Job Openings and Labor Turnover Summary
bls.gov
bls.gov
Some facts:
* The number of job openings declined to 10.4 million
* Hires decreased to 6.3 million
* Separations were unchanged at 6.0 million
* Within separations, the number of layoffs decreased but the number of voluntary separations increased to 4.3M
within the number of voluntary separations (see https://www.bls.gov/news.release/jolts.t04.htm):
* Private industry quits up from 3.87M to 4.1M (increase of 140K workers), primarily driven by Accommodation and Food Services (157K more quits. Wow.). The other separations were not particularly meaningful. Next biggest was healthcare (+30K). Perhaps this is due to the traveling nurses phenomena. Everything else was noise and separations decreased in all other industries (in aggregate) other than Hotels and restaurants.
This does point out that the Hotel and Restaurant industry is still being hit hard. Note that just because something is a "quit" doesn't mean that it was voluntary per, se. It could be a buyout offer, or people quitting who have had their hours reduced or are earning much less in tips to keep working. Hotels and Restaurants are definitely hurting due to ongoing lockdowns and reduced travel.
Note that in Information, separations declined. In Professional and Business services, separations went from from 697K to 706K (+1.3%). That is statistical noise.
It's also the case that my observation while traveling to a number of different places the last couple of months is that a lot of restaurants are still having trouble getting staff. I got into one (crowded) restaurant just before it was closing at 3pm on a Sunday and it wasn't reopening until Thursday. A lot of mid-week closures in the city that didn't seem to be the result of weak demand.
Now, could they just increase wages until they hire enough people? Possibly. But if it's not a coordinated effort, they'll probably lose out to a competitor and presumably higher prices have some effect on collective demand given that eating out is not a necessity in general.
I ate at another restaurant in another city that had explicitly jacked up prices considerably--like maybe 40%. It was empty even though other restaurants in the area looked pretty busy. And service was still pretty bad.
If you look at someone like a waiter, he is as busy as the number of customers and the amount they are ordering. If he is spending a lot of time standing around, well, then his wages are going to have to be cut. It could easily be cut to such a low level so that the waiter can't pay his bills and has to quit.
So restaurants can be in the simultaneous situation of not being able to hire enough workers to handle some peak hours, but also not being able to pay those workers enough to work full time for them.
And raising prices again results in fewer customers who can always eat at home or order delivery, which doesn't need the waiter. Restaurants, if they could just raise prices and earn more revenue, would do so. They charge as much as they can, assuming they are well run, to already maximize revenue, regardless of what they pay waiters.
You have even a bigger problem with hotels. If the hotel doesn't have enough guests, it's going to have to either lay off the cleaning staff and hotel staff, or reduce their hours and pay. And again, that could mean that the hotel staff have to quit. Here, too, the hotel is already charging what the market will bear to maximize revenue.
It's just a screwed up labor market when it comes to Hotels and Restaurants.
In general, I'd observe that hotel pricing, while certainly not dirt-cheap, is at relatively "rational" levels in places where you were easily getting in the $300-400/night range pre-pandemic. (And that was for generally midrange business hotels.)
My guess is that both restaurants and hotels plunged a lot right at the beginning, and now they've recovered about 2/3 of that and that recovery has now stalled. People are still trying to figure out what is sustainable and what isn't, in terms of staffing.
We may not see this industry rebound to pre-covid employment levels ever. For instance, Uber delivery and other services may just be a thing and permanently shift labor away from waiters, and hotels may have permanently ceded market shares to AirBnBs or other lower service offerings. Maybe in the future, daily cleanings will be seen as some kind of odd luxury.
But I think it's all up in the air right now.
Just to take one of the most obvious examples, there will probably be fewer person days in downtown offices which has all sorts of ripple effects. And I expect fewer flights to do a quick meet and greet lunch or to have various internal pro forma meetings every single quarter.
I've seen some surveys about this sort of thing but no one really knows what it will look like until it plays out.
I'm imagining that the 20 or 30 minutes of labor is the majority of it. So like $10-15 dollars.
Where am I going wrong?
Just one more cost (from the perspective of the consumer) to take out of the system, which someone was making money to supply.
But aside from some pizza delivery in college, I've never been in a situation where I had access to cheap and decent takeout delivery options.
It was a screwed up labor market. Basically, the bottom two deciles working for garbage wages and working conditions to the benefit of everyone else.
If those people can find better work/compensation options, good for them, even if it means less eating out and traveling for others.
