TIME - Business

Blizzard Employees Share Salaries With Each Other to Protest Wage Disparities

Tue, 04 Aug 2020 09:50:02 GMT

Employees at Blizzard Entertainment, a division of Activision Blizzard Inc., began circulating a spreadsheet on Friday to anonymously share salaries and recent pay increases, the latest example of rising tension in the video game industry over wage disparities and executive compensation.

Blizzard, based in Irvine, California, makes popular games including Diablo and World of Warcraft. In 2019, after an internal survey revealed that more than half of Blizzard workers were unhappy with their compensation, the company told staff it would perform a study to ensure fair pay, according to people familiar with the situation. Blizzard implemented the results of that study last month, which led to an outcry on the company’s internal Slack messaging boards.

One employee then created a spreadsheet and encouraged staff to share their compensation information. The anonymous document, reviewed by Bloomberg News, contains dozens of purported Blizzard salaries and pay bumps. Most of the raises are below 10%, significantly less than Blizzard employees said they expected following the study.

“Our goal has always been to ensure we compensate our employees fairly and competitively,” Activision Blizzard spokeswoman Jessica Taylor said. “We are constantly reviewing compensation philosophies to better recognize the talent of our highest performers and keep us competitive in the industry, all with the aim of rewarding and investing more in top employees.”

This year, Blizzard top performers received a salary increase that was 20% more than in prior years, and more people got promotions, Taylor added. “Our overall salary investment is consistent with prior years,” she also said.

Wage disparity has become a hot-button issue in the $150 billion video game industry as calls for unionization grow. A pro-labor group recently slammed Activision Blizzard for the pay of Chief Executive Officer Bobby Kotick. His 2019 compensation was worth $40 million at the end of that year, according to data compiled by Bloomberg, and the package has grown since then as the company’s stock has soared. Last year, the company also paid $15 million in stock awards and sign-on bonus to incoming Chief Financial Officer Dennis Durkin. In the anonymous spreadsheet, one employee listed the CEO’s annual salary, bonus and stock award.

In internal messages reviewed by Bloomberg News, Blizzard employees said they were struggling to make ends meet while watching Activision Blizzard revenue grow year after year. Some producers and engineers at Blizzard can make well over $100,000 a year, but others, such as video game testers and customer-service representatives, are often paid minimum wage or close to it.

Blizzard Entertainment has traditionally remained autonomous from its parent company, but in recent years, Activision’s corporate office has pushed the game-development studio to cut costs. Last year, the company eliminated hundreds of jobs and asked some of the remaining staff to take on the responsibilities of those who were let go. That extra work did not come with more pay, according to the people familiar with the company, who asked not to be identified discussing sensitive private information.

One veteran Blizzard employee told Bloomberg News they received a raise of less than 50 cents an hour. They are making less now than they did almost a decade ago because they are working fewer overtime hours than they did back then. Several former Blizzard employees said they only received significant pay increases after leaving for other companies, such as nearby rival Riot Games Inc. in Los Angeles.

In 2018 messages on internal Blizzard communication channels reviewed by Bloomberg News, employees talked about money-saving measures they’ve taken to remain with the company. One employee wrote that they had to skip meals to pay rent and that they used the company’s free coffee as an appetite suppressant. Another said they would only eat oatmeal and bail on team lunches because they couldn’t afford to buy food at the company cafeteria. A third said they and their partner stopped talking about having kids because they knew they wouldn’t be able to afford it. That contrasted with pictures they saw of more senior Blizzard employees enjoying vacations to Disneyland with their families.

–With assistance from Anders Melin.

Trump Organization Puts ‘Apprentice’ Helicopter Up for Sale

Mon, 03 Aug 2020 21:49:04 GMT

A Trump Organization helicopter featured in the opening credits of “The Apprentice” with now-President Donald Trump is for sale.

The 1989 Sikorsky S-76B, painted red, white and blue, registration N76DT, is listed for sale without a price on controller.com. Helivalue, a helicopter appraisal business, values similar models at $400,000 to $950,000.

Eric Trump, the President’s son who has run the family business while his father is in the White House, confirmed the listing.

“We currently have three helicopters and with my father in Washington (and not even allowed to use them), we simply don’t need them all,” Trump wrote in an email. The aircraft are stationed in New York, Florida and Europe, and they’ll probably keep two located in the U.S., he said.

The helicopter was used by Trump to travel to the 2016 Republican convention in Cleveland, where he was officially made the party’s nominee.

African Mahogany

According to the listing, the six-seater aircraft features African mahogany paneling, ecru/almond leather seats, with fittings, including seat belts, finished in gold.

A broker responsible for the sale, Emmanuel Dupuy, said that he couldn’t comment on the listing because the information was private.

The Trump Organization’s business includes hotels, which have suffered in the coronavirus pandemic.

Trump’s government-mandated 2019 financial disclosure, an inexact look into his assets and income, was released Friday evening and showed little change across properties such as his Mar-a-Lago and Doral resorts in Florida and his Washington hotel. Trump filed the 78-page report after getting an extension on its due date.

Lord & Taylor, America’s Oldest Department Store, Files for Bankruptcy

Mon, 03 Aug 2020 07:31:03 GMT

Lord & Taylor, known for its upscale fashions and extravagant holiday window displays, sought bankruptcy protection from creditors after a turnaround effort faltered amid the coronavirus pandemic.

The oldest U.S. department store filed for Chapter 11 protection in Richmond, Virginia, on Sunday and will submit a reorganization plan with the court. The company, founded in Manhattan by two English immigrants in 1826, said it had about $137.9 million of debt obligations.

Lord & Taylor’s owner, fashion start-up Le Tote Inc., filed for Chapter 11 along with the retail chain. Le Tote bought the rights to the company’s stores, brand and e-commerce site from Fifth Avenue owner Hudson’s Bay Co. for $71 million last year.

The company, with 38 stores and 651 employees as of the filing, joins a burgeoning list of department-store casualties tied to the virus, which turned malls into ghost towns. Former fashion stalwarts like J. Crew Group Inc. and Neiman Marcus Inc. already filed for bankruptcy protection this year.

Lord & Taylor closed all of its stores temporarily in March as governors ordered residents to shelter in place to combat the spreading virus.

San Francisco-based Le Tote offers fashion-apparel rentals. Executives at the company have planned to cut the number of Lord & Taylor stores and target younger women with luxury try-on studios, beauty subscriptions and rental drop-off points.

Under the deal with Hudson’s Bay, the seller agreed to cover Lord & Taylor’s rent for three years, saving Le Tote $58 million annually. Le Tote said in a court filing Sunday that its companies reported revenue of about $253.5 million in 2019.

