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    Hiring Remains Strong Even as Fed Tries to Cool Economy

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    The Labor Department reported 390,000 new jobs in May, as policymakers try to ease inflation without inducing a recession.American employers extended an impressive run of hiring in May, even as policymakers took steps to cool the economy in an effort to ease high inflation.The Labor Department reported Friday that employers added 390,000 jobs, the 17th straight monthly gain. The unemployment rate was 3.6 percent for the third straight month, a touch away from a half-century low.At the same time, the labor force grew by 330,000 people, and the share of adults employed or looking for work continued to edge closer to prepandemic levels.The data signaled that the Federal Reserve’s initial moves to dial back its monetary support for the economy were — at least so far — not constraining business activity so much that hiring was feeling a pinch.After the strong rebound from the depths of the coronavirus lockdowns — all but 800,000 of the 22 million jobs that were lost have been recovered — the Fed has shifted its emphasis from maximum employment to its other mandate: price stability. The challenge is to apply its primary tool, a steady series of interest-rate increases, without inflicting a recession.“I think we’re on sort of what looks like a glide path right now, and that’s good — nothing’s broken,” said Guy Berger, the principal economist at the career-focused social network LinkedIn. “But keep fast-forwarding it a year and the question marks are still big.”The closely watched indicators include the impact on wages, which have been increasing at a pace not seen in decades, though not enough to keep up with inflation over the past year. The Fed is worried that rising labor costs will be passed along to consumers.Wages kept rising across industries.Percent change in average hourly earnings for nonmanagers since January 2019

    Data is seasonally adjusted. Not adjusted for inflation.Source: Bureau of Labor StatisticsBy The New York TimesOn that score, the Labor Department report showed little change in trajectory. Average hourly earnings rose 0.3 percent from the previous month, the same pace as in April, and were 5.2 percent higher than a year earlier, compared with a 5.5 percent year-over-year increase in April.“It’s moderating, but it’s not moderating to a level, I think, where it’s consistent with the Fed’s inflation goals,” said Michael Feroli, chief U.S. economist at J.P. Morgan, said of wage growth. He said the Fed would probably want wages to cool toward an annualized 3.5 percent pace, at the higher end, a rate that officials view as aligned with 2 percent inflation.The State of Jobs in the United StatesJob gains continue to maintain their impressive run, even as government policymakers took steps to cool the economy and ease inflation.May Jobs Report: U.S. employers added 390,000 jobs and the unemployment rate remained steady at 3.6 percent ​​in the fifth month of 2022.Vacancies: Employers had 11.4 million vacancies in April down from a revised total of nearly 11.9 million the previous month, which was a record.Opportunities for Teenagers: Jobs for high school and college students are expected to be plentiful this summer, and a large market means better pay.Higher Interest Rates: Spurred by red-hot inflation, the Federal Reserve has begun raising interest rates. What does that mean for the job market?President Biden gave a nuanced celebration of the jobs data in remarks on Friday, emphasizing recent gains while arguing that a slowdown would be welcome, allowing inflation to ease.“The point is this: We’ve laid an economic foundation that’s historically strong,” Mr. Biden said. “Now we’re moving forward to a new moment, where we can build on that foundation, build a future of stable, steady growth so that we can bring down inflation without sacrificing all of the historic gains that we have made.”Stocks declined on Friday and bond yields rose as investors evidently read the report as reinforcing the Fed’s muscular efforts, which risk denting economic growth. “The better the data, the more difficult that a pause or reduced pace of tightening later this year becomes,” analysts at TD Securities wrote in a research report published after the jobs numbers were released.The continued job gains are among many indications of a vibrant economy. Reports from the nation’s largest banks show checking accounts are still above 2019 levels for nearly all income groups. New bankruptcies and debt-collection proceedings are both at their lowest levels since tracking began in 1999.Yet those encouraging trends have been at odds with the generally sour national mood, dominated by inflation concerns. U.S. consumer sentiment declined in early May to the lowest since 2011, according to the University of Michigan.The unemployment rate stayed flat in May.The share of people who have looked for work in the past four weeks or are temporarily laid off More

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    Economic Scorecard: Biggest Numbers May Not Be Best, for Now

