Tag: flexible work arrangements

White-collar workers are feeling the brunt of the Fed’s rate hikes. Here’s why | 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 Business
—

September’s hotly anticipated jobs data ended up cooling markets on Friday. Stocks fell sharply as investors evaluated the report, which showed more jobs than expected were added to the US economy and indicated that more pain-inflicting interest rate hikes from the Federal Reserve lie ahead.

But a breakdown of the numbers shows that the Fed’s plans to weaken the labor market to fight persistent inflation may already be working, just not for everybody.

White-collar office workers appear to be feeling the brunt of the Fed’s actions: The financial and business sector saw a large decline in employment last month. Legal and advertising services also experienced drops. Service and construction workers, meanwhile, are still thriving.

What’s happening: The US economy added 263,000 jobs in September, higher than analyst estimates of 250,000. The unemployment rate came in at 3.5%, down from 3.7% in August.

Leading the gain in jobs was the leisure and hospitality industry, which added 83,000 jobs in September — and employment in food services and drinking places made up 60,000 of those jobs alone. Manufacturing and construction also came in hot, adding 22,000 and 19,000 jobs, respectively.

The largest non-governmental losses in jobs came from the financial industry, which shed 8,000 between August and September. Large banks hire in cycles, extending offers to recent graduates in the early fall months. That makes this September’s drop particularly significant.

Business support services — such as telemarketing, accounting and administrative and clerical jobs — are also bleeding jobs. The sector lost 12,000 in September. Meanwhile, legal services lost 5,000 jobs, and advertising services also dropped 5,000 jobs.

What it means: The Federal Reserve’s hawkish policy appears to be cooling certain parts of the economy, but not others. Finance workers are likely beginning to worry as their industry depends on stock and lending markets which have been particularly hard hit by Fed actions.

Friday’s numbers indicate that we’re beginning to see that impact in the employment data.

What remains to be seen is whether the Fed can cool the economy just by loosening employment in white-collar industries or if these losses will trickle down to other industries, hurting lower-income workers.

Coming up: Earnings season begins in earnest this week with big banks like JPMorgan, Citigroup

(C), Morgan Stanley

(MS) and BlackRock

(BLK) reporting. Investors will be watching closely for any guidance on hiring and layoff plans.

Two key inflation indicators, PPI and CPI are also set to be released. Expect markets to react poorly if inflation comes in hot.

A panel of top US economists just released its economic outlook for the next year, and it’s not great.

The panel of 45 forecasters, led by the National Association for Business Economics (NABE), said they expected slower growth, higher inflation, higher interest rates, and weakening employment in both 2022 and 2023 than they previously expected.

Most of the worries come down to the Federal Reserve’s interest rate policy.

“More than three-quarters of respondents believe the odds are 50-50 or less that the economy will achieve a ‘soft landing’,” said NABE Vice President Julia Coronado. “More than half the panelists indicate that the greatest downside risk to the U.S. economic outlook is too much monetary tightness.”

NABE panelists downgraded their median forecast for real GDP for the fourth quarter of 2022 to a 0.1% increase, compared to a 1.8% increase in the May 2022 survey. The vast majority of respondents placed more than a 25% probability of a recession occurring in 2023, with the most likely start date in the first quarter.

The latest report comes as a growing number of economists are predicting that recession is imminent. Former US Treasury Secretary Larry Summers told CNN on Thursday that it’s “more likely than not” the US will enter a recession, calling it a consequence of the “excesses the economy has been through.”

Friday’s jobs report showed that the share of workers telecommuting or working from home because of the pandemic ticked lower — falling to just 5.2% in September from 6.5% in August.

Fully remote work in the United States, which many predicted would remain the norm long after the pandemic, appears to be edging away, especially as the job market loosens for white collar workers and employees have less leverage.

Last week, a KPMG survey of US-based CEOs found that two-thirds believed in-office work would be the norm within the next three years.

Still, it may not be enough to help an ailing commercial real estate market, where the outlook is dire. New York City office properties declined by nearly 45% in value in 2020 and are forecast to remain 39% below their pre-pandemic levels long-term as hybrid policies continue, according to a recent study from the National Bureau of Economic Research.

Looking forward: The Bureau of Labor Statistics has noted that while hybrid work may still be popular, Covid-19 is no longer fueling work from home trends. The October report will rephrase its telework questions to remove references to the pandemic.

Since May 2020, each jobs report has asked: “At any time in the last four weeks, did you telework or work at home for pay because of the Coronavirus pandemic?”

In May 2020, 35.4% answered yes.

Starting next month, the question will be revised. “At any time in the last week did you telework or work at home for pay?” it will ask, limiting the timeline and eliminating any reference to the pandemic.

The US bond market is closed for Columbus Day/Indigenous Peoples’ Day.

Coming later this week:

▸ Third quarter earnings season begins. Expect reports from big banks like JPMorgan Chase

(JPM), Wells Fargo

(WFC), Citigroup

(C), Morgan Stanley

(MS), PNC

(PNC) and US Bancorp

(USB) and consumer staples like Pepsi

(PEP), Walgreen

(WBA)s and Domino’s

(DMPZF).

▸ CPI and PPI, two closely watched measures of inflation in the US are also due to be released.

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October 10, 2022
Silicon Valley escalates the battle over returning to the office | CNN Business

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CNN
—

Three years after Silicon Valley companies led the charge for embracing remote work in the early days of the pandemic, the tech industry is now escalating the fight to bring employees back into the office -— and igniting tensions with staff in the process.

