Nominal Wage – Goodwill Savannah GA Fri, 26 Nov 2021 14:33:52 +0000 en-US hourly 1 Nominal Wage – Goodwill Savannah GA 32 32 Not that inflation of the 70s by Jeffrey Frankel Fri, 26 Nov 2021 13:35:00 +0000

Unlike the stagflation of the 1970s, the US recovery from the pandemic-induced recession has been strong, whether judging by GDP or labor market indicators. Today’s economic conditions are therefore reminiscent of the late 1960s, another period of rapid growth and moderately rising inflation.

CAMBRIDGE – Are the United States and other advanced economies experiencing stagflation, the unfortunate combination of high inflation and low output and employment growth that characterized the mid-1970s? At least in the case of America, the answer is no. What the United States is currently facing is moderate inflation, without the stagnant part. It’s reminiscent of the 1960s, not the decade that followed.

To be sure, headline consumer price inflation in the United States hit an unexpected level of 6.2% in October, the highest rate since 1991. Few people still predict a rapid return to 2% inflation , the long-term goal of the US Federal Reserve. Inflation has also reached ten-year highs in the United Kingdom (4.2%) and the European Union (4.4%), although it remains low in Japan.

Unlike the stagflation of the 1970s, however, the U.S. recovery from the pandemic-induced recession of 2020 has been strong, judging by GDP and labor market indicators. Growing demand for goods is facing supply constraints, including bottlenecks in ports and shortages of chips, leading to price inflation. Meanwhile, growing demand for labor is meeting a labor supply constrained by the lingering effects of the pandemic. This has resulted in wage inflation.

The U.S. unemployment rate fell from 14.8% in April 2020 to 4.6% in October 2021, which would have been considered close to full employment for most of the past half century. In contrast, unemployment reached 9% in May 1975, during a period of stagflation. Other current indicators point to an even tighter labor market today: the ratio of job vacancies to the unemployed is the highest on record, as is the quit rate. Wage growth is also on the rise, particularly at the lower end of the wage distribution.

Only participation in the labor market remains significantly depressed. Part of the decline reflects retirements, but much of it is attributable to COVID-19.

Evidence suggests that the problem with the US economy is not insufficient demand, which monetary and fiscal expansion could remedy, but rather inadequate supply, which they cannot. In particular, nominal GDP and direct measures of domestic demand, such as real personal spending or retail sales, have resumed their pre-pandemic long-term trends. When demand exceeds supply, the result is a trade deficit and inflation. We are currently seeing both.

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These are, in a sense, good problems to have. It is clearly better for demand and supply to recover, even if demand rebounds faster, than neither does. The US economy is way ahead of what most thought it would be a year ago. It is also ahead of other countries, such as the UK affected by Brexit, as GDP is now above its pre-pandemic level.

Monetary policy can do nothing to ease capacity constraints. But those constraints could go away on their own over the next year or so, as ports unclog, supply chains reform, the most demanding workers successfully match the jobs they want and the jobs they want. that supply responds to the high prices of those particular sectors facing acute excess demand.

Rather than looking like the 1970s, therefore, the current period is perhaps more like the late 1960s, another period of rapid growth and tight labor markets. Consumer inflation reached 5.5% in 1969.

Some fear that today’s moderate inflation will eventually be built into expectations, trigger a wage-price spiral, and resemble the high and persistent inflation of the 1970s. It is not impossible, and we do not. should not be complacent about inflation. But policymakers are unlikely to repeat the mistakes made at the time.

These mistakes started with increasing government spending to finance the Vietnam War without the tax revenue to pay for it. They continued in 1971, when Fed Chairman Arthur Burns and President Richard Nixon responded to rising inflation with a combination of quick monetary stimulus and doomed wage and price controls. failure. An overheating economy blew the lid off the boiling pot a few years later and inflation topped 12%.

Admittedly, the Fed has been overly optimistic in its inflation forecast this year, expecting price increases to be weaker and more transient. Larry Summers and Olivier Blanchard got it right in February, when they correctly predicted that rapid growth would lead to inflation.

