Regulation and Deregulation of Industry

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    Gig Worker Protections Get a Push in European Proposal

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    A proposal with widespread political support would entitle drivers and couriers for companies like Uber to a minimum wage and legal protections.LONDON — In one of the biggest challenges yet to the labor practices at popular ride-hailing and food-delivery services, the European Commission took a major step on Thursday toward requiring companies like Uber to consider their drivers and couriers as employees entitled to a minimum wage and legal protections.The commission proposed rules that, if enacted, would affect up to an estimated 4.1 million people and give the European Union some of the world’s strictest rules for the so-called gig economy. The policy would remake the relationship that ride services, food delivery companies and other platforms have with workers in the 27-nation bloc.Labor unions and other supporters hailed the proposal, which has strong political support, as a breakthrough in the global effort to change the business practices of companies that they say depend on exploiting workers with low pay and weak labor protections.Uber and other companies are expected to lobby against the rules, which must go through several legislative steps before becoming law. The companies have long classified workers as independent contractors to hold down costs and limit legal liabilities. The model provided new conveniences for traveling across town and ordering takeout, and gave millions of people a flexible new way to work when they want.A courier in Paris last year, when lockdown measures highlighted the fragile nature of gig work.Dmitry Kostyukov for The New York TimesBut in Europe, where worker protection laws are traditionally more robust than in the United States, there has been growing momentum for change, particularly as the pandemic highlighted the fragile nature of gig work when food couriers and others continued to work even amid lockdowns and rising Covid-19 cases.While there have been some important legal victories and laws passed in some countries targeting Uber and others, the policy released by the European Commission, the executive branch of the European Union, is the most far-reaching legislative attempt to regulate companies to date.The rules would affect drivers, couriers, home cleaners, home health care aides, fitness coaches and others who use apps and online platforms to find work. As employees, they would be entitled to a minimum wage, holiday pay, unemployment and health benefits, and other legal protections depending on the country where they worked.“New forms of work organization do not automatically translate into quality jobs,” Valdis Dombrovskis, the bloc’s commissioner for trade, said as he presented the new rules. “People involved in platform work can sometimes find themselves exposed to unsafe living and working conditions.” The European Union estimates that 28 million people work through digital labor platforms in the bloc, with their number expected to grow to 43 million by 2025. The commission said on Thursday that 5.5 million workers were at risk of what it called misclassification, and that up to 4.1 million of them could be reclassified as employees through the directive.“This is not just bike riders in big cities,” said Johanna Wenckebach, a lawyer and scientific director at the Hugo Sinzheimer Institute for Labor and Social Security Law in Germany. “This is a phenomenon with millions of workers and many more ahead.”The rules are part of a broader digital agenda that European Union leaders hope to pass in the coming year. Proposals include tougher antitrust regulations targeting the largest tech companies, stricter content moderation rules for Facebook and other internet services to combat illicit material, and new regulations for the use of artificial intelligence.The new labor rules follow a landmark case in February, when Britain’s top court ruled that Uber drivers should be classified as workers entitled to a minimum wage and holiday pay. In the Netherlands, a court ruled in September that Uber drivers should be paid under collective rules in place for taxi drivers.Dutch Uber drivers calling for expanded workers’ rights outside a court in June that would later rule in their favor.Koen Van Weel/EPA, via ShutterstockSupporters of the new worker regulations said companies like Uber behave like employers by controlling workers through software that sets wages, assigns jobs and measures performance — a practice the commission called “algorithmic management.”The new European rules would require companies to disclose more about how their software systems made decisions affecting workers. For those who may remain independent, the new rules would also require companies to grant more autonomy that self-employment entails.The policy threatens the business models of Uber and other platforms, like the food delivery service Deliveroo, that already struggle to turn a profit. The E.U. law could result in billions of dollars in new costs, which are likely to be passed on to customers, potentially reducing use of the apps.Uber opposes the E.U. proposal, saying it would result in higher costs for customers. The company said roughly 250,000 couriers and 135,000 drivers across Europe would lose work under the proposal.Rather than help workers, Uber said the proposal “would have the opposite effect — putting thousands of jobs at risk, crippling small businesses in the wake of the pandemic and damaging vital services that consumers across Europe rely on.”Just Eat, the largest food-delivery service in Europe, said it supported the policy. Jitse Groen, the company’s chief executive, said on Twitter that it would “improve conditions for workers and help them access social protections.”The E.U. rules are being closely watched as a potential model for other governments around the world. Negotiations could last through 2022 or longer as policymakers negotiate a compromise among different European countries and members of the European Parliament who disagree about how aggressive the regulations should be. The law is unlikely to take effect until 2024 or later.Enforcement would be left to the countries where the companies operated. The policy contrasts Europe with the United States, where efforts to regulate app-based ride and delivery services have not gained as much momentum except in a few states and cities.A protest in Bakersfield, Calif., against Proposition 22, a 2020 state ballot question backed by gig economy companies.Tag Christof for The New York TimesLast year, gig economy companies staged a successful referendum campaign in California to keep drivers classified as independent contractors while giving them limited benefits. Although a judge ruled in August that the result violated California’s Constitution, his decision is being appealed, and the companies are pursuing similar legislation in Massachusetts.The Biden administration has suggested that gig workers should be treated as employees, but it has not taken significant steps to change employment laws. In May, the Labor Department reversed a Trump-era rule that would have made it more difficult to reclassify gig workers in the country as employees.In Europe, Spain offers a preview of the potential effects of the E.U. proposal. The country’s so-called Riders Law, enacted in August, required food delivery services such as Uber and Deliveroo to reclassify workers as employees, covering an estimated 30,000 workers.Uber responded by hiring several staffing agencies to hire a fleet of drivers for Uber Eats, a strategy to comply with the law but avoid responsibility for managing thousands of people directly. Deliveroo, which is partly owned by Amazon, abandoned the Spanish market.The companies prefer policies like those in France, where the government has proposed allowing workers to elect union representation that could negotiate with companies on issues like wages and benefits. Uber also pointed to Italy, where a major union and food delivery companies struck a deal that guarantees a minimum wage, insurance and safety equipment, but does not classify the workers as employees.Kim van Sparrentak, a Green lawmaker in the European Parliament who helped draft a report on platform workers that was published this year, praised the commission’s proposal as “quite radical.”“It can set a new standard for workers’ rights,” Ms. Van Sparrentak said.Adam Satariano More

