Business

Today’s Business News: Live Updates on United Airlines and Unemployment Claims

Credit…Jefferson Siegel for The New York Times

The National Labor Relations Board on Thursday upheld a 2019 ruling that Tesla had illegally fired a worker involved in union organizing and that the company’s chief executive, Elon Musk, had illegally threatened workers with the loss of stock options if they unionized.

The board ruled that the worker, Richard Ortiz, must be reinstated with back pay, and that Mr. Musk must delete his tweet. The company must also post a notice committing not to violate labor law in the future and announcing that it will undertake the mandated remedies.

Mr. Ortiz had been visibly involved in union organizing, including distributing leaflets in the parking lot of the company’s plant in Fremont, Calif., before he was fired in October 2017. The company said it fired him because he had posted screenshots of employees’ profiles in an internal platform to Facebook. An administrative law judge ruled that it was in retaliation for his organizing efforts.

The judge also found that the company had illegally issued a warning to another employee for taking the screenshots and sending them to Mr. Ortiz, a ruling that the board upheld on Thursday as well.

In May 2018, Mr. Musk posted his tweet, which included the clause, “why pay union dues & give up stock options for nothing?” Both the judge and the board deemed the post an unlawful attempt to coerce employees by threatening their compensation.

The board went further than the judge’s earlier ruling on some questions, finding that Tesla’s confidentiality agreement, which it required employees to sign, unlawfully prohibited them from speaking with the media about Tesla without authorization even if the material was public. The ruling on Thursday requires the company to amend its agreement.

Tesla did not respond to a request for comment.

An NFT collector who goes by the handle @3fmusic placed a last-minute winning bid of 350 ether.

A one-of-a-kind digital collectible item created out of a New York Times technology column sold for more than $500,000 in an auction, the first such sale in the history of the newspaper.

An image of the column — titled “Buy This Column on the Blockchain!” — was turned into a nonfungible token, or NFT, and sold in a heated auction that brought in more than 30 bids on the NFT marketplace website Foundation.

The NFT, a unique bit of digital code that is stored on the Ethereum blockchain and refers to a 14 megabyte graphic of the column hosted on a decentralized file hosting service, cannot be duplicated or counterfeited, making it potentially valuable for collectors. Some NFTs have sold for hundreds of thousands of dollars in recent weeks, with one such sale — a collection of art by the digital artist Beeple — bringing in more than $69 million at auction.

Along with the token, the winner of the auction — should they choose to identify themselves — will receive additional perks including a voice message from Michael Barbaro, the host of “The Daily” podcast. All proceeds from the auction will be donated to the Neediest Cases Fund, a Times-affiliated charity.

The winner of the auction, an NFT collector who goes by the handle @3fmusic, placed a last-minute winning bid of 350 ether, a digital currency, which translates to roughly $560,000 at Wednesday’s exchange rates. A link on the user’s profile led to the website of a Dubai-based music studio.

@3fmusic could not be reached as of Wednesday afternoon. The user appeared to be an avid collector of NFT artwork. In addition to the Times token, their collection on Foundation also includes such works as “The result of 2020,” an image of a sad-looking Kermit the Frog, and “Mushy’s Midafternoon Nap,” an image of a cartoon toadstool sitting on a log.

By extending the program, lawmakers gave both lenders and small businesses additional time to adjust to an abrupt overhaul to the program announced in late February.
Credit…Stephen Speranza for The New York Times

Congress gave final approval on Thursday to a two-month extension of the Paycheck Protection Program, a popular federal loan program for small businesses, as well as giving the Small Business Administration an additional 30 days to process loans submitted before the new May 31 deadline.

The House approved the extension on a 415-to-3 vote earlier this month, and the Senate on Thursday cleared the legislation on a 92-7 margin. The program was set to expire on March 31 without congressional action.

“It’s clear that the most vulnerable small businesses will need help beyond March 31, so we must pass this extension as quickly as possible,” said Senator Ben Cardin, Democrat of Maryland and one of the lawmakers who introduced the legislation. “This common sense, bipartisan bill will meet the continued demand for P.P.P. loans.”

