Last year, Klaussner Home Furnishings was so desperate for workers that it began renting billboards near its headquarters in Asheboro, N.C., to advertise job openings. The steep competition for labor drove wages for employees on the furniture maker’s production floor up 12 to 20 percent. The company began offering $1,000 signing bonuses to sweeten the deal.
“Consumer demand was through the roof,” said David Cybulski, Klaussner’s president and chief executive. “We just couldn’t get enough labor fast enough.”
But in recent months, Mr. Cybulski has noticed that frenzy die down.
Hiring for open positions has gotten easier, he said, and fewer Klaussner workers are leaving for other jobs. The company, which has about 1,100 employees, is testing performance rewards to keep workers happy rather than racing to increase wages. The $1,000 signing bonus ended in the spring.
“No one is really chasing employees to the dollar anymore,” he said.
By many measures, the labor market is still extraordinarily strong even as fears of a recession loom. The unemployment rate, which stood at 3.7 percent in August, remains near a five-decade low. There are twice as many job openings as unemployed workers available to fill them. Layoffs, despite some high-profile announcements in recent weeks, are close to a record low.
Walmart and Amazon have announced slowdowns in hiring; others, such as FedEx, have frozen hiring altogether. Americans in July quit their jobs at the lowest rate in more than a year, a sign that the period of rapid job switching, sometimes called the Great Resignation, may be nearing its end. Wage growth, which soared as companies competed for workers, has also slowed, particularly in industries like dining and travel where the job market was particularly hot last year.
More broadly, many companies around the country say they are finding it less arduous to attract and retain employees — partly because many are paring their hiring plans, and partly because the pool of available workers has grown as more people come off the economy’s sidelines. The labor force grew by more than three-quarters of a million people in August, the biggest gain since the early months of the pandemic. Some executives expect hiring to keep getting easier as the economy slows and layoffs pick up.
“Not that I wish ill on any people out there from a layoff perspective or whatever else, but I think there could be an opportunity for us to ramp some of that hiring over the coming months,” Eric Hart, then the chief financial officer at Expedia, told investors on the company’s earnings call in August.
The State of Jobs in the United States
Economists have been surprised by recent strength in the labor market, as the Federal Reserve tries to engineer a slowdown and tame inflation.
Taken together, those signals point to an economic environment in which employers may be regaining some of the leverage they ceded to workers during the pandemic months. That is bad news for workers, particularly those at the bottom of the pay ladder who have been able to take advantage of the hot labor market to demand higher pay, more flexible schedules and other benefits. With inflation still high, weaker wage growth will mean that more workers will find their standard of living slipping.
But for employers — and for policymakers at the Federal Reserve — the calculation looks different. A modest cooling would be welcome after months in which employers struggled to find enough staff to meet strong demand, and in which rapid wage growth contributed to the fastest inflation in decades. Too pronounced a slowdown, however, could lead to a sharp rise in unemployment, which would almost certainly lead to a drop in consumer demand and create a new set of problems for employers.
Recent research from economists at the Federal Reserve Banks of Dallas and St. Louis found that there had been a huge increase in poaching — companies hiring workers away from other jobs — during the recent hiring boom. If companies become less willing to recruit workers from competitors, and to pay the premium that doing so requires, or if workers become less likely to hop between jobs, that could lead wage growth to ease even if layoffs don’t pick up.
There are hints that could be happening. A recent survey from another career site, ZipRecruiter, found that workers have become less confident in their ability to find a job and are putting more emphasis on finding a job they consider secure.
“Workers and job seekers are feeling just a little bit less bold, a little bit more concerned about the future availability of jobs, a little bit more concerned about the stability of their own jobs,” said Julia Pollak, chief economist at ZipRecruiter.
Some businesses, meanwhile, are becoming a bit less frantic to hire. A survey of small businesses from the National Federation of Independent Business found that while many employers still have open positions, fewer of them expect to fill those jobs in the next three months.
More clues about the strength of the labor market could come in the upcoming months, the time of year when companies, including retailers, traditionally ramp up hiring for the holiday season. Walmart said in September that this year it would hire a fraction of the workers it did during the last holiday season.
The signs of a cool-down extend even to leisure and hospitality, the sector where hiring challenges have been most acute. Openings in the sector have fallen sharply from the record levels of last year, and hourly earnings growth slowed to less than 9 percent in August from a rate of more than 16 percent last year.
Until recently, staffing shortages at Biggby Coffee were so severe that many of the chain’s 300-plus stores had to close early some days, or in some cases not open at all. But while hiring remains a challenge, the pressure has begun to ease, said Mike McFall, the company’s co-founder and co-chief executive. One franchisee recently told him that 22 of his 25 locations were fully staffed and that only one was experiencing a severe shortage.
“We are definitely feeling the burden is lifting in terms of getting people to take the job,” Mr. McFall said. “We’re getting more applications, we’re getting more people through training now.”
The shift is a welcome one for business owners like Mr. McFall. He said franchisees have had to raise wages 50 percent or more to attract and retain workers — a cost increase they have offset by raising prices.
“The expectation by the consumer is that you are raising prices, and so if you don’t take advantage of that moment, you are going to be in a pickle,” he said, referring to the pressure to increase wages. “So you manage it by raising prices.”
So far, Mr. McFall said, higher prices haven’t deterred customers. Still, he said, the period of severe staffing shortages is not without its costs. He has seen a loss in sales, as well as a loss of efficiency and experienced workers. That will take time to rebuild, he said.
“When we were in crisis, it was all we were focused on,” he said. “So now that it feels like the crisis is mitigating, that it’s getting a little better, we can now begin to focus on the culture in the stores and try to build that up again.”
TikTok recently tried to tamp down concerns from U.S. lawmakers that it poses a national security threat because it is owned by the Chinese internet company ByteDance. The viral video app insisted it had an arm’s-length relationship with ByteDance and that its own executive was in charge.
“TikTok is led by its own global C.E.O., Shou Zi Chew, a Singaporean based in Singapore,” TikTok wrote in a June letter to U.S. lawmakers.
