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    The Fed Wants to Fight Inflation Without a Recession. Is It Too Late?

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    Federal Reserve officials took a while to recognize that inflation was lasting. The question is whether they can tame it gently now.The Federal Reserve is poised to set out a path to rapidly withdraw support from the economy at its meeting on Wednesday — and while it hopes it can contain inflation without causing a recession, that is far from guaranteed.Whether the central bank can gently land the economy is likely to serve as a referendum on its policy approach over the past two years, making this a tense moment for a Fed that has been criticized for being too slow to recognize that America’s 2021 price burst was turning into a more serious problem.The Fed chair, Jerome H. Powell, and his colleagues are expected to raise interest rates half a percentage point on Wednesday, which would be the largest increase since 2000. Officials have also signaled that they will release a plan for shrinking their $9 trillion balance sheet starting in June, a policy move that will further push up borrowing costs.That two-front push to cool off the economy is expected to continue throughout the year: Several policymakers have said they hope to get rates above 2 percent by the end of 2022. Taken together, the moves could prove to be the fastest withdrawal of monetary support in decades.The Fed’s response to hot inflation is already having visible effects: Climbing mortgage rates seem to be cooling some booming housing markets, and stock prices are wobbling. The months ahead could be volatile for both markets and the economy as the nation sees whether the Fed can slow rapid wage growth and price inflation without constraining them so much that unemployment jumps sharply and growth contracts.“The task that the Fed has to pull off a soft landing is formidable,” said Megan Greene, chief global economist at the Kroll Institute, a research arm of the Kroll consulting firm. “The trick is to cause a slowdown, and lean against inflation, without having unemployment tick up too much — that’s going to be difficult.”Optimists, including many at the Fed, point out that this is an unusual economy. Job openings are plentiful, consumers have built up savings buffers, and it seems possible that growth will be resilient even as business conditions slow somewhat.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: Times readers sent us their questions about rising prices. Top experts and economists weighed in.Interest Rates: As it seeks to curb inflation, the Federal Reserve announced that it was raising interest rates for the first time since 2018.How Americans Feel: We asked 2,200 people where they’ve noticed inflation. Many mentioned basic necessities, like food and gas.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.But many economists have said cooling price increases down when labor is in demand and wages are rising could require the Fed to take significant steam out of the job market. Otherwise, firms will continue to pass rising labor costs along to customers by raising prices, and households will maintain their ability to spend thanks to growing paychecks.“They need to engineer some kind of growth recession — something that raises the unemployment rate to take the pressure off the labor market,” said Donald Kohn, a former Fed vice chair who is now at the Brookings Institution. Doing that without spurring an outright downturn is “a narrow path.”Fed officials cut interest rates to near-zero in March 2020 as state and local economies locked down to slow the coronavirus’s spread at the start of the pandemic. They kept them there until March this year, when they raised rates a quarter point.But the Fed’s balance-sheet approach has been the more widely criticized policy. The Fed began buying government-backed debt in huge quantities at the outset of the pandemic to calm bond markets. Once conditions settled, it bought bonds at a pace of $120 billion, and continued making purchases even as it became clear that the economy was healing more swiftly than many had anticipated and inflation was high.Late-2021 and early-2022 bond purchases, which are what critics tend to focus on, came partly because Mr. Powell and his colleagues did not initially think that inflation would become longer lasting. They labeled it “transitory” and predicted that it would fade on its own — in line with what many private-sector forecasters expected at the time.When supply chain disruptions and labor shortages persisted into the fall, pushing up prices for months on end and driving wages higher, central bankers reassessed. But even after they pivoted, it took time to taper down bond buying, and the Fed made its final purchases in March. Because officials preferred to stop buying bonds before lifting rates, that delayed the whole tightening process.The central bank was trying to balance risks: It did not want to quickly withdraw support from a healing labor market in response to short-lived inflation earlier in 2021, and then officials did not want to roil markets and undermine their credibility by rapidly reversing course on their balance sheet policy. They did speed up the process in an attempt to be nimble.Under Jerome H. Powell, the Fed, which meets on Wednesday, is trying to walk a thin line.Nate Palmer for The New York Times“In hindsight, there’s a really good chance that the Fed should have started tightening earlier,” said Karen Dynan, an economist at the Harvard Kennedy School and a former Treasury Department chief economist. “It was really hard to judge in real time.”Nor was the Fed’s policy the only thing that mattered for inflation. Had the Fed begun to pull back policy support last year, it might have slowed the housing market more quickly and set the stage for slower demand, but it would not have fixed tangled supply chains or changed the fact that many consumers have more cash on hand than usual after repeated government relief checks and months spent at home early in the pandemic.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Starbucks Plans Wage Increases That Won’t Apply to Unionized Workers

