View from the Barricades: The Labor Market

By BOB BURNETT

If you’re confused by the state of the US economy, you’re not alone. Market watchers know that stocks are sending confusing signals. Some “experts” say we are in a recovery, other predict big problems. In August, consumer sentiment hit a decade low. The unemployment rate is falling, but tens of thousands of workers are leaving the labor market. What’s happening?

Duh: we’re in the middle of a civil war.

Thankfully, so far it’s a non-shooting civil war. Nonetheless, it’s a civil war marked by two vectors: one is the millions of folks who insist that the orange menace won the 2020 presidential election; they’re more interested in creating chaos than a better world. The second is the millions of Americans who refuse to get vaccinated; they leaving and aggravating the labor market. (By the way, these populations overlap.)

The Unemployment Rate: The latest jobs report indicated the US economy added 194,000 jobs in September and the unemployment rate fell to 4.8%. That seems like good news, but it must be tempered by the understanding that 183,000 workers dropped out of the labor force (mostly women). The “job participation rate” increased to 61.6% and remains below the 63% norm — pre-pandemic.

What’s happening? For one thing, the latest jobs report indicates that there’s no truth to the Republican claim that workers were staying out of the job market in order to get unemployment insurance benefits; many are reentering, but looking for better jobs. The churn in the labor market can be understood by studying the relationship between unemployment and vaccination rates. For example, California, the state with the highest vaccination rate, is also one of the states least impacted by the labor shortage. (Conversely, South Dakota, one of the states with lowest vaccination rate, is also one of the states most impacted by the labor shortage.) Where it’s safe, workers are returning to the labor market, but they are being picky. Where it’s not safe, workers are quitting their jobs.

Unfilled Jobs: There remains a big gap between the number of job openings and those who are looking for work — a deficit of several million. Many employers — particularly small businesses — are desperately looking for employees. There are several explanations for the lower than expected “job participation rate.” The most obvious is that “caregivers,” mostly women, are staying at home taking care of vulnerable family members: children or the elderly. Their justification is that they don’t feel safe letting others care for their family members or, in some cases, there’s no safe hospital or nursing home option. (More than 300,000 women over 20 dropped out of the labor force in September.)

The second explanation is that some unemployed workers came from sectors that are on the “front lines” dealing with the pandemic: leisure and hospitality, professional and business services, retail trade, and public education. Many of these workers left jobs where there was a high probability of exposure to the coronavirus — such as bus drivers — or they were put in the unpleasant position of having to enforce a mask mandate — such as restaurant employees. They don’t want to return to that hassle. (Consider this Buzzfeed article where restaurant workers report the abuse they’ve recently had to endure.

The third explanation is that many American workers now feel empowered to quit their jobs. The August labor report indicated that a record number, 4.3 million, quit in August. (“Quits increased in accommodation and food services (+157,000); wholesale trade (+26,000); and state and local government education (+25,000)..”)

Writing in the Washington Post, Karla Miller observed there are four main causes for “the great resignation”: “A backlog of workers who wanted to resign before the pandemic but held on a bit longer; burnout, particularly among frontline workers in health care, food service and retail; “pandemic epiphanies” in which people experienced major shifts in identity and purpose that led them to pursue new careers and start their own businesses; and an aversion to returning to offices after a year or more of working remotely.”

Worker Power: UC Economist Robert Reich postulates that we’re experiencing a form of national strike. “American workers now have bargaining leverage to do better. After a year and a half of the pandemic, consumers have pent-up demand for all sorts of goods and services...But employers are finding it hard to fill positions ... Over the past year, job openings have increased 62%. Yet overall hiring has actually declined ... My take: workers are reluctant to return to or remain in their old jobs mostly because they’re burned out ... What’s really going on is more accurately described as a living-wage shortage, a hazard pay shortage, a childcare shortage, a paid sick leave shortage, and a healthcare shortage.” [Emphasis added]

Summary: We’re living in interesting times. We’re in the middle of a (low key) civil war and similarly subdued national employment strike. And then there’s climate change. Stay tuned.

Bob Burnett is a Northern California writer and activist. Email bburnett@sonic.net.

From The Progressive Populist, November 15, 2021

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