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Hello and welcome to World Business Report from the BBC World Service.
I'm Victoria Craig coming to you live from New York.
On the program.
Today, hundreds of people have been arrested during an immigration raid in the US state of Georgia.
We'll take you there live for the latest details.
Plus, the all-important monthly jobs report here in the US is out today and it shows hiring stalled last month.
Our US business correspondent walks us through what that means for the Federal Reserve's very closely watched rate decision in just about two weeks.
And Russia's president dangles the possibility of a restoration in business cooperation with America.
How realistic is that?
Doing what Putin suggests would essentially blow up the sanctions regime and destroy all the work we've done to punish Russia for its invasion over the past three years.
That's coming up just a bit on the program.
But first, we begin in America's south in the state of Georgia.
U.S. immigration agents have arrested 475 people there.
It's the largest workplace raid in President Trump's second term.
The Department of Homeland Security said today that the arrests happened last night during a raid on a massive battery complex that's under construction for the South Korean carmaker Hyundai.
DHS said the operation was into unlawful hiring practices and that most of those detained are Korean.
Hyundai says it understands that none of those workers are its direct employees.
Steve Schrank is a special agent for Homeland Security.
This operation underscores our commitment to protecting jobs for Georgians and Americans, ensuring a level playing field for businesses that comply with the law, safeguarding the integrity of our economy and protecting workers from exploitation.
We are sending a clear and unequivocal message that those who exploit our workforce, undermine our economy and violate federal laws will be held accountable.
Well, for the very latest, I'm joined now by Abby Kousouris, a reporter at Atlanta News, First in Georgia.
Abby, thanks for joining us this afternoon.
What is happening there on the ground now?
What exactly do we know about these raids at this point?
Yeah, so we know that federal authorities detained 475 workers.
The majority of them, they have said, are Korean nationals.
Finding out that news.
We know that Georgia has very close ties with South Korea when it comes to economic development.
Of course, there's that Hyundai Kia plant where this raid had taken place.
That is a huge investment in our economy here in Georgia.
But overall, $2 billion of economic improvement between Georgia and Korea.
So it puts a question mark on really how that relationship will continue, especially as Georgia Governor Brian Kemp has really doubled down on his support for that raid and everything that went on yesterday and today.
Yeah, that's a great point, because this raid comes just about a week after South Korea's president visited Donald Trump at the White House and after the country agreed to invest heavily in the US as part of a new trade deal.
I'm just wondering how likely it is to impact what's happening on the ground there, this construction that's going on.
And are there concerns about future business investment there?
I think that that is the nail on the head and the big question mark, because they're one of our closest allies when it comes to investment projects.
I know I personally interviewed our governor several times about some of his economic development trips that he's gone on and especially his relationship with those projects with those folks over in South Korea.
It's a very important relationship that he has highlighted several different times.
And Hyundai, Kia, those are some of the big names that we see a lot of times.
We also have the LG plant down there as well.
And so Georgia.
He has said he wants to be the EV capital of the world.
Georgia, powering the battery belt.
And so what this will do for the future, I think is the big question mark.
Let's zero down on what's been happening over the last day or two there.
Hyundai says that the people arrested were not employed by the company.
Do we have any details about who they were employed by and how they were in the United States?
We do know that the majority of them were employed by subcontractors, which is what we heard from Homeland Security, especially that special agent in charge, Stephen Schrank.
He was able to confirm with us that they were tied to those subcontractors.
Many had entered the U.S. illegally or had overstayed their visas.
And just talking to people on the ground there, a lot of them said that when news of the plant broke there was really a push to get people there, get workers there, so that the construction project could get moved along quickly.
We know a lot of those who have been detained were working in construction and actually put a pause there.
So you mentioned that, those workers.
The allegation is that they have overstayed their visas.
Have any of them been charged at this point now that they're detained?
We have not heard of any charges.
We've been in contact with federal prosecutors trying to see what types of charges could be filed.
They confirmed to us today that they have not been filed yet.
The investigation is still ongoing.
Those detained workers.
They are being kept at Folkston's Ice Processing Center, which is in southeast Georgia.
And we've heard about the conditions there repeatedly.
A lot of people have been saying that there's no air conditioning.
There's maggots in their food.
And so you can also imagine that those workers that were detained could also be facing those same conditions that have been reported in the past couple of months.
And what about the plant itself?
Obviously, construction workers there, they're working on new parts of the plant.
Is that still operating or what's happening with the plant in the situation there?
Hyundai has said that they are still keeping a part of that electric vehicle plant in operation.
LG Energy, they said that they have paused construction in order to assist investigators.
Both have said that they are cooperating with the investigation and are trying to help in whatever way that they can.
Abby Kousouris, a reporter at Atlanta First News in Georgia there for us.
