WEBVTT - US Payroll Gains Not as Robust as Reported, BLS Data Suggest 0:00:00.600 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.520 --> 0:00:12.880 This is Bloomberg Business Wait inside from the reporters and 0:00:13.080 --> 0:00:16.640 editors who bring you America's most trusted business magazine, plus 0:00:16.720 --> 0:00:20.840 global business, finance and tech news. The Bloomberg Business Week 0:00:20.880 --> 0:00:25.800 podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:27.280 --> 0:00:29.800 So wait, what is up with the ECB? The global 0:00:29.800 --> 0:00:32.920 mond market losing some steam after notching its longest winning 0:00:33.080 --> 0:00:36.400 run this year after the European Central Bank raised its 0:00:36.440 --> 0:00:39.839 inflation forecasts after delivering a widely expected rate cut. It 0:00:39.880 --> 0:00:41.479 made us be like, yeah, wait. 0:00:41.320 --> 0:00:43.159 What okay, it was a historic move. It saw the 0:00:43.200 --> 0:00:47.199 ECB slashing borrowing costs ahead of the FED meeting next week. Officials, 0:00:47.280 --> 0:00:49.640 led by President Christine Legard, said that while the inflation 0:00:49.680 --> 0:00:53.760 outlook has improved quote markedly, they'll keep policy rates sufficiently 0:00:53.800 --> 0:00:56.280 restrictive for as long as necessary. 0:00:56.320 --> 0:00:58.280 All right, with what you need to know? Why you 0:00:58.320 --> 0:01:01.360 should care? Back in studio with us Bloomberg International Economics 0:01:01.360 --> 0:01:04.800 and Policy correspondent Michael McKee, Mike, so widely expected, but 0:01:04.840 --> 0:01:07.280 it seemed like, why do you cut rates when you 0:01:07.360 --> 0:01:08.840 think inflation is going up? 0:01:09.520 --> 0:01:12.840 Well, the couple of things. One they think that the 0:01:12.959 --> 0:01:17.319 inflation path is becoming more clear, that they can make 0:01:17.400 --> 0:01:21.959 these revised forecasts with more confidence that that's actually going 0:01:22.000 --> 0:01:25.000 to happen, that over the long run, inflation will come 0:01:25.040 --> 0:01:27.520 down to target. The other thing they point out is 0:01:27.600 --> 0:01:32.120 that the real rate, as inflation comes down, goes up. 0:01:32.800 --> 0:01:37.560 So the argument today from the ECB management was that 0:01:38.520 --> 0:01:42.320 they are basically just keeping policy as tight as it 0:01:42.600 --> 0:01:47.720 was because inflation's come down a lot, and even though 0:01:48.120 --> 0:01:51.680 they cut rates, the restraint on the economy has gone 0:01:51.760 --> 0:01:54.600 up because real rates are higher. Okay, does that make 0:01:54.600 --> 0:01:58.640 sense to you, Well, it makes sense to me. This 0:01:58.720 --> 0:02:02.120 is a debate that Paul Krugman is waiting into it 0:02:02.160 --> 0:02:04.000 in the New York Times today, saying the Fed's behind 0:02:04.000 --> 0:02:06.800 the curve because the ECB did the right thing. You 0:02:06.840 --> 0:02:08.919 are going to have people on both sides arguing, and 0:02:09.240 --> 0:02:11.080 kind of the bottom line is twenty five basis points 0:02:11.120 --> 0:02:12.640 isn't going to make a difference one way or another. 0:02:12.680 --> 0:02:16.160 It's a bit more about the psychology of the markets 0:02:16.240 --> 0:02:18.760 and how they take it and what's going to happen 0:02:18.800 --> 0:02:22.000 in the future. The ECB today, Christine Leguard, was very 0:02:22.040 --> 0:02:24.400 cagey about that, which is why everybody's calling it a 0:02:24.480 --> 0:02:29.480 hawkish cut because they didn't make any promises and they did, 0:02:29.520 --> 0:02:32.680 as you said, talk about keeping rates high for longer. 