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California Is Desperate for Affordable Housing But Can’t Stop Getting in Its Own Way

A Los Angeles nonprofit was given government land in January 2007 to build a few dozen units of affordable housing. They’re finally hoping to open the building next year.

Lorena Plaza, a 49-unit development rising in the predominantly Latino neighbourhood of Boyle Heights in eastern Los Angeles, is taking longer to complete, a city official said, than practically any other residential building this size in the history of Los Angeles.

The 17 years of false starts and delays are an extreme instance of how difficult it has long been to build affordable housing in California—for both the homeless as well as lower and middle-income workers—and in other states with complex regulations and high costs.

The development has faced nearly every hurdle that California laws allow opponents to place in the way of affordable housing. Approvals by politicians and commissions took years, often held up by a single determined opponent on the city council. It took the developers more time to win over skeptical neighbours who were particularly opposed to nearby housing for the mentally ill and homeless. Financing hurdles and other costs piled up along the way. Construction finally began about a year ago.

In California, affordable housing developers typically abide by a host of requirements when they take public subsidies, such as tougher energy-efficiency standards and higher wages for construction workers. They often need to build amenities such as offices for social workers and transit-boosting features such as bike storage.

Los Angeles is aiming to construct more than 450,000 new homes by 2029. PHOTO: ALEX WELSH FOR THE WALL STREET JOURNAL

Even home builders who are sympathetic to these priorities say those same objectives undermine the state’s ability to produce enough affordable housing. That means California will continue to suffer stubbornly high rates of homelessness that plague the Golden State and are evident on the tent-filled streets of cities like L.A.

“We’re really committed to things like climate change and we’re very committed to transit-oriented development,” said Linda Mandolini, president of Bay Area-based Eden Housing, a nonprofit low-income housing builder. “But those goals don’t come for free.”

Housing costs and homelessness have become the top political issue in the state, prompting officials to set ambitious goals to build more housing, faster. Los Angeles is aiming to construct more than 450,000 new homes by 2029, a feat that would require five times as much construction as occurred in the previous decade, according to a May report from researchers at the University of California Los Angeles’ Ziman Center for Real Estate and California State University Northridge.

Los Angeles Mayor Karen Bass has pointed to the delays with Lorena Plaza as an example of what the city is trying to fix. The mayor is expediting permits for projects in which all of the units are considered affordable and cutting other red tape that has sidelined projects.

“How on earth could we expect to house 40,000 [homeless] people if we continue to do business as usual?” the Democrat asked in a speech at the development’s construction site last year.

There are still serious impediments to building enough housing in Los Angeles and the state. Existing subsidies that fund affordable housing construction are oversubscribed. And cities keep looking for ways to block new housing, market-rate or affordable.

The Bay Area suburb of Woodside, for example, last year tried to declare that its entire city was a mountain lion refuge to prevent apartment development. The town, which later reversed the decision, didn’t return a request for comment.

Affordable housing faces hurdles outside of California, too. In New York City, a developer’s plan to build low-income apartments at the site of a community garden in lower Manhattan has been held up for a decade by city review processes and lawsuits filed by opponents. In Dallas, a mixed-income apartment complex planned for an empty field in the northern part of the city was delayed for more than three years by deed restrictions that allowed neighbouring property owners to dictate land use.

An apartment building takes an average of four years to build in L.A., according to a UCLA and CSU-Northridge analysis of building permits from 2010 to 2022. Two-and-a-half of those four years come after the approvals process.

About 36% of projects that received permits in California between 2010 and 2022 had not yet been completed, according to UCLA.

“Thinking about building in a city like Los Angeles and dealing with the politics, navigating the bureaucracy, it’s the last place I want to be,” said Caleb Roope, chief executive of the Pacific Companies, a West Coast affordable housing builder based in Idaho.

California Gov. Gavin Newsom is pushing changes at the state level, as are the mayors of other cities where housing construction has been painfully slow and homelessness has risen.

In San Jose, Calif., the average cost to build just one unit of low-income housing shot up by 24% in 2022 alone, hitting a new high of $938,700, or roughly what it costs to buy a three-bedroom bungalow there, according to an October report commissioned by the city.

San Francisco permitted 856 housing units this year through October. New Braunfels, Texas, which is one-eighth the size of San Francisco by population, permitted 1,940 units in the same period, according to data compiled by the U.S. Department of Housing and Urban Development.

In Los Angeles, Lorena Plaza, if all goes as planned from here, will open in the late summer. Its 49 units will consist of studios up to three-bedroom apartments. They will measure between about 420 and 1,050 square feet and feature full-size kitchens. The rentals will be priced so that people making less than 50% of the area median income can afford them. The units cost $34.2 million to build.

The project’s wood beams are stacking up in Boyle Heights. It’s a neighbourhood that over the past century has made homeownership possible to a rotating cast: Irish and Jewish immigrants at the turn of the century gave way to Black residents barred from buying elsewhere, before becoming the predominantly Latino neighbourhood it is today. Vendors hawk elote, tamales and flowers on street corners.

Musicians play at Mariachi Plaza in the Boyle Heights neighborhood of Los Angeles. PHOTO: ALEX WELSH FOR THE WALL STREET JOURNAL

The neighbourhood has also seen gentrification in recent years, which has turned this barrio into a hotbed of housing activism. On the surrounding blocks, taco trucks coexist with $45 men’s haircuts. A Starbucks drive-through sits on what was once a Unocal service station and the historic Boyle Hotel, which once boarded mariachi musicians, now houses a La Monarca, the local chain of upscale Mexican-American bakeries.

Some 74% of the neighbourhood’s residents are renters, and for more than two decades, rents have risen faster than in the rest of Los Angeles, according to one city government-commissioned study, amid an influx of higher-earning residents.

In 2007, A Community of Friends, a nonprofit developer known as ACOF, proposed to build permanent supportive housing, a type of project designed for low-income people with specific needs. In the case of Lorena Plaza, it meant some units would be set aside for those who had experienced homelessness or mental health issues, and who would rely on services such as social work and healthcare provided by on-site staff.

The Los Angeles County Metropolitan Transportation Authority agreed to provide the land, but was slow to make it available, in large part because it was being used as a staging area during the construction of a train line. A global financial crisis further derailed plans. By the time the economy began rebounding in 2012, the deepest troubles for the 49 could-be apartments were setting in.

The city councilman representing the neighbourhood, Jose Huizar, had broad powers to delay projects on his turf. To get a city subsidy, the developers would need a signed letter from Huizar, who sat on the MTA board and remained opposed to the project for years.

Dora Leong Gallo, executive director of ACOF, recalled a nervous 2013 meeting with Huizar’s staff. Huizar’s staff wanted more commercial space, Gallo said. Once that was satisfied, they requested the approval of the Boyle Heights Neighborhood Council, a community advisory group.

“He moved the goal posts,” Gallo said.

Huizar is currently awaiting sentencing after pleading guilty to corruption charges unrelated to Lorena Plaza. His attorney said that “asking for additional commercial space and support from the neighbourhood council seem not only like routine asks, but responsible ones.”

In a series of heated community meetings, some area homeowners and renters including vendors at El Mercado, a bustling, three-story indoor market next door, chafed at the idea of sharing the neighbourhood with mentally ill and homeless residents.

“They’re trying to bring mentally ill people to put our children at risk,” Pedro Rosado, the owner of El Mercado, said during a 2013 hearing. Rosado died in 2015 and his children, Tony and Marlene, continued his appeals. They didn’t respond to requests for comment.

In 2015, the development got a boost after the neighbourhood council voted 15-1 to let ACOF proceed. It took about another year to receive city approval on all the necessary zoning and environmental reviews.