But even though the Fed’s inflation forecast was far from target, its stocks arguably fell short of target. Granted, the Fed didn’t expect to start cutting back on its monthly asset purchases – known as quantitative easing – as early as November 2021. But it has responded appropriately to incoming inflation data, as well. than on the strength of the economy, adjusting the timing of its plans.

Additionally, markets barely reacted to the taper’s announcement of November 3, indicating that (now re-appointed) Fed Chairman Jerome Powell had successfully communicated the central bank rethink – unlike in 1994 and 2013, when the investors had not anticipated the onset of tightening cycles. If the Fed starts raising short-term interest rates in mid-2022, that won’t surprise the markets either.

President Joe Biden can do relatively little to stem the highly unpopular rise in inflation. It has already stepped in to help unblock ports and other logistics in the supply chain. Increased vaccination against COVID-19 would increase labor supply, for example by keeping children in school, although it is difficult to see what more Biden could do here.

A good way to moderate inflation would be to allow more imports. Former President Donald Trump’s tariffs on many products – including aluminum and steel, and nearly all U.S. imports from China – have pushed up prices for consumers. Biden should be able to persuade China and other countries to lower some trade barriers against the United States in exchange for the removal of American tariffs. In any case, trade liberalization could bring some prices down quickly.

Some argue that the new government spending envisioned in Biden’s social spending bill would help increase inflation, either because they disapprove of big government or because a dollar of spending increases demand more than it does. a dollar of tax revenue reduces it. Others believe that the net effect on inflation will be beneficial (especially in the longer term), as many of the planned programs, such as quality universal preschool education, will increase the labor supply. artwork.

Regardless of these arguments, the effect of the new legislation on inflation is expected to be minor. Biden’s infrastructure package and proposed social spending should be judged on their own merits. Rising inflation in the United States reflects the economy’s rapid recovery from the COVID-19 recession, which means we should stick our heads out from the 1970s.

Fed minutes reflect intensifying inflation debate Wed, 24 Nov 2021 20:57:00 +0000

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SAN FRANCISCO, CALIFORNIA – AUG 11: A pedestrian walks past a closed restaurant on August 11, 2020 in San Francisco, California. More than 2,000 businesses in the San Francisco Bay Area have closed permanently and many other small businesses are struggling to stay open as the Coranavirus (COVID-19) pandemic continues across much of the world. (Photo by Justin Sullivan / Getty Images)

The COVID-19 pandemic ushered in massive change in the restaurant industry, many were forced to shut down, while others had to make the decision to downsize and rely more on technology.

But now restaurants have completely reopened and customers are back, and restaurants are looking to hire again. However, the environment is characterized by a shortage of workers: the so-called “big resignation” has left millions of jobs unfilled.

Although the industry is recovering, many restaurant workers have left the industry for good.

Meanwhile, small businesses like Tejeda’s are lagging behind larger corporations in the race to raise wages, making it even more difficult for them to attract a shrinking pool of available workers now that unemployment is on the rise. fell to 4.6% in October. New regulations designed to address concerns about COVID have presented an additional burden, some say.

We cannot face more bureaucracy. That’s enough. We already have enough [before] COVID … so we have a bunch of regulations because of COVID.Paula Tejeda, owner of the café

In San Francisco this summer, the minimum wage for all workers in the city and county rose to $ 16.32 an hour, $ 0.25 more than it previously was at 16.07 $. But some small businesses say they can’t keep up given tight profit margins and skyrocketing prices.

“Hourly wages are very high,” Tejeda explained. “Without the foot traffic we depend on, we’re talking about selling a $ 2 coffee and an $ 8 empanada in three hours when you’re paying $ 18 an hour. I ended up closing three days a week. It just didn’t make sense for me to be open.

What’s more, industry-wide bottlenecks have also forced business owners to wear multiple hats: “from shopping, to garbage collection, to cleaning,” Tejeda said.

It’s a balance between keeping the restaurant afloat and keeping the employees happy.

