Massive Worker Backlash?
The equivalent of Pennsylvania's entire labor force is sitting on the sidelines.
The Atlantic’s Derek Thompson asks, “Where Did 7 Million Workers Go?“
The great mystery of this moment is the labor shortage. America’s GDP is larger than it was in February 2020. But the total economy is down about 7 million workers. That’s akin to the entire labor force of Pennsylvania sitting on the sidelines. In September, the number of people working or actively looking for work mysteriously declined, which is not what you would expect to see in a rapidly growing economy with simmering inflation. Wages are rising. Job openings are everywhere. But we’re running out of people who seem to want a job right now.
So what’s going on? Where are all the workers?
That might sound like a stupid question, on account of this is a pandemic. More than 10,000 Americans are still dying of COVID-19 every week. Tens of thousands more are sick from recent infections or lingering symptoms. Millions more might be scared of throwing their body in front of the coronavirus by going back to work among rude customers who might refuse vaccines, masks, or any sense of human decency. Finally, more than 700,000 people have died from COVID-19, and although it’s ghoulish to treat these deaths predominantly as a loss for the labor force, that the virus has killed many American workers is nonetheless undeniable.
But when you look closely, the direct effects of COVID-19 don’t explain very much. Most pandemic deaths have been among elderly people, not Americans of prime working age. And COVID fears have lessened over the past few months. Even so, the number of Americans under 65 looking for work is still shrinking.
“What’s most puzzling to me is that the labor shortage is everywhere,” Jason Furman, the chairman of the Council of Economic Advisers under President Barack Obama, told me. “It’s everywhere, and it’s every industry. Every small-business person I talk to has a story. And this is coinciding with large increases in nominal wages. So what are people doing? How are they getting by?”
The most complete explanation is that the massive fiscal-policy response to the pandemic reduced the urgency of looking for work. The United States has spent trillions of dollars to help families get through the economic deep freeze, via stimulus checks, expanded unemployment benefits, and the moratorium on student-loan interest payments. National eviction bans have taken pressure off renters. Then there’s the record-high surge in savings among families who haven’t gone on vacation or splurged on experiences in more than a year. Add to that the fact that job openings have hit record highs—which means people know that if they wait a month or three, there will still be jobs aplenty to apply to. Seeing this whole picture, more Americans clearly feel like they can take a more leisurely approach to going back to work.
Surveys bear this out. A monthly questionnaire by the hiring company Indeed found that the most common reasons given for not looking for work right now are “having an employed spouse” and having a “financial cushion,” followed by “care responsibilities” and then “COVID fear.” These might seem like distinct reasons, but we can knit them all together into one meta-explanation: People can afford to prioritize family care and avoid COVID-19, for now, because of savings and working partners.
The labor shortage fits into a broader picture of workplace turmoil. Widespread media reports assert that strikes are “sweeping the labor market,” although it’s a bit unclear whether the frequency of strikes or the volume of the media coverage is what’s increasing. What’s more certain is that Americans are quitting their jobs at record numbers, especially in the leisure and hospitality sector. The “Great Resignation” seems to be accelerating, alongside a remote-work revolution in the knowledge economy.
So, I get the business about the “Great Resignation.” Thompson himself has contributed quite a bit of good work on the phenomenon. It’s not at all hard to understand why people who had unsatisfying, low-paying, high-stress jobs were reluctant to go back to them, especially at the height of the pandemic.
But that really doesn’t answer Furman’s question, which I have been asking myself for some time: “How are they getting by?” The folks in the worst jobs are almost surely not living large on their savings from foregone vacations and luxury spending over the last eighteen months. Nor were they likely drowning in student loan debt. And the checks from the Treasury weren’t that large.
Built-up savings, though, would be a plausible explanation for why this phenomenon seems to be existing across the economy. People who had well-paying but unsatisfying jobs may well have stockpiled cash and engaged in self-reflection during the lockdown and either decided they want to do something else or simply balking at going back to the office after having grown accustomed to the flexibility of working from home.