State law provided an opportunity to stall Lorena Plaza further. The Rosados appealed the project’s city-approved environmental review, claiming it was too dense for an already-overcrowded area, according to the filing.

A landmark state law called the California Environmental Quality Act, passed in 1970 and signed by Gov. Ronald Reagan, allows any opponent to use appeals to slow down development if they claim environmental reviews are flawed. In Los Angeles, appeals are heard by the city council’s Planning and Land Use Management Committee. That body was chaired by Huizar.

“He had double power,” said Jose Torres, the project manager for Lorena Plaza at the time. “One as a council member of his own district, and the other as the chair of PLUM.”

The committee didn’t schedule a hearing on the appeal for more than a year. When the project did get a hearing, Huizar sided with the Rosados, saying an abandoned oil well on the site posed a potential hazard.

By 2017, California’s housing crisis was worsening. Economists estimated there was a shortage of three million homes statewide. On the campaign trail, gubernatorial hopeful Newsom was vowing to spearhead an effort to alleviate homelessness and slow down home prices by building 3.5 million homes within eight years. While housing production has ticked up in recent years, it still sits well below half the pace needed to hit that figure.

Media attention zeroed in on the Lorena Plaza project and its years long saga, prompting the Chamber of Commerce and the United Way to rally behind it. In early 2018, Huizar called up the Los Angeles Times to say he had changed his mind after the developer made concessions and would push for the project’s approval.

The owners of El Mercado then turned to the courts, filing a lawsuit alleging ACOF didn’t properly address potential soil contamination. The case dragged on until ACOF and the business owners settled in 2020.

By 2021, when the Lorena Plaza developers secured all the necessary funding, the project’s costs had shot up by $9 million, or about one-third, in the five years after it first received approvals to build, Gallo said.

“It’s unfortunate what happened, but I think it’s very illustrative,” Gallo said. “I think a lot of things have changed as a result of this particular project.”

Much of what stifled construction of Lorena Plaza likely wouldn’t have happened now due to recent law changes. Developers no longer need a letter of support from their city council member to receive affordable housing funding.

Environmental appeals have to be heard within 75 days. Zoning approvals for affordable projects, which took more than a year at Lorena Plaza, are now happening as quickly as a few months-time under a Mayor Bass executive order.

David Aghaei, co-founder of Eleos Ventures, a developer with a pipeline of more than 20 all-affordable housing projects in Los Angeles, said the changes have significantly improved the timeline for four of his larger projects. One of them, which will bring 222 units of affordable housing to South Los Angeles, received planning approvals in five months. Historically, Aghaei said, that could have taken as long as two years.

The new rules mean Lorena Plaza may permanently hold the title for perhaps the city’s longest-running development. ACOF plans to start taking applications from prospective tenants in the spring.

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Chinese Leaders Vow to Step Up Support for Flagging Economy

Chinese leaders vowed to increase government spending and monetary support for the economy at an annual gathering, signalling they plan to stick with a measured approach to stimulus despite calls for bolder action.

The Central Economic Work Conference, which ended Tuesday, capped a bruising year for the country’s economy, which has struggled with a drawn-out housing crunch and weak consumption.

The trouble shows no sign of abating. After a pickup in the third quarter, data in recent weeks has pointed to slowing growth again as exports struggle, activity in the services sector slows and deflation deepens.

Still, Chinese leaders offered few specifics Tuesday on how they intend to reignite consumer and business confidence and reinvigorate growth.

Chinese leader Xi Jinping presided over the two-day meeting, where leaders urged officials to increase fiscal stimulus and help expand domestic demand, according to Chinese state media. They also acknowledged economic challenges, including “excess capacity in certain industries and weak sentiment in the society,” according to a readout of the meeting.

Chinese leaders also called for strengthening the resilience of industrial supply chains and accelerating the development of artificial intelligence, as well as other strategic industries such as aerospace and biotechnology.

The closed-door meeting, which is typically held in December each year to map out plans for economic policy-making, sets out the leadership’s growth ambitions for the following year, though the detailed targets won’t be released until March, during the National People’s Congress.

Though the overall tone of the conference was pro-growth, “it is still not a call for massive stimulus,” economists at Société Générale said in a note to clients after the readout was published. Instead, officials are emphasising the need to stabilise the economy and stem risks to growth, they said.

Many economists expect Beijing to anchor its growth target at around 5% in 2024, taking their cue from a meeting last week of the Communist Party’s Politburo, its body of top leaders. Policy makers emphasised the importance of economic progress, saying the country needed to “pursue stability through growth.”

This year’s target was also set at around 5%. Despite its difficulties, the economy looks set to hit that goal this year, but economists say maintaining that pace will be tough without bigger measures to stimulate the economy.

Beijing has taken some measures this year including interest rate cuts and channeling cheaper loans to firms to arrest the downturn but has so far failed to reverse a broad-based loss of confidence.

China’s difficult year contrasts with surprising resilience in the U.S., where buoyant consumer and government spending have kept the economy motoring despite aggressive increases in interest rates by the Federal Reserve. The latest data on jobs and inflation has stoked optimism that the U.S. will avoid recession and instead enjoy a “soft landing,” in which price growth slows to target without a steep rise in unemployment. That marks a reversal in expectations from earlier in the year when China was expected to easily outpace a cooling U.S. economy.

And there are fresh signs of trouble for China.

Business surveys showed factory activity slid deeper into contraction in November as domestic and foreign orders dried up, while activity in the services sector shrank for the first time this year as consumers cut back spending.

Exports rose just 0.5% on the year last month after shrinking for six months, highlighting the drag from slowing growth in the U.S. and Europe.

Weak domestic spending and bloated industrial capacity caused consumer prices in China to fall in November for the second straight month, deepening a bout of deflation that economists say could prove hard to shake if the economy doesn’t pick up soon.

China’s slow-motion property crunch shows few signs of abating. Some developers have defaulted on their debts and construction has stalled on millions of homes. Home prices fell in October and new investment in the sector is shrinking.

A central question for investors and economists is whether Beijing will experiment with novel stimulus approaches to shore up battered confidence among households and businesses.

At the meeting, Chinese leaders vowed to expand consumption and raise income for both urban and rural residents but offered little sign that they may pivot to giving cash handouts to households, despite repeated calls from policy advisers and economists to do so.

Instead, the government is seen as more likely to step up efforts to resolve the crisis in the property market, which remains a major drag on overall growth.

Chinese leaders called for equal treatment for developers to meet their financing needs—a likely reference to the perception that banks favour state-backed developers over private ones. They also urged accelerating the construction of government-subsidised affordable housing and urban village renovation projects.

Still, the meeting didn’t spell out a plan to help cash-strapped developers finish tens of millions of uncompleted apartments, a crucial step that economists believe will help restore household’s confidence in the government.

While officials aren’t expected to disclose a growth target until a political gathering next spring, economists and investors are already debating how aggressive Beijing will be with its 2024 goal.

Economists from J.P. Morgan predicted that policy makers will likely maintain a goal of around 5%, to signal a renewed focus on the economy. Robin Xing, chief China economist at Morgan Stanley, said he expects Beijing to set a target of 4.5% to 5% and pursue a stronger fiscal stimulus.

Others believe Beijing will stick to a more conservative target because of the headwinds facing the economy. Ting Lu, chief China economist at Nomura, said he expects China to aim for around 4.5%.

“I still think the Chinese government is quite rational,” said Lu, who cautioned that the economy hasn’t bottomed out and the actual growth rate could slip to 4% in 2024 from Nomura’s 5.2% forecast for 2023.

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Crystal Consults and Tarot Readings: Energy Healers Become the Go-To Home-Repair Pro

Brook Harvey-Taylor felt creatively stuck.

