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tl;dr
ending UI had a minimal effect on employment, but dinged consumer spending significantly
https://files.michaelstepner.com/pan...tion-paper.pdf
Barry Ritholtz is a treasure
https://ritholtz.com/2021/09/cutting-ui/In response to employee shortages and hiring difficulties, 25 states in America ended enhanced unemployment insurance payments early.
The thinking: If we curtail generous unemployment benefits of the CARES act, these people would then go back to their former low-paying and/or unsatisfying jobs. The US still has 5.7 million fewer employed than before the pandemic.
Today, the Wall Street Journal reported that “Nonfarm payrolls rose 1.33% in July from April in the 25 states that ended the benefits [early] and 1.37% in the other 25 states and the District of Columbia [that did not].”
In other words, the promised benefit of ending UI benefits early was not evident in the data.
This should come as no surprise: As we have detailed here, those pushing for early benefit termination 1) used an outdated, misguided model of lower-wage workers; 2) ignored data about the state of the labor market; 3) assumed a positive impact on labor shortages that was highly unlikely.
Start with a lack of available child care and concerns about Covid so often cited by economists. That only gets you part of the way to why those ending UI had little or no impact. There are myriad underlying reasons driving this phenomenon — and if you understand these, you will understand a lot more about what is going on today.
It is also why I am so constructive: My view of the expansion is the economy is mid-cycle, not late-cycle/Fed dependant; this implies the market has further — perhaps much further — to run. Let’s look at the data that is informing my perspective
Consider those changing careers: As noted in Elvis (Your Waiter) Has Left the Building, “Waitstaff, bartenders, hotel maids, busboys, dishwashers (and others) used the year of lockdown to level up, gain new skills, find not new jobs, but new careers. They have exited difficult, thankless, dead-end jobs for a chance at the American Dream.”
Any hypothesis is just an empty theory without the data to back it up. There are two key data points that support this idea:
1) New business formation has been substantial; in 2020 it was near record-breaking pace.
2) The Quits Rate is not only above pre-pandemic levels, it reached an all-time high at 2.7%.
We’ve never had more gainfully employed people quitting their jobs to do something else, and we never have had more people starting up new businesses than ever before. The balance of power between employers and employees is shifting. As noted here in June, “Job openings at record highs, Quit rates at record highs, new business formation at records highs . . . why, it’s almost as if these things are related!”
What are the new gigs that have people refusing to go back to their old jobs? We have seen an explosion in:
-Mobile apps
-FinTech & finance
-DeFi, Crypto/Blockchain
-Content creators, influencers, and new media
-Non-traditional assets
-Creator/Etsy retail
-Online services
-Angel round funding of countless tech start ups
And so much more.
There is a Tsunami of available capital washing over the land. It is not just the$ 4 trillion in the various CARES Acts’ monies, but an endless sea of seed dollars and angel funds and venture capital and private equity and investor dollars ready to be put to work. If you have a smart idea and a half-decent team, lack of capital should not be your impediment.
And while that much cash will always lead to pockets of froth, that should not paint your view of the entire market. If someone wants to pay $12 million dollars for an NFT of a rock, and someone else wants to pay the same for a 60-year old Ferrari, those are one-offs, not necessarily reflective of broader deeper more liquid markets.
The genius of the gig economy is not a million serfs driving cars for someone else, but that apps like Uber and Task Rabbit opened so many people’s eyes to starting their own business versus working a menial job for low pay and zero satisfaction. Why hate a low-paying job when you can take a risk with launching your own firm? If it doesn’t work out, you end up in similar places financially, only one gives you valuable experience and much more satisfaction and control.
Sometimes the world is a confusing mixture of crosscurrents, unseen causations, coincidences, and randomness. These are the times when nothing seems to make much sense, you cannot figure out what is going on, and are forced to grope about blindly.
2021 was not one of those times.
Select the correct data set to review and you can discern the world quite clearly: You see other people’s biases and motivations, you understand the causal relationships occurring, and even though it may lead you to an outlier conclusion, you can have sufficient confidence in your own methodology to comfortably embrace being outside of the mainstream.
To get this right, all you need to do was look at the data without outmoded, ideological, and yes, racist views of the bottom quartile of the labor market.
tl;dr
ending UI had a minimal effect on employment, but dinged consumer spending significantly
https://files.michaelstepner.com/pan...tion-paper.pdf
take this job and shove it
...& waiting for their state unemployment benefits to expire as they waited their Federal benefits to do likewise. They salted their money and worked/work off the grid on the Internet, et al.
