News of the Day

Inflation accelerated for a second straight month in August, reversing previous declines as consumers continued to grapple with the rising cost of everyday goods. Prices climbed 3.7% from the same time last year, faster than the 3.2% reading in July

The Labor Department said Wednesday that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries and rents, rose 0.6% in August from the previous month, in line with estimates. It marked the steepest monthly increase this year, underscoring the challenge in taming high inflation.

Other parts of the report also pointed to a slower retreat for inflation. Core prices, which exclude the more volatile measurements of food and energy, climbed 0.3% and 4.3% annually. Core prices remain more than two times higher than the typical pre-pandemic level.

The spike in headline inflation largely stemmed from a surge in gas prices, which accounted for more than half of the increase last month, the Labor Department said in the report. In total, energy prices climbed 5.6% in August from the previous month, including a 10.6% jump in gas prices.

Other price gains also proved persistent and stubbornly high in August. Shelter costs, which account for about 40% of the core inflation increase, rose 0.3% for the month and are up 7.3% over the past year. Grocery costs rose 0.2% last month and are up 3% compared with the same time last year.

On its first day of oral arguments, the Wisconsin Supreme Court justices questioned whether a charitable arm of the Catholic Diocese of Superior should be exempt from paying into Wisconsin’s unemployment insurance system.

Catholic Charities Bureau, Inc. argues its social welfare programs throughout Wisconsin are operated primarily for religious purposes and should be exempted from state unemployment insurance payments. In 2015, a Douglas County Circuit court judge exempted Challenge Center, Inc., a Catholic Charities subsidiary helping people with developmental disabilities, from having to pay into the state plan.

The Catholic Charities Bureau, or CCB, argues its other subsidiaries should also receive an exemption allowing them to pay into a church-run unemployment program. A circuit court agreed in 2020.  Two years later, a state appeals court overturned the ruling and sided with the Wisconsin Labor and Industry Review Commission, which argues while the diocese operates the CCB, the activities it performs — including offering low-income housing, assistance for the elderly and disability services — aren’t expressly religious in nature.

Liberal Justice Rebecca Dallet questioned where to draw the line for exempting charities run by religious organizations when “all you have to do is say a religious purpose, which is pretty broad stuff.”  “I mean, these are some pretty broad principles which are the basis of, I would venture to say, most religions, maybe all religions,” Dallet said. “So, where is that line?”

Attorney Eric Rassbach, of the Becket Fund for Religious Liberty, which is representing the Catholic Charities Bureau, told the court the sincerity of the church’s mission to help the underserved is one limiting principle. Rassbach said courts “decide sincerity questions all the time” with regard to religious claims. He also said a nonprofit having an affinity for a religion isn’t enough.

“It actually has to be something that is operated by or controlled by a church,” Rassbach said. “And in this case, the diocese is the church. And so therefore, I think those are some pretty important limiting principles.”

Attorney Jeffrey Shampo, representing the Wisconsin Labor and Industry Review Commission, told the court that while the Catholic Charities Bureau is run by the diocese, federal tax forms and websites from its various nonprofits don’t mention religious activity. He said state statute requires nonprofits to be primarily operated for religious purposes in order to qualify for an unemployment insurance exemption.

“We have to look at the activities that they do, because otherwise they can assert that anything they do through these organizations would have a religious purpose because they’re all nonprofits,” Shampo said.

Conservative Justice Rebecca Grassl Bradley disagreed.

“Your test would violate Catholic doctrine because Catholic doctrine says the provision of charity must be to all people, not discriminating against people based on faith,” Bradley said. “Charity should be provided to people who have no faith without proselytizing. So again, doesn’t your test, as you’ve advanced it, discriminate against religions that don’t look like what the Court of Appeals of Wisconsin apparently regards as religion?”

After a summer of robust consumer spending, America’s bars, hotels and restaurants say the era of post-pandemic splurging by U.S. consumers has likely drawn to a close.

The prediction came as part of the regular “Beige Book” economic snapshot from the Federal Reserve released Wednesday. Several of the Fed’s 12 regional districts reported peaking or even slowing tourism activity — a sign that U.S. consumer spending, which accounts for about two-thirds of U.S. economic output, could be shifting in the coming months.

“Consumer spending on tourism was stronger than expected, surging during what most contacts considered the last stage of pent-up demand for leisure travel from the pandemic era,” the report said.

But that strength in leisure spending began to level off toward the end of August, the latest Beige Book shows. That’s partly because students went back to school and summer vacations wrapped up. Still, leisure spending varied by region, with some reporting a noticeable slowing and others saying it is holding steady.

Time is running short for Ford, General Motors and Stellantis to reach respective agreements with the United Auto Workers (UAW) for new contracts, and UAW President Shawn Fain reiterated Wednesday that his union is ready to strike against any of Detroit’s Big Three automakers that have not made a deal before next week’s deadline.

