Odd Times in the Labor Market

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The branch where I bank is closed for lack of staff. I had to make an appointment a week ahead to open my safe deposit box. I asked a worker about the closure, and she said the employees were sent home in 2020 on account of covid, and when they were called back in 2021 a bunch of them didn’t return. The bank doesn’t have enough people to keep the branch open.

A number of other businesses in Seattle have closed or reduced their hours for the same reason. Everywhere you see “Now Hiring” signs. I see an occasional billboard, normally appealing to customers, now appealing to job applicants instead. I can’t recall ever seeing billboards seeking employees.

I also notice that a fair share of retail employees, young ones mainly, can’t answer a simple question. For labor, this is a once-in-a-lifetime seller’s market.

That is reflected in the pay. In 2018, the median hourly wage in King County (greater Seattle) was $33.26; the median per capita personal income was $90,438 — two-thirds higher than the national average. For most workers, the minimum wage in Seattle is $17.27 an hour.

The latest unemployment rate in my area, King County, Washington, is 2.4% — the lowest rate of any of the 39 counties in the state.

If millions of Americans make better decisions about how to make a living, that could be a good thing.

 

I used to write about this stuff for a newspaper. The unemployment rate measures the percentage of adults who say they have actively looked for work in the past month and haven’t found it. If you haven’t actively looked at least once, the government figures you’re not serious — which is reasonable enough.

A year ago, I would have said that the cause of all this was the extended federal unemployment benefits. But they ended last September. And I’ve seen the statistics on the number of people around here who claim regular benefits, and the number is very low. There are obviously people not working, some of them camped in tents in the public parks, but they are not in the labor market. Statistically they are not that many. And they were around before covid.

What does it mean?

Some of the commentators talk of the Great American Quit, of employees who like not being in the office or at the plant and don’t want to settle for the old life. That’s all right; it’s their decision. If millions of Americans make better decisions about how to make a living, that could be a good thing.

Think of it from the employer’s view. They are getting used to operating with less labor. Many of them will keep doing it when they no longer have to.

I recall the newspaper where I worked two decades ago. When the union employees went on strike, the company had to put out the paper with management employees and scabs — and did it. They proved to themselves that they didn’t need so many employees. At the end of the strike, they called everybody back, but it had been two months and many of the people had gone elsewhere. And that was fine. The new head count was lower, permanently.

Employers are getting used to operating with less labor. Many of them will keep doing it when they no longer have to.

 

Newspapers are a dying business, so maybe that’s not a surprise. There are other dying businesses — branch banking, for one. The sign in my bank branch says it is closed temporarily, but I will not be surprised if it never reopens. What are bank branches for? To cash paper checks? How many of those have you handled in the past month? When’s the last time you had to stand in a line at the bank to wait for a teller? When’s the last time you’ve seen a bank build a new branch?

Even before my branch closed, it started charging non-customers to use its parking lot. Maybe the real estate is worth more than the banking business.

Even some of the bank’s cash machines are closing. How much paper currency are you using, compared to the pre-covid time? There is a national shortage of coins — and who cares? For decades, there has been a low-level agitation to get rid of the penny, because it wouldn’t buy anything. Maybe it’s time to jettison the nickel, the dime, and even the quarter. For years I kept quarters for parking meters and payphones. Now I pay the parking meter with a bank card or my phone. And coin-operated phones: what are those?

Coins have been around for more than two thousand years. Old technology.

The labor market is tight, not loose. But the winnowing-out is similar.

 

Another doomed business: cinemas. They were already in decline, and covid has hammered them. Where I am, they’re going to have a hard time affording the labor — or the real estate. Some cinemas may hang on, but they will eventually go the way of drive-in theaters, killed by the real estate market.

When the covid epidemic began, the politicians argued that they needed to spend a mountain of money to avoid a recession. On this page I wrote that no recession had ever started that way. And what we’ve been through is not a normal recession. The labor market is tight, not loose. But the winnowing-out is similar. As always, the weak trees are the ones blown down.

The epidemic is about over — at least in terms of masks, vaccination cards, and other hassles. (And about time!) The effects, however, are not over. A million Americans have died. And our economic life has been changed. Going forward, businesses will use less labor, particularly low-level, dumb labor. Americans are increasingly determined to hold out for the jobs they want. All this will tend to make the economy more efficient and the workers happier. The change can be annoying, but ultimately, I think, it will be a good thing.

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