J.M. Smucker Co. is pouring sugar on thousands of employees in the form of $1,000 bonuses.
The Orrville food company announced the employee bonuses as part of its third quarter earnings report released Friday morning.
Corporate earnings were significantly higher than a year ago in large part because of federal tax reform that lowered corporate tax rates. Smucker also increased its earnings outlook for the year.
The company said it is giving $1,000 one-time bonuses to nearly 5,000 employees, will make $1 million in charitable contributions, and will contribute an additional $20 million to its employee pension plan because of federal tax reform.
Smucker reported net income of $831.3 million, or $7.32 per share, on revenue of $1.9 billion for the quarter ending Jan. 31. The bulk of the net income increase was due to a nonrecurring benefit from recently enacted federal tax reform, the company said.
The company had adjusted earnings of $2.50 a share for the quarter, up 25 percent from a year ago.
A year ago, Smucker reported net income of $134.6 million, or $1.16 a share, on revenue of $1.87 billion.
Third quarter revenue and profit were boosted by strong coffee and pet food sales, while U.S. food sales declined.
The company announced results before the stock market opened.
Earnings and revenue beat analyst estimates.
Shares rose Friday afternoon after dipping in the day, closing up $1.81, or 1.5 percent, at $124.02.
“We had a strong third quarter, with sales growth for key brands in every business and strong earnings per share growth fueled by the benefits of U.S. income tax reform and ongoing cost discipline,” Mark Smucker, chief executive officer, said in a statement.
“These results reflect our commitment to delivering top and bottom line growth and supporting our portfolio of iconic and emerging brands. In addition, the benefits of income tax reform provide incremental fuel to invest in our growth initiatives and support our employees and communities as well as opportunities to increase cash returned to shareholders.”
Third quarter coffee sales increased $12.9 million to $550.5 million compared to a year ago.
U.S. food sales fell $5.7 million to $511.6 million compared to a year ago.
Pet food sales in the United States rose by $11 million to $561.9 million compared to the third quarter of 2017.
International sales totaled $279.3 million, up $6.3 million from a year ago.
The company said it now expects to have adjusted earnings of $8.20 to $8.30 a share for the full 2018 fiscal year compared to previous estimates of $7.75 to $7.90 a share.
Full year revenue is expected to be flat to down slightly compared to fiscal 2017.
Smucker food, coffee and pet food brands include Smucker’s, Folger’s, Jif, Crisco, Dunkin’ Donuts, Cafe Buselo, Pillsbury, Milk-Bone, Meow Mix, 9Lives and others.
The recent stock market correction and ongoing volatility are happening in an economic upturn and do not appear to be something to lose much sleep over, Huntington Bank’s chief investment officer says.
Meanwhile, the Akron-area economy is performing well but also needs to generate more jobs, Huntington’s John Augustine said during an economic forecast presentation Tuesday morning. He spoke before about 300 people at a breakfast meeting in the Sheraton Suites in downtown Cuyahoga Falls, touching on stocks and investments, economic indicators and more.
“The stock market is going through an adjustment phase,” Augustine told the audience.
But not because of a bad economy.
“It’s coming from a position of strength,” Augustine said. The U.S. and global economy are doing well and should continue to do well, Augustine said.
The 30-stock Dow Jones industrial average had the fastest 10 percent correction in decades and has recently bounced back several percentage points, he said. The main reason for the correction is that stocks grew too far too fast in January, he said.
“Now markets are trying to find the right level,” he said. “It’s most interesting because it comes from a position of strength.”
This is a good time for people to review their investments, to rebalance out-of-alignment portfolios and to look at upgrading their investments if need be, Augustine said.
The U.S. economy is going to benefit later this year by the influx of hundreds of billions of dollars because recent U.S. tax reform cut corporate tax rates, he said.
That means employees will see such things as better employer matches in retirement plans, the repatriation of corporate money into the U.S. and more, he said.
“You are probably going to hear a lot of dividend increases this spring,” Augustine said.
Corporate earnings “are going up noticeably,” which is good for stock prices, he said.
People and businesses need to “turn optimism into action,” he said. For individuals, that means working this year on improving their investments and financial management, he said.
Augustine said his previous economic forecast for 2018 may need to be revised upward.
“What is all this money going to do when it hits the economy?” he said.
The U.S. economy historically grew at an average of 3 percent a year, Augustine said. That average growth fell down to the “2s” in the aftermath of the Great Recession, he said.
“Now it’s going to speed up,” Augustine said. “The economy is doing fine.”
Not every economic segment will shine, he noted.
The automobile industry likely will be “sideways” for a while, Augustine said. That has implications for all the businesses that rely on the U.S. auto industry, he said.
Meanwhile, housing construction appears to be improving based on building permit figures, he said.
Good news for the manufacturing-heavy Midwest is that capital expenditures are increasing and exports are up, he said.
“A lot of our businesses are tied to capital spending,” he said.
Farming, which has struggled, may be able to pass along increased prices later this year, he said.
The Greater Akron area is also doing well, Augustine said.
