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.