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New York Plans to Invest $1 Billion to Expand Chip Research

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The move is aimed at drawing $9 billion in corporate investment, as New York jockeys to host a new national semiconductor technology center.Gov. Kathy Hochul of New York announced on Monday a plan to invest $1 billion to expand chip research activities in Albany, N.Y., as the state aims to continue as a global semiconductor center.The plan is expected to create 700 new permanent jobs and retain thousands more, and includes the purchase of a new version of one of the world’s most expensive and sophisticated manufacturing machines, along with the construction of a new building to house it.At an event in Albany, Gov. Hochul positioned the investment as a national priority. “The Chinese are attempting to dominate this industry,” she said. “We have no intention of letting that happen. “The initiative should draw $9 billion in additional investments from chip-related companies, according to state officials. They expect it to boost New York’s chances to be selected to host a new National Semiconductor Technology Center, a planned centerpiece of the research portion of federal money that Congress allocated in 2022 as part of the CHIPS Act.“We’re hoping that this level of investment will attract more investment from the U.S. CHIPS Act to make it even bigger,” said Mukesh Khare, an IBM vice president who is general manager of its semiconductor operations.Besides IBM, which has long conducted chip research in Albany, companies participating in the project include Micron Technology, Applied Materials and Tokyo Electron.The focus of the effort is the Albany Nanotech Complex, a cluster of research buildings owned and operated by a state-affiliated nonprofit called NY CREATES. The state plans to spend about $500 million to build a new 50,000-square-foot clean room building.A different building is needed to accommodate the next major advance in a technology called lithography, which projects patterns of circuitry on silicon wafers to make chips. Advances in such equipment are needed to create smaller transistors and other circuitry to boost the power of computers and other devices.The most sophisticated chips are currently made using technology called extreme ultraviolet, or EUV, lithography. The Dutch company ASML is the dominant supplier of the machines, which officials in the United States and the Netherlands have prevented from being sold to China as part of an effort to limit that country’s progress in chip manufacturing.Albany Nanotech has owned prototype EUV tools and currently operates a commercial version. Under the new plan, New York will invest $500 million to purchase a next-generation EUV system — known by the phrase “High NA,” for numerical aperture — that will allow the center to develop much more advanced chips.Besides permanent research jobs, state officials estimated that the Albany project would generate 500 to 600 temporary construction jobs over roughly two years.Albany NanoTech won’t be the first to use the High NA tool. Intel has ordered the first system from ASML, which is expected to begin installing it in early 2024. The comparable machine is expected to arrive in Albany in late 2025, Mr. Khare said.The effort is unusual in several ways, including that the new machine will be owned by the state and operated as a public resource to help the broader U.S. semiconductor industry, he added.States in the Northeast United States seem destined to play a big role in the chip industry’s evolution. U.S. Commerce Department officials also said Monday that BAE Systems in New Hampshire will receive the first grant under the manufacturing portion of the CHIPS Act.Micron, a Boise, Idaho, company that is the only American maker of chips used to store data, has also said it will spend up to $100 billion over a decade or more to develop a new manufacturing site near Syracuse, N.Y. More

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    Strike Is a High-Stakes Gamble for Autoworkers and the Labor Movement

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    Experts on unions and the industry said the U.A.W. strike could accelerate a wave of worker actions, or stifle labor’s recent momentum.Since the start of the pandemic, labor unions have enjoyed something of a renaissance. They have made inroads into previously nonunion companies like Starbucks and Amazon, and won unusually strong contracts for hundreds of thousands of workers. Last year, public approval for unions reached its highest level since the Lyndon Johnson presidency.What unions haven’t had during that stretch is a true gut-check moment on a national scale. Strikes by railroad workers and UPS employees, which had the potential to rattle the U.S. economy, were averted at the last minute. The fallout from the continuing writers’ and actors’ strikes has been heavily concentrated in Southern California.The strike by the United Automobile Workers, whose members walked off the job at three plants on Friday, is shaping up to be such a test. A contract with substantial wage increases and other concessions from the three automakers could announce organized labor as an economic force to be reckoned with and accelerate a recent wave of organizing.But there are also real pitfalls. A prolonged strike could undermine the three established U.S. automakers — General Motors, Ford and Stellantis, which owns Chrysler, Jeep and Ram — and send the politically crucial Midwest into recession. If the union is seen as overreaching, or if it settles for a weak deal after a costly stoppage, public support could sour.“Right now, unions are cool,” said Michael Lotito, a lawyer at Littler Mendelson, a firm representing management.“But unions have a risk of not being very cool if you have five-month strike in L.A and an X-month strike in how many other states,” he added.If the stakes seem high for the U.A.W., that’s partly because the union’s new president, Shawn Fain, has gone out of his way to elevate them. During frequent video meetings with members before the strike, Mr. Fain has portrayed the negotiations as a broader struggle pitting ordinary workers against corporate titans.“I know that we’re on the right side in this battle,” he said in a recent video appearance. “It’s a battle of the working class against the rich, the haves versus the have-nots, the billionaire class against everybody else.”Mr. Fain’s framing of the contract campaign in class terms appears to be resonating with his members, thousands of whom have watched the online sessions.Shunte Sanders-Beasley, a U.A.W. member said, “If we can win back some of the concessions we took, I’m hoping that it’ll be a trickle-down effect.”Cydni Elledge for The New York TimesShunte Sanders-Beasley, a U.A.W. member in Michigan who started working at a Chrysler plant in Indiana in 1999, said she saw the fight similarly.“If you follow history, autoworkers tend to set the tone,” said Ms. Sanders-Beasley, who has served as vice president of her local and backed Mr. Fain’s campaign for the union’s presidency last year. “If we can win back some of the concessions we took, I’m hoping that it’ll be a trickle-down effect.”A successful autoworker strike in 1937, which led G.M. to recognize the U.A.W. for the first time, helped set in motion a wave of union organizing across a variety of industries like steel, oil, textiles and newspapers over the next few years.Labor activists agreed that the current strike could also reverberate across other industries, where workers appear to be paying close attention to the labor actions of the past year. “In organizing meetings, they say, ‘If they can do it, we can do it,’” said Jaz Brisack, an organizer with Workers United who had played a key role in the Starbucks campaign.But the flip side is that the strike could inflict collateral damage that creates frustration and hardship among tens of thousands of nonunion workers and their communities.“The small and medium-sized manufacturers across the country that make up the automotive sector’s integrated supply chain will feel the brunt of this work stoppage, whether they are a union shop or not,” Jay Timmons, the chief executive of the National Association of Manufacturers, said in a statement Friday.Higher wages and gains for rank-and-file workers can be good for the economy. But some argue that Mr. Fain’s and other labor leaders’ aggressive demands could discourage businesses from investing in the United States or render them uncompetitive with foreign rivals.“Mr. Fain has to think about this, too — the long-term financial viability of these three companies,” said John Drake, vice president of transportation, infrastructure and supply chain policy at the U.S. Chamber of Commerce.Even those who welcome the union’s aggressive stance say it is fraught with risk. Gene Bruskin, a longtime union official who helped workers at a Smithfield meat-processing plant in North Carolina achieve, in 2008, one of the biggest organizing victories in decades, said a long strike could disillusion workers if the union came up short on key demands.“If the U.A.W. fails to make any significant gains, particularly on the two-tier stuff, their future could be seriously harmed,” said Mr. Bruskin, referring to a system in which newer workers are paid far less than veteran workers who perform similar jobs.Mr. Bruskin also worried that the union could effectively win the battle and lose the war if the auto companies respond by shifting more production to Mexico, where they already have a significant presence. Shawn Fain, president of the U.A.W., said, “It’s a battle of the working class against the rich, the haves versus the have-nots, the billionaire class against everybody else.”Cydni Elledge for The New York TimesThe tens of billions of dollars in federal subsidies for domestic production of electric vehicles that President Biden has helped secure should limit that shift and help keep manufacturing jobs at home. Many automakers are already locating new plants in the United States to take advantage of the funds.Still, Willy Shih, an expert on manufacturing at Harvard Business School, said the automakers could adjust their operations in ways that undercut the U.A.W. while continuing to produce cars domestically. Automation is one option, he said, as is locating new plants in lightly unionized Southern states.The Detroit automakers have created joint ventures with foreign battery makers outside the reach of the U.A.W.’s national contracts and have sought to locate some of those plants in states like Tennessee and Kentucky. The union is seeking to bring workers at those plants up to the same pay and labor standards that direct employees of the Big Three enjoy, but it has not succeeded so far.Given those threats, the union may feel justified in taking a more ambitious posture toward the automakers. The primary check on shifting work to other states will be the U.A.W.’s ability to organize new plants, especially in the South, where it has struggled to gain traction for years. Experts argued that the union would likely increase its chances of attracting members there if it could point to large concrete gains.“The answer is winning a strong contact here and using it to organize huge groups of autoworkers who are currently nonunion,” said Barry Eidlin, a sociologist at McGill University in Montreal who studies labor.And there are other ways in which being too cautious may be a bigger risk to the union than being too aggressive. Organizers point out that workers are often demoralized when union leaders talk tough and then quickly settle for a subpar deal.Critics of the previous U.A.W. administration accused it of doing just that before Mr. Fain took over this year. “We’d be trying to make sense of how certain things passed in the first place,” Shana Shaw, another longtime U.A.W. member who backed Mr. Fain, said of the concessionary contracts autoworkers were asked to accept over the years.Even Mr. Fain’s habit of framing the fight in broad class terms may prove to be a strategic advantage. A recent Gallup poll found that 75 percent of the public backed the autoworkers in the showdown, compared with 19 percent who were more sympathetic to the companies.The widespread public support suggests that the autoworkers may be operating in a different context from workers in another strike that famously contributed to a loss of power for labor: air traffic controllers’ unsuccessful fight against the Reagan administration in the early 1980s, after which private-sector employers appeared to become more comfortable firing and replacing striking employees.Dr. Eidlin said that while the air traffic controllers failed to court allies in the labor movement, “the fact that Fain and the U.A.W. are messaging more broadly, really trying to build that broad coalition, speaks to the possibility of a different outcome.” More

