2023/11/12, Sunday, Rainy day,

 

The Low-Wage Pay Surge Is Over, Threatening the Consumer Boom

While a loosening labor market is cutting into the leverage and spending power of workers at the bottom, they aren’t moving backward

By 

Amara Omeokwe

Nov. 12, 2023 6:00 am ET

---

---

More workers are seeking jobs, and the economy is feeling the impact of the Federal Reserve’s fight against inflation. PHOTO: FREDERIC J. BROWN/AGENCE FRANCE-PRESSE/GETTY IMAGES

Low-wage workers were the labor market’s surprise winners of the past few years. As employers clamored to hire from a limited pool of workers, Americans in lower-paying industries gained leverage to obtain some of the largest pay raises and perks. Government relief during the pandemic padded those workers’ finances.

Now, that leverage is weakening. More workers are seeking jobs, and the economy is feeling the impact of the Federal Reserve’s campaign to combat inflation. That has resulted in slower wage growth overall, but particularly at the lower end of the pay scale. Pandemic-era savings cushions are growing smaller. Indeed, U.S. credit-card debt rose by $154 billion in the third quarter from the same period in 2022, not adjusted for inflation, the largest increase on records back to 1999, according to the Federal Reserve Bank of New York. But borrowers are showing strain: The share of credit-card users who became newly delinquent, or 30 or more days behind on at least one account, was higher than the prepandemic average during the third quarter, according to New York Fed research. Delinquency rates are rising fastest in lower-income ZIP Codes, the research found.

The Path to Green Energy Is Getting Messier

The shift away from oil and gas looks increasingly more expensive and further out

Steel monopile foundations for an offshore wind project were unloaded in Virginia last month. PHOTO: HANDOUT/AGENCE FRANCE-PRESSE/GETTY IMAGES

By Phred Dvorak

Nov. 12, 2023 6:00 am ET

Offshore wind projects are being scrapped, and renewable-energy companies’ share prices are tanking. In the U.S., automakers are reining in electric-vehicle plans as demand falters. Meanwhile, the oil-and-gas industry is embarking on a round of megadeals enabled by soaring profits and is pushing more forcefully the idea that fossil fuels will be around for a long time yet. Climate-warming carbon emissions are expected to climb to a record this year, some researchers say. The shift away from oil and gas is still happening. Solar and wind capacity is growing fast, governments are rolling out policies to support low-carbon technologies and billions of dollars are flowing into projects ranging from hydrogen production to electric-vehicle charging stations.

With headwinds ranging from high interest rates and inflation to geopolitical tensions driving an increased focus on energy security, the path to a low-carbon future now looks less straightforward, rockier and more expensive than it did just a few years ago.

A big chunk of the clean-energy industry’s woes are macroeconomic. Some of the worst-hit companies started big, expensive projects before pandemic supply-chain bottlenecks helped send the cost of materials such as steel soaring, and interest-rate increases made financing more expensive. In the U.S., dozens of renewable-power developers have increased prices they are charging for electricity and rewritten contracts to try to recoup costs. The U.S. in particular has also seen a political backlash against climate change-focused investing, with a number of Republican-led states and conservative lawmakers pushing for curbs on ESG—or environmental, social and corporate-governance—investments. Investors pulled a net $2.7 billion out of U.S. sustainable-investment funds during the three months through September, while a growing number of U.S. funds dropped ESG-related terms from their names, according to Morningstar.