As the holiday season approaches, business owners are starting to feel the heat of rising inflation, supply chain chaos and labor shortages. The National Restaurant Association reported last month that 4 in 5 operators were understaffed, including 81% of full-service operators and 75% of limited-service operators.

Many have had to increase their prices to afford the salary increases and to be transparent with customers about the reason for the changes. However, Tejeda has yet to do so.

“I can’t pass the expenses on to my clients, the backlash is serious,” Tejeda said.

Meanwhile, other challenges began to arise for Bay Area business owners.

At the height of the pandemic, restaurant parklets – the outdoor catering appliances built on sidewalks and parking lots – were essential to the survival of businesses. However, the city will begin to impose new rules on the now permanent structures, which could mean a financial blow to struggling small businesses.

“They have to give us a little more time to recover,” Tejeda said.

“We cannot face more bureaucracy. That’s enough. We’ve had enough of what pre-COVID meant already, so we have a bunch of regulations because of COVID and now not because of parklets, ”she added.

The fate of al fresco dining

People enjoy alfresco dining as the spread of coronavirus disease (COVID-19) continues, in New York, New York, United States on February 4, 2021. REUTERS / Jeenah Moon

People enjoy alfresco dining as the spread of coronavirus disease (COVID-19) continues, in New York, New York, United States on February 4, 2021. REUTERS / Jeenah Moon

In New York City, al fresco dining has sparked heated debate and prompted city officials to codify one of the most transformative changes of decades. It has become a controversial battle that prompted a group of residents to sue the city last month, detailing complaints about al fresco dining.

Despite the ongoing litigation, the town planning committee voted unanimously on Monday for an amendment to the zoning text that will create a clean slate for the city to develop and regulate a permanent program.

“Open Restaurants has saved over 100,000 industry jobs and countless small businesses from financial collapse, and this yes vote is a critically important first step towards developing a sustainable future for this program. very popular, ”Andrew Rigie, executive director of the NYC Hospitality Alliance, said Yahoo Finance in a statement.

As al fresco dining faces uncertainty, this winter could be a turning point for some restaurants, especially New Yorkers, after the city announced that propane heaters could not be used for provide heat for outdoor dining due to fire safety concerns.

Meanwhile, restaurants have yet to mitigate the effects of a labor shortage and supply chain disruptions that hamper their ability to thrive. Some powerful players have looked to technology to fill in the gaps, especially those facing employee shortages.

Restaurants can be slow to adapt to new technologies because the transition is expensive and complex. But the trend could become imperative for them to thrive after the pandemic.

“There is no doubt that the future of the hospitality industry depends on digitization,” Enrique Ortegon, SVP, SMB, Salesforce, told Yahoo Finance in a statement.

“It has become more imperative than ever for restaurants to adopt technologies that optimize both their customer experience and the productivity of their staff with effective tools and training that prepare them – and their businesses for success.” , he added.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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CFPB Payday Rule Challenged, Possibly Paves The Way For More EWA Programs | Wilson Sonsini Goodrich & Rosati Thu, 11 Nov 2021 18:35:10 +0000

On August 31, 2021, the District Court for the West District of Texas upheld the payment provisions of the 2017 Consumer Financial Protection Bureau (CFPB) rule “Payday, Vehicle Title, and Certain High-Cost Modment Loans”. payday), but on October 15, 2021, the Fifth Circuit extended the suspension of the payday rule while it hears an appeal from the Community Financial Services Association of America Ltd. and the Consumer Service Alliance of Texas. The payday rule initially consisted of two parts: 1) mandatory underwriting provisions; and 2) Payment arrangements. The mandatory underwriting provisions made it an unfair and abusive practice for a lender to grant certain short and long term loans with lump sum payments without performing a repayment capacity analysis. The mandatory underwriting provisions were repealed in July 2020. The payment provisions make it an unfair and abusive practice for a lender to attempt to withdraw funds from a consumer account after two consecutive unsuccessful attempts, unless the lender does receives a new specific authorization. The payment provisions apply to both short and long term lump sum covered loans, including payday and vehicle title loans, and certain other high cost long term loans. The District Court for the Western District of Texas has set a mandatory compliance date for June 2022, but the Fifth Circuit ruling puts that compliance date in jeopardy.

