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Tag: compensation and benefits

  • French workers may have to retire at 64 and many are in uproar. Here’s why | CNN

    French workers may have to retire at 64 and many are in uproar. Here’s why | CNN

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    Paris
    CNN
     — 

    Impromptu protests broke out in Paris and across several French cities Thursday evening following a move by the government to force through reforms of the pension system that will push up the retirement age from 62 to 64.

    While the proposed reforms of France’s cherished pensions system were already controversial, it was the manner in which the bill was approved – sidestepping a vote in the country’s lower house, where President Emmanuel Macron’s party crucially lacks an outright majority – that arguably sparked the most anger.

    And that fury is widespread in France.

    Figures from pollster IFOP show that 83% of young adults (18-24) and 78% of those aged over 35 found the government’s manner of passing the bill “unjustified.” Even among pro-Macron voters – those who voted for him in the first round of last year’s presidential election, before a runoff with his far-right adversary – a majority of 58% disagreed with how the law was passed, regardless of their thoughts about the reforms.

    Macron made social reforms, especially of the pensions system, a flagship policy of his 2022 re-election and it’s a subject he has championed for much of his time in office. However, Thursday’s move has so inflamed opposition across the political spectrum, that some are questioning the wisdom of his hunger for reforms.

    Prime Minister Elisabeth Borne conceded in an interview Thursday night with TF1 that the government initially aimed to avoid using Article 49.3 of the constitution to crowbar the reforms past the National Assembly. The “collective decision” to do so was taken at a meeting with the president, ministers and allied lawmakers mid-Thursday, she said.

    For Macron’s cabinet, the simple answer to the government’s commitment to reforms is money. The current system – relying on the working population to pay for a growing age group of retirees – is no longer fit for purpose, the government says.

    Labor minister Olivier Dussopt said that without immediate action the pensions deficit will reach more than $13 billion annually by 2027. Referencing opponents of the reforms, Dussopt told CNN affiliate BFMTV: “Do they imagine that if we pause the reforms, we will pause the deficit?”

    When the proposal was unveiled in January, the government said the reforms would balance the deficit in 2030, with a multi-billion dollar surplus to pay for measures allowing those in physically demanding jobs to retire early.

    For Budget Minister Gabriel Attal, the calculus is clear. “If we don’t do [the reforms] today, we will have to do much more brutal measures in the future,” he said Friday in an interview with broadcaster France Inter.

    “No pensions reform has made the French happy,” Pascal Perrineau, political scientist at Sciences Po university, told CNN on Friday.

    “Each time there is opposition from public opinion, then little by little the project passes and basically, public opinion is resigned to it,” he said, adding that the government’s failure was in its inability to sell the project to French people.

    They’re not the first to fall at that hurdle. Pensions reform has long been a thorny issue in France. In 1995, weeks-long mass protests forced the government of the day to abandon plans to reform public sector pensions. In 2010, millions took to the streets to oppose raising the retirement age by two years to 62 and in 2014 further reforms were met with wide protests.

    An anti-pension reform demonstrator writes

    For many in France, the pensions system, as with social support more generally, is viewed as the bedrock of the state’s responsibilities and relationship with its citizens.

    The post-World War II social system enshrined rights to a state-funded pension and healthcare, which have been jealously guarded since, in a country where the state has long played a proactive role in ensuring a certain standard of living.

    France has one of the lowest retirement ages in the industrialized world, spending more than most other countries on pensions at nearly 14% of economic output, according to the Organisation for Economic Cooperation and Development.

    But as social discontent mounts over the surging cost of living, protesters at several strikes have repeated a common mantra to CNN: They are taxed heavily and want to preserve a right to a dignified old age.

    Macron is still early in his second term, having been re-elected in 2022, and still has four years to serve as the country’s leader. Despite any popular anger, his position is safe for now.

    However, Thursday’s use of Article 49.3 only reinforces past criticisms that he is out of touch with popular feeling and ambivalent to the will of the French public.

    Politicians to the far left and far right of Macron’s center-right party were quick to jump on his government’s move to skirt a parliamentary vote.

    “After the slap that the Prime Minister just gave the French people, by imposing a reform which they do not want, I think that Elisabeth Borne should go,” tweeted far-right politician Marine Le Pen on Thursday.

    Members of Parliament of left-wing coalition NUPES (New People's Ecologic and Social Union) hold placards as French Prime Minister Elisabeth Borne addresses deputies to confirm the force through of the pension law without a parliament vote on Thursday.

    The leader of France’s far-left, Jean-Luc Melenchon was also quick to hammer the government, blasting the reforms as having “no parliamentary legitimacy” and calling for nationwide spontaneous strike action.

    For sure, popular anger over pension reforms will only complicate Macron’s intentions to introduce further reforms of the education and health sector – projects that were frozen by the Covid-19 pandemic – political scientist Perrineau told CNN.

    The current controversy could ultimately force Macron to negotiate more on future reforms, Perrineau warns – though he notes the French President is not known for compromise.

    His tendency to be “a little imperious, a little impatient” can make political negotiations harder, Perrineau said.

    That, he adds, is “perhaps the limit of Macronism.”

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  • Farmworkers use Florida march to pressure other companies

    Farmworkers use Florida march to pressure other companies

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    Farmworkers were leading a five-day, 45-mile (72-kilometer) trek on foot this week from one of the poorest communities in Florida to a mansion-lined, oceanfront town that is one of the richest in an effort to pressure retailers to leverage their purchasing power for better worker pay and working conditions.

    The farmworkers said they were marching to highlight the Fair Food Program, which has enlisted companies like McDonald’s, Walmart, Taco Bell and Whole Foods to use their clout with growers to ensure better working conditions and wages for farmworkers. They hoped to use the march to pressure other companies, like Publix, Wendy’s and Kroger, to join the program that started in 2011.

    The march began Tuesday from the farming community of Pahokee, one of the poorest in Florida, where the median household income is around $30,000. The march’s launching point was a camp where farmworkers were coerced into working for barely any pay by a labor contractor who was convicted and sentenced last year to almost 10 years in prison. The contractor confiscated the Mexican farmworkers’ passports, demanded exorbitant fees from them and threatened them with deportation or false arrest, according to the U.S. Department of Justice.

    The marchers were on schedule to arrive Saturday in the town of Palm Beach, which has a median household income of almost $169,000 and is lined with the mansions of the rich and famous, including billionaire Nelson Peltz, who is Wendy’s chairman, and former President Donald Trump.

    According to the Florida-based Coalition of Immokalee Workers, which organized the march, the program has ensured that farmworkers are paid for the hours they work; guaranteed them on-the-job safety measures such as shade, water and access to bathrooms; and has reduced the threats of sexual assault, harassment and forced labor under armed guards in the fields where tomatoes and other crops are harvested. Immokalee is a southwest Florida farming town in the heart of the state’s tomato-growing area.

    Growers have benefitted since it reduces turnover and improves productivity, according to the coalition.

    Wendy’s said in a statement that it didn’t participate in the Fair Food Program because it sources its tomato supply from indoor hydroponic greenhouse farms, while the program operates for farmworkers predominantly in outdoor fields, so “there is no nexus between the program and our supply chain.” The fast-food chain said it requires third-party reviews to make sure no abuses are involved in the harvesting of the tomatoes it gets from suppliers.

    “The idea that joining the Fair Food Program, and purchasing field-grown, commodity tomatoes, is the only way that Wendy’s can demonstrate responsibility in our supply chain is not true,” Wendy’s said.

    The coalition on Friday in a statement described Wendy’s response as a “dodge.”

    Officials from Publix and Kroger didn’t respond to emailed inquiries.

    The idea to pressure retailers to use their clout with growers to improve pay and conditions for Florida tomato pickers took off in the early 2000s when the Coalition of Immokalee Workers led a four-year, nationwide boycott of Taco Bell. The boycott ended in 2005 when the company agreed to pay a penny more per pound for tomatoes purchased from Florida growers in order to raise farmworkers’ wages.

    The Fair Food Program followed several years later in an agreement with Florida tomato growers, and it now includes more than a dozen participating corporations. Leaders of the Coalition of Immokalee Workers and the Fair Food Program have been recognized with a MacArthur Foundation fellowship, a Robert F. Kennedy Human Rights award and presidential award presented by then-Secretary of State John Kerry.

    “So now workers enjoy the right to complain without fear of retaliation. Workers also have water and shade as part of these agreements,” said Gerardo Reyes Chavez, a coalition official, at the start of the march in Pahokee. “The program has proven to be the solution, the antidote to the problem of modern day slavery, the problem of sexual assault, and the problems that have always plagued the agricultural industry.”

    ___

    Daniel Kozin in Pahokee, Florida contributed to this report.

    ___

    Follow Mike Schneider on Twitter at @MikeSchneiderAP

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  • In low-wage Portugal, Europe’s housing crisis bites deep

    In low-wage Portugal, Europe’s housing crisis bites deep

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    LISBON, Portugal — Like a growing number of people in Portugal, Georgina Simoes no longer earns enough money to afford a place to live.

    The 57-year-old nursing home carer earns less than 800 euros ($845) a month, as do about a fourth of the country’s workforce. For the last decade, she got by because she’s been paying just 300 euros a month for her one-bedroom apartment in an undistinguished Lisbon neighborhood.

    Now, with rents soaring in the capital, her landlord is evicting her. She says she’s not budging because finding another place near work will be too expensive.

    “You live in this state of anxiety,” she says in her apartment with its partial view of the River Tagus. “Every day you wake up thinking, ‘Am I staying here or do I have to leave?”

    Simoes and many others, increasingly including the middle class, are being priced out of Portugal’s property market by rising rents, surging home prices and climbing mortgage rates, fueled by factors including the growing influx of foreign investors and tourists seeking short-term rentals. Deepening fears in recent days about the health of financial institutions, as well as the prospect of continuing high inflation, have added more uncertainty.

    Portugal’s center-left Socialist government last month unveiled a package of measures to address the problem, and some of them are set to be approved by the Cabinet on Thursday.

    Between 2020 and 2021, house prices in Portugal shot up by 157%. From 2015 to 2021, rents jumped by 112%, according the European Union’s statistics agency Eurostat.

    But the rising cost of real estate tells only part of the story.

    Portugal is one of Western Europe’s poorest countries and has long pursued investment on the back of a low-wage economy. Just over half of Portuguese workers earned less than 1,000 euros ($1,054) a month last year, according to Labor Ministry statistics.

    Across the EU, the recent spike in inflation, especially rising food and energy prices, and the lingering economic and labor consequences of the COVID-19 pandemic have aggravated the housing dilemma in the 27-nation bloc.

