Friday, June 17, 2022

Inflation, Interest Rates, Gas Prices, and Employment: What’s Really Happening, and What They Really Mean

These areas are all over the business news, and beyond.  Let’s clear the air.

First, inflation is high, but not atrocious, by historical standards.  The latest three months’ levels, 8.5% for March, 8.3% for April, and 8.6% for May, are not included here, but would easily fit on this chart:

 


(Source: The New York Times)

From “How inflation became a global problem” (Patricia Cohen, The New York Times, June 10th), we learn that its latest readings were 9.2% in the Netherlands, 5.3% in Australia, at “four-decade highs” in Germany and Great Britain, and over 10% in “seven eastern European nations.”  It’s not just us.

Second, on Wednesday afternoon the Federal Reserve raised the federal funds target rate by 0.75%, which, though the largest one-time boost in 28 years, only brings it to where it was just before Covid-19 became widespread, which was lower than it was from Nixon through Clinton:

(Source:  Trading Economics)


Third, at over $5 a gallon, gasoline prices seem way high, but when adjusted for inflation are not obscene:

(Source:  The New York Times)

 

Fourth, unemployment, 3.6% adjusted in most-recent May, is within 0.2% of the best it has been in 65 years:


(Source:  Federal Reserve Economic Data)


Beyond the statistics above, what is important to understand?

It is possible that interest rate hikes will not significantly shrink inflation.  That is because our current situation is due to “over-buoyant demand” (the view of the Organization for Economic Cooperation and Development, cited by Cohen above), from the pandemic’s slowing, and from relatively high household cash.  On the other hand, with deep job supplies such increases may not boost unemployment much either – indeed, per “Fed Takes Aggressive Action in Inflation Fight:  Live Updates,” by Jeanna Smialek in the June 15th New York Times, the Federal Reserve predicted joblessness, even with higher interest rates, would reach only 3.7% this year and 4.1% in the next.  In that case, the only thing we could do, without finding a way of wrenching tens of millions of jobs and trillion dollars of money away from Americans, would be to wait for demand to cool itself off.   

As well, as addressed in “The Daily Money:  Why are gas prices so high?  Oil refineries never caught up after COVID” (Jayme Deerwester, USA Today, June 7th), and reflecting on the United States only producing 12% of world petroleum and Russian production being down in “Biden Has ‘Only Bad Options’ for Bringing Down Oil Prices” (Clifford Krauss, The New York Times, June 5th), we cannot do a lot.  However, as described in “Gasoline demand falters with average price on brink of $5/gallon” (Yahoo Finance, June 9th), “demand destruction,” in the form of people just plain driving less, is already in progress and can only exert downward price pressure.  Expect more, including lower per-mile consumption from consumer vehicle choices. 

Overall, we are hardly in terrible shape.  Inflation and gas prices are high but understandable.  Interest rates remain historically tiny.  Today’s unemployment level would be the envy of any time from the 1970s through the 2010s, as virtually nobody wanting work needs to go without it.  Sometimes we can’t force things to change – we can nudge them, but that’s all.  Accept that, and we will all be happier.

Friday, June 10, 2022

Artificial Intelligence and Robots Keep Progressing, Like It or Not

Inflation and the pandemic have been the two largest American 2020s news stories, but not all.  Before they, and the Ukraine war, took over the headlines, another combined area gathered much more attention.  As it will remain critical after these three other situations have passed, let’s check in.

Artificial intelligence has been the toddler of technology, capable of much more than its governance can handle.  In “Clearview AI settles suit and agrees to limit sales of facial recognition database,” by Ryan Mac and Kashmir Hill in the May 9th New York Times, we learned about how this company, which uses “its database of what it said were more than 20 billion facial photos,” will no longer work with “most private individuals and businesses in the country,” but will still “sell that database to federal and state agencies.”  This decision stemmed from a 2020 American Civil Liberties Union lawsuit, which Clearview AI ended “to avoid a protracted, costly and distracting legal dispute with the A.C.L.U. and others.”  It can still be used by the likes of police departments, and the technology will remain.

Along similar data-collection lines, we have “Your Bosses Could Have a File on You, and They May Misinterpret It” (Sarah Scoles, The New York Times, May 17th).  Here, the ability to collect and integrate information has surpassed its prudent use, as “some private enterprises may be attracted to scrutinizing employees like an intelligence agency might keep tabs on analysts and spies,” since “software can watch for suspicious computer behavior or it can dig into an employee’s credit reports, arrest records and marital-status updates,” and it “can check to see if Cheryl is downloading bulk cloud data or run a sentiment analysis on Tom’s emails to see if he’s getting testier over time.”  This sort of thing, with poor or no established handling practices, being subject to unsettled laws, and as in the ACLU example ripe to easily run afoul of others with more power, is going to cause plenty of trouble before it achieves huge gains.

While still often controversial, physical AI applications are marching on.  One was described in “Robotic surgery is safer and improves patient recovery time,” from University College London on May 15th in Science Daily.  This was a formal writeup of an academic study showing that “robot-assisted surgery used to perform bladder cancer removal and reconstruction enables patients to recover far more quickly and spend significantly (20 per cent) less time in hospital.”  Here, “researchers say the findings provide the strongest evidence so far of the patient benefit of robot-assisted surgery.”  Although robots have helped with surgery before, such research results are where such things begin widespread legitimacy and implementation.

“What’s holding back the self-driving car revolution?”  This obvious query was posed by Mike Bebernes in Yahoo Finance on May 19th.  He said “the simplest reason” was that “driving is much more complex and difficult to replicate than automakers anticipated,” especially in dealing with “unexpected situations.”  Others he proposed were auto companies “rolling untested self-driving features onto the road and making lofty claims that prompt drivers to push beyond their vehicle’s capabilities,” and “the task of creating cars that can navigate every imaginable road scenario may simply be impossible.”  The second problem here is of marketing, but the first and third were supposed to be solved with efforts beginning with dedicated testing grounds and billions of dollars of purchased brainpower.  As one cited observer put it, “unless the industry and public agree to accept a flawed self-driving system – one capable of failure – autonomous vehicles on our streets will never become mainstream.  Achieving perfection here can’t, and shouldn’t, be the goal.”  That is the real issue, which boils down to a lack of tolerance, a lack of perspective in underemphasizing the most recent years’ 42,000 American human-driving deaths, and a lack of will.  There is no imaginable way that, given the possible things that could have gone wrong, we could have overcome a similar attitude when, for example, getting to the moon. 

How are sales of automatons doing now?  Just fine, as “US robot orders surge 40% as labor shortages, inflation persist” (Lucas Manfredi, Fox Business, June 1st).  It makes clear sense, as if workers need higher pay they open a door for alternatives, which can improve and cost less over time.  The industries with substantial increases were metals; plastics and rubber; semiconductor, electronics and photonic; food and consumer goods; and “all others.”  Expect more.

A well-established Japanese nursing-home idea has making stateside inroads.  As described in “Therapy with a robot?  How AI could help those struggling with mental health” (Michael L. Diamond, Asbury Park Press, published in Times Herald-Record on May 26th).  Sort of like 1990s Furby toys, called MARCos, “short for the mental health assisting robot companion,” they are “soft and cushy with two nonjudgmental eves and no mouth,” and look “like your favorite stuffed animal from childhood to whom you told your secrets.”  These devices “can respond, listening for key words to dispense advice or alert your contacts in case of an emergency.”  At $499 to $720 and heading lower, they are cost-effective if they achieve customer acceptance – and of course they can continue to improve.

Finally, “Farm Robots Will Solve Many of Our Food Worries” (Amanda Little, Bloomberg.com, June 2nd).  They “use computer vision to distinguish between crops and weeds and then deploy with sniper-like precision tiny jets of herbicide onto the weeds.”  Currently “expensive, enormous, wildly complex machines currently accessible only to industrial-scale farmers,” with enough demand they will get cheaper and smaller, and “within a few years their impact on the environment and human health could be nothing short of spectacular.”  More progress with the usual massive potential – that’s once more the story with robots and artificial intelligence.