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    As the Federal Reserve tries to rein in inflation without causing a recession, slower job creation and wage growth could be a plus.When it comes to the economy, more is usually better.Bigger job gains, faster wage growth and more consumer spending are all, in normal times, signs of a healthy economy. Growth might not be sufficient to ensure widespread prosperity, but it is necessary — making any loss of momentum a worrying sign that the economy could be losing steam or, worse, headed into a recession.But these are not normal times. With nearly twice as many open jobs as available workers and companies struggling to meet record demand, many economists and policymakers argue that what the economy needs right now is not more, but less — less hiring, less wage growth and above all less inflation, which is running at its fastest pace in four decades.Jerome H. Powell, the Federal Reserve chair, has called the labor market “unsustainably hot,” and the central bank is raising interest rates to try to cool it. President Biden, who met with Mr. Powell on Tuesday, wrote in an opinion article this week in The Wall Street Journal that a slowdown in job creation “won’t be a cause for concern” but would rather be “a sign that we are successfully moving into the next phase of recovery.”“We want a full and sustainable recovery,” said Claudia Sahm, a former Fed economist who has studied the government’s economic policy response to the pandemic. “The reason that we can’t take the victory lap right now on the recovery — the reason it is incomplete — is because inflation is too high.”But a cooling economy carries its own risks. Despite inflation, the recovery from the pandemic recession has been among the strongest on record, with unemployment falling rapidly and incomes rebounding fastest for those at the bottom. If the recovery slows too much, it could undo much of that progress.“That’s the needle we’re trying to thread right now,” said Harry J. Holzer, a Georgetown University economist. “We want to give up as few of the gains that we’ve made as possible.”Economists disagree about the best way to strike that balance. Mr. Powell, after playing down inflation last year, now says reining it in is his top priority — and argues that the central bank can do so without cutting the recovery short. Some economists, particularly on the right, want the Fed to be more aggressive, even at the risk of causing a recession. Others, especially on the left, argue that inflation, while a problem, is a lesser evil than unemployment, and that the Fed should therefore pursue a more cautious approach.But where progressives and conservatives largely agree is that evaluating the economy will be particularly difficult over the next several months. Distinguishing a healthy cool-down from a worrying stall will require looking beyond the indicators that typically make headlines.“It’s a very difficult time to interpret economic data and to even understand what’s happening with the economy,” said Michael R. Strain, an economist with the American Enterprise Institute. “We’re entering a period where there’s going to be tons of debate over whether we are in a recession right now.”Slower job growth could be good (or bad).The jobs report for May, which the Labor Department will release on Friday, will provide a case study in the difficulty of interpreting economic data right now.Understand Inflation and How It Impacts YouInflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Measuring Inflation: Over the years economists have tweaked one of the government’s standard measures of inflation, the Consumer Price Index. What is behind the changes?Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Interest Rates: As it seeks to curb inflation, the Federal Reserve began raising interest rates for the first time since 2018. Here is what that means for inflation.Ordinarily, one number from the monthly report — the overall jobs added or lost — is enough to signal the labor market’s health. That is because most of the time, the driving force in the labor market is demand. If business is strong, employers will want more workers, and job growth will accelerate. When demand lags, then hiring slows, layoffs mount and job growth stalls.Right now, though, the limiting factor in the labor market is not demand but supply. Employers are eager to hire: There were 11.4 million job openings at the end of April, close to a record. But there are roughly half a million fewer people either working or actively looking for work than when the pandemic began, leaving employers scrambling to fill available jobs.The labor force has grown significantly this year, and forecasters expect more workers to return as the pandemic and the disruptions it caused continue to recede. But the pandemic may also have driven longer-lasting shifts in Americans’ work habits, and economists aren’t sure when or under what circumstances the labor force will make a complete rebound. Even then, there might not be enough workers to meet the extraordinarily high level of employer demand.A coffee shop advertised open positions in New York. The limiting factor in the labor market is not demand but supply.Amir Hamja for The New York TimesMost forecasters expect the report on Friday to show that job growth slowed in May. But that number alone won’t reveal whether the mismatch between supply and demand is easing. Slowing job growth coupled with a growing labor force could be a sign that the labor market is coming back into balance as demand cools and supply improves. But the same level of job growth without an increase in the supply of workers could indicate the opposite: that employers are having an even more difficult time finding the help they need.Many economists say they will be watching the labor force participation rate — the share of the population either working or looking for work — just as closely as the headline job growth figures in coming months.“One can unambiguously root for higher labor force participation,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “Beyond that, nothing else is unambiguous.”Wage growth may need to slow.Another number will be getting a lot of attention from economists, policymakers and investors: wage growth.Employers have responded to the hot competition for workers exactly the way Econ 101 says they should, by raising pay. Average hourly earnings were up 5.5 percent in April from a year earlier, more than twice the rate they were rising before the pandemic.Normally, faster wage growth would be good news. Persistently weak pay increases were a bleak hallmark of the long, slow recovery that followed the last recession. But even some economists who bemoaned those sluggish gains at the time say the current rate of wage growth is unsustainable.“That’s something that we’re used to saying pretty unequivocally is good, but in this case it just raises the risk that the economy is overheating further,” said Adam Ozimek, chief economist of the Economic Innovation Group, a Washington research organization. As long as wages are rising 5 or 6 percent per year, he said, it will be all but impossible to bring inflation down to the Fed’s 2 percent target.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Why Union Efforts at Starbucks Have Spread Further Than at Amazon

