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Why is U.S. labor supply so low?

90 points by snowytrees 5y ago

pksebben 5y ago
The conclusions this article comes to re: the reason for the shortage (that is, that pandemic unemployment and emergency assistance prevent people from looking for work) are backed up by an article that predicates all it's findings on studying lottery winners: How Americans Respond to Idiosyncratic and Exogenous Changes in Household Wealth and Unearned Income This comes off as more than a little lazy at best, and totally disingenuous at worst.
- diordiderot 5y ago
  Could you do tldr?
cable2600 5y ago
Baby Boomers are retiring and dying off. So many of them held jobs without a college degree because they didn't need one out of high school or the military. That and covid-19 killed the job market as people found they could last on unemployment rather than work a job.
- Supermancho 5y ago
  > people found they could last on unemployment rather than work a job. I haven't found this credible (this year, at least). Unemployment doesn't last forever and it's decidedly less than what they were making before. The former is more compelling than the latter, but the basic economics tell me that it isn't ppl living out of hallways that has caused a shortage of labor. How many years can this be reasonably asserted? I think it's a combination of the inflation and the building up of debt/loss of stability due to the pandemic. While the unemployment was nice, it's long gone and that labor (by the numbers) didn't all die off.
  - fragmede 5y ago
    There were absolutely people that were making more on unemployment, at the height of the pandemic in 2020. (Specifying 2020 because more people have died from Covid-19 in 2021 than 2020.) Depending on the state, unemployment was some $900/week. That works out to $46.8k/yr, which is below the official federal poverty line of $52k/yr. But there are people who live there. That these people seems to have been the undervalued backbone our economy, working 3 part-time jobs, 7 days a week, is extremely depressing.
    - tzs 5y ago
      > That works out to $46.8k/yr, which is below the official federal poverty line of $52k/yr. The federal poverty line depends on household size, and only reaches $52k/yr when the household size reaches 10 people. For a household of N people in 2021 it was 12880 + 4540 (N-1). Did you perhaps mix the poverty line up with the ACA subsidy maximum income? The ACA subsidy maximum income is 4x the poverty line, which works out to just under $52k for an individual?
      - fragmede 5y ago
        Ah thanks. I was confused, $52k is SF median income.
    - simonsarris 5y ago
      > That works out to $46.8k/yr, which is below the official federal poverty line of $52k/yr. What on earth? It's $12,880. Not 52k. How does 52k even pass the sniff test for you? https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-register-references/2021-poverty-guidelines https://aspe.hhs.gov/topics/poverty-economic-mobility/povert...
      - deleted 5y ago
        [deleted]
- taneq 5y ago
  > people found they could last on unemployment rather than work a job. The real question to ask when considering anyone to whom this genuinely applies is what kind of job provides less net benefit than unemployment?
  - josephcsible 5y ago
    You seem to be assuming that the job provides too little and unemployment provides the right amount, and ignoring the much more likely case that the jobs provides the right amount, and unemployment provides way too much.
  - hansel_der 5y ago
    i guess taking part in scociety is a net benefit on it's own, but the low-pay job sector is booming in no small part due to the rise of automation at discharge/distribution platforms.
- lrem 5y ago
  Who doesn't know anyone who subsided off social benefits well before the pandemics?
  - arbitrage 5y ago
    Lots of people. What's your point?
    - lrem 5y ago
      Saying that "job market was killed by people realizing they can subside off benefits" simply ignores the reality. A small but non-trivial percentage of people hold jobs only as much as they need to get the benefits back. Each such person knows a hundred more people, that now also know one can do this. But most of them don't like the idea of not having a job for cultural reasons. On top of that a job is more money, which is nice.
bick_nyers 5y ago
Nearly a million adults died from COVID too, I'm sure that affects the labor supply. How many millions of people are we "short" in the labor supply precisely?
- TeeMassive 5y ago
  800k to be more precise. And they're not working age adults, the vast majority of covid deaths happened in elderly population (70+). And even the 800k figure is disputed as Covid being the primary cause of deathin all of those.
  - fragmede 5y ago
    The 800k is disputed as being far too low. Including for excess deaths that aren't directly attributed to Covid, the count is well over a million US deaths during the pandemic.
    - TeeMassive 5y ago
      > The 800k is disputed as being far too low. Interesting, but since it is said without anything to back it up it can also be as easily dismissed. I based my data on https://usafacts.org/visualizations/coronavirus-covid-19-spread-map/ https://usafacts.org/visualizations/coronavirus-covid-19-spr... > Including for excess deaths that aren't directly attributed to Covid, the count is well over a million US deaths during the pandemic. Correlation doesn't mean causation. Isolation also creates excess deaths. Economic hardships also creates excess deaths. Stress and anxiety create also excess deaths. Alcohol and drugs also create excess deaths. All of these increased since the pandemic.
      - crooked-v 5y ago
        The exact cause doesn't really matter in this context. The point is that more than that have died compared to a normal year.
        5y ago
landemva 5y ago
- LittlePeter 5y ago
  Those screaming at you to get jabbed and wear a mask are not Karens. Karens are anti-vax and anti-mask, according to my extensive research of memes.
  - evv555 5y ago
    Sounds like extensive research of your own filter bubble.
  - hansel_der 5y ago
    have to go looking for memes of pro- vs. anti-vax karen
  - bpodgursky 5y ago
    It is well within the Karen meme archetype to report a service employee to his/her manager for not being vaccinated or masked.
  - wiseowise 5y ago
  - propogandist 5y ago
    you haven't researched much, if that's the conclusion you've came to. Here's an example from few days ago, on a Delta flight https://twitter.com/stillgray/status/1474606759146708992?s=20 https://twitter.com/stillgray/status/1474606759146708992?s=2...
- cpursley 5y ago
  I can't upvote this enough; some people live in an alternative universe full of unicorns and bubble wrap but short of a basic understanding of economics and statistics.
- presentation 5y ago
m0llusk 5y ago
What they mean by "so low" is a change of just over one percent, and their explanation is that the modest benefits programs that ended in September are keeping people away from work in December. This is garbage from people who demonstrate no interest in comprehending the economy.
jl6 5y ago
I suspect there’s no single cause (as is the case for all complex issues), but I’ll just respond to those saying that the 1m+ excess deaths can’t be a cause because those people were predominantly retired: you need to consider the second-order effects. When the 70+ population dies, dealing with the consequences is tough, both emotionally and organizationally. It’s totally plausible that their working age children need to take extended time off work to deal with grief and estate wind-up. And those who inherited substantial estates may not see the need to return to work - at least not right away. Their own retirement plans may have been effectively moved forward.
- amanaplanacanal 5y ago
  Yep. I think a big chunk of people decided to retire early. This isn’t predominantly young people leaving the labor force. It’s older people looking around and realizing life is short.
  - LinuxBender 5y ago
    At least anecdotally I can agree. Several of my coworkers and I retired early. In hind-sight I should have done it sooner.
  - CubsFan1060 5y ago
    This has some interesting numbers: https://www.cnn.com/2021/12/15/economy/labor-force-retirement-great-resignation/index.html https://www.cnn.com/2021/12/15/economy/labor-force-retiremen... "Nearly 70% of the 5 million people who left the labor force during the pandemic are older than 55, according to researchers from Goldman Sachs, and many of them aren't looking to return" I suspect that many of those left good jobs. And then everyone essentially took a step up in jobs. So for the lowest level, there just aren't people to fill those jobs now.
- deleted 5y ago
  [deleted]
- mberning 5y ago
  Thank you for this response. I completely agree and get tired of the reddit tier “lol just pay more” hot takes. I think if paying more were the solution the labor shortage would be over quite quickly. Around where I live wages have not only gone up for menial jobs, but companies are offering large sign on bonuses, guaranteed raise after x days, daily pay, and “job on the spot” interview slots every day. Somebody can walk in off the street and get a job at the local gas station making $15+/hr, a bonus, and a guaranteed raise if they stick with it. And yet they still cannot find anybody to work. Paying more might solve the problem on a micro scale, but at a macro level the shortage will remain. Unless there are a huge number of people sitting on the bench willing to get up at some specific threshold. But as you point out for many people there might not be any amount that would motivate them to get off the bench at this moment.
