JOBS GALORE; BIDEN TIPS THE PLAYING FIELD

Employers told Labor Department surveyors that they added 210,000 workers in November. Household members told another bunch of Labor Department surveyors that they had found 1,136,000 jobs in November. It is custom to use the employer survey as the headline number. Not this time.

The Employer Survey Is Flawed

Almost 600,000 people joined the work force in November, yet the unemployment rate fell, meaning that not only did those workers, or an equivalent number, find work, but another 542,000 came off the unemployment rolls. A possible villain is the seasonal adjustment used by the job-counters. Before the seasonal adjustment, a notoriously difficult and chancy process, especially around holiday time, the figure employers reported was 778,000 new jobs. So look for revisions, not unlike the 450,000 jobs added to earlier totals for August, September and October.

Four other reasons to believe the 1,136,000 figure is closer to reality than the 210,00:

·     Over 4 million job openings remain unfilled.

·     Wages are up 4.8 per cent over last year, well above the usual increase of 3 percent. That doesn’t happen in weak labor markets.

·     Only in a strong, job-creating labor market would a record numbers of workers quit their jobs. In September, 4.4 million, 3 per cent of the work force, did just that, the ruder or unwise among them telling their employers to take this job and shove it.

·     The economy is booming. Hard on the heels of the jobs data came reports that the service sector, which accounts for 77 per cent of total GDP, is expanding at a record rate, and is sitting on a record backlog of orders. And consumers plan to party on. Already loaded with cash, 27 per cent of consumers are applying for new credit cards and 11 per cent for credit-limit increases, numbers not seen since before the pandemic.

All reasons why not a single expert who typically relies on the employer survey number, in this case the 210,000, is defending it.

Workers Become Entrepreneurs

If this welter of statistics is confusing, ignore them, and trust your eyes and ears. You see storefronts festooned with help-wanted ads, and hear employers complaining about their inability to find staff. And consider the possibility that the data do not and are not designed to capture a major structural change in the labor market, a conversion of workers into entrepreneurs. Between January and October, 4.54 million new businesses were registered, a 56 percent increase on the same months in 2019, before Covid hit, and the largest number since 2004, when records were first kept. They are “employed” as laypeople use that word, but do not have “jobs” in the eyes of Labor Department bean counters.

American Go Soft, Or Get Smart

Also, the hard numbers cannot reflect what we might call the softening of the American work ethic. This land of legendary workaholics, guilt-ridden on vacations, sandwiches gulped at desks in lieu of European-style lunch breaks, road warriors proudly amassing air miles while keeping exhausting travel schedules, is changing, as the work force puts a secular twist, called “work-life balance”, on the biblical injunction, “Man shall not live by bread alone.”

       The five-day work week is becoming a relic. Tour office towers on a Friday, and your footsteps will echo down most corridors. Yes, there are more hybrid work weeks, three days of supervised work and interaction with colleagues, one or two with yoga pants and interaction with pets. But in many cases, Fridays are now the start of a longer, relaxed weekend.

Even hard-nosed Wall Street employers are bowing before the assault on its work-until-you-drop tradition. In October, fewer than 9,000 of 332,100 employees in New York City’s financial industry came to work daily. With competition for workers so intense, “Nobody wants to be the bad guy,” says Kathryn Wyde, CEO of the non-profit Partnership for a Better New York.

Two major financial industry employers are among those who have found their show-up or shove-off mandates unenforceable, as least so far. James Gorman, CEO of Morgan Stanley said “If you can go to a restaurant in New York City, you can come into the office.” About 65 percent of the bank’s headquarter employees now show up at least three days per week. Goldman Sachs CEO David Solomon called remote work “an aberration … we are better together than apart.” Still, Goldman’s downtown office is staffed at only about 60 percent reports The Wall Street Journal. The outbreak of a new African variant, no matter how mild its effects, with those effects confined largely (but not only) to the unvaccinated, will only strengthen the demands of workers to be allowed to reduce risk by working at home.

Designing Offices Worth Coming To

Employers displeased with the negative effect of these trends on productivity and creativity are reacting with workplace changes designed to woo workers back to the office. Both KKR & Co., a private equity firm, and Wells Fargo are among the financial services firms  seeking office space located in high-end buildings with terraces and superior ventilation systems. Cubicles are so yesterday. Many are planning to add bars to increase social interaction, not an unambiguously clever move in this era of restrictions on the range of socially acceptable interactions. These changes are unlikely to prove transient, although offers of free Ubers and Lyfts to commuter-averse workers might.  

Biden Puts His Thumb On The Scale

The rebalancing of economic power in the labor market is being accompanied by a shift in the balance of political power between workers and employers. Franklin Roosevelt, President Biden’s hero and model, famously instructed his team to “Clear it with Sidney,” meaning have Sidney Hillman, president of a garment worker union and co-founder of the Congress of Industrial Organizations (CIO), sign off on economic policy proposals and political appointments. Biden’s version is “Clear it with my memory of my father”, the man who taught him that unions built the middle class, the obvious conclusion for now-President Biden being government policy should therefore favor trade unions.

The shift in political power from employers to workers takes many forms. Last week a Biden appointee to the National Labor Relations Board voided the election at one of Amazon’s Alabama facilities, although over 70 per cent of employees at the facility had voted not to join a union, many because they did not think union dues bought significant benefits. The official ruled the company had unfairly coerced workers by, among other things, facilitating the use of secret ballots rather than cards filled out in the presence of union organizers.

Multiple pro-union features are built into the infrastructure bill recently passed by the House. Subsidies to buyers of electric vehicles are limited if the vehicle is made in a non-union factory, as are Teslas. Only homeowners who use union labor are eligible for up to $14,000 in tax-payer subsidies for making their homes energy-efficient. And $250 per year in union dues are henceforth to be deductible from taxable incomes, allowing unions to raise dues without increasing the total cost to their members.

And The Fed?

Chairman Powell is safely installed for the next four years, immune from political pressure by a President who tried to unseat him but feared a confirmation fight from several Democratic senators if he chose a successor. Powell will carry on as planned. The strong labor market allows the Fed to continue “tapering” asset purchases without fear of triggering unemployment. It will postpone raising interest rates until early 2023 in the hope that easing supply bottlenecks will slow the 5-6 percent inflation rate. Unless it doesn’t. In which case he can always raise them late in 2022, right before the mid-term elections, which would be bad news for the man who reappointed him.