The business environment is strong, according to the April 2024 NABE Business Conditions Survey released today by the National Association for Business Economics. Also, more survey respondents reported higher sales and profit margins, compared to those who responded to the January survey.
However, the survey found less optimism that sales or profit margins will increase in the next three months.
“The results also suggest that inflation is still with us but may be easing,” NABE Business Conditions Survey Chair Carlos Herrera, chief economist, Coca-Cola North America, stated in a press release. “Almost two-thirds of panelists expect prices charged to remain unchanged in the next three months.”
In addition, 18% of respondents said employment rose at their firms over the past three months, while 12% reported having shed workers. Looking forward, 22% of respondents anticipate employment will rise at their firms over the next three months and 4% anticipate it will fall; this results in the net rising index for expected employment (percent of respondents reporting increasing employment minus percent reporting decreasing employment) over the next three months increasing to 18, up from five in January and its highest level since July 2022.
Labor continues to be the most often cited category of input shortages, with 29% of respondents reporting shortages of skilled labor and 12% reporting shortages of unskilled labor.
In addition, the survey asked NABE members, “If your company is facing labor shortages, when do you expect those shortages will start to abate?”
Responses reflect continued tightness in the labor market, with 36% of respondents reporting labor shortages, up from 29% in the January survey. Half of respondents, 49%, reported no labor shortages, consistent with the 51% in January. Of those reporting shortages, 14% indicate that their labor shortages have already begun to abate. The remaining 22% expect labor shortages to start to abate in the future: 6% anticipate improvements by the second quarter of 2024, 4% expect improvements by the second half of 2024, and 12% do not anticipate improvements until the first half of 2025 or later.
Meanwhile, 56% of respondents report wages at their firms rose over the past three months — the largest share of respondents reporting rising wages since April 2023 — while just 2% reported wages fell over the same period. However, a smaller share of respondents than in the January survey expects wages at their firms to increase over the next three months, with the forward-looking Net Rising Index at 40, down from 52 in the prior survey and its lowest level since October 2020.
The April 2024 NABE Business Conditions Survey included responses from 49 NABE members and was conducted from April 1 to April 9.
Alphabet Inc.’s Google will roll back requirements that US suppliers and staffing firms pay their employees at least $15 an hour and provide health insurance and other benefits, Reuters reports. The move could enable the tech giant to avoid bargaining with unions. It follows the US National Labor Relations Board’s January ruling that Google was a joint employer of workers provided by staffing firm Cognizant Technology Solutions and must bargain with their union. Google is appealing that decision.
Given the creeping encroachment of AI into almost every aspect of modern life — from making music to helping Google maintain even more of a monopolistic chokehold on the open web — it was probably to be expected that the federal government would eventually decide to employ the technology in service of tax collection.
IRS commissioner Danny Werfel, aka the top federal official in charge of squeezing as much money as possible from taxpayers, said in public remarks just a few days ago in Washington DC that the tax agency is exploring two use cases for AI: Deploying the technology in the form of chatbots, to answer questions from taxpayers. And also to help the agency identify people who aren’t paying Uncle Sam enough money.
“Right now, I believe that there are AI solutions that we have not yet leveraged that exist today that can help with some of these basic questions to the benefit of taxpayers,” Werfel said. “And on the other side of the equation, we are using AI today to do even more to unlock and spot this complexity.”
Werfel’s remarks came days after Tax Day 2024 (April 15) and also against the larger backdrop of generative AI becoming increasingly mainstream thanks to companies like OpenAI, Meta, and Google baking the technology into their core products. All that said, however, I can’t help but feel like there’s something dystopian about the government turning to AI for a core function like this. Were this to be deployed at scale, I would expect, at a minimum, there to be a corresponding reduction in the IRS’ headcount.