The payday rule helps protect borrowers who can live paycheck to paycheck and are dependent on credit. As an alternative to payday loans, there has been a slight increase in Access to Earned Wage (EWA) programs. EWA programs allow employees to access their earned wages before their employer’s scheduled payday.

Typically, there are two EWA models: 1) the non-recourse business-to-business (B2B) model, where the EWA provider contracts directly with employers; and 2) the “direct to consumer” (D2C) model, in which the EWA provider contracts directly with employees. An increasing number of employers are considering adopting EWA programs as a benefit to attract and retain employees. EWA products represent a short-term liquidity alternative to more expensive options such as payday loans contemplated by the salary rule and high interest credit card debt.

In November 2020, the CFPB issued an advisory opinion providing federal guidance on whether EWA programs can be considered credits under Regulation Z, which implements the Truth in Lending Act (TILA). Through its long-awaited advisory opinion and its subsequent approval order of December 30, 2020, the CFPB defines all the characteristics that distinguish “covered” EWA programs from credit extensions, thus paving the way for the CFPB to grant programs EWA a safe harbor. from any liability under TILA and Regulation Z. The order of approval, issued to Payactiv, Inc., applies the characteristics of a covered EWA program to Payactiv’s business model, ultimately concluding that Payactiv’s EWA program is not an offer or an extension of credit.

EWA providers have sought clarification from the CFPB as to whether an obligation to repay EWA funds constitutes ‘credit’ under TILA and Regulation Z and, therefore, requires EWA providers to quit. ‘They comply with TILA and Z regulation requirements. In its advisory opinion, the CFPB ultimately determined that EWA programs are not credit extensions if they include all of the following features:

  • the EWA program is offered through an employer as a benefit to employees;
  • the salary advanced to an employee does not exceed the employee’s accumulated salary as verified by the employer;
  • the EWA provider does not charge an employee a fee for accessing its EWA funds (beyond the nominal processing fee which “does not involve offering or extending credit”), which obliges the EWA provider to provide EWA funds to an employee’s choice account;
  • the EWA provider only recovers the employee’s advance through employer-facilitated payroll deduction;
  • the EWA Supplier does not retain any legal or contractual claims or remedies against any employee for failure or partial withholding from wages;
  • the EWA Provider discloses to the Employee that the EWA Provider: will not require the Employee to pay any fees or charges (in excess of the Nominal Processing Fee) in connection with the EWA Program; has no claims or contractual remedies against the employee in the event that withholding from wages is insufficient to cover the EWA transaction; and will not engage in debt collection activities, place an EWA transaction with a third party as debt, or report the EWA transaction to a consumer information agency; and
  • the EWA provider does not assess the credit risk of individual employees.

A covered EWA program is not an extension of credit under TILA and Reg Z because EWA transactions do not “give employees the right to defer payment of debt or incur debt and defer payment.” When considering all of the circumstances comparing a credit transaction to an EWA program, EWA providers have no claim against the employee for non-payment, and employees are not charged for participating in the program. EWA. Additionally, EWA providers do not draw credit scores to assess an employee’s credit risk or to report EWA transactions to consumer reporting agencies. Finally, EWA providers do not engage in debt collection activities, nor do they provide or sell EWA transactions to third parties as receivables.

While EWA programs that adhere to the CFPB Advisory Opinion and Order of Approval have some level of certainty regarding TILA and Regulation Z, the CFPB’s position on EWA programs may change under the Biden administration. . In October 2021, nearly 100 organizations co-signed a letter to CFPB urging CFPB to reconsider its position on EWA programs. The November 2020 Advisory Opinion and the December 2020 Approval Order were issued by former CFPB Director Kathy Kraninger. With Director Rohit Chopra at the helm of the CFPB, a number of Trump-era political decisions could be reconsidered.