zaptheimpaler 5y ago
So a huge pandemic has been raging through the world for almost 2 years now, massively reconfiguring the world in so many ways. lockdowns, deaths, fear, government subsidies, cheap money, GME and unions, several global mindshift changes e.g of how crucial low wage jobs are or how short life is. But the bean counters are confused about why “labor supply” is low. hmmmm Or maybe they aren’t confused, they're worried. > More broadly, the participation rate has generally underperformed in economies with large increases in household liquidity. The most notable case in point is Chile, where the participation rate declined by 5pp as fiscal support and pension withdrawals flooded households with liquidity. “if people have money they might not work at jobs”. jobs that have systematically trained them over decades to expect a paycheck but nothing else, not loyalty or satisfaction or upward mobility or any semblance of agency. wow. fucking clueless.
- diordiderot 5y ago
  When media speaks about a good or bad 'economy' it means is capital being returned at near record rates, not can most people afford a subsistence existence without soul crushing levels of anxiety from fear of accidentally becoming destitute
  - chii 5y ago
    > not can most people afford a subsistence existence without soul crushing levels of anxiety from fear of accidentally becoming destitute This is the human condition - through all the ages, most people would feel this way, and will continue to do so in the future. Until the day free energy and star trek level replicators exist, all wealth and all goods and services that people consume will need to be created by people. It's just the relative amounts that differ between the ages, but unfortunately, people don't compare themselves to people 100 years ago, they compare themselves to the jones.
- presentation 5y ago
  Is the labor shortages as bad elsewhere in the world? Plenty of places with great social safety nets, not just now but all the time. Treating the vast majority of people as wage slaves seems particularly American.
aylmao 5y ago
I find it interesting that when discussing this nobody mentions immigration much or at all. The number of green cards awarded took a huge dip in 2020 [1]. As an immigrant myself, I heard a lot about USCIS (United States Citizenship and Immigration Services) slowing down considerably. Could the effects of the pandemic on immigration, on top of the slow down in legal immigration that happened during the previous administration [2], not be a significant part of this perceived shortage in labour supply? [1]: https://www.pewresearch.org/fact-tank/2021/03/22/key-facts-about-u-s-immigration-policies-and-bidens-proposed-changes/ https://www.pewresearch.org/fact-tank/2021/03/22/key-facts-a... [2]: https://www.cato.org/blog/president-trump-reduced-legal-immigration-he-did-not-reduce-illegal-immigration https://www.cato.org/blog/president-trump-reduced-legal-immi...
- kqvamxurcagg 5y ago
  Exactly. This reason is entirely down to the lack of immigration due to travel restrictions and its effects on the wider economy. The media hasn’t really reported on this but it has been obvious for the past year. In a world without mass immigration to the west wages at the lower end would he substantially higher.
  - aylmao 5y ago
    Speaking of wages, another factor that could be interesting to consider: it's well known that Mexico is by far the country has most immigrants in the USA. The current president of Mexico, who took office right before the pandemic started (Dec 2019), has been increasing the minimum wage at an accelerated rate [1] and set up a special economic zone along the Mexico-USA border. This zone has a minimum wage that's almost twice the national minimum wage, and lower taxes for companies [2]. The minimum wage there is still much less than the minimum wage in the USA, although I don't know what the average wage would be in one vs the other. Nonetheless, along with the rest of incentives immigrants have to remain in their country, I wonder if this could be leading to less immigration, on top of travel restrictions, etc. [1]: https://www.vynmsa.com/blog/en/economy/minimum-wage-in-mexico/ https://www.vynmsa.com/blog/en/economy/minimum-wage-in-mexic... [2]: https://www.gob.mx/se/acciones-y-programas/zona-libre-de-la-frontera-norte https://www.gob.mx/se/acciones-y-programas/zona-libre-de-la-...
bigmattystyles 5y ago
I find it surprising that no one in the comments has mentioned that at least in the US, immigration, documented and undocumented is down. Especially documented. For all the negative comments from some circles about immigration, it doesn’t surprise me that it would contribute, at least in part, to a labor shortage.
- drdec 5y ago
  I don't know if decreased immigration is a cause of the current situation, but it does strike me that increased immigration is a potential solution. Unfortunately it appears unlikely due to the political situation in the US.
hungryforcodes 5y ago
I think the real question is how people are actually paying their rent and buying food. If they don't need jobs, then they must be solving this problem somehow.
- snarf21 5y ago
  I listened to a recent podcast on NPR that talked about this. (This is just one source so find others.) One couple was drawing down retirement money and slashing spending rather than work horrible conditions in tv/movies. They both said that they would have to start working more soon as their money buffer was getting small. I think there are a lot of people at the lower end that are doing this. Using the government payouts, plus savings, plus cutting costs to just take a break and reset what work is and what it should be.
  - hungryforcodes 5y ago
    A "break" from work I agree. A "reset", I'm not so sure (though I'd love it to be the case!). If they're drawing from their savings and so on, then at some point they'll have to go back to whatever shitty jobs are available -- though now they and society will be much more brittle as the retirement buffer is gone. If they took the time and money to reinvest in their skills -- I'd agree it would be a reset. But the cynical side of me says they are not, most of them. It's just a question -- everyone is talking about this great revolution -- however who's paying the rent? I keep coming back that question. Maybe I don't have all the information, but I sure have to pay rent. I wonder how others do this too. Thanks for your suggestion of the NPR podcast -- I'll check it out :)
    - DarylZero 5y ago
      It's very simple, when people can't pay rent, they move more and more people into fewer and fewer apartments.
- asciimov 5y ago
  The older people fully own their homes, so they don’t have to pay as much to sustain their lifestyle. Then the younger lower wage people either moved in with family, got roommates, or are now homeless.
grumple 5y ago
So there are a few obvious issues - people don't want to work for low wages with no other benefit to their lives, so if they don't have to, they won't. But the blame is on companies here: if you raise wages high enough and treat your employees well, someone will do the job. In order to suppress wages, we've generally kept immigration high and kept social services low. As immigration has declined and we've recently injected cash directly into the hands of the people, wages have climbed. But I think there's another elephant in the room that nobody has mentioned: the accumulation of wealth and its staying power over generations has created a large class of people that don't have to work (and have never had to). You don't have to be a billionaire to be in that class. If you inherit (or are gifted) a home, the amount of income you require to live is very low, certainly less than full time wages. If you additionally inherit money and have it modestly invested, you could easily live off that money and never work. Some of these people work, but not all, and they are quite able to take long breaks in employment during a pandemic if they choose. This class of people continues to grow every year as our methods for taxing wealth are ineffective. Frankly, assuming most of us are software devs or work for vcs - our children will probably be a part of this class of people. Some of you reading this already are. But I don't know how an economy continues with this class growing the way it has (ok, the answer is the wealth will eventually get inflated away but that will be a big problem for all of us). There's also another class of people that are perfectly happy working part time and just getting by - this group is happier working a bit but not full time, and certainly not multiple jobs. The lack of motivation is tied to the lack of advancement options for all but a few. If you didn't take one of the few high-income tracks in university, and you don't have the technical chops for software, or the physical durability for a trade, there aren't great options for you to make a lot of money.
- turbinerneiter 5y ago
  I think this is a good point. In the upper end, people don't need to work anymore. On the lower end, people don't see a reason to try anymore. I'm in the top 30% percent bracket of income (despite being at the beginning of my career). I save more than 30% of my income. This year, the house prices increased so fast, that the downpayment roses by more than I could save in a year. I can see people who are in the lower 30% bracket just giving up facing these numbers. What's the point? They could try all they want and work as hard they can and still not be able to make it. Might just as well do the minimum to scrape by and try to get ahold of some VR googles.
