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    New Inflation Developments Are Rattling Markets and Economists. Here’s Why.

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    Inflation is less about pandemic and war surprises and more about economic momentum. That could make the solution more painful.When inflation began to accelerate in 2021, price pressures were clearly tied to the pandemic: Companies couldn’t produce cars, couches and computer games fast enough to keep up with demand from homebound consumers amid supply chain disruptions.This year, Russia’s war in Ukraine sent fuel and food prices rocketing, exacerbating price pressures.But now, as those sources of inflation show early signs of fading, the question is how much overall price increases will abate. And the answer is likely to be driven in part by what happens in one crucial area: the labor market.Federal Reserve officials are laser-focused on job gains and wage growth as they quickly raise interest rates to constrain the economy and slow rapid price increases. Officials are convinced that they must sap the economy of some of its momentum to wrestle the worst inflation in four decades back down to their goal of 2 percent.The way they do that is by slowing spending, hiring and wage gains — and they do that by raising the costs of borrowing. So far, a pronounced cool-down is proving elusive, suggesting to economists and investors that the central bank may need to be even more aggressive in its efforts to temper growth and bring inflation back down.As data this week showed, prices continue to soar. And, while the job market has moderated somewhat, employers are still hiring at a solid clip and raising wages at the fastest pace in decades. That continued progress seems to be allowing consumers to keep spending, and it may give employers both the power and the motivation to increase their prices to cover their climbing labor costs.As inflationary forces chug along, economists said, the risk is rising that the Fed will clamp down on the economy so hard that America will be in for a rough landing — potentially one in which growth slumps and unemployment shoots higher.It is becoming more likely “that it won’t be possible to wring inflation out of this economy without a proper recession and higher unemployment,” said Krishna Guha, who heads the global policy and central bank strategy team at Evercore ISI and who has been forecasting that the Fed can cool inflation without causing an outright recession.Rising wages could become a more primary driver of higher prices.Hiroko Masuike/The New York TimesThe challenge for the Fed is that, more and more, price increases appear to be driven by long-lasting factors tied to the underlying economy, and less by one-off factors caused by the pandemic or the war in Ukraine.Consumer Price Index data from August released on Tuesday illustrated that point. Gas prices dropped sharply last month, which many economists expected would pull overall inflation down. They also thought that recent improvements in the supply chain would moderate price increases for goods. Used car costs, a major contributor to inflation last year, are now declining.Yet, in spite of those positive developments, quickly rising costs across a wide array of products and services helped to push prices higher on a monthly basis. Rent, furniture, meals at restaurants and visits to the dentist are all growing more expensive. Inflation climbed 8.3 percent on an annual basis, and picked up by 0.1 percent from the prior month.The data underscored that, even without extraordinary disruptions, so many products and services are now increasing in price that costs might continue ratcheting up. Core inflation, which strips out food and fuel costs to give a sense of underlying price trends, reaccelerated to 6.3 percent in August after easing to 5.9 percent in July.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Biden Maneuvers to Try to Avoid Devastating Rail Strike

