McDonald’s to Increase Wages as Job Market Tightens: Live Updates

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Tesla’s U-turn on Bitcoin raises questions of the cryptocurrency’s stability.

Unemployment claims fell last week.

U.S. stocks recover after a global sell-off.

A $2.8 billion antitrust fine led Alibaba to book its first loss since going public.

It could take days for the flow of fuel in the Colonial Pipeline to return to normal.

McDonald’s said the entry-level wage for new employees would increase to $11 to $17 an hour, based on the location of the restaurant.Credit…Mike Blake/Reuters

Competing with fast-food chains, restaurants and other businesses for workers, McDonald’s said on Thursday that it, too, will raise wages at some restaurants in an effort to attract employees.

The company said it would increase hourly wages for current employees by an average of 10 percent and that the entry-level wage for new employees would rise to $11 to $17 an hour, based on the location of the restaurant.

The pay increases do not affect the 95 percent of the nearly 14,000 restaurants in the United States that are independently owned, only the 650 company-owned restaurants.

Responding to a tight job market and echoing a move earlier this week by the burrito chain Chipotle, McDonald’s said it hoped the higher pay would attract as many as 10,000 new employees in the next three months, as the busy summer season approaches and dine-in restrictions are removed at many of its restaurants.

At its company-owned restaurants, McDonald’s said the average employee wage would increase to $13 an hour, with some restaurants achieving an average wage of $15 an hour later this year. All company-owned restaurants expected to be at an average salary of $15 by 2024, the company noted.

Still, that falls short of the minimum wage of $15 an hour being demanded by the Fight for $15 organization, which is backed by the Service Employees International Union. The Fight for $15 organization is spearheading a strike by McDonald’s employees in several cities across the country on Wednesday ahead of the company’s annual shareholder meeting.

In 2019, McDonald’s announced it would no longer use its powerful lobbying arm to fight attempts to raise the minimum wage to $15 an hour at the federal, state and local level. In a call with Wall Street analysts in January, the McDonald’s chief executive, Chris Kempczinski, said the company was doing “just fine” in the more than two dozen states that had increased minimum wages in a phased-in way.

In fact, despite having many of its dining rooms closed or with limited capacity in parts of the country for much of the pandemic, the strength of McDonald’s drive-throughs helped push its profit to more than $4.7 billion in 2020. It paid its shareholders more than $3.7 billion in dividends and spent another $874 million repurchasing shares before suspending the program in early March of last year.

Mr. Kempczinski agreed to cut his base salary in half last year, but his total compensation was still more than $10.8 million.

Elon Musk, the chief executive of Tesla, has been a big Bitcoin advocate.Credit…Susan Walsh/Associated Press

Elon Musk has been a big cryptocurrency booster of late, even directing Tesla to buy $1.5 billion in Bitcoin for its corporate treasury earlier this year. On Thursday, he abruptly reversed course, tweeting that Tesla would stop accepting Bitcoin as payment for cars, citing environmental reasons.

“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” he said.

Bitcoin’s price promptly plunged by more than 10 percent, and Tesla’s shares dropped more than 4 percent, but recovered when trading began on Thursday.

Bitcoin price

Tesla said it would begin accepting the cryptocurrency a few months ago, when it also revealed a billion-dollar Bitcoin buy, pushing the price up by more than 10 percent. Bitcoin seems remarkably sensitive to the billionaire’s tweets. “If one person can dramatically alter spending power, the ‘stable store of value’ criteria of a currency is not met,” Paul Donovan of UBS wrote in a note to clients on Thursday.

Mining Bitcoin is energy-intensive, and the more it is worth, the more power it takes a network of computers to create the tokens, by design. Bitcoin’s climate problem is hardly a secret. The DealBook newsletter asks: What gives?

Tesla only started accepting Bitcoin for car purchases in the United States in March. Just over two weeks ago, Zach Kirkhorn, Tesla’s chief financial officer, told investors that “it is our intent to hold what we have long term and continue to accumulate Bitcoin from transactions from our customers as they purchase vehicles.” He described the rationale for buying and accepting Bitcoin as “Elon and I were looking for a place to store cash that wasn’t being immediately used, trying to get some level of return.”

An entry-level Tesla is worth about one Bitcoin, so the company’s $1.5 billion Bitcoin purchase in February far surpasses the amount of crypto it would collect from car sales for a very long time. That raises questions about the vetting and approval process for that investment, which may worry E.S.G. investors, who otherwise look favorably at an electric vehicle company. Did Mr. Musk not know about Bitcoin’s environmental impact until now? Who advised him on it? Did climate factor into the board’s approval process?

SpaceX’s rockets are massive carbon emitters. The Boring Company, his tunnel drilling endeavor, has also faced criticism about its environmental impact.

