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US appears to shake off Omicron and adds nearly half a million January jobs
US appears to shake off Omicron and adds nearly half a million January jobsEconomists had predicted dramatic slump in job growth but labor department figures much better than expected The US economy appeared to shake off the Omicron variant in January as employers added 467,000 new jobs, the labor department reported on Friday.Data for the report was collected in mid-January when the Omicron variant was at its peak in the US. While some economists – and the White House – had predicted a dramatic slump in jobs growth, the number of jobs added was far better than expected.The unemployment rate remained low overall at 4%, down from a pandemic high of 14.8% in April 2020 but up from 3.9% in December.The news comes at a sensitive time for the Biden administration and the Federal Reserve. The US economy is wrestling with soaring inflation and signs of an economic slowdown after last year’s strong rebound.Joe Biden celebrated the jobs news in a speech in Washington. “America is back to work,” Biden said. “History’s been made here.”His comments were in stark contrast to those made by White House officials earlier in the week. In a highly unusual move, the White House sought to manage expectations ahead of the latest jobs figure release, cautioning that Friday’s jobs report could be “confusing” because of the timing of the survey and suggesting that the US would add few or even lose jobs in January.Covid infections have fallen sharply across the US since the report was compiled.The government report follows on from a survey conducted by ADP, the US’s largest private payroll supplier, which reported that companies cut jobs in January for the first time in more than a year. Payrolls fell by 301,000 for the month with more than half the losses coming from the pandemic-sensitive leisure and hospitality industries.“The labor market recovery took a step back at the start of 2022 due to the effect of the Omicron variant and its significant, though likely temporary, impact to job growth,” said Nela Richardson, ADP’s chief economist.There were signs that the jobs market is still recovering ahead of Friday’s report. On Thursday, the labor department reported that new unemployment claims fell to 238,000 for the final week in January, dropping 23,000 from the week prior, a second straight week of falls.TopicsUS economyUS unemployment and employment statisticsUnemployment and employment statisticsCoronavirusOmicron variantUS politicsnewsReuse this content More
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Share the Profits! Why US business must return to rewarding workers properly | Robert Reich
Share the profits! Why US businesses must return to rewarding workers properlyRobert ReichThe economy is booming and corporate profits are huge, but American wages still stagnate. History provides the answer According to this week’s release from the commerce department, the US economy has been growing at its fastest pace in almost 40 years. Corporate profits are their highest in 70 years. And the stock market, although gyrating wildly of late, is still scoring record gains.Where egos dare: Manchin and Sinema show how Senate spotlight corrupts | Robert ReichRead moreSo why do most Americans remain gloomy about the economy? Mainly because their real (inflation-adjusted) wages continue to go nowhere.Steeply-rising profits, economic growth and stock market highs – coupled with near-stagnant wages – has been the story of the American economy for decades. Most economic gains have gone to the top.So why not share the profits?Profit-sharing was tried with great success in the early decades of the 20th century but is now all but forgotten. In 1916, Sears, Roebuck & Co, then one of America’s largest corporations with more than 30,000 employees, announced it would begin to share profits with its employees, giving workers shares of stock and thereby making them part-owners.The idea caught on. Other companies that joined the profit-sharing bandwagon included Procter & Gamble, Pillsbury, Kodak and US Steel.The Bureau of Labor Statistics suggested profit-sharing as a means of reducing “frequent and often violent disputes” between employers and workers. Profit-sharing gave workers an incentive to be more productive, since the success of the company meant higher profits would be shared. It also reduced the need for layoffs during recessions because payroll costs dropped as profits did.By the 1950s, Sears workers had accumulated enough stock that they owned a quarter of the company. And by 1968, the typical Sears salesperson could retire with a nest egg worth well over $1m, in today’s dollars.The downside was that when profits went down, workers’ paychecks would shrink. And if a company went bankrupt, workers would lose all their investments in it. The best profit-sharing plans took the form of cash bonuses that employees could invest however they wish, on top of predictable wages.But profit-sharing with regular employees all but disappeared in large