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    The Biden administration is considering executive action to try to avoid a shutdown of the nation’s rail network that would harm the economy ahead of the midterm elections.WASHINGTON — President Biden, desperate to avert a damaging freight rail strike that could exacerbate rapid inflation, is pushing rail companies and unions to reach an agreement ahead of a Friday deadline, while exploring whether he can do anything unilaterally to assuage workers’ concerns.Mr. Biden and his economic team have been inserting themselves into final-hour negotiations between rail unions and large rail companies, which are at loggerheads over scheduling and sick time. Labor groups have insisted that employees be able to take unpaid time off for physician appointments, a request railroad companies have been unwilling to grant.On Wednesday, in anticipation of a strike, Amtrak said it would cancel all long-distance passenger trains beginning on Thursday in order to avoid possibly stranding people given that many of its trains run on tracks operated and maintained by freight carriers.Also on Wednesday, members of a small rail union, whose leaders had reached a tentative deal with freight companies, voted down the agreement, signaling more difficulty in negotiations to come. And Mr. Biden’s labor secretary gathered union and company leaders in Washington to try to resolve the impasse, with little progress.The looming strike has plunged Mr. Biden into a difficult position at a critical moment, with midterm elections that will determine whether Democrats retain control of Congress rapidly approaching and rampant inflation chipping away at the president’s support. Mr. Biden, a longtime champion of labor leaders and union employees, is caught between his long-running push to reduce the pandemic-era supply chain snarls that have helped fuel inflation and his efforts to continue to win the enthusiastic support of labor unions.As a result, Mr. Biden is attempting to walk a careful line, taking pains to tell both unions and companies that they have an obligation to the public to keep rail service moving. While he has pushed to elevate the power of organized labor throughout his time in office, he is wary of hurting American consumers and the economy, which could experience shortages and price spikes from even a brief strike.President Biden and his economic team have been inserting themselves into final-hour negotiations between the rail unions and large rail companies.Erin Schaff/The New York TimesOn Monday, Mr. Biden phoned leaders on both sides of the table to urge a deal, stressing the same message to both sides, according to people familiar with the discussions: A strike will hurt rail customers and a broad swath of people and businesses across the country, and a negotiated agreement is the best way to avoid one.Martin J. Walsh, the labor secretary, and White House officials hosted union and company leaders in Washington on Wednesday in an attempt to broker a deal before Friday, when a federally imposed “cooling off period” for negotiations expires. Workers could go on strike immediately, though they will not automatically do so.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    In New York City, Pandemic Job Losses Linger