    More than 82 million households in the EU have difficulty paying their rent, 17% of people live in overcrowded accommodations and just over 10% spend more than 40% of their income on rent, the the bloc says.

    Hit hardest by unequal access to decent, affordable housing are young people, families with children, the elderly, those with disabilities and migrants.

    In Portugal, the problem has been magnified by tourism, whose robust growth before the pandemic has come roaring back, as well as an influx of foreign investors who found relatively low real estate prices in Lisbon and have been driving up prices that force local people out of their neighborhoods.

    After attracting a record 25 million foreign tourists in 2019, Portugal drew 15.3 million last year — a 158% rise after the previous year of pandemic restrictions. Analysts expect a 33% rise this year.

    For some people, that long-awaited national success with foreign vacationers is a case of being careful what you wish for.

    Rosa Santos, a 59-year-old born and raised close to Lisbon’s 14th-century St. George’s Castle overlooking the port city, says most homes in her neighborhood are occupied by short-term vacation rentals, largely for foreign tourists. It’s common to see and hear visitors dragging suitcases over the cobblestones.

    The locals’ rich traditions are gone, and there’s not even a bakery or grocery store there now, Santos says.

    “It’s not a neighborhood anymore,” she said. “This isn’t a city, it’s an amusement park.”

    Activists are fighting back against the trend that is robbing the capital of its charm. Santos is part of a growing movement that is calling for a referendum to stop short-term vacation rentals in Lisbon. They gather every weekend in one of the city’s neighborhoods to collect signatures supporting their goal. They need at least 5,000 signatures to start the referendum process at city hall.

    On a recent rainy day, police helped municipal workers using backhoes demolish several illegal makeshift dwellings on Lisbon’s outskirts with no power or running water. The families forced by necessity to live in them pleaded for them to stop.

    The shacks stood just a few kilometers (miles) from luxury condominiums being built on the Lisbon waterfront, where a four-bedroom apartment sells for 2.4 million euros.

    Not far away, in the Camarate low-income district close to Lisbon airport, missionary worker Jose Manuel helps needy families, some of whom can’t afford to pay for a room, let alone a house, and are consequently being pushed out of the city.

    “We are talking already of a room in Camarate for 400 euros, a house for 600 or 700 euros,” he said. “Those who are on a minimum wage cannot afford a house.”

    Grassroot housing rights groups have sprung up and are helping people struggling to keep a roof over their head. One of them, Habita, is pushing authorities to stop encouraging premium developments that are by, and for, wealthy foreigners.

    For Habita’s Rita Silva, the government must also introduce tighter rents controls and “stop evictions if there are no suitable housing alternatives.”

    Prime Minister Antonio Costa says cities that lose their inhabitants forfeit their “authenticity” and become “a Disneyland” for tourists.

    Among the measures that his government hopes will bring about a market correction:

    — Forcing the owners of unoccupied properties to rent them out, granting priority to renters under 35, single-parent families or families whose income has dropped by more than 20%.

    — Capping increases in new rental contracts to 2% above the previous contract.

    — Ending the government’s “golden visa” program, which grants residence permits to wealthy foreign investors who buy property in Portugal.

    — Halting new licenses, except in rural areas, for short-term vacation rentals through tourist accommodation platforms.

    — Switching commercial property to housing use.

    The proposals have stirred controversy: Some see them as heavy-handed and misguided, others say they lack detail on how they will work. And some are angry.

    Hugo Ferreira Santos of the Portuguese Association of Real Estate Developers and Investors said foreign investment has ground to a halt as people wait to see how the golden visa changes shape up.

    “What I have been hearing from international investors is that Portugal is not a credible country,” he said. “It is a country that changes the rules of the game halfway through and a country where foreign investment is not welcome.”

    Small-time investors in apartments for short-term vacation rentals also are aggrieved.

    “There are people that left their lives, set up their own businesses, generated jobs, have workers and suddenly one day they are knocked down without any prospect,” said Eduardo Miranda, head of a Portuguese association representing their interests.

    Some measures will require parliament’s approval, and others could be sent to the Constitutional Court for vetting.

    ___

    This story has been corrected to show that at least 5,000 signatures are needed for a referendum, not 7,500.

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  • US to pay $6.5 million in lost wages owed to Mexican migrant workers | CNN

    US to pay $6.5 million in lost wages owed to Mexican migrant workers | CNN

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    CNN
     — 

    Some 13,000 Mexican migrant workers are owed $6.5 million in unpaid wages, according to a tweet from the United States Department of Labor’s Bureau of International Labor Affairs, which announced a joint effort with Mexico to locate and compensate the workers.

    “This program will return millions of dollars in back wages to Mexican nationals who participated in US temporary foreign worker programs,” tweeted Ken Salazar, the United States Ambassador to Mexico, on Tuesday.

    The Mexican ministry and the United States Department of Labor’s Bureau of International Labor Affairs is launching the H-2A Workers’ Wages Recovery Program to ensure the workers can collect their compensation, Salazar added.

    Skilled foreign farm workers are the backbone of US agriculture and are often in the US on H-2A seasonal visas. It is unclear who these workers were employed by when they failed to receive their full wages, and what years they were employed.

    The money owed to these thousands of workers was recovered by the US Department of Labor after it failed to locate the individuals in order to deliver their checks, according to a press release from Mexico’s Ministry of Labor and Social Welfare.

    The partnership will attempt to locate the migrant workers who are believed to have “received less than the legally established salary from their employers in the United States,” according to a press release by Mexico’s Ministry of Labor and Social Welfare.

    The US is expected to send Mexico a list with names of workers who are “owed wages and overtime.” Mexico will then look up the workers in government databases and inform them of their checks.

    “Together, we watch over labor rights,” tweeted Luisa Alcalde, Mexico’s Minister of Labor and Social Welfare, on Tuesday.

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  • UK Treasury chief seeks drama-free budget day amid strikes

    UK Treasury chief seeks drama-free budget day amid strikes

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    LONDON — U.K. Treasury chief Jeremy Hunt will stage a moment of high political theater Wednesday, unveiling his budget to a crowd of baying lawmakers as consumers demand more help with the high cost of living and workers press for higher wages with strikes at schools, hospitals and the offices of civil servants.

    Even as Hunt plays his historically scripted role — emerging from his official residence with the spending plan in a battered red dispatch box, then carrying it to the House of Commons where he will be greeted by jeers and cheers — the truth is he will try to be as boring as possible.

    That’s because the last time the government staged a similar “fiscal event,” the mini-budget presented by Hunt’s predecessor last September, it set off an economic catastrophe by promising huge tax cuts without saying how it would pay for them. The value of the pound plunged, mortgage rates soared and the central bank was forced to intervene to protect pension funds.

    This time, strong and stable is the goal. Most of the big-ticket items — an extra 5 billion pounds ($6.1 billion) of defense spending over the next two years, increased funding for child care and help for workers saving for retirement — have already been announced.

    “We shouldn’t expect much in the way of rabbits or hats in this budget,” said Sarah Coles, head of personal finance at the investment adviser Hargreaves Lansdown. “Jeremy Hunt needs to remain boring and predictable to avoid unsettling the markets.”

    But even as Hunt delivers his remarks to Parliament, many people across the country are seething about a cost-of-living crisis that is eroding the spending power of workers as Russia’s war in Ukraine has helped fuel the highest inflation in four decades.

    Government workers, teachers and the young doctors who staff the nation’s hospitals will be walking the picket line Wednesday, furious that public-sector workers have borne the brunt of the budget austerity implemented by Hunt’s Conservative Party after it took power following the global financial crisis.

    The British Medical Association, which represents the fully qualified physicians known in the U.K. as “junior doctors,” says first-year doctors have seen their pay fall by 26% over the past 15 years after accounting for inflation.

    That means first-year doctors now earn as little as 14.09 pounds an hour, compared with up to 14.10 pounds an hour for baristas at Pret a Manger, a sandwich and coffee shop chain that just gave workers a third raise in less than 12 months, the group said.

    Rebecca Lissman, 29, a trainee in obstetrics and gynecology, said junior doctors are just asking is to be “paid a wage that matches our skill set.”

    “I want to be in work, looking after people, getting trained,” she said. “I don’t want to be out here striking, but I feel that I have to.”

    The government says the medical association’s comparison to baristas is misleading because most doctors actually make more than the basic minimum salary and have much higher lifetime earning potential than shop workers.

    Hunt and Prime Minister Rishi Sunak are trying to hold the line on public-sector salaries because they say big pay increases will only fuel inflation.

    Consumer prices rose 10.1% in the year through January, the fifth consecutive month of double-digit increases. To combat inflation, the Bank of England has approved 10 interest rate increases over the past 15 months, raising the cost of mortgages, consumer and business loans.

    That is crimping economic growth, with the central bank forecasting a recession that may last a year or more.

    Hunt’s other major goal is rebuilding Britain’s reputation for fiscal responsibility by reducing the public debt built up during the financial crisis and the COVID-19 pandemic. The government wants to cut borrowing to less than 3% of economic output and begin reducing debt as a percentage of output within five years.

    As a result, Hunt has been cautious about increasing government spending or boosting salaries.

    But higher-than-expected revenue and lower spending, combined with more optimistic forecasts for economic growth and interest rates, may mean the government has room to spend an additional 166 billion pounds without endangering its targets, according to estimates from the National Institute of Economic and Social Research, an independent think tank.

    And several spending initiatives have been leaked ahead of the release of what is being called a “back-to-work budget.”

    Those include increased child care payments to help young mothers return to work and more generous allowances for tax-free pension saving to entice early retirees back into the workforce.

    Hunt also is expected to extend the government-subsidized energy price guarantee that has helped shield consumers from the soaring cost of electricity and natural gas amid the war in Ukraine.

    During a meeting with U.S. President Joe Biden and Australian Prime Minister Anthony Albanese last weekend in San Diego, Sunak announced plans to boost defense spending to 2.5% of economic output amid increasing threats from Russia and China.

    But back home, thousands of doctors, nurses and other workers are picketing in front of hospitals and other government buildings.

    Outside St. Thomas’ Hospital in central London, Leah Sugarman, 33, joined other strikers as they chanted, ‘’What do we want? Fair pay! When do we want it? Now!”

    The emergency medicine doctor, who has been on the job for nine years, said she can’t pay a mortgage and struggles to live a normal life.

    “We’ve all lived through COVID, that was horrendous. Most of us have come out mentally scarred from that,” she said. “And every day that I leave work, I pretty much want to cry because I haven’t been able to do the job that I chose to go into this profession for.”

