The daily business briefing: February 22, 2023
Four-day workweek trial yields surprising results, Supreme Court hears arguments in challenges to social-media immunity shield, and more
4-day workweek wins over British companies
More than 90 percent of 61 British companies that participated in a test of a four-day workweek said they would continue trying out the policy, with 18 of them saying they were adopting it permanently. From June through November 2022, the companies shifted their 2,900 workers to working four days a week, or 32 hours, at the same pay. The companies logged "sharp drops in worker turnover and absenteeism while largely maintaining productivity," The Wall Street Journal reported. The idea of shortening the conventional 40-hour, five-day week gained supporters during the coronavirus pandemic. Nearly half of the employees in the study said their mental health improved. Fifteen percent said "no amount of money" would convince them to go back to a five-day week.
Supreme Court hears challenges to tech companies' liability shield
The Supreme Court on Tuesday heard the first oral arguments in two cases challenging Section 230 of the Communications Decency Act, which shields social media companies from liability for users' posts that promote violence. Tuesday's arguments came in a case filed by the family of Nohemi Gonzalez, an American college student killed by Islamic State terrorists in the 2015 Paris attacks. The family argues that the algorithm used by Google's YouTube recommended videos that spread ISIS propaganda, serving as a terrorist recruitment tool. The second case involves Twitter. In the YouTube case, a majority of justices appeared skeptical that Google could be held liable, but questioned whether immunity under Section 230 should be narrower than currently interpreted.
Walmart warns 2023 will be a rough year as inflation hits consumers
Walmart on Tuesday reported strong fourth quarter 2022 sales and profits, but its second straight decline in annual profit. The retail giant also projected a slow rebound in 2023 from last year's setbacks. Walmart warned that annual adjusted earnings could drop to $5.90 per share, considerably lower than the $6.53 a share that Wall Street had predicted. The company last year took a hit when consumer demand for apparel, home goods, and other general merchandise softened. This year, it is benefiting from strong grocery sales and increasing market share as inflation weary shoppers, even those with higher incomes, turn to stores like Walmart that offer lower prices.
Stock futures flat after Tuesday's dive
U.S. stock futures were little changed early Wednesday after Tuesday's big losses, which were fueled by disappointing retail earnings reports and rising concerns that the Federal Reserve will have to raise interest rates higher than expected to tame high inflation. Futures tied to the Dow Jones Industrial Average, the S&P 500, and the Nasdaq were down about 0.1 percent at 6:45 a.m. ET. All three of the major U.S. indexes fell 2 percent or more on Tuesday, "dragged down by a disappointing forecast from Home Depot," according to The Wall Street Journal. Until the Fed ends its rate hikes, Susannah Streeter, head of money and markets at Hargreaves Lansdown, told the Journal, "we are going to see big cycles of volatility."
McKinsey & Co. to eliminate 2,000 jobs
Consulting firm McKinsey & Co. said Tuesday it planned to eliminate 2,000 jobs in one of its biggest cuts ever. McKinsey, which other companies often turn to for help with efficiency and layoffs, is "expected to focus on support staff in roles that don't have direct contact with clients," Bloomberg reported, citing people with knowledge of the matter. The plan, including the size of the cuts in McKinsey's 45,000-person workforce, could change. It should be finalized within weeks, according to Bloomberg. The changes come after rapid growth in the firm's staff, which grew from 28,000 five years ago and 17,000 in 2012.