Market Overview
Work, in progress
Having a little trouble getting some assistance in Home Depot’s plumbing aisle? Is your favorite restaurant closed at least one night a week now? Did you walk in for a haircut but walk out with an appointment for next Tuesday?
Welcome to the labor shortage of 2021. Some blame it on the Covid-19 pandemic. Some blame it on the extraordinarily generous government response to it. But here’s another thought: Something like this was bound to happen, and the events of the past year and a half just caused it to happen sooner rather than later.
USPFA doesn’t give us free iPhones. Hey, boss …! Credit: Business Insider
What’s changed
The most obvious change in the workplace since 2019 is the lack of it. According to a Pew Research study last December, roughly two-thirds of those working from home said it’s because their workplace was not available; the other one-third actually chose to work-from-home. On the surface that’s surprising, but a follow-up question revealed that the majority of all these remote workers was not looking forward to returning to the office.
Not that telecommuting is all that great either. Parents are having trouble getting work done without interruption while those who are still fairly new to the work force aren’t feeling motivated without the presence of their coworkers and bosses.
Also, so-called Zoom fatigue is a real thing. It’s the burnout that comes from too many videoconferences. Then again, we don’t know of any pre-2020 studies that looked at in-person meeting fatigue. So, who knows if the medium is the real problem?
Of course, not everyone has meetings for a living. We’re talking mostly about those with advanced degrees and higher incomes, who found out what they had always suspected: With 21st-century technology, there was no earthly reason to go into the office except to steal pens, paper clips and printer ink. But what about blue-collar workers?
“About three-quarters or more of those employed in retail, trade, or transportation (84%); manufacturing, mining, construction, agriculture, forestry, fishing and hunting (78%); and hospitality, service, arts, entertainment and recreation (77%) say that, for the most part, the responsibilities of their job can’t be done from home,” according to Pew. “Two-thirds of those in the health care and social assistance sector say the same.”
Pew found that these employees are generally satisfied with the measures that have been put in place to protect them from being exposed to the coronavirus. That though might be the end of the list of what they’re happy about.
Roughly one out of four workers are less satisfied with their jobs than they were pre-pandemic. The vast majority of workers say their chances for advancement are no better, nor is their job security, nor is the perceived quality of management. Surprisingly, flexibility in scheduled hours – what had been touted as a silver lining of the pandemic’s impact on work – is little better.
So, it’s no wonder that many workers have just stopped showing up. In April 2021, 4 million Americans – more than in any previous month – quit their jobs. Welcome to The Great Resignation.
“Take this job …”
From March to April 2020, the unemployment rate skyrocketed from a healthy 4.4% to an astonishing 14.7%. That means almost 16 million people were thrown out of work.
The government had to do something, even if it wasn’t the optimal thing to do. Rather than follow the lead of many other leading economies – paying employers to keep everyone on the books until this whole thing blew over – the Republican White House, Democratic Congress and Republican Senate agreed to send each individual an economic impact payment, then pay anyone who was out of work hundreds of dollars a week of unemployment insurance, whether or not they ever paid into the trust. When the Democrats won the White House and both houses of Congress in January, they repeated this and threw in a tax credit for every minor child of every taxpayer, payable in chunks of $300 per month rather than as a refund on taxes at year-end.
It was bound to happen that, for workers in low-wage jobs, it made more economic sense to stay home and collect that money than to punch in at work. But this doesn’t mean they were idle.
Lots of people took the opportunity to make good on the dreams they had before they got stuck at a $12-an-hour job. They took classes and started better careers. Some opened their own businesses. In 2019, 3.5 million businesses started up in the U.S. The following year that figure surged 24% to 4.4 million.
And of course, there are people gaming the system or just being unmotivated. As this article is being written, the CARES Act’s unemployment benefits had just run out, affecting 11.6 million people. We’ll soon see if they go back to filling tough, dirty jobs.
But we’ll also see how much that job is worth. There are 10.1 million jobs to be had, so the numbers are in rough symmetry. Skills matching, though, becomes the real challenge. It is unlikely that, in the current environment, employers can go back to paying the pre-pandemic minimum wage of $7.25 per hour. When you consider that CEO pay has grown 1,322% since 1978 – a figure unsupported by stock value or earnings growth -- while average wages increased only 8.8%, the case can be made: The government subsidies weren’t too high. The prevailing wages were too low.
“Don’t work for your money …”
Regardless of how work changes, though, the old adage still has the ring of truth: “Don’t work for your money – make your money work for you.”
Easier said than done, of course. The years you spend gaining expertise in your field brings with it the opportunity cost of having blind spots in other areas of expertise. It’s always good advice to reach out to a respected financial professional for advice on how to manage your money – however you came by it.
