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Despite some sharp wage rises, low-paid US workers have far to go

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Employees at a McDonald's restaurant in New York are seen on May 27, 2022; demands by some Manhattan fast-food workers for an hourly minimum wage of $20 would once have been unthinkable
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Fast-food employees in Manhattan demonstrating for a wage of $20 an hour: a demand unthinkable before the Covid-19 pandemic has become unexceptional, as short-handed companies offer big wage increases without, however, doing much to narrow a yawning income gap.

The upward wage pressure has come from several sources, including an unusually tight labor market and child-care challenges linked to the pandemic, as well as chronically underpaid workers unwilling to return to pre-pandemic conditions.

Employers have not only had to raise wages but in some cases have offered improved health care insurance and bonuses.

“The country’s major employers have understood that they need to bring wages up to scratch if they want to attract reliable workers who can help them navigate this period of major uncertainty,” said Gregory Daco, chief economist at Ernst & Young Parthenon.

Apple, after announcing it was raising its hourly minimum wage to $22, said in a statement, “Supporting and retaining the best team members in the world enables us to deliver the best, most innovative products and services for our customers.”

The tech giant said that in addition to sector-leading wages, it was providing “a robust range of benefits” for full- and part-time employees.

Higher wages may also help Apple in its efforts, like Amazon, to discourage unionization efforts. 

Apple’s $22 hourly minimum represents a 45 percent increase from the company’s minimum in 2018, the group said.

– Winning workers’ loyalty –

In the summer of 2021, facing serious labor shortages, several major companies including Amazon, Target and Chipotle pushed their base hourly wage past $15, more than double the federal minimum of $7.25, a figure unchanged since 2009. 

Bank of America announced this week that it was lifting its hourly minimum to $22, a figure set to rise to $25 by 2025.

Across the US, some of the biggest wage increases have gone to some of the lowest-paid workers — people unafraid in the Covid era to make their demands known. 

While there have been wage increases at all salary levels, only the lowest-paid workers saw rises big enough to compensate for today’s high inflation rates, according to Mahir Rasheed, an economist with Oxford Economics.

Put another way, he said, “Even with stronger incomes, most consumers are actually seeing wages down in real terms.”

– Deceptive wage hikes –

So even if the increases might appear significant — particularly for restaurant and hotel employees — workers in that sector are still earning less than the national median salary.

“The increases look huge, with some workers going from $7 to $10, from $10 to $12, from $12 to $15 or even from $15 to $20,” said Daco.

And yet, he added, “$15 an hour is $30,000 a year, considerably less than the (US) median salary of $50,000 to $60,000.”

What’s more, the increases might be a one-time affair.

“It’s unlikely that these wage gains will continue to increase at a persistent clip over the next year,” said Rasheed, even if some companies make occasional raises in a bid to attract qualified workers.

The increases are bound to slow, he added, as more and more people return to work.

As the labor market opens up, workers’ negotiating power will erode, Daco said.

“Unfortunately, I don’t expect those gains to be durable in the long term, because we haven’t seen increases in the federal minimum wage,” said Elise Gould, an economist with the Economic Policy Institute, an American think tank.  

She predicted “a decided slowdown in wage gains.”

In a study published last month, she noted that average wages rose by 4.4 percent in the first year of the pandemic in the US, but declined by 1.7 percent in the second year.

And despite the recent increases, “wage levels remain vastly unequal across the US labor market, with disparities among workers by wage level, gender and race/ethnicity remaining stark,” Gould wrote.

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Netflix ‘actively’ working on ad-supported subscription

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It was revealed last month Netflix was planning to introduce a new cheaper subscription model by the end of 2022
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Netflix is “actively” working on building its cheaper, ad-supported deal, the company’s French team said on Tuesday, but added there was no clear timeline. 

It was revealed last month that the streaming platform was planning to introduce a new cheaper subscription model by the end of the year that would break its taboo on advertising. 

That leak to the New York Times followed news that Netflix had lost 200,000 subscribers in the first quarter of the year — its first decline in a decade. 

“We don’t have a precise timeline yet,” Anne-Gabrielle Dauba-Pantanacce, head of communications for Netflix France, told AFP. 

“We are actively working on it. It’s a priority — this idea of giving subscribers more options in the context of high inflation,” she added. 

Bloomberg reported over the weekend that Netflix has yet to appoint a head of advertising or build a sales team. 

The Wall Street Journal said Netflix is actively looking into partnerships with Google and Comcast to provide ads. 

There are also tricky questions about where to place the ads. 

Should they come only at the start of programming? Or will their teams have to go back through countless hours of content to find suitable moments for an ad break in shows like “Stranger Things” that were never created with ads in mind? 

“For now, nothing is decided,” said Dauba-Pantanacce. 

In its bid to rake in more cash, Netflix is also looking to crackdown on users who share their passwords with others. 

Despite losing subscribers, which led to a tumble in its share price, Netflix remains by far the most popular streaming service in the world with 222 million subscribers. 

But they are shared with an estimated 100 million other households that are not paying for the service. 

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Party’s over: Airbnb bans events permanently

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Airbnb says its permanently banned parties
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Airbnb has made permanent its pandemic-era prohibition of parties at the properties rented out globally through its app, saying Tuesday the rules have been effective against problematic events.

The rental platform has gradually tightened its policies on parties after complaints and some high-profile trouble, including a 2019 shooting that killed five in California.

Airbnb provisionally barred events in 2020 as a measure against the spread of Covid, but it turned out to also be effective against large or disruptive gatherings.

“Over time, the party ban became much more than a public health measure. It developed into a bedrock community policy,” the company said.

In the past, property owners were given the room to use their best judgment on whether to allow parties, but rules tightened to bar “party houses” as well as large events advertised on social media.

After the pandemic hit, bringing the closure of many nightlife venues, people in some cases turned to hosting events at places rented through Airbnb, which in turn became a problem.

But Airbnb argued the tighter rules have been effective in reducing the rate of rowdiness complaints it has received.

Under the new policy Airbnb will also lift its 16-person cap at rental properties, a rule enacted against Covid but which will now take into account that certain larger or outdoor sites are OK for bigger groups. 

The company said people breaking the rules face consequences from account suspension to full removal from the platform, adding that in 2021, over 6,600 guests were suspended over the party ban.

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South Africa’s Eskom announces further power cuts

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Power cuts are a major source of frustration in South Africa, where protests broke out near Eskom's offices last year
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South Africa, a country plagued by power shortages, on Tuesday imposed the the toughest electricity rationing in two and a half years after labour disputes disrupted production at several plants.

Power rationing to consumers was ramped up to so-called Stage 6 load-shedding to prevent countrywide blackouts.

Stage 6 means that South Africans will now experience multiple cuts per day, each lasting several hours.

Africa’s leading industrialised country last experienced such drastic outages in December 2019. 

“There is a high risk that the stage of load-shedding may have to change at any time, depending on the state of the plant,” power utility Eskom said in a statement.  

Power cuts are a major source of frustration and discontent in South Africa, where protests broke out near Eskom’s offices last year.

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