But in fact, Mr. Chew’s decision-making power over TikTok is limited, according to 12 former TikTok and ByteDance employees and executives.
Zhang Yiming, ByteDance’s founder, as well as by a top ByteDance strategy executive and the head of TikTok’s research and development team, said the people, who declined to be identified for fear of reprisals. TikTok’s growth and strategy, which are led by ByteDance teams, report not to Mr. Chew but to ByteDance’s office in Beijing, they said.
increasingly questioned TikTok’s data practices, reigniting a debate over how the United States should treat business relationships with foreign companies.
On Wednesday, TikTok’s chief operating officer testified in Congress and downplayed the app’s China connections. On Thursday, President Biden signed an executive order to sharpen the federal government’s powers to block Chinese investment in tech in the United States and to limit its access to private data on citizens.
a March interview with the billionaire investor David Rubenstein, whose firm, the Carlyle Group, has a stake in the Chinese giant. Mr. Chew added that he had become familiar with TikTok as a “creator” and amassed “185,000 followers.” (He appeared to be referring to a corporate account that posted videos of him while he was an executive at Xiaomi, one of China’s largest phone manufacturers.)
Jinri Toutiao. The two built a rapport, and an investment vehicle associated with Mr. Milner led a $10 million financing in Mr. Zhang’s company that same year, three people with knowledge of the deal said.
The news aggregator eventually became ByteDance — now valued at around $360 billion, according to PitchBook — and owns TikTok; its Chinese sister app, Douyin; and various education and enterprise software ventures.
By 2015, Mr. Chew had joined Xiaomi as chief financial officer. He spearheaded the device maker’s 2018 initial public offering, led its international efforts and became an English-speaking face for the brand.
“Shou grew up with both American and Chinese language and culture surrounding him,” said Hugo Barra, a former Google executive who worked with Mr. Chew at Xiaomi. “He is objectively better positioned than anyone I’ve ever met in the China business world to be this incredible dual-edged executive in a Chinese company that wants to become a global powerhouse.”
In March 2021, Mr. Chew announced that he was joining ByteDance as chief financial officer, fueling speculation that the company would go public. (It remains privately held.)
appointed Mr. Chew as chief executive, with Mr. Zhang praising his “deep knowledge of the company and industry.” Late last year, Mr. Chew stepped down from his ByteDance role to focus on TikTok.
Kevin Mayer, a former Disney executive, left after the Trump administration’s effort to sunder the app from its Chinese parent. China was also cracking down on its domestic internet giants, with Mr. Zhang resigning from his official roles at ByteDance last year. Mr. Zhang remains involved in decision making, people with knowledge of ByteDance said.
Mr. Chew moved to establish himself as TikTok’s new head during visits to the app’s Los Angeles office in mid-2021. At a dinner with TikTok executives, he sought to build camaraderie by keeping a Culver City, Calif., restaurant open past closing time, three people with knowledge of the event said. He asked attendees if he should buy the establishment to keep it open longer, they said.
a TikTok NFT project involving the musical artists Lil Nas X and Bella Poarch. He reprimanded TikTok’s global head of marketing on a video call with Beijing-based leaders for ByteDance after some celebrities dropped out of the project, four people familiar with the meeting said. It showed that Mr. Chew answered to higher powers, they said.
Mr. Chew also ended a half-developed TikTok store off Melrose Avenue in Los Angeles, three people familiar with the initiative said. TikTok briefly explored obtaining the naming rights of the Los Angeles stadium formerly known as the Staples Center, they said.
He has also overseen layoffs of American managers, two people familiar with the decisions said, while building up teams related to trust and safety. In its U.S. marketing, the app has shifted its emphasis from a brand that starts trends and conversations toward its utility as a place where people can go to learn.
In May, Mr. Chew flew to Davos, Switzerland, for the World Economic Forum, speaking with European regulators and ministers from Saudi Arabia to discuss digital strategy.
June letter to U.S. lawmakers, he noted that ByteDance employees in China could gain access to the data of Americans when “subject to a series of robust cybersecurity controls.” But he said TikTok was in the process of separating and securing its U.S. user data under an initiative known as Project Texas, which has the app working with the American software giant Oracle.
“We know we’re among the most scrutinized platforms,” Mr. Chew wrote.
Consumer spending accounts for nearly 70% of U.S. economic activity.
Americans picked up their spending a bit in August from July even as surging inflation on household necessities like rent and food took a toll on family budgets.
U.S. retail sales rose an unexpected 0.3% last month after falling 0.4% in July, the Commerce Department said Thursday. Excluding business at gas stations, sales rose 0.8%.
Sales at grocery stores rose 0.5% , helped by rising prices in food.
There was, however, weakening in some areas of discretionary spending with Americans fully aware of inflation’s bite. Business at restaurants ticked up 1.1%, but the pace has slowed. Sales at furniture stores fell 1.3%. Online sales fell 0.7% last month after Amazon’s Prime Day boosted e-commerce sales in July.
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“Retailers would probably like to be growing more, especially relative to inflation, but I’m not sure they could realistically hope for much more,” said Ted Rossman, senior industry analyst at Bankrate.com. “Consumer spending habits are changing as the pandemic continues to recede and inflation remains high.”
Consumer spending accounts for nearly 70% of U.S. economic activity and Americans have remained mostly resilient even with inflation near four-decade highs. Yet surging prices for everything from mortgages to milk have upped the anxiety level. Overall spending has slowed and shifted increasingly toward necessities like food, while spending on electronics, furniture, new clothes and other non-necessities has faded.
On Thursday, it appeared that the U.S. dodged a national freight rail strike, which could have sent retail prices higher.
Related StoryU.S. Inflation Falls For 2nd Straight Month But Remains High At 8.3%
Still, inflation remains stubbornly high. Lower gas costs slowed U.S. inflation for a second straight month in August, but most other prices across the economy kept going up — evidence that inflation remains a heavy load for American households.
Consumer prices rose 8.3% from a year earlier and 0.1% from July. But the jump in “core” prices, which exclude volatile food and energy costs, was especially worrisome. It outpaced expectations and sparked fear that the Federal Reserve will increase interest rates more aggressively and raise the risk of a recession.