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    Starbucks announced Tuesday that it was raising pay and expanding training at corporate-owned locations in the United States. But it said the changes would not apply to the recently unionized stores, or to stores that may be in the process of unionizing, such as those where workers have filed a petition for a union election.On a call with investors to discuss the company’s quarterly earnings, the chief executive, Howard Schultz, said that the spending would bring investments in workers and stores to nearly $1 billion for the fiscal year and that it would help Starbucks keep up with customer traffic.“The investments will enable us to handle the increased demand — and deliver increased profitability — while also delivering an elevated experience to our customers and reducing strain on our partners,” Mr. Schultz said, using the company’s term for employees.The initiative was announced as the union has won initial votes at more than 50 Starbucks stores, including several this week.The pay increases follow a commitment to raise the company’s minimum hourly wage to $15 this summer and will include a raise of at least 5 percent for employees with two to five years of experience, or an increase to 5 percent above the starting wage rate in their market, whichever is greater.Employees with more than five years’ experience will receive a raise of at least 7 percent, or an increase to 10 percent above the starting wage in their market, whichever is greater.The company will also increase pay for store managers.The plans also call for doubling the training hours that new baristas receive, as well as additional training for existing baristas and shift supervisors.In a formal charge filed with the National Labor Relations Board, the union representing the newly unionized Starbucks workers — Workers United, an affiliate of the Service Employees International Union — has accused the company of coercing employees who were voting in a union election by suggesting that it would withhold new benefits if they unionized.The company said it was legally prohibited from unilaterally imposing wage and benefit increases in stores where employees have unionized or will soon vote on unionization. It noted that it must bargain with a union over any wage or benefit changes.But labor law experts said that it could be illegal to withhold wages and benefits from only unionized employees or employees voting on a union.Matthew Bodie, a former lawyer for the labor board who teaches law at Saint Louis University, said the announced pay increases could unlawfully taint the so-called laboratory conditions that are supposed to prevail during a union election by giving employees an incentive not to unionize.“If Starbucks said, ‘Drop the union campaign and you’ll get this wage increase and better benefits,’ that’d clearly be illegal,” Mr. Bodie said by email. “Hard to see how this is that much different in practice.”Mr. Bodie said the pay increases could also amount to a violation of the company’s obligation to bargain in good faith because they suggest an intention to give unionized employees a worse deal than nonunionized employees. “They’d have to at least offer this package to the union,” Mr. Bodie added.Reggie Borges, a Starbucks spokesman, did not say whether the company would make the same proposals announced Tuesday in negotiations with unionized workers but said, “Where Starbucks is required to engage in collective bargaining, Starbucks will always negotiate in good faith.”Starbucks also said it planned to post leaflets in stores to keep employees informed, in which the company says that the outcome of collective bargaining is uncertain and risky. “Through collective bargaining, wages, benefits and working conditions may improve, diminish or stay the same,” says one of the informational sheets to be posted in stores.Such messaging is common among employers facing union campaigns, but labor experts say it is misleading because workers are highly unlikely to see their compensation drop as a result of collective bargaining. More

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    Job Openings in U.S. Rose to Record in March