0:02:33.520 --> 0:02:35.600 The FED, on the other hand, is probably not going 0:02:35.680 --> 0:02:37.400 to do anything, but they will come out with a 0:02:37.440 --> 0:02:40.960 new dot plot and that will set the direction for 0:02:41.360 --> 0:02:42.840 the markets in the US. 0:02:43.120 --> 0:02:45.440 Okay, well, speaking of that, this is ahead of the 0:02:45.520 --> 0:02:48.280 US Jobs report tomorrow, the CPI report next Wednesday in 0:02:48.280 --> 0:02:51.160 the US, the same day that the FED finishes up 0:02:51.200 --> 0:02:53.919 its meeting and gives its update on economic and rate projections, 0:02:53.919 --> 0:02:56.639 which you just referred to. Does what we saw from 0:02:56.680 --> 0:03:00.680 the ECB today mean anything to fed A officials. 0:03:01.320 --> 0:03:04.600 Now, both of the ECB and the FED have the 0:03:04.600 --> 0:03:08.960 advantage of being the central banks for huge economies, so 0:03:09.200 --> 0:03:12.560 they really are able to focus on their own economies 0:03:12.600 --> 0:03:16.280 and do what they need to do for them. If 0:03:16.320 --> 0:03:18.679 you're in a small country, you're going to be affected 0:03:18.760 --> 0:03:22.360 by either one or both because the big trading partners, 0:03:22.400 --> 0:03:24.680 they're going to be affecting the value of your currency. 0:03:24.960 --> 0:03:28.280 But in this case, it didn't, It didn't really, it 0:03:28.320 --> 0:03:30.720 doesn't really have an impact. The FED and the ECB 0:03:30.840 --> 0:03:33.200 will do what they have to do for their own economies. 0:03:33.280 --> 0:03:34.639 All right, So now we want to get into a 0:03:34.680 --> 0:03:38.400 little bit more when it comes to payroll because we 0:03:38.480 --> 0:03:41.280 obviously have the monthly read tomorrow at eight thirty am 0:03:41.280 --> 0:03:43.000 Wall Street Time. Mike's going to stay with us. We 0:03:43.000 --> 0:03:45.640 want to bring into the conversation Bloomberg News Economics reporter 0:03:46.000 --> 0:03:48.840 Rich Miller. He is in our Washington DC bureau. Rich, 0:03:48.880 --> 0:03:50.960 You've got a great story that's out on the Bloomberg 0:03:51.040 --> 0:03:53.960 and it gets into why US payroll gains may not 0:03:54.080 --> 0:03:56.800 be as robust as reported, What gives and what is 0:03:56.840 --> 0:03:59.920 the data that points this out? 0:04:00.160 --> 0:04:01.960 With me a second. It's a little complicated, but. 0:04:03.000 --> 0:04:03.960 We like complicated. 0:04:05.120 --> 0:04:12.040 Good, good good. There's something called the Quarterly Census Unemployment Wages. 0:04:12.240 --> 0:04:16.000 It's basically a compilation of that the Labor Department has 0:04:16.040 --> 0:04:22.000 of unemployment insurance tax records filed by businesses. This covers 0:04:22.040 --> 0:04:25.000 like twelve more than twelve million businesses as opposed to 0:04:25.000 --> 0:04:28.360 the Monthly Payrolls Report, which is a survey of about 0:04:28.400 --> 0:04:31.600 one hundred and nineteen hundred and twenty thousand. So this, 0:04:31.880 --> 0:04:37.760 this quarterly report, which is commonly called among the geeks 0:04:37.800 --> 0:04:45.240 as qc W, suggests that the Monthly Payrolls Report last 0:04:45.320 --> 0:04:50.360 year was overstated by about sixty thousand per month. That means, 0:04:50.400 --> 0:04:52.720 you know, the labor market may not be quite as 0:04:52.800 --> 0:04:57.800 sturdy as j Powell thinks, as Joe Biden hopes, and 0:04:57.839 --> 0:05:00.600 that kind of raises the stakes for the Fed as 0:05:00.640 --> 0:05:03.960 it tries to sort of balance cooling off the labor 0:05:04.040 --> 0:05:05.760 market but not killing. 0:05:05.480 --> 0:05:10.240 It rich the QCW, you know, the new piece that 0:05:10.600 --> 0:05:13.480 the data are eventually used in annual revisions to the 0:05:13.480 --> 0:05:17.919 monthly data. Right, does the dispersion that we saw with 0:05:18.000 --> 0:05:21.559 the data released earlier today match dispersions that we've seen 0:05:22.000 --> 0:05:24.680 in other quarters and other years when it comes. 