Home sales spring back
Here are three of the week's top pieces of financial insight, gathered from around the web:
'Shared sacrifice' on salaries
More companies are using the pandemic as an excuse to cut salaries, said Matthew Boesler and Reade Pickert at Bloomberg. On earnings calls in recent weeks, the Container Store and Lyft joined others that had announced they were "putting smaller numbers on people's paychecks." A study by the venture capital fund Thomvest Ventures recently found that "nonexecutive employees had seen pay reduced by an average of 10 to 15 percent" at 22 public and private technology companies. This has rarely been the case in prior downturns. Cutting pay tends to demotivate workers, so wages stay "sticky" even when prices are cut. But now some companies are "adopting the language of shared sacrifice," hoping that the public-health crisis "makes pay cuts more palatable."
Bringing risk into the office
Your boss may be a little nosier about your personal life than usual, said Chip Cutter and Thomas Gryta at The Wall Street Journal. "Some companies are concerned that the many safeguards put in place at work to limit the spread of the coronavirus could be undone if workers are taking risks off the job." Employees have no legal obligation to disclose how they spend their personal time, so employers who are trying to maintain a safe working environment "have to tread carefully" to avoid violating employee privacy. Apparel maker VF Corp., which owns North Face and Vans, published a 40-page guide for returning employees that recommends staffers not use "ride-sharing, car-pooling, or public transportation." The New York Stock Exchange has also "asked those returning to its historic trading floor to avoid arriving via mass transit."
Home sales spring back
"The number of people applying for loans to purchase a home has increased for six consecutive weeks," said Jacob Passy at MarketWatch. Homes sales cratered earlier in the pandemic, falling a stark 21 percent from April to March. But now mortgage rates are at an all-time low, with the average of 3.15 percent last week besting the previous record, 3.23 percent, which was just set, at the end of April. The volume of purchase loans is up more than 50 percent since then, indicating that the earlier drop was not a collapse in the housing market but "a delayed spring home-buying season." Many homeowners are also going ahead with refinancings, which are up 176 percent from a year ago.
This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.