A JOLT to the Labor Market

The Pitch: Economic Update for December 9, 2021

(The Pitch is a weekly economics newsletter written by Zach Silk. Sign up for free on Substack to receive a new issue in your inbox every Thursday.)

Friends,

Yesterday, the Bureau of Labor Statistics released their monthly Job Openings and Labor Turnover survey. In normal times, the JOLT survey doesn’t usually carry the same weight as the monthly unemployment report — but of course we are not living in normal times. In fact, I’d argue that due to the volatility of the labor market, the JOLT survey currently offers a clearer picture of what it means to work in America right now than the monthly unemployment number.

So what does this month’s JOLT survey tell us? Some 4.2 million Americans quit their jobs in October — just slightly lower than the record 4.4 million who quit in September. And the survey found a near-record 11 million job openings, just under this summer’s all-time high. In short, if you’re unhappy at your job, you should consider this your signal to quit and find a better employer. The labor market hasn’t been this strong in decades. Of course, all those open positions have translated to increased wages, and the Wall Street Journal reports that employers are planning to raise paychecks significantly next year, but those bigger paychecks have thus far been eaten up by increased inflation, so workers are currently treading water in terms of spending power. If higher costs start to come down while the labor market is still roaring, the middle class will enjoy an economic boom like nothing they’ve ever experienced.

The Latest Economic News and Updates

Buffalo Starbucks store becomes first American Starbucks to unionize

This morning, the news broke that at least one of the three Buffalo Starbucks stores voting on union representation this week has approved unionization. This comes on the heels of Kellogg’s announcement that it will move to replace all 1,400 striking workers at their factories. These stories are still developing, and we’ll have a lot more to say about them in upcoming issues.

More good news than bad in November jobs report

Preliminary reports from the Bureau of Labor Statistics say the US added back just over 200,000 jobs in November, with unemployment falling to a pre-pandemic-level 4.2 percent. (I use the word “preliminary” only to recognize that the monthly jobs report has been steadily inaccurate of late, with the BLS massively underestimating the number of jobs added for most of this year.) About 83 percent of the jobs lost during the pandemic have been added back. Despite the underwhelming topline number, this jobs report showed some positive signs for workers of all races, and for the transportation and warehouse sectors.

But it’s not all good news. Heidi Shierholz warns that hiring is way down in government jobs, with almost one million fewer state and local government jobs available now than at the start of the pandemic. She also warns that wage growth slowed down over the past few months compared to the spring and summer of 2021.

A different kind of economic recovery

Skanda Amaranth shared the below chart comparing job growth following the pandemic to job growth in other economic recoveries. The job gains America has made over the past few months has been remarkable and — yes — unprecedented. And this week, the total number of unemployment claims dropped to 184,000 — the lowest level in 52 years. Why is this current jobs recovery so robust? For one thing, we must acknowledge that a pandemic makes a different kind of economic impact — swifter and deeper — than a prolonged recession. But we also can’t ignore the fact that our modern recessions have been followed by periods of increased austerity, in which the government cuts back on investments in ordinary Americans. The Biden Administration did the exact opposite, pushing for a robust recovery plan, a large infrastructure bill, and — fingers crossed — a once-in-a-lifetime Build Back Better plan that will continue to ensure the middle class, and not the wealthiest one percent, make economic gains.

And Claudia Sahm notes that Biden’s economic policy has resulted in more jobs, increased business investment, and — this is an under-reported success story — hugely increased wealth among the bottom 50 percent of the economy:

A shortage of exploitative low-wage jobs

In September, Economist David Autor wrote about the labor shortage for the New York Times, but I wanted to resurface his piece and re-examine it after several more months of strong jobs data. Autor offers the very convincing possibility that this Great Resignation may not be solely pandemic-related. He argues that the labor shortage may continue for some time, with worker shortages continuing in sectors that have traditionally offered low-wage jobs.

“For years, social scientists have warned that because of declining birthrates, retiring baby boomers and severe immigration restrictions, we’re approaching an era of labor scarcity,” Autor writes. “The good news is that this long-term demographic crunch is going to make cheap labor more rare.” So far, his prediction is right on.