jleyank 5y ago
How about: Aside from salary or possibly social connection, there’s better places to work that the us. If people are going to work for crap pay, there’s far less tiring roles than pickers or servers. These have been filled with domestic or imported underclass. See Brexit. If you don’t have to work to do what you like, why would you? Schooling looks pretty good right now. Why work just to pay child care? I could go on, but as many have written covid has given everybody time to think rather than just go along day to day. Thinking is dangerous to the status quo.
akagusu 5y ago
There is no such thing as labor shortage. There are low wages, poor working conditions and companies treating workers like slaves. Everything else is just an excuse. Treat workers like humans, pay them fairly so they can live a meaningful life, give them a good place to work, and they WILL work.
- throwaway75787 5y ago
  I am holding out for a professional position where I will work 24-32 hours per week with benefits. I am not doing the full-time "you own me" rodeo again.
  - User23 5y ago
    Get a full time remote job from a company that treats their employees like adults. You can easily get whatever their equivalent of a "meets expectations" rating is on 4-5 hours of work a day. And ethically you're doing nothing wrong, because the company is formally saying it's satisfied with your work which means they're getting what they bargained for.
    - sirspacey 5y ago
      As someone hiring engineers remotely, this is explicitly our offer. About 4 hours is peak productivity. We don’t need you to work extra to satisfy our god complex.
      - Retric 5y ago
        No need to self censor the company name in that comment.
      - Infernal 5y ago
        Where can one apply?
    - throwaway75787 5y ago
      It has to be official from now on. There is going to be no potential for a slippery slope of after-hours messages or pizza party overtime. I have even set up a VoIP number with a 9-5 M-F time condition for use with applications and employers. I don't have it in me to to work in front of a screen all day, although I understand that works for many on this site. I don't care if the workplace is an open office, a cashier's stool at a supermarket checkout, or a train driver's cab.
b-team 5y ago
These guys are hacks. There are papers by serious economists on this question.
sys_64738 5y ago
When I read this it feels like the underlying question to be answered off it is "how do we force more people back to work?". Work shouldn't be mandatory.
- PopAlongKid 5y ago
  "Nebraska’s quandary: Can it force more citizens to work?" https://apnews.com/article/coronavirus-pandemic-business-health-nebraska-pete-ricketts-5cf5cef955a79c466281fd43f32cc358 https://apnews.com/article/coronavirus-pandemic-business-hea...
  - JaimeThompson 5y ago
    ""I don't think mask mandates are appropriate," Ricketts told reporters. "I think they create resistance. Masks are just a tool, not the only tool, (and) they are not a panacea to solve all the problems."" It will be most interesting to see how Ricketts spins mask mandate == bad / forcing people to work == good.
- gruez 5y ago
  >Work shouldn't be mandatory. How do you think that would work when our economy isn't post-scarcity?
  - sys_64738 5y ago
    Automation and robots. Think about what Universal Income is all about.
    - gruez 5y ago
      > Automation and robots. But we're actually not there yet, otherwise business wouldn't be clamoring for workers.
- josephcsible 5y ago
  It shouldn't be required by law or anything like that, agreed. But if you can work but choose not to, nobody should be giving you any money or paying for anything for you.
silexia 5y ago
The antiwork movement is extremely popular here on HN. Supporters of this view are brigade downvoting any view they see as opposed to this: especially if it suggests that government handouts result in people not wanting to work. I think the desire for better pay and better work conditions are well founded. Most of our Fortune 500 companies are run by hired gun CEOs, not founders, that are trying to extract maximum short term profits at the expense of employees and customers and the environment. That is evil behavior. The solution to bad companies that mistreat people is not stick out heads in the sand and claim that no one should need to work, the solution is to remove government monopolies (parents) granted to these companies, government contracting to them, and government bailouts. We also need to find ways to expose the predatory financial classes: venture capitalists mislead entrepreneurs by saying they will support their vision but then fire the founders at high rates, private equity pays founders to leave then makes money by harming customers, employees, and the business, and the stock market gives perverse incentives based on short term profit. Read Henry Ford's autobiography, he has a lot of brilliant ideas including keeping all of his companies equity so he could retain control and do things like cut prices every year on his cars while paying employees double the going rate.
egypturnash 5y ago
Early on in this article there is a graph of the change in US, Canada, and EU wages over the past year. It is in "percentages of change". I suspect that this article's question would be answered much more quickly if these wages were graphed in something like "value in the same currency".
pylua 5y ago
Pay bus drivers and school janitors and cafeteria workers enough to own their own home. Pay everyone enough to live the life they deserve to live as humans. For some reason we have gone down the path of exploiting and demeaning people and there is no turning back. I am surprised that both parties refuse are so disconnected from reality.
- trixie_ 5y ago
  You are disconnected from reality if you think more money is what creates more jobs or homes. The government literally just did that and we ended up with more supply chain problems and more inflation. Money is paper meant to balance resources, money does not magically create more resources. That’s where education and technology advances come in.
  - pylua 5y ago
    I do not believe that "more" money will create jobs or homes. The bigger question is why does it make sense for companies to optimize for luxury apartments or mansions, that are well out of reach for most people. Why does our system of capitalism incentivize that? Should it not incentivize taking care of society? Why have workers wages been stagnant over the past decades? It is clear that the capitalism practiced in America is starting to harm society at a fundamental level. Why does our government allow companies to pay wages that are so little people are basically ostracized from education, health care, and housing? That is messed up. Why does our government allow companies in the United States to benefit off of cheap labor in countries that do not treat their citizens fairly and exploit them? I'm not saying that I have all the answers here, because it is a complicated problem, but it is important to bring the obvious truths to the forefront.
    - trixie_ 5y ago
      If you want to see capitalism with a lot less rules, harming the poor and environment then go back 50 years. Then go back 100 and 150. It gets much much worse than where we are today. If you have perspective you’ll realize that while things are never perfect, they are improving. And you do recognize ‘why’ as well in your own post - the government. The gov sets the rules and playing field for capitalism to regulate resources. Still you don’t understand when you say, why don’t companies pay higher wages. As that would create more healthcare, education or homes, as opposed to inflating prices. I’ll say it again, money doesn’t create resources it only balances the limited resources that exist right now. To increase resources in a sustainable way requires improved education and technology to increase productivity.
JamesLeonis 5y ago
Funny how Goldman Sachs completely misses the entire PPP program, with a total value of $791,242,381,400 as of the latest report from the SBA. Also funny how they missed that 83% of the value of all the 2020-21 Paycheck Protection Program loans were forgiven as of December 19th, 2021 [1]. That's a total value of $653,038,613,899. That's nearly as large as the 2008 bailouts. Even that doesn't tell the whole story because 94% of the 2020 loans alone were forgiven, and 2021 is on track to meet it. Why only talk about one bailout, GS? [1]: https://www.sba.gov/sites/default/files/2021-12/2021.12.19_Weekly%20Forgiveness%20Report_Public-508.pdf https://www.sba.gov/sites/default/files/2021-12/2021.12.19_W...
- EGreg 5y ago
  Do you think EIDL loans would be forgiven since many businesses go out of business in 30 years and have limited liability? How large was that program compared to the PPP?
- refurb 5y ago
  This is my hypothesis. Severely reduced spending due to restrictions, combined with massive stimulus/Covid support leaves a lot of people with a lot of surplus dollars. Even lower income people can sock away a few months of expenses and say “nah, I’m not going back to my old job, I’m going to take some time to figure out my next steps”. Hell, I read that Vietnam’s economy was propped up by US Covid support that was sent to Vietnam by relatives. https://e.vnexpress.net/news/life/remittances-help-covid-hit-vietnamese-stay-afloat-4406654.html https://e.vnexpress.net/news/life/remittances-help-covid-hit...
  - 999900000999 5y ago
