Key takeaways:

• So far this year, at least 13 states have introduced bills weakening child labor protections, and four have enacted them.
• Meanwhile, only three states have introduced bills to strengthen standards in 2026, compared with 15 in 2025.
• Industry-backed attacks on child labor standards have followed four troubling trends: 1) lowering minimum wages for teen workers; 2) weaponizing “youth apprenticeships”; 3) eliminating youth permits; and 4) weakening safeguards for teen child care workers.
• The Trump administration has undermined federal enforcement of child labor standards, even amid rising violations.
• Oregon enshrined current federal child labor standards into state law, offering a replicable model for states to hold the line against potential federal rollbacks.

Many state lawmakers took encouraging steps in 2023 and 2024 to strengthen their child labor standards—in response to high-profile reporting of widespread child labor violations across the U.S. and simultaneous efforts to weaken state child labor standards in the wake of COVID-19. But trends in 2026 suggest that this momentum may be waning despite continued increases in child labor violations. Meanwhile, opponents of strong child labor standards have continued to erode state standards and—in effect—chip away at the basis for federal standards, which have also come under threat.

In fiscal year 2025, more cases of federal child labor violations were uncovered than during any other year since the Great Recession, and hazardous work violations ticked up again after declining in the year prior (see Figure A). The rate of young worker deaths nearly doubled between 2020 and 2024, and at least one minor was killed on the job in the past year. At the same time, enforcement of federal child labor standards appears to have diminished under the Trump administration, which has proposed weakening existing standards. Since Trump was inaugurated in January 2025, the U.S. Department of Labor’s Wage and Hour Division (WHD) has published news releases about only three child labor enforcement actions. In the last year of the Biden administration, WHD published news releases about 26 cases.

Figure A

Amid this growing child labor crisis, a few states are taking necessary action to shore up or strengthen standards, but in far too many states industry-backed attacks are continuing to succeed in rolling back child labor laws.

Oregon enshrined current federal standards into state law, a model other states can emulate

The 1938 Fair Labor Standards Act (FLSA) sets guidelines for the hours and nonhazardous jobs for which employers can hire minors. It sets a floor above which states can adopt and enforce their own stronger standards, but where state standards are weaker, federal law applies. Oregon, the only state to pass a bill strengthening child labor standards so far this year, enacted a law that enshrines into state law FLSA work hours for minors as of January 2026. Prior to the change, Oregon law followed federal hours guidelines for 14- and 15-year-olds,1 but had prevented the adoption of any state guidelines more restrictive than those in federal law (FLSA). The new law locks in current standards and guards against potential future erosion of federal standards, stipulating that Oregon’s minor work hours rules must be no less restrictive than FLSA standards as of January 1, 2026, and giving the state freedom to implement its own higher standards for minor work hours if needed in the future. Other states can propose legislation that enshrines federal child labor standards into state law and can go further by establishing standards that improve upon the existing federal floor.

Three other states proposed bills to strengthen existing standards

In 2026, Maryland, New Jersey, and New York lawmakers also made progress on bills to strengthen state child labor standards, but none have been enacted as of this publication. A 2025 New York bill mandating that minor workers receive information on their workplace rights in order to receive work authorization passed the Senate in March; a New Jersey bill proposes establishing minimum penalties and increasing penalties for certain child labor violations; and a Maryland bill establishing civil penalties and preventing the executive branch from seeking waivers from the FLSA passed the House but was not taken up by the Senate. The Maryland bill’s provision prohibiting FLSA waivers was likely a response to a proposal in Project 2025 that would allow states to opt out of certain FLSA provisions, which would erode workers’ right to federal minimum wage and overtime protections. Next year, lawmakers should recommit to advancing stronger state standards, especially given the distinct possibility that federal standards will come under threat.

Over a dozen state legislatures attempted to roll back child labor standards this year

So far in 2026, at least 13 states have introduced bills that weaken child labor protections, and four have enacted them (see Table 1). In contrast, only three states have introduced bills to strengthen child labor protections in 2026, and only one has enacted such legislation.2 For comparison, 15 states introduced bills to strengthen child labor standards in 2025.

Table 1

Proposals to erode existing standards this year included: weakening protections from hazardous work; implementing or expanding minimum wage exemptions for minors; extending the number of hours employers can schedule minors to work; eliminating the state’s youth employment documentation system; and lowering minimum age requirements for workers in child care centers (see Table 1). Four particularly troubling patterns have emerged in legislation attempting to weaken child labor standards across multiple states:

1. Attempts to lower the minimum wage for teen workers;
2. Attempts to use state legislation on “youth apprenticeship” or “work-based learning” programs as a vehicle for weakening state child labor standards;
3. Elimination of youth work permits or other systems that ensure the documentation of minor employment; and
4. Attempts to lower or remove safety standards and staffing ratios for teen workers in child care facilities.

