Stripe Is Offering $20,000 Bonus To Employees Who Relocate To Less Expensive Cities, But It Comes With A Pay Reduction


Topline

Stripe is offering a $20,000 bonus to employees who move away from San Francisco, New York City or Seattle but it comes with a 10% pay reduction, spokesman Mike Manning told Forbes, making the e-commerce and mobile payment processor the latest tech company to implement pay cuts for workers who chose to relocate to less expensive cities as remote work policies are extended because of the pandemic. 

Key Facts

Stripe, which has more than 2,800 employees, has relied on remote work for years and in May announced it would hire at least 100 remote engineers, saying remote workers have helped the company stay close to customers so they can tailor Stripe’s products accordingly. 

Stripe joins other technology companies that have said they’ll cut the pay of employees who move to less expensive cities, including the social media companies Facebook and Twitter and enterprise software companies VMware and ServiceNow, according to Bloomberg, which first reported the news.

Further Background

Just as many white-collar Americans are reconsidering the cost of living in expensive cities if remote work policies continue, many companies are also reconsidering expensive office costs. Some companies have had market-based salary policies in place for years, meaning pay is adjusted based on the cost of living or cost of labor in the area. 

Tangent

The job search marketplace Hired surveyed 2,300 tech workers and found that 55% said they would not be willing to accept a reduced salary if their employer made work from home permanent. An overwhelming 90% said the same job should receive the same pay, regardless of if the person works remotely, but 40% said they support location adjustments. More than half, 53%, said they would be “likely” or “very likely” to move to a city with a lower cost of living if allowed to work from home permanently. 

Further Reading

Stripe Workers Who Relocate Get $20,000 Bonus and a Pay Cut (Bloomberg)

Why Silicon Valley workers who relocate for remote work face pay cuts (Fox Business)

2020 State of Salaries Report: Salary benchmarks and talent preferences (Hired)



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‘Fixer Upper’ Is Back As Chip And Joanna Gaines’ Lifestyle Empire Expands


TOPLINE

Chip and Joanna Gaines, hosts of the wildly popular home improvement TV show Fixer Upper, announced a new season of the Waco, Texas-set program would kick off in 2021—on their own broadcast network—as their lifestyle empire, which comprises of book deals, restaurants, retail shops and a Target home goods line, shows no signs of slowing down.

KEY FACTS

In a blog post, Chip Gaines wrote, “It wasn’t more than a few weeks ago that we first talked about returning to the show. I mentioned it to Jo, fully expecting her to tell me I was crazy. But instead, in a real sincere way, she told me she’d been missing it too.”

The newest season will appear on the Magnolia Network, a joint venture between the couple and Discovery (which also owns HGTV, Fixer Upper’s original home).

The Gaineses stopped filming Fixer Upper in 2017, but in April 2019, Discovery announced its DIY network would be rebranded for a media company launched by the couple.

The return of Fixer Upper came two weeks after a six-store expansion of their Waco-based Magnolia lifestyle brand was announced, which also contains two restaurants, a coffee shop and two retail stores.

The Magnolia business empire also includes a real estate company and three Waco vacation rentals, along with several New York Times-bestselling books and home goods collaborations with Target and Anthropologie, though the pandemic has led to furloughs of an undisclosed number of their 500 employees, according to the New York Times.

The Gaineses are credited with revitalizing and giving a new identity to Waco, which was most well-known nationally as the site of the deadly 1993 standoff between the FBI and the Branch Davidian religious community that left 80 dead.

Crucial quote

“I think we all have a calling for our lives. Jo and I feel called to be bridge builders, meaning we want to help initiate conversations between people that think differently from one another,” Chip Gaines told Forbes in 2017. “In no way does that mean we all have to agree, but there’s a distinct difference between disagreement and hate.”

Big number

1.7 million. That’s how many tourists flocked to Waco in the first half of 2018, according to the New York Times