The CEO and founder of Pacifica skin care and cosmetics company had moved into a Santa Barbara, Calif.-area estate in December 2022, and something was blocking her from decorating the five-bedroom, five-bathroom space. A year ago, the only furniture in the living room was two sofas. A year later, the living room still only has two sofas.

Then there was the matter of honouring the property, a 1980s vestige originally designed for a television producer by interior designer Michael Taylor, the godfather of the California look. Harvey-Taylor, 54, and her husband have a great reverence for the house—which has Ibiza finca-style overtones and a Mediterranean feel—and how it sits in nature. “We wanted to show the property and the original owner gratitude,” says Harvey-Taylor, who declined to disclose the purchase price.

So Harvey-Taylor enlisted Colleen McCann, 44, a Los Angeles-based shamanic energy practitioner, to harmonise the property’s energy. Home harmonising is one of the services McCann offers through her consulting firm, Style Rituals, which she founded in 2015 after a 15-year career as a fashion designer and stylist.

Los Angeles-based energy stylist Colleen McCann doing home harmonising work at her client Brook Harvey-Taylor’s house in the Santa Barbara, Calif., area. VIDEO:TEAL THOMSEN FOR THE WALL STREET JOURNAL

In November, McCann spent four days at Harvey-Taylor’s estate. They performed a Celtic space clearing blessing, paid ceremonial homage to the original owner and upgraded a spiral staircase’s feng shui energy flow, among other activities. But the pair says the biggest aha moment came when crystals, tarot cards and a dowsing pendulum helped reveal that locating Harvey-Taylor’s office within the house was creating a family-wide creativity block. This revelation, Harvey-Taylor says, and the subsequent scheme to move her office into the garage, feels like the beginning of unblocking her creative stuckness.

Across the U.S., homeowners are hiring house-energy specialists to reset and elevate their home’s energy, often through modern-day twists on ancient spiritual practices and healing arts. Real-estate professionals are tapping into their mystical sides, too, embracing these same ritualistic endeavours.

Ele Keats, 52, is an actress—she starred in Disney’s 1992 movie “Newsies”—who has been designing crystal and gemstone jewellery for 20 years. Through her Santa Monica, Calif.-based shop, Ele Keats Jewelry, she offers house crystal consultations.

Crystal healing, to wildly oversimplify it, is a practice rooted in the belief that crystals have healing powers: citrine amplifies creativity and wealth; rose quartz enhances love; selenite clears and purifies; and so on. Practitioners believe placing crystals on or around the body, or in a physical space, can balance energy. Crystals can be priced as little as about $3 for a small, hand-held piece, whereas world-class, museum-quality specimens can cost roughly $100,000 to $1 million and higher.

Keats works with homeowners such as a client who wanted to revamp the sad, empty energy she felt permeated her Los Angeles dwelling. “There was no life force,” Keats says. To usher in vibrancy and aliveness, Keats helped the client with the personal process of positioning a half-dozen or so crystal types, varying in sizes and forms, inside and outside the client’s residence.

Keats was recently hired to select crystals to inlay under a 50-foot indoor saltwater pool at The Huron, a 171-unit condo building slated to open in Greenpoint, in Brooklyn, in January 2024. “It was top of mind to make sure the pool space is tranquil, rejuvenating and soul-cleansing,” says Jared White, senior vice president at Quadrum Global, the New York-based company developing the project, where offerings currently range from $750,000 studios to $3.16 million three-bedrooms. “That discussion went to crystals.”

In Boca Raton, Fla., Senada Adžem is Douglas Elliman’s executive director of luxury sales. She recently listed a $23.995 million Delray Beach, Fla., property at which the homeowners put their interest in crystal healing on display. They commissioned custom-designed chandeliers made from healing crystals. They use crystals as design pieces, including a nearly human-sized amethyst by the dining room’s doorway. Built in 2018, the house has six bedrooms and 10 bathrooms, and is 11,457 square feet of living space on 2.5 acres.

Additionally, after a house showing, the space is saged, says Adžem, referring to the ancient ritual of burning plants—in this case, sage—for purification.

Brook Harvey-Taylor’s energy stylist Colleen McCann says clients engage her in house energy work for many reasons. Some want their space’s energy refreshed annually. Others are experiencing a house-affecting life transition, such as moving, having a baby or divorcing. Others can’t put their finger on why they are feeling bad vibes. Then there are people who are freaked out. “They say, ‘There are doors slamming, the lights are flickering,’ ” says McCann, who works globally.

McCann says one of the many steps in her home-harmonising process is laying crystals and tarot cards on a house’s blueprint, and using a dowsing pendulum, tools she uses along with her intuition. Over the past 15 years, McCann has studied many different spiritual, mystical and metaphysical lineages. “My preference is to learn a lot of modalities and blend it together to make it my own,” McCann says. Consultations start at $1,000 and prices vary on the project’s scope.

New York-based Holly Star, 45, has 20 years of energetic work experience. She studied for five years with various gurus, healers and shamans. Her space-clearing process tends to involve custom bundles of herbal and botanical mixtures, sometimes up to three or four mixes of 10 or 15 types, such as frankincense, copal, pine, lavender and sandalwood. When working on a house, she does a lot of burning and bells. “I kind of go into a trance,” Star says. “It’s almost like I pan back from the space and I can feel the energetic templating shifting.” Afterward, clients often tell her their spaces feel light, says Star, who also owns Matter and Home, a spiritually inclined luxury homegoods boutique. Her space clearing fee starts at $2,000.

Sometimes houses need healing like people do, says London-based Emma Lucy Knowles, 39, who has been working in clairvoyance, crystals, energy, hands-on healing, light, meditation and spiritual coaching for 20 years. Knowles says she treats a house like a body: She reorients, manipulates and liberates a space’s energy to its true form. She uses energy healing, elemental sources (such as crystals and fire, the latter through burning palo santo, sage and incense) and sound (such as music, sound bowls, mantra or chanting). To close her sessions, she lights a violet flame for intention. She often decorates with crystals, which she says work like energy hubs around the house. Her space energy clearing work depends on square footage, but starts at $400.

Brooke Lichtenstein, 46, refers to herself as spiritual guide and family energy healer who, with her husband, is renting a five-bedroom, five-bathroom, 4,800-square-foot house in Los Angeles’s Pacific Palisades neighbourhood, where the median listing price is $4.3 million. In her house, she performs clearings, healing and blessings through rituals such as prayer, light visualisations, herb burning, rosewater spraying and sound healing using her voice in prayer and playing instruments such as crystal bowls, chimes and a harp. To her, this is home maintenance. “People do a lot of things to maintain their homes,” she says. “This is paramount for us.” Her 7- and 8-year-old sons sometimes join her practice. “To watch them owning their own space is a privilege to witness,” she says.

“People have a desire to have a spiritual component to their lives,” says Lytton John Musselman, Old Dominion University’s Mary Payne Hogan Professor of Botany, Emeritus, who is an expert in the intersection of plants and spirituality. The University of Texas at Austin’s curator of gems and minerals, Kenneth Befus, agrees. “Humans believe in religion and the spiritual realm,” says Befus, a crystal expert. “We want to. It brings us peace.”

The problem, both scholars say, is separating the religious and psychosomatic from medical efficacy. Musselman says, “If I plant lavender in my garden and feel better, is that because I want to feel better? Or because I enjoy planting it, or smelling it? Or does it really have an effect on my other senses?”

