Sunday, May 9, 2021

Sunday reading - The real COVID aftershock may be in what we accept for jobs - and what we don't

Wanted to forward this intriguing article from Heather Long in the Washington Post, who looked at April's "disappointing" jobs report, and found it might be giving us an insight into how the post-COVID world might look for workers in the middle and lower parts of the wage scale.

While Long notes that while Wall Street shrugged off the lower-than-expected jobs number as a one-month blip, driven by seasonal adjustments over any kind of real slowdown in the economy (and I largely agree), she says there may be a bigger change in the jobs market afoot. One that goes beyond the number of people working, and into how and why they are working.
A Pew Research Center survey this year found that 66 percent of the unemployed had “seriously considered” changing their field of work, a far greater percentage than during the Great Recession. People who used to work in restaurants or travel are finding higher-paying jobs in warehouses or real estate, for example. Or they want to a job that is more stable and less likely to be exposed to the coronavirus — or any other deadly virus down the road. Consider that grocery stores shed over 49,000 workers in April and nursing care facilities lost nearly 20,000.

Economists describe this phenomenon as reallocation friction, the idea that the types of jobs in the economy are changing and workers are taking awhile to figure out what new jobs they want — or what skills they need for different roles.
This is especially true with parents, who often had to take care of children who were out of classrooms for much of the 2020-21 school year, or were having difficulties affording the child care that would allow more flexibility for parents to be able to work longer hours at better jobs. Long illustrates this via an interview with a younger couple in Michigan>
Tim and Sara Wojtala are a young couple completely rethinking their careers due to the pandemic. Tim worked for years as a manager at major retailer. Last year, he was frustrated by what he felt were lax safety conditions at work and having to deal with irate customers who didn’t want to wear masks. He quit in the fall as the virus surged again. Now he’s going to school to become a wind turbine technician through a program backed by the government. Sara also spent many years in retail and wants to do something more meaningful now.

“The problem is we are not making enough money to make it worth it to go back to these jobs that are difficult and dirty and usually thankless. You’re getting yelled at and disrespected all day. It’s hell,” said Sara, who is 31. She added that with two young kids, finding child care has also been a huge issue lately.
And most of the time in the COVID World, it is women that have had to sacrifice earning opportunities when the family is squeezed, as Long noted with this stunning stat from Friday's jobs report.

In Wisconsin, employers have now flipped to searching for more workers, in anticipation of a strong Summer recovery with vaccinations and stimulus funds boosting confidence and demand.
Simply putting a “help wanted” sign in the window is not working, and businesses are competing with each other for labor.

“An already tight talent market got even worse,” said Valerie Grube, an executive with MRA, a Waukesha-based human resources nonprofit that focuses on employee-employer relations....

The restaurant, tourism and service industry has been hit hard by the pandemic, along with the businesses that support those industries. Grube said those businesses are preparing for a busy summer.

“It’s almost like a switch was flipped,” Grube said. “Now they can’t find people in what was an already difficult-to-hire market anyways.”
Grube also says that employers are telling her that the $300/week add-on for unemployment is another barrier that they have to overcome, because potential workers now have more choices on how they can get by (THE HORROR!).

Fortunately, the Biden Administration isn't taking the bait from whiny CEOs, and they do not plan on backing off on expanded unemployment benefits any time soon.

Long says those supply bottlenecks may explain why goods-making and construction hiring was disappointing in April, even while sales in those types of products and services keeps going up.

Two supposedly hot areas of the economy — manufacturing and construction — also had surprisingly weak hiring, with manufacturing shedding 18,000 jobs and construction flat. Supply chain holdups are forcing factories and construction sites to slow down or even shut down for a while. But it’s notable that the manufacturing sector has bounced back strongly, yet the industry has only added back about 60 percent of the jobs lost. This suggests many factories are ramping up automation in a way that allows them to do more with fewer workers.
Automation, or just good ol'-fashioned profit hoarding, where firms lay people off as soon as there is a downturn, but are slow to hire people back as the economy rebounds. This is a trend that has been ongoing for the last 30 years, as it has taken longer and longer for jobs to recover after the end of a recession. (Chart courtesy of the Bill McBride "Calculated Risk" blog)

Now the shoe is on the other foot, where firms are finding out that the average worker has more choices, and doesn't have to accept the same subpar wages for the hard work they put in.

Long notes that while April's 266,000 seasonlly-adjusted jobs increase will likely be dwarfed by what we add in the coming months, the real economic effects in the post-COVID World might be in the structural changes in everyday operations and demand that is happening in its wake. And it might be that the typical American worker isn't going to settle for what they had to take in the pre-COVID times.

The overall expectation is still for hiring to pick up this summer as the economy reopens fully and more people are vaccinated. But the past year has fundamentally changed the economy and what many Americans want in their working life. This big reassessment — for companies and workers — is going to take awhile to sort out and it could continue to pop up in surprising ways.
I find that exciting and a general positive, but mediocre businessmen and their GOP puppets likely won't. Sorry, guys, but if you were all cheering these "essential workers" this time a year ago, maybe you should compensate them accordingly. Or else the government needs to step in to do this for you.
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