A recap of this week’s top-five news items and resources from the intersection of business and government.
1. House Dems set to overcome GOP for climate, health care win
Later today, the House is scheduled to vote on the “Inflation Reduction Act,” legislation aimed at climate change, health care and taxes. Democrats are expected to narrowly pass the measure despite solid Republican opposition. The legislation passed the equally divided Senate last Sunday with Vice President Kamala Harris casting the tie-breaking vote.
The bill’s largest initiative is about $375 billion over 10 years to encourage businesses and consumers to shift from carbon-emitting to cleaner forms of energy, which marks Congress’ biggest climate investment ever. Health priorities include Medicare prescription drug reform, regulating the price of insulin and an additional $64 billion to help 13 million Americans with privately bought health insurance premiums. $80 billion would boost the IRS budget to hire employees and update technology, with the goal of collecting $120 billion in unpaid taxes. The bill would raise around $740 billion in revenue over the next decade, over a third from government savings from lower drug prices.
Republicans say the legislation’s tax increases will force companies to raise prices, worsening the nation’s 40-year high inflation. They also assert that the bill would raise taxes on lower- and middle-income families.
2. Gas prices fall below $4 a gallon, the lowest point since March
For the first time since early March, the national average for a gallon of gasoline has fallen below $4. AAA reports a national average of $3.99, down 20% from the peak above $5 in June. The lower cost of gas means that there is less drag on the broader economy, as evidenced by federal data released Wednesday that shows inflation eased in July. Although inflation does remains high, job growth has soared and customer spending has been resilient.
Slower economic growth crimps demand everywhere — not only in the United States and Europe but also in emerging markets, said Pavel Molchanov of the investment bank Raymond James. Because oil is a global commodity, a supply or price shock in one part of the world will reverberate everywhere.
3. Employers add 528,000 jobs; unemployment falls to 3.5%
Last Friday, the Labor Department released new jobs numbers, indicating America’s employers added a stunning 528,000 jobs last month, restoring all the positions lost during the pandemic. Unemployment also fell to 3.5%, the lowest level since the pandemic struck in early 2020. Despite ongoing inflation woes and anxiety about a possible recession, these robust numbers indicate the strong jobs market has kept the economy from slipping into a downturn.
“The strength of the labor market in the face of … rate tightening from the Fed already this year clearly shows that the Fed has more work to do,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “Overall, today’s report should put the notion of a near-term recession on the back-burner for now.″
4. Hourly workers still have leverage as hiring booms
More than 4 million Americans have quit their jobs every month since June 2021, a level never seen before last year. A Pew Research survey found that about one in five U.S. workers say they are very or somewhat likely to look for a new job in the next six months. In July, hourly earnings rose 0.5%, an increase of 5.2% over the past year — still not enough to keep up with inflation. For workers on the lower end of the pay scale such as hourly employees, high inflation has erased any raises they may have received, leading many to seek new positions with better pay. Still, hiring is booming and unemployment is at a 50-year low, making job-switching an attractive option for the foreseeable future.
“One major source of worker power is the implicit threat that you’ll quit your job and take another,” said Heidi Shierholz, president of the liberal Economic Policy Institute. “When there’s a huge number of job openings at one time, that implicit threat is real.”
That could change if hiring slows and the U.S. economy weakens. But for the moment, “The momentum is still with the worker,” said Hershbein. “We’re not where we were six to 12 months ago — but the labor market remains strong.”
5. How America’s immigration system contributes to the worker shortage
Workforce struggles are affecting businesses in various industries across the country. Currently, there are over 10 million open jobs in the U.S., and around 6 million unemployed workers. In addition to that discrepancy, labor force participation has not returned to pre-pandemic levels. The imperiled immigration system in the U.S. is only contributing to these immense challenges.
U.S. Census Bureau data shows that net international migration to the U.S. only contributed to a 247,000 person increase to the U.S. between 2020 and 2021 – its lowest levels in decades. Fewer immigrants coming to the U.S. means that critical sources of talent for American businesses are drying up, contributing to the significant workforce problems companies are currently facing. Read more from the America Works Data Center.
Immigration reform is also emerging as an issue of critical importance after the recent passage of the bipartisan CHIPS and Science Act, a $280 billion effort to revitalize the American semiconductor industry. An unusual alliance of industry lobbyists, science advocates and China watchdogs now say the legislation lacks one key element – a small yet critical core of high-skilled foreign workers. From electrical engineering to computer science, the U.S. currently does not produce enough doctorates and master’s degrees in the science, technology, engineering and math fields who can go on to work in U.S.-based microchip plants. Read the full story here.
Only 20 tickets left!
Congressional Roundup: Sept. 14 in D.C.
Receive a front-row seat on Capitol Hill for a program tailored specifically to your top business priorities. Confirmed speakers include Senators Ben Cardin and Chris Van Hollen, and Representatives Andy Harris, Kweisi Mfume, Dutch Ruppersberger, John Sarbanes and David Trone.
Visit our event page as we update our speakers list with more confirmations.