Some businesses seem determined to wait them out. Wages have risen, but many employers appear reluctant to make other changes to attract workers, like flexible schedules and better benefits. That may be partly because, for all their complaints about a labor shortage, many companies are finding that they can get by with fewer workers, in some instances by asking customers to accept long waits or reduced service.
“They’re making a lot of profits in part because they’re saving on labor costs, and the question is how long can that go on,” said Julia Pollak, chief economist for the employment site ZipRecruiter. Eventually, she said, customers may get tired of busing their own tables or sitting on hold for hours, and employers may be forced to give into workers’ demands.
Some businesses are already changing how they operate. When Karter Louis opened his latest restaurant this year, he abandoned the industry-standard approach to staffing, with kitchen workers earning low wages and waiters relying on tips. At Soul Slice, his soul-food pizza restaurant in Oakland, Calif., everyone works full time, earns a salary rather than an hourly wage, and receives health insurance, retirement benefits and paid vacation. Hiring still hasn’t been easy, he said, but he isn’t having the staffing problems that other restaurants report.
Restaurant owners wondering why they can’t find workers, Mr. Louis said, need to look at the way they treated workers before the pandemic, and also during it, when the industry laid off millions.
“The restaurant industry didn’t really have the back of its people,” he said.
Still, better pay and benefits alone won’t bring back everyone who has left the job market. The steepest drop in labor force participation came among older workers, who faced the greatest risks from the virus. Some may return to work as the health situation improves, but others have simply retired.
And even some nowhere near retirement have made ends meet outside a traditional job.
When Danielle Miess, 30, lost her job at a Philadelphia-area travel agency at the start of the pandemic, it was in some ways a blessing. Some time away helped her realize how bad the job had been for her mental health, and for her finances — her bank balance was negative on the day she was laid off. With federally supplemented unemployment benefits providing more than she made on the job, she said, she gained a measure of financial stability.
Ms. Miess’s unemployment benefits ran out in September, but she isn’t looking for another office job. Instead, she is cobbling together a living from a variety of gigs. She is trying to build a business as an independent travel agent, while also doing house sitting, dog sitting and selling clothes online. She estimates she is earning somewhat more than the roughly $36,000 a year she made before the pandemic, and although she is working as many hours as ever, she enjoys the flexibility.
Ms. Yellen’s task has been complicated by the fact that while she can readily convey the economic risks of default, the debt limit has become wrapped up in a larger partisan battle over Mr. Biden’s entire agenda, including the $3.5 trillion spending bill.
Republicans, including Mr. McConnell, have insisted that if Democrats want to pass a big spending bill, then they should bear responsibility for raising the borrowing limit. Democrats call that position nonsense, noting that the debt limit needs to be raised because of spending that lawmakers, including Republicans, have already approved.
“This seems to be some sort of high-stakes partisan poker on Capitol Hill, and that’s not what her background is,” said David Wessel, a senior economic fellow at the Brookings Institution who worked with Ms. Yellen at Brookings.
While lawmakers squabble on Capitol Hill, Ms. Yellen’s team at Treasury has been trying to buy as much time as possible. After a two-year suspension of the statutory debt limit expired at the end of July, Ms. Yellen has been employing an array of fiscal accounting tools known as “extraordinary measures” to stave off a default.
Uncertainty over the debt limit has yet to spook markets, but Ms. Yellen is receiving briefings multiple times a week by career staff on the state of the nation’s finances. They are keeping her informed about the use of extraordinary measures, such as suspending investments of the Exchange Stabilization Fund and suspending the issuing of new securities for the Civil Service Retirement and Disability Fund, and carefully reviewing Treasury’s cash balance. Because corporate tax receipts are coming in stronger than expected, the debt limit might not be breached until mid- to late October, Ms. Yellen has told lawmakers.
A Treasury spokeswoman said that Ms. Yellen is not considering fallback plans such as prioritizing debt payments if Congress fails to act, explaining that the only way for the government to address the debt ceiling is for lawmakers to raise or suspend the limit. However, she has reviewed some of the ideas that were developed by Treasury during the debt limit standoff of 2011, when partisan brinkmanship brought the nation to the cusp of default.
A new report from the Bipartisan Policy Center underscored the fact that if Congress fails to address the debt limit, Ms. Yellen will be left with no good options. If the true deadline is Oct. 15, for example, the Treasury Department would be approximately $265 billion short of paying all of its bills through mid-November. About 40 percent of the funds that are owed would go unpaid.
Andrea Jones hadn’t yet settled on a date to retire from her customer service job at United Airlines when Newark airport started looking like a ghost town in March 2020. After 28 years with the carrier, she still loved her work. But by the end of that month, she had hung up her blue uniform for the last time. She is still struggling with a sense of loss.
“I wasn’t at all ready to leave,” she said. “It hit me right between the eyes.”
