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As more Californians fall behind in making debt payments, one group stands out

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As more Californians fall behind in making debt payments, one group stands out

Stubbornly high inflation and interest rates are taking an increasing toll in California as the state experiences rising unemployment and slowing wage gains. And those feeling it the hardest: the largest and perhaps most budget-minded generation of them all.

Millennials, those roughly 28 to 43 years old, are generally thought to be more averse to debt and better savers than earlier cohorts such as Gen X (44 to 59 years old) and baby boomers (60 to 78).

But new data from the California Policy Lab at UC Berkeley show that while consumer debts overall are growing and becoming more difficult to manage for all but the very oldest generation in America, millennials are having the most trouble making their loan payments on time.

In the first quarter, 7.6% of millennial borrowers were at least 30 days late in making monthly payments on their credit card, auto and other loans. That compares with 6% of Gen X, 5.5% of Gen Z (ages 18 to 27) and 3.3% of boomers who fell behind on their loans. The earlier Silent and Greatest generations had even lower delinquency rates.

Unlike for Gen X-ers and boomers, the overall loan delinquency rate among millennials — who make up about one-fourth of California’s population — has now climbed above pre-pandemic levels. And economists worry that financial pressures will only continue to mount, especially with an end to the student loan repayment pause. Among other things, millennials are known for carrying a lot of college loan debt.

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“I see no reason to believe that delinquencies aren’t going to be tracking higher,” said Evan B. White, the California Policy Lab’s executive director.

Foreclosures and personal bankruptcies for all ages are still very low by historical standards, as is the percentage of after-tax income that households are spending on making debt payments, another important indicator of financial stress.

Even so, consumers in California and across the country have been taking on more debt in recent quarters, including credit card borrowing. And 30-day delinquencies have been creeping higher — an early warning sign of potential trouble ahead.

Thus far consumer spending, which accounts for most of the nation’s economic growth, has held up well. But many people are feeling the effects of what’s been an extended period of high inflation and interest rates. A pullback by consumers could have a significant effect on the broader economy.

In the Federal Reserve’s annual report on the economic well-being of Americans, also released this week, about two-thirds of adults surveyed said that changes in the prices they paid in 2023 compared with the prior year had made their financial situation worse. And one-fifth of them said inflation had made things much worse.

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The Fed report found that 72% of adults were at least “doing OK” financially, similar to the 73% figure in 2022 but well below the recent high of 78% in 2021.

U.S. households continue to benefit from a strong labor market, including solid, if slightly smaller, gains in wages. The nation’s unemployment rate was 3.9% in April, the 27th straight month in which the jobless figure has been below 4% — the longest such stretch since the 1960s.

California’s employment situation, however, has not been as strong. The pace of job gains statewide has lagged behind the nation’s. And California’s unemployment rate of 5.3% last month was the highest in the country, reflecting weakness in key sectors such as entertainment, high tech, and business and professional services. The number of unemployed workers in the state has increased by 164,000 over the last 12 months, according to California’s Employment Development Department.

Meanwhile, wage growth has slowed more in California than for the nation overall — and it’s now running below the rate of inflation, meaning workers’ purchasing power is shrinking.

In the 12 months ending in April, the average hourly earnings for all private employees in California were up 1.4% from the prior year. That’s less than half the rate of both wage growth and inflation for the United States. In contrast, from 2016 to 2022, California employees saw wage gains averaging 3% to 6% per year.

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Nationally, aside from student loans, delinquencies on all types of consumer debt have been steadily rising since the end of 2021, according to the New York Fed.

During the first two years of COVID-19, consumers paid down their debts significantly, thanks in part to stimulus checks and other government programs. But since then, credit card delinquencies, in particular, have risen above pre-pandemic levels, and an increasing share of borrowers are maxing out on their plastic, most of them younger adults.

Why millennials seem to be struggling more financially may seem puzzling at first. They’re the best-educated generation and the first to grow up in the digital age. But many millennials also had the misfortune of entering their formative adult lives amid the Great Recession that began in late 2007 and left a trail of job and financial hardships for some years. Saddled with student loans and other debt, they have been slower to move out of their parents’ homes, start families and build wealth compared with earlier generations.

More recently, with home mortgage rates and home prices having soared, many millennials are stuck in apartments and feeling the squeeze of higher rents and prices for certain services that they are likely to need given their stage in life, like day care.

In fact, the Fed’s economic well-being report found that while there was little change for most population groups between 2022 and last year, one notable exception was parents living with their children under age 18. Given that women are having children later, this group would include a disproportionate share of millennials.

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“Those are years when you’re moving into higher expenses of buying homes, buying cars and even setting aside money for children’s college,” said Greg McBride, chief financial analyst at Bankrate.com, which has studied generational differences in handling debt. “When we’ve experienced the type of inflation we’ve had, that really puts the squeeze on tight budgets.”

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Eggs of grapevine-gobbling insect snagged en route to California. Are vineyards at risk?

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Eggs of grapevine-gobbling insect snagged en route to California. Are vineyards at risk?

Eggs of the spotted lanternfly, an invasive species that’s wreaked havoc on crops across more than a dozen states, were recently discovered on a metal art installation that was headed to Sonoma County, one of California’s most esteemed wine regions.

The discovery of the infamous bug’s eggs represents the first time the insect has been seen in California. The California Assn. of Winegrape Gowers, a statewide nonprofit, warns the invasive plant-hopper native to Asia has the potential to affect the entire winegrape industry in California, potentially pushing up prices if an infestation results in a smaller grape crop.

“Spotted lanternflies have been found in 18 states and have proven to pose a serious threat to vineyards,” Natalie Collins, president of the growers group, said. “These invasive insects feed on the sap of grapevines, while also leaving behind a sticky honeydew residue on the clusters and leaves.”

