Friday, July 30, 2021

The Pandemic and the Economy: Where We Are and Why We Got Here

It’s been an eventful Covid-19 week.

To clear up two spreading misconceptions, per Apoorva Mandavilli’s “As Infections Rise, C.D.C. Urges Some Vaccinated Americans to Wear Masks Again (The New York Times, July 27th), the Centers for Disease Control and Prevention “said on Tuesday that people vaccinated against the coronavirus should resume wearing masks in public indoor spaces in parts of the country where the virus is surging.”  That organization neither ordered Americans to comply nor suggested that for the entire country.  It released the following map, and said that those fully vaccinated in the counties colored blue or yellow need not resume wearing masks:

The orange and red counties were those with 50 new recent weekly cases per 100,000 in population.  Businesses are still free to name their own masking policies, but in the safer counties this pronouncement should not encourage them to reinstate such requirements.

“Will the Delta Variant Wreck the Recovery?”  That was the title of a July 28th New York Times piece, in which author Neil Irwin attempted to judge that.  First, though, according to “Flush with COVID stimulus money and boosted by reopenings, the U.S. economy grew sharply in the spring but slower than projected” (Paul Davidson, USA Today, July 29th), our gross domestic product gained 6.5%, annually and seasonally adjusted, in the second calendar quarter.  That did not match 8.5% forecasts, but is still strongly positive, given that, per Davidson, we still have “supply chain bottlenecks” and “shortages of materials and workers.” 

Irwin, though, missed the point.  He said that this more contagious coronavirus version could have the effect of “throwing sand in the gears,” even though business is continuing, feared damage if “schools were to return to remote learning” when the C.D.C. recently announced that they would not need to, and “that the pandemic policy story… is starting to repeat itself,” when it does not even approach that.  We have enough problems dealing with reasonable fears to add others.

However, we do have a sort of time bomb now set and ready to go off, as described in “The Delta variant is jeopardizing the economic recovery, but Congress isn’t budging as 20 million workers are set to lose unemployment aid” (Juliana Caplan and Joseph Zeballos-Roig, Yahoo News, July 27th).  That many “are poised to lose all jobless aid on Labor Day,” and the current 8 or 9 million advertised positions aren’t enough.  Expect much more on this issue over the next week or two, including continuation proposals.

The special pandemic problems of an unusual place make up “How to Reopen a Festival City When a Virus Lurks:  Very Anxiously” (Katy Rockdahl, The New York Times, July 25th).  New Orleans, with an economy heavily dependent on close-quarters face-to-face activities, has an above-average vaccination rate, but also vast numbers of visitors of unknown status.  Ultimately, concerns there are only a more intense version of those elsewhere, in response to which getting the shots is even more important.

Consistent with conversations I have had with other fully inoculated people, I agree with David Frum that “Vaccinated America Has Had Enough” (The Atlantic, July).  Indeed, “this pandemic could be almost over by now,” and “the reasons it’s still going are pretty clear,” namely “vaccine resistance among conservative, evangelical, and rural Americans.”  I don’t fault the last set as much as the other two, since people living in the country are often isolated and get into contact with a small and limited set of others, resulting in tiny numbers of new Covid-19 cases – for verification of that, see the concentration of blue-colored counties in the Great Plains – but the other two have been a national embarrassment.  They remind me of the church sign I saw which ended by saying that if you want to meet Jesus now, text while driving, and have made a mockery of calls to “make America great again.”  See the Northeast region above, and imagine the entire country like that – that’s what imprudent people have blocked.

I end with a pungent and remarkably humorous July 26th article by Ryan Cooper, “Is the American economy about to fall back into the pandemic pit?,” in The Week.  That magazine usually reviews news and commentary from elsewhere, but went beyond that here.  As you have seen I don’t think our economy will do any such thing, but I enjoyed reading “as infrastructure negotiations drag on interminably, depressing liberal base voters about the dysfunctional U.S. political system,” “you should never underestimate the irresponsibility of the conservative propaganda apparatus” as shown by “months and months of deranged anti-vaccine propaganda,” “for decades the hegemonic view among American political elites has been that the government needs to force people to work,” and, my favorite, “seemingly all it took for the entire political establishment of both parties to abandon (the $300 federal unemployment supplement) was a handful of restaurant owners whining on television that they couldn’t find enough workers at the wages they were offering.”  Whether you agree or disagree – and I did both while reading Cooper’s piece – I hope you too want to see more from this man.

