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Tag: labor and employment

  • What to look for in Friday’s jobs report | CNN Business

    What to look for in Friday’s jobs report | CNN Business

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    Minneapolis
    CNN
     — 

    A week that has been chock-full of economic data will be capped off Friday with the first US jobs report of 2023.

    Economists estimate that 185,000 positions were likely added in January, according to Refinitiv.

    That would be a considerable drop from the 504,000 jobs added in January 2022 and the 520,000 added in January 2021. It also would nearly match the 183,000 monthly average between 2010 and 2019, Bureau of Labor Statistics data shows.

    And yet, while the Federal Reserve’s aggressive rate hikes have helped make a dent in inflation and resulted in slower economic activity without stark rises in unemployment, the full effects have yet to come, Fed Chair Jerome Powell warned Wednesday.

    “I would say it is a good thing the disinflation we have seen so far has not come at the expense of a weaker labor market,” Powell said in a news conference following the Fed’s first monetary policymaking meeting of the year. “But I would also say the inflationary process you see under way is really at an early stage.”

    America’s unemployment rate dipped back down in December to 3.5%, once again matching a 50-year low. It’s expected to tick up to 3.6% come Friday.

    Layoff announcements — led by large tech firms — are picking up steam: The 43,651 job cuts announced in December jumped to 102,943 in January, according to a new data released Thursday morning by Challenger, Gray & Christmas.

    Still, those spikes in cutbacks haven’t become widespread. New data released Thursday by the Labor Department showed weekly initial jobless claims fell for the fourth time in five weeks, landing at 183,000, which is the lowest weekly total since April.

    “It’s a very interesting time where it’s really not clear whether what we’re seeing is a welcome, healthy rebalancing of the labor market — or a more worrying stall,” said Julia Pollak, senior economist with ZipRecruiter.

    Beyond the key headline indicators of payroll gains, unemployment and average hourly earnings, here are some other areas of the jobs report that Pollak and other economists will scrutinize when the January jobs report is released Friday morning.

    In December, the average working week for employees — including part-time workers — was 34.3 hours, according to BLS data.

    That’s down from the January 2021 high of 35 hours when the average workweek ballooned as workers were scarce and other employees were forced to pick up the slack and the extra shifts, Pollak said.

    “Typically, in good times, the workweek tends to be somewhere between 34.3 and 34.6 hours on average, and somehow it’s slowed all the way down to the bottom end of that range,” she said. “If it continues to deteriorate, that would suggest weakening demand for labor.”

    And usually, when demand gets weak, hiring stalls and layoffs and job losses follow, she said.

    As businesses recovered from the pandemic, they’ve increasingly relied on staffing agencies and contract employees. That sector started the pandemic with 2.9 million employees, plummeted to 1.9 million during the April 2020 trough, hit a record high of 3.56 million in July 2022 and has declined in each month since.

    “The recent decline in temp staffing is mostly the result of a healthy recovery in full-time, in-house hiring,” Pollak said. “But if it falls much below 3 million, I think that would be a warning sign as well.”

    Temporary and contract hiring can show where businesses expand and reduce their workforce at the margins, said Sarah House, senior economist at Wells Fargo.

    “The fact that we see that paring down suggests that the demand backdrop is starting to soften, and maybe they just don’t see the reason to hire and expand as much as they had previously,” House said.

    The imbalance of labor demand and worker supply has been consistently highlighted by the Fed as a potential sticking point in its efforts to lower inflation. While Fed officials have noted that wages don’t appear to be driving inflation, they have expressed concern that a a low participation rate and the imbalance of worker supply and demand could cause pay to rise and, in turn, cause higher prices.

    The labor force participation rate inched up two-tenths of a percentage point in December to 62.3%. Although that came following three consecutive months of declines, the percentage of people working or actively looking for work hovered between 62.1% and 62.4% throughout 2022.

    Based on Wednesday’s labor turnover data, that gap grew wider in December: There were 11.01 million job openings, or 1.9 available jobs for every unemployed person that month.

    “Long Covid is pretty real, and there’s a sizable share of the population who continue to suffer health effects related to Covid that are preventing them from being able to work,” said John Leer, chief economist with Morning Consult. “Then there’s ongoing child care challenges; we’ve got a lot of folks who retired early; we’ve got limited immigration not where it was pre-pandemic.”

    Beyond that and the ongoing demographic shifts of Baby Boomers aging out of the workforce, there’s also possibly some “information asymmetry” that’s occurring, he said.

    “There are people outside of the labor market who aren’t working, and they just simply don’t know how needed they are right now,” he said. “And I think that’s a function of being a little removed. The world has changed pretty dramatically over the last two to three years, and it’s going to be difficult to show people that the skills they possess are needed right now.”

    The government’s monthly jobs report is scheduled to be released at 8:30 a.m. ET on Friday.

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  • The bizarre history of Groundhog Day — or, how we decided to trust a subterranean rodent | CNN

    The bizarre history of Groundhog Day — or, how we decided to trust a subterranean rodent | CNN

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    CNN
     — 

    Every year, Americans in snowy states wait with bated breath to see whether Punxsutawney Phil will spot his shadow. And every year, we take Phil’s weather forecast – six more weeks of winter, or an early spring? – as gospel, meteorology be damned.

    It’s about as strange (and cute) as holidays get. So how did Groundhog Day go from a kooky local tradition to an annual celebration even those of us who don’t worry about winter can find the fun in?

    We explore Groundhog Day’s origins from a tiny event to an American holiday we can all be proud of. Spoiler: there are badgers, immortality and at least one groundhog on the menu.

    Every February 2, the members of the Punxsutawney Groundhog Club trek to Gobbler’s Knob, Punxsutawney Phil’s official home just outside of town. Donning top hats and tuxedos, the group waits for Phil to leave his burrow, and if he sees his shadow, the town gets six more weeks of winter. If he doesn’t see his shadow, Punxsutawney gets an early spring.

    But the early seeds of the Groundhog Day we know today were planted thousands of years ago, according to Dan Yoder, a folklorist “born and raised in the Groundhog Country of Central Pennsylvania” who penned the definitive history of the folk holiday turned national tradition.

    The holiday evolved over centuries as it was observed by different groups, from the Celts to Germans to the Pennsylvania Dutch and eventually, by those in other parts of the US. Its evolution began in the pre-Christian era of Western Europe, when the Celtic world was the predominant cultural force in the region. In the Celtic year, instead of solstices, there were four dates – similar to the dates we use today to demarcate the seasons – that were the “turning points” of the year. One of them, per Yoder, was February 1.

    These turning point dates were so essential to Europeans at the time that they Christianized them when Western Europe widely adopted Christianity. While May 1 became May Day, and November 1 became All Saints’ Day, the February 1 holiday was pushed to the following day – and would eventually become Groundhog Day.

    First, though, the February holiday was known as “Candlemas,” a day on which Christians brought candles to church to be blessed – a sign of a source of light and warmth for winter. But like the other three “turning points,” it was still a “weather-important” date that signified a change in the seasons, Yoder wrote.

    In 1973, Punxsutawney Phil delighted onlookers with his cuteness and disappointed them by predicting six more weeks of winter.

    And when agriculture was the biggest, if not only, industry of the region, predicting the weather became something of a ritual viewed as essential to the health of crops and townsfolk. There was some mysticism attached to the holiday, too, as seen in a poem from 1678 penned by the naturalist John Ray:

    “If Candlemas day be fair and bright

    Winter will have another flight

    If on Candlemas day it be showre and rain

    Winter is gone and will not come again.”

    The animal meteorology element wasn’t folded in until German speakers came to parts of Europe formerly populated by the Celtic people and brought their own beliefs to the holiday – except, instead of a groundhog, they hedged their bets on a badger. An old European encyclopedia Yoder cited points to the German badger as the “Candlemas weather prophet,” though it’s not clear why. (Sources including the state of Pennsylvania and the Punxsutawney Groundhog Club say the Germans also considered hedgehogs as harbingers of the new season.) When the holiday came overseas with the Pennsylvania Dutch, they traded the badger for an American groundhog, equally shy and subterranean and likely more prevalent in the area in which they settled.

    Many sources claim that the original Groundhog Day took place in 1887, when residents of Punxsutawney set out to Gobbler’s Knob, known as Phil’s “official” home, but the first piece of evidence Yoder found of townspeople trusting a groundhog for the weather, a diary entry, was dated 1840. And since Pennsylvania Dutch immigrants mostly arrived in the mid-to-late 18th century, it’s likely that the holiday existed for decades earlier than we have recorded, per the Library of Congress.

    Part of the reason so many of us know about Groundhog Day is due to the 1993 film of the same name. The phrase “groundhog day” even became shorthand for that déjà vu feeling of reliving the same day over and over. But Punxsutawney Phil became something of a cult celebrity even before the film debuted – he appeared on the “Today” show in 1960, according to the York Daily Record, and visited the White House in 1986. He even charmed Oprah Winfrey, appearing on her show in 1995.

    Before he was a celebrity, though, he was lunch. In a terrible twist, the earliest Groundhog Days of the 19th century involved devouring poor Phil after he made his prediction. The year 1887 was the year of the “Groundhog Picnic,” Yoder said. Pennsylvania historian Christopher Davis wrote that locals cooked up groundhog as a “special local dish,” served at the Punxsutawney Elk Lodge, whose members would go on to create the town’s Groundhog Club. Diners were “pleased at how tender” the poor groundhog’s meat was, Davis said.

    Last year, the apparently immortal and married groundhog Punxsutawney Phil predicted six more weeks of winter. AGAIN?!

    Groundhog meat eventually left the menu of Punxsutawney establishments as the townsfolk realized his worth. In the 1960s, Phil got his name, a nod to “King Phillip,” per the Groundhog Club. (The specific King Phillip he was named for is unclear; Mental Floss pointed out that there has not been a King Phillip of Germany, where many Pennsylvania settlers came from, in centuries). Before that, he was simply “Br’er Groundhog.”

    Punxsutawney Phil’s popularity has inspired several imitators: There’s Staten Island Chuck in New York, Pierre C. Shadeaux of Louisiana and Thistle the Whistle-pig of Ohio, to name a few fellow groundhog weather prognosticators. But there’s only one Phil, and he’s the original.

    Despite their early practice of noshing on Phil’s family, the Punxsutawney Groundhog Club avers that there has only been one Phil since 1886. He’s given an “elixir of life” every year at the summertime Groundhog Picnic, which “magically gives him seven more years of life,” the club said. (Groundhogs can live up to six years in the wild and up to 14 in captivity, per PBS’ Nature, so do with that what you will.)

    Phil also doesn’t have to spend the offseason alone. He’s married to Phyliss, per the Groundhog Club, who does not receive the same elixir of life and so will not live forever like her groundhog husband. There is no official word on how many wives Phil has outlived through over the years.

    As for his accuracy in weather-predicting – Phil’s hit or miss. He often sees his shadow – 107 times, in fact, per the York Daily Record, which has analyzed every single one of Phil’s official weather predictions since the 19th century. Last year, Phil saw his shadow, which coincided with a huge winter storm. Fingers crossed for better luck for us all this year.

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  • Britain hit by biggest day of strikes in a decade as pay disputes escalate | CNN Business

    Britain hit by biggest day of strikes in a decade as pay disputes escalate | CNN Business

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    London
    CNN
     — 

    As many as half a million workers are striking across Britain on Wednesday, closing schools, canceling university lectures and bringing most of the rail network to a standstill in what unions say is the biggest single day of walkouts in more than a decade.

    Teachers, university staff, train drivers and civil servants — including staff checking passports at airports — are striking in large numbers over pay and working conditions as living standards continue to plunge after years of below-inflation raises.

    At the same time, the Trades Union Congress, which represents 48 unions, is holding over 75 rallies across the United Kingdom to protest a government bill that it argues is an “attack” on the right to strike. The bill would require basic service levels to be maintained in the fire, ambulance and rail sectors in the event of walkouts.

    Escalating strike action comes just weeks after the government tried to resolve pay disputes to bring an end to the worst wave of industrial unrest the country has seen in decades. Many public sector workers have been offered raises of 4% or 5% for the current financial year, with the annual rate of inflation running at 10.5%

    Up to 300,000 teachers are expected to strike on Wednesday, marking the first of seven days of strike action through February and March by the National Education Union, the largest union in the sector. Strikes will affect around 23,400 schools, about 85%, in England and Wales, with many closed fully or partially.

    Wednesday also marks the beginning of strikes by 70,000 members of the University and College Union (UCU), which will hit 150 UK universities on 18 days in February and March, affecting 2.5 million students.

    Meanwhile, more than 100,000 members of the Public and Commercial Services Union, which represents civil servants, will strike over pay, pensions and job security at 123 government departments and agencies.

    And only around 30% of train services are expected to run on Wednesday, according to Britain’s railway company Rail Delivery Group, which warned in a statement on its website that the disruption could drag on into the rest of the week because many trains won’t be in the right depots.

