Why Work? It’s not just COVID causing our workforce crisis.
It’s no secret that America has a labor shortage. Anyone who has seen their favorite cafe curtail its hours and menu knows the problem. It’s not just sick and quarantined employees. As shown in the chart below, employment is still 3 million workers short of pre-pandemic levels. The problem will eventually be solved through automation or immigration or both. Meanwhile…
WORKERS QUITTING: In June, almost a million Americans sought new jobs because they quit a previous position, according to the Bureau of Labor Statistics. 164,000 quit in June alone!
Employment still trails pre-COVID levels. |
At a recent wedding, I was startled to learn that the bride and groom planned to leave their high-paying jobs to circumnavigate the globe for a year. Another couple revealed that they were quitting to travel across the US for six months before their child entered elementary school. All in high-demand tech professions, they have no concerns about finding jobs upon return. Where there are four, there likely are more.
Less affluent parents, furloughed, have concluded that the joy of spending time with their children exceeds the net return after childcare. They will not return to the workplace, but might consider remote work.
Then there is my neighbor’s son; like a number of Gen Xers and Millennials, he quit work to become a day trader in stocks and crypto currency. Indeed, why work for a modest wage when the stock market and crypto currency are doubling or better in a year? In addition to greater returns, owners of capital now pay lower taxes than their workers. Figure 2 shows how the Trump tax cuts accomplished this, for the first time in modern history.
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ALL RISK, LITTLE BENEFIT: Another reason people are reconsidering work is that companies are offloading risk and expenses onto gig workers, while reducing their pay. Real estate and travel companies expect agents to find their own clients and work on commission. As part of the new school voucher program, a “micro-school” company in New Hampshire keeps half a student’s funding. Then it expects the micro-school “guide”, an independent contractor, to find their own students and use their home as the classroom in exchange for a per-pupil commission. This places potential liability squarely upon the low-income, educationally uncertified “guide.”
DEMOGRAPHICS: Part of the worker shortage is simple demographics, as shown in Figure 2. Workers approaching retirement have concluded that they may as well stay home since they face difficulty finding a senior position in companies that prefer younger and less pricey employees. Also, COVID fears likely weigh more heavily on older workers. The help-wanted site Indeed surveyed unemployed and found many wanted their co-workers all vaccinated before venturing back to onsite work. At the other end of the spectrum, there are simply fewer teens approaching working age than in the cohort now in their 20’s. This means the situation will worsen before it improves, unless we allow widespread immigration by families and young adults.
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UPSKILLING: Meanwhile, the end of the federal bonus has brought some experienced workers back to the workforce, as it displaced inexperienced teens who were taking their places.
Currently, about one job opening exists for every unemployed worker. But there is a skills mismatch, or “structural unemployment.” Few restaurant workers, who left high-stress, low-paid jobs with no benefits and unpredictable hours, qualify for tech jobs. One industry that is hiring them is cannabis: “An estimated 321,000 Americans, a 32% increase from last year,” the Washington Post reports, “making legal marijuana one of the nation’s fastest-growing sectors. In other words: The United States now has more legal cannabis workers than dentists, paramedics or electrical engineers… Hourly pay at dispensaries…runs from $12 to $15, in line with most retail and warehouse jobs. But given the newness of the industry, entry-level workers can often move up in less than a year to more specialized positions…”.
NH-SPECIFIC PROBLEMS: Of course, in New Hampshire only medical cannabis is legal, that industry offers fewer jobs. Meanwhile, our under-18 population is dwindling and our over-65 population is rising faster than the national average. It’s a primary reason that New Hampshire’s business quality rating dropped from 27th to 35th after the census. We also lack affordable housing, transportation and childcare needed by low- and middle-income workers. Our wages tend to be about 25% lower than our neighbor to the south, more than making up for MA income tax.
Workforce shortages will only worsen. The one business rating on which New Hampshire earned an A+ was education. The new voucher program passed this year is back-loaded so that its impact will not be felt until after 2022 elections, but its goal is to close smaller, less wealthy, rural schools. Quality of education is the top reason for families to choose a residence. Lack of good schools will deter families unable to educate their children on a $4140 voucher from moving here.
And then there are those who would rather lose their jobs than get vaccinated. And the medical personnel burnt out from treating the unnecessary illnesses caused by the unvaccinated. But that’s another story:
