Let the post-pandemic boom rise
The United States’ economic recovery from the pandemic has halted, but there are signs that it could really start to take off. The latest figures from the Bureau of Labor Statistics show the number of job postings is skyrocketing, along with the number of people quitting.
The Conservatives and the wealthy are starting to panic about the situation. The idea that workers have the ability to be selective about job opportunities – or worse yet, to successfully demand higher wages – is horrible to them. So they are already mounting a lobbying campaign to intimidate the Federal Reserve into strangling the economy before the damage caused by the pandemic is repaired. Deutsche Bank recently warned that inflation is a global “time bomb”. CNBC reports: “Up to 65% of millionaires are concerned about inflation caused by recent government spending.” America is “on the brink of an inflation crisis,” wrote Senator Ted Cruz (R-Tex.) In a recent editorial.
This campaign of fear is wildly exaggerated and must be fought.
Let’s take a look at the data from last month’s Job Openings and Workforce Turnover Survey (or JOLTS), which is truly surprising. Since the pandemic began to ease in the United States around March, there has been no this many jobs created – America still has about 7.6 million fewer jobs than in February 2020. However, monthly employment openings soared from about 7.5 million in March (roughly how many there were at the end of 2018) to 9.2 million in May – the highest level measured since this survey began in 2000. The share of workers quitting their jobs each month also climbed to 2.7. percent, also the highest figure since 2000. The drop-out rate in the accommodation and food services industry is 5.6 percent, again a record.
As is always worth mentioning, all of these various reports are loud and preliminary, and it will be several months before we can be sure what exactly is going on. However, it is possible to make educated guesses. On the one hand, the pandemic has created many disruptions in business and the labor market. The global production system was in tatters even in 2019 thanks to a decade of weak demand, and the pandemic has inflicted far more damage. Meanwhile, it seems a lot of people are rethinking their careers. Many categories of already precarious workers have had an absolutely brutal year – a recent study found line cooks have the highest risk of COVID-19 death of any occupation, including healthcare workers. Warehouse jobs, farming, baking, and construction round out the five occupations most at risk for viruses.
These jobs and many others usually had low wages and meager benefits before they even became so deadly. It seems that many people in these professions are looking for something better – perhaps after seeing how nice it is to have some economic security through the various benefits of pandemic bailouts. Others seem to be leaving the workforce altogether to spend more time with their families.
On the other hand, the American consumer is unusually full of cash. Closures and pandemic relief bills have meant most of the population has saved tons of money in the past year – something like $ 2.4 trillion. We see a huge demand for housing, cars, computer chips and hundreds of other products.
High demand meets limited supply, and that’s how we have bottlenecks and price increases in all kinds of places – lumber, semiconductors, container shipping, etc.
It’s not hard to imagine how this could work reasonably well. Companies will increasingly need labor to develop their supply capacity to deal with bottlenecks. They will be forced to increase their wage offers and improve working conditions to get workers – because just about any job can be ‘good’ with sufficient pay, benefits, and sufficient job control over it. work place. Workers will flock to high productivity companies that can afford to pay well – the abusive and non-innovative companies that have only succeeded in the last decade by exploiting the workforce (like virtually all businesses). “Gig”) will improve or disappear from business. In a year or two we will return to an economy with very low unemployment, but this time with significantly higher wages and productivity, and a much more robust supply.
But all of this can only happen if demand remains strong. Despite the fact that in some markets (like timber and housing) recent price spikes have already reversed – suggesting that these supply bottlenecks will be temporary – we are still seeing great panic about inflation. The push is aimed at the Federal Reserve, to convince President Jerome Powell to raise interest rates and crush the boom before this stronger economy can emerge.
There are two reasons: First, the Conservatives want to strangle the economy so that President Biden is blamed for the lack of jobs. Second, the rich want to keep the economy weak to maintain their vast power and wealth. A recent ProPublica a report looked at the taxes of some of the richest people in the world and found that they paid next to nothing on their staggering treasures – between 2014 and 2018, Michael Bloomberg earned $ 22.5 billion in wealth, but no ‘paid only 1.3% in taxes; Jeff Bezos paid only 0.98% of his $ 99 billion gain in taxes; and Warren Buffett paid fair 0.1 percent on his wealth gain of $ 24.3 billion in taxes.
A big reason why these men are worth so much is the desperate condition of the American working class. If workers were scarce, firms would have to pay higher wages to attract them, which would leave the firm’s surplus to shareholders and senior executives and hence lead to less appreciation of financial assets. If labor markets get tight enough, we might see unions start to spread. So, to keep the ultra-rich in ultra-large yachts, American workers must remain desperate.
But unless you have enough money to buy your own little continent, don’t listen to this inflation nonsense. You’d better let this boom go up and see where it takes us.