ALBANY, N.Y. — New York’s minimum-wage workers had more than just the new year to celebrate Monday, with a pay bump kicking in as the clock ticked over to 2024.
In the first of a series of annual increases slated for the Empire State, the minimum wage increased to $16 in New York City and some of its suburbs, up from $15. In the rest of the state, the new minimum wage is $15, up from $14.20.
The state’s minimum wage is expected to increase every year until it reaches $17 in New York City and its suburbs, and $16 in the rest of the state by 2026. Future hikes will be tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers, a measurement of inflation.
New York is one of 22 states getting minimum wage rises in the new year, according to a recent report by the Economic Policy Institute.
In California, the minimum wage increased to $16, up from $15.50, while in Connecticut it increased to $15.69 from the previous rate of $15.
This most recent pay bump in New York is part of an agreement made last year between Democratic Gov. Kathy Hochul and the state Legislature. The deal came over the objections of some employers, as well as some liberal Democrats who said it didn’t go high enough.
The federal minimum wage in the United States has stayed at $7.25 per hour since 2009, but states and some localities are free to set higher amounts. Thirty states, including New Mexico and Washington, have done so.
The U.S. ecommerce company Zulily says it is closing down, surprising customers, after efforts to salvage the business failed
SEATTLE — The U.S. online retailer Zulily is closing down, surprising customers and laying off hundreds of workers after efforts to salvage the business failed.
The Seattle-based company said in a notice on its website that it had tried to fill all pending orders and expected to manage that within the coming two weeks. Zulily said it was trying to ensure that orders that could not be filled were cancelled and refunded and offered a contact for customers who did not get their orders or refunds.
“This decision was not easy nor was it entered into lightly. However, given the challenging business environment in which Zulily operated, and the corresponding financial instability, Zulily decided to take immediate and swift action,” said the notice, signed by Ryan C. Baker, vice president at management consultant Douglas Wilson Companies, which is handling the receivership for the company.
Founded in 2010 by Darrell Cavens and Mark Vadon, Zulily made a splash with products catering to families with young children and staged a successful IPO on the Nasdaq in 2013. But it was taken private after it was acquired in 2015 for $2.4 billion by QVC parent company Qurate, formerly known as Liberty Interactive. Zulily’s CEO Terry Boyle left the company at the end of October as financial troubles mounted following its acquisition by private equity firm Regent from Qurate in May.
The company’s liquidation followed several rounds of layoffs as Zulily struggled to compete with Amazon.
Instead of declaring bankruptcy, Zulily is using an alternative for winding down the business known as an Assignment for the Benefit of Creditors, or ABC. The company has transferred all its assets and business in trust to Zulily ABC, LLC, to pay creditors out of proceeds from selling them.
ALBANY, N.Y. — New York’s governor vetoed a bill days before Christmas that would have banned noncompete agreements, which restrict workers’ ability to leave their job for a role with a rival business.
Gov. Kathy Hochul, who said she tried to work with the Legislature on a “reasonable compromise” this year, called the bill “a one-size-fits-all-approach” for New York companies legitimately trying to retain top talent.
“I continue to recognize the urgent need to restrict non-compete agreements for middle-class and low-wage workers, and am open to future legislation that achieves the right balance,” she wrote in a veto letter released Saturday.
The veto is a blow to labor groups, who have long argued that the agreements hurt workers and stifle economic growth. The Federal Trade Commission had also sent a letter to Hochul in November, urging her to sign the bill and saying that the agreements can harm innovation and prevent new businesses from forming in the state.
But in recent months, the legislation had come under fierce attack by Wall Street and top business groups in New York. They argued the agreements are necessary to protect investment strategies and keep highly-paid workers from leaving their companies with prized inside information and working for an industry rival.
While the agreements are often associated with top executives, about 1 in 5 American workers — nearly 30 million people — are now bound by noncompete agreements, according to the Federal Trade Commission.
For example, the sandwich chain Jimmy John’s previously came under scrutiny for forcing its low-wage workers to sign noncompete agreements that prevented them from working for a nearby business for two years after they left. In 2016, the company reached a settlement with the New York attorney general agreeing to no longer enforce the agreements.
The Federal Trade Commission has proposed its own rule to eliminate all noncompete agreements nationwide under the idea that they unfairly reduce competition.
Peter Rahbar, an employment attorney who represents individuals dealing with noncompete issues, said he was disappointed the governor vetoed the bill.
“I view it as a missed opportunity to help employees and workers gain leverage in their negotiations with employers,” he said. “She is missing an important step that would help employees not only have freedom of choice on where they want to work, but deprive them of an opportunity to increase their income.”
The Federal Trade Commission has estimated that banning noncompete agreements could increase workers’ earnings by approximately $250 billion to $296 billion per year.
Rahbar pointed to California as the “center of American innovation,” crediting that to the state’s longtime ban on noncompete agreements.
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Maysoon Khan is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues. Follow Maysoon Khan on X, formerly known as Twitter.
Shares of Nike Inc. tumbled after hours Thursday after the athletic-gear giant warned of a “softer second-half revenue outlook” on its quarterly earnings call, and said it is targeting up to $2 billion in cost cuts over the next three years as it looks to shed management and focus on women customers and its Jordan brand.
Nike NKE, +0.91%
said that the savings could come from simplifying its product selection and using more automation and technology. But the athletic-gear giant has also reportedly begun to lay workers off, and said it expected to book pre-tax restructuring charges of around $400 million to $450 million, much of it in the company’s fiscal third quarter, “primarily associated with employee-severance costs.”
Nike did not immediately respond to questions about job cuts at the company, or how many staff have been or could be laid off. But on the company’s earnings call, management said its plans included “reducing management layers.”
In Nike’s earnings release, Chief Financial Officer Matthew Friend said the company’s fiscal second quarter — in which per-share profit beat expectations while sales were roughly in line — marked “a turning point in driving more-profitable growth.”
But investors appeared skeptical after hours on Thursday, as shares slid more than 11%.
Nike announced the cost-cutting drive as clothing and shoe brands try to steer through weaker demand overall and a broader price-cutting battle in retail stores for inflation-battered customers. Those customers have had to set aside more money to cover the costs of ever-pricier essential goods, at the expense of things like sportswear and sneakers.
“We are seeing indications of more cautious consumer behavior around the world in an uneven macro environment,” Friend said during the call.
Nike executives said consumer demand was strong through the back-to-school season, Black Friday and Cyber Monday, but lagged in between. Demand wobbled online, and in China and Europe.
They also said that the money they planned to save would be reinvested into helping Nike become more nimble and more responsive to consumer preferences, after years of shifting away from selling shoes and gear through traditional retail chains in favor of doing business through its own stores and e-commerce channels. They added that those efforts “added complexity and inefficiencies” as competition grew steeper.
Chief Executive John Donahoe said on the call that the Nike-brand women’s segment was already a $9 billion business. But he said new products — like bras, leggings, retro-themed running shoes and other offerings that span both sports and lifestyle — would help draw more women customers.
Within the Jordan category, Donahoe cited opportunities beyond basketball sneakers. Clothing and golf-, soccer- and football-related products, along with offerings targeted toward women and children, would also help drive growth, he said.
But for the rest of its fiscal year, Nike’s expectations were dimmer. The company said it forecasted “slightly negative” sales growth for its fiscal third quarter. For its fourth quarter, executives expect low-single-digits sales gains. And they said they now anticipate Nike’s full-year sales to increase around 1%, compared to an outlook in September for mid-single-digits gains.
In its fiscal second quarter, which ended on Nov. 30, Nike reported net income in the period of $1.58 billion, or $1.03 a share, compared with $1.33 billion, or 85 cents a share, in the same quarter last year. Revenue rose 1% year over year, to $13.4 billion.
Analysts polled by FactSet expected adjusted earnings per share of 84 cents, on sales of $13.39 billion.
Gross margin rose to 44.6%, helped by price increases and lower costs for ocean-freight shipping.
Outlooks this year from athletic-gear retailers like Foot Locker Inc. FL, +1.89%
and Dick’s Sporting Goods Inc. DKS, +0.78%
have also been cautious, and Nike has faced competition from the likes of Adidas ADDYY, +1.01%
and On Running ONON, -1.05%.