    She added that she has been forced to drop her hours to less than 40 hours a week, “because I can’t mentally go to work full time anymore.”

    “It is just a car crash,” she said. “So that’s why I’m here.”

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  • Parisian streets littered with trash after wave of strikes | CNN

    Parisian streets littered with trash after wave of strikes | CNN

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    Paris
    CNN
     — 

    The City of Lights has a garbage problem.

    Massive strikes in Paris against pension reform this week are affecting trash pickup services in the French capital, with piles of waste sitting on many of the city’s normally picturesque streets, including those just steps from monuments like the Eiffel Tower and the Arc de Triomphe.

    As of Saturday, about 4,400 tonnes of trash were awaiting collection, a spokeswoman for the Paris mayor’s office said. The spokeswoman said that the problem is a blockage at trash incinerators caused by the strikes. Garbage trucks have thus been unable to pick up waste in much of the city because they have nowhere to put it.

    Not all neighborhoods have been equally affected. The municipal government is in charge of garbage collection in half of Paris’ 20 arrondissements. Private contractors are responsible for the other 10.

    Municipal services like trash collection in Paris have been affected since Tuesday, when strikes saw flights and trains canceled and delayed; oil refiners blockaded; schools shuttered; and left thousands without electricity. The French capital was the most affected, with nearly 60% of its primary school teachers walking out and the local metro forced to cut service to all but the busiest times.

    Massive protests have been staged regularly throughout France since January 19, with more than a million people coming out multiple to voice their opposition to the government’s plan to raise the official retirement age for most workers as part of reforms to the government’s pension system, one of Europe’s most generous.

    As of Saturday, about 4,400 metric tones of trash were awaiting collection on the streets of Paris, a spokeswoman for the mayor's office said.

    President Emmanuel Macron’s government says the changes are necessary to make the system financially stable.

    The trash buildup in Paris has been sparked health concerns among Parisians and local politicians. The mayor of the 17th arrondissement, Geoffroy Boulard, said in an interview with CNN affiliate BFMTV that he has asked Paris Mayor Anne Hidalgo to hire a private service provider to intervene.

    “We can’t wait,” he said. “This is a matter of public health.”

    Boulard said he’s also worried about the proliferation of rats and rodents as well as Paris’ image.

    Another local mayor, Jean-Pierre Lecoq of the 6th arrondissement, asked Hidalgo to intervene in an open letter he published on Twitter.

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  • Takeaways from the February jobs report | CNN Business

    Takeaways from the February jobs report | CNN Business

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    Minneapolis
    CNN
     — 

    February’s jobs report had a little something for everyone.

    For workers, there were jobs; for employers, there were workers filling shortfalls caused by the pandemic; for the Federal Reserve, there were indications that the labor market was loosening and wage pressures were easing.

    Then again, the total of 311,000 net jobs added was significantly higher than expectations of 205,000, and the unemployment rate surprisingly grew to 3.6%.

    The report was a “mixed bag” at a time when the Fed — which this week signaled a more hawkish approach after a strong batch of recent economic data — is weighing to go lighter or heavier on rate hikes.

    Here are some takeaways from Friday’s report:

    Economists were anticipating that January’s blockbuster 504,000 net job gain was an anomaly due to a combination of factors such as annual data adjustments, warm weather and employers hoarding workers.

    But the US labor market in February showed that, overall, it remained fairly resistant to the Fed’s yearlong barrage of interest rate hikes. The latest employment snapshot from the Bureau of Labor Statistics also showed only a slight downward revision to the January jobs total.

    “This report, it’s not about the Federal Reserve, it’s not about inflation, it’s about you; it’s about how workers are doing,” said Claudia Sahm, founder of Sahm Consulting and a former Fed economist. “And once again, we had a month in which we were adding jobs on net, and this is really good for workers.”

    There are also encouraging signs for employers, she said, noting some of the biggest gains were in industries that have been suffering from the deepest shortages since the pandemic.

    The leisure and hospitality industry added 105,000 jobs in February, accounting for 34% of the entire month’s total gains and putting the sector that much closer to matching its pre-pandemic levels. As of February, the leisure and hospitality industry was 410,000 jobs, or 2.42%, shy of February 2020 employment levels, a CNN analysis of BLS data shows.

    “Right now, we’re still in a phase of getting back to normal in terms of not having labor shortages, not having the costs of serving customers rise and rise,” Sahm said. “I would much rather see us get back to normal by workers coming back as opposed to customers going away.”

    Despite the Fed hammering out a succession of rate hikes during the past year, construction employment hasn’t yet faltered. In February, the construction industry added 24,000 jobs, marking 12 consecutive months of employment growth.

    “Contractors are continuing to work through existing backlogs that have grown over the past two years as new opportunities arose and supply chain issues extended construction timelines,” wrote Nick Grandy, construction and real estate senior analyst at RSM US.

    Notable sectors that recorded job losses during the month were in information, which was down another 25,000 jobs (-0.8%); transportation and warehousing, which was down 21,500 jobs (0.3%); and manufacturing, which was down 4,000 positions.

    While the headline job figure and relatively minimal losses show overall strength, there is an indication of a pullback across industries. The BLS’ employment diffusion index, which shows the percentage of 250 industries that added jobs, fell to 56, which is the lowest reading since April 2020.

    “That indicates that the impact of high interest rates is spilling over to more industries,” said Julia Pollak, chief economist at ZipRecruiter.

    The labor market has remained extremely tight and fairly out of whack for the past three years. Friday’s report showed that “a modicum of slack crept back into the jobs market,” wrote Wells Fargo economists Sarah House and Michael Pugliese.

    The unemployment rate moved to 3.6% from its 53-year-low of 3.4%. That increase was in part due to more people reentering the workforce and joining the ranks of the unemployed, which the BLS classifies as people without jobs actively searching for work.

    February’s employment report showed a 0.1 percentage point increase in the labor force participation rate to 62.5% — the highest it’s been since April 2020.

    The average workweek ticked down to 34.5 hours from a revised 34.6 hours, signaling a “significant overall drop” in labor demand, said Brad McMillan, chief investment officer for Commonwealth Financial Network.

    Still, with the prime-age employment to population ratio increasing to 80.5% — on par with early 2020 levels — there may be little space left for sustained labor supply gains, according to Matt Colyar, a Moody’s Analytics economist.

    “February’s figure, apart from early 2020 readings, is higher than any rate during the previous decade-long expansion,” Colyar noted. “Even in corners of the economy where demand has slumped, businesses have shown little appetite to lay off workers en masse. As other sectors continue to hire rapidly, an acceleration in wage growth will remain a looming threat.”

    A softening in average hourly earnings is helping fuel hopes for a soft landing.

    At 0.2% on the month, wage growth was below expectations and measured 4.6% year over year.

    “There were signs in today’s report that progress on inflation can be made without torpedoing employment,” the Wells Fargo economists noted.

    As of February, the annualized rate of wage growth during the past three months is slightly under 3.6%, a pace seen when inflation was below the Fed’s target, said economist Dean Baker, co-founder of the Center for Economic and Policy Research.

    “Perhaps most important from the Fed’s perspective is the slowdown in wage growth,” Baker wrote in a statement. “The 3.6% annual rate over the last three months can hardly be seen as posing a serious threat of inflation. This slowing in the average hourly wage, coupled with the 4% rate reported in the fourth quarter Employment Cost Index, should provide solid evidence that wage growth has slowed sharply.”

    A hot batch of January economic data helped to send the Fed into a more hawkish turn. Fed Chair Jerome Powell told members of Congress this week that the Fed is prepared to increase the pace of its rate hikes if warranted.

    “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell told lawmakers.

    There’s still more data to come before the Fed meets for its two-day policymaking meeting on March 21-22, notably the Consumer Price Index, Producer Price Index and the Commerce Department’s retail sales report. However, Friday’s jobs report likely won’t spur a more dovish turn from the Fed, said Sean Snaith, an economist and director of the University of Central Florida’s Institute for Economic Forecasting.

    “We didn’t go from a four-alarm fire to a five-alarm fire with this data report, but the inflation flames aren’t out either,” he wrote in a note Friday. “And nothing today indicates that the Fed needs to change its more aggressive approach to raising interest rates.”

    Still, economist Gregory Daco cautioned that the Fed shouldn’t fall into the trap of confirmation bias by letting the stronger-than-expected economic data influence the analysis of Friday’s jobs report and next week’s CPI report.

    The Fed may see the low unemployment rate and the robust job gains as fueling wage growth, said Daco, chief economist at EY Parthenon.

    “Our view, however, is slower job growth in the goods sector, easing hours worked and moderating sequential wage growth momentum and a rise in the labor force participation rate indicate a welcome easing of labor market tightness,” Daco noted. “While we acknowledge this report was by no means a weak one, we also observe that some of the job gains were in sectors where there has been a structural employment shortfall — health care and education in particular. Employment strength in those sectors may not be indicative of cyclical wage pressures, but rather easing structural constraints.”

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  • Rain rates in California during newest storm may reach 1 inch per hour | CNN

    Rain rates in California during newest storm may reach 1 inch per hour | CNN

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    CNN
     — 

    Millions of Californians already hammered by ferocious snowfall were hit Thursday by a new storm, with torrential rain threatening to cause dangerous flooding and the Weather Prediction Center increasing its excessive rainfall outlook for parts of the state to a level 4 of 4.

    “If you have feet of snow on your roof, all of a sudden that’s going to get very, very heavy. That snow is going to absorb the rainfall,” CNN Meteorologist Chad Myers warned Thursday.

    “And then in the higher elevations, it will wash away some of that snowfall. So, rain on snow will begin to fill up parts of the San Joaquin Valley.”

    About 16.7 million people are under flood watches in California and slices of Nevada. Hourly rainfall rates will steadily increase in intensity across California from Thursday overnight through Friday morning, potentially reaching 1 inch per hour.

    The level 4 excessive rainfall warning is targeted to two sections in central California – the coast from Salinas southward to San Luis Obispo and areas in the foothills of the Sierras near Fresno – Thursday overnight into Friday. The last time the Bay Area and Central Coast were in “high risk” was in 2010, the National Weather Service office in San Francisco said.

    Much of the state is under some risk of excessive rainfall Thursday and Friday.

    “An atmospheric river will bring anomalous moisture to California Thursday and Friday. The combination of heavy precipitation and rapid snow melt below 5,000 feet will result in flooding,” the prediction center said Wednesday, adding that “numerous” floods are likely for millions.

