October 20, 2019

In a Strong Economy, Why Are So Many Workers on Strike?

“It’s about: ‘O.K., the government is not going to take care of us. Business is not going to take care of us. We’ve got to take care of ourselves,’” said D. Taylor, president of the hospitality workers union, UNITE HERE, which has had thousands of members strike in the past two years, including at Marriott International. “It’s been bubbling up for some time. Now it’s come up to the surface.”

In the airline industry, workers who made numerous concessions amid a wave of post-9/11 corporate restructurings complain that they continue to struggle under austerity even as the airlines post outsize profits.

“They got all these employees to agree to terms within the shadow of bankruptcy court, then they created these megamergers and are making billions,” said Sara Nelson, president of the Association of Flight Attendants.

While airline workers, unlike most private-sector workers, must receive permission from the government before they can strike, they have repeatedly demonstrated their anger. Thousands of airline catering workers, many of whom make under $12 per hour, voted to strike this year, pending the assent of a federal mediation board. Airline mechanics, including at Southwest Airlines, have won raises after effectively gumming up the operations of their employers: The mechanics significantly increased the number of low-grade maintenance problems they identified, leading to widespread flight delays and cancellations. (The mechanics denied that this was their intention.)

Teachers have expressed frustration that their districts were slow to reverse the spending cuts that followed the economic crisis a decade ago, even as state and local budgets have recovered.

“When the recession hit, teachers kind of buckled down. We said: ‘We get it. Everybody has got to pull their weight,’” said Noah Karvelis, who helped organize last year’s teacher walkouts in Arizona that forced lawmakers to raise teacher salaries and partially restore education funding. “But 10 years later, the state’s economy is back, we’re doing really well, and still the cuts are there. It was a huge, huge thing for us.”

Article source: https://www.nytimes.com/2019/10/19/business/economy/workers-strike-economy.html?emc=rss&partner=rss

Fed Signals a Rate Cut Remains Possible, Despite Glimmers of Economic Hope

Even if those uncertainties clear up, data increasingly suggest that economic damage is already materializing.

A global slowdown is well underway. The International Monetary Fund lowered its expectations for global growth in 2019 to 3 percent, the lowest rate since the financial crisis, in projections released Tuesday. Manufacturers around the world are slumping, and the American factory sector has pulled back markedly.

The United States’ economic strength has hinged on everyday consumers, whose spending makes up about two-thirds of the economy. But there are early signs that households might be cracking: Retail sales unexpectedly declined in September, data this week showed.

Policymakers have seen a strong job market and climbing wages as positives that should keep households feeling good. But employment gains have begun to slow, and both average hourly earnings and a broader measure of wages and benefits have grown more gradually in recent months, suggesting that business caution may be spilling over.

Despite mounting warning signs, the housing market is holding up, bolstered by Fed rate cuts in July and September. While overall output growth is slowing, that was expected as stimulus from Mr. Trump’s 2017 tax cut faded, and gains remain at or above the economy’s longer-term trend.

“This is a fluid situation — you’ve got a lot of uncertainty,” Robert Kaplan, president of the Federal Reserve Bank of Dallas, told reporters on Friday at an event in Washington. Though he does not have a vote on monetary policy, he does sit at the decision-making table.

He remains “agnostic” about whether a cut is needed this month, he said, and wants to keep the Fed’s options open.

Article source: https://www.nytimes.com/2019/10/18/business/economy/fed-rate-cut-economy-slowdown.html?emc=rss&partner=rss

Working to Benefit Society, Not Just Companies

What did you want to be when you were young?

By the time I was in fourth or fifth grade, I wanted to be an elected official or a policymaker. My grandfather Ruby, whom I was close to, read The New York Times every day from front to back and engaged me in conversation about policy and social justice from an early age. I assumed the best way make a difference was to run for office.

Who or what inspired you to go into your field?

A series of relationships and mentors have helped guide me, including my parents and my grandparents. I spent time in college working on the Pine Ridge Reservation in South Dakota and the elder Basil Brave Heart was a spiritual and moral center.

But it was former Congressman David Skaggs who really set me on my path. After I interned in his office, I asked if I could return to work for him after college. He said, “Maybe, but I think not yet.” Instead, he told me to do something out in the world — to see what our economy is all about. Although I had no experience in capital markets at the time, his words set me on that path and away from public policy. And I saw that I could effect change without being a politician.

Where do you find sources of creativity?

This is not a creative field — it’s not tech, art or music, but I do think that it requires a lot of creativity to invent what an economy ought to look like. But I’m not a mad genius imagining things and willing them to be true.