Nike management also said in their previous earnings call in September that they aimed to do more to attract women and running-shoe customers. However, they noted that demand for the company’s products remained solid and they were “cautiously planning for modest markdown improvements for the balance of the year,” as the company tightens up its supplies of sneakers and clothing in stock.
On Thursday’s call, executives said that demand for higher-priced products had been “resilient,” and that they didn’t have to cut prices as much as their rivals. And they said new releases — like the Sabrina 1 and Luka 2 sneakers — were the best way to stand out in a sea of discounts.
“We know in an environment like this, when the consumer is under pressure and the promotional activity is higher, that it’s newness and innovation which causes the consumer to act,” Friend said.
Tesla has found itself locked in an increasingly bitter dispute with union workers in Sweden and neighboring countries. The showdown pits the electric car maker’s CEO Elon Musk, who’s staunchly anti-union, against the strongly held labor ideals of Scandinavian countries.
None of Tesla’s workers anywhere in the world are unionized, raising questions about whether strikes could spread to other parts of Europe where employees commonly have collective bargaining rights — notably in Germany, Tesla’s most important European market.
Here are key things to know about the union fight:
About 130 mechanics at 10 Tesla garages across Sweden walked off the job on Oct. 27 over the company’s refusal to sign a collective bargaining agreement. Tesla doesn’t have a factory in Sweden, but does have a network of service centers.
Since the mechanics with the powerful Swedish metalworkers’ union IF Metall went on strike, other workers around the country have joined in sympathy, withholding their services to pressure the company.
Members of the country’s transport union say they’ll stop collecting waste from Tesla service centers starting Sunday. Employees with supplier Hydro Extrusions, which makes aluminum profiles, are refusing to make a component for Tesla cars.
Other unions say their members won’t paint Tesla cars, clean the company’s offices or service electrical systems at its workshops or any of its 70 charging stations in Sweden.
Postal workers have stopped delivering license plates for new Tesla vehicles, prompting Tesla to sue the Swedish Transport Agency, demanding that it be allowed to retrieve the plates, and PostNord, the company that delivers the registration numbers. Tesla lost an early battle in the case, which is still working through the courts.
The boycott has escalated by spreading to neighboring Nordic countries. Like in Sweden, dockworkers in Denmark won’t unload Tesla vehicles arriving at ports. Unions in Finland and those in Norway have warned that workers at ports and workshops will join the strike if the dispute isn’t resolved by Wednesday.
A group of 16 institutional investors including KLP, Norway’s biggest pension fund, and PensionDanmark, have written to Tesla board chair Robyn Denholm. They have urged the company to reconsider its approach to unions and asked for a meeting to discuss it further.
PensionDanmark has sold its 476 million kroner ($70 million) stake in the carmaker, saying it’s putting Tesla on its blacklist “in the light of the conflict spreading to Denmark and Tesla’s latest and very categorical denial to reach collective agreements in any country.”
Paedagoernes Pension, Denmark’s teachers’ pension fund, sold its 242 million kroner ($35 million) stake in Tesla because it “cannot compromise” on its core values, CEO Sune Schackenfeldt said in a statement.
The fund discussed workers’ rights with Tesla in March, but Musk’s “hard course against the Nordic trade union movement” makes continued investment unsustainable, it said.
Sweden is one of the most highly unionized countries in Europe, with nine in 10 workers covered by collective agreements.
Across Scandinavia, trade unions and employers negotiate deals on wages and working conditions, with almost no involvement from the state. It’s a system that originated in the 1930s and is widely acknowledged as the backbone of a labor market model that has helped workers benefit from decades of economic prosperity.
The system results in fewer strikes than in other countries like France and Germany, because negotiations are the first avenue to resolve disputes.
Tesla’s attempts to secure a quick win in the license plate clash through Swedish courts “appears to be having precisely the opposite impact, making unions more steadfast and creating sympathetic actions across the country,” said Matthias Schmidt, an independent auto analyst.
Collective agreements allow “for companies to operate on a level playing field, while avoiding the risk of any one employer distorting competition in the sector by imposing poor conditions on their employees,” the IF Metall union says.
In a famous example of this model’s success, the Toys R Us toy chain started up in Sweden in 1995 and hired only nonunion workers. The chain refused to sign such collective agreements. It resulted in a three-month strike by the retail employees union that snowballed into an all-out boycott as other Swedish unions joined in sympathy strikes. The company eventually agreed to sign collective deals.
He’s never hidden his disdain for unions, writing, “this is insane,” on his social media platform X, formerly known as Twitter, in response to a tweet about Swedish postal workers refusing to deliver license plates.
In the U.S., Musk has picked online fights with the United Auto Workers and vehemently battled union legal challenges to his company’s actions.
“I disagree with the idea of unions,” Musk said in a November onstage interview with The New York Times. “I just don’t like anything which creates kind of a lords and peasants sort of thing.”
Musk, the world’s wealthiest person, said that unions try to create negativity in a company, denying that Tesla has a wealth hierarchy largely because the company awards everyone stock options.
“Everyone eats at the same table. Everyone parks in the same parking lot,” he said.
Musk has accused the UAW of driving General Motors and Chrysler into bankruptcy, costing many workers their jobs. He said that if Tesla becomes unionized, “it will be because we deserve it and we’ve failed in some way.”
Tesla didn’t respond to a request for comment.
Watching from the sidelines are labor organizers in Germany, where Tesla opened its first European gigafactory in 2022. The plant in Grunheide, southeast of Berlin, employs 11,000 people. It makes both batteries and Model Y SUVs.
Germany is the company’s biggest market in Europe, selling 55,000 vehicles so far this year, three times as many as in Sweden, according to data from Schmidt.
Labor organizers are on a union drive to sign up Tesla workers and say the numbers are rising quickly.
Workers and unions in Germany are banned from joining sympathy strikes, but that might “act as a catalyst to German Tesla production line workers to join local unions that can strike a good deal for them,” Schmidt said.
Germany’s IG Metall union says it’s concerned about occupational safety at the plant and has fielded reports from “numerous employees” about accidents and health problems that resulted in high staff sickness rates.
Christiane Benner, the union’s newly elected chairwoman, has Tesla in her sights.
“We don’t allow union-free zones! Not even on Mars, Elon Musk!” she said in her inaugural speech in October.
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AP writers Tom Krisher in Detroit and Jan M. Olsen in Copenhagen, Denmark, contributed.
CAPE TOWN, South Africa — More than 2,000 workers remained underground for a second day Tuesday in a protest over pay and benefits at a platinum mine in South Africa.
The mine is owned by Implats, which is one of the world’s biggest platinum miners. The firm has suspended work at the Bafokeng Rasimone Platinum Mine near the city of Rustenburg, and it calls the protest illegal.
Representatives from the National Union of Mineworkers went underground to meet with the workers but the protest “remains unresolved,” Implats said.
There were no immediate details on how much the workers are paid.
More than 2,200 workers began the protest, but 167 had returned to the surface by Tuesday night, Implats said. The workers are in two shafts at the mine in North West province, about 150 kilometers (93 miles) west of the capital, Pretoria.
South Africa is by far the world’s largest platinum producer.
Such protests are not unusual. There were two recent underground protests at a gold mine in the city of Springs, near Johannesburg, in October and earlier this month. On both occasions, hundreds of workers remained underground for days amid allegations some were holding others hostage in a dispute over which union should represent them.
The Rustenburg area where the platinum mines are concentrated is the site of one of South Africa’s most horrific episodes. In 2012, police killed 34 miners in a mass shooting following a prolonged strike and days of violence at another platinum mine in nearby Marikana. Six mine workers, two police officers and two private security officers were killed in the days before the shootings.
Videogame maker Activision Blizzard has agreed to pay nearly $55 million to settle a California civil-rights lawsuit brought over complaints of sexual harassment, discrimination and pay disparities by women employees that helped trigger the company’s acquisition by Microsoft.
The agreement, subject to court approval, will see Activision pay nearly $46 million into a settlement fund dedicated to compensating women employees and contract workers at the company, plus more than $9 million in attorneys’ fees and costs. Additionally, Activision will take steps “to help ensure fair pay and promotion practices at the company,” including retaining an independent consultant to evaluate its compensation and promotion policies.
