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29th May 2023
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THE HOT STORY
Americans say average family needs $85,000 to get by
A new Gallup poll has found that Americans believe that the average family needs to make a minimum of $85,000 annually to get by, a major increase from just a decade ago. The Gallup poll shows about a 46% increase in the perceived average income a family of four needs compared to 2013, when Americans put the figure at $58,000 annually. About 31% of respondents said that the minimum annual income a family of four needs to make is between $50,000 to $75,000 per year, while 30% of respondents said the family’s annual income should be at least $100,000. Those saying that a family of four needed an income of at least $100,000 tripled from 2013, when only 10% selected that bracket. The current United States federal poverty level for a family of four is an annual income of $30,000 or less in 2023, which is used as an indicator of eligibility for certain federal programs and benefits. “The rise in perceived necessary income to support a family of four highlights the economic pressure facing American households as high inflation stretches into a second year,” the poll results read.  
ESYMPOSIUM
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WORKFORCE
Hundreds of thousands lose Medicaid coverage
Hundreds of thousands of low-income Americans have lost Medicaid coverage in recent weeks as part of a sprawling unwinding of a pandemic-era policy that prohibited states from removing people from the program. From the outset of the pandemic until this spring, states were barred from removing people from Medicaid under a provision in a coronavirus relief package passed by Congress in 2020. The guarantee of continuous coverage spared people from regular eligibility checks during the public health crisis and caused enrollment in Medicaid to soar to record levels. However, since the end of March, at least 19 states have started to remove people from the eligibility rolls. Daniel Tsai, a senior official at the Centers for Medicare and Medicaid Services who is helping to oversee the unwinding process for the Biden administration, said that more outreach was needed to help those who have lost coverage. He said federal officials were in regular contact with state officials around the country to review early data on the unwinding and check whether people who lost coverage had a fair shot to prove their eligibility.
Haitians denied legal pathways to work in the U.S.
The Biden administration has touted the success of legal pathways for migrants, but Haitians are being left behind. While the humanitarian parole program has allowed over 100,000 people from Haiti, Cuba, Nicaragua, and Venezuela to enter the US, only four H-2B visas and two H-2A visas have been granted to Haitians in the first six months of the current fiscal year. The program doesn't offer a permanent pathway to residency, and the guest worker visa programs are working more for Central America than for Haiti. Haitians are increasingly being denied visa renewals, and the humanitarian parole program is draining Haiti of the professionals and young people the country needs. Critics say the hastily put together humanitarian parole program is not targeting the group it was intended to help.

 