I would love to see higher pricing for late night meals or overnight/weekend/holiday shifts at a hotels, restaurants, and other leisure businesses.
I'd rather not have the options to eat at places where people hate working, if it meant that person could have a better life, I'd be bummed when I'm craving something, but I'd find an alternative.
The wealthiest people and upper class they probably couldn't survive if the only option was cooking something themselves. They'd probably end up hiring a personal chef for 500k/year, or something elaborate... There's so many jobs the top levels would never volunteer to do, not even just for a podcast or something. Dirty jobs or jobs that just suck.
I consider these jobs basically modern forced servitude. Make no mistake you are forced unless you like being homeless and starving.
I'm anxiously watching what happens, something has to balance out soon. It happened in the 1920s, and I think 60 years earlier... we're just do for a great re-balancing. It won't be pretty, and it'll be harder than any before it (global warming and all) but if we succeed, maybe post-scarcity could be in reach.
Why would anyone need to volunteer to be in the servant class?
The biggest hinderance to UBI is the 50% to 95% class not being able to afford all their normal luxuries since they are based on being able to purchase cheap toilet cleaning labor, due to the circumstances in which the people cleaning toilets were born.
So many of people’s expectations of quality of life rely on them being above others on the socioeconomic ladder, that messing with this ranking is a political minefield. But supply and demand does not care for politics, hence you see the gutted US manufacturing moving to China, and the current moaning about “labor shortages” when migrant Mexican/Latin american labor slowed down due to Covid.
https://www.washingtonpost.com/technology/2020/10/29/amazon-...
If enough such people decided not to try to come back when restaurants reopened, you'd see restaurants struggling to attract employees in a tight labor market and the resulting employees being, on average, less experienced / skilled.
> Now, could they just increase wages until they hire enough people? Possibly. But if it's not a coordinated effort, they'll probably lose out to a competitor
Or they'll be the place that's reliably open all week!
>> Over the 12 months ending in August 2021, hires totaled 72.6 million and separations totaled 66.7 million, yielding a net employment gain of 5.9 million. These totals include workers who may have been hired and separated more than once during the year.
It’s a good thing that the workers have the leverage to ask for better pay, condition. The striketober [1] may even end up being a good thing for the economy.
[1] https://twitter.com/fareedzakaria/status/1452357666236420104
Average hourly earnings have increased from $24.79 in September 2020 to $26.15 in June 2021. Great! How much has the price of goods and services increased during the same time? Rising wages that don't keep up with worrisome and probably-not-transitory inflation are not a good thing.
And the whole bit about entrepreneurship sounds weird. What kind of business is the average person who couldn't find a job with acceptable pay really starting? Are these newly minted "entrepreneurs" really starting businesses that will be capable of paying themselves decent wages and providing adequate benefits?
We can wager for honor, if you like.
1. Vax mandates. I thought the admin would have enough sense to impose these after Christmas (or not impose them at all), but they're dumb enough to fuck up the economy right as we go into the holidays. I predict much regret in the midterms.
2. Inflation - unskilled workers might not be able to afford food/shelter anymore at their current level of income, and will therefore be forced to find better paying jobs. Upper middle class me is starting to feel the sticker shock at the grocery store ($350 at Costco the other day), I can only imagine how it is for folks of lesser means. Worse, this will be ongoing as inflation always outpaces income growth at the lower end of the labor market, and "better paying jobs" will cause even more inflation as costs will be passed onto the consumers.
I do not see why this must be true. It might affect upper middle class people shopping at Costco, but there is no reason there cannot be absolute gains made at the very bottom in terms of wages and working conditions. The people having to shop at dollar tree or working evenings and weekends is who might really feel the lift. They were not eating out or going on vacations anyway.
For example, if bars and clubs lose their illegal barback labor because immigration from Mexico has slowed or stopped. Or strawberry farmers. Or people stop having 3+ kids, or even 2+ kids, and have them later in life, and the demand for people willing to change bedpans in nursing homes for $15 an hour is much higher than supply of labor.
This is not an inevitability.
Wages can rise for the bottom deciles more than prices rise. The difference would come from wages rising less or even decreasing for the upper deciles. It would also cause asset prices to rise less (or maybe even decrease) as labor expenses rise.
In other words, wealth transfer, where the income/wealth gap decreases. As an illustration, someone used to getting Starbucks every day can only get it once per week now. And someone who used to never be able to buy Starbucks can get it once per week now.
