By FRANK STRICKER
So where the heck are we on the job front? The Bureau of Labor Statistics report on employment in August included contradictory information. Payroll job totals of government and non-farm business employers showed an increase of 315,000 jobs. Yet in the household survey unemployment increased by two tenths of a percentage point to 3.7%.
More Workers Got Jobs but Unemployment Increased
In the household survey, unemployment rose, but the number of people with jobs rose by 442,000. More people were working, and more were looking for work and not finding it. The labor force is composed of these two groups, and it increased by 786,000 people. For those who want more people working and for employers who are short of staff, this is good news.
On the workers’ side, there’s a key question: are more people searching for jobs because they are now less confident that they will be able to find half-way decent jobs later? Kristin Myers, who writes for The Balance Today (September 2, 2022), advises that if you want a raise, ask for it now while you still have some leverage. And that leads me to ask: if you are thinking about looking for a new job, shouldn’t you start now, when you still have a little extra bargaining leverage?
Is the Economic Steam Roller Moving Toward a Full-Blown Recession?
Does the current report tell policy makers, especially Federal Reserve Chair Jerome Powell, that the economy is still too strong and that unemployment is still too low to force workers to get desperate about getting a job. We need more unemployment for a longer time. But can we avoid a recession? That depends on policy. Several months ago, Powell stopped talking about a “soft landing”– slower growth but no recession. Just to confuse the issue, Powell is now talking about a growth recession. What’s that? Normally recession means no growth or negative growth. How about using honest labels? Among prominent economists, Paul Krugman thinks we can get inflation down with less economic growth but without a recession. Maybe that’s what Powell means. Former Treasury Secretary, Larry Summers, is a tough guy. He thinks we must have much more unemployment to cut inflation rates.
And Powell probably agrees with Summers. His anti-inflation strategy is to cut wage growth by raising unemployment and making it easier for employers to hire workers. But is this the right focus? Everyone knows that wage increases are trailing the general increase in prices. For average employees, the purchasing power of an hour of work in July was 2.7% less than in July of 2021. In fairness to the American people and the truth, Chairman Powell could acknowledge that wages are trailing prices and urge other federal agencies to come down hard on businesses that have benefitted from inflation. Oil companies are raking in record profits. The Fed chair might tell me that it is not his job to regulate nonfinancial businesses. But it is his job to tell the truth about the economy. One truth is that other governmental agencies and officials need to be going after the price-gougers. But mainstream anti-inflation dogma has long been about raising unemployment, not restraining corporate pricing power. The Biden administration seems okay with this.
So, the main U.S. anti-inflation policy is to stick it to working-class Americans. We may already be seeing some results. For example, the black unemployment rate has increased by six tenths of a per cent since June and has risen to 6.4%. The white rate is down a tenth of a point since June.
Some Recent Data Still Look Pretty Good
The JOLT (Job Openings and Labor Turnover) report for July did not show much new. Layoffs were up a little from extremely low levels in October-December, but they were still very low–the lowest in 20 years. Job vacancies were still high at 11.3 million. Worker quit rates were a tad lower, but still high at 4.2 million. That could indicate that quite a few workers still feel confident about quitting one job to find a better one.
Not Enough Good Jobs
Of course, it is already difficult for many people to find better jobs. Craig Woodling quit his job as driver-deliverer for an Amazon contractor in Orlando. He could not take the heat or the doubling of his quotas during the pandemic. It wore him down. And for just $18 an hour. That’s about $36,000 year and below any sane poverty line. So Craig’s job was lousy, and there should have been better jobs waiting for him. But now that he is actively searching, he is not finding the better job he desires in radio or information technology.
And, in general, there are more people in need of jobs than is indicated by the official 3.7% unemployment rate. The National Jobs for All Network estimates that real unemployment last month was 9.2%, counting all job-wanters and part-timers who could not find full-time work. NJFAN’s jobless totals make you wonder about employers’ claims that they are 11 million vacancies. And how many of those jobs are good jobs? That’s a good question. Vacancy rates are highest in leisure and hospitality businesses (average wage of $17.81), education and health services ($28.99), and professional and business services ($32.64). So there may be a mix of good and bad jobs waiting for workers.
In recent months we heard a lot about the Great Resignation. There really was a higher rate of worker quits in 2021-2022 than in any other two- year period since 2000. More workers were reflecting on the jobs they had and the jobs they wanted. I think many still are. The pandemic storm broke their quietude and unleashed long-simmering discontents about lousy pay, arbitrary schedules, arbitrary supervisors, and poor-to-no benefits. Meanwhile, federal income programs made it safer to quit. These exploding discontents not only made for more quits, but more organizing. A fair number of Starbucks outlets have unionized. Four thousand cafeteria workers at Google, employed by outside contractors, have joined a union. The numbers here are relatively small, but they reflect something hopeful.
Now we have a new headline phrase: quiet quitting. This is about employees deciding to contribute only the required minimum of work. No after-work calls from the boss and no take-home tasks.
Some commentators say this is nothing new. But we do not know whether more people are doing it now. I am guessing that there are more resisters, and I think their behavior registers the same winds that brought more union drives and more quits. In any case, it is good to be discussing these events. They are all part of a general stir that, I hope, won’t be permanently calmed by a recession and rising unemployment.
Frank Stricker is on the executive board of NJFAN and is a member of Democratic Socialists of America. He published American Unemployment: Past, Present, and Future, a history and commentary, in 2020. He adds: “I read a lot of articles and several government reports to help me think about my subjects, including the Los Angeles Times, The New York Times, Business Insider, and Dean Baker. Of course I put my own spin on what I read and use.”
In case you missed it: August 2022 National Jobs for All Network Newsletter featuring: NJFAN and a 21st Century Bill of Economic Rights; Raising Interest Rates is the Wrong Medicine for Today’s Inflation; and Analysis of the New American Labor Movement
One thought on “The Confusing Job Situation in August 2022”
How does Chairman Powell justify the unemployment he is creating? Creating unemployment mostly among low income workers does little to dampen the purchasing demand that he claims is driving the increased prices. Josh Bivens at the Economics Policy Institute says that wage growth has dampened inflation growth. I looked at RealTime Inequality, a web page sponsored by UC Berkeley economists, and it shows post-tax income share of the lower-earning 50% of adults as 20.7% of all income, average income of $37K (post-tax). Factor income (labor and capital only) for the lower 50% is 19.9K and 11.3% of all income. The next higher 40% has 41.7% share of income, the top 10% has 37.6% – post-tax income share. I found a report from Mike Konczal at the Roosevelt institute, “Prices, Profits, and Power”, that claims the corporate price mark-ups is at a 40 year high. It’s a complicated report that follows up on another report that traces mark-ups from 1955 to 2016, and Konczal continues the investigation to 2021. If costs are $100 and price is $160, then the mark-up is 1.6. Konczal’s report takes the data to 2021, and concludes “In 2021, markups suddenly increased to 1.72—that is, the average markup charged in 2021 was 72 percent above marginal cost.” The mark-up rate was 1.1 in 1955 and it rose steadily over the decades and was 1.6 in 2016. The case against corporations for opportunistic price gouging is very strong when one looks at the rise in corporate profits in comparison to pre-pandemic profits. The Fed’s FRED web page has several graphs showing large increases, maybe 35% to 48% higher.