    What a great article, I think much of it has to do with relatives back home being unable to work at all.
mdavidn 5y ago
How does the cost and availability of child care factor into this analysis?
pengwing 5y ago
Five times "why" tends to give us more answers. 1) Why is the labor supply so low? Workers are not interested in the relatively low salary for relatively bad working conditions. 2) Why do salaries not rise? Mid-term the hard cap for salary increases is the increase in worker productivity. 3) Why does worker productivity not rise? It does rise, but far less than inflation (about 1% p.a. for the last ten years). Mostly due to micro-optimizations of existing jobs. 4) Why can't we increase productivity significantly? It would require a shift in how we structure work, i.e. stop doing things that shouldn't be done in the first place instead of optimizing them. Existing jobs will barely change, new ones will. 5) Why is this process not faster? Because both institutions and people are unwilling to change behavior on a large scale. Institutions because they did not need to (before the great resignation) and worker mostly out of habit and complete lack of economic understanding, aka. salary must be earned in form of generating revenue, not in the form of passing time.
- akagusu 5y ago
  > 1) Why is the labor supply so low? Workers are not interested in the relatively low salary for relatively bad working conditions. It is not about what workers are interested or not. They just need to earn enough to live. > 2) Why do salaries not rise? Mid-term the hard cap for salary increases is the increase in worker productivity. Salaries are not proportional to productivity and you all know it. There are people out there doing the same job with the same output but one earns more than other just because companies want to pay more for one and less for other. > 3) Why does worker productivity not rise? It does rise, but far less than inflation (about 1% p.a. for the last ten years). Mostly due to micro-optimizations of existing jobs. There are lot's of research out there showing how much worker's productivity increased but salaries didn't increase proportionally.
  - pengwing 5y ago
    1: It's the same from an econ perspective as long as people are interested in being alive. 2: I think "same job" is the misunderstanding here. It is about your contribution to the company's gross result. Being a lumber jack at a badly run company is the not the same as being a lumber jack at a great company with economics of scale and a large distribution network. 3: If you have data, please provide it. The official OECD number for GDP per hour worked (aka productivity) back my claim of about 1% p.a. ( https://data.oecd.org/lprdty/gdp-per-hour-worked.htm https://data.oecd.org/lprdty/gdp-per-hour-worked.htm )
chronotis 5y ago
Central banks and other researchers have been writing for decades now about the inevitable shift in labor markets as a result of the US demographic curve and retiring baby boomers. My POV is that the pandemic served as an accelerant, pushing more end-of-career folks into retirement (perhaps earlier than planned) and that employers haven't understood or accepted that the "mix" in the workforce is changing rapidly. The impacts go beyond the usual arguments about social security / government-funded pension programs. The producer-consumer ratio is changing, which is increasing the value of producers.
juanani 5y ago
aspaceman 5y ago
This may be a bit stupid of a thing to say. But didn't a bunch of people just die? Wouldnt this make labor more scarce and valuable? Why is this continually framed as a "these lazy kids" or welfare thing?
mindslight 5y ago
My pet theory isn't addressed at all. And it's weird they're comparing across other countries when the US is an outlier with housing prices. Before the pandemic, there were many people just barely keeping up with the rent treadmill. Situations that maybe they wished they could leave, but would have cost too much to make the switch (or they'd seem like a social failure for giving up). Losing their employment (service industry) or losing their commute (remote workers) gave them zero downside to moving at the same time living in denser areas became a liability rather than a benefit. So they moved out to less dense areas with family in existing housing (safety during crisis). They found new jobs (eg package delivery), or just a bit of gig work for their much lower burn rate, or they're "unemployed" doing informal labor for family members. Moving back onto the treadmill would mean drastically increasing their burn rate, and they're not going to do that without drastically increased wages that not only cover rent, but make it lucrative to move back. Basically the labor supply is sticky. This benefited businesses for decades by keeping wages down, but the physical pandemic flipped it to another stable state. Relief payments helped this along a bit, but they're merely the tip of the iceberg.
VLM 5y ago
I find it interesting to compare the written narrative vs the graphs. The written explanation implies its entirely due to overly-generous unemployment compensation (the lazy youth meme that's millennia old). The graph in exhibit 10 implies at least half of it is due to long term demographic trends and early retirement (bye bye boomers). So the written explanation is blame lazy kids, and the graphical explanation is blame the tired elders.
CapitalistCartr 5y ago
In my industry, we draw from the same labor pool as the construction industry, which is on fire right now. So we fight for people. Each industry has it's own story to tell.
- trixie_ 5y ago
  Low interest rates and stimulus have caused over demand in the supply chain, labor shortages, and inflation. Exactly what you would expect from trillions of dollars in stimulus. This article agrees with this, but it was already obvious from the beginning.
cronix 5y ago
The lockdowns taught me how much money I was wasting each month. After the first month I had enough left in my bank account that I panicked and briefly thought I missed a mortgage payment or something. No, it just turned out that going to restaurants, bars, coffee shops, malls, etc., was just a lot more money than I was mentally tracking. I've completely cut them out of my life and have been putting an extra $700/mo into my Roth. It made me realize just how much of the economy is unnecessary and really just convenience-based, and largely invisible if you're engaged in the habitualized behavior. After looking at things through that lens, I just spend a heck of a lot less than I used to as I basically now categorize everything into "necessary" or "unnecessary." I don't see that changing. I now really enjoy cooking for family and friends and my freshly burr-ground coffee is perfect, every day, without a line.
- basedgod 5y ago
  Ah yes, let's all stay home all the time and hoard money. Experiencing life isn't worth it and the only thing that matters is dying at age 97 with an extra $3 million in our bank accounts.
  - aaomidi 5y ago
    I think you're both right. Theres ways to experience life that doesn't mean consumerism hell hole that doesn't actually satisfy anything. It could mean saving up for things to do DIY with, it could mean taking classes, it could mean starting your book collection, or just it could mean meaningful conversations with people. The idea of you have to spend copious amounts of cash to enjoy life is one rooted in capitalism and consumerism, and generally leads to depression and lack of any substantive impact on one's life. For me I saved up for 3D printers, read over 100 books, made new virtual friends and had deep conversations with them, and explored my sexuality safely with others. Most of which didn't really cost me a ton of money.
  - steelstraw 5y ago
    Americans have massive amounts of high interest credit card debt. Maybe after they pay that down we can worry about saving too much...
fundad 5y ago
Because mass death, displacement and dramatically reduced immigration. I expect it to get worse as we face more pandemics and the climate crisis worsens.
TradingPlaces 5y ago
This is terrible social science: -The data is incomplete -They test only hypotheses regarding unemployment benefits and COVID health effects. The study design was geared to get the answer they wanted. -They don’t ever ask why labor force exits in the US are dominated by women with children and workers over 55. -They don’t ask why the biggest issues are in leisure and hospitality businesses, where weekly wages are 29% lower than retail, even after a substantial rise in 2021.
dragonwriter 5y ago
The approach here of inferring US causation by comparing policy responses and outcomes in other countries is potentially useful tool for understanding what is going on, but it seems to ignore known facts about the actual nature of the LFPR decline in the US. Particularly, it ignores that more than half of the labor force reduction during the pandemic (through the second quarter of 2021) was through excess (above age-based trend) retirements. https://research.stlouisfed.org/publications/economic-synopses/2021/10/15/the-covid-retirement-boom https://research.stlouisfed.org/publications/economic-synops...
wilde 5y ago
This article misses both the PPP program and the drop in supply of immigrant workers. Seems like they wrote the conclusion before doing research… https://www.cato.org/blog/us-issued-12-million-fewer-visas-work-eligible-foreigners-march-2020 https://www.cato.org/blog/us-issued-12-million-fewer-visas-w...
yob28 5y ago
new_realist 5y ago
The equivalent of universal basic income during the pandemic has caused the labor force to shrink, and inflation to increase.