    A train stopped at a platform in Waterloo Station, London, during Britain's biggest day of strikes in more than a decade on February 1, 2023.

    The strikes will take a toll on already slowing economic growth. The United Kingdom is likely to be the only major economy to fall into recession this year, after recording one of the strongest growth rates among advanced economies last year, according to the International Monetary Fund (IMF).

    The IMF has marginally upgraded its forecast for global growth, on the back of China’s reopening and an improvement in financial conditions as inflation starts to ease.

    On Britain, however, the fund has turned gloomier.

    Research director Pierre-Olivier Gourinchas said this was because of higher energy prices, lower productivity as a result of employment not recovering to its pre-pandemic level and elevated inflation leading to higher interest rates and mortgage costs.

    The IMF expects inflation to remain above 8% in the United Kingdom this year, compared to a rate of 4.6% across advanced economies and 6.6% globally. It sees the UK economy contracting by 0.6% in 2023, a 0.9 percentage point downgrade from its forecast in October.

    Union members and supporters march towards Westminster, London on February 1, 2023.

    An economic slowdown and persistent inflation will worsen a cost-of-living crisis that is afflicting thousands of workers, as wages fail to keep pace with rising prices.

    The average 5% pay increase for teachers this year is inadequate, particularly as it follows a decade of “wage erosion” that is leading to a “recruitment and retention crisis,” NEU deputy general secretary Niamh Sweeny told CNN.

    According to the union, pay for experienced teachers has declined by 23% since 2010 once inflation is taken into account. Support staff such as teaching assistants have seen salaries fall by 27% in real terms over that period, and some can earn more working in their local supermarket than in education, according to Sweeny.

    A spokesperson for the Department of Education responded: “Strike action is highly damaging to children’s education, particularly following the disruption that children have experienced over the past two years.”

    Sian Elliott, a senior policy officer at the Trades Union Congress told CNN that the solution to the wave of strikes was simple: “All that is needed in order to resolve the current disputes is just to offer an improved pay deal.”

    Yet rather than resolve pay disputes, the government has “rushed” an anti-strike bill through parliament without adequate scrutiny or an impact assessment, she added.

    In a sign that industrial unrest could escalate further, UK firefighters have voted to strike for the first time since 2003. The Fire Brigades Union has given the government until February 9 to make an improved pay offer.

    Nurses and ambulance drivers will begin a new wave of walkouts next week.

    — Olesya Dmitracova contributed reporting.

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  • Tech CEO apologizes for quoting Martin Luther King Jr. in layoff announcement | CNN Business

    Tech CEO apologizes for quoting Martin Luther King Jr. in layoff announcement | CNN Business

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    New York
    CNN
     — 

    A tech CEO is apologizing after quoting Martin Luther King Jr. in a layoffs announcement.

    On January 24, PagerDuty CEO Jennifer Tejada sent a letter to employees announcing the digital operations management company would eliminate about 7% of its workforce.

    Tejada quoted King at the end of that letter.

    “I am reminded in moments like this, of something Martin Luther King said, that ‘the ultimate measure of a [leader] is not where [they] stand in the moments of comfort and convenience, but where [they] stand in times of challenge and controversy,’” she wrote. “PagerDuty is a leader that stands behind its customers, its values, and our vision — for an equitable world where we transform critical work so all teams can delight their customers and build trust.”

    On Friday, Tejada apologized for quoting King.

    “The quote I included from Dr. Martin Luther King, Jr. was inappropriate and insensitive,” she said in the memo. “I should have been more upfront about the layoffs in the email, more thoughtful about my tone, and more concise. I am sorry.”

    When asked for additional comment, a representative for PagerDuty pointed to the blog post updated with Tejada’s apology.

    The tech industry has seen a spate of layoffs in recent weeks. Amazon announced in early January that it would lay off more than 18,000 workers. And Salesforce said it plans to cut about 10% of its staff. Microsoft, meanwhile, is laying off 10,000 employees.

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  • Apple has infringed on worker rights, NLRB investigators say | CNN Business

    Apple has infringed on worker rights, NLRB investigators say | CNN Business

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    Washington
    CNN
     — 

    Apple has illegally imposed rules on its employees that prohibit them from discussing their wages and engaging in other protected activity, according to investigators at the National Labor Relations Board.

    The findings by NLRB agents determined that “various work rules, handbook rules, and confidentiality rules at Apple” are unlawful because they “reasonably tend to interfere with, restrain, or coerce employees” who attempt to assert their labor rights, NLRB spokesperson Kayla Blado told CNN Tuesday.

    The probe involved several allegations dating to 2021, Blado said, some of which accused Apple of interfering with employee attempts to collect salary data and of “suppressive activity that has enabled abuse and harassment of organizers.” One of the charges claimed Apple had maintained “work rules that prohibit employees from discussing wages, hours, or other terms or conditions of employment.”

    Apple declined to comment. The agency findings were first reported by Bloomberg.

    The determinations could put pressure on Apple to settle the charges or risk facing a formal complaint by NLRB prosecutors in an internal administrative law proceeding — which could result in an order to change Apple’s business practices. The NLRB does not have the power to impose penalties, but can force employers to implement “make-whole remedies,” according to its website.

    According to Bloomberg, the cases in question were brought by two former Apple employees, one of whom cited an email from CEO Tim Cook vowing to crack down on information leaks at the company. Only some of the charges filed have been made public through Freedom of Information Act requests, and those that are available on the NLRB website are partially redacted. The contents of investigators’ findings also have not been made public.

    But Blado said as part of the investigation an NLRB regional office had “found merit to a charge alleging statements and conduct by Apple — including high-level executives — also violated the National Labor Relations Act.”

    Apple has previously clashed with the NLRB over its handling of workers looking to unionize at its retail stores.

    Apple was hit with a complaint from the NLRB over allegations that it interrogated employees regarding their support for a union and selectively prohibited the placement of pro-union fliers in a break room at a New York City Apple store. Apple pushed back at those claims in a filing with the NLRB.

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  • Biden and his team ramp up travel to highlight effects of infrastructure law ahead of State of the Union | CNN Politics

    Biden and his team ramp up travel to highlight effects of infrastructure law ahead of State of the Union | CNN Politics

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    CNN
     — 

    President Joe Biden and senior administration officials are embarking on a travel swing this week, showcasing what they see as successful measures to rebuild America’s ailing infrastructure.

    In what’s been described as a preview of some of the messaging for next week’s State of the Union address, Biden, Vice President Kamala Harris and Cabinet secretaries are all hitting the road to highlight the implementation of the landmark legislation signed into law during the president’s first two years in office. Among those accomplishments are the American Rescue Plan, the Bipartisan Infrastructure Law, the Chips and Science Act, and the Inflation Reduction Act.

    The president traveled to Baltimore on Monday to showcase the implementation of his policies, and later this week, he’ll head to New York City and Philadelphia for similar remarks.

    The trips are taking place in the lead up to Biden’s State of the Union speech in Washington next week – a national platform where he’s expected to illustrate how his policies are successfully going into effect – and a prospective reelection announcement in the coming months. Biden’s approach is expected to be focused on touting the rebound of the American economy and taking aim at Republican proposals – while still underscoring his desire to work across the aisle.

    In Baltimore on Monday, he discussed how the infrastructure law will fund replace the 150-year-old Baltimore and Potomac Tunnel, addressing the largest bottleneck for commuters on the Northeast Corridor between Washington, D C, and New Jersey. The new tunnel will be named in honor of civil rights leader and abolitionist Frederick Douglass.

    Speaking from a presidential podium set to the backdrop of an American flag and an Amtrak train on the tracks, Biden recalled that he’d made a thousand trips through the tunnel and walked through it in the 1980s.

    “When folks talk about how badly the Baltimore tunnel needs an upgrade, you don’t need me to tell you. I’ve been there and you’ve been there, too,” Biden said.

    “You ought to get inside and see,” he remarked, discussing his tour of the tunnel decades ago. “This is a 150-year-old tunnel. I wonder how in the hell it’s still standing.”

    “The structure is deteriorating. The roof is leaking. The floor is sinking. This is the United States of America, for God’s sake. We know better than that,” he continued.

    When the project is done, Biden said, trains will roll through the tunnel at 110 mph instead of 30 mph, shortening regional MARC train commutes from Baltimore to Washington to 30 minutes.

    At Monday’s project kickoff, the president announced an agreement between the state of Maryland and Amtrak, which includes a $450 million commitment for the tunnel replacement project, according to the White House. A project labor agreement between Amtrak and the Baltimore-DC Building and Construction Trades Council was unveiled to cover the first phase of the project. And he also announced an agreement between Amtrak and the North American Builders’ Trade Union “that ensures Amtrak’s large civil engineering construction projects controlled by Amtrak will be performed under union agreements,” according to the White House.

    The program is expected to cost approximately $6 billion, of which Bipartisan Infrastructure Law funding could contribute up to $4.7 billion, the White House said. Biden was joined by labor leaders, state and local officials, as well as members of Congress and Transportation Secretary Pete Buttigieg.

    On Tuesday, Biden travels to New York City to discuss how Bipartisan Infrastructure Law funding will improve the Hudson River Tunnel, which sees 200,000 passengers passing through each weekday on Amtrak and New Jersey Transit.

    On Friday, Biden and Harris are scheduled to travel to Philadelphia to discuss how Bipartisan Infrastructure Law funding is removing lead pipes and ensuring clean water across Philadelphia and the country, the official told CNN.

    According to the White House, the pair “will discuss the progress we have made and their work implementing the Biden-Harris economic agenda that continues to deliver results for the American people.”

    Housing and Urban Development Secretary Marcia Fudge will also travel to Chicago to discuss progress made to address homelessness as a result of provisions within the American Rescue Plan, according to the official.

    While Biden has often embarked on domestic trips to highlight his policies in action, these stops have served as a significant messaging platform since Republicans took control of the House of Representatives this year.

    In a speech at a union hall in Virginia, Biden, for example, sought to contrast his economic policies with House Republicans’ effort in the debt limit standoff.

    He asked the crowd, “(Why) in God’s name would Americans give up the progress we’ve made for the chaos they’re suggesting?”

    “MAGA Republicans,” he added, “are literally choosing to inflict this pain on the American people.”

    Despite that heavy emphasis on his warnings about GOP plans, Biden this week is expected to hone in on his ability to work across the aisle to push legislation into law. Specifically, in a preview of the travel, White House press secretary Karine Jean-Pierre underscored Biden’s “success (in) bringing Republicans and independents and Democrats together to pass the Bipartisan Infrastructure Law.”

    In Baltimore on Monday, the president brought up his recent trip to Kentucky, where he stood alongside Senate Minority Leader Mitch McConnell to herald the implementation of the massive $1.2 trillion infrastructure bill that McConnell and 18 other Senate Republicans supported.

    The policy messaging trips also carry more weight as the prospect of a presidential reelection campaign looms large over the White House.

    Biden has been working intensively on his State of the Union Speech speech – including over the weekend – which his team views as a launching pad for the reelection bid. His speeches around the East Coast week will offer a preview of his message as he touts new infrastructure projects.

    Behind the scenes, aides are building up a campaign infrastructure and the West Wing is in the process of restructuring for a politically intense two years.

    Peppered in between stops to visit projects funded though the proposals which were the bedrock of his 2020 presidential campaign, Biden will participate in events that are part of an intense fundraising push ahead of the campaign announcement.

    The travel comes as Biden also contends with a number of simmering issues in Washington – House Republican probes, investigations into classified documents found at his residence and former office and the debt ceiling standoff. The US Treasury is already taking extraordinary measures to keep the government paying its bills after the US hit the debt ceiling set by Congress.

    While the president is in Washington on Wednesday in between travel stops, he’s scheduled to meet with House Speaker Kevin McCarthy.

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  • A 6th Memphis officer is off the force, and 3 fire department workers are fired as new details emerge from the deadly police beating of Tyre Nichols | CNN

    A 6th Memphis officer is off the force, and 3 fire department workers are fired as new details emerge from the deadly police beating of Tyre Nichols | CNN

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    Editor’s Note: This article contains graphic videos and descriptions of violence.



    CNN
     — 

    [Breaking news update, published at 5:55 p.m. ET]

    Three Memphis Fire Department personnel who responded to the Tyre Nichols beating have been fired, according to the department.

    [Previous story, published at 5:04 p.m. ET]

    Fallout from the deadly police beating of Tyre Nichols now includes a sixth Memphis officer removed from duties, demands for more criminal charges against officers and calls for nationwide police reform.

    Officer Preston Hemphill “was relieved of duty with the other officers” involved in the January 7 encounter with Nichols, Memphis police Maj. Karen Rudolph said Monday.

    Hemphill has actually been on administrative leave since the beginning of the investigation, Memphis police spokesperson Kimberly Elder told CNN. Elder declined to say whether Hemphill is being paid or whether any other officers were put on leave.

