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    Unemployment Is High. Why Are Businesses Struggling to Hire?

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    Health concerns, expanded jobless benefits and still being needed at home are among the reasons would-be workers might be staying away.A BevMo store in Larkspur, Calif., early this month.Justin Sullivan/Getty ImagesThere are two distinct, and completely opposite, ways of looking at the American job market.One would be to consult the data tables produced every month by the Bureau of Labor Statistics, which suggest a plentiful supply of would-be workers. The unemployment rate is 6 percent, representing 9.7 million Americans who say they are actively looking for work.Alternately, you could search for news articles mentioning “labor shortage.” You will find dozens in which businesses, especially in the restaurant and other service industries, say they face a potentially catastrophic inability to hire. The anecdotes come from the biggest metropolitan areas and from small towns, as well as from tourist destinations of all varieties.If this apparent labor shortage persists, it will have huge implications for the economy in 2021 and beyond. It could act as a brake on growth and cause unnecessary business failures, long lines at remaining businesses, and rising prices.What explains the disconnect? There are competing theories, all plausible — and potentially interrelated. Meanwhile, the economic and public health situation is evolving too quickly for research to keep up. So consider this a guide to these potential explanations, and an accounting of the evidence for each.Benefits too generous?“The government is making it easy for people to stay home and get paid. You can’t really blame them much. But it means we have hours to fill and no one who wants to work.” — Tom Taylor, owner of Sammy Malone’s pub in Baldwinsville, N.Y., quoted in The Syracuse Post-Standard.Business leaders have been quick to blame expanded unemployment insurance and pandemic stimulus payments for the labor shortages.The logic is simple: Why work when unemployment insurance — including a $300 weekly supplement that was part of the newly enacted pandemic rescue plan — means that some people can make as much or more by not working? And the combined $2,000-per-person cash payments enacted since late last year created a cushion people can rely on for a time.Ample economic research shows that more generous unemployment benefits are a disincentive for people to seek or accept work. But several studies on what happened when a $600 weekly supplement was added to benefits last spring suggested that the early pandemic had unique dynamics.Research by Ioana Marinescu, Daphné Skandalis and Daniel Zhao, for example, found that every 10 percent increase in the jobless benefits a person received corresponded to a 3 percent decline in the number of jobs applied to. But in the context of mass closings of businesses, that didn’t matter for how many people were employed — there were still far more job seekers than jobs.By contrast, “right now what seems to be happening is that job creation is outpacing the search effort that workers are putting forth,” said Professor Marinescu, an economist at the University of Pennsylvania. “Compared to how people reacted last spring, it’s not that long ago, but the situation has changed a bit.”That is to say, a similar decline in workers’ desire to pursue jobs matters more when there are plenty of jobs to go around, which is increasingly the case as the economy reopens.In other research on the expanded jobless benefits, Peter Ganong of the University of Chicago Harris School and five co-authors found a smaller decrease in the inclination to search for jobs than earlier research would have predicted. In other words, those $600 weekly supplements didn’t decrease employment very much.But those were circumstances that may no longer apply.“The goal of government should be to get everyone back to work as soon as possible while continuing to provide economic support to workers who have not gone back to work yet,” Mr. Ganong said. “Those two things were not in tension in 2020, and they are in tension in 2021. All of those things that made 2020 special are receding, so we now face a more traditional set of trade-offs.”Arindrajit Dube, an economist at the University of Massachusetts Amherst who has also studied the impact of last year’s expanded benefits, is skeptical that the lure of jobless benefits is the primary explanation. He notes that even with the reported shortages, businesses appear to be successfully hiring at a breakneck pace.Companies added 916,000 employees to payrolls in March alone, a number matched only by the initial rebound from pandemic shutdowns last summer and in the immediate aftermath of World War II. Moreover, the expanded benefits are scheduled to expire in September.