Befus says crystal healing has no empirical scientific evidence. “Crystal healing is in the realm of metaphysical,” he says. “We call it pseudoscience.” However, he acknowledges the potential of the placebo effect. “That’s a place where crystals could be healing,” he says. “It’s not in the word ‘energy’ or ‘chakra’ or ‘aura.’ ”

Musselman—whose latest book, “Solomon Described Plants,” is a guide to biblical botany—says as a scientist he seeks documentation from field studies and scientific literature. “I was at a large, wonderful bazaar in Iraq, and I saw a very poisonous rosary pea,” he says. “I asked the vendor what it was for, and he said, ‘For women to drive away evil spirits.’ I thought, ‘How are you going to test that?’”

Energetic healing practitioner and energy consultant Holly Star says, “People may not be able to scientifically prove how something came to be, but I believe how you feel and seeing change in your life or home is the proof.” She says sometimes the most powerful part of a clearing lies in homeowners learning about themselves. “Their lives start to open,” she says. “It’s kind of a backdoor.” Jewellery designer and crystal-store owner Ele Keats shares a similar sentiment: She says she’s heard countless stories of how crystals have enabled breakthroughs and life improvements.

Chelsea Leibow, 33, took the backdoor approach when she addressed a problem in her house using tarot, a tool for divination and tapping into one’s intuition.

In September 2022, Leibow and her husband, Mike Farrell, 34, purchased a five-bedroom, four-bathroom, 3,200-square-foot house in West Orange, N.J., for $805,000. Early on, they splurged on hiring painters for their front foyer, stairway, second-floor landing and back hall. The painters did a great job. The issue was that Leibow deeply believed she chose the wrong color of white paint.

“I could not live with myself,” Leibow says. “I was like, ‘It’s wrong and I hate it and I want to fix it immediately.’ ” Her husband, on the other hand, thought they should embrace the paint. He thought it looked exactly like every other white paint.

To get a grip on the situation, Leibow sorted through her feelings using tarot, a modality she dabbled in during college but got more serious about in 2020, when, during the Covid-19 pandemic, she began attending a Sunday Zoom group led by a practicing witch who is an expert in tarot and astrology. “The cards were like, ‘You’ve got to chill out. Just give it a beat,’ ” says Leibow, who owns communications firm Chelsea Leibow Communications.

Leibow listened to her husband—and the cards. The couple agreed the paint would stay, but if Leibow still detested it a year later, they’d get it fixed.

A year later, their foyer, stairway, second-floor landing and back hall are now a new colour of white paint.

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The Long Goodbye: Why Laid-Off Employees Are Still on the Job

Chris Pinner, a 42-year-old technical writer in Cleveland, knows his last day on the job is Dec. 29. The software company where he works told him so back in April.

At first, Pinner was puzzled by the supersize notice that his job would be eliminated. But the advance warning has given him more time to look for a new position, which Pinner said he appreciates. He is still in job-search mode as his end date draws closer.

Pinner and many other workers facing termination are experiencing a different kind of corporate cutting—layoffs with a long runway that can take weeks or months to finally come to pass. Wells Fargo and Disney are among large employers that have done some long goodbyes instead of more-traditional, abrupt ones, in which laid-off workers learn they are cut and leave on the same day, often escorted out by security.

The old way protected companies from security problems or lost clients as laid-off workers walked out the door, and workers had little recourse. Now employers are trying to appear transparent and compassionate when cutting, several executives and leadership consultants said.

“Companies can’t lay people off on the quiet anymore,” said Sarah Rodehorst, chief executive of Onwards HR, a software platform that helps companies with legal compliance during employee terminations. “Whatever they do is much more under a microscope. They have to hold themselves to a higher standard.”

Avoiding a backlash

Demand for white-collar workers has taken a big hit this year, as companies acknowledge they over hired during the pandemic and job openings dry up. The tightening job market means employers are piling on layers of new requirements and lengthy, additional rounds of interviews for a few coveted jobs, dragging out the hiring process as they grow more selective about whom they bring on.

Layoffs that are seen as insensitively done can spark backlash on social media, with laid-off employees venting online and circulating internal details, said George Penn, a managing vice president at Gartner who advises companies on staff restructuring.

“Layoffs became not only a legal but a reputational nightmare for some organisations,” he said.

Federal law requires employers of a certain size to give 60 days’ notice to workers when conducting big layoffs. Some companies have gotten around advance warning by paying terminated workers a lump sum to cover that period.

Some affected employees said they would still receive severance pay after their long layoff notice periods, though it would be reduced if they left before their designated end dates.

In the Houston area, James Ridgway Jr., 40, is working at Huntsman, a chemical company, after learning in August that he would lose his job at the end of the year. The father of two children with another on the way said the news was initially an “existential gut punch.” He said the long lead time has given him more time to network and tighten family finances.

“It’s not a great place to be in, but I appreciate that I do have that runway,” said Ridgway, adding that the notice is helping him as he hands off responsibilities to co-workers.

Ridgway, a communications manager, is still looking for another full-time job. Because his colleagues know he is job-hunting, ducking out for interviews is less awkward than feigning doctors’ appointments, he said.

Wade Rogers, Huntsman’s senior vice president of global human resources, said giving laid-off employees months of notice shows remaining and prospective workers that the company treats its people well. That approach, he said, could help the company recruit and retain good hires in the future.

“How we handle ourselves and how we handle our relationships with our associates matters,” he said.

‘Take every advantage’

Not all workers want to stick around after a layoff. A Wells Fargo employee said staying motivated after being terminated was tough. She was told months ago that her job would be eliminated. No precise date was given, making it hard to plan her job search.

“Every day, you go in, and you’re like, is it going to be today?” she said.

Wells Fargo said it periodically needs to adjust its staffing levels according to business needs. During layoffs, “We always treat our employees respectfully, including giving them reasonable time to prepare,” the bank said.

At Disney, a former corporate employee who was given several months’ notice this past spring said she was annoyed that she was expected to keep doing her job even though it was ending, until her manager said she could stay home and stop working. Two other Disney employees said they weren’t asked to work during their advance-notice period; they used the time to consider next career steps.

Earlier this year, a laid-off Disney marketing executive was given two months’ notice of his layoff. While he collected paychecks, he used the time to job-hunt and made use of his employee benefits. He took his children to Disneyland free several times.

“I am going to take every advantage of this as possible,” the former executive recalled thinking.

Disney declined to comment.

Some companies simply can’t give employees much warning, but some of those are trying to soften the blow.

“If you’re dealing in an environment where you have confidential patents or access to business plans, you just want to protect your company assets,” said Tashia Mallette, a longtime human-resources executive who conducted layoffs last year at Therabody, a wellness-technology company.

Mallette said that workers were notified on the day they had to leave but that Therabody encouraged managers to check on them and created an alumni Slack channel so people didn’t feel abruptly cut off. Mallette herself has left the company.

Companies don’t want workers to feel burned during a layoff. If anything, they want workers to feel that they would rejoin the company if given the chance.

Jennifer Bender managed layoffs of hundreds of people during her years at Change Healthcare, where until this past spring she was a senior vice president of human resources. The company had to trim staff during acquisitions and project and client fluctuations, and it also had to fill hundreds of openings a month, she said.

The company decided to tell people two to four weeks ahead of their layoff dates, she said. It felt more compassionate to workers, and it also made it easier to redeploy some people into other roles the company needed to fill, which was a benefit to the company and employees who were interested in staying on.

While longer notice periods involve risks, including security issues or unmotivated people who don’t want to work during that time, Bender said the company let employees know that performance issues could still result in corrective action, including termination for cause. That meant, she added, that it wasn’t much of an issue.

“It’s really a best practice at this point,” Bender said.

—Ben Eisen contributed to this article.

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How Is China’s Economy Doing? Not Nearly as Well as China Says It Is

Chris Pinner, a 42-year-old technical writer in Cleveland, knows his last day on the job is Dec. 29. The software company where he works told him so back in April.