    Body cam footage reveals Hemphill fired a Taser at Nichols and saying, “One of them prongs hit the bastard.”

    Later, Hemphill says to another officer: “I hope they stomp his ass.”

    Five other Memphis officers have been fired and face charges of second-degree murder in connection with the beating death of Nichols.

    Hemphill has not been charged. “He was never present at the second scene” that escalated to the beating, and Hemphill has been cooperating with the investigation, his attorney Lee Gerald said.

    Attorneys for Nichols’ family wonder why authorities were quick to fire five Black police officers and charge them with murder – while staying relatively quiet about Hemphill role in the encounter.

    “The news today from Memphis officials that Officer Preston Hemphill was reportedly relieved of duty weeks ago, but not yet terminated or charged, is extremely disappointing. Why is his identity and the role he played in Tyre’s death just now coming to light?” attorneys Ben Crump and Antonio Romanucci said in a statement Monday.

    “It certainly begs the question why the White officer involved in this brutal attack was shielded and protected from the public eye.”

    But officials knew releasing video footage of Nichols’ beating without filing charges against officers could be “incendiary,” Shelby County District Attorney Steve Mulroy said Sunday. “The best solution was to expedite the investigation and to expedite the consideration of charges so that the charges could come first and then the release of the video,” he said.

    Video of the gruesome beating “outraged” the Memphis police chief. The footage showed “acts that defy humanity,” Chief Cerelyn “CJ” Davis said.

    The attack has fueled broader public scrutiny of how US police use force, especially against people of color. And weeks after Nichols’ death, many questions remain. Among them:

    • Whether more officers will face charges or other: Memphis City Council member Frank Colvett said he wanted to know why more officers at the scene of Nichols’ beating scene had not been disciplined or suspended.

    It’s also not clear whether Hemphill or others will face criminal charges. “We are looking at all of the officers and first responders at the scene,” Shelby County District Attorney’s Office spokesperson Erica Williams said Monday. “They could face charges, or they could not, but we are looking at everyone.”

    It was “unprecedented” for indictment charges against the officers to come within weeks, said Mulroy, the Shelby County district attorney.

    • How Memphis’ police chief will fare: While some have praised Chief Davis’ swift action in the case, she also created the controversial SCORPION unit that the charged officers were linked to. “There is a reckoning coming for the police department and for the leadership,” Colvett said. “She’s going to have to answer not just to the council but to the citizens – and really the world.”

    • What happens to fire and sheriff’s personnel: Two Memphis Fire Department employees who were part of Nichols’ initial care were relieved of duty, pending the outcome of an internal investigation.

    And two deputies with the Shelby County Sheriff’s Office have been put on leave pending an investigation.

    • If Nichols’ death spurs national-level police reform: The Congressional Black Caucus has asked for a meeting with President Joe Biden this week to push for negotiations on police reform.

    Video of the fatal encounter is difficult to watch. It starts with a traffic stop and later shows officers repeatedly beating Nichols with batons, punching him and kicking him – even as his hands are restrained behind his back at one point.

    Nichols is heard calling for his mother as he was kicked and pepper-sprayed.

    He was left slumped to the ground in handcuffs. Another 23 minutes passed before a stretcher arrived at the scene. Nichols was hospitalized and died three days later.

    “All of these officers failed their oath,” said Crump, one of the attorneys representing the Nichols family, “They failed their oath to protect and serve.”

    At the residential street corner where Nichols was beaten, mourners created a makeshift memorial. Across the country, protesters marched in cities including New York, Atlanta, Boston and Los Angeles.

    Nichols’ family remembered him as a good son and father who enjoyed skateboarding, photography and sunsets. They recalled his smile and hugs and mourned the moments they’ll never have again.

    Family members promised to “keep saying his name until justice is served.”

    Protesters gather Saturday in New York to denounce the police beating of Tyre Nichols in Memphis.

    The five fired officers charged in connection with Nichols’ beating – Tadarrius Bean, Demetrius Haley, Justin Smith, Emmitt Martin and Desmond Mills Jr. – are expected to be arraigned February 17.

    From top left: Emmitt Martin III, Desmond Mills, Demetrius Haley. From bottom left: Justin Smith and Tadarrius Bean.

    Mills Jr. didn’t cross lines “that others crossed” during the confrontation with Nichols and instead was a “victim” of the system he worked within, his attorney, Blake Ballin, told CNN.

    Martin’s attorney, William Massey, said “no one out there that night intended for Tyre Nichols to die.”

    Attorneys for the other former officers did not immediately respond to requests for comment.

    The Memphis Police Association declined to comment on the terminations beyond saying the city of Memphis and Nichols’ family “deserve to know the complete account of the events leading up to his death and what may have contributed to it,” the union said in a statement.

    The Shelby County district attorney’s office said each of the five fired officers face seven counts, including: second-degree murder, aggravated assault, aggravated kidnapping with bodily injury, aggravated kidnapping in possession of a deadly weapon, official misconduct and official oppression.

    But a second-degree murder charge – which requires intent to kill – might be harder to prove than a first-degree felony murder charge, said Alexis Hoag-Fordjour, assistant professor of law and co-director of the Center for Criminal Justice at Brooklyn Law School.

    “For first-degree felony murder, it means that a murder happened in conjunction with an underlying felony,” said Hoag-Fordjour, noting she practiced law in Tennessee.

    “Here, every single charge that the Memphis district attorney charged these five individuals with were felonies. And the underlying felony that would support a first-degree murder charge – felony murder – is kidnapping.”

    The kidnapping counts against officers may seem unusual because “we obviously deputize law enforcement officials to make seizures, to make arrests,” Hoag-Fordjour told “CNN This Morning” on Monday.

    “But at this point … what would have been legitimate behavior crossed the line into illegitimacy.”

    While first-degree felony murder might be easier to prove, Hoag-Fordjour said, second-degree murder convictions are still possible.

    Under Tennessee law, a person can be convicted of second-degree murder if they could be reasonably certain their actions would result in somebody’s death, Hoag-Fordjour said.

    And some of the blows dealt to Nichols – including kicks to the head and strikes with a baton while he was subdued on the ground – could be deemed deadly, she said.

    The five fired officers charged in Nichols’ beating were members of the now-scrapped SCORPION (Street Crimes Operation to Restore Peace in Our Neighborhoods) unit, Memphis police spokesperson Maj. Karen Rudolph said Saturday.

    Hemphill, the officer placed on administrative leave, was also a member of the SCORPION unit, a source familiar with his assignment confirmed to CNN.

    The unit, launched in 2021, put officers into areas where police were tracking upticks in violent crime.

    “That reprehensible conduct we saw in that video, we think this was part of the culture of the SCORPION unit,” Crump said.

    “We demanded that they disbanded immediately before we see anything like this happen again,” he said. “It was the culture that was just as guilty for killing Tyre Nichols as those officers.”

    Memphis police will permanently deactivate the unit. “While the heinous actions of a few casts a cloud of dishonor on the title SCORPION, it is imperative that we, the Memphis Police Department take proactive steps in the healing process for all impacted,” the department said.

    Colvett supported the dismantling of the SCORPION unit.

    “I think the smart move and the mayor is correct in shutting it down,” the council member said. “These kinds of actions are not representative of the Memphis Police Department.”

    The case should give the city a chance to “dig deeper” into community and police relations, City Council member Michalyn Easter-Thomas said.

    “We saw a very peaceful and direct sense of protest in the city of Memphis, and I think it’s because maybe we do have faith and hope that the system is going to get it right this time,” Easter-Thomas said.

    Crump called on Congress to pass the George Floyd Justice in Policing Act, which passed the Democratic-controlled House in 2021 but t.

    “The brutal beating of Tyre Nichols was murder and is a grim reminder that we still have a long way to go in solving systemic police violence in America,” Congressional Black Caucus chair Rep. Steven Horsford said Sunday in a statement.

    The Tennessee State Conference NAACP president applauded Davis for “doing the right thing” by not waiting six months to a year to fire the officers who beat Tyre Nichols.

    But she had had harsher words for Congress: “By failing to craft and pass bills to stop police brutality, you’re writing another Black man’s obituary,” said Gloria Sweet-Love. “The blood of Black America is on your hands. So, stand up and do something.”

    On the state level, two Democratic lawmakers said they intend to file police reform legislation ahead of the general assembly’s Tuesday filing deadline.

    The bills would seek to address mental health care for law enforcement officers, hiring, training, discipline practices and other topics, said Tennessee state Rep. G.A. Hardaway, who represents a part of Memphis and Shelby County.

    While Democrats hold the minority, with 24 representatives compared to 99 GOP representatives, this legislation is not partisan and should pass on both sides of the legislature, Rep. Joe Towns Jr. said.

    “You would be hard-pressed to look at this footage (of Tyre Nichols) and see what happened to that young man, OK, and not want to do something,” he said. “If a dog in this county was beaten like that, what the hell would happen?”

    Correction: An earlier version of this story had the wrong first name for Tyre Nichols.

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  • First on CNN: Biden administration to strengthen Obamacare contraceptive mandate in proposed rule | CNN Politics

    First on CNN: Biden administration to strengthen Obamacare contraceptive mandate in proposed rule | CNN Politics

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    CNN
     — 

    The Biden administration wants to make it easier for women to access birth control at no cost under the Affordable Care Act, reversing Trump-era rules that weakened the law’s contraceptive mandate for employer-provided health insurance plans.

    The proposed rule, unveiled Monday by the departments of Health and Human Services, Labor and Treasury, would remove an exemption to the mandate that allows employers to opt out for moral convictions. It would also create an independent pathway for individuals enrolled in plans offered by employers with religious exemptions to access contraceptive services through a willing provider without charge.

    The proposed rule would leave in place the existing religious exemption for employers with objections, as well as the optional accommodation for contraceptive coverage.

    The administration crafted the proposed rule keeping in mind the concerns of employers with religious objections and the contraceptive needs of their workers, a senior HHS official told CNN.

    “We had to really think through how to do this in the right way to satisfy both sides, but we think we found that way,” the official said, stressing that there should be no effect on religiously affiliated employers.

    Students at religiously affiliated colleges would have access to the expanded accommodation, just like workers in group health plans where the employer has claimed the exemption.

    Now that the proposed rule has been announced, the public will have the opportunity to comment during the next few months. Officials expect there to be many thousands of public comments, and it will be “many months” before the rule could be finalized.

    HHS expects the proposal would affect more than 100 employers and 125,000 workers, mainly through providing the proposed independent pathway for employees to receive no-cost contraception.

    Women using that pathway would obtain their birth control from a participating provider, who would be reimbursed by an insurer on the Affordable Care Act exchanges. The insurer, in turn, would receive a credit on the user fee it pays the government.

    “If this rule is finalized, individuals who have health plans that would otherwise be subject to the ACA preventive services requirements but have not covered contraceptive services because of a moral or religious objection, and for which the sponsoring employer or college or university has not elected the optional accommodation, would now have access,” Centers for Medicare and Medicaid Services Administrator Chiquita Brooks-LaSure said in a news release.

    How many people benefit, however, would depend on whether women and their health care providers know the independent pathway exists and whether providers and insurers are willing to set it up.

    “We’ll just have to see how widely that information is spread and in what way to providers and individuals,” said Laurie Sobel, associate director for Women’s Health Policy at the Kaiser Family Foundation, noting that the proposed rule would not require data collection to show the pathway’s takeup.

    But the Planned Parenthood Federation of America cheered the initiative.

    “Employers and universities should not be able to dictate personal health care decisions and impose their views on their employees or students,” said Alexis McGill Johnson, the group’s CEO. “The ACA mandates that health insurance plans cover all forms of birth control without out-of-pocket costs. Now, more than ever, we must protect this fundamental freedom.”

    The requirement to provide no-cost contraception is not in the Affordable Care Act itself. Instead, HHS under former President Barack Obama included it as one of the women’s preventive services that all private insurance plans must offer without charge.

    The mandate was controversial from the start, sparking lawsuits from religiously affiliated employers and closely held companies that said it violated their beliefs. Exemptions and accommodations have been available for such employers.

    The Trump administration, however, weakened the mandate. Under the rules issued in 2018, entities that have “sincerely held religious beliefs” against providing contraceptives are not required to do so. That provision also extends to organizations and small businesses that have objections “on the basis of moral conviction which is not based in any particular religious belief.”

    The rules also include an optional accommodation that lets objecting employers and private universities remove themselves from providing birth control coverage while still allowing their workers and dependents access to contraception. But the employer or university has to voluntarily elect the accommodation, which risks leaving many without access.

    The Trump administration changes were temporarily blocked after a Pennsylvania district court judge issued a nationwide injunction in 2019. But the following year, the Supreme Court ruled that the administration could expand exemptions for employers who have religious or moral objections to covering contraception.