When asked during an interview with the Associated Press whether the labor union would strike against any of the companies that do not have tentative agreements in place when the current contracts expire at 11:59 p.m. on Sept. 14, Fain said, “That’s the plan.”

The labor union is seeking a 46% pay raise over the four-year contract along with an array of additional benefits, including a reduction of the workweek to 32 hours for 40 hours worth of pay for its 146,000 members at Ford, GM and Dodge parent Stellantis, whose latest offer the UAW rejected last month.

UAW members at each of the Big Three voted in favor of strike authorization last month by large margins, according to the union, passing with 96% among GM workers, 98% at Ford and 95% for Stellantis.

Although Fain doubled down Wednesday on saying the UAW could strike against all three automakers, he told the AP that the union does not want a strike and would prefer to reach new contract agreements before the deadline.

Republican state lawmakers have been circulating a package of six bills designed to address child care affordability.

One proposal would allow families to create pre-tax savings accounts for up to $10,000 annually in child care expenses. Another lays out details for an interest-free revolving loan fund, which would allow child care facilities to borrow money for renovations. Lawmakers included $15 million for that fund in the state’s biennial budget, and backers say the financing option could help providers expand capacity.

Four other bills would alter licensing requirements in the following ways:

• Creating a new type of license for facilities to be known as “large family child care centers.” Family day care centers typically operate out of a provider’s home, and the change would expand capacity by creating a category for such centers that care for between four and 12 children. The large family centers would be prohibited from caring for more than eight children at a time who are 2 years old or younger — an increase compared to current rules, which allow family centers to care for no more than four children at once who are under 2 years old.
• Lowering the minimum age from 17 to 16 years old to become an assistant child care teacher or school-age group leader and lowering the minimum age from 18 to 16 years for providing sole supervision to a group of children. Sponsors say the change would alleviate Wisconsin’s shortage of qualified child care workers.
• Increasing the maximum number of children allowed per worker, as well as the maximum number of children per age in group centers. Group centers could change their ratios of workers to children to match the average teacher-pupil ratio in the local school district.
• Allowing a category of providers known as “certified child care operators” to care for as many as six children under the age of 7, regardless of whether the children are related to the provider. Under current law, those providers can care for up to six children, but no more than three who are not related to them.

State Representative Joy Goeben, R-Hobart, is listed as author of at least five of the recently-unveiled proposals. Goeben said she used to own a family child care center, and that she has been speaking to current providers about the changing landscape in the approximately 25 years since then.

“I know that when I ran that center, there was profit.” she said. “We need to really find the underlying issues as to why there’s a struggle with this profitability. So I’m trying to look at … ‘What are barriers that are getting in the way of that?’ Because this is why we can’t afford child care.”

“While it’s great to hear some legislative Republicans are finally acknowledging the child care crisis facing our state, legislation that could reduce the quality of care for our kids, fails to keep child care center doors open tomorrow, and provides no immediate help to make child care more affordable for working families simply will not cut it,” a spokesperson for the governor said in a statement.

Evers has tried unsuccessfully to get lawmakers to allocate more than $360 million in state funding to continue a pandemic-era subsidy program called Child Care Counts. Thousands of Wisconsin child care providers used money from Child Care Counts to help cover costs including wages, rent and utilities, but the initiative is petering out with federal funding set to end in early 2024.

Governor Tony Evers and the Department of Safety and Professional Services, or DSPS, are asking the state’s Republican-controlled finance committee for more staff and funding as they say the agency has reduced the amount of time to process licenses.

The Evers administration unveiled a new licensing dashboard on Thursday that shows the agency is reviewing applications within three to five days, meaning applicants who meet all requirements can receive licenses in less than a week on average. The processing time for applications is down from 38 days earlier this year and a high of about 80 days in 2021 as the agency faced a backlog of licenses for nurses and other professionals.

DSPS oversees 245 types of licenses for professions including nurses, therapists and plumbers. The agency issues more than 70,000 new credentials and 400,000 license renewals each biennium, according to the Department of Administration. Data from the agency’s dashboard shows it has issued 38,845 licenses so far this year compared to 30,200 licenses issued in all of 2018.

The agency is using federal money from the American Rescue Plan Act to fund 21 contracted staff at its call center, but the funding is set to run out at the end of next year. The governor proposed to increase funding for the agency under the current two-year budget by nearly 24 percent or around $14.7 million and add nearly 80 positions. Republicans scaled back that request to 17.75 positions, including seven full-time positions to support licensing.

U.S. consumer spending increased by the most in six months in July as Americans bought more goods and services.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.8% last month. Data for June was revised slightly higher to show spending rising 0.6% instead of 0.5% as previously reported.

Spending on goods increased 0.7% last month mostly reflecting products with a short life span, including pharmaceuticals, recreational items, groceries and clothing. There were also increases in outlays on recreational goods and vehicles as well as household furnishings and equipment and other long-lasting goods. Services spending increased 0.8%, driven by portfolio management and investment advice services, housing and utilities, restaurants and healthcare.