Friday, June 3, 2022

Employment Report: New Jobs Healthy, People Rejoining Labor Force, AJSN Says We’re 16.4 Million Jobs Behind

This morning’s Bureau of Labor Statistics Employment Situation Summary turned out close to what people expected – almost. 

We gained 390,000 net new nonfarm positions, reasonably near the two 325,000 projections I saw.  Seasonally adjusted unemployment did not reach the 3.5% some thought, but held at 3.6%, actually increasing a bit with the difference falling into rounding – the unadjusted figure gained 0.1% to 3.4%.  Other indicators were mixed.  The adjusted count of those officially jobless rose 100,000 to 6.0 million, with 43,000 fewer or 810,000 on temporary layoff, and the number in long-term unemployment, or out for 27 weeks or longer, 100,000 better at 1.4 million.  The two measures best showing how common it is for Americans to be working or one step away, the labor force participation rate and the employment-population ratio, were up 0.1% and unchanged respectively to reach 62.3% and 60.1%.  The count of those employed, 158.609 million, was up 631,000, and that of unemployed also gained, 90,000 to 5.548 million.  Those working part-time for economic reasons, or holding that sort of position while seeking a full-time one, jumped 300,000 to 4.3 million.  Average hourly private nonfarm payroll wages again lagged behind inflation, gaining 10 cents per hour to $31.95. 

The American Job Shortage Number or AJSN, the metric showing how many currently unadvertised positions it would take to get one to each person who would grab it if they thought they were readily available, was up over 300,000 to reach the following:

 




The areas in which the AJSN got worse were people not searching for work in the previous year (adding almost 400,000 to the total) and those officially unemployed, contributing 81,000.  Improving were the count of those not wanting a job, contributing 52,800 fewer than in April, and the “other” category, with 47,100 fewer.  The share of the AJSN from those officially unemployed was almost unchanged, down 0.1%, to 30.4%.  Compared with April 2021 the AJSN again showed a year of great improvement, 3.5 million lower, with all but half a million of the difference from official joblessness and most of the rest from fewer people not looking for a year or more. 

On the pandemic side, per The New York Times, from April 15-16 to May 16 the seven-day average of new daily cases leaped 159% to 95,918, and hospitalizations were up 50% to 22,346 with vaccinations figured the same way off 33% to 371,272.  Deaths, though, fell 33% to 302, clearly telling us that the current variant is the least lethal we have seen.  Once more there is no indication from Covid-19 that people should be working less than they are. 

So what happened here?  The statistics above are unanimous in showing that many people tried to go back to work, starting with a one-million decline in those claiming no interest, and while most got there many did not.  The gain in people employed, along with the robust net new jobs count which is still around ten times what we need for population growth, tell us that our economy is strongly expanding.  Latent demand increased as more people are looking.  We still have a problem with wages, and the main reason for not finding jobs, and the boost in those working part-time for economic reasons, may be that existing opportunities pay too little.  That’s why the numbers above, for the strong and improving times we are in, look messy.  Employers still need to evaluate the cost of leaving needed positions unfilled against that of paying more – as they realize that the latter will allow their sales, in an outstandingly high-demand time, to jump even more, which will also shut up the misguided people talking about a possible recession.  There’s no doubt that the bones of our employment situation are strong, so, accordingly, the turtle took another solid step forward.

Friday, May 27, 2022

Inflation, Interest Rates, Recession, Stagflation, “The Era of Cheap and Plenty,” and Getting a Grip

Unjustified fears are hardly restricted to the far left or far right these days.  Consider our economic situation, which looms highest on American’s current concerns.

First, the one on which we can’t sensibly disagree.  In “Why Has the Inflation Calculation Changed Over Time,” by Stuart A. Thompson and Jeanna Smialek in the May 24th New York Times, we are reminded that the latest rate, April’s, is 8.3%.  That was down 0.2% from March.  The only algorithm adjustments the authors mentioned were 23 and 39 years ago, allowing items that could substitute for others and removing house prices, which means no special recent controversy.

Inflation is why “Fed officials expected to make at least three big rate increases over the next few months” (Ana Swanson, The New York Times, May 25th).  We have already had two such hikes, resulting in the federal funds rate still a historically low 0.75 to 1 percent, and Swanson, doubtless along with the Federal Reserve itself, has no firm timelines for the next, though the next meetings, scheduled for June 14-15 and July 26-27 per the Board of Governors calendar, seem probable targets.  There is real disagreement on whether these raises will solve our current problem, as it is not the usual inflation situation but caused by pandemic-related demand coupled with unusual supply problems, but the Fed is under bipartisan pressure to “do something,” and this is the only something they know.

We also need to keep in mind “What Higher Interest Rates Could Mean for Jobs,” as on May 17th, also in the Times.  Author Lydia DePillis concluded implicitly that they wouldn’t mean much at all, as “job losses would have to mount considerably before workers would have a hard time finding new positions, given the backlogged demand,” about 740,000 additional people must be hired every year to support house building, commercial construction is behind and in demand, and an outplacement company president reported that “a lot of our customers are trying to avoid the ‘fire and rehire’ playbook of the past.”  Therefore, in these areas and doubtless others, lower sales will not even eliminate shortfalls. 

What is a recession?  Per Oxford Languages, it is “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”  Even though the definition does not include employment, it would still require, from here, demand to significantly drop and stay lower.  Could that happen, with that now widely outstripping supply and healthy hiring and job creation?  Well, “A Harvard economist says the economy looks bad right now, but a recession isn’t a sure thing.  It all depends on these 2 factors” (Tristan Bove, Fortune, published in Yahoo Finance, May 12th).  Except for stock market activity, which since the publication date has been up and down instead of “crashing,” with 3.6% adjusted unemployment and household wealth strong it’s hard to defend that “the economy looks bad.”  This professor’s two things are consumer activity, already another good aspect of how we are doing, and his expectation that gasoline prices, due to higher production and large releases from the American strategic reserve, will fall.  Easy.  With there being no reason for jobs to go away, and in turn for consumer demand to plummet, I see almost no chance for a recession, by definition and in spirit.

Even further out is stagflation, described in Investopedia as being “characterized by slow economic growth and relatively high unemployment—or economic stagnation—which is at the same time accompanied by rising prices (i.e., inflation) … alternatively defined as a period of inflation combined with a decline in the gross domestic product (GDP).”  We have the third component, but where are the chances for the first two?  Still, “Ben Bernanke sees ‘Stagflation’ Ahead” (Andrew Ross Sorkin, The New York Times, May 16th).  Bernanke, a former good Fed chair, should know better, and maybe he does, as in the text he is only quoted as saying something could happen that “you could call” stagflation.  Perhaps, as he suggested, 4% unemployment (“up a little bit”) and 5% inflation (dropping due to fewer people working) would qualify.  If so, we spent most of the prosperous 1960s in stagflation. 

Finally, could it be that “The Era of Cheap and Plenty May Be Ending” (Jeanna Smialek and Ana Swanson, The New York Times, May 3rd)?  “The answer could hinge on whether a shift away from globalization takes hold,” although then we might have “more resilient, more robust supply chains,” something on the list of corporate managers all over.  With plenty of international connections still functioning well, changes seem likely to be incremental instead of fundamental, and for now, per the above, our country is not in long-term economic trouble either.  So, as with the other possibilities, let’s not worry about developments with minimal or nonexistent chances.  Inflation is real, and we need to continue reducing it, but recession, stagflation, and few low-priced goods are not worthy of your attention.  We have enough to worry about.

