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    in Economy

    Will the Delta Variant Wreck the Recovery?

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    Probably not. But there are potential challenges with both supply and demand that put the economy at risk.Empty streets in downtown Boston last month. If the Delta variant plays havoc with companies’ return-to-work plans, such scenes could continue.Philip Keith for The New York TimesThe good economic news, when it comes to the ascendant Delta variant of the coronavirus, is that it puts the economy at risk in only two ways. The bad news: They are supply and demand.So far, the recovery remains robust by most available data. Real-time indicators of business activity show little evidence that Americans are pulling back their economic activity in any meaningful way.But while there is no reason to expect a repeat of the huge disruption of 2020, the new variant puts at risk the kind of rapid recovery that has been underway for months. Just as major parts of the economy were figuring out how to return to full functioning, this may amount to throwing sand in the gears.The emergence of the variant has already caused several wobbly days on Wall Street. And the chairman of the Federal Reserve, Jerome Powell, is likely to face questions about the economic implications of Delta in a news conference Wednesday afternoon after a meeting of the Fed’s policy committee.At the White House, officials are monitoring the variant closely, but see no evidence that it is hurting the recovery — or that policymakers will need to inject another dose of short-term fiscal stimulus anytime soon.“Overall it looks like the risks are considerably diminished compared to the height of the crisis,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics. “But I do think you have to worry about the macroeconomic risks, and our experience over the last 18 months has shown that.”As economists and policymakers game out the nature of those risks, what stands out is not the chance of a major shutdown. Instead, the concerns are the constraints on the availability of workers and on the supply and demand for many services.On the supply side, there are already severe disruptions in many supply chains, especially those that rely on goods imported from Asia. These create ripple effects for the United States, such as a shortage of computer chips that is in turn hindering automobile production and contributing to high inflation.Many Asian nations — especially those behind the curve on vaccinating their populations — are putting in lockdowns to try to stop the spread of the Delta variant, which threatens to make those shortages and price spikes worse.“We had already expected that semiconductor shortages would continue into 2022, and that’s virtually assured now,” said Sara Johnson, the executive director of global economics for I.H.S. Markit. She noted that new restrictions were limiting production activity in countries including Vietnam, Indonesia, Thailand and Malaysia.A more domestically focused supply-side risk comes with the U.S. labor supply.Employers have been complaining about labor shortages, and if the renewed risk of illness makes even vaccinated adults reluctant to enter or re-enter the work force, those shortages could worsen.That is particularly true if schools were to return to remote learning — even for brief periods — making it all the harder for parents to work.“What happens if you have a flare-up?” Ms. Bostjancic said. “Do you shut school for a week? That’s very disruptive to parents who want to return to the labor force.”On the demand side, there is some comfort in the seemingly robust spending from American consumers, who are flush with accumulated savings from the pandemic, federal stimulus dollars and rising wages.The consumer confidence index rose slightly in July, the Conference Board said Tuesday, suggesting that the emergence of the variant has so far done no major damage to consumers’ willingness to spend.There is even a perverse twist that could reduce the variant’s impact on demand for things like restaurant meals and concert tickets. The rate of infection has remained relatively low in places with high vaccination rates. In the places where infections are skyrocketing, public sentiment tends to be overwhelmingly against anything resembling a lockdown.Still, as noted by two Bank of America economists, Stephen Juneau and Anna Zhou, Michigan saw a pullback in consumer spending on services during its surge of infections earlier this year, even absent formal restrictions on activity.“So far we have seen little evidence of the Delta variant significantly affecting economic activity or spending on services,” they wrote in a recent research note. “However, survey data point to increased hesitancy of being in physical locations and concerns over the virus.”That could prove particularly relevant in a few segments of the economy that have been slowest to recover from the pandemic recession.Many white-collar employers have been on the verge of bringing workers back to offices. If those plans change because of the variant, offices and downtown streets risk staying emptier for longer, implying less demand for office space and downtown restaurant meals.There is a similar story in the business travel sector, which has lagged leisure travel in returning to health. Will conferences and trade shows return with the kind of robust attendance many hotels, convention centers and event planners have been hoping for?One particularly tricky thing is that the solution to these potential economic ripples lies in the public health arena. If the recovery stalls, fiscal and monetary policy are unlikely to play much of a constructive role. Already, enough money is flowing through the economy to make overheating and inflation a top-of-mind concern.There may be a demand shortfall for very specific things, like sandwiches from a downtown restaurant or rooms in a convention center hotel. But it is hard to argue in the summer of 2021 that there is much risk of inadequate aggregate demand.White House officials say vaccinations over the past several months — and strong support from the federal government for people and businesses — have set the foundation for the economy to maintain momentum even as Delta spreads. And they believe consumers will react differently this time to the spreading virus.In past waves, people who worried about a higher risk of contracting Covid-19 could either assume that risk and keep up their normal economic activities, or pull back spending in places like retail stores and restaurants. Now, the officials say, spooked consumers have a third choice. They can get vaccinated and largely maintain their typical routines — or, if they’re already vaccinated, just keep spending the way they have been.All of that means that the policy response to the Delta variant, as for Covid all along, relies more heavily on getting the best possible public health outcomes, with conventional economic policy a secondary concern.Just when it seemed that the pandemic policy story was finally winding down, in other words, it is starting to repeat itself.Jim Tankersley contributed reporting. More