Regardless, it raises other interesting questions:
This raises a bigger question: Is this a new normal? For now, much of the labor force seems to be participating in a kind of distributed protest against the status quo of work in America. As more people reject the office, spend more time with their family, or avoid returning to work entirely, this may be a pivotal turning point in the relationship between labor and capital.
Or maybe not! Perhaps we are suspended in an air bubble in history, and perhaps it will pop in the next year. Eventually, Americans will go back to work, where bosses will still boss them around, employers can still fire them, unions are still rare, and real wage growth is still slow. President Joe Biden is stumping for a social-infrastructure bill that would include paid family leave, expanded child tax credits, and subsidized child care. But the fate of that bill is highly uncertain.
Rather than answering any of these questions, though, Thompson takes a curious turn:
Whether or not today’s worker revolt becomes tomorrow’s worker revolution, what’s abundantly clear is that America needs more workers. America’s prime-age population stopped growing more than a decade ago, and because of declining fertility rates, it’s unlikely to recover through natural growth alone. If the U.S. needs more workers, the arithmetic is straightforward: We need more immigrants.
Welcoming immigrants is more complicated than putting up a HELP WANTED sign at the border. Democrats are looking for ways to expand legal immigration—a matter of moral and long-term economic urgency—while avoiding a xenophobic backlash from the right. One great way to do this would be to “recapture” surplus permanent-residency visas, or green cards, that went unclaimed in previous years. Since 1992, hundreds of thousands of green cards authorized by Congress have not been issued because of administrative hiccups; last year, unused green cards reached a record high. As a result, the U.S. could extend permanent-residency visas to more than 100,000 immigrants—essentially liberalizing immigration law without technically increasing the total number of visas already authorized by Congress. This would be a clever first step in allowing more legal immigration without spooking Americans who are, for a variety of reasons, resistant to dramatic changes in the number of people the U.S. admits.
Eventually, Americans will spend down their savings and millions of people will come back from the sidelines and start working again. When they do, America will still need more workers to build houses, staff restaurants, run hotels, and care for the elderly—fields that are now experiencing serious worker shortages and that, in the past, have provided many immigrants with their first foothold in the U.S. economy. More immigration would fill more vacancies, stimulate more demand, and lead to more new ideas, new companies, and new technologies. What stands in the way of this abundance agenda is little more than an irrational fear of new Americans’ contributions. In economic policy, as in interstellar psychological warfare, fear is the mind killer.
I’m skeptical of the politics of this but generally think it’s good policy. Still, aside from Republican and blue-collar Democratic xenophobia, I would think there would be a Progressive backlash against shifting the balance of power back to the ownership class now that it has swung in the direction of labor.
The labor shortage for this year was predicted more than 10 years ago, due to demographics. So, when people say 7 million people are missing from the labor market, the important question is “compared to what?”
I mean, I don’t know the answer. I don’t know if demographic shifts are accounted for, or if some reporter is just looking at a graph and saying, “Hey, this is 7 million lower than 2 years ago.”
“What stands in the way of this abundance agenda is little more than an irrational fear of new Americans’ contributions. In economic policy, as in interstellar psychological warfare, fear is the mind killer.”
Two things: as we all know, folks in this country have made quite a bit of money convincing us that immigrants are criminals, drug runners, non-Christians, and public health risks. Referring to them as ‘new Americans’ who can make a positive contribution is cute- they’ll never be seen as ‘real Americans’.
Perhaps we can get the National Guard to do these jobs, similar to the British and their petrol-delivery shortages (snark).
That ‘Dune’ reference, at the end, is very on trend.
I’d be worried bout this puzzle, but like Atrios I’ve seen this movie before. Markets are good at matching supply and demand, labor markets match available workers with available jobs. But not quickly.
Last time around everybody said it was
until it wasn’t. This time it’ll be childcare and boorish customers, until it isn’t. That’s also why we have supply chain issues. Those supply chains evolved over decades. It’ll take time for them to re-evolve after a massive disruption.
As of today there are 5 million fewer workers than when the pandemic began. COVID and it’s direct and indirect effects is reason number one. I feel that the expense of child care has a substantial effect and the reconciliation bill should address this.
