I found this piece in the Wall Street Journal by Heather Haddon, Te-Ping Chen and Lauren Weber about an aspect of the post-pandemic recovery that has been too little considered. One side of the story is that erstwhile workers are being discouraged from seeking new jobs by generous federal, state, and local benefits. Another side of the story is that hirers are unable to find workers. The authors of this piece have an entirely different take—workers are “moving on”. They’ve left low wage deadend jobs in favor of brighter prospects:
After Covid-19 forced restaurants, hotels and bars to shut last year, thousands of workers didn’t just get pushed to the employment sidelines. Many, like Ms. Roshitsh, moved onto new careers in digital sales, shipping, mortgage-financing and other businesses that thrived in the pandemic, in what some economists say could mark a lasting shift in the labor market for hospitality staff.
That exodus, they say, could spell labor challenges for the sector that persist well beyond September, when the enhanced federal unemployment benefits that have helped keep some low-wage workers from returning to jobs are set to expire.
To try to lure workers back, many restaurant operators and other hospitality businesses are raising wages, offering signing perks and rethinking scheduling practices to make the work more flexible and, in some cases, less grueling.
While the new job-market dynamics have left such employers scrambling to find enough workers, they are helping many longtime cooks, servers, hotel staff and other hospitality workers break into new lines of work, often with more predictable schedules and better pay and benefits than their previous jobs.
At this point in the pandemic, says Brad Hershbein, senior economist at the W.E. Upjohn Institute for Employment Research, many such workers have “found employment somewhere else, possibly at a higher wage.â€
I wish the authors quantified things a bit more. All of those things could be happening at the same time to one degree or another. Whether what the authors point out is just incidental is anybody’s guess but the same could be said of the claim that workers aren’t seeking jobs because of generous government benefits. Stats from the NFIB support the claim that many businesses are finding it hard to find people.
Yet another factor that may not have been considered: how many people working here “without papers” returned home? Or went to Canada or somewhere else?
I continue to think that there are quite a number of business models including fast food and casual dining that are highly dependent on a constant supply of workers willing to work for minimum wage whose profit margins are just too narrow to pay higher wages. The measures mentioned by the authors (higher wages, signing benefits, etc.) call that into question. Again, I wish some of this stuff were quantified.
I don’t think we should exerting ourselves excessive to preserve the business models of niche businesses that are dependent on circumstances that are really not in the national interest if they are to survive.
When you add all of this up, it certainly looks as though the post-pandemic economy is going to be quite a bit different than the pre-pandemic one. The challenge is ensuring that the change is for the better. If a significant number of people are able to find better jobs with higher pay and brighter prospects, it may well be.
I’ve always said, when you need to find a quality investment banker to sell your business, find a good busboy tired of the grind.
Yeah, I found that amusing, too.
So wisecracks aside……….
I don’t know how these characters can possibly make such assertions yet. The government has inserted itself into the market wage structure. Until those payments burn off we won’t know.
As far as dependency of certain industries on low wage jobs, I’m leery of the notion that some work is menial. It still serves a purpose as an introduction to the workforce or as a second household income. My first job was as a busboy. I wasn’t quite ready to enter the M&A business.
I still believe the two most counterproductive (and perhaps cruel) policies encouraged by government intervention in my lifetime are: a) the willy-nilly importation of accept-any-wage immigrants (facilitated by transfer payments to US workers); it is de facto taxpayer subsidy of employer’s wage costs and b) government subsidy of Big Education through encouragement of worthless degrees financed by government. Great for administrators and the like; not so much the students.
Today’s workforce is very different from when you were starting out and totally different from when I was starting out. When I was starting out entry level jobs were frequently held by part-timers, teenagers, etc. Nowadays those same jobs are being held by adults trying to earn their livings, support families, while sending remittances back home. There is no real path from most of those entry level jobs to anything better and not enough of those better jobs are being created anyway.
I’m skeptical of the authors’ view but, since they quantify nothing, what can one say?
I think that policymakers should be considering the labor force as belonging in multiple categories and prioritizing the attention devoted to the categories. “We’re equally concerned about everybody” sounds nice but it’s a formula for non-action. In effect it translates into “we’re only concerned about ourselves”.