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    in Economy

    Utah Farm Draws a Rare Breed: The American Shepherd

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    DIXIE NATIONAL FOREST, Utah — “The object is to keep ’em grazing,” Scott Stubbs said as he looked over the 1,470 ewes and lambs chewing up Castle Valley’s dandelions, clover and grasses. “Get them full, which makes them fat.”Mr. Stubbs, a fifth-generation sheep farmer in southern Utah, did not expect to be giving a hands-on shepherding seminar this summer, but he was stuck. He needed a second experienced herder, and the one who was supposed to arrive in the spring from Peru did not get approval for a special agricultural visa. Now backlogs at some foreign passport offices and American consulates — compounded by the pandemic — were delaying a replacement.That’s why Mr. Stubbs last month ended up hiring Duane Rogers, a type of worker rarer than a blue lamb in these parts: an American-born beginner who was eager to herd sheep.Labor shortages are common this summer, especially in Utah, where the unemployment rate is 2.7 percent. The Marriott in Cedar City did not have enough maids to offer daily housekeeping, and the Denny’s outside of Beaver had a sign on the door asking customers to be patient with a short-handed staff. But the predicament that Mr. Stubbs and farmers like him are facing is of longer standing and more severe.“Nobody wants this type of work,” Mr. Stubbs said of herding and farm labor. And most American-born workers haven’t wanted it in a while — at least at the wages that most farmers say they can afford. That is why more than 200,000 temporary foreign farm workers, mostly from Mexico, were allowed into the United States last year to pick cherries, tomatoes and tobacco or to tend livestock. The number of visas issued has more than tripled since 2011, and it increased in 2020 despite the pandemic, after food and agricultural workers were characterized as part of the essential work force.Mr. Stubbs, 54, started using the agricultural visa program, known as H-2A, eight years ago. Through an agency, he hired a Peruvian, Ronal Leon Parejas, who is still with him.Before then, aside from family members or the occasional high school student who would pitch in for a few weeks, the only people in recent years willing to herd sheep were Native Americans or undocumented immigrants, Mr. Stubbs said. This year, the Navajo herder who had been working for him needed a knee operation. At 68, he probably wouldn’t be coming back.“You put a small flock out, but you can’t get labor,” said Mr. Stubbs, who raises his flock for both wool and meat. “It’s putting a hurt on.”Mr. Stubbs, who was 5 or 6 years old when his grandfather taught him how to move a flock from meadow to creek on the federal forest land where his family has had grazing rights since the 1800s, knows it is a hard and lonely job. His first month herding alone was after eighth grade. “I thought I would die,” he said, even though his mother drove from their farm nearly 20 miles away each day to check on him. “I lost 30 pounds in 30 days.”A herder has to stay with the sheep 24 hours a day through the roughly 10-month period on the open range, in sun and rain, hail and snow, whether temperatures climb toward 100 degrees or drop below zero. The workday begins at sunup and ends at sundown, although there may be nights when you need to help the guard dogs scare off a coyote or a mountain lion. There are no weekends or holidays off.The H-2A program has been criticized for low wages and lack of worker protections. For workers under the visa program, the pay is set by the government, and has increased in recent years. In Utah, it is $1,728 a month plus transportation, room and board. In this case, the room is a 14-by-8-foot sheep wagon that has a bed, a wood-fire stove, a gas grill and a cooler. Mr. Stubbs delivers requested food — eggs, bacon, sandwich meat, bread, potato chips, cookies, soda and cans of chile and corn — every few days, along with water.And that is the deal that Mr. Rogers accepted three weeks ago. “I’m grateful that Scott gave me a chance,” he said.Mr. Rogers prepared dinner in his trailer near the grazing area where he herds sheep.A herder has to stay with the sheep 24 hours a day through the nine-month grazing period.Marty Stubbs, who is training Mr. Rogers, roped a lamb that was showing signs of a possible injury.Mr. Rogers, left, assisted Mr. Stubbs with the injured lamb.Mr. Rogers pulled on his tan leather gloves. “I love being in the mountains, and I don’t mind being alone,” he said. His wife, whom he met a few years ago on Western Match, an online dating service for cowboys and “country folk,” lives in South Texas with his stepson and two step-granddaughters. He arrived in Utah with five dogs and his father’s old saddle.At 58, Mr. Rogers has tried his hand at various jobs. He grew up in Hayden, Colo., where his father owned a small farm and raised some cattle and sheep. He served in the military for 12 years and did a tour in Panama before joining the National Guard. In addition to herding cattle and working as a ranch hand, he has driven trucks, maintained highways, worked in construction, plowed snow and guarded women and children who had been arrested at the border and locked up in Immigration and Customs Enforcement detention centers — a job he said he hated because of the conditions.During a long rehabilitation after a truck wreck in 2017, Mr. Rogers said, he spent a lot of time thinking about what he wanted to do. He had looked after small flocks of sheep in enclosed areas, but the idea of working a large open-range herd had always exerted a magnetic pull. He was fascinated by the nomadic life, and had watched dozens of documentaries about it. And he was excited to train his dogs to herd sheep.He was unemployed when he saw the advertisement on the state’s job listing site and applied.