The government’s monthly report on retail sales covers about a third of all consumer purchases and doesn’t include spending on most services, ranging from plane fares and apartment rents to movie tickets and doctor visits. In recent months, Americans have been shifting their purchases away from physical goods and more toward travel, hotel stays and plane trips as the threat of the virus fades.
The people running companies that deliver all manner of products gathered in Philadelphia last week to sift through the lessons of the mayhem besieging the global supply chain. At the center of many proposed solutions: robots and other forms of automation.
On the showroom floor, robot manufacturers demonstrated their latest models, offering them as efficiency-enhancing augments to warehouse workers. Driverless trucks and drones commanded display space, advertising an unfolding era in which machinery will occupy a central place in bringing products to our homes.
The companies depicted their technology as a way to save money on workers and optimize scheduling, while breaking down resistance to a future centered on evolving forms of automation.
persistent economic shocks have intensified traditional conflicts between employers and employees around the globe. Higher prices for energy, food and other goods — in part the result of enduring supply chain tangles — have prompted workers to demand higher wages, along with the right to continue working from home. Employers cite elevated costs for parts, raw materials and transportation in holding the line on pay, yielding a wave of strikes in countries like Britain.
The stakes are especially high for companies engaged in transporting goods. Their executives contend that the Great Supply Chain Disruption is largely the result of labor shortages. Ports are overwhelmed and retail shelves are short of goods because the supply chain has run out of people willing to drive trucks and move goods through warehouses, the argument goes.
Some labor experts challenge such claims, while reframing worker shortages as an unwillingness by employers to pay enough to attract the needed numbers of people.
“This shortage narrative is industry-lobbying rhetoric,” said Steve Viscelli, an economic sociologist at the University of Pennsylvania and author of “The Big Rig: Trucking and the Decline of the American Dream.” “There is no shortage of truck drivers. These are just really bad jobs.”
A day spent wandering the Home Delivery World trade show inside the Pennsylvania Convention Center revealed how supply chain companies are pursuing automation and flexible staffing as antidotes to rising wages. They are eager to embrace robots as an alternative to human workers. Robots never get sick, not even in a pandemic. They never stay home to attend to their children.
A large truck painted purple and white occupied a prime position on the showroom floor. It was a driverless delivery vehicle produced by Gatik, a Silicon Valley company that is running 30 of them between distribution centers and Walmart stores in Texas, Louisiana and Arkansas.
Here was the fix to the difficulties of trucking firms in attracting and retaining drivers, said Richard Steiner, Gatik’s head of policy and communications.
“It’s not quite as appealing a profession as it once was,” he said. “We’re able to offer a solution to that trouble.”
Nearby, an Israeli start-up company, SafeMode, touted a means to limit the notoriously high turnover plaguing the trucking industry. The company has developed an app that monitors the actions of drivers — their speed, the abruptness of their braking, their fuel efficiency — while rewarding those who perform better than their peers.
The company’s founder and chief executive, Ido Levy, displayed data captured the previous day from a driver in Houston. The driver’s steady hand at the wheel had earned him an extra $8 — a cash bonus on top of the $250 he typically earns in a day.
“We really convey a success feeling every day,” Mr. Levy, 31, said. “That really encourages retention. We’re trying to make them feel that they are part of something.”
Mr. Levy conceived of the company with a professor at the M.I.T. Media Lab who tapped research on behavioral psychology and gamification (using elements of game playing to encourage participation).
So far, the SafeMode system has yielded savings of 4 percent on fuel while increasing retention by one-quarter, Mr. Levy said.
Another company, V-Track, based in Charlotte, N.C., employs a technology that is similar to SafeMode’s, also in an effort to dissuade truck drivers from switching jobs. The company places cameras in truck cabs to monitor drivers, alerting them when they are looking at their phones, driving too fast or not wearing their seatbelt.
Jim Becker, the company’s product manager, said many drivers hade come to value the cameras as a means of protecting themselves against unwarranted accusations of malfeasance.
But what is the impact on retention if drivers chafe at being surveilled?
“Frustrations about increased surveillance, especially around in-cab cameras,” are a significant source of driver lament, said Max Farrell, co-founder and chief executive of WorkHound, which gathers real-time feedback.
Several companies on the show floor catered to trucking companies facing difficulties in hiring people to staff their dispatch centers. Their solution was moving such functions to countries where wages are lower.
Lean Solutions, based in Fort Lauderdale, Fla., sets up call centers in Colombia and Guatemala — a response to “the labor challenge in the U.S.,” said Hunter Bell, a company sales agent.
A Kentucky start-up, NS Talent Solutions, establishes dispatch operations in Mexico, at a saving of up to 40 percent compared with the United States.
“The pandemic has helped,” said Michael Bartlett, director of sales. “The world is now comfortable with remote staffing.”
Scores of businesses promoted services that recruit and vet part-time and temporary workers, offering a way for companies to ramp up as needed without having to commit to full-time employees.
Pruuvn, a start-up in Atlanta, sells a service that allows companies to eliminate employees who recruit and conduct background checks.
“It allows you to get rid of or replace multiple individuals,” the company’s chief executive, Bryan Hobbs, said during a presentation.
Another staffing firm, Veryable of Dallas, offered a platform to pair workers such as retirees and students seeking part-time, temporary stints with supply chain companies.
Jonathan Katz, the company’s regional partnerships manager for the Southeast, described temporary staffing as the way for smaller warehouses and distribution operations that lack the money to install robots to enhance their ability to adjust to swings in demand.
A drone company, Zipline, showed video of its equipment taking off behind a Walmart in Pea Ridge, Ark., dropping items like mayonnaise and even a birthday cake into the backyards of customers’ homes. Another company, DroneUp, trumpeted plans to set up similar services at 30 Walmart stores in Arkansas, Texas and Florida by the end of the year.
But the largest companies are the most focused on deploying robots.
Locus, the manufacturer, has already outfitted 200 warehouses globally with its robots, recently expanding into Europe and Australia.