0:05:24.440 --> 0:05:29.680 To the data traditionally, if this holds, and the qc 0:05:30.680 --> 0:05:36.960 QCW data is also occasionally revised, but if this difference holds, 0:05:37.080 --> 0:05:40.640 it would be one of the biggest revisions in the 0:05:40.680 --> 0:05:44.480 payrolls data that we've seen. For example, last year. Last year, 0:05:44.480 --> 0:05:47.000 there was again there was a lot of concern about 0:05:47.000 --> 0:05:51.039 a big downward revision in payrolls for the imperious year. 0:05:51.440 --> 0:05:54.080 As it turned out, the revision wasn't all that big. 0:05:54.120 --> 0:05:58.920 It came in less than twenty thousand, so it's still 0:06:00.080 --> 0:06:03.920 only the Department will give sort of an early estimate 0:06:03.960 --> 0:06:06.159 of how what it thinks the revision will be in August, 0:06:06.240 --> 0:06:08.680 so we're still a number of months away from that, 0:06:09.680 --> 0:06:12.080 and that's when we get a sort of final tally 0:06:12.120 --> 0:06:15.320 about how much the numbers were off. 0:06:15.880 --> 0:06:17.840 Bring I want to bring my king because no disk 0:06:17.880 --> 0:06:20.680 of the qc W, and I like wonky and I 0:06:20.760 --> 0:06:24.480 like nerding out here on economic data points. But Mike, 0:06:25.040 --> 0:06:26.719 we've had a lot of conversations with you. I feel 0:06:26.720 --> 0:06:28.480 like this doesn't come up. Why is it coming up? 0:06:28.880 --> 0:06:32.840 Because the data just came out yesterday. A preliminary data 0:06:32.960 --> 0:06:35.040 was released in May. 0:06:35.680 --> 0:06:37.160 So it's new data sets. 0:06:37.800 --> 0:06:41.360 Well, basically what they do is they release a report 0:06:41.400 --> 0:06:46.080 every quarter for the previous quarter, so well actually for 0:06:46.080 --> 0:06:48.520 a quarter and a half back because the May data 0:06:48.520 --> 0:06:53.000 and the data we got today incorporated the final quarter 0:06:53.000 --> 0:06:55.440 of twenty twenty three and then the first quarter of 0:06:55.480 --> 0:07:01.080 this year, and we have not had such a huge 0:07:01.080 --> 0:07:06.039 as Rich was saying, such a possible huge change. But 0:07:06.120 --> 0:07:09.480 as you know, last year there was some of this 0:07:09.680 --> 0:07:12.080 worry going around in the economics community and it didn't 0:07:12.120 --> 0:07:16.280 really prove out. And by August it is possible the 0:07:16.320 --> 0:07:20.560 current QCW numbers could get revised lower as well. But 0:07:20.640 --> 0:07:23.120 what we get in August is one giant number. So 0:07:23.200 --> 0:07:26.840 this is the whole amount for the year through March, 0:07:27.360 --> 0:07:29.400 and then they have to divide it up, which we 0:07:29.440 --> 0:07:32.680 won't get till the next February. Month by month, So 0:07:32.800 --> 0:07:34.680 you could see some of these months where we got 0:07:34.680 --> 0:07:37.040 three hundred thousand jobs, you get two hundred and forty thousand. 0:07:37.080 --> 0:07:39.240 That's gonna not look too bad. But if you had 0:07:39.240 --> 0:07:42.880 something like one hundred thousand jobs and you lose. 0:07:42.640 --> 0:07:44.480 Sixty thousand, you would say fed your pond. 0:07:45.360 --> 0:07:48.040 Or they could say that particular month you lost every 0:07:48.080 --> 0:07:50.960 job and it was negative, and that's Bloomberg Economics is 0:07:51.080 --> 0:07:53.480 saying that's a possibility, and they're all worried about that. 0:07:53.680 --> 0:07:55.800 So we're in a blackout period ahead of the Federal 0:07:55.800 --> 0:07:56.800 Reserve meeting next week. 0:07:57.040 --> 0:07:58.760 I've been counting you down for the last. 0:07:58.560 --> 0:08:01.600 Month, and we're finally there, Carol, We're finally there. Sorry, 0:08:01.880 --> 0:08:04.480 but Mike, you I mean you talk to Fed officials 0:08:04.520 --> 0:08:05.000 all the time. 0:08:05.520 --> 0:08:06.240 This is data. 0:08:07.440 --> 0:08:09.720 How do you think they're taking this into account ahead 0:08:09.720 --> 0:08:10.520 of the policy meeting. 