News

Consumer confidence highest in nearly 18 years

BY Deena M. Amato-McCoy

Building on modest increases in July, consumer confidence skyrocketed in August to hit its highest level in years.

The Consumer Confidence Index now stands at 133.4, up from 127.9 in July — its highest level since October 2000, according to The Confidence Board. The “present situation” index increased from 166.1 to 172.2, while the “expectations” index increased from 102.4 last month to 107.6 this month.

“Consumer confidence increased to its highest level since October 2000 (Index, 135.8), following a modest improvement in July,” said Lynn Franco, director of economic indicators at The Conference Board.

“Consumers’ assessment of current business and labor market conditions improved further. Expectations, which had declined in June and July, bounced back in August and continue to suggest solid economic growth for the remainder of 2018,” Franco added. “Overall, these historically high confidence levels should continue to support healthy consumer spending in the near-term.”

Consumers’ appraisal of current conditions improved further in August. Those stating business conditions are “good” increased from 38.1% to 40.3%, while those saying business conditions are “bad” declined from 10.3% to 9.1%.

Appraisal of the labor market was also more favorable. Those claiming jobs are “plentiful” was virtually unchanged at 42.7%, while those claiming jobs are “hard to get” declined from 14.8% to 12.7%.

Optimism about the short-term outlook also bounced back in August. The percentage of consumers anticipating business conditions will improve over the next six months increased from 22.9% to 24.3%, but those expecting business conditions will worsen marginally rose, from 10.3% to 10.5%.

Consumers’ outlook for the labor market was mixed. The proportion expecting more jobs in the months ahead decreased from 22.6% to 21.7%, while those anticipating fewer jobs also decreased, from 15.2% to 14.1%.

When it comes to their short-term income prospects, the percentage of consumers expecting an improvement rose from 20.4% to 25.5%, while the proportion expecting a decrease declined, from 9.4% to 7.0%.

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The most talked-about brands—by Gen Z

BY Marianne Wilson

Traditional youth brands are no longer finding a seat at the “cool table.”

That’s according to a new study by Engagement Labs, which studied the conversation patterns of teens, or Generation Z. The group is expected to account for 40% of all consumers by 2020.

The study “Gen Z: The TotalSocial Generation,” reveals that Gen Z is highly talkative about brands. They have 13.4 conversations about products and services on average each day, one-third more than the 9.9 conversations among people 21 and older.

“They are talking more face-to-face about products and services as well,” said Ed Keller, CEO, Engagement Labs. “We are also seeing major shifts from the teenagers of five years ago, indicating that Gen Z is a very different type of generation, with long-term implications for marketers.”

iPhone and Apple are the two most talked about brands of Generation Z, reflecting the importance of technology, connectivity, and mobility to today’s teens.

A surprising number of traditionally youth-oriented brands are being left out of the conversation among GenZ, the study found. The biggest declines are for Aeropostale, Hollister, and Abercrombie & Fitch. Many of the declining brands are athletic shoes — Reebok, Converse, Vans, Puma — but Nike is rising. It is now one of the most talked about brands among Gen Z.

The biggest declines among teens since 2013 are for Nordstrom, J.C. Penney, Kohl’s, Macy’s, Kmart, Sears, and TJ Maxx. Some bright spot for teenagers are “neighborhood” convenience and drug stores. 7-Eleven is up by more than 300% among Generation Z in terms of the frequency of conversation, while Aldi’s, Walgreens, and CVS are also posing double and triple digit gains. Conversations about Walmart are also up. Taken together, the reports’ authors attribute the findings to a preference for “around the corner” retail in place of destination retail.

Compared to 2013, nearly every restaurant is being talked about more often by Gen Z, according to the report. Conversation levels among teens have literally tripled — or more — for Baskin & Robbins, Del Taco, Domino’s, and California Pizza Kitchen. However, several quick-services restaurants like McDonald’s are seeing modest declines, including Burger King, Subway, Taco Bell, and Wendy’s.