90 points by snowytrees 5y ago

The conclusions this article comes to re: the reason for the shortage (that is, that pandemic unemployment and emergency assistance prevent people from looking for work) are backed up by an article that predicates all it's findings on studying lottery winners: How Americans Respond to Idiosyncratic and Exogenous Changes in Household Wealth and Unearned Income This comes off as more than a little lazy at best, and totally disingenuous at worst.

diordiderot 5y ago
Could you do tldr?

cable2600 5y ago

Baby Boomers are retiring and dying off. So many of them held jobs without a college degree because they didn't need one out of high school or the military. That and covid-19 killed the job market as people found they could last on unemployment rather than work a job.

Supermancho 5y ago
> people found they could last on unemployment rather than work a job. I haven't found this credible (this year, at least). Unemployment doesn't last forever and it's decidedly less than what they were making before. The former is more compelling than the latter, but the basic economics tell me that it isn't ppl living out of hallways that has caused a shortage of labor. How many years can this be reasonably asserted? I think it's a combination of the inflation and the building up of debt/loss of stability due to the pandemic. While the unemployment was nice, it's long gone and that labor (by the numbers) didn't all die off.
- fragmede 5y ago
  There were absolutely people that were making more on unemployment, at the height of the pandemic in 2020. (Specifying 2020 because more people have died from Covid-19 in 2021 than 2020.) Depending on the state, unemployment was some $900/week. That works out to $46.8k/yr, which is below the official federal poverty line of $52k/yr. But there are people who live there. That these people seems to have been the undervalued backbone our economy, working 3 part-time jobs, 7 days a week, is extremely depressing.
  - tzs 5y ago
    > That works out to $46.8k/yr, which is below the official federal poverty line of $52k/yr. The federal poverty line depends on household size, and only reaches $52k/yr when the household size reaches 10 people. For a household of N people in 2021 it was 12880 + 4540 (N-1). Did you perhaps mix the poverty line up with the ACA subsidy maximum income? The ACA subsidy maximum income is 4x the poverty line, which works out to just under $52k for an individual?
    - fragmede 5y ago
      Ah thanks. I was confused, $52k is SF median income.
  - simonsarris 5y ago
    > That works out to $46.8k/yr, which is below the official federal poverty line of $52k/yr. What on earth? It's $12,880. Not 52k. How does 52k even pass the sniff test for you? https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-register-references/2021-poverty-guidelines https://aspe.hhs.gov/topics/poverty-economic-mobility/povert...
    - deleted 5y ago
      [deleted]
taneq 5y ago
> people found they could last on unemployment rather than work a job. The real question to ask when considering anyone to whom this genuinely applies is what kind of job provides less net benefit than unemployment?
- josephcsible 5y ago
  You seem to be assuming that the job provides too little and unemployment provides the right amount, and ignoring the much more likely case that the jobs provides the right amount, and unemployment provides way too much.
- hansel_der 5y ago
  i guess taking part in scociety is a net benefit on it's own, but the low-pay job sector is booming in no small part due to the rise of automation at discharge/distribution platforms.
lrem 5y ago
Who doesn't know anyone who subsided off social benefits well before the pandemics?
- arbitrage 5y ago
  Lots of people. What's your point?
  - lrem 5y ago
    Saying that "job market was killed by people realizing they can subside off benefits" simply ignores the reality. A small but non-trivial percentage of people hold jobs only as much as they need to get the benefits back. Each such person knows a hundred more people, that now also know one can do this. But most of them don't like the idea of not having a job for cultural reasons. On top of that a job is more money, which is nice.

bick_nyers 5y ago

Nearly a million adults died from COVID too, I'm sure that affects the labor supply. How many millions of people are we "short" in the labor supply precisely?

TeeMassive 5y ago
800k to be more precise. And they're not working age adults, the vast majority of covid deaths happened in elderly population (70+). And even the 800k figure is disputed as Covid being the primary cause of deathin all of those.
- fragmede 5y ago
  The 800k is disputed as being far too low. Including for excess deaths that aren't directly attributed to Covid, the count is well over a million US deaths during the pandemic.
  - TeeMassive 5y ago
    > The 800k is disputed as being far too low. Interesting, but since it is said without anything to back it up it can also be as easily dismissed. I based my data on https://usafacts.org/visualizations/coronavirus-covid-19-spread-map/ https://usafacts.org/visualizations/coronavirus-covid-19-spr... > Including for excess deaths that aren't directly attributed to Covid, the count is well over a million US deaths during the pandemic. Correlation doesn't mean causation. Isolation also creates excess deaths. Economic hardships also creates excess deaths. Stress and anxiety create also excess deaths. Alcohol and drugs also create excess deaths. All of these increased since the pandemic.
    - crooked-v 5y ago
      The exact cause doesn't really matter in this context. The point is that more than that have died compared to a normal year.
      - 5y ago

landemva 5y ago

LittlePeter 5y ago
Those screaming at you to get jabbed and wear a mask are not Karens. Karens are anti-vax and anti-mask, according to my extensive research of memes.
- evv555 5y ago
  Sounds like extensive research of your own filter bubble.
- hansel_der 5y ago
  have to go looking for memes of pro- vs. anti-vax karen
- bpodgursky 5y ago
  It is well within the Karen meme archetype to report a service employee to his/her manager for not being vaccinated or masked.
- wiseowise 5y ago
- propogandist 5y ago
  you haven't researched much, if that's the conclusion you've came to. Here's an example from few days ago, on a Delta flight https://twitter.com/stillgray/status/1474606759146708992?s=20 https://twitter.com/stillgray/status/1474606759146708992?s=2...
cpursley 5y ago
I can't upvote this enough; some people live in an alternative universe full of unicorns and bubble wrap but short of a basic understanding of economics and statistics.
presentation 5y ago

m0llusk 5y ago

What they mean by "so low" is a change of just over one percent, and their explanation is that the modest benefits programs that ended in September are keeping people away from work in December. This is garbage from people who demonstrate no interest in comprehending the economy.

jl6 5y ago

I suspect there’s no single cause (as is the case for all complex issues), but I’ll just respond to those saying that the 1m+ excess deaths can’t be a cause because those people were predominantly retired: you need to consider the second-order effects. When the 70+ population dies, dealing with the consequences is tough, both emotionally and organizationally. It’s totally plausible that their working age children need to take extended time off work to deal with grief and estate wind-up. And those who inherited substantial estates may not see the need to return to work - at least not right away. Their own retirement plans may have been effectively moved forward.

amanaplanacanal 5y ago
Yep. I think a big chunk of people decided to retire early. This isn’t predominantly young people leaving the labor force. It’s older people looking around and realizing life is short.
- LinuxBender 5y ago
  At least anecdotally I can agree. Several of my coworkers and I retired early. In hind-sight I should have done it sooner.
- CubsFan1060 5y ago
  This has some interesting numbers: https://www.cnn.com/2021/12/15/economy/labor-force-retirement-great-resignation/index.html https://www.cnn.com/2021/12/15/economy/labor-force-retiremen... "Nearly 70% of the 5 million people who left the labor force during the pandemic are older than 55, according to researchers from Goldman Sachs, and many of them aren't looking to return" I suspect that many of those left good jobs. And then everyone essentially took a step up in jobs. So for the lowest level, there just aren't people to fill those jobs now.
deleted 5y ago
[deleted]
mberning 5y ago
Thank you for this response. I completely agree and get tired of the reddit tier “lol just pay more” hot takes. I think if paying more were the solution the labor shortage would be over quite quickly. Around where I live wages have not only gone up for menial jobs, but companies are offering large sign on bonuses, guaranteed raise after x days, daily pay, and “job on the spot” interview slots every day. Somebody can walk in off the street and get a job at the local gas station making $15+/hr, a bonus, and a guaranteed raise if they stick with it. And yet they still cannot find anybody to work. Paying more might solve the problem on a micro scale, but at a macro level the shortage will remain. Unless there are a huge number of people sitting on the bench willing to get up at some specific threshold. But as you point out for many people there might not be any amount that would motivate them to get off the bench at this moment.