Lawmakers continued to propose excluding teen workers from voter-approved state minimum wage increases

As in previous years, state lawmakers continued to advance proposals that would subject minor workers to lower minimum wages than adults, particularly in states where successful ballot measures recently increased the state minimum wage. Florida, Missouri, and Nebraska voters approved ballot measures in recent years that increased the state minimum wage to $15 an hour (Florida’s minimum wage will increase from $14 to $15 in September). Legislators in the same three states are now attempting to exclude minor workers from these higher minimum wages.

Florida lawmakers reintroduced a bill to allow minors in work-based learning programs to “opt out” of receiving the constitutionally-mandated state minimum wage; Missouri lawmakers proposed paying minors nearly $3 less than the state’s new $15 minimum wage; and Nebraska lawmakers successfully enacted a bill that increased the state’s temporary youth training wage but also implemented a permanent subminimum wage for 14- and 15-year-olds. Such proposals undermine the stated goals of lawmakers to boost youth employment, address the “labor shortage,” and allow teens to earn for their futures. Youth subminimum wages do not benefit young people and erode the wage floor, depressing wages for all workers—teens and adults alike.

States continued a troubling trend of using unregulated state “youth apprenticeship” programs to roll back child labor protections

As shown in Table 1, three states proposed bills to weaken hazardous work protections for minors enrolled in work-based learning programs, marking a continued trend of attempts to erode standards that ensure early career training programs provide valuable experiences and skills without unnecessarily exposing young people to hazards known to pose a high risk of illness, injury, or fatality.

In Pennsylvania, lawmakers proposed exempting minors enrolled in work-based learning programs from state child labor standards, except where such standards reflect federal law. In Virginia, lawmakers introduced legislation that would allow employers to set the standards for appropriate work in hazardous occupations, undermining existing state laws that require work-based learning programs to be accredited by the U.S. Department of Labor or state Board of Education. However, education advocates managed to neutralize the bill’s harms by removing that provision, limiting the scope of work-based learning programs to particular industries, and adding language requiring such programs to comply with federal laws prohibiting employers from exposing teens to hazardous work.

In West Virginia, lawmakers used their recently created “youth apprenticeship program” to further erode state child labor standards for all minor workers, exacerbating troubling conflicts between state and federal child labor law created by earlier state legislation. In 2024, West Virginia lawmakers established a new “youth apprenticeship program” (YAP) that appears to permit YAP-enrolled minors to be employed in any of the 17 hazardous occupations prohibited by federal law, even though federal law provides limited exemptions for apprentices and student learners for only seven of the 17 hazardous occupation orders. This year, lawmakers expanded the program by removing the requirement that hazardous work assigned to youth apprentices be “occasional and incidental” to their training. This guardrail, which originates in federal law, is meant to protect youth apprentices from being treated as adult workers in hazardous jobs and to ensure that they are assigned hazardous work very rarely and only when it is necessary to further their training.

As part of the same legislation, West Virginia lawmakers also removed from state code the list of hazardous occupations prohibited for minors under state law. As a result, working minors not covered by the FLSA will no longer have protection from being employed in the deadliest jobs, and if federal protections are unenforced or eroded as Trump’s Project 2025 agenda has threatened, all West Virginia minors working in these jobs would lack protection. Many states have their own list of state hazardous occupation orders, which may differ slightly from the federal list. Where state and federal standards differ, the more protective standard prevails. Removing the state’s list will both endanger young workers and create confusion for employers who may not realize they must still follow federal law in areas where state law has been eroded, leading to increased reputational risk and legal liability for the state’s businesses.

Several states have weakened restrictions on hazardous work while eliminating the state’s ability to identify and investigate child labor violations

The West Virginia playbook for rolling back state child labor laws represents a troubling pattern for lawmakers and advocates to continue to monitor and resist. In 2024, the state created a new work-based learning program that did not conform to federal law, then eliminated youth work permits (and replaced them with weaker age certificates, which have now also come under threat), and a year later further weakened the state’s hazardous work protections using their new work-based learning program as a vehicle.

In just the past three years, two other states—Indiana and Iowa—have both eliminated their systems for documenting youth employment while also weakening prohibitions on hazardous work for minors. In 2023, Iowa lawmakers eliminated youth work permits, weakened hazardous work protections for youth enrolled in “work-based learning” programs, and added new provisions allowing state agencies to “waive” restrictions on hazardous work that violated federal law, among a host of other changes.

And this year, Indiana lawmakers eliminated the state’s “youth employment system” for documenting minor employment after implementing the system to replace eliminated youth work permits in 2020. As a result, state agencies will have no record of teen employment—a change the legislature’s own fiscal analysts acknowledged will impede enforcement of child labor laws. Indiana’s 2026 rollback comes on the heels of numerous changes enacted in 2024 that extended work hours for minors, eliminated night work restrictions, weakened protections for hazardous work, and—though this provision was amended out of the final bill—proposed giving employers complete civil immunity for workplace fatalities of minors enrolled in work-based learning programs.