Friday, May 20, 2022

Transportation Developments Beyond The Usual: High Value, Varying Progress

Over a trillion dollars of the American gross domestic product goes to moving us around.  Being able to go almost anywhere safely is one of the great things about the modern age, and, over the centuries if not decades, has progressed greatly.  For 60 and 100 years respectively, jet airliners and gasoline-powered cars have dominated, but there is and could be more.

That most prosaic was the topic of Farhad Manjoo’s March 18th New York Times “The Holy Grail of Transportation Is Right in Front of Us.”  Although “in America, nobody loves the bus,” and its systems are “chronically underfunded,” they use existing roadways, are flexible, and its citizens took 4.6 billion trips with them in 2019.  From what he saw in London, Manjoo recommended increasing their numbers, to which I add something I too have seen overseas, electric signs at bus stops with expected arrival times.  If buses got even a sliver of the personal and legislative love of trains, we would benefit.

Onto a form that cannot complain about being unfavored: “Electric vehicle sales hit record high in 2021, KBB reports” (Erika Giovanetti, Fox Business, February 22nd).  Lyndon Baines Johnson was president when I first read about the great potential of electric cars, and their main problem, driving distance between lengthy charges, remains the same.  So I can’t get excited, after decades of subsidies and green enthusiasm, about seeing that sales of electric vehicles (not the same as personal automobiles) reached 4.5% of the market last year, with hybrids, the most adaptive version, below 10% of “the car sales market.”  Even if we sweep their higher prices under the rug, the implied and even touted environmental advantage is small, with an average of 35% of American electricity coming from fossil sources, meaning, as when hippies and Vietnam headed the news, they are still generally neither suitable nor desirable.

Electric car acceptance could be passed by something more recent and more fanciful, if it gets help.  In “Virgin Hyperloop unveils West Virginia as location for Hyperloop test center,” (Louis Casiano, Fox Business, October 8, 2020) we saw at least planned progress for this magnetic-driven 600mph ground transportation technology.  Yet, nine months later on July 16th, the same publication could only issue Chris Taylor’s “All aboard the hyperloop:  How your commute could be changing,” a how-this-works-and what-it could-do-someday piece that could have been issued two years before.  The hyperloop concept has been proven, and people years ago rode on it for half-miles and speeds of 200, so it’s time to move ahead – will it happen?

Something even more spectacular and ambitious has been implemented better.  First, “Tony Robbins puts money behind Cape Canaveral space balloon business” (Bradford Betz, Fox Business, December 3rd).  Pompous ass or not, this motivational speaker wants to actually do things more than most, and this one is actually in progress, with, per Debra Kamin’s May 7th New York Times “The Future of Space Tourism Is Now.  Well, Not Quite.,” seven “completed space tourist launches,” by Jeff Bezos’s Blue Origin, Elon Musk’s SpaceX, and Richard Branson’s Virgin Galactic, completed, and a fourth company, World View, taking and getting 2024 reservations for Robbins-style balloon trips, during which “a 10-person pressurized capsule… will gently float to 100,000 feet while passengers sip champagne and recline in ergonomic chairs,” “high enough to show travelers the curvature of the planet.”  I thought I had seen that from 30,000 feet at twilight, but I’m sure it’s better higher.  With no rocket and long-standing technology I don’t see a problem, and will skip over other of Kamin’s reported projections, as this industry is now, partially but indisputably, past the concept-and-testing stage.

That leaves us with driverless cars.  I ignore the incremental and extremely localized achievements, as in 2017 we were expecting autonomous vehicles to be all over the place, in favor of a more important and equally pertinent report.  It is “Newly Released Estimates Show Traffic Fatalities Reached a 16-Year High in 2021,” issued May 17th by the National Highway Traffic Safety Administration.  The tentative number was 42,915 – more than 21,000 times the total killed by driverless vehicles.  A lack of will is not only sad but can be deadly – and that goes for other transportation shortcomings as well.  

Friday, May 13, 2022

Inflation and Interest Rates: What Happened, What They Mean, and How We Can React To Them

The largest jobs-and-the-economy news story of 2022 is clearly here.  There has been almost too much coverage and commentary, even when it’s not politically distorted.  So let’s go to the core.

Per Jeanna Smialek’s May 4th New York Times “Fed raises rates half a percentage point, its largest increase since 2000,” the federal funds target level went up last week, though at 1.00% it is historically low, in fact under any point from before 1970 to 2002.  We should expect more such hikes, as Federal Reserve chair Jerome H. Powell said that “there is a broad sense on the committee that additional 50 basis points increases should be on the table at the next couple of meetings.”  The Bureau of Labor Statistics announced that “inflation edged down to 8.3% in April compared to a year ago, remaining near 40-year highs” (The Washington Post, May 11th), from 8.5% in March, suggesting that the rate, if still a major problem, is leveling off or decreasing.

One of higher prices’ less-publicized effects is that “Sky-high inflation could lead to higher taxes for millions of Americans” (Megan Henney, Fox Business, May 10th).  Since federal income tax became indexed in 1981, we haven’t thought much about “bracket creep,” the result of pay following higher prices being subject to percentage tax increases, but “15 states fail to account for inflation when drawing the brackets for taxes on wages and income” and “another 18 states do not index personal exemption tax to inflation.”  These locations are spread all over the country, and the first group includes high-population Georgia, New Jersey, and New York.  With the current problem small for four decades, this situation was given little priority, but expect that to change.

“What do Federal Reserve interest rate hikes mean for Main Street?” (Brock Dumas, Fox Business, March 16th).  That includes higher personal rates on “car loans, mortgages, and credit card balances,” but those for “savings accounts and CDs will rise at a slower pace.”  Discouraging, but to be expected. 

What else can ordinary people do?  The advice offered in “Gas prices could hit a new record high:  Here’s how to save” (Daniella Genovese, Fox Business, May 9th) is well-worn, but bears repeating:  “Lighten the weight of your car”; “Purchase a fuel-efficient car”; “Only use the air conditioning when you need it”; “Use cruise control”; “Don’t idle”; “Make sure your tires are properly inflated”; “use cash-back credit cards and… join a gas station loyalty program when possible.”  These things matter more than usual.  I add that when deciding whether to pay with cash or credit when the latter costs more, consider what your cash-back rate is, as often now the difference at the pump is less than 1%. 

A new opportunity, perfect for now, was described by Ann Carrns in the May 3rd New York Times: “Inflation bonds are earning eye-popping rates:  9.62 percent.”  Seems too good to be true, but these are legitimate Series I U.S. savings bonds.  They pay amounts algorithmically determined from fixed amounts and inflation levels.  They must be bought online, with limits of $10,000 per person plus a maximum of $5.000 more with tax refund money, “you must hold I bonds for at least 12 months before redeeming them, and you’ll be docked the last three months of interest as a penalty if you redeem before five years.”  If you don’t believe it, check out treasurydirect.gov and open an account for yourself to start the process, which takes at least ten business days.  I did.

In government policy as elsewhere, the strongest response is not always the best.  That was the idea of “The Courage Required to Confront Inflation,” by the New York Times Editorial Board on April 29th.  Points made in this piece include “supply shortages… are best endured patiently.  The Fed’s decision… won’t ease them,” “lingering questions about the health of the economy provide another reason for the Fed to move cautiously,” and “there is no evidence the United states is entering a wage-price spiral.”  Sellers are all too willing to get more products, and when the problems from supply-chain snags to Covid-19-caused foreign worker restrictions ease, they will come in no matter the interest rates.  In the meantime, jobs are plentiful and families have added a lot of money, two things we don’t want to endanger.  The course we are following is prudent and will prove effective – let us give it the time it needs.

Friday, May 6, 2022

Another Good Jobs Report, with AJSN-Shown Latent Demand Down Another 500,000 to 16.1 Million

After some wild Bureau of Labor Statistics Employment Situation Summary editions, it’s good in a way to see one that matched predictions and was consistent with common sense. 