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    In a Hot Job Market, the Minimum Wage Becomes an Afterthought

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    The federal wage floor of $7.25 is increasingly irrelevant when even most teenagers are earning twice that. But what happens when the economy cools?Under New Hampshire law, Janette Desmond can pay the employees who scoop ice cream and cut fudge at her Portsmouth sweet shop as little as $7.25 an hour.But with the state unemployment rate under 2 percent, the dynamics of supply and demand trump the minimum wage: At Ms. Desmond’s store, teenagers working their first summer jobs earn at least $14 an hour.“I could take a billboard out on I-95 saying we’re hiring, $7.25 an hour,” Ms. Desmond said. “You know who would apply? Nobody. You couldn’t hire anybody at $7.25 an hour.”The red-hot labor market of the past two years has led to rapid pay increases, particularly in retail, hospitality and other low-wage industries. It has also rendered the minimum wage increasingly meaningless.Nationally, only about 68,000 people on average earned the federal minimum wage in the first seven months of 2023, according to a New York Times analysis of government data. That is less than one of every 1,000 hourly workers. Walmart, once noted for its rock-bottom wages, pays workers at least $14 an hour, even where it can legally pay roughly half that.Hardly anyone makes $7.25 anymoreAverage number of workers earning federal minimum wage

    Note: 2023 data is through July.Source: Current Population Survey, via IPUMSBy The New York TimesThere are still places where the minimum wage has teeth. Thirty states, along with dozens of cities and other local jurisdictions, have set minimums above the federal mark, in some cases linking them to inflation to help ensure that pay keeps up with the cost of living.But even there, most workers earn more than the legal minimum.“The minimum wage is almost irrelevant,” said Robert Branca, who owns nearly three dozen Dunkin’ Donuts stores in Massachusetts, where the minimum is $15. “I have to pay what I have to pay.”As a result, the minimum wage has faded from the economic policy debate. President Biden, who tried and failed to pass a $15 minimum wage during his first year in office, now rarely mentions it, although he has made the economy the centerpiece of his re-election effort. The Service Employees International Union, which helped found the Fight for $15 movement more than a decade ago, has shifted its focus to other policy levers, though it continues to support higher minimum wages.Opponents, too, seem to have moved on: When Pennsylvania’s House of Representatives voted this year to raise the state’s $7.25 minimum wage to $15 by 2026, businesses, at least aside from seasonal industries in rural areas, shrugged. (The measure has stalled in the state’s Republican-controlled Senate.)“Our members are not concerned,” said Ben Fileccia, a senior vice president at the Pennsylvania Restaurant and Lodging Association. “I have not heard about anybody being paid minimum wage in a very long time.”The question is what will happen when the labor market cools. In inflation-adjusted terms, the federal minimum is worth less than at any time since 1949. That means that workers in states like Pennsylvania and New Hampshire could struggle to hold on to their recent gains if employers regain leverage.Congress hasn’t voted to raise the minimum wage since George W. Bush was president — in 2007, he signed a law to bring the floor to $7.25 by 2009. It remains there 14 years later, the longest period without an increase since the nationwide minimum was established in 1938.As the federal minimum flatlined, however, the Fight for $15 campaign was succeeding at the state and local levels. Cities like Seattle and San Francisco adopted a $15 minimum wage, followed by states like New York and Massachusetts. And while Republican legislatures opposed raising minimums, voters often overruled them: Missouri, Florida, Arkansas and other Republican-dominated states have passed increases through ballot measures in the past decade.Nationwide, the number of people earning the minimum wage fell steadily, from nearly two million when the $7.25 floor took effect to about 400,000 in 2019. (Those figures omit people earning less than the minimum wage, which can in some cases include teenagers, people with certain disabilities or tipped workers.)Then Covid-19 upended the low-wage labor market. Millions of cooks, waiters, hotel housekeepers and retail workers lost their jobs; those who stayed on as “essential workers” often received hazard pay or bonuses. As businesses began to reopen in 2020 and 2021, demand for goods and services rebounded much faster than the supply of workers to deliver them. That left companies scrambling for employees — and gave workers rare leverage.The result was a labor market increasingly untethered to the official minimum wage. In New Hampshire, the 10th percentile wage — the level at which 90 percent of workers earn more — was just above $10 in May 2019. By May 2022, that figure had jumped to $13.64, and local business owners say it has continued to rise.Making more than the minimumLow-wage workers are making more than their state’s minimum wage nearly everywhere, but especially in states that haven’t raised their wage floors above the federal level of $7.25 an hour. (The 10th percentile wage is the pay rate at which 90 percent of workers in a state earn more.)