Recent research shows that youth work permits play an important role in preventing child labor violations by enhancing awareness of child labor standards, creating legal accountability, and aiding in enforcement. In 2024, Wisconsin lawmakers passed legislation eliminating work permits for minors under 16, but the governor vetoed the legislation and stated in his veto message that he objected to eliminating a process that protects youth from exploitation. This year, Wisconsin’s Department of Workforce Development uncovered more than 1,600 child labor violations by a single Burger King franchisee—the largest in the state’s history—including 593 work permit violations. Recent research has shown that states with work permit mandates have fewer child labor violations. Employers violating work permit rules are also often violating work hours and hazardous work protections.

Continued efforts to weaken protections for teen child care workers are part of a larger deregulatory agenda in the care industry

This year, for the third time since 2022, Iowa lawmakers proposed legislation to weaken standards related to teen supervision of children in child care facilities. In 2022, Iowa enacted a bill that lowered the minimum age for child care workers and increased the number of children facilities could place under the care of a single staff person. In 2024, lawmakers proposed allowing a 16-year-old to be charged with the care of four infants, seven toddlers, or 10 three-year-olds without direct supervision, but the bill failed. The bill was supported by the billionaire-founded right-wing dark money group Americans for Prosperity, which also lobbied in support of a 2023 Kansas bill to allow minors as young as 14 to care for young children and allow 16-year-olds to provide child care with no adult supervision.

In 2025, Iowa enacted additional changes through the administrative rulemaking process, allowing teenagers as young as 16 to care for children of any age in limited circumstances. And this year, lawmakers proposed allowing 15-year-olds to care for children without supervision. The 2026 Iowa bill received significant support from lobbyists representing The Family Leader and Family Leader Foundation, Iowa’s state affiliate of the Family Research Council, an anti-LGBTQ and anti-abortion hate group.

Michigan also issued new administrative rules effective April 2026 that increased child-to-staff ratios and allow 16-year-olds to care for numerous young children without supervision—in both group and family child care homes.

The push to lower the minimum age for child care providers and increase child-to-staff ratios is part of a larger industry agenda to deregulate the care economy and avoid reckoning with its true costs. This agenda—which has also involved reducing the education and experience requirements necessary for provider licensing and even using state power to block stronger local standards—has strained providers, degraded the quality of care, and led to injuries and even deaths of young children in recent years. Placing the burden of responsibility of caring for young children on teenagers who are still themselves children harms everyone while sidestepping the real issues facing our child care system: insufficient public investment to make child care affordable and to pay providers adequately.

In an era of federal retrenchment and continued state rollbacks amid rising violations, more state lawmakers should seek to strengthen standards

Though the news media has largely moved on and federal enforcement attention appears to have waned, child labor violations remain a persistent issue and may be getting worse. Fiscal year 2025 saw more child labor cases generally and more minors employed in violation of hazardous occupation orders than any year in recent memory. While some states continued advancing legislation to strengthen child labor standards in 2026, and Oregon succeeded in enacting legislation to guard against federal rollbacks, far more states focused their efforts on weakening existing standards.

Given the very real risk that aspects of FLSA child labor protections could be eliminated (or will go unenforced), all states should at a minimum lock in existing FLSA standards and ensure state capacity to enforce them. Beyond this, states have critical opportunities and responsibilities to modernize child labor standards beyond the minimal, outdated FLSA floor to ensure that minors who must work or choose to work can access safe work experiences that don’t harm their health or education.

1. Maximum of 3 hours per day, 18 hours per week when school is in session; 8 hours per day, 40 hours per week when school is not in session. See: https://www.dol.gov/agencies/whd/state/child-labor

2. We exclude legislation related to child influencers. At least five states have introduced bills to increased protections for children featured in video content in 2026 (AZ, MD, MO, NJ, TN), and two states (NJ, TN) have enacted such legislation.

Layan Odeh of Bloomberg reports BCI expands into financing private equity funds amid deal slump:

British Columbia Investment Management Corp. created a team within its private equity unit to provide financing to buyout firms that are increasingly looking for new ways to drum up cash amid a prolonged dealmaking drought. The new Capital Solutions Group will focus on preferred equity, recapitalizations and funding continuation vehicles, according to Jon Salon, the pension fund’s head of private equity.

“We can be a capital solutions provider to our general partners in the market at a time where liquidity is scarce,” he said in an interview.

Deal activity across the buyout industry has remained subdued for years, limiting firms’ ability to return capital to investors. In response, fund managers have increasingly turned to alternative liquidity tactics, including so-called continuation vehicles that allow them to hold investments for longer while generating distributions for existing investors.

“When you think about our pipeline, somewhere between 20% and 30% is single asset continuation vehicles, which is a huge amount,” Salon said, adding that it was roughly 5% two years ago. In some cases, BCI will extend liquidity to fund managers looking to raise continuation vehicles, and in others, it will invest in those funds itself, he said, adding that BCI also invests in structured equity funds.

The pension fund is also looking to invest in preferred equity tranches that typically generate returns of 12% to 15%, Salon added.