US corporations. Ever since the early 1980s when corporate “raiders” (now private-equity managers) began demanding high returns, corporations stopped granting employees shares of stock, presumably because they didn’t want to dilute share prices. Sears phased out its profit-sharing plan in the 1970s.Yet, just as profit-sharing with regular employees disappeared, profit-sharing with top executives took off, as big Wall Street banks, hedge funds, private equity funds and high-tech companies began doling out huge wads of stock and stock options to their MVPs.The result? Share prices and chief executive pay (composed increasingly of shares of stock and options to buy stock) have gone into the stratosphere, while the wages of the typical worker have barely risen.Researchers have found that before the 1980s, almost all the increases in share prices on the US stock market could be accounted for by overall economic growth. But since then, a large portion of the increases have come out of what used to go into wages.Jeff Bezos, who now owns around 10% of Amazon’s shares, is worth $170.4bn. Other top Amazon executives hold hundreds of millions of dollars of shares. But most of Amazon’s employees, such as warehouse workers, haven’t shared in the bounty.Amazon used to give out stock to hundreds of thousands of its employees. But in 2018 it stopped the practice and instead raised its minimum hourly wage to $15. The wage raise got headlines and was good PR – Amazon is still touting it – but the decision to end stock awards was more significant. It hurt employees far more than the increased minimum helped them.Corporate sedition is more damaging to America than the Capitol attack | Robert ReichRead moreIf Amazon’s 1.2 million employees together owned the same proportion of Amazon’s stock as Sears workers did in the 1950s – a quarter of the company – each Amazon worker would now own shares worth an average of more than $350,000.America’s trend toward higher profits, higher share prices, mounting executive pay but near stagnant wages is unsustainable, economically and politically.Profit-sharing is one answer. But how can it be encouraged? Reduce corporate taxes on companies that share profits with all their workers, and increase taxes on those that do not.Sharing profits with all workers is a logical and necessary step to making the system work for the many, not the few.
Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
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‘We have to fight back’: can Joe Biden recover before the midterms?
‘We have to fight back’: can Joe Biden recover before the midterms? As the president seeks to reset course, a booming economy and receding pandemic reveal encouraging signsSnow fell lightly as Joe Biden stared into the wooded hollow where, just hours before he arrived in Pittsburgh, a half-century old bridge had collapsed. It was a dramatic illustration of what had brought the president to the City of Bridges: his urgent drive to rebuild crumbling US infrastructure.Silicon Holler: Ro Khanna says big tech can help heal the US heartlandRead moreLast year, Biden signed a $1tn infrastructure bill, an achievement that eluded his most recent predecessors and one he was eager to champion after legislative setbacks.“There are another 3,300 bridges here in Pennsylvania, some of which are just as old and just as in decrepit a condition as that one was,” Biden said later, in a speech at a manufacturing research and development center. Funding in the infrastructure law would help repair the Pittsburgh bridge and “thousands of other bridges across the country”.“We’ve got to move,” he said. “The next time, we don’t need headlines saying that someone was killed.”The visit to Pittsburgh was the beginning of an effort by the White House to change the narrative of Biden’s presidency, as he shifts from an inaugural year mired in legislative battles to elections that will determine control of Congress. The new approach was a recognition of a stalled agenda, an unyielding pandemic, rising inflation and flagging popularity.Yet the week brought a much-needed burst of good news, a reminder that the electoral landscape may look very different come November.The supreme court justice Stephen Breyer announced his retirement, giving Biden the opportunity to name his replacement. The commerce department reported that the US economy grew last year at its fastest pace since 1984. US households began receiving free coronavirus tests from the government. And suddenly, after months of gridlock, the administration is optimistic Congress will pass a plan aimed at making the US more competitive against China.Democratic strategists, progressive activists and former party officials welcomed Biden’s use of the bully pulpit, urging him to seize such momentum by touting economic success and drawing sharp contrasts with Republicans.“In the districts, people can’t tell you a thing that’s in Build Back Better but they can tell you to the penny how much a tank of gas is,” said Chuck Rocha, a progressive Democratic strategist. “They can also tell you what their relief check meant to them.”