    Notes: Minimum wages are as of January 2022. Pay data is as of May 2022. Minimum wages in some cities and localities may be higher than the state minimum.Source: Labor DepartmentBy The New York Times“Today you’re looking at $15 an hour and saying I wish that’s all we had to pay,” said David Bellman, who owns a jewelry store in Manchester, N.H.The unemployment rate in New Hampshire was low before the pandemic; at 1.7 percent in July, it is now among the lowest rates ever recorded anywhere in the country. Competition for workers is fierce: The Wendy’s on Mr. Bellman’s drive home from work advertises wages of $18 an hour. At his own store, he is paying $17 to $20 an hour and recently hired someone away from the local bagel shop — his son had noticed that she seemed like a hard worker.“Basically the only way to hire anybody is to take them away from somebody else,” Mr. Bellman said.New Hampshire is surrounded by states where the minimum wage is above $13, so if Granite State employers tried to offer substantially less, many workers could cross the border for a bigger paycheck. But even in states like Alabama and Mississippi, where the cost of living is lower and where few neighboring states have minimum wages above the federal standard, most employers are finding they have to pay well above $7.25.Paige Roberts, president and chief executive of the Jackson County Chamber of Commerce in Mississippi, said she was “nearly laughed out of a job” when she started asking members about paying the minimum wage. Entry-level jobs there pay about $12 an hour, according to the local unemployment office.In states with higher minimums, the picture is more nuanced. Faster hikes in the wage floor in the late 2010s forced up long-stagnant wages in fields like restaurants and retail. And some businesses, such as summer camps, say they are still paying the minimum wage for entry-level workers or those in training. But for the most part, the minimums no longer exert the strong upward pressure on pay that they did when they were adopted.When New Jersey passed a minimum-wage law in 2019, many businesses complained that the increases were too aggressive: The floor would rise by at least a dollar an hour every year until it hit $15 in 2024. But recently, the hot job market has levitated the wage scale even more.Jeanne Cretella starts workers in her New Jersey restaurants and event venues at $15 an hour, though the state’s minimum won’t reach that figure until next year.Hiroko Masuike/The New York Times“Covid kind of shifted things around a bit, as did inflation,” said Jeanne Cretella, whose business, Landmark Hospitality, operates 14 venues in New Jersey and Pennsylvania.Before the pandemic, dishwashers and other entry-level employees at Landmark typically made the minimum wage. These days, Ms. Cretella starts workers in New Jersey at $15 an hour, though the state’s minimum won’t hit that mark until next year.When the Fight for $15 movement began, many economists warned that raising the minimum wage too high or too quickly could lead to job losses. Some studies did find modest negative effects on employment, particularly for teenagers and others on the margins of the labor market. But for the most part, researchers found that pay went up without widespread layoffs or business failures.Some economists still wondered what would happen as $15 minimum wages spread beyond high-cost coastal cities. But that was before the pandemic reshaped the low-wage labor market.“We’re kind of in different territory now,” said Jacob Vigdor, an economist at the University of Washington who has studied the issue.Washington has the highest statewide minimum wage, at $15.74. Yet when Mr. Vigdor recently visited Aberdeen, a small town near the Pacific coast, all business owners wanted to talk about was how to retain workers.“I did not really hear a lot of concern about those minimum wages,” he said. “There the concern is that they’re losing people.”Still, economists say the minimum wage could become relevant again when the labor market eventually cools and workers lose bargaining power.David Neumark, a professor at the University of California, Irvine, said states with high minimum wages could be at a disadvantage in a recession, because employers would have to keep pay high as demand softened, potentially leading to layoffs.Other economists have the opposite concern: that workers in states where the minimum wage remains $7.25 could see their recent gains evaporate when they no longer have the leverage to demand more.“It’s as tenuous as it gets,” said Kathryn Anne Edwards, a labor economist and policy consultant. “The labor market has gained ground, but policy has not cemented that territory.”Despite the strong labor market, many workers say they barely get by.KaSondra Wood has spent much of her adult life working for the minimum wage, from the army depot where she held her first job, earning $5.15 an hour, to the Little Caesars where she made $7.25 as recently as last year.But not anymore: This summer, she started a job cleaning rooms at a local hotel, earning $12 an hour. Even in Oneonta, Ala., a rural area with few job opportunities, employers know better than to try hiring at the minimum wage.“They wouldn’t advertise for it, knowing they wouldn’t get anyone in there,” she said.But Ms. Wood, 38, hardly feels that she is getting ahead. The hotel is a 45-minute drive from her home, so gas eats up much of her paycheck, even though she car-pools with her mother. Groceries keep getting more expensive.“A couple years ago, $12 an hour would’ve been killer money,” she said. But now, it isn’t enough to pay her bills.“I don’t ever get caught up,” she said. “I’m broke by the time I get paid.” More

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    Could U.S. Toughness on Chinese Business Have Unintended Consequences?