Housing prices have recovered, gross domestic product is up, and the unemployment rate is down, he said.
But while the jobless rate is down, the number of people who are employed has not climbed back to levels in 2007, at the start of the Great Recession, Augustine said.
“That is a trend in our state,” he said.
One solution is to encourage people who have moved elsewhere to come back, Augustine said. Businesses continue to say they have labor quality issues, Augustine said. Managers are spending more of their time on talent management and recruiting, he said.
“The economy is doing good. Labor is what’s in shortage,” he said.
Nick Browning, Huntington’s Akron Region president, briefly addressed the audience and said Northeast Ohio residents should encourage young people who have moved elsewhere to return home. One big attraction is that Akron has a “culture of caring,” he said.
And there will be lots of job openings in upcoming years as baby boomers such as himself retire, he said. The area cannot afford to lose any talent, he said.
“I think Akron is thriving,” Browning said afterward. “It is on the cusp of something I think is really great. … I think we’re seeing the benefit of having new thought leadership in town. The possibilities are out on the table.”
WASHINGTON, D.C.: While the U.S. solar industry work force declined last year, Ohio saw a 12 percent increase in workers.
The Solar Foundation reported Wednesday in its annual National Solar Jobs Census that Ohio employment jumped from 5,831 jobs in 2016 to 6,564 last year.
Nationwide, there were 250,271 Americans working in solar last year, a 3.8 percent decline from the previous year. It’s the first year that jobs have decreased since the Solar Jobs Census was first released in 2010, the group said.
Twenty-nine states saw the number of jobs increase.
California remained the state with the largest number of solar jobs (86,414), but jobs there fell 14 percent in 2017.
“After six years of rapid and steady growth, the solar industry faced headwinds that led to a dip in employment in 2017, including a slowdown in the pace of new solar installations,” Solar Foundation President and Executive Director Andrea Luecke said in a prepared statement.. “Uncertainty over the outcome of the trade case also had a likely impact on solar jobs growth. At the same time, the fact that jobs went up in 29 states is an encouraging sign that solar is taking hold across the country as a low-cost, sustainable, and reliable energy source.”
To read the full report, go to: SolarJobsCensus.org.
A Michigan industrial manufacturing company has purchased and started refurbishing the former Wrayco Industries buildings in Stow, a city official says.
One of the two buildings, a 180,000-square-foot facility at 858 Seasons Road, could be occupied no later than the end of March, said Ken Trenner, Stow economic development coordinator.
The plant apparently will be used for metal fabrication, he said.
“They have great plans for the building,” he said. “They’re in there right now getting the building ready. … We’re thrilled we got another manufacturer. This is great for the city.”
The other former Wrayco building is at 5010 Hudson Drive; Trenner said he was unsure how that 60,000-square-foot site will be used.
Real estate firm CBRE on Tuesday issued a news release announcing the sale of the two buildings but didn’t identify the new owner or tenant. Terms also were not disclosed.
Trenner said the Stow buildings will be occupied by a business affiliated with Royal Arc Industrial Services, a diversified manufacturer out of Michigan.
The Royal Arc website said the company provides Occupational Safety and Health Administration compliant training, engineering, designing and manufacturing and maintaining of overhead cranes, preventative maintenance, annual inspections, hoist rebuilds and overhead lifting devices.
Royal Arc could not be reached for comment Tuesday.
Wrayco Industries, which specialized in manufacturing leakproof vessels for heavy construction equipment such as fuel and hydraulic tanks, announced in December 2016 that it was shuttering its facilities in early 2017, with the loss of about 80 jobs. The company was founded in 1980.
Meggitt Aircraft Braking Systems Corp. said it will begin laying off Akron employees at the end of March.
These initial layoffs follow the company’s announcement last October that it will let go as many as 55 employees this year as it permanently relocates its structural manufacturing operations in Akron to a plant in Kentucky and to one in Mexico.
The first five Akron employees will lose their jobs March 30 or shortly afterward, the British-owned company said in a letter to the Ohio Department of Job and Family Services. The Worker Adjustment and Retraining Notification, or WARN, letter was dated Jan. 29 and received by the state on Friday.
Meggitt, located off Massillon Road at Akron Fulton International Airport, makes and refurbishes parts for commercial and military aircraft.
Meggitt officials did not respond to phone messages left by the Beacon Journal/Ohio.com on Monday seeking comment.
The five employees initially identified to be laid off are union members and have bumping rights, meaning other less-senior union members may lose their jobs instead, according to the WARN document.
Meggitt in October said it expected 43 hourly unionized employees and 12 salaried employees in Akron will lose their jobs once the transfer is complete this year.
Meggitt said last year its other operations at its Akron campus, including its carbon brake division, are expected to be largely unaffected by the relocation of the structural manufacturing facility. A Meggitt spokesman said last year the company hoped to add a new engineering “Center of Excellence” at its Akron campus.
WASHINGTON: U.S. employers added a robust 200,000 jobs in January, and wages rose at the fastest pace in more than eight years, encouraging trends that suggest that the economy may accelerate this year.
