newly hired tech workers in Hawaii increased by about 4 percent after the state banned noncompetes for those workers. In Oregon, where new noncompetes became unenforceable for low-wage workers in 2008, the change appeared to raise the wages of hourly workers by 2 percent to 3 percent.Although noncompetes appear to be more common among more highly paid and more educated workers, many companies have used them for low-wage hourly workers and even interns.About half of states significantly constrain the use of noncompetes, and a small number have deemed them largely unenforceable, including California.But even in such states, companies often include noncompetes in employment contracts, and many workers in these states report turning down job offers partly as a result of the provisions, suggesting that these state regulations may have limited effects. Many workers in those states are not necessarily aware that the provisions are unenforceable, experts say.“Research shows that employers’ use of noncompetes to restrict workers’ mobility significantly suppresses workers’ wages — even for those not subject to noncompetes, or subject to noncompetes that are unenforceable under state law,” Elizabeth Wilkins, the director of the F.T.C.’s office of policy planning, said in a statement.The commission’s proposal appears to address this issue by requiring employers to withdraw existing noncompetes and to inform workers that they no longer apply. The proposal would also make it illegal for an employer to enter into a noncompete with a worker or to try to do so, or to suggest that a worker is bound by a noncompete when he or she is not.The proposal covers not just employees but also independent contractors, interns, volunteers and other workers.Lina Khan, the F.T.C. chair, has tried to use the agency’s authority to limit the power and influence of corporate giants.Graeme Sloan, via Associated PressDefenders of noncompetes argue that employees are free to turn down a job if they want to preserve their ability to join another company, or that they can bargain for higher pay in return for accepting the restriction. Proponents also argue that noncompetes make employers more likely to invest in training and to share sensitive information with workers, which they might withhold if they feared that a worker might quickly leave.A ban “ignores the fact that, when appropriately used, noncompete agreements are an important tool in fostering innovation,” Sean Heather, a senior vice president at the U.S. Chamber of Commerce, said in a statement.At least one study has found that greater enforcement of noncompetes leads to an increase in job creation by start-ups, though some of its conclusions are at odds with other research.Dr. Starr said that noncompetes did appear to encourage businesses to invest more in training, but that there was little evidence that most employees entered into them voluntarily or that they were able to bargain over them. One study found that only 10 percent of workers sought to bargain for concessions in return for signing a noncompete. About one-third became aware of the noncompete only after accepting a job offer.Michael R. Strain, an economist at the American Enterprise Institute, said that while there were good reasons to scale back noncompetes for lower-wage workers, the rationale was less clear for better-paid workers with specialized knowledge or skills.“If your job is to make minor tweaks to the formula for Coca-Cola and you’re one of 25 people on earth who knows the formula,” Dr. Strain said, speaking hypothetically, “it makes total sense that Coca-Cola might say, ‘We don’t want you to go work for Pepsi.’”He said that it might be possible to satisfy an employer’s concerns with a less blunt tool, like a nondisclosure agreement, but that the evidence for this was lacking.In a video call with reporters on Wednesday, Ms. Khan said she believed the F.T.C. had clear authority to issue the rule, noting that federal law empowers the agency to prohibit “unfair methods of competition.”But Kristen Limarzi, a partner at Gibson, Dunn & Crutcher who previously served as a senior official in the antitrust division of the Justice Department, said she believed such a rule could be vulnerable to a legal challenge. Opponents would probably argue that the relevant federal statute is too vague to guide the agency in putting forth a rule banning noncompetes, she said, and that the evidence the agency has on their effects is still too limited to support a rule.At the helm of the F.T.C. since last year, Ms. Khan has tried to use the agency’s authority in untested ways to rein in the power and influence of corporate giants. In doing so, she and her allies hope to reverse a turn in recent decades toward more conservative antitrust law — a shift that they say enabled runaway concentration, limited options for consumers and squeezed small businesses.Ms. Khan has brought lawsuits in recent months to block Meta, Facebook’s parent company, from buying a virtual reality start-up and Microsoft from buying the video game publisher Activision Blizzard. Both cases employ less common legal arguments that are likely to face heavy scrutiny from courts. But Ms. Khan has indicated she is willing to lose cases if the agency ends up taking more risks.Ms. Khan and her counterpart at the Justice Department’s antitrust division, Jonathan Kanter, have also said they want to increase the focus of the nation’s antitrust agencies on empowering workers. Last year, the Justice Department successfully blocked Penguin Random House from buying Simon & Schuster using the argument that the deal would lower compensation for authors.One question looming over the discussion of noncompetes is what effect banning them may have on prices during a period of high inflation, given that limiting noncompetes tends to raise wages.But the experience of the past two years, when rates of quitting and job-hopping have been unusually high, suggests that noncompetes may not currently be as big an obstacle to worker mobility as they have traditionally been. Partly as a result, banning them may not have much of a short-term effect on wages.Instead, some economists say, the more pronounced effect of a ban may come in the intermediate and long term, once the job market softens and workers no longer have as much leverage. At that point, noncompetes could begin to weigh more heavily on job switching and wages again.