0:08:10.720 --> 0:08:12.560 Well, I'm sure they are, and I'm sure they've done 0:08:12.560 --> 0:08:16.120 the math and tried to figure out for themselves exactly 0:08:16.160 --> 0:08:20.360 what it might mean. But as we said yesterday earlier 0:08:20.440 --> 0:08:22.680 this week, the head has to deal with the numbers 0:08:22.680 --> 0:08:24.680 that it has at the time it has them to 0:08:24.720 --> 0:08:29.840 make their decisions. This could be another input, but you know, 0:08:30.480 --> 0:08:33.199 is it going to come through in which case maybe 0:08:33.240 --> 0:08:35.920 you wanted to cut rates or is it not, in 0:08:35.960 --> 0:08:38.560 which case you're maybe moving too soon. Because this is 0:08:38.600 --> 0:08:39.679 just an if at this. 0:08:39.760 --> 0:08:43.160 Point, Rich, how do you kind of think about it 0:08:43.640 --> 0:08:45.960 against what the Fed might do? And also kind of 0:08:45.960 --> 0:08:48.360 I feel like there was I think a story on 0:08:48.360 --> 0:08:50.520 the Bloomberg turn al today from our Bloomberg Economics team. 0:08:50.559 --> 0:08:53.080 It just about kind of the continuation of like seeing 0:08:53.120 --> 0:08:55.800 softer and softer economic points, whether it's on the consumer, 0:08:56.000 --> 0:08:59.040 on the labor, Like we are starting to see some softness, 0:08:59.040 --> 0:09:02.400 not necessarily everything falling apart, But so how are you 0:09:02.400 --> 0:09:06.480 thinking about this? This new survey the qc e W 0:09:06.760 --> 0:09:09.480 against kind of the broader backdrop of what we are 0:09:09.520 --> 0:09:12.240 seeing anecdotally are actual. 0:09:13.080 --> 0:09:14.960 I mean, it just I mean, it just adds to 0:09:15.040 --> 0:09:19.679 the confusion, right basically, Uh, you know, we've got all 0:09:19.720 --> 0:09:22.880 these conflicting signals. I mean, the trouble is they're trying 0:09:22.880 --> 0:09:24.840 to cool things off, but they don't want to cool 0:09:24.880 --> 0:09:26.920 them off too much. So the thing is, you know, 0:09:27.200 --> 0:09:31.400 you're constantly asking you a question. Are things slowing? First, Yes, 0:09:31.480 --> 0:09:34.839 they're slowing, but are they slowing too much? Oh, we're worried. 0:09:34.880 --> 0:09:37.920 We're worried. So I mean, and this just you know, 0:09:38.040 --> 0:09:41.880 puts one nugget or one sand on the side of 0:09:41.960 --> 0:09:45.000 we're slowing too much, but there are other sands on 0:09:45.040 --> 0:09:48.320 the side of you know, this looks like a soft landing. 0:09:48.520 --> 0:09:52.079 I think it just makes it much more difficult, and unfortunately, 0:09:52.120 --> 0:09:54.880 you know, raises the risk that you know, the FED 0:09:54.960 --> 0:09:57.960 can make them, you know, a mistake, either that it's 0:09:58.080 --> 0:10:01.000 you know, it cuts too soon or cuts too late. 0:10:01.040 --> 0:10:04.760 It just makes their job, which is already done difficult 0:10:04.800 --> 0:10:06.280 even more more difficult. 0:10:06.360 --> 0:10:08.040 What I want to ask Mike and come on back in. 0:10:08.160 --> 0:10:11.200 It's like, why couldn't the Fed okay, oops, maybe things 0:10:11.200 --> 0:10:14.839 are slowing down faster. Do fifty basis points versus a quarter? 0:10:14.920 --> 0:10:17.079 Is it such a shock to the system, Like if 0:10:17.080 --> 0:10:19.720 they feel like they're getting behind, what's the difference of 0:10:19.760 --> 0:10:22.200 doing something like that versus like a quarter of a 0:10:22.240 --> 0:10:24.120 point gradually and really forecasting the head? 0:10:24.200 --> 0:10:27.199 Well, if they did feel that the economy was falling 0:10:27.200 --> 0:10:31.400 off cliff, they would probably go fifty. Not inconceivable, they 0:10:31.400 --> 0:10:31.800 could go. 0:10:31.800 --> 0:10:33.240 More and they wouldn't have to wait to a meeting. 