Yet the settlement also sees CRD withdraw its initial claims alleging a culture of widespread, systemic workplace sexual harassment at Activision, according to a copy of the agreement provided to MarketWatch. The document notes that the department is filing an amended complaint that removes the sexual-harassment allegations against the company and focuses on the gender-based pay and promotion claims.
CRD made no note of its prior sexual-harassment claims against Activision in its announcement Friday. A spokesperson for the department said the statement “largely speaks for itself with respect to the historic nature of this more than $50 million settlement agreement, which will bring direct relief and compensation to women who were harmed by the company’s discriminatory practices.
Representatives for Activision declined to comment.
The Wall Street Journal first reported the news of the settlement Friday.
The California agency’s complaint was one of several high-profile investigations by both state and federal regulators in recent years into alleged workplace misconduct at Activision and failures by its leadership to respond appropriately.
The settlement would be the second-largest ever for the California Civil Rights Department, according to the Journal, after its $100 million agreement with another Los Angeles-area videogame developer, Riot Games, to resolve gender-discrimination allegations in 2021. The agency had initially sought a much-larger settlement with Activision, the publication reported, citing how the state had estimated the company’s liability at nearly $1 billion to some 2,500 employees with potential claims.
NEW YORK — General Motors’ troubled Cruise autonomous vehicle unit is cutting over 900 jobs, about a quarter of its workforce, as it moves to reduce costs and remake itself after a series of safety problems in San Francisco.
The subsidiary announced the cuts Thursday in a letter to Cruise’s 3,800 workers from President and Chief Technical Officer Mo ElShenawy, who wrote that the layoffs are not the fault of the workers.
The job cuts come a day after Cruise confirmed that nine key leaders are no longer with the company amid an ongoing investigation into an October crash involving one of its driverless robotaxis that forced it to suspend operations.
“We are simplifying and focusing our efforts to return with an exceptional service in one city to start with,” ElShenawy wrote. “As a result of our decision to slow down commercialization, we are restructuring to focus on delivering the improvements to our tech and vehicle performance that will build trust in our AVs (autonomous vehicles),” the letter said.
The employment actions come following an initial analysis of the Oct. 2 crash and the company response after a Cruise robotaxi ran over and injured a pedestrian who had been hit by another vehicle driven by a human. The Cruise vehicle then dragged the pedestrian to the side of the road.
California regulators have alleged that Cruise covered up the severity of the October crash — which could result in a potential penalty of roughly $1.5 million. The robotaxi service is also being investigated by U.S. auto safety regulators after separately receiving reports of potential risks to pedestrians and passengers.
Employees were to be notified if by email Thursday if they have been let go. The letter said they would stay on the payroll through Feb. 12 and are eligible for another eight weeks of pay. Long term employees will get another two weeks of pay for every year at the company over three years, the letter said.
“This is one of the hardest days we’ve had so far because so many talented people are leaving,” ElShenawy wrote.
The executive departures included leaders in from legal, government affairs, commercial operations and safety and systems teams, Cruise said. The announcements come just weeks after Kyle Vogt resigned as Cruise’s CEO.
Cruise has faced significant turmoil over recent months. Weeks following the October mishap, California’s Department of Motor Vehicles effectively shut down the robotaxi service by suspending its license to operate in the state.
Cruise announced it would be pausing driverless operations for a review by independent experts and later recalled all 950 of its cars to update software.
General Motors has absorbed huge losses during the development of the driverless service that was supposed to generate $1 billion in revenue by 2025, with plans to expand beyond San Francisco.
GM plans a slowdown in spending at Cruise, which it bought eight years ago. During the first nine months of this year Cruise posted pretax losses of $1.9 billion.
BRUSSELS — Western leaders are grappling with how to handle two era-defining wars in the Middle East and in Ukraine. But there’s another issue, one far closer to home, that’s derailing governments in Europe and America: migration.
In recent days, U.S. President Joe Biden, his French counterpart Emmanuel Macron, and British Prime Minister Rishi Sunak all hit trouble amid intense domestic pressure to tackle immigration; all three emerged weakened as a result. The stakes are high as American, British and European voters head to the polls in 2024.
“There is a temptation to hunt for quick fixes,” said Rashmin Sagoo, director of the international law program at the Chatham House think tank in London. “But irregular migration is a hugely challenging issue. And solving it requires long-term policy thinking beyond national boundaries.”
With election campaigning already under way, long-term plans may be hard to find. Far-right, anti-migrant populists promising sharp answers are gaining support in many Western democracies, leaving mainstream parties to count the costs. Less than a month ago in the Netherlands, pragmatic Dutch centrists lost to an anti-migrant radical.
Who will be next?
Rishi Sunak, United Kingdom
In Britain, Prime Minister Rishi Sunak is under pressure from members of his own ruling Conservative party who fear voters will punish them over the government’s failure to get a grip on migration.
U.K. Prime Minister Rishi Sunak speaks during a press conference in Dover on June 5, 2023 in Dover, England | Pool photo by Yui Mok/WPA via Getty Images
Seven years ago, voters backed Brexit because euroskeptic campaigners promised to “Take Back Control” of the U.K.’s borders. Instead, the picture is now more chaotic than ever. The U.K. chalked up record net migration figures last month, and the government has failed so far to stop small boats packed with asylum seekers crossing the English Channel.
Sunak is now in the firing line. He made a pledge to “Stop the Boats” central to his premiership. In the process, he ignited a war in his already divided party about just how far Britain should go.
Under Sunak’s deal with Rwanda, the central African nation agreed to resettle asylum seekers who arrived on British shores in small boats. The PM says the policy will deter migrants from making sea crossings to the U.K. in the first place. But the plan was struck down by the Supreme Court in London, and Sunak’s Tories now can’t agree on what to do next.
Having survived what threatened to be a catastrophic rebellion in parliament on Tuesday, the British premier still faces a brutal battle in the legislature over his proposed Rwanda law early next year.
Time is running out for Sunak to find a fix. An election is expected next fall.
Emmanuel Macron, France
The French president suffered an unexpected body blow when the lower house of parliament rejected his flagship immigration bill this week.
French President Emmanuel Macron at the Elysee Palace in Paris, on June 21, 2023 | Ludovic Marin/AFP via Getty Images
After losing parliamentary elections last year, getting legislation through the National Assembly has been a fraught process for Macron. He has been forced to rely on votes from the right-wing Les Républicains party on more than one occasion.
Macron’s draft law on immigration was meant to please both the conservatives and the center-left with a carefully designed mix of repressive and liberal measures. But in a dramatic upset, the National Assembly, which is split between centrists, the left and the far right, voted against the legislation on day one of debates.
Now Macron is searching for a compromise. The government has tasked a joint committee of senators and MPs with seeking a deal. But it’s likely their text will be harsher than the initial draft, given that the Senate is dominated by the centre right — and this will be a problem for Macron’s left-leaning lawmakers.
If a compromise is not found, Marine Le Pen’s far-right National Rally will be able to capitalize on Macron’s failure ahead of the European Parliament elections next June.
But even if the French president does manage to muddle through, the episode is likely to mark the end of his “neither left nor right” political offer. It also raises serious doubts about his ability to legislate on controversial topics.
Joe Biden, United States
The immigration crisis is one of the most vexing and longest-running domestic challenges for President Joe Biden. He came into office vowing to reverse the policies of his predecessor, Donald Trump, and build a “fair and humane” system, only to see Congress sit on his plan for comprehensive immigration reform.
U.S. President Joe Biden pauses as he gives a speech in Des Moines, Iowa on July 15, 2019 | Photo by Justin Sullivan/Getty Images
The White House has seen a deluge of migrants at the nation’s southern border, strained by a decades-old system unable to handle modern migration patterns.
Ahead of next year’s presidential election, Republicans have seized on the issue. GOP state leaders have filed lawsuits against the administration and sent busloads of migrants to Democrat-led cities, while in Washington, Republicans in Congress have tied foreign aid to sweeping changes to border policy, putting the White House in a tight spot as Biden officials now consider a slate of policies they once forcefully rejected.