BCI’s private equity unit, which managed C$33.6 billion ($24.3 billion) at the end of March 2025, already invests in capital solutions, which account for less than 5% of the portfolio, and is targeting an allocation of about 15% over the next several years, Salon said.

“I want BCI to be a one-stop shop for those capital needs,” he said.

Earlier today BCI issued a press release stating it is launching a Capital Solutions strategy to expand flexible investing capabilities:

NEW YORK & VICTORIA, BC – British Columbia Investment Management Corporation (BCI) today announced the launch of its Capital Solutions strategy within BCI Private Equity, a dedicated investment group focused on opportunities to generate equity-like returns that extend beyond traditional buyouts. The Capital Solutions Group (CSG) provides flexible capital across structured equity, GP solutions and strategic opportunities, with a focus on preferred equity, continuation vehicles, recapitalizations, and strategic minority stakes. This proactive approach provides additional avenues for BCI Private Equity to strengthen relationships with the more than 1,000 companies it is connected to directly and indirectly through its ecosystem of GPs, funds, and institutional relationships, particularly those seeking capital and support for strategic objectives and growth initiatives. 

The launch of Capital Solutions strengthens BCI Private Equity’s position as a strategic partner to high-quality companies by expanding its ability to deliver tailored capital across the investment spectrum, addressing complex partner and business needs while unlocking underserved opportunities. Operating in collaboration with BCI Private Equity’s sector teams, the group leverages deep domain expertise, established GP relationships, and dedicated investment capabilities to originate and execute transactions that support companies’ growth, liquidity, and capital structure objectives. 

“Capital Solutions directly supports our strategy of being a flexible solutions-oriented investor that can proactively adapt to changing market dynamics,” said Jon Salon, Executive Vice President and Global Head, Private Equity, BCI. “This strategy supports the continued evolution of our platform and reinforces BCI’s role as a differentiated partner for GPs and companies seeking tailored capital solutions, empowering us to provide creative investment structures unique to each opportunity.” 

“The strategy expands our private equity investment toolkit, allowing us to engage more strategically and bring institutional scale and capabilities to opportunities beyond traditional buyout parameters,” said Dean Qu, Director, Capital Solutions Group, BCI Private Equity. “By leveraging flexible capital with deep sponsor relationships and sector expertise, we can deploy solutions that align interests, navigate complexity, and support companies at critical points in their growth.” 

The launch responds to a changing private equity landscape marked by liquidity constraints, elevated valuations, higher cost of capital, shifting capital structures and a maturing competitive landscape, which are driving demand for differentiated capital beyond traditional buyouts. Backed by long-duration, flexible capital and a strong network of strategic partners, the Capital Solutions strategy can invest creatively and at scale in situations where other investors may be constrained. This positions BCI as a partner of choice for sponsors and management teams seeking a sophisticated, solutions-oriented capital provider. It also enables the team to continue supporting companies they have high conviction in, even as conventional fund limitations or investment horizons are reached. 

Building on a series of successful capital solutions investments in the past 18 months, the strategy is now being formalized with dedicated resources to scale origination and execution. Managing these investments directly enables BCI Private Equity to broaden its investable universe and deepen relationships with sponsors and portfolio companies, reflecting BCI’s continued evolution as a solutions‑driven investor in private markets. 

 Alright, I read about this earlier today and found it interesting given the environment in private equity.

 Before I share my thoughts, some context is in order here.

Karl Angelo Vidal of S&P Global reports muted exits push private equity continuation funds to 8-year high:

Capital raised by private equity continuation funds surged in 2025 as private equity managers sought to extend their ownership stakes in portfolio companies and provide liquidity for investors.

In 2025, global private equity continuation funds raised a total of $62.67 billion, the highest annual amount since at least 2017, according to Preqin Pro data. Through May 8, 2026, continuation funds have raised $11.86 billion across 20 vehicles.

The number of closed continuation funds also climbed to an eight-year high of 105 in 2025.

 

The growth of continuation fund transactions reflects several parallel issues converging on the market over the past three years, including extended asset hold periods exacerbated by ongoing muted M&A and IPO markets, record levels of unrealized value in private funds and the mounting liquidity needs of limited partners, said Tara Walsh, senior consultant for industry affairs at the Institutional Limited Partners Association, an organization representing institutional limited partners that invest in private equity.

"The market has come to accept [continuation funds] not simply as a cyclical response to liquidity pressures in recent years but as a recurring structural feature used by sponsors to deliver exits and to fundraise," Walsh said.

The exit environment has created a backlog of companies held for more than four years that are potential candidates for continuation fund transactions, said Gerald Cooper, partner and global co-head of secondaries at Campbell Lutyens & Co. Inc.

The challenging exit environment has also bifurcated continuation vehicle strategies into those used to hold genuinely high-quality assets that private equity firms believe can achieve further value creation and those that serve to delay recognizing losses on assets with structurally impaired competitive positions, said Adam Reilly, national managing partner for mergers, acquisitions and restructuring services at Deloitte & Touche LLP.