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    Even as the country as a whole has recovered all of the jobs it lost during the pandemic, the city is still missing 176,000 — the slowest recovery of any major metropolitan area.The darkest days of the pandemic are far behind New York City. Masks are coming off, Times Square is packed with tourists and Midtown Manhattan lunch spots have growing lines of workers in business suits. Walking around the city, it often feels like 2019 again.But the bustling surface obscures a lingering wound from the pandemic. While the country as a whole has recently regained all of the jobs it lost early in the health crisis, New York City is still missing 176,000, representing the slowest recovery of any major metropolitan area, according to the latest employment data.New York relies more than other cities on international tourists, business travelers and commuters, whose halting return has weighed on the workers who cater to them — from bartenders and baggage handlers, to office cleaners and theater ushers. A majority of the lost private sector jobs have been concentrated in the hospitality and retail industries, traditional pipelines into the work force for younger adults, immigrants and residents without a college degree.By contrast, overall employment in industries that allow for remote work, such as the technology sector, is back at prepandemic levels.The lopsided recovery threatens to deepen inequality in a city where apartment rents are soaring, while the number of residents receiving temporary government assistance has jumped by almost a third since February 2020. As New York emerges from the pandemic, city leaders face the risk of an economic rebound that leaves thousands of blue-collar workers behind.“The real damage here is that many of the industries with the most accessible jobs are the ones that are still struggling to fully recover,” said Jonathan Bowles, the executive director of the Center for an Urban Future, a public policy think tank.New York City was hit particularly hard by the first wave of the virus, prompting business closures and employer vaccine mandates that were among the longest and strictest in the country. Part of the reason for New York’s lagging recovery is that it lost one million jobs in the first two months of the pandemic, the most of any city. More recently, New York City has regained jobs at a rapid clip. The technology sector actually added jobs in the first 18 months of the pandemic, a period when almost every other industry shrank.But job growth slowed this summer in sectors like hotels and restaurants compared with a year ago, while businesses in technology, health care and finance increased employment at a faster pace over the same period, according to an analysis by James Parrott, an economist at the Center for New York City Affairs at the New School.After being laid off from her restaurant job early in the pandemic, Desiree Obando, 35, chose not to return, enrolling instead in community college.Andrew Seng for The New York TimesIn July, the city’s unemployment rate was 6.1 percent, compared with 3.5 percent in the country overall that month.At the height of the pandemic, Ronald Nibbs, 47, was laid off as a cleaner at an office building in Midtown Manhattan, where he had worked for seven years. Mr. Nibbs, his girlfriend and his two children struggled on unemployment benefits and food stamps.He secured temporary positions, but the work was spotty with few people back in offices. He did not want to switch careers, hoping to win his old position back. He began to drink heavily to deal with the anxiety of unemployment.In May, his building finally called him back to work. “When I got that phone call, I wanted to cry,” Mr. Nibbs said.There are 1,250 fewer office cleaners in the city now than there were before the pandemic, according to Local 32BJ of the Service Employees International Union.Last month, New York officials cut their jobs growth forecast for 2022 to 4.3 percent, from 4.9 percent, saying the state was not expected to reach prepandemic levels of employment until 2026. Officials cited the persistence of remote work and the migration of city residents away from the state as a long-term risk to employment levels.The number of tourists visiting New York City this year is expected to rebound to 85 percent of the level in 2019, a year in which a record 66.6 million travelers arrived, according to forecasts from NYC & Company, the city’s official tourism agency.However, according to the agency, visitors to the city are spending less money overall because those who have historically stayed longer — business and international travelers — have not returned at the same rates. This has hurt department stores that depend on high-spending foreign visitors, as well as hotels that rely on business travelers to book conferences and banquets.Ilialy Santos, 47, returned to her job as a room attendant this month at the Paramount Hotel in Times Square, which is reopening for the first time since March 2020. The hotel had been a candidate to be converted into affordable housing, but the plan was opposed by a local union, the New York Hotel and Gaming Trades Council, in order to save jobs.Ms. Santos said she could not find any employment for two years, falling behind every month on her bills. The hotel union provided a $1,000 payment to her landlord to help cover her rent.“I’m excited to be going back to work, getting back to my normal life and becoming more stable,” Ms. Santos said.Despite the city’s elevated unemployment rate, many employers say they are still struggling to find workers, especially in roles that cannot be done remotely. The size of the work force has also dropped, declining by about 300,000 people since February 2020.The number of tourists visiting New York City in 2022 is expected to rebound to 85 percent of the level in 2019, a year in which a record 66.6 million travelers came to the city.Christopher Lee for The New York TimesSome blue-collar employees who lost their jobs early in the pandemic are now holding out for positions that would allow them to work from home.Jade Campbell, 34, has been out of work since March 2020, when the pandemic temporarily shuttered the Old Navy store where she had worked as a sales associate. When the store called her back in the fall, she was in the middle of a difficult pregnancy, with a first-grade son who was struggling to focus during online classes. She decided to stay home, applying for different types of government assistance.Ms. Campbell now lives on her own in Queens without child care support; her children are 1 and 8 years old. She has refused to get vaccinated against Covid-19, a prerequisite in New York City for many in-person jobs. Still, she said she felt optimistic about applying for remote customer service roles after she reached out to Goodwill NYNJ, a nonprofit, for help with her résumé.“I got two kids I know I have to support,” she said. “I can’t really depend on the government to help me out.”At Petri Plumbing & Heating in Bay Ridge, Brooklyn, several workers quit over the city’s policy that employees of private businesses be fully vaccinated. The restriction was the most stringent in the country when it was announced in December 2021 at the end of Mayor Bill de Blasio’s term.After Mayor Eric Adams signaled earlier this year that his administration would not enforce the mandate, Michael Petri, the company’s owner, offered to rehire three former workers. One returned, another had found another job and the third had moved to another state, he said.Thanks to a $50 hourly wage and monthly bonuses, current job openings at Petri Plumbing have attracted a flood of applicants. In a shift from before the pandemic, Mr. Petri said he now has to wade through more applicants with no plumbing experience.The strongest candidates often have too many driving infractions to be put on the company’s insurance policy, he said. But recently, Mr. Petri was so desperate to hire a mechanic with too many infractions that he recruited a young worker just to drive him.“This is without a doubt one of the more difficult times we have faced,” said Mr. Petri, whose family started the company in 1906.The disruptions have set the city’s youngest workers back the most. The unemployment rate for workers ages 16 to 24 is 20.7 percent.After graduating from high school in 2020, Simone Ward enrolled in community college but dropped out after a few months, feeling disengaged from online classes.Ms. Ward, 20, signed up for a cooking program with Queens Community House, a nonprofit organization, which allowed her to get a part-time job preparing steak sandwiches at Citi Field during baseball games. But the scheduling was inconsistent, and the job required a 90-minute commute on three subway lines from her home in Brooklyn’s Canarsie neighborhood.She applied for data entry jobs that would allow her to work remotely, but never heard back. She remembered interviewing for a job at an Olive Garden restaurant and recognizing in the moment that she was flailing, her social skills diminished by the isolation of lockdown.“The pandemic feels like it set my life back five steps,” she said. New York officials have cited the persistence of remote work and the migration of workers to other states as long-term risks to employment levels.Hiroko Masuike/The New York TimesFor Desiree Obando, 35, losing her job at a restaurant in Manhattan’s West Village early in the pandemic nudged her to leave the hospitality industry after 12 years. When the restaurant group she used to work for asked her to come back a few months later, she had already enrolled at LaGuardia Community College, returning to school after dropping out twice before, with the goal of becoming a high school counselor.She is now working a part-time job at an education nonprofit that pays $20 an hour, less than her hospitality job. But the work is close to her home in East Harlem, giving her the flexibility to pick up her daughter whenever the school has virus exposures.Ms. Obando is hopeful that she will eventually get an income boost after she completes her master’s degree.“There’s nothing like the pandemic to put things in perspective,” Ms. Obando said. “I made the right choice for me and my family. More