Friday, July 23, 2021

Covid-19 As It Is: Four Facts, and Five Clear Conclusions

We have reached yet another new pandemic stage.  Wednesday’s 7-day average of new American cases, according to The New York Times, was 41,310, more than any day before June 30th or between May 19th and July 20th.  Deaths, with daily average 249, are doing much better, and hospitalizations, with 25,917 on most recent data date July 20th, are somewhere in the middle.  Vaccinations have leveled at 530,000 per day, less than one-sixth of the April 13th 3.384 million peak but still remarkably high given how many people, 49% fully vaccinated and 7% more having had one shot and needing another (60% and 9% of adults), have already completed that. 

There have been numerous recent articles about our current situation, many misleading and poorly summarized.  Where actually are we?

First, the pandemic is now a problem of the unvaccinated.  Per the Center for Disease Control, at of July 6th only 5,186 out of 156 million fully vaccinated Americans have contracted Covid-19.  While more who have had the shots have been transmitting the disease to others, their chance of getting it themselves is tiny.

Second, even the more contagious Delta variant is no real danger to the vaccinated, even those who have had the Johnson & Johnson one-shot formula.  We may well establish a need for booster doses, but we haven’t yet, and if so they will probably be more akin to tetanus and polio vaccines than anything urgent. 

Third, there is another Covid-19 version, named Beta, which is rare here.  Per Emily Anthes in July 19th’s New York Times “The Beta Variant: What Scientists Know,” it has been around since last year, yet has only one of every thousand American infections.  At one point it accounted for 95% of South African virus samples, but has failed to have anywhere near Delta’s growth or the original strain’s total cases.

Fourth, the worst American infection rates are all in red states.  The highest are now in southwestern Texas, the Jacksonville area, and all over the three columnar states Missouri, Arkansas, and Louisiana.  That coincides with low vaccination levels, which in turn correlate strongly with percentages of Republican voters.

Starting with the above, what should we be doing and not doing?

First, there is a case for requiring fully vaccinated people to wear masks, but it is weak.  It prevents requiring others to trust, and it cuts down transmission of the virus by those who have had the shots.  Otherwise, all points are in favor of continuing to end that as a requirement. 

Second, businesses are completely entitled to set rules.  Whether for employees, customers, or walk-ins, they can decide what to require, including mask wearing and documentation of vaccination status.  There is nothing immoral or overly invasive about asking for the latter.

Third, we can debate the issue of paying unvaccinated people to get that done, but we need to do that quickly.  I think that, beyond incentives worth about $50 apiece or less, that is inappropriate, as it establishes doubt about the medicine’s value and rewards the wrong people, but it still may be worth it, as more of them are getting sick and dying every day.

Fourth, we cannot justify mandating that people get the vaccine, but can restrict public access to locations and resources on that basis.  It is past time for our governments to clearly state these two things.

Fifth, getting vaccinated is a choice, but an obvious one.  At least it is from my standpoint.  However, the past five or six years have taught us how powerful tribal identities can be even here, and how they can, in George Orwell’s words, convince many pursuing them to “reject the evidence of (their) eyes and ears.”  If those seeking to belong are willing to die for that, it is their business, but it gives the appearance of dragging the rest of us down.  That is sad, but, along with the first four points, it is reality, and we need to, like it or not, accept it.

Friday, July 16, 2021

Americans Going Back to Work: Seven Points to Understand

Is it true that great masses of people are refusing to take jobs, when they worked before the pandemic started?  I’ll give that partial credit, as millions still fit that category, but what do we need to know about what is really taking place?

First, people collecting unemployment benefits are once more consistently required to show evidence that they are looking for work and not turning down opportunities.  With more open positions, that is a tougher requirement than once.  Some states are only now reinstating that, but with ready vaccine eligibility and availability it has been fully justified for months.

Second, while on May 19th we could have read about “21 states now canceling federal unemployment benefits” (Denitsa Tsekova in Yahoo! Money), none northeast of West Virginia, that is less relevant now for the reason above, which is just as well since the problem that was intended to solve would have been better fixed through mandatory job searches.

Third, it is good for all of us that the Federal Reserve chair is wary of acting, that even when “The Economic Gauges Are Going Nuts, Jerome Powell Is Taking a Longer View” (Neil Irwin, The New York Times, June 17th).  Per the author, Powell believes that “the labor market can run hotter for longer than a lot of economists once assumed, with widely beneficial results,” “there are many powerful structural forces that will keep inflation in check,” and “the Fed should move cautiously in raising interest rates, rather than risk choking off a full economic recovery too soon.”  He also “does not see the labor shortages of 2021 as evidence of lasting scars to the potential of American workers, but rather as a reflection of the difficulty of reopening large sectors of the economy and reallocating labor after a pandemic.”  Despite the Labor Department’s subsequent finding that “the Consumer Price Index jumped by 5.4 percent in the year through June” (“Prices Pop Again, and Fed and White House Seek to Ease Inflation Fears,” Jeanna Smialek and Jim Tankersley, The New York Times, July 13th), which rates to be temporary, that still holds true.