"We expect continuation fund activity to remain elevated, but the quality and credibility of the underlying thesis will matter more than ever," Reilly said.

Fairness concerns

The Institutional Limited Partners Association warned of risks related to continuation fund transactions, as these are "inherently conflicted," with general partners acting as both buyers and sellers.

"Sponsors must balance competing obligations to existing fund [limited partners] and new continuation vehicle investors. This requires a clear, well-articulated commercial rationale for pursuing a continuation vehicle in the first place," Walsh said.

Deloitte's Reilly said that general partners have introduced third-party minority investors whose pricing and underwriting standards can provide an additional market-based reference point when assessing fairness.

Per region

North America-based continuation funds secured the largest amount of capital since the start of 2025 through May 8, 2026, with $45.87 billion raised, according to Preqin Pro data. During this period, 70 funds closed.

Europe came in second, with $27.04 billion of capital raised across 41 funds, while eight Asia-based funds brought in $1.12 billion.

Clearly, there is a need to finance funds that want to set up continuation funds and as you can read above, these funds are at an eight-year high given the muted exit environment. 

The only real risk is this:

The challenging exit environment has also bifurcated continuation vehicle strategies into those used to hold genuinely high-quality assets that private equity firms believe can achieve further value creation and those that serve to delay recognizing losses on assets with structurally impaired competitive positions, said Adam Reilly, national managing partner for mergers, acquisitions and restructuring services at Deloitte & Touche LLP.

But John Salon and his team at BCI know this and have to identify high-quality assets that private equity firms believe can achieve further value creation.  

BCI's press release also states the following:

The launch responds to a changing private equity landscape marked by liquidity constraints, elevated valuations, higher cost of capital, shifting capital structures and a maturing competitive landscape, which are driving demand for differentiated capital beyond traditional buyouts. Backed by long-duration, flexible capital and a strong network of strategic partners, the Capital Solutions strategy can invest creatively and at scale in situations where other investors may be constrained. This positions BCI as a partner of choice for sponsors and management teams seeking a sophisticated, solutions-oriented capital provider. It also enables the team to continue supporting companies they have high conviction in, even as conventional fund limitations or investment horizons are reached.  

And from the Bloomberg article above:

“When you think about our pipeline, somewhere between 20% and 30% is single asset continuation vehicles, which is a huge amount,” Salon said, adding that it was roughly 5% two years ago. In some cases, BCI will extend liquidity to fund managers looking to raise continuation vehicles, and in others, it will invest in those funds itself, he said, adding that BCI also invests in structured equity funds.

The pension fund is also looking to invest in preferred equity tranches that typically generate returns of 12% to 15%, Salon added.

Are there potential conflicts of interest? Will people accuse BCI of financing these continuation funds to put off marking down these assets?

The potential is there but the truth is if these assets need more time to realize their full value, isn't it in the best interest of members to finance these private equity sponsors?

We shall see how this all plays out and how successful this new venture is, maybe BCI can arrange an interview with John Salon or Dean Qu featured above so I can ask them a lot more questions.

Below, Miriam Gottfried, reporter at The Wall Street Journal, says continuation funds now account for about 20% of PE exits, highlighting liquidity pressures as firms struggle to sell assets bought during the 2021 boom (Dec 31, 2025).

Layan Odeh of Bloomberg reports BCI shuts two stock funds, cites shrinking public pool:

British Columbia Investment Management Corp. is closing two global stock-picking strategies that oversee about C$4.3 billion ($3.1 billion), as it contends with a contracting pool of publicly listed firms.

The pension fund manager is retiring two internally managed global strategies focused on thematic and fundamental equities, BCI said an emailed statement to Bloomberg. The strategies, Global Active Thematic Equities and Global Active Fundamental Equities, make up about 7.2% of its public equities portfolio.

“The opportunity set for active fundamental stock selection in global developed equities has reduced materially — fewer listed companies, growth companies staying private for much longer, higher index concentration and a narrower path to alpha,” BCI’s global head of capital markets and credit investments, Daniel Garant, said in the statement.

The rise of passive investing has further reshaped markets in recent years, with investors directing more capital toward index funds and low-cost exchange-traded funds. At the same time, increasing concentration in major benchmarks — driven in part by the so-called Magnificent Seven group of tech and growth stocks — has diminished the payoff of stock picking.

Meanwhile, private capital is keeping high-quality businesses private for longer, BCI said in the statement. Other firms are staying away from the public markets because of regulatory costs and quarterly reporting mandates, according to the pension manager.

BCI, which had C$251.6 billion in net assets as of March 31, 2025, said it will remain active in other areas of equities, including Canadian large-cap stocks, global quantitative active strategies and global emerging markets.

The pension manager said it has shifted the responsibilities of several individuals within capital markets, and that several others have left BCI.

