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    Why Is the Fed Raising Interest Rates?

    Prices for groceries, couches and rent are all climbing rapidly, and Federal Reserve officials have been warily eyeing that trend. On Wednesday, they are expected to take their biggest step yet toward counteracting it.Central bank officials — who have been signaling for months that they are preparing to pull back economic support — are expected to raise their policy interest rate by a quarter percentage point. That small change will carry with it a major signal. Policymakers are telling markets and the public that they have fully pivoted to inflation-fighting mode and will do what is necessary to make sure price gains do not remain hot for months and years to come.The Fed will release its decision at 2 p.m., and Jerome H. Powell, the central bank’s chair, will hold a news conference at 2:30 p.m.The Fed is acting at a tense moment for many consumers, when people are worrying about rising day-to-day expenses and trying to think through what higher interest rates could mean for their finances. Here’s a rundown of what is happening, why it is happening and what it is likely to mean for markets and the economy.The Fed is taking its foot off the accelerator. More

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    NLRB Issues a Complaint Against Starbucks

    The National Labor Relations Board issued a complaint against Starbucks on Tuesday over accusations that it retaliated against two employees seeking to unionize their store in Phoenix.The workers are part of a campaign that has created unions at six stores in the Buffalo area and Arizona since December, out of roughly 9,000 company-owned stores nationwide. Overall, workers at more than 100 Starbucks locations have filed for union elections during that time.The formal complaint — something a regional office of the labor board issues after investigating and finding merit in accusations against employers or unions — is the first of the current Starbucks campaign. It contends that Starbucks issued a written warning to one employee and suspended her, and rejected the scheduling preferences of a second employee, leading to her termination, because the employees supported the union.In addition, the complaint states that the first employee, Laila Dalton, was suspended and disciplined for raising concerns about wages, hours and insufficient staffing on behalf of co-workers, and that the retaliation was intended to discourage other employees from raising similar concerns, even though it is their legal right to do so.If the regional office is successful in prosecuting the case through an administrative law judge, Starbucks will have to advise employees of their rights to engage in protected activities like complaining about wages and staffing. The company would also have to make the second employee, Alyssa Sanchez, whole for the losses she suffered as a result of her effective termination. The agency could seek other remedies as well. The company could appeal the decision to the full N.L.R.B. in Washington.“Today is the first step in holding Starbucks accountable for its unacceptable behavior during the unionizing efforts in our store and stores around the country,” Bill Whitmire, a barista at the store who is involved in the union campaign, said in a statement. “Laila and Alyssa were traumatized, and their hope is that no other partner EVER has to go through what they have gone through.”Reggie Borges, a company spokesman, reiterated previous denials of accusations of anti-union activity.The union representing Starbucks employees, Workers United, an affiliate of the Service Employees International Union, has brought similar charges on behalf of other workers around the country, including roughly 20 two weeks ago. More

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    Starbucks Workers at 3 More Buffalo-Area Stores Vote to Unionize

