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Subsiding COVID-19 Infections Boost U.S. Private Payrolls in September
U.S. private payrolls increased more than expected in September as COVID-19 infections started subsiding, boosting hiring at restaurants and other high-contact businesses, Reuters reported. The ADP National Employment Report released on Wednesday supported expectations that job growth picked up last month, though it has a poor record predicting the private payrolls count in the Labor Department's more comprehensive and closely watched employment report. September's employment report, due on Friday, will garner more attention after the Federal Reserve signaled last month that it would likely begin reducing its monthly bond purchases as soon as November. Fed Chair Jerome Powell believes the economy is one "decent" monthly employment report short of meeting the U.S. central bank's threshold for tapering its bond-buying program. Private payrolls increased by 568,000 jobs last month, the ADP National Employment Report showed. Data for August was revised lower to show 340,000 jobs added instead of the initially reported 374,000. Economists polled by Reuters had forecast that private payrolls would increase by 428,000 jobs.
Toymakers Race to Get Products on Shelves Amid Supply Clogs
Running out of time to get its products on store shelves ahead of the holidays, the Basic Fun toy company made an unprecedented decision: It’s leaving one-third of its iconic Tonka Mighty Dump Trucks destined for the U.S. in China, the Associated Press reported. Given surging prices for shipping containers and clogs in the supply network, transportation costs to get the bulky yellow toy to U.S. soil is now 40% of the retail price, which is roughly $26. That’s dramatically up from 7% a year ago. And it doesn’t even include the cost of getting the product from U.S. ports to retailers. “We’ve never left product behind in this way,” says Jay Foreman, CEO of Basic Fun. “We really had no choice.” Toy companies are racing to get their products to retailers as they grapple with a severe supply-network crunch that could mean sparse shelves for the holidays. They’re trying to find containers to ship their goods while searching for alternative ports. Some are flying in some of the toys instead of shipping by boat to ensure delivery before Dec. 25. And in cases like Basic Fun, they are leaving toys behind in China and waiting for costs to come down. Like all manufacturers, toy companies have been facing supply-chain woes since the pandemic started and temporarily closed factories in China in early 2020. Then, U.S. stores temporarily cut back or halted production amid lockdowns. The situation has only worsened since the spring, with companies having a hard time meeting surging demand for all sorts of goods from shoppers re-entering the world.
Analysis: Falling Unemployment Could Add to Worries About the U.S. Labor Market
The Labor Department’s official unemployment rate — the most well-known gauge of the labor market’s health — counts as unemployed only those who aren’t working but are actively seeking a job. That leaves out millions who stopped working and looking for work since the coronavirus hit the economy in early 2020, leaving many businesses struggling to hire, the Wall Street Journal reported. A September drop would be good news if it primarily reflects job growth. Economists estimate that employers added 485,000 jobs to payrolls last month, which would be a pickup from August but not as large as the monthly gains of early summer. But the decline would be worrisome if it is also due to potential workers staying on the sidelines. In Friday’s report, economists will be closely watching the labor-force participation rate, or the share of adults working or seeking work. It has held at or below 61.7% since April, well down from 63.4% in January 2020.
Democrats Weigh Cutting Programs or Reducing Scope to Trim $3.5 Trillion Bill
Democrats, working to unite around a far-reaching social policy and climate bill, are weighing two different approaches to reduce its overall cost: eliminating proposed programs entirely or cutting their duration, the Wall Street Journal reported. Democrats’ debate over the two options took on fresh urgency this weekend after President Biden said Friday that they would have to shrink the size of the legislation, projected to spend $3.5 trillion over a decade to expand and create education, healthcare, climate and other programs. Centrists opposed that amount of spending, questioning the cost and the potential impact on inflation. Mr. Biden told House Democrats that, after negotiations with centrists, he expects the overall tab to fall between $1.9 trillion and $2.3 trillion, according to people familiar with his remarks. Progressive Democrats, who backed the $3.5 trillion level, acknowledged yesterday of the need to scale back the legislation to reach a compromise, though they said that there’s no agreement on how much. To get to a lower spending range, some lawmakers, including progressives, are looking at shortening the timeline for the proposed spending, aides said, while others, including some centrists, want to focus the funds on a smaller number of programs.
