As restaurants struggle to find workers, some are finding creative ways to fill openings

A waitress wearing a face mask and serving a customer some coffee at his table in a restaurant.
  • Leisure and hospitality is down 2.2 million jobs from February 2020 levels.
  • One restaurant owner said the people they typically get to fill positions are finding work elsewhere.
  • Signing bonuses and pay increases may not be enough of an incentive to attract workers.
  • See more stories on Insider’s business page.

Just like many restaurants across the country, Sugapeach Chicken & Fish Fry in Iowa is having a hard time finding workers.

Chad Simmons, who owns the restaurant with his wife Carol Cater-Simmons, said the pandemic has been a difficult time for them. They did grow their business during the pandemic, but at the same time their expenses grew. The restaurant is looking to hire now that customers are coming back, but they’ve had few applicants.

“We still have not been able to be successful at attracting people. The primary people we would normally attract are finding opportunities in other areas,” Simmons said, noting that he and his wife typically look for more experienced workers. He said these workers are leaving the industry, finding jobs with higher pay, or aren’t looking for work right now because of unemployment benefits.

Restaurants like Simmons’ are struggling to find workers. According to one survey, 74% of independent restaurant owners said they’re having a harder time filling positions than before the pandemic. Teens on break from school are helping fill openings over the summer, but those workers are only temporary. Wages have increased in the industry as owners try to attract workers, but some restaurants have had to cut operating hours because of staffing issues. Even as the industry recovers from pandemic jobs losses, the leisure and hospitality industry still has a long way to go: employment is down by 2.2 million jobs from February 2020.

Restaurant owners are coming up with creative solutions to the staffing shortage

Angel Li knows how challenging it can be to find workers right now. Her sister owns a restaurant in Connecticut, which has three openings. Li, who’s a partner at accounting firm Fiondella, Milone & Lasaracina, has had to help out on a few holidays. Some of Li’s clients are restaurants, and she said that she has seen others like her sister struggle to hire and have had to find “creative solutions.”

“Currently, there is no backup plan for if someone misses a shift or needs to quarantine,” Li said in an email. “My sister is the only backup plan right now. Filling the open positions she has would often be the difference between her working until 2 am prepping for the next day, or going home at 9 pm.”

Simmons has hired high schoolers as part of a program called Scholars Making Dollars, which works with local Alpha Phi Alpha chapter in Iowa City. High schoolers get mentorship provided by the chapter and part-time work experience through the restaurant. Sugapeach also asked a a former employee who now works at Amazon to help clean for a few hours a week for pay and a meal.

“We’ve had to try to really get creative because customers don’t care about your problems,” Simmons said. “They want their food and they want it in a timely manner.”

For Li’s sister, that means hiring workers from out of state, usually New York. Her sister picks these workers up on Thursday and drives them back on Monday, providing them with a house while they’re in Connecticut.

“A lot more restaurants closed in New York than in Connecticut, so there actually are talented people in all types of positions looking for jobs there and some of them are happy to take a position in Connecticut that comes with a place to live,” Li told Insider in an email.

Workers aren’t going to come back just for bonuses and pay bumps

The quit rate in restaurants and hotels was 5.3% in May 2021, higher than the pre-pandemic rate. Some hospitality workers don’t plan on coming back to the industry, according to one survey by Joblist, even as some employers are offering bonuses. Bonuses may not be enough as an incentive, Saru Jayaraman, president of One Fair Wage, told NPR.

“It’s not enough to have a worker who’s decided, I’m going to walk away and change my life, to then flip back for a temporary boost,” Jayaraman told NPR.

Li said she knows one cafe she advises that has increased pay by about $3 per hour to retain employees.

“Even with the strong retention because of the higher wages, the owner is short-handed and hasn’t taken a day off since early 2020,” Li said.

Daniel Zhao, senior economist at Glassdoor, told Insider that signing bonuses and increased wages are helpful incentives, but “ultimately people evaluate job opportunities holistically.” He said workers think about things like pay, company culture, and benefits offered.