By extending the program, which was first established in the $2.2 trillion stimulus law passed last March, through May 31, lawmakers gave both lenders and small businesses additional time to adjust to an abrupt overhaul to the program announced by the Biden administration in late February. The changes led to gridlock and uncertainty as self-employed people and the smallest of businesses raced to take advantage of more generous aid freed up by the overhaul.

“The Paycheck Protection Program has been instrumental in helping small businesses keep their doors open and continue paying their employees during the pandemic, but many small businesses need additional time to access this lifeline and have their loans processed,” Senator Susan Collins, Republican of Maine, said in a statement urging her colleagues to support the legislation earlier this week. “The nearly 100 groups that support our legislation agree that we need to extend this vital program. I urge our colleagues to support this bipartisan bill.”

Banks have remained healthy through the pandemic, helped in part by Fed policy responses that kept markets from melting down more disastrously last March.
Credit…J. Scott Applewhite/Associated Press

The Federal Reserve said Thursday that the pandemic-era limitations it had placed on banks that restricted share buybacks and dividend payouts will end midway through 2021 for most firms, a victory for some of America’s biggest financial institutions.

“Temporary and additional restrictions on bank holding company dividends and share repurchases currently in place will end for most firms after June 30, after completion of the current round of stress tests,” the Fed said in a release, a reference to its annual review that gauges a bank’s ability to withstand severe economic conditions.

Whether banks are able to restart normal payouts, which help to boost their share prices and reward investors, will hinge on whether they have capital above their required minimum levels. Since December, the amount that the banks can pay out to shareholders has been limited based on the company’s income over the past year. Before December, they had been barred from buying back shares or increasing dividends.

The Fed’s goal was to conserve capital — sources of funding that are easy to turn into cash in a pinch — so that banks would stay healthy and remain able to lend even as the United States economy took a major hit from the coronavirus pandemic and the lockdowns meant to contain it. Banks have remained healthy through the episode, helped in part by Fed policy responses that kept markets from melting down more disastrously last March.

“The banking system continues to be a source of strength, and returning to our normal framework after this year’s stress test will preserve that strength,” Randal K. Quarles, the Fed’s vice chair for supervision, said in a statement.

Still, restrictions could remain for some. Any “bank that falls below any of its minimum risk-based requirements in the stress test will remain subject to the additional restrictions for three extra months, through Sept. 30,” according to the Fed’s release.

And if they are still below after that, the central bank’s normal minimum capital requirement framework “will impose even stricter distribution limitations.”

The Ever Given, stuck in the side of the Suez Canal. This is a handout photo made available by the Suez Canal Authority.
Credit…EPA, via Shutterstock

At another time, the blocking of the Suez Canal by a container ship might have sent oil prices soaring. But the reaction has been muted on this occasion because the market was in the midst of pulling back after hitting its highest levels in more than a year in mid-March.

So far, the oil market has largely shrugged off the interruption of traffic through the canal, which has been blocked since Tuesday when the massive vessel, the Ever Given, became stuck.

Analysts say the problem is unlikely to alter more important fundamentals, including worries that an economic recovery from the pandemic may be slower than expected, and a realization that huge volumes of additional oil supplies could eventually come on the market from the Organization of the Petroleum Exporting Nations and other producers.

Prices for Brent crude, the international benchmark, fell by 2.65 percent on Thursday to $62.70 a barrel after rising on Wednesday. Essentially, analysts say, the Suez situation is providing a short-term cushion for a weak market.

“The oil market is aware that the Suez incident is a one-off boost and will be resolved sooner or later,” said Bjornar Tonhaugen, head of oil market research at Rystad Energy, a consulting firm. Of course, if the bottleneck persists, shipowners and their clients will need to ponder whether to continue waiting at the entrances to the canal or turn around and head for the Cape of Good Hope at the tip of Africa, adding weeks to the trip.

Nevertheless, the blocked canal is a major inconvenience with around 30 fuel-carrying ships either waiting to cross the canal or approaching it. According to Kpler, a market research firm, the tankers include a vessel bringing crude from Basrah in Iraq to Spain for Repsol, the Spanish oil company; and another chartered by Chevron, the American giant, headed toward China with crude from Kazakhstan.