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    Businesses fear that efforts to look tough on Beijing, which have the potential to be more expansive than moves by the federal government, could have unintended consequences.At a moment when Washington is trying to reset its tense relationship with China, states across the country are leaning into anti-Chinese sentiment and crafting or enacting sweeping rules aimed at severing economic ties with Beijing.The measures, in places like Florida, Utah and South Carolina, are part of a growing political push to make the United States less economically dependent on China and to limit Chinese investment over concerns that it poses a national security risk. Those concerns are shared by the Biden administration, which has been trying to reduce America’s reliance on China by increasing domestic manufacturing and strengthening trade ties with allies.But the state efforts have the potential to be far more expansive than what the administration is orchestrating. They have drawn backlash from business groups over concerns that state governments are veering toward protectionism and retreating from a longstanding tradition of welcoming foreign investment into the United States.Nearly two dozen mostly right-leaning states — including Florida, Texas, Utah and South Dakota — have proposed or enacted legislation that would restrict Chinese purchases of land, buildings and houses. Some of the laws could potentially be more onerous than what occurs at the federal level, where a committee led by the Treasury secretary is authorized to review and block transactions if foreigners could gain control of American businesses or real estate near military installations.The laws being proposed or enacted by states would go far beyond that, preventing China — and in some cases other “countries of concern” — from buying farmland or property near what is broadly defined as “critical infrastructure.”The restrictions coincide with a resurgence of anti-China sentiment, inflamed in part by a Chinese spy balloon that traveled across the United States this year and by heated political rhetoric ahead of the 2024 election. They are likely to pose another challenge for the administration, which has dispatched several top officials to China in recent weeks to try to stabilize economic ties. But while Washington may see a relationship with China as a necessary evil, officials at the state and local levels appear determined to try to sever their economic relationship with America’s third-largest trading partner.“The federal government in the United States, across branches with strong bipartisan support, has been quite forceful in sharpening its China strategy, and regulating investments is only one piece,” said Mario Mancuso, a lawyer at Kirkland & Ellis focusing on international trade and national security issues. “The shift that we have seen to the states is relatively recent, but it’s gaining strength.”One of the biggest targets has been Chinese landownership, despite the fact that China owns less than 400,000 acres in the United States, according to the Agriculture Department. That is less than 1 percent of all foreign-owned land.Such restrictions have been gathering momentum since 2021 after Fufeng USA, the American subsidiary of a Chinese company that makes components for animal feed, faced backlash over plans to build a corn mill in Grand Forks, N.D. The Committee on Foreign Investment in the United States, a powerful interagency group known as CFIUS that can halt international business transactions, reviewed the proposal but ultimately decided that it did not have the jurisdiction to block the plan. However, the Air Force, citing the mill’s proximity to a U.S. military base, said this year that China’s involvement was a national security risk, and local officials scuttled the project.Since then, states have been developing or trying to bolster their restrictions on foreign investment, in some cases blocking land acquisitions from a broad set of countries, including Iran and North Korea. In other instances, they have targeted China specifically.The state moves, some of which also include investments coming from Russia, Iran and North Korea, have raised the ire of business groups that fear the rules will be too onerous or opponents who view them as discriminatory. Some of the proposals wound up being watered down amid the backlash.This year, Texas lawmakers proposed expanding a ban that was enacted in 2021 on the development of infrastructure projects funded by investors with direct ties to China and blocking Chinese citizens and companies from buying land, homes or any other real estate. Despite the support of Gov. Greg Abbott of Texas, a Republican, the proposal was scaled back to prohibit purchases of just agricultural land, quarries and mines by individuals or companies with ties to China, Iran, North Korea and Russia. The bill ultimately expired in the Texas Legislature in May.In South Dakota, Gov. Kristi Noem, a Republican, has been pushing for legislation that would create a state version of CFIUS to review and investigate agricultural land purchases, leases and land transfers by foreign investors. Ms. Noem has argued that the federal government does not have sufficient reach to keep South Dakota safe from bad actors at the state level.The legislation failed amid pushback from farming groups that were concerned about restrictions on who could buy or rent their land, along with lawmakers who said it would hand too much power to the governor.One of the most provocative restrictions has been championed by Gov. Ron DeSantis of Florida, a Republican who is running for president. In May, Mr. DeSantis signed a law prohibiting Chinese companies or citizens from purchasing or investing in properties that are within 10 miles of military bases and critical infrastructure such as refineries, liquid natural gas terminals and electrical power plants.“Florida is taking action to stand against the United States’ greatest geopolitical threat — the Chinese Communist Party,” Mr. DeSantis said when he signed the law, adding, “We are following through on our commitment to crack down on Communist China.”Gov. Ron DeSantis of Florida, a Republican presidential candidate, signed into law one of the most provocative restrictions against Chinese investments.David Degner for The New York TimesBut the legislation is written so broadly that an investment fund or a company that has even a small ownership stake from a Chinese company or a Chinese investor and buys a property would be violating the law. Business groups and the Biden administration have criticized the law as overreach, while Republican attorneys general around the country have sided with Mr. DeSantis.The Florida legislation, which targets “countries of concern” and imposes special restrictions on China, is being challenged in federal court. A group of Chinese citizens and a real estate brokerage firm in Florida that are represented by the American Civil Liberties Union sued the state in May, arguing that the law codifies and expands housing discrimination. The Justice Department filed a “statement of interest” arguing that Florida’s landownership policy is unlawful.A U.S. district judge, who heard arguments about the case in July, said last week that the law could continue to be enforced while it was being challenged in court.The restrictions are creating uncertainty for investors and fund managers that want to invest in Florida and now must decide whether to back away from those plans or cut out their Chinese investors.“It creates a lot of thorny issues not just for the foreign investors but for the funds as well, because some of these laws try to make them choose between keeping investors and being able to invest in those states,” said J. Philip Ludvigson, a partner at King & Spalding. “It’s really a gamble for the states that are passing some of these very broad laws.”Mr. Ludvigson, a former Treasury official who helped lead the office that chairs CFIUS, added: “You might want to get tough on China, but if you don’t really think through what the second- and third-order effects might be, you could just end up hurting your state revenues and your property market while also failing to solve an actual national security problem.”The state investment restrictions also coincide with efforts in Congress to block businesses based in China from purchasing farmland in the United States and place new mandates on Americans investing in the country’s national security industries. The Senate voted overwhelmingly in favor of the measures in July, which still need to clear the House to become law.The combination of measures is likely to complicate diplomacy with China and could draw retaliation.“Officials in Beijing are quite concerned about the hostility to Chinese investments at both the national and state levels in the U.S., viewing these as another sign of rising antipathy toward China,” said Eswar Prasad, a former head of the International Monetary Fund’s China division. “The Chinese government is especially concerned about a proliferation of state-level restrictions on top of federal limitations on investments from China.”He added, “Their fear is that such actions would not just deprive Chinese investors of good investment opportunities in the U.S., including in real estate, but could eventually limit Chinese companies’ direct access to American markets and inhibit technology transfers.” More

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    Jobs Sit Empty in the Public Sector, So Unions Help Recruit

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    Shortages of state and city personnel, especially those who must work on site, are so dire that unions are helping to get people in the door.The State of Minnesota, like nearly every public-sector employer across the country, is in a hiring crunch.Not just for any job, though. The desk jobs that can be done remotely, with flexible schedules? Applicants for those positions are relatively abundant. It’s the nurses, groundskeepers, plumbers, social workers and prison guards — those who are on site, sometimes at odd hours — that the state really can’t find.“It’s terrifying, if I’m being honest,” said Mitchell Kuhne, a sergeant with the Department of Corrections staffing a table at a state jobs fair in Minneapolis this week. “People just don’t know about the opportunities that exist. It’s a great work force, it’s a great field to be in, but it’s a really intimidating thing that isn’t portrayed accurately in the movies and media.”Understaffing requires employees to pick up many hours of mandatory overtime, Mr. Kuhne said. The additional income can be welcome, but also makes home life difficult for new recruits, and many quit within a few weeks. So his union, the American Federation of State, County and Municipal Employees, is playing an unusual role — helping their bosses recruit workers.It’s a nationwide quandary. While private-sector employment fully regained its prepandemic level a year ago — and now sits 3 percent above it — state and local governments remain about 1 percent below the 20 million people they had on staff in February 2020. The job-opening rate for public-sector positions is below that of private businesses, but hasn’t come down as much from the highs of 2022.Private-Sector Employment Bounced Back. State and Local Government Hasn’t Recovered.Employment level as a percentage of employment in February 2020