“For many of these employers, it’s going to be difficult to raise wages by a dollar or two an hour and expect that to beat out another job, which might have better working conditions and better long-term career opportunities. ” Zhao said.

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How unemployed Americans scored a big last-minute win in Biden’s infrastructure bill, cutting a $50 billion measure that could have stripped their benefits

Biden infrastructure bipartisan Senate group at White House
President Joe Biden at the White House with a bipartisan group of senators.

  • A bipartisan Senate gang dropped a $50 billion measure to generate money from slashing fraud in unemployment.
  • Experts had raised concerns that jobless people would be booted from safety net programs as a result.
  • One says paying for infrastructure by repurposing unemployment aid is “funny money” that can’t be done.
  • See more stories on Insider’s business page.

Unemployed Americans notched a major last-minute win in President Joe Biden’s $1 trillion infrastructure bill.

During the tumultuous negotiations, a bipartisan gang of 10 Senate Democrats and Republicans had initially eyed netting $50 billion in revenue from shoring up the “integrity” of unemployment insurance and cutting down on fraud.

Some experts and advocates raised doubts that fraud even cost that much – and that fraud measures could worsen the lives of jobless Americans already struggling with ailing UI systems. But that provision is no longer in the bill that was released on Sunday evening after weeks of discussions, possibly due to a budgetary snag.

“At the end, there’s a lot of back and forth on what would be in and what would be out,” Sen. Lisa Murkowski of Alaska, one of the GOP negotiators, told Insider. “That’s one of the things that, as they say, was left on the cutting room floor.”

Sen. Mark Warner of Virginia, a Democratic negotiator, said it was omitted because it seemed likely that it wouldn’t show up as a major source of federal funding in a budget score from the nonpartisan Congressional Budget Office, particularly if states kept the money. Republicans want the bill to be fully paid for and not grow the deficit.

“There was some scoring problem if you have a kind of incentive for the state to be able to keep some,” he told Insider.

Some experts argued as much.

“I wouldn’t be surprised if they went to CBO, and CBO said the provision was actually going to cost money or raise them close to nothing,” Marc Goldwein, head of policy at the nonpartisan Committee for a Responsible Federal Budget, told Insider.

“I was a little skeptical that putting more money into that would lead to additional savings,” Andrew Stettner, an unemployment expert at the left-leaning Century Foundation, said in an interview, referring to stepping up program integrity measures.

Experts argue that the pay-fors centered on UI wouldn’t even be possible, or raise anywhere close to the money that senators claimed. For his part, Goldwein called it “gibberish,” and said that the proposal to pay for parts of the package with repurposed unemployment insurance was “complete funny money, and it’s totally made up.”

For the bill, lawmakers are attempting to reappropriate $53 billion from states that ended their enhanced unemployment insurance programs this summer. Still, the experts said that federal money can’t be pulled from one bucket and put into another for something else.

“There’s nothing they’re doing in this action that’s reducing the deficit in any way by using this money for the infrastructure bill,” Stettner said. “It’s $53 billion that’s not going to be spent.”

Some unemployed Americans who lost their benefits prematurely told Insider that the proposed repurposing particularly stings, since it’s aid money that could have kept them afloat while cases from the Delta variant surge.

“We were basically thrown under the bus,” Natasha Binggeli, an unemployed worker in South Carolina, wrote in a message to Insider.

She added: “It feels like a knife through the heart from all political parties.”

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Russia plans to build a bitcoin tracking tool to monitor crypto wallets linked to crime and terrorism

A view of the Kizelovskaya State District Power Plant at the Gubakhinsky Coke and Chemical Works.
  • Russia plans to build a bitcoin monitoring tool to track crypto wallets possibly linked to criminal activities, CoinDesk reported.
  • The government has selected a contractor to develop the proprietary tool for roughly $200,000.
  • The tool must maintain a database of crypto wallets and monitor the behavior of market participants.
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Russia plans to build a bitcoin monitoring tool to track cryptocurrency wallets possibly linked to criminal activities as well as terrorism financing, CoinDesk first reported Wednesday.