Ms. Jones, 68, of East Windsor, N.J., retired to protect the health of her husband, George, who has multiple myeloma, a form of cancer. Fortunately, the Joneses had a nest egg, and United offered a retirement package that enabled her to keep their health insurance.
Patricia Scott has not been so lucky. Ms. Scott, a special-education teacher in Stockton, Calif., retired in January to preserve her own health. A grandmother of 10, she survived breast cancer in 2016; her oncologist told her she couldn’t risk catching Covid-19 by returning to the classroom. Now, at age 66, she is on financial quicksand. “My income is half what it was,” she said. She is single and in debt. “I’m stressed, I’m depressed and I’m terrified.”
For many of the nearly three million workers ages 55 to 70 who have left their jobs since March 2020, retiring during the pandemic has inflicted two traumas. Like Ms. Jones and Ms. Scott, most felt they were forced out of work before they wanted to go, said Teresa Ghilarducci, a professor of economics and policy analysis at the New School for Social Research. Among that subset, the majority, like Ms. Scott, were financially unprepared, Ms. Ghilarducci said.
research from the New School, far more older workers retired during the pandemic than during other recessions. After the 2008 financial crisis, for example, 1.9 million older workers left the labor force in the first three months of the recession. In the first three months of the pandemic last year, 2.9 million left the work force. The latest data shows that 1.7 million of the newer wave of retirees left despite financial uncertainty, Ms. Ghilarducci said.
Their departures generally were not a bid for a few extra years of bird-watching. “A lot of people were pushed out of their jobs,” Ms. Ghilarducci said; she attributed that push partly to age discrimination. “It used to be that employers would let the ones they just hired go first in a recession, but this time older people who have been in their jobs the longest have been hit hardest.”
Lack of enforcement of anti-discrimination laws was a factor, she said. So was what some employers saw as a rare opportunity created by the pandemic to get rid of older workers, who are perceived to be less productive and more expensive.
Regardless of the reason, the new army of reluctant retirees, disproportionately made up of Black workers and those who lack a college degree, according to June data from the New School, is in trouble. One key reason: Debt rates among Americans 65 and older are the highest they’ve ever been, Ms. Ghilarducci said. And they are likely to rise as more people are forced to draw down their assets to make ends meet. Collecting Social Security earlier than anticipated will add to their vulnerability, since claiming earlier will permanently reduce their benefits.
Even for people with a financial safety net, the hurdles can be significant. “There’s a lot of stress that comes with having retirement forced on you,” said Malcolm Ethridge, a financial adviser in Washington who has several newly out-of-work older clients. “It takes time to get past the disruption.”
Jovan Johnson, a certified financial planner in Atlanta, said Ms. Scott and others in her situation should start looking for a pro bono financial adviser who can help make sense of their money. “There are a lot of us out there who will help people out for free during a crisis,” he said. He recommends searching sites like the XY Planning Network.
The primary benefit of sitting down with a professional may be relief from panic, he said. But the 15 new retirees who have contacted him for pro bono help since the pandemic started, among them nurses and teachers, have also gained a better understanding of how to manage limited funds. “Everybody deserves to have a plan,” he said.
Pen and Brush after 23 years as executive director, the stress started last year, when she contracted Covid-19 and spent several weeks in an intensive care unit. She was not psychologically ready to retire, but because she has still not fully recovered, she felt she had to. “I was one of those people who was going to have to be wheeled out of there, I loved it so much,” she said.
Now she is adjusting to what she said was a more limited routine. Sunday nights and Mondays flummox her the most. “It’s like when you have that dream where you have a final exam and you’ve never been to class, or you forget your locker combination. I keep thinking, I have to go to work.” Instead, she takes walks with her husband, Wallace Munro, a retired actor, and visits the grocery store more than she thought she would ever want to.
“It’s something to do,” she said. “You have to restructure your life when something like this happens to you. It’s so easy to get depressed.”
Managing money in a sudden retirement
Mr. Johnson, the financial planner, offered tips on juggling your income and expenses when you’re thrust into joblessness with little warning.
Make sure that you do not have any old pension or 401(k) money out there from previous employers. People who have rolled over retirement accounts from previous employers often forget about them.
Don’t feel guilty for taking Social Security early — especially if you have no other option. You can begin claiming your benefits as early as age 62. However, the downside to claiming before your full retirement age (you can look it up on the Social Security website) is that your total monthly payments will be permanently reduced. If your income is below a certain threshold, your full Social Security payments might be tax-free.
Use Social Security payments for your nondiscretionary, fixed expenses and retirement assets for discretionary expenses, such as travel and entertainment.
Bridge the gap to Medicare, because the age of eligibility is 65. Consider plans under the Affordable Care Act. Typically, if your income is low enough, you may receive premium tax credits and other benefits if you choose a plan on the marketplace.
If Social Security and retirement savings cannot sustain your lifestyle, it’s time to consider Medicaid, Supplemental Security Income and similar programs.