The case is Le Tote Inc., 20-33332, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond).

–With assistance from Adam Cataldo.

Microsoft Confirms It Is in Talks to Buy the U.S. Arm of TikTok as Trump Threatens Ban

Mon, 03 Aug 2020 01:45:15 GMT

(NEW YORK) — Microsoft confirmed Sunday it is in talks with Chinese company ByteDance to acquire the U.S. arm of its popular video app TikTok and has discussed with President Donald Trump his concerns about security and censorship surrounding such an acquisition.

In a statement, Microsoft said Microsoft and ByteDance have provided notice of their intent to explore a deal resulting in Microsoft owning and operating the TikTok service in the U.S., Canada, Australia and New Zealand. The company said it expects those talks to conclude by Sept. 15.

Trump said on Friday that he would soon ban TikTok in the United States. Trump and CEO Satya Nadella have spoken, the company said, and Microsoft was prepared to continue exploring the purchase of TikTok’s U.S. operations after their conversation.

“Microsoft fully appreciates the importance of addressing the President’s concerns. It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury,” the Microsoft statement said.

The White House did not immediately comment on the Microsoft statement.

Previously, there were reports that Microsoft was in advanced talks to buy the U.S. operations of TikTok, which has been a source of national security and censorship concerns for the Trump administration. Earlier Sunday, Secretary of State Mike Pompeo again raised the administration’s warnings about social media platform.

“These Chinese software companies doing business in the United States, whether it’s TikTok or WeChat — there are countless more … are feeding data directly to the Chinese Communist Party, their national security apparatus,” Pompeo said on Fox News Channel’s “Sunday Morning Futures.”

“Could be their facial recognition patterns. It could be information about their residence, their phone numbers, their friends, who they’re connected to. Those — those are the issues that President Trump has made clear we’re going to take care of,” Pompeo said.

In its statement, Microsoft said it may invite other American investors to participate on a minority basis in the purchase of TikTok. Financial terms were undisclosed.

TikTok’s U.S. user data is stored in the U.S., with strict controls on employee access, and its biggest investors come from the U.S., the company said earlier Sunday. “We are committed to protecting our users’ privacy and safety as we continue working to bring joy to families and meaningful careers to those who create on our platform,” a TikTok spokesperson said.

A federal committee has been reviewing whether Trump could ban TikTok in the U.S. Its members agree that TikTok cannot remain in the U.S. in its current form because it “risks sending back information on 100 million Americans,” Treasury Secretary Steven Mnuchin said.

“We all agree there has to be a change … everybody agrees it can’t exist as it does,” Mnuchin said Sunday on ABC’s “This Week.”

As speculation grew over a ban or sale of the social media platform’s U.S. business, TikTok posted a video on Saturday saying, “We’re not planning on going anywhere.”

TikTok’s catchy videos and ease of use has made it popular, and it says it has tens of millions of users in the U.S. and hundreds of millions globally. Its parent company, Bytedance Ltd., launched TikTok in 2017. It bought Musical.ly, a video service popular with teens in the U.S. and Europe, and combined the two. It has a similar service, Douyin, for users in China.

But TikTok’s Chinese ownership has raised concern about the potential for sharing user data with Chinese officials as well as censorship of videos critical of the Chinese government. TikTok says it does not censor videos and it would not give the Chinese government access to U.S. user data.

“The President, when he makes his decision, will make sure that everything we have done drives us as close to zero risk for the American people,” Pompeo said. “That’s the mission set that he laid out for all of us when we get — we began to evaluate this now several months back. We’re closing in on a solution. And I think you will see the president’s announcement shortly.”

The debate over TikTok parallels a broader U.S. security crackdown on Chinese companies, including telecom providers Huawei and ZTE. The Trump administration has ordered that the U.S. stop buying equipment from those providers to be used in U.S. networks. Trump has also tried to steer allies away from Huawei over concerns that the Chinese government has access to its data, which Huawei denies.

McDonald’s CEO Chris Kempczinski on Changing Consumer Behavior and the Future of Those Ball Pits

Sun, 02 Aug 2020 10:50:19 GMT

(Miss this week’s The Leadership Brief? This interview above was delivered to the inbox of Leadership Brief subscribers on Sunday morning, Aug. 2; to receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.)

When Chris Kempczinski was appointed CEO of McDonald’s last November, he was replacing a successful but flawed leader. His predecessor, Steve Easterbrook, was credited with revitalizing the global fast-food behemoth; during Easterbrook’s nearly five-year tenure, annual net income grew 33%, to more than $6 billion in 2019, and the company’s stock price doubled. But Easterbrook was fired for having a consensual affair with an employee, a violation of company policies. As if stepping into the top job unexpectedly—Kempczinski had been running McDonald’s USA at the time of his promotion—weren’t challenging enough, he’s spent the bulk of his first year as CEO managing through a global pandemic. While McDonald’s in the U.S. has remained open since COVID-19 hit, the accompanying economic turmoil has taken a toll on business. In addition, some McDonald’s workers have recently gone on strike, protesting the company’s safety procedures, benefits and pay policies.

Just hours after McDonald’s had released what Kempczinski, 51, called possibly the “worst” quarterly results in the history of the company—sales dropped 24%—the CEO joined TIME for a video conversation from his Chicago home. One of the factors that impacted the company’s bottom line for the quarter was 12 million free meals it donated to frontline workers during the pandemic, at a cost of $30 million to $40 million. Kempczinski discussed with TIME how consumer behavior is changing as a result of the pandemic, allegations of sexual harassment at McDonald’s restaurants, and de-escalation training for employees who encounter customers who won’t wear masks.

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This interview with McDonald’s CEO Chris Kempczinski has been edited and condensed for clarity.

What’s your outlook for the public-health picture going forward?

One of the things that we’ve been saying to our team is that until there’s a vaccine that’s been widely distributed, we’re going to be in this period of regional hot spots that keep flaring up. Everything that we’re seeing right now suggests that that is going to be the pattern for probably the next year.

What is the status of your U.S. outlets?

They never shut down. One of the things that happened early on is that the government at the federal level basically denoted which businesses they viewed as essential businesses. McDonald’s and restaurants were deemed an essential business, and as a result, we were allowed to stay open, albeit in most cases with drive-throughs only. So with 95% of our restaurants in the U.S. have a drive-through, the vast, vast majority of our restaurants stay opened.

How has the pandemic affected your breakfast business?

Breakfast has definitely been the most impacted day part. If you think about breakfast, lunch and dinner, breakfast is most susceptible to people not going to work. We did some work, looking at cell-phone data and tracking mobility: what we saw in the mobility data was consistent with what we saw in the restaurant, which is essentially that people moving around was down dramatically in the mornings.