“Maybe an unemployed person spends several additional days unemployed because of the $300,” Professor Dube said. “But if it’s a problem, it takes care of itself. It’s nothing compared to the broader trajectory of the reopening, which swamps anything on the unemployment insurance front.”Which brings us to other factors that may be keeping would-be workers away from the job market, especially in the service sector.Worried about getting sick“We’ve been taking lockdown pretty seriously. My wife and son have some autoimmune conditions. I didn’t want to put my family in a position where I’d be working in a very public-facing job and potentially bringing something home.” — Paul Hofford, former bartender at A Rake’s Progress in Washington. Quoted in Washington City Paper.Nobody wants to get a potentially deadly disease for a job slinging eggs Benedict. And more so than many other occupations, restaurants and other parts of the service sector require face-to-face contact with the public.One piece of evidence supporting this idea: There appears to be a relationship between vaccinations of people and a rise in their employment rate.Aaron Sojourner, a University of Minnesota economist, used the Census Bureau’s Household Pulse Survey to explore that relationship among 3,600 finely grained groupings of Americans by demographics and geography.A 10-percentage-point increase in the share of people fully vaccinated corresponded with a 1.1-percentage-point increase in their employment. There are many ways to interpret the finding — it doesn’t tell us anything about causation — but one possibility is that vaccinated people are more comfortable taking jobs.“The first-order issue is the virus, and if that’s what caused the crisis, then it is also the path out of the crisis,” Professor Sojourner said. “Crushing the virus is the solution to both the supply problem and the demand problem.”Health concerns and the expanded jobless benefits can operate hand in hand. It’s easier for a person nervous about the virus to stay out of the work force when benefits are more generous.Still needed at home“Lot of kids are still at home doing school so, depending on age, they’ve got to have a parent there, somebody who would have been in the work force. We need them back and we need them back in force.” — Stacy Roof, president of the Kentucky Restaurant Association, quoted in The Lexington Herald-Leader.Someone has to oversee the school-age children stuck at home taking classes. The same goes for older or disabled relatives who might have had other forms of care before the pandemic.The Census Household Pulse survey shows that this remains a major reason for adults not to be working. Based on surveys taken in late March, 6.3 million people were not working because of a need to care for a child not in a school or day care center, and a further 2.1 million were caring for an older person. Combined, those numbers amount to nearly 14 percent of the adults not working for reasons other than being retired.What’s more, those numbers have actually gone up since the start of the year — an additional 850,000 people.That speaks to the interrelated challenges of reopening the economy. Many businesses may be opening and seeing a surge of demand, but so long as schools, day care centers and elder care are still limited, there will be constraint in their ability to get workers.“As we move toward herd immunity, those issues around care infrastructure will get better,” said Heidi Shierholz, an economist at the Economic Policy Institute. “These structural things related to public health, we may not know the magnitude of how many people they’re keeping out of the labor force, but with the vaccine we can come at this with optimism that it will improve.”Show me the money“If you can swing a hammer, you can go make $25 an hour.” — Brandt Casey, manager of Cafe Olé in Meridian, Idaho, quoted in The Idaho Statesman.The simple, Economics 101 answer to what a company should do when it has trouble recruiting enough workers is to pay them more. That is the logic that underpins the economic policy of the Biden administration and the Federal Reserve: Achieving a tight labor market will result in higher pay for workers.But the restaurant industry faces a particular challenge. The sectors that have thrived during the pandemic have been on hiring binges, often paying higher wages than restaurants do. Amazon alone added 500,000 employees in 2020, with a wage floor of $15 an hour. Companies like Walmart, Target and home-improvement and grocery chains have all been hiring aggressively with wages at or not far behind those levels.And as Mr. Casey suggested, those with some in-demand skills — whether in construction or commercial truck driving — can do even better. Knight-Swift Transportation Holdings has raised its wages for newly certified drivers by 40 percent, to the point they can average $60,000 salaries.That puts restaurants in a tough spot competitively. According to federal data, the median cook or food preparation worker made $13.02 an hour in May 2020, and dishwashers $12.15.For tipped workers like waiters and bartenders, the pandemic has made potential earnings more erratic. In an era of outdoor dining, a rainy day can mean a drastic loss of income.It’s easy to see how restaurant workers might be exploring other options. Restaurants, with thin profit margins in the best of times, have had their finances walloped by a year of stop-and-start pandemic closures.