The two projections I saw for net new nonfarm payroll positions, 380,000 and 390,000, were almost right on this morning’s 428,000.  There is a large usual difference between how many people are working in March and April, as while the seasonally adjusted employment rate held at 3.6% the actual or unadjusted figure fell from 3.8% to 3.3%.  Other key statistics were mixed.  On the good side, the count of officially jobless dropped 100,000 to 5.9 million, and the total of those working part-time for economic reasons, or holding on to that kind of work while seeking full-time opportunities, shed 200,000 to 4.0 million.  Losers were those on temporary layoff, up 66,000 to 853,000, those out of work for 27 weeks or longer, up 100,000 to 1.5 million, average private nonfarm payroll wages, up 12 cents per hour to $31.85 but well below inflation, and the two measures of how common it is for Americans to be working or one step away, the labor force participation rate and the employment-population ratio, down 0.2% and 0.1% to 62.2% and 60.0%. 

The American Job Shortage Number or AJSN, the measure of how many new open positions could be quickly filled if all knew they were routinely easy to get, lost 501,000 to reach the following:




The share of the AJSN from those unemployed by official definition is now 30.5%, down from 33.5%, meaning that almost 70% of nonworking people who would take freely available jobs have other statuses.  That is historically very low.  Compared with a year ago, the AJSN has lost 3.7 million, all but 300,000 of that from lower official unemployment. 

On the pandemic side, the 7-day average of Covid-19 cases increased 18% from March 16th to April 15th (data was not available for April 16th) to 37,003, the same for deaths down 63% to 466, people hospitalized for this ailment off 42% to 14,868, and total number of vaccinations, most commonly newly-available boosters, up 203% to 718,910.  Given the still-low if rising case count, the geographical concentration of recent activity, and most of all the plummeting death numbers, it is still clear that few are taking undue risks to stay on the job. 

How can we size up April?  In some ways we didn’t go anywhere – pay is still lagging behind inflation, more people left the labor force, and the shortest and longest joblessness figures worsened.  On the other hand, that 428,000, about ten times enough to cover our smaller population growth, is nothing to take for granted.  We’re doing well, though it is obvious where we need to improve.  This time the turtle took a medium-size step forward.

Friday, April 29, 2022

Ten Months on Robots, Automation, and Artificial Intelligence

Big topics, little communication.  My cupboard is not quite bare, but has some odds and ends, which are worthwhile, even if they add up to one post instead of the three these matters seem well worth.

Artificial intelligence, or AI, seems to be springing leaks, if not in how it is progressing but how people deal with it.  A stern view on one, by George Maliha et al. in Harvard Business Review on July 13th, was “To Spur Growth in AI, We Need a New Approach to Legal Liability.”  We hit the issue of which humans are legally responsible for post-algorithmic technology with driverless cars, which haven’t spread enough for anything resembling legal precedents, and here we have the straightforward assertion that “the existing liability system in the United States and other countries can’t handle the risks” it entails.  The authors recommend “revising standards of care” especially for medical AI applications, granting radiologists, for example, immunity from malpractice if they provide secondary image reading after AI provides the first; “changing who pays:  insurance and indemnity” including insurers giving better rates for professionals using favored AI systems;  “revamping the rules:  changing liability defaults” such as, if autonomous cars are involved, not automatically blaming a human driver in the striking vehicle for a rear-end collision;  “creating new adjudicators:  special courts and liability systems” using more sophisticated knowledge than most judges have;  and “ending liability completely:  total regulatory schemes” or institutionalizing knowledge that in some cases nobody is at fault.  A good start, all of this.

Julian Jacobs addressed another future problem area in the Brookings TechTank on November 22nd, with “Automation and the radicalization of America.”  Jacobs found that combining one study assigning mechanization potential to occupations with another giving demographic data on people working them told us that those more likely to be replaced by machines “tend to have a dark and cynical view of politics, the economy, the media, and humanity” and skew left on financial issues but slightly right on “socio-cultural ones.”  He stopped short of predicting revolutionary activity among these workers, but such, if they do indeed lose their jobs, could happen this decade or next.

“Will Robots Really Destroy the Future of Work?”  Peter Coy revisited this old overstatement in the January 24th New York Times, featuring an interview with labor economist David Autor, who “loves” both robots and unions and wants the two to be coordinated better, ideally on better-paying jobs.  Per Coy, such means realizing that “workers need training so they can use automation, not be replaced by it.”  I see no mention of the number of positions that we can expect to be lost, and it seems naïve to think it will not be substantial, even if some are created – the major point of mechanization is to reduce labor costs, which would not happen if almost as many jobs are created to work with it.  Now, as opposed to two years ago, we can better justify trading lower-paying positions for fewer higher-compensated ones, but there is hardly a guarantee 3%+-unemployment will last indefinitely.  Destroy, no – damage and change, yes.

The Writing on the Wall” was a long April 17th Steven Johnson piece in the magazine section of The New York Times.  The subtitle of sorts was “A.I. has begun to master language, with profound implications for technology and society.  But can we trust what it says?”  We’re now at the point where such a system can write good-looking essays proposing plausible solutions to complicated problems in a second or so, through abilities to determine missing words and access massive numbers of sites, not all truthful or prudent.  The core of this issue is that the machines themselves cannot judge written material and cannot always identify lies, meaning human input is still needed.  We also are not avoiding the issue of what AI language modules may produce without confidential influences, which could well offend or even upend modern sensibility.  Overall, Johnson’s view that “the very premise that we are having a serious debate over how to instill moral and civic values in our software should make it clear that we have crossed an important threshold” seems appropriate – and solutions may depend on specific assumptions such as “people are basically good” and “guns in houses are safe enough,” which could be revealed to all.  A long way to go we have, and this piece does help.

Shrinking to a less general concern, we have Tanya Moore’s April 19th New York Times “Can A.I. All but End Car Crashes?  The Potential Is There.”  We don’t have many autonomous vehicles, but there are plenty of others with related software – even my ordinary, year-old Toyota Camry beeps when I cross a center line.  Moore mentioned various other mechanistic improvements, and others in progress – this area is burgeoning.  That means that even if we don’t lose drivers, we will still gain a lot of safety and save many lives.

I end with a robot application with smaller import, but the kind which we can solidly expect.  It’s “Jack in the Box to pilot Miso Robotics’ Flippy 2, Sippy” (Lucas Manfredi, Fox Business, April 26th).  It will start in only one of the fast-food chain’s locations, and not until late this year, but the first of these “takes over the work for an entire fry station” at a 30% production increase, and the second cuts drink spills as it “efficiently moves cups,” “accommodates a range of cup sizes and groups cups by order for easy delivery to customers.”  At today’s rates, Flippy 2’s $3,000 per month is less than only one full-time fast-food worker, and will work many more hours.  Like it or not, if the trial works, it will propagate, help the business, and potentially save customers’ time and money.  Look for many more – and don’t forget these growing and evolving issues, as, headlines or not, they won’t leave us alone forever. 

Friday, April 22, 2022

Inflation, Employment, Recession, and Housing: Where the Economy Is Now, and Where It Is and Isn’t Heading

What’s happening with our financial system?  We’ve heard a lot about inflation, but there’s more on other aspects as well.  All from the last month – let’s go!