    The most vulnerable areas for flooding from rain and snowmelt are creeks and streams in the foothills of the Sierra Nevada, the prediction center said.

    Higher elevations will see heavy, wet snow. “This will lead to difficult travel, and combined with an already deep snowpack, may lead to increasing impacts from the depth and weight of the snow,” the prediction center said.

    The bleak forecast spurred officials across central and Northern California to urge residents to prepare, with residents in one area advised to stock up on essentials for two weeks. Others were asked to use sandbags to protect their properties and clear their waterways to lessen any flooding impacts.

    “We are asking people to watch their news, stay informed, have a full tank of gas in case they need to evacuate, get snow off of their roof if they can, if it’s safe,” Lt. Gov. Eleni Kounalakis told CNN on Thursday. “And just be very vigilant and prepared, because we are in the era of extreme weather, and that’s what we are seeing this week.”

    Here’s what the storm could bring:

    • Heavy rainfall: The National Weather Service in San Francisco forecasts rainfall totals through Sunday morning will be from 1.5-3 inches for most urban areas with 3-6 inches in some hilly areas. As many as 8 inches could fall on the Santa Cruz Mountains and locally up to 12 inches over some peaks and higher terrain of the Santa Lucia Mountains. The National Weather Service in Los Angeles is forecasting 2-4 inches across Santa Barbara and San Luis Obispo counties, with some areas in the latter receiving as many as 10 inches through late Friday night. The Weather Prediction Center said: “The abnormally warm and wet conditions moving in are expected to cause rapid snowmelt.”

    • Ferocious winds: More than 15 million people across central and Northern California, northern Nevada and southwestern Idaho are under high wind alerts. Wind gusts could reach up to 55 mph across lower elevations and up to 70 mph across peaks and mountains. Strong winds could knock down power lines and trees – exacerbating thousands of existing power outages from previous storms that dumped heavy snow, particularly in higher elevations.

    • More intense snow: Parts of the Sierra Nevada above 8,000 feet could get hit with 8 feet of snow. And some higher elevations across southern Oregon and the Rocky Mountains in Idaho, Montana and Wyoming could get pounded by 2 feet of snowfall between Thursday and Friday.

    Already, 34 of California’s 58 counties are under a state of emergency issued by the governor’s office due to previous storms and this week’s severe weather. The state activated its flood operations center Thursday morning.

    The forecast also led some ski resorts to announce closings. Kirkwood Mountain Resort said it would not open Friday, as did the Northstar California resort and the Heavenly resort in South Lake Tahoe, on Nevada’s border with California.

    Meanwhile, the Eastern Sierra Avalanche Center issued a backcountry avalanche warning for sections of Mono County, according to the National Weather Service in Reno, Nevada.

    Many of the areas preparing for Thursday’s storm have not had a chance to recover from the multiple rounds of fierce snow that buried some neighborhoods and made roads inaccessible as residents ran low on essential supplies.

    In hard-hit San Bernardino County, one of the recent storms claimed the life of a resident in a car crash, the sheriff’s department told CNN on Wednesday.

    video thumbnail california snowbank 81year-old

    Grandson reveals 81-year-old’s reaction after surviving in snowbank for a week

    As the storm hits central California, some urban flooding along with flooding from the smaller creeks and streams is likely. Eventually, more roads are expected to flood as the main rivers rise, said Katrina Hand, a meteorologist at the weather service’s Sacramento office.

    San Francisco officials urged small businesses to clear storm drains, stock up on inventory, use sandbags and ensure equipment is properly stored. They also suggested employers consider adjusting their work schedules for workers’ safety.

    In Merced, crews tried to clear storm drains and fortify creek banks ahead of the storm.

    City officials said flooding from previous, deadly rounds of atmospheric rivers that battered much of the state in January has made the city’s water ways unsafe.

    Atmospheric rivers are long, narrow bands of moisture in the atmosphere that carry warm air and water vapor from the tropics.

    “The city urges all residents to avoid these waterways and walking paths,” Merced officials said. “Because of ground saturation and erosion from prior storms, expect to see more debris in creek flows.”

    In San Luis Obispo, city officials on Wednesday said residents should be informed on flood insurance policies and be prepared to protect their homes. On Thursday, they issued an evacuation order for residents south of the Arroyo Grande Creek Levee.

    Evacuation warnings were also issued for residents in low-lying areas of Santa Cruz County and for people in Tulare County.

    In the Big Sur area, officials urged residents to have enough food and other essentials for at least two weeks. The Big Sur area, a roughly 90-mile stretch of California’s central coast, is one of the area’s renowned tourist attractions with rugged cliffs, mountains and hidden beaches along the Pacific Coast Highway.

    In Kern County, home to Bakersfield, fire officials urged residents to create emergency kits and to be aware of escape routes and safe areas to seek shelter if needed. Officials also encouraged the use of sandbags to protect properties.

    And in Sacramento, city officials said they intend to open overnight warming centers beginning Friday in preparation for the expected heavy rainfall and low temperatures.

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  • Adidas earnings take beating on breakup with Ye, China slump

    Adidas earnings take beating on breakup with Ye, China slump

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    Adidas’ breakup with the rapper formerly known as Kanye West and the inability to sell his popular Yeezy line of shoes helped batter earnings at the end of last year

    FRANKFURT, Germany — Adidas’ breakup with the rapper formerly known as Kanye West and the inability to sell his popular Yeezy line of shoes helped batter earnings at the end of last year, leading to a net loss of 513 million euros ($540 million).

    The fourth-quarter loss, also attributed to higher supply costs and slumping revenue in China, contrasts with a profit of 213 million euros in the same period a year ago, the German shoe and sportswear maker said Wednesday.

    More losses could be ahead as the company forecast a 500 million-euro hit to earnings this year if it decides not to repurpose the remaining Yeezy products it has in stock. The company is predicting a 2023 operating loss of 700 million euros.

    Adidas split with Ye in October following the rapper’s antisemitic remarks on social media and in interviews, facing pressure along with other brands to end ties. The company is now grappling to find ways to replace its banner Yeezy line, which analysts have said amounted to as much as 15% of its net income.

    CEO Bjorn Gulden said in a statement that 2023 would be “a transition year” and “we can then start to build a profitable business again in 2024.”

    Fourth-quarter net sales were up a bare 1.3% at 5.21 billion euros from the same quarter a year ago, held back by around 600 million euros in lost revenue by the decision to halt the partnership with Ye.

    The company also cited a revenue drop in China of about 50% and higher costs for supplies and shipping, which could not be offset by higher prices.

    For the full year, the Herzogenaurach, Germany-based company said it made net profit of 638 million euros on sales that rose 6%, to 22.5 billion euros.

    The company also said it would be replacing its top sales and marketing executives. Global sales head Roland Auschel will leave the company after 33 years and be succeeded by Arthur Hoeld, now head of the Europe, Middle East and Africa region.

    Brian Grevy, head of global brands, will step down March 31. CEO Gulden will take responsibility for his product and marketing activities.

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  • The US dollar is at a crossroads | CNN Business

    The US dollar is at a crossroads | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Wall Street investors are reaching for their neck braces in preparation for yet another volatile swing in stock markets: A surging US dollar.

    The greenback — which is not just the dominant global currency but also “the key variable affecting global economic conditions,” according to the New York Federal Reserve — reached a 20-year high last year after the Fed turned hawkish with its aggressive rate hikes.

    Since then, inflation seemed to have softened, pushing the dollar down. But in recent weeks, as a slew of economic data has shown the Fed’s inflation battle is far from over, the currency soared by about 4% from its recent lows, and now sits near a seven-week high.

    Investors are stressing about this sudden rebound, since a stronger dollar means American-made products become more expensive for foreign buyers, overseas revenue decreases in value and global trade weakens.

    Multinational companies, naturally, aren’t thrilled about any of this. And around 30% of all S&P 500 companies’ revenue is earned in markets outside the US, said Quincy Krosby, chief global strategist for LPL Financial.

    What’s happening: The US dollar “finds itself at a significant crossroads yet again,” said Krosby. “While the Fed remains steadfastly data dependent, the dollar’s course as well remains focused on inflation and the Fed’s monetary response.”

    “The strong US dollar has been a headwind for international earnings and stock performance (for US investors),” wrote Wells Fargo analysts in a recent note.

    February was a rough month for markets: The Dow ended February down 4.19%, the S&P 500 fell 2.6% and the Nasdaq lost just over 1%.

    What’s next: Investors are clearly focused on the next Fed policy meeting, which is still three weeks away, for signals about the direction of rates. But until then, investors may gain some insight Tuesday when Fed Chairman Jerome Powell speaks before the Senate Banking Committee.

    They’ll also be watching next Friday’s jobs report for any softening in the labor market that could temper the Fed’s hawkish mood.

    Don’t forget the debt ceiling: Another significant threat to the dollar is looming in Congress — the ongoing debt ceiling fight. The United States could start to default on its financial obligations over the summer or in the early fall if lawmakers don’t agree to raise the debt limit — its self-imposed borrowing limit — before then, according to a new analysis by the Bipartisan Policy Center.

    That could potentially lead to a disastrous downgrade to America’s credit rating and could send the dollar spiraling as investors start to sell off their US assets and move their money to safer currencies.

    “It would certainly undermine the role of the dollar as a reserve currency that is used in transactions all over the world. And Americans — many people — would lose their jobs and certainly their borrowing costs would rise,” Treasury Secretary Janet Yellen told CNN in January.

    ▸ A lot has changed in the last twenty years. The gender pay gap hasn’t.

    In 2022, US women on average earned about 82 cents for every dollar a man earned, according to a new Pew Research Center analysis of median hourly earnings of both full- and part-time workers.

    That’s a big leap from the 65 cents that women were earning in 1982. But it has barely moved from the 80 cents they were earning in 2002.

    “Higher education, a shift to higher-paying occupations and more labor market experience have helped women narrow the gender pay gap since 1982,” the Pew analysis noted. “But even as women have continued to outpace men in educational attainment, the pay gap has been stuck in a holding pattern since 2002, ranging from 80 to 85 cents to the dollar.”

    ▸ Initial jobless claims, which measures the number of people who filed for unemployment insurance for the first time last week, are due out at 8:30 a.m. ET on Thursday.

    This will be the last official jobs data investors see before February’s heavily anticipated unemployment report next Friday.

    Economists are expecting 195,000 Americans to have filed for unemployment, which is higher than the seasonally adjusted 192,000 who applied two weeks ago.

    Initial claims have come in lower than expected in recent weeks and remain well below their pre-pandemic levels.

