WSJ What’s News - What’s Driving Tech Companies to Hire More U.S. Workers?

Starting point is 00:00:00 President Trump agrees to Europe's red lines on Ukraine before his summit with President Putin. Plus, why tech startups are looking to spend a lot more on research and development within the U.S. When a company spends money on R&D and hires people to perform R&D roles, they can take a deduction immediately. So in effect, it is cheaper to hire people in the U.S. than it was a few weeks ago. And the New York Attorney General sues the owner of Payments Platform Zell. It's Wednesday, August 13th. I'm Alex O'Soula for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

Starting point is 00:00:46 This morning, President Trump had a call with select European leaders at a virtual summit convened by German Chancellor Friedrich Meritz. Speaking after the call ended, Trump said it was constructive. had a very good call. He was on the call. President Zelensky was on the call. I would rate it at 10. Trump also threatened President Vladimir Putin with, quote, very severe consequences if the Russian president refused a ceasefire in their meeting plan for Friday, which officials describe as the most significant negotiation between the West and Russia since the full-scale invasion of Ukraine in February 2022. Shortly before the meeting was set to begin today, the Russian government reiterated its conditions for ending the war, including a demand that Ukraine withdraw from territories that Russia

Starting point is 00:01:30 hasn't conquered. That appeared to roll back an earlier offer Putin made to Trump's special envoy Steve Whitkoff, who told European officials last week that Moscow might agree to freeze the front line in southern Ukraine if Kiev agreed to cede territory in the east. I'm joined now by WSJ chief European political correspondent Bojan Panchevsky. Bojan, let's go back to this morning's call. Did European leaders get what they wanted out of it? Yes, indeed. They say they have. I've spoken to several senior aides to European leaders from different countries that participated in the call, and they were all exceedingly satisfied with the outcome. They felt Trump was listening. He was extremely attentive. He was in agreement with everything they said. Bullet points, which they

Starting point is 00:02:17 trying to hammer home to him to take to the meeting with the Russian president in a Alaska on Friday. And Trump agreed with every single one of them. He was totally receptive of the arguments and he seemed to be engaging very constructively. What are those bullet points that they were referring to? Well, the number one is a ceasefire before everything else. They said you can't discuss anything while there is bloodshed on the battlefield. Trump is responsive to this because this is something that he's been calling for for over a year now and certainly since he came into office. The second thing is that no territorial discussions can be made unless you take the current battle line as the basis for such discussions. The contact line becomes the boundary, we freeze it, and then we can talk if Ukraine wants to, any if Russia wants to.

Starting point is 00:03:13 Number three was only Ukraine can negotiate territorial issues, nobody else on behalf of Ukraine, not Europe, not the United States. Trump immediately agreed to this, which was a great boon for the Ukrainian president, who was actually physically present in Berlin, participating in the video conference. So Trump immediately agreed, no questions asked. And he said his role would be to open the door to these talks on Friday. And if he's successful, there will be another meeting. And that meeting will definitely be including Vladimir Zelensky. These are the three main points. The fourth point, slightly more difficult, is security guarantee.

Starting point is 00:03:52 Russia has to accept whatever security guarantees are established at the end of this process. And there's a little clarity as to what the security guarantees will eventually turn out to be. But this is a subject of intense negotiation. That was WSJ Chief European Political Correspondent, Bojan Panchevsky. Thanks, Bojan. Thank you so much for having me on. New York Attorney General Letitia James. is suing the owner of Zell for allegedly failing to protect its users from fraud.

Starting point is 00:04:27 The suit revives claims that the Trump administration had abandoned as part of its moves to gut the Consumer Financial Protection Bureau, a federal watchdog for consumers. Dylan Tokar covers corporate crime and regulatory policy for the journal and is here now with more. Dylan, early warning services, which owns Zell, what have they said about this suit? They've essentially accused the New York Attorney General of just filing a copycat suit that repeats the claims that the Consumer Financial Protection Bureau made. They're calling this a political stunt. They're saying that the New York Attorney General's office didn't conduct their own investigation here.

Starting point is 00:05:03 And if they had, they would find that Zell does a lot of work to stop scams. Zimmy out a little bit. Can attorneys general replace the function of a federal agency? That is an open question. We saw the Democratic states try to fill this space during Trump one point of. This time, the Trump administration is really doubling down on the agency in a way that they didn't during the first administration. States do have their own consumer finance protection laws. Some of those may differ, and there may be some added powers that the federal government have that the states don't have.

Starting point is 00:05:40 So it's probably going to be pretty nuanced. We're going to see the Democratic states stepping in here and bringing some of these cases that we would have seen the CFPB bring. but there may be areas where they just can't fill the gap. And the reality is they have to focus on harm that's done to their state citizens. They can't bring a case to damages that happen outside the state. That was WSJ reporter, Dylan Tokar. Thanks, Dylan. Thank you.