    Source: Bureau of Labor StatisticsBy The New York TimesIn historical perspective, it could be worse: State and local government employment had only barely recovered from a long slide after the 2007-9 recession, which left many public services underpowered as states and cities lacked the funding to return to full strength.This time, the problem is different. Tax collections recovered more quickly than expected, and the federal government helped with transfers of cash to local jurisdictions to offset the effects of the Covid-19 crisis. That helped many governments award temporary pay increases to retain key personnel, and hire others into departments that had been cut to the bone, such as public health.But officials then faced a new twist. Wages in the private sector were growing faster than they had in decades, drawing people away from government jobs that had, for some, become too stressful. Civil servants also tend to be older than other workers, and more of them retired early rather than put up with mounting strain. As federal relief funds peter out, governments face difficult questions about how to maintain competitive pay.Public needs, however, have only increased. Minnesota, along with recovering from a hiring freeze early in the pandemic, has passed larger budgets and new laws — regulating cannabis sales, for example — that have added hundreds of positions across several agencies. At the same time, the federal infrastructure bill is supercharging demand for people to manage construction projects.That’s a victory for labor unions, which typically push for more hiring, higher wages and better benefits. But it doesn’t help them much if positions stay empty. A survey of local government human resource officers, released in June by the nonprofit research organization Mission Square, found that more than half the respondents had to reopen recruitment processes very often or frequently for lack of enough applications. In Minnesota, the vacancy rate for state government jobs rose to 11.5 percent in the 2023 fiscal year from 7.5 percent in 2019.That’s why the American Federation of State, County and Municipal Employees, known as AFSCME, decided it needed to pitch in on a function usually reserved for human resources departments: getting people in the door. The union has started a national campaign to generate buzz around frontline positions, while locals are contacting community organizations and even families of union members to spotlight opportunities.“Our employers are feeling the heat,” said Lee Saunders, the union’s president. “They understand that services are not being provided at the level that they should be provided. It’s a team effort as far as bringing fresh blood into the public service.”That was the point of the hiring fair in Minneapolis. Seventy-five job seekers filtered through, often looking for more stable or higher-paying positions than the ones they held, usually referred by a friend or relative in the union.Cassandra Crawford spoke to someone at nearly every table, looking for something better paid and more active than her remote job in health care administration. “The older you get, the more you want to move your body,” she said. Speaking with recruiters in person was also more encouraging than sending her résumé to an automated portal. “I think they might remember me,” she said, laughing.Joel Shanight, 43, a disabled Army veteran and Peace Corps volunteer with experience in hostile environments, expressed confidence that he had landed a job doing roadway assistance on state highways. After doing unsatisfying accounting work in the private sector, he was glad to have learned about positions that could allow him to help people again.“I can’t find that in the corporate world,” Mr. Shanight said. “There’s no compassion anymore.”Also present were high-level officials from the state government, including Jamie Long, the House majority leader, who praised the union for helping out. Other government unions — like the American Federation of Teachers, which represents a field that saw an exodus during the pandemic — also have programs to try to bring more people into the classroom.AFSCME plans to create a national training and development center that will maintain a database of available union-represented jobs and centralize apprenticeship programs to build the next generation of public servants.Joseph McCartin, the executive director of the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University, said he hadn’t seen anything similar since World War II, when unions joined the federal government to fill positions essential to the military effort. Unions can be trusted messengers in communities, he said, and have a better understanding of what job seekers are looking for than employers do.A tour bus used for recruitment by the American Federation of State, County and Municipal Employees, a trade union of public employees, at the hiring fair in Minneapolis this week.Tim Gruber for The New York Times“I think it’s an extraordinary development,” Dr. McCartin said. “It’s a great advantage when you have a partner that’s going to be working with you to try to help you solve this problem.”Some states that limit collective bargaining in the public sector think that not having to deal with labor organizations allows them to adapt compensation more quickly in response to staffing needs. But they still deal with their share of difficulty in hiring.Take Idaho, whose population boomed during the pandemic. By the 2022 fiscal year, the state was facing vacancy rates as high as 20 percent at the Department of Corrections and 15 percent in the Department of Health and Welfare. A benchmarking analysis found that state jobs paid 24.6 percent less than the private sector for comparable positions, and annual turnover had reached 21.8 percent.The state ramped up recruiting, eased formal education requirements for some positions and brought on contractors to fill labor gaps, which is expensive. Those moves didn’t solve the problem, especially for less attractive shifts at hospitals, prisons and veterans’ homes, which couldn’t fill available beds because of understaffing.So in early 2023, Gov. Brad Little, a conservative Republican, asked for an 8.5 percent across-the-board pay increase for state workers over two years, with another 6 percent for those in public safety. Next year the governor plans to seek the same bump for workers in health care, information technology and engineering.The Legislature generally went along with those recommendations, with a few tweaks. But given the continuing constraints, Lori Wolff, head of the Division of Human Resources, said she was looking for ways to provide services with fewer people, especially for tasks like enrolling people in state benefits.“There’s a lot of jobs that we’re going to have to start looking at technology to solve,” Ms. Wolff said.The state’s 199 municipalities have an even tougher time increasing pay and adopting automated services. The state has limited their ability to raise revenue through property taxes, so it has been more difficult to compete. Skyrocketing housing costs are compounding that problem, fueled by high-income remote workers who moved out of bigger cities during the pandemic.Kelley Packer, director of the Association of Idaho Cities, said she had recently spoken with a member whose public works director had been forced to live in his car.“It’s a really interesting balancing act to allow for the growth to happen, and meet the needs of the housing crisis that we’re in, and still be able to provide services with a restricted property tax system,” Ms. Packer said.Of course, it’s not all about salary. Rivka Liss-Levinson, research director with Mission Square, said people usually listed three primary motivations to work for governments: job security, job satisfaction and robust retirement benefits. Conveying the value of comparatively generous health care coverage and pensions, plus the public service mission, is still the basic strategy.“Those things haven’t really changed over time,” Dr. Liss-Levinson said. “States and localities that are able to address these needs and concerns are the ones that are going to thrive when it comes to recruitment and retention.” More

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    Oregon Town’s Marijuana Boom Yields Envy in Idaho