“We just have to not be afraid to beat our chest as Democrats,” he said.‘Toast in the midterms?’Historical patterns suggest Republicans are well-positioned to win the House and possibly the Senate in November. The party that holds the White House typically loses seats during its first midterm elections, the extent of such losses often correlating with a president’s popularity.Biden will use time away from Washington to build support for his legislative priorities while highlighting what his administration has accomplished: a poverty reducing coronavirus stimulus package, the infrastructure law, full vaccination of more than 210 million Americans.Strategists say his travels may remind Americans why they voted for him.Biden began his presidency with high approval ratings and broad public confidence in his ability to confront the pandemic. But the national mood darkened, sending Biden’s popularity spiraling, including among Black, Latino, female and young voters – core segments of his coalition. A survey by Pew Research this week found the president’s approval rating down to 41%, from a high of 59% in April.“We need to get Biden’s approval numbers up or else we’re toast in the midterms,” warned Lanae Erickson, senior vice-president at the moderate think tank Third Way.Disappointment with Biden’s handling of the pandemic is a key factor weighing down such ratings. Now that vaccines have proven effective, including against fast-spreading variants like Omicron, Erickson said voters want to hear the White House strategy for living with the virus.“Right now people are hearing a lot of ‘Stay home, stay safe’ from Democrats. But people are tired of staying home,” she said. “We have to be the party that’s talking about getting people back to work.”Biden’s relatively infrequent travel during his first year in office was partly due to the pandemic. But he was also grounded by negotiations on Capitol Hill. In September, the White House canceled a trip to Chicago so Biden could hammer out a deal on his domestic spending package, only to see such efforts collapse soon after.This month, Biden’s visit to Capitol Hill to pressure Democrats to pass voting rights protections was forestalled by Senator Kyrsten Sinema, who declared her opposition to changing the filibuster, thereby dooming the legislation, in a speech just before the president’s arrival.Pittsburgh bridge collapses hours before Biden’s infrastructure speech in cityRead moreBiden appeared to acknowledge that his involvement with negotiations on Capitol Hill hurt his standing with voters, who wanted to see him govern more like a commander-in-chief. Defending his reputation as a bipartisan dealmaker, built over 36 years in the Senate, Biden conceded that the role of president required a different type of engagement.“The public doesn’t want me to be the ‘president-senator,’” he told reporters this month. “They want me to be the president and let senators be senators.”The retirement of Justice Breyer immediately put a spotlight on one of the most consequential responsibilities of any presidency: filling a vacancy on the supreme court. At a press conference this week, Biden said he would draw up a list of candidates based on his promise to nominate a Black woman.Stefanie Brown James, co-founder and executive director of the Collective Pac, which aims to build Black electoral power, said the assurance “felt monumental”, particularly after the disappointments on domestic spending and voting rights.Though the replacement would do little to shift the ideological composition of the court, after three Trump-era appointments created a conservative supermajority, James said appointing a Black woman would “right a historic wrong”.Antjuan Seawright, a South Carolina Democratic strategist, said the chance for Biden to add a woman of color could be a “galvanizing” moment for Democrats, a reminder to supporters Biden can still deliver on his promises.“The president won because of our votes, Black voters, the most consequential and loyal voting bloc in the country,” Seawright said. “And so this is going to remind them of the net worth of their vote and why it’s important to keep showing up.”‘Look people in the eye’A natural retail politician with a zeal for campaigning, Biden lamented that he had so few opportunities to “look people in the eye” in his first year as president.On Tuesday, he stepped out of the White House to visit a boutique that opened during the pandemic, purchasing a necklace for his wife and a coffee mug featuring the face of Kamala Harris, his vice-president. The excursion also included a stop for ice-cream, where he posed with employees after greeting US Marines.On Wednesday, Biden bantered with the General Motors chief executive, Mary Barra, about the speed of a new electric vehicle, during a White House roundtable with the heads of major US companies.