0:10:34.080 --> 0:10:36.800 They they went fifty and seventy five in two thousand 0:10:36.880 --> 0:10:44.760 when the tech bubble burst, But they wouldn't surprise with 0:10:44.880 --> 0:10:47.880 that because then the problem becomes for the markets, what 0:10:47.920 --> 0:10:49.800 do they know that we don't know? I mean, how 0:10:49.880 --> 0:10:54.240 bad really is it? And obviously during COVID it was 0:10:54.280 --> 0:10:56.360 really bad, which is why they were to seventy five 0:10:56.400 --> 0:10:58.960 basis points, But there were millions of people dying, and 0:10:59.000 --> 0:11:01.880 I mean, it was very opt to everyone that the 0:11:01.960 --> 0:11:04.480 FED could do that, and they sort of telegraph that 0:11:04.520 --> 0:11:07.079 they would so they could do fifty. And that's one 0:11:07.120 --> 0:11:10.120 of the arguments they make for holding is it's easy 0:11:10.480 --> 0:11:14.080 to cut rates and stimulate the economy, and we know 0:11:14.160 --> 0:11:16.320 how to do that, so if we're behind, we can 0:11:16.400 --> 0:11:18.880 catch up. Now you can argue about that, but that's 0:11:18.920 --> 0:11:21.000 their their argument, their feeling. 0:11:21.280 --> 0:11:24.280 Hey, Rich, I just want to wrap up with the 0:11:24.320 --> 0:11:26.679 idea of something that you flick out at the end 0:11:26.720 --> 0:11:29.240 of your piece of undocumented migrants in the way that 0:11:29.679 --> 0:11:32.520 they could be or not be accounted for in this 0:11:32.760 --> 0:11:34.760 data what did you find with the sources you spoke 0:11:34.800 --> 0:11:36.000 with when you're reporting this out? 0:11:36.840 --> 0:11:42.040 Well, I mean, this is all too pretty confusing. But 0:11:42.120 --> 0:11:47.080 some people argue that the QCW data because it's you know, 0:11:48.000 --> 0:11:53.240 companies reporting effectively to the IRS on their unemployment insurance 0:11:53.440 --> 0:11:57.240 taxes that they might not want to if they have 0:11:57.360 --> 0:12:02.640 undocumented workers on their payroll, they might not want to 0:12:02.679 --> 0:12:05.520 say anything about that and they and they wouldn't anyway, 0:12:05.520 --> 0:12:09.200 they wouldn't be covered by the unemployment insurance system. So 0:12:09.280 --> 0:12:13.480 therefore that the argument is that unlike in past years 0:12:13.559 --> 0:12:17.880 when we didn't have a big surgeon immigrants, uh, these 0:12:18.000 --> 0:12:24.800 QCW data are basically understating what the true level is. 0:12:26.760 --> 0:12:30.439 But that you know, that's open to debate and yet 0:12:30.480 --> 0:12:32.080 another thing that the FED is wrestling with. 0:12:32.800 --> 0:12:36.360 Yeah, talk about wrestling, right, it's like kind of conflicting. Rich, 0:12:36.400 --> 0:12:38.600 Thank you so much, really appreciate your reporting. Rich Miller, 0:12:38.640 --> 0:12:41.640 economics reporter at Bloomberg News, joining us there in our Washington, 0:12:41.720 --> 0:12:44.319 DC bureau. You bet, Rich, Thank you, Mike Ricki, thank 0:12:44.360 --> 0:12:44.880 you so much. 0:12:46.400 --> 0:12:49.920 You're listening to the Bloomberg Business Week podcast. Catch us 0:12:49.960 --> 0:12:53.199 live weekday afternoons from two to five pm. Eastern Listen 0:12:53.240 --> 0:12:55.400 on Apple card Play and then Bright Auto with a 0:12:55.400 --> 0:12:58.439 Bloomberg Business app, or watch us live on YouTube. 0:13:00.240 --> 0:13:02.120 New Yorkers who liked to debate a lot of things 0:13:02.160 --> 0:13:04.560 and count congestion pricing is one of those topics. It 0:13:04.600 --> 0:13:07.240 can get kind of heated when you bring up the topic. 0:13:07.760 --> 0:13:11.520 Some are definitely cheering New York Governor Kathy Hochele's last 0:13:11.520 --> 0:13:15.800 minute decision this was yesterday to definitely indefinitely halt a 0:13:15.840 --> 0:13:19.240 congestion pricing plan. Others remind us of the possible consequences 0:13:19.320 --> 0:13:21.120 of that move. I have to say, you know, when 0:13:21.120 --> 0:13:22.800 it crossed, I thought this was kind of a doune thing. 0:13:22.880 --> 0:13:24.520 I was kind of shocked reading my phone. 