The unemployment rate remained 4.1 percent, the lowest level since 2000, the Labor Department said in its monthly jobs report Friday.
The pay gains show that employers are increasingly competing for a narrower pool of workers with the U.S. expansion now in its ninth year. Raises stemming from Republican tax cuts and minimum wage increases in 18 states also likely boosted pay last month. The figures point to an economy on strong footing, fueled by consumer spending and global growth.
“Labor is becoming scarce, and employers have to work to find, retain and train employees,” Diane Swonk, chief economist at Grant Thornton, said. “This is new for many employers.”
In January, average hourly pay rose 9 cents to $26.74 after an even bigger increase in December. Compared with 12 months earlier, wages are up 2.9 percent — the biggest gain since the recession ended eight years ago.
Weak wage growth has been one of the economy’s most persistent shortcomings for nearly a decade. But with fewer workers to hire, some employers are being forced to raise pay.
Roughly 275 companies have announced bonuses and higher minimum wages since the Republican tax overhaul was enacted late last year and sharply cut corporate taxes. Most of those companies awarded one-time bonuses, which typically aren’t included in the government’s calculation of hourly pay.
A key question is whether last month’s gain can be sustained. Other reports also suggest that pay increases are picking up. A quarterly measure of wages and salaries in the private sector, released Wednesday, showed that they increased in the October-December quarter by the most in nearly three years.
Still, the gains aren’t equally spread. A separate measure of hourly wages that doesn’t include managers rose 2.4 percent over the past year, more slowly than the broader figure. That suggests that managers and supervisors have received the biggest benefits.
Hiring was broad-based last month. Construction companies added 36,000 jobs, lifted by demand for new homes and remodeling.
Manufacturers added 15,000, health care 26,000. Professional and business services added 23,000.
Spray Products Corp. is hiring for numerous positions and will host a job fair from 9 a.m. to 1 p.m. Thursday at the OhioMeansJobs office, 60 Public Square, Medina.
The company is looking to fill positions at a new 270,000-square-foot facility that opens this spring in Medina.
Spray Products specializes in private label and custom contract aerosol packaging for large and small companies. It provides research/development and formulation, manufacturing, packaging, and distribution.
The company said it has openings for:
• Management and supervision
• Chemical batching
• Safety and environmental
For more information, call OhioMeansJobs Medina County at 330-723-9675.
OKLAHOMA CITY: Chesapeake Energy Corp. has announced the layoffs of about 400 employees, the vast majority at its headquarters in Oklahoma City.
The layoffs were announced Tuesday in an email to employees from Chesapeake CEO Doug Lawler.
Lawler says the layoffs are part of the company’s continuing effort to “structure and position” itself for success.
The layoffs include about 330 employees in Oklahoma City. The remainder will be at company field offices in Louisiana, Ohio, Texas, Pennsylvania and Wyoming. That accounts for about 13 percent of the company’s workforce.
The job cuts leave Chesapeake with a total of about 2,900 employees. About 1,800 of them are in Oklahoma City.
Lawler’s email says employees affected by the layoffs will receive undisclosed assistance in “their personal and career transition.”
Summit County’s unemployment rate closed out 2017 in better shape than it did a year earlier.
The county jobless rate rose to 4.8 percent in December, up from 4.5 percent in November, but was down from 5 percent a year ago, according to figures released Tuesday by the Ohio Department of Job and Family Services.
Still, while a low unemployment rate is good news, it does not provide a complete economic picture. Even as jobless rates have been declining, the number of people counted as employed in Summit County remains below pre-Great Recession levels — even below numbers from 17 years ago.
The unemployment rate for Akron last month rose to 5.4 percent from 5.1 percent in November, while it was down from 5.7 percent in December 2016.
The jobless rate for Cuyahoga Falls was 4.6 percent in December, up from 4.1 percent in November and unchanged from a year ago.
There were 258,200 people counted as working in December in Summit County, up from 256,200 in December 2016.
But employment for the month of December since 2000 in the county peaked at 283,300 in 2007 — that’s 25,100 more working people than last month. The low since 2000 was 251,600 in 2010, when the jobless rate was 8 percent.
State figures show there were fewer people counted as working last month than in December 2000, when the number of employed was 269,400.
The December 2017 jobless rate increased in 87 of Ohio’s 88 counties, with one county rate unchanged from November, the state figures show. Rates ranged from a low of 2.8 percent in Mercer County to a high of 8.8 percent in Monroe County.
Rates were not adjusted to take into account seasonal factors.
The comparable Ohio unemployment rate for December was 4.5 percent, with the seasonally adjusted rate at 4.7 percent.
The comparable U.S. jobless rate was 3.9 percent, with the seasonally adjusted rate at 4.1 percent.