I was surprised to learn how extensive your delivery business is, approaching $4 billion in revenues.

We have a very robust and fast-growing delivery business. Over the last several years, it’s been a significant growth driver for us.

Going forward, will delivery play an increasingly large role in your business?

I think it will. What we’ve seen is, even in markets that kind of get back to quote-unquote a more normal situation, delivery usage tends to stay elevated. And it’s not just unique to restaurants. There’s kind of a macro trend that customers like the convenience of getting delivery at home.

Any other consumer behavior shifts?

The other thing that we’re seeing is the whole notion of contactless is going to be one of the enduring things that stays with us after this pandemic. Whether that is mobile-app usage or using kiosks to do ordering or doing delivery, customers seem to be increasingly preferring service channels that minimize contact with other people. I think that that is something that is going to be enduring.

What do you see the McDonald’s experience looking like in five years?

I think in the U.S., you’re going to continue to see drive-through and delivery be important parts of it. But I don’t think dine-in is going away. I think there’s still this kind of fundamental human need to socialize over food with other people, and so I think that behavior will still exist. It won’t be as pronounced as it was, but it will still be there.

Will you ever build a ball pit again?

There’s probably some good public-health reasons not for us to be doing a lot of ball pits.</span><span style="font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, Oxygen-Sans, Ubuntu, Cantarell, 'Helvetica Neue', sans-serif;">[Laughs.] I don’t know if we’ve got ball pits in our future. There’s probably some good public-health reasons not for us to be doing a lot of ball pits.

You’re requiring masks starting Aug. 1. What are the consequences for not wearing masks? Recently, an employee was assaulted in Oakland, Calif., after asking a customer to put on a mask.

We’re trying to strike a balance here. There’s certainly a public-health need for people to wear masks. There’s also situations out there, [where employees are] having to police the wearing of the mask. We’ve trained all of our restaurants how to handle or de-escalate those types of situations. But ultimately if a customer is not willing to wear a mask, that is where we encourage our crew to call law enforcement and let them deal with it. We don’t want to have our crew being put in a situation where their safety is somehow being put at risk by policing this. But I think the vast, vast majority of the customers out there recognize the importance of wearing masks.

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But what does it say about our society that restaurant workers, many of them teenagers, have to be taught de-escalation training?

For a long time, McDonald’s has in our communities played a larger role beyond just serving food. In many cases, we’re the town square. We’re the community center. We’re less comfortable or excited to be a policing entity. We have different times and different places that we get put into situations like that, whether it’s homeless who are trying to use our restaurant as a place to wash up or whatever. Or we have incidences that periodically occur where people have drug overdoses.

The whole parade of humanity.

When you serve 70 million people a day, which is what we do globally, what you tend to see in McDonald’s is what is happening in society at large. And so, we do the best we can with our crew to make sure that they’re able to serve our customers, but ultimately we have to make sure our crew are safe and so we don’t want to be putting them in situations where they’re in harm’s way.

Has the pandemic led to any supply shortages?

One of the things that’s been remarkable for us is through this whole pandemic, we haven’t had a single supply break on food, packaging, cleaning materials, etc., which is pretty extraordinary. In the U.S. in particular, there were some issues, about six weeks ago or two months ago, with beef shortages being of particular concern. I’m happy to tell you, those never impacted us. They impacted some of our competitors. There were industry supply pressures earlier around proteins. Those have let up, and throughout McDonald’s didn’t have any problems with it.

I’m guessing if you’re a McDonald’s supplier you are going to make sure that is one order that gets filled without fail.

We have made a point similar to that on a few different occasions.

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Has there been one menu item that has gained in popularity in recent months?

The surprising thing is that in the pandemic, consumers are gravitating back to our core menu. You’re seeing it in grocery-shopping behavior where these brands that in some cases people have viewed as, years ago I used to eat soup, and now all of a sudden people are eating soup again. You’re seeing a similar desire for trusted favorites … Big Mac, Quarter Pounder, french fries. They’re less willing to be trying new things. They’re less likely to go out there and try some fancy new burger at McDonald’s.

Are you happy with your menu offerings?

Our menu is a very democratic process; whatever the customer wants is what I want on that menu. If it’s not something that the customer wants, it’s not on our menu. I get asked quite often, Why isn’t this on the menu? Why isn’t that on the menu? And my short answer to all of those is because it didn’t sell enough. We are completely agnostic. We will put on whatever sells.

Beyond a hankering for the old favorites, any shifting tastes?

I do think one thing that is a global trend that we’re also seeing in the U.S. is protein consumption is shifting from beef to chicken. We’re paying attention to that in a number of markets again because consumption patterns are changing.

Last year, in fast food, it was the year of the chicken sandwich. But the Washington Post declared you late to the game and was pretty harsh about your offering, calling it “an amalgamation of various spare parts, lying around the company garage.” Snap!

That’s the great thing about working at McDonald’s, you never lack for attention. We always will get different perspectives. But we’re certainly working on ways that we can update and upgrade our chicken offering in the U.S. Suffice to say we will continue to be competing and innovating in chicken. And I’m sure we’ll continue to be getting critiques about how we’re doing.

You’re still working on your chicken-sandwich formulation?

Well, I don’t want to get too into revealing competitive secrets, but I think we are feeling good about where we’re at, and we look forward to bringing the customers some more innovation in chicken.

Given the environmental impact, should people even be eating meat at all?

It’s not our job to tell people what they should or shouldn’t be eating.</span><span style="font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, Oxygen-Sans, Ubuntu, Cantarell, 'Helvetica Neue', sans-serif;">Well, that’s a larger question that I think is not for McDonald’s to answer. That’s for consumers to answer. If consumers decide they don’t want to eat meat and they want to eat something else, we’ll serve that. It’s not our job to tell people what they should or shouldn’t be eating.

I understand you’re a marathon runner. How much McDonald’s food is part of your diet?

I eat it five days a week, twice a day. I have it every breakfast and lunch five days a week. I eat a fair bit of McDonald’s. I know my way around the menu pretty well. So I have my days that I’m going to eat healthy, and then I have my cheat days. And the great thing about our menu is you can do both.

What is your healthy go-to order?

If you’re talking breakfast, my healthy go-to order would be getting an Egg McMuffin sandwich with no bacon on it. And I might with that get either a cup of coffee or a small Diet Coke. And that’s typically all I’ll eat for breakfast. Lunch, it could be a salad. It could be our filet of fish with no tartar sauce on it. Double ketchup. Or it could be, if it’s a cheat day, it could be the Quarter Pounder.