At first, Pinner was puzzled by the supersize notice that his job would be eliminated. But the advance warning has given him more time to look for a new position, which Pinner said he appreciates. He is still in job-search mode as his end date draws closer.

Pinner and many other workers facing termination are experiencing a different kind of corporate cutting—layoffs with a long runway that can take weeks or months to finally come to pass. Wells Fargo and Disney are among large employers that have done some long goodbyes instead of more-traditional, abrupt ones, in which laid-off workers learn they are cut and leave on the same day, often escorted out by security.

The old way protected companies from security problems or lost clients as laid-off workers walked out the door, and workers had little recourse. Now employers are trying to appear transparent and compassionate when cutting, several executives and leadership consultants said.

“Companies can’t lay people off on the quiet anymore,” said Sarah Rodehorst, chief executive of Onwards HR, a software platform that helps companies with legal compliance during employee terminations. “Whatever they do is much more under a microscope. They have to hold themselves to a higher standard.”

Avoiding a backlash

Demand for white-collar workers has taken a big hit this year, as companies acknowledge they over hired during the pandemic and job openings dry up. The tightening job market means employers are piling on layers of new requirements and lengthy, additional rounds of interviews for a few coveted jobs, dragging out the hiring process as they grow more selective about whom they bring on.

Layoffs that are seen as insensitively done can spark backlash on social media, with laid-off employees venting online and circulating internal details, said George Penn, a managing vice president at Gartner who advises companies on staff restructuring.

“Layoffs became not only a legal but a reputational nightmare for some organisations,” he said.

Federal law requires employers of a certain size to give 60 days’ notice to workers when conducting big layoffs. Some companies have gotten around advance warning by paying terminated workers a lump sum to cover that period.

Some affected employees said they would still receive severance pay after their long layoff notice periods, though it would be reduced if they left before their designated end dates.

In the Houston area, James Ridgway Jr., 40, is working at Huntsman, a chemical company, after learning in August that he would lose his job at the end of the year. The father of two children with another on the way said the news was initially an “existential gut punch.” He said the long lead time has given him more time to network and tighten family finances.

“It’s not a great place to be in, but I appreciate that I do have that runway,” said Ridgway, adding that the notice is helping him as he hands off responsibilities to co-workers.

Ridgway, a communications manager, is still looking for another full-time job. Because his colleagues know he is job-hunting, ducking out for interviews is less awkward than feigning doctors’ appointments, he said.

Wade Rogers, Huntsman’s senior vice president of global human resources, said giving laid-off employees months of notice shows remaining and prospective workers that the company treats its people well. That approach, he said, could help the company recruit and retain good hires in the future.

“How we handle ourselves and how we handle our relationships with our associates matters,” he said.

‘Take every advantage’

Not all workers want to stick around after a layoff. A Wells Fargo employee said staying motivated after being terminated was tough. She was told months ago that her job would be eliminated. No precise date was given, making it hard to plan her job search.

“Every day, you go in, and you’re like, is it going to be today?” she said.

Wells Fargo said it periodically needs to adjust its staffing levels according to business needs. During layoffs, “We always treat our employees respectfully, including giving them reasonable time to prepare,” the bank said.

At Disney, a former corporate employee who was given several months’ notice this past spring said she was annoyed that she was expected to keep doing her job even though it was ending, until her manager said she could stay home and stop working. Two other Disney employees said they weren’t asked to work during their advance-notice period; they used the time to consider next career steps.

Earlier this year, a laid-off Disney marketing executive was given two months’ notice of his layoff. While he collected paychecks, he used the time to job-hunt and made use of his employee benefits. He took his children to Disneyland free several times.

“I am going to take every advantage of this as possible,” the former executive recalled thinking.

Disney declined to comment.

Some companies simply can’t give employees much warning, but some of those are trying to soften the blow.

“If you’re dealing in an environment where you have confidential patents or access to business plans, you just want to protect your company assets,” said Tashia Mallette, a longtime human-resources executive who conducted layoffs last year at Therabody, a wellness-technology company.

Mallette said that workers were notified on the day they had to leave but that Therabody encouraged managers to check on them and created an alumni Slack channel so people didn’t feel abruptly cut off. Mallette herself has left the company.

Companies don’t want workers to feel burned during a layoff. If anything, they want workers to feel that they would rejoin the company if given the chance.

Jennifer Bender managed layoffs of hundreds of people during her years at Change Healthcare, where until this past spring she was a senior vice president of human resources. The company had to trim staff during acquisitions and project and client fluctuations, and it also had to fill hundreds of openings a month, she said.

The company decided to tell people two to four weeks ahead of their layoff dates, she said. It felt more compassionate to workers, and it also made it easier to redeploy some people into other roles the company needed to fill, which was a benefit to the company and employees who were interested in staying on.

While longer notice periods involve risks, including security issues or unmotivated people who don’t want to work during that time, Bender said the company let employees know that performance issues could still result in corrective action, including termination for cause. That meant, she added, that it wasn’t much of an issue.

“It’s really a best practice at this point,” Bender said.

—Ben Eisen contributed to this article.

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Car Dealers on Why Some Customers Hesitate With EVs

Auto dealers across many parts of the country say electric vehicles are becoming too hard a sell for buyers worried about the range, reliability and price of these models.

When Paul LaRochelle heard Ford Motor was coming out with an electric pickup truck, the dealer was excited about the prospects for his business.

“We thought we could build a million of them and sell them,” said LaRochelle, a vice president at Sheehy Auto Stores, which sells vehicles from a dozen brands in Virginia, Maryland and Washington, D.C.

The reality has been less positive. On Sheehy’s car lots, LaRochelle says there is a six- to 12-month supply of EVs, compared with a month of gasoline-powered vehicles.

With automakers set to release a barrage of new electric models in the coming years, concerns are mounting among auto retailers about whether the technology will have broader appeal given that many customers are still reluctant to make the switch.

Battery-powered models have been piling up on car lots, dealers say, as EV sales growth has slowed in the U.S. this year. Car companies have been offering a combination of discounts and lower interest-rate deals in an effort to juice demand. But it hasn’t been enough, because buyer reticence extends beyond the price tag, dealers say.

“I’m not hearing the consumer confidence in the technology,” said Mary Rice, dealer principal at Toyota of Greensboro in North Carolina. “People aren’t beating down the door to buy these things, and they all have a different excuse why they aren’t buying one.”

Customers cite concerns about vehicles burning through a battery charge faster in cold weather or not being able to travel as far as they expected on a single charge, dealers say. Potential buyers also worry that chargers aren’t as readily accessible as gas stations or might be broken.

Franchise dealerships fear that the push to roll out new models will inundate them with hard-to-sell vehicles. Research firm S&P Global Mobility said there are 56 EV models for sale in the U.S. this year, and the number is expected to nearly double to 100 next year.

“I start to think, you know maybe we should just all pump the brakes a little bit,” Rice said.

A group of dealers expressed their concerns about the government’s role in pushing electric vehicles in a letter last month to President Biden.

A Toyota Motor spokesman said the majority of dealers have become “increasingly more confident in their ability to sell Toyota EV products.”

At Ford, the company’s electric-vehicle sales are rising, including for its F-150 Lightning pickup, but demand isn’t evenly spread across the country, according to a spokesman.

Dealers say that after selling an EV, they sometimes hear complaints about charging and the vehicles not always meeting their advertised range. In some cases, customers seek to return them to the dealer shortly after buying them.

“We have a steady number of clients that have attempted to or flat out returned their car,” said Sheehy’s LaRochelle.

While EVs remain a small but rapidly expanding part of the new-car market, the pace of growth has slowed this year. Electric-vehicle sales increased 48% in the first 11 months, compared with a 69% jump during the same period in 2022, according to Motor Intelligence. Sales remain concentrated in a few states, with California accounting for the largest chunk, S&P Global Mobility data found.

