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.