The political pressure has spilled into the other aisle. States and cities, particularly ones led by Democrats, are pressuring Washington leaders to do more in terms of providing additional federal aid and revamping southern border policies to limit the flow of asylum seekers into the United States.
New York City has had more than 150,000 new arrivals over the past year and a half — forcing cuts to new police recruits, cutting library hours and limiting sanitation duties. Similar problems are playing out in cities like Chicago, which had migrants sleeping in buses or police stations.
The pressure from Democrats is straining their relationship with the White House. New York City Mayor Eric Adams runs the largest city in the nation, but hasn’t spoken with Biden in nearly a year. “We just need help, and we’re not getting that help,” Adams told reporters Tuesday.
Olaf Scholz, Germany
Migration has been at the top of the political agenda in Germany for months, with asylum applications rising to their highest levels since the 2015 refugee crisis triggered by Syria’s civil war.
The latest influx has posed a daunting challenge to national and local governments alike, which have struggled to find housing and other services for the migrants, not to mention the necessary funds.
The inability to limit the number of refugees has put German Chancellor Olaf Scholz under immense pressure | Michele Tantussi/Getty Images
The inability — in a country that ranks among the most coveted destinations for asylum seekers — to limit the number of refugees has put German Chancellor Olaf Scholz under immense pressure. In the hope of stemming the flow, Germany recently reinstated border checks with Poland, the Czech Republic and Switzerland, hoping to turn back the refugees before they hit German soil.
Even with border controls, refugee numbers remain high, which has been a boon to the far right. Germany’s anti-immigrant Alternative for Germany party has reached record support in national polls.
Since overtaking Scholz’s Social Democrats in June, the AfD has widened its lead further, recording 22 percent in recent polls, second only to the center-right Christian Democrats.
The AfD is expected to sweep three state elections next September in eastern Germany, where support for the party and its reactionary anti-foreigner policies is particularly strong.
The center-right, meanwhile, is hardening its position on migration and turning its back on the open-border policies championed by former Chancellor Angela Merkel. Among the new priorities is a plan to follow the U.K.’s Rwanda model for processing refugees in third countries.
Karl Nehammer, Austria
Like Scholz, the Austrian leader’s approval ratings have taken a nosedive thanks to concerns over migration. Austria has taken steps to tighten controls at its southern and eastern borders.
Though the tactic has led to a drop in arrivals by asylum seekers, it also means Austria has effectively suspended the EU’s borderless travel regime, which has been a boon to the regional economy for decades.
Austria has effectively suspended the EU’s borderless travel regime, which has been a boon to the regional economy for decades | Thomas Kronsteiner/Getty Images
The far-right Freedom Party has had a commanding lead for more than a year, topping the ruling center-right in polls by 10 points. That puts the party in a position to win national elections scheduled for next fall, which would mark an unprecedented rightward tilt in a country whose politics have been dominated by the center since World War II.
Giorgia Meloni, Italy
Italian Prime Minister Giorgia Meloni made her name in opposition, campaigning on a radical far-right agenda. Since winning power in last year’s election, she has shifted to more moderate positions on Ukraine and Europe.
Meloni now needs to appease her base on migration, a topic that has dominated Italian debate for years. Instead, however, she has been forced to grant visas to hundreds of thousands of legal migrants to cover labor shortages. Complicating matters, boat landings in Italy are up by about 50 per cent year-on-year despite some headline-grabbling policies and deals to stop arrivals.
While Meloni has ordered the construction of detention centers where migrants will be held pending repatriation, in reality local conditions in African countries and a lack of repatriation agreements present serious impediments.
Italy’s Prime Minister, Giorgia Meloni at a press conference on March 9, 2023 | Tiziana Fabi/AFP via Getty Images
Although she won the support of Commission President Ursula von der Leyen for her cause, a potential EU naval mission to block departures from Africa would risk breaching international law.
Meloni has tried other options, including a deal with Tunisia to help stop migrant smuggling, but the plan fell apart before it began. A deal with Albania to offshore some migrant detention centers also ran into trouble.
Now Meloni is in a bind. The migration issue has brought her into conflict with France and Germany as she attempts to create a reputation as a moderate conservative.
If she fails to get to grips with the issue, she is likely to lose political ground. Her coalition partner Matteo Salvini is known as a hardliner on migration, and while they’re officially allies for now, they will be rivals again later.
Geert Wilders, the Netherlands
The government of long-serving Dutch Prime Minister Mark Rutte was toppled over migration talks in July, after which he announced his exit from politics. In subsequent elections, in which different parties vied to fill Rutte’s void, far-right firebrand Geert Wilders secured a shock win. On election night he promised to curb the “asylum tsunami.”
Wilders is now seeking to prop up a center-right coalition with three other parties that have urged getting migration under control. One of them is Rutte’s old group, now led by Dilan Yeşilgöz.
Geert Wilders attends a meeting in the Dutch parliament with party leaders to discuss the formation of a coalition government, on November 24, 2023 | Carl Court/Getty Images
A former refugee, Yeşilgöz turned migration into one of the main topics of her campaign. She was criticized after the elections for paving the way for Wilders to win — not only by focusing on migration, but also by opening the door to potentially governing with Wilders.
Now, though, coalition talks are stuck, and it could take months to form a new cabinet. If Wilders, who clearly has a mandate from voters, can stitch a coalition together, the political trajectory of the Netherlands — generally known as a pragmatic nation — will shift significantly to the right. A crackdown on migration is as certain as anything can be.
Leo Varadkar, Ireland
Even in Ireland, an economically open country long used to exporting its own people worldwide, an immigration-friendly and pro-business government has been forced by rising anti-foreigner sentiment to introduce new migration deterrence measures that would have been unthinkable even a year ago.
Ireland’s hardening policies reflect both a chronic housing crisis and the growing reluctance of some property owners to keep providing state-funded emergency shelter in the wake of November riots in Dublin triggered by a North African immigrant’s stabbing of young schoolchildren.
A nation already housing more than 100,000 newcomers, mostly from Ukraine, Ireland has stopped guaranteeing housing to new asylum seekers if they are single men, chiefly from Nigeria, Algeria, Afghanistan, Georgia and Somalia, according to the most recent Department of Integration statistics.
Ireland has stopped guaranteeing housing to new asylum seekers if they are single men, chiefly from Nigeria, Algeria, Afghanistan, Georgia and Somalia | Jorge Guerrero/AFP via Getty Images
Even newly arrived families face an increasing risk of being kept in military-style tents despite winter temperatures.
Ukrainians, who since Russia’s 2022 invasion of their country have received much stronger welfare support than other refugees, will see that welcome mat partially retracted in draft legislation approved this week by the three-party coalition government of Prime Minister Leo Varadkar.
Once enacted by parliament next month, the law will limit new Ukrainian arrivals to three months of state-paid housing, while welfare payments – currently among the most generous in Europe for people fleeing Russia’s war – will be slashed for all those in state-paid housing.
Justin Trudeau, Canada
A pessimistic public mood dragged down by cost-of-living woes has made immigration a multidimensional challenge for Prime Minister Justin Trudeau.
A housing crunch felt across the country has cooled support for immigration, with people looking for scapegoats for affordability pains. The situation has fueled antipathy for Trudeau and his re-election campaign.
Trudeau has treated immigration as a multipurpose solution for Canada’s aging population and slowing economy. And while today’s record-high population growth reflects well on Canada’s reputation as a desirable place to relocate, political challenges linked to migration have arisen in unpredictable ways for Trudeau’s Liberals.
Political challenges linked to migration have arisen in unpredictable ways for Trudeau’s Liberals | Andrej Ivanov/AFP
Since Trudeau came to power eight years ago, at least 1.3 million people have immigrated to Canada, mostly from India, the Philippines, China and Syria. Handling diaspora politics — and foreign interference — has become more consequential, as seen by Trudeau’s clash with India and Canada’s recent break with Israel.
Canada will double its 40 million population in 25 years if the current growth rate holds, enlarging the political challenges of leading what Trudeau calls the world’s “first postnational state”.
Pedro Sánchez, Spain
Spain’s autonomous cities of Ceuta and Melilla, in Northern Africa, are favored by migrants seeking to enter Europe from the south: Once they make it across the land border, the Continent can easily be accessed by ferry.