When adjusted for inflation, consumer spending increased 0.6%, also the largest gain since January. The so-called real consumer spending rose 0.4% in June. Last month’s solid increase put real consumer spending on a higher growth path at the start of the third quarter, prompting economists to raise their gross domestic product estimates.

The United States Department of Labor (DOL) has proposed an increase to the Fair Labor Standards Act’s (FLSA’s) annual salary-level threshold to $55,068 from $35,568 for white-collar exemptions to overtime requirements. The department also is proposing automatic increases every three years to the overtime threshold.

The proposed rule would, according to the DOL, do the following:

• Restore and extend overtime protections to low-paid salaried workers. Many of these employees work side by side with hourly employees, doing the same tasks and often working over 40 hours a week.
• Automatically update the salary threshold every three years to reflect current earnings data.
• Restore overtime protections for U.S. territories. From 2004 until 2019, the department’s regulations ensured that for U.S. territories where the federal minimum wage was applicable, so too was the overtime salary threshold. The department’s proposed rule would return to that practice and ensure that workers in the U.S. territories subject to the federal minimum wage have the same overtime protections as other U.S. workers.

To be exempt from overtime under the FLSA’s “white-collar” executive, administrative and professional exemptions, employees must be paid a salary of at least the threshold amount and meet certain duties tests. If they are paid less or do not meet the tests, they must be paid 1 1/2 times their regular hourly rate for hours worked in excess of 40 in a workweek.

Prior to January 1, 2020, the salary threshold was $23,660. A blocked Obama-era rule would have doubled the threshold, but a federal judge held that the DOL exceeded its authority by raising the rate too high. The Trump administration’s 2020 overtime rule raised the salary threshold to $35,568 per year. Adjusted for inflation, that amount today would be $42,594 annually.

Under the new rule, approximately 300,000 more manufacturing workers would be entitled to overtime pay, the Labor Department reports. A similar number of retail workers would be eligible, along with 180,000 hospitality and leisure workers, and 600,000 in the health care and social services sector. In total, overtime protections would be extended to approximately 3.6 million workers, according to the DOL.

Republican lawmakers say a nearly $3 billion tax cut proposal will bring relief to middle class Wisconsinites, including retirees.

An Assembly bill introduced Tuesday would use the state’s surplus to cut income taxes for Wisconsin’s third tax bracket from 5.3 to 4.4 percent starting in tax year 2023. That affects individuals with $27,630 to $304,170 in annual taxable income or joint filers making between $36,840 to $405,550.

“The third bracket is a large bracket, but it’s clearly where the middle class of Wisconsin is,” said state Rep. Mark Born, R-Beaver Dam, who co-chairs Wisconsin’s joint budget committee.

The new bill also would expand tax cuts for retirees who are at least 67 years old. It includes a tax exemption for retirement income up to $100,000 for individuals or up to $150,000 for joint married filers.

Wisconsin is projected to end the two-year budget cycle with a $4 billion surplus, and Republicans say much of that extra money should go to tax relief.

Thus far, the tax cut bill has at least one Republican senator as a co-sponsor — Sen. Rachael Cabral-Guevara of Appleton, who said she believes there’s “across the board” support for tax cuts in the state Senate.

The IRS announced Friday that it’s putting an administrative transition period in place until 2026 to extend the new requirement that catch-up contributions made by higher-income individuals participating in a 401(k) or similar retirement plan be treated as after-tax Roth contributions. The change delays the implementation of a rule that Congress approved last year as part of the Secure 2.0 Act.

Americans aged 50 and older have previously been able to make catch-up contributions to put extra cash into their retirement accounts above the contribution limit. For example, eligible savers can deposit a catch-up contribution of up to $7,500 into their 401(k) plans or other retirement accounts above the $22,500 cap in 2023.

Under the Secure 2.0 Act, which became law as part of a year-end appropriations package enacted by Congress in December 2022, the new catch-up contribution rule would require higher-income earners put their catch-up contributions in after-tax accounts subject to Roth rules.

The policy applies to individuals who earned more than $145,000 from a single employer in the prior year and to catch-up deposits into 401(k), 403(b) or 457(b) retirement plans. In effect, this means that higher-income earners wouldn’t receive the same tax break they’ve previously enjoyed once the Secure 2.0 changes are implemented because they wouldn’t be permitted to make pretax catch-up contributions, which reduce the size of the saver’s income subject to tax.

The IRS’ two-year delay allows savers to continue to make pretax catch-up contributions through 2025 as the agency implements the policy change. It also clarified that plan participants ages 50 and up can continue to make catch-up contributions after 2023 regardless of their income level.

“The administrative transition period will help taxpayers transition smoothly to the new Roth catch-up requirement and is designed to facilitate an orderly transition for compliance with that requirement,” the IRS said in the announcement.