Apple announced on Wednesday that it was bringing hundreds of billions of dollars back to the US that the company had previously held overseas to take advantage of a loophole in the US tax code that has now been closed. In doing so, Bloomberg’s Alex Webb and Mark Gurman report, the company will incur a tax bill of around $38 billion, but it also plans to spend $30 billion over the next five years on capital expenditures, with which it expects to create 20,000 new jobs and open a new campus:
“We are focusing our investments in areas where we can have a direct impact on job creation and job preparedness,” Chief Executive Officer Tim Cook said in a statement Wednesday, which also alluded to unspecified plans by the company to accelerate education programs. Apple also told employees Wednesday that it’s issuing stock-based bonuses worth $2,500 each following the new U.S. tax law, according to people familiar with the matter.
These moves came in response to the tax reform package passed by the US Congress in December, which reformed the international tax system for corporations by removing a rule that let American companies defer paying taxes on foreign income until they repatriated those earnings, incentivizing companies to stockpile some $3.1 trillion in cash overseas. Apple was among the companies best known for taking advantage of the deferral provision and faced extensive criticism for doing so, including from President Donald Trump.
Other major US companies, including Walmart, have announced raises, bonuses, and other investments in their workforce in light of the major corporate tax cut enacted last month.
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US employers added 148,000 jobs in December for a total increase of 2.1 million jobs across last year, according to the latest employment data released by the Bureau of Labor Statistics on Friday. The monthly figure, while still reflecting a strong labor market, was considerably lower than the revised totals of 252,000 and 211,000 jobs added in November and October, respectively. Figures for these months were revised downward by a total of 9,000 in Friday’s BLS report. The annual increase was slightly below the 2.2 million jobs added in 2016. The greatest job gains last year came in the health care, construction, food service, and manufacturing sectors, whereas retail employment declined by 67,000.
The unemployment rate held steady at 4.1 percent, remaining at its lowest level since December 2000 for the third month running. The total number of Americans employed part-time who would prefer full-time work was “essentially unchanged” at 4.9 million in December but down 639,000 for 2017, while the number of long-term unemployed fell by 354,000 over the course of the year to 1.5 million last month. Average hourly earnings rose by 65 cents, or 2.5 percent, over the year.
Economists’ views of what this portends for the coming year differ, based partly on how much impact they think the household and corporate tax cuts passed by Congress last month will have on hiring and consumer spending. “The pace of job creation in 2017 suggests the expansion may have more room to run eight and a half years after the most recent recession ended,” the Wall Street Journal’s Eric Morath writes, while the tax cuts could “turbocharge growth,” as Joseph Brusuelas, chief economist at consulting firm RSM US, puts it. Glassdoor’s chief economist Andrew Chamberlain takes a different view:
The US economy added 228,000 jobs in the month of November, outperforming economists’ expectations, while the unemployment rate remained at 4.1 percent, its lowest since 2000, according to the latest figures from the Department of Labor. Average earnings rose by five cents an hour, resulting in a total increase of 64 cents, or 2.5 percent, in the past year.
The jobs report reflects the continued strength of the American economy, with wage growth finally starting to pick up after a years-long period of stagnation despite of a historically tight labor market. It also shows that the mainland US has rebounded strongly from the major hurricanes that did extensive damage to Florida and Texas in September. The small job loss reported that month was later upward to a small gain, meaning the US has added jobs for 86 consecutive months. The monthly figures do not cover the territories of Puerto Rico and the US Virgin Islands, however, which were devastated by Hurricane Maria and are still struggling to rebuild.
The problem remains that the tightness of the labor market isn’t translating into real earnings growth for US workers, as most economic models predict it should. With talent in short supply, employers are under pressure to raise wages, the New York Times reports, and the slower-than-expected wage growth over the past year may reflect businesses being unable to afford the wages candidates are demanding:
Most economists expect wage growth to pick up as the unemployment rate falls. Other measures of earnings have already shown modestly faster gains, and there are signs that businesses are feeling pressure to raise pay. For the first time in six years, chief executives surveyed by the Business Roundtable, a coalition of big corporations, reported that labor expenses were their biggest cost pressure in the fourth quarter.
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After a September jobs report marred by the impact of Hurricanes Harvey and Irma, October’s monthly data from the Bureau of Labor Statistics shows the US labor market rapidly rebounding from these disasters, with non-farm employment rising by a seasonally adjusted 261,000 last month. Although this did not meet economists’ expectations of 315,000 new jobs, it was a huge improvement from September. Figures for that month were also revised upward from 33,000 jobs lost to 18,000 jobs gained, meaning the US remains on a record 85-month job growth streak.
Unemployment fell to 4.1 percent, its lowest level since December 2000, but wage growth was stagnant at 2.4 percent year-over-year, a slowdown over the previous month. “With the swings from the hurricanes now largely behind us, the longer-term challenge of wage growth returns to the foreground,” Jed Kolko, chief economist at Indeed, commented to the Wall Street Journal.