The report, “Gen Z: The TotalSocial Generation” is available for download at http://bit.ly/2ohzipi.

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CSA Regulatory Wrap-Up
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Regulatory Wrap-Up: Weekly review of retail-related judicial, legislative developments – Aug. 27

BY CSA Staff

Wages

Michigan – The state court of appeals rejected an industry-backed challenge and ordered the minimum wage ballot initiative to be placed on the Nov. ballot. The group that brought the case, Michigan Opportunity, said it would appeal the decision to the state supreme court. Should the initiative reach the ballot and pass, it would raise the minimum wage to $12/hr in 2022 and gradually increase the tipped wage from the current $3.52/hr to $12/hr by 2024.

St. Paul, MN – The Citizens League’s $15 Minimum Wage Study Committee is expected to submit a report to both the city council and the mayor’s office on Aug. 31, outlining its recommendations. The committee which consists of business owners, labor representatives, local chambers, workers and other community organizations met several times over the summer. The findings are expected to outline the implementation of the mayor’s proposal for a $15/hr minimum wage by year’s end.

BLS Report – The Bureau of Labor Statistics released a report this week that found the U.S. average weekly wage rose 3.7 percent over the last year. Many economists have noted that the increase has been stifled by a corresponding increase in inflation.

Disney – In an effort to temper an ongoing feud with city officials, Disneyland executives requested that the city of Anaheim cancel the slated $267 million in tax subsidies that was part of the development deal for a proposed luxury hotel. The move could also allow the proposed property to avoid a pending $18/hr minimum wage ballot initiative that applies to hotels receiving city subsidies. The labor-backed measure will appear on the Nov. ballot.

Paid Leave

Federal – Nebraska Senator Joni Ernst proposed an amendment to a funding bill that would amend the Family and Medical Leave Act. The amendment failed to be adopted but may come back up in future debates. It would have required 12 weeks of unpaid leave per spouse for the birth of a child or when a family member is on military deployment. Under current law, married spouses employed by the same company only receive 6 weeks of unpaid leave per spouse, as opposed to the mandatory 12 weeks for all other employees.

San Antonio, TX – Instead of allowing a paid leave proposal to appear on the Nov. ballot, the city council last week voted to enact it into law. This week the mayor, who has been publicly skeptical of a local paid leave mandate, announced that he will establish a commission to propose potential changes to the ordinance. This process will allow for business community input and could also delay implementation, allowing the state legislature time to take up the matter in 2019.

Wage Theft

Labor Department – Several prominent Democratic senators sent a letter to the labor secretary criticizing the administration’s Payroll Audit Independent Determination (PAID) program.  The PAID program allows employers to self-report wage violations to avoid hefty fines. The senators argue that the program’s lack of consequential enforcement could result in increased instances of wage violations.

California – The state labor commissioner fined a construction company $1.9 million for wage theft violations. The company paid its workers a flat daily rate regardless of actual hours worked and failed to allow for government-mandated rest breaks throughout the workday.

New York – Celebrity chef Marc Murphy faces a proposed class action in state court alleging the company charges its catering customers a mandatory fee for service but does not remit that money to the workers in the form of gratuities.

Minneapolis, MN – Worker advocacy groups have asked the city council and the mayor to consider legislation that would increase enforcement against wage theft in the city. The groups are proposing increased penalties for repeat offenders and dedicated funds for investigation and enforcement efforts.

Health Care

Maryland – The Trump Administration granted the state’s request for a waiver that will allow it to create a reinsurance program that could reduce rates by as much as 30% through 2020. A bipartisan effort was required to create the program that essentially provides an insurance fund, paid for by insurance companies, that can offset the risk of covering customers with expensive medical conditions.