Google, which has long been a bellwether for workplace policies in the tech industry and beyond, frustrated some employees this week by announcing plans to begin more strictly enforcing its policy that requires workers in-office at least three days a week. The updated policy includes tracking office badge attendance and possibly factoring it into performance reviews, according to CNBC, citing internal memos.

“Overnight, workers’ professionalism has been disregarded in favor of ambiguous attendance tracking practices tied to our performance evaluations,” Chris Schmidt, a software engineer at Google and member of the grassroots Alphabet Workers Union, told CNN in a statement. “The practical application of this new policy will be needless confusion amongst workers and a disregard for our various life circumstances.”

In a statement, Ryan Lamont, a Google spokesperson, told CNN that its policy of working in the office three days a week is “going well, and we want to see Googlers connecting and collaborating in-person, so we’re limiting remote work to exception only.”

Lamont said that company leaders can see reports showing how their teams are adopting the hybrid work model, including “aggregated data” on badge swipes. He added that now that the company is more than a year into its hybrid model, “we’re formally integrating this approach into all of our workplace policies.”

Google isn’t alone in facing pushback from employees. Other tech companies are also grappling with how best to compel workers to come into the office after they’ve grown accustomed to greater flexibility. The tug-of-war is compounded by the fact that tech companies have laid off tens of thousands of employees over the past year, leveling a major blow to employee morale.

At Amazon, tensions boiled over last week as hundreds of office workers staged a walkout to call attention to their grievances, including the three-day return-to-office mandate that was implemented in May.

A current Amazon worker who spoke at the walkout said that she started an internal Slack channel called “remote advocacy” because she wanted a space where workers could discuss how the new return-to-office policy would impact their lives.

“Before I realized what was happening, that channel had 33,000 people in it,” the worker, who identified only as Pamela, said to the crowd at the event. Pamela called the Slack channel advocating for remote work “the largest concrete expression of employee dissatisfaction in our entire company history.”

But the employee criticism isn’t stopping tech companies, who have spent billions on sprawling campuses over the years and often preach the value of serendipitous workplace interactions, from moving forward with their return to office policies.

In response to the walkout, Amazon previously told CNN it may “take time” for some workers to adjust to being in the office more days. But the company also said it’s “happy with how the first month of having more people back in the office has been” and touted the extra “energy, collaboration, and connections happening” in the office.

Facebook-parent Meta similarly doubled down last week on its push to get workers in the office, warning that employees currently assigned to an office must return to in-person work three days a week starting this September. (A Meta spokesperson told CNN the updated policy was not set in stone, and employees designated as remote workers will be allowed to keep their remote status).

At least one tech company is taking a gentler approach.

Salesforce is trying to lure staff into offices by offering to donate $10 to a local charity for each day an employee comes in from June 12 to June 23, according to an internal Slack message reported on by Fortune.

A Salesforce spokesperson told CNN: “Giving back is deeply embedded in everything we do, and we’re proud to introduce Connect for Good to encourage employees to help us raise $1 Million+ for local nonprofits.”

But it might take more than temporary charitable contributions to convince some workers it’s worthwhile to return. Schmidt, the software engineer at Google, said that even if you go into the office, there’s no guarantee you’ll have people on your team to work with or even a desk to sit at.

“Many teams are distributed, and for some of us there may not be anyone to collaborate with in our physical office locations,” Schmidt said. “Currently, New York City workers do not even have enough desks and conference rooms for workers to use comfortably.”

“A one size fits all policy does not address these circumstances,” he added. “We deserve a voice in shaping the policies that impact our lives to establish clear, transparent and fair working conditions for all of us.”

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April 12, 2021
Twitter accused of failing to pay millions in employee bonuses after Musk takeover | CNN Business

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CNN
—

Twitter failed to pay out annual bonuses to staff after its acquisition by billionaire Elon Musk despite repeated assurances from executives in the lead-up to the deal closing that the company would do so, according to a new lawsuit filed on behalf of employees.

The lawsuit was filed in a San Francisco federal court on Tuesday by Mark Schobinger, who was a senior director of compensation at Twitter until he left the company late last month. The suit is seeking class action status for former and current Twitter employees who did not receive their 2022 bonus.

“We estimate about a couple thousand employees would have been eligible for the bonuses,” Shannon Liss-Riordan, the attorney representing Schobinger, said in a statement to CNN. “While I don’t have an exact number, we expect the amount owed is in the tens of millions.”

Twitter, which has cut much of is public relations team, did not respond to CNN’s request for comment.

The complaint states that after it was announced that Musk was acquiring the social media company last April, “many employees raised concerns” over the fate of “their compensation and annual bonus” if and when the deal closed.

In the months leading up to Musk completing his acquisition of Twitter, company executives repeatedly promised employees that 2022 bonuses would be paid out at 50% of the target, according to the complaint. “The promise was repeated following Musk’s acquisition,” the complaint said.

Despite the promises, however, Twitter has yet to pay out bonuses, the lawsuit says. Schobinger left the company last month following “Twitter’s reneging on various promises it had made to employees, including its failure to pay promised bonuses,” according to the complaint.

The lawsuit is the latest in a string of legal actions taken by former Twitter employees after Musk’s acquired the company and slashed 80% of the staff in an urgent bid to cut costs.

Liss-Riordan previously brought multiple proposed class action suits against Twitter, including on behalf of female employees and disabled employees. Another suit was filed by a group of former employees who accused Twitter of breach of contract because it allegedly failed to follow through on promises to allow remote work and provide consistent severance benefits after the acquisition.

Twitter has denied the breach of contract allegations in the lawsuit brought by former employees about remote work and severance. The proposed class action suits on behalf of female and disabled employees were dismissed by federal judges last month. The suits were later refiled.

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April 12, 2021