“Doing something like this is a way to help sustain the increase in worker power over the last couple of years,” said Heidi Shierholz, president of the liberal Economic Policy Institute, who was chief economist at the Labor Department during the Obama administration.David McCabe More

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    Labor Market Strength Persisted Heading Into the Holidays

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    Government data from November showed job openings remained high, with rates of quitting and layoffs holding steady.The labor market remained a key source of strength for households and the overall economy ahead of the holiday season, even as hiring struggles remained a headache for employers, the latest government data indicates.The Bureau of Labor Statistics reported Wednesday that there were 10.5 million U.S. job openings on the last day of November, a figure little changed from the month before. The number of workers voluntarily quitting their jobs ticked up slightly, and layoffs were comparable to the previous month.According to the bureau’s Job Openings and Labor Turnover Survey, or JOLTS, there were 1.7 open jobs for every unemployed worker near the end of 2022. Some experts caution that the vacancy rate should be taken with a grain of salt, since many employers may no longer be urgently recruiting, yet don’t see the harm in leaving a job listing posted online in case the right candidate comes along.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.Retirees: About 3.5 million people are missing from the U.S. labor force. A large number of them, roughly two million, have simply retired.Switching Jobs: A hallmark of the pandemic era has been the surge in employee turnover. The wave of job-switching may be taking a toll on productivity.Delivery Workers: Food app services are warning that a proposed wage increase for New York City workers could mean higher delivery costs.A Self-Fulfilling Prophecy?: Employees seeking wage increases to cover their costs of living amid rising prices could set off a cycle in which fast inflation today begets fast inflation tomorrow.The JOLTS release is what economists call a lagging indicator, telling more about recent conditions in the business cycle rather than about what might come next. Most economists expect layoffs to increase and the economy to slouch, with fewer job postings. But the persistence of vacancies in November underlines commentary from small businesses leaders and Fortune 500 chief executives alike, lamenting a dearth of talent to fill openings.“The people shortage is systemic, and it’s fundamentally changing how businesses should prepare for economic slowdowns,” argued Ron Hetrick, a senior economist at Lightcast, a labor market analytics firm. “If the U.S. does see some sort of recession in 2023, it will be less about persistent worker displacement and more about employers finally being able to fill the roles they’ve had open for the past several years.”Baby boomers are retiring. And with political gridlock set to pick up in Washington, some federal legislative proposals intended to expand the labor pool — like immigration reform or an expansion of child care support — are unlikely to become law anytime soon.As inflation from sources like supply chain snags has cooled, policymakers and influential economic commentators have dedicated a larger share of their discussions to concerns about a labor market that in their view is “overheated,” or too strong for the overall good.In his most recent news conference, Jerome H. Powell, the chair of the Federal Reserve, emphasized that the central bank was focused on bringing all dimensions of the economy, including the job market, into “better alignment” in an effort to slow price increases.“We do see a very, very strong labor market, one where we haven’t seen much softening, where job growth is very high, where wages are very high, vacancies are quite elevated and, really, there’s an imbalance in the labor market between supply and demand,” he said. “So that part of it, which is the biggest part, is likely to take a substantial period to get down.”For roughly two years, millions of workers gained an unfamiliar degree of leverage as their talent became more valued or scarce, and they began quitting or bargaining for higher wages in greater numbers. That trend has been a lingering source of anxiety for a variety of business owners, who have had to contend with inflation, much like their customers, while balancing higher labor costs with their profit goals.In November, the rate of workers voluntarily quitting jumped notably for establishments with fewer than 10 employees, potentially further evidence of how small-scale entrepreneurs are struggling to compete with bigger businesses to attract talent. More

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    Japan’s Business Owners Can’t Find Successors. This Man Is Giving His Away.

