There is no such thing as labor shortage.<p>There are low wages, poor working conditions and companies treating workers like slaves. Everything else is just an excuse.<p>Treat workers like humans, pay them fairly so they can live a meaningful life, give them a good place to work, and they WILL work.
So a huge pandemic has been raging through the world for almost 2 years now, massively reconfiguring the world in so many ways. lockdowns, deaths, fear, government subsidies, cheap money, GME and unions, several global mindshift changes e.g of how crucial low wage jobs are or how short life is. But the bean counters are confused about why “labor supply” is low. hmmmm<p>Or maybe they aren’t confused, they're worried.<p>> More broadly, the participation rate has generally underperformed in economies with large increases in household liquidity. The most notable case in point is Chile, where the participation rate declined by 5pp as fiscal support and pension withdrawals flooded households with liquidity.<p>“if people have money they might not work at jobs”. jobs that have systematically trained them over decades to expect a paycheck but nothing else, not loyalty or satisfaction or upward mobility or any semblance of agency. wow. fucking clueless.
I find it interesting that when discussing this nobody mentions immigration much or at all. The number of green cards awarded took a huge dip in 2020 [1]. As an immigrant myself, I heard a lot about USCIS (United States Citizenship and Immigration Services) slowing down considerably.<p>Could the effects of the pandemic on immigration, on top of the slow down in legal immigration that happened during the previous administration [2], not be a significant part of this perceived shortage in labour supply?<p>[1]: <a href="https://www.pewresearch.org/fact-tank/2021/03/22/key-facts-about-u-s-immigration-policies-and-bidens-proposed-changes/" rel="nofollow">https://www.pewresearch.org/fact-tank/2021/03/22/key-facts-a...</a>
[2]: <a href="https://www.cato.org/blog/president-trump-reduced-legal-immigration-he-did-not-reduce-illegal-immigration" rel="nofollow">https://www.cato.org/blog/president-trump-reduced-legal-immi...</a>
Funny how Goldman Sachs completely misses the entire PPP program, with a total value of $791,242,381,400 as of the latest report from the SBA.<p>Also funny how they missed that 83% of the value of all the 2020-21 Paycheck Protection Program loans were forgiven as of December 19th, 2021 [1]. That's a total value of $653,038,613,899. That's nearly as large as the 2008 bailouts. Even that doesn't tell the whole story because 94% of the 2020 loans alone were forgiven, and 2021 is on track to meet it.<p>Why only talk about one bailout, GS?<p>[1]: <a href="https://www.sba.gov/sites/default/files/2021-12/2021.12.19_Weekly%20Forgiveness%20Report_Public-508.pdf" rel="nofollow">https://www.sba.gov/sites/default/files/2021-12/2021.12.19_W...</a>
The lockdowns taught me how much money I was wasting each month. After the first month I had enough left in my bank account that I panicked and briefly thought I missed a mortgage payment or something. No, it just turned out that going to restaurants, bars, coffee shops, malls, etc., was just a lot more money than I was mentally tracking. I've completely cut them out of my life and have been putting an extra $700/mo into my Roth. It made me realize just how much of the economy is unnecessary and really just convenience-based, and largely invisible if you're engaged in the habitualized behavior. After looking at things through that lens, I just spend a heck of a lot less than I used to as I basically now categorize everything into "necessary" or "unnecessary." I don't see that changing. I now really enjoy cooking for family and friends and my freshly burr-ground coffee is perfect, every day, without a line.
The conclusions this article comes to re: the <i>reason</i> for the shortage (that is, that pandemic unemployment and emergency assistance prevent people from looking for work) are backed up by an article that predicates all it's findings on studying lottery winners: <i>How Americans Respond to Idiosyncratic and Exogenous Changes in Household Wealth and Unearned Income</i><p>This comes off as more than a little lazy at best, and totally disingenuous at worst.
I suspect there’s no single cause (as is the case for all complex issues), but I’ll just respond to those saying that the 1m+ excess deaths can’t be a cause because those people were predominantly retired: you need to consider the second-order effects.<p>When the 70+ population dies, dealing with the consequences is tough, both emotionally and organizationally. It’s totally plausible that their working age children need to take extended time off work to deal with grief and estate wind-up. And those who inherited substantial estates may not see the need to return to work - at least not right away. Their own retirement plans may have been effectively moved forward.