The CDC says one-third of Americans are obese and frequent fast-food consumption has been shown to contribute to weight gain. You talk a lot about values. And I know you’re serving customers what they want. But how do you reconcile that with the fact that a Double Quarter Pounder with Cheese and a large chocolate shake account for more than three-quarters of total recommended daily caloric intake, heavy on the sodium and saturated fat?

Our philosophy is that it’s ultimately the customer’s choice. We do disclose all of our nutritionals, and so it is prominently featured on the menu. It’s prominently featured on the app if you were to order. Essentially any of our order channels, you can see what the nutritionals are. And then a customer will make those choices that they need. For us, our obligation is to make sure we’re giving the customer all the information that they need, and ultimately they’ll decide what they want to do.

I understand that it’s not an urban myth, that there are specific reasons why Coke does taste better at McDonald’s. Can you tick off a few?

We have a very tight and special relationship with Coke. And it’s in our mutual best interest for us to have the best-tasting Coke in McDonald’s. One of the things that is helpful and why we have such a great-tasting Coke product is because of our volumes. We have in the back of our restaurants these tanks that essentially allow us to have a better mixing process in our restaurants between the syrup and the carbonated water than what someone else is able to do.

And there’s some adjustment of the sweetness to compensate for melting ice?

We have a process with Coke, where we have what we would call a gold-standard product. And we work with Coke to make sure that what is ultimately coming out of the fountain machine and into a customer’s cup reflects the gold standard. And that does entail tweaking, when needed, the sweetness.

Could you talk about how you follow a talented leader who was also very human? How do you approach that? At the town hall after you were named CEO, you talked about how emotional that was for you.

Part of what I tried to do is just to start with being honest with people and authentic. And I didn’t try to wrap it in any kind of corporate speak or euphemisms or anything like that. I mean I tried to just speak pretty openly about how I felt, which was conflicted because on the one hand, I considered Steve a friend. He brought me into the company. He supported me. But on the other hand, Steve made a mistake, and he made a mistake that CEOs shouldn’t be making. So have that trove of emotions that you do in any situation where someone does things that surprise you, disappoint you. Steve was at the company for 20 years. So there were a lot of friendships that were built, but also by the same token, I know there were a lot of people very upset and disappointed.

The Nation just published a detailed article describing a culture of sexual harassment at many McDonald’s outlets. Does McDonald’s have a sexual-harassment problem in the restaurants?

Anytime I hear about one of those situations, it’s disappointing to me because it flies totally in the face of what we stand for as a business. We stand for diversity, inclusion. We want to be a place that everybody feels welcome and that they’re treated based on their abilities and their contribution. Not for anything else.

What’s management’s role in responding?

It’s our job to take action and make sure that whatever were the conditions for the situation that led to that, that we deal with it very quickly. And also part of my obligation as CEO is to set the tone at the top. And I’m spending a lot of time just making sure that people understand my expectations around values. People understand my expectations about speaking up if they see anyone deviating from those values and giving them the confidence that if they do that, they’re going to be protected and that we’re also going to deal with it swiftly. And that’s what I think we have done, and that’s certainly what I’m going to continue to do as CEO.

Can you address the recent employee strikes over sick days, health care, personal protective gear and wages?

I think all of those in light of the pandemic make a ton of sense in that people are very worried about their health. They want to make sure that when they go to work that they’re going to be protected. I don’t think any of us—myself included—want to be in a situation where you’re having to decide between your health and going and getting a paycheck. One of the misconceptions is that somehow or another through this pandemic, McDonald’s workers haven’t been able to get sick pay. The vast, vast majority of our restaurants are offering sick pay to crew working in the restaurants right now. In the vast, vast majority of restaurants, people aren’t having to make that trade-off between safety and getting a paycheck.

And personal protective equipment? Do you feel the company is doing a good job in supplying that to workers?

Yes. We have global safety standards, and one of those is that crew are required to wear PPE in the restaurants. So that’s a face mask, that’s gloves. We ask the crew, and there’s a whole set of procedures around washing hands every hour. And if you look at the infection rate in our restaurants relative to the general population, we typically are better than the general population. So it doesn’t mean that we’re complacent about it. But I think we’re doing a nice job of keeping our crew safe.

One of the first things you did as CEO was change advertising agencies to Wieden + Kennedy. How involved are you in the advertising?

Let me put it this way, my team hopes I’m never involved in the advertising piece. When I’m involved in the advertising, it usually means there’s a problem. Or that something is not maybe as good as it needs to be. So I would say like most things in my job, I’m usually not involved until there’s a problem, and then I get heavily involved.

I’m Interested in those 15-second spots that focus on ingredients with the wonderful Scottish actor Brian Cox from Succession. He doesn’t seem like the most obvious choice for McDonald’s voice-over work.

You’re always trying to find something that is arresting or grabs your attention. That’s always a challenge in advertising. How do you get someone to pay attention? And in many cases, it’s that little bit of that odd juxtaposition that creates interest. To have his voice, which people either unconsciously or consciously know who he is, juxtaposed with the ingredient—there’s something unique and kind of makes you pay attention to that, and that’s why I think it worked.

Your mother was a kindergarten teacher. Do you ever have a bad day and go home and think I basically have the same job?

[Laughs.] That feels like a very dangerous question for me to answer. I would just say that I feel like I have an opportunity to build the future in a very good way for the company. So like my mother as a kindergarten teacher, she’s looking at the future, I feel like my job is to look at the future as well.

KEMPCZINSKI’S FAVORITES

BUSINESS BOOK: Thinking, Fast and Slow by Daniel Kahneman

AUTHOR: I do love Philip Roth on the serious side. He was a phenomenal, phenomenal writer. My guilty pleasure is tabloid journalism: TMZ, the Daily Mail, Page Six. I can give you the latest and greatest on all the happenings.

EXERCISE: I like sports. I’m good at none of them, but I love all of them.

APP: Outside of the ESPN app, Google Maps is a phenomenal app. I use that one for everything.

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Court Records Reveal 115 Injury Reports for Slide at Universal Orlando Water Park

Fri, 31 Jul 2020 21:22:40 GMT

(ORLANDO, Fla.) — At least 115 injury reports have been made involving a water slide at Universal Orlando’s Volcano Bay, according to court records filed in a lawsuit by a tourist who says he was left paralyzed after going on the ride.

The Orlando Sentinel reports the injuries included scrapes, nose bleeds, a concussion and whiplash. Two ride safety testers also were injured.