“There will be refineries and product consumers who will experience some short-term problems,” said Alex Booth, head of research at Kpler.

On Thursday, tugboats and dredgers were trying to dislodge the vessel, which ran aground during a sandstorm on Tuesday. The company working on the operation said it could take days or even weeks to remove it.

According to Kpler, the tankers that are likely to be delayed hold 8.8 million barrels of crude oil, a little less than one-tenth of a day’s global consumption and worth about $550 million at current prices. There also 15 vessels carrying various petroleum products like jet fuel and gasoline and five giant carriers of liquefied natural gas.

President Biden speaks about the stimulus plan in Columbus, Ohio, last week.
Credit…Doug Mills/The New York Times

President Biden used the opening remarks of his first formal news conference on Thursday to celebrate what he cast as encouraging signs for the American economy since the passage of his $1.9 trillion economic rescue bill, citing new forecasts that show economic growth for the year could reach 6 percent.

“Since we passed the American Rescue Plan, we have started to see new signs of hope in our economy,” Mr. Biden said. He pointed to economic forecasters raising their estimates for growth this year after the passage of the bill.

Mr. Biden also told reporters that his administration had now delivered 100 million direct payments of $1,400 per individual to low- and middle-income Americans, which were funded by the relief bill that he signed into law this month. The bill also included extended and expanded unemployment benefits, new tax credits for parents that are meant to fight poverty and money for vaccine deployment, school reopenings and Covid testing, among other provisions.

He cited news from the Labor Department on Thursday that initial claims for state unemployment benefits fell last week to 657,000, a decline of 100,000 from the previous week.

“That’s the first time in a year the number’s fallen below the prepandemic high,” he said.

The president stressed that the economy still had a long road of recovery ahead of it, and that there were “still too many Americans out of work, too many families hurting.”

But, he said, “I can say to you, the American people: Help is here and hope is on the way.”

Mr. Biden is set to travel to Pittsburgh next week to unveil the next phase of his economic agenda, a pair of infrastructure packages that could cost between $3 trillion and $4 trillion. Its details have not been finalized, but administration officials have settled on a strategy that breaks the effort into two proposals.

Mr. Biden said near the end of the news conference that his next major effort would be “to rebuild the infrastructure, both physical and technological infrastructure in this country, so that we can compete and create good-paying jobs.” He mentioned capping oil wells, repairing roads and bridges, replacing aging pipes that leach lead into water and helping the United States close an infrastructure-spending gap with China.

The planned first package will spend as much as $2 trillion on physical infrastructure development, according to documents and people familiar with the plans. It will center on the construction of roads, bridges, rail lines, ports, electric vehicle charging stations, and improvements to the electric grid and other parts of the power sector. It will also boost the development of clean-energy projects and projects in other “high-growth industries of the future” like 5G telecommunications, and it includes money for rural broadband, advanced training for millions of workers, and one million affordable and energy-efficient housing units.

The second package includes investments in what progressive groups call the nation’s human infrastructure, including education and caregiving. It would make community college free, create universal prekindergarten, seek to reduce the cost of child care, establish a national paid leave program and include home-based care assistance for older adults.

Mr. Biden’s aides have drawn up plans to offset the first package, at least in part, with corporate tax increases, including raising the corporate income tax rates and pursuing a variety of efforts to increase taxes on the income that multinational companies earn and book outside the United States. The plans to offset the second package include Mr. Biden’s proposals to raise the top marginal federal income tax rate from 37 percent to 39.6 percent, and other measures meant to increase taxes on people and households earning more than $400,000 a year.

Keri Putnam, the chief executive of the Sundance Institute, which she joined in 2010.
Credit…George Frey/EPA, via Shutterstock

After more than a decade running the Sundance Institute, Keri Putnam will step down as chief executive in August. A search committee will be formed to find her replacement.

Ms. Putnam joined Sundance in 2010 after years working in the indie film world for companies like HBO and Miramax.

She expanded Sundance’s global footprint, bringing the organization’s film festival — held each year in Park City, Utah — to audiences in London and Hong Kong and offering its lab programs across the United States, Mexico, East Africa and the Middle East. She also spearheaded new programs for artists seeking production, financing and distribution of their work and prioritized the institute’s commitment to underrepresented voices.

