COVID Economy

[ZiggysFryBoy]

Is the jizz mopping program still solid?

Yessir!  Girth is important.

[MU82]

NY Times asking “where are the workers?” It turns out the enhanced unemployment and stimulus checks allowed people to not go back to work. Though what will happen when the cushion runs out?

Thanks to pandemic stimulus programs during both the Trump and Biden administrations, many families have received multiple checks from the federal government over the past 18 months. Those stimulus programs also increased the size of unemployment benefits. Over the same period, home values and stock prices have risen, too.

As a result, many households have more of a financial cushion than they used to. If anything, the recent increases in savings have been larger at the bottom of the economic spectrum than at the top:

With this cushion, some workers — especially those in service industries disrupted by Covid-19 — have decided that they did not like their old jobs enough to return. Others have simply quit their jobs.

I read that piece by David Leonhardt, a journalist I respect. But he was giving only a very small part of the story, and the passage you highlighted gave en even smaller part.

For example, later in the column, Leonhardt said that despite this supposed trend of people squirreling away federal aid, "the financial cushion of most households still is not large. The median cash savings of the bottom quarter of households (ranked by earnings) has risen by 70 percent over the past two years — but it’s still only about $1,000."

So, $1,000 in the bank is going to let people feel flush with $$$ and just chill out for months and months and months?

Leonhardt also says:

With more Americans choosing not to work — including aging baby boomers — companies would then need to increase pay and improve working conditions to attract employees.

In other words, lots and lots of the 55-and-over crowd, who actually WERE flush with cash (but not from unemployment benefits), have simply said, "Screw it. I don't need to work anymore." They might have been thinking they'd work for another year or 3 or 5, but after the pandemic hit, they decided not to. This was a significant part of the workforce, as many economists have noted, and it created a domino effect.

Finally, Leonhardt concludes by recommending a piece by NYT colleague Ben Casselman, which describes some of the causes of the shortage other than the cash glut, like Covid fears and a dearth of day-care options.


https://www.nytimes.com/2021/10/19/business/economy/us-economy.html

Here's the lead to Casselman's piece:

Fall was meant to mark the beginning of the end of the labor shortage that has held back the nation’s economic recovery. Expanded unemployment benefits were ending. Schools were reopening, freeing up many caregivers. Surely, economists and business owners reasoned, a flood of workers would follow.

Instead, the labor force shrank in September. There are five million fewer people working than before the pandemic began, and three million fewer even looking for work.

The slow return of workers is causing headaches for the Biden administration, which was counting on a strong economic rebound to give momentum to its political agenda. Forecasters were largely blindsided by the problem and don’t know how long it will last.

Conservatives have blamed generous unemployment benefits for keeping people at home, but evidence from states that ended the payments early suggests that any impact was small. Progressives say companies could find workers if they paid more, but the shortages aren’t limited to low-wage industries.

Instead, economists point to a complex, overlapping web of factors, many of which could be slow to reverse.

The health crisis is still making it hard or dangerous for some people to work, while savings built up during the pandemic have made it easier for others to turn down jobs they do not want. Psychology may also play a role: Surveys suggest that the pandemic led many to rethink their priorities, while the glut of open jobs — more than 10 million in August — may be motivating some to hold out for a better offer.

The net result is that, arguably for the first time in decades, workers up and down the income ladder have leverage. And they are using it to demand not just higher pay but also flexible hours, more generous benefits and better working conditions. A record 4.3 million people quit their jobs in August, in some cases midshift to take a better-paying position down the street.

Again, I like Leonhardt, but I think he was way oversimplifying the reason for the labor shortage. And I don't want to shoot the messenger, BH, because you were merely relaying some of what Leonhardt said, but I think you were way, way oversimplifying things when you concluded, "It turns out the enhanced unemployment and stimulus checks allowed people to not go back to work."

There is nothing close to a consensus that it "turns out the enhanced unemployment and stimulus checks allowed people to not go back to work." Indeed, most economists seem to reject that theory.

While I have little doubt that "some workers" (as Leonhardt said) haven't returned because federal aid might have helped them generate a cash cushion, I'll go with this from the Casselman piece:

Economists point to a complex, overlapping web of factors.

Interesting discussion, though.

[jesmu84]

Giving money to individuals is a moral hazard.