Key background

The Gaineses teamed up to revamp Waco homes around 2003, the same year they opened their first Waco store. Their business grew from there and continued expanding with the 2013 premiere of Fixer Upper. The success of Magnolia and Fixer Upper hasn’t been all smiles, shiplap (the wooden planking made eponymous by Joanna) and industrial boho chic, however. In 2016, Buzzfeed published a story on Antioch Community Church, where the Gaineses were congregants. Pastor Jimmy Siebert has told congregants that he believes “homosexuality is a sin,” and that business owners should be willing to reject deals or lose their companies in their rejection of LGBTQ people. HGTV released a statement after saying they didn’t discriminate against LGBTQ people in their programming (although Fixer Upper has never featured a gay couple). Several months later Chip Gaines responded with a blog post: “We care about you for the simple fact that you are a person, our neighbor on planet earth. It’s not about what color your skin is, how much money you have in the bank, your political affiliation, sexual orientation, gender, nationality or faith,” he wrote. Some legal troubles have also befallen the Gaineses. In 2017, the couple paid $40,000 in fines to the Environmental Protection Agency to settle lead paint violations. Most recently, in February, a Waco judge threw out a lawsuit against Chip Gaines from his former real estate partners that alleged Chip bought them out of the business right before Fixer Upper premiered on HGTV because he knew it would be a success, and therefore cut them off from the profits. A lawyer representing Gaines maintained no wrongdoing on his part.

Further reading

For Joanna Gaines, Home Is the Heart of a Food and Design Empire (New York Times)

Chip And Joanna Gaines’ Church Is Firmly Against Same-Sex Marriage (Buzzfeed News)

“What’s Ahead” Podcast with Steve Forbes: Chip and Joanna Gaines (Forbes)

Chip Gaines on His New Book, Odd Motto, and The Most Important Lesson He’s Ever Learned (Forbes)



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Trump Touts ‘Suburban Lifestyle Dream’ After Rescinding Obama-Era Rule Preventing Housing Discrimination


TOPLINE

President Trump on Wednesday promised U.S. suburban residents that the value of their homes would not be impacted by crime or the construction of low-income housing after an Obama-era rule designed to limit housing segregation was ended last week, the culmination of years of deregulation effort by Trump and a reported appeal to suburban voters.  

KEY FACTS

Trump tweeted early Wednesday afternoon:

“Your housing prices will go up based on the market, and crime will go down. I have rescinded the Obama-Biden AFFH Rule. Enjoy!” Trump added.

Trump is referencing the 2015 Affirmatively Further Fair Housing rule, which President Obama implemented to fight housing discrimination.

The rule required local governments receiving federal housing funds to create plans that would combat housing discrimination, which advocates said helped strengthen the 1968 Fair Housing Act.

Housing Secretary Ben Carson appears to have begun revoking the AFFH rule as of July 23, according to a press release, which means Trump’s tweets came six days after the fact.

Carson called the AFFH rule “complicated, costly and ineffective,” and touted the Trump Administration’s “opportunity zone” initiative, which provides discounts on capital gains taxes for investors sending money into one of over 8,000 designated areas.

Opportunity zones have been criticized by Congress as a means of profit for wealthy real estate developers—including some tied to the current administration.

Chief critics

Social media outcry over Trump’s tweets began almost immediately, which users described as anti-BIPOC. “Trump is a racist idiot,” tweeted Chicago Alderman Carlos Ramirez-Rosa. Leah Greenberg, executive director of congressional activist group Indivisible Team, called Trump’s tweets “an active campaign for housing segregation.”

Key background

Trump’s tweets come amid decreased suburban support for his November reelection campaign, CNBC reported. The AFFH rule would effectively encourage communities to build more apartments, NPR reported, which would in turn encourage smaller wage earners to move to those areas. The rule did not, however, specifically target suburbs. The Trump administration gutted AFFH in 2018, and Carson had previously criticized the rule during a 2017 hearing. According to the New York Times, Trump‘s opportunity zones were enacted as part of his signature tax cuts in 2017. The Times reported in November 2019 that while some money went to more depressed areas in Pennsylvania and Alabama, the lion’s share has appeared in rapidly gentrifying cities like Atlanta, Houston and Miami. 

Tangent

In 1973, the Justice Department filed a civil rights case against Trump’s company, accusing him of violating the Fair Housing Act by not renting to Black tenants. The case was settled in 1975, with Trump signing an agreement that his company would not discriminate against future tenants or home buyers, as well as place ads informing minorities of their rights to obtain housing at his properties. At the time, Trump said the settlement did not mean he admitted to any wrongdoing, while the DOJ celebrated it as “one of the most far-reaching” agreements it had negotiated.

Further reading

Trump tells suburban voters they will ‘no longer be bothered’ by low-income housing (CNBC)

Seeking Suburban Votes, Trump To Repeal Rule Combating Racial Bias In Housing (NPR)

Lawmakers Increase Criticism of ‘Opportunity Zone’ Tax Break (New York Times)

Inside the government’s racial bias case against Donald Trump’s company, and how he fought it (Washington Post)



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The Coming Housing Crisis Is Already Here


Millions of renters and homeowners could face evictions and foreclosure as many have trouble paying their bills in the recession. With temporary job losses turning permanent and the unemployment rate still at double digit rates, many families do not earn enough to make ends meet. They often rely on government assistance, but that government help in all forms – from added unemployment insurance checks to eviction and mortgage moratoriums — is starting to fade. Families could then quickly lose the roofs over their heads.