    The white-hot labor market in the US added more than 500,000 jobs in January, blowing analysts’ expectations out of the water and bringing the unemployment rate to its lowest level since May of 1969.

    That’s bad news for the Federal Reserve where policymakers have been attempting to tame inflation by cooling the economy through painful interest rate hikes.

    ▸ It’s a big day for groceries. Kroger (KR), Costco (COST) and Anheuser-Busch (BUD) all report earnings on Thursday.

    Investors will be watching closely for clues about consumer sentiment during an uncertain retail earnings season. On Tuesday, Kohl’s reported that it had a rough holiday season and executives at the company put the blame on inflation. The company said higher prices squeezed sales and forced it to mark down some products to entice shoppers — which hurt its profit margin.

    Those comments echoed those of other big box retailers like Walmart (WMT) and Target (TGT), who have said consumers are feeling the pinch of inflation.

    Still, Target and Walmart’s bottom lines were bolstered by food sales even as consumers pulled back on discretionary purchases.

    The US Senate voted on Wednesday to overturn a Biden administration retirement investment rule that allows managers of retirement funds to consider the impact of climate change and other ESG factors when picking investments.

    As my CNN colleagues Ali Zaslav, Clare Foran and Ted Barrett write: The rule is not mandated – it allows, but does not require, the consideration of environmental, social and governance factors in investment selection.

    Republicans complained that the rule is a “woke” policy that pushes a liberal agenda on Americans and will hurt retirees’ bottom lines.

    “This rule isn’t about saying the left or the right take on a given environmental, social, or governance issue is ‘correct,’” countered Senator Patty Murray (D-WA) on the Senate floor Wednesday. “It’s about acknowledging these factors are reasonable for asset managers to consider.”

    The measure will next go to President Joe Biden’s desk as it was passed by the House on Tuesday. The administration, however, has issued a veto threat. As a result, passage of the resolution could pave the way for Biden to issue the first veto of his presidency.

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  • Senate votes to overturn Biden administration retirement investment rule Republicans decry as ‘woke’ | CNN Politics

    Senate votes to overturn Biden administration retirement investment rule Republicans decry as ‘woke’ | CNN Politics

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    CNN
     — 

    The Senate passed a politically charged resolution on Wednesday to overturn a Biden administration retirement investment rule that allows managers of retirement funds to consider the impact of climate change and other environmental, social and governance factors when picking investments.

    Republicans complain the rule is “woke” policy that pushes a liberal agenda on Americans and will hurt retirees’ bottom lines, while Democrats say it’s not about ideology and will help investors.

    The measure, which would rescind a Department of Labor rule, will next go to President Joe Biden’s desk as it was passed by the House on Tuesday. The administration, however, has issued a veto threat. As a result, passage of the resolution could pave the way for Biden to issue the first veto of his presidency.

    Opponents of the rule could try to override a veto, but at this point it appears unlikely they could get the two-thirds majority needed in each chamber to do so.

    The resolution, authored by GOP Sen. Mike Braun of Indiana, only needed a simple majority to pass. It passed on a vote of 50 to 46 with Democratic Sens. Joe Manchin of West Virginia and Jon Tester of Montana voting with Republicans.

    Republican lawmakers advanced it under the Congressional Review Act, which allows Congress to roll back regulations from the executive branch without needing to clear the 60-vote threshold in the Senate that is necessary for most legislation.

    Opponents of the rule have argued that it politicizes retirement investments and that the Biden administration is using it as a way to push a liberal agenda on Americans.

    “The Biden Administration wants to let Wall Street use workers’ hard-earned savings to pursue left-wing political initiatives,” Senate GOP leader Mitch McConnell said in remarks on the Senate floor on Tuesday morning.

    Republican Sen. John Barrasso of Wyoming said at a news conference on Tuesday, “What’s happened here is the woke and weaponized bureaucracy at the Department of Labor has come out with new regulations on retirement funds, and they want retirement funds to be invested in things that are consistent with their very liberal, left-wing agenda.”

    Supporters of the rule argue that it is not a mandate – it allows, but does not require, the consideration of environmental, social and governance factors in investment selection.

    Senate Majority Leader Chuck Schumer said on Wednesday that Republicans are “using the same tired attacks we’ve heard for a while now that this is more wokeness. … But Republicans are missing or ignoring an important point: Nothing in the (Labor Department) rule imposes a mandate.”

    “This isn’t about ideological preference, it’s about looking at the biggest picture possible for investments to minimize risk and maximize returns,” he said, noting it’s a narrow rule that is “literally allowing the free market to do its work.”

    The statement of administration policy saying that Biden would veto the measure similarly states, “the 2022 rule is not a mandate – it does not require any fiduciary to make investment decisions based solely on ESG factors. The rule simply makes sure that retirement plan fiduciaries must engage in a risk and return analysis of their investment decisions and recognizes that these factors can be relevant to that analysis.”

    Republicans are also working to advance a measure to rescind a controversial Washington, DC, crime law – which critics argue is soft on violent criminals – with a simple majority vote in the Senate.

    Many Democrats oppose overriding the DC law. They argue local officials should make their own laws free of congressional interference and decry Republicans as hypocrites since they typically promote state and local rights.

    A Senate vote on the DC measure is expected next week.

    This story and headline have been updated with additional developments.

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  • The US gender pay gap: Why it hasn’t narrowed much in 20 years | CNN Business

    The US gender pay gap: Why it hasn’t narrowed much in 20 years | CNN Business

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    New York
    CNN
     — 

    A lot can change in two decades. Or… not.

    In 2022, US women on average earned about 82 cents for every dollar a man earned, according to a new Pew Research Center analysis of median hourly earnings of both full- and part-time workers.

    That’s a big leap from the 65 cents that women were earning in 1982. But it has barely moved from the 80 cents they were earning in 2002.

    “Higher education, a shift to higher-paying occupations and more labor market experience have helped women narrow the gender pay gap since 1982,” the Pew analysis noted. “But even as women have continued to outpace men in educational attainment, the pay gap has been stuck in a holding pattern since 2002, ranging from 80 to 85 cents to the dollar.”

    Before getting to potential reasons why the pay gap hasn’t narrowed for two decades — let alone disappeared — it’s worth noting that the top-line average doesn’t tell the whole story of what’s been going on for women in different cohorts.

    Take age: Women between the ages of 25 and 34 are much closer to achieving pay parity with men than they are likely to be when they get older.

    Since 2007, younger women have been earning about 90 cents on the dollar, according to Pew: “But even as pay parity might appear in reach for women at the start of their careers, the wage gap tends to increase as they age.”

    Having children is a factor, Pew found. For example, parenthood leads some women to put their careers on hold, or put in a shorter workweek. For employed fathers between the ages 35 and 44, having children at home is a time that often coincides with receiving higher pay even though the pay of employed mothers that same age is unaffected.

    “In 2022, mothers ages 25 to 34 earned 85% as much as fathers that age, but women without children at home earned 97% as much as fathers. In contrast, employed women ages 35 to 44 — with or without children — both earned about 80% as much as fathers,” the report said.

    Or take race and ethnicity: Pew found that Black women last year earned just 70% as much as White men. Hispanic women earned 65% as much. For White women, the gap was less, at 83%. Asian women were closest to parity, at 93%.

    “To some extent, the gender wage gap varies by race and ethnicity because of differences in education, experience, occupation and other factors that drive the gender wage gap for women overall,” the Pew analysis noted.

    “But researchers have uncovered new evidence of hiring discrimination against various racial and ethnic groups, along with discrimination against other groups, such as LGBTQ and disabled workers,” the report continued. “Discrimination in hiring may feed into differences in earnings by shutting out workers from opportunities,”

    Lastly, consider occupation: Women are still overrepresented in lower-paying occupations such as personal care and service jobs; and underrepresented in higher-paying ones, like managerial and STEM jobs.

    Regardless, the gender pay gap is typically narrowest when you pick any single occupation and control for measurable factors between men and women like education, tenure and hours worked.

    “But it never goes away,” said Rakesh Kochhar, a Pew senior researcher.

    The persistence of a gap over the past 20 years, even when comparing apples to apples, suggests there are other factors at play.

    These can include potential discrimination. When Pew asked Americans in October what factors they believed played a role in the gender wage gap, half indicated a major reason is that employers treat women differently. Women were much more likely than men (61% vs 37%) to cite this as a major reason.

    Another factor that may help explain the stickiness of the pay gap is that the wage premium for those with college degrees has grown smaller. So while more employed women (48%) now have at least a bachelor’s degree than men (41%), it is worth less.

    Individual choices such as taking periods away from the workforce to care for children also continue to play a role. Those choices may be borne of cultural norms, societal issues such as a lack of affordable child care, or personal preference.

    Narrowing the gender pay gap from here may be tough sledding.

    “More sustained progress in closing the pay gap may depend on deeper changes in societal and cultural norms and in workplace flexibility that affect how men and women balance their careers and family lives,” Pew researchers suggested.

    And even then, progress may be slower than desired, since, as they noted, “even in countries that have taken the lead in implementing family-friendly policies, such as Denmark, parenthood continues to drive a significant wedge in the earnings of men and women.”

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  • A new bipartisan push for paid family and medical leave | CNN Politics

    A new bipartisan push for paid family and medical leave | CNN Politics

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    CNN
     — 

    A cocktail party on Capitol Hill is often hardly notable.

    But at one recent soiree, the clinking of glasses had a different ring. Members of both parties joined together to kick off a renewed effort to solve a uniquely American problem: no universal paid family and medical leave.

    It’s been 30 years since the Family and Medical Leave Act became law. It guaranteed workers the right to unpaid, job-protected time off.

    But the United States is one of only seven countries in the world without some form of universal paid family and medical leave.

    A bipartisan congressional duo is trying to change that.

    “We live in the greatest nation in the world, and we do so many things well, but when you’re talking about families, this is one area that we have struggled,” Republican Rep. Stephanie Bice of Oklahoma told CNN during an interview in her Capitol Hill office last month.

    Sitting beside her, nodding, was Democratic Rep. Chrissy Houlahan of Pennsylvania.

    “It’s frankly an embarrassment that we are one of the seven nations or so that doesn’t have this kind of focus on the family,” Houlahan said. “It’s really, really important that we lead by our example.”

    At the end of January, determined to find a solution to the lack of universal paid family and medical leave in America, the congresswomen officially launched their House Bipartisan Paid Family Leave Working Group.

    “We are action-oriented, and we are committed to having open eyes and ears,” Houlahan said, addressing policy advocates and politicians alongside Bice at the group’s launch party.