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    Hidekazu Yokoyama has spent three decades building a thriving logistics business on Japan’s snowy northern island of Hokkaido, an area that provides much of the country’s milk.Last year, he decided to give it all away.It was a radical solution for a problem that has become increasingly common in Japan, the world’s grayest society. As the country’s birthrate has plummeted and its population has grown older, the average age of business owners has risen to around 62. Nearly 60 percent of the country’s businesses report that they have no plan for what comes next.While Mr. Yokoyama, 73, felt too old to carry on much longer, quitting wasn’t an option: Too many farmers had come to depend on his company. “I definitely couldn’t abandon the business,” he said. But his children weren’t interested in running it. Neither were his employees. And few potential owners wanted to move to the remote, frozen north.So he placed a notice with a service that helps small-business owners in far-flung locales find someone to take over. The advertised sale price: zero yen.Mr. Yokoyama’s struggle symbolizes one of the most potentially devastating economic impacts of Japan’s aging society. It is inevitable that many small- and medium-size companies will go out of business as the population shrinks, but policymakers fear that the country could be hit by a surge in closures as aging owners retire en masse.In an apocalyptic 2019 presentation, Japan’s trade ministry projected that by 2025, around 630,000 profitable businesses could close up shop, costing the economy $165 billion and as many as 6.5 million jobs.Economic growth is already anemic, and the Japanese authorities have sprung into action in hopes of averting a catastrophe. Government offices have embarked on public relations campaigns to educate aging owners about options for continuing their businesses beyond their retirements and have set up service centers to help them find buyers. To sweeten the pot, the authorities have introduced large subsidies and tax breaks for new owners.Still, the challenges remain formidable. One of the biggest obstacles to finding a successor has been tradition, said Tsuneo Watanabe, a director of Nihon M&A Center, a company that specializes in finding buyers for valuable small- and medium-size enterprises. The company, founded in 1991, has become enormously lucrative, recording $359 million in revenue last year.Mr. Yokoyama plans to give away his land and equipment to a successor he has chosen.Noriko Hayashi for The New York TimesOne of Mr. Yokoyama’s workers.Noriko Hayashi for The New York TimesBut building that business has been a long process. In years past, small-business owners, particularly those who ran the country’s many decades- or even centuries-old companies, assumed that their children or a trusted employee would take over. They had no interest in selling their life’s work to a stranger, much less a competitor.More on Social Security and RetirementEarning Income After Retiring: Collecting Social Security while working can get complicated. Here are some key things to remember.An Uptick in Elder Poverty: Older Americans didn’t fare as well through the pandemic. But longer-term trends aren’t moving in their favor, either.Medicare Costs: Low-income Americans on Medicare can get assistance paying their premiums and other expenses. This is how to apply.Claiming Social Security: Looking to make the most of this benefit? These online tools can help you figure out your income needs and when to file.Mergers and acquisitions “weren’t well regarded. A lot of people felt that it was better to shut the company down than sell it,” Mr. Watanabe said. Perceptions of the industry have improved over the years, but there are “still many businesspeople who aren’t even aware that M&A is an option,” he added.While the market has found buyers for the businesses most ripe for the picking, it can seem nearly impossible for many small but economically vital companies to find someone to take over.In 2021, government help centers and the top five merger-and-acquisitions services found buyers for only 2,413 businesses, according to Japan’s trade ministry. Another 44,000 were abandoned. Over 55 percent of those were still profitable when they closed.Many of those businesses were in small towns and cities, where the succession problem is a potentially existential threat. The collapse of a business, whether a major local employer or a village’s only grocery store, can make it even harder for those places to survive the constant attrition of aging populations and urban