The cooling growth has raised broader questions in the industry about whether car companies face a temporary hurdle or a longer-term demand challenge. Automakers have invested billions of dollars to bring more EV models to the market, and many analysts and car executives say they remain optimistic that sales will continue to expand.

“Although the rate of growth has slowed recently, EV demand is clearly moving in the right direction,” said General Motors Chief Executive Mary Barra on a recent conference call with analysts. A combination of more affordable model options and better charging infrastructure would help encourage more people to buy electric vehicles, she said.

There are also varying views within the dealer community about how quickly buyers will adopt the technology.In hot spots for electric-vehicle demand, such as Los Angeles, dealers say their battery-powered models are some of their top sellers. Those popular EV markets also tend to have more mature public charging networks.

Selling an electric car or truck outside of those demand centres is proving more difficult.

Longtime EV owner Carmella Roehrig thought she was ready to go full-electric and sold her backup gasoline vehicle. But after the 62-year-old North Carolina resident found herself stranded last year in a rural area of South Carolina, she changed her mind. Roehrig’s Tesla Model S got a flat tire, but none of the stores in the area carried tires for a Tesla. She ended up paying a worker at a nearby shop to drive her home.

Roehrig still has her Tesla but bought a pickup truck for long road trips.

Tesla didn’t respond to a request for comment.

“I have these conversations with people who say we’ll all be in EVs in 15 years. I say: ‘I’m not so sure. I’ve tried to do it,’” Roehrig said. “I think you need a gas backup.”

Customers who want to ditch their gas vehicle for environmental reasons are sometimes hesitant, said Mickey Anderson, president of Baxter Auto Group, which owns dealerships in Kansas, Nebraska and Colorado.

“We’re in the Colorado Springs market. If this is your sole mode of transportation, and you’re in a market in extremes of elevation and temperature, the actual range is very limited,” Anderson said. “It makes it extremely impractical.”

Dealers representing around 4,000 stores across the U.S. signed the letter in November addressed to Biden, saying the administration’s proposed auto-emissions regulations designed to promote electric-vehicle sales are unrealistic. The signatories ranged from stores owned by family businesses to publicly held giants such as AutoNation and Lithia Motors.

“Some customers are in the market for electric vehicles, and we are thrilled to sell them. But the majority of customers are simply not ready to make the change,” the letter said.

Some carmakers are pushing back EV-rollout plans. GM said in mid-October that it would delay the opening of an electric pickup plant by a year to late 2025. In response to weaker-than-expected consumer demand, Ford said in late October that it would defer $12 billion of planned spending on electric-vehicle investment.

Since September, dealers on average took more than two months to sell an EV, compared with 40 days for all vehicles, according to car-shopping website Edmunds.

While discounts have helped boost sales of some electric vehicles, they also have led to repercussions for some current owners because it reduces the value of their vehicles, dealers say.

“Most people don’t have the confidence to buy an EV and know what it will be worth in 10-15 years,” said Rice from the Toyota dealership.

It may take some time for the industry to adjust because it is still in an early stage of switching to electric vehicles, Sheehy’s LaRochelle said.

“We’re asking for this market to grow organically,” he said.

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The Embarrassment of Having to Explain Your ‘Monster’ Diamond Ring

Wedding planner Sterling Boulet has some advice for brides-to-be regarding lab-grown diamonds, which cost a fraction of the natural ones.

“If you’re trying to get your man to propose, they’ll propose faster if you offer this as an option,” says Boulet, of Raleigh, N.C. Recently, she adds, a friend’s fiancé “thanked me the next three times I saw him” for telling him about the cheaper lab-made option.

Man-made diamonds are catching on, despite some lingering stigma. This year was the first time that sales of lab-made and natural mined loose diamonds, primarily used as centre stones in engagement rings, were split evenly, according to data from Tenoris, a jewellery and diamond trend-analytics company.

The rise of lab-made stones, however, is bringing up quirks alongside the perks. Now that blingier engagement rings—above two or three carats—are more affordable, more people are dealing with the peculiarities of wearing rather large rocks.

An engagement ring made with a lab-grown diamond at Ada Diamonds in New York City. PHOTO: CAM POLLACK/THE WALL STREET JOURNAL

Esther Hare, a 5-foot-11-inch former triathlete, sought out a 4.5-carat lab-made oval-shaped diamond to fit her larger hands as a part of her vow renewal in Hawaii last year. It was a far cry from the half-carat ring her husband proposed with more than 25 years ago and the 1.5-carat upgrade they purchased 10 years ago. Hare, 50, who lives in San Jose, Calif., and works in high tech, chose a $40,000 lab-made diamond because “it’s nuts” to have to spend $100,000 on a natural stone. “It had to be big—that was my vision,” she says.

But the size of the ring has made it less practical at times. She doesn’t wear it for athletic training and swaps in her wedding band instead. And she is careful to leave it at home when traveling. “A lot of times I won’t take it on vacation because it’s just a monster,” she says.

The average retail price for a one-carat lab-made loose diamond decreased to $1,426 this year from $3,039 in 2020, according to the Tenoris data. Similar-sized loose natural diamonds cost $5,426 this year, compared with $4,943 in 2020.

Lab-made diamonds have essentially the same chemical makeup as natural ones, and look the same, unless viewed through sophisticated equipment that gauges the characteristics of emitted light.

At Ritani, an online jewellery retailer, lab-made diamond sales make up about 70% of the diamonds sold, up from roughly 30% two years ago, says Juliet Gomes, head of customer service at the company, based in White Plains, N.Y.

Ritani sometimes records videos of the lab-diamonds pinging when exposed to a “diamond tester,” a tool that judges authenticity, to show customers that the man-made rocks behave the same as natural ones. “We definitely have some deep conversations with them,” Gomes says.

Not all gem dealers are rolling with these stones.

Philadelphia jeweller Steven Singer only stocks the natural stuff in his store and is planning a February campaign to give about 1,000 one-carat lab-made diamonds away free to prove they are “worthless.” Anyone can sign up online and get one in the mail; even shipping is free. “I’m not selling Frankensteins that were built in a lab,” Singer says.

Some brides are turned off by the larger bling now allowed by the lower prices.When her now-husband proposed with a two-carat lab-grown engagement ring, Tiffany Buchert, 40, was excited about the prospect of marriage—but not about the size of the diamond, which she says struck her as “costume jewellery-ish.”

“I said yes in the moment, of course, I didn’t want it to be weird,” says the physician assistant from West Chester, Pa.

But within weeks, she says, she fessed up, telling her fiancé: “I think I hate this ring.”

The couple returned it and then bought a one-carat natural diamond for more than double the price.

Couples find that lab-grown diamonds have made it more affordable to get engaged. PHOTO: CAM POLLACK/THE WALL STREET JOURNAL

When Boulet, the wedding planner in Raleigh, got engaged herself, she was over the moon when her fiancé proposed with a 2.3 carat lab-made diamond ring. “It’s very shiny, we were almost worried it was too shiny and was going to look fake,” she says.

It doesn’t, which presents another issue—looking like someone who really shelled out for jewellery. Boulet will occasionally volunteer that her diamond ring came from a lab.

“I don’t want people to think I’m putting on airs, or trying to be flashier than I am,” she says.

For Daniel Teoh, a 36-year-old software engineer outside of Detroit, buying a cheaper lab-made diamond for his fiancée meant extra room in his $30,000 ring budget.

Instead of a bigger ring, he got her something they could both enjoy. During a walk while on an annual ski trip to South Lake Tahoe, Calif., Teoh popped the question and handed his now-wife a handmade wooden box that included a 2.5-carat lab-made diamond ring—and a car key.

