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

    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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    Labor Market Strength Persisted Heading Into the Holidays

    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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    U.S. Job Growth Remains Strong, Defying Fed’s Rate Strategy

    Employers added 263,000 workers in November, even as some industries showed signs of a slowdown. Wage growth exceeded expectations.America’s jobs engine kept churning in November, the Labor Department reported Friday, a show of continued demand for workers despite the Federal Reserve’s push to curb inflation, largely by tamping down hiring.Employers added 263,000 jobs, even as a wave of layoffs in the tech industry made headlines. That was only a slight drop from the revised figure of 284,000 for October.The unemployment rate was unchanged at 3.7 percent, while wages were 5.1 percent higher than a year earlier, a bigger rise than expected.Those signs of strength perpetuate a strange duality: While a strong labor market may benefit workers in the short term, it could strengthen the Fed’s resolve to raise rates even further, which would increase the likelihood of a recession in 2023.“It upsets some of the narrative going into the report, which was that things are slowing down,” said Neil Dutta, head of U.S. economics at Renaissance Macro. “The reason that this matters for everyone is that the Fed still sees the labor market as the mechanism by which they can solve the inflation problem.”Despite steady employment growth, the impact of higher interest rates is already evident. Hiring in goods-producing sectors like manufacturing and residential construction — which are more sensitive to rising borrowing costs — has slowed substantially, and the number of hours worked fell, mainly because of those industries. But robust hiring in health care and hospitality, where wages have also grown most rapidly, powered continued gains.Wages continue to increase, though still not at the pace of inflationYear-over-year percentage change in earnings vs. inflation More

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    Job Openings Ease, but Layoffs Are Little Changed

    Government data for October shows the labor market is still strong, though cooling slightly.Employers continued to pull back in October on the number of jobs they were looking to fill, the latest sign that the labor market is strong but gradually cooling.About 10.3 million positions were open on the last day of October, the Labor Department said Wednesday, down from 10.7 million the previous month. Vacant positions in October effectively equaled the level in August, seasonally adjusted.Reductions in job openings occurred in a broad range of industries including manufacturing, construction, professional and businesses services, and state and local government. Still, openings in every major industry remained above prepandemic levels, underscoring the persistent strength in the labor market despite higher borrowing costs.The Federal Reserve is trying to constrain hiring in its efforts to tame inflation, concerned that a hot job market is forcing employers to raise wages, contributing to soaring prices.Other measures in the report — the Job Openings and Labor Turnover Survey, or JOLTS — affirm the labor market’s resilience. There were roughly 1.7 posted jobs for every unemployed worker, still extraordinarily high by historical standards.In recent weeks, a number of technology companies have announced sweeping layoffs. Elon Musk, Twitter’s new owner, slashed the company’s work force in half in early November. Meta, the parent company of Facebook and Instagram, shed 11,000 people, or about 13 percent of its workers.Even as the job cuts in the technology industry have dominated the headlines, however, layoffs across the entire economy in October were largely unchanged at 1.4 million, low by historical standards, suggesting that employers remain hesitant to part with workers after the pandemic-era hiring frenzy.The number of workers voluntarily quitting their jobs — an indicator of how confident workers are that they will be able to find better employment opportunities — ticked down but only slightly.Although the report overall pointed to continued elevated demand for workers, there were undeniable signs that the labor market is weakening.After a surprise jump in September, job openings resumed their march lower. There were four million quits in October, continuing the downward trend from the “Great Resignation” peak last year. The rate of people quitting their jobs — the number of people voluntarily leaving their jobs divided by total employment — was the lowest it had been since May 2021, at 2.6 percent.“Today’s JOLTS report shows that the job market is gradually slowing,” said Daniel Zhao, an economist at the career site Glassdoor. “And that’s in line with what we have been seeing in other data as well.”A more up-to-date readout of the economy will come on Friday, when the Labor Department releases data on monthly job growth and unemployment in November. Employers added 261,000 jobs in October. More

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    Biden Proposal Could Lead to Employee Status for Gig Workers