Transit via the land border that separates the European territory from Morocco is normally kept in check with security measures like high, razor-topped fences, with border control officers from both countries working together to keep undocumented migrants out.
Spain’s autonomous cities of Ceuta and Melilla, in Northern Africa, are favored by migrants seeking to enter Europe | Pierre-Philippe Marcou/AFP
But in recent years authorities in Morocco have expressed displeasure with their Spanish counterparts by standing down their officers and allowing hundreds of migrants to pass, overwhelming border stations and forcing Spanish officers to repel the migrants, with scores dying in the process.
The headaches caused by these incidents are believed to be a major factor in Prime Minister Pedro Sánchez’s decision to change the Spanish government’s position on the disputed Western Sahara territory and express support for Rabat’s plan to formalize its nearly 50-year occupation of the area.
The pivot angered Sánchez’s leftist allies and worsened Spain’s relationship with Algeria, a long-standing champion of Western Saharan independence. But the measures have stopped the flow of migrants — for now.
Kyriakos Mitsotakis, Greece
Greece has been at the forefront of Europe’s migration crisis since 2015, when hundreds of thousands of people entered Europe via the Aegean islands. Migration and border security have been key issues in the country’s political debate.
Human rights organizations, as well as the European Parliament and the European Commission, have accused the Greek conservative government of Kyriakos Mitsotakis of illegal “pushbacks” of migrants who have made it to Greek territory — and of deporting migrants without due process. Greece’s government denies those accusations, arguing that independent investigations haven’t found any proof.
Mitsotakis insists that Greece follows a “tough but fair” policy, but the numerous in-depth investigations belie the moderate profile the conservative leader wants to maintain.
In June, a migrant boat sank in what some called “the worst tragedy ever” in the Mediterranean Sea. Hundreds lost their lives, refocusing Europe’s attention on the issue. Official investigations have yet to discover whether failures by Greek authorities contributed to the shipwreck, according to Amnesty International and Human Rights Watch.
In the meantime, Greece is in desperate need of thousands of workers to buttress the country’s understaffed agriculture, tourism and construction sectors. Despite pledges by the migration and agriculture ministers of imminent legislation bringing migrants to tackle the labor shortage, the government was forced to retreat amid pressure from within its own ranks.
Nikos Christodoulides, Cyprus
Cyprus is braced for an increase in migrant arrivals on its shores amid renewed conflict in the Middle East. Earlier in December, Greece sent humanitarian aid to the island to deal with an anticipated increase in flows.
Cypriot President Nikos Christodoulides has called for extra EU funding for migration management, and is contending with a surge in violence against migrants in Cyprus. Analysts blame xenophobia, which has become mainstream in Cypriot politics and media, as well as state mismanagement of migration flows. Last year the country recorded the EU’s highest proportion of first-time asylum seekers relative to its population.
Cypriot President Nikos Christodoulides has called for extra EU funding for migration management | Ludovic Marin/AFP via Getty Images
Legal and staffing challenges have delayed efforts to create a deputy ministry for migration, deemed an important step in helping Cyprus to deal with the surge in arrivals.
The island’s geography — it’s close to both Lebanon and Turkey — makes it a prime target for migrants wanting to enter EU territory from the Middle East. Its complex history as a divided country also makes it harder to regulate migrant inflows.
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LONDON — President Joe Biden has quietly shelved plans for a “foundational” trade agreement with the U.K. ahead of the 2024 election — following Senate opposition and disagreements over the scope of the deal.
A draft outline of the pact and its 11 proposed chapters, prepared by the United States Trade Representative’s (USTR) office earlier this year, indicated negotiations would begin before the end of 2023.
But after facing multiple headwinds, the deal is not expected to go ahead, two people briefed by the British and U.S. governments respectively told POLITICO.Both were granted anonymity to speak on a sensitive matter.
“I don’t think we’re going to see that re-emerge,” said one of the people briefed on the proposed negotiations.
The proposal’s timeline for talks — which would not consider market access or meet the World Trade Organization’s definition of a free trade agreement — set out that negotiations would wrap up ahead of elections in Britain and the U.S. next year.
The deal was closer in substance to the U.S.-led Indo-Pacific Economic Framework for Prosperity (IPEF) — which tackles regulation and non-tariff barriers — than a full trade agreement.
But last month IPEF talks fell apart after senior Democrats criticized the Biden administration’s negotiation of trade provisions that did not contain enforceable labor standards.
The British government has long coveted a trade agreement with the U.S. as a significant post-Brexit prize.
The draft was considered a road map to eventually securing a full-fledged, comprehensive deal. Business and Trade Secretary Kemi Badenoch pitched the IPEF-style deal in April during Biden’s visit to Belfast, Bloomberg reported, to reinvigorate talks first started under the Trump administration.
Congressional oversight
Key voices in the U.S. have expressed concern about the nature of a pact with the U.K.
“Trade negotiations should be driven by substance,” said a spokesperson for Democratic Senator Ron Wyden, chairman of the powerful Senate Finance Committee, which provides congressional oversight for trade.
“It is Senator Wyden’s view that the United States and United Kingdom should not make announcements until a deal that benefits Americans is achievable,” the spokesperson added.
When POLITICO first reported on proposed talks in October, Wyden said it was “extremely disappointing” the Biden administration was attempting to proceed “with a ‘trade agreement’ that will neither benefit the American public, nor respect the role of Congress in international trade.”
Wyden’s spokesperson said Congress “must have a clear role in approving any future trade agreements” and that the senior Democrat “believes it is important for USTR to be significantly more engaged with Congress on any future negotiations.”
‘The vibes were quite tough’
USTR has gone back to Congress to ask for its input on a potential U.K. trade deal. But major outstanding issues between the U.S. and U.K. remain, including agriculture and whether any agreement would benefit American workers.
In a recent meeting with U.S. diplomats “the vibes were quite tough,” said the second person briefed on the proposed negotiations cited earlier. “They just doubled down on ‘you guys really need to lean into the worker-centric trade policy’ and ‘put yourself in the shoes of somebody in Pennsylvania.’”
The message, the person added, was “does this improve the lot of the farmers in Iowa? Does this help the U.S. economy? And if it doesn’t, they’re not going to do it.”
The U.S. approach “seems to be very focused on labor standards, on environmental issues on these very worthy things,” said the first person briefed on the proposed negotiations quoted at the top of this story.
Prime Minister Rishi Sunak’s Cabinet also pushed back on a chapter dealing with agriculture regulations in the draft after the British leader told a food summit earlier this year that he would not allow chemical washes or hormone-injected beef imports like those from the U.S. into Britain.
Scottish ministers meanwhile complained they hadn’t been consulted. Agriculture regulations are a devolved issue in Scotland.
In the meantime, the focus of the U.K.-U.S. trade relationship is predominantly on securing a critical minerals agreement that would allow British automotive firms to tap into electric vehicle rebates offered in the Biden administration’s Inflation Reduction Act.
“The U.K. and U.S. are rapidly expanding co-operation on a range of vital economic and trade issues building on the Atlantic Declaration announced earlier this year,” said a U.K. government spokesperson.
Some in the U.K. are taking a philosophical view on whether a wider ranging trade deal with the U.S. is really needed. Michael Mainelli, who, as lord mayor of the City of London, opened a new outpost for the U.K.’s powerhouse financial district in New York City on Monday said: “The trade has been going on fine without it. It might go a bit better with it.”
The latest numbers show total two-way trade between the nations grew 23.8 percent in the year to the end of Q2 2023.
But in the U.S. a trade deal with the U.K. is just “not that high on the list,” Mainelli said.
MONTGOMERY, Ala. — Current and former inmates announced a lawsuit Tuesday challenging Alabama’s prison labor program as a type of “modern day slavery,” saying prisoners are forced to work for little pay — and sometimes no pay — in jobs that benefit government entities or private companies.
The class action lawsuit also accuses the state of maintaining a discriminatory parole system with a low release rate that ensures a supply of laborers while also generating money for the state.
“The forced labor scheme that currently exists in the Alabama prison system is the modern reincarnation of the notorious convict leasing system that replaced slavery after the Civil War,” Janet Herold, the legal director of Justice Catalyst Law, said Tuesday.
