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AI is learning new tricks, like making debt-collection calls. And tech companies keep investing, even though some doubt the payoff is worth it. Still, Big Tech is finding new ways to spend. We’ll have more on that below. Also in today’s newsletter: What we know about California’s primaries, and a family business woven from need . First, small businesses are defying the low-hire, low-fire labor market trend. My colleague Caleigh Wells explains why. — Tony Wagner and Carrie Barber newsletter editors

Two people sit at an outdoor restaurant table while a waitress takes their order.

Genaro Molina/Los Angeles Times via Getty Images

Why many small business are hiring

They’ve been struggling to find workers since COVID. Now the talent pool is bigger.

Small businesses have added jobs in almost every sector and every region in the U.S., payroll company Gusto said this week. Paychex, another payroll firm, reported higher wages and more hours for small business employees last month.

Even before this data, the low hiring numbers weren’t all by choice. Lots of small businesses have been wanting to hire more people for a while.

“A few years ago, everybody was looking to staff up because of the huge layoffs or pauses in hiring after COVID,” said Holly Wade, executive director of the National Federation of Independent Business Research Center.

Ever since then, she said small businesses have been having trouble hiring.

“That's one of their main problems that they tell us every month is labor quality, finding applicants, filling those positions.”

But then big businesses started cutting their workforces, noted Frank Fiorille, chief risk executive at payroll processor Paychex.

And now, “there's a better pool of talent because the bigger enterprise companies have probably laid some people off, so now there's people there that they couldn't find or pick from previously,” he said.

News you should know

Let’s do the numbers

Stocks fell today after new fighting between the U.S. and Iran tested the ceasefire. The S&P 500 lost 0.7%, the Dow dropped 1.2%, and the Nasdaq sank 0.9%, all from record highs.
Rising oil prices were another drag on Wall Street; a barrel of Brent crude reached $97.81 today. A gallon of regular gas averaged $4.26.
The global economy could face recession if war in Iran drags into 2027, the Organisation for Economic Co-operation and Development said in its latest economic outlook.

Artificial Intelligence

Can AI act as a debt collector? Some companies are trying it, and one estimate says it could become a multibillion-dollar industry … but the tech isn’t quite there yet.
Alphabet is doing something it hasn’t done in 20 years: offering new equity in the company. It’s not the only tech company betting big on AI infrastructure — can the spending spree last?
Amazon created a “leaderboard” to incentivize employee AI use, and dinged workers who weren’t adopting AI tools. The practice led to cheating and wasted resources as employees ran their scores up. Go figure.

Government

Californians hit the polls yesterday to elect a new governor for the world’s fourth-largest economy. Follow the race here.

It could take days to know who will advance to a November runoff, but early numbers show candidates who drew Big Tech donations are not doing well.
The Justice Department is reportedly investigating former congressman and convicted fraudster George Santos for insider trading by placing Kalshi bets on his own activities.

QUOTE OF THE DAY

“I used to help my dad dye and clean the wool, so it’s very important to me to preserve this and to help my family out.”

— Rufina Gutierrez, artist and co-founder of The Zapotec Weavers

Gutierrez grew up in Oaxaca, Mexico, the second of three generations of artisans who make rugs, hand bags, and an array of other woven textiles. She and her daughter sell the handmade goods from their business in Anaheim, California. Profits have lifted the standard of living for Oaxacan family members, who struggled financially during the COVID-19 pandemic.

HEAR MORE

Fans cheer with arms raised while watching a Knicks game at a New York bar.

David Dee Delgado/Getty Images

Final note

A good use for prediction markets?

The Jeffrey beer garden in New York offered 1 percentage point off bar tabs for every winning point the Knicks scored over the Cleveland Cavaliers in Game 4 of Eastern Conference finals. The Knicks’ 130-93 victory meant a 37% discount, and all the bar’s profits that night.

For the NBA Finals starting tonight, Jeffrey owner Andrew Freedman is hedging his bets after Kalshi contacted him to help

The Jeffrey will pick up $100 of each tab if the Knicks beat the San Antonio Spurs in Game 1 … and his $5,000 bet on the Knicks through Kalshi could more than offset any losses. This could be a best-use case for prediction markets — hedging, as opposed to insider trading.

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