    At the time, the National Women’s Law Center estimated that the ruling would impact about 64.3 million women in the United States with insurance coverage that included birth control and other preventive services without out-of-pocket costs.

    Employers are not required to notify HHS if they have a moral objection. The agency estimates about 18 employers have claimed that exemption and around 15 employees are affected.

    Still, if the rule is finalized, senior HHS officials say it is “plausible” there could be potential lawsuits brought by religiously affiliated employers – similar to what has been seen in the past.

    “There’s no new obligation on them to participate in any sort of process. This is simply an additional channel for employees in those employer health plans to receive access to contraceptive services,” another senior HHS official said.

    The contraceptive mandate has taken on increased importance now that the Supreme Court has overturned Roe v. Wade, allowing many states to impose severe restrictions on abortion access.

    The Biden administration in turn has focused on continuing access to birth control at no cost. The Health, Labor and Treasury department secretaries last year met with health insurers and issued guidance underscoring Obamacare’s contraceptive coverage requirements for private insurance under the Affordable Care Act.

    “Now more than ever, access to and coverage of birth control is critical as the Biden-Harris Administration works to help ensure women everywhere can get the contraception they need, when they need it, and – thanks to the ACA – with no out-of-pocket cost,” HHS Secretary Xavier Becerra said in a news release.

    This story has been updated with additional information.

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  • New year, new voters in Fed policymaking | CNN Business

    New year, new voters in Fed policymaking | CNN Business

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    Minneapolis
    CNN
     — 

    Every year the Federal Reserve’s policymaking committee — aka the officials who decide interest rate moves — gets a slight refresh, with four of the district presidents rotating out as official voting members and four rotating in.

    The 2023 rotation brings a more dovish-leaning flock, and it comes during a critical year for the US central bank and the American economy.

    This year the Federal Open Market Committee’s new voting members include the newest district president Austan Goolsbee, head of the Chicago Fed; Patrick Harker, of the Philadelphia Fed; Lorie Logan, the Dallas Fed president who started in August 2022; and Neel Kashkari, president of the Minneapolis Fed.

    Rotating out as voting members are James Bullard of the St. Louis Fed; Susan Collins of the Boston Fed; Esther George, the Kansas City Fed chief who’s also retiring this month; and Loretta Mester of the Cleveland Fed.

    On the whole the FOMC contingent remains largely similar, with eight of the 12 voting members continuing from 2022. The non-voting members still lend their voices and perspectives to the proceedings.

    Following a stretch of seven consecutive heavy-handed interest rate hikes last year to battle rising prices, the Fed this year is expected to take a more delicate approach to its blunt monetary policy tools by downshifting on rate increases to an eventual idle.

    For new Fed members, be they governors or district presidents, it can take a while to stake out their territory and potentially differ from consensus, said Ellen Meade, a Duke University economics professor who had a 25-year career at the Fed.

    History has shown that the Reserve bank presidents typically tend to dissent more than board members; however, even that is a small percentage — about 7% — of votes cast, she added.

    “I’m not expecting that we will see a lot of dissent in terms of votes,” she said. “I think where we might see it is how they color the data that they’re seeing.”

    “Hawks” and “doves” are commonly used terms to describe Fed members’ differing monetary policy approaches. Doves tend to favor looser monetary policy and issues like low unemployment over low inflation. Hawks, however, favor robust rate hikes and keeping inflation low above all else.

    “If I had to qualify them as the hawkish- or dovish-leaning, I would say that last year’s constellation was a reasonably hawkish one, and this year’s constellation is almost certainly not quite as hawkish,” Meade said.

    That could change, however, if Federal Reserve Vice Chair Lael Brainard leaves to head President Joe Biden’s economic council. Brainard has been considered as leaning more dovish than Powell and others, so her departure could result in a more hawkish shift in ideology at the top of the Fed.

    U.S. Federal Reserve Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on December 14, 2022, in Washington, DC.

    This particular Fed is obviously not quite as well known, Meade noted, adding that “because we have some new policymakers voting in 2023, we don’t have as much information on their policy inclinations as we did for last year’s voters.”

    For any potential split to occur would take some large moves in labor market outcomes – something not seen to this point, Meade said.

    “If [moderating inflation] holds up and the labor market softens but doesn’t take a very negative turn, then I think consensus is with us,” she said. “I think the question is what happens if the labor market starts to turn quickly?”

    The Fed has indicated, through its economic projections, that it would tolerate unemployment rising to the 4.5% to 4.75% range. But if that grows closer or past 5% and inflation hasn’t moderated as much as desired, “then I think we’re in a place where we’re going to see more signs of disagreement.”

    As it stands now, Fed officials have largely been singing from the same songbook, said Claudia Sahm, a former Fed economist and founder of Sahm Consulting.

    “Whether it was voting members or non-voting members, you didn’t see a lot of pushback in public,” she said. “There was really a unified force of ‘we’re going to go big, and we’re going to go fast.’”

    That unified messaging continued during recent speeches on how the Fed would slow it down, be patient and stay the course, Sahm added.

    “The Fed is being very clear across the board, even people you would think of as more ‘dovish,’ that they do not want to let up too soon and get us into a situation where then they have to come back and do even more,” she said. “I don’t think that switching up who’s voting will matter much.”

    “They’re all hawks now,” Sahm added.

    The Fed also does not want to be in a position where it is lulled into a false sense of security by positive inflation data, she added. Fed Governor Christopher Waller put it bluntly in a speech last week: “We do not want to be head-faked.”

    “It’s going to take months and months of good news, and frankly, we’re in store for a bumpy ride this year,” Sahm said. “It’s not like every month is going to be good news on inflation.”

    Patrick Harker, Philadelphia Fed president and CEO, new 2023 FOMC voting member

    Austan Goolsbee, Chicago Fed president and CEO, new FOMC voting member for 2023

    Lorie Logan, Federal Reserve Bank of Dallas president and CEO, and new voting member for 2023.

    Neel Kashkari, Minneapolis Fed president and CEO, and new FOMC voting member for 2023

    2023 Federal Open Market Committee

    Permanent voting members (Board of Governors):

    Jerome Powell, chair

    Lael Brainard, vice chair

    Michael Barr, vice chair for supervision

    Michelle Bowman, governor

    Lisa Cook, governor

    Philip Jefferson, governor

    Christopher Waller, governor

    Voting Districts:

    John Williams, New York (permanent voting district)

    *Austan Goolsbee, Chicago

    *Patrick Harker, Philadelphia

    *Lorie Logan, Dallas

    *Neel Kashkari, Minneapolis

    Non-voting districts:

    Helen Mucciolo, interim first vice president, New York

    Loretta Mester, Cleveland

    Thomas Barkin, Richmond

    Raphael Bostic, Atlanta

    Mary Daly, San Francisco

    James Bullard, St. Louis

    Esther George, Kansas City (plans to retire this month)

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  • CEO pay cuts could be just the start | CNN Business

    CEO pay cuts could be just the start | CNN Business

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    New York
    CNN Business
     — 

    Corporate boards are slashing the pay of some leading CEOs in a new trend that could just be getting started.

    The pay cuts are hitting some of America’s best-known and highest-paid bosses, including Apple CEO Tim Cook, Morgan Stanley CEO James Gorman and Goldman Sachs CEO David Solomon.

    The moves follow a dreadful year in the stock market – 2022 was the S&P 500’s worst year since 2008 – and come as a growing number of corporations lay off rank-and-file workers to brace for a potential recession.

    For example, Goldman Sachs laid off 3,200 employees earlier this month amid a downturn in Wall Street dealmaking. The bank then disclosed on Friday that Solomon’s 2022 pay is being cut by nearly 30%. Goldman Sachs’ profit dropped 49% last year as the slowdown in dealmaking curbed advisory fees.

    “This is a show of solidarity. CEOs need to share the pain,” said Nell Minow, vice chair of ValueEdge Advisors, which advises institutional investors on corporate governance matters.

    A similar pay cut could be coming for Sundar Pichai, the CEO of Google parent Alphabet

    (GOOGL)    .

    After Alphabet announced 12,000 job cuts this month, Pichai told employees that top executives would take a “very significant” pay cut, Business Insider reported. Google did not respond to a request for comment.

    But don’t feel too badly for these top execs. They’re still raking in serious cash and stock awards, just not quite as much as in the past.

    Apple, for example, said it is cutting the target pay package of Cook by 40%. But that still leaves him with a massive $49 million in total compensation.

    “They are still overpaid. Let me super clear about that,” said Minow.

    Among the 500 largest public companies by revenue, the median CEO made $14.2 million in fiscal 2021, up 18.9% from the year before, according to the latest research from Equilar.

    Tech bosses have received the biggest pay hikes, with the median CEO pay surging by 42.1% in 2021 to $19.1 million, Equilar said.

    Earlier this month, Morgan Stanley announced Gorman made $31.5 million in total compensation for 2022, down 10% from the year before. The Wall Street bank said its compensation committee took into consideration the fact that “in a challenging economic and market environment firm performance for 2022 was not as strong as the prior year” when it enjoyed record results.

    Minow is relieved that some boards are imposing pain on CEOs.

    “That’s exactly the way pay is supposed to work,” Minow said. “The problem with pay traditionally is it’s been all upside and no downside. CEOs would often get all the credit and money for good times and then blame El Nino or some extraneous force for the downside. Now they are being forced to accept more responsibility.”

    Of course, some of that responsibility is coming because the rules have changed.

    After the 2010 Dodd-Frank law, regulators have required public companies to give shareholders a voice on compensation issues. So-called “Say on Pay” votes are advisory, meaning companies can still go forward even if 100% of shareholders vote no. Still, having shareholders reject pay packages is an embarrassment companies try to avoid.

    Last year, JPMorgan Chase suffered a blow when its shareholders voted down a massive $52.6 million retention bonus that was planned for CEO Jamie Dimon.

    This month, JPMorgan announced Dimon’s pay will be unchanged at $34.5 million – even though wages are rising for average workers. The bank also said it decided not to give Dimon a special award for the year.

    That means Dimon’s pay isn’t budging even as wages go up for many employees.

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  • Union members are poised to reject Disney World contract offer | CNN Business

    Union members are poised to reject Disney World contract offer | CNN Business

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    New York
    CNN
     — 

    Jonathan Pulliam has been working at Disney World since 2018, dressing up as everything from beloved Disney cartoon characters to Star Wars villains. And while he loves his job, he says he can’t afford it any longer.

    “Me loving it, that’s not enough to pay the bills,” he said about his $15.85-an-hour salary that usually earns him about $550 a week. With rent for a typical apartment in the Orlando area costing about $1,800 per month according to Realtor.com, he says he couldn’t get by if he wasn’t living with his sister.

    “I’d probably be living in my car. I know several who are living in cars because they can’t afford to pay rent,” said the Kansas native, who remembers annual childhood trips to Disney World with his family. “It’s a tourist area. Everything’s expensive.”

    On Thursday and Friday, about 32,000 Disney employees will be voting on a contract offer from management. These workers do everything from performing as characters to working in restaurants and shops, driving buses, trams and monorails as well as working at front desks and performing housekeeping duties at hotels.

    Those working under this contract, all of them full-time employees, represent more than 40% of all workers at Disney World. Currently, the park has 75,000 cast members, as the company refers to its employees, including full-time and part-time, hourly and salaried staff. It is comparable to Disney World’s pre-pandemic employment levels.

    The company’s five-year offer would raise salaries for cast members by a minimum of $1 an hour per year, taking most workers to at least $20 an hour by 2026. That would be $5 an hour more than the Florida minimum wage, which is in the process of being increased from the current $11 an hour to $15 an hour by 2026. The company said 46% of cast members will get more than a $1-an-hour raise in the contract’s first year.

    This is a “very strong offer” with guaranteed raises each year of the five-year agreement, said Andrea Finger, a Disney spokesperson. She said the majority of employees will see raises totaling 33% to 46% during the life of the contract.

    The company’s offer would pay housekeepers and bus drivers at least $20 an hour immediately and culinary staff would start at $20 to $25 per hour, depending on their role.

    There will also be retroactive pay increases dating back to October 1, when the previous contract expired, providing lump-sum pre-tax payments of about $700 to full-time workers.

    But union leadership is urging members to vote no. The unions say Disney presented this as its best offer and that is why it’s going to membership for a vote – not because there is a tentative agreement, which is the point at which an offer normally goes to rank-and-file union members for a vote.

    And this time around, all indications are that the company’s offer will be rejected.

    The six union locals working under the current contract want an immediate $3 an hour raise, or a 20% raise, for what it says is 75% of the members currently making $15 an hour, plus an additional $1 an hour raise every year after that.

    “The unions have been clear from our very first bargaining session that a dollar in the first year is not enough,” said Matt Hollis, president of the Service Trades Council Union, the collection of six union locals that are negotiating with Disney management. “A dollar does not afford Disney workers with the ability to keep up with the skyrocketing rent increases. And a dollar does not afford Disney workers with the ability to continue to purchase basic necessities, such as food, gas and utilities.”

