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U.S. Businesses Take Steps to Reopen: Live Economy Updates U.S. Businesses Take Steps to Reopen: Live Economy Updates
(30 minutes later)
Democratic lawmakers criticized airlines over employee pay, refunds and new fees at a Senate hearing on Wednesday.Democratic lawmakers criticized airlines over employee pay, refunds and new fees at a Senate hearing on Wednesday.
Senator Maria Cantwell of Washington, the ranking Democrat on the Commerce, Science and Transportation Committee, singled out United Airlines, Delta Air Lines and JetBlue for their decisions to cut employee hours.Senator Maria Cantwell of Washington, the ranking Democrat on the Commerce, Science and Transportation Committee, singled out United Airlines, Delta Air Lines and JetBlue for their decisions to cut employee hours.
“Mandatory or forced reductions in payroll hours is not what the CARES Act intended,” she said, referring to the stimulus law passed in March, which authorized $50 billion to help airlines continue operating during the coronavirus pandemic. Half of that funding was intended to pay employees through September, provided airlines refrained from cutting pay or laying off staff.“Mandatory or forced reductions in payroll hours is not what the CARES Act intended,” she said, referring to the stimulus law passed in March, which authorized $50 billion to help airlines continue operating during the coronavirus pandemic. Half of that funding was intended to pay employees through September, provided airlines refrained from cutting pay or laying off staff.
United on Wednesday reversed a plan that would have made thousands of full-time workers into part-timers. A union representing thousands of United employees sued the airline over the plan on Tuesday. The company said the lawsuit was “meritless.”United on Wednesday reversed a plan that would have made thousands of full-time workers into part-timers. A union representing thousands of United employees sued the airline over the plan on Tuesday. The company said the lawsuit was “meritless.”
Executives from United and other airlines did not take part in the hearing. The airlines were represented by the chief executive of the trade group Airlines for America, Nicholas E. Calio. He said airlines were doing whatever they could to survive.Executives from United and other airlines did not take part in the hearing. The airlines were represented by the chief executive of the trade group Airlines for America, Nicholas E. Calio. He said airlines were doing whatever they could to survive.
“The duration and breadth of the impacts directly on our industry compounded by the larger economy leave no doubt that the U.S. airline industry will emerge a shadow of what it was on March 1 of this year,” Mr. Calio said.“The duration and breadth of the impacts directly on our industry compounded by the larger economy leave no doubt that the U.S. airline industry will emerge a shadow of what it was on March 1 of this year,” Mr. Calio said.
That did not satisfy Democrats who said the industry’s practices around refunds were misleading or deceptive. Many airlines have been encouraging travelers to take vouchers for future travel instead of cash.That did not satisfy Democrats who said the industry’s practices around refunds were misleading or deceptive. Many airlines have been encouraging travelers to take vouchers for future travel instead of cash.
Senator Amy Klobuchar of Minnesota criticized the low-cost carrier Frontier Airlines for saying that it would charge customers $39 to $89 to keep the middle seat next to them empty. Many larger airlines are not putting any passengers in middle seats by default.Senator Amy Klobuchar of Minnesota criticized the low-cost carrier Frontier Airlines for saying that it would charge customers $39 to $89 to keep the middle seat next to them empty. Many larger airlines are not putting any passengers in middle seats by default.
“I don’t think it’s appropriate for some passengers who can’t afford to pay an additional charge for a seat to be less safe than other travelers,” she said.“I don’t think it’s appropriate for some passengers who can’t afford to pay an additional charge for a seat to be less safe than other travelers,” she said.
Government figures due Friday will undoubtedly show that job losses in April were the worst ever. But they could provide key hints about the recovery.Government figures due Friday will undoubtedly show that job losses in April were the worst ever. But they could provide key hints about the recovery.
Economists surveyed by MarketWatch expect the Labor Department report to show that U.S. payrolls fell by 22 million jobs last month — a decade’s worth of job gains, wiped out in weeks. The payroll processing company ADP on Wednesday said that the private sector lost more than 20 million jobs in April, with the cuts spread across every sector and size of employer.Economists surveyed by MarketWatch expect the Labor Department report to show that U.S. payrolls fell by 22 million jobs last month — a decade’s worth of job gains, wiped out in weeks. The payroll processing company ADP on Wednesday said that the private sector lost more than 20 million jobs in April, with the cuts spread across every sector and size of employer.