1) We have always had essentially open borders and immigrants, legal and illegal. The question should be why did it increase. Besides poor conditions that drove people wanting to come here (the push) Think the other change is that US employers decided in large numbers that they would find ways to illegally hire them to save money and increase profits. This was always present to some degree. When I lived in Texas long ago people commonly used wetbacks for child care, lawn services and such but, as best I can determine, you didn’t have wide scale use of illegals where whole meat packing plants were essentially all illegal immigrants.
2) Dave is largely correct about entry level jobs now. You do occasionally see teens at fast food places and in retail but it is mostly older folks. While there may be too much emphasis on degrees I dont think that affects entry level work that much. It also seems to me that the push to have kids get a degree comes more from parents, who perceive it as the way to get a better job.
Steve
That is untrue. It was true until about 1875 but has not been true since. If you’re saying that the laws have been imperfectly enforced, that’s true. The same is true of the laws against murder or theft. That does not mean that there are no such laws or that they are just ignored.
In the period from about 1875 to 1965 there were other formal and informal measures that served as remedies to unwanted immigration but I really don’t want to go back to those. So, for example, between 1917 and 1921 and 1942 to 1964 we had migrant worker programs, punctuated with occasional roundups of people who looked Mexican (including U. S. citizens) who were unceremoniously dumped over the border. Also until about 1900 freely available public education was pretty rare in the U. S. Now it’s an entitlement to which the children of immigrants, legal or illegal, citizens or not may not be denied. There are many other services today for which immigrants are eligible, legal or illegal. That dramatically changes the cost-benefit analysis for immigration, substantially complicating if not outright refuting historical arguments.
I do not argue and have never argued for anything different from the policies in places like Canada, Australia, and New Zealand—countries with which we have much in common and I don’t believe any of them is a fascist hellhole.
There are many problems with our educational policy not the least being that it effectively discourages young people from learning working skills (welding, etc.) that are greatly needed and can provide a good living and we aren’t producing many jobs in media arts, psychology, journalism, or other popular majors to employ young people in those areas.
There was no border patrol until 1924. Early on it was more dedicated to stopping alcohol entering the country. We didnt hit 1000 border police until 1940. We had no way to effectively control the border at those numbers. Yup, we occasionally rounded up people and kicked them out but even that was limited to when we were especially mad about it or had the funds. Not much stopped them from coming back, just those few hundred agents patrolling the border we cant control with over 20,000 agents, drones and Jeeps. It was not the ability to keep immigrants out that kept us from having higher numbers of illegals here.
Steve
The social acceptability of using immigrant labor, legal or illegal, is certainly ONE of the factors. There are many. There are both push and pull factors. Rising government overhead costs incentivize the use of illegal labor. The Interstate Highway system. The rise of criminal gangs in Mexico.
Like any other crime swift and sure detection and punishment of illegal immigration is a deterrent. That’s why I believe in a compulsory biometric eVerify system with substantial penalties for employers who don’t implement it.
“Nowadays those same jobs are being held by adults trying to earn their livings, support families, while sending remittances back home. There is no real path from most of those entry level jobs to anything better and not enough of those better jobs are being created anyway.”
That’s right. Which just goes to the issue of a very poorly considered immigration policy. It serves the interests of businesses taking advantage, the politicians taking lobbyist money or buying votes, the immigrant workers satisfied with the wages and immigrants who avail themselves of our welfare state. Does it serve US citizens/consumers? Well, yes, to the degree they enjoy lower cost consumer goods and services. No, to the degree they pay the taxes associated with the welfare state or suffer the lost wages or jobs taken by immigrants. Now, who can accurately allocate the cost/benefit to all that? Certainly not government. All you get is things like phony virtue signaling from politicians (unless you are Cuban) or the narrow ideological ax grinding such as Steve’s comments on employers.
Its a complicated problem that in my opinion can only be sorted out in the marketplace with a few guiding principals: 1) immigration is not a right, its a privilege, 2) thought should be given to needs, 3) there should be a waiting period for citizenship and receipt of state benefits, and 4) bad actors should be deported.
Its a real problem, but as a country we aren’t really serious about resolution, so I’m not encouraged.
Reading this it seems like you 2 believe that all these entry level jobs are manned solely by illegal (mostly) immigrants. The very large majority that I see are older white people. The ethnic restaurants have people of the appropriate race/nationality outgo to Target, Walmart and most regular restaurants and it is white people with a lot of them older, late 40s and up.
Steve
Steve