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The Week in Business: Creeping Layoffs

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The Week in Business: Creeping Layoffs

What started as a wave of ominous job cuts by expertise corporations is rippling by way of different industries, most lately media and retail. Within the final week alone, layoffs, or experiences of coming layoffs, have swept The Washington Publish, Vox and Saks.com. Including to the tens of hundreds of unemployed tech staff, Spotify mentioned on Monday that it was reducing 6 % of its work drive, or about 600 workers, and IBM introduced on Wednesday that it will shed 3,900. Tech’s challenges could also be considerably explicit to the sector — employers have largely pointed to overhiring in the course of the pandemic as a motive for the current cuts — however its upheaval could be an indicator of the place the financial system is heading. But at the same time as layoffs seem to creep throughout the job market, unemployment claims total stay low, and hundreds of thousands of jobs are open throughout the nation.

Regardless of what may appear to be apparent harbingers of an financial downturn — mass layoffs, for instance — there are different indicators of relative well being. Take gross home product, an indicator that was not as dependable at the start of the pandemic however has since normalized. The newest report on G.D.P., when adjusted for inflation, exhibits the U.S. financial system grew at an annual fee of two.9 % within the fourth quarter of 2022, suggesting that it has been largely resilient within the face of inflation, excessive rates of interest and the conflict in Ukraine. Although only a few months in the past, G.D.P. numbers met one commonplace customary for figuring out a recession, the newest knowledge would appear to assuage fears. However solely to a sure extent —  many economists nonetheless count on a recession to start later this yr.

Greater than 4 years after he posted a tweet telling his followers that he had secured the funding to take Tesla non-public, Elon Musk, now the chief government of each Tesla and Twitter, appeared in courtroom to defend that assertion in opposition to a lawsuit. He supplied seven hours of testimony over three days, arguing that funding for a cope with Saudi Arabia’s sovereign wealth fund was plentiful however dodging a query about whether or not a selected greenback quantity had been mentioned. Within the 2018 tweet, Mr. Musk instructed that he had secured $420 a share (a favourite variety of the billionaire’s). Legal professionals for the plaintiffs, a bunch of Tesla buyers, are attempting to construct a case to show that Mr. Musk’s actions led to the wild swings in Tesla’s inventory, inflicting them to lose cash. Some consultants imagine they’re prone to succeed: Final yr, the senior U.S. District Court docket choose listening to the case dominated that he agreed with the plaintiffs that Mr. Musk was “intentionally reckless” — buyers’ phrases — when he posted the tweet.

The Federal Reserve took its first step towards slowing its rate of interest will increase final month, when it broke a streak of aggressive three-quarter-point will increase with a half-point one. At its assembly on Tuesday, the central financial institution might decide to sluggish its tempo additional. In current weeks, Fed officers together with Susan M. Collins, the president of the Federal Reserve Financial institution of Boston, and Christopher Waller, a Fed governor, have mentioned the opportunity of a quarter-point transfer. “There seems to be little turbulence forward, so I at present favor a 25-basis-point improve,” Mr. Waller mentioned. However he echoed his colleagues in emphasizing that their marketing campaign to struggle inflation was not over but, and Jerome H. Powell, the Fed chair, has made clear officers’ intention to boost the coverage rate of interest to five.1 % by the top of the yr.

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State board approves protections for hot workplaces

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State board approves protections for hot workplaces

Relief is on the horizon for California fast-food workers operating hot kitchen appliances, logistics workers in vast inland warehouses that lack cooling equipment and others laboring in hot indoor settings as a state agency Thursday approved new workplace protections against excessive heat.

A standards board at the California Division of Occupational Safety and Health voted unanimously to adopt safety measures that require employers to provide cooling areas and monitor workers for signs of heat illness when indoor workplaces temperatures reach or surpass 82 degrees.

If temperatures climb to 87 degrees, or workers are made to work near hot equipment, employers must take additional safety precautions by cooling the work site, allocating more breaks, rotating out workers or making other adjustments.

The new rules still must undergo a procedural legal review. If that review process is expedited the new rules could be in effect by late July or early August. Otherwise, they are likely to be in place by October.

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Thursday’s vote marked the end of more than five years of delays in the effort to strengthen the state’s requirements for indoor working conditions. Most recently, a scheduled vote on the rules in March was cancelled after finance officials from Gov. Gavin Newsom’s administration raised last-minute concerns about the costs California prisons and other public entities would incur trying to adhere to the new rules.

In light of those concerns, the rules were amended to exclude state and local correctional facilities.

During a public comment period before the board voted, several people urged the board to pass the long-awaited measure.

Tim Shadix, legal director at Warehouse Worker, an advocacy group, said it “would be a tragedy,” if workers become sick from heat exposure this summer and hoped to see the rules in place “well before the end of summer.”

AnaStacia Nicol Wright, a policy manager at Worksafe, voiced concern about the decision to exclude correctional facilities, which employ tens of thousands of people in “archaic buildings with little protection from temperatures.”

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Wright pressed the board should move swiftly to put pass separate protections for correctional staff and incarcerated workers.