“I’m looking for a job, Mary,” quipped the president, a car enthusiast, after Barra told him the vehicle went from “zero to 60 in three seconds”.Next week, Biden will travel to New York to discuss plans for combatting gun crime with Mayor Eric Adams, after the fatal shooting of two police officers. The White House has sought to elevate efforts to combat rising violent crime as Republicans attempt to portray the country as lawless. Centrist Democrats believe Adams, a retired NYPD captain who campaigned on a promise to reduce crime, offers a model for how the party can beat back such attacks.The White House insists the president hasn’t given up on passing Biden’s Build Back Better agenda or voting protections, but is scaling back his involvement – and his ambitions. Activists and progressives are pressing him to ramp up use of his executive authority.Cristina Tzintzún Ramirez, president of NextGen America, a youth voting organization, said canceling student debt was one of the “most basic and critical” steps Biden could take to deliver for young people. She said the issue was a top priority for voters under 35, and would help fulfil a promise to reduce the racial wealth gap.Biden has expressed doubt whether he has the legal authority to enact widespread student loan forgiveness. In December, he extended a moratorium on student loan payments put in place by the Trump administration in the early days of the pandemic.“Young folks overwhelmingly supported the Biden administration and now it’s up to the Biden administration to support young people,” Tzintzún Ramirez said. “We understand they can’t pass every single policy but on student debt they hold the power to make it happen.”‘Best messenger’If Biden’s standing slips further, his visits could become a political headache for Democrats in battleground states.American muckrakers: Peter Schweizer, James O’Keefe and a rightwing full court pressRead moreOn Friday, a leading Democratic contender in the Pennsylvania governor’s race was noticeably absent from Biden’s Pittsburgh event, citing a scheduling conflict. Earlier in the month, Stacey Abrams, the leading Democratic candidate for governor in Georgia, also cited a scheduling conflict for her absence at Biden’s Atlanta speech on voting rights, which was boycotted by some civil rights groups. Beto O’Rourke said he was “not interested” in help from the president or any national politician in his bid to become governor of Texas.Ed Rendell, a former governor of Pennsylvania, said Biden was still the “best messenger to motivate our rank-and-file Democrats” in battleground states.But Rendell said the time for bipartisan backslapping had passed. Biden’s message to voters, he said, must be clear: Republicans, not Democrats, are squarely to blame for his stalled agenda.“We have to fight back with the weapons at our disposal,” Rendell said. “We’d rather negotiate peace … but we’re not going to fight with a hand tied behind our back.”TopicsJoe BidenBiden administrationUS politicsUS midterm elections 2022DemocratsUS CongressUS SenatefeaturesReuse this content More
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The US jobs report was a warning sign – even before the Omicron surge | Robert Reich
The US jobs report was a warning sign – even before the Omicron surgeRobert ReichThe Fed wants to raise interest rates and coronavirus support programs are ending. Millions of families stand to suffer Friday’s jobs report from the Department of Labor was a warning sign about the US economy. It should cause widespread concern about the Fed’s plans to raise interest rates to control inflation. And it should cause policymakers to rethink ending government supports such as extended unemployment insurance and the child tax credit. These will soon be needed to keep millions of families afloat.US workforce grows by just 199,000 in disappointing DecemberRead moreEmployers added only 199,000 jobs in December. That’s the fewest new jobs added in any month last year. In November, employers added 249,000. The average for 2021 was 537,000 jobs per month. Note also that the December survey was done in mid-December, before the latest surge in the Omicron variant of Covid caused millions of people to stay home.But the Fed is focused on the fact that average hourly wages climbed 4.7% over the year. Central bankers believe those wage increases have been pushing up prices. They also believe the US is nearing “full employment” – the maximum rate of employment possible without igniting even more inflation.As a result, the Fed is about to prescribe the wrong medicine. It’s going to raise interest rates to slow the economy – even though millions of former workers have yet to return to the job market and even though job growth is slowing sharply. Higher interest rates will cause more job losses. Slowing the economy will make it harder for workers to get real wage increases. And it will put millions of Americans at risk.The Fed has it backwards. Wage increases have not caused prices to rise. Price increases have caused real wages (what wages can actually purchase) to fall. Prices are increasing at the rate of 6.8% annually but wages are growing only between 3-4%.The most important cause of inflation is corporate power to raise prices.Yes, supply bottlenecks have caused the costs of some components