Universal spokesman Tom Schroder told the newspaper in a statement that 1.5 million visitors have gone on the Punga Racers water slide since it opened in 2017, and New York tourist James Bowen’s injury was the only one that required reporting under Florida law.

Bowen sued Universal and ride manufacturer ProSlide Technology in state court after he says his neck snapped back violently as he went through a wave of water at the end of the ride last year.

Under Florida law, large theme parks are only required to report to the state ride injuries where visitors are hospitalized for at least 24 hours.

“When there is an injury of any kind, we immediately begin an investigation and review,” Schroder said. “We are confident in our process and in the safety of our rides.”

Bowen’s attorney said last April during a court hearing that Universal could have foreseen the risk of injuries since a test rider was injured in the exact same way.

Trader Joe’s Won’t Change Trader Jose, Trader Ming Product Labels After Viral Petition ...

Fri, 31 Jul 2020 20:31:49 GMT

(LOS ANGELES) — Trader Joe’s, which indicated earlier this month it might change the names of some of its products after an online petition denounced them as racist, now says it will stick with labels like Trader Jose’s and Trader Ming’s for Mexican and Asian food.

“We want to be clear: we disagree that any of these labels are racist,” the popular grocery chain said in a statement posted on its website. It added, “We do not make decisions based on petitions.”

The petition posted on change.org by a high school student claims the names create “a narrative of exoticism that perpetuates harmful stereotypes.”

Other Trader Joe’s names cited include Arabian Joe for Middle Eastern food, Trader Giotto’s for Italian and Trader Joe San for Japanese cuisine.

After the petition was launched Trader Joe’s issued a statement saying it has been in the process of updating product labels and hoped to conclude that effort soon.

“While this approach to product naming may have been rooted in a lighthearted attempt at inclusiveness, we recognize that it may now have the opposite effect — one that is contrary to the welcoming, rewarding customer experience we strive to create every day,” company spokeswoman Kenya Friend-Daniel said at the time.

She didn’t respond to a message Friday asking what changed the company’s mind.

But in its recent statement the grocery chain said it still believes the names, many created decades ago, represent lighthearted efforts at inclusion, adding that its customers say they still like them. Initial word that it would change the names, Trader Joe’s said, was based on “inaccurate reports.”

“We thought then—and still do—that this naming of products could be fun and show appreciation for other cultures,” the company said.

The petition, which had more than 5,000 signatures on Friday, also provoked disagreement among some who saw it.

“Enough is enough,” one person commented. “Let’s stop stereotyping and perpetuating narratives that are harmful and hurtful.”

Another responded, “Pick on something else. The packaging indicates it’s authentic to the country the recipe comes from! There are far more important issues to be worked on!”

Trump Expected to Order China’s ByteDance to Sell TikTok in U.S.

Fri, 31 Jul 2020 19:25:52 GMT

President Donald Trump plans to announce a decision ordering China’s ByteDance Ltd. to divest its ownership of the popular U.S.-based music-video app TikTok, according to people familiar with the matter.

The U.S. has been investigating potential national security risks due to the company’s control of the app, and Trump’s decision could be announced as soon as Friday.

Spokespeople for the White House and Treasury Department didn’t immediately respond to requests for comment. A TikTok spokesperson couldn’t be reached for comment.

Snap Inc., a TikTok competitor, gained on the report, reflecting speculation that it may benefit from any move that weakens TikTok. Shares of the Santa Monica, California-based company were up 2 percent to $22.87 in New York.

Bytedance bought Musical.ly Inc. in 2017 and merged it with TikTok, creating a popular and fast-growing social media hit in the U.S — the first Chinese app to make such inroads.

As TikTok grew more popular, U.S. officials grew more concerned about the potential for the Chinese government to use the app to gain data on U.S. citizens. The Committee on Foreign Investment in the U.S., which investigates overseas acquisition of U.S. businesses, began a review of the purchase in the fall of 2019, according to a person familiar with the investigation.

TikTok has become a political pawn between the U.S. and China, and elected officials have criticized the app’s security and privacy practices, suggesting that user data collected through the app might be shared with the Chinese government. Trump said earlier this month he was considering banning TikTok as a way to retaliate against China for its handling of the coronavirus.

TikTok critics and competitors have played up that fear, including Facebook Inc., which has criticized the app for alleged censorship.

Trump’s threat to ban TikTok came just a few weeks after reports that many TikTok users had tried to sabotage a Trump campaign rally by requesting tickets they never planned to use and coordinated a push to flood Trump’s 2020 campaign app with negative reviews.

TikTok has been looking for ways to distance itself from its Chinese ownership, seeking to reassure the public that no data is stored on servers in China and that the app operates independently. Bytedance even appointed a CEO formerly of Walt Disney Co, Kevin Mayer, to run its operations in America.

Kodak Shares Jump 2,441% After Winning Government Loan to Make Drug Ingredients to Fight Coronavirus

Wed, 29 Jul 2020 16:12:40 GMT

Shares of Eastman Kodak Co. have leapt 2,441% higher this week, sending its market valuation to nearly $2 billion, after it won a government loan to help produce ingredients used in key generic medicines to fight the coronavirus.

Kodak, the storied photography giant whose business and shares were devastated by the switch to filmless cameras, gained as much as 655% on Wednesday, triggering at least six halts for volatility along the way. More than 110 million shares traded hands, more than 23 times its typical volume. The company’s value climbed to $1.99 billion as of 10:25 a.m. in New York, after closing on Friday shy of $100 million.

Kodak shares tripled on Tuesday on news of a $765 million loan to shift part of its factories to produce drug ingredients. The development bank loan was the first of its kind under the Defense Production Act in collaboration with the U.S. Department of Defense, and intended to speed production of drugs in short supply and those considered critical to treat Covid-19, including hydroxychloroquine, the controversial antimalarial drug touted by President Donald Trump.

Judge Says OxyContin-Maker Purdue Must Halt Some Political Contributions

Wed, 29 Jul 2020 02:39:39 GMT

A federal bankruptcy judge ruled Tuesday that OxyContin maker Purdue Pharma can’t make any more contributions to partisan organizations that seek to boost the election efforts of candidates for state attorney general offices.

The company can keep contributing to some other political groups, according to the ruling from Judge Robert Drain.

Lawyers asked Drain to block Purdue from making political contributions earlier this month when it was revealed that the company had given $185,000 to political groups after declaring bankruptcy last year.

Advocates were particularly troubled by contributions to the Democratic Attorneys General Association and the Republican Attorneys General Association because state attorneys general are suing the company and trying to negotiate a settlement with it. Both groups said earlier this month that they would return the contributions to Purdue, as have partisan groups representing the nation’s governors.

The company said participating in the political groups is a normal part of its business.