Instead, I find that creativity comes through relationships and community, and through conversation to find the right design.

What obstacles do you need to overcome?

We face an enormous challenge in that the economic system, over the last 400 years, was built on extraction, without limits. People have been treated as just another economic input, rather than as humans.

Article source: https://www.nytimes.com/2019/10/17/business/certified-b-corps.html?emc=rss&partner=rss

G.M. and U.A.W. Reach Deal That Could End Strike

With negotiations at an impasse last month, the union declared the first nationwide strike against a Detroit automaker since 2007. The talks appeared to turn rancorous, at least episodically, with the union negotiator declaring this month that the U.A.W. “could not be more disappointed with General Motors.” G.M.’s chief executive, Mary T. Barra, inserted herself directly into the talks on two occasions over the last week.

One of the union’s aims was to reduce pay disparities between those hired before and after 2007, when a two-tier pay scale was negotiated to help ease G.M.’s financial distress. The union also wanted G.M. to make firm commitments to producing future vehicles in the United States, but said the company had resisted doing so.

G.M. entered the talks hoping to reduce its health care costs and limit increases in wages and benefits. Last week the company said it had offered to invest $7.7 billion in its domestic plants from its own coffers, and $1.3 billion through ventures with other companies, including a battery plant that would hire union workers under a separate contract. It proposed to locate that plant near Lordstown, Ohio, where a G.M. factory assembling the Chevrolet Cruze ceased production this year.

The tentative agreement, if it becomes final, would solve the most immediate challenge facing Ms. Barra, and should provide certainty in calculating labor costs over the next four years.

“It’s critically important to have certainty about the costs the manufacturers have to plan for,” said Mark Wakefield, a managing director at AlixPartners, a consulting firm with a large automotive practice. “It’s important to get a deal that’s fair and equitable, but also one that doesn’t put you at a competitive imbalance.”

When G.M. and the U.A.W. last negotiated a contract in 2015, a tentative settlement failed to win ratification, and the terms had to be reworked. But the workers never walked out, as they had for 67 days in 1970, when their ranks exceeded 300,000.

Article source: https://www.nytimes.com/2019/10/16/business/gm-uaw-strike.html?emc=rss&partner=rss

What’s Really in the Trade Deal Trump Announced With China

“A deal that isn’t written down isn’t a real deal,” Senator Ron Wyden, Democrat of Oregon, said in a statement.

Longstanding concerns about Chinese economic policies that put American companies at a disadvantage do not appear to have been addressed.

These policies, which are often called “structural issues,” include China’s generous subsidies to certain companies, the outsize role of the government in the economy and its systematic discrimination against foreign firms. In particular, the Trump administration has often criticized Beijing’s ambitious plan to dominate cutting-edge technologies like advanced microchips, artificial intelligence and electric cars, called Made in China 2025.

China has fiercely resisted any American demands that it sees as efforts to interfere with how it runs its economy. Negotiators have discussed some measures, like requiring China to disclose more information about how it subsidizes its industries, and people familiar with the talks say such talks will continue. But American officials made no mention of these issues with regard to the initial agreement.

The agreement also excludes provisions related to the manufacturing sector. And it appears to allow China to retain, for now, its high tariffs on American-made cars.

That is notable, because nonagricultural goods — including cars, car parts and aircraft — account for both the bulk of American exports to China and the very large American trade deficit with China that Mr. Trump has criticized.

Mr. Trump tweeted on Saturday that the deal would include $16 billion to $20 billion in purchases of Boeing planes, but American officials have not shared any other details.

Article source: https://www.nytimes.com/2019/10/15/business/economy/china-trade-deal.html?emc=rss&partner=rss

Nobel Economics Prize Goes to Pioneers in Reducing Poverty

Dr. Duflo and Dr. Kremer have often produced joint studies, including guides on how to use and perform the economic field trials. Dr. Duflo and Dr. Banerjee also collaborate regularly, publishing studies just this year on “Using Gossips to Spread Information” — in which well-connected villagers were selected to spread information and increase vaccination rates — and using police resources to counter drunken driving in India.

The pair have a book, “Good Economics for Hard Times,” coming out in November, following their 2011 book, “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty.”

Peers were quick to applaud the selection.

“Congratulations to Banerjee Duflo and Kremer on the Nobel and to the committee for making a prize that seemed inevitable happen sooner rather than later,” Richard Thaler, a University of Chicago economist who won the award in 2017, said on Twitter.