“After an incredibly rewarding decade, and following the success of our first-ever online festival, I have decided it’s the right time for me to step down as C.E.O. of Sundance Institute,” Ms. Putnam said in a statement. “Leading Sundance through this volatile era in media together with such an impassioned team has been one of my greatest joys.”

Most of United’s new flights will connect cities in the Midwest to tourist destinations.
Credit…Sebastian Hidalgo for The New York Times

Airlines are adding new flight routes and reviving old ones, the latest sign that demand for leisure travel is picking up as the national vaccination rate moves higher.

United Airlines said Thursday that it plans to add more than two dozen new flights starting Memorial Day weekend. Most will connect cities in the Midwest to tourist destinations, such as Charleston, Hilton Head and Myrtle Beach in South Carolina; Portland, Maine; Savannah, Ga.; and Pensacola, Fla. United also said it planned to offer more flights to Mexico, the Caribbean, Central America and South America in May than it did in May 2019.

The airline has seen ticket sales rise in recent weeks, said Ankit Gupta, United’s vice president of domestic network planning and scheduling. Customers are booking tickets further out, too, he said, suggesting growing confidence in travel.

“Over the past 12 months, this is the first time we are really feeling more bullish,” Mr. Gupta said.

Southwest Airlines also revealed plans on Thursday to expand service in the coming months. Between late May and early June, the airline plans to add flights to Myrtle Beach from Baltimore, Chicago, Nashville, Dallas, Pittsburgh, Atlanta, Columbus and Indianapolis. It also said it would add flights out of Austin, Texas, to a handful of cities this summer.

Airports have been consistently busier in recent weeks than at any point since the coronavirus pandemic brought travel to a standstill a year ago. Well over one million people were screened at airport security checkpoints each day over the past two weeks, according to the Transportation Security Administration, although the number of screenings is still down more than 40 percent compared with the same period in 2019.

Most of the new United flights will be offered between Memorial Day weekend and Labor Day weekend aboard the airline’s regional jets, which have 50 seats. The airline said it would also add new flights between Houston and Kalispell, Mont.; Washington and Bozeman, Mont.; Chicago and Nantucket, Mass.; and Orange County, Calif., and Honolulu.

All told, United said it planned to operate about 58 percent as many domestic flights this May as it did in May 2019 and 46 percent as many international flights. Most of the demand for international travel has been focused on warm beach destinations that have less-stringent travel restrictions.

“That is one of the strongest demand regions in the world right now,” Mr. Gupta said. “A lot of the leisure traffic has sort of shifted to those places and it’s actually seen a boom in bookings.”

Delta Air Lines issued a similar update last week, announcing more than 20 nonstop summer flights to mountain, beach and vacation destinations. Both Delta and United have said in recent weeks that they have made substantial progress toward reducing how much money they are losing every day.

Richard Clarida, the Federal Reserve vice chair.
Credit…Jonathan Crosby/Reuters

The Federal Reserve’s vice chair, Richard H. Clarida, pushed back on concerns raised by two prominent economists — Lawrence H. Summers, the former Treasury secretary, and Olivier J. Blanchard, former chief economist at the International Monetary Fund — that big government spending risks of out-of-control inflation.

“They have both correctly pointed out that the U.S. has a lot of fiscal support this year,” Mr. Clarida said, speaking on an Institute of International Finance webcast. “Where I would disagree is whether or not that is primarily going to represent a long-term, persistent upward risk to inflation, and I don’t think so.”

Mr. Clarida said that there’s a lot of room for the economy to recover — some 9.5 million jobs are missing compared to before the pandemic — and that the effect of the government’s relief spending will diminish over time. He also pointed out that while there is pent-up demand on the part of spenders, there is also pent-up supply, because the service sector has been shut for months on end.

“At the Fed we get paid to be attentive and attuned to inflation risks, and we will be,” he said. But he noted that forecasters don’t see “undesirable upward pressure” on inflation over time.

Mr. Clarida did acknowledge that price gains are likely to move up over the next few months, but said that he expects most of that “to be transitory” and for inflation to return to “or perhaps run somewhat above” 2 percent in 2022 and 2023. But he emphasized that the Fed is now aiming for 2 percent annual price gains on average, so such a result would be welcome.