zaptheimpaler 5y ago

So a huge pandemic has been raging through the world for almost 2 years now, massively reconfiguring the world in so many ways. lockdowns, deaths, fear, government subsidies, cheap money, GME and unions, several global mindshift changes e.g of how crucial low wage jobs are or how short life is. But the bean counters are confused about why “labor supply” is low. hmmmm Or maybe they aren’t confused, they're worried. > More broadly, the participation rate has generally underperformed in economies with large increases in household liquidity. The most notable case in point is Chile, where the participation rate declined by 5pp as fiscal support and pension withdrawals flooded households with liquidity. “if people have money they might not work at jobs”. jobs that have systematically trained them over decades to expect a paycheck but nothing else, not loyalty or satisfaction or upward mobility or any semblance of agency. wow. fucking clueless.

diordiderot 5y ago
When media speaks about a good or bad 'economy' it means is capital being returned at near record rates, not can most people afford a subsistence existence without soul crushing levels of anxiety from fear of accidentally becoming destitute
- chii 5y ago
  > not can most people afford a subsistence existence without soul crushing levels of anxiety from fear of accidentally becoming destitute This is the human condition - through all the ages, most people would feel this way, and will continue to do so in the future. Until the day free energy and star trek level replicators exist, all wealth and all goods and services that people consume will need to be created by people. It's just the relative amounts that differ between the ages, but unfortunately, people don't compare themselves to people 100 years ago, they compare themselves to the jones.
presentation 5y ago
Is the labor shortages as bad elsewhere in the world? Plenty of places with great social safety nets, not just now but all the time. Treating the vast majority of people as wage slaves seems particularly American.

aylmao 5y ago

I find it interesting that when discussing this nobody mentions immigration much or at all. The number of green cards awarded took a huge dip in 2020 [1]. As an immigrant myself, I heard a lot about USCIS (United States Citizenship and Immigration Services) slowing down considerably. Could the effects of the pandemic on immigration, on top of the slow down in legal immigration that happened during the previous administration [2], not be a significant part of this perceived shortage in labour supply? [1]: https://www.pewresearch.org/fact-tank/2021/03/22/key-facts-about-u-s-immigration-policies-and-bidens-proposed-changes/ https://www.pewresearch.org/fact-tank/2021/03/22/key-facts-a... [2]: https://www.cato.org/blog/president-trump-reduced-legal-immigration-he-did-not-reduce-illegal-immigration https://www.cato.org/blog/president-trump-reduced-legal-immi...

kqvamxurcagg 5y ago
Exactly. This reason is entirely down to the lack of immigration due to travel restrictions and its effects on the wider economy. The media hasn’t really reported on this but it has been obvious for the past year. In a world without mass immigration to the west wages at the lower end would he substantially higher.
- aylmao 5y ago
  Speaking of wages, another factor that could be interesting to consider: it's well known that Mexico is by far the country has most immigrants in the USA. The current president of Mexico, who took office right before the pandemic started (Dec 2019), has been increasing the minimum wage at an accelerated rate [1] and set up a special economic zone along the Mexico-USA border. This zone has a minimum wage that's almost twice the national minimum wage, and lower taxes for companies [2]. The minimum wage there is still much less than the minimum wage in the USA, although I don't know what the average wage would be in one vs the other. Nonetheless, along with the rest of incentives immigrants have to remain in their country, I wonder if this could be leading to less immigration, on top of travel restrictions, etc. [1]: https://www.vynmsa.com/blog/en/economy/minimum-wage-in-mexico/ https://www.vynmsa.com/blog/en/economy/minimum-wage-in-mexic... [2]: https://www.gob.mx/se/acciones-y-programas/zona-libre-de-la-frontera-norte https://www.gob.mx/se/acciones-y-programas/zona-libre-de-la-...

bigmattystyles 5y ago

I find it surprising that no one in the comments has mentioned that at least in the US, immigration, documented and undocumented is down. Especially documented. For all the negative comments from some circles about immigration, it doesn’t surprise me that it would contribute, at least in part, to a labor shortage.

drdec 5y ago
I don't know if decreased immigration is a cause of the current situation, but it does strike me that increased immigration is a potential solution. Unfortunately it appears unlikely due to the political situation in the US.

hungryforcodes 5y ago

I think the real question is how people are actually paying their rent and buying food. If they don't need jobs, then they must be solving this problem somehow.

snarf21 5y ago
I listened to a recent podcast on NPR that talked about this. (This is just one source so find others.) One couple was drawing down retirement money and slashing spending rather than work horrible conditions in tv/movies. They both said that they would have to start working more soon as their money buffer was getting small. I think there are a lot of people at the lower end that are doing this. Using the government payouts, plus savings, plus cutting costs to just take a break and reset what work is and what it should be.
- hungryforcodes 5y ago
  A "break" from work I agree. A "reset", I'm not so sure (though I'd love it to be the case!). If they're drawing from their savings and so on, then at some point they'll have to go back to whatever shitty jobs are available -- though now they and society will be much more brittle as the retirement buffer is gone. If they took the time and money to reinvest in their skills -- I'd agree it would be a reset. But the cynical side of me says they are not, most of them. It's just a question -- everyone is talking about this great revolution -- however who's paying the rent? I keep coming back that question. Maybe I don't have all the information, but I sure have to pay rent. I wonder how others do this too. Thanks for your suggestion of the NPR podcast -- I'll check it out :)
  - DarylZero 5y ago
    It's very simple, when people can't pay rent, they move more and more people into fewer and fewer apartments.
asciimov 5y ago
The older people fully own their homes, so they don’t have to pay as much to sustain their lifestyle. Then the younger lower wage people either moved in with family, got roommates, or are now homeless.

grumple 5y ago

So there are a few obvious issues - people don't want to work for low wages with no other benefit to their lives, so if they don't have to, they won't. But the blame is on companies here: if you raise wages high enough and treat your employees well, someone will do the job. In order to suppress wages, we've generally kept immigration high and kept social services low. As immigration has declined and we've recently injected cash directly into the hands of the people, wages have climbed. But I think there's another elephant in the room that nobody has mentioned: the accumulation of wealth and its staying power over generations has created a large class of people that don't have to work (and have never had to). You don't have to be a billionaire to be in that class. If you inherit (or are gifted) a home, the amount of income you require to live is very low, certainly less than full time wages. If you additionally inherit money and have it modestly invested, you could easily live off that money and never work. Some of these people work, but not all, and they are quite able to take long breaks in employment during a pandemic if they choose. This class of people continues to grow every year as our methods for taxing wealth are ineffective. Frankly, assuming most of us are software devs or work for vcs - our children will probably be a part of this class of people. Some of you reading this already are. But I don't know how an economy continues with this class growing the way it has (ok, the answer is the wealth will eventually get inflated away but that will be a big problem for all of us). There's also another class of people that are perfectly happy working part time and just getting by - this group is happier working a bit but not full time, and certainly not multiple jobs. The lack of motivation is tied to the lack of advancement options for all but a few. If you didn't take one of the few high-income tracks in university, and you don't have the technical chops for software, or the physical durability for a trade, there aren't great options for you to make a lot of money.

turbinerneiter 5y ago
I think this is a good point. In the upper end, people don't need to work anymore. On the lower end, people don't see a reason to try anymore. I'm in the top 30% percent bracket of income (despite being at the beginning of my career). I save more than 30% of my income. This year, the house prices increased so fast, that the downpayment roses by more than I could save in a year. I can see people who are in the lower 30% bracket just giving up facing these numbers. What's the point? They could try all they want and work as hard they can and still not be able to make it. Might just as well do the minimum to scrape by and try to get ahold of some VR googles.