House Delays Infrastructure Vote
House Democratic leaders late yesterday postponed a vote yet again on the bipartisan infrastructure bill amid threats from progressives to tank it as leverage for a separate, larger package to expand social safety net programs, The Hill reported. After a long day of meetings between Speaker Nancy Pelosi (D-Calif.) and the warring centrist and progressive factions of the caucus, as well as with White House staff, Democrats opted to delay a vote planned for Thursday rather than allow an embarrassing public failure on the House floor. Democratic leadership and the White House were hoping they could reach an agreement on a framework for the larger reconciliation bill that would convince House progressives to vote for the Senate-passed bipartisan infrastructure bill. Progressives worry that if they help pass the bipartisan bill before the reconciliation framework is agreed upon, centrists won't help them pass the reconciliation bill packed with progressive priorities. But as the night wore on, a deal on a framework with two key Democratic centrists, Sens. Joe Manchin (W.Va.) and Kyrsten Sinema (Ariz.), remained elusive despite haggling with top White House staff.
New York’s MTA Running on ‘Borrowed Time,’ Comptroller Says
New York’s Metropolitan Transportation Authority, the largest U.S. mass-transit provider, is running on borrowed time, facing budget and revenue challenges as federal aid is set to tap out in 2025, State Comptroller Thomas DiNapoli said in a report yesterday, Bloomberg News reported. Ridership sank on the MTA’s New York City system of subways, buses and commuter rails during the coronavirus pandemic. Its subway system is still only carrying about half the number of weekday passengers it did in 2019. Recent severe weather has pummeled the transit network with record rainfall, flooding subway stations and suspending service. While $14.5 billion of federal aid is covering the sharp drop in fare-box revenue collections, the MTA estimates it will deplete those funds in 2025. The risk of permanently lower ridership, damage from extreme weather and the end of federal assistance are challenges for the MTA that can turn into emergencies if not dealt with promptly, according to DiNapoli. “Bringing riders back, protecting against extreme weather and maximizing new sources of revenue are all challenges the MTA needs to address before emergency federal funds dry up in 2025,” DiNapoli said. “After that, the MTA faces enormous budget shortfalls that could harm the regional economy, with no easy solutions.”
Amid Reports of Homelessness and Food Insecurity, 25,000 Employees Sue Disneyland for Better Pay
“We feel like there’s always somebody else that will fill our spot,” Disneyland cast member Gabriel Sarracino told SFGATE, “and we’re just there.” Sarracino has worked at the Disneyland Hotel for 15 years as a valet, parking cars and assisting guests with their luggage. For all of those 15 years, he’s earned minimum wage from Disney and supplemented his income with tips. But a recent decision from leadership that prevents valets from handling luggage has cut substantially into his earnings. He’s now one of the 25,000 cast members, as Disneyland calls its employees, who are participating in the class action lawsuit against Disneyland that alleges the company is legally obligated to pay a living wage. Sarracino considers himself fortunate that his wife and two young children are getting by in affordable housing, but not every cast member at Disneyland can claim the same. In fact, according to a survey of 5,000 cast members, many are experiencing difficult living conditions because of low pay. “Working for the Mouse,” a study by Occidental College and the Economic Roundtable published in February 2018, found that 11% of Disneyland employees reported experiencing homelessness in the previous two years, 68% were food insecure and 73% said they do not earn enough for basic living expenses. While many employees said they would like to take on second jobs, Disneyland often schedules most workers different hours every week, preventing them from doing so. Other cast members sleep in their cars, or make two-hour drives each way to sleep at relatives’ homes or experience food insecurity, the New York Times found shortly after the survey was released. That may have all happened three years ago, but the time between then and now, including a pandemic and a surging real estate market, has not been kind to low-income earners. In 2020, the Orange County Food Bank distributed an average of 6 million pounds of food monthly — roughly three times their previous monthly distribution high.