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    Fed Warns Meme Stocks Could Pose Some Risks

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    Stocks that experience major volatility as a result of social media attention — often called meme stocks — have not threatened broader financial stability so far but could open the door to vulnerabilities, the Federal Reserve said in a report on Monday.The Fed’s twice-yearly update on America’s financial system included a special section on the meme stock phenomenon. It attributed the trend, in which attention on Twitter, Reddit and other platforms encourages rapid inflows into or out of buzzy stocks, to new trading technologies including mobile apps and to changing demographics, as younger people enter the retail trading market.“Along with the rise in risk appetite and the growing share of younger retail investors, access to retail equity trading opportunities has expanded over the past decade,” the report said.Social media can pump up interest in stocks, and it can also create an echo chamber, one in which “investors find themselves communicating most frequently with others with similar interests and views, thereby reinforcing their views, even if these views are speculative or biased.”Still, internet-inspired pile-ons do not necessarily create conditions that will spur a broad market crash, the Fed’s report suggested.“To date, the broad financial stability implications of changes in retail equity investor characteristics and behaviors have been limited,” the Fed said. The central bank specifically assessed what happened to shares of AMC Entertainment and GameStop in January, noting that activity and volatility in those stocks came alongside high activity on Twitter.While the report concluded that “recent episodes of meme stock volatility did not leave a lasting imprint on broader markets,” the Fed said a few trends “should be monitored.”The report pointed out that young and debt-laden investors may be more vulnerable to stock price swings, especially since they are now using “options,” which allow traders to place bets on whether prices will rise or fall and which can magnify leverage and potential losses.The Fed also warned that “episodes of heightened risk appetite may continue to evolve with the interaction between social media and retail investors and may be difficult to predict,” and that financial firms may not have calibrated their risk-management systems to reflect the volatility and losses that meme stock episodes might trigger.“More frequent episodes of higher volatility may require further steps to ensure the resilience of the financial system,” it said.Looking across a broader range of asset classes and recent trading activity, the Fed’s financial stability analysis generally suggested that the vulnerabilities have moderated compared with earlier in the pandemic — but it did flag high asset prices and a number of lingering risks.Stock prices have increased “notably,” the report said, and prices relative to forecast earnings remain near historical highs. Home prices have climbed, it noted, though mortgage lending standards have not deteriorated too badly. When lenders start to lower their standards, that can make the market more vulnerable.The Fed noted that “corporate bond issuance remained robust, supported by low interest rates,” also pointing out that “across the ratings spectrum, the composition of newly issued corporate bonds has become riskier.”And while many markets show signs of investor optimism, some financial strains from the pandemic shock persist.Some commercial real estate sectors continue to face challenges because “office vacancies are elevated and hotel occupancy rates remain depressed,” the report noted. Plus, “structural vulnerabilities persist in some types of money market funds,” which could amplify a future shock to the system.Money market mutual funds melted down during the pandemic and required a Fed rescue for the second time in a dozen years, and regulators are now looking at how to make them more resilient.The report also warned that life insurers might struggle to raise cash in a pinch.And it delved into climate risks. The central bank is among regulators now trying to understand what risks climate change might pose to banks, insurers and the broader financial system.“The Federal Reserve is developing a program of climate-related scenario analysis,” the report noted. “The Federal Reserve considers an effective scenario analysis program, which is designed to be forward looking over a period of years or decades, to be separate from its existing regulatory stress-testing regime.” More

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    OSHA, citing Covid failures, moves to strip three states of workplace safety authority.