jleyank 5y ago

How about: Aside from salary or possibly social connection, there’s better places to work that the us. If people are going to work for crap pay, there’s far less tiring roles than pickers or servers. These have been filled with domestic or imported underclass. See Brexit. If you don’t have to work to do what you like, why would you? Schooling looks pretty good right now. Why work just to pay child care? I could go on, but as many have written covid has given everybody time to think rather than just go along day to day. Thinking is dangerous to the status quo.

akagusu 5y ago

There is no such thing as labor shortage. There are low wages, poor working conditions and companies treating workers like slaves. Everything else is just an excuse. Treat workers like humans, pay them fairly so they can live a meaningful life, give them a good place to work, and they WILL work.

throwaway75787 5y ago
I am holding out for a professional position where I will work 24-32 hours per week with benefits. I am not doing the full-time "you own me" rodeo again.
- User23 5y ago
  Get a full time remote job from a company that treats their employees like adults. You can easily get whatever their equivalent of a "meets expectations" rating is on 4-5 hours of work a day. And ethically you're doing nothing wrong, because the company is formally saying it's satisfied with your work which means they're getting what they bargained for.
  - sirspacey 5y ago
    As someone hiring engineers remotely, this is explicitly our offer. About 4 hours is peak productivity. We don’t need you to work extra to satisfy our god complex.
    - Retric 5y ago
      No need to self censor the company name in that comment.
    - Infernal 5y ago
      Where can one apply?
  - throwaway75787 5y ago
    It has to be official from now on. There is going to be no potential for a slippery slope of after-hours messages or pizza party overtime. I have even set up a VoIP number with a 9-5 M-F time condition for use with applications and employers. I don't have it in me to to work in front of a screen all day, although I understand that works for many on this site. I don't care if the workplace is an open office, a cashier's stool at a supermarket checkout, or a train driver's cab.

b-team 5y ago

These guys are hacks. There are papers by serious economists on this question.

sys_64738 5y ago

When I read this it feels like the underlying question to be answered off it is "how do we force more people back to work?". Work shouldn't be mandatory.

PopAlongKid 5y ago
"Nebraska’s quandary: Can it force more citizens to work?" https://apnews.com/article/coronavirus-pandemic-business-health-nebraska-pete-ricketts-5cf5cef955a79c466281fd43f32cc358 https://apnews.com/article/coronavirus-pandemic-business-hea...
- JaimeThompson 5y ago
  ""I don't think mask mandates are appropriate," Ricketts told reporters. "I think they create resistance. Masks are just a tool, not the only tool, (and) they are not a panacea to solve all the problems."" It will be most interesting to see how Ricketts spins mask mandate == bad / forcing people to work == good.
gruez 5y ago
>Work shouldn't be mandatory. How do you think that would work when our economy isn't post-scarcity?
- sys_64738 5y ago
  Automation and robots. Think about what Universal Income is all about.
  - gruez 5y ago
    > Automation and robots. But we're actually not there yet, otherwise business wouldn't be clamoring for workers.
josephcsible 5y ago
It shouldn't be required by law or anything like that, agreed. But if you can work but choose not to, nobody should be giving you any money or paying for anything for you.

silexia 5y ago

The antiwork movement is extremely popular here on HN. Supporters of this view are brigade downvoting any view they see as opposed to this: especially if it suggests that government handouts result in people not wanting to work. I think the desire for better pay and better work conditions are well founded. Most of our Fortune 500 companies are run by hired gun CEOs, not founders, that are trying to extract maximum short term profits at the expense of employees and customers and the environment. That is evil behavior. The solution to bad companies that mistreat people is not stick out heads in the sand and claim that no one should need to work, the solution is to remove government monopolies (parents) granted to these companies, government contracting to them, and government bailouts. We also need to find ways to expose the predatory financial classes: venture capitalists mislead entrepreneurs by saying they will support their vision but then fire the founders at high rates, private equity pays founders to leave then makes money by harming customers, employees, and the business, and the stock market gives perverse incentives based on short term profit. Read Henry Ford's autobiography, he has a lot of brilliant ideas including keeping all of his companies equity so he could retain control and do things like cut prices every year on his cars while paying employees double the going rate.

egypturnash 5y ago

Early on in this article there is a graph of the change in US, Canada, and EU wages over the past year. It is in "percentages of change". I suspect that this article's question would be answered much more quickly if these wages were graphed in something like "value in the same currency".

pylua 5y ago

Pay bus drivers and school janitors and cafeteria workers enough to own their own home. Pay everyone enough to live the life they deserve to live as humans. For some reason we have gone down the path of exploiting and demeaning people and there is no turning back. I am surprised that both parties refuse are so disconnected from reality.

trixie_ 5y ago
You are disconnected from reality if you think more money is what creates more jobs or homes. The government literally just did that and we ended up with more supply chain problems and more inflation. Money is paper meant to balance resources, money does not magically create more resources. That’s where education and technology advances come in.
- pylua 5y ago
  I do not believe that "more" money will create jobs or homes. The bigger question is why does it make sense for companies to optimize for luxury apartments or mansions, that are well out of reach for most people. Why does our system of capitalism incentivize that? Should it not incentivize taking care of society? Why have workers wages been stagnant over the past decades? It is clear that the capitalism practiced in America is starting to harm society at a fundamental level. Why does our government allow companies to pay wages that are so little people are basically ostracized from education, health care, and housing? That is messed up. Why does our government allow companies in the United States to benefit off of cheap labor in countries that do not treat their citizens fairly and exploit them? I'm not saying that I have all the answers here, because it is a complicated problem, but it is important to bring the obvious truths to the forefront.
  - trixie_ 5y ago
    If you want to see capitalism with a lot less rules, harming the poor and environment then go back 50 years. Then go back 100 and 150. It gets much much worse than where we are today. If you have perspective you’ll realize that while things are never perfect, they are improving. And you do recognize ‘why’ as well in your own post - the government. The gov sets the rules and playing field for capitalism to regulate resources. Still you don’t understand when you say, why don’t companies pay higher wages. As that would create more healthcare, education or homes, as opposed to inflating prices. I’ll say it again, money doesn’t create resources it only balances the limited resources that exist right now. To increase resources in a sustainable way requires improved education and technology to increase productivity.

JamesLeonis 5y ago

Funny how Goldman Sachs completely misses the entire PPP program, with a total value of $791,242,381,400 as of the latest report from the SBA. Also funny how they missed that 83% of the value of all the 2020-21 Paycheck Protection Program loans were forgiven as of December 19th, 2021 [1]. That's a total value of $653,038,613,899. That's nearly as large as the 2008 bailouts. Even that doesn't tell the whole story because 94% of the 2020 loans alone were forgiven, and 2021 is on track to meet it. Why only talk about one bailout, GS? [1]: https://www.sba.gov/sites/default/files/2021-12/2021.12.19_Weekly%20Forgiveness%20Report_Public-508.pdf https://www.sba.gov/sites/default/files/2021-12/2021.12.19_W...