Locus says its machines are meant not to replace workers but to complement them — a way to squeeze more productivity out of the same warehouse by relieving the humans of the need to push the carts.
But the company also presents its robots as the solution to worker shortages. Unlike workers, robots can be easily scaled up and cut back, eliminating the need to hire and train temporary employees, Melissa Valentine, director of retail global accounts at Locus, said during a panel discussion.
Locus even rents out its robots, allowing customers to add them and eliminate them as needed. Locus handles the maintenance.
Robots can “solve labor issues,” said Nathan Ray, director of distribution center operations at Albertsons, the grocery chain, who previously held executive roles at Amazon and Target. “You can find a solution that’s right for your budget. There’s just so many options out there.”
As Mr. Ray acknowledged, a key impediment to the more rapid deployment of automation is fear among workers that robots are a threat to their jobs. Once they realize that the robots are there not to replace them but merely to relieve them of physically taxing jobs like pushing carts, “it gets really fun,” Mr. Ray said. “They realize it’s kind of cool.”
Workers even give robots cute nicknames, he added.
But another panelist, Bruce Dzinski, director of transportation at Party City, a chain of party supply stores, presented robots as an alternative to higher pay.
“You couldn’t get labor, so you raised your wages to try to get people,” he said. “And then everybody else raised wages.”
Black Americans have been hired much more rapidly in the wake of the pandemic shutdowns than after previous recessions. But as the Federal Reserve tries to soften the labor market in a bid to tame inflation, economists worry that Black workers will bear the brunt of a slowdown — and that without federal aid to cushion the blow, the impact could be severe.
Some 3.5 million Black workers lost or left their jobs in March and April 2020. In weeks, the unemployment rate for Black workers soared to 16.8 percent, the same as the peak after the 2008 financial crisis, while the rate for white workers topped out at 14.1 percent.
Since then, the U.S. economy has experienced one of its fastest rebounds ever, one that has extended to workers of all races. The Black unemployment rate was 6 percent last month, just above the record low of late 2019. And in government data collected since the 1990s, wages for Black workers are rising at their fastest pace ever.
first laid off during a downturn and the last hired during a recovery.
William Darity Jr., a Duke University professor who has studied racial gaps in employment, says the problem is that the only reliable tool the Fed uses to fight inflation — increasing interest rates — works in part by causing unemployment. Higher borrowing costs make consumers less likely to spend and employers less likely to invest, reducing pressure on prices. But that also reduces demand for workers, pushing joblessness up and wages down.
“I don’t know that there’s any existing policy option that’s plausible that would not result in hurting some significant portion of the population,” Mr. Darity said. “Whether it’s inflation or it’s rising unemployment, there’s a disproportionate impact on Black workers.”
In a paper published last month, Lawrence H. Summers, a former Treasury secretary and top economic adviser to Presidents Bill Clinton and Barack Obama, asserted with his co-authors that the Fed would need to allow the overall unemployment rate to rise to 5 percent or above — it is now 3.5 percent — to bring inflation under control. Since Black unemployment is typically about double that of white workers, that suggests that the rate for Black workers would approach or reach double digits.
The Washington Post and an accompanying research paper, Jared Bernstein — now a top economic adviser to President Biden — laid out the increasingly popular argument that in light of this, the Fed “should consider targeting not the overall unemployment rate, but the Black rate.”
Fed policy, he added, implicitly treats 4 percent unemployment as a long-term goal, but “because Black unemployment is two times the overall rate, targeting 4 percent for the overall economy means targeting 8 percent for blacks.”
news conference last month. “That’s not going to happen without restoring price stability.”
Some voices in finance are calling for smaller and fewer rate increases, worried that the Fed is underestimating the ultimate impact of its actions to date. David Kelly, the chief global strategist for J.P. Morgan Asset Management, believes that inflation is set to fall considerably anyway — and that the central bank should exhibit greater patience, as remnants of pandemic government stimulus begin to vanish and household savings further dwindle.
“The economy is basically treading water right now,” Mr. Kelly said, adding that officials “don’t need to put us into a recession just to show how tough they are on inflation.”
Michelle Holder, a labor economist at John Jay College of Criminal Justice, similarly warned against the “statistical fatalism” that halting labor gains is the only way forward. Still, she said, she’s fully aware that under current policy, trade-offs between inflation and job creation are likely to endure, disproportionately hurting Black workers. Interest rate increases, she said, are the Fed’s primary tool — its hammer — and “a hammer sees everything as a nail.”
having the federal government guarantee a job to anyone who wants one. Some economists support less ambitious policies, such as expanded benefits to help people who lose jobs in a recession. But there is little prospect that Congress would adopt either approach, or come to the rescue again with large relief checks — especially given criticism from many Republicans, and some high-profile Democrats, that excessive aid in the pandemic contributed to inflation today.
“The tragedy will be that our administration won’t be able to help the families or individuals that need it if another recession happens,” Ms. Holder said.
Morgani Brown, 24, lives and works in Charlotte, N.C., and has experienced the modest yet meaningful improvements in job quality that many Black workers have since the initial pandemic recession. She left an aircraft cleaning job with Jetstream Ground Services at Charlotte Douglas International Airport last year because the $10-an-hour pay was underwhelming. But six months ago, the work had become more attractive.
has recently cut back its work force. (An Amazon official noted on a recent earnings call that the company had “quickly transitioned from being understaffed to being overstaffed.”)
Ms. Brown said she and her roommates hoped that their jobs could weather any downturn. But she has begun hearing more rumblings about people she knows being fired or laid off.
A trader enters the floor of the New York Stock Exchange (NYSE) in New York City, U.S. June 14, 2022. REUTERS/Brendan McDermid
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HONG KONG, Aug 15 (Reuters) – The move to delist five Chinese state-owned enterprises (SOEs) from the New York Stock Exchange (NYSE) signals Beijing may be willing to compromise in order to strike an audit deal with the United States and end a more than decade-old dispute, analysts and advisers said on Monday.