0:13:24.559 --> 0:13:26.079 I think shocked is a good way to describe, and 0:13:26.160 --> 0:13:28.600 I think way a lot of people felt, including perhaps 0:13:28.760 --> 0:13:31.320 our next guest simply put, New Yorkers maybe headed for 0:13:31.320 --> 0:13:33.640 the summer of hell. The story on this among our 0:13:33.679 --> 0:13:36.680 most read today on the Bloomberg terminal. Here with more 0:13:36.880 --> 0:13:40.640 Bloomberg News New York Politics reporter Laura Namius, along with 0:13:40.760 --> 0:13:44.079 Michelle Caski, who's reporter too here at Bloomberg. Both are 0:13:44.160 --> 0:13:47.240 joining us on this Thursday afternoon. Okay, so Laura, I 0:13:47.280 --> 0:13:49.839 just want to start with you and remind everybody how 0:13:49.840 --> 0:13:52.640 we got to this place, and also give us your 0:13:52.679 --> 0:13:55.679 reaction to seeing this news yesterday morning. 0:13:56.040 --> 0:13:59.040 I think it's fair to say that everyone in New 0:13:59.120 --> 0:14:04.320 York and even further beyond, was totally shocked by the 0:14:04.360 --> 0:14:09.280 governor's decision. Everyone I spoke to yesterday, people in politics, 0:14:09.880 --> 0:14:13.400 well known transit advocates, said they got no heads up 0:14:13.440 --> 0:14:19.960 about it. They were totally totally surprised. And this came 0:14:20.000 --> 0:14:22.520 about It's been many years in the making. I mean, 0:14:23.000 --> 0:14:28.720 the idea was first proposed decades ago, but it was 0:14:28.760 --> 0:14:31.960 passed by the legislature and signed by Governor Cuomo in 0:14:32.240 --> 0:14:35.680 former Governor Cuomo in twenty nineteen, and then there've been 0:14:35.680 --> 0:14:39.760 a series of things that have delayed environmental assessments, you know, 0:14:40.080 --> 0:14:44.520 various federal approvals that needed to be passed and signed. 0:14:44.640 --> 0:14:49.000 And it was scheduled to start on June thirtieth. 0:14:48.640 --> 0:14:51.320 Or The totally gantries right or in place. They are 0:14:51.360 --> 0:14:52.320 the streets of New York City. 0:14:52.360 --> 0:14:57.720 The signs are in place, Yes, truly stunning. People at 0:14:57.720 --> 0:15:01.120 the MTA were stunned. Hard to find anybody who knew 0:15:01.120 --> 0:15:03.960 this was going to happen before she officially made the announcement. 0:15:04.000 --> 0:15:06.120 Michelle CASKI, we want to bring you. You're a reporter 0:15:06.160 --> 0:15:07.440 to here at B LIBERG. You've been out on the 0:15:07.480 --> 0:15:09.280 streets and it sounds like you've been talking to folks 0:15:09.360 --> 0:15:10.560 about this. What are you hearing? 0:15:12.160 --> 0:15:16.600 Well, definitely, the surprise is definitely real. And now the 0:15:16.720 --> 0:15:21.960 issues what does the MPa do next? And they were 0:15:22.000 --> 0:15:26.520 relying on they were counting on a billion dollars a 0:15:26.600 --> 0:15:30.360 year coming in from congestion pricing. So the issue is 0:15:30.400 --> 0:15:32.320 how do they pay for their infrastructure? Now? 0:15:32.480 --> 0:15:34.960 Well before we get there, because it's like I said, 0:15:35.120 --> 0:15:37.400 New York's left to debate things. There's two sides to 0:15:37.440 --> 0:15:40.240 this story. Let me, lord, let me go back to 0:15:40.280 --> 0:15:42.280 you for a moment. I mean, why was she maybe 0:15:42.360 --> 0:15:44.240 right to pause? I mean we were talking with our 0:15:44.240 --> 0:15:48.600 Michael mckeeth. There are people where this cost will be 0:15:49.200 --> 0:15:52.160 a problem, an issue in an environment where things are 0:15:52.160 --> 0:15:53.640 costing a lot more. 0:15:53.880 --> 0:15:56.960 Right, So that was the rationale that the governor offered 0:15:57.000 --> 0:16:02.360 in a short video message that she released yesterday, and 0:16:02.520 --> 0:16:05.480 recent polling had found that although a majority of New 0:16:05.560 --> 0:16:09.600 Yorkers supported the measure before it was passed in twenty nineteen. 