Headline: This week our sermon is from the Book of Jobs
Date: 5/11/2021
Body I realize that this is not the normal format because usually I am adding some form of context to some financial product being extolled in the press. But, I truly believe that solving this riddle will help us to ignite an engine of sustained economic performance. So, please bear with me. Thank you.
I was trolling my Twitter feed and I ran across a variety of articles about businesses that want to open up (and legally can) but they don’t have the staff to do so, and can’t find them. This is interesting because we are coming out of a 1.5 year cycle where most economic activity that was not vital (literally) was strictly discouraged. As a result, many businesses went under and many people lost productive jobs. So, right now, there SHOULD be a large supply of ready labor, right? Well, maybe not Let’s try to square this circle.
To the best of my reading, the reasons break down into a couple of broad categories. For the record, I am simplifying these causes, many of them interact in complex ways, and that careful reader should understand that we are just trying to parse what is a very complicated economic picture.
1. Some people are still afraid of catching or spreading COVID. This is especially true for people in trades that work inside of homes. Adding to this shortage is the demand bump because people are at home more, and there is more wear and tear on their residential-grade fixtures and systems. More recently, the Omicron form of the virus is scaring people. Though it seems far less damaging, it is far easier to pass to other people.
2. Some people cannot find child care that they were doing when at home. Interestingly, according to Census data, there are nearly 10 Million Americans who are unemployed, and 63% of them didn’t search for a job because they had to provide child care. It should be said that as schools begin to re-open, the need to provide on-site child care will drop, so, this will likely be a time-mitigated factor. But, it seems an open question as to when we can responsibly open schools.
3. Some people are economically making out better being on unemployment. In fact, because of the relief payments in the CARES Act and other legislation, some people are receiving over $700 per week. Per the National Federation of Independent Business, 42& of its members had job openings that they could not fill. Most business owners tend to blame the generous unemployment compensation, and they are not entirely wrong. Per a government study, a 10% increase in benefits lead to a 3.6% decrease in applications. Interestingly, even as these government programs are ending, this shortage of workers persists.
A few other observations seem to be important to this discussion:
There are about 10,000,000 unemployed persons in this country, but many are deciding to leave the workforce instead of looking for that next job. Some are choosing to retire early, some are choosing to go back to school to train for a new career. Women (25-54) are especially affected. The employment rate for this group has fallen 4.5% while the general population declined 3.3%. In addition to these members of the workforce having to watch their own children, there was a double-whammy effect upon many women. Many women are still employed within the care-providing professions like teaching and nursing. Many cannot go back to work because the schools are not open. Others do not believe that it is prudent to do so because the risk of possible infection is deemed to be quite high still.
Again, and again in my readings business owners mentioned that even if an interview is scheduled, only 1 in 10 will actually show up. The business owners suggested that sometimes people will fill in job applications merely to fulfill requirements to retain unemployment benefits. Further, many of these small businesses simply cannot offer the fringe benefits of larger firms or venture-capital-backed firms that swoop in and take the most promising applicants. This leads to some unanticipated choices being made. One bakery in Georgia is short workers and will be curtailing hours to compensate. But, their online sales have been re-characterized as the engine of the company, and personnel are being re-assigned to continue excellent service in this arena. Said one of the owners, “That is one thing we don’t compromise on – it’s a priority.”
It is often suggested that whenever anyone says, ‘I can’t find the workers I need,’ he or she should really add, ‘at the wages I want to pay.’ In an industry paper, one economist opined that this is not a widespread labor shortage because wages are not rising rapidly. This lack of increase suggests that the labor market is still tight with respect to available labor. But, the generous unemployment compensation being offered does allows workers to be unemployed for a longer period of time, and be more selective about the opportunities that they do select.
All of this has forced some employers to become very creative and somewhat more generous in compensation. Uber has begun to offer a $1,000 signing bonus to entice some new workers. Some firms are even offering a bounty for current employees who bring in a friend who stays for a certain period of time. Many businesses appear to be using the employees that they do have to cover the jobs that are unfilled. But, there are 2 dangers here. First, there is the very real threat of employee burnout and the chances of mistakes go up substantially. Even if there are no accidents due to the extended hours, overtime must now be paid to these workers, and these are financial resources that the small businesses often do not have.
The Verdict
It would appear that as widespread as this recession is, it does not affect all people equally when it comes to employment. The jobs that can be done remotely are not as affected, but these tend to have higher educational requirements. Teaching jobs and healthcare seem to be highly affected, and many of these jobs are traditionally held by women, so, they are greatly affected. The hospitality and travel industries were also heavily affected by the lockdowns and downturn in the economy, and many of these jobs are held by people who are at the start of their careers. So, generally, it’s the younger populations that are hit the hardest. To see where this all leads, I think we might have to wait until schools begin to return to a normal schedule. When that might be, however, seems to be anybody’s guess.
REFERENCES
https://www.cnbc.com/2021/05/06/small-businesses-struggle-to-find-workers-as-pandemic-eases.html
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.