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    The Occupational Safety and Health Administration said Tuesday that it was taking steps that could strip three states — Arizona, South Carolina and Utah — of their authority to regulate workplace safety, citing shortcomings in policies on coronavirus protection.Under federal law, states can assume responsibility for occupational safety if the government approves their plan for doing so and if the plan remains at least as effective as federal enforcement.Federal officials said Tuesday that the three states had failed to adopt a rule that OSHA issued in June — or to adopt one at least as effective — requiring certain Covid-related safety measures by employers, like providing protective equipment.“OSHA has worked in good faith to help these three state plans come into compliance,” Jim Frederick, the agency’s acting director, said on a call with reporters. “But their continued refusal is a failure to maintain their state plan commitment to thousands of workers in their state.”Emily H. Farr, the director of South Carolina’s Department of Labor, Licensing and Regulation, expressed disappointment in the action, saying that the state’s program had “proven effective as South Carolina has consistently had one of the lowest injury and illness rates in the nation.”Officials in Arizona and Utah did not immediately respond to requests for comment.Twenty-eight states or territories have OSHA-approved plans for enforcing workplace safety. Where no plan has been approved, OSHA retains primary authority.The action comes as OSHA prepares to release a rule mandating that companies with 100 or more workers require employees to be vaccinated or to submit to weekly Covid-19 testing. Some states have indicated that they will challenge the rule, though the legal basis for doing so appears weak.OSHA, which is part of the Labor Department, will publish a notice in the Federal Register announcing its proposal to reconsider and revoke approval of the three states’ self-regulation plans. There will be a 35-day comment period on the proposal before it can be finalized.Seema Nanda, the Labor Department solicitor, said that as a result of the process, the states’ authority to regulate workplace safety could be revoked entirely or partially, such as for certain industries. More

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    Are Tesla and Texas a Perfect Match? It’s Questionable.

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    While its C.E.O., Elon Musk, and the state’s conservative lawmakers share libertarian sensibilities, they differ greatly on climate change and renewable energy.Tesla’s move from Silicon Valley to Texas makes sense in many ways: The company’s chief executive, Elon Musk, and the conservative lawmakers who run the state share a libertarian philosophy, favoring few regulations and low taxes. Texas also has room for a company with grand ambitions to grow.“There’s a limit to how big you can scale in the Bay Area,” Mr. Musk said Thursday at Tesla’s annual meeting hosted at its new factory near the Texas capital. “Here in Austin, our factory’s like five minutes from the airport, 15 minutes from downtown.”But Texas may not be the natural choice that Mr. Musk makes it out to be.Tesla’s stated mission is to “accelerate the world’s transition to sustainable energy,” and its customers include many people who want sporty cars that don’t spew greenhouse gases from their tailpipes. Texas, however, is run by conservatives who are skeptical of or oppose efforts to address climate change. They are also fiercely protective of the state’s large oil and gas industry.And, despite the state’s business-friendly reputation, Tesla can’t sell vehicles directly to customers there because of a law that protects car dealerships, which Tesla does not use.Tesla’s move is not surprising: Mr. Musk threatened to leave California in May 2020 after local officials, citing the coronavirus, forced Tesla to shut down its car factory in the San Francisco Bay Area. But his decision to move to Texas highlights some gaping ideological contradictions. His company stands at the vanguard of the electric car and renewable energy movement, while Texas’ lawmakers, who have welcomed him enthusiastically, are among the biggest resisters to moving the economy away from oil and natural gas.“It’s always a feather in Texas’ hat when it takes a business away from California, but Tesla is as much unwelcome as it is welcome,” said Jim Krane, an energy expert at Rice University in Houston. “It’s an awkward juxtaposition. This is a state that gets a sizable chunk of its G.D.P. from oil and gas and here comes a virulent competitor to that industry.”In February, a rare winter storm caused the Texas electric grid to collapse, leaving millions of people without electricity and heat for days. Soon after, the state’s leaders sought — falsely, according to many energy experts — to blame the blackout on renewable energy.“This shows how the Green New Deal would be a deadly deal for the United States of America,” Gov. Greg Abbott said of the blackout on Fox News. “It just shows that fossil fuel is necessary for the state of Texas as well as other states to make sure we will be able to heat our homes in the wintertimes and cool our homes in the summertimes.”Mr. Musk, a Texas resident since last year, seemed to offer a very different take on Thursday, suggesting that renewable energy could in fact protect people from power outages.