The recession brought massive job losses and record high unemployment with it. Families quickly fell behind in paying their bills, especially rents and mortgage payments, as they lost jobs and incomes. Rent and mortgage payments are among the largest and most consequential monthly payments for most families. If they fall further behind on those payments, they can lose their apartments or houses to evictions and foreclosures. Losing one’s home can further exacerbate other financial pressure, mainly because it becomes costlier to find a new place to live, and leave many families homeless or reliant on family and friends.

The federal government provided assistance to struggling families early on in the pandemic. This aid included moratoriums on rent and mortgage payments for federally backed properties as well as moratoriums on evictions and foreclosures. In addition, at the end of March, Congress passed the CARES Act that included stimulus payments, whereby adults could get up to $1,200 plus $500 for each child. The legislation added more financial support for struggling families after Congress increased the amount of unemployment insurance benefits for a larger number of people than would have otherwise received such benefits. Renter and homeowner protections coupled with added income support allowed a lot of people to stay in their homes that otherwise would have been out on the street.

Yet much of this government support is gradually disappearing. Federal protections for renters last through July, while mortgage forbearance protections expire in August. Added unemployment insurance checks will also come to an end before July runs out. The end to government assistance is coming at a time when the unemployment rate is still at double digits and some states are reimposing restrictions, forcing new waves of layoffs.

Many renters and homeowners with a mortgage already struggle, even in a world with government support. The Census reports that during the two weeks from June 11 to June 23, 18.2% of renters and 12.4% of homeowners with a mortgage didn’t pay their rent or mortgage or deferred those payments.

Many of those having trouble paying their rent or mortgage already lack regular income sources. For instance, only 50% of struggling mortgagees, who couldn’t pay their mortgage in mid-June, had some regular income, compared to 80.6% of mortgagees who paid their mortgage. Among struggling renters, an even smaller share, 40%, had a regular income, compared to 65.6% of renters, who paid their rent. As permanent job losses and long-term unemployment quickly rise, many renters and homeowners will continue to struggle paying their bills.

Families having a hard time paying their rent or mortgage already often rely on government assistance. For example, 29.6% of renters who did not pay their rent or deferred it in mid-June, used stimulus money to pay their bills and 20.2% relied on unemployment insurance benefits. Among struggling mortgagees, 31.7% used stimulus money and 19.0% had unemployment insurance benefits to pay their bills. As federal assistance disappears or shrinks, many renters and homeowners who deferred payments, for example, will not be able to make those payments after all.

Worse, many renters and homeowners who so far have paid their bills rely on government support, too. Among renters current on their rent, 27.8% used stimulus checks and 17.6% unemployment insurance benefits. And among mortgagees, who were up on their mortgages, 21.1% used stimulus money and 11.0% used unemployment insurance checks to pay their bills. Without Congress extending more financial assistance to families, many renters and mortgagees, who currently still pay their bills, could quickly fall behind on their payments.

The necessity of added government help is also apparent from the fact that many renters and homeowners are already going deeper into debt and using up their savings. More than one-in-five renters – 23.2% to be exact — who are paying their bills, went deeper into debt, for example, by using their credit cards, and 21.2% used savings. These shares were similar among struggling renters with 24.5% and 21.6%, respectively. Among mortgagees, who paid their mortgages, 24.5% went deeper into other debt and 23.3% used savings. More worrisome, more than one-third, 35.8%, of struggling mortgagees went deeper into debt and 31.5% dipped into their savings – and still could not afford their mortgage. A large share of struggling renters and homeowners are depleting their own resources, while they still cannot pay all of their bills. And many renters and homeowners, who are keeping up with their housing payments, have fewer and fewer reserves left if anything goes wrong.

The labor market will likely remain depressed for some time, especially as several states are now reimposing restrictions on businesses to get control on record virus cases. Temporary layoffs will increasingly turn into permanent ones. Families will find it harder and harder to pay their bills. Many have already dipped into their reserves, even with stimulus checks and added unemployment insurance benefits. All of this makes or a toxic combination that could result in massive evictions and foreclosures later this summer and going into the fall.

The federal government has the financial wherewithal to extend much needed financial assistance, while also protecting struggling renters and homeowners from losing their homes. Without this support, the country could quickly see a massive wave of evictions and foreclosures, destroying livelihoods and communities in its wake.



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