I’m sure it has multiple causes. Personally I suspect the biggest one is the eviction moratorium. Few things are more stressful, and thus likely to cause desperation and a willingness to work shit jobs, than the fear/threat of being homeless.
@Long Time Listener:
My wife watches a genealogy show on PBS. Last night they had two subjects surprised by the depths of bigotry their Irish Catholic ancestors saw in this country. The gag in Blazing Saddles about accepting the n*****s and c****s, but no Irish was straight history. We’ll eventually accept Hispanics, at least the paler ones, and even Muslims, as Americans. Blacks, I fear, will take longer. But eventually. Maybe when we have AI robots to discriminate against. We seem to need someone.
I think we would need a lot more data before we can get past guesswork. The reasons probably are more local than expected.
For instance, the Great Resignation is geographically influenced, with Idaho, Georgia and Kentucky leading the pack with almost twice the percentage of workers quitting as Washington, New York and California — and in general the west coast and northeast having fewer workers quitting. What does that mean? No idea, but the fact that the traditional liberal bastions have fewer workers quitting is bound to mean something.
I think we should also consider, though, that a lot of people have been traumatized by this pandemic. People they know are dead. Crazy people are screaming about masks being socialism. Those who take the virus seriously have been living a more limited life, those who don’t are seeing their government overrun by socialists and fascists simultaneously while they are being mocked for taking horse dewormer and even the horses are staring at them reproachfully.
That seems like something that might make someone want to step away, if they can.
Or the missing 7 million might just be dead, or disabled by long-covid.
You create a hysterical narrative surrounding a virus……….. and you are surprised it throws all sorts of distortions into an economy? And then you throw a huge tax and spend initiative into play……….and you are surprised about economic distortions? And you threaten people jobs and businesses unless they comply with your authoritarian demands………..and you are surprised about economic distortions? It was so different in the late 50’s and late 60s pandemics.
You’re doin’ a heckava job, Joey.
https://www.zerohedge.com/economics/plunge-export-shipments-sparks-us-gdp-downgrades-economy-verge-contraction
@keef:
Hey you probably haven’t noticed, but your period key (“.”) seems to be broken. New keyboards are like $5 a pop on amazon.
Anyway, can you tell me more about the bad hysterical narratives while also linking to zerohedge articles?
One aspect left out:
A lot of people who were in bad positions workwise were being prevented from seeking a better situation because those terrible jobs prevented them from having time to go out and find a better employment. The COVID19 shutdowns combined with the stimulus created a window where those people were suddenly free to take classes, try to turn a hobby into a business, go look for a better employer, etc.
@Stormy Dragon: But if that were the case, these people would be looking for work now, or employed, and would be counted in the workforce numbers.
Those people almost certainly exist, but they aren’t the missing 7 million.
@keef:
The biggest problems with labor supply are in the least vaccinated areas of the country.
Sorry, I meant to say………….The biggest problems with labor supply………are in the least vaccinated areas of ………..the country. Please consult your Q to……….English dictionary and………see if you can explain that.
@Neil J Hudelson: I am disappointed that my work computer’s content filters allow me to go to ZeroHedge, but not Wonkette.
I am, however, amused by “Tyler Durden” of Fight Club Fame complaining about a decline in durable goods orders. It’s almost as if someone does not understand the movie that they are so in love with that they base their identity around it.
@Neil J Hudelson:
Leave it up to our resident Trumper to yell at us that the sources many of us on this great blog turn to for news suck, just to recommend that we turn to Zerohedge as a more accurate source of news, it really is enough to cause you to fall to the floor and laugh your posterior off.
Is zerohedge the site that John Solomon ended up at? I know that Solomon has become a Martyr for a lot of folks who are unhappy he was revealed to be the hackiest of hacky “investigative” reporters.
Anecdote #1: My academic department of seven full time faculty had one retire mid Fall 2020 rather than adapt to Zoom teaching, one go one long term medical leave in January and pass away in August, and one get COVID in February, go on long term medical leave over Spring Break, and retire in May due to becoming a long haul case.
Meanwhile, the College adopted a hiring freeze at the beginning of 2020-2021 due to uncertainty in enrollments, so the few remaining faculty burnt out in the Spring covering all of the schedule gaps. I taught 30 credit hours in Spring 2020, for example. And this semester is more of the same.
