Posted on

Job Cuts Continue at Staggering Pace: Live Updates

Credit…Bridget Bennett for The New York Times

American employers continue to cut jobs, signaling new anxiety about the course of the coronavirus pandemic and uncertainty about further legislative relief.

Furloughs of more than 30,000 workers by United Airlines and American Airlines began Thursday after Congress was unable to come up with a fresh aid package for the industry. The Walt Disney Company, whose theme parks in Florida and California have been hard hit by a shortage of visitors, said Tuesday that it would lay off 28,000 workers.

Allstate announced Wednesday that it would lay off approximately 3,800 employees, or about 8 percent of the roughly 46,000 employees Allstate had at the end of 2019, and the book publisher Houghton Mifflin Harcourt said on Thursday it would cut about 22 percent of its work force as part of a restructuring.

Many economists say another effort like the CARES Act, passed in March, could ease the employment outlook, but an agreement has been elusive for months. Last-ditch negotiations between the White House and congressional Democrats were continuing Thursday, and Speaker Nancy Pelosi refused to rule out the chance of reaching an agreement with Treasury Secretary Steven Mnuchin.

Democrats are pushing a new $2.2 trillion plan unveiled this week while the White House has floated a $1.6 trillion plan.

“It’s unclear how many companies can sustain themselves and retain payrolls that support incomes,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics. “A solid rebound in job growth is now looking more muted.”

The Labor Department reported Thursday that 787,000 Americans filed for state unemployment benefits for the first time last week. It was a decline from the previous week’s total of 827,000, but the figures — unadjusted for seasonal variations — are roughly four times the weekly tally of claims from before the pandemic.

“Clearly there has been a moderation in the rate of improvement from the early stages,” said Michelle Meyer, head of U.S. economics at Bank of America. “As we get further away from the initial shock, we have less of a natural catch-up, and we face more residual damage.”

With seasonal adjustments, last week’s figure was 837,000.

Applications for Pandemic Unemployment Assistance, an emergency federal program aimed at independent contractors, gig workers and part-time employees, totaled 650,000.

With the expiration of a $600 federal weekly supplement to unemployment benefits at the end of July, consumers have less to spend at businesses struggling to stay open, like restaurants, bars and retail stores.

The Commerce Department said Thursday that personal income declined 2.7 percent in August, after a slight increase in July, reflecting the cessation of the $600 payments.

On Friday, the Labor Department will report on hiring and unemployment for September, when hiring is expected to continue to slow as it has for the past several months.

Credit…Chip Somodevilla/Getty Images

Speaker Nancy Pelosi on Thursday refused to rule out the chance of reaching an agreement with Treasury Secretary Steven Mnuchin on another coronavirus relief package, even as she outlined several critical differences with the Trump administration and signaled that House Democrats would press ahead with their own legislation.

“We’re hopeful that we can reach an agreement because the needs of the American people are great,” Ms. Pelosi said at her weekly news conference. “But there has to be a recognition that it takes money to do that, and it takes the right language to make sure it’s done right.”

Ms. Pelosi and Mr. Mnuchin are scheduled to speak on the phone at 1 p.m., according to a person familiar with the discussion.

The two remain at odds over the scope of the package, with Democrats pushing a new $2.2 trillion plan unveiled earlier this week and Mr. Mnuchin bringing a $1.6 trillion offer to a 90-minute meeting in Ms. Pelosi’s Capitol Hill suite on Wednesday.

The stalemate comes as several industries, notably airlines, are running into severe financial constraints as the virus persists and people continue to shy away from traveling. United Airlines and American Airlines began furloughs of 30,000 workers on Thursday after Congress was unable to come up with a fresh aid package for the industry.

House Democrats, under pressure from rank-and-file lawmakers eager to return to their districts with news of a deal, are expected to vote on the $2.2 trillion plan on Thursday.

Democratic leaders had delayed plans to vote on the legislation on Wednesday, in an effort to give the talks between Ms. Pelosi and Mr. Mnuchin time to produce an agreement.