Thanks so much for your insight this afternoon.
Well, earlier today we got the latest look at the health of the US labor market, and the picture is fairly dim.
22000 jobs were added to the economy in August, according to the Labor Department's Bureau of Labor Statistics.
That was well below the expected addition of 75,000 jobs.
If we look a little bit further under the hood, the unemployment rate ticked up slightly.
While the July jobs figures were revised up, June's job gains were revised down to show a net loss of 13000 jobs.
It's the first time that has happened since the pandemic back in 2020.
Erin Delmore, our US business correspondent, told me more about these figures and what exactly they mean for the overall health of the US economy.
We are seeing a decline in job growth across a lot of sectors.
This is really widespread.
And just to put up the goalpost for you, we were expecting to see 75000 jobs created in the month of August.
But instead, the number that came in was just 22,000 jobs.
That's a big difference.
And in context, when we see a number like 22K, economists start using words like seeing the labor market hiring, grind to a halt.
That's how low that number is.
And if we look back at the last eight months of the year here in the US, we've seen around 600000 jobs added during that time period.
But last year, the first eight months of the year generated some 1.14 million jobs.
Really a big, big difference.
And it takes its toll on how people perceive the economy, how people spend their money.
All of that tends to be cyclical here.
A lot of times perception can become reality.
But this data right now is showing that the reality in the U.S. is a pretty bleak jobs market.
And there's been so much talk over the last several months about President Trump's new tariff policy and the effect that that's having on the economy.
What do these numbers today tell us about that impact?
But maybe more importantly, how businesses are preparing and sort of guarding themselves for that?
Yeah, it's a mix of preparing and guarding themselves and a mix of a bit of paralysis.
You know, the big word that we hear in our reporting over and over again is uncertainty.
And frequently when we report on tariffs or when we report on reaction.
Here we talk about how markets don't like uncertainty.
Well, let's be really specific.
Business leaders don't like uncertainty.
No one likes uncertainty.
Right.
They want to know.
Hey, when we bring in raw materials from other countries to construct our goods in the United States, or when we bring in our goods from other countries, what is going to be the surcharge, the import tax?
That's what we call a tariff.
It is an import tax.
Thank you so much for joining us.
And we know President Trump keeps a very close eye on this data.
As we saw, last month, on the heels of that disappointing report, he fired the head of the Bureau of Labor Statistics, which compiles all this data.
Have we heard any murmurings from the White House this time around?
Yeah, a few different lines coming out today.
Among the things we've heard from the White House how the real data would begin to come out next year, kind of discrediting the validity of this data, even though President Trump's really worked to overhaul the leadership structure at the agency.
President Trump also striked a really familiar note here, saying that Fed Chair Jay Powell is Mr Too Late.
So that's the vernacular he uses to say that the Fed should have cut interest rates earlier.
Now, just to make things totally clear the Fed is widely expected to cut interest rates this month at their meeting and potentially again before the year is out.
That was the expectation before we saw this jobs report.
And the kind of numbers that we see in this jobs report make that all the more likely.
That was Aaron Delmore, our U.S. business correspondent.
Let's bring in Chris Lowe.
He is chief economist at FTN Financial here in the U.S.
Chris, good afternoon to you.
Hi, Victoria.
So stock and bond yields moved lower today on the heels of that jobs report.
This is one of two crucial pieces of data that the Fed's going to use in about two weeks at its rate decision meeting.
We've gotten the labor market update now.
What are your thoughts on that?
And what are you expecting from inflation numbers due out next week?
Another modest increase, but certainly inflation is going to be up.
We're not through with all of the tariff effects and prices.
But at this point, you know, the U.S.
Fed, unlike other central banks, they've got a dual mandate.
And part of that mandate is maintaining maximum employment, which certainly this morning's numbers didn't look like maximum employment.
Yeah.
I want to also ask you about gold, because it's one of the world's best performing major assets this year.
Goldman Sachs said it expects the price could rocket higher if this feud between Donald Trump and the Fed continues to escalate and central bank independence is threatened.
What are your thoughts on that?
It's an interesting idea.
I think gold is probably going up anyway, because the US economy is weakening.
The Fed is going to have to cut rates, as you alluded to just a couple of minutes ago.
They've really been forced into that by the economy, not the president.
But That additional idea, the possibility that Trump gets a grip on policy politicizes, the Fed, you know that's the kind of thing that could further weaken the dollar.
And we quote gold in dollars.
If the dollar is weakened enough, gold will soar.
Plenty to watch over the next couple of weeks, that's for sure.
There's no shortage of news on that front.
Chris Lowe, chief economist at FTN Financial, thanks so much for your time this afternoon.