Unemployment rates elsewhere in Northeast Ohio for December, November and December 2016:
• Cuyahoga County: 4.8, 4.8, 5.4
• Cleveland: 6, 6, 6.8
• Medina County: 4, 3.8, 4.4
• Portage County: 4.7, 4.3, 5
• Stark County: 5, 4.6, 5.2
• Canton: 5.8, 5.3, 6
• Wayne County: 3.8, 3.5, 4
COLUMBUS: State officials say Ohio’s unemployment rate dropped to 4.7 percent in December but remained higher than the national rate.
The state unemployment rate decreased from 4.8 percent in November and was lower than the 5 percent rate of December 2016.
The national rate was 4.1 percent in December, unchanged from November, and down from 4.7 percent in December 2016.
The state Department of Job and Family Services says Ohio’s nonagricultural wage and salary employment increased by 2,500 jobs in December.
Job gains were reported in sectors that include educational and health services; leisure and hospitality; financial activities; and other services. Those gains exceeded losses in the information; professional and business services; and trade, transportation and utilities sectors.
Government employment in Ohio dropped by 4,700 jobs in December.
The economy in Ohio and parts of neighboring states expanded moderately the past six weeks, the latest Beige Book report from the Federal Reserve.
Labor markets tightened in the Federal Reserve Bank of Cleveland’s multi-state territory, according to the report released Wednesday. A majority of contacts reported they are replacing departed workers.
Employers reported challenges in attracting and retaining qualified workers, especially for low-skills jobs. The strongest hiring activity was in the construction and nonfinancial services sectors. Hiring by manufacturers trended slowly higher.
The main labor-related challenge reported was attracting and retaining workers for low-skills and middle-skills jobs. Firms were raising wages and creating career paths within these job categories to attract and retain workers.
A professional services contact reported boosting wages for select low-skills jobs by up to 20 percent, while a fast food executive said that wages at her restaurants increased to $11 per hour.
Retailers reported higher-than-expected revenues for the early part of the holiday shopping season.
Manufacturing output grew slowly. There was ongoing strength in the construction and motor vehicle industries and stability in the energy sector.
The housing and commercial real estate markets remained healthy.
Retail chains that invested in technology to enhance shopping experiences saw sales increase.
One chain reported that a growing share of online orders are for in-store pickup, which generated higher in-store sales when customers came in to pick up orders.
A fast food chain reported that the average revenue per transaction from recently installed self-service kiosks was higher than transactions generated by cashiers.
Business lending trended up slowly. Bankers saw higher loan balances compared to a year ago. Increasing confidence in the economy was frequently cited for rising credit demand. Merger and acquisition financing remained strong.
WASHINGTON: U.S. employers added 148,000 jobs in December, a modest gain but still enough to suggest that the economy entered the new year with solid momentum.
The unemployment rate remained 4.1 percent for a third straight month, the lowest level since 2000, the Labor Department said Friday.
For all of 2017, employers added nearly 2.1 million jobs, enough to lower the unemployment rate from 4.7 percent a year ago.
Still, the data indicates that job gains are slowing, which typically happens when unemployment falls to ultra-low levels and fewer people are available to be hired. Average job gains have declined to 171,000 this year from a peak of 250,000 in 2014. Last year’s job gains were the fewest since 2010.
Despite the low unemployment and the difficulty some employers face in finding enough qualified workers, pay gains remain sluggish. Average hourly earnings rose 2.5 percent in December from a year earlier — about a full percentage point lower than is typical in a healthy economy.
Still, the December job growth, while modest, underscores the economy’s continued health in its ninth year of recovery. Last month’s pace of hiring is enough, over time, to lower the unemployment rate.
The unemployment rate for African-Americans reached a record low of 6.8 percent in December. And the jobless rate for veterans of Afghanistan and Iraq fell to 3.3 percent, also a record low.
Solid economic growth in both the United States and major countries overseas is supporting more hiring. Factory managers received the most new orders in December than in any month since 2004. Retailers have reported strong holiday sales. Builders are ramping up home construction to meet growing demand.
Sales of existing homes reached their fastest pace in nearly 11 years in November. Consumer confidence is at nearly a 17-year high. And the Dow Jones industrial average reached 25,000 for the first time on Thursday.
Manufacturing and construction reported strong job gains in December, adding 25,000 and 30,000 jobs, respectively. A category that includes hotels and restaurants gained 29,200.
Retailers cut 20,300 jobs, mostly in department store chains such as Macy’s, which announced this week that it would close 11 additional stores. That suggests that stores hired fewer seasonal workers for the winter holidays, a sign of the impact of e-commerce.
Transportation and warehousing, a category that has grown substantially this year to keep up with online deliveries, added just 1,800 positions in December.
Most economists expect the Trump administration’s tax cuts to help speed the economy’s already decent pace of growth. Some envision the unemployment rate dropping as low as 3.5 percent by the end of 2018.
A rate that low would mark the lowest such level in nearly a half-century, and it would likely force businesses to accelerate pay raises to attract and retain employees. Pay raises have remained puzzlingly weak for many U.S. workers despite the robust job market.
Some businesses, though, are already howling that they can’t find enough qualified people. There are roughly 6 million available jobs, near a record high, according to government data. Should unemployment fall to 3.5 percent, those complaints will intensify.