Fighting inflation from the bottom up

Despite all the good jobs news, we can’t forget that inflation is doing serious damage to American families. Mohamed Younis writes for Gallup that “45% of American households report that recent price increases are causing their family some degree of financial hardship. Ten percent describe it as severe hardship affecting their standard of living, while another 35% say the hardship is moderate,” and 7 in 10 low-income Americans are experiencing hardship due to inflation.

As I noted above, many policymakers call to react to every crisis with austerity measures like budget cuts and slashes to social safety net programs. That is not an appropriate response to high inflation, as the Center on Budget and Policy Priorities notes in a new report. CBPP reminds lawmakers that the Build Back Better Act would not increase inflation, and the services it would provide will help low-income families address the pressures caused by high prices. Separately, the CBPP is calling on Congress to renew the Monthly Child Tax Credit Payments as both an anti-poverty measure and as a way to help families with higher inflation. I especially appreciated this table showing where families have been spending their Child Tax Credit, which indicates the program is working exactly as expected:

President Biden’s economic policies are still popular with both parties

Much has been made of President Biden’s approval ratings, which declined when prices skyrocketed in the late summer and fall. But given that more people are seeing benefits from the economy, it should be no surprise that President Biden’s economic policies remain very popular. Navigator Research finds that the American people still widely approve of the Build Back Better plan — particularly when paid family leave is included in the plan — even as they disparage President Biden’s leadership on the economy. And the American Rescue plan is still incredibly popular regardless of party affiliation:

That’s a lot of seemingly contradictory information. When we talk about Biden’s polling numbers, it’s important that we remember that those numbers seem to largely be related to high prices and don’t reflect a lack of confidence in policies that broadly benefit more Americans.

Real-Time Economic Analysis

Civic Ventures provides regular commentary on our content channels, including analysis of the trickle-down policies that have dramatically expanded inequality over the last 40 years, and explanations of policies that will build a stronger and more inclusive economy. Every week I provide a roundup of some of our work here, but you can also subscribe to our podcast, Pitchfork Economics; sign up for the email list of our political action allies at Civic Action; subscribe to our Medium publication, Civic Skunk Works; and follow us on Twitter and Facebook.

• On Civic Action Live, we’ll continue to investigate the numbers surrounding the labor shortage, including David Autor’s compelling claim that it could mark the beginning of a long term decline in low-wage, exploitative jobs. We’ll also look at the polling indicating that economic policies which broadly benefit a wide swath of Americans are more popular than ever, and we’ll take your economic questions in real time.
• On the Pitchfork Economics podcast, Mehrsa Baradaran explains all the ways in which banks penalize their poorest customers, with households earning $25,000 per year paying roughly ten percent of their annual income on exploitative and predatory banking fees.
• On our Civic Skunkworks Medium page, Goldy unveils the wealthy .01 percenters who are trying to repeal Washington state’s new capital gains tax, which would equitably invest a modest tax on the extraordinary profits made from the sale of stocks and bonds into education for the next generation of Washingtonians.
• And in his Business Insider column, Paul explains why politicians should stop leaning on penalizing, eat-your-spinach-style environmental policies to combat climate change and instead aim for optimistic policies that promote fast, cheap, and effective green energy solutions instead.

Closing Thoughts

It’s up to leaders at every level of government, from federal to state to local elected officials, to find new ways to invest in the people who have been hit hardest by the pandemic. I wanted to spotlight an interesting program here in my home of Seattle that directs federal funds to the heroic workers who have been most impacted over the past two years. Paige Cornwell writes for the Seattle Times: “More than 3,500 of Seattle’s child care workers will receive one-time payments of up to $835 this month, city officials said Tuesday. The payments, totaling nearly $3 million, are part of a $128 million spending plan that came from federal COVID-19 relief funds. That plan was approved by the Seattle City Council in June.”

This spending is about more than just doing the right thing — though it certainly is that. It’s about investing in people who need it most. It is a shameful fact that child care workers on average bring home salaries that are just above the minimum wage, even in wealthy Seattle. Those workers will spend those checks in their communities — just in time for holiday shopping — and their consumer spending will circulate positive effects further throughout Seattle than any billionaire tax cut ever could. That’s how the economy really works.

Be kind. Be brave. Mask up. Get vaccinated — and don’t forget to get your booster shot.

Zach