“When certain sectors have disadvantages like not enough tipped earnings or worries about the pandemic, you would expect reduced labor supply to those sectors and greater labor supply to other sectors that have experienced increased demand, like logistics,” Mr. Dube said.Reconsidering career decisions?“This reprieve has given for a lot of people a chance to contemplate their lives, where they’re going and where they want to be, and for the industry to take a look at itself.” — Lisa Schroeder, owner of Mother’s Bistro in Portland, Ore., quoted in The Counter.Has the pandemic spurred many people to re-evaluate their lives, their careers and what they care about most?Many people who have long done hard, physically demanding work — with odd hours and modest pay — might second-guess those choices when faced with a year of crisis. In industries that had their economic underpinnings severed last March virtually overnight, there was a particular lesson in the inherent instability of the modern economy and what really matters.Could this be a meaningful cause of the food service sector’s labor shortage? It’s not the type of question that can be answered with solid data. But it is one that hangs over all sorts of businesses as the great reopening begins. More

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    Hurt by Lockdowns, California’s Small Businesses Push to Recall Newsom

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    #masthead-section-label, #masthead-bar-one { display: none }At HomeBake: Maximalist BrowniesListen: To Pink SweatsGrow: RosesUnwind: With Ambience VideosAdvertisementContinue reading the main storySupported byContinue reading the main storyHurt by Lockdowns, California’s Small Businesses Push to Recall GovernorThe pain for such enterprises been particularly acute in the state, leading some to back an effort to replace Gov. Gavin Newsom.Daniela Del Gaudio, left, and Alexandra Del Gaudio, are the founders of the Wild Plum, a yoga studio in the San Fernando Valley in California. By the time they reopened last month, they said, they had $70,000 in debt.Credit…Rozette Rago for The New York TimesFeb. 19, 2021Updated 6:26 p.m. ETLOS ANGELES — Alexandra and Daniela Del Gaudio had never been to a political rally before, let alone one to protest a coronavirus lockdown and recall Gov. Gavin Newsom. But things had changed in the sisters’ lives since they opened the Wild Plum, a yoga and wellness space, in 2018.The Wild Plum, in California’s San Fernando Valley, closed in March when Mr. Newsom issued pandemic stay-at-home orders for the state. By the time the Wild Plum reopened last month, when Mr. Newsom relaxed the latest lockdown restrictions, the sisters had amassed $70,000 in debt. So there they were at a recent anti-Newsom rally in a restaurant parking lot in the Sherman Oaks neighborhood of Los Angeles, along with dozens of other business owners.“Everyone says to walk away, but we put everything we have into this,” Daniela Del Gaudio, 33, said. “We’re banging our heads trying to figure out what to do.”California was one of the earliest states to go into lockdown last spring, and it is now emerging from a second lockdown, which started in December. That stop-start-stop has created a groundswell of anger toward Mr. Newsom, a Democrat in the third year of his first term, that is increasingly fueling a movement to recall him from office in one of the bluest of blue states.Demonstrators rally for a recall of Gov. Gavin Newsom in Huntington Beach, Calif., in November.Credit…Marcio Jose Sanchez/Associated PressThe recall threat to Mr. Newsom has considerable momentum. Since March, 1.5 million Californians have signed a petition to oust Mr. Newsom, enough to trigger an election for a new governor. If enough of the signatures are verified, it will be the fourth recall election of a governor in American history.After they are verified and costs are estimated, the state has 60 to 80 days to schedule an election. Voters will be asked two questions on the ballot. The first is whether Mr. Newsom should be recalled. The second: Who should replace him? If the first question on the recall comes up short, the second becomes moot.The recall campaign has been funded by the Republican National Committee, which committed $250,000, as well as Silicon Valley tech investors such as Chamath Palihapitiya, who donated $100,000. Small-business owners have also been an engine behind the effort, said Randy Economy, the spokesman for the Recall Gavin Newsom campaign.