“I was actually in Austin for that snowstorm in a house with no electricity, no lights, no power, no heating, no internet,” he said. “This went on for several days. However, if we had the solar plus Powerwall, we would have had lights and electricity.”Tesla is a leading maker of solar panels and batteries — the company calls one of its products Powerwall — for homeowners and businesses to store renewable energy for use when the sun has gone down, when electricity rates are higher or during blackouts. The company reported $1.3 billion in revenue from the sale of solar panels and batteries in the first six months of the year.Mr. Musk’s announcement that Tesla would be moving its headquarters from Palo Alto, Calif., came with few details. It is not clear, for example, how many workers would move to Austin. It’s also unknown whether the company would maintain a research and development operation in California in addition to its factory in Fremont, which is a short drive from headquarters and which it said it would expand. The company has around 750 employees in Palo Alto and about 12,500 in total in the Bay Area, according to the Silicon Valley Institute for Regional Studies.It is also not clear how much money Tesla will save on taxes by moving. Texas has long used its relatively low taxes, which are less than California’s, to attract companies. County officials have already approved tax breaks for the company’s new factory, and the state might offer more.Over the years, California granted Tesla hundreds of millions of dollars in tax breaks, something that Gov. Gavin Newsom noted on Friday. But because Tesla will continue to have operations in California, it may still have to pay income tax on its sales in the state, said Kayla Kitson, a policy analyst at the California Budget & Policy Center.Whatever incentives they offer Tesla, Texas officials are not likely to change their support for the fossil fuel industries with which the company competes.In a letter to state regulators in July, Mr. Abbott directed the Public Utility Commission to incentivize the state’s energy market “to foster development and maintenance of adequate and reliable sources of power, like natural gas, coal and nuclear power.”A Tesla factory under construction in Austin in September.Joe White/ReutersThe governor also ordered regulators to charge suppliers of wind and solar energy “reliability” fees because, given the natural variability of the wind and the sun, suppliers could not guarantee that they would be able to provide power when it was needed.Mr. Abbott’s letter made no mention of battery storage, suggesting that he saw no role for a technology that many energy experts believe will become increasingly important in smoothing out wind and solar energy production. Tesla is a big player in such batteries. Its systems have helped electric grids in California, Australia and elsewhere, and the company is building a big battery in Texas, too, Bloomberg reported in March.Texas has no clean energy mandates, though it has become a national leader in the use of solar and wind power — driven largely by the low cost of renewable energy. The state produces more wind energy than any other.Another issue that divides Tesla and Texas is the state’s law about how cars can be sold there.As in some other states, Texas has long had laws to protect car dealers by barring automakers, including Tesla, from selling directly to consumers. California, the company’s biggest market by far, has long allowed the company to sell cars directly to buyers, which lets it earn more money than if it had to sell through dealers.Tesla has showrooms around Texas, but employees are not even allowed to discuss prices with prospective buyers and the showrooms cannot accept orders. Texans can buy Teslas online and pick the vehicles up at its service centers.Once the Austin factory starts producing vehicles, including a new pickup truck Tesla calls Cybertruck, those vehicles will have to leave the state before they can be delivered to customers in Texas.Efforts to change the law by Tesla and some state lawmakers have gone nowhere, including during the legislative session that concluded this year. That’s partly because car dealers have tremendous political influence in the state.Perhaps once Tesla has moved to Austin and started producing cars, Mr. Musk might have enough political clout to get the Legislature to act. Texas lawmakers typically meet only every two years, however, so it would most likely take at least until 2023 for the company’s customers to receive a car directly from its factory there.Michael Webber, professor of mechanical engineering at the University of Texas at Austin, said Mr. Musk’s decision to move to Texas might have been influenced in part by the ability to pressure the state to change its law.“The Texas car market is the second-largest car market in America after California, so if you are selling cars it kind of makes sense to get closer to your customers,” Mr. Webber said. “The Texas car market is particularly difficult outside of cities because of the legislative barriers.”There were already signs on Friday that some in Texas, including those involved in oil and gas and related industries, were happy to have Tesla because it could eventually employ thousands of people.“It can only be positive for Texas, because it brings more business to Texas,” said Linda Salinas, vice president for operations at Texmark Chemicals, which is near Houston. “Even though it’s not fossil business, it’s still business.”She said Texmark might even benefit from Tesla’s manufacturing operations in the state. “Texmark produces and sells mining chemicals to people who mine copper, and guess what batteries are made out of?”Peter Eavis More

