This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.
Marc Stewart: Walmart raises its minimum wage. Plus, more automakers cut production amid the global chip shortage and how that’s making it even harder to buy a car.
Nora Naughton: If you find a car that works for you, you should really walk away with it in that moment.
Marc Stewart: And why some Millennials are taking a break from work. It’s Friday, September 3rd, I’m Marc Stewart with the Wall Street Journal. Here’s the A.M. edition of What’s News, the top headlines in business stories moving your world today.
We begin in Japan, where prime minister Yoshihide Suga said he won’t seek re-election as ruling party leader later this month, effectively ending his term after just a year in office. Suga’s decision to step down may bring a period of political instability to the world’s third-largest economy, which is also a close ally of the United States. Japan was later than many industrialized countries to begin backdating its citizens against COVID-19, and Suga’s approval ratings have dropped amid the spread of the Delta variant.
President Biden is expected to travel to Louisiana today to assess the damage caused by Hurricane Ida. The storm made landfall there earlier this week, and more than 900,000 customers are still without power in the state. States in the Northeast are cleaning up after the remnants of Ida dropped record rains and left more than 45 people dead. You can read updates on this story throughout the day at WSJ.com.
Ford and General Motors are scaling back production of their popular pickups because of the global shortage of semiconductors. Ford has been especially hard hit by the chip shortage. It announced its slowing or suspending operations at its plants that make the F150. GM announced it’s idling its two main plants that make Chevy Silverado and GMC Sierra model trucks. Later in the show, we’ll dive deeper into the shortage of available cars for sale.
We’ll get a better picture of the jobs landscape in the US when the Department of Labor releases its August jobs report today. We’ll have more on our evening podcast of What’s News.
The nation’s largest employer is giving many of its employees a raise. Walmart will raise its minimum wage for about a third of its workers in the US. For the particulars, WSJ markets reporter, Anna Hirtenstein, joins us from London. Anna, good morning.
Anna Hirtenstein: Hey. Good morning, Marc.
Marc Stewart: Anna, what did Walmart say? How much more will people make?
Anna Hirtenstein: Walmart said they’re raising minimum wage to $12 an hour. This is, for the most part, for people who work at registers, in the food and household goods areas, and those who restock shelves. It’s the country’s largest retailer by revenue, so it does affect a lot of people. They’ve got 1.6 million workers in the US.
Marc Stewart: Why is Walmart doing this now?
Anna Hirtenstein: We do see this labor shortage, especially for hourly workers. This means that big retailers like Walmart are having to compete for employees, and this is intensifying.
Marc Stewart: What about that competition? What do Amazon and Target pay their entry-level employees?
Anna Hirtenstein: They are paying them $15 an hour. They’ve also raised wages over the past year, actually. Walmart’s $12 an hour minimum wage is still below this. This week, we’ve also seen companies like Walgreens and CVS saying they’re raising the minimum wage to $15 an hour.
Marc Stewart: Anna Hirtenstein in London. Anna, have a good weekend.
Anna Hirtenstein: Thank you.
Marc Stewart: Just ahead, struggling to buy a new car? You’re not alone. More after the break.
Labor Day has usually been one of the big weekends for car deals, but this year it’s different. A global chip shortage has forced automakers to suspend production, meaning there are fewer cars on the lots. And a good deal: those may just be a memory. The Journal’s Nora Naughton covers the automotive industry and joins us from her base in Michigan. Hi, Nora. Good to have you here.
Nora Naughton: Hi, Mark. Thanks for having me.
Marc Stewart: Nora, tell me, what do car lots look like right now?
Nora Naughton: Empty is the one-word answer. There are really no new cars right now because of this extended chip shortage that has really hampered production. Really, there are completely empty lots. You might find a little bit more on the used side, but things are a little rough.
Marc Stewart: Yeah. As far as used cars are concerned, a lot of people have thought of that as the plan B because of where we are right now, but it sounds like it’s just as sparse.
Nora Naughton: Yeah. You’ll find a little bit more selection on the used side, but it will still be sparse. The bigger challenge will be that used cars are just very expensive right now. If you think of that as the thrifty alternative to the new lot, that conventional wisdom does not hold up right now. You’re going to be paying at least $25,000 for a used car right now. That was the average in July, which was a record for the second month in a row.
Marc Stewart: What about for a new car?
Nora Naughton: A new car, in August, sold for over $41,000 on average, which was the first time ever that the average has surpassed $41,000. And the reason for that is twofold. First, it’s classic supply and demand. There’s not very many cars and a lot of people that want cars. There’s no negotiating on price at the moment. Second, because production is so hampered, the car companies are prioritizing their highest trim, most expensive models so that they can squeeze as much profit out of their production as possible. That means even when you do find something on the new car lot, it is going to be the tippy top end of things.
Marc Stewart: What about if he wants something customized? I remember I was buying a car a number of years ago. I just was insistent that it have a leather interior because it would be easy, in my mind, to clean. How does that look if you want something customized, whether it be color or an interior?
Nora Naughton: If you’re looking for something specific, you’re going to have to order right now and wait. You might get lucky and find exactly the thing you’re looking for. If you do, do not dither. There’s no time to wait. If you don’t, you’re just going to have to place an order and wait. A lot of customers are waiting multiple months for their cars to be built and delivered to them, which creates an interesting change on that instant gratification of shopping for a car. “What can I do to get you in a car today?” It’s really, “What can I do to get you in a car in six months?”
Marc Stewart: Nora Naughton covers the auto industry for us. Nora, thanks for your time.
Nora Naughton: Sure. Thanks for having me.
Marc Stewart: And finally, the pandemic has shaken up the workforce: early retirements forced exits to take care of family, career changes, or the millennial sabbatical. Krithika Varagur writes the At Work column for the Journal. She writes about a specific set of workers, people in their late twenties and early thirties with a decade of career experience and with no plan B. They’re quitting.
Krithika Varagur: Solid middle-of-the-road millennials in their late twenties and early thirties, who maybe have a few years of work experience under their belt and some savings in the bank, are in a pretty good position to hit pause instead of just jumping immediately into another career. A lot of them felt burned out during the pandemic at their old job and realized how hard it is to leave once you’re locked into a full-time role, so they’re not in a rush to get into another one.
Marc Stewart: You can hear more from Krithika on our sister podcast, Your Money Briefing. That’s What’s News for Friday morning. But before you start the weekend, check back with us tonight for a new show. Until then, we’ll be bringing you the news on WSJ.com and the Journal Lab. I’m Marc Stewart for the Wall Street Journal. Take it easy, and thanks for listening.