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    A government survey released Tuesday showed a record number of job openings, with 11.5 million positions listed as available in March, underscoring the continuing strength of the labor market.The number of “quits” — a measurement of the amount of workers voluntarily leaving jobs — also reached a high, an indicator that many workers are confident they can leave their jobs and find employment that better suits their desires or needs.The data released by the Labor Department as part of its monthly Job Openings and Labor Turnover Survey, or JOLTS report, is a fresh indicator of the anomalous nature of the economy as it recovers from the pandemic recession. A resurgence of household spending and business investment is colliding with a messy reordering of the supply of goods and labor.Labor force participation has quickly recovered, nearing prepandemic rates, but has failed to keep up with the surge in job opportunities over the past year as business owners expand to meet the demand for a variety of goods and services.After a sharp climb last year, job openings plateaued somewhat. The March reading suggests that the decline in acute coronavirus concerns among experts and the average consumer — paired with the rolling back of public health restrictions and the start of the summer hiring season — is increasing businesses’ appetites for more workers. Layoffs and discharges remained uncommon, and relatively flat compared to the previous month, at 1.4 million.The Federal Reserve is raising the cost of borrowing as part of an effort to cool consumer spending, business lending and demand for workers. Markets expect the Fed to announce a half-percentage point increase in its benchmark interest rate on Wednesday.The State of Jobs in the United StatesJob openings and the number of workers voluntarily leaving their positions in the United States remained near record levels in March.March Jobs Report: U.S. employers added 431,000 jobs and the unemployment rate fell to 3.6 percent ​​in the third month of 2022.Job Market and Stocks: This year’s decline in stock prices follows a historical pattern: Hot labor markets and stocks often don’t mix well.New Career Paths: For some, the Covid-19 crisis presented an opportunity to change course. Here is how these six people pivoted professionally.Return to the Office: Many companies are loosening Covid safety rules, leaving people to navigate social distancing on their own. Some workers are concerned.Andrew Patterson, a senior international economist in Vanguard’s Investment Strategy Group, argued this strong report from the Labor Department on the eve of the central bank’s rate decision gives officials “more cover to continue to raise rates” and remove its longstanding financial support of the economy “expeditiously,” as the Fed chair, Jerome H. Powell, has said in recent weeks.Overall, even in an environment of higher borrowing costs, the remarkably robust desire among businesses to expand their work forces could help economic activity plow through the twin challenges presented by inflation, which is at a 40-year high, and the discombobulation of global supply chains compounded by coronavirus outbreaks in Asia and war in Eastern Europe.“If there’s something that’s going to cause a recession, it will be from some outside, exogenous shock,” said Nick Bunker, an economist at the Indeed Hiring Lab, a group that analyzes world labor markets. “It won’t be household spending.”Anonymized credit card data collected by Bank of America shows that even households with an annual income below $50,000 have about twice the savings they did before the pandemic. Still, a Gallup survey released last week found 46 percent of Americans rated their personal finances positively, down from 57 percent last year, when families were freshly benefiting from rounds of federal aid and inflation remained tame.Employers have been rankled, too, complaining of labor shortages as millions of workers — energized by the discussion about “essential work” during the pandemic and buoyed by savings — experience a degree of bargaining power they haven’t had in decades.That has led to a tense, politically charged dynamic in which wage pressures are a broadening complaint among large and small businesses trying to maintain their profit margins, even though jumps in pay haven’t generally kept up with price increases.“We’re learning a lot about how structurally fragile our economy is,” said Claudia Sahm, a former Federal Reserve economist. She cited a dependence on “endless low-wage workers and just-in-time supplies of goods” for keeping consumer prices depressed for many years.The employment cost index, which tracks wages and benefits, jumped by the most on record in the first quarter of this year, according to Labor Department figures released last week. Still, a recent analysis by the Economic Policy Institute, a left-leaning think tank in Washington, concluded that roughly 54 percent of the overall increase in prices in the nonfinancial corporate sector since the second quarter of 2020 could be attributed to an expansion of profit margins, while labor costs were responsible for less than 8 percent of price increases. The analysis indicates that 38 percent of the uptick stems from nonlabor input costs, such as overhead, fuel or raw materials.That data complicates the increasingly popular narrative that the spikes in worker pay are mostly to blame for the severity of price increases, rather than a wider mix of reasons.“Normally, you’d expect profits to decrease during a period of high inflation,” said Tony Roth, the chief investment officer of Wilmington Trust Investment Advisors, an arm of M&T Bank. The reason the opposite has happened for many companies over the last couple of years is, he said, straightforward: “Businesses are doing it because they can get away with it.”The economy, while strong, may be locked in a vexing, self-reinforcing cycle for a while: The continued wave of household spending has often signaled to businesses that they had room to raise prices without consequence — allowing executives to hire more workers while maintaining profitability.Until more consumers balk at heightened price levels, it’s unclear where prices and demand will find an equilibrium.Mr. Roth said his financial firm, like most others, was advising clients to invest in companies that still had a large amount of “pricing power” — meaning that they can raise prices without dampening demand for what they sell, either because the good or service is particularly desirable or because it is essential to the buyers’ life routines or business needs. More

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    Hot Job Market, an Economic Relief, Is a Wall Street Worry

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    This year’s decline in stock prices follows a historical pattern: “When unemployment is ultra low, the uppity times are behind us,” a bank research chief said.The U.S. unemployment rate is 3.6 percent — only a hair above its level just before the pandemic, which was a 50-year low. Corporate profits rocketed by 35 percent in 2021, and profit margins were at their widest since 1950. Yet stocks have been hammered lately: Two key stock indexes, the S&P 500 and the Nasdaq 100, have been deep in negative terrain since the start of the year.What may seem a contradiction is actually a historical pattern: Hot labor markets and hot stock markets often don’t mix well.In fact, times of low unemployment are correlated with somewhat subdued stock returns, while valuations trend higher on average during periods of high unemployment. Analysts explain this phenomenon as a plain function of the unemployment rate’s status as a “lagging indicator” — letting people know how the economy was faring in the immediate past — while the stock market itself constantly serves as a “leading indicator,” coldly, if somewhat imperfectly, projecting an evolving consensus about the fate of companies as time goes on.“When unemployment is ultra low, the uppity times are behind us, and when it’s super high, there are good times ahead,” said Padhraic Garvey, a head of research at ING, a global bank.Stocks outperform on average when unemployment is high.Average annual returns in the S&P 500 index from 1948 to 2022, by the concurrent rate of unemployment