For at least two years, economists have been expecting the falling unemployment rate to boost wages. They point to several trends that may be keeping a lid on wage gains.
As the vast baby boom generation ages — 10,000 of them are turning 65 every day — they are retiring and are being replaced by younger workers, who typically earn far less money. That is likely suppressing overall wage growth, economists say.
Worker pay also depends on productivity, or how efficient employees are. And productivity has been weak for roughly a decade.
In 2000, the last time the unemployment rate fell this low, wages were growing at a 4 percent annual pace. But productivity, which measures workers’ output per hour, was much higher then. A falling unemployment rate can force up pay, but rising productivity has a much greater effect.
Many businesses, meanwhile, feel they have limited ability to pass on higher wages to consumers in the form of higher prices. Online shopping and cheaper imported goods make it easier for consumers to find bargains. That leaves retailers and other firms reluctant to raise pay.
Summit County’s jobless rate dropped slightly in November to 4.5 percent, figures released Wednesday show.
The county’s unemployment rate fell below the 4.6 percent rate in October and 4.6 percent a year ago, according to a news release from the Ohio Department of Job and Family Services.
Akron’s jobless rate for November was 5.1 percent, down from 5.2 percent in October and 5.3 percent a year ago.
The unemployment rate for Cuyahoga Falls was 4.2 percent, the same as in October and higher than the 4.1 percent rate a year ago.
There were 260,400 people counted as employed in November in Summit County, up from 259,400 in November 2016.
But the figures show that Summit County still has not regained jobs lost since the Great Recession and had fewer people employed last month than 17 years ago.
Employment for the month of November since 2000 peaked at 285,100 in 2007 — meaning there were 24,700 more people with jobs in the county 10 years ago. The low since 2000 was 252,600 in 2013. There were 270,000 people counted as working in Summit County in November 2000, which is 9,600 more employed people than last month.
Rates were not adjusted to take into account seasonal factors.
The comparable Ohio unemployment rate for November was 4.2 percent; the seasonally adjusted rate was 4.8 percent.
The comparable U.S. unemployment rate was 3.9 percent, with the seasonally adjusted rate at 4.1 percent.
Rates fell in 65 of Ohio’s 88 counties last month. Unemployment rates increased in 15 counties and were unchanged in eight counties. The low in Ohio was 2.7 percent in Mercer County to a high of 7.2 percent in Monroe County.
Unemployment rates elsewhere in Northeast Ohio for November, October and a year ago:
• Cuyahoga County: 4.8, 5.4, 5
• Cleveland: 6, 6.6, 6.3
• Medina County: 3.8, 4.3, 3.9
• Portage County: 4.3, 4.4, 4.5
• Stark County: 4.6, 4.8, 4.9
• Canton: 5.4, 5.6, 5.8
• Wayne County: 3.5, 3.6, 3.7
NEW YORK: Big U.S. companies have been piling up cash for years, but have spent little of it on buying equipment and raising wages and other things to grow the economy.
Republicans say they know how to fix this: Give companies even more money by cutting their taxes.
The $2.6 trillion in cash that U.S. companies have stored abroad is enough to send a check for more than $7,000 to every man, women and child in the country. The tax plan overhaul would add to that pile under the theory that more money will get companies to invest more, hire more and increase pay for their workers.
The conservative Tax Foundation estimates that the entire overhaul could lead to 4.8 percent more spending by companies on equipment and other capital goods over a decade, and an additional 1.5 percent boost to wages.
Many experts think that is wishful thinking.
“There is more than enough cash for investment,” said Daniel Alpert, managing partner at investment bank Westwood Capital. The tax bill is trying “to solve a problem that doesn’t exist.”
Critics say the companies are more likely to use their tax savings to buy back their own stock and send dividend checks to investors than to expand operations. While the stock market has risen on the expectation of higher earnings, the bond market doesn’t seem convinced that the plan will accelerate economic growth all that much.
Long-term interest rates have remained low even as the Federal Reserve has raised short-term rates. That’s a signal that bond investors aren’t forecasting that big a pickup in inflation or economic growth.
Under the bill coming up for a vote in Congress, the corporate tax rate would be slashed from 35 percent to 21 percent. Companies hoarding cash overseas would also get a one-time tax break if they send the money back to the U.S. And they will be able to immediately expense 100 percent of the cost of big ticket purchases against taxes, saving even more.
A look at the ways companies could spend their tax windfall, and the odds they will do so.
By all accounts, wages should be surging. The last time the unemployment rate was so low, in 2000, workers were getting an average 4 percent raise each year. By contrast, wages are rising now at just 2.5 percent.
Economists are unsure why raises are so puny, but one thing is certain: It has nothing to do directly with how much money companies get to keep after paying taxes.
Companies generally raise wages only if they are forced to because they need people to do a certain job and there aren’t enough of them. In recent decades there’s been a surge in the number of workers globally as hundreds of millions of Chinese and Indians entered the middle class, helping keep wages down.