You’re there to do a job, in other words. And if AI is now doing more of it for you, there ought to be a cost savings that flows from that (even though, who am I kidding, this is the federal government we’re talking about — the place where efficiency and logic go to die). “We have to be cautious and thoughtful with how we deploy AI,” Werfel continued.
“We have a fundamental responsibility that is primary for us, and that is to protect taxpayer rights. And those rights include things like the right to privacy and the right that we will not add unnecessary intrusion into that privacy. We need to stay 1,000 miles away from even the perception that AI is in any way violating the responsibility we have to protect taxpayer privacy.”
The social media company founded by former President Donald Trump applied for a business visa program that he sought to restrict during his administration and which many of his allies want him to curtail in a potential second term.
Trump Media & Technology Group, the company behind Truth Social, filed an application in June 2022 for an H-1B visa for a worker at a $65,000 annual salary, the lowest wage category allowed under the program. Federal immigration data shows the company was approved for a visa a few months later. The company says it did not hire the worker.
Filing for the visa sets the image of Trump the candidate, who has proposed a protectionist agenda for companies to “hire American,” in conflict with Trump the businessman, who has said his companies will use every tool at their disposal. Records show the investment firm started by Trump’s son-in-law and White House adviser, Jared Kushner, also filed an application and was approved to hire a foreigner as an associate under the same visa program.
Trump Media & Technology Group said in a statement the application “was made under prior management,” even though the current CEO, former House Intelligence Committee chairman, and longtime Trump ally Devin Nunes, was already leading the company at the time the application was first filed with the U.S. Department of Labor.
“The company has never hired — and has no plans to hire — an H-1B visa program worker. When current management learned of this application, which was made under prior management, it swiftly terminated the process in November 2022,” the company said in a statement.
An H-1B visa petition can cost companies about $5,000 per employee. Companies can withdraw petitions even after being approved. U.S. Citizenship and Immigration Services records data doesn’t note when visas are revoked. But a spokeswoman for the Labor Department, which also tracks H-1B applications, said they had no records of Truth Social requesting a withdrawal.
A COMMON TOOL FOR TECH COMPANIES
Tech companies commonly hire employees using the H-1B program. Trump never hid the fact he used the visas before he became president, using them mostly to bring in foreign models and a few workers for his hotels and resorts, per a review of petitions filed since 2009.
But with exceptions to renew existing applications, his companies appeared to have no longer petitioned for H-1B visas until Truth Social was created.
Data from the Labor Department shows that an application was filed by Trump Media & Technology Group for an employee to earn $65,000. It lists the employer Will Wilkerson, a company co-founder and former senior vice president of operations, and an Atlanta address as the job’s location.
Wilkerson filed a whistleblower complaint in August 2022 with the U.S. Securities and Exchange Commission, alleging securities violations by the company. He was fired, according to The Washington Post, and is cooperating with federal authorities. His lawyers said he would not comment.
‘I SHOULDN’T BE ALLOWED TO USE IT’
Trump frequently talks about the arrivals of migrants who cross the U.S.-Mexico border illegally, but his policy proposals while in the White House also included curbs on legal immigration such as family-based visas and the visa lottery program.
In a 2016 primary debate, Trump spoke about the H-1B visa program and said it was “very bad” and “unfair” for U.S. workers.
“First of all, I think and I know the H-1B very well. And it’s something that I frankly use and I shouldn’t be allowed to use it. We shouldn’t have it,” he said. “Second of all, I think it’s very important to say, well, I’m a businessman and I have to do what I have to do.”
Three months after taking office, Trump issued his “Buy American and Hire American” executive order, which directed Cabinet members to suggest reforms to ensure that H-1B visas were awarded to the highest-paid or most skilled applicants to protect American workers. He has previously said the program was used by tech companies to get foreign workers for lower pay.
During his administration, a study by the nonpartisan National Foundation for American Policy found the government was scrutinizing cases more by launching requests for more information from companies filing to hire foreign workers and denying more petitions.