The five SOEs including oil major Sinopec (600028.SS) and China Life Insurance (601628.SS), whose audits have been under scrutiny by the U.S. securities regulator, said on Friday they would voluntarily delist from the NYSE. read more
The U.S. Securities and Exchange Commission (SEC) had in May flagged the five and many other companies as failing to meet U.S. auditing standards, and the delisting signals China could compromise on allowing U.S. auditors to access the accounts of private Chinese companies listed in the United States, some analysts said.
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Beijing and Washington have been in talks to end a dispute that had threatened to kick out hundreds of Chinese firms from their New York listings if China did not comply with Washington’s demand for complete access to the books of U.S.-listed Chinese companies.
“Having the state-owned companies not listed in the U.S. allows the Chinese side to compromise in the negotiations,” said one Hong Kong capital markets lawyer, declining to be named due to sensitivity of the matter.
“They were more worried about having the SOEs’ accounts accessed,” said the lawyer, referring to authorities in Beijing. “A lot of the private companies are not thought to have data as sensitive as SOEs.”
Some observers, however, were less optimistic on the impact of the delistings.
“By taking the state-owned enterprises off the table, it would, in theory, give more room for the Chinese to make some concessions,” said Paul Gillis, a retired professor at Peking University’s Guanghua’s School of Management.
“But I think with the overall political environment between the U.S. and China being what it is, it’s hard to reach a deal.”
U.S. regulators have been asking for complete access to the audit working papers of New York-listed Chinese companies for years, but the Chinese authorities have pushed back on national security grounds.
In May, an SEC official said China could agree to the voluntary delisting of companies deemed “too sensitive” to comply with U.S. requirements, which would ensure the remainder of companies and audit firms could meet U.S. inspection and investigative processes, and avoid potential trading prohibitions.
Since then, however, the U.S. Public Company Accounting Oversight Board (PCAOB), which regulates audits of U.S.-listed firms and is overseen by the SEC, has said de-listing companies would not bring China into compliance because U.S. rules require the agency to have retrospective access to company audit records.
The PCAOB’s position on the matter has not changed, a PCAOB spokesperson said on Monday. A spokesperson for the SEC did not immediately respond to a request for comment.
The China Securities Regulatory Commission did not respond to a query on Monday afternoon.
More than 270 Chinese companies are identified as at risk of trading prohibition, with the PCAOB determining it did not have complete access to their audit papers.
Concerns about the future of those companies on the New York exchanges have swirled in recent months, with global fund managers holding U.S.-listed Chinese stocks steadily shifting towards their Hong Kong-traded peers. read more
Alibaba Group Holding announced a fortnight ago it would switch its Hong Kong secondary listing to a dual primary listing, which analysts said would make it easier in the future if the e-commerce giant ever wanted to delist in the United States.
“As for private enterprises listed in the U.S., whether they may be allowed more discretion to cooperate with the PCAOB will probably depend on the sensitivity of data in their audit papers,” said Weiheng Chen, head of Greater China Practice at law firm Wilson Sonsini.
Private enterprises owning large amounts of geographic data and data that track location, movements and social behaviors of individuals and companies, are more likely being viewed as sensitive, Chen said.
After the delisting of the five SOEs, only two state-owned firms will remain listed in the United States – China Eastern Airlines (600115.SS) and China Southern Airlines (600029.SS).
“China should be motivated to cooperate with the U.S. SEC to ensure Chinese companies with no sensitive information will not be cut off from the U.S. capital markets,” analysts at Jefferies wrote.
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Reporting by Scott Murdoch, Kane Wu, Xie Yu and Samuel Shen; Editing by Sumeet Chatterjee, David Holmes and Marguerita Choy
Our Standards: The Thomson Reuters Trust Principles.
Scott Murdoch has been a journalist for more than two decades working for Thomson Reuters and News Corp in Australia. He has specialised in financial journalism for most of his career and covers equity and debt capital markets across Asia based in Hong Kong.
Starbucks alleges St. Louis labor board officials made special arrangements for pro-union workers to vote in person at its office.
Starbucks on Monday asked the National Labor Relations Board to temporarily suspend all union elections at its U.S. stores, citing allegations from a board employee that regional NLRB officials improperly coordinated with union organizers.
In a letter to the board chairman, Starbucks said the unnamed career NLRB employee informed the company about the activity, which happened in the board’s St. Louis office in the spring while it was overseeing a union election at a Starbucks store in Overland Park, Kansas.
The store is one of 314 U.S. Starbucks locations where workers have petitioned the NLRB to hold union elections since late last year. More than 220 of those Starbucks stores have voted to unionize. The company opposes the unionization effort.
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The Seattle coffee giant alleges that St. Louis labor board officials made special arrangements for pro-union workers to vote in person at its office when they did not receive mail-in ballots, even though Starbucks and the union had agreed that store elections would be handled by mail-in ballot.
In its letter, Starbucks referred to memos the regional office sent confirming that workers were allowed to come to the office and vote in person after the union told the regional office that some workers had not received ballots in the mail. The memos, citing “board protocol,” said the workers voted alone in an empty office, according to Starbucks.
“Because observers were not present, no one can be sure who appeared to vote, whether NLRB personnel had inappropriate communications with the voters, told them how to vote, showed them how to vote or engaged in other undisclosed conduct,” Starbucks wrote in its letter.
Starbucks said regional board officials also disclosed confidential information to the union, including which workers’ ballots had arrived in the mail to be counted.
Starbucks Workers United, the group seeking to unionize U.S. Starbucks stores, accused the company of trying to “distract attention away from their unprecedented anti-union campaign, including firing over 75 union leaders across the country, while simultaneously trying to halt all union elections.”
“Workers have spoken loud and clear by winning 82 percent of union elections,” the group said in a statement. “Ultimately, this is Starbucks’ latest attempt to manipulate the legal process for their own means and prevent workers from exercising their fundamental right to organize.”
A spokesperson for the NLRB said Monday that the agency doesn’t comment on open cases.
Press secretary Kayla Blado said the NLRB will “carefully and objectively” consider any challenges that Starbucks raises through “established channels.” Starbucks can also seek expedited review in the case, Blado said.
