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 22^nd).  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 29^th).  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 4^th 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 16^th.  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 20^th)?  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 9^th’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.