Dr. Thaler’s award, for his contributions in behavioral economics, was based on real-world observations, and experimental approaches have also been used in labor economics for years, said Lawrence Katz, a Harvard economist. But the new Nobel laureates helped to bring scientific rigor and real-world impact to development economics.

“This is probably the first 21st-century prize in economics,” Dr. Katz said. “This is not stuff worked on 20, 30 years ago — this is stuff that, none of it started until the 2000s.”

Dr. Duflo said she hoped that the Nobel would give development economics added visibility, potentially drawing more women into a field where they are often underrepresented — sometimes driven away by economics’ aggressive posture, sometimes by its finance-focused reputation.

She was a history major in college, but she was intrigued by the stories of global disparity that her mother, a pediatrician, brought back from her work in Madagascar, El Salvador and Rwanda.

Article source: https://www.nytimes.com/2019/10/14/business/nobel-economics.html?emc=rss&partner=rss

The Week in Business: Facebook’s Role in Impeachment

Tensions between the United States and China plagued yet another industry last week: the N.B.A. An exhibition game between the Los Angeles Lakers and the Brooklyn Nets, held in Shanghai on Thursday, was supposed to symbolize common ground between the two countries. (Hey, we all like basketball — maybe our governments can agree on other things, too!) But the N.B.A.’s multibillion-dollar relationship with China became another lightning rod for conflict when an executive at the Houston Rockets tweeted his support for pro-democracy protests in Hong Kong. Chinese television networks dropped the game and some ticket holders boycotted it. Meanwhile, Mr. Trump announced that officials from the two countries had reached a “phase one” trade agreement that would halt the next round of tariff increases on Chinese goods, which were set to go into effect on Tuesday. The deal provides a temporary détente in a yearlong trade war.

Once famous for defining female sexiness (cleavage, minimal body fat, salivating men), the largest lingerie company in the United States has had a long fall in the #MeToo era. The brand laid off 15 percent of its staff last week — an unusual move for a retailer heading into the holiday season, but these are unusual times. Sales have sagged for years as consumers’ underwear tastes shifted toward more inclusive, body-positive brands. And it certainly didn’t help that Victoria’s Secret has been caught up in the Jeffrey Epstein sex-trafficking scandal ever since Lesley Wexner, the chief executive of the store’s parent company, was revealed as one of Mr. Epstein’s biggest financial clients and closest associates.

CreditGiacomo Bagnara

In an effort to prevent a repeat of last year’s devastating wildfires, California’s largest utility, Pacific Gas and Electric, shut down power to hundreds of thousands of homes and businesses in the northern part of the state last week. Citing dry conditions and extreme winds that could damage power lines and spark flames, PGE said the blackouts could last several more days while electrical equipment is inspected. The economic fallout from the power cuts could be huge, but most residents would rather be safe than sorry — especially as fires have already displaced over 100,000 people in the Los Angeles area.

Article source: https://www.nytimes.com/2019/10/13/business/economy/this-week-in-business-facebook-impeachment-power-california.html?emc=rss&partner=rss

Candidates Grow Bolder on Labor, and Not Just Bernie Sanders

In the early stages of the economic recovery a decade ago, most workers were primarily concerned with avoiding unemployment, said Celinda Lake, a Democratic pollster who has conducted research on voters’ economic concerns. But as the expansion has plodded on, the focus has shifted from having any job to having a good job, which workers see as rare.

“You’re really trying to do something about what jobs pay,” Ms. Lake said.

With people increasingly open to more radical tools for accomplishing this, joining a union can seem downright middle of the road. According to recent polling by Pew Research Center, 42 percent of Americans view socialism favorably, up from 29 percent in 2010. During roughly that same time, support for unions has climbed significantly, from less than half to about two-thirds of Americans.

The increased openness to unions and collective bargaining has dovetailed with a palpable shift in expert opinion. For decades, economists tended to play down the importance of unions, attributing much of the increase in income inequality to a growing demand for skilled workers that resulted from automation and the spread of information technology. Some otherwise liberal economists were skeptical or even hostile to unions, seeing them as cartels that drove up wages for their members at the cost of reducing employment.

“I learned this in graduate school in macro — anti-union stuff from people who were highly inclined toward government redistribution,” said the economist and columnist Noah Smith, who earned his Ph.D. at the University of Michigan and has written about economists’ suspicion of unions. “There was this definite anti-union bias among liberals in the economics profession.”