California, in 2006, became the first state in the nation to implement heat standards for outdoor work, requiring employers to provide access to shade and water, and cool-down rests when workers need them. In high heat conditions, defined as temperatures of 95 degrees or higher, employers are required to remind workers of safe practices, encourage breaks and drinking water, and observe them for signs or symptoms of heat illness.

In 2016, the California Legislature turned its attention to indoor conditions, directing the Cal/OSHA to develop an indoor heat standard by 2019. The agency drafted a proposal mirroring the state regulations that protect outdoor workers, but the rule-making process moved slowly, blowing past the 2019 deadline.

Thursday’s vote came against the backdrop of recent shake-ups on the board that approved the rules.

Earlier this month, the Newsom administration removed worker safety expert Laura Stock and demoted David Thomas from his position as chair of the board after they criticized the 11th-hour decision to delay the vote in March.

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Head of the California Labor Federation Lorena Gonzalez criticized the move, saying neither she nor other labor leaders had been consulted in advance.

“Obviously, we are disappointed. We think it’s a big loss for the board,” Gonzalez said. “We hope it’s not retribution for standing up for workers on heat standards.”

In recent years, as the state has experienced record-breaking heat waves, cooks, warehouse workers and delivery drivers have repeatedly raised concerns about high temperatures.

Victor Ramirez, who has worked in various warehouses in the Inland Empire over the past two decades, most recently at a facility in Fontana operated by Menasha Packaging, said many of the warehouses he’s worked in did not have air conditioning or fans. In recent years, fans and air conditioning have become more common, but they “aren’t very effective and those warehouses still feel hot,” he said.

“We need this rule in place right now. Workers need protections, they need training so they know the dangers of the job and working in heat,” Ramirez said. “It’s a basic right to work in a safe environment.”

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MoviePass secures investment from Comcast-backed venture firm amid comeback attempt

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MoviePass secures investment from Comcast-backed venture firm amid comeback attempt

MoviePass, the infamous cinema subscription service that crashed and burned in 2020, has secured a new investor amid an ambitious comeback attempt.

The New York-based company announced Thursday that it had landed an investment from Forecast Labs, a venture group owned by Comcast. MoviePass did not disclose the amount invested or other financial terms.

The plan is for Forecast Labs to grow MoviePass’ subscriber base through TV advertising.

“Today’s investment will accelerate our mission to bring new technology and innovation to the film community that will spur growth and drive higher traffic to theaters,” Stacy Spikes, chief executive and co-founder of MoviePass, said in a statement.

“We are also continuing to invest in the development of our cinematic marketplace so that studios and partner theaters can see maximum value by engaging directly with movie fans on the platform.”

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Arjun Kapur, managing partner at Forecast Labs, added in a statement that the venture firm sees “tremendous value” in the new MoviePass and is confident in its ability to “enhance … the brand.”

The investor announcement comes more than four years after MoviePass filed for bankruptcy due to a lack of funding needed to sustain its perplexing business model.

The service — which offered subscribers access to screenings at various movie theaters for a monthly fee — began to unravel after Helios and Matheson Analytics Inc. purchased a majority stake in the company and dramatically dropped the monthly subscription price to $9.95 instead of $30 to $50.

Despite courting fame and millions of customers, the new model proved too good to be true, tanking MoviePass and its owner’s stock value in about three years. The fall of MoviePass spurred shareholder lawsuits and an investigation by the New York attorney general’s office.

Last month, HBO released a documentary chronicling the meteoric rise and spectacular demise of MoviePass.

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Spikes revived the company in 2022 with the help of a crypto-focused gaming software and investment firm and has been mounting a comeback. Last year, the entrepreneur told The Times that he had the support of 25% of exhibitors — “totally different from before” — and seemed optimistic that other theaters would follow.

“The $10 price point was … just dumb,” Spikes said at the time.

“There’s no way to offer a subscription plan where you don’t control the cost and you make it cheaper than a movie ticket. … Just don’t set ‘unlimited’ at a $10 price point. Voilà, you’ve avoided disaster.”

Times staff writer Stacy Perman contributed to this report.

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With fires burning again, is California becoming uninsurable?

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With fires burning again, is California becoming uninsurable?

Thursday marks the beginning of summer, but early wildfires have already scorched the outskirts of L.A. and the Bay Area. Many California homeowners find themselves more vulnerable than ever as major insurers abandon areas threatened by climate change-fueled fires. Gov. Gavin Newsom and state Insurance Commissioner Ricardo Lara have responded with efforts to ease regulations and boost coverage.

Insurance industry representative Rex Frazier argues that state leaders have the right idea: Burdensome regulations are making a difficult situation worse. But consumer advocate Jamie Court contends that the state needs to take a harder line by requiring coverage of homeowners who meet fire protection standards.

California’s sclerotic insurance bureaucracy isn’t helping anyone

By Rex Frazier

As the leader of an association of homeowners’ insurers, I frequently hear from anxious Californians who are losing their coverage and wondering whether the situation will get better. My answer is that I am not one of those who believes California is facing an uninsurable future. The problems we face are difficult but solvable.