Josh Welsh of Benefits and Pensions Monitor also reports Maple Eight fund shuts two global equity strategies amid shrinking public markets: 

British Columbia Investment Management Corp. (BCI) is winding down two internally managed global stock-picking strategies that together oversee roughly $4.3 billion, pointing to a steadily shrinking universe of publicly traded companies as a key driver of the decision, Bloomberg News recently reported.

The two strategies being closed — Global Active Thematic Equities and Global Active Fundamental Equities — represent approximately 7.2 per cent of BCI's public equities portfolio, the Victoria-based pension manager confirmed in an emailed statement to Bloomberg.

BCI, which managed $251.6 billion in net assets as of March 31, 2025, said the move reflects a fundamental shift in the global equity landscape rather than a retreat from active investing overall.

In comments provided to Bloomberg, Daniel Garant, BCI's global head of capital markets and credit investments, said the case for active fundamental stock selection in developed markets has weakened considerably. He cited a smaller pool of listed companies, growth firms remaining private for longer periods, heightened index concentration, and fewer opportunities to generate alpha as the principal headwinds.

Bloomberg notes that the surge in passive investing has reshaped global markets, with investors funneling capital into index funds and low-cost exchange-traded funds. Concentration in major benchmarks — fueled in part by the so-called Magnificent Seven group of mega-cap technology and growth stocks — has further eroded the rewards available to active stock pickers.

BCI also pointed to the growing role of private capital in keeping high-quality businesses out of public markets for longer, according to Bloomberg. The pension manager added that regulatory costs and quarterly reporting requirements are deterring other firms from listing publicly altogether.

Despite the closures, BCI told Bloomberg it intends to stay active in several other segments of the equity market, including Canadian large-cap stocks, global quantitative active strategies, and global emerging markets.

Meanwhile, the pension manager said responsibilities have been reassigned for several members of its capital markets team, while several other employees have departed BCI because of the changes, according to Bloomberg. 

I read this story and while I feel terrible for Amy Chang who headed up the internal global fundamental portfolio at BCI and her team, I can't say I'm surprised.

It's been brutal for some strategies in global equities, contending with a market where semiconductor stocks went parabolic, leaving the rest of the market way behind.

Global Active Thematic Equities and Global Active Fundamental Equities represent approximately 7.2% of BCI's public equities portfolio, so that's not negligible.

Anything fundamental or thematic is getting smoked. Value is significantly underperforming growth this year as elite hedge funds all ramp up chip stocks.

It's basically a market that rewards momentum, and by a wide margin:

Good luck jumping in front of this momentum freight train, you risk being crushed.

Will things revert back? Will value come back? You bet, but right now, it's all about momentum and quant strategies.

Still, I did read this Bloomberg article last week that explains how value stocks with earnings strength have posted a 3,500% run since 2000:

Turns out, loading up on technology giants isn’t the only route to better returns. Value companies, too, stand a decent chance of trouncing the market — as long as several conditions are met.

Picking out winners in the group whose stocks are tied the most to the economy requires two steps, strategists at Bloomberg Intelligence say. First select companies with rising share prices, then narrow the list to only keep those with improving earnings.

That portfolio returned 3,471% on a cumulative basis since 2000, more than eight times the advance in the S&P 500 Index, BI analysts led by Christopher Cain said in a note to clients. And it’s outperformed the benchmark equity gauge by more than two-fold this year through April, gaining 12.1% during that time.

The finding offers solace to those worried that having too light a position in technology shares would lead to meager long-term returns. It also underscores the importance of factoring in a profit backdrop when picking stocks. Strip out the earnings filter from the portfolio, and its return drops to 2,170%.

“This portfolio only invests in companies with improving fundamentals. That matters when valuations are stretched, since you’re buying companies that may look expensive but are expensive for a good reason,” said BI’s Cain. “It helps avoid buying stocks that trade at a premium without the underlying fundamentals to justify it.”

Value stocks, the group comprising companies whose fortunes are closely tied to the economy, have spent the better part of the last decade trailing growth as investors chased companies at the forefront of digital transformation.

The trend has reversed so far in 2026 as hostilities in the Middle East fueled a rally in energy shares and worries mounted that the euphoria around artificial intelligence has gone too far, too fast. The Russell 1000 Value Index has advanced 9.9% since early January, compared with a 4% gain in the Russell 1000 Growth Index. Chipmakers, the stock market’s biggest gainers this year, have stumbled since mid-May as investors pulled back from the group after weeks of outsize gains.

Rising earnings estimates have been the cornerstone of the bull run in US stocks that’s powered past geopolitical tensions in the Middle East and uncertainty about the path of inflation at home that in another environment may have derailed the advance.

And while value and momentum have been among the most popular investing factors, disregarding the companies’ earnings backdrop may come at a cost, say strategists at BI. They cited Walmart Inc., Pfizer Inc., and Goldman Sachs Group Inc. as examples of companies that screened highly in those categories but saw shares fall as fundamentals deteriorated.“In essence, going with earnings revisions as a factor is staying convex to the concept of a company’s fundamentals improving, without passing judgment on what the valuation around the improvement of those fundamentals might actually be,” said Julian Emanuel, chief equity and quantitative strategist at Evercore ISI.