“Why would a capitalist say, ‘I really love American workers. I’m going to raise their wages,”’ said Alpert. “If they need one more worker, they’re going to source that worker for the lowest possible cost.”
If the tax bill helps the economy grow faster and companies have to produce more, they may have to offer higher wages to attract more workers. The Treasury Department has said the Senate version of the tax bill would increase growth by 0.7 percent a year over the next decade, but independent estimates are much lower.
Congress’s nonpartisan Joint Committee on Taxation estimated that growth would increase by 0.08 percent a year.
BIG TICKET SPENDING
Proponents say the tax bill should spur companies to spend more on computers, software and other big ticket items.
To get companies to invest more, you have to make it more profitable for them, said Scott Greenberg, a senior analyst at the Tax Foundation. This goes beyond just lowering the rates. The tax bill would temporarily allow companies to write off all the money used in investments against taxes in just a year, instead of spreading out that benefit over many years. There would be full and immediate expensing for five years, after which it would gradually be phased out.
“Tax changes that lower the cost of investment cause companies to make more investments —to buy more machinery, to put up factories, to purchase more equipment,” Greenberg said. If companies make those investments, that would make their workers more productive, and thus able to demand higher pay.
But Greenberg said the impact of the investment break on taxes is limited, though, because the benefit runs out in five years. He prefers a permanent break.
Critics say the main reason companies haven’t been investing has nothing to do with incentives. It’s because there has been too much investing in previous years.
Even before the 2008 financial crisis the world had too much of nearly everything — raw materials like steel and oil , workers, factories to employ them and consumer products — which is why inflation has stayed low for many goods. Then the Chinese government encouraged even more production with a big stimulus program in the years after the crisis, and the glut got worse.
Asked about the possibility of using tax savings on capital spending, Marriott International CEO Arne Sorenson last month quickly shot down the idea, saying there is already “extra capacity” at the company.
“We don’t need to invest in our system,” he said.
BUYING BACK STOCK
What Marriott is likely to do is what it’s done in the past: Buy back its stock.
Corporate America has been spending trillions on their own stock in recent years, and the pace has barely eased up. S&P 500 companies spent $517 billion on these buybacks in the 12 months through September, according to S&P Dow Jones Indices.
If history is any guide, the tax overhaul will only fuel more buybacks.
The bill would offer an incentive to companies to return cash they’ve kept overseas by taxing it at discounted rates of 15.5 percent for liquid assets and 8 percent for illiquid assets. The U.S. would eventually transition to a system that imposed a small tax on extremely large foreign profits.
The last time the federal government offered such a discount, in 2004, companies “repatriated” $312 billion. But those companies tended to use the money to buy back their own shares, not to hire or expand operations. A 2011 Congressional Research Service report found that the tax break “did not increase domestic investment or employment.”
WASHINGTON: U.S. employers added a robust 228,000 jobs in November, a sign of the job market’s enduring strength in its ninth year of economic recovery.
The unemployment rate remained at a 17-year low of 4.1 percent, the Labor Department reported.
Friday’s jobs report made clear that the U.S. economy is on firm footing and is likely benefiting from more resilient global growth, with all major economies across the world expanding in tandem for the first time in a decade.
Over the past six months, U.S. economic growth has exceeded an annual rate of 3 percent, the first time that’s happened since 2014. Consumer confidence has reached its highest level since 2000.
“The November report is confirmation that the U.S. economy remains in solid shape at the end of 2017,” said Gus Faucher, chief economist at PNC Financial Services.
In many cases, in fact, employers say they’re struggling to find enough qualified workers to hire. Still, solid hiring and a low unemployment rate have yet to accelerate wages, which rose 2.5 percent in November compared with a year earlier. The last time unemployment was this low, average wages were growing at a 4 percent annual rate.
Last month, job growth was widespread and particularly strong in manufacturing, which added 31,000 jobs, and in construction, which added 24,000. The construction job gains might have reflected, in part, renovation and repair work in such hurricane-ravaged states as Texas and Florida.
In November, retailers added nearly 19,000 jobs, a sign that physical stores are hiring for the holiday shopping season even in the face of brutal competition from e-commerce companies. Transportation and warehousing companies, which are benefiting from the e-commerce boom, added 10,500.
Hiring has slowed slightly since last year, which is typical when unemployment falls to low levels. Employers have added an average of 174,000 a month this year, a bit below last year’s monthly average of 187,000. In large part because of the job market’s resilience, the Federal Reserve is widely expected to raise interest rates for the third time this year when it meets next week.
Rising confidence among consumers is translating into major purchases. Americans are buying more homes and cars. Auto sales rose 1.3 percent in November compared with a year earlier, to 1.4 million, according to Autodata Corp.
In October, newly built homes sold at their fastest pace in a decade, and existing homes sold at their quickest rate since June.
Businesses are spending more, too: Orders for such long-lasting items as industrial machinery, computers and oil-drilling equipment rose for the third straight month in October.