Workers at the Overland Park store petitioned the NLRB to hold a vote in February. In April, workers voted 6-1 to unionize, but seven additional ballots were the subject of challenges from Starbucks or the union. A hearing on those challenges is scheduled for Tuesday; Starbucks has asked for that hearing to be delayed.
Starbucks said there is evidence of misconduct in other regions as well. The company wants the NLRB to thoroughly investigate other Starbucks union elections and make public a report on its findings. The company said the board should also implement safeguards to prevent regional officials from coordinating with one party or another.
Starbucks also asked the NLRB to issue an order requiring all pending and future elections to be conducted in person with observers from both sides.
“If the NLRB does not respond by investigating and remedying these types of actions, we do not see how the board can represent itself as a neutral agency,” the company said in the letter.
Starbucks has long opposed unionization, dating back to CEO Howard Schultz’s acquisition of the company in the late 1980s. The current unionization effort has been riddled with accusations and lawsuits on both sides.
Starbucks Workers United has filed 284 unfair labor practice charges with the NLRB against Starbucks or one of its operators, according to the labor board. Starbucks has filed two charges against Workers United.
Earlier this month, the labor board dismissed one of the charges filed by Starbucks, saying the company failed to prove that pro-union workers blocked store entrances or intimidated customers during a spring rally.
In June, the NLRB asked a federal court in western New York to order Starbucks to stop interfering with unionization efforts at its U.S. stores. It also asked the court to order Starbucks to reinstate seven Buffalo employees it says were unlawfully fired for trying to form a union. That case is pending.
But the NLRB’s actions against Starbucks haven’t always been successful. In June, a federal judge in Phoenix ruled that Starbucks didn’t have to rehire three workers who claimed that the company had retaliated against them for organizing a union.
Starbucks isn’t the only large company facing a unionization effort that has attacked the voting process.
Related StoryFeds: Starbucks Engaged In Unfair Labor Practices In Phoenix
Amazon has also levied accusations of improper conduct against the NLRB’s regional office in Brooklyn in its attempt to re-do a historic labor win at a warehouse on Staten Island, New York. Among other allegations, Amazon said the agency tainted the voting process by seeking reinstatement of a fired Amazon worker in the weeks leading up to the March election.
Attorneys representing the e-commerce juggernaut argued their case in an agency hearing during the summer. Attorneys for the agency have pushed back. A regional director for an NLRB office in Phoenix is expected to issue a ruling on that case in the coming weeks.
PITTSTON, Pa. — Once upon a time, when parents were scrambling to occupy their children during pandemic lockdowns, bicycles were hard to find. But today, in a giant warehouse in northeastern Pennsylvania, there are shiny new Huffys and Schwinns available at big discounts.
The same goes for patio furniture, garden hoses and portable pizza ovens. There are home spas, Rachael Ray’s nonstick pans and a backyard firepit, which promises to make “memories every day.”
The warehouse is run by Liquidity Services, a company that collects surplus and returned goods from major retailers like Target and Amazon and resells them, often for cents on the dollar. The facility opened last November and is operating at exceptionally high volumes for this time of year.
last month, some major retailers say shoppers are buying less clothing, gardening equipment and electronics and focusing instead on basics like food and gas.
Adding to that glut are all the things people bought during the pandemic — often online — and then returned. In 2021, shoppers returned an average of 16.6 percent of their purchases, up from 10.6 percent in 2020 and more than double the rate in 2019, according to an analysis by the National Retail Federation, a trade group, and Appriss Retail, a software and analytics firm.
Last year’s returns, which retailers are not always able to resell themselves, totaled $761 billion in lost sales. That, the retail federation noted, is more than the annual budget for the U.S. Department of Defense.
rising consumer prices and declining spending, the American economy is showing clear signs of slowing down, fueling concerns about a potential recession. Here are other eight measures signaling trouble ahead:
Consumer confidence. In June, the University of Michigan’s survey of consumer sentiment hit its lowest level in its 70-year history, with nearly half of respondents saying inflation is eroding their standard of living.
The housing market. Demand for real estate has decreased, and construction of new homes is slowing. These trends could continue as interest rates rise, and real estate companies, including Compass and Redfin, have laid off employees in anticipation of a downturn in the housing market.
Copper. A commodity seen by analysts as a measure of sentiment about the global economy — because of its widespread use in buildings, cars and other products — copper is down more than 20 percent since January, hitting a 17-month low on July 1.
Oil. Crude prices are up this year, in part because of supply constraints resulting from Russia’s invasion of Ukraine, but they have recently started to waver as investors worry about growth.
The bond market. Long-term interest rates in government bonds have fallen below short-term rates, an unusual occurrence that traders call a yield-curve inversion. It suggests that bond investors are expecting an economic slowdown.
“You would think that there would be enough data and enough history to see that a little more clearly,” he added. “But it also suggests that times are changing and they are changing fast and more dramatically.”
Strong consumer spending may have saved the economy from ruin during the pandemic, but it has also led to enormous excess and waste.
Retailers have begun to slash prices on inventory in their stores and online. Last Monday, Walmart issued the industry’s latest warning when it said that its operating profits would drop sharply this year as it cut prices on an oversupply of general merchandise.
above a reclaimed strip mine dating back to when this region was a major coal producer. Today, the local economy is home to dozens of e-commerce warehouses that cover the hilly landscape like giant spaceships, funneling goods to the population centers in and around New York and Philadelphia.
Liquidity Services, a publicly traded company founded in 1999, decided to open its new facility as close as it could to the Scranton area’s major e-commerce warehouses, making it easy for retailers to dispense with their unwanted and returned items.
Even before the inventory glut appeared this spring, returns had been a major problem for retailers. The huge surge in e-commerce sales during the pandemic — increasing more than 40 percent in 2020 from the previous year — has only added to it.
The National Retail Federation and Appriss Retail calculate that more than 10 percent of returns last year involved fraud, including people wearing clothing and then sending it back or stealing goods from stores and returning them with fake receipts. But more fundamentally, industry analysts say the increasing returns reflect consumer expectations that everything can be taken back.
burned in incinerators that generate electricity.
stock price plummeted nearly 25 percent in one day. Other retailers’ share prices have also fallen.