Mr. Musk’s statement said that “Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy.” We’ll see whether it made any recent trades when it reports second-quarter results in July. Given the impact that Mr. Musk’s tweet had on Bitcoin’s price, any action just before or after will be scrutinized.

The return policy for cars bought with Bitcoin worked in Tesla’s favor, stipulating that buyers get back Bitcoin if it’s worth less than the equivalent dollar value at purchase but get back dollars if Bitcoin is worth more. That raises many issues, including accounting risks and worries about warranties and other consumer protection laws.

Mr. Musk can be an unreliable narrator. On Tuesday, he asked his followers on Twitter if Tesla should accept Dogecoin, the jokey cryptocurrency. (Most said yes.) On Sunday, he announced that SpaceX had taken Dogecoin as payment for shuttling a satellite to the moon. And as host of “Saturday Night Live,” he said that cryptocurrency was both “the future of currency” and “a hustle.”

Servers at a restaurant in Columbia, Mo., last week. The labor market is struggling to return to normal after more than a year of being whipsawed by the pandemic.Credit…Jacob Moscovitch for The New York Times

New claims for unemployment benefits fell last week, the government reported on Thursday, as the labor market slowly recovers from the staggering losses wreaked by the coronavirus pandemic.

About 487,000 workers filed first-time claims for state benefits during the week that ended May 8, the Labor Department said, a decrease from 514,000 the week before. In addition, about 104,000 new claims were filed for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits.

Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 473,000.

After more than a year of being whipsawed by the pandemic, the economy has been showing new life. Restrictions are lifting, businesses are reopening and job listings are on the upswing. But hiring in April was weaker than expected.

“Over all, jobless claims are about three times as high as they were pre-Covid, but they’re coming down” said Heidi Shierholz, senior economist at the left-leaning Economic Policy Institute.

Some employers, particularly in the restaurant and hospitality sectors, have complained of having trouble finding workers. The U.S. Chamber of Commerce and several Republican governors have asserted that a temporary $300-a-week federal unemployment supplement has made workers reluctant to return to the job.

The U.S. Labor Department said that as of Wednesday, six states — Iowa, Mississippi, Missouri, Montana, North Dakota and South Carolina — had notified the department that they were terminating federal pandemic-related unemployment benefits next month ahead of the Sept. 6 expiration date.

Several other states with Republican governors, including Tennessee, Arkansas, Alabama, Wyoming and Idaho, have said they also plan to withdraw from the federal program.

The unemployment rates in those states in March, the latest month for which data is available, ranged from 3.2 percent in Idaho to 6.3 percent in Mississippi.

Mississippi, Tennessee and Alabama are among the states that offer the lowest maximum benefit to qualified individuals — $275 or less each week. Nationwide, the average weekly benefit without federal supplements is $387, according to the Center for Budget and Policy Priorities.

Economists are skeptical that supplemental jobless benefits are playing anything more than a bit part in the pace of the job market’s recovery.

“There is tremendous churn in this labor market,” said Gregory Daco, chief U.S. economist at Oxford Economics. “There are still major supply constraints and unemployment benefits are not the most important one. The virus is.”

Many workers have children at home who are not attending school in person. Others are wary of returning to jobs that require face-to-face encounters. Covid-19 infections have decreased since September but there are still 38,000 new cases being reported each day and 600 Covid-related deaths. Less than half the population is fully vaccinated.

There is halting progress from employers as well, as businesses continually update their assessment of costs and customer demand. “The hiring pattern isn’t going to be smooth,” Mr. Daco said. “Businesses hire and then reassess. They need to find the right balance, it’s a trial and error process more than anything.”

Prematurely halting federal jobless benefits is “detrimental to the economy,” Mr. Daco said. “You’re voluntarily hurting certain vulnerable tranches of the population.”

Roughly 5.3 million people had exhausted other benefits by late April and were collecting extended pandemic-related federal benefits.

Nationwide, the unemployment rate was 6.1 percent, and there are 8.2 million fewer jobs than in February 2020.

An empty gas pump, in Chapel Hill, N.C. Colonial Pipeline said Wednesday it had restarted operations along its Texas-to-New Jersey pipeline, but full restoration of service was expected to take days.Credit…Jonathan Drake/Reuters

U.S. stocks rebound on Thursday following a sell-off in European and Asian equities after faster-than-expected inflation data in the United States rattled markets the previous day.

The S&P 500 open nearly 1 percent higher, after a 2.1 percent drop on Wednesday. The Nasdaq climbed more than 1 percent.

The Stoxx Europe 600 index fell 0.4 percent, recovering from a 1.7 percent decline earlier. The Nikkei 225 slumped 2.5 percent in Japan, and the Hang Seng in Hong Kong dropped 1.8 percent.

