I was busy driving from the Louisiana swamps to the Houston airport on Friday, which means I missed providing you with my keen insights on the latest jobs numbers. Can't have that! Here they are:¹
It turns out there really are a couple of interesting things to say this month. First, we added 531,000 jobs in October and revised upward the estimates for August and September by 235,000, for a total of 766,000 more jobs than we thought we had a month ago. The headline unemployment rate dropped to 4.6%. That's really good.
In fact, given my belief that we're really only about a million jobs short of where we ought to be, this represents a huge chunk of the "worker shortage" we hear so much about. And it's still a huge chunk even if I'm off by a factor of two or so.
The other interesting thing is wages. For some reason there's been an awful lot of chatter lately about strong wage growth over the past year, but I'm not sure where it comes from. Here is overall wage growth:
It's true that we had strong earnings growth for several years before the pandemic. It's also true that there was a surge in wages right at the start of pandemic, which put us at a permanently higher level.
However, since the middle of 2020 there's been essentially no wage growth after you account for inflation. Keep this very firmly in mind whenever you hear that companies can't attract as many workers as they need. The truth is that they really aren't trying very hard.
¹Note that I've changed the layout of the chart I use by eliminating the months with gigantic ups and down during the pandemic. Those huge swings are old news, and they make it hard to see what's going on in more normal months. With a y-axis range of -400,000 to +800,000, it's much easier to see the changes over the past year or so.
POSTSCRIPT: And since we all love anecdotes, I've got one for you. We've all seen the signs offering jobs at McDonald's for $18 per hour. Wow! But those are mostly in big urban areas where the media hangs out, like New York and Los Angeles. But I just got back from Louisiana, and I saw plenty of help wanted signs there too. They were offering jobs at McDonalds for $10 per hour. Suddenly those $18 jobs sound more like regional outliers than trends for the whole country.
Again, the surge in average wages in early 2020 was mostly because it was the lowest-paid workers in service jobs in restaurants, entertainment, etc. who were dropped, which boosted the average. And many of those people are still out - they are the ones who benefited most from the augmented unemployment, which actually paid many of them more than they were getting at their jobs. They are also the ones who most benefit from rent support, which is still going on. So wages near the bottom are probably even worse than Kevin's graph shows.
The raw employment numbers actually indicate that about 4-5 million jobs are missing from the early 2020 level:
https://fred.stlouisfed.org/graph/?g=IBMS
So there are plenty of people who could come back if employers offered high enough wages, but probably there is still resistance because of left-over money from the stimulus and from fear of covid. Whether there has been a permanent change in the attitude of wage-earners as many pundit allege is very doubtful, but anyway there is no evidence of change in attitude of employers - they are just not offering higher wages.
So far, the wages are not dropping as more people get jobs--which is a good sign.
Child care is still a problem. Grandma may still be hesitant to look after the kids on a regular basis, esp. if they have to be inside.
Cases are leveling off, and in some places going back up. Portends another Christmas surge??? We'll have to see how fast kids get vaccinated.
Problem is most of those jobs are gigs. 3.2 million of them. Guess what??? They never existed.
Skept-
But wan't one of the problems with the PPP that they would still be considered EMPLOYED ? In order to get the payroll loans you had to KEEP the employees on the payroll.
It was a weird dynamic.
Why are you departing from the mainstream media narrative?? Don't you know it's supposed to be all about INFLATION? Why, if other bloggers started talking about actual data, Biden's approval rating might go back up, the 2022 and 2024 elections might not feature the treasured DEAD HEAT narrative, and how would your industry survive without that avalanche of political ad revenue?
I probably have a different perspective on this than most of either party .
We are talking inflation adjusted wages here, so effectively talking about how much goods and services you can consume for what you earn for an hour of work.
In the end , that just has to correlate directly with how much you can produce with an hour of work - the productivity. You might use some sort of tax or welfare policy to skew that relationship for individuals ( where one type of worker gets more than their productivity and another less) , but on average and in total change in overall consumption needs to match overall production ( unless you are borrowing more from abroad which means their consumption has to decrease relative to production) . Or if you are stifling investment which is eating the seed corn.
Clearly covid pandemic and the restrictions meant to try to control it are reducing production and using up a lot of consumption. Masking at work alone cuts productivity . Effectively paying people to stay home and not work obviously does . And the massive " free" government programs for testing and vaccines have to be paid for somehow. That production comes from somewhere.
The idea that we can go through a huge crisis like this , with all of the extra expense and restrictions, and workers effective consumption per hour is expected to increase or stay stable is insane.
Real wages SHOULD have decreased some due to the pandemic and everyone should have realized they would be having to expect some cutbacks in consumption to get us through this .
That real hourly wages did not go down is the problem , not that they did not go up much. Trying to finagle a way to prevent lower real wages when productivity has to decrease temporarily causes major distortions as we see today in supply chain issues.
And trump and the Republicans are to blame here too. The covid stimulus programs were excessive last year and went too far . You want to prevent an economic collapse but some net consumption decline should be inevitable .
And of course the American public are too spoiled to accept any sort of sacrifice.
Why would masking cut productivity?
Wages do not follow productivity, or at least do so with long lags. Productivity rose steadily from 1970 to 2010 but wages did not keep pace.
Well, restrictions are gone. They didn't work and didn't cut down on anything.
Seems wrong. The significant restrictions faced by the supply side of the economy in the wake of the pandemic by rights ought to have increased, not decreased, productivity, as providers of goods and services are forced to increase efficiency and automation to deal with, among other challenges, the labor shortages we've all been discussing. Indeed, given that US GDP has never been higher in real terms (we've passed the early 2020 peak, that is, this past summer) it would be very surprising indeed if US output per labor hour isn't now at an all time high.
ttps://apnews.com/article/business-health-coronavirus-pandemic-economy-d4156ba20953bd62d157e3e664921e54#:~:text=Spending%20on%20goods%20grew%20at,spent%20with%20confidence%20last%20quarter.
We've seen a compositional change in the economy, of course (more goods, less services).
More conservative boilerplate from the troll. ZZZZZZZZ ...
This is entirely anecdotal, but I do not live in a major urban area, rather in a small college town in Wisconsin. Wages here are pretty good. My daughter started at her retail job at $15.00/hr.
Hopefully not Ripon!
Otherwise, Luther Olson will show up at your daughter's jobsite & hold the management hostage till they cut wages.
Once again rational thought chimes in to give us his contrarian view that government is wasting too much money on working people i.e. Mitt Romney-speak. He bravely touts his independence from Republicans and Democrats by spouting bog-standard Republican views.
He's an idiot who wants us to believe he's been in deep freeze since around 1985 or so.
Startribune had a big story about how employers are adding FUN (tm) to the office to combat worker shortages.
Happily every single comment correctly diagnosed the solution as higher wages + time off that can actually be used to deal with stuff life throws at you.
Federal minimum wage is $7.25. You saw jobs at $10. What would you have seen 3 years ago?
In other words: yes, wages are higher in metropolitan areas. But your anecdote doesn't show that wages haven't increased in Lousiana.