The Washington Post’s Breaking News told us on April 12th that “Prices climbed 8.5% in the year ending in March, amid growing fears that inflation will cause a broad economic slowdown.”  This is a fresh 41-year high, but at least the rate seems to be topping off, and seems unlikely to reach even 10%.  With booming weaker-Covid demand, the Ukraine war, Chinese pandemic problems, nagging supply chain issues, and even another Japanese earthquake it won’t go away soon, though, but will start falling this summer, such general optimism supported by Paul Krugman in the March 24th New York Times “How High Inflation Will Come Down.”  However, if you are thinking about buying a vehicle, you might as well do it soon, as per Jeanne Smialek in the April 10th New York Times, we’re looking at “Few Cars, Lots of Customers:  Why Autos Are an Inflation Risk,” with one dealer saying “If I could get 100 Toyotas today, I would sell 100 Toyotas today,” and their supply-demand situation calling for them to fetch maximum prices indefinitely.  Emma Goldberg told us that “With Inflation, Workers Are Facing Return-to-Office Sticker Shock” (The New York Times, April 20th), meaning there is a new disadvantage of not being able to work from home, as gas, coffee, and lunch food all cost more and the differences can add up quickly.

Again in the Times, Andrew Ross Sorkin et al. posed the question “Is U.S. employment at Its Peak?” on April 1st.  That’s good to ask, with official joblessness under 4% and still dropping, the count of open job advertisements of variable quality reaching all-time highs, and the American Job Shortage Number (AJSN) within one or two good employment reports of reaching a decade-plus-long latent-demand low.  The economy is still “two million jobs short of its prepandemic peak,” but two years of intensified efficiency and automation, along with the usual globalization, account for much of that, and national population growth, about one-third of that time’s level, has not been able to help.  We may soon drop through unemployment’s 3% and the AJSN’s 16 million, and if we do we will know the March report was not the high mark.

You may have heard of the Big Mac Index, which uses international prices for that sandwich to assess whether their currencies are overvalued or undervalued relative to others, but how about the men’s underwear index?  I learned about that in “Is a recession coming?  Alan Greenspan days the answer is in men’s underwear” (Nicole Goodkind, CNN Business, March 26th).  The former Federal Reserve chair supports the idea that, since other people rarely see other men’s shorts and their sales are “usually stable,” when they decline “that means that men are so pinched that they are deciding not to replace underpants.”  The piece contained no data on this metric, but also mentioned the “skyscraper index,” based on the notion that “an increase in very tall buildings happens as we’re approaching a bust,” and the “lipstick index,” trading on the thought that cosmetics function as economic inferior goods, as in hard times “women replace more expensive purchases with small pick-me-ups.”  None of these things are comprehensive, of course, but all seem worthwhile.  As for a recession soon, since neither employment nor consumer demand seem at all likely to crash, and cited precedents were all without pandemics, there’s little reason for a gloomy forecast.

“Is the U.S. already in a housing bubble?”  Brock Sumas asked this in Fox Business on April 20th.  Real estate prices are not a “paradox,” as Krugman has put it, but only a combination of burgeoning demand offset somewhat by higher mortgage rates.  As for a “bubble,” defined by a quoted economist as “an unsustainable period of house price growth generated by artificial demand, such as loose underwriting or speculative demand” – and we have seen both this century – this same source opined that higher prices are now “supported by the fundamentals and characterized by a shortage of supply relative to demand.”  Suras said that the presence of a bubble was “open to debate,” and there surely will be some localized price decreases, but to me it looks nonexistent.

We end with another, more comprehensive query: “Is America’s Economy Entering a New Normal?” (Jeanna Smialek, March 24th, The New York Times).  With Covid-19 still in progress, it seems too soon to answer anything this long-range, or be surprised that “economists have spent the past two years expecting many of the pandemic-era trends to prove temporary, but that has not yet been the case.”  We also need to understand that we will have gone through a significant amount of time, with as before change in some areas being accelerated, when American new case numbers drop below 1,000 per day and deaths reach double figures or less.  Other changes, such as more remote work, have been cyclical, and other factors, such as pooling up of money and most work acceptors not being technically unemployed, long predate the first coronavirus case.  Six to twelve months from now, an aggressive if anything estimate on the pandemic’s fading, is as soon as we should even consider what will happen long-term with our economy – and, even then, we will be unsure.  That may not be encouraging, but it is realistic – and realism is what we need.

Friday, April 8, 2022

Offices vs. Remote: Perceptions and Changes Keep Coming In, And Will Continue

One of the great employment-related 2020s issues is whether to work, or allow work, from an office.  As I have written, that’s really a 30-year-old problem, pushed to the forefront by and evolving faster because of the pandemic.  What has been written about it in recent months?

The oldest here is “One Size Doesn’t Fit All:  Employees’ Needs Are Changing Work Spaces” by Jane L. Levere in the October 19th New York Times.  The lead example was “M. Moser’s 10,000-square-foot Manhattan headquarters,” “designed in 2018 and revamped in 2020” to be more “flexible,” in other words without personal office space.  An architectural firm is advocating that workers arrive in an “anti-anxiety office entry” with “breathable and easily navigable spaces” to “choreograph the arrival experience to reduce crowding.”  Whew.  Perhaps this stuff will work, but more likely it’s just another set of business fads, to be swept away when businesses rediscover more efficient space design.

Is it true that “Remote Work Is Failing Young Employees” (Anne Helen Petersen and Charlie Warzel, The New York Times, November 22nd)?  It’s about how workers’ online instructions for getting acclimated to their jobs, right or wrong, don’t work as well as getting help in person, summarized by an interviewed new hire who said “I was shocked at how all the skills I had learned on how to navigate this type of environment in person evaporated remotely.”  Another claimed he “found it nearly impossible to socialize with colleagues,” perhaps caused by “well-intentioned but frazzled managers” with little “support or practice in remotely onboarding employees.”  A real gap, which may require working from home to be preceded by at least a week or two with others.

Strange times bring a strange vocabulary, and to keep you up at least partially, we got, from the same author, date, and publication as the previous, “The New Language of the Office, From Al Desko Dining to Zoombies.”  The two expressions in the title came along with “bookcase credibility” (specific titles on display during video calls); “commuter’s delight” (treats brought into the office for those unlucky enough to be there); “polywork,” or non-company financial projects consuming remote workers’ office-hours effort; and “synchronous time,” reflecting more difficulty in connecting simultaneously.  As “office lingo signals affiliation with an in-group,” these terms, and others coming along, are not only valuable but constructive.

“Is working remotely an option for the long haul?” (Paul Davidson, USA Today and published in the Times Herald-Record, December 27th)?  This piece, mainly a primer on then-current statuses which change month by month, doesn’t answer that.  People saying yes and no could write dueling books – a debate would be too short – and we could decide.  My take is “it depends in the individual employee and their job responsibilities,” but we’re hardly likely to decide quickly.  One possible response, by Amy Sinatra Ayres from and in the same publications and appearing January 16th, titled “Experts:  Virtual work is here to stay,” emphasized employee preferences while admitting that “finding the right combination of in-person and virtual work will take creativity and experimentation” and that “nobody knows the answer.”  And most businesses will understand even less when the pendulum swings back yet again.

Another issue primarily but not exclusively with working from home is “What We Lose When Work Gets Too Casual” (Elizabeth Spiers, The New York Times, February 7th).  So, “which parts of office culture were obliterated by Covid and need to be restored because they benefit workers more than they benefit corporations?”  For Spiers, that could include “fixed start and stop times,” “managerial hierarchies with clear pathways for advancement,” and “professional norms that create boundaries between personal and professionally acceptable behaviors.”  She makes cases for why these help employers at the expense of employees, such as a study showing fuzzier times meant unpaid extra hours, flat chains of command meant “employers can punt on” promotions, and Zoom backgrounds allowed us to draw inferences when “you finally get to see where Tyler from quality assurance lives – whether you want to or not.”  This is another group of concerns in flux, built on by “Can Workers Climb the Career Ladder From Outside the Office?” by Corrine Purtill in the March 3rd New York Times, which aired matters such as whether “you can feel people’s energy better when you’re around them” for “assessing someone’s availability,” a controversy about the effectiveness of “virtual water coolers” (which the article did not mention could store and transmit comments), “bonding opportunities like virtual happy hours” with the same problems which may not work across time zones, potentially less real or perceived sex and race discrimination against people not in your field of vision, and reduced numbers of “side conversations,” from which “a lot of decisions are made.” 

