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Biden Urges Employers to Lower Costs, Not Wages, in State of Union Address

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President Joe Biden’s State of the Union address on March 1 touched on several topics, ranging from Russia’s invasion of Ukraine to COVID-19. But the president spent most of his hour-long speech focused on the U.S. economy, touting the fact that over 6.5 million new jobs were created last year.

“Our economy grew at a rate of 5.7% last year, the strongest growth in nearly 40 years, the first step in bringing fundamental change to an economy that hasn’t worked for the working people of this nation for too long,” Biden said.

He outlined a plan to, “Invest in America. Educate Americans. Grow the workforce. Build the economy from the bottom up and the middle out, not from the top down,” while praising companies like Ford and GM for their job creations.

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“Companies are choosing to build new factories here, when just a few years ago, they would have built them overseas,” Biden said. “That’s what is happening. Ford is investing $11 billion to build electric vehicles, creating 11,000 jobs across the country. GM is making the largest investment in its history — $7 billion to build electric vehicles, creating 4,000 jobs in Michigan. All told, we created 369,000 new manufacturing jobs in America just last year.”

To fight inflation, Biden urged employers to lower their costs, not their wages: “Make more cars and semiconductors in America. More infrastructure and innovation in America. More goods moving faster and cheaper in America. More jobs where you can earn a good living in America.  And instead of relying on foreign supply chains, let’s make it in America.”

He also urged in his address passing the Paycheck Fairness Act and paid leave and raising the minimum wage to $15 an hour.

“When we invest in our workers, when we build the economy from the bottom up and the middle out together, we can do something we haven’t done in a long time: build a better America,” Biden said.

U.S. Economy Adds 678,00 Jobs in February

The United States economy had its best month of job growth since July 2021 in February, as 678,000 jobs were added last month, according to the U.S. Labor Department’s jobs report released on Friday.

The unemployment rate also fell to 3.8% from 4% in January, although average hourly earnings were unchanged and were downwardly revised by 0.6% in January. Still, hourly earnings are up 5.1% year-over-year and economists expect them to continue to grow as the tight labor market persists and more organizations dole out salary increases for the new year.

With Omicron cases continuing to decline in February, leisure and hospitality employers added back 179,000 jobs to build on a jump of 167,000 from January, and education and health services jobs rose by 223,000. Transportation and warehousing job growth came in at almost 50,000 to nearly match January's gains.

“This is an economy that has learned to manage very well through uncertainty,” Robert Rosener, senior U.S. economist with Morgan Stanley, told The New York Times. “We’ve continually been surprised by the resilience of the U.S. labor market.

Despite a resilient job market, the U.S. economy still has roughly two million fewer jobs than it did before the mass layoffs that began amid the initial outbreak of COVID-19 two years ago. Some workers remain sidelined by health concerns, child care problems or other variables.

Still, positive momentum is palpable, as coronavirus cases continue to decline, states continue to lift mask mandates and companies are beginning to attract workers back to the office. This could bring economic dividends, as workers return to central business districts, notes the Times. The share of employees who reported working from home because of the pandemic fell to 13% in February from 15.4% in January and a peak of more than 35% in the early stages of the pandemic.

“That will supercharge the recovery among downtown businesses,” Julia Pollak, chief economist with the career site ZipRecruiter, told the Times. “The industries that have taken the longest to recover, I think it’s their turn now.”

Russia-Ukraine Crisis Leaves Businesses Grappling

As the Russian attack on Ukraine began last week, many Ukrainian companies scrambled to close their operations and move employees to safety.

The Wall Street Journal reported executives began closing offices and factories Feb. 24, ensuring staff were safe and sending some to the Polish border, while weighing factors likely to hit their businesses.

Affected companies included:

Carlsberg A/S, the Danish brewer, said it was closing down three breweries in Ukraine and asked employees to stay at home and await instructions from local authorities. One of its breweries, in the city of Lviv, was temporarily closed because of disruption in the supply of natural gas. The company has 1,300 employees in Ukraine and a large business in Russia. 