They'll be back, after the New Years holidays, and not until.
yeah, but who's going to believe the red diaper babies at JP Morgan?
labor strikes ticking up too: Alabama coal miners, John Deere, Kaiser Permanente, Frontier Communications, film/TV workers...
elder care too.
like most of the indispensable (yet uncompensated) work of social reproduction, that mainly falls on women.
7. More & more Americans trying to get on non COVID disability.
Yep, if you're gonna the bed, now is the time.
Federal unemployment benefits ended at the end of August, some states ended it even sooner.
Since then, there's been a record level of quits.
https://www.bls.gov/news.release/jolts.nr0.htmThe number of quits increased in September to a series high of 4.4 million (+164,000). The quits rate
also increased to a series high 3.0 percent. Quits increased in several industries with the largest increases
in arts, entertainment, and recreation (+56,000); other services (+47,000); and state and local
government education (+30,000). Quits decreased in wholesale trade (-30,000). The number of quits
increased in the West region. (See table 4.)
I think the people protesting getting vaccinated are going to find their ability to find a new job... limited.
Quits don't get unemployment insurance.
Suxxors: Those of us who pay insurance premiums are going to have to pick up the expensive costs of the unvaccinated. Holy balls.
I seriously doubt 3% of the workforce quit just because of vax mandates
Quits don't get unemployment insurance.
Suxxors: Those of us who pay insurance premiums are going to have to pick up the expensive costs of the unvaccinated. Holy balls.
Welcome to the penumbra of universal HC. Here you thought you'd be the recipient.
Quits don't get unemployment insurance.
Suxxors: Those of us who pay insurance premiums are going to have to pick up the expensive costs of the unvaccinated. Holy balls.
There's a lot of things happening to cause this. Doors being shut in industries where workers need daily activities to make money means they cannot stick around. Businesses trimming their workforce during the 1st sign of hardship means people will pre-emptively look for better work. Businesses capitalizing on federal funding to post record profits while at the same time "tightening their belts" which means raising the EPS for shareholders through internal audits (which is just a euphemism for "we keep more of the money"). This leads to early retirement by people not wanting to deal with it.
A few years ago it was common for people to just keep working because they didn't want to tap into their retirement, especially if they worked from home or had an office job that was relatively low stress (seasoned managers with a veteran workforce). Now people are walking away at 55. Several of my friends and former colleagues have retired around that age when they'd planned on going till mid 60's. That's 10 years of seasoned workforce that moved to not even looking for work.
But hey, there are jobs available.
What do you mean here?
Hoarding profits then crying about the labor shortage
it's the COVID
https://www.axios.com/the-labor-shortage-is-a-health-problem-194351f9-93e3-41c6-b3ba-6676068bf821.htmlAlmost half of unemployed Americans say health issues are the primary reason they're not working, according to new survey data from McKinsey, shared exclusively with Axios.
Why it matters: If one of the key drivers of the labor shortage is Americans' physical and mental health, rather than any lack of economic growth, then that means the Fed is not well placed to get millions more people working.
By the numbers: Mental health problems have reached epidemic proportions. McKinsey's American Opportunity Survey polled 5,000 Americans and found that 37% of them had been diagnosed with mental health issues, or sought treatment for their mental health.
Between the lines: The survey found that 16% of respondents were unemployed, with 9% looking for work and 7% not looking. Those numbers are much higher than the official unemployment rate of 4.2%.
- Health was by far the main reason they said they weren't working. 15% said it was because of their mental health, and 30% said it was because of their physical health.
- Among unemployed people who are not looking for work, the numbers are even higher: 20% say it's because of their mental health, and 45% say it's because of their physical health.
- Where it stands: Health-related unemployment is on an upward trajectory, compared to the last time the survey was run, in March.
The big picture: The number of American jobs is about 9 million lower than the pre-pandemic trend. Only 59.2% of Americans are employed, down from 61.1% pre-pandemic and a high of 64.7% in 2000.
Quits hit another high in November
Quits hit another all time record in March. One wonders how big a dent COVID has put/is putting in the US workforce.
~~~
+/- MF Biden has forked out 50 billion dollars to Z'land just to moon President Putin...AND so he doesn't end up back out at Dover, AFB with the children & his Timex...
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