0:16:10.120 --> 0:16:13.840 In recent weeks and months, a majority of New Yorkers 0:16:14.200 --> 0:16:17.400 don't like it. I think the numbers were something like 0:16:17.560 --> 0:16:21.400 sixty three maybe sixty eight percent disapproved of. 0:16:21.360 --> 0:16:23.280 It, a growing number of New Yorkers. Yeah. 0:16:23.320 --> 0:16:27.080 But the caveat there is that there's all of this 0:16:27.160 --> 0:16:31.240 social science research and people familiar with similar polling plans 0:16:31.560 --> 0:16:34.440 that have been enacted in other cities in other countries 0:16:35.080 --> 0:16:38.040 all found that the polling was really negative right before 0:16:38.240 --> 0:16:42.680 something is implemented, because you're about to pay the real cost, 0:16:42.840 --> 0:16:45.120 but you aren't seeing the benefits yet. So there was 0:16:45.160 --> 0:16:48.200 a hope among people in the know that people would 0:16:48.200 --> 0:16:50.560 get used to it and they would start to like 0:16:50.600 --> 0:16:53.800 it more like you know, an analogy as the smoking 0:16:53.840 --> 0:16:56.520 ban in New York City was really people didn't like 0:16:56.560 --> 0:16:59.160 that before it took effect, and then eventually they grew 0:16:59.160 --> 0:16:59.560 to love it. 0:17:00.120 --> 0:17:02.120 Move on to the summer of hell. We can't wait 0:17:02.160 --> 0:17:04.640 to talk about. But to be fair, like we Tim, 0:17:04.680 --> 0:17:06.359 you bring this up off in this poll of like, 0:17:06.640 --> 0:17:09.160 stock market doing well, economy is still doing well, tight 0:17:09.200 --> 0:17:12.120 labor market, and yet so many Americans don't feel good 0:17:12.160 --> 0:17:15.280 about their own economic plight. Michelle, come on back in 0:17:15.359 --> 0:17:17.800 here before we get into what the MTA has to do, 0:17:18.200 --> 0:17:21.359 I mean your thoughts on right, like, for some Americans, 0:17:21.600 --> 0:17:25.680 this is another additional cost to you know, a pocketbook 0:17:26.040 --> 0:17:27.600 or wallet that's already strained. 0:17:28.600 --> 0:17:32.359 That's definitely true. As much as you know, there's millions 0:17:32.359 --> 0:17:35.760 of people a day who use New York City's transit's 0:17:35.840 --> 0:17:43.000 just you know, charging most drivers fifteen dollars to enter 0:17:43.560 --> 0:17:48.480 into midtown Manhattan. That really does add up. For some 0:17:48.520 --> 0:17:51.840 people who have no choice but but need to take 0:17:51.880 --> 0:17:53.760 a car for whatever reason, they have to take a 0:17:53.800 --> 0:17:56.240 car and not just maybe once a week or twice 0:17:56.240 --> 0:17:58.320 a week, but maybe five times a week. There was 0:17:59.000 --> 0:18:01.480 you know, I recently, number of weeks ago, was on 0:18:01.640 --> 0:18:06.359 the East Side, Midtown east Side, and I was at 0:18:06.480 --> 0:18:11.240 a medical facility and the people there, the nurses and 0:18:11.280 --> 0:18:14.240 the staff, we're talking about how some of them who 0:18:14.320 --> 0:18:17.600 live in deep in New Jersey, they have to drive 0:18:18.480 --> 0:18:22.800 to get to that location. And you know, some of 0:18:22.800 --> 0:18:25.119 them were wondering if might they might even need to 0:18:25.160 --> 0:18:28.760 look at other jobs because that's fifteen dollars a day, 0:18:28.800 --> 0:18:29.520 five times a week. 0:18:29.560 --> 0:18:30.080 Does that up? 0:18:30.320 --> 0:18:33.080 Well, Michelle, what about the other costs associated with this? 0:18:33.359 --> 0:18:37.119 Not the cost that would be the result of congestion pricing. 0:18:37.119 --> 0:18:40.280 But the cost now on the MTA and to the 0:18:40.320 --> 0:18:45.760 writers who might be stuck underground on broken subways with 0:18:45.960 --> 0:18:49.159 signal malfunctions, late to appointments and late to work, the 0:18:49.200 --> 0:18:52.679 loss of productivity from a crumbling subway here in New 0:18:52.760 --> 0:18:53.960 York City. What about that cost? 0:18:54.800 --> 0:18:57.640 Yeah, it's definitely real. People are already, you know, they're 0:18:57.640 --> 0:19:00.359 feeling it already. The system is more than a hundred 0:19:00.440 --> 0:19:03.560 years old. And you know, back in February, even the 0:19:03.720 --> 0:19:10.840 MTA had to suspend entering into new contracting work because 0:19:11.040 --> 0:19:16.000 of the