Impacts of the stress on the plant could range from reduced yields — and fewer bottles of wine for consumers — and, if severe and persistent enough, complete vine death and higher wine prices. No adult spotted lanterflies have been reported in the state, Collins said.

California is responsible for an average of 81% of the total U.S. wine production each year, according to the Wine Institute.

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The association warned that if there are additional egg masses in California from other shipments that haven’t been detected “they may produce adult [spotted lanternflies] in the coming weeks with peak populations expected in late summer or early fall.”

The California Department of Food and Agriculture last year developed an action plan to try to eradicate the pests if they were to enter the state. State officials have asked the public to look for egg masses outdoors. If a bug is found, they recommend grabbing it and placing it in a container where it can’t escape, snapping a photo and reporting it to the CDFA Pest Hotline at (800) 491-1899

The metal art installation on which the eggs were found was shipped to California in late March from New York, where the insects have been a persistent problem. After 11 viable egg masses were spotted at the Truckee Border Protection Station, the 30-foot-tall artwork was sent back to Nevada, where officials discovered an additional 30 egg masses. The art was power washed with detergent and then sent on its way again to Truckee, according to the association.

By the time the installation reached Sonoma County on April 4, the owner agreed to allow officials to open up the hollow beams in the artwork to inspect it further. Inside, they found an additional three egg masses and searched until they were confident no other eggs were present.

Spotted lanternflies were first discovered in Pennsylvania in 2014 and quickly spread to nearby states, where they became a nuisance. In New York they proved to be such a problem that officials encouraged residents to kill them on sight. The pest has become so notorious that it made an appearance on “Saturday Night Live” in a 2022 skit where one viewer applauded them for capturing “the unbelievable hubris of the lanternfly.”

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While they feed on more than 100 different plant species, they have a particular affinity for grapevines and a tree known as the “tree of heaven.” The adults, which have the ability to fly short distances, are typically 1 inch long. At rest, with its wings folded, the bug is a dull tan-gray color with black spots. During flight, its open wings feature a bright red, black and white pattern.

The species is often described as a “hitchhiker,” since its egg masses appear similar to cakes of mud and can easily be transported on tractor trailers and semi-trucks. During the first three immature stages of the bug’s life cycle they appear to be black with white spots and later turn red and black with white spots.

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After a pandemic strike, nurses union must pay Riverside hospital millions in damages

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After a pandemic strike, nurses union must pay Riverside hospital millions in damages

The union representing nurses at Riverside Community Hospital has been ordered to pay more than $6 million to the hospital for the fallout from a 2020 strike.

The unusual financial penalty was imposed by an arbitrator who found the 10-day work stoppage during the pandemic violated the terms of the labor agreement signed by HCA Healthcare, which operates the hospital, and Service Employees International Union Local 121RN. The $6.26-million fine, the arbitrator determined, was necessary to compensate the hospital for the cost of replacing workers who walked off the job during the strike, according to a statement released Wednesday.

Nurses walked off the job in June 2020 in an effort to force the hospital to increase staffing and improve safety as COVID-19 infections surged, the union said at the time. But hospital officials argued that because nurses also voiced complaints about shortages of personal protective equipment, the reasons for the strike were too expansive to be allowed under the collective bargaining agreement the two sides had signed.

“Our contract was clear, and the union showed reckless disregard for its members and the Riverside community by calling the strike,” said Jackie Van Blaricum, president of HCA Healthcare’s Far West Division, who was the hospital’s chief executive during the strike. “We applaud the arbitrator’s decision.”

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SEIU 121RN Executive Director Rosanna Mendez objected to the arbitrator’s findings, saying nurses were permitted under their contract to go on strike. She called the arbitrator’s decision “absurd and outrageous.”

“It is absolutely shocking that an arbitrator would expect nurses to not talk about safety issues,” Mendez said, adding that the union was exploring its options to contest the arbitrator’s decision.

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Supreme Court rejects California man's attempt to trademark Trump T-shirts

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Supreme Court rejects California man's attempt to trademark Trump T-shirts

The Supreme Court on Thursday turned down a California attorney’s bid to trademark the phrase “Trump Too Small” for his exclusive use on T-shirts.

The justices said trademark law forbids the use of a living person’s name, including former President Trump.

The vote was 9-0.

Trump was not a party to the case of Vidal vs. Elster, but in the past he objected when businesses and others tried to make use of his name.

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Concord, Calif., attorney Steve Elster said he was amused in 2016 when Republican presidential candidates exchanged comments about the size of Trump’s hands during a debate. Florida Sen. Marco Rubio, whom Trump had mocked as “Little Marco,” asked Trump to hold up his hands, which he did. “You know what they say about guys with small hands,” Rubio said.

After Trump won the election, Elster decided to sell T-shirts with the phrase “Trump Too Small,” which he said was meant to criticize Trump’s lack of accomplishments on civil rights, the environment and other issues.

Legally he was free to do so, but the U.S. Patent and Copyright Office denied his request to trademark the phrase for his exclusive use.

When he appealed the denial, he won a ruling from a federal appeals court which said his “Trump Too Small” slogan was political commentary protected by the 1st Amendment.

The Biden administration’s Solicitor Gen. Elizabeth Prelogar appealed and urged the Supreme Court to reject the trademark request.

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She acknowledged that Elster had a free-speech right to mock the former president, but argued he did not have the right to “assert property rights in another person’s name.”

“For more than 75 years, Congress has directed the U.S. Patent and Trademark Office to refuse the registration of trademarks that use the name of a particular living individual without his written consent,” she said.

Writing for the court, Justice Clarence Thomas said Thursday: “Elster contends that this prohibition violates his 1st Amendment right to free speech. We hold that it does not,”

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