Analysts have continued lifting profit forecasts for Corporate America, and chiefly for companies tied to artificial intelligence, helping offset concerns around rising inflation as oil prices have surged from the Iran war.

A strategy that entails chasing stocks with the highest three-month upward revision in earnings has gained 31% in the 12 months through May 18, the second-best performing group among 12 factors tracked by Bloomberg. It has advanced 8.5% in 2026, in the third-biggest gain among the factors.

“Much of the recent equity market momentum has corresponded with surging near-term earnings estimates,” Ben Snider, chief US equity strategist at Goldman Sachs Group Inc. wrote in a note to clients. He said recent conversations with portfolio managers have underscored the difficulty of finding investment opportunities not linked to AI.

“We believe investors should continue to focus on equities with fundamental support from earnings growth and revisions, whether those earnings are driven by AI or other tailwinds.”

Now, BCI said it will remain active in other areas of equities, including Canadian large-cap stocks, global quantitative active strategies and global emerging markets.

It also told Bloomberg it shifted the responsibilities of several individuals within capital markets, and that several others have left BCI. 

But even in emerging markets, things are getting wacky.  

Yesterday I read Taiwan overtook India in stock market value, powered mainly by a breakneck rally in the world’s largest chipmaker Taiwan Semiconductor Manufacturing Co. :

The island’s market capitalization climbed to $4.95 trillion as of Monday, according to data compiled by Bloomberg. India’s value has dropped to $4.92 trillion. Taiwan’s stock market is now the fifth largest in the world, behind only the US, mainland China, Japan and Hong Kong.

Taiwan’s ascent up the global equity rankings is largely driven by TSMC, which now accounts for about 42% of the benchmark index, representing intense market concentration. The chipmaker’s shares have rallied 46% this year as it has benefited from the artificial intelligence trade, in which its semiconductors have a dominant market position.

The surge in the island’s market value highlights intense optimism in AI that is triggering a global rally in tech shares, disproportionately benefiting manufacturing hubs such as Taiwan and South Korea. India, on the other hand, is grappling with surging energy cost, slowing corporate earnings growth and the lack of companies directly linked to the AI buildout. 

Talk about concentration risk, one stock is powering that index to the stratosphere, reminding me of the old Nortel days in Canada (except Taiwan Semiconductor is a great company, not a fraud like Nortel).

Alright, let me wrap it up there, just remember if you move to Victoria to manage an equity strategy, make sure you sign a decent golden parachute in case things go south (and sign it prior to moving there).

The stock market is a brutal and dangerous place, but I learned a hell of a lot from Fred Lecoq who reinvented himself from a fundamental portfolio manager to a great trend follower after leaving PSP. 

Below, the CNBC Investment Committee debate whether it's too late to buy the tech high-fliers.

Key takeaways:

• Misclassification of workers as independent contractors is a pervasive and widespread problem. AAPI workers are overrepresented in three of the 11 commonly misclassified occupations: manicurists and pedicurists, home health aides, and personal care aides. Vietnamese, Bangladeshi, Filipino, Samoan, and other Pacific Islander workers are overrepresented within these occupations.
• Groups with lower median hourly wages also have larger shares of their working populations in the 11 commonly misclassified occupations.
• Federal protections against misclassification are limited and currently under attack by the Trump administration. The state and local landscape for curbing misclassification is varied, which leaves some workers less protected than others.

In March, EPI published updated research highlighting the cost to workers of being misclassified as an independent contractor for 11 commonly misclassified occupations. Asian American and Pacific Islander (AAPI) workers were overrepresented in three of those occupations—manicurists and pedicurists, home health aides, and personal care aides—relative to their share of the overall workforce.

Most federal, state, and local labor laws apply only to employees and not to independent contractors, so misclassification strips workers of key protections such as minimum wage laws or qualifying for employer-provided health insurance and retirement benefits. Additionally, both misclassified workers and social insurance funds lose out on income: the report conservatively estimates that for the three jobs in which AAPI workers are overrepresented, misclassification costs workers at least $7,000 annually and costs social insurance programs $600 to $800 per worker each year.

With the understanding that the umbrella term “AAPI” encompasses an immensely diverse population both in ethnic origin but also in economic outcomes, this piece goes beyond the narrow view that all AAPI workers are high-wage earners. Below, we provide more detail on which groups of AAPI workers are most likely to be employed in lower-wage commonly misclassified occupations.

Disaggregated data shed light on particular AAPI communities that may be vulnerable to misclassification

Across all occupations, AAPI workers comprise approximately 8% of the total workforce. For three of the 11 occupations highlighted in the report—manicurists and pedicurists, home health aides, and personal care aides—AAPI workers make up 67%, 13%, and 10% of employment, respectively, according to Current Population Survey (CPS) data.

Table 1 provides a detailed breakdown of the composition of the AAPI workforce for the three occupations in which AAPI workers are overrepresented. Here, we use the American Community Survey (ACS) as it offers detailed race definitions which the CPS does not offer due to sample size restrictions.