The Alabama Department of Corrections and the Alabama attorney general’s office declined to comment on the lawsuit.
The lawsuit accuses the state of violating the equal protection clause of the U.S. Constitution, anti-human trafficking laws and the Alabama Constitution.
The lawsuit contends that the state maintains a “forced labor scheme” that coerces inmates into work. The lawsuit said those jobs include unpaid prison jobs where inmates perform tasks that help keep the facilities running. Inmates in work release might perform jobs where businesses pay minimum wage or more, but the prison system keeps 40% of a prisoner’s gross pay to defray the cost of their incarceration and also deducts fees for transportation and laundry services. The lawsuit referred to the state’s 40% reduction as a “labor-trafficking fee.”
LaKiera Walker, who was previously incarcerated for 15 years, said she worked unpaid jobs at the prison including housekeeping and unloading trucks. She said she later worked on an inmate road crew for $2 a day and then a work release job working 12-hour shifts at a warehouse freezer for a food company. She said she and other inmates felt pressured to work even if sick.
“If you didn’t work, you were at risk of going back to the prison or getting a disciplinary (infraction),” Walker said.
Almireo English, a state inmate, said trustworthy prisoners perform unpaid tasks that keep prisons running so that the prison administrators could dedicate their limited staff to other functions.
“Why would the slave master by his own free will release men on parole who aid and assist them in making their paid jobs easier and carefree,” English said.
While the state did not comment Tuesday, the state has maintained prison and work release jobs prepare inmates for life after incarceration.
The 13th Amendment to the U.S. Constitution ended slavery but it still allows forced labor “as a punishment for crime.” States set a variety of wages for inmate laborers, but most are low. A report from the American Civil Liberties Union research found that the average hourly wage for jobs inside prisons is about 52 cents.
The plaintiffs included two labor unions. The lawsuit said the supply of inmate labor puts downward pressure on wages for all workers and interferes with unions’ ability to organize workers.
Lawsuits and initiatives in other states have also questioned or targeted the use of inmate labor. Men incarcerated at Louisiana State Penitentiary in September filed a lawsuit contending they have been forced to work in the prison’s fields for little or no pay, even when temperatures soar past 100 degrees Fahrenheit (37 Celsius).
Nokia cut its operating margin guidance, with market conditions in its mobile networks business remaining challenging due to falling operator spending and the Indian market normalizing after a period of rapid 5G roll-outs.
The Finnish telecom equipment maker said Tuesday that it now targets a comparable operating margin target of at least 13% by 2026, from at least 14% previously.
Toy maker Hasbro is cutting about 1,100 jobs, or 20% of its workforce
ByANNE D’INNOCENZIO AP retail writer
December 11, 2023, 6:57 PM
FILE – The Hasbro logo is seen, April 26, 2018, in New York. Toy maker Hasbro said Monday, Dec. 11, 2023, that it is cutting about 1,100 jobs, or 20% of its workforce, as the malaise in the toy business extends through another holiday shopping season. (AP Photo/Richard Drew, File)
The Associated Press
NEW YORK — Toy maker Hasbro said Monday it is cutting about 1,100 jobs, or 20% of its workforce, as the malaise in the toy business extends through another holiday shopping season.
The nearly century-old Rhode Island-based company behind Monopoly, Play-Doh and My Little Pony toys disclosed the layoffs in a memo to employees published in a regulatory filing. The Wall Street Journal first reported the news.
The company said that the reductions are on top of 800 job cuts that have been taken so far in 2023 as part of moves announced last year to save up to $300 million annually by 2025. As of year-end 2022, the company said it had 6,490 employees.
Like many toy companies, Hasbro is struggling with a slowdown in sales after a surge during pandemic lockdowns when parents were splurging on toys to keep their children busy. Last holiday season, many toy companies had to slash prices to get rid of merchandise due to weak demand. And the challenges have continued. Toy sales in the U.S. were down 8% from January through August, based on Circana’s most recent data.
“The market headwinds we anticipated have proven to be stronger and more persistent than planned,” Hasbro CEO Chris Cocks wrote in the memo. “While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into holiday and are likely to persist into 2024.”
Cocks had said the toymaker will “focus on fewer, bigger brands; gaming; digital; and our rapidly growing direct to consumer and licensing businesses.”
Shares in Hasbro Inc. fell almost 6% in after-market trading Monday.
Toy maker Hasbro is cutting about 1,100 jobs, or 20% of its workforce
ByANNE D’INNOCENZIO AP retail writer
December 11, 2023, 6:57 PM
FILE – The Hasbro logo is seen, April 26, 2018, in New York. Toy maker Hasbro said Monday, Dec. 11, 2023, that it is cutting about 1,100 jobs, or 20% of its workforce, as the malaise in the toy business extends through another holiday shopping season. (AP Photo/Richard Drew, File)
The Associated Press
NEW YORK — Toy maker Hasbro said Monday it is cutting about 1,100 jobs, or 20% of its workforce, as the malaise in the toy business extends through another holiday shopping season.
The nearly century-old Rhode Island-based company behind Monopoly, Play-Doh and My Little Pony toys disclosed the layoffs in a memo to employees published in a regulatory filing. The Wall Street Journal first reported the news.
The company said that the reductions are on top of 800 job cuts that have been taken so far in 2023 as part of moves announced last year to save up to $300 million annually by 2025. As of year-end 2022, the company said it had 6,490 employees.
Like many toy companies, Hasbro is struggling with a slowdown in sales after a surge during pandemic lockdowns when parents were splurging on toys to keep their children busy. Last holiday season, many toy companies had to slash prices to get rid of merchandise due to weak demand. And the challenges have continued. Toy sales in the U.S. were down 8% from January through August, based on Circana’s most recent data.
“The market headwinds we anticipated have proven to be stronger and more persistent than planned,” Hasbro CEO Chris Cocks wrote in the memo. “While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into holiday and are likely to persist into 2024.”
Cocks had said the toymaker will “focus on fewer, bigger brands; gaming; digital; and our rapidly growing direct to consumer and licensing businesses.”
Shares in Hasbro Inc. fell almost 6% in after-market trading Monday.
Hasbro Inc. is cutting about 900 jobs as the company is facing a slump in toy and game sales after a boom during the pandemic.
The cost-saving plan will result in “the reallocation of people and resources,” including early retirement for some employees and layoffs over the next two years, Hasbro HAS, +0.39%
said in a filing late Monday.
The maker of My Little Pony and Monopoly launched the plan in January, and at the time announced the layoffs of about 15% of its workforce.
It has booked about $94 million in expenses related to severance, stock compensation and employee benefits, and expects to book an additional $40 million, the company said in the filing Monday.
Shares of Hasbro and rival Mattel Inc. MAT, +0.05%
fell about 4% and 3%, respectively, in the extended session Monday, as the Wall Street Journal report also cited “early data points to another weak year” for the toy industry following the a boom during the pandemic.
Shares of Mattel have gained 6% this year, which contrasts with a 20% drop for Hasbro stock. Both stocks, however, have underperformed in relation to the S&P 500 index SPX,
which is up about 20% in 2023.
In a February filing, Hasbro said it had about 6,500 employees worldwide as of the end of 2022.
WASHINGTON — WASHINGTON (AP) — President Joe Biden goes into next year’s election with a vexing challenge: Just as the U.S. economy is getting stronger, people are still feeling horrible about it.
Pollsters and economists say there has never been as wide a gap between the underlying health of the economy and public perception. The divergence could be a decisive factor in whether the Democrat secures a second term next year. Republicans are seizing on the dissatisfaction to skewer Biden, while the White House is finding less success as it tries to highlight economic progress.
“Things are getting better and people think things are going to get worse — and that’s the most dangerous piece of this,” said Democratic pollster Celinda Lake, who has worked with Biden. Lake said voters no longer want to just see inflation rates fall — rather, they want an outright decline in prices, something that last happened on a large scale during the Great Depression.
“Honestly, I’m kind of mystified by it,” she said.