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    Why has the union campaign spread so much further at the coffee chain than at the e-commerce giant?Roughly six weeks after successful union votes at two Buffalo-area Starbucks stores in December, workers had filed paperwork to hold union elections in at least 20 other Starbucks locations nationwide.By contrast, since the Amazon Labor Union’s victory last month in a vote at a huge warehouse on Staten Island, workers at just one other Amazon facility have filed for a union election — with an obscure union with a checkered past — before promptly withdrawing their petition.The difference may come as a surprise to those who believed that organizing at Amazon might follow the explosive pattern witnessed at Starbucks, where workers at more than 250 stores have filed for elections and the union has prevailed at a vast majority of the locations that have voted.Christian Smalls, the president of the independent Amazon Labor Union, told NPR shortly after the victory that his group had heard from workers in 50 other Amazon facilities, adding, “Just like the Starbucks movement, we want to spread like wildfire across the nation.”The two campaigns share some features — most notably, both are largely overseen by workers rather than professional organizers. And the Amazon Labor Union has made more headway at Amazon than most experts expected, and more than any established union.But unionizing workers at Amazon was always likely to be a longer, messier slog given the scale of its facilities and the nature of the workplace. “Amazon is so much harder a nut to crack,” John Logan, a labor studies professor at San Francisco State University, said by email. The union recently lost a vote at a smaller warehouse on Staten Island.To win, a union must get the backing of more than 50 percent of the workers who cast a vote. That means 15 or 20 pro-union workers can ensure victory in a typical Starbucks store — a level of support that can be summoned in hours or days. At Amazon warehouses, a union frequently would have to win hundreds or thousands of votes.Organizers for the Amazon Labor Union spent hundreds of hours talking with co-workers inside the warehouse during breaks, after work and on days off. They held cookouts at a bus stop outside the warehouse and communicated with hundreds of colleagues through WhatsApp groups.Brian Denning, who leads an Amazon organizing campaign sponsored by the Democratic Socialists of America chapter in Portland, Ore., said his group had received six or seven inquiries a week from Amazon workers and contractors after the Staten Island victory, versus one or two a week beforehand.But Mr. Denning, a former Amazon warehouse employee who tells workers that they are the ones who must lead a union campaign, said that many didn’t realize how much effort unionizing required, and that some became discouraged once he conferred with them.Understand the Unionization Efforts at AmazonBeating Amazon: A homegrown, low-budget push to unionize at a Staten Island warehouse led to a historic labor victory. (Workers at another nearby Amazon facility rejected joining a similar effort shortly after.)Retaliation: Weeks after the landmark win, Amazon fired several managers in Staten Island. Some see it as retaliation for their involvement in the unionization efforts.A New Playbook: The success of the Amazon union’s independent drive has organized labor asking whether it should take more of a back seat.Amazon’s Approach: The company has countered unionization efforts with mandatory “training” sessions that carry clear anti-union messages.“We get people saying how do we get an A.L.U. situation here? How do we do that like they did?” Mr. Denning said, adding: “I don’t want to scare them away. But I can’t lie to workers. This is what it is. It’s not for everyone.”At Starbucks, employees work together in a relatively small space, sometimes without a manager present to supervise them directly for hours at a time. This allows them to openly discuss concerns about pay and working conditions and the merits of a union.At Amazon, the warehouses are cavernous, and workers are often more isolated and more closely supervised, especially during an organizing campaign.“What they would do is strategically separate me from everyone in my department,” said Derrick Palmer, an Amazon employee on Staten Island who is one of the union’s vice presidents. “If they see me interacting with that person, they would move them to a different station.”Asked about the allegation, Amazon said it assigned employees to work stations and tasks based on operational needs.Both companies have accused the unions of their own unfair tactics, including intimidating workers and inciting hostile confrontations.Organizing drivers is an even greater challenge, partly because they are officially employed by contractors that Amazon hires, though labor organizers say they would like to pressure the company to address drivers’ concerns.Christy Cameron, a former driver at an Amazon facility near St. Louis, said the job’s setup largely kept drivers from interacting. At the beginning of each shift, a manager for the contractor briefs drivers, who then disperse to their trucks, help load them and get on the road.“It leaves very little time to talk with co-workers outside of a hello,” Ms. Cameron said in a text message, adding that Amazon’s training discouraged discussing working conditions with fellow drivers. “It was generally how they are highly against unionizing and don’t talk about pay and benefits with each other.”Amazon, with about a million U.S. workers, and Starbucks, with just under 250,000, offer similar pay. Amazon has said that its minimum hourly wage is $15 and that the average starting wage in warehouses is above $18. Starbucks has said that as of August its minimum hourly wage will be $15 and that the average will be nearly $17.Starbucks workers celebrated the results of a vote to unionize in Buffalo last year.Joshua Bessex/Associated PressDespite the similarity in pay, organizers say the dynamics of the companies’ work forces can be quite different.At the Staten Island warehouse where Amazon workers voted against unionizing, many employees work four-hour shifts and commute 30 to 60 minutes each way, suggesting they have limited alternatives.“People who go to that length for a four-hour job — it’s a particular group of people who are really struggling to make it,” said Gene Bruskin, a longtime labor organizer who advised the Amazon Labor Union in the two Staten Island elections, in an interview last month.As a result of all this, organizing at Amazon may involve incremental gains rather than high-profile election victories. In the Minneapolis area, a group of primarily Somali-speaking Amazon workers has staged protests and received concessions from the company, such as a review process for firings related to productivity targets. Chicago-area workers involved in the group Amazonians United received pay increases not long after a walkout in December.Ted Miin, an Amazon worker who is one of the group’s members, said the concessions had followed eight or nine months of organizing, versus the minimum of two years he estimates it would have taken to win a union election and negotiate a first contract.For workers who seek a contract, the processes for negotiating one at Starbucks and Amazon may differ. In most cases, bargaining for improvements in compensation and working conditions requires additional pressure on the employer.At Starbucks, that pressure is in some sense the union’s momentum from election victories. “The spread of the campaign gives the union the ability to win in bargaining,” Mr. Logan said. (Starbucks has nonetheless said it will withhold new pay and benefit increases from workers who have unionized, saying such provisions must be bargained.)At Amazon, by contrast, the pressure needed to win a contract will probably come through other means. Some are conventional, like continuing to organize warehouse employees, who could decide to strike if Amazon refuses to recognize them or bargain. The company is challenging the union victory on Staten Island.But the union is also enlisting political allies with an eye toward pressuring Amazon. Mr. Smalls, the union president, testified this month at a Senate hearing that was exploring whether the federal government should deny contracts to companies that violate labor laws.On Thursday, Senator Bob Casey, a Pennsylvania Democrat, introduced legislation seeking to prevent employers from deducting anti-union activity, like hiring consultants to dissuade workers from unionizing, as a business expense.While many of these efforts may be more symbolic than substantive, some appear to have gotten traction. After the Port Authority of New York and New Jersey announced last summer that it was awarding Amazon a 20-year lease at Newark Liberty International Airport to develop an air cargo hub, a coalition of community, labor and environmental groups mobilized against the project.The status of the lease, which was to become final by late last year, remains unclear. The Port Authority said that lease negotiations with Amazon were continuing and that it continued to seek community input. An Amazon spokeswoman said the company was confident the deal would close.A spokeswoman for Gov. Phil Murphy of New Jersey indicated that the company might have to negotiate with labor groups before the deal could go forward. “The governor encourages anyone doing business in our state to work collaboratively with labor partners in good faith,” the spokeswoman said.Karen Weise More