It’s no surprise that employers have cut millions of jobs. Weekly data on filings for unemployment benefits, released every Thursday, have tracked the destruction.It’s no surprise that employers have cut millions of jobs. Weekly data on filings for unemployment benefits, released every Thursday, have tracked the destruction.
But the monthly numbers due on Friday are more comprehensive than the weekly ones, which almost certainly understate the damage.But the monthly numbers due on Friday are more comprehensive than the weekly ones, which almost certainly understate the damage.
Friday’s report could also help answer a question that could be crucial to the eventual recovery: How far has the damage spread?Friday’s report could also help answer a question that could be crucial to the eventual recovery: How far has the damage spread?
If the losses are concentrated in sectors that have been directly affected by the virus, like retail and services that were hit by stay-at-home orders, that could bode well for the recovery, because it suggests the damage has been contained. But if it has spread to industries like finance and professional services, that could suggest a cascade effect is underway, with laid-off workers pulling back on spending, leading to lost revenues and still more layoffs. It could take much longer to climb out of that kind of hole.If the losses are concentrated in sectors that have been directly affected by the virus, like retail and services that were hit by stay-at-home orders, that could bode well for the recovery, because it suggests the damage has been contained. But if it has spread to industries like finance and professional services, that could suggest a cascade effect is underway, with laid-off workers pulling back on spending, leading to lost revenues and still more layoffs. It could take much longer to climb out of that kind of hole.
More people and businesses are using electronic payments and other alternatives to the traditional financial system in the coronavirus pandemic, according to new financial results announced by PayPal and Square on Wednesday.More people and businesses are using electronic payments and other alternatives to the traditional financial system in the coronavirus pandemic, according to new financial results announced by PayPal and Square on Wednesday.
In April alone, PayPal said, it added an average of 250,000 new active accounts every day, bringing the total new accounts for the month up 135 percent from March, when growth was also higher than normal.In April alone, PayPal said, it added an average of 250,000 new active accounts every day, bringing the total new accounts for the month up 135 percent from March, when growth was also higher than normal.
At both PayPal and Square, new customers flocked to the apps that allow consumers to make direct payments to friends and family. Those apps have come to serve as alternative bank accounts for many people. The number of new people using Square’s offering, Square Cash, as a bank account was four times higher in April than in March.At both PayPal and Square, new customers flocked to the apps that allow consumers to make direct payments to friends and family. Those apps have come to serve as alternative bank accounts for many people. The number of new people using Square’s offering, Square Cash, as a bank account was four times higher in April than in March.
The forced closing of many businesses hurt revenue at PayPal and Square in the most recent quarter, but their growth suggests the companies are likely to come out of the crisis with an expanded customer base.The forced closing of many businesses hurt revenue at PayPal and Square in the most recent quarter, but their growth suggests the companies are likely to come out of the crisis with an expanded customer base.
Gap, which owns its namesake brand, Old Navy, Banana Republic and Athleta, said on Wednesday that it planned to reopen up to 800 stores in North America by the end of May, as retailers clamor to return to business after shutting down because of the coronavirus pandemic.Gap, which owns its namesake brand, Old Navy, Banana Republic and Athleta, said on Wednesday that it planned to reopen up to 800 stores in North America by the end of May, as retailers clamor to return to business after shutting down because of the coronavirus pandemic.
“Our goal is to be responsibly aggressive,” Sonia Syngal, chief executive of Gap, said in an interview with The New York Times’s Sapna Maheshwari on Tuesday. “Every retailer will have its own opening strategy, but suffice it to say we are looking to open where we’re legally allowed to open as soon as we can.”“Our goal is to be responsibly aggressive,” Sonia Syngal, chief executive of Gap, said in an interview with The New York Times’s Sapna Maheshwari on Tuesday. “Every retailer will have its own opening strategy, but suffice it to say we are looking to open where we’re legally allowed to open as soon as we can.”
The plan follows similar strategies announced in recent weeks by Macy’s, the owner of Bloomingdales and Bluemercury, and Simon Property Group, the biggest mall operator in the United States. Macy’s said on April 30 that it planned to reopen all its 775 stores, including its major flagships in Manhattan, within six to eight weeks.The plan follows similar strategies announced in recent weeks by Macy’s, the owner of Bloomingdales and Bluemercury, and Simon Property Group, the biggest mall operator in the United States. Macy’s said on April 30 that it planned to reopen all its 775 stores, including its major flagships in Manhattan, within six to eight weeks.