Under Drain’s order, the company can make annual cash contributions to the Democratic Governors Association, the Republican Governors Association, the Republican State Leadership Committee and the Democratic Legislative Campaign Committee.

The amounts will be limited. Purdue can give no more than $25,000 to each group during the remainder of its bankruptcy proceedings, plus the cost of conference registration. It can make contributions to other political organizations, but only after notifying the court. The total of all contributions must be under $125,000.

Through its bankruptcy, Purdue is attempting to settle thousands of lawsuits filed by governments that accuse the company of contributing to the nation’s opioid addiction crisis.

Many Companies Won’t Survive the Pandemic. Amazon Will Emerge Stronger Than Ever

Tue, 28 Jul 2020 20:01:19 GMT

The pandemic has upended businesses across the world, but it has been very good for Amazon. Every lockdown “click to purchase” nudged the company a little further toward utter domination of online shopping as total e-commerce sales nearly doubled in May. But if bigger was better for everyone, Amazon founder and CEO Jeff Bezos would not be appearing before Congress on Wednesday for an antitrust hearing.

Charlene Anderson, and sellers like her, are one reason why he’ll be there. Anderson is among the many merchants who sell goods on Amazon — and who together account for more than half of sales on the site. But they pay, too: Amazon charges Anderson a $39.99 monthly fee to post her knitting and craft supplies on its site, and it takes a cut of about 30 percent on each item she sells. Anderson’s seller experience has worsened during the pandemic as Amazon exercised the power of what she calls “dictatorship” over the vast internal marketplace it alone controls.

In mid-March, for example, Amazon notified sellers that during the pandemic, its warehouses would accept only household staples, medical supplies and “other high-demand products,“ but it failed to explain how it determined what it would accept. Anderson could still send some colors of knitting bags to Amazon warehouses, but not others; she could send one size of knitting needles, but not another. Some sellers saw their sales evaporate; others paid USPS or other services to ship orders to customers, while still paying Amazon’s monthly fees.

Even after Amazon lifted that order, boxes of goods that Anderson ships to a warehouse still sit on loading docks for weeks, she says, and when Amazon unpacks them, it miscounts the items, an error that takes Anderson days to remedy. The company sends customers the wrong items, then allows them to leave negative feedback on her seller page despite the error being Amazon’s, says Anderson, who is 63 and lives in Jackson Hole, Wyoming. In the Facebook group she runs, Anderson says some sellers worry that the raft of problems will lower their internal scores on Amazon so much that the company will kick them off the site.

But where else can they go? “What are we going to do, protest and not sell on Amazon?” Anderson asks. “Right, I’m just going to kill my whole business. They have you and they know they have you—if you go, they’ll just find someone else to sell those products.”

Consumer spending on Amazon between May and July was up 60% from the same time frame last year, according to the financial data firm Facteus. The company’s extraordinary power — it has 38% of the e-commerce market, trailed by Walmart with 6% — was under scrutiny well before COVID-19. But the lockdown that boosted the company’s dominance also threw into higher relief its consequences for other businesses.

That’s increased interest in updating federal laws written more than a century ago to correct the distortions of monopolies on an economy. Bezos is appearing before a Subcommittee on Antitrust, Commercial, and Administrative Law, part of an investigation by the House Judiciary Committee into online platforms and market power. The hearings are asking: in the age of Big Tech, how big is too big? New York University marketing professor Scott Galloway, a longtime critic of Amazon, says it’s helpful to think of Amazon’s Prime membership service as the kind of massive competitive advantage once enjoyed by railroad barons. With its extensive logistics and delivery network, Amazon not only has the eyeballs of millions of households, it is the company that ships, packs, and delivers what they buy.

“Amazon already owns the rails into 115 million households in America,” says Galloway. “Do we really want one company to be the arbiter of all commerce?”

Roy Davison Charlene Anderson, who has sold items on Amazon for 20 years, says relations with the online giant have suffered as its power grows.

Economic crises have a way of creating winners and losers. Procter & Gamble thrived during the Great Depression by doubling down on advertising; Target expanded after the 2001 recession and saw profits grow 50%. Before the pandemic, Amazon represented around 4% of total U.S. retail sales. But with the new habits formed during the pandemic, UBS predicts that by 2025, e-commerce will make up one-quarter of total retail sales, up from 15% last year. The firm also estimates that 100,000 brick and mortar retail outlets will close in the next five years. “Consumers are increasingly shifting towards online shopping,” analysts wrote. “Many of these shoppers may not get back to in-store shopping when the current state is over.”

Amazon, which refused to make an executive available to comment on this article, casts itself as a friendly giant in its ubiquitous messages to consumers; it spent nearly $7 billion advertising itself in 2019 (more than double what Walmart spent). According to Ad Age, that made the company the biggest ad spender in the U.S. last year. But Amazon also sells advertising — $3.9 billion worth in the first quarter of 2020, up about 44% from a year earlier. The ads appear on Kindle, on Amazon Prime TV and on Amazon.com, some of them purchased by the same small sellers already paying to be listed on Amazon but afraid of getting lost on the site without additional promotion.

Because of the way e-commerce works, advertising on Amazon is essential for just about anyone selling on the site. According to marketing surveys, when online shoppers are thinking of buying an item, about half go straight to Amazon and search for the item, rather than Googling it or visiting another website. Most don’t scroll beyond the first page of results, so for sellers, it’s essential to be featured on that first page. They can hope that positive reviews lead Amazon’s algorithm to put them there, or they can buy ads.

Amazon is now the third-biggest digital ad seller in the United States, following Facebook and Google. And as it consolidates its grip on e-commerce, it can charge more for ads on its site. Buyers now compete with each other in an auction for keywords related to their products; the more people that are competing, the higher prices go. Revenues from advertising in the first three months of this year were up 43.8% from the previous year and 359% since 2017, according to company earnings reports.“It begins to feel like they’re playing chess, and they’re thinking three to four steps ahead,” says Andrew Lipsman, a retail analyst at market research firm eMarketer. “The more I think about Amazon, the more I marvel at it.”

So do investors, who saw its stock as a haven in a treacherous equity market. Amazon has gained half a trillion dollars in market value just this year, and shares should climb even higher when earnings are reported on July 30 if, as analysts at Goldman Sachs predicted, company revenues in North America show a jump of nearly 50% from the previous year. Bezos, already the richest person in the world with a net worth of $178 billion, could become the world’s first trillionaire by 2026.

