Economic and jobs news thread

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caltrek
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One Percent Swing Report for January 21, 2022

https://www.morganstanley.com/content/m ... e-20220121

Introduction:
(Morgan Stanley) US stocks traded lower on Friday as the S&P 500 declined 1.9% to close at 4,398. With the sell-off, the index is now down 7.7% year to date.

US equities extended their losing streak into the weekend, as the S&P 500 fell for the fourth straight session. On a holiday shortened week, with markets closed on Monday in celebration of MLK day, the S&P 500 declined 5.7% while technology stocks continued their recent underperformance, as the Nasdaq 100 fell 7.5%. Recent weakness has coincided with markets digesting a hawkish Federal Reserve and a higher interest rate environment, while Q421 earnings has been in particular focus this week. Friday's sell off appeared to be magnified by a large cap media and streaming company missing subscriber estimates on Thursday afternoon, which weighed on related Communication Services stocks and the broad market. Q421 earnings will continue be the focal point as more than 30% of the S&P 500 market cap reports next week, while Wednesday's FOMC meeting will also be closely watched.

Ten of the 11 S&P 500 sectors traded lower on Friday, with Consumer Staples (+0.02%) and Real Estate (-0.04%) outperforming the broader market, while Consumer Discretionary (-3.1%) and Communication Services (-3.9%) lagged.

Rates were lower across the curve, with the 10-year Treasury yield falling to 1.76% as of the 4 p.m. equity market close. Gold was modestly lower on the day while WTI oil was also lower at just under $85 per barrel. The US dollar was modestly weaker on the trading session, as measured by the US Dollar Index.
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Re: Economic and jobs news thread

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'That raise meant nothing': Inflation is wiping out pay increases for most Americans
Source: Washington Post

“That raise meant nothing,” said Stehlik, 23, whose roommate works at the same hotel. “I’ve got student loans. My roommate’s got medical debt. Most of my co-workers work two or three jobs, and they’re still having difficulty making ends meet.”

After years of barely budging, wage growth is finally at its highest level in decades. A global pandemic, combined with swift government stimulus and unexpected labor shortages have put workers in the driver’s seat, giving them the kind of negotiating power they had never imagined.

But in an unexpected twist, the same strong economic recovery that is emboldening workers is also driving up inflation, leaving most Americans with less spending power than they had a year ago.

Although average hourly wages rose 4.7 percent last year, overall wages fell 2.4 percent on average for all workers, when adjusted for inflation, according to the Labor Department.
Read more: https://www.washingtonpost.com/business ... inflation/
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caltrek
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Re: Economic and jobs news thread

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Cost-of-Living Adjustment (COLA) Information for 2022

https://www.ssa.gov/cola/

Introduction:
(Social Security Administration) Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 5.9 percent in 2022.

The 5.9 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022.

Increased payments to approximately 8 million SSI beneficiaries will begin on December 30, 2021. (Note: some people receive both Social Security and SSI benefits)

The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $147,000.
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Re: Economic and jobs news thread

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Twenty-one States Raised Their Minimum Wages on New Year’s Day
by David Cooper, Krista Faries, and Sebastian Martinez Hickey
January 6, 2022

https://www.epi.org/blog/states-minimum ... -jan-2022/
(Economic Policy Institute) On January 1, minimum wages went up in 21 states. The increases range from a $0.22 inflation adjustment in Michigan to a $1.50 per hour raise in Virginia, the equivalent of an annual increase ranging from $458 to $3,120 for a full-time, full-year minimum wage worker. The updates can be viewed in EPI’s interactive Minimum Wage Tracker and in Figure A and Table 1 below.

In prior years, we have estimated the number of workers who would directly benefit from these increases, as well as the total dollar amount and average wage increase for affected workers in each state. Unfortunately, ongoing data challenges resulting from the COVID-19 pandemic make it difficult to accurately produce estimates of this year’s increases. The pandemic devastated labor markets throughout the country, with a large share of the job losses occurring in low-wage sectors, such as leisure and hospitality, where minimum wage hikes typically affect large shares of workers. Job levels in those sectors have rebounded somewhat over the past year, but that job growth has also been accompanied by stronger than usual wage growth, which—all else equal—will reduce the number of workers affected by minimum wage hikes, since would-be affected workers were already receiving wages at or above the new minimum. Because conditions in these industries are so different from what they were in the period reflected in our model’s underlying (pre-pandemic) data, we cannot use it to make estimations about effects happening right at this moment.