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    Inflation, Jobs, Manufacturing: How Is the US Economy Doing?

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    The U.S. economy is in a strange place right now. Job growth is slowing, but demand for workers is strong. Inflation is high (but not as high as last spring). Consumers are spending more in some areas, but cutting back in others. Job openings are high but falling, while layoffs are low and … well, […] More

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    Who Are America’s Missing Workers?

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    The labor market appears hot, but the share of people who are either working or actively looking for a job still hasn’t quite recovered.As the United States emerges from the pandemic, employers have been desperate to hire. But while demand for goods and services has rebounded, the supply of labor has fallen short, holding back the economy.More than two years after the Covid-19 recession officially ended, some sectors haven’t found the workers they need to operate at capacity. Only in August did the work force return to its prepandemic size, which is millions short of where it would have been had it continued to grow at its prepandemic rate.In simple numbers, some of that gap is due to Covid’s death toll: more than a million people, about 260,000 of them short of retirement age. In addition, a sharp slowdown in legal immigration has pared the potential work force by 3.2 million, relative to its trajectory before 2017, according to calculations by economists at J.P. Morgan.But the problem isn’t just that population growth has stalled. Even with an uptick in August, the share of Americans working or actively looking for work is 62.4 percent, compared with 63.4 percent in February 2020.“It’s my sense that the most important reason that the labor market feels so hot right now is that we have so many fewer people in it,” said Wendy Edelberg, director of the Hamilton Project, an economic policy center at the Brookings Institution. “Demand largely recovered, and we didn’t have the supply.”Unraveling the causes of that lingering reluctance is difficult, but it’s possible to identify a few major groups who are on the sidelines.People at retirement age, who had been staying in the work force longer as longevity increased before the pandemic, dropped out at disproportionate rates and haven’t returned. More puzzlingly, men in their prime working years, from 25 to 54, have retreated from the work force relative to February 2020, while women have bounced back. Magnifying those disparities are two crosscutting factors: the long-term health complications from Covid-19, and a lagging return for workers without college degrees.Older workers are lagging behind in returning to the work forcePercent change in labor force participation rate for each age group since before the pandemic More

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    From Boom to Gloom: Tech Recruiters Struggle to Find Work