The U.S. Consumer Price Index, a measure of inflation, climbed 4.2 percent in April from a year earlier, the fastest pace of increase since 2008. From March to April, prices increased 0.8 percent; economists surveyed by Bloomberg only forecast a 0.2 percent increase.

The yield on 10-year Treasury notes held steady at about 1.69 percent after jumping seven basis points, or 0.07 percentage point, on Wednesday.

Federal Reserve policymakers have said that they expect the current increase in inflation to be transitory and would not set off a pullback in monetary stimulus. But the increase in April’s inflation reading, beyond what other analysts forecast, has some traders testing this view.

Commodities

Oil prices fell on Thursday after Colonial Pipeline said it had begun to restart operations along its massive pipeline, which transports gasoline, diesel and jet fuel from Texas to New Jersey. West Texas Intermediate, the U.S. benchmark, dropped more than 2 percent to $64.65 a barrel.

Other commodity prices have also fallen from recent highs. Iron ore futures were down 3.6 percent after climbing to a record this week. Aluminum prices fell 1.6 percent and silver prices were down 1.4 percent.

Cryptocurrencies

Bitcoin prices fell more than 10 percent to below $50,000, according to CoinDesk, after Elon Musk said Tesla would stop accepting the cryptocurrency as payment for its electric cars. Mr. Musk citing concerns about the energy consumption used in mining for Bitcoin, a longstanding issue. Tesla’s share price fell 1.5 percent in premarket trading, but recovered when markets opened.

Most other cryptocurrencies fell on Thursday with CoinMarketCap valuing the global market at $2.2 trillion, down 11 percent from the day before.

Shares in Coinbase, an exchange for people and companies to buy and sell various digital currencies, dropped nearly 2 percent.

Alibaba recorded an operating loss of $1.2 billion for the first three months of the year.Credit…Thomas Peter/Reuters

China’s landmark $2.8 billion antitrust penalty against Alibaba caused the e-commerce giant to report a loss in the latest quarter, its first since going public seven years ago. But sales continued to grow despite the regulatory scrutiny, helped by China’s strong economic expansion.

Alibaba recorded an operating loss of $1.2 billion for the first three months of the year, the company said on Thursday. Without the antitrust fine, operating profits would have been $1.6 billion, a 48 percent increase from a year earlier, the company said.

Revenue for the quarter grew by nearly two-thirds from a year before, to $28.6 billion. That figure got a boost because Alibaba began including the sales of Sun Art, a supermarket operator in which the company took a controlling stake last October.

China is on a regulatory blitz to curtail what officials describe as unfair and monopolistic business practices by the country’s internet heavyweights. The fine last month against Alibaba was followed swiftly by the opening of an antitrust investigation into Meituan, a food-delivery platform that is among China’s most valuable internet companies.

Two days after China’s market regulator announced the fine against Alibaba, which the agency said was for illegally restricting the vendors on its shopping sites, the company said it would lower the fees it charges those merchants and invest in new services for them.

Speaking to analysts on Thursday, Alibaba’s chief executive, Daniel Zhang, pledged to put “all of our incremental profits this year” toward helping merchants lower their operating costs, expanding in new business areas such as brick-and-mortar grocery and improving technology. But Mr. Zhang also stressed that these investments would be “highly targeted and disciplined.”

For the 12 months that ended in March, Alibaba recorded $109.5 billion in revenue, an increase of 41 percent over the year before. The company’s Chinese retail platforms attracted 811 million active consumers during that period.

The operator of Colonial Pipeline said on Wednesday that it had started to resume pipeline operations but noted that “it will take several days for the product delivery supply chain to return to normal.”

The pipeline, which stretches from Texas to New Jersey, had been shut down since Friday after a ransomware attack.

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“There will be lag time between Colonial Pipeline reopening and increases in fuel availability for general public,” warned an internal assessment of potential impact drawn up by the Departments of Energy and Homeland Security. It noted that the fuel “travels through the pipeline at 5 miles per hour” and would take “approximately two weeks to travel from the Gulf Coast to New York.”

The company has refused to say whether it had paid a ransom or was considering doing so. On Wednesday, administration officials said they believed the company was avoiding paying the ransom, at least for now. Instead, they said, the company was trying to reconstruct its systems with a patchwork of backed-up data.

Gasoline prices in Georgia and a few other states rose 8 to 10 cents a gallon on Wednesday alone, a jump not usually seen without a major hurricane shutting down refineries. At some stations, people were filling up gasoline cans, forcing others to wait longer and causing shouting matches. Lines of 20 to 25 cars waited at the few stations operating in Chapel Hill, N.C., where almost all the gas stations lacked fuel.

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