Though wages have yet to pick up, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said he thinks a continued decline in unemployment will lead to higher pay. U.S. metro areas with unemployment rates of 3.5 percent or lower are reporting annual wage growth of roughly 4 percent, Shepherdson said in an email.
AP Economics Writer Josh Boak contributed to this report.
WASHINGTON: The number of unemployed workers filing for jobless benefits fell by 2,000 last week to 236,000, the lowest level in five weeks and further evidence of the strength in the labor market.
Last week’s applications total was the third consecutive weekly drop, the Labor Department reported Thursday. The four-week average, a less volatile measure, declined 750 to 241,500.
The number of people receiving aid fell by 52,000 to 1.91 million, remaining near a four-decade low set last month.
Applications for unemployment benefits are a proxy for layoffs. The weekly number has been below 300,000 for close to three years, a stretch not seen in more than four decades. The government will release the November unemployment figure on Friday and private economists believe that figure will show unemployment remaining at 4.1 percent.
What you need to know:
—The continued low readings on weekly jobless claims show that the labor market has recovered from the devastation caused by the 2007-2009 Great Recession, the worst downturn since the 1930s.
—With unemployment at 4.1 percent, that is well below the level the Federal Reserve considers full employment. That is a key reason most economists are forecasting the Fed will nudge interest rates up for a third time this year at their meeting next week.
—The rebound in hiring is expected to be exhibited in Friday’s employment numbers. Many analysts forecasting the economy created a healthy 200,000 jobs in November. Employers added 261,000 jobs in October, a solid gain after hiring fell in September because of the storms.
—The Labor Department says the destruction from the September hurricanes is still disrupting claims processing in the Virgin Islands and Puerto Rico.
—The economy is growing at rates that should support strong hiring gains in coming months. The overall economy, as measured by the gross domestic product, expanded at a 3.3 percent pace in the July-September quarter after a 3.1 percent gain in the spring. Those were the first back-to-back quarterly gains above 3 percent in three years.
Retired Teamsters around the nation who are facing dramatic cuts to their monthly pensions are keeping their fingers crossed that proposed federal legislation will keep them from financial ruin.
The legislation, called the Butch Lewis Act and introduced last month by Sen. Sherrod Brown, D-Ohio, is now subject to intense lobbying by union members and others on Capitol Hill with the hope that it becomes attached to the new spending bill Congress is expected to soon enact.
On Wednesday, retired Teamsters in Akron were updated on the act by Mike Walden of Cuyahoga Falls who with others has spearheaded national efforts over the last four years to rescue union retirees from gut-wrenching drops in their financially troubled Central States multi-employer pension plan. A 2014 federal law allows multi-employer pension plans to significantly reduce retiree payments as a means to remain solvent.
Retirees in the Teamster’s Central States pension plan have been facing possible monthly pension cuts of as much as 69 percent. There are about 48,000 retired Teamsters in Ohio, with thousands in the Greater Akron area and hundreds of thousands more around the nation. Other troubled union pension plans already have cut monthly payments to retirees.
This latest federal plan to prevent that scenario is named for the late Butch Lewis, retired head of Teamsters Local 100 in Evendale, Ohio, who died in 2015 and was part of the movement to save union retiree pensions.
“We’re going to need more support,” said Walden, head of the Northeast Ohio Committee to Protect Pensions. He urged the hundred-plus retirees at the meeting in the Knights of Columbus Hall on Glenmount Avenue to write and call their congressional representatives.
“We need this done by the end of the year,” Walden said, explaining that it will take time for the act to be implemented. Passage by Dec. 31 would likely mean that the plan could be put into place by early summer.
Actuaries who have looked over the math in the Butch Lewis Act say it will work, Walden said.
The act creates a new office, the Pension Rehabilitation Administration, in the U.S. Treasury Department. The office would allow troubled pension plans to borrow money at low interest rates and in turn continue making payments to retirees.
According to Brown’s office, the money for the loans and the cost to run the pension office would come from selling Treasury bonds to financial institutions such as banks. The PRA would provide 30-year loans at low interest rates to financially troubled union pension plans. The pension plans are expected to repay the loans as their financial health improves.
The plan was initially developed by the Teamsters and then refined by Brown and his staff, Walden said.
The Teamsters next week will bus retired union members to Washington, D.C., and put them up overnight in a hotel as part of an effort to urge congressional members to support the Butch Lewis Act.
“We have some Republicans that are very, very close to signing on to the Butch Lewis Act,” Walden said.
Republicans have been largely concerned about what happens if a loan in the program created by the act defaults, Walden said. Getting their support might require a change in part of the proposed law to create a safety net, he said.
Joe Kline, 69, a Suffield Township resident and retired driver with USF Holland, said the Butch Lewis Act is not a taxpayer bailout of the Central States plan.
“We paid into it [Central States]. This will help salvage it,” Kline said. The Butch Lewis Act ultimately could ensure more comfortable retirements for as many as 10 million Americans, he said.
Ed Barker, 68, retired two years ago as a driver with ABF Freight. The Austintown resident and retiree from Teamsters Local 377 in Youngstown said he became involved in the fight to save the union pension plan fairly recently.