    Employees at three more Buffalo-area Starbucks have voted to unionize, bringing the total number of company-owned stores with a union to six, out of roughly 9,000 nationwide.The results, announced Wednesday by the National Labor Relations Board, were the latest development in one of the most formidable challenges to a major corporation by organized labor in years. Workers at two Buffalo-area stores voted to unionize in December, while a third store voted to unionize in Mesa, Ariz., last month, dealing a blow to the union-free model that prevailed at the coffee-retailing giant for decades.Since the December votes, workers at more than 100 Starbucks stores in more than 25 states have filed for union elections, in which they are seeking to join Workers United, an affiliate of the Service Employees International Union.Workers in cities including Seattle, Boston, Rochester, N.Y., and Knoxville, Tenn., have begun voting or will do so this month.“These workers fought so hard for their union,” Gary Bonadonna Jr., the leader of Workers United in upstate New York, said in a statement. “We had their backs during this campaign and we’ll continue to have their backs at the bargaining table.”Reggie Borges, a Starbucks spokesman, said in a statement: “We will respect the process and will bargain in good faith guided by our principles. We hope that the union does the same.”The vote counts — 8 to 7, 15 to 12, and 15 to 12 — came as tension between the union and the company has been escalating.The union contends that Starbucks has been systematically cutting hours across the country to prompt the departure of longtime employees so it can replace them with workers who are unsympathetic to unionizing. It also has said Starbucks recently retaliated against pro-union employees in Buffalo by pressuring them to leave the company because they had limited their work availability, and by firing one over time and attendance infractions.In early February, the company fired seven Memphis employees who had sought to unionize, citing safety and security policies.“Starbucks is also using policies that have not previously been enforced, and policies that would not have resulted in termination, as a pretext for firing union leaders,” the union said in a statement, adding that it was confident that the fired workers would be reinstated.Last week, the union filed about 20 unfair labor practice charges, many of which accused Starbucks of singling out union supporters for harsher treatment.Mr. Borges said in an email that “any claims of anti-union activity are categorically false.” He said the company was not systematically cutting hours, which typically fall in the slow winter months of January and February. Starbucks generally tries to honor workers’ preferences for lower availability, he added, but it was unable to at a Buffalo store where several employees had sought to cut their availability at once. He said a worker fired because of time and attendance issues had previously been cited for instances of tardiness.Amy Zdravecky, a management-side lawyer at Barnes & Thornburg, said it was hard to imagine the union losing momentum at this point except as a result of developments at the bargaining table — for example, if the union negotiated a contract that workers considered disappointing.“Until employees see what, if anything, they’re going to get or not get in negotiations, the union has the advantage — they can go out and tell employees that we’ll do all these things for you,” Ms. Zdravecky said.Starbucks workers in Buffalo filed in an initial round of petitions to hold union elections in late August, citing concerns like understaffing and workplace safety amid the pandemic, as well as a desire to have a greater say in how their stores are run.The company soon dispatched out-of-town managers and officials to the city, including Starbucks’s president of retail for North America, whose presence union supporters have said they found intimidating and at times surreal.Starbucks has said the officials were trying to resolve operational issues like poor training and inefficient store layouts. Some emphasized the potential downsides of unionizing in meetings and discussions with workers.The company also substantially increased the number of workers in at least one of the first three stores voting, a move that the company said was to help with understaffing but that the union said was intended to dilute its support. The union later successfully challenged the ballots of some of these workers on the grounds that they weren’t actually based at the store, helping to secure its victory there.Workers at one of the locations where the union won on Wednesday, known as Walden & Anderson, said the company’s approach to their store was even more disruptive than its actions in the Buffalo-area stores that voted in the fall.Starbucks closed the Walden & Anderson store for roughly two months beginning in early September and turned it into a training facility, sending workers to other locations during that time.Colin Cochran was among the pro-union workers at the Starbucks store that was turned into a training facility.Libby March for The New York TimesLeaders of the union campaign at the store said this made it harder for them to communicate with co-workers and maintain support for the union, which had initially been high. “We just didn’t see people for the entire two months we were closed,” said one of the workers seeking to unionize, Colin Cochran. Union supporters did not have access to many of their colleagues’ phone numbers during this time.The store also added workers — from roughly 25 in early September to roughly 40 once the voting began in January. “It felt like every time we got someone on board, two new people would be hired,” Mr. Cochran said of the period after the store reopened in November. “It was like a hydra.” Mr. Cochran and a second worker, Jenna Black, said that the store held workers’ hours fairly steady in the fall and most of the winter, even as the company hired more workers, but that many employees had their hours reduced as the voting came to an end in late February and that some were now considering leaving as a result.“I was holding at 25 hours and then for the past couple of weeks I’ve been down to 16, 18 hours,” Ms. Black said. She added that while she loved her co-workers, “there is no reason to keep devoting my time and making this job a priority when I can’t live off it.”Mr. Cochran said the pattern created the impression that the store wanted the additional workers only in the run-up to the vote, to dilute union support.The union said that workers in several states, including Oregon, Virginia, Ohio, New York, Texas and Colorado, had also reported having their hours cut more than usual for the winter.Michaela Sellaro, a shift supervisor at a Denver store that is seeking to unionize, said she had been scheduled for an average of about 31 hours for the past four weeks after working an average of about 36 hours over the same weeks last year. “It feels like they are threatening our job security,” Ms. Sellaro said.Mr. Borges said that hours had been higher than normal in the fall at Walden & Anderson to provide additional training, but that hours there now reflected customer demand and that the same was true nationally. He cited the Omicron variant of the coronavirus as an additional factor in scheduling nationwide.“We always schedule to what we believe the store needs based on customer behaviors,” he said. “That may mean a change in the hours available, but to say we are cutting hours wouldn’t be accurate.” More