Ms. Pelosi insisted that approval of the House Democratic plan did not signal the end of negotiations, telling reporters, “It just says, you asked, here’s what it is — this is how we came down” from their initial $3.4 trillion proposal approved in May.

On Wednesday evening, Mr. Mnuchin said the talks had been “productive,” adding that a deal would include direct payments to Americans that would be similar in size to the previous round of payments. But he and other administration officials warned that the Democratic offer in its current form was unacceptable.

And in a sign of the ongoing acrimony, Kayleigh McEnany, the White House press secretary, on Thursday placed blame on Ms. Pelosi for layoffs in the airline industry.

“Nancy Pelosi is not being serious” when it comes to the negotiations, she said.

Ms. McEnany confirmed that the White House offered a relief proposal that would cost $1.6 trillion, including $150 billion for schools and $250 billion for states and municipalities. She suggested that no additional offer was immediately forthcoming and suggested that Democrats should pass legislation on the items that the two sides already agree on.

  • Democrats and Republicans have been unable to reach an agreement on the appropriate level of financial support for small businesses, workers, state governments and the broader economy, though Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have held talks this week. House Democrats abruptly postponed a planned vote Wednesday evening on a $2.2 trillion plan, putting off action until Thursday to leave time for last-ditch negotiations with the Trump administration.

  • Speaking at her weekly news conference on Thursday, Ms. Pelosi held out hope for an agreement, even both sides remained at odds over the scope of the package. Mr. Mnuchin has floated a $1.6 trillion plan. The two are scheduled to speak again Thursday, according to a person familiar with the discussion.

  • But Wall Street analysts said they did not expect any additional fiscal stimulus before the November election, and major airlines began to furlough workers on Thursday after financial support from Washington ended the day before.

  • “We’re hearing a lot of hope out of Speaker Pelosi and Secretary Mnuchin that a deal will get done, but we wonder if this chatter is merely something to drown out all of the layoff announcements we’ve heard this week out of companies,” Matt Maley, chief market strategist at Miller Tabak, wrote in an email to clients on Thursday.

  • American Airlines and United Airlines told employees on Wednesday night that they would proceed with more than 32,000 furloughs, though both companies said they would reverse course if lawmakers provided the funding the industry had sought. Earlier in the week, the Walt Disney Company said it would lay off about 28,000 park workers, and Allstate announced plans to lay off approximately 3,800 employees.

  • The S&P 500 was about half a percent higher on Thursday, while shares in Europe ended slightly higher.

Credit…Beverly Hills Police Department

The unemployment insurance system — the main artery for delivering financial assistance to laid-off workers — has been besieged during the coronavirus crisis by fraud schemes aimed at bilking the government out of hundreds of millions of dollars.

Most of the fraud is being engineered by criminals, some of them working together, who have stolen or bought other people’s identities.

The U.S. Labor Department recently made fraud detection a priority, dedicating $100 million to combat the problem. But several state officials and security experts say some of the efforts have been misdirected, designed to uncover workers misrepresenting their eligibility.

“The focus continues to be on lying instead of stealing,” said Suzi LeVine, the commissioner of the Employment Security Department in Washington State. Traditional fraud-prevention strategies, she said, “will not help us catch these thieves.”

In California, fraud has been so pervasive that officials have suspended processing jobless claims for two weeks to put new controls in place and reduce a bulging backlog.

Unemployment insurance has generally not been a ripe target because states have been reducing benefits and tightening access. That changed after Congress moved in March to help workers suddenly left jobless when the coronavirus crisis upended the economy.

Handled by the states, pandemic jobless benefits were meant to cover self-employed, part-time and gig workers; independent contractors; and others ordinarily ineligible for unemployment insurance. But the desire to get money quickly to households facing eviction, hunger or financial ruin made the program vulnerable to swindlers. It depends largely on individuals’ certifying that they are unemployed because of the coronavirus pandemic.

“There is a low barrier to entry for potential scammers and criminals who are interested in getting involved with this form of fraud,” Parker Crucq, a senior threat intelligence analyst at the cybersecurity firm Recorded Future.