“He’s broken the back of small-business owners and put many of them out of business for the rest of their lives,” Mr. Economy said. He said many were incensed when Mr. Newsom was photographed in November having dinner at the French Laundry, a temple to haute cuisine in Napa Valley, in violation of state guidelines. (When photos of the dinner were leaked, Mr. Newsom apologized for his behavior.) Small businesses across the country have suffered from shutdowns that sometimes seem to flare up as suddenly as surges in the coronavirus itself. Restaurants, gyms, corner stores and spas have closed, some after trying to hang in there for months.The pain in California has been acute. Nearly 40,000 small businesses had closed in the state by September — more than in any other state since the pandemic began, according to a report compiled by Yelp. Half had shut permanently, according to the report, far more than the 6,400 that had closed permanently in New York.Few of the pandemic choices that Mr. Newsom has faced have been easy. California has suffered enormously from Covid-19, with more than 3.5 million cases and 47,000 deaths. Los Angeles County, one of the hardest-hit places in the recent virus surge, has more than 1.2 million cases and 19,000 deaths.Dan Newman, a political strategist for Mr. Newsom, said the governor was focused on coronavirus vaccinations and reopening the state. Mr. Newman blamed “state and national G.O.P. partisans” for supporting “this Republican recall scheme in hopes of creating an expensive, distracting and destructive circus.”Acknowledging that the pandemic has “heavily impacted our small businesses,” the director of the Governor’s Office of Business and Economic Development, Dee Dee Myers, pointed to several state programs that offer them help. They include the California Small Business Covid-19 Relief Grant Program, the California Rebuilding Fund and the Main Street Hiring Tax Credit.Ronna McDaniel, chairwoman of the Republican National Committee, said in a statement that Mr. Newsom had “proven that he is woefully unqualified to lead the state of California.”In places such as Los Angeles County, where Mr. Newsom won 72 percent of the vote in 2018, and neighboring Orange County, a more conservative area, the small-business anger is particularly intense. One local business owner leading the movement to open California’s economy is Andrew Gruel, 40, a chef who owns Slapfish, a seafood restaurant chain.Mr. Gruel argued in an interview last month that California’s lockdown rules were confusing and hurt small businesses disproportionately. “None of the rules make sense,” he said one afternoon from the Slapfish in Huntington Beach.As evidence, Mr. Gruel pointed to the Walmart just up the road. While local restaurants could not have diners sit outside in the first lockdown, even six feet apart and with plexiglass between them, a Burger King inside the Walmart remained open, he said.“And that was legal,” he said. “It’s like W.W.E. in there, people cross-body blocking each other for B.K. delight.”Opposition to Mr. Newsom’s pandemic policies is particularly intense among small businesses in the Los Angeles area.Credit…David Walter Banks for The New York TimesMr. Gruel said he had laid off 100 people, had closed one of his restaurants permanently and was worried about the rest of Slapfish’s two dozen locations. The company has lost around $100,000 and taken on a lot of debt, he added.That afternoon, he let people sit outside anyway, even though it was against the lockdown restrictions at the time. “You could do a citizen’s arrest,” he suggested.Local business associations said they were also furious. Nick Rimedio, who serves on the West Hollywood Chamber of Commerce, said the lockdowns had widened a class divide. While quarantine has been almost relaxing for what he called the wealthy “Zoom class,” it has been a nightmare for the poor and middle class who have storefronts or work service jobs in businesses in the area, he said.“If you’re well-to-do, if you have a healthy stock portfolio, if you can work from home, you’ve saved on your commute. You’re doing great,” Mr. Rimedio said.Angela Marsden, the owner of Pineapple Hill Saloon and Grill, a cozy bar in Sherman Oaks, has become another anti-lockdown leader. In December, she posted a video on Facebook in which she was masked and near tears. She pointed the camera at a movie set with outdoor tables, which was legal, and then contrasted that with her newly built outdoor dining setup, which had just been banned. The video went viral, and she started a GoFundMe page that has raised $220,000.Last month, Ms. Marsden, 48, gathered dozens of local business owners, including the Del Gaudio sisters, to discuss how to survive and what to do to push for reopening. Many owned bars and restaurants; others owned gyms or spas. Almost all of their locations had been closed since March.They sat at different tables, spaced a few feet apart. Most wore masks most of the time.