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    U.S. Employers Still Scrambling to Fill Vacancies, Report Shows

    Job openings in the United States and the number of workers quitting their jobs remained near record highs in January, an indicator of demand for labor and of worker leverage.The data, released by the Labor Department on Wednesday as part of its monthly Job Openings and Labor Turnover Survey, or JOLTS report, was another sign of an economy that wobbled slightly yet remained sturdy when faced with the Omicron wave of the coronavirus this winter.Job openings dipped to 11.3 million, down slightly from a record in December, but were still up about 61 percent from February 2020.In a potential sign of the impact wrought by the variant’s spread, several industries that had been rebounding from the pandemic, and had been most hungry for workers, reported fewer job openings. Accommodation and food services experienced a drop of 288,000. Transportation, warehousing and utilities reported 132,000 fewer openings. But openings continued to increase in both manufacturing and the service sector at large.Some 4.3 million people left their jobs voluntarily in January, edging down somewhat from the record 4.5 million who quit in November. While layoffs picked up slightly in January, they were still hovering above historical lows.For Jeffrey Roach, the chief economist at LPL Financial, the most fascinating current in the labor market is the increased share of workers who are quitting jobs not to make a career change but simply to achieve higher pay.“You can see people are actually staying within their industry — and it really helps the ‘lower-skilled’ worker,” he said. “I think we’ll continue to see really high churn rates.”The share of Americans in their prime working years — ages 25 to 54 — who were either working or looking for work plummeted in 2020, yet it has recovered to a rate of 79.5 percent, within 1 percentage point of prepandemic levels, a much faster rebound than occurred after the last downturn.The prevailing environment is likely to increase the price of labor — a welcome development for workers who have dealt with stagnant wages and a lack of power for decades, and an unsettling one for employers as high inflation increases the cost of doing business.Some business executives and managers have expressed concern — in corporate earnings and in private calls — that “wage inflation” could set in and cut into profits if the rapid wage gains that workers achieved last year don’t taper off.“When it comes to their business, they’re very concerned about it: What does that mean to their margins going forward? What kind of pricing power do they have?” said Steve Wyett, chief investment strategist at BOK Financial, a regional bank based in Oklahoma, where unemployment is notably low at 2.8 percent. “How do we protect ourselves against this?”Data from the Federal Reserve Bank of Atlanta shows that workers who quit to take other jobs are receiving larger pay increases than those who are staying put, though much of this movement is in lower-wage sectors.After the Labor Department’s employment survey showed strong wage gains in January, hourly earnings were nearly flat in February. And even if wage gains stay strong, they remain far from runaway levels.Fed data shows that median annual pay increases in the American labor market have been well within the range — 3 to 7 percent — that prevailed from the 1980s until the 2007-9 recession. More

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    Employer Practices Limit Workers’ Choices and Wages, U.S. Study Argues