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    Average annual returns
    Note: The S&P 500 index was formally introduced in 1957. The performance of companies prior to 1957 that joined the index later are included in this analysis.Sources: Ben Koeppel, BXK Capital; Ben Carlson, Ritholtz Wealth By The New York TimesIn 2007, for instance, unemployment sank as low as 4.4 percent, but the annual return for the S&P 500 index was only 5.5 percent. Stocks plunged during the financial crisis the next year — and then, in 2009, as unemployment ripped higher to 10 percent, the index gained 26.5 percent. (Breaks in the pattern occur, since various tailwinds for big business, such as the tech boom of the 1990s, can briefly overpower historical trends.)When recoveries peak, investor exuberance can lead to excessive risk taking by businesses, which plants the seeds of the next downturn — just as workers are benefiting from being in high demand, with their higher wages cutting into corporate cash piles built up during good times, putting pressure on near-term profits. Financial investors also have to contend with the Federal Reserve’s response to the cycle — if there’s inflation, as there is now, a strong labor market may give it room to raise interest rates. A weak one can pressure it to cut rates. Action in either direction affects stock valuations.The State of Jobs in the United StatesJob openings and the number of workers voluntarily leaving their positions in the United States remained near record levels in March.March Jobs Report: U.S. employers added 431,000 jobs and the unemployment rate fell to 3.6 percent ​​in the third month of 2022.Job Market and Stocks: This year’s decline in stock prices follows a historical pattern: Hot labor markets and stocks often don’t mix well.New Career Paths: For some, the Covid-19 crisis presented an opportunity to change course. Here is how these six people pivoted professionally.Return to the Office: Many companies are loosening Covid safety rules, leaving people to navigate social distancing on their own. Some workers are concerned.This year, in addition to those forces, the war in Ukraine has slowed global growth and added to the pandemic’s strain on global supply chains, increasing the cost of raw materials.Senior executives at Morgan Stanley wrote in a recent note that their “strategists see higher wages amid the tightening labor market and related labor shortages posing a risk to 2022 corporate profit margins,” adding a reminder that “what matters for markets isn’t always the same as what matters for the aggregate economy.”Wage growth, milder in recent history, has spiked quickly.Median wage growth for hourly workers from the prior year, three-month average

    Note: Gaps in the data are due to methodology changes in the Current Population Survey that prevent year-over-year comparisons.Source: Federal Reserve Bank of AtlantaBy The New York TimesEven though large companies achieved record profit margins last year, earnings estimates for many firms are declining compared with expectations set earlier this year. Recent “wage inflation,” as many frame it, is seen by countless stock traders as adding one burden too many — rapid enough to worry not only executives but also some prominent liberal economists who typically shrug off complaints about labor expenses as overplayed.Federal Reserve data shows that median annual pay increases are within the range — 3 to 7 percent — that prevailed from the 1980s until the 2007-9 recession. But a variety of leaders in business and in government, including the Fed chair, Jerome H. Powell, and Treasury Secretary Janet L. Yellen, have become more wary of their brisk pace.Corporate profits hit new highs last year.After-tax profits for U.S. corporations, seasonally adjusted

    Notes: Profits are in current dollars, not adjusted for inflation, minus capital consumption adjustment or inventory valuation adjustment (IVA). Sources: U.S. Bureau of Economic Analysis; Federal Reserve Bank of St. LouisBy The New York TimesIn the nonfinancial “real” economy, intense competition for workers that leads to greater choice and compensation is positive “because we’re making more money, we have more money to spend, we can absorb inflation better because we’ve gotten raises,” said Liz Young, head of investment strategy at SoFi, a San Francisco-based financial services company. At the same time, she acknowledged, “The other thing with a tight labor market is that when wages increase somebody has to pay for that.”Through most of the swift recovery from the pandemic-induced recession, money managers made a simple bet on the strengthening labor market as a signal that more people earning more disposable income would lead to even more spending on goods and services sold by the companies they trade, enhancing their future earnings.Now, the calculus on Wall Street isn’t so simple.In the coming months, many financial analysts say they’ll pay less attention to data on job creation and focus instead on growth in average hourly earnings — cheering for them to flatten or at least moderate, so that labor costs can ebb.Stocks have tumbled so far in 2022.S&P 500 daily close through April 26