EGreg 5y ago
Do you think EIDL loans would be forgiven since many businesses go out of business in 30 years and have limited liability? How large was that program compared to the PPP?
refurb 5y ago
This is my hypothesis. Severely reduced spending due to restrictions, combined with massive stimulus/Covid support leaves a lot of people with a lot of surplus dollars. Even lower income people can sock away a few months of expenses and say “nah, I’m not going back to my old job, I’m going to take some time to figure out my next steps”. Hell, I read that Vietnam’s economy was propped up by US Covid support that was sent to Vietnam by relatives. https://e.vnexpress.net/news/life/remittances-help-covid-hit-vietnamese-stay-afloat-4406654.html https://e.vnexpress.net/news/life/remittances-help-covid-hit...
- 999900000999 5y ago
  What a great article, I think much of it has to do with relatives back home being unable to work at all.

mdavidn 5y ago

How does the cost and availability of child care factor into this analysis?

pengwing 5y ago

Five times "why" tends to give us more answers. 1) Why is the labor supply so low? Workers are not interested in the relatively low salary for relatively bad working conditions. 2) Why do salaries not rise? Mid-term the hard cap for salary increases is the increase in worker productivity. 3) Why does worker productivity not rise? It does rise, but far less than inflation (about 1% p.a. for the last ten years). Mostly due to micro-optimizations of existing jobs. 4) Why can't we increase productivity significantly? It would require a shift in how we structure work, i.e. stop doing things that shouldn't be done in the first place instead of optimizing them. Existing jobs will barely change, new ones will. 5) Why is this process not faster? Because both institutions and people are unwilling to change behavior on a large scale. Institutions because they did not need to (before the great resignation) and worker mostly out of habit and complete lack of economic understanding, aka. salary must be earned in form of generating revenue, not in the form of passing time.

akagusu 5y ago
> 1) Why is the labor supply so low? Workers are not interested in the relatively low salary for relatively bad working conditions. It is not about what workers are interested or not. They just need to earn enough to live. > 2) Why do salaries not rise? Mid-term the hard cap for salary increases is the increase in worker productivity. Salaries are not proportional to productivity and you all know it. There are people out there doing the same job with the same output but one earns more than other just because companies want to pay more for one and less for other. > 3) Why does worker productivity not rise? It does rise, but far less than inflation (about 1% p.a. for the last ten years). Mostly due to micro-optimizations of existing jobs. There are lot's of research out there showing how much worker's productivity increased but salaries didn't increase proportionally.
- pengwing 5y ago
  1: It's the same from an econ perspective as long as people are interested in being alive. 2: I think "same job" is the misunderstanding here. It is about your contribution to the company's gross result. Being a lumber jack at a badly run company is the not the same as being a lumber jack at a great company with economics of scale and a large distribution network. 3: If you have data, please provide it. The official OECD number for GDP per hour worked (aka productivity) back my claim of about 1% p.a. ( https://data.oecd.org/lprdty/gdp-per-hour-worked.htm https://data.oecd.org/lprdty/gdp-per-hour-worked.htm )

chronotis 5y ago

Central banks and other researchers have been writing for decades now about the inevitable shift in labor markets as a result of the US demographic curve and retiring baby boomers. My POV is that the pandemic served as an accelerant, pushing more end-of-career folks into retirement (perhaps earlier than planned) and that employers haven't understood or accepted that the "mix" in the workforce is changing rapidly. The impacts go beyond the usual arguments about social security / government-funded pension programs. The producer-consumer ratio is changing, which is increasing the value of producers.

juanani 5y ago

aspaceman 5y ago

This may be a bit stupid of a thing to say. But didn't a bunch of people just die? Wouldnt this make labor more scarce and valuable? Why is this continually framed as a "these lazy kids" or welfare thing?

mindslight 5y ago

My pet theory isn't addressed at all. And it's weird they're comparing across other countries when the US is an outlier with housing prices. Before the pandemic, there were many people just barely keeping up with the rent treadmill. Situations that maybe they wished they could leave, but would have cost too much to make the switch (or they'd seem like a social failure for giving up). Losing their employment (service industry) or losing their commute (remote workers) gave them zero downside to moving at the same time living in denser areas became a liability rather than a benefit. So they moved out to less dense areas with family in existing housing (safety during crisis). They found new jobs (eg package delivery), or just a bit of gig work for their much lower burn rate, or they're "unemployed" doing informal labor for family members. Moving back onto the treadmill would mean drastically increasing their burn rate, and they're not going to do that without drastically increased wages that not only cover rent, but make it lucrative to move back. Basically the labor supply is sticky. This benefited businesses for decades by keeping wages down, but the physical pandemic flipped it to another stable state. Relief payments helped this along a bit, but they're merely the tip of the iceberg.

VLM 5y ago

I find it interesting to compare the written narrative vs the graphs. The written explanation implies its entirely due to overly-generous unemployment compensation (the lazy youth meme that's millennia old). The graph in exhibit 10 implies at least half of it is due to long term demographic trends and early retirement (bye bye boomers). So the written explanation is blame lazy kids, and the graphical explanation is blame the tired elders.

CapitalistCartr 5y ago

In my industry, we draw from the same labor pool as the construction industry, which is on fire right now. So we fight for people. Each industry has it's own story to tell.

trixie_ 5y ago
Low interest rates and stimulus have caused over demand in the supply chain, labor shortages, and inflation. Exactly what you would expect from trillions of dollars in stimulus. This article agrees with this, but it was already obvious from the beginning.

cronix 5y ago

The lockdowns taught me how much money I was wasting each month. After the first month I had enough left in my bank account that I panicked and briefly thought I missed a mortgage payment or something. No, it just turned out that going to restaurants, bars, coffee shops, malls, etc., was just a lot more money than I was mentally tracking. I've completely cut them out of my life and have been putting an extra $700/mo into my Roth. It made me realize just how much of the economy is unnecessary and really just convenience-based, and largely invisible if you're engaged in the habitualized behavior. After looking at things through that lens, I just spend a heck of a lot less than I used to as I basically now categorize everything into "necessary" or "unnecessary." I don't see that changing. I now really enjoy cooking for family and friends and my freshly burr-ground coffee is perfect, every day, without a line.

basedgod 5y ago
Ah yes, let's all stay home all the time and hoard money. Experiencing life isn't worth it and the only thing that matters is dying at age 97 with an extra $3 million in our bank accounts.
- aaomidi 5y ago
  I think you're both right. Theres ways to experience life that doesn't mean consumerism hell hole that doesn't actually satisfy anything. It could mean saving up for things to do DIY with, it could mean taking classes, it could mean starting your book collection, or just it could mean meaningful conversations with people. The idea of you have to spend copious amounts of cash to enjoy life is one rooted in capitalism and consumerism, and generally leads to depression and lack of any substantive impact on one's life. For me I saved up for 3D printers, read over 100 books, made new virtual friends and had deep conversations with them, and explored my sexuality safely with others. Most of which didn't really cost me a ton of money.
- steelstraw 5y ago
  Americans have massive amounts of high interest credit card debt. Maybe after they pay that down we can worry about saving too much...

fundad 5y ago

Because mass death, displacement and dramatically reduced immigration. I expect it to get worse as we face more pandemics and the climate crisis worsens.

TradingPlaces 5y ago

This is terrible social science: -The data is incomplete -They test only hypotheses regarding unemployment benefits and COVID health effects. The study design was geared to get the answer they wanted. -They don’t ever ask why labor force exits in the US are dominated by women with children and workers over 55. -They don’t ask why the biggest issues are in leisure and hospitality businesses, where weekly wages are 29% lower than retail, even after a substantial rise in 2021.

dragonwriter 5y ago

The approach here of inferring US causation by comparing policy responses and outcomes in other countries is potentially useful tool for understanding what is going on, but it seems to ignore known facts about the actual nature of the LFPR decline in the US. Particularly, it ignores that more than half of the labor force reduction during the pandemic (through the second quarter of 2021) was through excess (above age-based trend) retirements. https://research.stlouisfed.org/publications/economic-synopses/2021/10/15/the-covid-retirement-boom https://research.stlouisfed.org/publications/economic-synops...

wilde 5y ago

This article misses both the PPP program and the drop in supply of immigrant workers. Seems like they wrote the conclusion before doing research… https://www.cato.org/blog/us-issued-12-million-fewer-visas-work-eligible-foreigners-march-2020 https://www.cato.org/blog/us-issued-12-million-fewer-visas-w...

yob28 5y ago

new_realist 5y ago

The equivalent of universal basic income during the pandemic has caused the labor force to shrink, and inflation to increase.