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    Tax revenue has surged since cannabis stores opened in Ontario, Ore., fueling a push in neighboring Idaho to legalize sales and get in on the action.For John Leeds, the hour-and-a-half commute to and from his job as assistant manager at Treasure Valley Cannabis Company is exhausting, but logistically unavoidable.Like nearly half of the other employees, Mr. Leeds, 39, lives in Idaho and travels along Interstate 84, past sprawling alfalfa and onion fields, to the marijuana shop just across the Oregon state line, where cannabis is legal.“It’s really two different worlds,” Mr. Leeds said. “A lot of whiplash on this issue just in a car ride up and down the highway.”Every day, hundreds of customers and workers like Mr. Leeds make the pilgrimage from Idaho to Ontario, Ore., a small city nestled along the Snake River that is home to 11 dispensaries — roughly one for every 1,000 residents. They can compare the aromas of various strains of marijuana and gather the staff’s insights on THC levels in edibles.The cannabis boom is helping to drive a thriving local economy — and tax revenues that have paid for new police positions, emergency response vehicles, and park and trail improvements.Missing out on the action has become increasingly frustrating to some politicians and longtime residents in Idaho, where the population and living costs have surged in recent years.Because the sale or possession of marijuana remains illegal at the federal level, many states — and in this case neighboring ones — have landed on drastically different approaches for whether and how to decriminalize, regulate and tax cannabis. Since 2012, 23 states have legalized it for recreational use, and more than three dozen allow medical marijuana.Eleven states, mostly conservative-leaning, have enacted extremely limited medical marijuana laws. Aside from cannabis-derived drugs approved by the U.S. Food and Drug Administration for limited medical use, Idaho has not legalized any cannabis sales — a prohibition that has helped its more progressive neighbors.“Our cannabis market caters almost exclusively to Idaho residents,” said Ontario’s mayor, Debbie Folden. “This has been an economic boom unlike any this city has seen.”The patchwork of laws, which vary by state and often by county, have created similar commuter-propelled booms in other parts of the country as well, said Mason Tvert, a partner at VS Strategies, a national cannabis policy and public affairs firm in Denver.Texans travel to Colorado to stock up on their favorite strains or edibles, and Indiana residents make the trek to Michigan, he said. “Demand will be met by either the illegal market or by a legal market in another state,” Mr. Tvert said.That proposition, and the larger economic equation, are not lost on officials in Idaho.Last year, the state approached two million residents, a swell attributed largely to people moving from California and looking for overall cheaper costs of living. Only Florida grew faster.At the same time, property taxes have increased 20 percent since 2018, according to a report from the Idaho Center for Fiscal Policy, a nonpartisan group. And the state’s budget — currently showing a surplus — is expected to come under strain, the group noted, citing legislation that cut income taxes by roughly $500 million over three years even as population growth put new demands on health care, education and transportation.Some longtime residents of the state are tired of seeing the marijuana tax dollars go elsewhere as prices increase from the newer residents arriving.Legalizing and taxing cannabis sales could bring in revenue and help offset any budgetary concerns, said Joe Evans, a lead organizer for Kind Idaho, a group pushing to legalize medical marijuana.“That money should not be leaving the state of Idaho,” said Joe Evans, who supports the legalization of medical marijuana in the state.Ellen Hansen for The New York Times“That money should not be leaving the state of Idaho,” said Mr. Evans, who noted the entrepreneurial spirit of the region, home to Joe Albertson, who started a local grocery store chain, Albertsons, and laid the foundation for a multibillion-dollar national business.But for Mr. Evans, who served with the Army in Iraq and Afghanistan and knows fellow veterans who use cannabis for pain relief, legalization is also about something bigger than money. It is long past time, he said, for his state to legalize a substance that can offer relief for some medical conditions.Patients who use marijuana, especially older or chronically ill Idahoans, shouldn’t have to drive an hour or more to Oregon, he said.“This is about patient advocacy,” said Mr. Evans, who hopes the state will next year consider a measure to legalize cannabis for medicinal use.It would not be the first try.Initiatives to legalize cannabis for medicinal use failed to qualify for the ballot in 2012, 2014 and 2016. In 2020, supporters of a ballot measure suspended efforts to gather signatures because of the onset of the Covid-19 pandemic, and the next year a bipartisan group of state lawmakers introduced a medical marijuana bill that failed to get out of committee.As those efforts foundered, customers in Idaho increasingly made the trek to Oregon, where voters legalized cannabis for medical use in 1998 and for recreational use in 2014.Ontario, Ore., is home to 11 dispensaries — roughly one for every 1,000 residents.Ellen Hansen for The New York TimesFew areas in the state have benefited as much as Malheur County, home to Ontario.The city, which voted to legalize local recreational sales of marijuana in 2018, is the only part of the county with dispensaries. Even so, Malheur County racked up roughly $104 million in total cannabis sales last year, outpacing each of the state’s 35 other counties except Multnomah, which includes Portland.In 2020, the first full year in which Ontario allowed cannabis sales, the city took in $1.8 million in resulting tax revenue. The next year, the revenue increased 65 percent.The area is a conservative pocket in a progressive state — a movement called “Greater Idaho” wants the region to secede from Oregon and become part of Idaho — and Mayor Folden, an Ontario native, calls herself a conservative Republican.That hasn’t blocked the city’s emergence as a cannabis capital. The tax revenues, the mayor said, have been a municipal lifeline. But the city is stockpiling its reserves, Ms. Folden said, because she expects that within five years, Idaho will move ahead with some form of legalization.Treasure Valley Cannabis is one of the businesses that have led to a surge in tax revenue for Malheur County.Ellen Hansen for The New York Times“We know that this will not last forever, so we’re being prudent,” Ms. Folden said. “We know the economic winds, as they say, might shift.”In the fall, a poll for The Idaho Statesman, a Boise newspaper, found that 68 percent of residents backed legalizing marijuana for medicinal purposes. For recreational use, 48 percent supported legalization, while 41 percent were opposed.Gov. Brad Little of Idaho, who is in his second term, staunchly opposes marijuana legalization. In an emailed statement, Mr. Little, a Republican, said that “legalization of marijuana triggers numerous unintended consequences.”But some local politicians in Idaho have begun to consider the economics of the issue.Patrick Bageant, a Boise councilman, said the need for alternative forms of tax revenue was increasingly urgent.“Legalizing marijuana can help bring in different forms of cash,” Mr. Bageant said. “Just look around the country — we as a state should be more forward-looking.”Adam Watkins, a software engineer and a constituent of Mr. Bageant’s, has lived in the city’s West End neighborhood for the past decade. His home value has doubled since 2018, when he paid $3,200 in property taxes; now he pays close to $4,200.“You look around at other states that have legalized marijuana decades ago, when it comes to medical marijuana, and you just cannot help but think, why are we so backward on this issue?” said Mr. Watkins, who supports legalization for philosophical and fiscal reasons.“This is a drug with proven health effects, and we are just leaving this issue to other states to solve,” he added. “We are turning blindly, like this is not an issue, when it clearly is.”Back in Ontario on a recent afternoon, red, white and blue license plates emblazoned with the phrase “Scenic Idaho” lined the parking lot of Treasure Valley Cannabis. (A federal law prohibits transporting marijuana between states.)John Leeds commutes an hour and a half to and from his job at Treasure Valley Cannabis, where he manages a staff of 45.Ellen Hansen for The New York TimesMr. Leeds manages a staff of 45 employees four days a week. He used to work five days, but made a deal with the owner, Jeremy Archie, to work four to cut back on his commute.That day, Mr. Leeds and Mr. Archie walked the floor past vape pens, various strains of cannabis, and sweatshirts acclaiming the company and the state.They greeted customers and shared stories of patients battling health issues like cancer, who use their products to ease pain. On one wall hung a poster board proclaiming a 25 percent discount for customers car-pooling with at least three people.A small gesture of thanks, Mr. Archie said, for their Idaho customers.“The Idaho market has made this a very successful business,” he said. More

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    Biden Warns That Climate Change Could Upend Federal Spending Programs