By many measures, the U.S. economy is rock solid. Friday’s employment report showed that employers added 199,000 jobs in November and the unemployment rate dropped to 3.7%. Inflation has plummeted in little over a year from a troubling 9.1% to 3.2% without causing a recession — a phenomenon that some once skeptical economists have dubbed “immaculate.”
Yet people remain dejected about the economy, according to the University of Michigan’s Index of Consumer Sentiment. The preliminary December figures issued Friday showed a jump in sentiment as people seem to recognize that inflation is cooling. But the index is still slightly below its July level.
In a possible warning sign for Biden, people surveyed for the index brought up the 2024 election. Sentiment rose dramatically more among Republicans than Democrats, potentially suggesting that GOP voters became more optimistic about winning back the White House.
“Consumers have been feeling broadly uneasy about the economy since the pandemic, and they are still coming to grips with the notion that we are not returning to the pre-pandemic ‘normal,’” Joanne Hsu, director and chief economist of the survey, said of the overall trend in recent months.
Jared Bernstein, chair of the White House Council of Economic Advisers, stressed that a strong underlying economy is “absolutely necessary” to eventually lifting consumer sentiment. His argument is that as the economy continues to improve, more people will recognize the benefits and sentiment will improve.
“We’ve got to keep fighting to lower costs and build on the progress that we’ve made,” Bernstein said. “We just need more time to get these gains to working Americans — that’s our plan.”
The White House has made three major shifts in its messaging in hopes of building up confidence in Biden’s economic leadership. The president this summer began to pepper his speeches with the term “Bidenomics” to describe his policies, only to have Republicans latch onto the word as a point of attack.
White House officials have pointed out specific items for which prices have fallen outright. They noted lower prices for turkeys during Thanksgiving as well as for eggs. Biden repeatedly emphasizes that he lowered insulin costs for Medicare participants, while other officials discuss how gasoline prices have dropped from their peak.
Second, Biden recently started to blame inflation on corporations that hiked prices when they saw an opportunity to improve their profits, bringing more prominence to an argument first used when gasoline prices spiked. The president’s argument is suspicious to many economists, yet the intended message to voters is that Biden is fighting for them against those he blames for fueling inflation.
“Let me be clear: Any corporation that is not passing these savings on to the consumers needs to stop their price gouging,” Biden said recently in Pueblo, Colorado. “The American people are tired of being played for suckers.”
And Biden is now going after the track record of former President Donald Trump, the current GOP front-runner. Biden’s campaign sent out a statement after Friday’s employment report that said, “ Despite his claims of being a jobs president, Donald Trump had the worst jobs record since the Great Depression, losing nearly three million jobs.”
The Republican counter to Biden has been to dismiss the positive economic data and focus on how voters are feeling. As the annual inflation rate has fallen, GOP messaging has focused instead on multi-year increases in consumer prices without necessarily factoring in wage gains. And Republican lawmakers have argued that people should trust their gut on the economy instead of the statistics cited by Biden.
“Joe Biden’s message to them is just this: He says don’t believe your lying eyes,” Sen. John Barrasso, R-Wyoming, said in a recent floor speech.
Biden’s speeches over the past two years has done little to improve his anemic polling on the economy. Administration officials had once assumed that better economic numbers would overcome any doubts among voters, only to find that the negativity stayed even as the U.S. economy became likely to avoid a recession once forecasted by economists.
Claudia Sahm, a former Federal Reserve economist, has been surprised by the anger generated online when she has noted the signs of a strong economy.
A typical U.S. household is better off than it was in 2020. Inequality has lessened somewhat in recent years as wage growth has favored poorer workers. Yet people still seem rattled and disconnected by the shock of the pandemic, the arrival of government aid and the inflation that followed as hiring improved.
“People have really been jerked around,” Sahm said. “Things have been turned on and off. Everything has moved fast. It’s been disruptive and confusing. We’re just tired.”
There is no solitary cause for this gap between the major data and public feeling. But the experts trying to make sense of things have multiple theories about what’s going on. Besides the pandemic’s impact, it’s possible that social media has distorted how people feel about the economy as they watch the posh lifestyles of influencers. Many people also judge the economy based on their own political beliefs, rather than the underlying numbers.
It could simply be that people need time to adjust after a period of rising inflation. As a result, there’s a lag before a slowing rate of inflation boosts how consumers feel, according to a recent analysis by the economists Ryan Cummings and Neale Mahoney.
“Sentiment is still being weighed down by the high inflation we had last year,” Cummings said. “As that recedes further into the rearview mirror, its effects are likely to diminish.”
Another possibility is that the loss of pandemic aid from the government left people materially poorer. Millions of households got checks from the government and an expanded child tax credit deposited directly into their accounts. Republicans blamed this funding for feeding inflation, but the money also initially helped to shelter people from the pain of rising prices.
Adjusting for government transfers and taxes, the average annual income for someone in the lower half of earners was $34,800 when Biden took office, according to an analysis provided by Gabriel Zucman, an economist at the University of California, Berkeley.
That average fell to $26,100 by March 2023 in a sign that wage growth could not make up for the loss of government aid.
Samuel Rines, an investment strategist at Corbu, found that companies including Pepsi, Kraft-Heinz, Procter & Gamble and Kimberly-Clark latched onto the higher food and energy prices after Russia’s 2022 invasion of Ukraine to boost their own products’ prices and increase profits.
Earnings reports suggest that consumers started to tire of some companies’ double-digit price increases this summer, prompting those companies to indicate that future prices increases will be closer to the historic average of 2%.
Biden can reasonably argue that companies took advantage of the war in Ukraine and the pandemic to raise their prices, Rines said. But the increases happened 12 to 18 months ago and Biden’s current argument doesn’t apply to what businesses are doing now.
Rines said of the president’s message on price gouging: “It’s pretty much 18 months too late.”
WASHINGTON — U.S. employers added a healthy 199,000 jobs last month and the unemployment rate fell, fresh signs that the economy could achieve an elusive “soft landing,” in which inflation would return to the Federal Reserve’s 2% target without causing a steep recession.
Friday’s report from the Labor Department showed that the unemployment rate dropped from 3.9% to 3.7%, not far above a five-decade low of 3.4% in April. The jobless rate has now remained below 4% for nearly two years, the longest such streak since the late 1960s.
Last month’s job gain was inflated by the return of about 40,000 formerly striking auto workers and actors, who were not at work in October but were back on the job in November.
The latest jobs report and other recent data portray an economy and a labor market that, while still sturdy, are downshifting back to pre-pandemic norms. Businesses are hiring but are less desperate to fill huge numbers of jobs. More Americans have come off the sidelines to look for work, and immigration has jumped this year.
As a result, employers are finding it easier to hire, with fewer complaints of worker shortages and less pressure to aggressively raise pay, which can fuel inflation.
“What we wanted was a strong but moderating labor market, and that’s what we saw in the November report,” said Robert Frick, an economist at the Navy Federal Credit Union.
A cooling job market is also just what the Fed was hoping to achieve as it sought to slow the economy and inflation with its rapid interest rate hikes in the past year and a half. Hiring has averaged just over 200,000 a month in the past three months, down from an average of about 320,000 in the same period last year.
And most of last month’s job gains were concentrated in just a few sectors. The health care industry — doctors’ offices and hospitals — added 93,000 jobs in November. Hotels and restaurants added 40,000, and governments 49,000, accounting for nearly all the job growth. By contrast, retailers, shipping and warehousing companies, and temporary help agencies all cut jobs.
Still, last month’s hiring gain raised the proportion of Americans who are employed to 60.5%, the highest level since the pandemic struck, though it remains below the pre-COVID level of 61.1%.
In the meantime, wages are growing at a slower but still-healthy pace. In November, average hourly pay rose 4% from a year earlier, matching the previous month’s figure, which was the smallest since June 2021. Still, average pay is now growing faster than inflation, which should support consumer spending.
And layoffs remain low, according to government data, despite job cuts at such companies as Panera Bread, a restaurant chain, and Spotify, the music streaming platform, which cited higher interest rates as a reason it had to cut about 1,500 jobs globally.
Becky Frankiewicz, president of the staffing giant Manpower Group North America, said more employers are moving workers they may not need in one part of the company to another division rather than laying them off. Many companies still recall the difficulty they had finding workers during the pandemic and want to hold onto staff.
