Regulation and Deregulation of Industry

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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

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    China’s Biggest ‘Bad Bank’ Will Get a Rescue

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    After months of silence about its future, the corporate giant Huarong Asset Management announced that it would receive financial assistance from a group of state-backed companies.China has promised to teach its most indebted companies a lesson. Just not yet.Huarong Asset Management, the financial conglomerate that was once a poster child for China’s corporate excess, said Wednesday night that it would get financial assistance from a group of state-backed companies after months of silence about its future. The company also said it had made a $16 billion loss in 2020.Citic Group and China Cinda Asset Management were among the five state-owned firms that will make a strategic investment, Huarong said without providing more details on how much money would be invested or when the deal would be finalized.Huarong also said that it had no plans to restructure its debt but left unanswered the question of whether foreign and Chinese bondholders would have to accept significant losses on their investments.Investors took the news to be a strong indication that the Chinese government was not yet ready to see the failure of a company so closely tied to its financial system. For months, investors waited for any news of Huarong and its financial future after the company delayed its annual results in March and suspended the trading of its shares in April.“It’s hugely positive,” said Michel Löwy, chief executive of SC Lowy, an investment firm that has a small position in Huarong’s U.S. dollar bonds. “It’s certainly a partial bailout because I don’t believe that totally independent investors would be subscribing to a capital raise without assurances or a tap on the shoulder,” Mr. Löwy said of the group of state-backed companies mentioned in Huarong’s statement.For years Beijing looked the other way as companies like Huarong borrowed heavily to expand. The companies grew into huge conglomerates built largely on cheap state bank loans and money borrowed from foreign and domestic investors who believed they could count on the Chinese government to bail them out if push came to shove.Lai Xiaomin, the former chairman of Huarong, weeks before he was executed in January for corruption and abuse of power.CCTV, via Associated Press Video, via Associated PressOver the past few years, however, officials have indicated a willingness to let some of these companies fail as they try to rein in the ballooning debt threatening China’s economy.Even as Beijing cracked down on risky binge borrowing, Huarong tested the limits of China’s commitment to reform. Known as a “bad bank,” Huarong was created in the late 1990s to take the ugliest loans from state-owned banks before they turned to the global markets to raise money as China opened up. It later expanded into a sprawling empire by lending to high-risk companies, using its access to cheap loans from state-owned banks.Over the years, Huarong became more and more intertwined with China’s financial system, leading some experts to say it was “too big to fail” and putting regulators in a difficult position. Under its former chairman, Lai Xiaomin, it engaged in suspicious deals that regulators said led to corruption so widespread that it might be impossible to assess the full extent of the losses.Mr. Lai confessed to using his position to accept $277 million in bribes and was sentenced to death and executed in January for corruption and abuse of power.In its statement on Wednesday night, Huarong blamed the company’s “aggressive operation and disorderly expansion” under Mr. Lai in part for its $16 billion loss.A fresh injection of cash will give Huarong more time to sell off parts of its vast financial empire, analysts noted, though it was unclear whether the investment would be enough to stem the company’s towering losses. More

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    Evergrande Went From China’s Biggest Developer to One of Its Worst Debtors