IRVINGTON, N.Y.–(BUSINESS WIRE)–CastleGreen Finance is pleased to announce the closing of One Park Road, West Hartford, CT, a $13,767,000 Commercial Property Assessed Clean Energy (C-PACE) transaction. In partnership with Lexington Partners LLC, the property developer, and the Connecticut Green Bank, the program administrator for the state of Connecticut C-PACE program, CastleGreen Finance is delighted to be part of the largest C-PACE transaction to date in Connecticut.
For 135 years, the Sisters of St. Joseph of Chambéry have occupied a convent on Park Road in West Hartford, Connecticut. One Park Road is the redevelopment of this iconic property which will add a 292-unit multi-family housing complex on the 22-acre property while maintaining much of the greenspace and preserving the Sisters’ history and ensuring their retirement security at the property.
One wing of the historic convent will continue to be owned and occupied by the Sisters. The remaining 111,000 square feet of the Colonial Revival-style convent is undergoing renovation into a mix of studio, one-, two- and three-bedroom apartments.
A new 230,000 square foot four-story building over a one-story parking deck, will be connected to the existing structures and is designed to look like a series of separate buildings while providing a neighborhood feel.
The long-discussed redevelopment of this iconic property is the result of the partnership between the Sisters of St. Joseph, Lexington Partners, and the Town of West Hartford, and it will bring new rental housing to the fast-growing Park Road/West Hartford area. Construction on the $70 million project is scheduled to begin in mid-2021, with completion expected in the spring/summer of 2023.
CastleGreen Finance has facilitated approval of the $13.7 million C-PACE project through the Connecticut Green Bank’s C-PACE program. The project provides the project developer with access to affordable, long term financing for qualifying clean energy and energy efficiency upgrades that lower energy costs.
Martin J. Kenny, president of Lexington Partners, states, “We feel the Park Road business district is to West Hartford as Brooklyn is to New York City. The project will serve to strengthen the Park Road business district and provide a gateway to and combine with what is going on in Parkville. We needed creative financing in our capital stack to help bring this project to fruition. The CastleGreen team presented a compelling financing solution and delivered on time and as promised.”
C-PACE financing of clean, sustainable energy efficiency projects embraces the collaboration of public/private financing of energy improvements for the redevelopment of this iconic property.
Sal Tarsia, Managing Partner of CastleGreen Finance states, “Lexington Partners is a key player in the revitalization of the Park Road business district, creatively utilizing C-PACE financing for its ESG initiatives. It was a pleasure working with the Lexington team on a redevelopment which exemplifies the original purpose of what C-PACE was created for, but also respects and preserves the history of the property.”
“We are excited to see CastleGreen Finance closing their first project in Connecticut; the largest C-PACE project to date, in the state. This project is an excellent example of private capital working in the state’s open market for C-PACE financing,” said Bryan Garcia, President and CEO of Connecticut Green Bank. “The redevelopment at the Sisters of St. Joseph’s convent will not only make energy usage at the property more efficient and affordable, it will create housing opportunities and continue to support the Sisters, who strive to serve all people, especially those in need. This project will make a positive impact in West Hartford and exemplifies the Green Bank’s vision of a planet protected by the love of humanity.”
About CastleGreen Finance – www.CastleGreenfinance.com
CastleGreen Finance, in partnership with X-Caliber Capital, is a private capital source focused on Commercial PACE (Property Assessed Clean Energy) financing. CastleGreen Finance brings extensive experience in commercial real estate across a broad range of financial disciplines. The extensive real estate experience of the CastleGreen team, combined with its core C-PACE capabilities, provides our clients with the knowledge and resources to create a superior capital stack that meets all its needs and helps to unlock the potential of their commercial real estate. We understand that the most important part of any real estate transaction is showing up with the capital at closing. Our team focuses on the details of every deal to ensure we can get our clients to the finish line.
There were two weeks left in the Trump administration when the Treasury Department handed down a set of rules governing an obscure corner of the tax code.
Overseen by a senior Treasury official whose previous job involved helping the wealthy avoid taxes, the new regulations represented a major victory for private equity firms. They ensured that executives in the $4.5 trillion industry, whose leaders often measure their yearly pay in eight or nine figures, could avoid paying hundreds of millions in taxes.
The rules were approved on Jan. 5, the day before the riot at the U.S. Capitol. Hardly anyone noticed.
The Trump administration’s farewell gift to the buyout industry was part of a pattern that has spanned Republican and Democratic presidencies and Congresses: Private equity has conquered the American tax system.
one recent estimate, the United States loses $75 billion a year from investors in partnerships failing to report their income accurately — at least some of which would probably be recovered if the I.R.S. conducted more audits. That’s enough to roughly double annual federal spending on education.
It is also a dramatic understatement of the true cost. It doesn’t include the ever-changing array of maneuvers — often skating the edge of the law — that private equity firms have devised to help their managers avoid income taxes on the roughly $120 billion the industry pays its executives each year.
