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| How can so many Americans afford not to work? And will it last? (1859046) | |||
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How can so many Americans afford not to work? And will it last? |
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Posted by TransitChuckG on Wed Oct 20 06:50:47 2021 How can so many Americans afford not to work? And will it last? A job fair in Santa Clara, Calif.Justin Sullivan/Getty Images ‘I can be choosy’ A shortage of bus drivers has forced school districts to combine routes. A lack of servers has caused restaurants to reduce hours. And you may have noticed that the checkout lines at supermarkets, drugstores and other retailers have grown. The labor shortage of 2021 is both conspicuous and perplexing. How is it, after all, that several million people who were working before the pandemic are now getting by without a paycheck? There is no single answer, but a crucial part of the explanation is that Americans are flush with cash. (Monday’s newsletter detailed how the cash glut is also causing rising inflation and supply-chain problems like backed-up ports.) Thanks to pandemic stimulus programs during both the Trump and Biden administrations, many families have received multiple checks from the federal government over the past 18 months. Those stimulus programs also increased the size of unemployment benefits. Over the same period, home values and stock prices have risen, too. As a result, many households have more of a financial cushion than they used to. If anything, the recent increases in savings have been larger at the bottom of the economic spectrum than at the top: Income quarters based on 2019 household earnings.Source: JPMorgan Chase Institute With this cushion, some workers — especially those in service industries disrupted by Covid-19 — have decided that they did not like their old jobs enough to return. Others have simply quit their jobs. A low-wage economy That should not be entirely surprising. The American economy of the past few decades has not been very kind to workers. Since the 1980s, incomes for the poor, the working class and much of the middle class have grown slowly, failing to keep up with either economic growth or the incomes of the affluent. Other quality-of-life measures are also flashing red. Life expectancy has grown more slowly in the U.S. than in dozens of other countries. Drug use, alcohol use, chronic pain and suicide have risen among the working class, while marriage and self-reported satisfaction have declined (as these charts show). “Many, many people are realizing that the way things were prepandemic were not sustainable and not benefiting them,” Rachel Eager, 25, who previously worked at an after-school program in New York, told my colleague Ben Casselman. Eager is now looking for a new job, but she is not in a rush. “My financial situation is OK, and I think that is 99 percent of the reason that I can be choosy about my job prospects,” she said. So far, she has not been willing to take another job with low pay, no benefits and little flexibility. Her attitude is telling. The U.S. does not have a pure labor shortage so much as it has a shortage of workers willing to accept the working conditions that today’s economy often demands. Paul Krugman, the Nobel Prize-winning economist and Times Opinion columnist, has described the trend as “the revolt of the American worker.” Betsey Stevenson, a University of Michigan professor, calls it the “take this job and shove it” economy. There are also labor shortages in some other countries, probably related to their own large pandemic stimulus programs. But the situation seems to be most intense in the U.S. A turning point? The big uncertainty is what happens next. One possibility is that we have entered a new era of tight labor markets. With more Americans choosing not to work — including aging baby boomers — companies would then need to increase pay and improve working conditions to attract employees. Some are already doing so, Ben Casselman notes: Hourly wages in the leisure-and-hospitality sector, for example, have surged this year. In this scenario, the pandemic would represent a turning point. Almost a half-century of a low-wage economy would end, and incomes would grow more rapidly, as they did from the 1940s until the early ’70s. But I find it hard to believe this is the most likely scenario. For one thing, the financial cushion of most households still is not large. The median cash savings of the bottom quarter of households (ranked by earnings) has risen by 70 percent over the past two years — but it’s still only about $1,000, Fiona Greig of the JPMorgan Chase Institute points out. And the pandemic stimulus programs have mostly ended. Eventually, more Americans will feel the need to go back to work. When they do, they will find a job market where employers hold a decided power advantage, because of the decline of labor unions and an increase in corporate concentration. The college dropout crisis, leaving many workers struggling to keep up with technological changes, plays a role, too. President Biden and many other Democrats favor a set of policies intended to put workers on more even footing with their employers. The agenda includes paid family leave, expanded child tax credits, subsidized child care, a crackdown on anti-union activities and a more aggressive approach to corporate consolidation. But it is unclear how many of those ideas will become law. Congressional Republicans have expressed concerns about some of these same trends but oppose most policy responses. Congressional Democrats have razor-thin margins in Congress and don’t yet agree about what laws to pass. In the meantime, Ben says, the labor market is in a standoff: “Workers are holding out until their savings disappear. Businesses are holding out until their customers disappear.” You can read his story about the job shortage. It also describes some of the causes of the shortage other than the cash glut, like Covid fears and a dearth of day-care options. |
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