Despite any certainty, a strong downward pandemic trend has influenced companies to call employees in on future dates.  That’s what Andrew Keshner found in “Google isn’t the only company requesting workers go back to the office.  Jobs report shows more people are joining the ‘Great Return’” (MarketWatch, March 7th).  Will that mandate hold?  And how will the issues in this post play out?  Only time, and maybe our best projections, will tell.

I will not be posting next week.  Expect the next issue, on a topic to be determined, April 22nd.


Friday, April 1, 2022

Another Solid Employment Report, Showing People Returning to the Labor Force – AJSN Shows Latent Demand Down 400,000 to 16.6 Million

Four weeks ago, I predicted this morning’s Bureau of Labor Statistics Employment Situation Summary would again be especially strong.  Was it?

We added 431,000 net new nonfarm payroll positions, on top of the only estimates I saw (450,000 and 455,000), not in February’s 678,000 class but still about ten times what we need for our current, reduced population increase.  Almost all of the numbers I have been covering improved as well.  Seasonally adjusted and unadjusted unemployment fell 0.2% and 0.3% respectively, to reach 3.6% and 3.8%.  We reached 6.0 million officially jobless people, off 300,000, of whom 787,000, of 101,000 fewer, were on temporary layoff and 1.4 million, also down 300,000, have been out of work for 27 weeks or longer.  The two measures of how common it is for people to be working or unemployed, the labor force participation rate and the employment-population ratio, improved 0.1% and 0.2% and are now at 62.4% and 60.1%.  The laggers were the count of people working part-time for economic reasons, up 100,000 to 4.2 million after last time’s 400,000 gain, and average hourly nonfarm payroll earnings, up 15 cents per hour to $31.73, less than inflation despite February’s loss. 

The American Job Shortage Number or AJSN, the measure of how many new positions could be quickly filled if all knew they were easy to get, decreased 402,000, as follows:



 The effect of a lower number of unemployed was significantly offset by more people wanting to work but not looking for it for a year or more.  That was a clear indication that those who in February said they did not want jobs, which decreased over 600,000 in March, came back to the workforce.  The other factors above significantly improved, with their AJSN effects largest for those discouraged and those in school or training.  The share of the AJSN from those officially jobless fell from 35.9% to 33.5%, meaning that essentially two-thirds of new job acceptors would not have been what the Bureau of Labor Statistics considered unemployed.

Compared with a year before, the AJSN has dropped almost 3.9 million, 3.4 million of that from those jobless, half a million from a lower count of people interested in work but not searching for it for at least 12 months, and the other statuses collectively little changed. 

On the pandemic front, the differences in seven-day rolling daily averages between February 15th or 16th and March 16th all showed the dramatic fading of the Omicron variant, with new cases down 75% to 31,216, deaths off 46% to 1,263, people hospitalized dropping 70% to 25,558, and vaccinations, including boosters, 54% lower at 237,025.  There is scant reason, and even less day by day, to think a significant number of people are taking undue risks by working. 

So how good was it… really?  It wasn’t as super-strong as February’s, and the two-month trends of more people counted as employed without the full-time work they want and pay raises not covering increasing prices are causes for concern.  Yet our unemployment rates are only a few tenths of percent higher than they were just before Covid, and much of the effect of higher oil and food prices from the Ukraine war, three weeks old at survey time, is already baked in.  How we do from here will depend on how many of those 600,000-plus new entrants find work.  If they do, April should match or exceed March, but if they don’t, we may more or less break even next time.  For now, though, once again the turtle took a good step forward.

Friday, March 25, 2022

From the Management Side: What’s Been Happening, and What it Means for Workers

While the pandemic has influenced almost everything businesses have been doing in the past year, it has not been the only source of change.  Stories about how companies have been operating, except in ways Covid has driven, have generally been pushed behind the scenes, but reality has marched on.

While slightly mistitled, Nancy Collamer’s August 5th MarketWatch “Four hiring trends you should know about and how to put them to work for you,” while describing mostly long-time truths, still provided a good look at what’s been going on there.  Her first point, that “the hiring process is increasingly automated and virtual,” calls for not only candidate countermeasures but for realizing that some strategies, such as using “referrals to network your way into jobs,” are as important as ever.  It’s nothing new that “interest in remote work remains strong among many workers and employers,” and more and more information is available on how to get such positions.  The third, “diversity and inclusion have moved to the hiring and employment forefront,” could have been written 40 years ago, and, while the same could be said about the fourth, “it’s still not easy for older job seekers,” the latter has been worsened by accelerating working-technology change, meaning that older candidates, in particular, should emphasize their specific software experience areas. 

What skills do hospitality workers now need?  How about conflict resolution?  That they do seems clear from “Restaurants and hotels push back against the uptick in customer tantrums” (Clare Ansberry, Fox Business, September 28th).  Not fresh but still noteworthy, this piece focused on hostile customers who became more common during the pandemic, and are now not tolerated as much.  One restaurant owner found that a simple message on ordinary paper, posted on the front door, saying “BE KIND OR LEAVE,” helped.  And people will try more than that.

On September 29th, Peter Coy of The New York Times asked a good question: “Why are fast food workers signing noncompete agreements?”  Those accords, once reserved for people with high-value proprietary knowledge, have spread disturbingly in the past decade, and, as here, are often used to shackle workers rather than to maintain information security.  Although many such agreements may be invalidated in court, we are not far from nationwide restrictions on when they can be imposed.

We move on to something which management keeps trying, despite no sustained financial success, with “Will Rapid Grocery Delivery Change N.Y.C.?  Look to Berlin,” by Margot Boyer-Dry in the February 11th New York Times.  The currently-attempted model discussed here involves not runs from stores but from “new grocery warehouses, or “hubs,”” which have drawn complaints in that German city for their “noise and congestion,” and may violate zoning rules.  These services have many similarities with Uber and Airbnb, from a lack of profitability to the looming question of whether they could be even nominally successful if they were held to the same regulations as more established enterprises.

“Do Today’s Unions Have a Fighting Chance Against Corporate America?”  Here is another worthwhile query, addressed in article form by E. Tammy Kim on February 17th, also in the Times.  For decades, unions, with their heyday long in the past, have found their growth in representing governmental employees with nonconfrontational management, but have recently gained relevance as intense personal controls, comprehensive monitoring, and daunting production requirements have appeared at the likes of Amazon.  Unions have greatest appeal when employers are abusive or bordering on that – with such behavior on an upswing, they can regain much of the value they had when workers who died on the job were often denied even that day’s pay.  We should not expect labor organizations to resurge in pleasant, safe, reasonably fair workplaces, but when that is threatened, it is appropriate for them to return.

Finally, on the topic of that gargantuan concern, we got “Here Comes the Full Amazonification of Whole Foods” (Cecilia Kang, The New York Times, February 28th).  Amazon bought that grocery retailer “more than four years ago,” and didn’t say much about what they were doing with it for about three of those, but now is pioneering a system where “hundreds of cameras with a god’s eye view of customers” can see exactly what they pick up and walk out with, and bills them later.  The technology is not perfected yet, was only at press time at two locations, and uses “deep-learning software” to improve it, but, if management likes the results, will spread, not only to other Whole Foods stores but to competing chains.  It does, indeed, mean even fewer checkout personnel, but also cost savings that could be passed along.  We’ll see – and that, as well, goes for everything else in this post.