That kind of concentrated wealth invites the stark comparisons embodied by people like Susan Bengel. One of the 175,000 employees Amazon hired during a pandemic that cost 40 million American jobs, Bengel, 62, had been living in her car before she started working at an Amazon warehouse in Pennsylvania in late March. She told me she recently got an offer from UPS, but she stayed with Amazon despite difficult conditions that include being on her feet for entire night shifts. UPS couldn’t match the pay or benefits she gets at Amazon, Bengel says. “It’s a monopoly, but they provide well,” she told me after one shift, in which each worker received a Chick-fil-A boxed dinner and bottle of hand sanitizer courtesy of Amazon. As stores close in her hometown of Wayne, Pa., she turned to Amazon to buy what she needs, including new shoes and back braces to get her through her shifts.

Lindsey Wasson—Getty ImagesPeople wearing masks outside the Amazon campus in Seattle, Wash., on April 30, 2020.

For Amazon shoppers, there’s not much not to like, apart from the unease at feeding a behemoth that competitors say is gobbling up their customers. Amazon argues that it’s not a monopoly, since it competes with brick and mortar stores for sales. “There’s a single retail market of which online is one channel. People do not shop exclusively online,” an Amazon spokesman said in a statement. But stores without Amazon’s logistics network are finding it impossible to compete. While Amazon was hiring tens of thousands of new workers, Jeff Curtis was running around his Maine bookshop, Sherman’s, scrambling to fulfill online orders much as Bezos had done in the mid-90s during Amazon’s early days selling only books online. But Curtis was by himself, because his store was closed to comply with stay-at-home orders. He says the state denied his request for special dispensation to bring in workers to help, even as Amazon was allowed to have on-site employees fulfill its own rush of online orders. Curtis has already decided to permanently close one of six branches of his store and is worried he may have to close another. It is the way of the world Amazon has built. Kathy Gonzalez, who runs two retail stores in northwest Florida, says she’s tried to offer shipping for furniture and other items she sells, but the cost is so high that people turn to Amazon, where shipping is free.

“If you want to be able to reach customers online, you’re essentially compelled to be on Amazon’s platform, but Amazon’s platform is not a place that you can succeed,” says Stacy Mitchell, the co-director at the Institute for Local Self-Reliance. “With this sudden surge in online shopping, all of that has been magnified.”

Its mammoth size gives Amazon advantages available only to itself: One of its companies, Amazon Web Services (AWS), is a cloud computing platform that lets companies rent space on a network of servers. Its $35 billion in sales in 2019 (up 36% from the previous year) provided a financial cushion that let Amazon subsidize grocery delivery, expand its network of warehouses, and dare to offer one-day shipping without worrying about huge losses. The company now has 1,223 buildings covering 278 million square feet in its global logistics network, up 82% since 2016, according to MWPVL International, a supply chain and logistics consulting firm, and it’s still expanding at an “unprecedented” pace,” says Marc Wulfraat, founder and president of MWPVL. It built or announced plans to build 49 million square feet of logistics space in the U.S. between March and July alone, he says.

Amazon’s deep pockets are also ensuring the company’s ability to operate during the coronavirus in a way no other company can. Bezos said in late April that Amazon was investing $4 billion in coronavirus-protection efforts, including personal protective equipment for workers, enhanced cleaning at facilities, and development of its own COVID-19 testing capabilities. Galloway calls this the first “vaccinated supply chain,” and says it will help Amazon further dominate competitors as more people choose to buy and sell products through a service that has invested in being virus-free.

Amazon also continues to invest in technologies that will further consolidate its grip on e-commerce. In June, the company said it would spend $1.2 billion to acquire Zoox, a startup that makes self-driving vehicles, which could help in its delivery services. Amazon is expanding its fleet of cargo planes as other airlines lease them for cheap, the better to lessen its reliance on FedEx and UPS. It invested hundreds of millions of dollars in Rivian, an electric car company, and ordered 100,000 electric vans from the startup. In July, Amazon said it would open more cashier-less Amazon Go stores.

“Some people—and I’m one of them—only buy something if it’s on Amazon” says Brandon Fishman, CEO of VitaCup, which sells vitamin-infused coffee and tea both in retail stores and online and which saw a 35% increase in its Amazon sales in March and April. Fishman says it’s cheaper for him to sell his products in brick and mortar stores than to sell them on Amazon, because of the cut Amazon takes for packing and shipping. But he doesn’t want to miss out on e-commerce customers, who are his most loyal. More than half the people who buy VitaCup products on Amazon return to the site to buy more.

“Third party sellers would say it’s a deal with the devil,” says Galloway, the NYU professor. “Amazon brings us a lot of revenue, and we become addicted to it, but every year our economics get worse.”

In April, the Wall Street Journal reported that Amazon had been using data from third-party sellers to determine which items were selling well, then making private-label versions of the same products to compete with the sellers’ products. (Amazon said such a practice would violate its policies, and it vowed to investigate.) Other sellers have alleged that Amazon does not take down counterfeit versions of items sold on its site; they suspect that the company does not want to lose the fees it collects from both legitimate and non-legitimate sellers. (Amazon says it invests “heavily” in prohibiting the sale of counterfeit products, using automated systems to help ferret out counterfeits, and that 99.9% of all pages visited by customers did not receive a notice of potential counterfeit infringement.)

During the pandemic, sellers say, communication has worsened and Amazon has slowed its response to flagrant problems on the site. Charlene Anderson says she can’t sell a knitting gauge because the picture is inaccurate on Amazon’s catalog page; she has been trying the problem fixed for three months. In July, Anderson says, Amazon told sellers it was going to restrict how many products they could keep in warehouses based on a performance metric. The ups and downs of the pandemic have meant that while Anderson’s sales were down in the beginning of the COVID-19 outbreak, they’re up about 3% now. But some sellers in the Facebook group she runs report their sales are down more than 50%. Most frustrating for all of them is the inconsistency; they have no idea when Amazon will change the rules again. “We hate having to deal with all of this, but to build our business, we have to,” Anderson says.

Amazon says its platform allows anybody to make an income in an otherwise challenging pandemic economy, and that it is working to help sellers while meeting increased demand from consumers. “Our commitment to our selling partners has never been more steadfast,” an Amazon spokesperson said in a statement. In the twelve months ending May 31, 2020, small and medium-sized businesses sold 3.4 billion products, up 25% from the same time the previous year, according to a report Amazon released July 21. Amazon says the average American small and medium-sized seller had more than $160,000 in sales during that time, though it did not provide averages for how much these sellers took home after expenses.

Amazon is now valued by the stock market at $1.5 trillion, a figure that dwarfs the GDP of Saudi Arabia. The very thing that has made it so successful during the pandemic—its size and the many layers of its businesses—is what has given it so much leverage over sellers, workers and governments. Existing antitrust laws are designed to protect the consumer from predatory pricing. That orientation has shielded Amazon, because the company in many cases saves consumers money, but it is being questioned by scholars, and now lawmakers.