Credit…Hiroko Masuike/The New York Times

Tens of thousands of airline workers were furloughed starting Thursday after a widely supported effort to renew federal stimulus funding for the industry failed to overcome a congressional stalemate.

American Airlines and United Airlines told employees on Wednesday night that they would proceed with more than 32,000 furloughs, though both companies said they would reverse course if lawmakers provided the funding the industry had sought.

“I am extremely sorry we have reached this outcome,” Doug Parker, American’s chief executive, said in a letter to staff. “It is not what you all deserve.”

Passenger airlines received $25 billion in payroll funding under the March stimulus law known as the CARES Act, on the condition that they refrained from broad job cuts until Oct. 1. Unions representing airline workers had garnered bipartisan support in Congress for another round of aid in recent weeks, but the effort was caught in the deadlock over a broader stimulus package, even after airline executives pleaded their case in Washington.

The pandemic’s toll on air travel and the industry has been so severe that tens of thousands of airline employees have already volunteered to take pay cuts, unpaid leave for an extended period, buyouts or early retirement.

Credit…Max Whittaker for The New York Times

Google said on Thursday that it would spend more than $1 billion to license content from international news organizations, after years of criticism that it was not providing fair compensation for articles and other content linked to by its internet search products.

The program is part of a new Google product called News Showcase that will present news from around the world in short snippets that readers can quickly browse on a phone or other device. The company will pay publishers to curate the material that will be presented.

The program was starting on Thursday in Germany and Brazil, and would be rolled out to additional countries in the months ahead, Sundar Pichai, Google’s chief executive, wrote in a blog post. Partnerships have been signed with nearly 200 publications, including in Argentina, Australia, Britain and Canada, Google said. The papers include Der Spiegel and Handelsblatt in Germany and Folha de S.Paulo in Brazil.

Google has faced years of criticism around the world for not doing enough to support news organizations whose content it links to. In the Europe Union, new copyright rules give publishers stronger rights to negotiate with aggregators like Google. In Australia, Google and Facebook are facing new regulations that could require them to pay local publishers for news they carry.

The European Publishers Association, a trade group, criticized Google’s program as an attempt to undermine government actions. “By launching a product, they can dictate terms and conditions, undermine legislation designed to create conditions for a fair negotiation, while claiming they are helping to fund news production,” Angela Mills Wade, the group’s executive director, said in a statement.

Credit…Mike Segar/Reuters

Shares in the Swedish retailer H&M rose more than 7 percent after the company said online sales were growing strongly and the company had already returned to profit in the third quarter.

H&M also announced that it would close 250 stores globally next year as part of its plans to consolidate stores and ramp up digital offerings to meet the needs of customers who are increasingly choosing to shop online.

”More and more customers started shopping online during the pandemic, and they are making it clear that they value a convenient and inspiring experience in which stores and online interact and strengthen each other,” the company’s chief executive, Helena Helmersson, said in a statement.

The company also said that it was working to improve its supply chain to increase the availability of inventory and the speed of deliveries.

The coronavirus pandemic has hit retailers particularly hard. Many clothing stores shut their doors during the lockdowns, leading to unpaid rents and staff furloughs. H&M reported that in the beginning of the third quarter, roughly 900 of its 5,000 stores were temporarily closed. At the end of the quarter, which ended on Aug. 31, just over 200 stores were still temporarily shut.

“Although the challenges are far from over, we believe that the worst is behind us and we are well placed to come out of the crisis stronger,” Ms. Helmersson said.

Credit…Eric Johnson/Reuters

Boeing plans to consolidate production of its 787 Dreamliner jet at its factory in South Carolina, dealing a blow to workers in the Seattle area where the plane is also manufactured.

The move won’t take place until mid-2021 at the earliest and comes as Boeing contends with a steep decline in air travel that has devastated the aviation business. Over the past year, the company has repeatedly slashed production of the Dreamliner, a twin-aisle jet designed for long flights, and it warned this summer that it was exploring producing the plane in just one place.