Summer partner Yewande Alade contributed to the preparation of this opinion Wilson Sonsini.

Future returns: anticipate a return to normal in interest rates Tue, 09 Nov 2021 22:42:00 +0000 Now that the US Federal Reserve is starting to cut back on its monthly bond purchases, investors are anticipating interest rates to return to normal.

Despite the nervousness in the markets on Tuesday, the US stock and bond markets took very different views on the significance of this future shift.

On Wednesday, the Fed announced that it would end its economic stimulus strategy of buying US $ 120 billion in bonds each month, reducing its purchases by US $ 15 billion per month in November and December. At this rate, the program will end in mid-2022.

The stock market immediately reacted with records at all levels. The S&P 500 gained 29.92 points to close at 4660.57, a gain of 0.65%, while the Russell 2000 small-cap equity index jumped 42.42 points to close at 2404.28, a gain of 1.8%.

Meanwhile, most sectors of the bond markets fell, with the exception of long-term Treasuries. The benchmark 10-year Treasury bill fell to 97/232, pushing the yield up 0.031 percentage point to 1.58%.

“The question is, who is going to be right? Is it the equity market that says one thing or the interest rate market that says another, ”says Hans Olsen, chief investment officer at Fiduciary Trust Co., or FTC, a $ 20 billion wealth management firm. based in Boston and serving high net worth clients across the country.

Penta recently spoke with Olsen about the changing rate landscape and what it may mean for investors.

Quality research

While stock markets have generally risen, there are signs that investors are starting to anticipate a different environment, when rates will “normalize” and no longer be artificially low.

A sign is found in what is known as the S&P 500 Equal Weight Index, which gives equal weight to the 500 companies, unlike the real index, which is weighted by market capitalization. The equally weighted index has consistently indicated that the average stock is outperforming the big tech companies that dominate the index.

“We’re starting to see a rotation happening inside the market, where it’s expanding from the technology,” Olsen said. “It’s the market that recognizes that as we get rates normalized, those very long-lived stocks that weigh heavily on growth [and] have little income are redesigned.

As rates rise, “growth-oriented firms become more vulnerable” and higher-quality firms with more consistent profits begin to generate interest, he says.

This trend is also evident in the so-called Russell 2000 Quality Factor Total Return Index, which tracks stocks with strong earnings and profitability. These stocks are starting to outperform the overall index, which is filled with “no income,” says Olsen.

This shift to quality “is a function of the normalization of rates that is manifested in the stock markets,” he says.

While people rightly worry about whether the stock markets can continue to rise, the shift to quality means “that there is always an opportunity within these markets to make money in a way. more refined than before, ”says Olsen.

A return to the 60-40 portfolios?

The traditional model portfolio was invested 60% in stocks and 40% in bonds. Today, this configuration makes little sense to investors, because investing in bonds “dissipates purchasing power,” he says.

Olsen points to data showing negative returns almost everywhere in bond markets, with the Barclays Bloomberg Global Aggregate Bond Index down 4.3% for the year to end of October, and US Treasuries falling 6.1%.

The FTC has recommended that its clients consider private debt as an alternative, or structured securities, such as bonds backed by auto loans and credit card payments, or certain mortgage backed securities. These bonds offer “good credit support” and “a real rate of return on return,” says Olsen.

The only categories with positive returns for the year so far are Global High Yield Bonds (up 1.16%) and Global Inflation-Linked Bonds (up 2.51%), the latter indicating that the market thinks the Fed is wrong about inflation and should be rate lifting, he said.

If rates return to normal, the choice will fall to the bond markets, meaning that investors will once again be able to consider a range of fixed income securities, including quality corporate bonds and junk bonds. And, maybe one day the 60-40 portfolio will make sense again.

The question of inflation

Whether the signs of inflation evident in today’s economy are lasting or not will influence the Fed’s decision to raise rates after cutting its bond purchases. Although the central bank may first consider reducing its balance sheet, which has swelled to more than $ 8 trillion, says Olsen.