The nation’s financial monitoring service, Rosfinmonitoring, has selected tapped a firm called RCO for a contract to develop the proprietary tool for roughly $200,000, reduced from the initial price of around $270,000.

RCO is owned by one of Russia’s major information technology companies.

Apart from tracking, the tool must maintain a database of cryptocurrency wallets and monitor the behavior of market participants, CoinDesk reported, citing the auction page.

Aas early as 2018, Russia had been looking into cryptocurrency tracking, according to CoinDesk.

Meanwhile, the UK, is considering banning anonymous cryptocurrency transactions for the same reasons – to tighten its crackdown on money laundering and terrorism financing.

Cryptocurrencies have been at the center of recent high-profile cyberattacks, demanded as ransom by criminals because transactions are either anonymous or very difficult to trace.

In the US, the Biden administration is said to be ramping up efforts to trace cryptocurrencies used in cyberattacks and is planning to offer bounties of up to $10 million for information that will help catch criminals.

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Robinhood’s 126% post-IPO rally puts its founders within reach of a $1.4 billion stock payout

Robinhood co-founders  Baiju Bhatt (left) and Vlad Tenev.
Robinhood co-founders Baiju Bhatt (left) and Vlad Tenev.

  • Robinhood’s post IPO rally of as much as 126% put its founders within reach of a $1.4 billion payout.
  • Co-founders Vlad Tenev and Baiju Bhatt stand to receive 13.8 million shares if Robinhood’s stock price closes above $101.50 by 2025.
  • Shares of Robinhood hit an intra-day high of $85 on Wednesday, just 19% below the award price.
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A wild post-IPO rally in shares of Robinhood this week put its co-founders within reach of a $1.4 billion stock payout, according to the company’s S-1 filing.

Vlad Tenev and Baiju Bhatt stand to each receive 13.8 million shares if Robinhood’s stock price closes above $101.50 by 2025 for an extended period of time. Shares of Robinhood hit an intra-day high of $85 on Wednesday, just 19% below the price needed for Tenev and Bhatt to unlock their stock award.

The $101.50 price hurdle is based on the average of the daily volume weighted average of Robinhood’s stock price for each day over a consecutive 60-day trading period.

Robinhood stumbled in its IPO debut last week, with shares falling as much as 12%, but the stock has since staged an impressive rebound and recovered all of its losses and then some. The online trading app staged a two-day rally of as much as 126% on Tuesday and Wednesday.

The 13.8 million restrictive stock units were granted to both founders in 2013, but the award terms were revised in May to extend the deadline of the award to 2025. Under the original plan, Tenev and Bhatt would have only received 20% of the stock award if at the time of IPO shares were priced between $30.45 and $50.75, according to the filing.

The company priced its IPO at $38 per share, meaning Tenev and Bhatt would have only received 20% of their stock award if the terms weren’t revised.

Tenev and Bhatt also stand to receive millions of more Robinhood shares if their stock price eventually trades up to $300 per share by the end of this decade. The co-founders were granted an additional RSU equity award, 22 million shares for Tenev and 13 million shares of Bhatt, if the stock price hit a number of price hurdles, starting at $120 and moving up in increments of $30 until topping out at $300.

All in all, if successful, the equity awards for Tenev and Bhatt could be worth up to $10.8 billion and $8.1 billion, respectively, assuming both co-founders don’t sell a single share of their accumulated equity awards after the last tranche is granted at the $300 per share level.

Read more: Top 12 meme stocks this week on Reddit: AMD and Tesla steal the show after blowout earnings reports while Square shakes up the fintech space with a bold acquisition

“The 2021 Market-Based RSUs are designed to incentivize the Co-Founders toward further growing our share price over and above the price hurdles applicable to the 2019 Market-Based RSUs,” Robinhood said in the filing.

In April, Robinhood reduced the annual salary of Tenev and Bhatt to $34,248, which is the 2019 median wage of US workers. Both were previously paid a base salary of $400,000.

Tenev and Bhatt founded Robinhood in 2013. The company has seen its business explode as millions of Americans began investing in the stock market amid the COVID-19 pandemic and government stimulus checks. Epic rallies in dogecoin and meme-stocks like GameStop and AMC Entertainment have also boosted its business in recent months.