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The insurance challenges the state is facing today have roots in the past. While the giant wildfires of 2017 and 2018 had a huge impact, requiring insurers to pay claims equivalent to more than 20 years of profits, the state’s insurance problems predate the fires. California’s failure to update the old rules governing insurance rates have long prevented insurers from preparing for a hotter, drier future.

California’s laws are a national outlier. The rules for projecting wildfire losses, a crucial aspect of calculating insurance rates, are a case in point. California is the only state in the country that requires property insurers to project future wildfire losses based on average wildfire losses over the last 20 years, regardless of where they plan to do business. Every other state allows insurers to base their rates on where they intend to sell insurance, taking into account the degree of fire risk to the properties they plan to insure.

California is also a national outlier on rate approval in that it’s a “prior approval” state. That means an insurer must receive approval from the California Department of Insurance before it may increase or decrease rates.

While California law promises a 60-day approval period, it often takes six months or more to get permission to change rates. At times of high inflation, slow approvals require insurers to leave the highest-risk areas or face financial ruin.

A less visible but nevertheless critical issue is the financial well-being of the FAIR Plan, a pool of insurers providing last-resort coverage. The FAIR plan is growing well beyond its ability to pay claims for large fires. And if it runs out of money, it will charge insurers, as members of the pool, a fee in addition to claims from their own customers for the same fire. If that fee gets large enough, it could devastate insurers. We must address this.

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Fortunately, Insurance Commissioner Ricardo Lara has recognized the need to fix these problems. His Sustainable Insurance Strategy would update California’s rate regulations and approval process while requiring insurers to make commitments to cover high-risk areas. The proposal is far from perfect, but we look forward to working with all the interested parties to increase insurance availability and restore the health of the market.

While state regulations and processes can be changed, we remain vulnerable to forces that are beyond our control. Inflation makes repairing and rebuilding homes much more expensive, driving up rates. Longer dry seasons increase the chances of devastating fires, having the same effect in the short term. We need a system that acknowledges these realities.

But raising rates is not a long-term solution. Reducing them over time will require consensus on how to handle combustible fuels near valuable property.

That will take a lot of time and effort. California homeowners’ insurers are ready to do our part to secure an insurable future for the state.

Rex Frazier is the president of the Personal Insurance Federation of California.

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Newsom needs to look out for homeowners, not insurance companies

By Jamie Court

Home insurance companies have put Californians in a bind by refusing to sell new policies or renew many customers, leaving them with few coverage options. That has driven more homeowners into the high-cost, low-benefit FAIR Plan, a pool of insurers required to provide last-resort coverage.

Gov. Gavin Newsom recently announced legislation to allow insurance companies to hike rates more quickly in an effort to woo them back to the state. While that will certainly leave Californians paying higher rates, it’s not likely to get more people covered.

Insurance companies are refusing to write new policies despite substantial recent rate hikes — an average of 20% for State Farm and 37% for Farmers, for example. What has them spooked is greater exposure through the FAIR Plan, which increasingly covers expensive homes in wildfire-prone areas. Insurers are on the hook for FAIR Plan claims, and their exposure increases with market participation, so they limit their participation.

Only freeing people from the FAIR Plan will solve this. The most practical way to do that is to require insurers to cover people who harden their homes against fire. We have mandatory health and auto insurance, so why shouldn’t we have it for homes that meet standards?

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Hardening is expensive enough that most homeowners are unlikely to do it without guaranteed coverage. Mandating insurance is therefore the best way to mitigate wildfire risks.

Mitigation efforts are already working, with major claim events dwindling in recent years. Moreover, insurers recovered billions from the utilities responsible for major fire losses in 2017 and 2018.

The current crisis was precipitated not so much by wildfires as by investment losses and rising construction costs. Insurers responded by tightening underwriting and raising rates.

Insurance companies got their hikes, but they refuse to write new business here until they get more. Unfortunately, Newsom and Insurance Commissioner Ricardo Lara are ready to give them what they want.

Last week, Lara proposed regulations attempting to address the crisis. Echoing a legislative proposal that failed last year, they would allow companies to raise rates based on black-box climate models. Florida tried a similar approach, and its rates are now about double California’s. Florida’s insurer of last resort covers 20% of its homeowners, roughly five times the share in California.

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The proposed regulations purport to require insurers to increase sales to homeowners in “distressed areas” by 5%. However, they would not require them to charge prices consumers can afford. The requirement to cover these areas could also be waived if an insurer shows it’s “taking reasonable steps to fulfill its insurer commitment.” And the plan gives companies two years to comply but lets them start charging all policyholders higher rates immediately.

Newsom cheered the proposal, essentially arguing that California’s insurance rates are too damn low. He didn’t mention that California insurers’ profits have generally outpaced the national average over the last 20 years.

Newsom’s latest legislative proposal would limit public participation in rate-setting by cutting out so-called intervenors such as Consumer Watchdog, which can challenge unnecessary increases and has saved consumers more than $6 billion over 22 years.

Throwing more money at insurers won’t end the crisis; requiring them to cover responsible homeowners will.

Jamie Court is the president of the nonprofit Consumer Watchdog.

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