    A Biden administration report says collusion and other constraints on competition hold down pay and prospects in the labor market.The recent narrative is that there is a tight labor market that gives workers leverage. But a new report from the Biden administration argues that the deck is still stacked against workers, reducing their ability to move from one employer to another and hurting their pay.The report, released Monday by the Treasury Department, contends that employers often face little competition for their workers, allowing them to pay substantially less than they would otherwise.“There is a recognition that the idea of a competitive labor market is a fiction,” said Ben Harris, assistant Treasury secretary in the office of economic policy, which prepared the report. “This is a sea change in economics.”The report follows up on a promise made by President Biden last summer when he issued an executive order directing his administration to address excessive concentration in the market for work.Drawing from recent economic research, the report concludes that lack of competition in the job market costs workers, on average, 15 to 25 percent of what they might otherwise make. And it emphasizes that the administration will deploy the tools at its disposal to restore competition in the market for work.“This is the administration declaring where it is on the enforcement of antitrust in labor markets,” Tim Wu, a special assistant to the president for technology and competition policy on the National Economic Council, said in an interview in which he laid out the report’s findings. “It is sending a strong signal about the direction in which antitrust enforcement and policy is going.”Across the economy, wage gains generally come about when a worker changes jobs or has a credible offer from outside that will encourage the current employer to provide an increase, argues Betsey Stevenson, a professor of economics at the University of Michigan who was on President Barack Obama’s Council of Economic Advisers.The State of Jobs in the United StatesEmployment growth accelerated in February, as falling coronavirus cases brought customers back to businesses and workers back to the office.February Jobs Report: U.S. employers added 678,000 jobs and the unemployment rate fell to 3.8 percent ​​in the second month of 2022.Wages and Prices: A labor shortage is helping to push up workers’ pay. With inflation running hot, that could be a problem for the Federal Reserve.Service Workers:  Even as employers scramble to fill vacancies, service workers are seeing few gains. Part-time work is partly to blame.Unionization Efforts: The pandemic has fueled enthusiasm for organized labor. But the pushback has been brutal, especially in the private sector.New to the Work Force: Graduating college seniors will start their career without the memory of prepandemic work life. Here is what they expect.“Companies are well aware of this,” she said in an interview, so they rally around a simple solution: “If we just stop competing, it will be better for everybody.”The Treasury report lays out the many ways in which employers do this. There are noncompete agreements that bar workers from moving to a competitor, and nondisclosure agreements that keep them from sharing information about wages and working conditions — critical information for workers to understand their options. Some companies make no-poaching deals.“There is a long list of insidious efforts to take power out of the hands of workers and seize it for employers’ gain,” said Seth Harris, deputy director at the National Economic Council and deputy assistant to the president for labor and the economy.This is happening against a backdrop of broad economic changes that are hemming in the options of many workers, especially at the bottom end of the job market.The outsourcing of work to contractors — think of the janitors, cafeteria workers and security guards employed by enormous specialist companies, not by the companies they clean, feed and protect — reduces the options for low-wage workers, the report argues.The mergers and acquisitions that have consolidated hospitals, nursing homes, food processing companies and other industries have also reduced competition for workers, the study says, curtailing their ability to seek better jobs.The report notes, for instance, that mergers trimmed the number of hospitals in the United States to 6,093 in 2021, from 7,156 in 1975. It cites research into how some of these mergers have depressed the wage growth for nurses, pharmacy employees and other health workers.The Treasury’s document is drawn from a body of research that has been growing since the 1990s, when a seminal paper by David Card and Alan B. Krueger found that raising the minimum wage did not necessarily reduce employment and could even produce more jobs.The conclusion by Mr. Card and Mr. Krueger, which economists would consider impossible in a competitive labor market in which rising labor costs would reduce employer demand, started the discipline down a path to investigate the extent to which employers competed for workers. If a few employers had the power to hold wages below the competitive equilibrium, raising the wage floor might draw more workers in.Lack of competition, the Biden administration argues, goes a long way to explain why pay for a large share of the American work force is barely higher, after accounting for inflation, than it was a half-century ago. “The fact that workers are getting less than they used to is a longstanding problem,” Ms. Stevenson, who was not involved in the Treasury report, noted.Anticompetitive practices thrive when there are fewer competitors. If workers have many potential employers, they might still agree to sign a noncompete clause, but they could demand a pay increase to compensate.Even if there is no conclusive evidence that the labor market is less competitive than it used to be, the report says, researchers have concluded that there is, in fact, very little competition.Suresh Naidu, a professor of economics at Columbia University, argues, moreover, that institutions like the minimum wage and unions, which limited employers from fully exercising their market power, have weakened substantially over time. “The previously existing checks have fallen away,” Mr. Naidu said.Unions are virtually irrelevant across much of the labor market. Only 6 percent of workers in the private sector belong to one. The federal minimum wage of $7.25 an hour is so low that it matters little even for many low-wage workers. The Treasury report argues that an uncompetitive labor market is reducing the share of the nation’s income that goes to workers while increasing the slice that accrues to the owners of capital. Moreover, employers facing little competition for workers, it argues, are more likely to offer few benefits and impose dismal working conditions: unpredictable just-in-time schedules, intrusive on-the-job monitoring, poor safety, no breaks.The damage runs deeper, the report says, arguing that uncompetitive labor markets reduce overall employment. Productivity also suffers when workers have a hard time moving to new jobs that could offer a better fit for their skills. Noncompete clauses discourage business formation when they limit entrepreneurs’ ability to find workers for their ventures.Addressing the issues that the report singles out is likely to be an uphill task. The administration’s push to increase the federal minimum wage to $15 has been unsuccessful. In Congress, bills that would ease the path for workers to join a union face long odds. Going after noncompete clauses, no-poaching deals and other forms of anticompetitive behavior would be an easier task.Last year, the Justice Department’s antitrust division brought several cases challenging no-poaching and wage-setting agreements. In January, four managers of home health care agencies in Maine were indicted on federal charges of conspiring to suppress the wages and restrict the job mobility of essential workers during the pandemic.Still, deploying antitrust enforcement in the job market is somewhat new. It has been used mostly to ward off anticompetitive behavior that raises prices for consumers in product and service markets. Persuading courts to, say, prevent a merger because of its impact on wages might be tougher.A note by the law firm White & Case, for instance, complained that the move to block Penguin Random House’s attempt to buy Simon & Schuster on the grounds that it would reduce royalties to authors is “emblematic of the Biden administration’s and the new populist antitrust movement’s push to direct the purpose of antitrust away from consumer welfare price effects and towards other social harms.” More