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    Elizabeth Warren Calls Jerome Powell a ‘Dangerous Man’

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    Senator Elizabeth Warren, Democrat of Massachusetts, blasted the Federal Reserve chair, Jerome H. Powell, for his financial regulation track record and said that she would not support him if the White House renominated him, calling him a “dangerous man to head up the Fed.”Mr. Powell’s term as head of the central bank ends in early 2022, and the Biden administration is considering whether to reappoint him. Mr. Powell, a Republican, was nominated to the Fed’s Board of Governors by former President Barack Obama and elevated to chair by former President Donald J. Trump.While some prominent Democratic economists and advocacy groups support Mr. Powell, who has been intensely focused on the labor market during his term as Fed chair, some progressives openly oppose him. They often cite his track record on financial regulation — as Ms. Warren did to his face on Tuesday, as he testified before the Senate Banking Committee.“The elephant in the room is whether you’re going to be renominated,” Ms. Warren said, looking down at the Fed chair during the hearing. “Renominating you means gambling that, for the next five years, a Republican majority at the Federal Reserve, with a Republican chair who has regularly voted to deregulate Wall Street, won’t drive this economy over a financial cliff again.”Ms. Warren, and those who agree with her, have worried that leaving Mr. Powell in place will prevent the Fed from taking a tougher stance on financial regulation. Mr. Powell has said that when it comes to regulatory matters, he defers to the Fed’s vice chair for supervision, noting that Congress created that job to lead up bank oversight following the 2008 financial crisis.“I respect that that’s the person who will set the regulatory agenda going forward,” Mr. Powell said during a news conference last week. “And furthermore, it’s fully appropriate to look for a new person to come in and look at the current state of regulation and supervision and suggest appropriate changes.”Ms. Warren’s colleague Senator Michael Rounds, a Republican from South Dakota, followed her scathing comments by saying that Mr. Powell deserved to be renominated, and that he looked forward to working with him for the next several years.The White House has so far given little indication of whom it will pick to lead the central bank.President Biden already has the opportunity to fill one open governor position at the Fed, and several other roles will soon become available: The governor seat of the Fed’s vice chair, Richard Clarida, will expire in the coming months, as will Randal K. Quarles’s position as vice chair for supervision. The openings could give the administration a chance to remake the central bank from the top with its nominations, who must pass Senate confirmation.Other lawmakers at the Senate hearing pushed Mr. Powell to focus on improving diversity at the central bank — highlighting another key concern among Democrats as the leadership shuffle gets underway.Senator Sherrod Brown, a Democrat from Ohio and the head of the Senate Banking Committee, pointed out that there had never been a Black woman on the Federal Reserve’s Board of Governors in Washington, while also referring to reporting from earlier this year that showed a dearth of Black economists at the central bank.He asked if Mr. Powell believed that the central bank should have a Black woman on its Board of Governors.“I would strongly agree that we want everyone’s voice heard around the table, and that would of course include Black women,” Mr. Powell said. “We of course have no role in the selection process, but we would certainly welcome it.”Lisa Cook, a Michigan State University economist, and William Spriggs, chief economist of the labor union AFL-CIO, are often raised as possible candidates for governor positions or leadership roles. Both are Black. Lael Brainard, a white woman who is currently a Fed governor, is frequently raised as a possible replacement for Mr. Powell if he is not renominated, and Sarah Bloom Raskin, a white woman who is a former top Fed and Treasury official, is often suggested as a replacement for Mr. Quarles.Mr. Powell, as he noted, has no formal role in selecting his future colleagues at the Fed Board.He and his colleagues at the Fed Board will, however, have a chance to weigh in on who will take over two newly open positions around the Fed’s decision-making table. The central bank has 19 total officials at full strength, seven governors and 12 regional bank presidents.Robert S. Kaplan, the Dallas Fed president, and Eric S. Rosengren, the Boston Fed president, both announced their imminent retirements on Monday, amid widespread criticism of the fact that they were trading securities in 2020 — during a year in which the Fed unrolled a widespread market rescue in response to the pandemic.Mr. Powell addressed that scandal on Tuesday, pledging to lawmakers that the Fed would change its ethics rules and saying that the Fed was looking into the trading activity to make sure it was in compliance with those rules and with the law.“Our need to sustain the public’s trust is the essence of our work,” Mr. Powell said, adding that “we will rise to this moment.”Beyond grabbing headlines, the departures will leave two regional bank jobs available at the Fed. The regional branches’ boards, except for bank-tied members, will search for and select replacement presidents. The Fed’s governors in Washington have a “yes” or “no” vote on the pick.The Fed has never had a Black woman as a regional bank president, either. Raphael Bostic, president of the Federal Reserve Bank of Atlanta, is the first Black man to serve in one of those roles.At the Board of Governors, Mr. Quarles’s leadership term ends most imminently, on Oct. 13. His position as governor does not expire until 2032, and he has signaled that he will likely stay on as a Fed governor at least through the end of his leadership term at the Financial Stability Board, a global oversight body, in December. Mr. Powell’s leadership term ends in early 2022, though he could stay on as governor since his term in that role does not expire until 2028. Mr. Clarida will have to leave early next year unless he is reappointed. More

