Friday, May 28, 2021

The Past Seven Months for Uber and Lyft: Plenty Has Changed, But Their Prospects Haven’t

While Americans patronizing the country’s two largest unregulated cab companies may not have noticed much difference, the firms have dramatically shifted in three ways. 

The first happened when, as per “Uber and Lyft Drivers in California Will Remain Independent” by Kate Conger in the November 4th New York Times, the state’s hotly contested “Proposition 22, a ballot measure that allows gig economy companies to continue treating drivers as independent contractors,” passed with 59% of voters agreeing, despite solid conceptual reasons why workers called by apps were true employees.  While only in one state, the result has taken the wind out of the sails of status-conferring efforts elsewhere, has damaged true taxicab providers, and was described by Conger as “a bitter loss for state and local officials who have long seen the ride-hailing companies as obstinate upstarts that shrugged off any effort to make them follow the rules.”  Following reactions were well summarized in the titles of two other articles, “Fight Over Gig Workers Persists Despite Win for Uber and Lyft” (Noam Scheiber and Kate Conger, The New York Times, November 11th) and “New U.S. rule could boost ‘gig economy’ companies while costing American workers billions” (Levi Sumagaysay, MarketWatch, January 6th).  Since then, though, we learned from Henry Grabar in the April 30th Slate “What Uber and DoorDash’s Investors Are Suddenly Afraid Of,” that being a comment by Secretary of Labor Marty Walsh that “in a lot of cases gig workers should be classified as employees.”  Perhaps such a pronouncement, here applied to a local delivery service as well, will direct legal changes, but for now California’s decision is fully in effect.

The second change was in what Uber and Lyft are planning.  That was shown by three divestments of what these companies were developing to rescue them from indefinite money losses, as “Uber, After Years of Trying, Is Handing Off Its Self-Driving Car Project” by Cade Metz and Kate Conger in the December 7th New York Times, “Uber Jettisons Flying Car Project” also by Metz in the December 8th Times, and “Lyft sells self-driving unit to Toyota’s Woven Planet for $550M” by Kirsten Korosec on April 25th in TechCrunch.  While it’s no surprise that after the past two years driverless vehicles have lost their immediate promise, it is noteworthy that Uber and Lyft, neither of which have ever been profitable as public companies despite billions in annual revenue, are seemingly staying the same. 

The final large ridesharing swerve, actually a winding road, was delivered by the coronavirus, as “COVID didn’t kill gig economy, the pandemic accelerated it” (Brian Straight, FreightWaves, February 5th).  The previous calendar year was a good one for such positions, with a daVinci Payments survey showing that total payments for gigs were one-third more, or $1.6 trillion-plus, than in 2019.  However, USA Today reported on May 24th that “Permanent jobs rise as employers sweeten pay, benefits for gig workers amid labor shortages” (by Paul Davidson).  That will last only as long as high numbers of candidates stay off the job, though, which will most likely end within a few months.  That will leave Uber and Lyft once again in doubtful territory.  As I said years ago and which still holds now, you can ride them to your heart’s content, but find better companies in which to invest. 

Friday, May 21, 2021

Effects of the Pandemic: Expected, Unexpected, and Unknown

Beyond the coronavirus case, hospitalization, and death statistics, all steadily improving, related things are happening in America.

One is a failure to understand how small the risks are once we are two weeks past our final shots, as shown in Linsey Marr, Juliet Morrison, and Caitlin Rivers’ “I Got My Covid Vaccine.  Now Can I Hug My Mom?,” in the March 19th New York Times.  All three authors are professionals in pandemic-related fields, but two recommended meals, even between two fully vaccinated people, be taken outside of restaurants to stay away from “new variants circulating” and “lots of people” who “will be indoors and unmasked.”  They offered similar answers to related situations.  I trust that now, two months later, they have noticed that only microscopic shares of those immunized have either received or spread the virus, and that new variants have thus far shown no real ability to overcome existing vaccines.  We have done well thus far to be cautious, but, if we don’t need to be any longer, we should stop.

A month-plus later, was it true, though, that “America’s Workplaces Are Still Too Dangerous” (David Michaels, The New York Times, April 28th).  This former OSHA leader bemoaned how small and recently ineffective that agency has become, and exemplified their lack of legal sanction by saying that “the maximum fine for a serous OSHA violation is $13,353 – petty cash to any large employer – and the criminal charge for the work-related death of an employee is a misdemeanor, not a felony.”  Now that vaccines have been available to all American adults for weeks, it is safer to be on the job, whether protected or not, but that is a recent development.

To little surprise, we learned from Edmund DeMarch in the May 3rd Fox News that “’Herd Immunity’ looking unlikely in US, report says.”  That expression “means that a virus is no longer easily jumping from person to person,” as good a definition as any, and “nobody knows for sure what the herd immunity threshold is for the coronavirus, though many experts say it’s 70% or higher.”  According to The New York Times yesterday, we now have 38% fully inoculated, meaning it will be fall, later, or never to reach seven-tenths. 