Private equity’s ability to vanquish the I.R.S., Treasury and Congress goes a long way toward explaining the deep inequities in the U.S. tax system. When it comes to bankrolling the federal government, the richest of America’s rich — many of them hailing from the private equity industry — play by an entirely different set of rules than everyone else.
The result is that men like Blackstone Group’s chief executive, Stephen A. Schwarzman, who earned more than $610 million last year, can pay federal taxes at rates similar to the average American.
Lawmakers have periodically tried to force private equity to pay more, and the Biden administration has proposed a series of reforms, including enlarging the I.R.S.’s enforcement budget and closing loopholes. The push for reform gained new momentum after ProPublica’s recent revelation that some of America’s richest men paid little or no federal taxes.
nearly $600 million in campaign contributions over the last decade, has repeatedly derailed past efforts to increase its tax burden.
Taylor Swift’s back music catalog.
The industry makes money in two main ways. Firms typically charge their investors a management fee of 2 percent of their assets. And they keep 20 percent of future profits that their investments generate.
That slice of future profits is known as “carried interest.” The term dates at least to the Renaissance. Italian ship captains were compensated in part with an interest in whatever profits were realized on the cargo they carried.
The I.R.S. has long allowed the industry to treat the money it makes from carried interests as capital gains, rather than as ordinary income.
article highlighting the inequity of the tax treatment. It prompted lawmakers from both parties to try to close the so-called carried interest loophole. The on-again, off-again campaign has continued ever since.
Whenever legislation gathers momentum, the private equity industry — joined by real estate, venture capital and other sectors that rely on partnerships — has pumped up campaign contributions and dispatched top executives to Capitol Hill. One bill after another has died, generally without a vote.
An Unexpected Email
One day in 2011, Gregg Polsky, then a professor of tax law at the University of North Carolina, received an out-of-the-blue email. It was from a lawyer for a former private equity executive. The executive had filed a whistle-blower claim with the I.R.S. alleging that their old firm was using illegal tactics to avoid taxes.
The whistle-blower wanted Mr. Polsky’s advice.
Mr. Polsky had previously served as the I.R.S.’s “professor in residence,” and in that role he had developed an expertise in how private equity firms’ vast profits were taxed. Back in academia, he had published a research paper detailing a little-known but pervasive industry tax-dodging technique.
$89 billion in private equity assets — as being “abusive” and a “thinly disguised way of paying the management company its quarterly paycheck.”
Apollo said in a statement that the company stopped using fee waivers in 2012 and is “not aware of any I.R.S. inquiries involving the firm’s use of fee waivers.”
floated the idea of cracking down on carried interest.
Private equity firms mobilized. Blackstone’s lobbying spending increased by nearly a third that year, to $8.5 million. (Matt Anderson, a Blackstone spokesman, said the company’s senior executives “are among the largest individual taxpayers in the country.” He wouldn’t disclose Mr. Schwarzman’s tax rate but said the firm never used fee waivers.)
Lawmakers got cold feet. The initiative fizzled.
In 2015, the Obama administration took a more modest approach. The Treasury Department issued regulations that barred certain types of especially aggressive fee waivers.
But by spelling that out, the new rules codified the legitimacy of fee waivers in general, which until that point many experts had viewed as abusive on their face.
So did his predecessor in the Obama administration, Timothy F. Geithner.
Inside the I.R.S. — which lost about one-third of its agents and officers from 2008 to 2018 — many viewed private equity’s webs of interlocking partnerships as designed to befuddle auditors and dodge taxes.
One I.R.S. agent complained that “income is pushed down so many tiers, you are never able to find out where the real problems or duplication of deductions exist,” according to a U.S. Government Accountability Office investigation of partnerships in 2014. Another agent said the purpose of large partnerships seemed to be making “it difficult to identify income sources and tax shelters.”
The Times reviewed 10 years of annual reports filed by the five largest publicly traded private equity firms. They contained no trace of the firms ever having to pay the I.R.S. extra money, and they referred to only minor audits that they said were unlikely to affect their finances.
Current and former I.R.S. officials said in interviews that such audits generally involved issues like firms’ accounting for travel costs, rather than major reckonings over their taxable profits. The officials said they were unaware of any recent significant audits of private equity firms.
No Money Owed
For a while, it looked as if there would be an exception to this general rule: the I.R.S.’s reviews of the fee waivers spurred by the whistle-blower claims. But it soon became clear that the effort lacked teeth.
Kat Gregor, a tax lawyer at the law firm Ropes & Gray, said the I.R.S. had challenged fee waivers used by four of her clients, whom she wouldn’t identify. The auditors struck her as untrained in the thicket of tax laws governing partnerships.
“It’s the equivalent of picking someone who was used to conducting an interview in English and tell them to go do it in Spanish,” Ms. Gregor said.
The audits of her clients wrapped up in late 2019. None owed any money.