“To ensure we can be effective in a market that will be smaller in the near-term, and one that will have different demands from our customers long-term, we made a decision earlier this morning to consolidate 787 production in South Carolina after months of detailed and thorough study,” Stan Deal, president and chief executive of Boeing Commercial Airplanes, said in a message to employees.

The company did not say how many workers in the Seattle area might lose their jobs because of the decision. About 900 people work on the Dreamliner in Washington, Boeing said, and at least some may be reassigned to other planes.

The union representing machinists in Washington State had accused Boeing of using the crisis as a cover to move production to the company’s factory in North Charleston, S.C., where workers are not unionized. Another union, the Society of Professional Engineering Employees in Aerospace, criticized Boeing for abandoning its members.

“We believe Boeing is making a mistake,” Ray Goforth, the society’s executive director, said in a statement. “SPEEA’s immediate focus is supporting the members who will be laid off. Long term we will partner with community stakeholders to attract new aerospace jobs to the state by marketing the aerospace talent pool Boeing is walking away from.”

Boeing had cut production of the plane from 14 to 10 a month in April. In July, it announced plans to drop production to six per month next year. The company is also working to address quality concerns that have slowed delivery of the jet. Boeing and the Federal Aviation Administration are looking into the issues, which could affect nearly 900 planes.

The company started producing the Dreamliner in Everett, Wash., in 2007 and in South Carolina in 2010, but only the South Carolina factory is equipped to build the larger variant of the plane. Boeing’s Washington work force will continue to work on the 737, 747, 767 and 777.

The troubled 737 Max appears to be moving toward a return to service by early next year after being grounded worldwide last year following two fatal crashes.

  • The Supreme Court of Ireland ruled that the bread Subway used in its sandwiches was not in fact bread. With a sugar content five times that of the country’s legal limit, the bread served at U.S. sandwich food chain could no longer be considered bread or a “staple product” but a confectionary, the court said. The ruling stems from a case that questioned whether the bread counted as a staple food and was therefore exempt from taxes. Subway has nearly 2,500 stores in England and Ireland.

  • Houghton Mifflin Harcourt, one of the largest book publishers in the United States, said on Thursday that it was cutting 22 percent of its work force, including 525 employees who were laid off plus 166 who opted for a voluntary retirement program. Publishers like HMH that supply a lot of educational books and materials have been hit hard by school closures. The company said it anticipated saving about $95 to $100 million per year through staff reductions and other cost-saving measures, including shifting away from “print-centric processes” to digital ones, a response to many schools’ focus on remote learning this year.

  • Carnival Cruise Line has canceled cruises from all of its U.S. home ports except Miami and Port Canaveral for November and December, following a decision from the Centers for Disease Control and Prevention to extend its no-sail order for cruise operations. “As we have said throughout this pause, our return to operations will be gradual and phased in,” Christine Duffy, president of Carnival Cruise Line, said in a statement. “And while we are not making any presumptions, once cruising is allowed, we will center our initial start-up from the home ports of Miami and Port Canaveral.”

  • The Federal Reserve on Wednesday said it would extend its ban on share buybacks by big banks as well as its cap on dividend payouts through the end of the year, a move the central bank said was an effort “to ensure that large banks maintain a high level of capital resilience” as pandemic-spurred economic uncertainty persists. The limitations apply to only the largest banks — those with more than $100 billion in total assets, which include firms like Bank of America, Citigroup and Wells Fargo.

  • The National Association of Theater Owners, a trade organization for cinemas in the United States and beyond, pleaded with Congress for financial help. “Absent a solution designed for their circumstances, theaters may not survive the impact of the pandemic,” it said in a letter. The letter said that “69 percent of small and midsize theater companies will be forced to file for bankruptcy or close permanently” without government help.

Credit…David Ramos/Getty Images

The unemployment rate in the eurozone edged up to 8.1 percent in August from 8 percent in July, the European Union said Thursday, as government support cushioned much of the economic impact of the pandemic.