He said the U.S. government failed in its obligation to make sure the Central States Pension Plan remained solvent.
The Butch Lewis Act looks like the right approach, he said. If no action is taken, the subsequent drastic cuts in pension payments will force retirees to become more dependent on government money, he said.
“I think this will make everybody happy,” Barker said. “I was going to lose 60 percent of my money. … It’s not a taxpayer thing. I’m a taxpayer. I passed on pay raises to put into retirement.”
TimkenSteel and United Steelworkers Local 1123 Golden Lodge have reached a third tentative agreement on a four-year contract.
The 1,650-member union rejected the first two proposed contracts, the last time on a vote of 673 against, 590 in favor.
The latest tentative agreement provides annual wage increases, a signing bonus, annual bonus opportunities, health care, retirement benefits and a continued focus on safety, the Canton steelmaker said in a news release late Wednesday afternoon.
The union will announce informational meetings and a vote date.
“From the start of these contract discussions, we have worked with union leadership to convey the competitive pressures we continue to face, and to reach an agreement with those representatives that take into consideration today’s marketplace while still giving our employees some of the best wages and benefits in Stark County,” Bill Bryan, TimkenSteels executive vice president of manufacturing & supply chain, said in a news release.
Azteca Mexican restaurant in Akron has agreed to pay $118,354 in back wages and damages to 21 employees following an investigation by a division of the U.S. Labor Department.
This is the second time since 2013 that the restaurant on East Market Street has paid back wages and damages after an investigation by the labor department’s wage and hour division.
In the latest investigation, the wage and hour division found that Azteca Restaurante Mexicano Inc. and its owner, Salvador Alatorre, failed to comply with minimum-age, overtime and record-keeping provisions of the Fair Labor Standards Act, according to a news release issued Wednesday by the labor department.
The 21 employees will receive amounts ranging from $90.16 to $26,831.30. Fourteen of the employees will receive amounts greater than $3,000.
Alatorre said Wednesday in a phone interview that he installed a new computer system to keep track of employees’ hours and “everything is better right now, and we don’t have any more problems.”
“We’re working hard and trying to make everything good,” he said. “But it’s a very hard time for the little business. This is a family business. It’s not a chain.”
Alatorre started the business 18 years ago after working in the restaurant industry in Atlanta, Ga.
Federal investigators found that the restaurant paid kitchen staff fixed salaries, ranging from $550 to $675 per week, without regard to how many hours they worked.
This practice resulted in failure to pay required overtime when these employees worked more than 40 hours in a week, according to the labor department.
The restaurant also illegally deducted 3 percent of servers’ credit card sales from their tips, resulting in some servers receiving less than the minimum wage, the labor department found.
Under terms of the agreement with the labor department, Azteca Restaurante Mexicano has implemented a computerized time-keeping system in addition to paying the back wages and damages.
In early 2013, Azteca agreed to a settlement of $45,781 in back wages and damages to 18 workers after an investigation by the wage and hour division.
That investigation also found that Azteca paid some workers flat weekly salaries instead of hourly wages. The salaries didn’t meet the federal minimum wage for all hours worked and did not include overtime pay for hours worked more than 40.
Additionally, the labor department said the investigation found that servers were not paid overtime for hours worked over 40 in a week.
Separately, the city of Akron has filed a lawsuit in Summit County Common Pleas Court alleging that Azteca Restaurante Mexicano failed to withhold income tax due to the city.
The city said in the suit, filed Oct. 3, that Azteca owes the city “substantial withholding tax for the years 2011, 2012, 2013 and 2014.”
The city is seeking a judgment of about $48,138, plus the costs of the legal action and interest.
Beacon Journal staff writer Amanda Garrett contributed to this report. Staff writer Katie Byard can be reached at 330-996-3781 or [email protected].
WASHINGTON: The number of Americans filing applications for unemployment benefits fell for the first time in three weeks, pushing total applications down to a low 239,000, further evidence of the strength of the labor market.
The NUMBERS: Applications dropped by 13,000 last week after rising by 13,000 the previous week, the Labor Department reported Wednesday. The four-week average, which smooths out volatility, rose by 1,250 to 239,750.
The number of people receiving benefits rose by 36,000 to 1.9 million, still near a 44-year low.
KEY DRIVERS: Applications for unemployment benefits are a proxy for layoffs. The level of unemployment benefits has been below 300,000 for more than two years, a stretch not equaled in more than four decades.
The government reports that claims processing continues to be disrupted in the Virgin Islands but the ability to take claims has improved in Puerto Rico. Both islands were devastated by hurricanes earlier this year.
THE TAKEAWAY: The weekly unemployment benefits report suggests that the economic recovery that began in mid-2009 is steaming ahead. Employers added 261,000 jobs in October as the unemployment rate fell to 4.1 percent.
The economy, as measured by the gross domestic product, grew at a 3 percent rate in the July-September quarter after a 3.1 percent pace in the second quarter. It marked the first back-to-back quarterly gains of 3 percent or better in three years.