Friday, March 18, 2022

Beyond Inflation and Interest Rate Increases: Where We Are, and Where We Could Go Instead

On Wednesday, the solid Federal Reserve news finally hit.  Per “Fed raises rates and projects six more increases in 2002” (The New York Times, March 16th), the federal funds rate, lower than the prime rate or discount rate, went up 0.25% with more hikes, likely though dependent on how inflation and other factors perform, on the way.  This is a small increase – the Fed has been known to boost or cut rates 2% or more at once – and it shows caution.  Is that a good thing?

The oldest of nine pieces here was published just over a month ago.  In Jeanna Smialek’s February 17th New York Times “Could Wages and Prices Spiral Upward in America?,” the author maintained that “even if wages and prices are both rising now, it is not clear that they are egging each other on yet,” accurate, as the current bout of inflation has specific causes, namely pandemic recovery, workers refusing positions with pre-2021 pay, and a war between two wheat-exporting countries one of which is among the world’s largest oil producers. 

Between political views distorting many people’s assessments of our situation and the emotional effect of high inflation, we have “America’s Very Peculiar Economic Funk,” by Paul Krugman, on March 3rd and also in the Times.  Peculiar, as “if you ask people “How’s the economy doing?” as opposed to “How are you doing?” you get a very different answer.”  As there clearly is a “disconnect,” Krugman held that news sources are “missing a big part of the story if we take negative public views of the economy at face value without pointing out that they’re at odds not just with official statistics but also with self-reported experience.” 

The same author and publication returned with “How the Putin shock might affect the world economy” (March 8th), a good primer on this topic.  Krugman concluded “that it will be bad, but not catastrophic,” with problems centering on grain and fuel as above.  He said the spike in oil prices took him by surprise, in effect a good prediction as it has since greatly receded.

A long-time nuisance for workers may come under deserved pressure, as “Amid rising inflation, many Americans would prefer an increased pay frequency, survey says” (Fox Business, March 9th).  In a recent J.D. Power study, 59% said they were “paid every two weeks,” and of them, 35% (only?) wanted weekly checks instead.  I think those with relatively low income should be paid more often, and with less elapsed time, as it’s fair that they want to spend their earnings sooner.  I urge organizations to improve that.

We read about overall higher prices, but that doesn’t mean they have been going up uniformly.  In fact, there are large differences, as shown in “Where Inflation Is… And Isn’t,” in Yahoo Finance on March 10th.  This chart showed that the “12-month change,” overall 7.9%, had “used vehicles” increasing 41.2%, gasoline 38.0%, hotel rooms 25.2%, rental cars 24.3%, and “transportation” 21.1%, along with “household energy,” airfare, and “new vehicles” each up from 12.4% to 13.3%, and furniture, “food at home,” and “appliances” from 7% to 10% higher, followed by “food at restaurants,” clothing, housing, “personal care,” “pets & pet products,” “recreation, and rent increasing from 4.2% to 6.8%.  This data is important, as it tells us where the problems have and have not been.

Paul Krugman again, in the March 14th New York Times, seemed to have got what he wanted in “How Not to Have a Putin Recession.”  He agreed with small interest rate hikes, but said that “what the Fed should not do, however, is allow itself to be bullied into slamming on the brakes, drastically raising interest rates the way it did in the 1970s” (italics his).  He emphasized oil prices, and our current inflation is more broad-based, but there is indeed more danger in lifting money costs too quickly than too slowly.  A day later we saw “Global Economy Sinks Deeper Into Turmoil as Fed Prepares to Raise Rates” (Ana Swanson and Jeanna Smialek, The New York Times), emphasizing Chinese pandemic-related delays and shutdowns along with the effect of the Russia-Ukraine war on other countries.

Last, issued only hours before the interest-rate announcement, was Peter Coy’s “The Fed could cause a recession, this economist says,” also in the Times.  “The economist David Rosenberg” was concerned that “in trying to steer clear of the Scylla of inflation, the Fed could inadvertently plunge the U.S. economy into the Charybdis of recession.”  That summarizes my view as well.  We’re not going down to 2% inflation this spring, no matter what we rationally do, but we can keep the economy strong as we get it to slowly improve.  That is the best course, and the numbers, if not the people, will confirm that.

Friday, March 11, 2022

Quits, Willingness to Work, and the So-Called Labor Shortage: Where We Stand Now

There’s no lack of employees, any more than there are not enough $10 diamond rings.  More and more businesses are proving it.  That’s what I think.  What about others, and what are the facts?

For one view, “The free market is solving the labor shortage, Republican Rep. James Comer says” (Ben Winck, Business Insider, December 22nd).  Per Comer, “the labor shortage is just the free market setting a new minimum wage,” and “recent wage hikes “probably needed to happen” for adults to earn a livable wage.”  For that reason, many mandated minimum pay levels have become superfluous, which is the healthiest situation we could have.

Soon afterwards we saw The Washington Post’s “Two forces collided to create the most unusual job market in modern American history” (Alyssa Fowers and Andres Van Dam, December 29th).  Those vectors, with similar effects, were “demand for workers came soaring back at a velocity almost never before seen” and “despite companies going all out to hire, millions of workers either retired early or stayed on the sidelines.”  As well as the pandemic fading, the first factor was caused by “the twin fire hoses of cash, one from Congress, one from the Fed.”  The two were enough to reverse a more-than-40-year situation of the supply of candidates exceeding demand.  Given that, it is trivial to see why employees would increasingly leave their jobs, and to understand some of the causes of inflation.

On January 4th in The New York Times, Ben Casselman told us that “More quit jobs than ever, but most turnover is in low-wage work.”  He offered nothing to document the latter, but included a fascinating chart of the “number of people who quit jobs by month,” which showed us that, between the 2009 beginning of the Great Recession and the pandemic’s early 2020 start, this statistic increased, except for small monthly fluctuations, at a remarkably steady pace, about doubling from 1.7 million to 3.5 million.  A graph of job openings looked quite similar, and both, now, are above these trendlines. 

“Will the big worker shortage end this year?”  That’s what Paul Davidson asked in a USA Today article, printed in the Times Herald-Record on January 16th.  The author focused on those who had been taking time off but were running out of money, and noted that the country’s labor force was 2.3 million higher pre-Covid.  As well as fear of the virus, Davidson named the need to care for school-age children not able to go there, “early retirees,” and more than the usual count of “career switchers” and “entrepreneurs,” the second one probably understated, as in more stable times many more own-business efforts were patently adjuncts to larger work earnings.

“Has the Willingness to Work Fallen during the Covid Pandemic?”  This was the title of a National Bureau of Economic Research working paper issued in February.  Authors R. Jason Faberman, Andreas I. Mueller, and Aysegul Sahin claimed that “the labor market is tighter than suggested by the unemployment rate and the adverse labor supply effect of the pandemic is more pronounced than implied by the labor force participation rate.”  True, or at least seems to be, but the American Job Shortage Number (AJSN) results from that time showed that more people, for example 16.3 million in December, would take available positions, if good enough, than there has ever been advertised job openings.

Are we really in “The Age of Anti-Ambition” (Noreen Malone, Yahoo News, February 20th)?  Malone provided views that “almost no one I know likes work very much at the moment,” that “the office is where it shouldn’t be – at home, in our intimate spaces – and all that’s left now is the job itself, naked and alone,” and that “the emotional relationship of American workers to their jobs and to their employers” is not completely accurately describable as “the Great Resignation.”  One group has been especially likely to leave the workforce, as “in early 2021, women’s labor-force participation was at a 33-year low, returning us all the way back to the era when “Working Girl” was revolutionary.”  Add to that lower employee satisfaction in general and the neo-sweatshop positions at Amazon and elsewhere which are sparking the largest private-sector union growth in decades, and you do not get a time for employment’s highlight reel. 