Even so, we know that minimum wage increases are as crucial as ever in the current context—to protect low-wage workers from exploitation and continue toward the goal of a living wage for all workers. From a macroeconomic perspective, it’s smart policy: Low-wage households—who disproportionately benefit from increases to the minimum wage—are highly likely to quickly spend the extra dollars they receive, bolstering consumer demand as the economy continues to recover.
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caltrek
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Re: Economic and jobs news thread

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With Inflation Surging, Big Companies’ Wage Upticks Aren’t Nearly Enough
by Molly Kinder, Katie Bach, and Laura Stateler

https://www.brookings.edu/blog/the-aven ... ly-enough/

Extract:
(Brookings) Like millions of frontline workers around the country, Lisa Harris, a cashier at a Kroger grocery store outside of Richmond, Va., will bring home a larger paycheck this holiday season. For the first time in her 14-year career at Kroger, Harris finally earns more than $15 per hour—about $1.50 more than she did before the COVID-19 pandemic began. But despite the pay bump, Harris doesn’t feel she is getting ahead.

“My money isn’t going as far,” Harris told us in November, reflecting on the impact of quickly rising prices like gas and food. “It isn’t sustaining my day-to-day life. But also, my job is harder. We are extremely understaffed. I am being asked to do more people’s jobs than I already was before…Morale is on the floor and people are threatening to quit.”

So, are frontline workers better off economically today than when the pandemic began? And if they are, is “better” even good enough for what they deserve?

To find out, we analyzed wages for U.S. hourly workers at 13 of the largest and most profitable retail, grocery, and fast food companies in America. (We conducted this analysis as part of a larger report on frontline workers in the pandemic economy, forthcoming in early 2022.) The 13 companies are all household names and among the most influential employers in their industries; together, they employ nearly 5 million U.S. workers. Using company-wide pay policies, we calculated the nominal and real (inflation-adjusted) change in average pay at each company between January 2020 and the end of October 2021. We confirmed the data through direct company communications.

INFLATION HAS ERASED AT LEAST HALF OF THE AVERAGE WAGE GAINS FOR FRONTLINE WORKERS

We found that nominal pay (not factoring inflation) did increase, sometimes significantly, at all but two of the 13 companies. But inflation has erased most of the average gains. Since January 2020, inflation has risen over 7% through October 2021, and nearly 8% through November 2021. Over nearly two years as workers faced a global pandemic, the average wage increase, in real terms, at the average company we assessed was only 3% through October. (Assuming the 13 companies did not raise wages further in the last month, the average wage increase would have been just under 3% through November.) Without inflation, as measured by the Consumer Price Index, the average pay increase would have been 10%
caltrek: While the article correctly stresses the "not enough" aspect of the wage increases, note that those increases are estimated to exceed inflation.
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caltrek
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Re: Economic and jobs news thread

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File this under every little bit helps

IRS Tax Inflation Adjustments

https://www.aotax.com/irs-provides-tax- ... edents.%20

https://www.irs.gov/newsroom/irs-provid ... -year-2022

Extract:
(IRS)
• For the married couples who are filing their tax returns jointly for the tax year 2021, the Standard Deduction rises to $25,100 which is an increase of $300 from the previous year.
• For the married couples who are filing their tax returns separately or for the single individuals, the Standard Deduction would rise to $12,550 which is a rise of $150 from the prior year.
• For the heads of the households, the Standard Deduction would be $18,800 for the tax year 2021 which is an increase of $150 from the previous year.

• The standard deduction for married couples filing jointly for tax year 2022 rises to $25,900 up $800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,950 for 2022, up $400, and for heads of households, the standard deduction will be $19,400 for tax year 2022, up $600.
caltrek's comment: Bummer that the most significant increase in deductions will not kick in until 2022.
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caltrek
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Re: Economic and jobs news thread

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Of course, some folks don't have to worry too much about a trifling thing like inflation.

The Curse of Financial Entrepreneurship
by Robert Reich
January 12, 2022

https://robertreich.substack.com/p/curs ... reneurship

Introduction:
Wall Street may be having a bad week, but top bankers are doing wonderfully well. After a blockbuster year, the five biggest Wall Street banks just paid out $142 billion in bonuses and compensation for 2021. This was $18 billion more than in 2020. JPMorgan Chase reported record profits, and Citigroup’s annual profit more than doubled. Let me remind you (as if you need reminding) that 2020 and 2021 were not exactly blockbuster years for the rest of America.

In the first three decades after World War II, American companies made money by making things, selling them at a profit, and investing the profits in additional productive capacity. This helped create the largest middle class the world had ever seen. In those years, the financial sector accounted for 15 percent of U.S. corporate profits.

Then something happened. By the mid-1980s, the financial sector claimed 30 percent of corporate profits. By 2001, 40 percent — more than four times the profits made in all U.S. manufacturing.
Conclusion:
We are still living with the political and social consequences of America’s turn to financial entrepreneurship. The five biggest Wall Street banks could not have scored record profits these past two years were they not back to many of the same practices that caused them to implode in 2008 and the rest of America to pay the price. Inequalities of income and wealth are far wider now than they were when Wall Street’s bubble burst. I suspect even more Americans today feel the system is rigged by the rich and powerful than they did a few years ago.