The College finally approved us to replace one of the FT folks in July, and the other in September. Meanwhile, the packed schedules continue, and we’re having trouble even finding a time during the week where a hiring committee can convene to interview because the only part timers we can find don’t live in the area, so the FT folks are covering all of the in person classes while the PT folks teach the online ones.
I don’t plan to leave, but if one of my remaining colleagues does, I won’t blame them.
Anecdote #2: One of my brothers quit his IT Manager job last month, from a company he had worked at for twenty years. Working conditions became so bad that he couldn’t take it anymore, and my sister-in-law successfully runs her own small business.
He’s not looking yet. They can afford to give him the chance to work as house husband and child / pet wrangler while he decompresses enough to figure out how much of his trauma is company specific and how much is the career field.
Every person I’ve mentioned here that has left the workforce in the last year was a middle-class professional in between ages 45 and 62 with good working years ahead of them.
@Gustopher:
The workforce numbers are tied to polling “traditional” employers and if there was a big shift to non-traditional employment, it would look like employment is going down. Some of it is straight up “grey market” stuff that is specifically trying to avoid government notice, but some of it is if you go from running the griddle at McDonald’s to giving cooking lessons on Zoom, the government probably is going to think you’re not working any more.
Once I attained “fuck you” money I got really picky on which gigs to take. I wanted interesting plus a responsible project plan and no crunch.
Most of the interesting projects had a bonkers project plan. And a hard delivery date.
It was sort of my duty then to get revenue and I did.
I did. I just flat out refused to crunch super hard. Normal fee to 50 hours. I’ll go 60 no prob but you pay extra for the marginal above. 70 is my upper limit. I prefer 40-50. I need at least 36 hours uninterrupted once a week.
If you are single no kids you are expected / obligated to take up the slack. If you are contract they think they own you 24 / 7.
Yeah, once I got fuck you money my patience for your dumb ass bullshit decreased dramatically. “Failure is not an option” I heard twice out of the senior leader’s mouth. Both failed. Morons.
I was obligated to generate x billable income every quarter, but I could pick and choose my projects.
Here in Los Angeles, you can’t walk through a strip mall without seeing multiple stores with “Help Wanted” signs in the window. The sheer number of jobs available is quite surprising.
Just a quick anecdote….
A close friend just put her resume on indeed.com two weeks ago. She’s a 44 year odl recently divorced, stay at home, mother of two who has been out of the labor market for 20+ years. Within two days, she had five interviews scheduled, and another 5 requesting interviews. She got a job at a salon/store locally called Salon-Centric at a salary of $19/hr. Pre-Pandemic, that was a $12/hr job.
I can’t speak to other parts of the country, but here in LA, the pandemic has DEFINITELY boosted wages for lower wage jobs. It’s still not a living wage here as decent one bedroom apartments go for $2000 per month even in shitty neighborhoods, and could go $3500 in other areas. But it’s definitely better than it was
@inhumans99:
John Solomon burned a lot of bridges. I utterly do not care where he landed. Fuck him.
A couple years back I was qvetching about him here and some commenter told me to grow up. Low key belittled my concerns.
Nyah nah! I was right.
The Hill is still mostly crap, though. Concha (editorial) is an albatross.
@keef:
When I see your name, and a link to zerohedge, all i can think of is “garbage in, garbage out.”
@Stormy Dragon:
This. How many are making money on OnlyFans, Youtube, Instagram, Patreon or Zoom? How many are doing under the table work? How many are in jobs the IRS might not even have heard of before?
If you were working a crap job before but decided to make Youtube videos about your fav pandemic game, you could be raking in some decent cash if you were good at it. Maybe you decided to help out someone and watch their kids or elderly family members for $15 an hour instead of flipping burgers for half that. Or maybe it was just your second job and you said screw it, I’m not going back. Is anybody keeping track to see if the job losses were for the primary or only job?
So. Covid has killed 700,000 Americans so far. That’s more than were kllled in WWI, WWII, Korea and Vietnam combined.