Fourth, new unemployment claims, while less than one-sixth of a year ago, are still sitting at more than 50% over their pre-coronavirus levels, at 364,000 the last week of June and 373,000 the first of July.  That means a high number of positions are still being discontinued.  We also still have 5.8 million fewer people employed than in February 2020, which means we have a long way to go to reach where we were, let alone where we would be if the growth rate of jobs had continued its 2019-20 pace.

Fifth, we’re in a transitional time, between what working practices and compensation were like in February 2020 and how they will emerge from the pandemic.  Despite many confident predictions, we have no idea what share of people will be working remotely in a year, how many will end up changing careers, and, accordingly, what will happen to housing prices and commuter-dependent businesses. 

Sixth, companies hiring for low-end positions are trying everything – sign-on bonuses, tuition assistance, improved health care and other benefits – instead of hiking pay adequately, and as a result, “A record number of U.S. small businesses are raising wages, NFIB says, but skilled workers still hard to find” (Jeffry Bartash, MarketWatch, July 13th).  Give them another month of missing robust sales and many will see the light, whereupon they may be amazed at how many people are suddenly willing to work for them.

Seventh, ultimately what we need to do is heed the headline of a Neil Irwin March 5th New York Times article, “For the Economy, the Present Doesn’t Matter.  It’s All About the Near Future.”  Current economic results, beyond being in some kind of a recovery, are chaotic and should not be taken as meaningful trends.  For those, we’ll just have to wait and see.

Friday, July 9, 2021

A Shortage of Workers? Our Situation Assessed, Followed by the Winning Strategy

Why are more advertised positions going unfilled?

First, that “more” is accurate.  Per “U.S. job openings, quits hit record highs in April” (Lucia Mutikani, Reuters, June 8th), on April 30th there were 9.3 million of them, at least a 20-year high.  Yet the American Job Shortage Number (AJSN), based on data collected two or three weeks later, showed latent demand for 19.9 million additional positions, almost 4 million more than its 2019-2020 pre-pandemic low.  Clearly something is happening, but what is it?

We have seen two cases of dueling headlines here.  Combatants on the first, on the effect of higher jobless compensation, included  “Job searches haven’t jumped in states canceling unemployment benefits early” (Denitsa Tsekova, Yahoo Money, June 22nd) and “U.S. jobless claims dropping faster in states ending federal benefit” (Howard Schneider, Reuters, June 24th), followed by a left-of-center synthesis attempt by Patricia Cohen in the June 27th New York Times, “Where Jobless Benefits Were Cut, Jobs Are Still Hard to Fill.”  All three pieces use largely different sets of seemingly legitimate data, so it is hard to argue with any of them, but the most insight came from a photo included with Cohen’s article.  It was captioned as a restaurant in St. Louis, with two signs reading “Now Hiring!  Experienced Servers and Bartenders!”  With such positions needing only a week or two of training and practice for adequate initial performance, it was interesting to see one unmentioned solution next to several hundred words bemoaning a problem. 

The second controversial area was exemplified by Jeffrey Bartash’s July 6th MarketWatch “The red-hot U.S. economy cools off, ISM finds, because of major shortages and not enough workers.”  The author here cited an Institute for Supply Management pronouncement that not only are too few people taking jobs for “restaurants and retailers,” but such firms cannot “get all the supplies they need.”  However, four days before in HuffPost, Arthur Delaney had a piece titled “Despite ‘Worker Shortage,’ Businesses Keep Finding Workers,” in which he maintained that June’s 850,000 net new nonfarm payroll growth was exceedingly high, logistically, to process for one month.  He also cited a source saying that restaurant hourly pay was 11.2% higher than a year ago.