Gap will start reopening a batch of stores this weekend in Texas, though it declined to specify a number. The openings of 800 stores — nearly one-third of its locations in North America — would be dependent on guidelines from state and local authorities, Ms. Syngal said.Gap will start reopening a batch of stores this weekend in Texas, though it declined to specify a number. The openings of 800 stores — nearly one-third of its locations in North America — would be dependent on guidelines from state and local authorities, Ms. Syngal said.
Gap said it would put into place a range of safety measures in stores, including supplying associates with face masks and installing plexiglass partitions in front of registers. Fitting rooms and restrooms will not be available, and returns will be quarantined for 24 hours.Gap said it would put into place a range of safety measures in stores, including supplying associates with face masks and installing plexiglass partitions in front of registers. Fitting rooms and restrooms will not be available, and returns will be quarantined for 24 hours.
The company had furloughed nearly 80,000 store employees in the United States and Canada as part of the closures.The company had furloughed nearly 80,000 store employees in the United States and Canada as part of the closures.
A federal judge dismissed a lawsuit filed by an anonymous worker claiming that her employer, a Smithfield Foods pork plant in Milan, Mo., had taken insufficient steps to keep workers safe during the coronavirus pandemic.
In the ruling on Tuesday, the judge found that jurisdiction over the plant lay with two federal agencies, the Department of Agriculture and the Occupational Safety and Health Administration, rather than with the courts. The judge also said that the plant had taken “significant steps” to lower the risk of a coronavirus outbreak among its workers, such as giving them more space to eat while on break.
The suit sought an injunction requiring the plant to allow workers to stand farther apart and to make it easier for the employees to practice good hygiene, like covering their mouths while coughing. The suit also sought more frequent breaks for workers to clean their hands and a more generous sick-leave policy.
David Seligman, one of the lawyers involved in bringing the case, said in a statement that “the only thing that made Smithfield’s operation of this plant no longer a clear ‘offense against the public order’ was the changes that they’d made since our clients filed this lawsuit.”
Smithfield said in a statement that it was pleased with the decision and that “from the start, we stated that this lawsuit was frivolous, full of specious allegations that were without factual or legal merit.”
Lyft on Wednesday gave investors their first detailed look at how the coronavirus had affected its ride-hailing service. Revenue fell 6 percent from the previous quarter, to $955.7 million. Lyft lost $398 million, up 10 percent from its loss in the previous quarter.Lyft on Wednesday gave investors their first detailed look at how the coronavirus had affected its ride-hailing service. Revenue fell 6 percent from the previous quarter, to $955.7 million. Lyft lost $398 million, up 10 percent from its loss in the previous quarter.
Before the coronavirus began to spread in the United States, Lyft expected its first quarter revenue to be higher than $1 billion. Analysts lowered their expectations to about $897 million once the impact of the pandemic began to emerge. Lyft’s stock was up more than 10 percent in after-hours trading as the company outperformed expectations.Before the coronavirus began to spread in the United States, Lyft expected its first quarter revenue to be higher than $1 billion. Analysts lowered their expectations to about $897 million once the impact of the pandemic began to emerge. Lyft’s stock was up more than 10 percent in after-hours trading as the company outperformed expectations.
Last week, Lyft said it planned to lay off 17 percent of its work force and cut pay for employees and executives. On Tuesday, Lyft was sued by the State of California for misclassifying its drivers as independent contractors. California also sued Uber, Lyft’s primary competitor, and is seeking civil penalties and back wages for drivers that could total hundreds of millions of dollars.Last week, Lyft said it planned to lay off 17 percent of its work force and cut pay for employees and executives. On Tuesday, Lyft was sued by the State of California for misclassifying its drivers as independent contractors. California also sued Uber, Lyft’s primary competitor, and is seeking civil penalties and back wages for drivers that could total hundreds of millions of dollars.
General Motors reported a small profit in the first quarter and said on Wednesday that it was preparing to restart most of its operations in the United States and Canada on May 18 using new safety protocols to protect employees from the coronavirus. The North American plants of the three big U.S. automakers have been closed since mid-March. Mostly.
On Tuesday, Fiat Chrysler also said it aimed to resume production on May 18. Ford Motor has not said when it hopes to restart factories. A handful of General Motors workers have labored on — including several dozen at a plant in Bedford, Ind., that makes chassis for Chevrolet Corvettes.