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    Regulators want to fix the property sector’s bad habit of borrowing too much. Evergrande, with its billions of dollars in debt, may stand in the way.The company owes hundreds of billions of dollars. Its creditors are circling. Its shares have taken a beating. But if anything forces a reckoning for Evergrande, a vast real estate empire in China, it might be the nervousness of ordinary home buyers like Chen Cheng.Ms. Chen, 30, and her husband thought they had found the perfect apartment. It was part of an 18-building complex in the southern city of Guangzhou, near a good school for their daughter and a new subway station.Evergrande was asking for a deposit worth nearly one-third of the price before the property was completed. After reading headlines about the company’s financial difficulties and complaints about construction delays from recent buyers, Ms. Chen walked away.“We don’t have a lot of money,” she said. “We were really afraid this money would evaporate.”China has a special term for companies like Evergrande: “gray rhinos,” so large and so entangled in the country’s financial system that the government has an interest in their survival. A failure on the scale of Evergrande would ripple across the economy, and spell financial ruin for ordinary households.During the boom years, Evergrande was China’s biggest developer, creating economic activity that officials came to depend on while the country opened up. As more people were lifted out of poverty, home buyers put their money into property. Feeling flush and eager to expand, Evergrande borrowed money to dabble in new businesses like a soccer club, bottled water and, most recently, electric vehicles.Now Evergrande epitomizes the vulnerability of the world’s No. 2 economy. It owes more money than it can pay off, and officials in Beijing want it to slow down. Its stock price has lost three-quarters of its value in the past year, and creditors are panicking. The company has started selling off parts of its corporate empire, but to survive Evergrande needs to keep selling its apartments.The problem is that some Chinese home buyers, once attracted to Evergrande’s developments, have grown increasingly anxious about the company.On China’s internet, buyers describe waiting months or even years for their Evergrande apartments. Some have accused the company of using the pandemic as an excuse for further construction delays.Evergrande declined to comment, citing a “quiet period” ahead of a company earnings announcement.Xu Jiayin founded Evergrande in 1996, as urbanization in China was rising steeply.Paul Yeung/BloombergThe company’s problems have been building for years, but lenders, big investors and home buyers alike are treating it as though it is about to fail. By one estimate, Evergrande owes more than $300 billion. Creditors are not sure it can pay the bills. Business partners have filed lawsuits.Property in China is prone to big swings. Speculative buying propels prices to soar. Local governments then step in to cool things down, sometimes with a heavy hand. Despite the ups and downs, the residential real estate market is still the largest store of Chinese household wealth.For Xu Jiayin, Evergrande’s billionaire founder, the wild ride has mostly followed one trajectory: up.A former steel factory technician, he founded Evergrande in 1996 just as China was embarking on the gargantuan task of moving hundreds of millions of people from the countryside to cities. As property prices climbed with this urbanization, so did Mr. Xu’s wealth.After publicly listing his company in 2009, he began to expand the business into new areas. Evergrande took control of Guangzhou’s soccer club in 2010 and spent billions of dollars on foreign players. It then moved into the dairy, grain and oil businesses. At one point, it even tried pig farming.As the business grew, Mr. Xu was able to