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    April Jobs Report: Gain of 428,000 Shows Vibrant Labor Market

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    The Labor Department reported a gain of 428,000 jobs in April, along with a 5.5 percent increase in average hourly earnings from a year earlier.The U.S. economic rebound from the pandemic’s devastation held strong in April with another month of solid job growth.Employers added 428,000 jobs, matching the previous month, the Labor Department reported Friday, with the growth broad-based across every major industry.The unemployment rate remained 3.6 percent, just a touch above its level before the pandemic, when it was the lowest in half a century.The challenge of a highly competitive labor market for employers — a shortage of available workers — persisted as well. In fact, the report showed a decline of 363,000 in the labor force.The economy has regained nearly 95 percent of the 22 million jobs lost at the height of coronavirus-related lockdowns two years ago. But the labor supply has not kept up with a record wave of job openings as businesses expand to match consumers’ continued willingness to buy a variety of goods and services. There are now 1.9 job openings for every unemployed worker.The hiring scramble has driven up wages, and employers are largely passing on that expense, helping fuel inflation that Americans have cited as their leading economic concern. On that front, Friday’s report showed an easing in the acceleration of average hourly earnings, which increased 0.3 percent from the month before, after a 0.5 percent gain in March.President Biden pointed to the latest data as evidence of “the strongest job creation economy in modern times,” a message the White House is increasingly amplifying ahead of the congressional elections.The unemployment rate stayed under 4 percent in April.The share of people who have looked for work in the past four weeks or are temporarily laid off, which does not capture everyone who lost work because of the pandemic. More

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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