“Ever since we suspended our operations in March, our teams have been collaborating to understand and share the best practices for the return to the workplace,” G.M.’s chief executive, Mary T. Barra, said in a conference call. A G.M. spokesman said the factory’s continuing operation was aimed at reducing a chassis shortage and helping resume Corvette production more quickly once the company reopens an assembly plant in Bowling Green, Ky.
She said its safety measures were informed by its experience in China and a factory in Kokomo, Ind., where the automaker is producing ventilators. The spokesman said that the Bedford plant was running three shifts a day — with about 20 people per shift, down from about 250 hourly workers normally — and that the workers had volunteered for the assignment, at their usual wage.
In the first three months of the year, as the coronavirus forced the company to halt production around the world, G.M.’s revenue fell 6 percent to $32.9 billion and its profit dropped 87 percent, to $294 million. Vehicle sales in the quarter declined 18 percent in North America and 43 percent in China. The company said Wednesday that it planned to “restart the majority of manufacturing operations” in North America on May 18.
Ms. Barra said G.M. could break even in North America even if industrywide sales dropped to between 10 million and 11 million vehicles, roughly where sales fell to during the last recession about a decade ago. The G.M. spokesman said that aside from the Bedford plant, the company had continued work at a Texas plant to finish building a sport utility vehicle before the plant changed over to a new model, and in Lockport, N.Y., to make replacement parts for existing vehicles.
The European Union’s economy is set to shrink by 7.4 percent this year, investment is expected to collapse and unemployment rates, debts and deficits will balloon in the brutal aftermath of the coronavirus pandemic, the European Commission said Wednesday. Brian Rothenberg, a United Automobile Workers spokesman, said the union had cooperated with such efforts if the return to work was voluntary and adequate safety measures were in place.
To put these figures in perspective, the European Union’s economy had been predicted to grow by 1.2 percent this year, and in its worst recession, in 2009 during the financial crisis, its economy shrank by 4.5 percent.
Predicting the breadth of a recession can be a moving target, the commission acknowledged, and things could end up being much worse.
“The danger of a deeper and more protracted recession is very real,” the head of the commission’s economic unit, Maarten Verwey, said in the forecast’s foreword. The commission issues these forecasts four times a year.
Italy and Spain, the two countries worst hit by the disease, will see their economies shrink by more than 9 percent each. Greece, which had started turning a corner after a decade of economic calamity, will suffer the most of the union’s 27 nations, according to the forecasts, losing 9.7 of its economic output this year.
And unemployment is expected to be rampant, averaging 9 percent across the bloc and reaching 19.9 percent in Greece, the European Commission said.
The bloc’s biggest economy, Germany, is projected to shrink by 6.5 percent for the year.
After a day of swinging between gains and losses, stocks on Wall Street ended with a small decline Wednesday.After a day of swinging between gains and losses, stocks on Wall Street ended with a small decline Wednesday.
Markets had been buoyed this week by signs that the countries hardest hit by the virus were slowly emerging from economically devastating lockdowns, though gains on Monday and Tuesday were small — as was Wednesday’s decline. The S&P 500 fell less than 1 percent.Markets had been buoyed this week by signs that the countries hardest hit by the virus were slowly emerging from economically devastating lockdowns, though gains on Monday and Tuesday were small — as was Wednesday’s decline. The S&P 500 fell less than 1 percent.
The rest of the week will bring more concrete evidence of the severity of the damage caused by the shutdown, with a monthly report on unemployment Friday to provide a comprehensive look at the number of Americans out of work.The rest of the week will bring more concrete evidence of the severity of the damage caused by the shutdown, with a monthly report on unemployment Friday to provide a comprehensive look at the number of Americans out of work.
Already, reports on jobless claims have shown that more than 30 million workers in the United States sought unemployment benefits over the six weeks through April. Another weekly update is due on Thursday.Already, reports on jobless claims have shown that more than 30 million workers in the United States sought unemployment benefits over the six weeks through April. Another weekly update is due on Thursday.
On Wednesday, the ADP National Employment Report showed the private sector work force had plunged by 20 million jobs in April. Separately, new data from the European Commission predicted a deep recession on the continent this year.On Wednesday, the ADP National Employment Report showed the private sector work force had plunged by 20 million jobs in April. Separately, new data from the European Commission predicted a deep recession on the continent this year.
