Tuesday's Scoop: Relief🌤️

Hey friend - welcome back to your daily scoops on the economy and companies impacting your life.

Here’s what you need to know today to inform your work, spending, and investments…

1. Business activity cooled in April.

2. Four million more US workers will soon have a right to overtime pay.

3. Regulators instituted a nationwide ban on non-compete employment contracts.

Unemployment Rate: 3.8%
^{Still near the lowest rate in 50+ years}

Business activity cooled slightly in April, but the economy is still growing. S&P Global’s Purchasing Managers Index (PMI), which tracks activity in the manufacturing and service sectors, fell in April to multi-month lows. Factory activity declined, and growth in the services industry, which makes up most of the economy, slowed to a five-month low. There were some indications of inflation cooling, but most of the news was concerning. 

Four million more US workers will soon have a right to overtime pay. The Labor Department announced a new rule raising the maximum salary under which employers must pay 1.5x regular pay to workers who work more than 40 hours a week. Previously, only those earning less than $35,000 per year were eligible. The maximum salary for mandatory overtime increases to $43,888 on July 1 and $58,656 on January 1, 2025. After 2027, the maximum salary threshold will automatically increase with average workforce earnings. Back in 1975, nearly two-thirds of the American workforce qualified for time-and-a-half overtime pay. Now, that’s down to just 13 percent. The rule does not include hourly workers and will likely face legal challenges.

Regulators instituted a nationwide ban on non-compete employment contracts. The US Federal Trade Commission voted Tuesday to implement a near-total ban on non-compete clauses, paving the way for employees to switch jobs within the same industry without restrictions. Current non-compete agreements for executives earning over $151,164 annually in a policy-making role will continue to be upheld. Once the new rule takes effect in six months, non-compete clauses for lower-level employees will no longer be enforceable. The agency projects this change will boost US worker earnings by at least $400 billion over the next decade. However, the rule does not cover employees working for non-profit organizations or franchises. The nation’s largest business lobby has already announced plans to sue to block the rule.

The Market: ⬆️+1.2%
S&P 500: 5,070.55
1Mo: -3% | 1Yr: +23% | 5Yr: +73%

The market floated higher on Tuesday as investors celebrated signs of slowing business activity in April, hoping that means less inflation. Corporate financial reports have been mixed across industries and within them. Success right now is coming down to execution and efficiency.