The labor force participation rate also fell by 0.4 percentage points in October, to 62.7 percent, which suggests that even as the economy approaches nominally full employment, there remain many Americans who are neither working nor looking for work. Accordingly, re-engaging those labor force dropouts could become an increasingly important strategy for US organizations that want to expand their workforces in the current labor market.
“The bigger picture here is that the labor market’s fine,” Brett Ryan, an economist at Deutsche Bank, explains to the New York Times. Fine, however, is not necessarily great, as the labor force participation and wage figures suggest:
In another sign of the US labor market’s robustness, the number of Americans filing new unemployment claims fell last week to its lowest level in over 44 years, Reuters reported on Thursday:
Initial claims for state unemployment benefits fell 22,000 to a seasonally adjusted 222,000 for the week ended Oct. 14, the lowest level since March 1973, the Labor Department said. … Claims are declining as the impact of Hurricanes Harvey and Irma washes out of the data. The hurricanes, which lashed Texas, Florida and the Virgin Islands, boosted claims to an almost three-year high of 298,000 at the start of September.
A Labor Department official said claims for the Virgin Islands and Puerto Rico continued to be impacted by Irma and Hurricane Maria, which destroyed infrastructure. As a result the Labor Department was estimating claims for the islands.
The week’s massive decrease in claims was likely inflated by the Columbus Day holiday, but other data in the Labor Department’s report also indicate a very healthy labor market: The number of people still receiving benefits after an initial week of aid fell 16,000 to 1.89 million in the week ended October 7, which was the lowest level since December 1973, and the four-week moving average of continuing claims fell 22,750 to 1.91 million, the lowest since January 1974.
Reuters also highlighted a report from the Federal Reserve Bank of Philadelphia indicating strong employment in the manufacturing sector in the mid-Atlantic region this month, with the bank’s measure of factory employment rising 24 points to a record high of 30.6. That report’s average workweek index also increased, while no firms reported decreases in unemployment in October.
The annual Freelancing in America survey, released this week by Upwork and the Freelancers Union, paints a picture of a freelance workforce that is growing much faster than the US workforce in general. The report estimates the total number of US freelancers today at 57.3 million, or 36 percent of the total American workforce. That number has grown more than three times faster than the overall workforce in the past three years, and if this rate of change holds, freelancers are projected to compose a majority of the US workforce by 2027. Millennials are leading the trend in this direction, with 47 percent of millennial workers saying they freelanced.
The survey of over 6,000 US adults also finds that freelancers are doing better than their traditionally employed peers at preparing themselves for their professional futures: 55 percent of freelancers said they had engaged in some kind of re-skilling activity in the past six months, compared to 30 percent of regular workers. In general, 65 percent of freelancers said they were updating their skills as work evolved, while just 45 percent of others said so.
Freelancers are also feeling the impact of technological change more acutely, with 49 percent saying their work had already been affected by AI and robotics, against just 18 percent of full-time employees. At the same time, technology is also bringing them more work, with 71 percent saying the amount of work they had found online had increased in the past year.
Another interesting finding is that while many people lump freelancers in with the gig economy, freelancers don’t: Only 10 percent of freelancers in the survey said they considered themselves a part of that economy. Indeed, we’ve seen from other research that the gig economy, properly speaking—meaning workers who make a living through platforms like Uber—is just one component of the new trend toward contingent and temporary employment in the US labor market. Fast Company’s Ruth Reader considers why freelancers might be rejecting the “gig economy” label:
A Houston-area neighborhood after Hurricane Harvey (Eric V Overton/Shutterstock)
The US economy lost 33,000 jobs in September due to the destructive impact of Hurricanes Harvey and Irma on Texas and Florida, falling far short of economists’ predictions of 90,000 new jobs, according to the latest figures from the Bureau of Labor Statistics, released Friday. The unemployment rate, however, fell from 4.4 to 4.2 percent, the lowest rate since February 2001, suggesting that the labor market is still fundamentally strong. Marketplace delves into the details of the report:
Last month’s drop was driven by huge losses in restaurants and bars, which shed 105,000 jobs, a sign of the damage to Florida’s tourism industry. Roughly 1.5 million people were unable to work last month because of the weather, the government said, the most in 20 years. Hourly workers who couldn’t work and missed a paycheck would have been counted as not working, thereby lowering September’s job total. That’s true even if those employees returned to work after the storm passed or will return.
The unemployment rate fell because it is calculated with a separate survey of households. That survey counted people as employed even if they were temporarily off work because of the storms. In fact, the proportion of adults who have jobs rose to 60.4 percent, the highest since January 2009. … “The weakness in payrolls was likely because of temporary hurricane effects. Other parts of the report were much stronger than expected,” wrote Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
Average hourly wages rose 2.9 percent, but the Labor Department cautioned against reading too much into that figure, which was inflated by the fact that most of the jobs temporarily wiped out by the hurricanes were lower-paid. Overall, the Wall Street Journal reports, September’s jobs numbers leave the Federal Reserve on track to raise interest rates again later this year, undeterred by the disaster-induced dip in growth.