Too Many Inputs
Let’s be frank: No one understands what’s happening in the labor markets right now. It’s unnerving to hear experts and pseudo-experts on CNBC and elsewhere projecting authority while uttering disconnected and contradictory talking points. Roughly 12 million people have left the labor force since Covid arrived, and where they are and what they’re sitting out is murky.
But it’s clear that these workers are key to stabilizing retail businesses, most of which are operating on reduced hours and days; strengthening domestic supply chains, hamstrung by lack of logistics capacity; and restoring employment in depleted fields like medicine, child care, and education. My daughter’s Spanish teacher quit Minneapolis Public Schools the day before school began, no explanation offered. There is no one in reserve to teach the high school class.
A big factor in this mystery is our growing penchant as a nation to only accept data points that comport with what we want to believe. It used to be that business was immune to an ideology-based approach to metrics, but here we are. It’s also true that business has long relied on state and federal departments of labor, and right now government is not an impartial arbiter on Covid impacts. Florida sees one reality, California another.
As I write this, it’s been two weeks since the federal Covid contribution to weekly unemployment insurance ended. The government has given away an extraordinary sum of money, some to individuals and some to business. It hasn’t always been precision-targeted, nor has it always gone to the most deserving.
Free money is not a harmless phenomenon. Workplaces are understaffed, with declining morale among employees working longer hours. One restaurateur said her normally copacetic staff were getting into fights because they were so stressed out.
More importantly, it has become exceptionally easy to game unemployment because the state of Minnesota, for one, is not really checking if people can find work. It’s a problem that existed pre-Covid but is orders of magnitude larger today. I talk to owners who tell me that most of their scheduled job interviewees are no-shows. They set up the appointment to assuage the state, but apparently Minnesota never checks if they appear.
I hear from operators and owners almost every day who are in touch with ex-employees who say they will stay on the dole until someone takes it away. It’s better than a service industry job. Learning to live with an endemic virus includes returning unemployment compensation to a benefit for people who lost work and cannot find new jobs.
Free money is not a harmless phenomenon. Workplaces are understaffed, with declining morale among employees working longer hours. One restaurateur told me her normally copacetic staff were getting into fights because they were so stressed out. Businesses that can’t operate normally disappoint customers, which jeopardizes their capacity to stay open. It’s not sustainable.
But this era is also a reckoning for trades and industries that have long relied on substandard wages and benefits. The demand curve has flipped, and workers will have leverage for a while. Businesses that have relied on cheap labor to satisfy tightfisted consumers will have to rethink their model. Especially if your workplace is difficult to mitigate for Covid. People seem to have options.
It’s probably long overdue. Just as business can’t fund an unemployment compensation system that pays people not to work because available jobs don’t light their fire, we should reward the workers who have stuck it out through Covid.
But back to that murky 12 million. The state of Minnesota has said a lack of access to child care is the primary factor. Will schools reopening change this? It’s too soon to know, especially with Covid vaccinations still awaiting government approval for children, and skittish parents reluctant to expose them, even though the outcome data for children who get Covid is highly reassuring. The RSV virus, which isn’t being hyped relentlessly in the media, is putting far more kids in the hospital right now.
A major focus of what I call business trend media has been people who were motivated by the pandemic to change careers, especially people leaving the disrupted hospitality sector. But these people only show up in the long-term unemployment stats if their career change runs aground. I’m skeptical that they are a big player in this data, no matter how many articles the Wall Street Journal runs.
Finally, we must remember that there was a structural labor shortage in many fields before Covid.
There are really just too many inputs right now to make sense of it, and government has little to offer in the way of insight. Things should become clearer in the coming weeks with the end of enhanced unemployment benefits and schools back in session.
Covid is going to be a factor in our lives for the indefinite future. As a society we need to come to terms with the ongoing levels of risk and learn how to manage them, fast-tracking studies on effective and ineffective mitigation strategies for the workplace. This should already have been done, frankly, but we’re still wasting time “disinfecting” surfaces.
Business must not convince itself that it can wait out this evolving pandemic. But it would be easier to parse if we had more accurate data about what is going on.
Read more from this issue
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Too Many Inputs - Twin Cities Business Magazine
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