Workers have the leverage in the post-Covid jobs recovery, for now
The past 15 months has been a reckoning for everyone. The pandemic forced families to re-order their health, family and work obligations. Schools closed. Child care and elder care was disrupted.
Here’s the evidence.
Record job openings
“You think about all these companies trying to turn on the lights at full capacity at the same time,” says Nela Richardson, ADP chief economist. “There are some dislocations in the jobs market because everybody’s hiring at the same time.”
The so-called quit rate
More people are quitting their jobs than any time in the past 20 years, according to the Bureau of Labor Statistics. Four million people quit their jobs in April.
Record new business creation
Instead of applying to work for someone else, a record number are starting their own businesses. As of May, 2.5 million new business applications have been filed in 2021, according to the Census Bureau. That’s already more than half of the businesses formed in 2020.
Some of the strongest growth has been in sectors like retail, transportation and warehousing, construction, and real estate.
According to the Atlanta Fed, the fastest wage growth is among workers with only a high-school diploma.
About those extra jobless benefits
“We need to stop and really investigate the jobs we are trying to bring back to the economy,” says Richardson. “These are low-paying jobs. Instead of blaming the worker for making a rational choice during an ongoing pandemic, maybe it’s time as a society to look at the jobs we are trying to create.”
Child tax credit
“Making the child tax credit fully refundable and removing the earned-income requirements will lower work incentives for parents,” writes Goldman Sachs chief economist Jan Hatzius.
But, at the same time, more generous child and dependent care tax credits are coming too, which, according to Hatzius, “should increase parental labor supply.” The hope is, financial support for low-income families supports a return to work.
The big question
How long will all this last?
As time passes, labor dislocations may ease, just as supply-chain glitches are expected to work themselves out. Companies that can’t eat the cost of higher wages will raise prices or cut hiring to pay for more expensive labor. Others may invest in more automation. At the same time, millions of employers and employees face a learning curve on the balance of work from home and returning to the office.
There is no blueprint for what happens next.