    Their task force is composed of six House members: three from each party, including Democrats Colin Allred of Texas and Haley Stevens of Michigan and Republicans Julia Letlow of Louisiana and Mariannette Miller-Meeks of Iowa. Such a partnership across the aisle, Bice insisted, is not that uncommon.

    “More of that happens than people realize back home,” the Oklahoma Republican told CNN. “There’s a lot of bipartisanship that goes on behind the scenes, trying to bring everyone together and move the country forward. And this is one way we’re doing that.”

    Houlahan represents a blue-leaning district in eastern Pennsylvania that includes parts of the Philadelphia suburbs. Bice represents a reliably red seat that includes parts of Oklahoma City. They’re both relatively new to Congress – elected in 2018 and 2020, respectively. They shared committee assignments – and previously a hallway in a House office building – and “just kind of connected,” said Bice.

    But the two have something else in common: They’re both mothers with daughters.

    Bice said she worked in the private sector when her daughters were born and had the ability to take paid family leave through her company. That was 20 years ago. “[It] was almost unheard of,” she shared. She said she doesn’t know what she would have done without that opportunity for paid time off.

    The Oklahoma native acknowledges that her circumstance was the exception, not the rule, when it came to paid family leave. According to the Bureau of Labor Statistics, only 1 in 4 workers had access to paid family leave in 2022.

    Families in the lowest 25% of wage earners had even less access. Only 13% of those low-income workers were eligible for paid family leave last year.

    “I was incredibly fortunate,” Bice said.

    Houlahan was an active-duty officer in the Air Force when her daughter was born 30 years ago. She recalled that the policy at the time was effectively six weeks of convalescence.

    “And I know, I remember acutely that the child care on the base was a six-month waiting list,” Houlahan said. “I couldn’t figure out how to make ends meet.”

    The veteran said she struggled to find a solution: Child care on the base was affordable but not accessible, and child care off base was the opposite.

    “To be really honest, it was one of the reasons that drove me to separate from the military,” she admitted. “These are choices that are being made by husbands and wives and families across the country.”

    A lack of paid family and medical leave doesn’t just create burdens for families, Houlahan said – it hurts the economy by taking women out of the workforce, causing what she called a “vicious cycle.”

    “The domino effect of all of this kind of thing is real,” the Pennsylvania Democrat said. “When we’re talking about these issues, it’s not just about the mom. It’s not just about the family. It’s about the infrastructure and the economy as well.”

    Bice and Houlahan face what many from the outside would call insurmountable odds: a deeply partisan and divided Congress, with narrow majorities in both chambers. But Houlahan said the razor-thin majorities present an opening.

    “We have an opportunity-rich environment right now, to use a military term, to make sure that we take advantage of this really special time, honestly, where the majorities and minorities are so small and so slim that it really requires that we work together,” she said.

    “We can pretty much assure that our far edges of both parties will not necessarily be interested in working collaboratively,” Houlahan added. “So we need to find that moderate middle.”

    Bice hopes the growing number of women in the House GOP Conference will make a difference, too. There are now 33 Republican women serving in the chamber – the highest number ever. It’s still small in comparison with the 91 female House Democrats (soon to be 92) across the aisle, but it’s momentum nonetheless.

    “Having that female conservative perspective, I think, is important to bring to the conversation,” Bice said. “Many of the women in the Republican Conference are young mothers. And so I think this conversation is ripe on our side of the aisle right now.”

    GOP Rep. Stephanie Bice, seen in Oklahoma City in 2020 before her election to Congress, says the issue of paid family leave is ripe among Republicans at the moment.

    Part of the frustration in Washington – and around the country – is that universal paid family and medical leave is quite popular across the political spectrum. A Morning Consult poll this past summer found that 85% of Democrats and 66% of Republicans supported congressional action on ensuring paid family leave.

    But the two parties have deep philosophical differences about how to pay for it. It’s part of the reason successful legislation has eluded Congress – and a big obstacle for Bice and Houlahan as they start their work.

    “We want to start with a clean slate,” Bice said. “Coming at this from maybe a new fresh perspective, looking at what’s been done in the past. What legislation currently in place isn’t working? And figuring out either do we expand on that or do we pull back and look at a new policy that would actually be much more effective?”

    They’re also realistic about what’s possible. Houlahan is prepared for incremental change.

    “If we’re able to give some family leave for benefits to our federal employees and then our uniform personnel and then this population and then that population, at least we’re making progress,” she said.

    Bice and Houlahan are certainly not the first lawmakers to try to tackle the issue in recent years.

    In 2021, House Democrats pushed to get 12 weeks of universal paid leave in the sweeping Build Back Better package. They eventually pared it down to just four weeks to get the necessary votes to pass in the House along party lines. But the $1.75 trillion social spending bill stalled in the Senate. Paid family leave was then left out of Democrats’ $750 billion climate, tax and health care package, known as the Inflation Reduction Act, that was enacted last summer.

    Houlahan told CNN that she and Bice “stand on the shoulders of great people, mostly women,” who have worked on the issue for decades and across the Capitol. Currently, New York Democrat Kirsten Gillibrand and Louisiana Republican Bill Cassidy are among the senators working on solutions of their own in the upper chamber.

    The House working group co-chairs also acknowledge the importance of bringing men into the conversation. Their six-member task force includes Allred, who made headlines in 2019 when he became the first member of Congress to take paternity leave.

    “If we’re going to be pro-family, it’s going to be pro-family, Mom and Dad,” Bice said.

    This February marked three decades since the Family and Medical Leave Act became law.

    “We’ve been at this since I was pregnant,” Houlahan quipped at the launch party for their group, noting that her oldest daughter is 30 years old.

    “It’s time for there to be additional progress on this issue. It’s wonderful that you now can’t lose your job for taking time off, but that’s not enough for us to be a competitive nation. I don’t think that embodies the American values of the strengths of families as well,” she told CNN in the joint interview.

    Her Republican colleague agreed.

    “It’s time for us to find a solution and take action,” Bice said. “Thirty years is too long. You can’t sit back and watch. You got to move forward.”

    This headline has been updated.

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  • 401(k) balances rise, despite economic and market challenges | CNN Business

    401(k) balances rise, despite economic and market challenges | CNN Business

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    New York
    CNN
     — 

    Despite higher prices, endless talk of a possible recession and falling markets, 401(k) participants managed to keep their savings rates relatively steady in the fourth quarter of last year, helping to stabilize their nest eggs and increase their overall average balances.

    That’s according to new data from Fidelity Investments, one of the largest providers of workplace retirement plans, which combined represent $2.8 trillion in assets on its platform.

    “Fortunately, the data show that retirement savers understand the importance of saving for the long-term, despite market shift. We are encouraged to see people look past the current volatility and continue to make smart choices for their future,” said Kevin Barry, president of Workplace Investing at Fidelity.

    By that Barry means the average 401(k) savings rate (including both employee contributions and employer matches) held roughly steady at 13.7%, down from the 13.8% in the third quarter and 13.9% in the second quarter.

    Among generations in the workforce, Baby Boomers had the highest savings rate as a percent of their income (16.5%). The youngest cohort – Gen Z workers – saved 10.2%.

    A third of participants actually increased their contribution rate over the last year, according to Fidelity. But the average rate among this group is still very low – at just 2.6%.

    The average 401(k) balance in Fidelity-administered plans, meanwhile, rose 7% from the third quarter, to $103,900. That said, thanks to poor performances in both stocks and bonds last year, the average is still 23% below the $135,600 recorded at the end of 2021.

    In terms of 401(k) loans, the percent of active plan participants with outstanding ones remained at 16.7%. That’s down from 17% a year earlier and 21% from five years ago, Fidelity said.

    The average outstanding loan amount was $10,200. Among different age groups, Gen Xers had the highest average, followed by Baby Boomers. And even though they are just getting started in their careers and haven’t had a lot of time to amass savings, 3.2% of Gen Z workers also had outstanding 401(k) loans, but their average amount ($3,000) was the lowest among all age groups.

    Hardship withdrawals from 401(k)s – money taken when a participant is under financial stress of some kind (e.g., to prevent eviction, pay for funeral expenses or to cover a near-term tuition bill) – stood at 2.4% for the year, up from 1.9% in 2021. The average amount taken out was $2,200. Unlike a 401(k) loan, a hardship withdrawal does not need to be paid back, and will be taxed. Plus, in some instances it may be subject to a 10% penalty if you’re under 59-1/2.

    The new retirement law, Secure 2.0, includes a provision that will make it easier and less costly for 401(k) participants to take money out of their account for emergency needs up to $1,000 in a year.

    Apart from its workplace retirement plans, Fidelity reported a 10.2% annual increase in the number of IRAs on its platform, noting that 61% of the IRA contributions made in the fourth quarter of last year went into Roth IRAs.

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  • Toyota accepts union demands for biggest wage hike in two decades | CNN Business

    Toyota accepts union demands for biggest wage hike in two decades | CNN Business

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    Tokyo
    Reuters
     — 

    Toyota Motor, the world’s biggest automaker, said on Wednesday it would accept a union demand for the biggest base salary increase in 20 years and a rise in bonus payments, as Japan steps up calls for businesses to hike pay.

    As one of Japan’s biggest employers, Toyota

    (TM)
    has long served as a bellwether of the spring labor talks, which are in full swing at major companies. Many are expected to conclude swiftly as the government seeks inflation-beating wage hikes to ease burdens on consumers.

    The automaker’s incoming president Koji Sato said the decision to accept the union’s demands in full at the first round of talks was meant not just for Toyota but “also for the industry as a whole, and in the hope that it will lead to frank discussions between labor and management at each company.”

    Within hours of Toyota’s announcement, rival Honda

    (HMC)
    Motor said it had agreed to union demands for a 5% pay increase. The average monthly base salary rise of 12,500 yen ($92.70) at Honda

    (HMC)
    is the biggest jump since at least 1990.

    Toyota and the union federation representing 357,000 Toyota group workers said the base pay rise was the biggest in two decades, though they both declined to provide the percentage increase.

    With inflation running at around 4%, the highest level in 40 years following decades of deflation, Japan is under more pressure than ever before to raise wages to revive consumption.

    But with the economy struggling, it averted recession in the fourth quarter but grew much less than expected, analysts say pay increases will remain limited to big firms, such as Toyota.

    Small and medium-sized companies, which employ most Japanese workers, will struggle to afford pay rises, they say.

    Toyota said its wage increase would also apply to part-time workers and senior contract workers. It had agreed to union’s request for one-off bonus payments worth 6.7 months of wages.