“Our retirement savings are gone,” said Joe Lyons, who owns the Celtic Raven Pub in Winnetka, Calif., with his wife, Belinda.Credit…Rozette Rago for The New York TimesBelinda and Joe Lyons, who own the Celtic Raven Pub and co-own JJ Sullivan’s Irish Pub in the San Fernando Valley, said they had furloughed 12 people. One of their suppliers was demanding payments they could not make, they said. The Celtic Raven landlord has been pressuring them for 10 months of unpaid rent. By March 1, they will be personally liable for $49,000 in back rent.“It’s going to kill us,” Mr. Lyons said. “Our retirement savings are gone.”But the hardest part, Ms. Lyons said, was Mr. Newsom’s policies.“When we were told we could open last June by Gavin Newson, I put full insurance back with the intention of reopening, only to be told that we could not,” she said. “That cost me over $8,000 that I’m still paying, as the insurance company would not cancel.”Another attendee was Guido Murga, the owner of One Headlight, a hospitality supplies distributor. He said his business was down because restaurants, his main customers, were hurting.“I sell napkins, straws, cherries, olives, to-go cups. When they close, I close,” he said. “I’m drowning week to week.”Ms. Marsden had never led a rally before, but she got into the energy of it.“Come April or May, how many of us will be here?” she asked, her voice rising.“None!” some in the crowd shouted.“I’m drowning week to week,” said Guido Murga, whose supply business in Los Angeles depends on restaurants.Credit…Rozette Rago for The New York TimesThe event was disrupted midway through when a small group of virus skeptics who had joined the crowd grew boisterous and demanded that people stop wearing masks. The moment reflected the complexity at play. Those fighting to open businesses in a responsible way were tangling with more Trumpist factions, who saw new allies in some of the apolitical business owners.Carey Ysais, owner of the bar Kahuna Tiki, stood up to call everyone back to order.“Guys, where you’re at is a different place than where we’re at,” Mr. Ysais said, as the anti-mask crowd jeered. “Are you a bar owner? Excuse me, are you a bar owner?”The Del Gaudio sisters did not leave optimistic.“We were raised to work hard. We’re not even given that opportunity,” Alexandra Del Gaudio, 36, said. “We’re trying to pull our families out of poverty.”Thomas Fuller More

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    Kamala Harris: Women Leaving Work Force During Pandemic Is a 'National Emergency'

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccine RolloutSee Your Local RiskNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main story2.5 Million Women Left the Work Force During the Pandemic. Harris Sees a ‘National Emergency.’“In one year,” Vice President Kamala Harris said, “the pandemic has put decades of the progress we have collectively made for women workers at risk.”On a video call with women’s advocacy groups and lawmakers on Thursday, the vice president painted a dire picture of the situation that millions of American women are facing during the coronavirus pandemic.Credit…Stefani Reynolds for The New York TimesFeb. 18, 2021, 5:50 p.m. ETWASHINGTON — Vice President Kamala Harris said on Thursday that the 2.5 million women who have left the work force since the beginning of the pandemic constituted a “national emergency” that could be addressed by the Biden administration’s coronavirus relief plan.That number, according to Labor Department data, compares with 1.8 million men who have left the work force. For many women, the demands of child care, coupled with layoffs and furloughs in an economy hit hard by the pandemic, has forced them out of the labor market.“Our economy cannot fully recover unless women can participate fully,” Ms. Harris said on a video call with several women’s advocacy groups and lawmakers, essentially reiterating the argument she made in a Washington Post op-ed published last week. On the call, the vice president painted a dire picture of the situation that millions of American women are facing during the pandemic. “In one year,” she said, “the pandemic has put decades of the progress we have collectively made for women workers at risk.”“Women are not opting out of the work force,” Representative Rosa DeLauro, Democrat of Connecticut and the chairwoman of the House Appropriations Committee, said after attending the panel. “They are being pushed by inadequate policies.”As part of its $1.9 trillion relief plan, the Biden administration has outlined several elements that officials say will ease the burden on unemployed and working women, including $3,000 in tax credits issued to families for each child, a $40 billion investment in child care assistance and an extension of unemployment benefits.Ms. Harris said on Thursday that the package would “lift up nearly half of the children who are living in poverty in our country,” a claim backed by a Columbia University analysis of the plan.A recent Quinnipiac poll showed broad support for the Biden administration’s proposal, but so far, Republicans have not embraced it. Democrats aim to pass the plan using a fast-track budgetary process known as reconciliation, which would allow them to push it through the Senate with a simple majority. Senator Mitt Romney, Republican of Utah, unveiled his own child tax credit proposal this month, but it was promptly panned by colleagues in his party.