She put on the ring, celebrated with both of their sisters and a friend, who was the unofficial photographer of the happy event, and then they drove back to the house. There, she saw a 1965 Mustang GT coupe in Wimbledon white with red stripes and a bow on top.

Looking back, Teoh says, it was still the diamond that made the big first impression.

“It wasn’t until like 15 minutes later she was like ‘so, what’s with this key?’” he adds.

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3 Reasons You Should Buy a Stick Vacuum—And 3 Reasons They Suck

JILL KOCH, 39, bought her first cordless vacuum because it was pink. “I didn’t look at the brand, I didn’t look at the price. I saw the colour and was like, ‘I have to have it,’” said the Cincinnati-based home organisation and cleaning blogger. Koch, who owns almost a dozen vacuums, says her newest cordless stick, the Shark Wandvac, gets the most use. She finds its motor powerful enough to handle most tasks. But more important, because of its sleek look, “it’s not even weird to store it in plain sight,” she said. Whenever she sees something that needs cleaning, that vacuum is within reach. She can clear the mess, dump out its dustbin into a trash can, and re-dock the vacuum in a minute or two.

Cordless stick vacuums aren’t new—British manufacturer Dyson released its first cordless stick vacuum in 2010—but the battery-powered, bagless models have become more popular, largely due to their convenience. In 2018, a year after telling Bloomberg that cordless vacuums were driving his namesake company’s growth, James Dyson announced it would no longer bother developing corded models. Convenience, however, isn’t cheap. While you can find excellent corded upright vacuums for under $200, the latest cordless option from Dyson, its Gen 5 Outsize, costs $1,050.

Some experts say ditching your corded model is unwise. Cordless vacuums have a place in your cleaning arsenal, but they aren’t a replacement for a more powerful machine like an upright model with a bag, said Ken Bank, a third-generation vacuum expert and president of Livonia, Mich.-based Bank’s Vacuum Superstores. “The technology has improved a lot,” he said, “but [stick vacuums] aren’t anywhere near as powerful as a vacuum cleaner with a cord and a real motor in it.”

Here’s what to consider before going cordless.

The Pros

Cordless vacuums are light and maneuverable

They are a great choice for folks with strength or mobility issues, or those who just don’t want to push around a heavy vacuum.

Cordless vacuums are supremely versatile

Most vacuums come with multiple heads and attachments, but cordless vacuums make them easier to use. Once you’ve swapped out the long wand for a dust brush, crevice tool or upholstery cleaner, your vacuum easily fits in hand. It’s ideal for cleaning the inside of a car or drawers.

Cordless vacuums let you clean more spontaneously

Since they can be stored on docks or stands, a cordless vacuum is always within reach. If you see a mess, you can have cleaned it before someone with a corded vacuum might have time to locate a plug.

The Cons

Cordless vacuums don’t contain dirt that well

When it comes to filtration and dust containment, nothing beats a classic vacuum with a bag, says Bank, “The cordless ones [are] not sealed up tight,” Bank said. Each time you open your vacuum’s dustbin to dump it out in the trash, he says, you release dust.

Cordless vacuums require you to clean within a time limit

Stick vacuums are battery powered. Batteries die. That means an all-day deep clean might require multiple charging stops. While some cordless vacs can run for up to an hour at a time, estimates shorten when you’re using stronger suction settings.

Cordless vacuums can be tough to fix

Bank doesn’t just sell vacuums; he repairs them, too. He says most stick vacuums are a service nightmare. “They’re hard to maintain, you can’t really take them apart to clean them, and if they break, most companies don’t make parts for them,” he said.

Don’t Get Left In the Dust

For spills, quick pick-ups, and in-between the deep cleans, it’s tough to beat a stick. Two to consider:

A sweeper with storage

Samsung’s Bespoke Jet AI Cordless is not designed to be hidden away in a closet. Its sleek, free-standing docking station doubles as a charger and a canister that auto-empties the vacuum with enough capacity for a few days’ worth of dirt. The company says a battery charge can last for 100 minutes, though that might vary as the vacuum’s software adjusts the suction level based on the floor surface it detects underneath. $US999, Samsung.com

Dust disrupter

Designed by two former Dyson R&D experts, the Pure Cordless by Lupe (pronounced “loop”) has a beefy, 9-cell battery and a 1-liter dust bin. Though one charge lasts around an hour when the vacuum is set on low suction, and just 15 minutes on max, you can buy a second battery ($149) and keep it charged for longer cleaning sessions. Unlike many other models, the Lupe is easily serviceable: You can buy an affordable replacement for basically every component. It also comes with an industry-leading five-year warranty. $US699, LupeTechnology.com

The Wall Street Journal is not compensated by retailers listed in its articles as outlets for products. Listed retailers frequently are not the sole retail outlets.

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The OpenAI Board Member Who Clashed With Sam Altman Shares Her Side

Helen Toner was a relatively unknown 31-year-old academic from Australia—until she became one of the four board members who fired Sam Altman from the artificial-intelligence company he co-founded.

Thrust into the spotlight during the ouster and eventual return of Altman as CEO of OpenAI last month, Toner has emerged as a symbol of tension between AI-safety advocates and those giving priority to technological progress.

Toner maintains that safety wasn’t the reason the board wanted to fire Altman. Rather, it was a lack of trust. On that basis, she said, dismissing him was consistent with the OpenAI board’s duty to ensure AI systems are built responsibly.

“Our goal in firing Sam was to strengthen OpenAI and make it more able to achieve its mission,” she said in an interview with The Wall Street Journal.

Toner held on to that belief when, amid a revolt by employees over Altman’s firing, a lawyer for OpenAI said she could be in violation of her fiduciary duties if the board’s decision to fire him led the company to fall apart, Toner said.

“He was trying to claim that it would be illegal for us not to resign immediately, because if the company fell apart we would be in breach of our fiduciary duties,” she told the Journal. “But OpenAI is a very unusual organization, and the nonprofit mission—to ensure AGI benefits all of humanity—comes first,” she said, referring to artificial general intelligence.

Ultimately, Toner and some other board members did resign, clearing the way for Altman’s return.

In the interview, Toner declined to provide specific details on why she and the three others voted to fire Altman from OpenAI. Before his ousting, Altman and Toner had clashed.

In October, Toner, who is director of strategy at a think tank in Washington, D.C., co-wrote a paper on AI safety. The paper said OpenAI’s launch of ChatGPT sparked a “sense of urgency inside major tech companies” that led them to fast-track AI products to keep up. It also said Anthropic, an OpenAI competitor, avoided “stoking the flames of AI hype” by waiting to release its chatbot.

After publication, Altman confronted Toner, saying she had harmed OpenAI by criticising the company so publicly. Then he went behind her back, people familiar with the situation said.

Altman approached other board members, trying to convince each to fire Toner. Later, some board members swapped notes on their individual discussions with Altman. The group concluded that in one discussion with a board member, Altman left a misleading perception that another member thought Toner should leave, the people said.

By this point, several of OpenAI’s then-directors already had concerns about Altman’s honesty, people familiar with their thinking said. His efforts to unseat Toner, parts of which were previously reported by the New Yorker, added to what those people said was a series of actions that slowly chipped away at their trust in Altman and led to his unexpected firing on the Friday before Thanksgiving.

The board members weren’t prepared for the fallout from their decision.

The members, including Toner, were taken aback by staffers’ apparent willingness to abandon the company without Altman at the helm and the extent to which the management team sided with the ousted CEO, according to people familiar with the matter.

Toner took her account on social-media platform X private during the height of the crisis.