Labor Policy

NLRB – Mark Pearce, an Obama-era appointee, and one-time chairman of the National Labor Relations Board is about to complete his term which expires at the end of Aug. Mr. Pearce is considered the architect of many of labor’s top priorities at the NLRB, drawing the ire of many Republicans and the business community. He is lobbying for another 5-year term, which requires appointment by the President and approval by the U.S. Senate. Some are speculating that President Trump may cut a deal, reappointing Pearce, in exchange for fast-tracking several Labor Department appointees.

No-Poaching Agreements – Washington Attorney General Bob Ferguson announced an agreement with eight more chain restaurants to end the use of no-poach clauses that prevent employees from moving from one franchise location to another. Applebee’s, Church’s Chicken, Five Guys, IHOP, Jamba Juice, Little Caesars, Panera Bread and Sonic joined seven other chains (Arby’s, Carl’s Jr., McDonald’s, Jimmy John’s, Auntie Anne’s, Buffalo Wild Wings and Cinnabon) which announced a similar agreement last month. Although the Attorney General’s investigation is specific to operations in Washington state, the chains have announced their intention to end the practice nationwide.

California – A house-passed bill that prevents employers from mandating employees sign arbitration or nondisclosure agreements as a condition of employment passed the senate and heads to the governor’s desk for consideration. A similar bill was vetoed by Governor Brown in 2015 and some legal scholars have opined that it would ultimately be preempted by federal law. It remains to be seen if the governor will change his stance on the issue.

California – The state Supreme Court found in Connor v. First Student, Inc. that employers in the state must obtain written permission from employees and prospective employees before performing certain background checks.

Cisco Systems Inc. – The Labor Department’s Office of Federal Contract Compliance Programs (OFCCP) concluded an investigation into the tech company’s hiring practices. The OFCCP found that Cisco discriminated against U.S. workers in favor of foreign workers and paid the visa holders less than their American peers. The company is in settlement discussions with the government.

Transportation

Federal – The Federal Motor Carrier Safety Administration announced that it is seeking public comment regarding several specific areas of current hours-of-service regulations for commercial truck drivers. The agency will review potentially increasing the minimum number of hours on-duty for specific classes of drivers and driving conditions as well as revising the current mandatory 30-minute break after 8 hours of continuous driving.

Trade

China – The United States and China imposed a second round of tariffs on imported products in their ongoing trade dispute. The Trump administration imposed an additional $16 billion in tariffs on imports from China representing the second phase of the revised $50 billion announced earlier this summer. China immediately responded with their own revised list which also now totals $50 billion.

NAFTA – The Trump administration announced a deal with Mexico on several of the outstanding bilateral trade issues between the two countries. The deal on issues of automobile production and energy could allow Canada to reenter trilateral negotiations to revamp the entire agreement. A revised NAFTA deal would also need congressional approval before taking effect.

Key Takeaways

  • Yet again this week, another large employer in California was heavily fined for a wage theft violation – this time nearly $2 million. While the company in question was not a restaurant or retail operator, companies need to understand that the state is launching a comprehensive assault on the employment community in this space. Operators need to consider auditing all of their wage and hour practices in California to avoid being the subject of these actions.
  • In the wake of attorneys general investigations into no-poaching clauses specific to franchise relationships, companies should be examining all types of existing agreements more broadly. There are a variety of related issues viewed by regulators and policymakers as artificially suppressing wages – non-compete agreements for instance – which could quickly become another area of focus.

Legislature Status for Week of 8/27/18

  • The United States Senate is in session this week
  • The United States House is in recess this week
  • Four state legislatures are meeting actively this week:
    • CA, MA, NJ & VA

Podcast

Check out our Working Lunch podcast each week that includes further analysis into these legislative issues, policy, politics and much more. You can find Working Lunch on the Nation’s Restaurant News website, or by clicking here, and when you download the podcast and subscribe on iTunes here.

 

The Regulatory Wrap-Up is presented by Align Public Strategies. Click here to learn how Align can provide your brand with the counsel and insight you need to navigate the policy and political issues impacting retail.

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