    A proposed rule, long awaited by labor activists, would make it harder for companies to classify workers as independent contractors.The Labor Department on Tuesday unveiled a proposal that would make it more likely for millions of janitors, home-care and construction workers and gig drivers to be classified as employees rather than independent contractors.Companies are required to provide certain benefits and protections to employees but not to contractors, such as paying a minimum wage, overtime, a portion of a worker’s Social Security taxes and contributions to unemployment insurance.The proposed rule is essentially a test that the Labor Department will apply to determine whether workers are contractors or employees for companies. The test considers factors such as how much control workers have over how they do their jobs and how much opportunity they have to increase their earnings by doing things like offering new services. Workers who have little of either are often considered employees.The new version of the test lowers the bar for that employee classification from the current test, which the Trump administration’s Labor Department created.The proposal would apply only to laws that the department enforced, such as the federal minimum wage. States and other federal agencies, like the Internal Revenue Service, set their own criteria for employment status. But many employers and regulators in other jurisdictions are likely to consider the department’s interpretation when making decisions about worker classification, and many judges are likely to use it as a guide.As a result, the proposal is a potential blow to gig companies and other service providers that argue their workers are contractors, though it would not immediately affect the status of those workers.Uber and Lyft have said in federal filings that having to treat drivers as employees could force them to alter their business models, and some gig economy officials have estimated that their labor costs would rise 20 to 30 percent. The companies have repeatedly fought similar efforts by regulators and legislatures in states across the country.Share prices for both companies dropped more than 10 percent Tuesday.In a statement, Uber sounded optimistic that the proposal would not endanger the gig-economy model, at least if the administration heeded additional input.“Today’s proposed rule takes a measured approach, essentially returning us to the Obama era, during which our industry grew exponentially,” said CR Wooters, the company’s head of federal affairs. “In a time of deep economic uncertainty, it’s crucial that the Biden administration continues to hear from the more than 50 million people who have found an earning opportunity with companies like ours.”Read More About the Gig EconomyWaiting for Action: The Biden administration’s plans to strengthen labor protections have been slowed by Congress, the courts and a lobbying blitz. The delay has frustrated gig workers.A Thriving Sector: Conventional employment opportunities abound, but gig work continues to be a popular choice for people seeking flexibility and additional income.Para App: A former Uber employee created an app to help gig workers maximize their earnings. But the platforms that hire them are fighting back.Covid Risks: New York City’s gig workers risked their lives during the pandemic. A survey illustrates the hazards they faced.Lyft likewise noted that the proposal would restore the approach under President Barack Obama, when drivers were generally classified as contractors, and emphasized that it would not force the company to alter its business model. The company said the proposal was merely the beginning of a longer process.Companies, unions, workers and other members of the public will have a month and a half to formally comment on the proposal before the department incorporates feedback into a final rule. After that, the department will have considerable discretion over whether or not to enforce the rule at particular companies.“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors,” Labor Secretary Martin J. Walsh said in a statement. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.”David Weil, who oversaw the Obama Labor Department’s approach to classifying workers, cautioned that just because the department didn’t bring an enforcement action against Uber and Lyft didn’t mean it couldn’t have. He noted that the Obama rule had been adopted late in that administration.“I think it is true that there are lots of gray areas in the platform world, but with the caveats that you always have to go deep into the facts, Uber and Lyft do not strike me as that difficult,” Mr. Weil said in an interview, adding: “There is a lot about the relationship that looks like one of employees.”The proposal helps defuse growing pressure from activists supporting gig workers, who complained that the administration had been too slow to intervene to protect ride-hail drivers and other app-based workers.Lorena Gonzalez Fletcher, a former leader on workers’ issues in the California Assembly who is now head of the state’s labor federation, said in an interview that the action demonstrated the Biden administration’s strong pro-worker stance but that the effect of the new rule would come down to how aggressively the administration enforced it.“Companies just continue to break labor law,” Ms. Gonzalez Fletcher said. “They break it at the local level, the state level and federally, and there are no consequences. Everything is about enforcement.”The Biden Labor Department delayed and then scrapped the Trump rule on worker classification before a federal judge reinstated it. The new proposal would formally rescind and replace the Trump rule when made final in the coming months.Opponents could ask a federal judge to block the new rule temporarily or strike it down, but administration officials expressed confidence that it would withstand judicial scrutiny. They said they were merely returning to a standard that federal courts had repeatedly upheld over the decades.Uber and other gig companies say changes to how some of their workers are classified could force them to change their business models.Jim Wilson/The New York TimesUnder President Donald J. Trump, the department argued that two factors should predominate in determinations of whether a worker is an employee or a contractor, even if other factors are relevant: the degree of control a company has over the worker, and the extent to which a worker can increase his or her income by taking entrepreneurial initiative, like marketing his or her services.The Trump Labor Department suggested that gig workers like Uber drivers would probably be considered contractors under these criteria. Proponents argued that the Trump approach was necessary so enforcement didn’t snuff out new ways of doing business, such as the gig economy.But in an interview, Seema Nanda, the Biden Labor Department’s top lawyer, said the Trump rule “threatens to actually increase rather than decrease misclassification.”The proposal by the Biden Labor Department argues that several factors must be weighed when assessing whether a worker is a contractor or an employee, and that none of them are necessarily more important than the others. Among the additional factors are whether the work being performed is central to a company’s business, and what kind of investments workers make to do their jobs, such as buying equipment.Administration officials cautioned that determining whether or not gig workers like Uber drivers are employees would hinge on applying the test laid out in the proposal to individual cases and that they were not prejudging the outcome of any one of them. They also emphasized that the proposal did not target a particular industry.“We make a determination based on the specific facts in any case that we look at,” Ms. Nanda said. “Misclassification harms workers across a wide range of industries.”Gig companies like Uber and Lyft have sought for years to influence laws and regulations on worker classification. After the California Legislature passed a bill proposed by Ms. Gonzalez Fletcher that effectively classified gig drivers as employees in 2019, gig companies spent roughly $200 million helping to pass a ballot measure that would exempt their workers from employee status while granting them limited benefits.A state judge later ruled that the measure was unconstitutional. The decision is being appealed.Gig companies have tried and failed to enact similar measures in other liberal states, like New York and Massachusetts, but did help pass a contractor measure in Washington State.Uber and Lyft have often argued that drivers prefer the flexibility that independent contractor status affords them, such as the ability to work when, where and however long they choose to. They have cited polling data that appears to affirm this.Legal scholars point out that there is nothing inherent about employment status that would forbid companies to grant workers similar flexibility.Mr. Walsh, the labor secretary, has sometimes appeared open to the idea that gig workers could be classified as independent contractors.But when asked in an interview this summer whether he thought drivers would prefer to be independent contractors or employees if the trade-offs were made clear, he argued that “95 percent of people would say yes” to being classified as employees. More