I've seen this shit happen with my own eyes and experienced it on my own skin in the 90s in Russia. I didn't have any money back then, but my parents had a little, and they lost pretty much all of their life's savings.
> There's also no plausible mechanism, short of a dramatic reduction in labor supply, that could drive a macroeconomic trend like this.
Is proportion of working age population and fertility rates not going down? Of course they can be offset with immigration and automation, but will it be for the types of labor requested by the increasing proportion of old people?
I do not know the future for sure, but one big variable that has changed is slowing population growth. The government can print all the fiat it wants, but it will not make the necessary labor appear out of thin air if people are not having kids at the same rate as before. Immigration and automation might blunt the impact of slowing population growth, but it may not be able to absorb all of it.
Any fertility-related stuff will take decades to play out, and it'd have to outpace off-shoring, legal immigration, and illegal migration, none of which is the case today or will be in the foreseeable future. It is not the case specifically for this reason: the rich like abundant supply of cheap labor. They achieve this abundance through both reducing demand and increased supply. Worse, reduced fertility will result in state's inability to provide social services and healthcare to the elderly poor, which means rising taxes and therefore further acceleration of off-shoring. In this regard we are too very much unlike China where the young are supposed to care for _their_ elderly.
If our government thought at least 20 years ahead, they'd be trying to stimulate the birth rate, boost manufacturing, and they'd clamp down on the borders. But their planning horizon does not extend beyond 4 years, unlike, say, Xi Jinping's.
it is hubris to think that mere mortals can predict complex chaotic systems 20 yrs ahead.
I think allowing people the freedom to choose and let individuals make the best choices available to them is really the only "good" way forward. Planning an economy, or planning population growth, as seen done in the past, had not ever worked out.
In short, there is no way we can fix this (as far as I can tell) without major radical restructuring of how we distribute wealth. I'd say the odds of that happening are pretty slim.
The mechanism would be lower supply of labor relative to demand.
And many, many people have experienced increases in quality of life and increases in the wealth. It just happened to come close the gap with the middle in developed countries, not the richest.
As a result COVID is pushing people over the edge and making them choose taking a break or prioritising their health.
I know that's highly generalised but I think COVID and its associated impacts for some, have been the straw that broke the camel's back so to speak.
The solution seems rather obvious: don't construct a society where a large amount of people are forced to live on the edge while at the same time pretending they are replaceable. Once replacements run out (like is happening right now), we suddenly lost something we apparently depended on as not-on-the-edge consumers.
Imagine what happens if there is news of an extinction-level asteroid about to hit the earth. Responding to a real crisis like that might end humanity before the event occurs!
It's better to talk about percent of labor force, given that the size of the labor force grows over time.
A quits rate of 2.7% is high -- it's a series high, but the series only goes back to 2000, which means we just have two business cycle peaks to compare against.
This gives you a better view:
https://fred.stlouisfed.org/series/JTSQUR
Quits rates peak around business cycle peaks -- people don't quit during downturns, obviously. So in the last two peaks, the quit rate was 2.2% at the peak before the Great Recession, and 2.4% at the peak of the pre-covid recession, so this cycle is at 2.7% now. Looks like the quit rate is increasing, but interestingly, the layoff rate is decreasing, so that total turnover is not high at all.
But we have a screwy labor market at the moment, particularly in restaurants and hospitality, which is driving this number. It will be interesting to see what happens once we get out of the lockdown situation and things settle down.
Thanks for posting the links!
I belive long covid is a thing, I know people who were unable to work for a long time after much less serious health issues. But I'm not sure if long covid is a major factor here.
https://www.spiegel.de/gesundheit/corona-fast-jeder-fuenfte-...
It doesn't help that places like the US are filled with idiots open to taking random drugs peddled by right wing media. But I'd generalize, the the general US being one of the few countries that allows rampant drug ads on most media and allows doctors to reap from recommendations of certain drugs.
How can we deal with living in a society which feels it is post truth? Humans rely on consensus, but if the consensus mechanisms are blatantly failing, we have very little ability to sense the actual truth of things.
These days I look back on how much I used to think was truth, and I later came to a realization that it was actually illusion... I don't take much as blind fact these days, and try to stick close to things I can easily understand and get immediate feedback on, such as math, engineering and growing plants. Unfortunately, since so much of my life also consists of economy and psychology, I can't completely ignore the facets of reality out of my control.
At least when people tell me they actually believe in a conspiracy theory, they can give me some pre-formatted viewpoint which I cant test their premises against.