Target’s stumbles have been an opportunity for people like Walter Crowley.
Mr. Crowley regularly rents a U-Haul and drives back and forth to the liquidation warehouse from his home near Binghamton, N.Y.
Understand Inflation and How It Impacts You
Mr. Crowley, who turns 54 next month, focuses mostly on discounted home improvement goods, which he resells to local contractors, like multiple pallets of discontinued garage door openers, tiles and flooring.
But on a sweltering day earlier this month, he stood outside the warehouse in his U-Haul loading up on items from Target.
“I saw its stock got tanked,” said Mr. Crowley, a cigarette dangling from his mouth and sweat pouring down his face. “It’s an ugly situation for them.”
He bought several cribs, a set of sheets for his own house and a pink castle for a girl in his neighborhood who just turned 5.
“I end up giving a lot of it away to my neighbors, to be honest,” he said. “Some people are barely getting by.”
The buyers bid for the goods through online auctions and then drive to the warehouse to pick up their winnings.
It’s a diverse group. There was a science teacher who stocked up on plastic parts for his class, as well as a woman who planned to resell her purchases — neon green Igloo coolers, a table saw, baby pajamas — in the Haitian and Jamaican communities of New York. She ships other items to Trinidad.
The Pennsylvania warehouse, one of eight that Liquidity Service operates around the country, employs about 20 workers, some of whom have been hired on a temporary basis. The starting pay is $17.50 an hour.
Charles Benincasa, 39, is a temporary worker who has had numerous “warehousing” jobs, the most recent at the Chewy pet food distribution center in nearby Wilkes-Barre.
Mr. Benincasa said his friends and family had gotten in the habit of returning many of the goods they buy online. But as he’s watched the boxes pile up in the Liquidity Services warehouse, he worries about the implications for the economy.
“Companies are losing a lot of money,” he said. “There is no free lunch.”
SAN FRANCISCO — For years, Twitter was a runner-up social media company. It never grew to the size and scale of a Facebook or an Instagram. It simply muddled along.
Then, Elon Musk, a power user of the service, stormed in. He offered $44 billion to buy Twitter and declared that the company could perform far better if he were in charge. He disparaged Twitter’s executives, ridiculed its content policies, complained about the product and confused its more than 7,000 employees with his pronouncements. As Mr. Musk revealed the company’s lack of business and financial prospects, Twitter’s stock plunged more than 30 percent.
Now, as Mr. Musk, a billionaire, tries to back out of the blockbuster deal, he is inexorably leaving Twitter worse off than it was when he said he would buy it. With each needling tweet and public taunt, Mr. Musk has eroded trust in the social media company, walloped employee morale, spooked potential advertisers, emphasized its financial difficulties and spread misinformation about how Twitter operates.
set to sue Mr. Musk as soon as this week to force a completion of the deal. The court battle is likely to be protracted and immense, involving months of expensive litigation and high-stakes negotiations by elite lawyers. A resolution is far from certain — Twitter might win, but, if it loses, Mr. Musk could walk away by paying a breakup fee. Or the two sides could renegotiate or settle.
On Monday, the damage that Mr. Musk, 51, has inflicted was evident. Twitter’s stock plunged more than 11 percent to one of its lowest points since 2020 as investors anticipated the coming legal battle. Since Twitter accepted Mr. Musk’s acquisition offer, on April 25, its stock has lost over a third of its valueas investors have grown increasingly skeptical that the deal would get done on the agreed terms. (In contrast, the tech-heavy Nasdaq index was down about 12.5 percent in the same period.)
Twitter declined to comment on Monday. In a letter to Mr. Musk’s lawyers on Sunday, the company’s lawyers said that his move to terminate the deal was “invalid and wrongful” and that Mr. Musk “knowingly, intentionally, willfully and materially breached” his agreement to buy the firm. Twitter would continue to provide information to Mr. Musk and to work to close the transaction, the letter added.
cited the number of fake accounts on Twitter’s platform as the reason that he cannot buy the company, tweeted a picture of himself laughing at the situation.
the best it could obtain, suggesting it saw no way to reach that price on its own.
Parag Agrawal, Twitter’s chief executive, said in a memo to employees in May that the company had not lived up to its business and financial goals. To address the issues, he pushed out the heads of product and revenue, instituted a hiring slowdown and began an effort to attract new users and diversify into e-commerce. In April, the company stopped providing a forward-looking financial outlook to investors, pending the acquisition.
That trajectory is unlikely to change as uncertainty over the deal discomfits advertisers, the main source of Twitter’s revenue.
“Twitter will have trouble in the near future reassuring skittish advertisers and their users that they’re going to be stable,” said Angelo Carusone, the president of the watchdog group Media Matters for America.
In what was an implicit dig at Twitter’s top executives, Mr. Musk said he could have done way better with the company. In a presentation to investors in May, he said he planned to quintuple the company’s revenue to $26.4 billion by 2028 and to reach 931 million users that same year, up from 217 million at the end of last year.
letter filed to the Securities and Exchange Commission on Friday. The company’s “declining business prospects and financial outlook” had given him pause, his lawyers wrote, especially considering Twitter’s recent “financial performance and revised outlook” on the fiscal year ahead.
Mr. Musk, who has more than 100 million followers on Twitter, has also jackhammered the product, saying it is not as attractive as other apps. He has repeatedly claimed, without evidence, that Twitter is overrun with more inauthentic accounts than it has disclosed; such accounts can be automated to pump out toxic or false content. (The company has said fewer than 5 percent of the accounts on its platform are fake.)
His barbs about fake accounts have weakened trust in Twitter, just as the company prepares to moderate heated political discussions about an upcoming election in Brazil and the midterm elections this fall in the United States, misinformation experts said.
In another criticism of Twitter and the way it supervises content, Mr. Musk vowed to unwind the company’s moderation policies in the name of free speech. In May, he said he would “reverse the permanent ban” of former President Donald J. Trump from Twitter, allowing Mr. Trump back on the social network. That riled up right-wing users, who have long accused the company of censoring them, and renewed questions about how Twitter should handle debates over the limits of free speech.