“I like cattle, but sheep are a lot more entertaining,” and a lot smarter than people give them credit for, he said. “The lambs do some of the funniest things. In the morning, when they’re feeling good, they’ll climb up on the rocks and play king of the mountain.”The sheep were offering a symphony of guttural bleats punctuated with hollow tongs from bells dangling round their necks as Mr. Rogers and the dogs directed them toward a noonday water break. As the ewes and lambs shuffled forward, they kicked up swarms of grasshoppers that can strip a green field faster than any herd. It is one of several travails plaguing Western farmers this season, along with extreme heat and a prolonged drought that are shrinking harvests and killing off grazing land.The delay in hiring a second herder provided Mr. Stubbs with another challenge. Because he had no one to take the sheep to graze, he had to keep them on the farm, feeding them bales of hay he might otherwise have sold.Over the past few weeks, his son Marty has been helping train Mr. Rogers to herd, so he has not been around to help his father with farm work or tend to his own sheepshearing business. There are many days, Mr. Stubbs said, when he and his teenage daughter ended up working till midnight.One morning, Marty Stubbs caught sight of a small white lamb that wasn’t using his hind left leg. He rode after him, threw up a loop of rope and in a single swing lassoed his back legs. He jumped off a chestnut horse named Trigger and held down the lamb, pushing his left knee against the animal’s stomach. He examined the hind hoof, poking with a knife to loosen a stuck rock or thorn.Mr. Rogers took a brown bottle of penicillin and a large syringe out of his saddle bag.“How many CC’s you want?” he asked.“Six,” Marty replied.He closed his knife, took the needle and jabbed it into the lamb’s hindquarter and then marked the animal’s back with an orange line in chalk. He lifted his knee, and the lamb hobbled away.“If you know where they’re going, it’s OK,” Marty said of keeping track of the sheep. “The problem is if you don’t know where they are and you have to find them.”Knowing where the flock is likely to head, though, is something that only comes through experience. Mr. Parejas said it wasn’t until his fourth year that he felt truly comfortable.His herd was about 10 miles east of Mr. Rogers’s, and he was getting ready to move them across Highway 143, through thick clusters of pinyon pine and juniper, spruce and white quaking aspens, up Haycock Mountain. As the sheep fanned out across the road — they have the right of way — lines of cars and trucks backed up on either side of the double yellow line, their passengers alternately irritated and enchanted by the woolly procession.Sheep herded by Ronal Leon Parejas, a Peruvian herder, crossed Highway 143. Mr. Parejas, left, has not been able to return to Peru to visit his 4-year-old son since February 2020, before the pandemic hit.“It’s very hard and very lonely,” he said through a translator. “I miss my family.”Juan Arredondo for The New York TimesFor Mr. Rogers, left, the idea of working a large open-range herd has always exerted a magnetic pull. Mr. Parejas, 32, has not been able to return to his own small farm in Peru or his 4-year-old son since February 2020, before the pandemic hit. He hopes to visit in December, when the season ends, as long as it doesn’t interfere with his efforts to get a green card — a prize that would enable him to work and live in the United States without restrictions.“It’s very hard and very lonely,” he said through a translator. “I miss my family.” Still, it is better now than during his first couple of years, when he lacked a cellphone with WhatsApp and Facebook to keep in touch.He remembers his first night trying to sleep in the desert, when he heard a coyote howl. “I almost cried,” Mr. Parejas said.Now he is trying to help his nephew get an H-2A visa so he can also work for Mr. Stubbs. He said that he could probably earn as much if not more an hour in Peru, but that getting an employer back home to pay what he owes can be a trial. Working here delivers a dependable paycheck, he said.Mr. Rogers, too, appreciates the reliable paychecks and the fact that he has no expenses during the season and can bank his entire wage. He hopes to start paying down a large debt.Even so, he says that for him, the earnings are secondary. “Money isn’t everything, living is everything,” he said. “All you leave behind is your story, and this is a good story to tell my grandkids.” More

