Is it true that great masses of people are refusing to take jobs, when they worked before the pandemic started? I’ll give that partial credit, as millions still fit that category, but what do we need to know about what is really taking place?
First, people collecting unemployment benefits are once more consistently required to show evidence that they are looking for work and not turning down opportunities. With more open positions, that is a tougher requirement than once. Some states are only now reinstating that, but with ready vaccine eligibility and availability it has been fully justified for months.
Second, while on May 19th we could have read about “21 states now canceling federal unemployment benefits” (Denitsa Tsekova in Yahoo! Money), none northeast of West Virginia, that is less relevant now for the reason above, which is just as well since the problem that was intended to solve would have been better fixed through mandatory job searches.
Third, it is good for all of us that the Federal Reserve chair is wary of acting, that even when “The Economic Gauges Are Going Nuts, Jerome Powell Is Taking a Longer View” (Neil Irwin, The New York Times, June 17th). Per the author, Powell believes that “the labor market can run hotter for longer than a lot of economists once assumed, with widely beneficial results,” “there are many powerful structural forces that will keep inflation in check,” and “the Fed should move cautiously in raising interest rates, rather than risk choking off a full economic recovery too soon.” He also “does not see the labor shortages of 2021 as evidence of lasting scars to the potential of American workers, but rather as a reflection of the difficulty of reopening large sectors of the economy and reallocating labor after a pandemic.” Despite the Labor Department’s subsequent finding that “the Consumer Price Index jumped by 5.4 percent in the year through June” (“Prices Pop Again, and Fed and White House Seek to Ease Inflation Fears,” Jeanna Smialek and Jim Tankersley, The New York Times, July 13th), which rates to be temporary, that still holds true.
Fourth, new unemployment claims, while less than one-sixth of a year ago, are still sitting at more than 50% over their pre-coronavirus levels, at 364,000 the last week of June and 373,000 the first of July. That means a high number of positions are still being discontinued. We also still have 5.8 million fewer people employed than in February 2020, which means we have a long way to go to reach where we were, let alone where we would be if the growth rate of jobs had continued its 2019-20 pace.
Fifth, we’re in a transitional time, between what working practices and compensation were like in February 2020 and how they will emerge from the pandemic. Despite many confident predictions, we have no idea what share of people will be working remotely in a year, how many will end up changing careers, and, accordingly, what will happen to housing prices and commuter-dependent businesses.
Sixth, companies hiring for low-end positions are trying everything – sign-on bonuses, tuition assistance, improved health care and other benefits – instead of hiking pay adequately, and as a result, “A record number of U.S. small businesses are raising wages, NFIB says, but skilled workers still hard to find” (Jeffry Bartash, MarketWatch, July 13th). Give them another month of missing robust sales and many will see the light, whereupon they may be amazed at how many people are suddenly willing to work for them.
Seventh, ultimately what we need to do is heed the headline of a Neil Irwin March 5thNew York Times article, “For the Economy, the Present Doesn’t Matter. It’s All About the Near Future.” Current economic results, beyond being in some kind of a recovery, are chaotic and should not be taken as meaningful trends. For those, we’ll just have to wait and see.