    Pulliam, the character performer who says he can’t afford a dollar-an-hour raise, lives about an hour’s drive from the theme park, and says he’ll be voting no because he can’t get by with the wages being offered.

    “I’m filling my car three times a week,” he said. “I would love to ask these execs if they could get by on $1 an hour more. It’s disheartening. They don’t have to decide [whether]...to eat or get gas.”

    Pulliam said he’s angered by recent news reports about fired former Disney executives who left the company with huge pay packages, such as ex-Disney CEO Bob Chapek, who received a $20 million severance package when he was fired by the board in November, or Geoff Morrell, who received $10.3 million for his three months overseeing corporate and public affairs, or more than $100,000 a day.

    Negotiations on a new union contract have been ongoing since August. Despite widespread expectations that unions’ rank-and-file will reject this offer, no strike deadline or strike authorization vote has been scheduled.

    Union leadership said they hope that Disney will return to the table with a better offer once union members reject this one. Disney doesn’t rule out further negotiations, saying that after no votes on contracts there typically are additional rounds of talks.

    “While Disney insists at the bargaining table that this is the best offer, we know Disney can do better, and Disney knows they must do better,” said Hollis. He said the workers who would get more than a $1 an hour pay increase are in jobs where Disney is having trouble filling openings and retaining workers.

    Unions have represented workers at Disney World since soon after the park’s 1971 opening, but employees have never gone on strike. Disney reported that its parks, experiences and products unit, which includes Disney World and other park locations worldwide, had revenue of $7.4 billion and operating income of $1.5 billion in fiscal year 2022, which ran through October 1. (The first six months of that fiscal year were affected by surging Covid cases.)

    Revenue was up 36% and profits more than doubled from the previous fiscal year. And both revenue and operating profits are above what the company posted in fiscal year 2019, before the pandemic, with a 12% rise in revenue and a 10% gain in earnings.

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  • Jobs report to give further clues about where economy is headed | CNN Business

    Jobs report to give further clues about where economy is headed | 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.


    New York
    CNN
     — 

    The Federal Reserve is going to raise interest rates again on Wednesday. But will it be another half-point hike or just a quarter-point increase? And what about the rest of the year?

    The Fed’s actions beyond this week’s meeting will depend primarily on whether inflation is truly slowing. Investors will get another clue when the January jobs report is released on Friday.

    Economists predict that 185,000 jobs were added last month, a slowdown from the gain of 223,000 jobs in December and 263,000 in November. A further deceleration in the labor market would likely please the Fed, as it would show that last year’s rate hikes are successfully taking some air out of the economy.

    The Fed knows it’s in a tough situation. Inflation pressures are partly fueled by wage gains for workers. In an environment where the unemployment rate is at a half-century low of 3.5%, employees have been able to command big increases in pay to keep up with rising prices of consumer goods and services.

    Along those lines, average hourly earnings, a measure of wages that is also part of the monthly jobs report, are expected to increase 4.3% year-over year. That’s down from 4.6% in December and 5.1% in November.

    As wage growth cools, so do price increases. The Fed’s favorite measure of inflation – the Personal Consumption Price Index or PCE – rose “just” 5% over the past 12 months through last December, compared to a 5.5% annual increase in November.

    That is still uncomfortably high, but the trend is moving in the right direction.

    The problem for the Fed, though, is that it may need to keep raising interest rates until there is further evidence that the labor market is cooling off enough to push the rate of inflation even lower.

    Several other job market indicators continue to show that the US economy is in no serious danger of a recession just yet. The number of people filing for weekly jobless claims dipped last week to 186,000, a nine-month low. Investors will get the latest weekly initial claims numbers on Thursday.

    The market will also be closely watching reports about private-sector job growth from payroll processor ADP and the Job Openings and Labor Turnover Survey (JOLTS) from the Department of Labor this week. The last JOLTS report showed that more jobs were available than expected in November.

    Still, some expect that wage growth should continue to fall, which should take pressure off the Fed somewhat.

    “Wage growth has been on a slowing trajectory, and we suspect that softer wage growth will be a trend in 2023 as jobs available contract,” said Tony Welch, chief investment officer at SignatureFD, a wealth management firm, in a report.

    Not everyone agrees with that assessment. Organized labor has been winning bigger pay increases lately in the transportation industry. And more workers at tech and retail giants have been unionizing as of late.

    “Workers will be loath to relinquish the bargaining power they perceive to have gained over the past year,” said Jason Vaillancourt, global macro strategist at Putnam, in a report.

    Vaillancourt also pointed out that many consumers are still flush with cash that they saved up during the early stages of the pandemic. That could mean that inflation isn’t going away anytime soon.

    And even though the pace of jobs gains may be slowing, it’s not as if economists are starting to predict monthly job losses like the US has had in previous recessions.

    “Combine a strong labor market with a still substantial reserve of excess savings, and you have all the components in place to keep the Fed up at night,” Vaillancourt said.

    So as long as hopes for an economic “soft landing” persist, the Fed will have to keep worrying that inflation is too high. That increases the chances the Fed could go too far with rate hikes and ultimately lead to a recession.

    Wall Street is clearly buying into the “soft landing” argument. Just look at how well tech stocks have done so far this year, despite a series of high-profile layoff announcements from top Silicon Valley companies in the past few months.

    The Nasdaq is up 11% so far in January, putting it on track for its best monthly performance since July.

    Some argue that more tech layoffs won’t be a problem. Investors seem to be (somewhat perversely) taking the view that companies cutting costs is a good thing for profits and that revenue likely won’t be impacted in a negative way because consumers are still spending.

    “A theme that can’t go unnoticed this month is how traders are rewarding firms for cutting jobs. With corporate layoffs making headlines each evening, you might think the consumer is strained. Maybe not so much. It turns out that demand is decent,” said Frank Newman, portfolio manager at Ally Invest, in a report.

    But a continuation of the Nasdaq’s surge may depend a lot on how well a quartet of tech leaders do when they report fourth quarter earnings next week: Facebook and Instagram owner Meta Platforms, Apple

    (AAPL)    , Google owner Alphabet

    (GOOGL)     and Amazon

    (AMZN)    .

    “A set of much weaker-than-expected reports from these firms could dent the market’s strong start to 2023,” said Daniel Berkowitz, senior investment officer for investment manager Prudent Management Associates, in a report.

    So far, tech earnings season is not off to an inspiring start, with Microsoft

    (MSFT)    , Intel

    (INTC)     and IBM

    (IBM)     all reporting weak results. But it’s important to note that that trio is part of the “old tech” guard while Apple, Amazon, Alphabet and Meta all have more rapidly growing businesses.

    Tesla

    (TSLA)     reported strong results last week, which could be a sign of good things to come from other more dynamic tech companies.

    Monday: IMF releases world outlook; earnings from Philips

    (PHG)    , GE Healthcare, Franklin Resources

    (BEN)    , SoFi, Ryanair

    (RYAAY)    , Whirlpool

    (WHR)     and Principal Financial

    (PFG)

    Tuesday: China official PMI; Europe GDP; US employment cost index; US consumer confidence; earnings from Exxon Mobil

    (XOM)    , Samsung

    (SSNLF)    , GM

    (GM)    , Phillips 66

    (PSX)    , Marathon Petroleum

    (MPC)    , UPS

    (UPS)    , Pfizer

    (PFE)    , Sysco

    (SYY)    , Caterpillar

    (CAT)    , UBS

    (UBS)    , McDonald’s

    (MCD)    , Spotify

    (SPOT)    , Mondelez

    (MDLZ)    , Amgen

    (AMGN)    , AMD

    (AMD)    , Electronic Arts

    (EA)    , Snap

    (SNAP)     and Match

    (MTCH)

    Wednesday: Fed meeting; US ADP private sector jobs; US JOLTS; China Caixin PMI; Europe inflation; earnings from AmerisourceBergen

    (ABC)    , Humana

    (HUM)    , T-Mobile

    (TMUS)    , Novartis

    (NVS)    , Altria

    (MO)    , Peloton

    (PTON)    , Meta Platforms, McKesson

    (MCK)    , MetLife

    (MET)     and AllState

    (ALL)

    Thursday: US weekly jobless claims; US productivity; BOE meeting; ECB meting; Germany trade data; earnings from Cardinal Health

    (CAH)    , ConocoPhillips

    (COP)    , Merck

    (MRK)    , Bristol-Myers

    (BMY)    , Honeywell

    (HON)    , Eli Lilly

    (LLY)    , Stanley Black & Decker

    (SWK)    , Hershey

    (HSY)    , Sirius XM

    (SIRI)    , Penn Entertainment

    (PENN)    , Ferrari

    (RACE)    , Harley-Davidso

    (HOG)    n, Apple, Amazon, Alphabet, Ford

    (F)    , Qualcomm

    (QCOM)    , Starbucks

    (SBUX)    , Gilead Sciences

    (GILD)    , Hartford Financial

    (HIG)    , Clorox

    (CLX)     and WWE

    (WWE)

    Friday: US jobs report; US ISM non-manufacturing (services) index; earnings from Cigna

    (CI)    , Sanofi

    (SNY)    , LyondellBasell

    (LYB)     and Regeneron

    (REGN)

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  • Madison Square Garden CEO doubles down on use of facial recognition tech | CNN Business

    Madison Square Garden CEO doubles down on use of facial recognition tech | CNN Business

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    CNN
     — 

    The chief executive of the Madison Square Garden Entertainment Corporation has doubled down on using facial recognition at its venues to bar lawyers suing the group from attending events.

    Speaking to Fox 5 on Thursday, MSG Executive Chairman and CEO James Dolan said Madison Square Garden is a private company and therefore entitled to determine who is allowed to enter its venues for events.

    “At Madison Square Garden, if you’re suing us, we’re just asking of you – please don’t come until you’re done with your argument with us,” he said. “And yes, we’re using facial recognition to enforce that.”

    His comments come after New York Attorney General Letitia James on Wednesday sent a letter to MSG Entertainment requesting information regarding its use of facial recognition technology to prohibit legitimate ticketholders from entering venues. The letter said the attorney general’s office has reviewed reports MSG Entertainment has used facial recognition to identify and deny entry to multiple lawyers affiliated with law firms involved in ongoing litigation with the company. The letter indicates thousands of attorneys from around 90 law firms may have been impacted by the policy, and said the ban includes those holding season tickets.

    The attorney general’s letter raised the concern that banning individuals from accessing venues over ongoing litigation may violate local, state, and federal human rights laws, including laws prohibiting retaliation. The letter also questions whether the facial recognition software used by MSG Entertainment is reliable and what safeguards are in place to avoid bias and discrimination.

    In a press release, James said, “MSG Entertainment cannot fight their legal battles in their own arenas. Madison Square Garden and Radio City Music Hall are world-renowned venues and should treat all patrons who purchased tickets with fairness and respect. Anyone with a ticket to an event should not be concerned that they may be wrongfully denied entry based on their appearance, and we’re urging MSG Entertainment to reverse this policy.”

    MSG Entertainment owns and operates several venues in New York, including Madison Square Garden, Radio City Music Hall, the Hulu Theater, and the Beacon Theatre. Madison Square Garden is the home of the New York Knicks, Rangers, professional boxing, and college basketball teams.

    In a statement Thursday, an MSG spokesperson told CNN, “To be clear, our policy does not unlawfully prohibit anyone from entering our venues and it is not our intent to dissuade attorneys from representing plaintiffs in litigation against us. We are merely excluding a small percentage of lawyers only during active litigation.”

    “Most importantly,” the spokesperson added, “to even suggest anyone is being excluded based on the protected classes identified in state and federal civil rights laws is ludicrous. Our policy has never applied to attorneys representing plaintiffs who allege sexual harassment or employment discrimination.”

    In the Fox 5 interview Thursday, Dolan said when the attorneys suing MSG finish their litigation, they will be welcome back to the venues. “If your next door neighbor sues you, if somebody sues you, right, that’s confrontational. It’s adversarial and it’s fine, people are allowed to sue,” he said. “But at the same time, if you’re being sued, right, you don’t have to welcome the person into your home, right?”

    Dolan defended the use of facial recognition technology, saying it’s useful for security and noting that he believes Madison Square Garden to be one of the safest venues in the country. “Basically, anytime that you go out in public, you’re on camera,” he said. “Believe me, you walk down the street, you’re on camera, you’re on 10 cameras. What facial recognition does is looks at, you know, recognizes your face, and says you know, are you someone who’s on this list.”

    Dolan claimed the State Liquor Authority has threatened MSG’s license over its use of facial recognition technology. The New York State Liquor Authority told CNN it issued a “letter of advice” to MSG, after receiving a complaint in mid-November over attorneys engaged in litigation against the company not being allowed to enter its premises.