Giving money to wall Street, the military, banks and large corporations is the right thing to do.

[jficke13]

I think there's a very real (if hard to measure) effect of "working class" type people who were ground up and spit out during the pandemic just kind of deciding being treated like garbage by their bosses and being treated like garbage by their customers just isn't worth it for trash wages anymore.

Or maybe some proportion of these people, who by and large did not have the luxury of working from home and thus were more likely to contract covid, are now either dead or long covid sufferers who are physically limited in the kind of work they can perform.

But, ultimately, I'm certain the labor shortage is the result of multiple factors, and anyone saying they have the one and only answer is probably just trying to sell an article to a publisher.

[Uncle Rico]

I think there's a very real (if hard to measure) effect of "working class" type people who were ground up and spit out during the pandemic just kind of deciding being treated like garbage by their bosses and being treated like garbage by their customers just isn't worth it for trash wages anymore.

Or maybe some proportion of these people, who by and large did not have the luxury of working from home and thus were more likely to contract covid, are now either dead or long covid sufferers who are physically limited in the kind of work they can perform.

But, ultimately, I'm certain the labor shortage is the result of multiple factors, and anyone saying they have the one and only answer is probably just trying to sell an article to a publisher.

I agree with this analysis.  From personal experience as someone working in a field dubbed “important”, certain segments of the workforce saw unsustainable growth during the early stages of the pandemic.  Expectations weren’t adjusted post-covid (or post-lockdowns) and burn out factor is real

[MUBurrow]

I agree with this analysis.  From personal experience as someone working in a field dubbed “important”, certain segments of the workforce saw unsustainable growth during the early stages of the pandemic.  Expectations weren’t adjusted post-covid (or post-lockdowns) and burn out factor is real

Add me to the +1 on this.  There's a push to explain the worker shortage amidst increasing wages with dollar-by-dollar breakdowns of exactly how much the extra unemployment benefits have been worth, how much wages need to increase, how much the average working class person has in savings.  That's a necessary exercise becuase there are absolute dollars and cents thresholds that will eventually bring folks back to the table.  But I think if you interview unemployed folks right now, it would sound more like the Office Space exchange than a lesson in household budgeting:

"What if - and believe me this is hypothetical - but what if you were offered some kind of a stock option equity sharing program. Would that do anything for you?"
"I don't know, I guess. Listen, I'm gonna go. It's been really nice talking to both you guys. Good luck with your layoffs, all right? I hope your firings go really, really well."

[forgetful]

In other words, lots and lots of the 55-and-over crowd, who actually WERE flush with cash (but not from unemployment benefits), have simply said, "Screw it. I don't need to work anymore." They might have been thinking they'd work for another year or 3 or 5, but after the pandemic hit, they decided not to. This was a significant part of the workforce, as many economists have noted, and it created a domino effect.

To add to this, the stock market run up may have gotten that 55-and-over crowd to where they wanted to be in that 3-5 years now. So no need to work.

I know others (in the 30's-40's) that had decent cash on the side that invested heavily after the crash. They made out great, and in some cases then decided they didn't need two incomes, especially if one was risky and had crappy pay (e.g. day care).

An extra $1k, when inflation has led to rent increases approaching 40% in some markets, is having no effect. Those thinking this is still about extra unemployment benefits months ago are clueless.

[MU82]

I think there's a very real (if hard to measure) effect of "working class" type people who were ground up and spit out during the pandemic just kind of deciding being treated like garbage by their bosses and being treated like garbage by their customers just isn't worth it for trash wages anymore.

Or maybe some proportion of these people, who by and large did not have the luxury of working from home and thus were more likely to contract covid, are now either dead or long covid sufferers who are physically limited in the kind of work they can perform.

But, ultimately, I'm certain the labor shortage is the result of multiple factors, and anyone saying they have the one and only answer is probably just trying to sell an article to a publisher.

Yes to all of the above.

In health care and education, we know that the weight of the pandemic was very heavy. There has been significant burnout for nurses and teachers.