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    Seemingly overnight, the tech industry flipped from aggressive growth, hiring sprees, lavish perks and boundless opportunity to layoffs, hiring freezes and doing more with less.Nora Hamada, a 35-year-old who works with recruiters who hire employees for tech companies, is trying to be optimistic. But the change upended her online business, Recruit Rise, which teaches people how to become recruiters and helps them find jobs.In June, after layoffs trickled through tech companies, Ms. Hamada stopped taking new customers and shifted her focus away from high-growth start-ups. “I had to do a 180,” she said. “It was an emotional roller coaster for sure.”Throughout the tech industry, professional hirers — the frontline soldiers in a decade-long war for tech talent — are reeling from a drastic change of fortune.For years during an extraordinary tech boom, recruiters were flush with work. As stock prices, valuations, salaries and growth soared, companies moved quickly to keep up with demand and beat competitors to the best talent. Amy Schultz, a recruiting lead at the design software start-up Canva, marveled on LinkedIn last year that there were more job postings for recruiters in tech — 364,970 — than for software engineers — 342,586.But this year, amid economic uncertainty, tech companies dialed back. Oracle, Tesla and Netflix laid off staff, as did Peloton, Shopify and Redfin. Meta, Google, Microsoft and Intel made plans to slow hiring or freeze it. Coinbase and Twitter rescinded job offers. And more than 580 start-ups laid off nearly 77,000 workers, according to Layoffs.fyi, a crowdsourced site that tracks layoffs.The pain was acute for recruiters. Robinhood, the stock trading app that was hiring so quickly last year that it acquired Binc, an 80-person recruiting firm, underwent two rounds of layoffs this year, cutting more than 1,000 employees.Now some recruiters are adapting from blindly filling open jobs, known as a “butts in seats” strategy, to having “more formative” conversations with companies about their values. Others are cutting their rates as much as 30 percent or taking consulting jobs, internships or part-time roles. At some companies, recruiters are being asked to make sales calls to fill their time.“Companies are being looked at pretty dramatically differently in the investor market or public market, and now they have to pretty quickly adapt,” said Nate Smith, chief executive of Lever, a provider of recruiting software.It is a confusing time for the job market. The unemployment rate remains low, and employees who outlasted the “Great Resignation” of the millions who quit their jobs during the pandemic became accustomed to demanding more flexibility around their schedules and remote working.Nora Hamada’s program for training recruiters, Recruit Rise, grew quickly after she started it last summer.Leah Nash for The New York TimesBut companies are using layoffs and the specter of a recession to assert more control. Mark Zuckerberg, chief executive of Meta, said he was fine with employees’ “self-selection” out of the company as he set a new, relentless pace of work. Some companies have asked employees to move to a headquarters city or leave, which observers say is an indirect way to trim head count without doing layoffs.Plenty of tech companies are still hiring. Many of them expect growth to bounce back, as it did for the tech industry a few months after the initial shock of the pandemic in 2020. But companies are also under pressure to turn a profit, and some are struggling to raise money. So even the best-performing firms are being more careful and taking longer to make offers. For now, recruiting is no longer a top priority.Recruiters know the industry is cyclical, said Bryce Rattner Keithley, founder of Great Team Partners, a talent advisory firm in the San Francisco Bay Area. There’s an expression about gumdrops — or “nice to have” hires — versus painkillers, who are employees that solve an acute problem, she said.“A lot of the gumdrops — that’s where you’re going to see impact,” she said. “You can’t buy as many toys or shiny things.”Ms. Hamada started Recruit Rise in July last year, when recruiting firms were so overbooked that companies had to call in favors for the privilege of their business. Her company aimed to help meet that demand by offering people — typically midcareer professionals — a nine-week training course in recruiting for technical roles.The program grew quickly, forging relationships with prominent venture capital firms and Y Combinator’s Continuity Fund, which helped funnel students from Ms. Hamada’s program into recruiting jobs at high-growth tech start-ups.In May, emails from companies wanting to hire her students started tapering off. The venture firms she worked with began publishing doom-and-gloom blog posts about cutbacks. Then the layoffs started.Ms. Hamada stopped offering new classes to focus on helping existing students find jobs. She scrambled to contact companies outside the tech industry that were hiring tech roles — like banks or retailers — as well as software development agencies and consulting groups.“It was a scary period,” she said.For Jordana Stein, the shift happened on May 19. Her start-up, Enrich, hosts recurring discussion groups for professionals. In recent years, the most popular one was focused on “winning the talent wars” by hiring quickly. Enrich’s virtual events typically filled up with a wait list. But that day, three people showed up, and they didn’t talk about hiring — they talked about layoffs.“All of a sudden, the needs changed,” Ms. Stein, 39, said. Enrich, based in San Francisco, created a new discussion group focused on employee morale during a downturn.Pitch, a software start-up based in Berlin, froze hiring for new roles in the spring. The company’s four recruiters suddenly had little to do, so Pitch directed them to take rotations on other teams, including sales and research.By keeping the recruiters on staff, Pitch will be ready to start growing quickly again if the market rebounds, said Nicholas Mills, the start-up’s president.“Recruiters have a lot of transferable skills,” he said.Lucille Lam, 38, has been a recruiter her entire career. But after her employer, the crypto security start-up Immunefi, slowed its recruiting efforts in the spring, she switched to work in human resources. Instead of managing job listings and sourcing recruits, she began setting up performance review systems and “accountability frameworks” for Immunefi’s employees.“My job morphed heavily,” she said.Ms. Lam said she appreciated the chance to learn new skills. “Now I understand how to do terminations,” she said. “In a market where nobody’s hiring, I’ll still have a valuable skill set.”Matt Turnbull, a co-founder of Turnbull Agency, said at least 15 recruiters had asked him for work in recent months because their networks had dried up. Some offered to charge 10 percent to 30 percent below their normal rates — something he had never seen since starting his agency, which operates from Los Angeles and France, seven years ago.“Many recruiters are desperate now,” he said.Those who are still working have it harder than before. Job candidates often get stuck in holding patterns with companies that have frozen budgets. Others see their offers suddenly rescinded, leading to difficult conversations.“I have to try to be as honest as possible without discouraging them,” Mr. Turnbull said. “That doesn’t make not being not wanted any easier.”At Recruit Rise, Ms. Hamada restarted classes to train recruiters in late August. Steering her students away from start-ups funded by venture capital has shown promise, even if some of them have started with internships or part-time work instead of a full-time gig.Ms. Hamada is hopeful about the new direction, but less so about the tech companies propped by venture capital funding. “They’re not looking that stable right now,” she said. More

