The pandemic disrupted many Americans’ work lives. Some of
us — generally highly educated white-collar workers with relatively well-paying
jobs — were able to shift to remote work.
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Millions of other workers, especially
many poorly paid service workers, simply saw their jobs disappear when
consumers stopped eating out and traveling.
Now the economy is recovering — a recovery that will
probably continue despite the spread of the Delta variant of the coronavirus.
But many Americans don’t want to go back to the way things were before. After a
year and a half of working from home, many don’t want to return to the
stress of commuting.
And at least some of those who were forced into
unemployment have
come to realize how unhappy they were with low pay and poor working conditions,
and are reluctant to go back to their previous jobs.
To be honest, when businesses first began complaining about
labor shortages I was skeptical.
These kinds of complaints always surface when
the economy begins to recover from a slump and often mean only that job
applicants have gotten a bit less desperate.
Some of us also remember how,
seven or eight years ago, Very Serious People insisted that we faced a major
“skills gap” and would never be able to get unemployment down to the levels
that prevailed before the financial crisis. (Spoiler: We did.)
At this point, however, it seems clear that something really
is going on.
You can see this from the data on vacancies: There are far more
unfilled job openings than you would normally expect to see given the current
level of unemployment, which is still fairly high.
You can also see it by looking at what’s happening in the
sector hit hardest by the pandemic, leisure and hospitality (think restaurants
and hotels).
Employment in that sector is still well below its pre-pandemic
level; but to bring workers back, the sector has had to offer big wage
increases, significantly above the pre-pandemic trend.
In other words, some workers really don’t seem willing to go
back to their old jobs unless offered substantially more money and/or better
working conditions. But why is this happening? And is it a bad thing?
Conservatives insist that it is indeed a bad thing: Workers,
they say, are refusing to take jobs because government aid is making
unemployment too comfortable.
But they would say that, wouldn’t they? Remember,
they said the same thing in the aftermath of the financial crisis, claiming
that the unemployed were being coddled — when the actual reason recovery was
slower than it should have been was the destructive fiscal austerity imposed by
Republicans in Congress.
That said, the case for worrying about the incentive effects
of unemployment benefits is better now than it was then.
Aid to the unemployed
has been far more generous during the pandemic than it was during the Great
Recession; the $300 per week supplement to existing unemployment benefits
enacted in December and extended in March, although less than the $600 per week
supplement that prevailed for part of 2020, is, when combined with normal
benefits, enough to replace most or all normal earnings for less-well-paid
workers.
But have unemployment benefits actually had a major adverse
effect on employment? No.
State-level job numbers released Friday reinforced
the conclusions of earlier studies that found at most a small negative effect.
This time, Republicans inadvertently provided the data
needed to refute their own claims.
Many red states rushed to cancel enhanced
unemployment benefits earlier than their scheduled September expiration.
If
these benefits were a major force holding back job creation, these states
should have seen noticeably faster employment growth than blue states that kept
benefits in place. They didn’t.
But if it wasn’t government benefits, what explains the
reluctance of some workers to return to their old jobs? There may be several
factors.
Fear of the virus hasn’t gone away, and it may be keeping some workers
home. Child care is also an issue, with many schools still closed and day care
still disrupted.
My guess, however — and it’s just a guess, although some of
the go-to experts here seem to have similar views — is that, as I suggested at
the beginning of this article, the pandemic disruption of work was a learning experience.
Many of those lucky enough to have been able to work from home realized how
much they had hated commuting; some of those who had been working in leisure
and hospitality realized, during their months of forced unemployment, how much
they had hated their old jobs.
And workers are, it seems, willing to pay a price to avoid
going back to the way things were. This may, by the way, be especially true for
older workers, some of whom seem to have dropped out of the labor force.
To the extent that this is the story behind recent “labor
shortages,” what we’re looking at is a good thing, not a problem.
Perversely,
the pandemic may have given many Americans a chance to figure out what really
matters to them — and the money they were being paid for unpleasant jobs, some
now realize, just wasn’t enough.
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