[jficke13]

Every time I see a video of a free range Karen tormenting a retail worker I think back to when I worked a gun club in the summer between Freshman and Sophomore year. The club had a bar. Strict rules that you couldn't shoot after you started drinking. I'm scoring for a league and a guy comes up with his shotgun broken and on his shoulder, eyes just a hair glassy, voice just a hair soft--not bombed, but given my own year on the semi-professional circuit in McCormick I was certain he'd hit the bar before shooting. Now, technically, I was supposed to stop him from shooting. He asked me which position he was shooting in, and I realized then and there that $8/hr did not buy me enforcing that rule in that situation. I pointed him to position #2. You want me to confront tipsy old men who are armed? Well, I'm not sure what the going rate for that is service, but it's more than $8/hr.

The "put up with the dregs of humanity" cost keeps going up, but retail employers don't want to/can't absorb those costs. I've got no suggestions here, but I can honestly say I don't blame anyone for deciding trash wages isn't worth being abused by the worst of our society's impulses.

[JWags85]

Add me to the +1 on this.  There's a push to explain the worker shortage amidst increasing wages with dollar-by-dollar breakdowns of exactly how much the extra unemployment benefits have been worth, how much wages need to increase, how much the average working class person has in savings.  That's a necessary exercise becuase there are absolute dollars and cents thresholds that will eventually bring folks back to the table. 

I'm over this idea that people aren't going back to work for the sweet sweet UE cash, but I'm pretty interested in further data and studies on the people who "didn't like" their prepandemic role and are holding out for something different, more money, etc...  There has to be a tipping point somewhere.  I don't think its just going to be some wholesale salary increase across the board, at a certain point equilibrium will come.  But I truthfully think we're quite a ways away from "normal" enough to see that.

[MU82]

To add to this, the stock market run up may have gotten that 55-and-over crowd to where they wanted to be in that 3-5 years now. So no need to work.

I know others (in the 30's-40's) that had decent cash on the side that invested heavily after the crash. They made out great, and in some cases then decided they didn't need two incomes, especially if one was risky and had crappy pay (e.g. day care).

An extra $1k, when inflation has led to rent increases approaching 40% in some markets, is having no effect. Those thinking this is still about extra unemployment benefits months ago are clueless.

Great point about the market. There are millionaires now who, 5-10 years ago, NEVER thought they'd be millionaires. You're 60 years old, the pandemic is weighing on you, you look at your 401ks and brokerage accounts and see a combined $1.8 million, and you say, "Why am I still working for the man?" Even many of those who have a third of that have had similar thoughts.

As for your second point, my own Millennial daughter and son-in-law are facing that decision. They've done very well financially, they have a young son and another child on the way, and they're doing the math on whether it's worth it -- both financially and emotionally -- for my daughter to stay in the workforce. New parents have been making those kinds of calculations for decades, but the pandemic made things "more real" for many.

Every time I see a video of a free range Karen tormenting a retail worker I think back to when I worked a gun club in the summer between Freshman and Sophomore year. The club had a bar. Strict rules that you couldn't shoot after you started drinking. I'm scoring for a league and a guy comes up with his shotgun broken and on his shoulder, eyes just a hair glassy, voice just a hair soft--not bombed, but given my own year on the semi-professional circuit in McCormick I was certain he'd hit the bar before shooting. Now, technically, I was supposed to stop him from shooting. He asked me which position he was shooting in, and I realized then and there that $8/hr did not buy me enforcing that rule in that situation. I pointed him to position #2. You want me to confront tipsy old men who are armed? Well, I'm not sure what the going rate for that is service, but it's more than $8/hr.

The "put up with the dregs of humanity" cost keeps going up, but retail employers don't want to/can't absorb those costs. I've got no suggestions here, but I can honestly say I don't blame anyone for deciding trash wages isn't worth being abused by the worst of our society's impulses.

Wow, now there's an anecdote that really does equate to some of what's going on now. Thanks for sharing it.

[Hards Alumni]

I think there's a very real (if hard to measure) effect of "working class" type people who were ground up and spit out during the pandemic just kind of deciding being treated like garbage by their bosses and being treated like garbage by their customers just isn't worth it for trash wages anymore.

Or maybe some proportion of these people, who by and large did not have the luxury of working from home and thus were more likely to contract covid, are now either dead or long covid sufferers who are physically limited in the kind of work they can perform.

But, ultimately, I'm certain the labor shortage is the result of multiple factors, and anyone saying they have the one and only answer is probably just trying to sell an article to a publisher.