AND, I have dealings with other humans, with basic anti-spread precautions in place. Nothing about this seems “hysterical”, just necessary. Also, I got vaccinated, and my wife.
But for you this is an “hysterical” narrative. Also, you want to tie it Joe Biden. But it isn’t about Joe Biden at all. It’s about me not wanting to get Covid, or spread it to other people who may be more vulnerable than I am.
Zerohedge is a Russian propaganda outlet and anyone linking to it is either a witless dupe or actively working to undermine America.
I’ll leave it to the reader to decide where they believe Keef falls.
@Daryl and his brother Darryl: It does explain a alot.
@Long Time Listener:
First time caller?
if the labor shortage were to persist by 2024, what are the odds a GQP candidate would propose some form of labor conscription?
At below minimum wage, of course. This is a national emergency, not a welfare program.
Covid and the responses, good and bad. Markets at all time high, money pumped in, moratoriums, PPP loans (just look at that dollar total and total loans, majority of those businesses took money they did not need, it was just free) benefits that were better than people’s income. People realizing they can live on less, boomers retiring. So many things, but to me it’s the free money and covid. If you got a lot i.e. more than you were making, and you were already paycheck to paycheck, like a lot of people are, then why hurry back just yet if still have money and market is good?
@Grommit Gunn:
Anecdote #3: there’s a show I’ve been watching on YouTube the last few months called “Tasting History with Max Miller” which combines recreating a historical dish, a discussion of the history behind it, and then a tasting. The guy who does it worked at Disney Land up until the pandemic and originally started it as a hobby project while he was furloughed.
When the park reopened, he decided he was making enough from the show to make it a full time job and quit his Disney job and is now writing a cookbook based on the show for Simon and Schuster.
From the BLS perspective, he’s probably one of the 7 million people who left the workforce.
There are a lot of missing school children who didn’t come back. Many may have moved away. Others may be doing K-12 school online which is not necessarily associated with a school district.(an option here in Texas)
You got to wonder whether the missing workers and missing children are linked for similar reasons.
BTW, I will be joining the unemployed workforce come Dec 17th. Delayed retirement for almost 2 years because of the pandemic. I keep trying to find a word that is an alternative to retirement. Retirement seems too passive a term. I’m simply stopping working for money. Will be plenty busy.
The bloomberg link mentions child care though the Atlantic does not. I really wonder how big a percentage the loss of workers is from a parent or even grandparents quitting a job to look after kids. For some 2-income households, the loss of income from 1 job would be mostly covered by no longer paying expensive childcare. And some may find spending the extra time at home and with the kids more valuable than some extra cash being back in a boring or miserable job.
Same with retirement. The Atlantic article doesn’t seem to consider how many didn’t think they were ready to retire pre-Covid-19, but now that they’ve tasted life post-job have no interest in getting back to work. Covid-19 forced a lot of people out of their previous status quo, and some will find their new normal turned out better than their old normal.
@NBH:
I was wondering about this, particularly when there was a large disparity in the two incomes. The second income has to cover its own payroll taxes. The income tax on it, assuming joint filing, starts at whatever marginal rate the large income has reached. In addition to childcare, there may be significant other costs (eg, commuting related).
I admit that my secret suspicion is “a whole bunch of Boomers decided to retire.” First everyone hated us because we wouldn’t retire and get out of their way. Now they hate us because we did retire.
@Michael Cain: c
Anecdotally: Last year when we were hit hard by COVID-related shut-downs, one of the ways that the company made it through the lean times was to offer retirement bonuses for those who were at that point, and buy-out bonuses for long-term employees. Those buy-outs were capped at $50k, if I recall (based on years of service). You can live a long time around here on $50k if you want–especially if it gets you that extra year or so to retirement.
@Michael Cain: There was a guy (one that I remember, probably more) who did sit-down financial evaluations with middle class, two-income families and one of his continuing assertions was that for many families, especially in the center of the cohort as I recall, the second income didn’t quite balance out the additional costs associated with childcare–transportation, changes in grocery purchases (convenience foods, eating out more, etc.). Some number took his advice and reported no additional hardships from the reduced income stream.
On the other hand, it doesn’t always work, and some incomes are simply too low to support a family (which is a different question).