attract tens of billions of dollars in funding from foreign and domestic investors and cheap loans from Chinese banks. The success came with strong political connections. A member of China’s People’s Political Consultative Conference, an advisory body to the central government, Mr. Xu is a presence at the most important political gatherings in Beijing every year.His proximity to power also gave investors and banks the confidence they needed to keep lending to the company. Over the years when regulators have stepped in to try to curtail Evergrande’s business, they have usually eased off soon after. By 2019, Mr. Xu was one of the richest property developers in the world.Today his wealth is a little more modest, much of it tied to the company’s stock price, around $18 billion, according China’s Hurun wealth report.“In my opinion, Xi Jiayin is someone who can walk the tightrope really well,” said Rupert Hoogewerf, the founder of the Hurun Report. “He has been able to balance his debt with his growth.”The question for many observers is whether Mr. Xu can continue his careful balancing act as regulators try to shrink the sector’s spiraling debt. When China’s economy began to slow more drastically several years ago, developers like Evergrande found themselves overextended and strapped. To gin up business, they discounted apartments, undercutting the value of properties that earlier buyers paid, prompting street protests.The model of selling apartments before they were completed gave companies the cash they needed to keep operating. That was, until regulators took note of the property sector’s unruly debt, making it harder for developers like Evergrande to finish the apartments they have already sold to buyers.Evergrande took over the soccer club in Guangzhou, China, in 2010 and invested heavily in it —  including a 100,000-seat stadium that opened last year. Evergrande Group, via ReutersFearing a housing bust that would ricochet through China’s financial system, the central bank created “three red lines,” rules forcing property companies to get their debt levels down before they could borrow more money. The aim was to limit the banking sector’s exposure to the property market. But it also took away funds they could use to finish projects.To comply, Evergrande has started to sell off some of its businesses. Last week it sold stakes in its internet business. In public comments, Mr. Xu has pointed to the company’s success in paying off some foreign and domestic investors, reducing debt that incurs interest to $88 billion from $130 billion late last year.But it still has unpaid bills from acquisitions, land-use rights and contract liabilities that add up to hundreds of billions of dollars. Some lenders and business partners have taken it to court to try to freeze assets to get their money back.“On paper it doesn’t make any sense for a company like this to have so much debt. This is not normal,” said Jennifer James, an investment manager at Janus Henderson Investors who estimates that Evergrande has more than $300 billion in debt. Then there are the properties that it took payment for and still has not completed.Wesley Zhang has been waiting four years for an apartment he bought for his parents. Mr. Zhang, 33, paid a $93,000 deposit and has made 41 monthly mortgage payments of nearly $1,100. Local officials suspended the development project in 2018 but later reversed the decision, giving Evergrande the green light to start building.There are no signs of any progress or communication from Evergrande on the apartment he bought. The company is now trying to sell apartments in the complex that promise to be ready to move into by 2023.“It has a huge impact on my life,” Mr. Zhang said. To get his money back, he would have to file a lawsuit against the company to break his contract. “We also need to consider buying another apartment, but the property prices are much higher now.” More