Asian Indian and Chinese populations combined make up over 40% of the working-age AAPI population, thus their relatively large shares of the AAPI workforce in these occupations are not surprising. However, several groups are disproportionately represented across these occupations compared with their share of the overall AAPI workforce.

For example, Bangladeshi workers make up 5.1% of AAPI workers employed as home health aides while only constituting 1.1% of the total AAPI workforce. Chinese workers represent almost half (47.7%) of AAPI home health aides while representing just over one-fifth of the overall AAPI workforce (20.9%). AAPI employment among manicurists and pedicurists is largely held by those of Vietnamese origin (71.4%).

Finally, a majority of AAPI personal care aides are either Filipino (32.8%) or Chinese (20.8%). Filipino workers, however, are overrepresented by twice their share of the overall workforce. While Samoans and other Pacific Islanders comprised a much smaller share of personal care aide employment, they are also overrepresented in this occupation by more than twice their share of the overall workforce.

Table 1

Figure A provides a more comprehensive picture of the share of each detailed group employed across all 11 commonly misclassified occupations, revealing that smaller communities—often overlooked because of their size relative to the aggregate AAPI workforce—may be among the most vulnerable to misclassification. Workers belonging to seven of those groups are more likely than the average U.S. worker to be employed in one of those occupations. Almost 20% of Vietnamese workers are employed in one of those occupations, with over half concentrated as manicurists and pedicurists.

Samoan, Hawaiian, and other Pacific Islanders have the next highest shares working in the 11 occupations, making up 15% or more of their total working-age population. These groups also earn lower median hourly wages than the national median and the aggregate AAPI median hourly wage. Their disproportionate representation in commonly misclassified occupations further exposes these workers to wage suppression due to misclassification.

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Misclassification enforcement varies by state—meaning different AAPI populations can be disproportionately impacted

Federal protections from misclassification are limited and are currently under attack by the Trump administration, which has proposed a rule to weaken standards to determine worker classification under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Protection Act. The proposed rule narrows the definition of who is a covered employee under these statutes, encouraging employer schemes to reclassify their employees as independent contractors to evade those obligations.

Broadly, the Trump administration has been actively dismantling long-standing federal worker protections, leaving states to bear the responsibility of ensuring workers are given rights and protections and that they can exercise them. For most states, labor and employment protections only apply to workers classified as employees, meaning workers misclassified as independent contractors are denied their legal rights and protections.

EPI’s 2026 misclassification report outlines state and federal policy recommendations that ensure proper enforcement mechanisms to curb misclassification. One of the recommendations includes implementing the ABC test. Unlike the six-part “economic reality” test or the “common law” test, the ABC test presumes that a worker is an employee unless they can demonstrate they are an independent contractor based on three criteria. Placing the onus on the employer to determine the employment status of a worker provides protections against misclassification and extends proper protections to workers. Many states have adopted the ABC test for unemployment insurance programs and, to a lesser extent, for wage and hour orders and other employment applications.

As shown in Figure B, The AAPI population is highly concentrated across a handful of states. Almost half of the prime-age working Asian population is concentrated in California, New York, and Texas, and a majority of the Pacific Islander population resides in California, Hawaii, and Washington. Overall, 21 states have significant numbers of AAPI residents, and some are home to large shares of specific AAPI communities. For example, the Hmong community in Minnesota and the Burmese community in Indiana are concentrated in states that have smaller total AAPI populations.

The current landscape for state policy protections against misclassification is quite varied. For example, among the states with the largest AAPI populations, California is the only state to adopt the ABC test for both unemployment insurance and employment law, although certain occupations are exempt from the test—including app-based drivers. California also institutes penalties for misclassifying a worker, which can include restitution payments and, if the misclassification was willful, a penalty between $5,000 to $25,000 per violation.

Texas, on the other hand, has significantly less state enforcement. Apart from using the common law test for its unemployment insurance program and providing a definition of an independent contractor for workers’ compensation, Texas mainly relies on federal law for classifying workers as employees. In the last 15 years, Texas lawmakers have introduced several bills that would create penalties for misclassifying workers in the construction industry, but all have stalled or failed.

Figure B Comprehensive protections are needed to protect workers from misclassification

AAPI workers are facing multi-pronged attacks from the Trump administration through the degradation of federal protections for workers, immigration, and equity. Occupational segregation and other labor market disparities lead women, people of color, and immigrants to be disproportionately represented in occupations that are commonly misclassified. These factors—in addition to historical and current geopolitical relations that shape the flow of labor to the U.S., immigration and citizenship status, and English language proficiency—can contribute to the concentration of AAPI workers in these occupations. Disaggregated data further identify which specific AAPI communities are overrepresented, revealing that smaller, less economically secure groups are often most exposed to the costs of misclassification. Strong policies at the federal, state, and local levels are needed to combat misclassification and to ensure workers can exercise their rights.