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North American Edition
31st July 2024
 
THE HOT STORY
Disney workers celebrate historic wage increase
Disney workers at the Disneyland Resort in California have approved a proposed contract that will raise their wages from $19.90 an hour to $24 an hour. The contract, which was hailed as delivering the "biggest wage increases ever," will see wages climb to $26 an hour by 2026. The push for higher wages began in 2017 when a survey commissioned by the Coalition of Resort Labor Unions revealed that 73% of workers did not make enough to cover basic expenses. The survey led to the passing of Measure L, a living-wage ballot measure. After years of negotiations and legal battles, Disney says it has transformed its workplace and is now offering "industry leading wages." The contract also includes seniority-based pay and future raises for long-term employees. Ellie Gonzalez, a Disney worker and shop steward, called the wage increase "life changing" and said it will allow her to provide the best possible life for her twins.
WORKFORCE
U.S. job openings edge lower in June
U.S. job openings fell marginally in June and data for the prior month was revised higher, pointing to continued labor resilience that is underpinning the economy. The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) found that job openings dropped 46,000 on a monthly basis to 8.184m. From a year earlier, they were down 941,000. Economists polled by Reuters had forecast 8m job openings. About 3.3m workers quit their jobs in June, little changed from the month before. The figure is equivalent to about 2.1% of the workforce. The number of vacancies per unemployed worker, a ratio the Fed watches closely, held at 1.2, in line with the level prior to the pandemic. At its peak in 2022, the ratio was 2 to 1. Trade, accommodation and food services as well as state and local government were among industries that added the most open positions in June. Vacancies in manufacturing declined by the most in two years.
STRATEGY
Intel plans to cut thousands of jobs in cost-cutting effort
Intel plans to eliminate thousands of jobs in a cost-cutting effort to rebound from an earnings slump and market share losses. The workforce reduction may be announced this week. Chief executive Pat Gelsinger is spending heavily on research and development to improve Intel's technology and return to prominence in the semiconductor industry. Other chipmakers have caught up and taken market share, while Nvidia has sprinted ahead in the development of semiconductors for artificial intelligence-related tasks. Intel is also facing uneven demand for chips in its main business. Intel has previously reduced its workforce and slowed spending in other areas to save costs. Analysts project that Intel will report flat second-quarter revenue, with modest growth expected in the second half of the year. The company aims to increase total sales by 3% to $55.7bn for the full year, marking the first annual revenue increase since 2021. "Intel is betting that it can improve its technology," observed one expert.
New Jersey offers tax credits to attract AI companies
New Jersey is allowing the reallocation of up to $500m in tax credits from two incentive programs, Aspire and Emerge, to attract artificial intelligence (AI) companies. The move aims to encourage AI companies to build data centers or other facilities in the state. Gov. Phil Murphy signed the legislation, which is part of the state's $14bn economic recovery law. The tax credits will be available to AI companies that create new jobs and investment in New Jersey. The initiative comes as elected officials across the U.S. seek innovative ways to attract AI companies. 
HEALTH & WELLBEING
Bank of America is raising the stakes when it comes to recharging employees
Fortune reports on Bank of America’s sabbatical program for longtime employees, noting that the company is raising the stakes when it comes to recharging employees by giving them the benefit of not working at all. Bank of America launched its sabbatical program in January 2023, offering four weeks of paid leave for workers who have been at the company for 15 years, five weeks for 20- to 25-year staffers, and six weeks for employees with 30 years under their belt. The benefit has proved wildly popular with senior staffers: within the first year, about 10,000 employees were allowed to take the break. Another 11,000 have taken, or plan to take, their leave this year.
ECONOMY
Consumer confidence rises in July from downwardly revised level June reading
The Conference Board's consumer conference index increased to 100.3 this month, from a downwardly revised 97.8 in June, and above the 99.5 expected by economists polled by the Wall Street Journal. The expectations index jumped to 78.2 in July from 72.8 in June, although it remains below 80, which is the threshold which usually signals a recession ahead. The present situations index, meanwhile, slipped from 135.3 to 133.6. "Compared to last month, consumers were somewhat less pessimistic about the future. Expectations for future income improved slightly, but consumers remained generally negative about business and employment conditions ahead", said Dana Peterson, chief economist at the Conference Board. "Meanwhile, consumers were a bit less positive about current labor and business conditions. Potentially, smaller monthly job additions are weighing on consumers' assessment of current job availability."