    Takaaki Sakagami, deputy secretary-general of the Federation of All Toyota Workers’ Union, said the union was pleased it had been able to reach a deal with the company quickly.

    The pay agreement comes as Prime Minister Fumio Kishida has stepped up calls on business leaders to accelerate wage increases, warning of a return to stagflation if pay rises fall short of the rapid increase in prices.

    “We will boost consumption and expand domestic demand by promoting efforts toward structural wage increases,” Kishida said at a lower house budget committee session on Wednesday.

    Fast Retailing

    (FRCOF)
    , which owns clothing giant Uniqlo, last month said it would boost pay by up to 40%, fueling expectations big manufacturers would offer more at annual wage talks with unions this spring.

    Video game maker Nintendo

    (NTDOF)
    said earlier this month that it planned to lift workers’ base pay by 10%, despite trimming its full-year profit forecast.

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  • Home Depot says it will raise pay for US, Canadian workers

    Home Depot says it will raise pay for US, Canadian workers

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    Home Depot said Tuesday it’s investing $1 billion in wage increases for its U.S. and Canadian hourly workers.

    The Atlanta-based home improvement chain said every hourly employee will get a raise starting this month. Starting pay will be at least $15 per hour in all markets.

    Home Depot is one of many big retailers who have raised pay to attract workers in a strong U.S. job market, where unemployment is at its lowest level since 1969. Walmart announced in January that it would be raising its hourly wage to an average of $17.50, while Target invested $300 million in hourly wage increases last year.

    The pay raises could also help Home Depot head off a fledgling campaign to unionize its stores, which it opposes. Workers at a Home Depot in Philadelphia filed to hold a union election last September, saying workers weren’t benefiting from Home Depot’s strong sales and stores were understaffed. Workers at the store voted to reject the union in November.

    Home Depot employs 437,000 people in the U.S. and 34,000 in Canada. The vast majority are hourly employees, the company said. The company operates 2,000 stores in the U.S. and 182 stores in Canada.

    “This investment will help us attract and retain the best talent into our pipeline,” Home Depot’s Chairman, President and CEO Ted Decker wrote in an email to employees. Decker noted that 90% of the chain’s store leadership started as hourly workers.

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  • Here are the US cities where home prices are actually falling | CNN Business

    Here are the US cities where home prices are actually falling | CNN Business

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    Washington, DC
    CNN
     — 

    Home prices are going up across the country — in aggregate. Looking at individual markets, however, some are showing prices have fallen from a year ago.

    Single-family median home prices increased 4% in the fourth quarter from a year ago to $378,700. Prices were strongest in the Northeast in the last quarter, up 5.3%; followed by the South, up 4.9%; the Midwest, up 4% and the West, up 2.6%, according to the National Association of Realtors.

    But drill down to the market level and it’s clear that prices in some areas are declining from the prior year. The positive regional numbers mask that about 11% of individual housing markets tracked by NAR — 20 of 186 cities — experienced home price declines in the fourth quarter of last year.

    “A few markets may see double-digit price drops, especially some of the more expensive parts of the country, which have also seen weaker employment and higher instances of residents moving to other areas,” said Lawrence Yun, NAR’s chief economist.

    Nearly all of the most expensive places to buy are in the West and half of the 10 most expensive cities are in California. Several of those places are seeing prices fall the most.

    San Jose, California, was the most expensive place to purchase a home in the United States in the fourth quarter. But that median price of $1,577,500 is actually down 5.8% from a year ago — and prices there have already dropped 17% from the peak $1,900,000 median price in the second quarter of last year, according to NAR.

    San Francisco had the biggest price drop in the country, year over year, last quarter, with the median price of $1,230,000 — down 6.1% from a year ago. Prices for San Francisco homes are already down 21% in the fourth quarter from the peak median price of $1,550,000 in the second quarter.

    Among the most expensive cities that saw prices falling are Anaheim, California, with the median price of $1,132,000, down 1.6% from a year ago; Los Angeles, with the median price of $829,100, down 1.3%; and Boulder, Colorado, with the median price of $759,500, down 2.0%.

    Other places with falling prices saw the big price increases during the frenzied home buying market of the past few years. They also tend to be appealing lifestyle destinations where people moved to as remote work provided more flexibility. These include Boise, Idaho, where prices fell 3.4% from a year ago and Austin, Texas, where prices are down 1.3%.

    The good news for buyers looking for price relief is that the 4% median price hike in the fourth quarter is less than the 8.6% increase in the third quarter. In addition, the price increases are smaller, with far fewer markets experiencing double-digit price gains in the fourth quarter.

    “A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42% in the past three years,” said Yun, noting these cost increases have far surpassed wage increases and consumer price inflation since 2019.

    Throughout much of the pandemic, home prices across the country moved in a single direction: up. Some hotspots like Austin and Boise saw prices skyrocket. Other areas — particularly in the Midwest — saw prices go up more moderately. Yet, because mortgage rates were near historic lows, buyers came out in droves.

    That story changed last year, when mortgage rates spiked as a result of the Federal Reserve’s historic campaign to rein in inflation. Homebuying fell off a cliff. By the end of 2022, sales of existing homes were down nearly 18% from 2021 as would-be homebuyers left the market, according to NAR.

    Typically, a drop in demand to buy would mean excess supply and ultimately lead to prices coming down. But that’s not happening, broadly speaking, in the housing market.

    Instead, prices for single-family homes climbed in nearly 90% of metro areas tracked by NAR in the fourth quarter: 166 markets out of 186 saw prices still going up. The national median price of a single-family home increased 4% last quarter from one year ago to $378,700.

    How can this be?

    One main driver of this phenomenon is that there is a shortage of inventory due to chronic underbuilding of affordable homes in the United States, along with homeowners who don’t want to part with the ultra-low mortgage rate they secured over the past few years.

    “Even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of the markets due to extremely limited supply,” said Yun.

    There are still places where home prices continue to climb at double-digit rates. The top 10 cities with the largest year-over-year price increases all recorded gains of at least 14.5%, with seven of those markets in Florida and the Carolinas, according to NAR.

    Farmington, New Mexico, saw the biggest price increase in the fourth quarter, up 20.3% from a year ago. It was followed by Sarasota, Florida, up 19.5%; Naples, Florida, up 17.2%; Greensboro, North Carolina, up 17.0%; Myrtle Beach, South Carolina, up 16.2%; Oshkosh, Wisconsin, up 16.0%; Winston-Salem, North Carolina, up 15.7%; El Paso, Texas, up 15.2%; Punta Gorda, Florida, up 15.2%; and Daytona Beach, Florida, up 14.5%.

    In the last quarter of 2022 a family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 71 markets, up from 59 in the prior quarter, according to NAR.

    Yet there were 16 markets where a family needed a qualifying income of less than $50,000 to afford a home, although that was down from 17 the previous quarter. Some of those included Peoria, Illinois, where a family can qualify for a loan with an income of $33,660; Waterloo, Iowa, with an income of $40,639; and Montgomery, Alabama, with an income of $48,172.

    Nationally, the monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,969 in the fourth quarter according to NAR. That’s a 7% increase from the third quarter of last year, when the monthly payment was $1,838, but a major surge of 58% — or a $720 monthly increase — from one year ago.

    This made the affordability picture even harder for many home buyers. Families typically spent 26.2% of their income on mortgage payments, which was up from 25% in the prior quarter and 17.5% one year ago.

    First-time buyers were evidently pushed to a breaking point on affordability. They typically spent 39.5% of their family income on mortgage payments, up from 37.8% in the previous quarter. A mortgage is considered unaffordable if the monthly payment, including principal and interest, amounts to more than 25% of the family’s income. Generally, a common financial rule of thumb is to not spend more than 30% of your income on housing costs.

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  • US inflation slows to 6.4%, but price pressures re-emerge

    US inflation slows to 6.4%, but price pressures re-emerge

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    WASHINGTON — The pace of consumer price increases eased again in January, the latest sign that the high inflation that has gripped Americans for two years is slowing.

    At the same time, Tuesday’s consumer price report from the government showed that inflationary pressures in the U.S. economy remain stubborn and are likely to fuel price spikes well into this year.

    The government said consumer prices rose 6.4% in January compared with 12 months earlier, down from 6.5% in December. It was the seventh straight year-over-year slowdown and well below a recent peak of 9.1% in June. Yet it remains far above the Federal Reserve’s 2% annual inflation target.

    And on a monthly basis, consumer prices increased 0.5% from December to January, much higher than the 0.1% rise from November to December. More expensive gas, food and clothing drove up inflation in January.

    The Fed has aggressively raised its benchmark interest rate in the past year to its highest level in 15 years in its drive to get rampaging inflation under control. The Fed’s goal is to slow borrowing and spending, cool the pace of hiring and relieve the pressure many businesses feel to raise wages to find or keep workers. Businesses typically pass their higher labor costs on to their customers in the form of higher prices, thereby helping fuel inflation.

    So far, most of the slowdown in inflation reflects freer-flowing supply chains and sinking gas prices. But the Fed’s rate hikes — eight since March of last year — have had no discernible effect on America’s job market, which remains exceptionally strong.

    The unemployment rate has dropped to 3.4%, the lowest level in 53 years, and job openings remain high. The strength of the job market has, in turn, helped support consumer spending, which underpins the bulk of the U.S. economy.

    Average wages are rising at a brisk pace of about 5% from a year ago. Those pay gains, spread across the economy, are likely inflating prices in labor-intensive services. Powell has often pointed to robust wage increases as a factor that’s driving up services prices and keeping inflation high even as other categories, like rent, are likely to decelerate in price.

    Many economists expect inflation to fall to roughly 4% later this year. But it could plateau at that point so long as hiring and wage gains remain vigorous. The Fed might then feel compelled to keep borrowing rates high well into 2024 or even raise them further this year.

    The Biden White House last week calculated a measure of wages in service industries excluding housing — the sector of the economy that Powell and the Fed are most closely tracking. The administration’s Council of Economic Advisers concluded that wages in those industries for workers, excluding managers, soared 8% last January from a year earlier but have since slowed to about a 5% annual pace.

    That suggests that services inflation could soon slow, especially if the trend continued. Still, wage gains of that level are still too high for the Fed’s liking. The central bank’s officials would prefer to see wage growth of about 3.5%, which they see as consistent with their 2% inflation target.

    A key question for the economy this year is whether unemployment would have to rise significantly to achieve that slowdown in wage growth. Powell and other Fed officials have said that curbing high inflation would require some “pain” for workers. Higher unemployment typically reduces pressure on businesses to pay bigger wages and salaries.