“Everything we see continues to point to a slow glide into a cooler labor market,” she said.
Aaron Seyedian, owner of a small cleaning company based in Takoma Park, Maryland, says his business is still growing and hiring. He has enough demand to add five workers to his 30-person staff.
Seyedian’s company, “Well-Paid Maids,” has just raised its starting pay from $23 to $24 an hour. He said he hasn’t had any trouble finding people to hire.
“From my perspective,” Seyedian said, “the economy is still strong, and people still want to spend money.”
For the Fed, Friday’s jobs report won’t likely alter the near-certainty that it will keep interest rates unchanged for the third straight time when it meets next week. The central bank has raised its key rate 11 times since March 2022, from near zero to roughly 5.4%. The result has been much more expensive mortgages, auto loans, credit cards and business borrowing.
Most economists and Wall Street traders think the Fed’s next move will be to cut rates, though the strength in Friday’s jobs report could lead the central bank to keep rates at a peak for a longer period. Before the jobs report, Wall Street traders foresaw a 55% likelihood that the Fed would cut rates at its March meeting, according to the CME FedWatch, tool. Now, they don’t expect the first cut until May.
Guy Berger, former principal economist at the career website LinkedIn, said the job market’s resilience means the Fed can keep rates high to fight inflation without worrying so much about triggering a recession.
“If we’re not cooling, what’s the rush?” to cut rates, Berger said.
Many of the most recent economic figures have pointed toward a potential soft landing. Companies are advertising fewer job openings, and Americans are switching jobs less often than they did a year ago, trends that typically slow wage growth and inflation pressures.
Most economists expect growth to slow and inflation will continue to decline. The economy is expected to expand at just a 1.5% annual rate in the final three months of this year, down from a scorching 5.2% pace in the July-September quarter. Cooler growth should help bring down inflation while still supporting a modest pace of hiring.
Inflation has tumbled from a peak of 9.1% in June 2022 to just 3.2% last month. And according to a different inflation measure that the Fed prefers, prices rose at just a 2.5% annual rate in the past six months — not far above the central bank’s 2% target.
Christopher Waller, a key Fed official who typically favors higher rates, buoyed the markets’ expectations last week for rate hikes when he suggested that if inflation kept falling, the Fed could cut rates as early as spring.
Fed Chair Jerome Powell, though, pushed back against such speculation last Friday, when he said it was “premature to conclude” that the Fed has raised its benchmark rate high enough to quell inflation. And it was too soon, he added, to “speculate” about when the Fed might cut rates.
But Powell also said interest rates are “well into” restrictive territory, meaning that they’re clearly constraining growth. Many analysts took that remark as a signal that the Fed is done raising rates.
U.S. stocks closed higher on Friday, shaking off earlier weakness after a strong monthly jobs report, to clinch a sixth straight week in a row of gains. The Dow Jones Industrial Average DJIA, +0.36%
advanced about 130 points, or 0.4%, to end near 36,247, according to preliminary FactSet data. The S&P 500 index gained 0.4% Friday and the Nasdaq Composite finished 0.5% higher. A string of weekly gains propelled the S&P 500 index SPX, +0.41%
to a fresh 2023 closing high and left the Dow about 1.4% away from its record close set nearly two years ago, according to Dow Jones Market Data. Equities have benefitted from a risk-on tone going into year end, which has been driven by falling 10-year Treasury yields TMUBMUSD10Y, 4.230%
and optimism around the Federal Reserve potentially cutting interest rates in the year ahead. That hinges on if inflation continues to ease. November’s robust jobs report served as a reminder Friday of the tough path of the “last mile” in getting inflation down to the Fed’s 2% annual target. As part of this, the 10-year Treasury yield jumped about 11.5 basis points Friday to 4.244%, but still was about 74 basis points lower than its October high. For the week, the Dow was only fractionally higher, the S&P 500 gained 0.2% and the Nasdaq climbed 0.7%.
NEW YORK — More than 1,100 unionized DHL Express workers walked off the job at Cincinnati/Northern Kentucky International Airport (CVG), a critical logistics hub for the package delivery company, during the busiest time of the year.
The International Brotherhood of Teamsters, which represents over 6,000 DHL workers across the country, said its DHL-CVG members went on strike Thursday to further demand a fair contract and protest unfair labor practices.
“For too long, DHL has walked all over our rights to collective action,” Gina Kemp, a DHL-CVG ramp and tug worker, said in a statement shared in the Teamsters’ announcement. “This company’s repeated acts of disrespect — from the tarmac where we work to the bargaining table — leave me and my co-workers with no choice but to withhold our labor.”
Negotiations between DHL and the Teamsters for a first union contract at CVG began back in July — after ramp and tug workers, who load and unload airplane cargo, voted to organize with the Teamsters in April. In the months since, the union said, the Teamsters have also filed multiple unfair labor practices against DHL with the National Labor Relations Board.
In a statement sent to The Associated Press Friday, DHL expressed disappointment over the union’s move to “influence these negotiations and pressure the company to agree to unreasonable contract terms by taking a job action in CVG Thursday morning” and said that the company was commited to negotiating in good faith.
DHL added the majority of its employees reported to work on Thursday and operations ran at full capacity.
The company also said that Teamsters’ picket lines were expanded to other U.S. locations on Friday. DHL stated that it anticipated this and has enacted contingency plans — including moving flights and volume to other locations and bringing in replacement staff.
A Teamsters spokesperson confirmed to The Associated Press via email on Friday that Local 100 has extended its picket lines to unionized DHL workers in Chicago, the Miami airport gateway and a Covington pickup and delivery operation in Kentucky. These workers are not themselves on strike, the spokesperson said, but are honoring the picket line in solidarity.
DHL Express is a unit of Germany’s Deutsche Post AG. In 2022, Deutshe Post AG posted record revenue of over 94 billion euros (more than $101 billion) and operating profit of 8.4 billion euros ($9 billion).
DHL’s CVG hub is hailed as one of the company’s three “global superhubs,” alongside operations in Hong Kong and Germany. Its CVG hub sees about 130 daily flights with a 60-aircraft fleet.
DHL’s CVG workers load and unload roughly 360,000 pounds of cargo each day, the Teamsters said earlier this year.
The strike at DHL’s CVG hub follows a chain of historic work stoppages and contract negotiations seen over the course of 2023 — from Hollywood and hospitality, to Big Three auto production lines. Hundreds of thousands of workers across the U.S. have participated in labor actions this year.
November’s sharp pullback in 30-year fixed mortgage rates may not last if the labor market remains strong, said Mark Palim, deputy chief economist at Fannie Mae.
Palim was speaking to the robust jobs report released on Friday, showing the U.S. added 199,000 jobs in November and that wages rose, albeit with the figures somewhat inflated by the return of striking workers from the auto industry and from Hollywood.
Homebuyers can benefit from a robust labor market and the near 80 basis point decline in mortgage rates since the end of October, Palim said. But if the “labor markets remain this strong, we believe the pace of mortgage rate declines will likely not continue in the near term or may partially reverse,” he said in a statement.
The benchmark 30-year fixed mortgage rate was edging down to 7.05% on Friday, after surging to nearly 8% in October, according to Mortgage Daily News.
Optimism around the potential for falling mortgage costs to thaw home sales helped lift shares of Toll Brothers Inc., TOL, +1.86%
and a slew of other homebuilders tracked by the SPDR S&P Homebuilders ETF, XH,
to record highs earlier this week, even while investors in some homebuilder bonds have been sellers in recent weeks.
Yields on 10-year BX:TMUBMUSD10Y
and 30-year Treasury notes BX:TMUBMUSD30Y
were up sharply Friday, to about 4.23% and 4.32%, respectively, but still below the highs of about 5% in October. The surge in long-term borrowing costs was stoked by tough talk by Federal Reserve officials about the need to keep rates higher for longer to bring inflation down to a 2% annual target.
U.S. stocks were up Friday afternoon, shaking off earlier weakness following the jobs report. The Dow Jones Industrial Average DJIA
was 0.2% higher, further narrowing the gap between its last record close set two years ago, the S&P 500 index SPX
and the Nasdaq Composite Index COMP
also were up 0.2%, according to FactSet data.