and materials to rise. But large corporations have been using these rising costs to justify increasing their own prices when there’s no reason for them to do so.Corporate profits are at a record high. If corporations faced tough competition, they would not pass those wage increases on to customers in the form of higher prices. They’d absorb them and cut their profits.But they don’t have to do this because most industries are now oligopolies composed of a handful of major producers that coordinate price increases.Yes, employers have felt compelled to raise nominal wages to keep and attract workers. But that’s only because employers cannot find and keep workers at the lower nominal wages they’d been offering. They would have no problem finding and retaining workers if they raised wages in real terms – that is, over the rate of inflation they themselves are creating.Astonishingly, some lawmakers and economists continue to worry that the government is contributing to inflation by providing too much help to working people. A few, including some Democrats like Joe Manchin and Kyrsten Sinema, are unwilling to support Biden’s Build Back Better package because they fear additional government spending will fuel inflation.Joe Biden needs to stand up and fight Manchin like our lives depend on it | Daniel SherrellRead moreHere again, the reality is exactly the opposite. The economy is in imminent danger of slowing, as the December job numbers (collected before the Omicron surge) reveal.Many Americans will soon need additional help since they can no longer count on extra unemployment benefits, stimulus payments or additional child tax credits. This is hardly the time to put on the fiscal brakes.Policymakers at the Fed and in Congress continue to disregard the elephant in the room: the power of large corporations to raise prices. As a result, they’re on the way to hurting the people who have been taking it on the chin for decades – average working people.
Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
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Democrats worry inflation could imperil agenda and congressional majorities
Democrats worry inflation could imperil agenda and congressional majoritiesRepublicans blame Biden’s spending packages but supporters argue Build Back Better will help Americans pay their bills As recently as this summer, Joe Biden seemed to be taking a “keep calm and carry on” approach when it came to concerns about rising inflation.“As our economy has come roaring back, we’ve seen some price increases,” the US president said in July. “Our experts believe and the data shows that most of the price increases we’ve seen were expected and expected to be temporary.”But now, with inflation hitting a 30-year high last month, Biden’s tone has become noticeably less upbeat.“Everything from a gallon of gas to a loaf of bread costs more,” Biden said in Baltimore earlier this month. “We still face challenges, and we have to tackle them. We have to tackle them head on.”Americans are taking notice of high prices with growing alarm, and their concerns appear to be negatively affecting Biden’s approval rating, which had already been falling in recent months. As the US experiences sticker shock at the gas pump and in grocery stores, Democrats are worried that inflation could imperil their legislative agenda and their majorities in Congress as crucial midterm elections loom next year.While the president and fellow Democrats had previously sought to downplay rising inflation, it has become an unavoidable issue as prices continue to climb. The labor department has reported that prices increased by 6.2% over the past 12 months, marking the most rapid uptick since 1990. Gasoline prices have increased by 49.6% over the past year, while food prices have risen by 5.3%.As prices rise, more working Americans are noticing their bills have become more burdensome. According to a poll conducted by the progressive firm Navigator Research this month, 54% of Americans now say the cost of groceries and gas is a “major crisis”, marking a 17-point increase since September.Republicans have blamed the price increases on Biden’s economic policies, arguing that rising inflation underscores the need to oust Democratic lawmakers in the midterm elections next year.“As Biden and Democrats continue to push for trillions more in reckless spending and higher taxes, skyrocketing prices and a broken supply chain under Biden are crushing American families, workers and small businesses,” said Emma Vaughn, a spokesperson for the Republican National Committee. “Americans will soundly reject Biden’s failed economic agenda at the ballot box in 2022.”There are some early signs that Republicans’ message is striking a chord with voters, as the party looks to take back control of Congress in 2022.An AP VoteCast survey showed that 35% of Virginia voters named the economy and jobs as the most important issue facing the state, making it the most common response. Those voters were more likely to support the Republican gubernatorial candidate Glenn Youngkin, who defeated Democrat Terry McAuliffe by two points in the election held earlier this month.And it’s not just Republicans who are sounding the alarm about price hikes. Senator Joe Manchin, one of the key holdouts in Democrats’ negotiations over their $1.75tn spending package, has said he is hearing more from constituents who are concerned about their gas and grocery bills.