The “Project 2025” handbook, compiled by allies preparing for Trump’s potential transition to power, says the H-1B program should be transformed “into an elite mechanism exclusively to bring in the ‘best and brightest’ at the highest wages while simultaneously ensuring that U.S. workers are not being disadvantaged by the program.”
Companies in the professional, scientific, and technical services fields account for more than 60% of the total visas granted, said Nicolas Morales, an economist at the research department of the Federal Reserve Bank of Richmond who specializes in labor and migration. Morales said he has found the visa program has been beneficial for small companies to stay in business.
“Winning the H-1B lottery actually helps them. It increases their chances of survival,” he said. “In the next five years, they are more likely to stay active, particularly small companies that are very dependent on skilled labor.”
The applications require companies to attest they will provide the foreign workers the same benefits offered to U.S. workers and pay more than what they pay others with similar experience and qualifications or more than the typical wage for that type of occupation. Companies also have to provide a notice of the filing to the workers by posting a notice in two locations at the place of employment.
Much of the criticism regarding the H-1B program is about companies offering salaries in the lower wage categories to foreign workers. The application filed by Kushner’s investment firm to hire a foreign employee appears to satisfy that complaint.
The Labor Department certified a document where Kushner’s investment firm specified it would pay this employee a $200,000 salary, which falls under the highest wage level for the H-1B visas typically reserved for those who are experts in their field and have senior responsibilities. Recent data from U.S. Citizenship and Immigration Services shows the company was approved for a visa.
Kushner has not joined the Trump campaign and has been pursuing his own business interests applying for tourism projects in the Balkans.
The Federal Trade Commission sued to block Tapestry, Inc.’s $8.5 billion acquisition of Capri Holdings Ltd., saying that the deal would eliminate direct head-to-head competition between the fashion companies’ brands like Coach and Michael Kors in the so-called affordable luxury handbag arena.
The agency also said Monday that the deal, announced in August 2023, threatens to eliminate the incentive for the two companies to vie for employees and could depress employees’ wages and workplace benefits. The combined Tapestry and Capri would employ roughly 33,000 people worldwide, the agency said.
“To become a serial acquirer, Tapestry seeks to acquire Capri to further entrench its stronghold in the fashion industry,” said Henry Liu, director of the FTC’s Bureau of Competition in a statement.
The move is the latest by the FTC to take a more aggressive position on antitrust issues.
In February, the FTC sued to block the $24.6 billion merger between grocery giants Kroger and Albertson’s, saying the lack of competition would lead to higher grocery prices and lower wages for workers. The supermarket chains said Monday they will sell more of their stores to quell the federal government’s concerns.
Kroger and Albertsons announced their planned merger in October 2022. The companies said it’s necessary so they can better compete with Walmart, Amazon, and other big rivals.
Tapestry’s and Capri’s portfolio of brands covers a wide array of items from clothing to eyewear to shoes. Tapestry has been on an acquisition binge for the past several years and already owns Kate Spade New York, Stuart Weitzman, and Coach. Capri owns the Versace, Michael Kors, and Jimmy Choo brands.
Specifically, Tapestry’s Coach and Kate Spade brands and Capri’s Michael Kors brand are close rivals in the handbag market. The FTC said that they continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or reduce handbag prices.
Once completed, the new entity would be the fourth largest luxury company in the world, with a combined market share of around 5.1% of the luxury goods market, according to research firm GlobalData PLC. In the Americas, the company will become the second largest luxury player behind LVMH, with a combined share of 6% of the luxury goods market, GlobalData said.
Both Capri and Tapestry said they strongly disagreed with the FTC’s decision.
“The market realities, which the government’s challenge ignores, overwhelmingly demonstrate that this transaction will not limit, reduce, or constrain competition, ” Capri said in a statement on its website. “Tapestry and Capri operate in the fiercely competitive and highly fragmented global luxury industry. Consumers have hundreds of handbag choices at every price point across all channels, and barriers to entry are low. ”
Capri said it intends to “vigorously defend this case in court alongside Tapestry and complete the pending acquisition.” It said the U.S. FTC is the only regulator that hasn’t approved the transaction.