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    Labor Board Proposes to Increase Legal Exposure for Franchised Chains

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    Federal labor regulators on Tuesday proposed a rule that would make more companies legally liable for labor law violations committed by their contractors or franchisees.Under the proposal, which governs when a company is considered a so-called joint employer, the National Labor Relations Board could hold a company like McDonald’s liable if one of its franchisees fired workers who tried to unionize, even if the parent company exercised only indirect control over the workers. Indirect control can include requiring the franchisee to use software that locks in certain scheduling practices and setting limits on what the workers can be paid.Under the current approach, adopted in 2020, when the board had a majority of Republican appointees, the parent company could be held liable for such labor law violations only if it exerted direct control over the franchisee’s employees — such as directly determining their schedules and pay.The joint-employer rule also determines whether the parent company must bargain with employees of a contractor or franchisee if those employees unionize.Employees and unions generally prefer to bargain with the parent company and to hold it accountable for labor law violations because the parent typically has more power than the contractor or franchisee to change workplace policies and make concessions.“In an economy where employment relationships are increasingly complex, the board must ensure that its legal rules for deciding which employers should engage in collective bargaining serve the goals of the National Labor Relations Act,” Lauren McFerran, the chairwoman of the board, which has a Democratic majority, said in a statement.The legal threshold for triggering a joint-employer relationship under labor law has changed frequently in recent years, depending on the political composition of the labor board. In 2015, a board led by Democrats changed the standard from “direct and immediate” control to indirect control.As a result of that shift, parent companies could also be considered joint employers of workers hired by a contractor or franchisee if the parent had the right to control certain working conditions — like firing or disciplining workers — even if it didn’t act on that right.Under President Donald J. Trump, the board moved to undo that change. The Republican-led board not only restored the standard of direct and immediate control, it also required that the control exercised by the parent be “substantial,” making it even more difficult to deem a parent company a joint employer.The franchise business model has faced rising pressure. On Monday, Gov. Gavin Newsom of California said he had signed a bill creating a council to regulate labor practices in the fast food industry. The council has the power to raise the minimum wage for the industry in California to $22 an hour next year, compared with a statewide minimum of $15.50, and to issue health and safety standards to protect workers.The fast food industry strongly opposed the measure, arguing that it would raise costs for employers and prices for consumers. More