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    China's Parents Say For-Profit Tutoring Ban Helps Only the Rich

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    Many families and experts say Beijing’s education overhaul will help the rich and make the system even more competitive for those who can barely afford it.Zhang Hongchun worries that his 10-year-old daughter isn’t getting enough sleep. Between school, homework and after-school guitar, clarinet and calligraphy practice, most nights she doesn’t get to bed before 11. Some of her classmates keep going until midnight.“Everyone wants to follow suit,” Mr. Zhang said. “No one wants to lose at the starting line.”In China, the competitive pursuit of education — and the better life it promises — is relentless. So are the financial pressures it adds to families already dealing with climbing house prices, caring for aging parents and costly health care.The burden of this pursuit has caught the attention of officials who want couples to have more children. China’s ruling Communist Party has tried to slow the education treadmill. It has banned homework, curbed livestreaming hours of online tutors and created more coveted slots at top universities.Last week, it tried something bigger: barring private companies that offer after-school tutoring and targeting China’s $100 billion for-profit test-prep industry. The first limits are set to take place during the coming year, to be carried out by local governments.The move, which will require companies that offer curriculum tutoring to register as nonprofits, is aimed at making life easier for parents who are overwhelmed by the financial pressures of educating their children. Yet parents and experts are skeptical it will work. The wealthy, they point out, will simply hire expensive private tutors, making education even more competitive and ultimately widening China’s yawning wealth gap.For Mr. Zhang, who sells chemistry lab equipment in the southern Chinese city of Kunming, banning after-school tutoring does little to address his broader concerns. “As long as there is competition, parents will still have their anxiety,” he said.Children in Beijing’s Chaoyang Park. In May, China changed its two-child policy to allow married couples to have three children.Gilles Sabrié for The New York TimesBeijing’s crackdown on private education is a new facet of its campaign to toughen regulation on corporate China, an effort driven in part by the party’s desire to show its most powerful technology giants who is boss.Regulators have slammed the industry for being “hijacked by capital.” China’s top leader, Xi Jinping, has attacked it as a “malady,” and said parents faced a dilemma in balancing the health and happiness of their children with the demands of a competitive system, which is too focused on testing and scores.The education overhaul is also part of the country’s effort to encourage an overwhelmingly reluctant population to have bigger families and address a looming demographic crisis. In May, China changed its two-child policy to allow married couples to have three children. It promised to increase maternity leave and ease workplace pressures.Tackling soaring education costs is seen as the latest sweetener. But Mr. Zhang said having a second child was out of the question for him and his wife because of the time, energy and financial resources that China’s test-score-obsessed culture has placed on them.Parental focus on education in China can sometimes make American helicopter parenting seem quaint. Exam preparation courses begin in kindergarten. Young children are enrolled in “early M.B.A.” courses. No expense is spared, whether the family is rich or poor.“Everyone is pushed into this vicious cycle. You spend what you can on education,” said Siqi Tu, a postdoctoral research fellow at the Max Planck Institute for the Study of Religious and Ethnic Diversity in Göttingen, Germany. For Chinese students hoping to get a spot at a prestigious university, everything hinges on the gaokao, a single exam that many children are primed for before they even learn how to write.A boy with a school backpack in Haidian during summer break. Parental focus on education in China can sometimes make American helicopter parenting seem quaint.Gilles Sabrié for The New York Times“If this criteria for selecting students doesn’t change, it’s hard to change specific practices,” said Ms. Tu, whose research is focused on wealth and education in China. Parents often describe being pressured into finding tutors who will teach their children next year’s curriculum well before the semester begins, she said.Much of the competition comes from a culture of parenting known colloquially in China as “chicken parenting,” which refers to the obsessive involvement of parents in their children’s lives and education. The term “jiwa” or “chicken baby” has trended on Chinese social media in recent days.Officials have blamed private educators for preying on parents’ fears associated with the jiwa culture. While banning tutoring services is meant to eliminate some of the anxiety, parents said the new rule would simply create new pressures, especially for families that depended on the after-school programs for child care.“After-school tutoring was expensive, but at least it was a solution. Now China has taken away an easy solution for parents without changing the problem,” said Lenora Chu, the author of “Little Soldiers: An American Boy, a Chinese School, and the Global Race to Achieve.” In her book, Ms. Chu wrote about her experience putting her toddler son through China’s education system and recounted how her son’s friend was enrolled in “early M.B.A.” classes..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}“If you don’t have the money or the means or the know-how, what are you left with?” she said. “Why would this compel you to have another child? No way.”The new regulation has created some confusion for many small after-school businesses that are unsure if it will affect them. Others wondered how the rules would be enforced.Jasmine Zhang, the school master at an English training school in southern China, said she hadn’t heard from local officials about the new rules. She said she hoped that rather than shutting institutions down, the government would provide more guidance on how to run programs like hers, which provide educators with jobs.“We pay our teachers social insurance,” Ms. Zhang said. “If we are ordered to close suddenly, we still have to pay rent and salaries.”While she waits to learn more about the new rules, some for-profit educators outside China see an opportunity.“Now students will come to people like us,” said Kevin Ferrone, an academic dean at Crimson Global Academy, an online school. “The industry is going to shift to online, and payments will be made through foreign payment systems” to evade the new rules, he said.For now, the industry is facing an existential crisis. Companies like Koolearn Technology, which provides online classes and test-preparation courses, have said the rules will have a direct and devastating impact on their business models. Analysts have questioned whether they can survive.Global investors who once flooded publicly listed Chinese education companies ran for the exits last week, knocking tens of billions off the industry in recent days.Scott Yang, who lives in the eastern city of Wenzhou, wondered if his 8-year-old son’s after-school program would continue next semester. He has already paid the tuition, and he and his wife depend on the program for child care. Each day, someone picks up his son from school and takes him to a facility for courses in table tennis, recreational mathematics, calligraphy and building with Legos.Banning after-school classes will allow only families that can afford private tutors to give their children an edge, Mr. Yang said. Instead of alleviating any burden, the ban will add to it.“It makes it harder,” he said, “for kids of poor families to succeed.” More