    “After receiving a complaint, the State Liquor Authority followed standard procedure and issued a Letter of Advice explaining this business’ obligation to keep their premises open to the public, as required by the Alcoholic Beverage Control Law,” Joshua Heller, a State Liquor Authority spokesperson, told CNN.

    The SLA told CNN an investigation into the matter is “ongoing”.

    During the Fox interview, Dolan apparently threatened to shut down sales of liquor during an unspecified upcoming New York Rangers game, and said he would direct any upset patrons to the liquor authority to complain.

    Dolan also pushed back at the suggestion that he’s being “too sensitive.”

    “The Garden has to defend itself,” Dolan said. “If you sue us, right, you know we’re going to tell you not to come.”

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  • First responder on scene testifies he did not see ‘visible tears’ from Alex Murdaugh after his wife and son were found dead | CNN

    First responder on scene testifies he did not see ‘visible tears’ from Alex Murdaugh after his wife and son were found dead | CNN

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    CNN
     — 

    The first law enforcement official to respond to the scene where Alex Murdaugh’s wife and son were found killed testified Thursday that one of the first things Murdaugh mentioned after the sergeant from the Colleton County Sheriff’s Office arrived was a boating accident involving his son years ago.

    Murdaugh, a now disbarred attorney and member of a prominent legal family, is on trial in Walterboro, South Carolina, for the murders of his wife Margaret (known as Maggie) and his son Paul, who was 22 at the time of the June 7, 2021, crime.

    “This is a long story. My son was in a boat wreck months back, he’s been getting threats, most of them benign stuff we didn’t take serious,” Murdaugh can be heard saying on body camera footage played in court. “I know that’s what it is.”

    Murdaugh’s son Paul was allegedly the driver of the boat that wrecked in February 2019, killing 19-year-old Mallory Beach. At the time of his death, Paul Murdaugh was facing charges of boating under the influence, causing great bodily harm and causing death. He pleaded not guilty, and court records show the charges were dropped after his death.

    Sgt. Daniel Greene of the Colleton County Sheriff’s Office testified that Murdaugh offered this information right away, and he had not asked Murdaugh about it.

    Murdaugh has pleaded not guilty to the murder charges.

    Murdaugh was at the scene when Greene arrived, and although Murdaugh appeared to be upset, “I didn’t see any visible tears,” Greene testified.

    Murdaugh was visibily upset in court, though, when footage from Greene’s body camera was shown to the jury, at one point wiping his eyes.

    The jury also heard the 911 call Murdaugh placed to report that he had found his wife and son shot and on the ground near his kennel on the family’s property.

    “I can tell he’s shot in the head, and he’s shot really bad,” Murdaugh, speaking of his son, can be heard saying on the recording.

    Asked if they had shot themselves, he replied: “Oh no, Hell no!”

    In his cross examination of Greene, Murdaugh’s defense attorney Dick Harpootlian sought to cast doubt on the procedures taken by the first law enforcement responders to preserve the integrity of the evidence on scene.

    Vehicle tracks weren’t secured “in any way,” Harpootlian said, adding that any tracks that were there were driven over by “multiple vehicles, law enforcement vehicles.”

    Harpootlian asked Greene about where he and members of his agency were standing and walking, a spot he suggested was “on top of an area where shots have been fired.”

    Prosecutors accuse Murdaugh of committing the murders to distract attention from a series of alleged illicit schemes he was running to stave off “personal legal and financial ruin,” according to court filings. Evidence will show, the state claims, that Murdaugh’s alleged financial crimes were “about to come to light” when his wife and son were killed.

    Murdaugh faces 99 charges stemming from 19 grand jury indictments for various crimes, according to the state attorney general’s office, including allegedly defrauding his clients and former law firm of nearly $9 million. Just last month, the AG’s office announced Murdaugh had been indicted for tax evasion for failing to report almost $7 million of income earned through illegal acts, for which he allegedly owes the state almost $500,000.

    “You’re gonna hear some of what was going on in Alex Murdaugh’s life, leading up to that day – stuff that happened that very day, stuff that was leading up to a perfect storm that was gathering,” lead prosecutor Creighton Waters said in his opening statement Wednesday, after two days of jury selection ended with 12 trial jurors and six alternatives being seated.

    The prosecution’s opening statements were just “theories” and conjecture, Harpootlian said.

    Not a single witness will tell the jury that Murdaugh and Maggie’s relationship was anything but loving, Harpootlian said. Paul, he said, was the “apple of his (father’s) eye,” as exhibited by a Snapchat video the jury will see from the night of the killings, showing the father and son laughing and bonding over trees they planted.

    “To find Alex Murdaugh guilty of murdering his son, you’re going to have to accept that within an hour” of bonding, “that he executes him in a brutal fashion,” Harpootlian said. “Not believable.”

    The prominence of the Murdaugh family name overshadows the trial: Three generations of Murdaughs have served over 87 years as solicitor for the 14th Circuit, which oversaw prosecutions throughout the South Carolina Lowcountry. Podcasts and documentaries have been made about the family and the murders.

    The office of South Carolina Attorney General Alan Wilson is prosecuting the case due to the family’s close ties to the local solicitor’s office.

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  • Opinion: The rare bipartisan opportunity House Republicans should take advantage of | CNN

    Opinion: The rare bipartisan opportunity House Republicans should take advantage of | CNN

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    Editor’s Note: Patrick T. Brown is a fellow at the Ethics and Public Policy Center, a conservative think tank and advocacy group based in Washington, DC. He is also a former senior policy adviser to Congress’ Joint Economic Committee. Follow him on Twitter. The views expressed in this piece are his own. View more opinion on CNN.



    CNN
     — 

    With only a thin and fractious majority in the House, the GOP is facing two years of struggling to set any kind of positive agenda. But one thing every elected Republican would agree on is the need to scrutinize the Biden administration.

    Courtesy Patrick T. Brown

    Rep. James Comer of Kentucky, the new chairman of the House Oversight Committee, has already been hard at work, firing off letters demanding answers to pointed questions on border photo ops, President Joe Biden’s handling of classified documents, presidential visitor logs, remote work among top federal employees and Hunter Biden.

    This is, of course, business as usual. The party that doesn’t control the White House will always seek to score political points on possible bureaucratic scandals. In return, Democrats’ instinctive reaction might be to circle up the wagons and seek to stonewall or downplay as many of these efforts as possible.

    But one area of focus for the Oversight Committee deserves to be taken seriously, not just as a political point-scoring operation, but as an earnest attempt to improve how government works. A genuine bipartisan commitment can and should be made to evaluate the extent of fraud in the pandemic-era safety net measures. A better understanding of where the system failed would not only shine a light on how some funds were misspent but also lay the groundwork for better administration of safety-net benefits, in ways applicable and valuable even outside of the unique circumstances of a global pandemic.

    Recall that as the initial wave of coronavirus cases hit US shores, economists feared we could be headed for an economic meltdown. People stopped going about their daily lives, stay-at-home orders went into effect and businesses responded by laying off workers left and right. The unemployment rate spiked to 14.7% in April 2020, the highest level in the post-World War II era.

    Congress wanted to provide aid as quickly as possible; there simply wasn’t time to sit around and construct the ideal policies. As part of the frenetic response, the federal government used the often-clunky unemployment insurance systems run by states to try to backstop households’ finances.

    Fraud became an issue due to a number of factors, according to a June 2022 report from the Government Accountability Office, including unclear federal guidance, ill-equipped state offices and a relaxation of normal eligibility rules. It didn’t help that 32 states run their unemployment insurance systems on outdated infrastructure, often developed in the 1970s and 1980s, according to that same report. These systems make it difficult for states to have the flexibility and responsiveness necessary to run benefit programs efficiently – even when there isn’t a global pandemic.

    The underlying structure of unemployment insurance may have been an issue as well – the federal government provides support and technical assistance, while states determine eligibility and ensure accurate payments. The jerry-rigged systems in many states couldn’t handle the surge of applicants and a newly created unemployment insurance program relied on self-certification. Without any requirements to prove lost income, the program opened the door to bad actors.

    But some of the headlines about the amount of fraud in pandemic assistance are likely overblown. One widely-repeated claim about the ubiquity of fraud was advanced not by a disinterested party but by a company that sells ID verification systems. The GAO report estimates the amount of unemployment insurance fraud is likely over $60 billion (or about 7% of total $878 billion spent), although the true amount may not be knowable.

    $60 billion sounds like a lot of money, but some could argue the result justified the leaky process. Research by the Brookings Institution found that the expanded unemployment benefits delivered the most aid to lower-income workers, stabilizing the broader economy by keeping consumption stable. At the peak of Covid’s impact, millions of workers every week were applying for unemployment insurance; if excessive concern about fraud had prevented rolling out the federal expansion of benefits, it could have taken a lot longer for the economy to recover.

    But with the worst of the pandemic in the rear-view mirror, cracking down on people who abused the system and making it harder for future scammers to do the same is an appropriate area for the Oversight Committee to focus on. A full, bipartisan Congressional inquiry could spotlight the weaknesses of the current system and where it was taken advantage of in order to lay the groundwork for future efforts to improve the way benefits are disbursed.

    Not doing so would allow distrust around government programs to fester. Some voters who hear stories about fraudsters taking advantage of pandemic-era assistance – especially blatant examples of people who listed their name as “N/A” or claimed that they owned nonexistent farms – may lose faith in government’s ability to function properly. Knowing that the expanded assistance helped the economy does nothing to change or address the fact that some people took advantage of loopholes in the system.

    Some initial steps have been taken to address this lingering concern. The Pandemic Response Accountability Committee, which was created as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act in 2020, has provided publicly available data on how emergency pandemic funds were spent. Last summer, Congress passed bipartisan bills extending the statute of limitations to prosecute individuals who committed fraud through the Paycheck Protection Program or the Economic Injury Disaster Loan Program. And Democrats, such as Rep. Jim Clyburn of South Carolina, who previously served as the chair of a subcommittee on the coronavirus response, have rightly pointed out that small business aid during the pandemic was also plagued by fraud and improper payments.

    Yet more could be done. A GAO report in October 2021 made six recommendations about how the Department of Labor could stem fraud in unemployment insurance programs, but a recent follow-up found the department had not implemented any of them. The deluge of cases has left investigators overwhelmed, and Congress could beef up funding for the agents that investigate pandemic fraud.

    Last year, the Biden administration announced initial steps to combat fraud and identity theft in pandemic relief, but it hasn’t made a priority of supporting bills like the one introduced in 2021 by Sen. Ron Wyden of Oregon, which would have modernized the unemployment insurance program. Helping states develop better systems of determining eligibility and automating basic safeguards could make it easier to keep scammers out and make sure the truly deserving get the benefits they need.

    Republicans are right to put the spotlight on those who took advantage of pandemic-era programs. Democrats should join them. Getting benefits into the hands of people who merit them and keeping them out of the hands of people who don’t should be something both parties agree on. Amid all the other controversies that take up political oxygen, a concerted effort to crack down on wrongdoing and improve how our social safety net functions could be a welcome breath of bipartisan air.

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  • Fact check: Biden makes false and misleading claims in economic speech | CNN Politics

    Fact check: Biden makes false and misleading claims in economic speech | CNN Politics

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    Washington
    CNN
     — 

    President Joe Biden delivered a Thursday speech to hail economic progress during his administration and to attack congressional Republicans for their proposals on the economy and the social safety net.

    Some of Biden’s claims in the speech were false, misleading or lacking critical context, though others were correct. Here’s a breakdown of the 14 claims CNN fact-checked.

    Touting the bipartisan infrastructure law he signed in 2021, Biden said, “Last year, we funded 700,000 major construction projects – 700,000 all across America. From highways to airports to bridges to tunnels to broadband.”

    Facts First: Biden’s “700,000” figure is wildly inaccurate; it adds an extra two zeros to the correct figure Biden used in a speech last week and the White House has also used before: 7,000 projects. The White House acknowledged his misstatement later on Thursday by correcting the official transcript to say 7,000 rather than 700,000.

    Biden said, “Well, here’s the deal: I put a – we put a cap, and it’s now in effect – now in effect, as of January 1 – of $2,000 a year on prescription drug costs for seniors.”

    Facts First: Biden’s claims that this cap is now in effect and that it came into effect on January 1 are false. The $2,000 annual cap contained in the Inflation Reduction Act that Biden signed last year – on Medicare Part D enrollees’ out-of-pocket spending on covered prescription drugs – takes effect in 2025. The maximum may be higher than $2,000 in subsequent years, since it is tied to Medicare Part D’s per capita costs.

    Asked for comment, a White House official noted that other Inflation Reduction Act health care provisions that will save Americans money did indeed come into effect on January 1, 2023.

    – CNN’s Tami Luhby contributed to this item.

    Criticizing former President Donald Trump over his handling of the Covid-19 pandemic, Biden said, “Back then, only 3.5 million people had been – even had their first vaccination, because the other guy and the other team didn’t think it mattered a whole lot.”