But in recent years, many economists have begun to reconsider those views. Partly this reflects a broader ideological shift in the country away from the market-friendly policy approach of the 1980s and ’90s, which has lost credibility as inequality has widened. “We as social scientists live in a society where clearly the general social and political environment affects the questions we ask,” said Arindrajit Dube, a labor economist at the University of Massachusetts Amherst.

And partly this reflects a proliferation of research, which some of the campaigns have specifically cited, showing that employers have considerable power to hold down wages below the level the market would set.

Whatever the case, there appears to be a growing consensus among center-left economists that unions are a critical check on the tendency of capital to vacuum up the gains from economic growth. A recent paper by economists at Princeton and Columbia showed that unions raised wages for low-skilled workers in the decades in which inequality was narrowing and concluded that unions have “had a significant, equalizing effect on the income distribution.” A recent paper by the centrist Hamilton Project concluded that “unions lift wages, reduce inequality, and shape how work is organized.”

Article source: https://www.nytimes.com/2019/10/11/business/economy/democratic-candidates-labor-unions.html?emc=rss&partner=rss

Trump Reaches ‘Phase 1’ Deal With China and Delays Planned Tariffs

Stocks of companies with heavy exposure to China soared. Shares of Deere Company rose 1.9 percent, while Apple gained 2.7 percent and Wynn Resorts, which generates the bulk of its revenue from casinos in China, surged 6.3 percent. An index of semiconductor companies, which depend on Asian supply chains, gained 2.3 percent.

Business groups expressed relief that the negotiations between the United States and China appeared to be making progress after more than a year of sputtering, yet they acknowledged that the agreement fell short of the sweeping deal that Mr. Trump had promised.

John Neuffer, the president of the Semiconductor Industry Association, said the deal was “welcome news” for his industry that would give “both sides a chance to get back to the negotiating table to strike a more comprehensive deal.”

The initial reaction among Republican lawmakers was cautiously optimistic. Senator Charles E. Grassley of Iowa, the Republican chairman of the Finance Committee, said that any progress was good news, but that Mr. Trump must reach a more substantial deal for the pain of the trade war to have been worthwhile.

“After so much has been sacrificed, Americans will settle for nothing less than a full, enforceable and fair deal with China,” Mr. Grassley said. “I look forward to learning more details in the coming days.”

Trade experts in China were quick to welcome the deal as a breakthrough.

“It the first time since the start of the trade war that negotiators have reached some solid result,” said Cui Fan, a prominent professor of trade policy at the University of International Business and Economics in Beijing.

Mr. Trump’s defenders say China’s concessions will generate positive momentum for future talks and result in more business for farmers and manufacturers as they continue to press Beijing for a broader pact to correct longstanding economic abuses. Critics say that the move will go only part way toward resolving a crisis of the president’s own making, and that the trade war will continue to slow the global economy.

Article source: https://www.nytimes.com/2019/10/11/business/economy/us-china-trade-deal.html?emc=rss&partner=rss

Facebook’s Libra Cryptocurrency Faces Exodus of Partners

As part of that, the social network said, it had more than 27 corporate partners — including PayPal, Visa, Mastercard and companies like Uber — that had pledged to support the project. The partners are important because Libra will be controlled not by the social network but by a broad network of corporations, Facebook said.

Yet many world leaders, regulators and central bankers — including President Trump and Treasury Secretary Steven Mnuchin — immediately criticized Libra and the idea of an unregulated currency. And they questioned whether Facebook, which is grappling with other regulatory issues around privacy and antitrust, should be heading up such an initiative.

In July, David Marcus, the Facebook executive leading Libra, faced two days of questioning in Congress about Libra. Facebook’s chief executive, Mark Zuckerberg, is scheduled to testify at a congressional hearing about Libra on Oct. 23.

Facebook declined to comment on Friday and referred questions to the Libra Association, a Swiss organization that the company created to oversee the project.

The Libra Association is “focused on moving forward and continuing to build a strong association,” said Dante Disparte, its head of policy and communication. Even if the members change, he added, its underlying principles “will remain resilient.” The group plans to hold a meeting on Monday in Geneva to formalize its membership.

Senator Sherrod Brown, a Democrat from Ohio on the Senate’s banking committee, applauded the withdrawals of some of Facebook’s partners from Libra.

“Large payment companies are wise to avoid legitimizing Facebook’s private, global currency,” Mr. Brown said. “Facebook is too big and too powerful, and it is unconscionable for financial companies to aid it in monopolizing our economic infrastructure. I trust others will see the wisdom of avoiding this ill-conceived undertaking.”

Article source: https://www.nytimes.com/2019/10/11/technology/facebook-libra-partners.html?emc=rss&partner=rss