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SEC chief Gary Gensler says many crypto tokens are securities and fall under the agency’s jurisdiction

WASHINGTON, DC - JULY 30: Commodity Futures Trading Commission Chairman Gary Gensler testifies before the Senate Banking, Housing and Urban Affairs Committee in the Dirksen Senate Office Building on Capitol Hill July 30, 2013 in Washington, DC. Gensler and Securities and Exchange Commission Chairman Mary Jo White testified and took questions from Senators during the hearing titled, "Mitigating Systemic Risk in Financial Markets through Wall Street Reforms." (Photo by Chip Somodevilla/Getty Images)
Gary Gensler is working on Biden’s financial regulatory plans.

  • SEC Chair Gary Gensler told CNBC Wednesday that many crypto assets are considered securities.
  • “If somebody is raising money selling a token and the buyer is anticipating profits based on the efforts of that group to sponsor the seller, that fits into something that’s a security,” said Gensler.
  • His comments add to a discussion over what kinds of digital assets are considered securities.
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SEC Chair Gary Gensler told CNBC Wednesday that many crypto assets are considered securities, a definition that would place hundreds of coins within the $1.6 million cryptocurrency market under the agency’s jurisdiction.

“If somebody is raising money selling a token and the buyer is anticipating profits based on the efforts of that group to sponsor the seller, that fits into something that’s a security,” said Gensler. “I’m not going to go token by token, you can imagine why I wouldn’t do that. But my predecessor, Jay Clayton…said it best about three years ago that he really hadn’t seen many tokens that didn’t meet that securities test.”

There has been much discussion over the years about which kind of digital assets are considered securities and would therefore fall under the SEC’s purview. Bitcoin, for example, is considered a commodity under the Commodity Exchange Act. But there are thousands of other coins in the ecosystem, and Gensler said many of them should be considered securities for the purposes of regulatory oversight.

The issue is at the heart of the SEC’s lawsuit against Ripple. Ripple claims its XRP token is a commodity and out of the regulator’s reach, while the SEC says Ripple ran an unregistered securities offering. Gensler declined to comment on Ripple when asked by CNBC’s Andrew Ross Sorkin about the status of the company.

Gensler was formerly the chairman of the Commodity Futures Trading Commission, and he said it’s critical both government agencies work together to deal with crypto platforms that trade both securities and commodities.

The SEC chief also encouraged crypto trading platforms to have a “frank discussion” with the securities regulator. He noted that many have avoided confronting the SEC so far.

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5 charts show that Americans are deciding it’s a raw deal to buy a house

A for sale sign stands in front of a house in Westwood, Mass.
Buyer sentiments sit at record lows, spending is down, and builders are bracing for a pullback in demand.

  • After months of record price growth, Americans are growing sick of the housing market.
  • Buyer sentiments sit at record lows, spending is down, and builders are bracing for a pullback in demand.
  • Here are 5 charts from UBS economists showing Americans stepping away from the housing market.
  • See more stories on Insider’s business page.

Months of record-breaking prices. A historic imbalance between buyers and sellers. Most homes selling in less than one month.

To say homebuying in 2021 has been difficult is a gross understatement. And it seems that, finally, buyers have had enough.

Two significant developments stand to cool the housing market from its current fervor, economists at UBS said in a Monday note. The mass exodus from cities to rural and exurban neighborhoods is starting to reverse as companies call employees back to their offices. The switch-up should ease demand for houses in the non-urban areas that surged in popularity throughout the pandemic, the UBS team led by Ajit Agrawal said.

And although prices continue to shoot higher, demand is wavering. Total spending has fallen from its recent highs, and the number of houses available has rebounded slightly. Sentiments toward homebuying have also soured, signaling demand will wane further.

Here are 5 charts detailing the pullback in Americans’ homebuying appetites.

1. The number of total sales is falling


To start, total spending on new homes plummeted in recent months and now sits at the same levels seen just before the COVID crisis. While buyers are spending more on homes, the decline in spending implies fewer sales are taking place.