flight that is hollowing out the countryside.After a government-run matching program failed to find someone to take over for Mr. Yokoyama, a bank suggested that he turn to Relay, a company based in Kyushu, Japan’s southernmost main island.Hay stored in a warehouse on the Yokoyama land.Noriko Hayashi for The New York TimesAn abandoned cowshed.Noriko Hayashi for The New York TimesRelay has differentiated itself by appealing to potential buyers’ sense of community and purpose. Its listings, featuring beaming proprietors in front of sushi shops and bucolic fields, are engineered to appeal to harried urbanites dreaming of a different lifestyle.The company’s task in Mr. Yokoyama’s case wasn’t easy. For most Japanese, the town where his business is situated, Monbetsu, which has around 20,000 people and is shrinking, might as well be the North Pole. The only industries are fishing and farming, and they largely go into hibernation as the days grow short and snow piles up to roof eaves. In deep winter, some tourists come to eat salmon roe and scallops and see the ice floes that lock in the city’s modest port.A street full of 1980s-era cabarets and restaurants is a snapshot of a more prosperous time when young fishermen gathered to let off steam and spend big paychecks. Today, faded posters peel off abandoned storefronts. The town’s biggest building is a new hospital.In 2001, Monbetsu constructed a new elementary school building just around the corner from Mr. Yokoyama’s company. It closed after just 10 years.In times past, the classrooms would have been filled with the grandchildren of local dairy farmers. But their own children have now mostly moved to cities in search of higher-paying, less onerous work.With no obvious successors, the farms have folded one after another. Decades-high inflation brought on by the pandemic and Russia’s war in Ukraine has pushed dozens of holdouts into early retirement.Mr. Yokoyama’s employees are skeptical about his succession plan.Noriko Hayashi for The New York TimesThe workers are mostly in their 50s and 60s.Noriko Hayashi for The New York TimesAs local farmers have aged and their profits thinned, more of them have come to depend on Mr. Yokoyama for tasks like harvesting hay and clearing snow. His days start at 4 a.m. and end at 7 in the evening. He sleeps in a small room behind his office.It would be “extremely difficult” if his business folded, said Isao Ikeno, the manager of a nearby dairy cooperative that has turned heavily to automation as workers have become harder to find.On the cooperative’s farm, 17 employees tend to 3,000 head of cattle, and Mr. Yokoyama’s company fills in the gaps. No other area businesses can provide the services, Mr. Ikeno said.Mr. Yokoyama began contemplating retirement about six years ago. But it wasn’t clear what would happen to the business.While he had taken on a little over half a million dollars in debt, years of generous economic stimulus policies have kept interest rates at rock bottom, easing the burden, and the company’s annual profit margin was around 30 percent.The ad he placed on Relay acknowledged that the job was hard, but it said that no experience was needed. The best candidate would be “young and ready to work.”Whoever was chosen would take over the debts, but also inherit all of the business’s equipment and nearly 150 acres of prime farmland and forest. Mr. Yokoyama’s children will get nothing.“I told them that if you want to take it over, I’d leave it to you, but if you don’t want to do it, I’m giving it all to the next guy,” he said.Thirty inquiries poured in. Among those who expressed interest were a couple and a representative of a company that planned to expand. Mr. Yokoyama settled on a dark horse, 26-year-old Kai Fujisawa.A friend had showed Mr. Fujisawa the ad on Relay, and Mr. Fujisawa immediately jumped in a car and showed up on Mr. Yokoyama’s doorstep, impressing him with his youth and enthusiasm.Kai Fujisawa, Mr. Yokoyama’s potential successor.Noriko Hayashi for The New York TimesStill, the transition hasn’t been smooth. Mr. Yokoyama is not entirely convinced that Mr. Fujisawa is the right person for the job. The learning curve is steeper than either of them had imagined, and Mr. Yokoyama’s grizzled, chain-smoking employees are skeptical that Mr. Fujisawa will be able to live up to the boss’s reputation.Most of the company’s 17 employees are in their 50s and 60s, and it’s not clear where Mr. Fujisawa will find people to replace them as they retire.“There’s a lot of pressure,” Mr. Fujisawa said. But “when I came here, I was prepared to do this for the rest of my life.” More