He sees signs that inflation will be sticky, which will justify rate hikes. This is in part because of wage pressures caused by supply chain disruptions still resulting from the pandemic. Nominal average hourly earnings for truck drivers and warehouse workers, all of whom make it easy to move goods from one place to another, are at their highest level in three years. Likewise, the wages of employees in the leisure and hospitality sectors are at their highest for three years.

These levels indicate what economists called the “reservation wage,” which is the level of compensation workers need to overcome their job reservation.

“What happened is that the additional employment benefits, however well-intentioned they were, had the side effect of increasing the reserve wage,” says Olsen.

At the same time, research from the Federal Reserve Bank of Atlanta indicates that these salary increases and rising transportation costs are “sticky,” says Olsen.

Increase in rates

At this point, Olsen thinks there’s a 60% chance the Fed will raise rates that have hovered near zero since March 2020 at least once or twice in the latter part of the year. There’s also a 40% chance that hikes will be delayed, he says.

A rate hike will occur “if [the Fed] ends the taper in the middle of the year as expected, then inflation remains stubbornly high, ”Olsen said. It will also depend on how the markets react to rate hikes, as the Fed is keen to keep the markets in order.

Olsen describes the fourth quarter of 2018 as potentially enlightening. Then the Fed had reached the point of a 0.5 percentage point hike in rates and the markets protested strongly. As a result, “the Fed gave in and basically reversed itself,” he says. “It will be interesting to see if that happens this time or not. ”

Olsen’s message to long-term investors is to hang on to what could be a period of market volatility.

“To get to the other side with a more normalized rate environment with market-determined interest rates and choice, we’ll have to go through the ‘valley of volatility’,” Olsen said. “Going to the other side is worth it, but we’re going to have to live with it, so don’t cut and run.”

Snap elections called in Portugal after government collapse amid massive strikes Mon, 08 Nov 2021 05:45:26 +0000

Portuguese President Marcelo Rebelo de Sousa called snap elections on January 30 after Prime Minister António Costa’s minority Socialist Party (PS) government collapsed for seven years amid mass strikes. Parliament voted against the PS’s 2022 budget last week. This is the first time since the Carnation Revolution of 1974 toppled fascist dictator António Salazar Estado Novo regime that a Portuguese budget was rejected.

São Bento Palace

In a televised address, Sousa said that the defeat of the PS budget “has totally reduced the support base of the government” and that 2022 will be “a decisive year for a lasting exit from the pandemic and the social crisis that has plagued us. “. He added: “At times like this, there is always a solution in democracy… to give the voice back to the people. “

Costa refused to resign from his post as interim prime minister, promising to lead the PS campaign for a “reinforced, stable and lasting majority”. The PS held only 108 seats out of 230 in the Portuguese parliament, depending on the support of the Stalinist Communist Party of Portugal (PCP) and the petty bourgeois left bloc (BE). To maintain the pretext that they oppose austerity despite their support for the PS for six years, the BE and the PCP felt compelled to oppose the budget in the October 27 vote in parliament, resulting in its failure immediate.

The ruling elite are terrified of an eruption of class struggle. Early elections are deeply unpopular; in fact, 54 percent of those polled in a recent poll opposed calling an early election. It is widely seen as a dirty maneuver, using nationalism and pseudo-democratic rhetoric in an attempt to quell an upsurge in the class struggle. It comes as unions, under increasing pressure, desperately try to divide, call off and defuse a wave of strikes.

In recent weeks, strikes involving tens of thousands of workers in several sectors have broken out across the country. In September and October, railway workers, teachers, pharmacists, metro workers, pre-hospital first aid workers, tax office workers and prison guards all went on strike.

As Sousa announced the elections on Thursday, workers at the Metropolitano de Lisboa (ML) began the latest in a series of 24-hour strikes against the wage freeze and lack of career advancement.

Last week, the National Union of Professional Firefighters called off a strike for wage increases scheduled for November 11 and 12, arguing that the budget failure and “the foreseeable fall of the government decided in the coming days are factors that justify the withdrawal of the strike. “He said he would present his demands” in due course to the new elected executive. “