First Citizens to cut 500 jobs at SVB U.S.
First Citizens, the new owner of Silicon Valley Bank's U.S. operations, is cutting around 500 roles held by former SVB workers. The job cuts amount to around 3% of the company's total workforce. The failure of SVB, along with two other U.S. banks, triggered fears of a more widespread banking crisis, which forced authorities to step in. First Citizens' chief executive Frank Holding highlighted the problems faced by SVB earlier this year and said the cuts will affect "select SVB corporate functions and do not include any personnel in client-facing positions."
LEGAL
SEC's largest-ever award related to Ericsson's bribery case
The record $279m whistleblower award issued by the Securities and Exchange Commission (SEC) earlier this month stemmed from a bribery case against telecommunications company Ericsson. The award was related to the $1.1bn settlement Ericsson reached with U.S. authorities in 2019 over allegations it made illegal payments to win business in five countries. The SEC's cash-for-tips program allows whistleblowers to receive between 10% and 30% of fines collected in SEC civil-enforcement actions and related actions from other enforcement agencies. Ericsson's wrongdoing occurred in Djibouti, China, Vietnam, Kuwait and Indonesia from 2000 to 2016. The deferred prosecution agreement in 2019 included a $520m criminal penalty and $540m disgorgement of illicit profits and required Ericsson to retain a compliance monitor for three years and to cooperate in related probes.
IRS warns of Employee Retention Credit scams
The IRS is warning businesses to be cautious of scams promoting abuse of the Employee Retention Credit (ERC). The credit is real, but aggressive promoters are exaggerating who can qualify for them. The IRS has been stepping up its audit and criminal investigation work involving bogus ERC claims. Businesses, tax-exempt organizations, and others considering applying for this credit need to carefully review the official requirements for this limited program before applying. Those who improperly claim the credit face follow-up action from the IRS. Tax professionals have been seeing clients with legitimate claims also coming under suspicion. The ERC is a refundable tax credit designed for businesses that continued paying employees while shut down due to the COVID pandemic or that had a significant decline in gross receipts during the eligibility periods. “These are Johnny-come-latelies, showing up and they’re pushing this product, pushing this activity in a way that is unethical,” said Douglas O’Donnell, deputy commissioner of services and enforcement at the IRS. “It is drawing businesses into a trap, that they will then be claiming a credit that they are not entitled to.”
PRODUCTIVITY
KPMG: C-suite leaders see AI boosting productivity
A wide majority of corporate executives expect generative artificial intelligence technology to boost productivity and innovation in the workplace, but some worry about potential negative effects, such as a weaker sense of job security, according to a KPMG survey. Finance was among the top job categories that were expected to be positively impacted by the emerging technology, according to the survey results, released Wednesday. The list also included information technology and software, as well as customer service. “Instead of having financial analysts spend 80% of their time running reports, they can be freed up to help the business make better informed decisions” using AI-generated data, said Felicia Lyon, a partner in KPMG’s human capital advisory practice. KPMG polled 300 global C-suite and senior executives, including 225 U.S.-based respondents, during the last two weeks of March, focusing on businesses with at least $1 billion in revenue.  In the same survey, 65% of respondents said they believe generative AI will have a major impact on their organization in the next three to five years, but nearly the same number (60%) said they’re still a year or two away from implementing the technology due to hurdles such as cost, according to a separate group of findings.
TECHNOLOGY
AI-powered glasses can tell you what to say in a conversation
Stanford University computer science student Bryan Chiang has developed an AI chatbot called RizzGPT that uses an augmented reality eyepiece to help people with social anxiety. The eyepiece features a camera, a microphone and an internal projector screen where words are displayed in front of the user's eye. When someone talks to the user, RizzGPT monitors the conversation through the microphone, transforms it to text, and sends it via WiFi to OpenAI's artificial intelligence chatbot ChatGPT to generate a response. The goal is to assist people who struggle with social anxiety and have difficulties talking to others. "It's merely meant as this sort of assistive aid to help you think about things that you might have forgotten," explained Chiang.
Figure raises $70m for humanoid robot development
California-based AI robotics startup Figure has raised $70m to develop its humanoid robot, Figure 01. The company believes the robot could address labor shortages, perform dangerous jobs and support the global supply chain. Parkway Venture Capital led the investment in the 50-person firm. According to one report, funding for drones and robotics totalled $5.7bn in 2022.
CORPORATE
Bank of America to cut jobs in Asia amid slowing Chinese dealmaking
Bank of America has asked around 40 bankers in Asia to look for new roles within the company as the lender seeks to cut costs globally and reduce its presence in the Chinese dealmaking market. The affected bankers work in junior roles and in Chinese equities, while a few are employees in banking and markets divisions. Those who cannot find another role internally within a few months would face redundancy. Bank of America expects its global headcount to shrink to 213,000 by the end of June. The move follows a similar one that is seeing fewer than 200 wealth management and lending employees moved to product specialist positions within the company's global operations organization.
Davis Polk and Simpson Thacher to advise on A&O/Shearman tie-up
Wall Street law firms Davis Polk and Simpson Thacher have been appointed to advise on the proposed merger between Shearman & Sterling and Allen & Overy (A&O). The two firms will be tasked with untangling potential issues around pay structures, which are expected to be one of the most challenging aspects of the deal. The appointment of independent legal advisers sends out an important message to partners during law firm merger negotiations, according to Zulon Begum, a partner in London firm CM Murray’s partnership and LLP practice. The merger is expected to take between six and 12 months to complete.
INTERNATIONAL
U.N. chief decries failure to protect civilians in conflicts
U.N. Secretary-General Antonio Guterres has expressed his concern over the world's failure to protect civilians caught in conflicts. The International Committee of the Red Cross has also lamented that countless civilians are experiencing "a living hell." Civilians in Ukraine, Sudan, Africa's Sahel, and the Middle East are struggling to evade missiles and explosives and to find food and medicine. The humanitarian situation is deteriorating, and the number of people forcibly displaced has reached new highs. The U.N. recorded a 53% increase in civilian deaths to nearly 17,000, including almost 8,000 in Ukraine. The conflicts are compounded by climate shocks, food insecurity, and economic hardship. Guterres said the Security Council should urge countries to respect the rules of war. “Governments with influence over warring parties should engage in political dialogue and train forces on protecting civilians,” he said. “And countries that export weapons should refuse to do business with any party that fails to comply with international humanitarian law.”
China's youth unemployment crisis
China's economy has rebounded after the Covid-19 pandemic, but youth unemployment has soared, reaching a new high in April at nearly four times the national level. The unemployment rate for 16- to 24-year-olds in China's urban areas spiked at 20.4% - or roughly 6 million young people out of work. Almost 12 million college graduates will hit the job market this year, likely taking the youth unemployment rate to above 25%, according to Citigroup. This is a worrying development for the Communist Party, which Bloomberg says is obsessed with social stability, and for the economy's longer-term prospects. While Beijing is trying to encourage public and private hiring, underlying trends could keep youth unemployment relatively high for some time.
 


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