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U.S. Businesses Take Steps to Reopen: Live Economy Updates

Democratic lawmakers criticized airlines over employee pay, refunds and new fees at a Senate hearing on Wednesday.

Senator Maria Cantwell of Washington, the ranking Democrat on the Commerce, Science and Transportation Committee, singled out United Airlines, Delta Air Lines and JetBlue for their decisions to cut employee hours.

“Mandatory or forced reductions in payroll hours is not what the CARES Act intended,” she said, referring to the stimulus law passed in March, which authorized $50 billion to help airlines continue operating during the coronavirus pandemic. Half of that funding was intended to pay employees through September, provided airlines refrained from cutting pay or laying off staff.

United on Wednesday reversed a plan that would have made thousands of full-time workers into part-timers. A union representing thousands of United employees sued the airline over the plan on Tuesday. The company said the lawsuit was “meritless.”

Executives from United and other airlines did not take part in the hearing. The airlines were represented by the chief executive of the trade group Airlines for America, Nicholas E. Calio. He said airlines were doing whatever they could to survive.

“The duration and breadth of the impacts directly on our industry compounded by the larger economy leave no doubt that the U.S. airline industry will emerge a shadow of what it was on March 1 of this year,” Mr. Calio said.

That did not satisfy Democrats who said the industry’s practices around refunds were misleading or deceptive. Many airlines have been encouraging travelers to take vouchers for future travel instead of cash.

Government figures due Friday will undoubtedly show that job losses in April were the worst ever. But they could provide key hints about the recovery.

Economists surveyed by MarketWatch expect the Labor Department report to show that U.S. payrolls fell by 22 million jobs last month — a decade’s worth of job gains, wiped out in weeks. The payroll processing company ADP on Wednesday said that the private sector lost more than 20 million jobs in April, with the cuts spread across every sector and size of employer.

It’s no surprise that employers have cut millions of jobs. Weekly data on filings for unemployment benefits, released every Thursday, have tracked the destruction.

Friday’s report could also help answer a question that could be crucial to the eventual recovery: How far has the damage spread?

If the losses are concentrated in sectors that have been directly affected by the virus, like retail and services that were hit by stay-at-home orders, that could bode well for the recovery, because it suggests the damage has been contained. But if it has spread to industries like finance and professional services, that could suggest a cascade effect is underway, with laid-off workers pulling back on spending, leading to lost revenues and still more layoffs. It could take much longer to climb out of that kind of hole.

Trump administration officials said Wednesday that meat shortages at grocery stores and fast food chains would be short-lived, despite coronavirus outbreaks that have shuttered meat packing plants around the country and sickened thousands of workers.

Meat shortages should end within 10 days as plants come online, the agriculture secretary, Sonny Perdue, said in an Oval Office meeting with President Trump and Kim Reynolds, the Republican governor of Iowa.

“I think we’ve turned the corner,” he said. “I’d say probably a week to 10 days, we’ll be back up.”

The crowded conditions at the country’s largest meatpacking plants have turned them into coronavirus hot spots and led to the deaths of dozens of workers.

Factories across the Midwest have been temporarily shuttered, cutting down on the nation’s supply of hamburger, pork loins and chicken. Hundreds of Wendy’s restaurants have run out of hamburgers, while Costco and Kroger have put limits on the number of meat items customers can purchase.

The Trump administration issued an executive order last week to put more pressure on meatpacking facilities to remain open and help them reduce their liability to worker lawsuits.

When asked about shortages at Wendy’s, Mr. Trump said he would call the company’s chairman and added that he was confident the problem would go away.

Ms. Reynolds said only one meatpacking plant in Iowa was shut — a Tyson pork processing facility in Waterloo that accounts for nearly 4 percent of the country’s pork processing capacity. More than 400 of the plant’s 2,800 employees have already tested positive for coronavirus, and several have died.