    Facts First: Biden is free to criticize Trump’s vaccine rollout, but his “only 3.5 million” figure is misleading at best. As of the day Trump left office in January 2021, about 19 million people had received a first shot of a Covid-19 vaccine, according to figures published by the Centers for Disease Control and Prevention. The “3.5 million” figure Biden cited is, in reality, the number of people at the time who had received two shots to complete their primary vaccination series.

    Someone could perhaps try to argue that completing a primary series is what Biden meant by “had their first vaccination” – but he used a different term, “fully vaccinated,” to refer to the roughly 230 million people in that very same group today. His contrasting language made it sound like there are 230 million people with at least two shots today versus 3.5 million people with just one shot when he took office. That isn’t true.

    Biden said Republicans want to cut taxes for billionaires, “who pay virtually only 3% of their income now – 3%, they pay.”

    Facts First: Biden’s “3%” claim is incorrect. For the second time in less than a week, Biden inaccurately described a 2021 finding from economists in his administration that the wealthiest 400 billionaire families paid an average of 8.2% of their income in federal individual income taxes between 2010 and 2018; after CNN inquired about Biden’s “3%” claim on Thursday, the White House published a corrected official transcript that uses “8%” instead. Also, it’s important to note that even that 8% number is contested, since it is an alternative calculation that includes unrealized capital gains that are not treated as taxable income under federal law.

    “Biden’s numbers are way too low,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center at the Urban Institute think tank, though Gleckman also said we don’t know precisely what tax rates billionaires do pay. Gleckman wrote in an email: “In 2019, Berkeley economists Emmanuel Saez and Gabe Zucman estimated the top 400 households paid an average effective tax rate of about 23 percent in 2018. They got a lot of attention at the time because that rate was lower than the average rate of 24 percent for the bottom half of the income distribution. But it still was way more than 2 or 3, or even 8 percent.”

    Biden has cited the 8% statistic in various other speeches, but unlike the administration economists who came up with it, he tends not to explain that it doesn’t describe tax rates in a conventional way. And regardless, he said “3%” in this speech and “2%” in a speech last week.

    Biden cited a 2021 report from the Institute on Taxation and Economic Policy think tank that found that 55 of the country’s largest corporations had made $40 billion in profit in their previous fiscal year but not paid any federal corporate income taxes. Before touting the 15% alternative corporate minimum tax he signed into law in last year’s Inflation Reduction Act, Biden said, “The days are over when corporations are paying zero in federal taxes.”

    Facts First: Biden exaggerated. The new minimum tax will reduce the number of companies that don’t pay any federal taxes, but it’s not true that the days of companies paying zero are “over.” That’s because the minimum tax, on the “book income” companies report to investors, only applies to companies with at least $1 billion in average annual income. According to the Institute on Taxation and Economic Policy, only 14 of the companies on its 2021 list of 55 non-payers reported having US pre-tax income of at least $1 billion.

    In other words, there will clearly still be some large and profitable corporations paying no federal income tax even after the minimum tax takes effect this year. The exact number is not yet known.

    Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, told CNN in the fall that the new tax is “an important step forward from the status quo” and that it will raise substantial revenue, but he also said: “I wouldn’t want to assert that the minimum tax will end the phenomenon of zero-tax profitable corporations. A more accurate phrasing would be to say that the minimum tax will *help* ensure that *the most profitable* corporations pay at least some federal income tax.”

    There are lots of nuances to the tax; you can read more specifics here. Asked for comment on Thursday, a White House official told CNN: “The Inflation Reduction Act ensures the wealthiest corporations pay a 15% minimum tax, precisely the corporations the President focused on during the campaign and in office. The President’s full Made in America tax plan would ensure all corporations pay a 15% minimum tax, and the President has called on Congress to pass that plan.”

    Noting the big increase in the federal debt under Trump, Biden said that his administration has taken a “different path” and boasted: “As a result, the last two years – my administration – we cut the deficit by $1.7 trillion, the largest reduction in debt in American history.”

    Facts First: Biden’s boast leaves out important context. It is true that the federal deficit fell by a total of $1.7 trillion under Biden in the 2021 and 2022 fiscal years, including a record $1.4 trillion drop in 2022 – but it is highly questionable how much credit Biden deserves for this reduction. Biden did not mention that the primary reason the deficit fell so substantially was that it had skyrocketed to a record high under Trump in 2020 because of bipartisan emergency pandemic relief spending, then fell as expected as the spending expired as planned. Independent analysts say Biden’s own actions, including his laws and executive orders, have had the overall effect of adding to current and projected future deficits, not reducing those deficits.

    Dan White, senior director of economic research at Moody’s Analytics – an economics firm whose assessments Biden has repeatedly cited during his presidency – told CNN’s Matt Egan in October: “On net, the policies of the administration have increased the deficit, not reduced it.” The Committee for a Responsible Federal Budget, an advocacy group, wrote in September that Biden’s actions will add more than $4.8 trillion to deficits from 2021 through 2031, or $2.5 trillion if you don’t count the American Rescue Plan pandemic relief bill of 2021.

    National Economic Council director Brian Deese wrote on the White House website last week that the American Rescue Plan pandemic relief bill “facilitated a strong economic recovery and enabled the responsible wind-down of emergency spending programs,” thereby reducing the deficit; David Kelly, chief global strategist at J.P. Morgan Funds, told Egan in October that the Biden administration does deserve credit for the recovery that has pushed the deficit downward. And Deese correctly noted that Biden’s signature legislation, last year’s Inflation Reduction Act, is expected to bring down deficits by more than $200 billion over the next decade.

    Still, the deficit-reducing impact of that one bill is expected to be swamped by the deficit-increasing impact of various additional bills and policies Biden has approved.

    Biden said, “Wages are up, and they’re growing faster than inflation. Over the past six months, inflation has gone down every month and, God willing, will continue to do that.”

    Facts First: Biden’s claim that wages are up and growing faster than inflation is true if you start the calculation seven months ago; “real” wages, which take inflation into account, started rising in mid-2022 as inflation slowed. (Biden is right that inflation has declined, on an annual basis, every month for the last six months.) However, real wages are lower today than they were both a full year ago and at the beginning of Biden’s presidency in January 2021. That’s because inflation was so high in 2021 and the beginning of 2022.

    There are various ways to measure real wages. Real average hourly earnings declined 1.7% between December 2021 and December 2022, while real average weekly earnings (which factors in the number of hours people worked) declined 3.1% over that period.

    Biden said he was disappointed that the first bill passed by the new Republican majority in the House of Representatives “added $114 billion to the deficit.”

    Facts First: Biden is correct about how the bill would affect the deficit if it became law. He accurately cited an estimate from the government’s nonpartisan Congressional Budget Office.

    The bill would eliminate more than $71 billion of the $80 billion in additional funding for the Internal Revenue Service (IRS) that Biden signed into law in the Inflation Reduction Act. The Congressional Budget Office found that taking away this funding – some of which the Biden administration said will go toward increased audits of high-income individuals and large corporations – would result in a loss of nearly $186 billion in government revenue between 2023 and 2032, for a net increase to the deficit of about $114 billion.

    The Republican bill has no chance of becoming law under Biden, who has vowed to veto it in the highly unlikely event it got through the Democratic-controlled Senate.

    Biden said that “MAGA Republicans” in the House “want to impose a 30 percent national sales tax on everything from food, clothing, school supplies, housing, cars – a whole deal.” He said they want to do that because “they want to eliminate the income tax system.”

    Facts First: This is a fair description of the Republicans’ “FairTax” bill. The bill would eliminate federal income taxes, plus the payroll tax, capital gains tax and estate tax, and replace it with a national sales tax. The bill describes a rate of 23% on the “gross payments” on a product or service, but when the tax rate is described in the way consumers are used to sales taxes being described, it’s actually right around 30%, as a pro-FairTax website acknowledges.

    It is not clear how much support the bill currently has among the House Republican caucus. Notably, House Speaker Kevin McCarthy told CNN’s Manu Raju this week that he opposes the bill – though, while seeking right-wing votes for his bid for speaker in early January, he promised its supporters that it would be considered in committee. Biden wryly said in his speech, “The Republican speaker says he’s not so sure he’s for it.”

    Biden claimed the unemployment rate “is the lowest it’s been in 50 years.”

    Facts First: This is true. The unemployment rate was just below 3.5% in December, the lowest figure since 1969.

    The headline monthly rate, which is rounded to a single decimal place, was reported as 3.5% in December and also reported as 3.5% in three months of President Donald Trump’s tenure, in late 2019 and in early 2020. But if you look at more precise figures, December was indeed the lowest since 1969 – 3.47% – just below the figures for February 2020, January 2020 and September 2019.

    Biden said that the unemployment rates for Black and Hispanic Americans are “near record lows” and that the unemployment rate for people with disabilities is “the lowest ever recorded” and the “lowest ever in history.”

    Facts First: Biden’s claims are accurate, though it’s worth noting that the unemployment rate for people with disabilities has only been released by the government since 2008.

    The Black or African American unemployment rate was 5.7% in December, not far from the record low of 5.3% that was set in August 2019. (This data series goes back to 1972.) The rate was 9.2% in January 2021, the month Biden became president. The Hispanic or Latino unemployment rate was 4.1% in December, just above the record low of 4.0% that was set in September 2019. (This data series goes back to 1973.) The rate was 8.5% in January 2021.

    The unemployment rate for people with disabilities was 5.0% in December, the lowest since the beginning of the data series in 2008. The rate was 12.0% in January 2021.

    Biden said that fewer families are facing foreclosure than before the pandemic.

    Facts First: Biden is correct. According to a report published by the Federal Reserve Bank of New York, about 28,500 people had new foreclosure notations on their credit reports in the third quarter of 2022, the most recent quarter for which data is available; that was down from about 71,420 people with new foreclosure notations in the fourth quarter of 2019 and 74,860 people in the first quarter of 2020.

    Foreclosures plummeted in the second quarter of 2020 because of government moratoriums put in place because of the Covid-19 pandemic. Foreclosures spiked in 2022, relative to 2020-2021 levels, after the expiry of these moratoriums, but they remained very low by historical standards.

    Biden said, “More American families have health insurance today than any time in American history.”

    Facts First: Biden’s claim is accurate. An analysis provided to CNN by the Kaiser Family Foundation, which studies US health care, found that about 295 million US residents had health insurance in 2021, the highest on record – and Jennifer Tolbert, the foundation’s director for state health reform, told CNN this week that “I expect the number of people with insurance continued to increase in 2022.”

    Tolbert noted that the number of insured residents generally rises over time because of population growth, but she added that “it is not a given” that there will be an increase in the number of insured residents every year – the number declined slightly under Trump from 2018 to 2019, for example – and that “policy changes as well as economic factors also affect these numbers.”

    As CNN’s Tami Luhby has reported, sign-ups on the federal insurance exchange created by the Affordable Care Act, also known as Obamacare, have spiked nearly 50% under Biden. Biden’s 2021 American Rescue Plan pandemic relief law and then the 2022 Inflation Reduction Act temporarily boosted federal premium subsidies for exchange enrollees, and the Biden administration has also taken various other steps to get people to sign up on the exchanges. In addition, enrollment in Medicaid health insurance has increased significantly during the Covid-19 pandemic, in part because of a bipartisan 2020 law that temporarily prevented people from being disenrolled from the program.

    The percentage of residents without health insurance fell to an all-time low of 8.0% in the first quarter of 2022, according to an analysis published last summer by the federal government’s Department of Health and Human Services. That meant there were 26.4 million people without health insurance, down from 48.3 million in 2010, the year Obamacare was signed into law.

    Biden said, “And over the last two years, more than 10 million people have applied to start a small business. That’s more than any two years in all of recorded American history.”

    Facts First: This is true. There were about 5.4 million business applications in 2021, the highest since 2005 (the first year for which the federal government released this data for a full year), and about 5.1 million business applications in 2022. Not every application turns into a real business, but the number of “high-propensity” business applications – those deemed to have a high likelihood of turning into a business with a payroll – also hit a record in 2021 and saw its second-highest total in 2022.

    Trump’s last full year in office, 2020, also set a then-record for total and high-propensity applications. There are various reasons for the pandemic-era boom in entrepreneurship, which began after millions of Americans lost their jobs in early 2020. Among them: some newly unemployed workers seized the moment to start their own enterprises; Americans had extra money from stimulus bills signed by Trump and Biden; interest rates were particularly low until a series of rate hikes that began in the spring of 2022.

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  • Advertised salary ranges are not set in stone. That’s why you still have to negotiate | CNN Business

    Advertised salary ranges are not set in stone. That’s why you still have to negotiate | CNN Business

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    New York
    CNN
     — 

    Now that more and more states are requiring companies to advertise salary ranges for open roles, you may assume the range is the range and you can’t negotiate for more.

    Not true.