Critics say that regulating or breaking up Amazon will be better for merchants on its site and also, in the long term, for the economy. The rate of start-up creation in the United States has been falling for years; there is some evidence that this is because big companies like Amazon use their size to force smaller competitors out of business, or prevent them from being created in the first place. If small manufacturers and retailers had a fighting chance in competing with Amazon, they might help reverse the decline in start-up creation. New businesses in America are much of what drives the country’s productivity and economic growth, raising its standard of living and spreading wealth and jobs.

Historically, antitrust enforcement has helped upstarts; Companies like Google arose in part because of government antitrust action against Microsoft in the 1990s; the breakup of AT&T in the 1980s helped launch a technology renaissance.

“A key component of our success as a society is this very basic notion of checks and balances,” says Galloway, of NYU. “We’ve tried to avoid dictatorships, we try to avoid monopolies. We don’t have a judge, we have a judge and jury. And we believe in the wisdom of crowds.”

Charlene Anderson agrees. She says she and other sellers don’t want Amazon to disappear. If that happened, they would lose their income source and their access to millions of shoppers. They just want better communication with Amazon, more democracy, less dictatorship. “Amazon is not transparent at all,” she says. “Amazon will not tell you anything.”

Wednesday’s hearing before the House subcommittee on antitrust law will test that allegation, and more, as Congress peaks behind the curtain of one of America’s most successful companies. The next question is whether it has the tools to do anything about what it sees.

We Don’t Just Need More Stimulus — We Need Smarter Stimulus

Tue, 28 Jul 2020 18:21:12 GMT

With the Republican-led Senate only just now unveiling its first draft of a next stimulus package and passage of a final bill dependent on weeks of arduous negotiations between Congress and the White House, the already-tenuous economic recovery just became more tenuous. It’s likely a misnomer even to call it a recovery: going from 15% unemployment to 11% may look like a sharp improvement until you recognize that at no point during the Great Recession of 2008-2009 did the unemployment rate reach what it is now.

With the pandemic surging across the South and West, the situation has deteriorated since the early summer, and employment numbers don’t reflect the 30% of Americans who missed rent payments in June, or the vast numbers of rent abatements and deferrals for businesses across the nation. Other than booming tech companies catering to stay at home realities and odd pockets of increased demand such as bicycle makers and RV sales, the U.S. economy remains in dire shape. The question is – or should be – not whether government needs to spend oodles more—it does—but how it should spend more, much more. For now, the federal government is barely up to the tactical response of spending. But to prevent a multi-year recession/depression, it needs a strategy, and it doesn’t have one.

One would think that the federal response would be another round of what we saw in April, augmented by what we have learned since. The fact that even the Republicans are contemplating another $1 trillion bill (larger than the one substantial bill passed during the Great Recession) on top of the nearly $3 trillion in April is testament to the fact that this time, it is actually different. But while the numbers are there, the urgency isn’t, and the numbers may not be big enough. The Democrat-led House proposed a $3.5 trillion bill which addressed the painful shortfall of state budgets, but even it did not tackle the greatest challenge right now: how to encourage economic activity even in the midst of a pandemic.

The challenge now is that the U.S. economy is in a purgatory, neither truly open nor firmly closed. That ambiguity, along with the continued heated partisan attitudes towards “opening” and “closing,” seems to have hobbled Congress and the White House. Yet this hybrid reality of neither shut down nor opened up will almost certainly last for much of the remainder of the year and probably into 2021, too. It requires just as much aggressive government aid, but now tailored to the realities of an uncontained virus, millions of businesses attempting to function or not allowed to, and hundreds of millions of people trying to live some version of life.

The Senate Republicans have proposed reducing the enhanced $600 a week unemployment benefits to $200 and the White House via Treasury Secretary Mnuchin has floated a formula for guaranteeing wage replacement up to 70%. Those figures will almost certainly go back up, but the fact that cutting this emergency aid was even proposed is deeply flawed. Yes, some people have been receiving more in unemployment than they would working, and there surely are cases of companies unable to hire cheaper labor, but no one can seriously argue that the primary challenge for businesses just now is finding workers willing to work for lower wages. The challenge is finding customers who are willing to spend, and consumers tend to spend less and save more when they are anxious about the future, which is precisely what has been happening. The U.S. savings rate was 32% in April and 23% in May, is higher by a factor of 2x than it’s ever been since data was first collected in 1959.

You can pay people not to work, but you can’t pay them to spend, which is why the new proposals of direct checks may alleviate some worries but will not on their own jumpstart the economy. European government did a stellar job of guaranteeing income and employment but they have been unable to spur a resumption of much economic activity, hence the recent agreement to spend another trillion dollars. It won’t be enough there, and it won’t be enough here.

What’s needed now is a stark recognition that as long as the virus is uncontained globally, there will be no real recovery. In the United States, as long as state governments lurch between partly open and partly closed, businesses will teeter and people on the whole will save more and spend less, which will only slow the recovery and compound problems. As long as businesses are worried about the spread of the virus in the workplace, there will be no resumption of office work en masse. Zoom is great for many companies, but it cannot fully replace the economic activity that working in offices created, from the businesses that supported businesses to the service industries that catered to those working and commuting.

What’s needed is not just large stimulus but smart stimulus. That means supporting incomes, maintaining jobs and bolstering state budgets until tax revenue recovers, which will only happen when activity resumes, which can only happen if the virus is controlled. That then necessitates money for enhanced testing and money for school openings. And the final piece is money not just to address the immediate crisis but funds that can only be used for longer-term investment. That could mean not just the short-terms loans to businesses meant to keep them afloat but longer term loans earmarked for long-term growth. Biden recently proposed a massive “Buy America” program; Trump has long advocated reshoring. It would seem a perfect opportunity for all side to support of multi-trillion plan to boost American businesses for the long term.

In short, a cobbled together next round of spending is necessary but not sufficient. That is a tactic. The country also needs a strategy. It needs emergency government spending; it also needs a vision for the next few years and not just the next few months.

Long-term aggressive investing combined with short-term money may not make us safe from the virus but it could assure businesses and companies that the future is not so uncertain that they need to save and save. Only if people can see their way to a more stable future will they do more than escapist splurging and episodic spending, and without more sustained activity, without people and businesses putting money in motion, all the government spending in the world will be insufficient. Washington seems to have accepted the need to spend; it does not seem to have yet figured out how to spend. It’s not too late, but that clock is ticking.