Meat packing plants have installed new safety features including barriers between workers and new requirements for protective gear. But many workers stay they are still nervous to returning to facilities that had become hotbeds of infection.

People flock to electronic payments as a banking alternative.

More people and businesses are using electronic payments and other alternatives to the traditional financial system in the coronavirus pandemic, according to new financial results announced by PayPal and Square on Wednesday.

In April alone, PayPal said, it added an average of 250,000 new active accounts every day, bringing the total new accounts for the month up 135 percent from March, when growth was also higher than normal.

At both PayPal and Square, new customers flocked to the apps that allow consumers to make direct payments to friends and family. Those apps have come to serve as alternative bank accounts for many people. The number of new people using Square’s offering, Square Cash, as a bank account was four times higher in April than in March.

The forced closing of many businesses hurt revenue at PayPal and Square in the most recent quarter, but their growth suggests the companies are likely to come out of the crisis with an expanded customer base.

Gap, which owns its namesake brand, Old Navy, Banana Republic and Athleta, said on Wednesday that it planned to reopen up to 800 stores in North America by the end of May, as retailers clamor to return to business after shutting down because of the coronavirus pandemic.

“Our goal is to be responsibly aggressive,” Sonia Syngal, chief executive of Gap, said in an interview with The New York Times’s Sapna Maheshwari on Tuesday. “Every retailer will have its own opening strategy, but suffice it to say we are looking to open where we’re legally allowed to open as soon as we can.”

The plan follows similar strategies announced in recent weeks by Macy’s, the owner of Bloomingdales and Bluemercury, and Simon Property Group, the biggest mall operator in the United States. Macy’s said on April 30 that it planned to reopen all its 775 stores, including its major flagships in Manhattan, within six to eight weeks.

Gap will start reopening a batch of stores this weekend in Texas, though it declined to specify a number. The openings of 800 stores — nearly one-third of its locations in North America — would be dependent on guidelines from state and local authorities, Ms. Syngal said.

Gap said it would put into place a range of safety measures in stores, including supplying associates with face masks and installing plexiglass partitions in front of registers. Fitting rooms and restrooms will not be available, and returns will be quarantined for 24 hours.

The company had furloughed nearly 80,000 store employees in the United States and Canada as part of the closures.

A federal judge dismissed a lawsuit filed by an anonymous worker claiming that her employer, a Smithfield Foods pork plant in Milan, Mo., had taken insufficient steps to keep workers safe during the coronavirus pandemic.

In the ruling on Tuesday, the judge found that jurisdiction over the plant lay with two federal agencies, the Department of Agriculture and the Occupational Safety and Health Administration, rather than with the courts. The judge also said that the plant had taken “significant steps” to lower the risk of a coronavirus outbreak among its workers, such as giving them more space to eat while on break.

The suit sought an injunction requiring the plant to allow workers to stand farther apart and to make it easier for the employees to practice good hygiene, like covering their mouths while coughing. The suit also sought more frequent breaks for workers to clean their hands and a more generous sick-leave policy.

David Seligman, one of the lawyers involved in bringing the case, said in a statement that “the only thing that made Smithfield’s operation of this plant no longer a clear ‘offense against the public order’ was the changes that they’d made since our clients filed this lawsuit.”

Smithfield said in a statement that it was pleased with the decision and that “from the start, we stated that this lawsuit was frivolous, full of specious allegations that were without factual or legal merit.”

The North American plants of the three big U.S. automakers have been closed since mid-March. Mostly.

A handful of General Motors workers have labored on — including several dozen at a plant in Bedford, Ind., that makes chassis for Chevrolet Corvettes.

A G.M. spokesman said the factory’s continuing operation was aimed at reducing a chassis shortage and helping resume Corvette production more quickly once the company reopens an assembly plant in Bowling Green, Ky.

The spokesman said that the Bedford plant was running three shifts a day — with about 20 people per shift, down from about 250 hourly workers normally — and that the workers had volunteered for the assignment, at their usual wage.