The Mnuchin Compromise
As a presidential candidate, Mr. Trump vowed to “eliminate the carried interest deduction, well-known deduction, and other special-interest loopholes that have been so good for Wall Street investors, and for people like me, but unfair to American workers.”
wanted to close the loophole, congressional Republicans resisted. Instead, they embraced a much milder measure: requiring private equity officials to hold their investments for at least three years before reaping preferential tax treatment on their carried interests. Steven Mnuchin, the Treasury secretary, who had previously run an investment partnership, signed off.
McKinsey, typically holds investments for more than five years. The measure, part of a $1.5 trillion package of tax cuts, was projected to generate $1 billion in revenue over a decade.
credited Mr. Mnuchin, hailing him as “an all-star.”
Mr. Fleischer, who a decade earlier had raised alarms about carried interest, said the measure “was structured by industry to appear to do something while affecting as few as possible.”
Months later, Mr. Callas joined the law and lobbying firm Steptoe & Johnson. The private equity giant Carlyle is one of his biggest clients.
‘The Government Caved’
It took the Treasury Department more than two years to propose rules spelling out the fine print of the 2017 law. The Treasury’s suggested language was strict. One proposal would have empowered I.R.S. auditors to more closely examine internal transactions that private equity firms might use to get around the law’s three-year holding period.
The industry, so happy with the tepid 2017 law, was up in arms over the tough rules the Treasury’s staff was now proposing. In a letter in October 2020, the American Investment Council, led by Drew Maloney, a former aide to Mr. Mnuchin, noted how private equity had invested in hundreds of companies during the coronavirus pandemic and said the Treasury’s overzealous approach would harm the industry.
The rules were the responsibility of Treasury’s top tax official, David Kautter. He previously was the national tax director at EY, formerly Ernst & Young, when the firm was marketing illegal tax shelters that led to a federal criminal investigation and a $123 million settlement. (Mr. Kautter has denied being involved with selling the shelters but has expressed regret about not speaking up about them.)
On his watch at Treasury, the rules under development began getting softer, including when it came to the three-year holding period.
Monte Jackel, a former I.R.S. attorney who worked on the original version of the proposed regulations.
Mr. Mnuchin, back in the private sector, is starting an investment fund that could benefit from his department’s weaker rules.
A Charmed March
Even during the pandemic, the charmed march of private equity continued.
The top five publicly traded firms reported net profits last year of $8.6 billion. They paid their executives $8.3 billion. In addition to Mr. Schwarzman’s $610 million, the co-founders of KKR each made about $90 million, and Apollo’s Leon Black received $211 million, according to Equilar, an executive compensation consulting firm.
now advising clients on techniques to circumvent the three-year holding period.
The most popular is known as a “carry waiver.” It enables private equity managers to hold their carried interests for less than three years without paying higher tax rates. The technique is complicated, but it involves temporarily moving money into other investment vehicles. That provides the industry with greater flexibility to buy and sell things whenever it wants, without triggering a higher tax rate.
Private equity firms don’t broadcast this. But there are clues. In a recent presentation to a Pennsylvania retirement system by Hellman & Friedman, the California private equity giant included a string of disclaimers in small font. The last one flagged the firm’s use of carry waivers.
The Biden administration is negotiating its tax overhaul agenda with Republicans, who have aired advertisements attacking the proposal to increase the I.R.S.’s budget. The White House is already backing down from some of its most ambitious proposals.
Even if the agency’s budget were significantly expanded, veterans of the I.R.S. doubt it would make much difference when it comes to scrutinizing complex partnerships.
“If the I.R.S. started staffing up now, it would take them at least a decade to catch up,” Mr. Jackel said. “They don’t have enough I.R.S. agents with enough knowledge to know what they are looking at. They areso grossly overmatched it’s not funny.”
When Allegra Brochin and her boyfriend adopted Sprinkles, a feisty white Maltese, last year, they set about finding pet care.
“I immediately started looking,” said Ms. Brochin, 23, who works as a communications coordinator for Michael Kors in New York.
She saw ads for Bond Vet pop up on her Instagram feed, and when she took in Sprinkles for her shots, she was won over by the look and feel of the clinic, “especially when it’s for a pet you care about and feel responsible for,” she said.
Ms. Brochin is not alone in her devotion to her pandemic pet. More than 12.6 million households adopted animals from March to December of last year, according to the American Pet Products Association, helping to propel an increase in visits and revenue to veterinary offices, as new owners took pets in for their first checkup.
pet care business is riding a growth spurt: Morgan Stanley projected that it would be a $275 billion industry in 2030, up from $100 billion in 2019, with vet care the fastest-growing segment over the next decade.
“Ten years ago, there was a baby boom,” Arash Danialifar, chief executive of GD Realty Group, a California company that has leased space to a veterinary start-up, said about the proliferation of shops selling children’s fashion. “Now it’s all about pets.”