    Source: S&P Dow Jones Indices LLCBy The New York TimesAfter three years of outsized returns, the down year in markets is compounding the sour mood among the nation’s broadly defined middle class, whose wage gains have generally not kept up with inflation, and whose retirement savings and net worth (outside of home equity) are partly tied to such indexes. The University of Michigan consumer sentiment index has been hovering near lows not reached since the slow jobs recovery after the 2008 financial crisis.Ultimately, this cranky disconnect between strong jobs data and the national mood may stem from an initial lag between relative winners and losers in this robust-but-rocky recovery: The economic benefits of tightening an already-tight labor market are, in the short run, relatively concentrated — accruing to those with lower starting wages and less formal education, and to demographic cohorts like Black Americans, who are often “last hired, first fired” during business cycles. In the meantime, the downsides of even temporary high inflation are diffuse — spread broadly across the population, though frequently damaging the finances of lower-income groups the most.It remains true that the increased demand for labor has helped millions of workers come out ahead. After adjusting for inflation, wages have fallen for middle- and high-income groups but risen for the bottom third of earners on average: The wages of the typically lower-paid employees of the leisure and hospitality industry — the broad sector focused on travel, dining, entertainment, recreation and tourism — have risen nearly 15 percent over the past year, far outpacing inflation.A substantial bloc of economists are contending that wages are receiving too much blame for inflation. A recent analysis across 110 industries by the Economic Policy Institute, a progressive think tank based in Washington, concluded that wage growth wasn’t correlated with the surge in costs that suppliers dealt with last year, suggesting that much of inflation could still be stemming from other forces, like supply chain imbalances.Many analysts believe that if unemployment stays low enough for long enough, the fruits of a hot labor market will widen — creating a virtuous cycle in which employers increase pay for various rungs of workers, while economizing their business models to become more efficient, increasing capacity, productivity and the health of corporate balance sheets.That hope is under threat, as the Federal Reserve proceeds with a plan to increase borrowing costs by quickly raising interest rates to rein in some lending, consumer spending, business investment and demand for labor.Despite various challenges, the most optimistic market participants predict that employers, workers and consumers can experience a so-called “soft landing” this year, in which the Fed increases borrowing costs, helping inflation and wage growth moderate without a painful slowdown that kills off the recovery: Morgan Stanley strategists, for instance, expect real wages to turn positive overall by midyear, outpacing price increases, as inflation eases and pay rates maintain some strength. That could be a boon for stocks as well.“It’s possible that over the next few quarters the labor market continues to be tight despite the Fed hiking,” said Andrew Flowers, a labor economist at Appcast, a tech firm that helps companies target recruitment ads. He still sees an “overwhelming appetite” for hiring.Although especially low unemployment isn’t typically a bullish sign for stocks, some recent years have bucked the trend. In 2019, when the S&P 500 returned roughly 30 percent, unemployment by year’s end had fallen to 3.6 percent, in line with present levels.In such an uncertain environment, forecasts for how stocks will fare by the end of the year are varying widely among top Wall Street firms. By several technical measures, the market’s trajectory is currently near “make or break” levels.Public companies have “become massively efficient, so from an operating performance basis, they’ve been able to take on these extra costs,” said Brian Belski, the chief investment strategist at BMO Capital Markets. The outlook from Mr. Belski’s bank is among the most confident, with a call that the S&P 500 index will finish 2022 at 5,300 — 27 percent above Tuesday’s close, and far above most estimates.“At the end of the day, I think for the economy it’s good that we are seeing these sort of wages,” he said. “Don’t ever bet against the U.S. consumer, ever.” More

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    U.S. Tries New Tactic to Protect Workers’ Pay: Antitrust Law