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    U.S. Job Growth Eases, but Is Too Strong to Suit Investors

    The gain of 263,000 was shy of recent monthly totals but still robust. Stocks fell on fears of a harder, longer Fed campaign to fight inflation.Job growth eased slightly in September but remained robust, indicating that the economy was maintaining momentum despite higher interest rates. But the strong showing left many investors unhappy because they saw signs that the fight against inflation may become tougher and more prolonged.Employers added 263,000 jobs on a seasonally adjusted basis, the Labor Department said Friday, a decline from 315,000 in August. The number was the lowest since April 2021 but still solid by prepandemic standards. The unemployment rate fell to 3.5 percent, equaling a five-decade low.“If I had just woken up from a really long nap and seen these numbers, I would conclude that we still have one of the strongest job markets that we’ve ever enjoyed,” said Carl Tannenbaum, chief economist at Northern Trust.Officials at the Federal Reserve have been keeping a close eye on hiring and wages as they proceed with a series of rate increases meant to combat inflation. The job data indicates that, for now, they are doing so without tipping the economy into a recession that would throw millions out of work.But it also increases the prospect that the effort to subdue price increases will be more extended. For investors, that came as bad news, since higher interest rates raise costs for companies and weigh on stock prices.The S&P 500 recorded its worst one-day performance since mid-September, falling 2.8 percent and eroding gains from earlier in the week.Fed officials have signaled in speeches this week that they remain resolute in trying to wrestle inflation lower, and that they are waiting for clear evidence that the economy is headed back toward price stability before they pull back.Wage growth has subsided somewhat, at least compared with the trend a year ago. Average hourly earnings climbed 5 percent from a year earlier, roughly matching economists’ expectations but slowing down slightly from the prior annual reading.Wages are still growing, but less rapidly in some sectorsPercent change in earnings for nonmanagers since January 2019 by sector More