But economists fear that the jobless rate could surge when the programs expire, or employers go bankrupt or are forced to lay off workers permanently.

Germany, France and many other countries compensate workers for some of the income they lose when their employers put them on furlough or reduced hours. That has a led to relatively modest increases in the jobless rate, which was 7.2 percent in March when the pandemic hit Europe.

In the United States, which does not have a comparable program, unemployment shot from 3.5 percent in February to 14.7 percent in April, though the rate has since declined to 8.4 percent.

In theory, people on Europe’s short-work programs will get their jobs back when the economy improves. But as the pandemic lingers and surges in some places, restaurants and other small businesses may go under, while companies such as airlines may lay off workers permanently because they don’t expect revenue to rebound for several years.

“Short-time work schemes have managed to flatten the curve substantially,” Bert Colijn, a senior economist at ING Bank, said in a note. But he added that surges in the number of new infections creates “a lot of uncertainty about the growth environment.”

Credit…Victoria Jones/Agence France-Presse, via Pool/Afp Via Getty Images

London’s transport system will need another 5.7 billion pounds, or $7.3 billion, to get through the next 18 months, the city’s mayor, Sadiq Khan, said on Thursday, in a sign of how decimated the system has been by the pandemic, travel restrictions and orders to work from home.

Transport for London, the local government agency that oversees the city’s transportation system, already received a £1.6 billion bailout in May to keep running services through the pandemic. That deal is set to end later this month.

The additional money is needed because of a drop in passenger numbers and the increased cost of completing a delayed rail line, Mr. Khan said. The number of journeys on the London Underground was down more than 60 percent at the end of September compared with the end of February, before the pandemic. Income from passenger fares fell by 90 percent because of the lockdown, the mayor added.

In a submission to the government’s Comprehensive Spending Review, a process used to set budget priorities for the next few years, Mr. Khan called for £100 million for London’s creative industries, which have been hit particularly hard by the pandemic. He also accused the British government of leaving the capital out of investment plans for the country’s economic recovery.

London has been affected by travel restrictions and quarantine requirements that have reduced tourism as well as social distancing requirements that have kept theaters, museums and other attractions closed or at severely reduced capacity.

Credit…Pool photo by Nicholas Kamm/EPA, via Shutterstock

A Senate committee voted on Thursday to authorize subpoenas for the testimony of the chief executives of Facebook, Google and Twitter as it examines a law that shields the companies from legal liability over content they host.

The move could allow lawmakers to grill the executives — Mark Zuckerberg, Sundar Pichai and Jack Dorsey — about how they handle content on their platforms, manage their users’ data and fend off competition.

Their testimony would fuel a growing debate over the liability shield, known as Section 230 of the Communications Decency Act, which makes it impossible to sue online platforms over their users’ content in some cases.

Facebook and Twitter declined to comment. Google did not respond to a request for comment.

Republicans on the Senate Commerce Committee are particularly interested in charges that the platforms are slanted against conservative views. Senator Roger Wicker, Republican of Mississippi and chairman of the committee, said Thursday that the companies’ participation was “required to reveal the extent of influence their companies have over American speech during a critical time in our democratic process.”

Despite their claims, conservatives outlets and pundits are among the most successful pages on Facebook and have built devoted followings on YouTube, which is owned by Google.

Democrats initially balked at the prospect of subpoenaing the executives because they said it was an attempt to put pressure on social media companies ahead of a hotly contested national election.

“What I don’t want to see is a chilling effect on individuals who are in a process of trying to crack down on hate speech or misinformation about Covid during a pandemic,” Senator Maria Cantwell of Washington, the top Democrat on the committee, said on Thursday. But she agreed to support the subpoenas if they also included language about concerns over user privacy and the impact that online platforms have on local news.

Some Democratic leaders, including Joseph R. Biden Jr., have indicated that they are open to revising Section 230, which critics say has allowed Silicon Valley to take a hands-off approach to speech. (The industry says that the law has allowed tech companies to grow quickly without impinging on free expression.)

Read More