    While the new pay transparency laws mean you’ll have more information about what an employer is willing to pay, the ranges advertised likely won’t give you an accurate picture of what you might be paid for the actual role you’re applying for. So unless you do your own research, ask questions and then negotiate, you might shortchange yourself.

    “I’ve seen people deterred from negotiating because they think [the advertised pay range] is set in stone. We haven’t found that to be the case,” said Brandon Bramley, founder of The Salary Negotiator, which provides one-on-one consultation for people seeking to improve their pay packages and online courses in salary negotiation.

    Here are three reasons why a published salary range is hardly the whole story:

    1. The range may not be the “full” range: Some employers only publish ranges between, say, the 25th and 75th percentiles of what they pay for a given position, said Lulu Seikaly, a senior attorney and pay transparency expert at Payscale. “A lot of organizations won’t post the entire range. It just has to be a good faith estimate.”

    What’s more, Seikaly added, even if an employer publishes the full range for a job, employers are legally allowed to pay more to the right candidate.

    “There’s always flexibility to offer more than the top of the range,” she said.

    2. The published range may be very wide: It’s not hard to find advertised salary ranges so wide you could drive a truck through them. Think yawning gaps of $100,000 or more between the minimum and the maximum.

    Some employers may do so because they’re using one posting to attract applicants for a few roles under the same general function — such as a software engineer. But each role is suitable to people at different levels of experience (such as a junior engineer, a mid-level engineer or a senior one), Seikaly noted.

    Similarly, an employer may publish the same wide range for each of several jobs with different responsibilities.

    And sometimes, it’s not clear what an employer is thinking. Companies are in the trial-and-error stage of compliance since pay transparency laws are quite new and vary from place to place. The oldest one on the books, in Colorado, has only been in place for two years. Pay transparency laws in California and the state of Washington went into effect on January 1. And employers in New York City only started advertising pay three months ago, while employers in the rest of New York State won’t have to do so until September.

    When a range is laughably broad — Seikaly cited one posting that included a range of $90,000 to $900,000 — she believes the company is making “a very big branding mistake” because it appears as if they are not offering a good faith estimate and potential applicants might well be wary. “It’s a big red flag that they don’t value employees,” she said.

    3. The range typically reflects base salary only: There is a lot more to your compensation than your regular paycheck.

    The published range for an open role usually just reflects your base pay, not bonuses, equity and annual increases.

    And all those parts are often negotiable for the candidate a company wants most, even if a hiring manager or recruiter asserts that they’re not, Bramley said.

    What’s more, there are other negotiable parts of compensation that can augment your pay package, such as tuition reimbursement, a home office stipend and additional paid time off.

    Don’t take advertised ranges as gospel. Instead:

    Do your own compensation research: Bramley recommends getting pay averages from three pay data aggregators such as Payscale and Comparably.

    That way you’ll be able to gauge whether the employer’s published range is within reason for the role you’re seeking.

    Get more information on the employer’s published range: If you’re considering applying for a job with a wide pay range, ask the recruiter what specific role the employer wants to slot you into and what the specific pay band is for that role. Then ask what skills and experience justify their offering a candidate pay at the top of the range.

    Some companies may most typically offer to pay candidates at the midpoint of the range unless the candidate is more junior or senior, said talent hiring executive Rachel Levine.

    An employer may choose to pay a candidate above the top of the advertised range if someone brings additional value or an exceptional skillset to the role than what current employees in that role have, Levine said.

    Avoid sharing your pay expectations prematurely: Many states and localities ban organizations from asking job applicants what they’re currently making. So instead recruiters early on will ask you what your pay expectations are.

    “You get a lot of pressure to share,” Bramley said. The risk is you will offer a number below what an employer is actually willing to pay the right candidate, thereby limiting what you might get in the end.

    “Flip the script when asked about your salary expectations,” Bramley suggested. “Ask what range they had in the mind for those who are best qualified.” Or, he added, you might say, “To be honest, my expectation may be near the top [of the advertised range]. But it’s hard to say right now because I want to learn more about the company, the role and its compensation structure.”

    It pays to ask for more: Once you have an offer in hand, you will be in the strongest position to negotiate for more because you know they want you, and most of the time you can secure something extra, Bramley said. But even if you can’t, he has never seen an offer rescinded because someone tried. “The worst case is they say ‘No’,” Bramley said.

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  • Scammers posed as tech support to hack employees at two US agencies last year, officials say | CNN Politics

    Scammers posed as tech support to hack employees at two US agencies last year, officials say | CNN Politics

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    CNN
     — 

    Cybercriminals hacked employees of at least two US federal civilian agencies last year as part of a “widespread” fraud campaign that sought to steal money from individuals’ bank accounts, US cybersecurity officials revealed Wednesday.

    In one case, the unidentified hackers posed as tech support, convinced a federal employee to call them and then instructed the federal employee to visit a malicious website, according to the advisory from the US Cybersecurity and Infrastructure Security Agency, National Security Agency and a threat-sharing center for state and local governments known as MS-ISAC.

    The goal of the scam, which appears to have hit both private sector and government agencies, was to trick victims into sending the scammers money. It was unclear if that happened in the case of the federal employees.

    The episodes underscore how federal officials, like others, can be duped into sharing sensitive financial information – and that they might not find out about it for weeks or months afterward.

    CISA discovered the activity in October 2022, but the hackers had been sending phishing emails to federal employees’ personal and government email accounts since at least June, according to the advisory.

    Forensic analysis “identified related activity” on many other federal networks in addition to the two initial agency victims, the advisory said.

    While financially motivated crooks were apparently behind this campaign, the US agencies said they were concerned such hackers could sell stolen data to government-backed spies. The legitimate tech-support software used in the scam is useful for hackers looking to maintain covert, long-term access to a network, officials said.

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  • Spotify to cut 6% of its workforce | CNN Business

    Spotify to cut 6% of its workforce | CNN Business

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    London
    CNN
     — 

    Spotify

    (SPOT)     said Monday that it will cut 6% of its workforce to reduce costs, joining tech companies including Amazon

    (AMZN)     and Microsoft

    (MSFT)     in slashing headcount as the global economy slows.

    In a letter to employees posted on the company’s website, CEO Daniel Ek took full responsibility for the job cuts, which he called “difficult but necessary.”

    “Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us. In hindsight, I was too ambitious in investing ahead of our revenue growth,” he said.

    The Stockholm-headquartered music streaming business had about 9,800 employees globally as of September 30, according to an earnings report.

    The company’s stock, which has nearly halved in value over the past 12 months, gained more than 4% in premarket trading in New York. Spotify’s share price has risen 24% since the start of the year, Refinitiv data shows.

    Over the past few months, major tech companies have swiftly reversed a pandemic hiring spree that saw them add thousands of workers to keep up with a surge in demand from households and businesses for services such as online shopping and videoconferencing.

    The same companies have recently made deep cuts to their workforces, as inflation weighs on consumer spending and rising interest rates squeeze funding. The demand for digital services during the pandemic has also waned as people return to their offline lives.

    Over the past three months, Amazon

    (AMZN)    , Google

    (GOOGL)    , Microsoft

    (MSFT)     and Facebook

    (FB)    -parent Meta have announced plans to cut more than 50,000 employees from their collective ranks.

    The recent cuts in most cases amount to a relatively small percentage of each company’s overall headcount, essentially erasing the last year of gains for some while leaving them with enormous workforces.

    Spotify’s decision to shed about 590 jobs is part of a wider reorganization to improve efficiency and “speed up decision-making,” according to Ek. As part of the changes, engineering and product work will be centralized. Chief content officer Dawn Ostroff had also decided to leave the company, Ek said.

    Spotify reported a loss of €228 million ($248 million) in its most recent financial quarter through September 30, as operating expenses shot up by 65%, according to a company presentation to investors.

    In 2022, operating expenses grew at twice the rate of the company’s revenue, Ek said.

    “That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap,” he told employees in Monday’s letter. “As you are well aware, over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough.”

    — Clare Duffy contributed to this report.

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  • House GOP keeps up attacks on IRS with bill to abolish the agency | CNN Politics

    House GOP keeps up attacks on IRS with bill to abolish the agency | CNN Politics

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    Washington
    CNN
     — 

    The Republican-controlled House has made the Internal Revenue Service a political target after Democrats bolstered the agency with new funding last year.

    Within the first week of the new Congress, a dozen GOP lawmakers introduced a bill that would abolish the IRS altogether and replace the entire federal tax code with a national sales tax.

    Separately, the House voted to rescind nearly $80 billion in funding for the agency that Democrats approved last year – with many top Republicans repeating the misleading claim that the money will be used to hire 87,000 auditors.

    “Instead of adding 87,000 new agents to weaponize the IRS against small business owners and middle America, this bill will eliminate the need for the department entirely by simplifying the tax code with provisions that work for the American people and encourage growth and innovation,” said Rep. Earl “Buddy” Carter, a Republican from Georgia who introduced the Fair Tax Act earlier this month.

    It’s highly unlikely that either bill will become law, given that Democrats still control the Senate. But the measures highlight how America’s two major political parties have very different strategies when it comes to addressing the embattled tax collection agency – which has seen its budget shrink by more than 15% over the past decade and has struggled to not only process returns on time but also answer taxpayers’ questions. Just 13% of phone calls were answered last year.

    Democrats have taken a different approach, making funding the IRS a priority. The Inflation Reduction Act, which passed along party lines last year, approved $80 billion for the IRS over 10 years. By using the money to crack down on tax cheats, it’s estimated that the agency could boost federal revenue by more than $124 billion over that time period.

    The Republicans’ Fair Tax Act is not a new idea. A version was first introduced in Congress in 1999. It’s never had enough support to become law, but it puts forth an appealing message to those Americans who love to hate the federal tax agency.

    It would get rid of the complicated federal tax system, doing away with the annual task of filing tax returns. Instead, the bill would replace federal taxes on individual and corporate income with a national 23% sales tax in 2025, allowing for adjustments to the rate in later years. Americans would pay Uncle Sam whenever they bought a new good or service for personal consumption.

    The bill calls for abolishing the IRS and directing states to collect the new federal tax.

    While every consumer would pay the same tax at the cash register, the bill provides for a monthly tax rebate payment, based on the poverty rate and family size. It’s meant to help offset the tax levy on low-income Americans who tend to spend a higher share of their paycheck on goods and services.

    A national sales tax appears very simple: one rate all Americans pay on new goods and services they buy.

    But some policy experts say the Fair Tax Act is more complicated than it looks.

    “Moving away from taxing income and toward taxing consumption is a step in the right direction for a pro-growth and simpler tax code,” said Garrett Watson, a senior policy analyst at the Tax Foundation, an independent tax policy nonprofit.

    But there could still be complications. First, the tax rate would likely have to be higher than 23% in order for the federal government to pull in the same amount of tax revenue that it does now. One estimate found that a tax rate of about 30% would more likely be able to generate the same amount of revenue – or 44%, if measured the way state sales taxes are typically presented.

    Second, a nationwide sales tax could leave low- and middle-income people worse off. The current tax system is progressive, meaning it takes a larger percentage of income from high-earners than low-income groups. Even with the monthly tax rebate, a national sales tax would still be less progressive.

    A 2011 independent analysis of a similar national sales tax found that, on average, most income groups would pay more tax than they did under the federal tax system at the time – except the top 5% of earners who would see a tax cut.

    Additionally, it’s hard to imagine that lawmakers would pass a bill that does not exclude some things from the sales tax, like health care costs, for example.

    “The basic income tax is simple too,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.

    It’s the deductions, credits and exclusions – like for retirement savings and charitable giving – that make it complicated.

    Plus, Americans would likely have to file some paperwork to some tax collection entity in order to receive the rebate, Gleckman said. The administration cost may be less than it is now, but it wouldn’t be zero.

    Tax filing season opens Monday and National Taxpayer Advocate Erin Collins expects IRS services for taxpayers to improve this year – in part due to the funding increase provided by Congress.

    Since the Inflation Reduction Act was passed in August, the IRS has hired 5,000 new customer service agents. The agency has also worked to improve its technology so that taxpayers can ask questions via an automated service online, said Treasury Deputy Secretary Wally Adeyemo on a call with reporters last week.

    The IRS started the year with about 400,000 unprocessed paper individual returns and about 1 million unprocessed business returns. But it’s in much better shape than the prior year, when it had a backlog of 4.7 million unprocessed individual returns and 3.2 million unprocessed business returns, according to the taxpayer advocate’s annual report to Congress.

    Taxpayer service, like answering the phones and processing returns in a timely manner, has suffered as the IRS’ budget has shrunk.

    The Covid-19 pandemic brought even more challenges for the IRS. It was tasked with administering several rounds of stimulus payments to millions of Americans with a lot of its staff working from home. This caused long delays for many taxpayers who filed a paper return. The IRS is starting to implement a scanning system so that returns filed by paper can quickly be made digital. Previously, paper returns had to be entered manually into the agency’s computer system.

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