What they mean by "so low" is a change of just over one percent, and their explanation is that the modest benefits programs that ended in September are keeping people away from work in December. This is garbage from people who demonstrate no interest in comprehending the economy.
Five times "why" tends to give us more answers.<p>1) Why is the labor supply so low? Workers are not interested in the relatively low salary for relatively bad working conditions.<p>2) Why do salaries not rise? Mid-term the hard cap for salary increases is the increase in worker productivity.<p>3) Why does worker productivity not rise? It does rise, but far less than inflation (about 1% p.a. for the last ten years). Mostly due to micro-optimizations of existing jobs.<p>4) Why can't we increase productivity significantly? It would require a shift in how we structure work, i.e. stop doing things that shouldn't be done in the first place instead of optimizing them. Existing jobs will barely change, new ones will.<p>5) Why is this process not faster? Because both institutions and people are unwilling to change behavior on a large scale. Institutions because they did not need to (before the great resignation) and worker mostly out of habit and complete lack of economic understanding, aka. salary must be earned in form of generating revenue, not in the form of passing time.
So there are a few obvious issues - people don't want to work for low wages with no other benefit to their lives, so if they don't have to, they won't. But the blame is on companies here: if you raise wages high enough and treat your employees well, someone will do the job. In order to suppress wages, we've generally kept immigration high and kept social services low. As immigration has declined and we've recently injected cash directly into the hands of the people, wages have climbed.<p>But I think there's another elephant in the room that nobody has mentioned: the accumulation of wealth and its staying power over generations has created a large class of people that don't have to work (and have never had to). You don't have to be a billionaire to be in that class. If you inherit (or are gifted) a home, the amount of income you require to live is very low, certainly less than full time wages. If you additionally inherit money and have it modestly invested, you could easily live off that money and never work. Some of these people work, but not all, and they are quite able to take long breaks in employment during a pandemic if they choose. This class of people continues to grow every year as our methods for taxing wealth are ineffective. Frankly, assuming most of us are software devs or work for vcs - our children will probably be a part of this class of people. Some of you reading this already are. But I don't know how an economy continues with this class growing the way it has (ok, the answer is the wealth will eventually get inflated away but that will be a big problem for all of us).<p>There's also another class of people that are perfectly happy working part time and just getting by - this group is happier working a bit but not full time, and certainly not multiple jobs. The lack of motivation is tied to the lack of advancement options for all but a few. If you didn't take one of the few high-income tracks in university, and you don't have the technical chops for software, or the physical durability for a trade, there aren't great options for you to make a lot of money.
My pet theory isn't addressed at all. And it's weird they're comparing across other countries when the US is an outlier with housing prices.<p>Before the pandemic, there were many people just barely keeping up with the rent treadmill. Situations that maybe they wished they could leave, but would have cost too much to make the switch (or they'd seem like a social failure for giving up). Losing their employment (service industry) or losing their commute (remote workers) gave them zero downside to moving at the same time living in denser areas became a liability rather than a benefit. So they moved out to less dense areas with family in existing housing (safety during crisis). They found new jobs (eg package delivery), or just a bit of gig work for their much lower burn rate, or they're "unemployed" doing informal labor for family members. Moving back onto the treadmill would mean drastically increasing their burn rate, and they're not going to do that without drastically increased wages that not only cover rent, but make it <i>lucrative</i> to move back.<p>Basically the labor supply is sticky. This benefited businesses for decades by keeping wages down, but the physical pandemic flipped it to another stable state. Relief payments helped this along a bit, but they're merely the tip of the iceberg.
Pay bus drivers and school janitors and cafeteria workers enough to own their own home. Pay everyone enough to live the life they deserve to live as humans. For some reason we have gone down the path of exploiting and demeaning people and there is no turning back. I am surprised that both parties refuse are so disconnected from reality.
This is terrible social science:<p>-The data is incomplete<p>-They test only hypotheses regarding unemployment benefits and COVID health effects. The study design was geared to get the answer they wanted.<p>-They don’t ever ask why labor force exits in the US are dominated by women with children and workers over 55.<p>-They don’t ask why the biggest issues are in leisure and hospitality businesses, where weekly wages are 29% lower than retail, even after a substantial rise in 2021.
I think the real question is how people are actually paying their rent and buying food. If they don't need jobs, then they must be solving this problem somehow.