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    A chapter in the new Economic Report of the President focuses on the growing risks to people and businesses from rising temperatures, and the government’s role in adapting to them.WASHINGTON — The Biden administration warned on Monday that a warming planet posed severe economic challenges for the United States, which would require the federal government to reassess its spending priorities and how it influenced behavior.Administration economists, in an annual report, said that reassessment should include a new look at the climate-adaptation implications of aid to farmers, wildland firefighting and wide swaths of safety-net programs like Medicaid and Medicare, as the government seeks to shield the poorest Americans from suffering the worst effects of climate change.The White House Council of Economic Advisers also warned that, left unchanged, federal policies like fighting forest fires and subsidizing crop insurance for farmers could continue to encourage Americans to live and work in areas at high risk of damage from warming temperatures and extreme weather — effectively forcing taxpayers across the country to pay for increasingly costly choices by people and businesses.The findings were contained in a chapter of the annual Economic Report of the President, which was released on Monday afternoon and this year focused on long-run challenges to the U.S. economy. They came on a day when the Intergovernmental Panel on Climate Change, a body of experts convened by the United Nations, reported that Earth was barreling quickly toward a level of warming that would make it significantly more difficult for humans to manage drought, heat waves and other climate-related disasters.The White House report details evidence showing the United States is more vulnerable to the costs of extreme weather events than previously thought, while suggesting a series of policy shifts to ensure the poorest Americans do not foot the bill.“Climate change is here,” Cecilia Rouse, the departing chair of the Council of Economic Advisers, said in an interview. “And as we move forward, we’re going to have to be adapting to it and ensuring that we minimize the cost to families and businesses and others.”The report broadly suggests that climate change has upended the concept of risk in all corners of the American economy, distorting markets in ways that companies, people and policymakers have not fully kept up with. It also suggests that the federal government will be left with significantly higher costs in the future if it does not better identify those risks and correct those market distortions — like paying more to provide health care for victims of heat stroke or to rebuild coastal homes flooded in hurricanes.State and local officials, not the federal government, have authority where development happens, so people keep building in high-risk areas, a classic example of what economists call a moral hazard.Johnny Milano for The New York TimesFor example, the report cites evidence that private mortgage lenders are already offloading loans with a high exposure of climate risk to federally backed Fannie Mae and Freddie Mac. It highlights how the federal flood insurance program, which essentially underwrites all home flooding insurance policies in the country, is at risk of insolvency.At a time when administration officials and the Federal Reserve are struggling to stabilize the nation’s financial system, the report warns that home buyers and corporate investors appear to be underestimating climate-related risks in their markets, which could lead to a financial crisis.“Rapid changes in asset prices or reassessments of the risks in response to a shifting climate could produce volatility and cascading instability in financial markets if not anticipated by regulators,” the report says..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.To address those dangers, the report offers components for a federal climate adaptation strategy. Its recommendations — some of them already in early stages through existing administration actions — include producing better information about climate risk, helping financial markets accurately price that risk and better protecting the most vulnerable from the effects of climate change.Perhaps the most significant proposal, and probably the most politically sensitive, is a call for Washington to exert more pressure on state and local officials, pushing them to be careful about where and how they let people build homes, businesses and infrastructure projects.That proposal would address a core problem that has hindered America’s efforts to adapt to climate change. When people build in places that are most exposed to the effects of climate change — along coastlines, near riverbanks, at the edge of forests prone to wildfires — state and local governments get most of the benefits, in the form of higher tax revenues and economic growth. But when flooding, fires or other major disasters happen, the federal government typically pays the bulk of the cost for responding and rebuilding.Yet for the most part, state and local officials, not the federal government, have authority over where and how development happens — so people keep building in high-risk areas, a classic example of what economists, including the authors of the report, call a moral hazard.In response, the document proposes using federal funds to change the behavior of state and local officials, by tying that money to state and local decisions. That approach has been tried before, with little success. In 2016, the Obama administration suggested adjusting the level of disaster aid provided to states, based on what steps they took to reduce their exposure to disasters. States objected, and the change never happened.Subsidizing crop insurance for farmers could continue to encourage Americans to work in areas at high risk of damage from warming temperatures and extreme weather, the Biden administration will warn.Mark Abramson for The New York TimesAdministration officials said they were already trying to leverage some spending from the infrastructure law President Biden signed in 2021 to influence state and local behavior. The report suggests much more aggressive action could be necessary.It also proposes a rethinking of the nation’s system of insuring against disasters — moving away from separate localized policies that cover fire, flooding and other events, and more toward a nationally mandated “multiperil catastrophe insurance” system that is backstopped by the federal government.Perhaps most sobering for Washington’s current fiscal moment — when Mr. Biden is battling with House Republicans who are seeking sharp cuts to federal spending and raising anew concerns over the growing national debt — is the report’s suggestion that climate effects could subject growing numbers of Americans to heat stroke, respiratory illnesses and other ailments in the years to come. That could further drive up government costs for health programs like Medicare and Medicaid.The Council of Economic Advisers has begun a yearslong effort to project those climate-related effects on future federal budgets, which it detailed in a highly technical paper released this month.The report released on Monday also included chapters on the economics of child care, higher education, digital assets and more.In reviewing Mr. Biden’s economic record, White House economists dived deep into the issue that has bedeviled the recovery on his watch: persistently high inflation. The report lists several explanations for why price growth has surprised administration and outside economists over the last two years but never settles on a primary driver. It does concede that pandemic relief spending under Mr. Biden and President Donald J. Trump may have played a role, by helping Americans save more than usual — and then begin to spend that extra savings.“If the drawdown of excess savings, with current income, boosted aggregate demand, it could have contributed to high inflation in 2021 and 2022,” the report says. More

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    IRS Decision Not to Tax Certain Payments Carries Fiscal Cost

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    The Biden administration has opted not to tax state payments to residents, a decision that could add to the nation’s fiscal woes.WASHINGTON — More than 20 state governments, flush with cash from federal stimulus funds and a rebounding economy, shared their windfalls last year by sending residents one-time payments.This year, the Biden administration added a sweetener, telling tens of millions taxpayers they did not need to pay federal taxes on those payments.That decision by the Internal Revenue Service, while applauded by some tax experts and lawmakers, could cost the federal government as much $4 billion in revenue at a time when Washington is struggling with a ballooning federal deficit and entering a protracted fight over the nation’s debt limit.The I.R.S.’s ruling came after bipartisan pressure from lawmakers and was the latest move by the agency to forgo revenue this tax season.In December, the I.R.S. delayed by a year a new requirement that users of digital wallets like Venmo and Cash App report income on 1099-K forms if they had more than $600 of transactions. That requirement, which was part of the American Rescue Plan of 2021, was projected to raise nearly $1 billion in tax revenue per year over a decade. The last-minute decision to delay it followed intense lobbying from business groups and political backlash directed at the Biden administration, which was accused of breaking its pledge not to raise taxes on people making less than $400,000.Taken together, the moves by the I.R.S. run counter to two big economic issues bedeviling Washington — rapid inflation and concerns about the government’s ability to avoid defaulting on its debt.Allowing residents to avoid paying taxes on their state rebates means more money in their pockets to spend at a moment when the Federal Reserve is trying to rein in consumer and business spending to cool rising prices. A report released on Friday showed that, despite the Fed’s efforts to slow the economy, personal spending sped up in January.Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More

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    How Arizona Is Positioning Itself for $52 Billion to the Chips Industry