@Just nutha ignint cracker:
Point in life can matter. Maybe there are benefits that accrue for later from the employment. Details of the financial situation. My wife and I — due, I always claimed, to exposure to prairie Great Depression grandparents at an impressionable age — worked hard to pay our mortgage off early. Several years later, when I was hit with “Your services are no longer required” after a corporate merger, we had many more options than other people our age hit with that same treatment who had to come up with a monthly mortgage or rent check.
@Gustopher: Indeed there is likely very important sub-national geographic variation such that naitonal level data are going to be not very useful for achieving analytical understanding. Regional but even State level is likely needed.
@gVOR08:
I won’t venture a reason for the current employment statistics, but I will venture two near certain predictions:
1) There won’t be one cause, but several
2) There will be some unintended consequences involved
They’re near certain because they happen in almost all interactions between people.
The secret to having a full staff is simple, pay well and have a good environment to work. Last week I stopped by my favorite coffee shop and the owner happened to be there. I asked her if she was having trouble with staffing and she said no and in fact has a surfeit of applications. All the staff there are making at least $20/hr with base and tips and she is not beyond putting a rude customer in their place if needed. Yes, most are part timers, but the employees are the typical mix of students, starving artists and musicians, so few are looking for full time positions.
@Michael Cain: Paying off large debts is almost always a good idea. My retirement is different than it might have been because I’m debt free and have enough liquidity to pay cash for most anything I’m likely to purchase. (Probably absolutely anything in my case, but I’m trying–and failing– to be modest.)
Somewhere between 25-35% of childcare facilities have permanently closed.
You can’t go to work if there’s no one to watch your child. I think there’s a bunch of factors that include:
– People moving to relocate closer to family support systems (particularly if 1 of the earners can now work remotely)
– Boomers retiring
– People fed up with jobs taking a breather to reevaluate and figure out what’s next
– Couples realizing that their finances are not radically different if one stays home for child care
– People shifting from one low-wage field to another (shifting out of restaurant work where you’ll get screamed at by an anti-mask loon to a warehouse job where you won’t, for example)
– Long-haul covid issues making it hard for some to return to work
– And, of course, the deaths of 700,000 Americans, which might have knock-on effects that we aren’t considering. (Aunt Mabel passed away from covid, leaving $XXXK to her favorite niece, who could then move away from her crummy job and start her own business; Granny passed away from covid and there went the childcare…etc.)
Nearly 3 years ago I retired, young – 53.
I was making great money in a job I had worked decades to be qualified for. But my wife and I decided we had ‘enough’ – so I quit.
My colleagues couldn’t believe I would walk away from millions of more dollars in earning power over the next ~14 years until I was eligible for Social Security. I told them I had enough to live comfortably forever, and I had other priorities. They shook their heads in disbelief.
I feel like the pandemic changed some people’s mental state and priorities. Wealth for wealth’s sake is no longer what it used to be. Fashion is ridiculous because we can’t even dine indoors. Fine dining works well at home, and it’s fun and rewarding to cook. Don’t need a fancy car because we’re home all the time.
Hey! Look at all this money we have because we stopped spending so much!
I welcome the reset of priorities, and I hope it brings us a new mindset of community and harmony, less focused on material wealth.
@destijl: you cracked the code. I like it here. Been lurking for years, but only recently starting piping up 🙂
@Tony W:
I’m glad it worked out for you.
It was pretty easy for me too. Thankfully, I have absurdly simple tastes and zero need or desire to impress anyone with stuff you can buy.
I got the same pushback – you’re leaving so much money on the table, why walk away now? Because I want to. Because I can.
@de stijl: For us it’s the old saw about “if you wear your wedding dress every day then it’s not special”.
“Special” for us is fast food convenience instead of cooking. Fancy is the local pub for happy hour. Extravagant is a full dinner at a sit-down place with waiters and stuff – maybe $50-60 total for two.
Desire being the cause of suffering, and all that.
I think the pandemic has caused a lot of people to step back and say, “Hey, wait a minute … why am I working irregular hours for $2 an hour plus tips with no benefits?” Employers are going to have to get used to the new normal.