Small Door Veterinary recently announced it had raised $20 million and planned to go from a single location to 25 by 2025. The firm operates on a membership model, with 24/7 telemedicine and waiting areas with arched, white oak-paneled alcoves that give owners and their pets an intimate place to chill before appointments. Designed by Alda Ly Architecture, the clinics are rented storefronts of 2,000 to 3,000 square feet and cost about $1 million to kit out, said Josh Guttman, Small Door’s co-founder and chief executive.
Bond Vet, another New York start-up, models itself on CityMD clinics; it recently raised $17 million and now has six offices, including its first suburban location, in Garden City on Long Island.
Modern Animal, has an office in a high-end shopping district in West Hollywood, with three more to come in the city by year’s end and a dozen clinics in California by 2022, said the company’s founder and chief executive, Steven Eidelman.
new pet owners during the pandemic. Seventy-six percent of millennials own pets, according to a recent survey, and they are spending generously on their charges.
Terravet Real Estate Solutions, founded in 2016, now owns more than 100 buildings in 30 states, many of them housing practices owned by consolidators. For instance, Terravet owns the building housing CountryChase Veterinary Hospital in Tampa, Fla., and the American Veterinary Group, which operates practices across the South, owns the business.
Hound Properties, founded two years ago, has been buying buildings with an investor-backed fund. And Vetley Capital, started this year, has a portfolio of 20 buildings in nine states, most of them on the small side, ranging from 2,500 to 4,000 square feet and costing around $1 million, said Zach Goldman, the company’s founder and president.
The price of real estate has risen, but the returns are generally modest. “It’s the ultimate slow and steady income,” said Tripp Stewart, co-founder and chief executive of Hound Properties, who is also a practicing vet.
Despite the interest, there are obstacles to opening pet hospitals. Zoning sometimes limits their locations. In Pasadena, Calif., GD Realty had to request a zoning change for Modern Animal.
Because such businesses revolve around animal doctors, who are in demand as veterinary companies expand, there are shortages of vets in some parts of the country, according to the American Veterinary Medical Association.
The improvements in vet facilities are thus aimed not only at pets and their owners, but also at the doctors themselves, who can choose where they want to work.
“It used to be that when you went to a vet, it was a family vet who worked out of a kitchen in an old house,” said Dr. Stewart. “Today, you’re not going to attract new young vets to an old house.”
All over the world, countries are confronting population stagnation and a fertility bust, a dizzying reversal unmatched in recorded history that will make first-birthday parties a rarer sight than funerals, and empty homes a common eyesore.
Maternity wards are already shutting down in Italy. Ghost cities are appearing in northeastern China. Universities in South Korea can’t find enough students, and in Germany, hundreds of thousands of properties have been razed, with the land turned into parks.
Like an avalanche, the demographic forces — pushing toward more deaths than births — seem to be expanding and accelerating. Though some countries continue to see their populations grow, especially in Africa, fertility rates are falling nearly everywhere else. Demographers now predict that by the latter half of the century or possibly earlier, the global population will enter a sustained decline for the first time.
A planet with fewer people could ease pressure on resources, slow the destructive impact of climate change and reduce household burdens for women. But the census announcements this month from China and the United States, which showed the slowest rates of population growth in decades for both countries, also point to hard-to-fathom adjustments.
spirals exponentially. With fewer births, fewer girls grow up to have children, and if they have smaller families than their parents did — which is happening in dozens of countries — the drop starts to look like a rock thrown off a cliff.
“It becomes a cyclical mechanism,” said Stuart Gietel Basten, an expert on Asian demographics and a professor of social science and public policy at the Hong Kong University of Science and Technology. “It’s demographic momentum.”
Some countries, like the United States, Australia and Canada, where birthrates hover between 1.5 and 2, have blunted the impact with immigrants. But in Eastern Europe, migration out of the region has compounded depopulation, and in large parts of Asia, the “demographic time bomb” that first became a subject of debate a few decades ago has finally gone off.
South Korea’s fertility rate dropped to a record low of 0.92 in 2019 — less than one child per woman, the lowest rate in the developed world. Every month for the past 59 months, the total number of babies born in the country has dropped to a record depth.
schools shut and abandoned, their playgrounds overgrown with weeds, because there are not enough children.
To goose the birthrate, the government has handed out baby bonuses. It increased child allowances and medical subsidies for fertility treatments and pregnancy. Health officials have showered newborns with gifts of beef, baby clothes and toys. The government is also building kindergartens and day care centers by the hundreds. In Seoul, every bus and subway car has pink seats reserved for pregnant women.
But this month, Deputy Prime Minister Hong Nam-ki admitted that the government — which has spent more than $178 billion over the past 15 years encouraging women to have more babies — was not making enough progress. In many families, the shift feels cultural and permanent.
projections by an international team of scientists published last year in The Lancet, 183 countries and territories — out of 195 — will have fertility rates below replacement level by 2100.
municipalities have been consolidated as towns age and shrink. In Sweden, some cities have shifted resources from schools to elder care. And almost everywhere, older people are being asked to keep working. Germany, which previously raised its retirement age to 67, is now considering a bump to 69.