uncertainty with the congestion pricing revenue given there 0:19:16.000 --> 0:19:20.119 have been these legal challenges against congestion pricing, and so 0:19:20.359 --> 0:19:24.600 they couldn't promise work to contractors because they just really 0:19:24.600 --> 0:19:27.480 couldn't move forward with that yet. And you know what 0:19:27.520 --> 0:19:31.640 that means is they can't already, you know, before Cochl's decision, 0:19:32.119 --> 0:19:36.480 they were stalling on really necessary work to help modernize 0:19:36.480 --> 0:19:39.560 the system, to fix it, to repair it, to get it. 0:19:39.720 --> 0:19:42.760 You know, the thing about the signal upgrades that helps 0:19:42.760 --> 0:19:46.679 the trains, that really decreases delays, helps the trains run faster. 0:19:47.160 --> 0:19:48.920 That's improved service, right, there. 0:19:49.080 --> 0:19:51.080 I got to say, in the last few months, we've 0:19:51.080 --> 0:19:52.800 all had those moments and then we had some tapings 0:19:52.800 --> 0:19:55.280 and it's like nobody's here because we just can't get here. 0:19:55.320 --> 0:19:59.000 We're just kind of stuck. Laura back to Governor Hokeel 0:19:59.240 --> 0:20:02.439 and you know how they make up the shortfall? Now, 0:20:02.520 --> 0:20:06.600 if they're not getting money from congestion pricing, what is 0:20:06.640 --> 0:20:08.360 the governor proposing that they can do? 0:20:09.000 --> 0:20:13.919 She is proposing, and this also astonished people, replacing the 0:20:14.000 --> 0:20:19.679 revenue from the congestion tolling program with a payroll mobility tax. 0:20:21.080 --> 0:20:25.159 Our understanding is that it's something similar to a tax 0:20:25.240 --> 0:20:30.959 that was enacted in under former Governor Patterson and then 0:20:31.000 --> 0:20:34.720 partly repealed in twenty ten because it was so unpopular. 0:20:34.840 --> 0:20:38.919 It actually ended up resulting in or was blamed for 0:20:38.960 --> 0:20:41.200 the losses of a bunch of Democrats in the state 0:20:41.280 --> 0:20:45.600 Senate in suburban districts in twenty ten. And the legislature, 0:20:45.800 --> 0:20:48.639 although they're discussing this right now, the last day of 0:20:48.680 --> 0:20:53.320 the legislative session for this year is tomorrow. Very unlikely 0:20:53.400 --> 0:20:57.200 they get anything passed by tomorrow, or a bill drafted 0:20:57.359 --> 0:21:03.199 or even a discussing. Yeah, it's it's politically could be 0:21:03.240 --> 0:21:06.879 a really heavy lift to enact a totally new tax 0:21:07.000 --> 0:21:09.800 to cover the shortfall. So we'll see what hap. 0:21:09.800 --> 0:21:10.760 We talked about with Michael. 0:21:12.840 --> 0:21:14.879 Guys, I'm sorry if I could just piggyback off of 0:21:14.960 --> 0:21:19.040 Laura there. Yeah, So the businesses in New York City 0:21:19.240 --> 0:21:23.480 and seven surrounding counties have been paying this payroll mobility 0:21:23.520 --> 0:21:27.480 tax for a few years now. Just what's really really 0:21:27.520 --> 0:21:33.040 surprising is that last year the state lawmakers actually increased 0:21:33.080 --> 0:21:37.760 that tax on the largest New York City businesses, and 0:21:38.119 --> 0:21:43.400 so it's just it's surprising that the legislature is actually 0:21:44.359 --> 0:21:49.560 has an appetite to at least consider raising this tax again. 0:21:50.359 --> 0:21:53.359 This is going back to the business community again to 0:21:53.480 --> 0:21:56.080 help offset the loss of the contest and at a. 0:21:56.040 --> 0:21:58.320 Time when you know, story after story we see businesses 0:21:58.320 --> 0:22:00.360 moving out of the city and make you know, moving 0:22:00.400 --> 0:22:04.400 employees to other states. Michelle, real quick, the budget shortfall 0:22:04.440 --> 0:22:06.720 that the MTA will see this year that it was 0:22:06.760 --> 0:22:10.240 already relying on, where's that going to come from? 0:22:10.680 --> 0:22:14.520 Yeah, definitely. So the if if state lawmakers, if they 0:22:14.680 --> 0:22:18.560