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    The state has become a hub for chip makers including Intel and TSMC, as the government prepares to release a gusher of funds for the strategic industry.In recent weeks, Gina Raimondo, the commerce secretary, has talked with Senator Mark Kelly of Arizona, spent time with the president of Arizona State University and appeared at a conference with the mayor of Phoenix.Their discussions centered on one main topic: chips.Ms. Raimondo is in charge of handing out $52 billion for semiconductor manufacturing and research under the CHIPS Act, a funding package intended to expand domestic production of the foundational technology, which acts as the brains of computers. The legislation, which passed in August, is a prime piece of President Biden’s industrial policy and part of a push to ensure America’s economic and technology leadership over China.Arizona wants to make sure it is in position for a portion of that once-in-a-generation gusher of federal funding, for which the Commerce Department will begin taking applications after Thursday. As a result, Arizona officials have inundated Ms. Raimondo to promote the state’s growing chip industry and talked with the chief executives of giant chip companies such as Intel and Taiwan Semiconductor Manufacturing Company.Arizona, which is vying for subsidies along with Texas, New York and Ohio, may have a head start on the action. The state has been home to semiconductor makers since the 1940s and has 115 chip-related companies, whereas there is one major manufacturer in Ohio.Arizona has also led the nation in chip investments since 2020, with the announcements of two new chip-making plants by TSMC and two additional factories from Intel that will cost a combined $60 billion. State leaders had helped persuade the companies to open the facilities by offering big tax breaks and water and other infrastructure grants. They also promised to expand technical and engineering education in the state.State officials and chip companies also acted as a lobbying bloc in Washington. They helped shape the CHIPS Act to include federal tax credits, subsidies, and research and work force grants. TSMC expanded its lobbying staff to 19 people from two in two years, and Intel spent more than $7 million in lobbying efforts last year, the most it had spent in two decades. Arizona State University spent $502,000 on lobbying last year, also the most in two decades.“It has been an intentional and an all-hands-on-deck effort,” said Sandra Watson, president of the Arizona Commerce Authority, a nonprofit economic development organization that has helped lead state efforts to attract chip companies and push for the CHIPS Act.Sandra Watson, president of the Arizona Commerce Authority, hosted more than 20 chief executives of chip companies at the Super Bowl this month.Caitlin O’Hara for The New York TimesThe Commerce Department is expected to soon begin handing out $39 billion in subsidies to semiconductor makers, later opening the process to companies, universities and others to apply for $13.2 billion in research and work force development subsidies. The CHIPS Act also provides an investment tax credit for up to 25 percent of a manufacturer’s capital expenditure costs.Ms. Raimondo has described the process as a “race” among states. “Every governor, every state legislature, every president of public universities in every state ought to be now putting their plan of attack together,” she said in August during a visit to Arizona State University’s tech research and development center. “This is going to be a competitive process.”The Commerce Department declined to comment.Arizona’s history with chip manufacturing stretches back to 1949, when the telecom hardware and services provider Motorola opened a lab in Phoenix that later developed transistors. In 1980, Intel built a semiconductor plant in Chandler, a suburb southeast of Phoenix, drawn by the state’s low property taxes, relative proximity to its Silicon Valley headquarters and stable geology. (Earthquakes are rare in Arizona.)During President Donald J. Trump’s administration, he pushed an “America First” policy agenda. That opened an opportunity for Doug Ducey, a Republican who was then Arizona’s governor, and other state officials to transform their economy into a tech hub.Arizona’s governor at the time, Doug Ducey, and Commerce Secretary Gina Raimondo while touring the TSMC construction site in December.T.J. Kirkpatrick for The New York TimesIn 2017, Mr. Ducey and other Arizona officials traveled to Taiwan to meet with executives of TSMC, the world’s biggest maker of leading-edge chips. They promoted the state’s low taxes, its business-friendly regulatory environment and Arizona State University’s engineering school of more than 30,000 students.Mr. Ducey, who was close to Mr. Trump, also had calls with Commerce Secretary Wilbur Ross, Defense Secretary Mark Esper and Secretary of State Mike Pompeo on financial incentives to expand domestic production of chips.“My job is to sell Arizona,” Mr. Ducey said. “In this case, it was to sell Arizona to TSMC but also to the administration.”In 2019, Mr. Ducey helped set up calls between the cabinet secretaries and TSMC’s executives to lock in a deal to open manufacturing plants in Arizona. The state promised tax credits and other financial incentives to help offset costs for the company to move production to the United States from Taiwan.In May 2020, TSMC announced plans to build a $12 billion factory in Phoenix. Later that year, the city provided TSMC with $200 million in infrastructure incentives, including water lines, sewage and roads. One traffic light would cost the city $500,000.“TSMC appreciates the support from our dedicated partners on the state, local and federal levels,” said Rick Cassidy, the chief executive of TSMC Arizona, adding that the CHIPS Act funds will enable the company and its suppliers to expand “for years to come.”The CHIPS Act is a prime piece of President Biden’s industrial policy. He toured TSMC’s Arizona plant in December.T.J. Kirkpatrick for The New York TimesIn early 2021, Pat Gelsinger, Intel’s chief executive, announced a sweeping strategy to increase U.S. production of chips. States began soliciting the company. Arizona officials highlighted their long relationship with Intel and perks, such as the state’s low property and business taxes.Intel soon announced a $20 billion expansion in Chandler, with two additional factories that would bring 3,000 new jobs to the state. Chandler also approved $30 million in water and road improvements for the new plants.“The Arizona government has been a great collaborator,” said Bruce Andrews, Intel’s chief government affairs officer. “By investing in semiconductors early, they created an ecosystem that has had a jobs multiplier effect and massive economic benefits.”But some of the tax breaks have rankled Arizona residents, who say the moves have hurt funding for public schools. The state ranks 47th in per-student spending.“We need to bring business to our state, but we need to look at balance,” said Beth Lewis, the executive director of Save Our Schools in Arizona. “Corporations are choosing not to settle in Arizona because of our devastated public education system.”Arizona pressed ahead with pushing Congress to create legislation for chip subsidies. In March 2021, Senator Kelly joined Senators John Cornyn, Republican of Texas, and Mark Warner, Democrat of Virginia, the authors of legislation that would become the CHIPS Act, in a call with the new Biden administration to push for the White House’s support of funding.Mr. Kelly, an early sponsor of the CHIPS Act, became a chief negotiator on the legislation in Congress. He negotiated the inclusion of a four-year 25 percent investment tax credit in the bill, including a provision that ensured Intel and TSMC would get the tax credits even though their Arizona factory projects were announced before the bill would go into effect.Mr. Kelly also helped the president of Arizona State University, Michael Crow, lobby for the inclusion of more than $13 billion in grants for research and development and work force training. And Mr. Kelly and state leaders hosted administration officials at events to showcase the state’s semiconductor efforts as part of the White House’s manufacturing strategy.Senator Mark Kelly of Arizona at TSMC’s factory in December.Adriana Zehbrauskas for The New York Times“We have the potential to lead the nation in microchip production,” Mr. Kelly said in a statement. “I was honored to lead this effort, and now I’m working to maximize it for Arizona”Mr. Ducey, who left office when his term ended in January, pushed for more tech-friendly policies, including an income-tax cut. He also said he would use $100 million that the state had received from federal Covid grants to attract more chip companies and help them apply for funds provided by the CHIPS Act.In December, TSMC announced a second factory that would bring its total investment in Arizona to $40 billion. Mr. Biden and Ms. Raimondo traveled to Phoenix to speak at the announcement, with Mr. Kelly accompanying them on Air Force One.Arizona officials continue to pitch semiconductor companies to open factories in the state.This month, Ms. Watson hosted more than 20 chief executives of chip companies at the Super Bowl in Glendale. Katie Hobbs, Arizona’s new governor and a Democrat, and Mr. Kelly heralded how the state could benefit from the CHIPS Act.“There’s a robust pipeline,” Ms. Watson said. More