Spending on, and sales of, existing homes “has not yet been as great” as that for new homes, UBS said. But existing-home data lags that of new homes since it tracks contract closings instead of initial signings, the bank added.

2. Sales-in-progress are weakening, too


Pending home sales tumbled in June and now sit near their historical average. Pending sales are among the most reliable forward indicators of housing activity, meaning the latest decline will likely translate to weaker sales later in the summer.

Experts aren’t expecting a bounceback in July, UBS said. Consensus estimates call for another decline, and real estate marketplace Redfin holds a similar outlook.

“Home sellers are increasingly having to lower their expectations,” Daryl Fairweather, chief economist at Redfin, said in a July report on pending sales. “Many homebuyers have turned to the rental market amid such high home prices, but now with rental prices growing, I expect many will return to the housing market by spring of next year.”

3. Buyers are growing more pessimistic


Perhaps the clearest sign of buyers’ frustration comes from Fannie Mae’s sentiment data. The share of surveyed Americans saying it was a good time to buy slid to another record low in June, while the share of those believing it’s a good time to sell reached an all-time high.

High home prices were the predominant reason for the massive gap, Doug Duncan, Fannie Mae’s chief economist, said in the July report. Renters looking to buy homes in the next few years saw an even larger decline in homebuying sentiment, reflecting the higher barrier-to-entry faced by first-time buyers.

“It’s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments who have already established homeownership,” Duncan said.

4. Builders are stepping back


It’s not just buyers taking a breather. Builders have also retraced some of their recent jump in construction, most likely due to early indicators of weakening demand. Single-family housing starts, while choppy, fell through the end of last year and 2021.

Permits — a more forward-looking indicator of homebuilding activity — staged a steeper decline this year. Taken together, it seems builders are hoping to prop up demand and avoid flooding the market with fresh supply.

5. Building costs are reversing


Even the marketplaces that fuel homebuilding are reverting to more normal levels. Lumber costs, which skyrocketed in the spring alongside home prices, have quickly reversed their gains and now sit at their lowest level since late last year.

Demand, then, is weakening throughout the market. From homebuyers to builders to suppliers, everybody is growing tired of the housing sector’s melt-up.

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GM plunges 8% as $1.3 billion in recall costs lead to 2nd-quarter earnings miss

GM US Plant
Work being done at GM’s plant in Arlington, Texas.

  • GM shares sank 8% on Wednesday following a second-quarter earnings miss by the automaker.
  • GM had $1.3 billion in warranty and recall costs, part of which stemmed from Chevy Bolt recalls to address fire risk.
  • GM raised its 2021 adjusted earnings projection to a range of $5.40-$6.40 a share.
  • See more stories on Insider’s business page.

General Motors stock tumbled Wednesday, trading among the worst price performers on the S&P 500, after the auto maker’s second-quarter earnings fell short of expectations even as the company raised its full-year outlook.

The company’s earnings report released early Wednesday included $1.3 billion in warranty and recall expenses, with $800 million related to recalls of thousands of Chevy Bolt electric vehicles to address fire risk. GM posted adjusted earnings of $1.97 a share, less than the $2.23 a share expected in a Refinitiv poll of analysts.

GM shares dropped 8.4% to $53.01, the lowest price since early March. The stock this year had gained about 27% and has more than doubled since the year-earlier period.

Revenue of $34.17 billion was higher than the estimated $30.9 billion and more than doubled from $16.78 billion a year ago.

The company raised its 2021 guidance based on its performance during the first half of the year, during which it said it gained significant retail market share in the full-size pickup segment in the US. It also said high prices for used vehicle prices because of low inventories of new vehicles drove continued record results at GM Financial, its auto financing arm.

GM now expects 2021 adjusted earnings of $5.40 to $6.40 a share, up from its previous outlook of $4.50 to $5.25 a share.

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A Trump economic official said that ‘the best way to make people homeless is to make housing free’

Housing Advocates Boston Eviction Moratorium Sign
Housing activists gathering in Massachusetts in October.