Well, let's stick with the jobs theme here on World Business Report, because McDonald's is taking a stand on tipping.
It says that all restaurant workers should get a full minimum wage rather than relying on tips to boost a smaller set pay.
So beholden to this view is the Golden Arches, that it has quit the National Restaurant Association that's the main industry group here over differences on the issue.
So how much does this critique by the burger behemoth mean to this years-long battle that the industry is having?
Here to talk us through it is John Gordon.
He is the founding principal at Pacific Management Consulting.
John, thanks for joining us here.
For our listeners who are outside of America.
Just quickly walk us through the difference between the minimum wage and the tipped minimum wage.
Yes, happy to do so.
Thank you for having me.
So in the United States, there are a series of wage rate structures.
The so-called tipped wage is a different value in every state that has it.
And about 43 of the 50 states have it.
It is for tipped personnel who receive tips.
And this has been a part and parcel of the restaurant industry at least for the last 150 years.
So the number is different.
It is less than what the prevailing state or federal minimum wage might be.
So it might be $2, $3, $4, $5, $6, $7 an hour.
The minimum wage, however, is a federal labor law matter.
Well, both of these are actually in the federal labor law.
And the non-tipped wage.
They receive higher income because the non-tipped population doesn't receive tips.
They just receive their straight normal time pay.
So that's the difference.
So why is you have consulted with McDonald's franchises in the past?
Why is McDonald's wading into this issue?
Is it because some city governments are looking at it now?
And is this just an added sort of pressure or what's their likely view into it?
Sure.
So this is very complex and it has just developed the last few days.
McDonald's has been under fire, at least for the last two years because, as they see it, their lower income customers are being sucked into McDonald's.
The casual dining world, Chili's, Ruby Tuesdays, Olive Garden and the like, because that they are able to to offer lower and overall lower marketing costs. proposal because some of their, not all of their, but maybe about 20 or 30% of their wage base has a tip credit.
Unfortunately, my view of this is that this is politics.
On the part of McDonald's and the McDonald's CEO, because they have been under fire for quite some time because the perception is that the McDonald's prices on the part of some are too high.
And they have lost market share to some of the tipped markets concepts that are doing very well right now.
And this actually is somewhat of a political charade as I see it.
It is a complicated picture, as you outlined for us.
John Gordon at Pacific Management Consulting.
Thank you so much for giving your views on that one for us this afternoon.
I want to come back to Chris Lowe at FTN Financial quickly here.
Chris, your views on this McDonald's tipping, wading into tipping.
I mean, I think a lot of people think about this, certainly here in the US, and you have the option almost everywhere to tip.
What were your thoughts on that?
Well, yeah.
And you know what McDonald's is doing here, of course, is their workers are so much less likely to be tipped.
People just don't tip at McDonald's.
And so if they're going to retain workers, they're going to have to pay them at least minimum wage.
They're Bigger than that.
The backlash against the tipping culture is affecting sales in all kinds of places in the economy.
Just look at the downturn in people going to places like Las Vegas, for example.
Okay, wonderful, Chris.
Let's take a look at some of the other things that were moving markets today, because one of the things we can't ignore is Tesla shares, which were up about 35 today.
That's after the company's board approved a 1 trillion pay package for Elon Musk over the next decade.
I'm just wondering sort of squaring this announcement with the move in the share price?
Is a requirement that he be less politically involved, perhaps with cheering investors, or what's your take on that?
Yeah, I think that's a very important thing.
Elon Musk's political involvement hurt the company's share price and their sales pretty badly globally.
On top of that, though, and I think maybe even more important, they set some really big milestones.
Among other things, Tesla...
Tesla's market value has to rise to $8.1 trillion in order for him to get this payout.
So from a shareholder point of view, obviously, that would be fantastic.
It would imply that shares would be worth about eight times what they are now.
That's incredible.
I mean we think about the moves that we've seen in Tesla shares and the involvement from Elon Musk in the political scene.
I mean, that has been a real push and pull over the last, I don't know, year or so, hasn't it been?
I mean, this is a real circle to square for the company, certainly when it's thinking about the future of what Tesla and Elon Musk's other companies frankly look like.
Yeah, you know, and Musk is not alone in this.
We've seen CEOs getting involved in politics on the left and on the right.
And, you know, inevitably it alienates at least some customers.
Those companies that steer clear of politics altogether, they do tend to do better.
Yeah.
One other thing I want to get your thought on before I finally let you go.
We talk about Google all the time on this program.
Alphabet shares ending the week up more than 10%.
It got sort of a break from a federal judge this week that it wouldn't have to break itself up here in the US.
But the European Commission today fined it about 35 billion for breaking what it says are antitrust rules.
A bit of a whiplash for investors.
How do you digest these constantly moving regulatory hurdles?