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    The Justice Department is using antitrust law to charge employers with colluding to hold down wages. The move adds to a barrage of civil challenges.Antitrust suits have long been part of the federal government’s arsenal to keep corporations from colluding or combining in ways that raise prices and hurt the consumer. Now the government is deploying the same weapon in another cause: protecting workers’ pay.In a first, the Justice Department has brought a series of criminal cases against employers for colluding to suppress wages. The push started in December 2020, under the Trump administration, with an indictment accusing a staffing agency in the Dallas-Fort Worth area of agreeing with rivals to suppress the pay of physical therapists. The department has now filed six criminal cases under the pillar of antitrust law, the Sherman Act, including prosecutions of employers of home health aides, nurses and aerospace engineers.“Labor market collusion dots the entirety of the U.S. economy,” said Doha Mekki, principal deputy assistant attorney general in the department’s antitrust division. “We’ve seen it in sectors across the board.”If the courts are swayed by the government’s arguments, they could drastically alter the relationship between workers and their employers across large swaths of the economy.“The expansion of Sherman Act criminal violations changes the ballgame when it comes to how companies engage with their workers,” noted an analysis by lawyers at White & Case, including J. Mark Gidley, chair of the firm’s global antitrust and competition practice. “Executives and managers could face jail time for proven horizontal wage-fixing conspiracies.” In addition to fines for corporations or individuals, the Sherman Act provides for prison terms of up to 10 years.The Biden administration is also deploying antitrust law in civil cases to shore up workers’ pay. And in another first, the Justice Department filed a lawsuit in November to stop Penguin Random House’s attempt to buy Simon & Schuster on the grounds that the resulting publishing Goliath would have the power to depress advances and royalty payments to authors.The move to block the publishers’ merger “declines to even allege the historically key antitrust harm — increased prices,” the White & Case lawyers argued. It is “emblematic of the Biden administration’s and the new populist antitrust movement’s push to direct the purpose of antitrust away from consumer welfare price effects and towards other social harms.”And yet the Justice Department’s push builds on a rationale for criminal antitrust enforcement articulated since the Obama administration. “Colluding to fix wages is no different than colluding to suppress the prices of auto parts or homes sold at auction,” said Renata Hesse, acting assistant attorney general for antitrust, in November 2016. “Naked wage-fixing or no-poach agreements eliminate competition in the same irredeemable way as per se unlawful price-fixing and customer-allocation agreements do.”The Biden administration has picked up the argument with a vengeance. Last summer, President Biden issued an executive order mandating a “whole of government” effort to promote competition across the economy. Last month, the Treasury Department issued a report on just how anticompetitive labor markets have become.Corporate America is alarmed. “In their minds, everything is an antitrust issue,” said Sean Heather, senior vice president for antitrust at the U.S. Chamber of Commerce. “There is a role for antitrust in labor markets,” he added. “But it is a limited one.”The State of Jobs in the United StatesJob openings and the number of workers voluntarily leaving their positions in the United States remained near record levels in March.March Jobs Report: U.S. employers added 431,000 jobs and the unemployment rate fell to 3.6 percent ​​in the third month of 2022.A Strong Job Market: Data from the Labor Department showed that job openings remained near record levels in February.New Career Paths: For some, the Covid-19 crisis presented an opportunity to change course. Here is how these six people pivoted professionally.Return to the Office: Many companies are loosening Covid safety rules, leaving people to navigate social distancing on their own. Some workers are concerned.The latest criminal indictment, brought in January against owners and managers of four home health care agencies in Portland, Maine, is emblematic of the new approach.According to the indictment, the agencies agreed to keep the wage of health aides at $16 to $17 an hour. They encouraged other agencies to sign on, prosecutors said, and threatened an agency that raised its pay to between $17 and $18.50.The agencies’ margin is essentially the difference between the wage and the reimbursement from the Maine Department of Health and Human Services. In April 2020, the department raised the rate to $26.20 an hour, from $20.52, explicitly to “fund pay raises for approximately 20,000 workers,” according to the indictment.The agencies’ agreement, the indictment said, was “a per se unlawful, and thus unreasonable, restraint of interstate trade and commerce in violation of Section l of the Sherman Act.”That blows directly against the position of the Chamber of Commerce. Last April, it filed a brief in a similar case, opposing the government’s argument against an outpatient medical care facility that agreed with a rival not to solicit each other’s employees. The Justice Department was overstepping, the brief argued, because the company couldn’t know the behavior was “per se” illegal — an outright breach of the law irrespective of its effects — since the government’s argument had not been tested in court.American companies “are entitled to fair notice of what conduct is and is not prohibited by the federal antitrust laws,” it argued. “Because no court has previously held that nonsolicitation agreements are per se illegal, this prosecution falls far short of the fair notice that due process requires.”A federal court in a separate case has since sided with the government’s interpretation. In November, Judge Amos L. Mazzant III of the United States District Court in the Eastern District of Texas denied a motion to dismiss a federal criminal indictment alleging wage-fixing at a staffing company providing physical therapists, agreeing that price fixing would be “per se” illegal and that the defendants had fair warning that their behavior was against the law.But beyond the legal wrangling brought about by the Justice Department’s new approach, there are striking examples of efforts by employers to suppress wages.“I suspect those things are all over the place,” said Ioana Marinescu, an economist at the University of Pennsylvania’s School of Social Policy and Practice, whether it is employers hoarding highly paid computer engineers or chicken plants paying $15 an hour. “The benefits of collusion may not be super large, but if the costs are quite low, why not do it if you can extract profit?”Until recently, over half of all franchise agreements in the United States, at companies including McDonald’s, Jiffy Lube and H&R Block, included provisions barring franchisees from hiring one another’s workers, according to research by the economists Alan B. Krueger and Orley Ashenfelter. Economic analysis has found that suppressing competition for workers, reducing their options, generally means lower wages. After challenges from several state attorneys general, hundreds of companies abandoned the practice.Another study found that 18 percent of workers are under contracts that forbid moving to a competitor. Most are highly skilled and well paid. Employers who invest in their training can plausibly argue that the noncompete clauses protect their investment and prevent workers from taking valuable information to a rival.But such provisions cover 14 percent of less-educated workers and 13 percent of low-wage workers, who receive little or no training and hold no trade secrets. Several states have challenged the provisions in court. Some, including California, Oklahoma and North Dakota, have prohibited their enforcement.Then there is the litigation. There are civil cases from the 1990s: one by the Justice Department against the Utah Society for Healthcare Human Resources Administration and several hospitals in the state that shared wage information about registered nurses and matched one another’s wages, keeping their pay low. Lawsuits filed by nurses in 2006 accusing hospital systems of conspiring to suppress their wages led to multimillion-dollar settlements in Albany and Detroit.In 2007, the Justice Department sued the Arizona Hospital and Healthcare Association for fixing the rates that hospitals paid to nursing agencies for their temporary nurses, putting a cap on their wages. In settling the case, the association agreed to abandon the practice.The pace picked up after a Justice Department lawsuit in 2010 taking aim at no-poaching agreements involving Adobe, Apple, Google, Intel, Intuit, Pixar and later Lucasfilm. The companies settled the case without admitting guilt or paying fines, but Adobe, Apple, Google and Intel paid $415 million to settle a subsequent class-action lawsuit.Since then, lawsuits have been filed across the industrial landscape. Pixar, Disney and Lucasfilm paid $100 million to settle an antitrust challenge to their agreements not to hire one another’s animation engineers. In 2019, 15 “cultural exchange” sponsors designated by the State Department paid $65.5 million to settle a lawsuit claiming, among other things, that they colluded to depress the wages of tens of thousands of au pairs on J-1 visas. Since 2019 Duke University and the University of North Carolina have paid nearly $75 million to settle two antitrust cases over agreements not to recruit each other’s faculty members.This month, Local 32BJ of the Service Employees International Union filed a complaint with the Federal Trade Commission arguing that Planned Companies, one of the largest building services contractors in the Northeast and Mid-Atlantic, illegally forbids its clients to hire its janitors, concierges or security guards either directly or through another firm — locking its workers in.In perhaps the biggest case of all, in 2019 a class action was filed against the American chicken industry, growing to cover some 20 producers responsible for about 90 percent of the poultry market. The complaint accused them of exchanging detailed wage information to fix the wages of about a quarter-million employees, including hourly workers deboning chickens, refrigeration technicians and feed-mill supervisors on a salary.Four of the chicken processors have settled, agreeing to pay tens of millions of dollars. In February, Webber, Meng, Sahl & Company, one of two firms that collected wage data for the poultry companies, settled as well, offering a fairly clear window into the industry’s attempts to suppress wages.In a declaration to the court, part of the settlement agreement, the law firm’s president, Jonathan Meng, said the chicken companies had used the firm “as an unwitting tool to conceal their misconduct.” He offered details about how poultry executives would share detailed wage information. “They wanted to know how much and when their competitors were planning to increase salaries and salary ranges,” he said, because it would allow them “to limit and reduce their salary increases and salary range increases.”Most of the defendants, however, are still contesting the case. They have argued that to prove collusion, the plaintiffs must show that wages across the industry moved in tandem, an argument the court has yet to rule on.Another hurdle is convincing judges that chicken industry workers amount to a specific occupation. If workers deboning chickens could easily leave the poultry industry to work for a better wage at McDonald’s or 7-Eleven, they would have a tougher case to prove that anticompetitive practices by poultry processors caused them direct harm.In pursuing such cases, the government is likely to be challenged by corporate groups every step of the way.Mr. Heather at the Chamber of Commerce, for one, argues that “this narrative that lax antitrust is responsible for income inequality” is wrong. He notes a study sponsored by the chamber showing that corporate concentration is no higher than in 2002 and has been declining since 2007. “The heart of the premise is just flawed,” Mr. Heather said.Moreover, Mr. Heather said, labor markets are already covered by labor laws. “The chamber has an objection to the blending of antitrust and workplace regulation,” he said.Mr. Gidley of White & Case broadly agrees. “It is intriguing to us to see the last 40 years of antitrust law thrown out the window,” he said in an interview. “If antitrust is no longer about low prices but about a clean environment and wages and this, that and the other, it loses its compass.” More