Nestlé SA said it had temporarily closed its factories, warehouses and supply chain in Ukraine, and recommended its employees stay home. The company said it had taken the measures to ensure the safety of its workers, and that it was adapting its plans in line with the changing environment. Nestlé has three factories and about 5,000 employees in Ukraine.

ArcelorMittal SA, the world’s second-largest steelmaker, said it was slowing production at its large plant in Ukraine and has halted production at its underground mines.

Germany’s Hamburger Hafen und Logistik AG, which runs a large container terminal at Ukraine’s Odessa port, said that Ukrainian authorities closed the port and that its 480 employees had left the site.

Davidoff cigarettes maker Imperial Brands PLC suspended operations in Ukraine, where it has 600 employees across a Kyiv factory and a sales and marketing team.

The invasion has also sent a ripple effect throughout Western industries, such as oil and gas, consumer goods, auto, airlines and entertainment. As a result, companies have had to re-evaluate their businesses in Russia or suspend operations in Ukraine.

“The war just makes the worldwide situation for commodities more dire,” Christopher F. Graham, a partner at White and Williams, told the New York Times.

Target Will Raise Some Starting Wages to $24 an Hour

Target announced this week that it was raising its starting wage for workers in some positions to up to $24 an hour. According to CNN, the increase will apply to hourly workers at its discount stores, supply chain facilities and headquarters.

In 2020, Target had announced it would set its minimum wage at $15. That will remain in place, said CNN, but some Target workers will qualify for higher starting pay based on the nature of their job and the prevailing competitive wages in their local market.

Target, which employs more than 350,000 workers and has over 1,900 U.S. stores, said the hike in some starting wages is part of its plan to spend an additional $300 million on its workforce. That investment also includes expanding access to healthcare benefits for hourly workers, beginning in April.

Under the plan, Target’s hourly employees who work a minimum average of 25 hours a week will be eligible to enroll in a company medical plan, down from the previous requirement of 30 hours per week.

CNN also reported that the retailer is also shortening the waiting period for eligible hourly team members to enroll in a Target medical plan. Depending on their position, employees will be able to get comprehensive health care benefits three to nine months sooner. Employees will also get faster access to 401(k) plans.

Another Starbucks Store Votes to Unionize

According to The New York Times, workers at a Starbucks in Mesa, Arizona voted 25 to 3 to unionize, with three challenged votes, on Feb. 25. The result brought the number of company-owned stores with a union to three, out of roughly 9,000 nationwide. They join workers at two Starbucks stores in Buffalo, New York, who voted to unionize in December.

Many of the issues that workers in Mesa cited in their decision to support the union were similar to those identified by workers in Buffalo, like staffing and COVID-19 safety, reported the Times.

The Times also reported that more than 100 Starbucks stores across more than 25 states have filed petitions for union elections. “The next tally will probably come from three more stores in the Buffalo area, where votes have already been cast. Starbucks workers in cities including Boston, Chicago and Seattle are scheduled to vote or are likely to vote in the coming months,” said the publication.  

“This is another historic moment for Starbucks partners and service industry workers across the country,” Michelle Hejduk, a shift supervisor at the store, said in a statement. “This movement started in Buffalo, and we’ve now brought it across the country.”

According to the Times, “[Starbucks] has generally sought to challenge the union store by store, contesting the voting pool for each election before the labor board and sending company officials to cities where workers have filed for elections, partly to share its concerns about unionizing.”

But Brian West Easley, a management-side lawyer with Jones Day, told the Times it would become more difficult for Starbucks to sustain that approach if the company continued to suffer defeats, especially as the number of stores filing for elections increases.

“The bigger this gets, the more stretched resources become and the more ineffective they become,” he said. “The ability to push back is eroding as the numbers increase.”


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