Oil prices, which had rebounded over the past two days, fell on Wednesday. The price of benchmark crude in the United States retreated to a little over $23 a barrel. Brent crude, the international benchmark, fell below $30 a barrel.Oil prices, which had rebounded over the past two days, fell on Wednesday. The price of benchmark crude in the United States retreated to a little over $23 a barrel. Brent crude, the international benchmark, fell below $30 a barrel.
BuzzFeed’s chief executive and founder, Jonah Peretti, told staff Wednesday that 68 noneditorial employees, from the business, studio and administration teams, would be furloughed for three months, with a goal of keeping losses this year to under $20 million, according to an email obtained by The New York Times. Mr. Peretti also said cuts to the news division would be necessary and that he would begin discussions with the union about them. BuzzFeed has already instituted staff-wide graduated pay cuts for those making more than $40,000 a year.BuzzFeed’s chief executive and founder, Jonah Peretti, told staff Wednesday that 68 noneditorial employees, from the business, studio and administration teams, would be furloughed for three months, with a goal of keeping losses this year to under $20 million, according to an email obtained by The New York Times. Mr. Peretti also said cuts to the news division would be necessary and that he would begin discussions with the union about them. BuzzFeed has already instituted staff-wide graduated pay cuts for those making more than $40,000 a year.
Uber said it would lay off about 3,700 full time workers on its customer support and recruiting teams as the ride-hailing business slumps. Uber had about 27,000 employees at the end of 2019, and the company was reported last week to be looking at cuts of about 20 percent of its work force. Uber also said its chief executive, Dara Khosrowshahi, would waive his base salary for the rest of the year.Uber said it would lay off about 3,700 full time workers on its customer support and recruiting teams as the ride-hailing business slumps. Uber had about 27,000 employees at the end of 2019, and the company was reported last week to be looking at cuts of about 20 percent of its work force. Uber also said its chief executive, Dara Khosrowshahi, would waive his base salary for the rest of the year.
United Airlines announced a $2.25 billion bond offering on Wednesday that would be used to pay down a $2 billion loan it took out in early March. The airline also said it would no longer force thousands of full-time workers to part-time status, a move that prompted a union lawsuit, if enough employees volunteer for a reduction in hours.United Airlines announced a $2.25 billion bond offering on Wednesday that would be used to pay down a $2 billion loan it took out in early March. The airline also said it would no longer force thousands of full-time workers to part-time status, a move that prompted a union lawsuit, if enough employees volunteer for a reduction in hours.
The New York Times Company reported on Wednesday that it had netted 587,000 new digital subscriptions in the first quarter and surpassed six million total subscriptions by the end of April. But its chief executive, Mark Thompson, warned that advertising revenue had plummeted and could continue to fall by as much as 55 percent in the second quarter.The New York Times Company reported on Wednesday that it had netted 587,000 new digital subscriptions in the first quarter and surpassed six million total subscriptions by the end of April. But its chief executive, Mark Thompson, warned that advertising revenue had plummeted and could continue to fall by as much as 55 percent in the second quarter.
BMW said Wednesday that deliveries of new vehicles plunged 20 percent in the first three months of the year and warned that it was bracing for a long period of depressed sales. The German carmaker said it “expects the consequences of the corona pandemic to constrain the operations of the entire automotive industry for quite some time to come.” Car sales, BMW said in a statement, “are not going to return to normal in the space of just a few weeks.”BMW said Wednesday that deliveries of new vehicles plunged 20 percent in the first three months of the year and warned that it was bracing for a long period of depressed sales. The German carmaker said it “expects the consequences of the corona pandemic to constrain the operations of the entire automotive industry for quite some time to come.” Car sales, BMW said in a statement, “are not going to return to normal in the space of just a few weeks.”
Reporting and research was contributed by Kate Conger, Ben Casselman, Sapna Maheshwari, Matina Stevis-Gridneff, Adam Satariano, Marc Tracy, Neal E. Boudette, Jack Ewing, Carlos Tejada, Kevin Williams, Niraj Chokshi, Mohammed Hadi, Lin Qiqing, Katie Robertson and Kevin Granville. Reporting and research was contributed by Noam Scheiber, Kate Conger, Ben Casselman, Sapna Maheshwari, Matina Stevis-Gridneff, Adam Satariano, Marc Tracy, Neal E. Boudette, Jack Ewing, Carlos Tejada, Kevin Williams, Niraj Chokshi, Mohammed Hadi, Lin Qiqing, Katie Robertson and Kevin Granville.