L EADI NG P E O P L E . L E A D I N G P R O S P E R I T Y.
Getting Back to Work The Jobs Gap – and How Washington Can Help Fix It PRESENTING SPONSOR:
GOLD SPONSORS:
This REACH issue is dedicated to helping companies bring people back to work. Your Chamber has led the way from the very beginning of the pandemic, with resources, tools, and webinars to help guide businesses through last year’s shock to our people and to our economy. As vaccination rates increase and more companies are relaxing restrictions, the economy is rebounding and so are people. The new buzz phrase amongst social commentary and financiers is the “hot vax summer.” But even with the levity, new issues evolved surrounding shortages around workers and resources, as well as good intentions gone awry. The pent-up demand consisting of people wanting to get out and socialize, creating a new golden age, is real. We supported ceasing the $300/week additional federal unemployment aid to Texas workers, as a motivator for people to return to work.
“This is one of the issues impeding economic progress.” – DANA PARR The U.S. Chamber of Commerce Chief Economist, Curtis Dubay, summed it up best in his article, “The Jobs Gap - And How Washington Can Help Fix It.”
At the Chamber we’ve been hearing for months now from businesses of all sizes that hiring the right workers has become increasingly difficult. It’s not a question of the wrong incentives—across industries, the right workers simply cannot be found. Some of the reason workers aren’t reentering the workforce are due to medium- to long-term impacts of the pandemic: Some workers are still reluctant to take jobs because of COVID-19 concerns, while others are at home caring for children. But there is another fundamental reason the pool of available workers has shrunk. Increasingly, businesses are struggling to compete with overly-generous government benefits, including the $1,400 checks that went out in March and the extra $300 per week in unemployment benefits paid by the federal government under COVID relief bills passed by Congress. Now, what were once anecdotal reports of employers having a tough time finding workers, are showing up in the data. The tightness in the labor market is highlighted by wage growth and the quit rate (hat tip to Michael Strain of the American Enterprise Institute). According to the Atlanta Fed, median average hourly wage growth in March 2021 of 3.7 percent is about equal to the February 2020 level of 3.9 percent (before the pandemic). If you can remember back to early 2020 before the pandemic struck: the labor market was tight and this was forcing wages up sharply, especially for the least-skilled workers. Today, as the reopening gathers momentum, businesses are forced to compete, raising wages to attract and retain workers.
THE JOBS GAP - AND HOW WASHINGTON CAN HELP FIX IT Friday’s (June 11, 2021) job report was a big miss. Most analysts expected the economy to create one million jobs in April. Instead, businesses added a paltry 266,000 new jobs—that’s a gap of almost 750,000 jobs. Did I say it was a big miss? However, the unemployment rate remained essentially unchanged at 6.1 percent. At the same time, wages rose 0.7 percent from March and the labor force increased 430,000 overall. As first glance, it seems the economy is sending us lots of mixed signals. But is it? Taking a bit closer look at the numbers provides us some answers and the key is the labor market.
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At the same time, the quit rate has increased. The quit rate refers to employees who leave companies of their own accord as opposed to being fired or laid off. In times of economic uncertainty, quit rates drop. When the economy improves, quit rates increase. Today, the quit rate is above where it was pre-pandemic despite the fact that overall jobs in the U.S. economy have not reached pre-pandemic norms. This is a sign workers are finding better opportunities—or more money—elsewhere and therefore willingly leaving their jobs. It is also another indicator of a very tight labor market.
