The Jobs Conundrum: Questions About Wages Persist

‘The job’s not quite done’

The U.S. economy is a paradox. Official figures show that growth is solid, jobs are plentiful and wages are climbing, and yet voters are mostly feeling down and giving President Biden little credit.

Friday’s jobs data is adding to that split-screen view, with economists pointing out red flags in an otherwise sterling report.

The labor market seems to be performing strongly. Employers added 353,000 jobs last month, almost double economists’ forecasts, and an additional 100,000 via revisions in previous months. Average hourly wages rose, too.

But that doesn’t necessarily mean workers are more prosperous. For a start, wintry weather shrank the average workweek to 34.1 hours in January. In particular, nonsalaried employees, especially those in retail, construction and the hospitality sectors, worked fewer hours, which probably ate into their pay, Bill Adams, an economist at Comerica Bank, said in a research note.

And Goldman Sachs’s wage tracker for U.S. workers fell after Friday’s report on a quarterly annualized basis.

Workers are increasingly anxious about changing jobs. Quit rates have fallen to a four-year low, suggesting employees are feeling less confident that they’ll find a better position elsewhere. If this trend persists, it could also put the chill on wage gains that soared during the so-called Great Resignation.

Big segments of the work force are checking out. U.S.-born male workers are leaving the work force in larger numbers, Adams said. On the flip side, “foreign-born labor force participants have accounted for all of the job growth over the last year, offsetting the effects of an aging native-born workforce,” he added.

Such numbers could explain why Biden’s approval rating continues to languish, largely for his handling of the economy. It also may explain why Donald Trump, who draws support from a base of male U.S.-born voters, is seen as a better steward of the economy.

High inflation isn’t helping Biden’s case with voters, either. Jay Powell, the Fed chairman, said last week that a March rate cut was probably not on the cards, but he told “60 Minutes” on Sunday night that three moves were still expected in 2024. The “danger of moving too soon is that the job’s not quite done,” he said, reaffirming his view that the central bank needs more evidence that inflation is under control before making a decision.

That said, there’s still a disconnect between the markets and the Fed, with futures traders still seeing four to five cuts this year.

HERE’S WHAT’S HAPPENING

Harvard names new directors ahead of presidential search. Ken Frazier, Merck’s former C.E.O., and Joe Bae, the co-C.E.O. of KKR, will join the Harvard Corporation, the university’s governing board. The appointments come as Harvard prepares to look for a new leader after Claudine Gay resigned in December amid pressure from donors; Frazier is close to Ken Chenault, the former American Express C.E.O. and a Harvard board member who had offered support to Gay.

McDonald’s revenues miss expectations amid war in the Middle East. The fast-food giant said that comparable store sales rose just 3.4 percent in the fourth quarter, the slowest growth rate since late 2020. Expectations had already been lowered after McDonald’s warned of a “meaningful business impact” in the Middle East, particularly because of “misinformation” about franchisees’ responses to the war in Gaza.

Taylor Swift sets a Grammys record. In a night dominated by women, the pop star became the first artist to win album of the year four times (and announced her latest album, due on April 19). But Swift’s success belies the troubles facing the music industry, which has announced layoffs and become embroiled in fights with tech companies.

Inflation data and earnings will be in the spotlight this week. It’s a busy one for corporate results, with KKR reporting on Tuesday, Alibaba and Disney on Wednesday, and Apollo Global Management, SoftBank and Maersk on Thursday. Beijing is also set to release inflation data on Thursday, while the Commerce Department is scheduled to publish revisions to the 2023 full-year Consumer Price Index on Friday.

Musk takes on Delaware

Days after a Delaware court rejected Tesla’s $56 billion pay package for Elon Musk, the car maker’s billionaire chief is continuing to press his case that corporate America’s traditional home base is inhospitable for business.

Musk shared social-media posts criticizing Delaware by Cathie Wood, the tech-focused money manager who has been a stalwart supporter of Tesla (and recently bought $32 million worth of the company’s shares after they fell in price).

Wood took issue with the finding that Musk’s compensation plan, approved in 2018, was unfair to Tesla shareholders: “Given the results five years later, with $TSLA up ~13-fold from the time of the vote to its peak in November 2021 and still up 9-fold today, I would like to understand what Delaware means by ‘fairness,’ ” she posted on Musk’s X social network.

“Thank you,” Musk wrote in sharing another Wood post calling the Delaware court decision “un-American.”

The issue of fairness was raised by The Wall Street Journal, which over the weekend examined the links between Musk and many current and former Tesla directors, who are supposed to be independent of management.