Going further than many other nations, Germany has also worked through a program of urban contraction: Demolitions have removed around 330,000 units from the housing stock since 2002.
recently increased to 1.54, up from 1.3 in 2006. Leipzig, which once was shrinking, is now growing again after reducing its housing stock and making itself more attractive with its smaller scale.
“Growth is a challenge, as is decline,” said Mr. Swiaczny, who is now a senior research fellow at the Federal Institute for Population Research in Germany.
Demographers warn against seeing population decline as simply a cause for alarm. Many women are having fewer children because that’s what they want. Smaller populations could lead to higher wages, more equal societies, lower carbon emissions and a higher quality of life for the smaller numbers of children who are born.
But, said Professor Gietel Basten, quoting Casanova: “There is no such thing as destiny. We ourselves shape our lives.”
The challenges ahead are still a cul-de-sac — no country with a serious slowdown in population growth has managed to increase its fertility rate much beyond the minor uptick that Germany accomplished. There is little sign of wage growth in shrinking countries, and there is no guarantee that a smaller population means less stress on the environment.
Many demographers argue that the current moment may look to future historians like a period of transition or gestation, when humans either did or did not figure out how to make the world more hospitable — enough for people to build the families that they want.
Surveys in many countries show that young people would like to be having more children, but face too many obstacles.
Anna Parolini tells a common story. She left her small hometown in northern Italy to find better job opportunities. Now 37, she lives with her boyfriend in Milan and has put her desire to have children on hold.
She is afraid her salary of less than 2,000 euros a month would not be enough for a family, and her parents still live where she grew up.
“I don’t have anyone here who could help me,” she said. “Thinking of having a child now would make me gasp.”
Elsie Chen, Christopher Schuetze and Benjamin Novak contributed reporting.
In the near future, giant index funds, those low-cost investments that have helped millions of people to build nest eggs, will gain “practical power over the majority of U.S. public companies.”
That nightmarish vision originated in a prescient 2018 paper by John Coates.
Mr. Coates was a professor of Harvard Law School when he laid out his argument — one that I share. Now, he is a policymaker. In February, he became acting director of the Securities and Exchange Commission’s division of corporation finance. Under the new reform-minded S.E.C. chairman, Gary Gensler, Mr. Coates is in a position to address the problems he has analyzed so painstakingly.
Neither Mr. Coates nor Mr. Gensler was available for an interview, but in that paper, Mr. Coates laid out his views. Index funds, which simply track the market and make no attempt to outperform it, are so effective and cheap, he said, that they have become the investment vehicle of choice for trillions of dollars of assets. Yet under current rules, it is the index fund executives, not the millions of people who invest in them, who have the power to cast proxy votes.
Those votes are the heart of a system intended to give investors a voice on crucial matters like how much the chief executive is paid or whether a company is damaging the environment.
wrote in December 2019, that lack of proxy voting capability leaves vast numbers of investors out of the equation, and gives corporations inordinate power. Consider that roughly half of all American households, comprising tens of millions of people, have a stake in the stock market. But most own equities indirectly through funds — mainly index funds.
That leaves fund managers with the decisive power over corporate governance, and the biggest fund companies have sided with management roughly 90 percent of the time.
As Mr. Coates wrote in 2018, “Control of most public companies — that is, the wealthiest organizations in the world, with more revenue than most states — will soon be concentrated in the hands of a dozen or fewer people.” The title of his paper was “The Problem of Twelve,” referring to the unelected leaders of index fund operations.
What’s worse, mutual fund companies are frequently conflicted. Many receive revenue from public traded corporations for providing financial services connected to retirement plans, yet have the responsibility of casting critical votes on how those companies are run. Scholars like Mr. Coates have worried about these conflicts for years.
study, “Uncovering Conflict of Interests: Proxy Voting Data Reveals Bias for Asset Managers to Favor Clients,” was done by the group As You Sow, which files for shareholder proposals on issues such as the environment, gender and racial diversity, and executive pay.
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The group based its finding on an analysis of 9.6 million proxy votes by fund companies, along with Labor Department records that show how much fund companies were paid for retirement plan services.
“The big fund companies have a massive aggregation of power that comes from the investments of their shareholders,” said Andrew Behar, chief executive of As You Sow. “At the very least, the fund companies shouldn’t be allowed to vote if they have conflicts of interest.”
Such apparent conflicts are permitted under current rules, as Mr. Coates noted in his 2018 paper. There are many possible regulatory solutions, but the fundamental cure would be to take proxy voting power away from the fund companies and put it in the hands of millions of fund shareholders. That change would be especially important for investors in broad-based index funds, which mirror the stock market and cannot divest shares of individual companies.