To bring us back to the title, I end with March 9th’s “Employers are still scrambling to fill vacancies, a new U.S. report shows” (Talmon Joseph Smith, The New York Times).  This installment of the Department of Labor’s Job Openings and Labor Turnover Survey (JOLTS) told us that while “job openings dipped to 11.3 million,” and “some 4.3 million people left their jobs voluntarily in January,” down from November’s 4.5 million, those numbers are still historically high.  And, with demand for goods and services extremely strong, until more employers raise their pay and improve working conditions, they will increase if anything.  People are as willing to work than ever – see the AJSN, or ask any company which has raised pay about the most recent 7.9% inflation rate, has kept productivity demands in check, and has allowed other perks, such as remote reporting, when reasonable and justified.  There are plenty of possible candidates – clean the baseboards, put out the food they want, and they will come out of the woodwork.

Friday, March 4, 2022

February’s Employment Numbers Were Hot Ones, Including AJSN Showing Latent Job Demand Off 800,000

We left January’s Bureau of Labor Statistics Employment Situation Summary by calling it a muddled mess, made that way by peaking Omicron cases and annual adjustments.  This morning’s installment made it clear where we are going.

The two marquee statistics, the seasonally adjusted unemployment rate and the gain in nonfarm payroll positions, starred, the first down 0.2% to 3.8% and the second at half again its consensus projection, 678,000.  Most of the others also came out well.  Unadjusted joblessness fell 0.3% to 4.1%, the count of unemployed was off 200,000 to 6.3 million, and there were 71,000 fewer on temporary layoff or 888,000.  The two numbers best showing how many Americans are actually working or one step away, the employment-population ratio and the labor force participation rate, increased 0.2% and 0.1% and are at 59.9% and 62.3%.  There were some laggers – the count of those out of work 27 weeks or longer held at 1.7 million, average private nonfarm payroll earnings lost 5 cents per hour plus the effect of inflation to reach $31.58, and those working part-time for economic reasons, or keeping that level of employment while unsuccessfully seeking full-time propositions, now total 400,000 more or 4.1 million. 

The American Job Shortage Number or AJSN, the one-number statistic showing how many more positions could be quickly filled if all knew they would be as easy to get as a pizza, shed 832,000 as follows:




Almost all of the change was from the count of unemployed, which cut off 382,000, and the number wanting to work but not looking for it during the previous year, now 412,000 fewer.  The other components seemingly only fluctuated.  The share of the AJSN from those officially jobless fell 0.5% to 35.9%, meaning that almost two-thirds of those taking currently unadvertised positions without existing jobs would have other statuses.  Compared with a year before the AJSN has lost 4.2 million, from lower unemployment (3.3 million) and fewer people not looking for a year or more (1.0 million).  The continued large year-over-year improvements show how strong our recovery has been. 

On the pandemic side, the 7-day daily averages from January 16th to February 16th (or the 15th when the 16th was unavailable) showed new cases down 85% to 124,025, deaths up 17% to 2,328, the number hospitalized off 45% to 84,966, and vaccinations down 52% to 516,988.  Mid-January was the absolute peak of the Omicron variant, with hospitalizations and deaths lagging moderate and large intervals, and all of these numbers are still falling.

This time, the jobs data verdict is clear.  February was a robust month, with no hint that we sacrificed health for work and the only real concerns being that possibly-one-time poor payroll earnings result and some secondary statuses hovering in highish territory.  As Covid-19 has lost influence, demand for goods and services has put many more people back to work, and there is every reason that will continue.  Accordingly, the turtle took a big step forward, and is stretching his legs in anticipation of another one.

Friday, February 25, 2022

Changing Economic Influences from Ukraine to Football, and What They Mean

“Lord, it was an awful time, and then the war started” – Bill James

In some ways, what this modern American thinker wrote about the decade ending in 1919 fit yesterday.  But does it generally? 

The largest world news, of course, was Russia’s Ukraine invasion.  I won’t comment on that itself except that it was depressing, horrendously misguided, and possibly ultimately suicidal for both de facto Russian dictator Vladimir Putin and his country.  But we need to look at what it means to us domestically.

The clearest of several primers just out might be “Russia Is Sowing Conflict in Ukraine.  What Does That Mean for the U.S. Economy?,” by Jeanna Smialek and Ana Swanson, in the previous day’s New York Times.  Points these well-established authors made were that energy prices and those for “raw materials and finished goods” would head higher, “global unrest could spook American consumers, prompting them to cut back on spending and other economic activity,” there will be disruptions in food supplies caused by Russia and Ukraine combining for almost 30% of world wheat exports, we will have further supply chain shakiness, and may see “digital retaliation” from Moscow to American sanctions.  While gold and silver have gained only modestly, the Dow Jones Industrial Average, though up 92 points yesterday, is still over 3,500, or more than 10%, below its January all-time high.  Oil closed at $94.81 per barrel and may well see $120 within a month.  The war may also push unemployment up slightly, but without as much effect as our domestic situations.  All bad, but not affecting everything. 

Otherwise, while the pandemic both worldwide and in the United States has been fading quickly – per the New York Times, Wednesday’s 7-day average of new daily cases was down over 90% from its peak 40 days before – it is still roiling business shipments, with truck drivers often still required to quarantine just after crossing international borders, and, per the November 17th Guy Platten New York Times “The Supply-Chain Crisis Is a Labor Crisis,” doing the same for ship’s crews and even cargo plane pilots.  That sort of deleterious thing has improved, but isn’t over yet.

How else are Americans responding to these times?  Although an ancient practice, we saw that “Shifting Side Hustle Statistics Reveal New Trends About How We Earn” (Jeff Proctor, December 17th, DollarSprout.com).  This source’s “2021 Side Hustle Report” showed that of people with such earning propositions, the share putting in 15 hours per week on them shot up last year from 12% to 27%, over half of “side hustlers” had tried at least three different ones within 12 months, and the portion of those with these extra ventures using income from them “to cover necessary monthly bills and expenses” jumped in 2021 from 27% to 41%.  Almost one-seventh of participants earned more than $1,500 monthly last year, tripling since May 2020, with the largest draws being “enjoying the work” and “flexibility over schedule.”  Soon after Covid-19 became widespread, many started these activities when their regular jobs became endangered or went on hold, but the developments here go far beyond that.  Expect people to be increasingly willing to pay for convenience, as more have less time but extra money.

Something unambiguously a response to where we are now, though, is our response to remote meetings, specified in “After Two Years On Zoom, Workers Finally Learned How To Fool Their Bosses” (Jack Kelly, Forbes, February 6th).  Such techniques include participants “setting their laptop camera at an angle to make them look more domineering” (practiced by two-thirds of respondents), appearing “on an indoor exercise bike to appear disciplined, healthy and dynamic” (just short of one-quarter!), “wearing formal office attire on the upper body, while dressing casually below the waist” (82%), “thinking carefully about their onscreen backdrop and décor” (86%), and “regularly leaving Zoom calls to attend another work meeting that doesn’t actually exist” (56%).  The last, along with other ploys to overstate busyness and therefore production and value, is an old chestnut updated for the current environment, and the upper/lower clothing split has long been common in MBA photo shoots, but some are indeed newer, and, with these robust percentages, seem now to be the norm.  How will management respond?

When all else fails, we have something, as described in “Super Bowl wagers rise to records as online sports betting sweeps US” (Katherine Sayre, The Wall Street Journal, February 16th), long a distraction during as well as outside work time.  Fortified by law loosenings, especially New York state’s January legalizing of it on cell phones, it reached a probable all-time American peak for its largest single betting game.  Look for even more wagers, as fully legal American sites replace unlawful and gray-area propositions from the likes of offshore sportsbooks, and higher tax revenues if relatively few new jobs.  It will spawn social problems from people unable to handle it, but never before have there been so many messages giving telephone numbers for help lines and the like.  We will endure it, probably ending up like Great Britain and Ireland where it is both ubiquitous and largely ignored.  And we will survive everything else here as well.