At one point during the heated negotiations, a lawyer for OpenAI said the board’s decision to fire Altman could lead to the company’s collapse. “That would actually be consistent with the mission,” Toner replied at the time, startling some executives in the room.

In the interview, Toner said that comment was in response to what she took as an “intimidation tactic” by the lawyer. She says she was trying to convey that the continued existence of OpenAI isn’t, by definition, necessary for the nonprofit’s broader mission of creating artificial general intelligence that benefits humanity at large. A simultaneous concern of researchers is that AGI, an AI system that can do tasks better than most humans, could also cause harm.

“In this case, of course, we all worked very hard to ensure the company could continue succeeding,” she added.

OpenAI has an unusual structure where a nonprofit board, on which Toner served, oversees the work of a for-profit arm. The board’s mandate is to “humanity,” not investors.

In the interview, Toner didn’t answer questions about her interactions with Altman. She wouldn’t comment on whether she would have done anything differently but said she had good intentions.

Before he was reinstated, Altman offered to apologise for his behaviour toward Toner over her paper, according to people familiar with the matter. Ultimately, he returned to lead the company without following through on that gesture.

Toner is known in the AI-safety world for being a critical thinker who isn’t afraid to challenge commonly held beliefs.

Some of Altman’s backers, including OpenAI investor Vinod Khosla, publicly expressed derision specifically toward Toner and Tasha McCauley, another former OpenAI board member who voted to fire Altman and is connected to organisations that promote effective altruism.

“Fancy titles like ‘Director of Strategy at Georgetown’s Center for Security and Emerging Technology’ can lead to a false sense of understanding of the complex process of entrepreneurial innovation,” Khosla wrote in an essay in tech-news publication the Information, referring to Toner and her current position.

“OpenAI’s board members’ religion of ‘effective altruism’ and its misapplication could have set back the world’s path to the tremendous benefits of artificial intelligence,” he wrote amid the power struggle.

Toner was previously an active member of the effective-altruism community, which is multifaceted but shares a belief in doing good in the world—even if that means simply making a lot of money and giving it to worthy recipients. In recent years, Toner has started distancing herself from the EA movement.

“Like any group, the community has changed quite a lot since 2014, as have I,” she said.

Toner graduated from the University of Melbourne, Australia, in 2014 with a degree in chemical engineering and subsequently worked as a research analyst at a series of firms, including Open Philanthropy, a foundation that makes grants based on the effective-altruism philosophy.

In 2019, she spent nine months in Beijing studying its AI ecosystem. When she returned, Toner helped establish a research organisation at Georgetown University, called the Center for Security and Emerging Technology, where she continues to work.

She succeeded her former manager from Open Philanthropy, Holden Karnofsky, on the OpenAI board in 2021 after he stepped down. His wife co-founded OpenAI rival Anthropic.

“Helen brings an understanding of the global AI landscape with an emphasis on safety, which is critical for our efforts and mission,” Altman said when she joined the board.

The new board members along with returning board member Adam D’Angelo offer a glimpse of the direction OpenAI might be headed. Larry Summers, former Treasury secretary, and Bret Taylor, former Salesforce co-CEO, appear to be more traditionally business-minded than Toner, McCauley and the third board member who was succeeded, Ilya Sutskever, OpenAI’s chief scientist.

There are no longer any women on the board, though the company is expected to expand it in coming months.

“I think looking forward is the best path from here,” Toner said.

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Green Investors Were Crushed. Now It’s Time to Make Money.

Invest according to your political views, and you’re unlikely to make money. Companies that appeal to left-wingers or to right-wingers might be good or bad investments, but the fact of being, on current politics, clean and union-friendly for the left or oily and gun-friendly for the right is neither here nor there. What matters is their ability to make money and how highly they are valued.

This has been rammed home for environmentally-minded investors in the past year, as a coordinated selloff in anything with green credentials crushed the idea of making money while doing good.

It turns out that the real world is tougher than advocates of ESG—environmental, social and governance—investing claimed. The lessons have been hard, but should remind investors in the sector of some of the basic facts of investing. The fall in prices has improved the outlook for the stocks.

This year has been almost universally bad for clean investments. The two worst performers still in the S&P 500 are solar companies Enphase Energy and SolarEdge Technologies, down 60% and 70%, respectively. Hydrogen stocks have fallen sharply, led by Plug Power, which warned it might not survive. Wind-farm developers have been doing so badly they have pulled out of some contracts, with Denmark’s Ørsted off 48% in dollar terms and Florida-based NextEra Energy off 29%.

Electric cars have disappointed too, hitting startups and suppliers and pushing the price of lithium ores, used to produce the battery metal, down by three-quarters or more, although market-leader Tesla’s stock has been an exception.

Just as there was a coordinated green selloff, there has been a coordinated partial rebound in the past month or so.

This provides the first lesson: debt. The clean-energy sector is dependent on vast amounts of borrowing, so high interest rates really hurt. Roman Boner, who runs a clean-energy fund at Dutch fund manager Robeco, points out that major projects are typically financed with 80% debt, so rises in financing costs have a big impact on competitiveness.

Investors who bought into green stocks probably didn’t think they were making a leveraged bet on Treasurys, but that is what they ended up with. It isn’t only about corporate financing costs, either. High borrowing costs hit consumer demand for rooftop solar and for electric cars, both of which are often leased, since leasing costs depend on the cost of debt.

At a very high level, this is about long-term thinking. Low rates encourage investors to think long term, because they make future profits almost as valuable as current profits, and encourage borrowing to try to secure those future profits.

High rates encourage short-term thinking, by making profits today far more valuable than future profits—why bet on the future when you can earn 5% from Treasury bills? Short-term we get fossil-fuel profits, while long-term we get either clean energy or global warming; recently investors have been encouraged by rising rates to think short term.

The second lesson: government. Ronald Reagan overstated it when he said: “The nine most terrifying words in the English language are: ‘I’m from the government, and I’m here to help.’” But investors who rely on state subsidies to ensure profits leave themselves at the mercy of both fickle politicians and the bureaucrats Reagan was concerned about. This year’s selloff has been worsened by the bureaucrats and their failure to provide the details of many of the subsidies promised in last year’s badly named Inflation Reduction Act.

“We’re still hoping to get them by year end,” says Ed Lees, co-head of the environmental strategies group at BNP Paribas Asset Management. The next problem might be the politicians, at least if Donald Trump wins the presidency and torches the IRA. Lees thinks this will be hard, because so many IRA-subsidised projects are heading for Republican states. But Trump certainly has no sympathy for environmental causes.

The third lesson is the one most relevant to buying today: valuation. Buying stocks when they are trendy and wildly overpriced is a recipe for disaster. Perhaps the most extreme example of late is the L&G Hydrogen Economy ETF, launched in London at the height of clean-energy excitement in February 2021. It plummeted from day one, never regained its launch price, and is down 55% since then.

“We’ve seen a very harsh reality check,” said Sonja Laud, chief investment officer of L&G Investment Management.

The question is whether the hype has left. Laud worries that one year of high rates won’t have crushed all the excesses built up in 12 years of near-zero rates. But clearly valuations are much lower than they were, and she is hopeful there are opportunities to be found now.

“The huge green premium you had previously is no longer there,” says Velislava Dimitrova, who runs sustainable funds at Fidelity International. Clean-energy stocks are “much more interesting than they used to be—I don’t believe that renewables are dead.”

In the bond market, investors are no longer paying much if any “greenium,” or extra price for green bonds. In stocks, it is harder to judge: The S&P Global Clean Energy index trades at a discount to the global market on some measures, but not others, making it difficult to conclude that the sector as a whole is a wonderful bargain.

Still, it is good news for buyers that the hype has evaporated. Investors who care about profits more than purpose can finally consider clean-energy stocks again.