Starting point is 00:06:11 U.S. stocks rose today, reflecting hopes that the Federal Reserve will cut interest rates at its meeting next month. The Dow added about 1%, while the S&P 500 and the NASDAQ were up 0.3% and 0.1% respectively to fresh highs. Shares of cryptocurrency exchange bullish sold more than 150% in its initial public offering today, highlighting the challenge of pricing and IPO in today's exuberant market. Bullish's stock was temporarily paused after it began trading and eventually closed almost 84% up. Many bankers who work on deals say ideal first-day gains are typically around 20 to 30%. Just last month, shares of software company Figma jumped 250% in their debut. That prompted whispers about the risks of a company underpricing an IPO and potentially leaving billions of dollars on the table.

Starting point is 00:07:05 Coming up, why it's suddenly way more appealing for tech startups to hire talent in the U.S. That's after the break. President Trump's big, beautiful tax and spending law includes a popular tax deduction for U.S. spending on research and development. It's causing tech startups to dust off their hiring plans. According to data from online hiring platform ZipRecruiter, five weeks into the third quarter, job ads for R&D-related positions had already reached two-thirds the level they did for the full quarter last year. WSJ Special Writer, Teo Francis, is here now with more. Teo, what is this incentive that we're talking about?

Starting point is 00:07:50 Well, this is a tax deduction, right? So just like individuals, companies get to deduct certain kinds of expenses from their income for tax purposes. And in this case, it's research and development spending. So that includes salaries, right? It's a big deal for companies that are cash constrained. So startups or smaller companies or companies that for one reason or another need to hold on to cash. they are sending less money to Uncle Sam when they pay their tax bill. So in effect, it is cheaper to hire people in the U.S. than it was a few weeks ago.

Starting point is 00:08:22 These days, almost every company has R&D, even in, quote-unquote, low-tech industries. So this could conceivably be a factor for a lot of companies. Now, tech, of course, is where R&D is arguably most concentrated along with places like biotech and pharmaceuticals. What does this mean for the U.S. economy and the labor market? For a lot of companies, they're going to hire people when they need to hire people, right? It's just where are they going to hire them? Keep in mind, people outside the U.S. can be a lot cheaper. The cost of hiring a software engineer in India or China is still dramatically lower than in the U.S.

Starting point is 00:08:56 And so that may still make all the difference in companies may still decide to hire overseas in order to save money on that front. But in more cases, what this tax incentive means is that there will be a reason to consider hiring in the U.S. when they might not have done so before. My colleague Meg Tanaka, who I wrote the article with, heard that companies and startups in particular were considering hiring in the U.S. when they were previously thinking about hiring outside the U.S. or hiring consultants instead of actually taking on employees.

Starting point is 00:09:29 Moreover, economists will tell you that R&D spending in some ways is a better boost to the economy than a lot of other things. That could be a net positive for the U.S. economy. Does this also mean that companies are spending more on research and development in general? Well, it kind of depends how you look at it, right? From the company's perspective, they might not be spending more. It's just that they don't have to wait to get some of that money back.

Starting point is 00:09:54 So the net spending might be the same, but because of the speeded up deductions, they might be willing to spend it sooner. And so in effect, they might hire more people. They might rehire people who've been laid off in recent years. They might start projects that were borderline, maybe not profitable, but now with a bit more of an incentive here with a bit more of a tax benefit, they can actually go ahead and restart it. That was WSJ Special Writer, Teo Francis. Thanks so much, Teo. Thank you. Walmart said today that, effective immediately, it was extending its 10% employee discount to include nearly all grocery purchases at its stores and online.

Starting point is 00:10:36 Walmart's roughly 1.6 million U.S. workers received the benefit after 90 days of employment. It excludes clearance items. The discount has long applied to fresh produce and general merchandise, but excluded groceries such as milk, pasta, frozen pizza, or meat, except during the November and December holiday shopping season. Walmart workers have grumbled about the perks limitations for years. The new employee benefit takes aim at a growing cost for many of Walmart's workers, their grocery bills. It's also the company's latest effort to better recruit and retain workers, bringing Walmart more in line with some competitors such as Target and Whole Foods. Meanwhile, Whole Foods owner Amazon plans to take on rival Walmart with a massive expansion of its grocery delivery business,

Starting point is 00:11:22 a move to boost growth in one of the few retail arenas in which it doesn't yet have a dominant position. The tech giant has launched same-day grocery delivery service in 1,000 cities, including Phoenix, Orlando, and Kansas City, and plans to more than double it to 2,300 U.S. locations by the end of the year. The company has also made the service free for prime members, a move intended to drive orders and increase market share. Amazon is the largest e-commerce company, but its grocery business hasn't grown as fast as those of some rivals. And that's what's news for this Wednesday afternoon.

Starting point is 00:11:56 Today's show is produced by Pierre Bionemae, with supervising producer Michael Cosmides. I'm Alex Osloaf for the Wall Street Journal. We'll be back with a new show, tomorrow morning. Thanks for listening.

WSJ What’s News - What’s Driving Tech Companies to Hire More U.S. Workers?

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