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    Why Washington Worries About Stablecoins

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    Stablecoins might be the most ironically named innovation of the cryptocurrency era, at least in the eyes of many Washington regulators and policymakers.These digital currencies promise to maintain their value, which is generally pegged to a government currency like the dollar or euro, by relying on stable financial backing like bank reserves and short-term debt. They are exploding in popularity because they are a practical and cheap way to transact in cryptocurrency. Stablecoins have moved from virtual nonexistence to a more than $120 billion market in a few short years, with the bulk of that growth in the past 12 months.But many are built more like slightly risky investments than like the dollars-and-cents cash money they claim to be. And so far, they are slipping through regulatory cracks.The rush to oversee stablecoins — and the industry’s lobbying push to either avoid regulation or get on its profitable side — might be the most important conversation in Washington financial circles this year. How officials handle sticky questions about a relatively new phenomenon will set the precedent for a technology that is likely to last and grow, effectively writing the first draft of a rule book that will govern the future of money.The debate over how to treat stablecoins is also inescapably intertwined with another hot conversation: whether the Federal Reserve ought to offer its own digital currency. A Fed offering could compete with private-sector stablecoins, depending on its features, and the industry is already bracing for the possibility.Below is a rundown of what stablecoins are, why they may be risky, the possible regulatory solutions and the government’s likely next moves when it comes to policing them.What is a stablecoin?A stablecoin — stablevalue coin, if you’re feeling proper — is a type of cryptocurrency that is typically pegged to an existing government-backed currency. To promise holders that every $1 they put in will remain worth $1, stablecoins hold a bundle of assets in reserve, usually short-term securities such as cash, government debt or commercial paper.Stablecoins are useful because they allow people to transact more seamlessly in cryptocurrencies that function as investments, such as Bitcoin. They form a bridge between old-world money and new-world crypto.But many stablecoins are backed by types of short-term debt that are prone to bouts of illiquidity, meaning that they can become hard or impossible to trade during times of trouble. Despite that somewhat shaky backing, the stablecoins themselves promise to function like perfectly safe holdings.That makes them the type of financial product “macroeconomic disasters usually come from,” said Morgan Ricks, a professor at Vanderbilt University Law School and former policy adviser at the Treasury Department. “The stakes are really, really high here.”That said, some people — including George Selgin, director of the Center for Monetary and Financial Alternatives at the Cato Institute — argue that because stablecoins are used as a niche currency and not as an investment, they may be less prone to runs in which investors try to withdraw their funds all at once. Even if their backing comes into question, people will not want the potential taxes and paperwork that come with changing stablecoins into actual dollars.Given that the technology is so nascent, it is hard to know who is correct. But regulators are worried that they may find out the hard way.Are they all equally risky?Stablecoins are not all created equal. The largest stablecoin, Tether, says it is roughly half invested in a type of short-term corporate debt called commercial paper, based on its recent disclosures. The commercial paper market melted down in March 2020, forcing the Fed to step in to fix things. If those types of vulnerabilities strike again, it could be difficult for Tether to quickly convert its holdings into cash to meet withdrawals.Other stablecoins claim different backing, giving them different risks. But there are big questions about whether stablecoins actually hold the reserves that they claim.The company Circle had said its U.S.D. Coin, or U.S.D.C., was backed 1:1 by cashlike holdings — but then it disclosed in July that 40 percent of its holdings were actually in U.S. Treasurys, certificates of deposit, commercial paper, corporate bonds and municipal debt. A Circle representative said U.S.D.C. will, as of this month, hold all reserves in cash and short-term U.S. government Treasurys.The New York attorney general investigated Tether and Bitfinex, a cryptocurrency exchange, alleging in part that Tether had at one point obscured what the stablecoins had in reserve. The companies’ settlement with the state included a fine and transparency improvements.Tether, in a statement, noted that it has never refused a redemption and that it has amended its disclosures in the wake of the New York attorney general’s investigation. The common thread is that, without standard disclosure or reporting requirements, it is hard to know exactly what is behind a stablecoin, so it is tough to gauge how much risk it entails.It is also difficult to track just how stablecoins are being used.Stablecoins “may facilitate those seeking to sidestep a host of public policy goals connected to our traditional banking and financial system: anti-money-laundering, tax compliance, sanctions and the like,” Gary Gensler, who heads the Securities and Exchange Commission, told Senator Elizabeth Warren in a letter this year.What can regulators do?The trouble with stablecoins is that they slip through the regulatory cracks. They aren’t classified as bank deposits, so the Fed and the Office of the Comptroller of the Currency have limited ability to oversee them. The S.E.C. has some authority if they are defined as securities, but that is a matter of active debate.State-level regulators have managed to exert some oversight, but the fact that significant offerings — including Tether — are based overseas could make it harder for the federal government to exercise authority. Regulators are looking into their options now.What are the government’s next steps?Treasury, the Fed and other financial oversight bodies have a few choices. It’s not obvious what they will choose, but the issue is clearly top-of-mind: The President’s Working Group on Financial Markets, anchored by Treasury, is expected to issue a report on the topic imminently. An upcoming Fed report on central bank digital currencies could also touch on stablecoin risks.A few of the top regulatory options include:Designate them as systemically risky. Because stablecoins are intertwined with other important markets, the Financial Stability Oversight Council could designate them a systemically risky payments system, making them subject to stricter oversight.While the market may not be big enough to count as a systemic risk now, the Dodd Frank Act gives regulators the ability to apply that designation to a payments activity if it appears to be poised to become a threat to the system in the future. If that happened, the Fed or other regulators would then need up to come up with a plan to deal with the risk.Treat them as if they were securities. The government could also label some stablecoins securities, which would bring bigger disclosure requirements. Mr. Gensler told lawmakers during a recent hearing that stablecoins “may well be securities,” which would give his institution broader oversight.Regulate them as if they were money market mutual funds. Many financial experts point out that stablecoins operate much like money market mutual funds, which also act as short-term savings vehicles that offer rapid redemptions while investing in slightly risky assets. But money funds themselves have required two government rescues in a little more than a decade, suggesting their regulation is imperfect.“Stablecoins don’t look new,” said Gregg Gelzinis, who focuses on financial markets and regulation at the Center for American Progress. “I see them either as an unregulated money market mutual fund or an unregulated bank.”Treat them as if they were banks. Given flaws in money fund oversight, many financial regulation enthusiasts would prefer to see stablecoins treated as bank deposits. If that were to happen, the tokens could become subject to oversight by a bank regulator, such as the Office of the Comptroller of Currency, Mr. Gelzinis said. They could also potentially benefit from deposit insurance, which would protect individuals if the company backing the stablecoin went belly up.Try to compete with central bank digital currency. Jerome H. Powell, the Fed chair, has signaled that outcompeting stablecoins could be one appeal of a central bank digital currency — a digital dollar that, like paper money, ties back directly to the Fed.“You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies, if you had a digital U.S. currency. I think that’s one of the stronger arguments in its favor,” Mr. Powell said during testimony this year.But how a central bank digital currency is designed would be critical to whether it succeeded at replacing stablecoins. And industry experts point out that since stablecoin users prioritize privacy and independence from the government, a new form of government-backed currency might do little to supplant them.Cooperate internationally. If there’s one point everyone in the conversation agrees on, it’s that different jurisdictions will need to collaborate to make stablecoin regulation work. Otherwise, coins will be able to move overseas if they face unattractive oversight in a given country.The Financial Stability Board, a global oversight body, is working on establishing stablecoin-related standards and plans for cooperation, aiming for final adoption in 2023. More

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    California Bill Could Alter Amazon Labor Practices