Tapestry said that “there is no question that this is a pro-competitive, pro-consumer deal and that the FTC fundamentally misunderstands both the marketplace and how consumers shop. ”
“Tapestry and Capri operate in an intensely competitive and highly fragmented industry alongside hundreds of rival brands, including both established players and new entrants,” Tapestry said in a statement.
California lawmakers on Monday rejected a proposal aimed at cracking down on how some of the nation’s largest utilities spend customers’ money.
California’s investor-owned utilities can’t use money from customers to pay for things like advertising their brand or lobbying for legislation. Instead, they’re supposed to use money from private investors to pay for those things.
Consumer groups say utilities are finding ways around those rules. They accuse them of using money from customers to fund trade groups that lobby legislators and for TV ads disguised as public service announcements, including some recent ads by Pacific Gas & Electric.
A bill in the state Legislature would have expanded the definitions of prohibited advertising and political influence to include things like regulators’ decisions on rate-setting and franchises for electrical and gas corporations. It would also allow regulators to fine utilities that break the rules.
Monday, the bill failed to pass a legislative committee for the second time in the face of intense opposition from utilities, including Pacific Gas & Electric.
“We’ve seen too many examples of the blatant misuse of ratepayer funds across the state,” said Democratic state Sen. Dave Min, who authored the bill that failed to pass on Monday. “I know that consumers are outraged by this.”
PG&E opposed the bill because it said it would take away the power of state regulators to examine utility companies’ costs and decide whether it is “just or reasonable″ for customers to pay for them.
Plus, PG&E lobbyist Brandon Ebeck said it’s appropriate for customers to pay for the company’s membership fees that go to various industry associations because they benefit customers. He noted those groups coordinate emergency response and wildfire training. When the war in Ukraine started, the Edison Electric Institute — a national association representing investor-owned utilities — sought to find surplus equipment that could be sent to Ukraine.
“There’s a lot of benefits to customers,” Ebeck said.
The bill was part of a larger backlash against the rising cost of electricity in California. Power is expensive in California in part because of the work required to maintain and upgrade electrical equipment to reduce the risk of wildfires in a state with long, dry summers.
As rates have continued to climb, utilities like Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric have faced increasing scrutiny from consumer groups over how they spend the money they collect from customers.
Matt Vespa, senior attorney at the environmental advocacy group Earthjustice, said Monday’s vote was “incredibly disappointing.” He said the current rules for utilities “incentivize them to see what they can get away with.”
As an example, Min and consumer groups noted PG&E spent up to $6 million in TV ads to tout its plan to bury power lines to reduce wildfire risk, a plan that some consumer groups opposed because it increased customers’ bills.
The ads first aired in 2022 and feature CEO Patti Poppe in a company-branded hard hat while saying the company is “transforming your hometown utility from the ground up.”
The utility recorded the expenses for those ads to come from a customer-funded account that is dedicated to reducing wildfire risk, as first reported by the Sacramento Bee. PG&E spokesperson Lynsey Paulo said the company has not yet asked regulators to review that expense. The California Public Utilities Commission will decide whether customer funds can pay for the ads.
Paulo noted state regulators allow utilities to use money from customers to pay for safety communications on television.
“Our customers have told us they want to know how we are investing to improve safety and reliability,” Paulo said. “We also use digital and email communications, but some customers do not have internet or email access, so we use methods including television spots to communicate with all of our customers.”
Some consumer groups say the ads have crossed the line.
“Only at PG&E would (Poppe’s) attempts at brand rehabilitation be considered a ‘safety message,’” said Mark Toney, executive director of the Utility Reform Network. “This blatant misuse of ratepayer funds is exactly why we need SB 938 and its clear rules and required disclosures for advertising costs.”