The article outlined how board members including Ira Ehrenpreis, Antonio Gracias and James Murdoch — all of whom were directors when the 2018 pay package was ratified — have financial ties to Musk-operated companies worth hundreds of millions. (The Journal also reported that some directors were aware that Musk used illegal drugs.)

From The Journal:

The connections are an extreme blurring of friendship and fortune and raise questions among some shareholders about the independence of the board members charged with overseeing the chief executive. Such conflicts could run afoul of the loose rules governing what qualifies as independence at publicly traded companies.

The Delaware decision also focused on fairness. Chancellor Kathaleen McCormick wrote that Tesla directors “enjoyed thick ties with the directors tasked with negotiating on behalf of Tesla, and dominated the process that led to board approval of his compensation plan.”

Haley’s last stand?

Despite finishing a distant second in New Hampshire’s Republican primary last month, Nikki Haley is picking up campaign donations at a growing clip. It suggests that she could have staying power in the G.O.P. race, even as the party leadership closes ranks around Donald Trump.

Haley raised $16.5 million last month, with 69,274 new donors, according to Axios. That compares with the $24 million she raised in the fourth quarter, suggesting that she has continued to gain support from anti-Trump donors. (She also made a cameo on “Saturday Night Live” this weekend that generated plenty of buzz on social media.)

Haley is seeking to capitalize on that momentum by holding 10 fund-raisers over the next two weeks, courting donors like those who held one for her on Jan. 30. Hosts of that event included Stanley Druckenmiller, Henry Kravis and Cliff Asness.

Those donations come after other G.O.P. backers have moved on: The financier Ken Griffin, for example, has said that he will focus more on Congressional races.

How much longer can Haley last? Campaign experts say that she has been thrifty, allowing her to devote resources to the Feb. 24 primary in her home state, South Carolina. Haley has described the contest as critical, though recent polls suggest she’s badly trailing Trump there.

And even if anti-Trump donors would like Haley to stay in the race until Super Tuesday next month, the Republican party apparatus appeared to be close to merging with Trump’s campaign. That could put more pressure on Haley to call it quits, especially if she struggles in South Carolina.

Apple’s bet on the future

Vision Pro, Apple’s biggest product splash in a decade, is on sale in the U.S., and many — including Andrew — say it offers a glimpse of the future. But analysts say it could be years before the virtual reality headset materializes into a new category that Apple might dominate, much like it did with the iPhone.

The stakes are high for Apple and its C.E.O. Tim Cook is known for his operational and supply chain brilliance, and for building Apple’s services business into a multibillion-dollar juggernaut. But critics note that he has yet to create a platform-defining device.

Analysts say 180,000 units were sold before its official launch. Morgan Stanley forecasts that sales could reach up to four million annually over the next five years. Apple has reportedly filed 5,000 patents related to Vision Pro.

Here’s what early users are saying:

• Andrew calls the Vision Pro “a game changing, historic moment. But it is super pricey. If you can afford the future now, you’ll buy it. If you can’t, it’ll be even better (and lighter!) if you wait into the actual future. Either way, the future is pretty cool.”

• The Times’s Kevin Roose mostly agrees, but has questions. “I still have no idea whom or what this thing is supposed to be for. At $3,500, it’s not a device for the masses, or even the mass affluent. It’s a big, honking statement piece — a status symbol for your face.”

• The Wall Street Journal’s Joanna Stern says to look past the deficiencies of this first-generation product. “It’s the best mixed-reality headset I’ve ever tried, way more advanced than its only real competition, the far cheaper Meta Quest Pro and Quest 3. These companies know these aren’t really the devices we want. They’re all working toward building virtual experiences into something that looks more like a pair of regular eyeglasses.”

• Casey Neistat, a digital influencer, was blown away. “In summary, buy Apple stock cause this is without a doubt a new product category that they will see through.”

THE SPEED READ

Deals

• Yandex, which operates Russia’s most popular search engine, agreed to divest its operations in that country to a group of Russian investors for $5.2 billion. (FT)

• Reddit has reportedly chosen the New York Stock Exchange as the home for its forthcoming stock listing. (WSJ)

• How reviving Citigroup’s wealth management business may be a key to turning around the embattled financial giant. (WSJ)

Policy

• New lawsuits accuse corporate landlords of price-fixing rental rates in the U.S. (CNBC)

• The Samsung scion and top executive Lee Jae-yong was cleared of stock and accounting manipulation. (NYT)

Best of the rest

• Fraudsters used A.I.-generated video to pose as the C.F.O. of an unnamed multinational company, tricking a finance employee into paying them $25 million, according to Hong Kong police. (CNN Business)

• “Craig Wright Claims He’s Bitcoin Creator Satoshi Nakamoto. Can He Prove It in Court?” (Wired)

We’d like your feedback! Please email thoughts and suggestions to [email protected].