This article misses both the PPP program and the drop in supply of immigrant workers. Seems like they wrote the conclusion before doing research…<p><a href="https://www.cato.org/blog/us-issued-12-million-fewer-visas-work-eligible-foreigners-march-2020" rel="nofollow">https://www.cato.org/blog/us-issued-12-million-fewer-visas-w...</a>
I find it surprising that no one in the comments has mentioned that at least in the US, immigration, documented and undocumented is down. Especially documented. For all the negative comments from some circles about immigration, it doesn’t surprise me that it would contribute, at least in part, to a labor shortage.
The approach here of inferring US causation by comparing policy responses and outcomes in other countries is potentially useful tool for understanding what is going on, but it seems to ignore known facts about the actual nature of the LFPR decline in the US. Particularly, it ignores that more than half of the labor force reduction during the pandemic (through the second quarter of 2021) was through excess (above age-based trend) retirements.<p><a href="https://research.stlouisfed.org/publications/economic-synopses/2021/10/15/the-covid-retirement-boom" rel="nofollow">https://research.stlouisfed.org/publications/economic-synops...</a>
In my industry, we draw from the same labor pool as the construction industry, which is on fire right now. So we fight for people. Each industry has it's own story to tell.
Nearly a million adults died from COVID too, I'm sure that affects the labor supply. How many millions of people are we "short" in the labor supply precisely?
How about:<p>Aside from salary or possibly social connection, there’s better places to work that the us.<p>If people are going to work for crap pay, there’s far less tiring roles than pickers or servers. These have been filled with domestic or imported underclass. See Brexit.<p>If you don’t have to work to do what you like, why would you?<p>Schooling looks pretty good right now.<p>Why work just to pay child care?<p>I could go on, but as many have written covid has given everybody time to think rather than just go along day to day. Thinking is dangerous to the status quo.
When I read this it feels like the underlying question to be answered off it is "how do we force more people back to work?". Work shouldn't be mandatory.
I find it interesting to compare the written narrative vs the graphs.<p>The written explanation implies its entirely due to overly-generous unemployment compensation (the lazy youth meme that's millennia old). The graph in exhibit 10 implies at least half of it is due to long term demographic trends and early retirement (bye bye boomers). So the written explanation is blame lazy kids, and the graphical explanation is blame the tired elders.
Central banks and other researchers have been writing for decades now about the inevitable shift in labor markets as a result of the US demographic curve and retiring baby boomers. My POV is that the pandemic served as an accelerant, pushing more end-of-career folks into retirement (perhaps earlier than planned) and that employers haven't understood or accepted that the "mix" in the workforce is changing rapidly.<p>The impacts go beyond the usual arguments about social security / government-funded pension programs. The producer-consumer ratio is changing, which is increasing the value of producers.
Early on in this article there is a graph of the change in US, Canada, and EU wages over the past year. It is in "percentages of change".<p>I suspect that this article's question would be answered much more quickly if these wages were graphed in something like "value in the same currency".
This may be a bit stupid of a thing to say.<p>But didn't a bunch of people just die? Wouldnt this make labor more scarce and valuable?<p>Why is this continually framed as a "these lazy kids" or welfare thing?
Because mass death, displacement and dramatically reduced immigration.<p>I expect it to get worse as we face more pandemics and the climate crisis worsens.
Baby Boomers are retiring and dying off. So many of them held jobs without a college degree because they didn't need one out of high school or the military.<p>That and covid-19 killed the job market as people found they could last on unemployment rather than work a job.
The antiwork movement is extremely popular here on HN. Supporters of this view are brigade downvoting any view they see as opposed to this: especially if it suggests that government handouts result in people not wanting to work.<p>I think the desire for better pay and better work conditions are well founded. Most of our Fortune 500 companies are run by hired gun CEOs, not founders, that are trying to extract maximum short term profits at the expense of employees and customers and the environment. That is evil behavior.<p>The solution to bad companies that mistreat people is not stick out heads in the sand and claim that no one should need to work, the solution is to remove government monopolies (parents) granted to these companies, government contracting to them, and government bailouts.<p>We also need to find ways to expose the predatory financial classes: venture capitalists mislead entrepreneurs by saying they will support their vision but then fire the founders at high rates, private equity pays founders to leave then makes money by harming customers, employees, and the business, and the stock market gives perverse incentives based on short term profit.<p>Read Henry Ford's autobiography, he has a lot of brilliant ideas including keeping all of his companies equity so he could retain control and do things like cut prices every year on his cars while paying employees double the going rate.