It doesn’t have to remain this way. We are not prisoners of bad decisions made in the past. We can and should rein in Wall Street, break up its five giant “too-big-to-fail” banks, support local and state banks, resurrect the Glass-Steagall Act’s divide between investment and commercial banking, tax all financial transactions — and rebuild jobs and wages on the product side of the American economy.
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Re: Economic and jobs news thread

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U.S. banks close record number of retail branches in 2021, Wells Fargo shutters most
U.S. banks closed a record number of retail branches in 2021 as customers increasingly turn to digital banking and the industry consolidates.

On net, U.S. banks shuttered 2,927 branches last year, according to S&P Global Market Intelligence data. Banks closed nearly 4,000 branches and opened more than 1,000 branches, the analysis found...
https://www.cnbc.com/2022/01/21/banks-c ... fargo.html
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caltrek
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Re: Economic and jobs news thread

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In addition to some minor tax relief through adjustment of the standard deductions, the year 2021 also saw the expansion of the Child Tax Credit. Unfortunately, this Biden administration agenda item is now under threat.


If Congress Fails to Act, Monthly Child Tax Credit Payments Will Stop, Child Poverty Reductions Will Be Lost
by Kris Cox, Chuck Marr, Arloc Sherman, and Stephanie Hingten
December 3, 2021

https://www.cbpp.org/research/federal-t ... stop-child

Extract:
(Center on Budget and Policy Priorities) The American Rescue Plan, enacted in March 2021, increased the Child Tax Credit for more than 65 million U.S. children — roughly 90 percent of children — and established advance monthly payments. The enhanced tax credit has enabled parents across the country to pay for food, clothing, housing, and other basic necessities and is expected to lower the number of children experiencing poverty by more than 40 percent as compared to child poverty levels in the absence of the expansion. But Congress must pass the Build Back Better bill to maintain this progress.

The Build Back Better legislation would extend the Rescue Plan’s temporary expansions of the Child Tax Credit, which changed the credit parameters in three main ways for 2021. First, it made the full credit available to families with low or no earnings in a given year, often called making the credit “fully refundable.” Previously, 27 million children — including roughly half of Black and Latino children and half of children in rural communities — received less than the full credit amount, which higher-income children received, because their parents’ income were too low. This change drives most of the significant reduction in child poverty expected from the enhanced Child Tax Credit. Build Back Better would permanently make the credit fully available to children in families with low incomes.

Second, the Rescue Plan increased the maximum credit amount from $2,000 per child to $3,600 for a child under age 6 ($3,000 for a child aged 6-17) for head of household tax filers making less than $112,500 and married tax filers making less than $150,000. Third, it allowed families to claim their 17-year-old children for the credit for the first time. Build Back Better would extend these improvements for one year.
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caltrek
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Re: Economic and jobs news thread

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Biden Praised for $15 Minimum Wage Hike for all Federal Workers
by Brett Wilkins
January 22, 2022

https://www.alternet.org/2022/01/biden-15-minimum-wage/

Introduction:
(Alternet) As a record number of U.S. states and cities raise their minimum wages following a decade of grassroots organizing by the #FightFor15 movement, the Biden administration on Friday directed federal agencies to pay government employees at least $15 an hour.

The U.S. Office of Personnel Management (OPM) issued new guidance to the heads of all executive departments and agencies instructing them to implement the new wage by January 30. Nearly 700,000 federal workers are expected to receive a raise as a result of the new policy, which was first reported by Axios.

OPM Director Kiran Ahuja said in a statement that "as the largest employer in the country, how the federal government treats its workforce has real impact. Raising pay rates across the federal government to a minimum of $15 per hour reflects our appreciation for the federal workforce and our values as a nation."
caltrek's comment: While commendable, there is a problem with this sector-by-sector approach. Some might get left behind. As early as the 1940s, Frederick Hayek warned of resentments that such an approach can engender. Examples based on recent headlines might read as follows:
  • Why should families with children get such credits when those of us without such families are out of luck?
  • Well, that is nice that Social Security recipients get such COLA adjustments, but I don't have such benefits at my workplace.
  • Why should federal employees benefit from an upward adjustment in minimum wage when many in the private sector still work at slavery level rates of compensation?
So, there is something to be said about a UBI approach that ensures everybody benefits, or at least everybody under a certain high level of compensation. Build Back Better also has so many provisions that affect so many different sectors that such complaints, while numerous, can at least be offset by widespread benefits. Unfortunately, those who scream the loudest about the negative effects of inflation are often the least inclined to embrace a more comprehensive approach. Often, because they want to keep tax rates for the ultrarich and corporations low. This leaves well intentioned centrists like Biden with little option but to pursue a sector-by-sector approach, utilizing what authority they do have to benefit some sectors, such as federal employees.
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