“I think that there is absolute reason to believe that Republicans should support this,” said Senator Patty Murray, Democrat of Washington, who participated in the call. But she added that her party had ensured that the proposal could go forward without the Republicans.Child care remains an issue for working mothers, and it was a major theme of the round table on Thursday. Nearly 400,000 child care jobs have been lost since the outset of the pandemic, Ms. Harris said. The closings of small businesses and the loss of millions of jobs have created the “perfect storm” for women, particularly for Black business owners, she added. “The longer we wait to act,” she said, “the harder it will be to bring these millions of women back into the work force.”The Coronavirus Outbreak More

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    A Look at What’s in Biden’s $1.9 Trillion Stimulus Plan

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesA Future With CoronavirusVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyA Look at What’s in Biden’s $1.9 Trillion Stimulus PlanThe president-elect is rolling out a large spending package aimed at helping battle the virus and alleviate the economic toll it has taken.President-elect Joseph R. Biden Jr. planned to lay out plans on Thursday for efforts to combat the coronavirus and address its economic toll.Credit…Kriston Jae Bethel for The New York TimesJan. 14, 2021Updated 7:24 p.m. ETThe incoming Biden administration unveiled a $1.9 trillion stimulus plan on Thursday that offered a wish list of spending measures meant to help both people and the economy recover from the coronavirus pandemic, from state and local aid and more generous unemployment benefits to mass vaccinations.Below, we run through a few of the biggest provisions, how they would work and what they might mean for the United States economy as it struggles through a winter of surging coronavirus cases and partial state and local lockdowns.Let’s put that headline number in context.That $1.9 trillion figure is a lot of money, to put it mildly. Congress passed a $900 billion relief program in December, and its package in March was also about $2 trillion. By way of comparison, the major financial crisis spending package — the American Recovery and Reinvestment Act of 2009 — clocked in around $800 billion.The administration is looking for $1,400 checks.President-elect Joseph R. Biden Jr. is trying to make good on Democrats’ promise to send more money to households in the form of one-time checks. Its proposal would send out $1,400 per person for those under certain income thresholds, topping off the $600 checks that came as part of the December relief package.It also wants an unemployment insurance supplement of $400 a week.Mr. Biden is asking Congress to extend emergency unemployment insurance programs through the end of September — they are set to expire in mid-March — while providing “a $400 per week unemployment insurance supplement to help hard-hit workers.”That amount is higher than what lawmakers included in the December stimulus, which provided a $300 supplement for 11 weeks, but it is lower than the $600 weekly benefit included in the first package in March.Schools could get money to reopen.The administration says it wants to make “the necessary investments to meet the president-elect’s goal of safely reopening a majority” of kindergarten-to-eighth-grade schools within Mr. Biden’s first 100 days in office.Administration officials are suggesting $170 billion for schools, supplemented by additional state and local funds. About $130 billion of that would go toward reopening, while much of the rest of the money would go to help colleges dealing with the shift to distance learning and other pandemic-tied problems.The minimum wage could rise.After holding steady at $7.25 for more than a decade, the federal minimum wage would rise to $15 per hour under the proposal, which would also end the tipped minimum wage and sub-minimum wage for people with disabilities. Many states and localities have already raised their own wage floors. It is not clear how quickly the higher wage would phase in.Research from the Congressional Budget Office in 2019 suggested that raising the wage to $15 nationally could increase pay for tens of millions of workers, though potentially at some cost to jobs — perhaps 1.3 million people who would otherwise work would not be, in part because employers would reduce payroll.The Coronavirus Outbreak More