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    Britain’s inflation rate climbed to 7 percent, the highest in 30 years.

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    In Britain, several pieces of dispiriting economic news arrived this week: Prices are rising at their fastest pace in 30 years, wages adjusted for inflation fell the most in nearly eight years and the economy hardly grew in February.It is mounting evidence of what is turning out to be a challenging year for many, with the tightest squeeze on household budgets forecast since records began in 1956.Even before Russia invaded Ukraine, Britain’s economic growth had slowed. But that war has weakened Britain’s economic outlook, as is the case in many countries. Rising energy costs are passing through to household bills. Manufacturers, farmers and supermarkets have warned about the rising cost of essential inputs into their supply chain from goods produced in Russia and Ukraine — including metals, wheat, fertilizer and sunflower oil. The pain is wide-reaching: Even fish and chips, a traditionally cheap British staple, has jumped in price.The Consumer Prices Index rose 7 percent in March from a year earlier, up from 6.2 percent the previous month, the Office for National Statistics said Wednesday. That exceeded economists’ predictions. Inflation was driven by record prices for gasoline and diesel, as well as by large increases at restaurants and hotels, for food and drinks, and clothing and furniture.This broad-based increase in prices for products that are usually seen as less volatile “will be viewed with particular discomfort by the Bank of England,” Sandra Horsfield, an economist at Investec, wrote in a note. The central bank has raised interest rates three times since December to their prepandemic level in an effort to arrest price increases, even as policymakers have cut the outlook for economic growth.The statistics agency also said on Wednesday that wholesale prices were rising at their fastest pace since September 2008. Output prices of manufacturers rose nearly 12 percent in March from a year earlier, while their input prices rose 19 percent, a record high.On Tuesday, data showed Britain’s unemployment rate fell to 3.8 percent, back to its prepandemic low, while there are a record number of job vacancies. Signs of a tight labor market are fueling expectations that workers will be in a position to demand larger salaries. Wages, excluding bonuses, in December to February rose 4 percent from a year earlier, but at the moment the gains are being eaten away by inflation. Once adjusted for price increases, pay fell 1 percent, the most since mid-2014.The British economy has recovered from its pandemic slump, but growth is waning. After the Omicron wave subsided in February, bookings for accommodation and travel services increased, offering the main contributor to economic growth that month. The economy grew just 0.1 percent, as manufacturing of cars, electrical products and chemicals all declined, the statistics agency said on Monday. More

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    Actors in ‘Waitress’ Tour Seek to Join Labor Union