Inside the company, employee morale has been battered, leading to infighting and attrition, according to six current and former employees.
Some of those who remain said they were relieved that Mr. Musk seemed to have decided against owning the company. Others shared nihilistic memes on the company’s Slack or openly criticized Twitter’s board and executives for entertaining Mr. Musk’s offer in the first place, according to internal messages viewed by The New York Times. The mood among executives was one of grim determination, two people with knowledge of their thinking said.
illustrated the mood with a cartoon that showed a shattered company that had been bumped off a shelf by Mr. Musk’s careless elbow. His caption: “You break it, you buy it!”
Ryan Mac and Isabella Simonetti contributed reporting.
Just a few months ago, Yandex stood out as a rare Russian business success story, having mushroomed from a small start-up into a tech colossus that not only dominated search and ride-hailing across Russia, but boasted a growing global reach.
A Yandex app could hail a taxi in far-flung cities like Abidjan, Ivory Coast; Oslo, Norway; or Tashkent, Uzbekistan; and the company delivered groceries in London, Paris and Tel Aviv. Fifty experimental Yandex robots trundled across the campus of Ohio State University in Columbus, bringing Grubhub food orders to students — with plans to expand to some 250 American campuses.
Often called “the coolest company in Russia,” Yandex employed more than 18,000 people; its founders were billionaires; and at its peak last November, it was worth more than $31 billion. Then President Vladimir V. Putin of Russia invaded Ukraine.
massacre by Russian troops. “In any other situation, it would be a perfect company, like Google, like any tech company. But Yandex has a problem since it is a Russian company.”
Founded by two math wizards in 1997, it has long claimed to generate around 60 percent of the web searches in Russia. (Google has about 35 percent, Dr. Bunina said.)
Before Yandex, Russian taxis consisted of random drivers trying to earn a few rubles. Uber tried to muscle into the market, but eventually relented and became a partner with Yandex in Russia and numerous former Soviet states. Yandex Taxi has expanded to about 20 countries.
Like many successful companies in Russia, particularly those involved in news in any format, Yandex soon caught the eye of the Kremlin. Mr. Putin’s image keepers inevitably noticed that news critical of Mr. Putin was featured frequently on Yandex.News, the company’s aggregator. During street protests in 2011 and 2012, and then the assaults on Crimea and eastern Ukraine in 2014, Kremlin officials sought to edit the list of acceptable news sources and sometimes even individual headlines.
Yandex tried to push back by explaining that an algorithm generated the list automatically from thousands of sources based on popularity.
“The pressure has been ramping up on us since 2014, and we have done everything we can to preserve a neutral role,” John W. Boynton, an American entrepreneur and the chairman of its board of directors, said in a June interview. “We do not get involved in politics, we have never wanted to.”
But Yandex was too big not to be enmeshed in politics, and the Kremlin kept chipping away at its independence. New laws forced news aggregators and search engines to use officially endorsed sources, while the government wrangled more control over the company’s management structure.
“They were just making it easier to pull the strings if they wanted to,” said Esther Dyson, one of two Americans who resigned from the board when the war started. It became clear that the Kremlin “was going further toward complete control,” she said.
After the Feb. 24 invasion, Mr. Putin quickly signed a law making it a crime to spread “fake news” about the military, subject to jail sentences of up to 15 years and hefty fines. What had been a manageable problem, fending off the Kremlin while maintaining an image of independence, suddenly became a crisis.
For users like Tonia Samsonova, a tech entrepreneur who had sold her start-up to Yandex for several million dollars but was still running it, the impact was jarring. Having read an online story from a British newspaper that the Kremlin had placed the country’s nuclear forces on high alert, she checked the headlines on Yandex.
There she found a bland story from a state-run agency about “deterrent” forces. Alarmed, she texted several Yandex executives to suggest that it present news that would rally opposition to the war; that elicited a firm “No,” she said.
Ms. Samsonova then posted her handwritten resignation letter on Instagram, accusing the company of hiding civilian deaths perpetrated by the Russian military.
“It is not accurate by design and the management knows it,” Ms. Samsonova said in an interview. “It is a crime to continue to do that when your country is invading another one.”
Aleksei A. Navalny, the imprisoned opposition leader, wrote on Twitter: “Don’t forget that the main propagandist of the war is not TV at all, but the Russian IT giantYandex.”
In its first sanctions against one top executive, the E.U. cited online accusations of disinformation made by a former head of Yandex.News.
The company responded to the accusations that it spread disinformation by saying that Russian law tied its hands, and that it wanted to preserve the livelihoods of its employees and the interests of its investors.
Keenly aware that the government had wrested control over another social media giant, VKontakte, the equivalent of Facebook, Yandex executives tread carefully, worried about a similar nationalization.
Facing internal questions, Dr. Bunina said that, during a weekly company forum soon after the war started, she told employees that putting independent news onto the home page would last about 10 minutes, bring no change and potentially bring an end to Yandex as they knew it.
Executives figured that as long as they controlled the Yandex search engine, users could find credible news on the war from abroad, she said, noting that Russia was not yet China.
But that proved to be far too optimistic. The company soon announced that it would spin off Yandex.News and Yandex.Zen, a kind of blogging platform that had attracted government wrath as a main vehicle for spreading videos that Mr. Navalny regularly produced exposing Kremlin corruption.
For now, Yandex executives say their main concern is to continue to innovate while the heart of the company remains in Russia, cut off from most Western technology.
“Since the war, we have put all our initiatives to take our services global on hold,” said Mr. Boynton.
Some 2,500 employees who left Russia remain outside, Dr. Bunina said, and the pace of departures from the company is accelerating.
Yandex is further bedeviled by a growing split between the employees who stayed in Russia and those outside, which makes even conversation difficult, much less collaboration. Those inside anxiously refuse to discuss the war or the world, sticking to IT, while those who left in disgust often want nothing more to do with their native land.
“Whether you leave, or whether you stay, these are such different worlds right now, so you will not understand each other,” Mr. Krasilshchik said. “This is not only about Yandex, Yandex is like the country in miniature.”