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    The bill would rein in production quotas at warehouses that critics say are excessive and force workers to forgo bathroom breaks.Among the pandemic’s biggest economic winners is Amazon, which nearly doubled its annual profit last year to $21 billion and is on pace to far exceed that total this year.The profits flowed from the millions of Americans who value the convenience of quick home delivery, but critics complain that the arrangement comes at a large cost to workers, whom they say the company pushes to physical extremes.That labor model could begin to change under a California bill that would require warehouse employers like Amazon to disclose productivity quotas for workers, whose progress they often track using algorithms. “The supervisory function is being taken over by computers,” said Assemblywoman Lorena Gonzalez, the bill’s author. “But they’re not taking into account the human factor.”The bill, which the Assembly passed in May and the State Senate is expected to vote on this week, would prohibit any quota that prevents workers from taking state-mandated breaks or using the bathroom when needed, or that keeps employers from complying with health and safety laws.The legislation has drawn intense opposition from business groups, which argue that it would lead to an explosion of costly litigation and that it punishes a whole industry for the perceived excesses of a single employer.“They’re going after one company, but at the same time they’re pulling everyone else in the supply chain under this umbrella,” said Rachel Michelin, the president of the California Retailers Association, on whose board Amazon sits.California plays an outsize role in the e-commerce and distribution industry, both because of its huge economy and status as a tech hub and because it is home to the ports through which much of Amazon’s imported inventory arrives. The Inland Empire region, east of Los Angeles, has one of the highest concentrations of Amazon fulfillment centers in the country.Kelly Nantel, an Amazon spokeswoman, declined to comment on the bill but said in a statement that “performance targets are determined based on actual employee performance over a period of time” and that they take into account the employee’s experience as well as health and safety considerations.“Terminations for performance issues are rare — less than 1 percent,” Ms. Nantel added.The company faces growing scrutiny of its treatment of workers, including an expected ruling from a regional director of the National Labor Relations Board that it unlawfully interfered in a union vote at an Alabama warehouse. The finding could prompt a new election there, though Amazon has said it would appeal to preserve the original vote, in which it prevailed.In June, the International Brotherhood of Teamsters passed a resolution committing the union to provide “all resources necessary” to organize Amazon workers, partly by pressuring the company through political channels. Teamsters officials have taken part in successful efforts to deny Amazon a tax abatement in Indiana and approval for a facility in Colorado and are backers of the California legislation.Both sides appear to regard the fight over Amazon’s quotas as having high stakes. “We know that the future of work is falling into this algorithm, A.I. kind of aspect,” said Ms. Gonzalez, the bill’s author. “If we don’t intervene now, other companies will be the next stage.”Ms. Michelin, the retail association president, emphasized that the data was “proprietary information” and said the bill’s proponents “want that data because it helps unionize distribution centers.”A report by the Strategic Organizing Center, a group backed by four labor unions, shows that Amazon’s serious-injury rate nationally was almost double that of the rest of the warehousing industry in 2020 and more than twice that of warehouses at Walmart, a top competitor.Asked about the findings, Ms. Nantel, the Amazon spokeswoman, did not directly address them but said that the company recently entered into a partnership with a nonprofit safety advocacy group to develop ways of preventing musculoskeletal injuries. She also said that Amazon had invested over $300 million this year in safety measures, like redesigning workstations.Amazon employees have frequently complained that supervisors push them to work at speeds that wear them down physically.“There were a lot of grandmothers,” one worker said in a study underwritten by the Los Angeles County Federation of Labor, another backer of the California bill. Managers would “come to these older women, and say, ‘Hey, I need you to speed up,’ and then you could see in her face she almost wants to cry. She’s like, ‘This is the fastest my body can literally go.’”Yesenia Barrera, a former Amazon worker in California, said that managers told her she needed to pull 200 items an hour from a conveyor belt, unbox them and scan them. She said she was usually able to reach this target only by minimizing her bathroom use.“That would be me ignoring using restroom-type things to be able to make it,” Ms. Barrera said in an interview for this article. “When the bell would ring for a break, I felt like I had to do a few more items before I took off.”An employee sorted items at a Staten Island warehouse in May. Workers have complained that supervisors push them to work at speeds that wear them down.Chang W. Lee/The New York TimesEdward Flores, faculty director of the Community and Labor Center at the University of California, Merced, says repetitive strain injuries have been a particular problem in the warehousing industry as companies have automated their operations.“You’re responding to the speed at which a machine is moving,” said Dr. Flores, who has studied injuries in the industry. “The greater reliance on robotics, the higher incidence of repetitive motions and thus repetitive injuries.” Amazon has been a leader in adopting warehouse robotics.Ms. Gonzalez said that when she met with Amazon officials after introducing a similar bill last year, they denied using quotas, saying that they relied instead on goals and that workers were not punished for failing to meet them.During a meeting a few days before the Assembly passed this year’s bill, she said, Amazon officials acknowledged that they could do more to promote the health and safety of their workers but did not offer specific proposals beyond coaching employees on how to be more productive.At one point during the more recent meeting, Ms. Gonzalez recalled, an Amazon official raised concerns that some employees would abuse more generous allotments of time for using the bathroom before another official weighed in to de-emphasize the point.“Someone else tried to walk it back,” she said. “It’s often said quietly. It’s not the first time I’ve heard it.”The bill’s path has always appeared rockier in the State Senate, where amendments have weakened it. The bill no longer directs the state’s occupational safety and health agency to develop a rule preventing warehouse injuries that result from overwork or other physical stress.Instead, it gives the state labor commissioner’s office access to data about quotas and injuries so it can step up enforcement. Workers would also be able to sue employers to eliminate overly strict quotas.Ms. Gonzalez said she felt confident about the Senate vote, which must come by the close of the legislative session on Friday, but business groups are still working hard to derail it.Ms. Michelin, the retailer group president, said that the Senate committees’ changes had made the bill more palatable and that her members might support a measure that gave more resources to regulators to enforce health and safety rules. But she said they had serious concerns about the way the bill empowers workers to sue their employers.As long as that provision remains in the bill, she said, “we will never support it.” More