“By all accounts, the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse,” Manchin said in response to the labor department’s latest report. “From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day.”Manchin has previously expressed concern that Democrats’ spending package, known as the Build Back Better Act, could negatively contribute to inflation. In a September op-ed for the Wall Street Journal, Manchin warned against approving more government spending, saying, “An overheating economy has imposed a costly ‘inflation tax’ on every middle- and working-class American.”The Biden administration has sought to mitigate inflation-related concerns about the bill, which passed the House on Friday. The president has repeatedly touted a letter from 17 Nobel laureates in economics, which argued the spending package would “ease longer-term inflationary pressures”.But the bill’s critics say the legislation would not address the inflation happening now and may even cause prices to rise further, urging members of Congress not to approve another large spending package.“We’re not worried about the long-term. We have inflation in the here and now, and this policy will make it worse in the foreseeable future,” said Curtis Dubay, a senior economist at the US Chamber of Commerce, a pro-business lobbying group that opposes the spending package.“The first rule of being in a hole is to stop digging,” Dubay added. “This would keep digging. So they need to not pass it.”Jason Furman, who served as the chair of the White House council of economic advisers under Barack Obama, rejected that argument. “Build Back Better will have a negligible impact on inflation over the medium term,” Furman said. “In gross terms, the total spending is one-tenth as much per year as what we just did this year [with the coronavirus relief package]. Moreover, that spending is paid for.”For progressives, conservatives’ warnings about inflation seem a convenient excuse to quash a bill that they already opposed.Natalia Salgado, the director of federal affairs for the progressive Working Families party, said the legislation would actually help average Americans deal with rising inflation by lowering their healthcare and childcare costs.For example, the Build Back Better Act would establish universal prekindergarten for all three- and four-year-old children. It would also reduce Affordable Care Act premiums and lower drug prices by allowing Medicare to negotiate with pharmaceutical companies.“If we really want to have a discussion about inflation, let’s talk about the many things that this bill is going to help minimize the cost of,” Salgado said. “Folks coming out of this pandemic were already hurting economically. It is economically imperative to pass the Build Back Better legislation.”Democrats in Congress have echoed that message, urging those who are worried about inflation to support the bill.“House Democrats’ infrastructure deal and Build Back Better Act tackle inflation head on through their historic investments,” said Congressman Sean Patrick Maloney, the chair of the Democratic Congressional Campaign Committee. “Rather than working to solve economic problems, Republicans have voted overwhelmingly to block these bills that reduce prices for the American people and focused instead on their own extremist agenda.”But many of the provisions of the Build Back Better bill will not go into effect immediately. The Medicare drug price negotiations will not begin until 2025, and the universal prekindergarten program will be built up over the next few years.In the short term, it may be difficult for Biden to address rising prices. Even if the Federal Reserve moves quickly to stifle inflation, it would take months for Americans to feel the effect of the fiscal policy change. And when it comes to gas prices specifically, Biden has little sway over the global oil market, although he has called on the Federal Trade Commission to investigate “mounting evidence of anti-consumer behavior by oil and gas companies”.“Politically, people are very sensitive to inflation in gasoline prices and food because that’s just a visible item they see,” Furman said. “I’ve been in government when gas prices are going up, and it’s terrible. Everyone hates you.”On the plus side for Democrats, the frequent fluctuations in gas and food prices mean those costs could decrease over the next year even if overall inflation continues to rise, Furman said.That possibility may be Democrats’ best hope for maintaining control of Congress after the 2022 elections. However, if prices do not improve over the coming year, the president’s party may need to brace for an ugly election night next November.TopicsUS economyInflationDemocratsUS politicsanalysisReuse this content More