Say you don’t want to put money into Exxon Mobil because you disagree with its approach to climate change. If you own shares in an S&P 500 index fund, you will have an indirect stake in Exxon nonetheless. And if you hold the fund in a workplace retirement account, you may be stuck. Only 3 percent of 401(k) plans include investment options based on what are known in the industry as environmental, social and governance (E.S.G.) principles, according to the research firm Morningstar, a research firm that rates funds.
Reflecting widespread concern about climate change, fund companies appear to be shifting some of their proxy votes, Morningstar said. BlackRock, headed by Larry Fink, has called for a speedy transition to a “net zero economy” and Vanguard in April adopted guidelines that may lead to more “E.S.G.-friendly” votes, said Jackie Cook, director of investment stewardship research at Morningstar.
INDEX, has taken a small step that could have revolutionary implications: This year, it has begun asking shareholders how they want to vote.
Index Proxy Polling,” an easy way for shareholders to convey their preferences on proxy votes for S&P 500 companies. The aim is to demonstrate how shareholders in an index fund could express their opinions.
So far, only about 100 investors have participated, said Mike Willis, the fund manager, and current S.E.C. regulations require him to make the final voting decisions on behalf of the fund. But he said he hoped the S.E.C. would eventually allow him “to move to real shareholder democracy and go to pass-through voting, in which the shareholders say what they want and we just cast the vote for them.”
I commend Mr. Willis for his innovative approach, but note that this is not a typical index fund. It is an equal-weighted version of the S&P 500: It gives equal emphasis to big and small companies, so it may underperform the market when giants like Apple boom, and do better than the standard index when smaller companies excel. Its expense ratio of 0.25 percent is reasonable but not as low as some of the giant funds.
If experiments like this catch on, they could help to move the markets closer to something resembling shareholder democracy. But legislators and regulators — people like Mr. Coates and Mr. Gensler — will need to weigh in, too, if we are to avert a future in which the voices of investors are muffled and giant corporations are dominated by even more powerful index funds.
JPMorgan Chase named two female executives as joint heads of its largest division, potentially paving the way for the nation’s largest bank to be led by a woman.
Marianne Lake, chief executive of the consumer lending division, and Jennifer Piepszak, chief financial officer, both age 51, were named heads of JPMorgan’s consumer and community bank, the sprawling division that handles auto loans, mortgages and private wealth management for bank customers. Their promotions are effective immediately.
In a message to employees on Tuesday, Jamie Dimon, JPMorgan’s longtime chief executive, praised both Ms. Lake and Ms. Piepszak, who will now run a division that takes in more than $50 billion per year in revenue and competes neck and neck with the bank’s corporate and investment bank for dominance.
“We are fortunate to have two such superb executives who are both examples of our extremely talented and deep management bench,” Mr. Dimon wrote. “They have proven track records of working successfully across the firm.”
The two executives step into a role previously held by Gordon Smith, the firm’s co-president and chief operating officer, who said he would retire at the end of the year. His retirement also paves the way for Daniel Pinto, the other co-president and chief operating officer, as well as the head of its corporate and investment bank, to become the sole No. 2. Jeremy Barnum, currently global head of research for the corporate and investment bank, will succeed Ms. Piepszak as chief financial officer.
Tuesday’s announcement brings renewed attention to what has been a hotly debated question within financial circles for years: who would replace Mr. Dimon, the charismatic C.E.O. who led JPMorgan through the financial crisis and is the longest-tenured bank leader on Wall Street. Mr. Dimon, 65, took on his role in late 2005 and has since quadrupled the bank’s stock price. He has said that leading JPMorgan is his calling, adding on more than one occasion that he planned to stay at the helm for at least another five years. But over the past decade, as a number of executives once viewed as potential successors have exited, concerns about who might replace Mr. Dimon have mounted.
The market’s reaction to the announcements was modest, suggesting that investors didn’t expect imminent changes at the top of the bank.
“Obviously, with each year that goes by, how could he not be a year closer,” Glenn Schorr, a banking analyst who covers JPMorgan for Evercore ISI, said of Mr. Dimon’s retirement. At the same time, he added, the elevation of Ms. Lake and Ms. Piepszak doesn’t necessarily mean that the chief executive’s departure is any closer. “I’ve seen this so many times,” Mr. Schorr said. “It doesn’t mean that at all.”
“The board has said it would like Jamie to remain in his role for a significant number of years,” Joseph Evangelisti, a JPMorgan spokesman, said in a statement.
It’s May 17 and it’s Tax Day, the deadline for filing your 2020 taxes. The Internal Revenue Service in March said that Americans who needed it could take extra time to file their taxes. That time has arrived.
The one-month delay from the usual April deadline did not offer as much extra time as the I.R.S. gave people last year, when the filing deadline was pushed to July 15. But the aim was the same: to make it easier for taxpayers to get a handle on their finances — as well as tax changes that took effect this year with the signing of the American Rescue Plan.
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