Less expected, per Michael Wilson in the May 4th Times, was that the “Sudden Decision to Reopen Leaves New Yorkers Dizzy and Divided.”  The announcement two days before that many, but hardly all, restrictions in the city would be lifted May 19th got reactions such as “it’s too fast” and “seems a little hasty,” though also the likes of “it’s about time.”  Although restaurants, for example, are now allowed 100 percent capacity, they still need to keep patrons six feet apart, which in many means little change.  What has happened, though, appropriately most benefits those fully vaccinated.   

An emphatic David Brooks opinion piece, published May 6th also in The New York Times, described “Our Pathetic Herd Immunity Failure.”   He asked something posed often in recent years, “Could today’s version of America have been able to win World War II?” and concluded that “it hardly seems possible,” decrying immunization refusal with “we’re not asking you to storm the beaches of Iwo Jima; we’re asking you to walk into a damn CVS.”  Perhaps we and our leaders have underplayed this civic-duty aspect, but Brooks didn’t, devoting this entire column to it.  I find it noteworthy that those in our political segment most likely to call themselves patriotic have here been, in general, the worst.

We have seen various pieces, usually premature, projecting how the truly post-pandemic United States will be affected by our shared experience, and we can all propose possibilities.  Two from my sphere of interest are American Contract Bridge League customers and management discovering the advantages and disadvantages of online tournaments, which will certainly continue after widespread in-person play resumes, and local public radio station WJFF learning how effective it was to hold a fundraising auction on Facebook.  More generally we have “Pandemic forces many to consider new jobs,” by Dee-Ann Durbin et al. in the May 19th Times Herald-Record.  Not only additional labor opportunities have caused that, but “many workers don’t want to go back to the jobs they once had” for personal reasons.  Strong employment markets have always meant a lot of job-hopping, and this one clearly is no exception.

If there is an overall message here, it is the same as before.  Ending the pandemic is now, above all, a matter of personal choice.  If you want to do that, get vaccinated.

Friday, May 14, 2021

Eight Takes on Joblessness – What Do They Offer Us?

Not only is it a strange time for unemployment, with work coming back but weekly unemployment applications still way high, but there has been a lot of discussion. 

Going back to The New York Times on February 22nd, Jeanna Smialek wrote on “Why Top Economists Are Citing a Higher-Than-Reported Jobless Rate.”  The “alternative statistic” she mentioned is more cumbersome and arbitrarily defined than the American Job Shortage Number, which I have been compiling for almost ten years.  To get to the core of how many additional positions we could quickly fill if getting one were as easy as going out for groceries, look in this blog at the first post of each month. 

A day later in the same publication, Giovanni Russonello answered the question “How Is the Fed Thinking About Unemployment?”  This secondhand report of a Senate hearing that day told us that chair Jerome Powell needed “full employment, 2 percent inflation, and an outlook for above-2 percent inflation” – all three – for higher interest rates, and he would only consider the first item fulfilled with a high-enough “employment-to-population rate,” possibly the same as the Bureau of Labor Statistics’ ratio of almost identical name.  That is still well short of its pre-pandemic levels, so we, rightfully, will continue having interest rates close to zero.

Also in The New York Times, Ben Casselman worked to explain the mystery in the first paragraph, on March 18th, with “Why Are Jobless Claims Still High?  For Some, It’s the Multiple Layoffs.”  That explains why we have over two million applications each month but half-million-range net new positions.  It is, per a policy director of an unemployment advocacy group, “oscillation of employed, unemployed, employed, unemployed.”  That should slow down, even if reopenings, such as next week’s scheduled one for New York City, precipitate overly optimistic and thus in-effect temporary job creation – I expect new weekly claims to be below 350,000 almost every week starting July. 

The fourth and final Times piece, by Neil Irwin on April 16th, asked and answered “Unemployment Is High.  Why Are Businesses Struggling to Hire?”  We now have an “apparent labor shortage,” with “news articles” by the “dozens,” “in which businesses, especially in the restaurant and other service industries, say they face a potentially catastrophic inability to hire.”  It’s caused by five factors – high unemployment compensation causing people required to look for work be less diligent and sincere about it; many jobs, not coincidentally in service fields, still virally unsafe; general uncertainty, also shown by the employment churn, about what positions will last, making relocation in particular ill-advised; doubt about whether non-office opportunities will stay that way; and, more than anything else, insufficient pay offers.  I maintain that most employers not finding workers would get them with twenty percent higher compensation, which reflects true current market values.  Irwin also mentioned parents and other caregivers being needed at home, a valid sixth reason.

Is it shocking or expected that “Nearly half of 2020 college grads remain jobless” (Daniella Genovese, FOXBusiness, April 16th)?  The author found a Monster survey showing 45%, in which “85% of new graduates say their goals have been pushed back by at least a month,” and “69% of recent and impending graduates expect lower salaries due to the pandemic and the subsequent economic downturn.”  All of these should improve within months, and people have long had to reduce their expectations when testing the market after getting degrees – expect stories like this one to read differently by November.

Another clear combination of facts, that “Businesses are hiring and layoffs are falling, but jobs aren’t returning all at once,” was written by Jeffry Bartash in the April 17th MarketWatch.  It hurts companies to create positions prematurely, and they need not only legal sanction to continue in the way they would like but enough customers, which is more difficult to forecast.  Bartash also echoed points made elsewhere, including widespread skepticism that jobs would be safe.

Employers are responding in ways other than paying more, as Paul Davidson showed in USA Today’s April 19th “Want a new job?  As fewer workers respond to ads in the COVID era, more firms are turning to aggressive hiring tactics.”  Those approaches include finding potential employees on LinkedIn, “poaching people” at lower organizational levels than before, allowing remote work for more positions, and speeding up the hiring process.  Accordingly, successful “truck drivers, nurses, software developers, and grocery store managers,” among others, have good chances of being offered career upgrades.

Finally, some advice from Brent Orrell and Matthew Leger, also in the April 19th USA Today: “COVID-19 has reshaped our economy for the long haul.  Here’s how to help workers adapt.”  The authors, looking governmentally, recommended “flexibility in employment and workforce development financing and services,” including allowing “personal reemployment accounts,” along with improving websites and digital “enhancements to the nation’s American Job Centers.”  What they need more than any of this is closer ties between employers and candidates, who need to know that training will help them. 

Soon the employment situation may change drastically, with vaccination rates well higher, new coronavirus cases way down, and a boom clearly in progress.  Until then, though, we need to do what we can.  For applicants, that starts with getting vaccinated.  For hirers, it means improving salaries, wages, and benefits.  If the two sides can do these things, they will succeed sooner.

Friday, May 7, 2021

April Jobs Data: Nonfarm Payroll Employment Up 266,000 But 660,000 More Working Total – AJSN Latent Demand Down 700,000 to Less Than 19.8 Million

A confusing title perhaps, but this morning’s Bureau of Labor Statistics Employment Situation Summary was as well.  It started with 266,000 net new nonfarm payroll jobs, about 700,000 lower than the only projection I saw, but more broadly the report played like 660,000 or so more were on the job.  That was the difference between March’s and April’s “number employed,” meaning that we added about 400,000 net positions either on farms or not on payrolls.  Some of the other metrics reflected a strong month, with the labor force participation rate and employment-population ratio, now 61.7% and 57.9%, up 0.2% and 0.1% respectively, seasonally unadjusted unemployment off 0.4% to 5.7%, and the count of those working part-time for economic reasons, or holding short-hours positions while thus far unsuccessfully seeking longer ones, crashed almost 600,000 to 5.2 million.  The number of those out for 27 weeks or longer stayed at 4.2 million.  Figures getting worse included the adjusted unemployment rate up from 6.0% to 6.1%, the tally of those jobless up 100,000 to 9.8 million, and the number of people on temporary layoff increasing the same to 2.1 million.  The hardest to interpret was “average hourly earnings for all employees on private nonfarm payrolls” up 21 cents to $30.17 – such gains have lately been bad, as they have reflected lower-paid people disproportionally losing their jobs, but this time it may mean higher pay in general. 

The American Job Shortage Number or AJSN, the measure showing how many new positions could be quickly filled if all knew they were truly available, had a large decline to the following:

Almost 80% of the improvement from March came from lower official unemployment, but the count of people not searching for work for a year or more contributed over 100,000.  The year-over-year comparison, with the worst employment month of the pandemic, showed a 14.5 million improvement from 34.3 million, with over 2½ million of that from statuses other than straight joblessness.  The share of the AJSN from unemployment was 42.0 percent, down 1.9%. 

On the coronavirus side, numbers were also mixed.  The 7-day average of new daily American cases gained 28% to 70,075, and that of people hospitalized rose 8% to 44,950.  The average of daily deaths, though, plummeted 43% to 749, while the total of vaccine doses administered each day gained a robust 38% to 3,349,306. 

How can we sort all of this out?  For one thing, we are no longer improving across the board.  We’re reaching limits both on people accepting vaccinations and on employers’ willingness to pay more.  We are nowhere near herd immunity, however you define that, and will not get there until our share of fully vaccinated people, still only 33%, more than doubles.  Legal reopenings, such as the one authorized for later this month in New York City, will help, but only to the extent that customers return.  The rest of the year, then, is murkier than I thought it was a year ago, and does not look as spectacular.  For now, though, the turtle did take a real step forward.