  • The Biden administration and the CDC enacted a new, limited eviction ban on Tuesday.
  • The new ban could help keep many Americans in their homes in areas hit hard by the Delta variant.
  • But conservatives said they fear the new order will keep developers from building more amidst a historic housing shortage.
  • See more stories on Insider’s business page.

Conservatives, including a former Trump economic official, worry that the new eviction ban implemented by the Biden Administration on Tuesday could lead to less housing getting built, as millions of Americans prepared to be forced out of their homes amidst an ongoing pandemic.

These worries come after the Biden administration announced a new targeted ban on evictions just days after a federal pandemic-era eviction moratorium lapsed, leaving seven million renters at risk of getting kicked out.

Casey Mulligan, the former chief economist for the White House Council of Economic Advisers during the Trump administration, told the Washington Post that allowing a longer reprieve for people behind on paying rent would mean fewer funds to developers and could disincentivize them building more. The US is currently in a housing crisis because it doesn’t have enough homes to meet prospective buyers’ demand.

“There’s an old expression that the best way to make people starve is to make food free. The best way to make people homeless is to make housing free,” Mulligan told the Washington Post.

Biden’s new measure isn’t as encompassing as the eviction moratorium that was in place during the pandemic. It’ll focus on areas that have high levels of COVID transmission, and it expires October 3. But it does serve to provide relief for some renters who faced losing their homes as the Delta variant continues to surge throughout the US. The order targets areas that are experiencing “substantial” or “high” levels of covid transmission – which the CDC order says was true of over 80% of counties on August 1.

“This moratorium is the right thing to do to keep people in their homes and out of congregate settings where COVID-19 spreads,” CDC Director Dr. Rochelle Walensky said in a statement, adding, “Such mass evictions and the attendant public health consequences would be very difficult to reverse.”

The order will be dropped in impacted areas when infections reach “controllable levels” for 14 consecutive days, or on October 3, whichever comes first (unless infections start spiking again), Insider’s Azmi Haroun and Joseph Zeballos-Roig reported.

But some conservatives are arguing that the new order could also worsen the ongoing housing shortage by shortchanging housing developers. Developers have been building more new rental homes recently, but President Biden himself recently met with homebuilders and unions to discuss the current short-squeeze.

As Insider’s Ben Winck reported, there is an ongoing housing crisis – but it’s one that centers more on homeowners and affordability. Inventory has been and continues to remain tight, and it’s filtering in to the rental market and jacking up prices.

But letting the eviction moratorium lapse might actually exacerbate the current housing situation, Insider’s Taylor Borden reports. According to US Census Bureau data, 7.4 million households were behind on rent; if they’re forced out, their units might open up to prospective renters – but it also means millions of newly evicted renters will be scrambling to find housing.

And more affordable housing might still be far off: While the Biden administration included affordable housing in its initial infrastructure proposal, it doesn’t seem to have made it into the bipartisan proposal.

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One chart shows the explosion in high-paying work-from-home jobs during the pandemic

work from home
Working from home is more common than ever.

  • Careers site Ladders found a 1,000% increase in high-paying job listings that allow remote work.
  • The share of high-paying jobs that can be worked from home in the marketing, media, and design sector especially shot up.
  • Over a quarter of high-end sales and business development jobs offer remote work.
  • See more stories on Insider’s business page.

Millions of Americans have been working remotely since the beginning of the pandemic, and the number of jobs that can be done from home is only growing.

High-end careers site Ladders recently analyzed internal job listing data for positions paying over $100,000, and found an explosion in jobs that allow remote work over the last year. In a press release announcing the results of that analysis, it noted that the number of high-paying remote work listings on the site increased from about 7,000 in March 2020 to more than 80,000 in July 2021.

Ladders broke down the results by sector. In March 2020, less than 2% of high-paying media, marketing, and design jobs offered remote work, and that share skyrocketed to 18% in July 2021. Over a quarter of jobs in the sales and business development sector now can be worked remotely, up from about 8% before the pandemic.

High-paying jobs in some other sectors are less likely to offer remote options. Less than 5% of positions in health care and in construction and engineering offered work from home in July, according to Ladders’ data.