Yeah, it's really something.
You know, I think in part the decision here in the US is because Google is less dominant than they used to be.
You have other players, like TikTok, for example, which is actually bigger in the digital ad space than Google now.
But in Europe, Google still absolutely dominant.
And, you know, also with tighter rules on this kind of thing, I think this is going to be a tricky one for them to beat.
Certainly lots of roadblocks ahead, I'm sure.
Chris Lowe, thanks so much.
Have a great weekend.
Thanks for joining us on a Friday afternoon.
You too.
Thanks, Victoria.
Thanks, Chris.
Let's turn now to Russia, where President Vladimir Putin today delivered a keynote speech at the Eastern Economic Forum in Vladivostok.
He asserted that there are many companies in the U.S. that want to resume work with Russia.
And he stressed that Russia has good proposals for working with American companies in Alaska.
The Asia Pacific region includes the United States, for example, and there are many interested parties there who want to resume or start new work with us.
We have good offers for working with U.S. companies in Alaska.
There are resources there.
And we have technologies for gas extraction and liquefaction which are much more efficient than those some of our American partners have.
They know this.
And at a level of economic participants, these companies are ready for cooperation.
Well, to assess these claims, we called up Donald Jensen.
He is a lecturer of Russian foreign policy at Johns Hopkins University and a former US diplomat in Moscow.
The problem is, of course, is that Russia is under heavy sanctions.
That would essentially doing what Putin suggests, would essentially blow up the sanctions regime and essentially destroy all the work we've done to punish Russia for its invasion over the past three years.
So Putin knows the West very well.
The Kremlin studies, focuses its negotiating tactics on how to get what it wants.
Frankly feels that having the lure of business ties will get a negotiated settlement in Ukraine closer to the terms that Putin wants.
This is in many ways, a bargaining to get the negotiations forward that Trump, three weeks ago, seemed so positive about.
And that's why we have to be very, very careful about all of this.
It's so interesting.
So essentially a multifaceted bargaining tool is what he's trying to use to get what he wants.
But how is Washington likely to react to this?
Because we haven't seen positive murmurs from President Trump following that Alaska summit.
Is what he wants sort of dead on arrival when it comes to negotiating these things with the U.S.?
? an excellent question.
It is dead on arrival, but it's a more complicated death than maybe we might think.
First of all, if you go back and look at the discussions going back early in the year to February, with first contacts between the Trump administration and the Kremlin, first public they talk a lot anyway.
You see the heavy presence of business representatives on both sides.
Mr Witkoff, who is a real estate mogul from New York and Florida, who has business interests in Russia, but his ear is attuned to business talk, the talk of commerce, the talk of making deals.
On the Russian side you have Mr Dmitriev, who is very close to Putin, sometimes seen as Putin's banker or his business guy.
Mr Dmitriev and Mr Witkoff and, as I understand it from my Russian contacts, other Russians especially have been angling for a bit closer business cooperation from the United States all the way back to February.
And this is not what we hear today.
This is not anything new.
What is interesting is that it shows Putin is still playing his same game.
It's interesting that it comes only two weeks after Alaska, where the momentum, as you suggest, has been largely stopped.
So when you talk, on the one hand, of European security forces and Ukraine being a military target and, the other hand, you dangle the prospect of profit, which implies no more sanctions, which implies large US entity firms can participate in exploiting natural resources.
That is a very complicated negotiating strategy, but we should not forget for a moment that this is partly a negotiating strategy.
And if I could add one more point without talking too long, you have to remember as well and I lived in Moscow in the 1990s that property rights are cheap.
The rule of law is cheap.
Any Western firm... who operates in Moscow has to deal with the Putin regime.
And that means illegality, corruption, no corporate protections of the kind you have in the West.
So there's a significant risk for a Western energy company, for example.
Taking this proposal from Putin today, even if he could.
What you're seeing as well is the Russians trying to distract from the war on the ground, where there's been no progress between Russia and Ukraine at all since Alaska.
So this is again.
He's holding up a bright, shiny thing, hoping the Western business interests will pressure the White House to do something that would be against US national security.
And there's no sign at all right now that that's going to happen.
That was Donald Jensen.
He's a lecturer on Russian foreign policy at Johns Hopkins University and a former US diplomat to Moscow.
Speaking of US relations with Russia in the last hour, President Donald Trump has said that next year's G20 summit will be held in Miami Florida, at one of his own golf courses.
He also said that he would quote love it if President Xi of China and President Putin of Russia both attend that conference.
Certainly, lots to digest there.
We'll be watching those very closely.
Thanks to all of our listeners tonight for tuning in to World Business Report, and to our producers Gideon, Victoria and Shay and everyone else in the studio.
Have a great weekend, everyone.