“This outcome would be entirely consistent with the new framework we adopted in August 2020,” he said.

The administration has ushered a $1.9 trillion relief package through Congress and into law, adding to a $900 billion relief package enacted in December 2020, prompting many economists to project faster growth this year. Mr. Clarida spoke positively about the outlook for the economy.

“This year the U.S. looks like it’s going to be a locomotive for the global economy,” Mr. Clarida said.

Now, the Biden administration is pulling together an up-to-$3 trillion infrastructure package. While Mr. Clarida declined to comment on specific legislation or proposals, he did say broadly that “infrastructure is needed, and the supply-side of the economy will be boosted if that money is well spent and targeted.”

The ExxonMobil refinery in Baytown, Texas. The American Petroleum Institute, the oil industry’s largest trade group, has come out in favor of a price on carbon.
Credit…Brandon Thibodeaux for The New York Times

The oil industry’s largest trade group on Thursday came out in favor of a price on carbon for the first time as part of a broader strategy to combat climate change.

The move by the group, the American Petroleum Institute, signals that the oil industry is eager to be taken seriously by the Biden administration, which is working on a large infrastructure and climate change proposal. The administration’s plan is expected to promote greater use of renewable energy and electric vehicles and reducing planet-warming emissions from the burning of fossil fuels like oil and natural gas.

Economists have long argued that taxing each ton of carbon dioxide and other greenhouse gases generated by businesses and individuals is the most efficient and fastest way to fight climate change. But proposals to put a price on carbon through taxes or by other means have failed to gain political traction in large part because of opposition from oil and gas companies and their lobbyists.

Exxon Mobil and a few other large oil and gas companies have voiced support for carbon taxes for years, partly because they believed it would encourage utilities to switch from coal to cleaner-burning natural gas. But environmental groups have said that those oil companies never aggressively lobbied Congress to enact a carbon tax.

Most Republican lawmakers oppose carbon taxes and Democrats like President Biden have seemingly given up on the idea, too, after an effort to pass a cap-and-trade bill failed during the Obama administration when Democrats had large majorities in both houses of Congress. A cap-and-trade system also imposes a cost on polluters but it works differently. The government puts a cap on overall emissions that drops over time and businesses have to purchase permits to emit greenhouse gases.

A.P.I. said in a statement that it wants lawmakers to couple a carbon price, which could be in the form of a tax or a cap-and-trade system, with federal incentives for capturing and storing carbon emitted from power plants and the development and use of hydrogen as a source of energy. The group also committed to work to reduce the flaring of methane — a powerful greenhouse gas — from oil fields.

“Confronting the challenge of climate change and building a lower-carbon future will require a combination of government policies, industry initiatives and continuous innovation,” Mike Sommers, the institute’s president, said in a statement. “We urge lawmakers to support market-based policies that foster innovation, including carbon pricing.”

Mark Zuckerberg of Facebook, Jack Dorsey of Twitter and Sundar Pichai of Google appeared at a hearing about how disinformation spreads across their platforms. The hearing was being held by two subcommittees of the larger House Energy and Commerce Committee that focus on technology issues.

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Tech Executives Testify on Disinformation

Mark Zuckerberg of Facebook, Sundar Pichai of Google and Jack Dorsey of Twitter testified remotely before Congress on “misinformation and disinformation plaguing online platforms.”

