Published on: May 10, 2021
by Kevin Coupe
There is an interesting piece in the Washington Post that looks to put into context last Friday's jobs numbers - there reportedly were 266,000 new jobs created during April, a number universally agreed to be disappointing, though there were different perspectives about the degree to which this reflected the robustness of the nation's economic recovery.
One of the central points in the debate is whether government subsidies provided because of the pandemic have created an entire cohort of people for whom it makes more economic sense not to work. (I've certainly heard this from a number of MNB readers desperately seeking workers.)
The Post writes, however, that "another way to look at this is there is a great reassessment going on in the U.S. economy. It’s happening on a lot of different levels. At the most basic level, people are still hesitant to return to work until they are fully vaccinated and their children are back in school and day care full time. For example, all the job gains in April went to men. The number of women employed or looking for work fell by 64,000, a reminder that child-care issues are still in play.
"There is also growing evidence - both anecdotal and in surveys - that a lot of people want to do something different with their lives than they did before the pandemic. The coronavirus outbreak has had a dramatic psychological effect on workers, and people are reassessing what they want to do and how they want to work, whether in an office, at home or some hybrid combination.
"A Pew Research Center survey this year found that 66 percent of the unemployed had 'seriously considered' changing their field of work, a far greater percentage than during the Great Recession. People who used to work in restaurants or travel are finding higher-paying jobs in warehouses or real estate, for example. Or they want a job that is more stable and less likely to be exposed to the coronavirus - or any other deadly virus down the road. Consider that grocery stores shed over 49,000 workers in April and nursing care facilities lost nearly 20,000.
"Economists describe this phenomenon as reallocation friction, the idea that the types of jobs in the economy are changing and workers are taking awhile to figure out what new jobs they want - or what skills they need for different roles."
From my perspective - and I'm just a poor country pundit, not an economist and certainly not a politician - it seems to me that all of these scenarios may have a measure of truth … and I'd pay a lot of attention to the "reallocation friction" argument.
My first reaction when I heard the jobs numbers was that they were disappointing, but that it probably makes sense not to make too much out of a single month and have knee-jerk reactions to one set of numbers. If the trend persists, a stronger reaction will seem appropriate.
I do think that there are going to be cases in which some people actually are making more money not working than working … though this may say more about how little some parts of the workforce make than anything else.
But I also think it would be a mistake to ignore the notion of a great reassessment taking place. The pandemic has been a tectonic event in many people's lives, forcing many to rethink their decisions and circumstances and assumptions. In the same way that my parents where children of the Depression, an event that changed their behavior forever (I think of my dad every time I turn off a light), it probably is a fair observation that the pandemic will have the same impact on many people.
(Though let's be clear - for many people in the lower regions of the economy, reconsidering their circumstances is a luxury they cannot afford. They just want to survive … and figure out child care and elder care and health care. For them, reallocation friction is a fiction.)
I find myself wondering if there are Eye-Opening ways in which businesses - and for the sake of this argument, I'm thinking about retailers - should be rethinking how they hire and deploy and manage their people going forward, perhaps with a greater emphasis on full-time employment and career building, and certainly with an understanding about how vulnerable these people may feel about their well-being and futures.
I'm sure of very little in this discussion, largely because I appreciate the limitations of my own knowledge and education. But I am pretty sure that there are a lot of moving parts, and that to assign blame to one think or accept simple solutions is a mistake.