Yesterday’s employment or “jobs” report was better than expected, which is a nice way of saying . . . not as bad as feared during a pandemic. Economists expected 350 thousand jobs were created last month and were pleasantly surprised to learn it was 638 thousand. This was despite a drop of 138 thousand in Federal employment, due to “completion” of the decennial census. The only downbeat piece of the report was that 1.15 million workers slipped into long-term unemployment. The longer workers are unemployed, the less likely they will ever find a job. Skills erode quickly.
Retailers are hiring faster than expected, attempting to “pull sales forward” in case another lockdown shortens the Christmas season.
There is anecdotal evidence that the new employees are working for less compensation, but that has not been confirmed yet. However, it does make sense that a huge increase in the supply of unemployed workers would decrease down their value or bargaining strength.
At this point, we have recovered about half of the jobs lost during the pandemic.
This report renewed the argument over the shape of our economic recovery. The Administration insists it is V-shaped. They are supported by the fact that corporate earnings have been running ahead of expectations, which is reflected in the stock market. Democrats are afraid it will be W-shaped, falling back into the V without additional stimulus. Most economists think our recovery will be shaped like a checkmark or the Nike-swoosh, which means that rising from the bottom will be slower than the fall. I agree!
The trauma of this pandemic will deepen the problem of income inequality, with the stay-at-home workers surviving nicely, while the service workers suffer. “Frictional” unemployment exists when workers are not in the same location as the jobs. Today’s work-from-home movement will help with that problem, at least temporarily. But, we still need to undo the damage of Congress’ failure to provide re-training for workers displaced from globalization twenty-five years ago. We accepted the benefits of globalization without paying the cost of re-training those workers, which Congress promised. We cheated a whole generation of workers, but it is not too late to pay that cost, if only for the benefit of the next generation.