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    When Heat Waves, Wildfires and Drought Grip Oregon and Washington

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    In early summer, a day laborer laying irrigation lines at a plant nursery just south of Portland, Ore., collapsed to the ground and died. His official cause of death was declared “heat related.”It was 104 degrees out — several days into a brutal heat wave whose like has become increasingly commonplace in many parts of the country. Mussels and clams baked in their shells along the Washington coast. Record temperatures and fierce winds fueled one of the largest wildfires in the United States.Drought, megafires and heat waves are descending on the Pacific Northwest as the effects of climate change alter the landscape. They have forced farm owners, fieldworkers and state regulators to navigate newly extreme conditions.But visits to several farms in the Rogue Valley in Oregon and in Southern Washington over the last month showed that the response can often feel improvised, and at times inadequate.Workers during the watermelon harvest last month in Sunnyside, Wash.A tractor hauling freshly harvested watermelons passes the only form of shade on this farm in Sunnyside.A farmworker in Phoenix, Ore., took a break on Monday.Policymakers in Oregon and Washington have recently established safety regulations to protect workers. Just after the punishing heat wave in June, Gov. Kate Brown of Oregon directed the state’s Occupational Health and Safety agency to adopt emergency rules for any workplace where conditions could lead to heat illness.The rules, which took effect Aug. 9, require employers to provide access to shade and cool drinking water in farms and other outdoor places when temperatures reach 80 degrees, with additional requirements to offer more breaks and periodic wellness checks when it reaches 90 degrees.The rules also require employers that provide temporary housing to field workers, like those with H-2A agricultural visas, to keep rooms at 78 degrees or below. Washington State this year created similar emergency rules to manage extreme weather patterns, joining Minnesota and California, which have also imposed heat safety regulations that apply to farms in recent years.The new protections on the ground in the Northwest can look thrown together: plastic benches roasting in the sun, pop-up tents for shade, drinks laid out in kiddie pools.An apple-picking crew during lunch in Sunnyside, Wash., last month.Volunteers with the United Farm Workers union preparing drinks to hand out last month.Farms have also begun shifts that run at odd hours or overnight to battle the heat.During the 2-6 a.m. shift on a pear orchard in Zillah, Wash.Picking pears at night in Zillah to fight the heat.The Oregon Farm Bureau, an industry group, has supported the new rules, noting that many of its farmers already carry out safety measures that include access to shade, water and extra breaks on their farms. But the group also said that adopting all of the rules has been challenging because they took effect during the middle of the harvest season.“At some point, there is a breaking point in terms of rules and regulations and natural disasters,” said Anne Marie Moss, a spokeswoman for the group. “We need more federal and state government programs for farms to stay sustainable.”Employees of a farm in Southern Oregon, who asked to not be identified out of fear of retribution by their employer, this week described cramped living conditions in temporary housing that made escaping the outside heat difficult.At one unit, with little protection from the elements, the windows were fully covered to keep the heat and light out. In a 20-square-foot room with six bunk beds stacked in rows, small fans were tied to beds with pieces of cloth.Sheets cover the windows to keep heat and sun out of employee housing on a farm in Southern Oregon.A worker inside the employee housing unit where several bunk beds are crammed into a room.Wildfires have also generated some of the poorest air quality in the country. This week, laborers in Medford worked under 94-degree temperatures with an air quality index of 154 — a level considered to be unhealthy by federal standards.The new emergency rules in Oregon mandate that employers provide masks that block very fine particulate matter to field workers when the air quality index reaches 100.The hazards of air quality and heat are magnified by the continued risk of the coronavirus pandemic. The Medford area has had among the highest growth rates of Covid cases in the United States.N95 masks were handed out to workers in Sunnyside, Wash., last month when the air quality began to deteriorate.One worker on a vineyard in Medford, who asked to be identified only as Beatriz because of her insecure status as a migrant worker from Mexico, said field conditions had become exceptionally harsh recently. She noted that while her employer supplies the workers with water, there is little shade for taking cover during her 6 a.m. to 3 p.m. shifts.The heat and wildfire smoke worry her, but not because of health concerns. Beatriz, 38, like many others, is paid by what she can pick. “The grape goes to waste with the smoke,” she said. “It affects our pay also, because we don’t get paid for bad grapes.”Blueberries scorched by high temperatures in Albany, Ore.Some farm owners have questioned whether they should be in business at all. Instead of picking pears, people this week at Meyer Orchards in Medford were cutting down trees, dismantling a farm that had been operating for over a century.Oregon, like much of the West, is gripped by drought. Large parts of the state have exceptionally low levels of water, according to the United States Drought Monitor, including the river valley where the Meyer orchard sits. The outlook is not promising either, according to forecasters.Workers at Meyer Orchards chopping down pear trees.“There has never been a drought this severe,” said Kurt Meyer, who is the fourth generation to run the orchard. “After 111 years, we didn’t have much of a choice. You can’t farm without water.”The orchard is 115 acres, and Mr. Meyer estimates that it costs up to $350,000 a year to grow the fruit. This year, he said, there’s no return on that money.“The industry will have to go to where there’s water,” Mr. Meyer said. “I don’t see the Rogue Valley being a big farming community anymore.”Empty crates for picking apples line an orchard field and back road during a morning harvest shift in Sunnyside. More