Other weak apparent-worker-shortage explanations came from two other sources.  Quentin Fottrell’s May 25th MarketWatch “’Contagious unemployment’ is one theory why companies have difficulty hiring workers,” which on closer scrutiny was only the old practice of disregarding or factoring down the credentials of applicants long jobless, with responsibility properly shifted by author and Wharton professor Peter Cappelli to companies’ hiring practices.  Many especially on the left would be glad to see that “There isn’t a worker shortage in the U.S. – there’s been a worker awakening” (Hope King, Axios, June 16th), but while I agree with the first headline clause, it’s too soon to assume that the second, though possibly in progress, is at hand already.  Christopher Rugaber got warmer with “Fewer working-age people could slow the economy” (Times Herald-Record, July 5th), pointing out that people from the late 1950s, when more American babies were born than in any other time in history, are now turning 65 and causing historic, though, small, drops in the 16-64 age cohort.  Still, the AJSN tells us that latent demand for employment is deeper and wider than the 0.1% reduction Rugaber named.

So what is the solution?  Bartash may not have seen it this way, but why have restaurant wages, in times of too few employees chasing potentially surging sales, increased just over 10%?  Why not 20%, 30%, or more?  If employers fear that paying what they need to get the workers they require must be permanent, they can frame their money offerings as temporary.  If they think raising prices will boot away customers forever, they should recheck that assumption – most have heard about inflation, along with scarcer low-paid labor, for months now, and they, who are often flush from not spending as much for over a year, want that restaurant meal or what’s been missing on Walmart shelves.  If managers have always hired only workers with experience, the personalities they prefer, or current employment, not to mention illegal attributes, they are paying a steep price in lost business for what are now luxuries.  We know much less than we think we do about what working life will be like after, say, the first of the year, but we can’t wait to find out.  Money’s a wasting – companies as well as people wanting jobs need to get it while they can.

Friday, July 2, 2021

They’re Coming Back: 850,000 More Jobs, but 1.4 Million More in Labor Force Means 800,000 Rise in Latent Demand Per AJSN, to 20.75 Million

The number of advertised jobs keeps rising to new highs, but the seekers are there too, and they’re not all connecting.

That’s one of the findings from this morning’s Bureau of Labor Statistics Employment Situation Summary.  That report started with the marquee result of 850,000 net new nonfarm payroll positions, which beat out 675,000 and 700,000 published projections.  The adjusted employment rate fell 0.2% from 6.1% to 5.9%, and people working part-time for economic reasons, or holding onto that sort of job while seeking and not finding a full-time one, dropped 700,000, or over one-eighth, to 4.6 million.

Otherwise the numbers were weak or neutral.  Unadjusted joblessness, reflecting a normal drop in the count of people working from mid-May to mid-June, rose 0.6% from 5.5% to 6.1%.  The adjusted number of unemployed people was up 200,000 to 9.5 million.  There were also 200,000 more out for 27 weeks or longer, or 4.0 million.  Results unchanged were the number of those on temporary layoff (1.8 million), the labor force participation rate (61.6%), the employment-population ratio (58.0%), and, in effect, average private nonfarm payroll hourly earnings (up 7 cents to $30.40). 

The real changes were among inputs to the American Job Shortage Number or AJSN, the metric showing how many more positions could be filled if everyone knew that getting one would be as easy as running an errand.  That gained 827,000, to reach the following:

The total number of unemployed, unadjusted as is the entire AJSN, which jumped up over 1 million, was responsible for more than the measure’s entire gain.  Other factors, though, changed by unusual amounts.  The count of those out of the labor force fell from 100,603,000 to 99,172,000, a large difference for one month.  The number claiming no interest in working, here, was off just over 1.2 million.  The catchall “Other” category, also above, fell 16%.  As a result, even though we added jobs, so many people returned that we needed more positions than before.

Otherwise on the AJSN front, its share from those officially unemployed rose from 39.9% to 42.9%.  Compared with a year before, which was deeper into the Covid-19 crisis than now, the metric is 8.4 million lower, with all but one million of that from higher joblessness.

How did we do on the pandemic front?  From May 16th to June 16th, the 7-day average of daily cases dove 61% from 33,040 to 12,729, the same count of deaths dropped 45% from 611 to 333, hospitalizations were down 44% from 33,693 to 18,803, and vaccine doses given, figured the same way, shrank 38% from 1,886,917 to 1,165,916.  The last statistic is a result of the other three, on which we continued to make outstanding progress.    

How can we best assess all of this?  We are still gaining filled jobs, but not huge quantities of them.  As always, people change their mind about whether they want to work depending on how they see their prospects, and many, this time, decided they had improved.  However, our 9.3 million advertised positions were lacking, as the count of those unemployed rose more than the net number of opportunities filled.  The coronavirus results say we were not sending people back to work too soon.  Overall, good but not great – the turtle has taken larger steps forward, but he did make another substantial one.