    Yet for now, the job market remains historically very robust. Powell said last week that the jobs data was “certainly stronger than anyone I know expected,” and suggested that if such healthy readings were to continue, more rate hikes than are now expected could be necessary.

    Other Fed officials, speaking last week, stressed their belief that more interest rate increases are on the way. The Fed foresees two more quarter-point rate hikes, at its March and May meetings. Those increases would raise its benchmark rate to a range of 5% to 5.25%, the highest level in 15 years.

    The Fed lifted its key rate by a quarter-point when it last met on Feb. 1, after carrying out a half-point hike in December and four three-quarter-point increases before that.

    The financial markets envision two more rate increases this year and don’t expect the Fed to reverse course and cut rates until sometime in 2024. For now, those expectations have ended a standoff between the Fed and Wall Street investors, who had previously been betting that the Fed would be forced to cut rates in 2023 as inflation fell faster than expected and the economy weakened.

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  • Russia to cut oil output by 5% as sanctions bite | CNN Business

    Russia to cut oil output by 5% as sanctions bite | CNN Business

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    London
    CNN
     — 

    Russia will cut crude oil production by half a million barrels per day starting in March, a little over two months after the world’s major economies imposed a price cap on the country’s seaborne exports.

    “We will not sell oil to those who directly or indirectly adhere to the principles of the price ceiling,” Russian Deputy Prime Minister Alexander Novak said in a statement. “In relation to this, Russia will voluntarily reduce production by 500,000 barrels per day in March. This will contribute to the restoration of market relations.”

    The cut is equivalent to about 5% of Russian oil output.

    Futures prices for Brent crude, the global benchmark, jumped 2.7% Friday to $86 a barrel as traders anticipated a tightening in global supply. US oil gained 1% to trade at $79 a barrel.

    In June last year, the European Union agreed to phase out all seaborne imports of Russian crude oil within the following six months as part of unprecedented Western sanctions aimed at reducing Moscow’s ability to fund its war in Ukraine.

    In a move aimed at further tightening the screws, G7 countries and the European Union agreed in December to cap the price at which Western brokers, insurers and shippers can trade Russia’s seaborne oil for markets elsewhere at $60 a barrel. Earlier this month, EU countries also banned imports of Russia’s diesel and refined oil imports.

    Novak warned that the crude oil price cap could lead to “a decrease in investment in the oil sector and, accordingly, an oil shortage.”

    Neil Crosby, a senior analyst at oil data firm OilX, told CNN that a 500,000 barrel-a-day cut is not the “worst-case scenario” and is still a smaller hit to Russian production than most analysts were expecting last year.

    “But it sets a precedent for further cuts ahead if necessary or desired by Russian authorities,” Crosby said, adding that Moscow could be anticipating difficulty in finding enough demand for its crude.

    Russian Urals crude traded at a discount to Brent crude of $28 a barrel on Friday. Over the past few months, India and China have snapped up cheap oil from Moscow, just as the EU — once Russia’s biggest customer for crude — has ended all imports.

    “Russia currently has a limited pool of buyers for its crudes and has likely found a ceiling to its export sales in the near term, primarily to China and India,” said Alan Gelder, vice president of refining, chemicals and oil markets at Wood Mackenzie.

    According to Reuters, Russia took the decision to reduce its output without consulting the OPEC+ group of producers, which includes Saudi Arabia. OPEC+ decided in October to cut output by 2 million barrels per day and has not adjusted that stance since.

    A potential drop in global oil supply could come at a tricky time. China’s swift reopening of its economy in December after almost three years of strict coronavirus restrictions has pushed up estimates for global oil demand.

    Last month, the International Energy Agency said it expected global demand to surge by 1.9 million barrels per day to reach an all-time high of 101.7 million barrels per day, with China accounting for nearly half of the increase.

    Western sanctions — added to the grinding cost of war — are weighing on Russia’s economy. The country’s budget deficit ballooned to $45 billion last year, or 2.3% of its gross domestic product.

    But Russia’s central bank held its main interest rate at 7.5% Friday, saying that economic activity was better than expected and that inflation was likely to come down this year.

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  • Japan’s workers haven’t had a raise in 30 years. Companies are under pressure to pay up | CNN Business

    Japan’s workers haven’t had a raise in 30 years. Companies are under pressure to pay up | CNN Business

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    Hong Kong/Tokyo
    CNN
     — 

    Hideya Tokiyoshi started his career as an English teacher in Tokyo about 30 years ago.

    Since then, his salary has stayed pretty much the same. That’s why, three years ago, after giving up hopes for higher pay, the schoolteacher decided to start writing books.

    “I feel lucky, as writing and selling books gives me an additional income stream. If not for that, I would’ve stayed stuck in the same wage loop,” Tokiyoshi, now 54, told CNN. “That’s why I was able to survive.”

    Tokiyoshi is part of a generation of workers in Japan who have barely gotten a raise throughout their working lives. Now, as prices rise after decades of deflation,the world’s third largest economy is being forced to reckon with the major problem of falling living standards, and companies are facing intense political pressure to pay more.

    Japanese Prime Minister Fumio Kishida is urging businesses to help workers keep up with higher living costs. Last month, he called on companies to hike pay at a level above inflation, with some already heeding the call.

    Like other parts of the world, inflation in Japan has become a major headache. In the year to December, core consumer prices rose 4%. That’s still low by comparison with America or Europe, but represents a 41-year high for Japan, where people are more used to prices going backwards.

    “In a country where you haven’t had nominal wage growth over 30 years, real wages are declining quite rapidly as a result [of inflation],” Stefan Angrick, a Tokyo-based senior economist at Moody’s Analytics, told CNN.

    Last month, Japan recorded its biggest drop in earnings, once inflation is taken into account, in nearly a decade.

    In 2021, the average annual paycheck in Japan was $39,711, compared with $37,866 in 1991, according to data from the Organisation for Economic Co-operation and Development (OECD).

    That means workers got a pay bump of less than 5%, compared to a rise of 34% in other Group of Seven economies, such as France and Germany, over the same period.

    Experts have pointed to a series of reasons for the stagnant wages. For one, Japan has long grappled with the opposite of what it’s facing now: low prices. Deflation started in the mid-1990s, because of a strong yen — which pushed down the cost of imports — and the bursting of a domestic asset bubble.

    “For the past 20 years, basically, there has been no change in consumer price inflation,” said Müge Adalet McGowan, senior economist for the Japan desk at the OECD.

    Until now, consumers wouldn’t have taken a hit to their wallets or felt the need to demand better pay, she added.

    But as inflation rises, people are likely to start making “strong” complaints about the lack of raises, predicted Shintaro Yamaguchi, an economics professor at the University of Tokyo.

    Experts say Japan’s wages have also suffered because it lags in another metric: its productivity rate.

    The country’s output, measured by how much workers add to a country’s GDP per hour, is lower than the OECD average, and “probably the biggest reason” for flat wages, according to Yamaguchi.

    “Generally, wages and productivity growth go hand-in-hand together,” McGowan said. “When there’s productivity growth, firms perform better and [when] they do better, they can offer higher wages.”

    She said Japan’s aging population was an additional issue because an older labor force tends to equate to lower productivity and wages. The way people are working is also changing.

    In 2021, nearly 40% of Japan’s total workforce was employed part-time or worked irregular hours, up from roughly 20% in 1990, according to McGowan.

    “As the share of these non-regular workers has gone up, of course the average wages also stay low, because they make less,” she said.

    People crossing a street in the Ginza area of Tokyo in November. The shape of Japan's workforce is shifting, with more people working part-time.

    Japan’s unique work culture is contributing to wage stagnation, according to economists.

    Many people work in the traditional “lifetime employment” system, where companies go to extraordinary lengths to keep workers on the payroll for life, Angrick said.

    That means they’re often very cautious about raising wages in good times so that they have the means to protect their workers when times are tough.

    “They don’t want to lay people off. So they need to have that buffer in order to be able to keep them on the payroll when a crisis hits,” he said.

    Its seniority-based pay system, where workers are paid based on their rank and length of service rather than performance, lowers incentives for people to change jobs, which in other countries generally helps push up wages, according to McGowan.

    “The biggest issue in Japan’s labor market is the stubborn insistence on pay by seniority,” Jesper Koll, a prominent Japan strategist and investor, previously told CNN. “If genuine merit-based pay were introduced, there would be much more job switching and career climbing.”

    Last month, Kishida warned the economy was at stake, saying Japan risked falling into stagflation if wage rises continued to fall behind price increases. The term refers to a period of high inflation and stagnant economic growth.

    Raising wages by 3% or more a year was already a core goal of Kishida’s administration. Now, the prime minister wants to take another step further, with plans to create a more formalized system.

    Asked for details, a government spokesperson told CNN that new “comprehensive economic measures will include expanded support for wage increases, integrated with an improvement in productivity.”

    Authorities plan to roll out guidelines for companies by June, said a representative from the Ministry of Health, Labor and Welfare.

    Hideya Tokiyoshi, a teacher in Japan, told CNN he had barely seen his salary go up over the last 30 years.

    Meanwhile, the country’s largest labor group, the Japanese Trade Union Confederation or Rengo, is now demanding wage increases of 5% at this year’s talks with the management of various companies. The annual negotiations kick off this month.

    In a statement, Rengo said it was making the push because workers were making “inferior wages on a global scale,” and needed help with rising prices.

    Some companies have already acted. Fast Retailing

    (FRCOF)
    , the company behind Uniqlo and Theory, announced last month that it would boost salaries in Japan by up to 40%, acknowledging that compensation had “remained low” in the country in recent years.

    While inflation was a factor, the company wanted to align “with global standards, to be able to increase our competitiveness,” a Fast Retailing spokesperson told CNN.

    According to a Reuters poll released last month, more than half of the country’s big firms are planning to raise wages this year.

    Suntory, one of Japan’s biggest beverage makers, may be one of them.

    Customers browsing for vegetables at a supermarket in Tokyo in January. Japanese Prime Minister Fumio Kishida is urging businesses to hike pay and help workers keep up with the higher costs of living.

    CEO Takeshi Niinami is weighing a 6% raise for its Japanese workforce of approximately 7,000 people, according to a spokesperson, adding that it was subject to negotiation with a union.

    The news may prompt other businesses to follow suit.

    “If some of the biggest companies in Japan raise wages, many other firms will follow,” if only to stay competitive, said Yamaguchi. “Many firms look at what other firms do.”

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