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    Employees of a nonunion production are seeking improved compensation and safety protocols, saying a union version of the same musical pays better.A group of actors and stage managers employed by a nonunion touring production of the musical “Waitress” is seeking union representation, emboldened by a growing focus on working conditions in the theater business and by the labor movement’s recent successes in other industries.Actors’ Equity Association, a labor union representing 51,000 performers and stage managers, said it had collected signatures from more than the 30 percent of workers required to seek an election, and that on Tuesday it had submitted an election petition to the National Labor Relations Board, which conducts such elections.The number of people affected is small — there are 22 actors and stage managers employed by the tour, according to Equity — but the move is significant because it is the first time Equity has tried to organize a nonunion tour since an unsuccessful effort two decades ago to unionize a touring production of “The Music Man.” (The union also sought a boycott of that production.)Union officials said the “Waitress” tour was an obvious place for an organizing campaign because of an unusually clear comparison: There are currently two touring companies of that musical, one of which is represented by the union and one of which is not. The workers in the nonunion tour are being paid about one-third of what the workers in the union company are making, and have lesser safety protections, Equity said. (The minimum union actor salary is $2,244 per week.)“We thought it was not right and not fair, so we approached them to see if they were interested in us representing them,” said Stefanie Frey, the union’s director of organizing and mobilization. Frey said that the productions were so similar that some of the nonunion performers have been asked to teach performers in the union production, and that some have moved from the nonunion production to the union production. “It’s an obvious group of people getting exploited,” she said.Jennifer Ardizzone-West, the chief operating officer at NETworks Presentations, the company that is producing the nonunion “Waitress” tour, declined to offer an immediate reaction, saying, “Until we see the actual filing, it is premature for me to comment.”Tours are an important, and lucrative, part of the Broadway economy. During the 2018-19 theater season — the last full season before the pandemic — unionized touring shows grossed $1.6 billion and were attended by 18.5 million people, according to the Broadway League. Similar statistics are not readily available for nonunion tours, but Frey said, “The nonunion tour world has grown over the last 15 years.”Equity is in the process of hiring two additional organizers as it seeks to expand its efforts, according to a union spokesman, David Levy, who noted recent successful efforts to organize some employees at REI, Starbucks and Amazon. The National Labor Relations Board said last week that the number of union election petitions has been increasing dramatically.Frey said the long pandemic shutdown of theaters had also contributed to a new interest in organizing in the theater industry. “Workers are feeling a little bit more of their power and want to fight for what they deserve in a different way,” she said. More

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    March Fed Minutes: ‘Many’ Officials in Favor of a Big Rate Increase

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    Minutes from the Federal Reserve’s March meeting showed that central bankers were preparing to shrink their portfolio of bond holdings imminently while raising interest rates “expeditiously,” as the central bank tries to cool off the economy and rapid inflation.Fed officials are making money more expensive to borrow and spend in a bid to slow shopping and business investment, hoping that weaker demand will help to tame prices, which are now climbing at the fastest pace in four decades.Central bankers raised interest rates by a quarter of a percentage point in March, their first increase since 2018 — and the minutes showed that “many” officials would have preferred an even bigger rate move and were held back only by uncertainty tied to Russia’s invasion of Ukraine. Markets now expect the Fed to make half-point increases in May and possibly June, even as they begin to withdraw additional support from the economy by shrinking their balance sheet.The balance sheet stands at nearly $9 trillion — swollen by pandemic response policies — and Fed officials plan to shrink it by allowing some of their government-backed bond holdings to expire starting as soon as May, the minutes showed. That will help to further push up interest rates, potentially leading to slower growth, more muted hiring and weaker wage increases. Eventually, the theory goes, the chain reaction should help to slow inflation. “They’re very resolute in fighting inflation and moving it lower,” said Kathy Bostjancic, chief U.S. economist at Oxford Economics. “They are concerned.”While central bankers were hesitant to react to rapid inflation last year, hoping it would prove “transitory” and fade quickly, those expectations have been dashed. Price increases remain rapid, and officials are watching warily for signs that they might turn more permanent.“All participants underscored the need to remain attentive to the risks of further upward pressure on inflation and longer-run inflation expectations,” the minutes showed.Now, officials are trying to cool off the economy as it is growing quickly and the job market is rapidly improving. Employers added 431,000 jobs in March, wages are climbing swiftly, and the unemployment rate is just about matching the 50-year low that prevailed before the pandemic.Central bankers are hoping that the strong job market will help them slow the economy without tipping it into an outright recession. That will be a challenge, given the Fed’s blunt policy tools, a reality that officials have acknowledged.At the same time, Fed officials are worried that if they do not respond vigorously to high inflation, consumers and businesses may come to expect persistently higher prices. That could perpetuate quick price increases and make wrestling them under control even more painful.“It is of paramount importance to get inflation down,” Lael Brainard, a Fed governor who is the nominee to be the central bank’s vice chair, said on Tuesday. “Accordingly, the committee will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting.”Ms. Brainard’s statement that balance sheet shrinking could happen “rapidly” caught markets by surprise, sending stocks lower and rates on bonds higher. Investors also focused their attention on the minutes released on Wednesday.The notes from the March meeting provided more details about what the balance sheet process might look like. Fed officials are coalescing around a plan to slow their reinvestment of securities, the minutes showed, most likely capping the monthly shrinking at $60 billion for Treasury securities and $35 billion for mortgage-backed debt.That would be about twice the maximum pace the Fed set when it shrank its balance sheet between 2017 and 2019, confirming the signal policymakers have been giving in recent weeks that the plan could proceed much more quickly this time around.The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More