TAX
Lower foreign taxes for U.S. multinationals unlikely to benefit domestic workers, study finds
Policies that lower the foreign taxes of U.S.-based multinational corporations are unlikely to benefit domestic workers, according to a recent academic study. The study examined the impact of two different provisions: the 1997 "Check-the-Box" regulations and the 2004 "repatriation holiday." The researchers found that the Check-the-Box regulations significantly reduced domestic employment and earnings, indicating that multinational companies substitute domestic with foreign activity in response to lower tax rates abroad. The repatriation holiday had no effects on labor markets, suggesting that foreign cash holdings of U.S.-based MNCs are not an important source of financing for domestic business activity. The study concludes that policies lowering the foreign taxes of U.S. MNCs are unlikely to benefit domestic workers. "What our paper says is that our results are consistent with the substitution effect dominating the income effect, on average, when U.S. firms face cuts to their foreign taxes," said Daniel Garrett, one of the researchers. The study highlights the importance of a global minimum tax to support U.S. workers and prevent firms from shifting production to countries with lower taxes. The Supreme Court decision in the case of Moore v. United States is not expected to impact U.S. multinationals' ability to create jobs at home. Lowering the foreign effective tax rate is not an effective way to encourage firms to hire more workers, according to the study. Bonus depreciation, on the other hand, has been shown to lead firms to hire more workers.
LEGAL
IRS recognizes whistleblowers' role in tax administration
To mark National Whistleblower Appreciation Day yesterday, the IRS Whistleblower Office highlighted the important role whistleblowers play in tax administration. Since 2007, the IRS has paid over $1.2bn in awards based on the successful collection of $7bn from non-compliant taxpayers. The IRS says it appreciates the valuable contributions of whistleblowers and is committed to improving the whistleblower program. The IRS Whistleblower Office was established in 2007 to administer claims from whistleblowers. National Whistleblower Appreciation Day is recognized annually on July 30 - the first whistleblower law was passed on this day in 1778.
Financial institutions advised to enhance compliance programs
Financial institutions are being advised to evaluate and enhance their compliance programs in light of proposed revisions to anti-money laundering and counterterrorism financing (AML/CFT) rules. The Financial Crimes Enforcement Network (FinCEN) has put forward these rules to streamline AML/CFT program rules across various financial institutions. The proposed changes include the introduction of a new statement of purpose, the requirement for an "effective" compliance program, additional components or pillars, a risk assessment process, qualified personnel for pillars, periodic assessments and audits, and the responsibility of U.S. persons. The proposed revisions are driven by the Anti-Money Laundering Act of 2020. Companies are urged to prepare for increased regulatory scrutiny and engage in the regulatory comment process. Comments on the proposal can be submitted until September 3. 
CYBERSECURITY
Ransomware litigation surges as cybercriminals target businesses
Ransomware litigation has seen a surge as cybercriminals target businesses of all sizes. The Ransomware-as-a-Service business model has made it easier for criminals to carry out attacks, resulting in a rise in lawsuits. CDK Global, a major industry software vendor, recently fell victim to a ransomware attack, causing operations at thousands of car dealerships to come to a halt. The attack led to multiple lawsuits being filed against CDK, with claims of compromised personal information and financial losses. The attack bears similarities to the high-profile attack on Change Healthcare earlier this year, which also resulted in numerous lawsuits. The increase in ransomware attacks has led to a record-breaking number of complaints being filed in federal court, indicating a growing trend in litigation. As these attacks become more common, defendants will find it harder to argue that they were unforeseeable, making negligence claims easier for plaintiffs. Higher cybersecurity standards may be necessary to defend against breach of duty allegations.
TRAINING & DEVELOPMENT
California high school students to graduate with financial skills
Under a new law, high school students in California will now have to complete a course in pocketbook economics to graduate. The course will cover managing credit cards, balancing checkbooks, and avoiding scams. The bill, known as the California Personal Finance Initiative, was backed by signatures gathered to place the proposal on the November ballot. Tim Ranzetta, a Silicon Valley businessman and supporter of the legislation, believes that this course will benefit many generations of Californians by teaching them about financial responsibility and helping them make better financial decisions. Ranzetta is also the head of Next Gen Personal Finance, a nonprofit organization that provides free teacher and curriculum training. The organization has reached 100,000 teachers in the United States, including approximately 6,000 in California.
INTERNATIONAL
Australian government pledges greater protection for people with disabilities
Australians with disabilities are to have greater protection from discrimination and increased inclusion in society. The Australian government has responded to the disability royal commission and accepted 130 out of 172 recommendations, with 36 still under consideration. The government will modernize disability discrimination laws and allocate funds for a disability advocacy program and a specialist disability employment program. Safeguarding mechanisms will be put in place, and national approaches to accessible information will be improved. The government's response did not fully address calls to phase out segregated schools and group homes for people with disabilities. Social Services Minister Amanda Rishworth emphasized the government's commitment to making Australian society more inclusive for people with disabilities. Approximately 4.4m Australians identify as having a disability.
OTHER
American families expected to spend $874 on back-to-school shopping
Back-to-school shopping season is here, and American families are expected to spend as much as $874 on clothing, shoes, school supplies, and electronics. According to a study by WalletHub, 70% of parents feel that schools are asking them to buy too much during this season. The National Retail Federation estimates that total back-to-school spending this year will be $38.8bn. Retailers like Walmart, Target, and Kohl's have back-to-school deals on children's clothing, while Amazon offers school supplies starting at 25 cents. Financial experts suggest checking last year's supplies for leftovers and spreading out purchases to save money. 
 


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