The company said Wednesday that it planned to “restart the majority of manufacturing operations” in North America on May 18.

The G.M. spokesman said that aside from the Bedford plant, the company had continued work at a Texas plant to finish building a sport utility vehicle before the plant changed over to a new model, and in Lockport, N.Y., to make replacement parts for existing vehicles.

Brian Rothenberg, a United Automobile Workers spokesman, said the union had cooperated with such efforts if the return to work was voluntary and adequate safety measures were in place.

After a day of swinging between gains and losses, stocks on Wall Street ended with a small decline Wednesday.

Markets had been buoyed this week by signs that the countries hardest hit by the virus were slowly emerging from economically devastating lockdowns, though gains on Monday and Tuesday were small — as was Wednesday’s decline. The S&P 500 fell less than 1 percent.

The rest of the week will bring more concrete evidence of the severity of the damage caused by the shutdown, with a monthly report on unemployment Friday to provide a comprehensive look at the number of Americans out of work.

Already, reports on jobless claims have shown that more than 30 million workers in the United States sought unemployment benefits over the six weeks through April. Another weekly update is due on Thursday.

On Wednesday, the ADP National Employment Report showed the private sector work force had plunged by 20 million jobs in April. Separately, new data from the European Commission predicted a deep recession on the continent this year.

Oil prices, which had rebounded over the past two days, fell on Wednesday. The price of benchmark crude in the United States retreated to a little over $23 a barrel. Brent crude, the international benchmark, fell below $30 a barrel.

Catch up: Here’s what else is happening.

  • Lyft on Wednesday gave investors their first detailed look at how the coronavirus had affected its ride-hailing service. Revenue fell 6 percent from the previous quarter, to $955.7 million. Lyft lost $398 million, up 10 percent from its loss in the previous quarter.

  • BuzzFeed’s chief executive and founder, Jonah Peretti, told staff Wednesday that 68 noneditorial employees, from the business, studio and administration teams, would be furloughed for three months, with a goal of keeping losses this year to under $20 million, according to an email obtained by The New York Times. Mr. Peretti also said cuts to the news division would be necessary and that he would begin discussions with the union about them. BuzzFeed has already instituted staff-wide graduated pay cuts for those making more than $40,000 a year.

  • Uber said it would lay off about 3,700 full time workers on its customer support and recruiting teams as the ride-hailing business slumps. Uber had about 27,000 employees at the end of 2019, and the company was reported last week to be looking at cuts of about 20 percent of its work force. Uber also said its chief executive, Dara Khosrowshahi, would waive his base salary for the rest of the year.

  • United Airlines announced a $2.25 billion bond offering on Wednesday that would be used to pay down a $2 billion loan it took out in early March. The airline also said it would no longer force thousands of full-time workers to part-time status, a move that prompted a union lawsuit, if enough employees volunteer for a reduction in hours.

  • The New York Times Company reported on Wednesday that it had netted 587,000 new digital subscriptions in the first quarter and surpassed six million total subscriptions by the end of April. But its chief executive, Mark Thompson, warned that advertising revenue had plummeted and could continue to fall by as much as 55 percent in the second quarter.

  • BMW said Wednesday that deliveries of new vehicles plunged 20 percent in the first three months of the year and warned that it was bracing for a long period of depressed sales. The German carmaker said it “expects the consequences of the corona pandemic to constrain the operations of the entire automotive industry for quite some time to come.” Car sales, BMW said in a statement, “are not going to return to normal in the space of just a few weeks.”

Reporting and research was contributed by Ana Swanson, Noam Scheiber, Kate Conger, Ben Casselman, Sapna Maheshwari, Matina Stevis-Gridneff, Adam Satariano, Marc Tracy, Neal E. Boudette, Jack Ewing, Carlos Tejada, Kevin Williams, Niraj Chokshi, Mohammed Hadi, Lin Qiqing, Katie Robertson and Kevin Granville.

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