“I don’t think anyone wants a world where you can only say things that private companies judge to be true.” “Our mission is to organize the world’s information, and make it universally accessible and useful.” “We believe in free debate and conversation to find the truth. At the same time, we must balance that with our desire for our service not to be used to sow confusion, division or destruction.” “There are two faces to each of your platforms. Facebook has family and friends, neighborhood, but it is right next to the one where there is a white nationalist rally every day. YouTube is a place where people share quirky videos, but down the street, anti-vaxxers Covid deniers, QAnon supporters and Flat Earthers are sharing videos.” “You’ve failed to meaningfully change after your platform has played a role in fomenting insurrection, and abetting the spread of the virus and trampling American civil liberties. And while it may be true that some bad actors will shout ‘fire’ in the crowded theater by promoting harmful content, your platforms are handing them a megaphone to be heard in every theater across the country and the world. Your business model itself has become the problem.” “How is it possible for you not to at least admit that Facebook played a central role or a leading role in facilitating the recruitment, planning and execution of the attack on the Capitol?” “Chairman, my point is that I think that the responsibility here lies with the people who took the actions to break the law, and take and do the insurrection and secondarily, also the people who spread that content, including the president, but others as well.” “Your platform bears some responsibility for disseminating disinformation related to the election and the ‘Stop the Steal’ movement that led to the attack on the Capitol. Just a yes or no answer.” “Congressman, it’s a complex question. We —” “OK, we’ll move on. Mr Dorsey.” “Yes, but you also have to take into consideration a broader ecosystem. It’s not just the technology platforms we use.” “We’re all aware of big tech’s ever-increasing censorship of conservative voices and their commitment to serve the radical progressive agenda by influencing a generation of children — removing, shutting down or canceling any news, books and even now, toys, that aren’t considered woke.” “First of all, do you recognize that there is a real concern, that there’s an anti-conservative bias on Twitter’s behalf? And would you recognize that this has to stop if this is going to be, Twitter is going to be viewed by both sides as a place where everybody is going to get a fair treatment?” “We don’t write policy according to any particular political leaning. If we find any of it, we route it out.”

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Mark Zuckerberg of Facebook, Sundar Pichai of Google and Jack Dorsey of Twitter testified remotely before Congress on “misinformation and disinformation plaguing online platforms.”CreditCredit…Via Reuters
A Nike store in Beijing on Thursday. Nike shares fell after it was criticized on Chinese social media over a statement it made about reports of forced labor in Xinjiang.
Credit…Greg Baker/Agence France-Presse — Getty Images

Stocks on Wall Street gained on Thursday as the latest weekly data showed that state unemployment claims fell to the lowest level since the start of the pandemic.

The S&P 500 index rose 0.5 percent, and the Nasdaq composite gained 0.1 percent after two days of losses.

On Thursday, the Labor Department reported that initial claims for unemployment benefits fell last week to 657,000, a decrease of 100,000 from the previous week. On a seasonally adjusted basis, new state claims totaled 684,000.

As Europe grapples with an emerging third wave of the pandemic, Germany has canceled a strict five-day lockdown that was set to start at the beginning of April. Chancellor Angela Merkel said she took “ultimate responsibility” for the reversal, which came after a large backlash to the plan, even from within her own party, and anger from retailers and restaurants.

“In the near term, this avoids the negative economic consequences of a lockdown,” Paul Donovan, an economist at UBS Global Wealth Management, wrote in a note. But over a longer a period of time, markets will question whether this will just delay Germany’s ability to restrain the virus and slow down the recovery, he added.

European stocks were lower Thursday. The Stoxx Europe 600 index lost 0.1 percent and the FTSE 100 in Britain fell 0.6 percent.

Oil prices dropped. Futures of Brent crude, the European benchmark, fell nearly 4 percent to $61.95 a barrel and futures of West Texas Intermediate, the U.S. benchmark, fell more than 4 percent to about $58.56 a barrel.

On Wednesday, oil prices jumped more than 5 percent after a container ship got stuck in the Suez Canal, blocking one of the world’s key shipping routes, which is also an important artery for the flow of oil. On Thursday, efforts to dislodge the ship were ongoing as some 150 other ships were waiting on either side.

The company trying to move the ship warned it could take weeks. Shipping has already been heavily disrupted by the pandemic, sending freight prices soaring.

  • Nike shares dropped more than 3 percent and H&M shares fell close to 2 percent in Stockholm after Chinese social media users called for a boycott of the companies. The two fashion retailers published statements expressing concern over reports of forced labor in Xinjiang. Nike’s statement said the company didn’t source cotton from the region, but the online attacks have called it a boycott of the region’s cotton farmers.

  • Yields on 10-year Treasury notes were unchanged at about 1.62 percent.

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CreditCredit…By Sean Dong

In the On Tech newsletter today, Shira Ovide explains that the Section 230 debate reflects our discomfort with the power of Big Tech and our desire to hold someone accountable.

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