The pandemic has ended the daily commute for many workers. The Bureau of Labor Statistics’ recently released American Time Use Survey found that average time spent traveling by Americans dropped from about an hour and 12 minutes a day in 2019 to just 47 minutes in 2020, and the share of people working from home almost doubled from 22% to 42%.

Working from home has become a very desirable job attribute for many workers. A survey on work attitudes run by Stanford, the University of Chicago, and ITAM shows that about a third of workers who are currently working remotely want to continue doing so full-time after the pandemic, and another 46% want to work away from the office part-time.

Several big companies like Twitter, Amazon, and Salesforce have offered various remote work and hybrid-work options as they begin contemplating a return to the office. Many other employers could follow suit if scarce workers in a red-hot labor market demand flexible arrangements.

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JPMorgan’s Jamie Dimon says he disagrees with the Fed on inflation being transitory – and once unemployment hits 4.5%, the central bank will start tapering

jamie dimon jpmorgan
  • JPMorgan CEO Jamie Dimon said he doesn’t see current high US inflation as temporary, speaking to Fox Business on Wednesday.
  • The bank chief also believes the Federal Reserve will start tapering will begin once unemployment reaches 4.5%.
  • Dimon’s comments put him at odds with the Fed, which reiterated its view on inflation last week.
  • Dimon also believes that tapering will begin once unemployment reaches 4.5%.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

JPMorgan CEO Jamie Dimon said that unlike the Federal Reserve, he doesn’t believe the current higher-than-usual US inflation rate is transitory, speaking in a Fox Business interview Wednesday.

He said the central bank will start tapering once it sees the “white of the eyes” – when the unemployment rate hits 4.5%, wages go up, and there are more than enough jobs.

The Wall Street bank chief sees rising inflation as almost inevitable, given the current fiscal environment in the US, he said on “Mornings with Maria”. Lawmakers passed a $19 trillion COVID relief bill in March, covering direct payments to individuals among other stimulus measures.

“You still have a lot of stimulus that hasn’t been spent, and a lot more stimulus coming. You know, having fiscal deficit that big is unprecedented, and that by itself almost has to be inflationary,” Dimon said.

“I think there’s a portion that’s just temporary, and a portion that’s probably not.”

The comments set Dimon at odds with the Fed, which has pushed the narrative that inflation is only transitory and will stop rising sooner rather than later.

In recent months, the rate at which prices climb has been going up at a historically fast rate. Annual headline inflation stood at 5.4% for June, with consumer prices up 0.9% between May and June.

Inflation has been a concern for investors in assessing the strength of the US economy’s recovery from the COVID-linked slowdown. Fed policymakers may decide to raise interest rates if they believe inflation is too high.

The US central bank’s chairman, Jerome Powell, last week reiterated its stance on inflation and said the US economy still had a way to go before the Fed would hike rates or begin pulling back on its pandemic-era support.

Dimon said he believes the economy will need to make further progress, especially on employment and wages, before the Fed begins tapering. He argued the central bank will not base its decisions on forecasts as it usually does.

“They’re going to wait until they see the actual white of the eyes. I think they haven’t been this explicit. I think the white of the eyes is 4.5% unemployment, wages going up, jobs plentiful, and they are less concerned about inflation, they want to see growth,” Dimon said.

The US unemployment rate was 5.9% in June, according to the Bureau of Labor Statistics. compared with 3.5% in February 2020, before the COVID-19 outbreak.

In Dimon’s view, growth will continue, given that credit and debit card spending is topping pre-pandemic levels, there are enough jobs, and wages are rising. As schools reopen in the fall, unemployment levels will decline, he said.

At the same time, he expects interest rates to rise as central banks reduce their bond buying.

“One outcome is that rates go up. I think they belong much more at 3%, 3.5% and 2% on the short end, and then we still have healthy growth going for a couple of years,” he said, adding that the other, more negative, outcome is an uptick in inflation.

“But in the meantime, celebrate the growth, and you know, we’ll deal with the next problem when we get there,” he said.

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