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    Washington State Advances Landmark Deal on Gig Drivers’ Job Status

    Lawmakers have passed legislation granting benefits and protections, but allowing Lyft and Uber to continue to treat drivers as contractors.The Washington State Senate on Friday passed a bill granting gig drivers certain benefits and protections while preventing them from being classified as employees — a longstanding priority of ride-hailing companies like Uber and Lyft.While the vote appears to pave the way for ultimate passage after a similar measure passed the state House of Representatives last week, the two bills would still have to be reconciled before being sent to the governor for approval. Gov. Jay Inslee has not said whether he intends to sign the legislation.Mike Faulk, a spokesman for Mr. Inslee, said Friday that the governor’s office usually did not “speculate on bill action,” adding, “Once legislators send it to our office, we’ll evaluate it.”The Senate legislation — the result of a compromise between the companies and at least one prominent local union, the Teamsters — was approved 40 to 8.The action follows the collapse of similar efforts in California and New York amid resistance from other unions and worker advocates, who argued that gig drivers should not have to settle for second-class status.Under the compromise, drivers would receive benefits like paid sick leave and a minimum pay rate while transporting customers. The bill would also create a process for drivers to appeal so-called deactivations, which prevent them from finding work through the companies’ apps.But the minimum wage wouldn’t cover the time they spend working without a passenger in the car — a considerable portion of most drivers’ days. And like independent contractors, they could not unionize under federal law.One especially controversial feature of the bill is that it would block local jurisdictions from regulating drivers’ rights. A similar feature helped ignite opposition that killed the prospects for such a bill in New York State last year.Looming in the background of the legislative action in Washington State was the possibility of a ballot measure that could have enacted similar changes with weaker benefits for drivers. After California passed a law in 2019 that effectively classified gig workers as employees, Uber, Lyft and other gig companies spent roughly $200 million on a ballot measure that rolled back those protections. The legislation is still being litigated after a state judge deemed it unconstitutional. More