There is a portion of society that was approaching retirement age, or was retirement age that decided to stop working as well.  We've seen it across the US with a school bus driver shortage.  Many drivers were retirees and part-time.  It's hard to convince them to come back to drive a bunch of walking petri dishes for any reasonable amount of money.

[tower912]

How much of the theoretical labor market is delivering packages?

[ZiggysFryBoy]

How much of the theoretical labor market is delivering packages?

120%.

[jesmu84]

https://ips-dc.org/u-s-billionaire-wealth-surged-by-70-percent-or-2-1-trillion-during-pandemic-theyre-now-worth-a-combined-5-trillion/

[MU82]

On Oct. 20, Iowa Gov. Kim Reynolds announced a crackdown on unemployment benefits. She required recipients to double their job search activity, and she imposed strict audits—with the threat of cutting off payments to anyone who fell short—to ensure that “no Iowan who is receiving unemployment benefits unnecessarily remains on the sidelines” of the job market.

Nine days later, however, Reynolds signed legislation that pays vaccine refusers to do just that: sit on the sidelines. Under the new law, anyone “discharged from employment for refusing to receive a vaccination against COVID-19 … shall not be disqualified for benefits.”
Reynolds is one of many Republican politicians who openly advocate, and in some states have successfully imposed, a two-tiered system of unemployment insurance. It’s not a left-wing policy of money for everyone or a right-wing policy of money for no one. It’s a policy of pernicious hypocrisy: welfare for vaccine refusers, tough love for everyone else.

https://slate.com/news-and-politics/2021/11/red-states-are-now-paying-unemployment-benefits-to-anti-vaxxers-who-quit-their-jobs.html?utm_term=OZY&utm_campaign=pdb&utm_content=Thursday_12.02.21&utm_source=Sailthru&utm_medium=email

[jesmu84]

https://www.reuters.com/business/meat-packers-profit-margins-jumped-300-during-pandemic-white-house-economics-2021-12-10/

INFLATION FROM GOVERNMENT HANDOUTS!!!

[Lennys Tap]

https://www.reuters.com/business/meat-packers-profit-margins-jumped-300-during-pandemic-white-house-economics-2021-12-10/

INFLATION FROM GOVERNMENT HANDOUTS!!!

You still sticking with the “inflation is transitory” talking point?

[jesmu84]

You still sticking with the “inflation is transitory” talking point?

If the logistics/supply chain issues get leveled out and companies stop inflating prices by their own choice...ya.

[Lennys Tap]

If the logistics/supply chain issues get leveled out and companies stop inflating prices by their own choice...ya.

The last guy on a sinking ship is never who you want to be but to each his own.

[ZiggysFryBoy]

The last guy on a sinking ship is never who you want to be but to each his own.

Economics by jesmu is one of my favorite topics. 

[jesmu84]

If I'm being mocked by "trickle down" hogs, I'm on the right track

But, since you are so much wiser, please tell us all the source of the inflation so we can squash it

[Goose]

Retailers have not even begun to pass the correct price increases onto the consumer. Logistics costs have barely been passed on and cost of goods from SE Asia continue to increase. I think after the holiday sales we are going to see an uptick in pricing on consumer goods. IMO, inflation is here for awhile and it might get ugly. Our clients are facing logistics issues, labor shortages, increased cost of goods and inflated wages. Our clients range from small startups to NYSE companies and everyone is facing these problems.

[Skatastrophy]

Retailers have not even begun to pass the correct price increases onto the consumer. Logistics costs have barely been passed on and cost of goods from SE Asia continue to increase. I think after the holiday sales we are going to see an uptick in pricing on consumer goods. IMO, inflation is here for awhile and it might get ugly. Our clients are facing logistics issues, labor shortages, increased cost of goods and inflated wages. Our clients range from small startups to NYSE companies and everyone is facing these problems.

Yeah one of my clients is moving all of their manufacturing near-shore. SE Asia is losing there market dominance over this.

[Goose]

Skatastrophy

Reshoring or near shoring is going to be a very difficult obstacle for 99% of companies out there. The capital, both in terms of labor and operational costs will make this very difficult for most. IMO, there is going to be a lot of talking on this subject and not a lot of walking. If costs were equal between SE and near shoring it still does not make a great deal of sense because of the amount of labor needed to make product. We do work in Mexico and they have a long way to go before they are ready to truly compete with SE Asia, mainly because of lack of labor and delivery goods as promised.