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    in Economy

    Low-Wage Workers Now Have Options, Which Could Mean a Raise

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    The sharp rebound in hiring, especially in service industries, is widening opportunities and prompting employers to compete on pay.McDonald’s is raising wages at its company-owned restaurants. It is also helping its franchisees hang on to workers with funding for backup child care, elder care and tuition assistance. Pay is up at Chipotle, too, and Papa John’s and many of its franchisees are offering hiring and referral bonuses.The reason? “In January, 8 percent of restaurant operators rated recruitment and retention of work force as their top challenge,” Hudson Riehle, senior vice president for research at the National Restaurant Association, said in an email. “By May, that number had risen to 72 percent.”Restaurant workers — burger flippers and bussers, cooks and waiters — have emerged from the pandemic recession to find themselves in a position they could not have imagined a couple of years ago: They have options. They can afford to wait for a better deal.In the first five months of the year, restaurants put out 61 percent more “workers wanted” posts for waiters and waitresses than they had in the same months of 2018 and 2019, before the coronavirus pandemic shut down bars and restaurants around the country, according to data from Burning Glass, a job market analytics firm.That’s not all: The jobs that waiters and waitresses typically transition to — as bartenders, hosts and hostesses, chefs and food preparation workers — are booming, too.Something similar is happening all along the least-paid end of the labor market. Many employers have blamed expanded unemployment benefits for their troubles in filling gaping job vacancies. But the sharp rebound in hiring — clustered in urban service industries — is creating bottlenecks in sets of occupations that are improving prospects across much of the nation’s low-wage labor force.Marcela Escobari, Ian Seyal and Carlos Daboin Contreras of the Brookings Institution in Washington offer an occupation-by-occupation analysis of this dynamic.Of the roughly 11 million jobs lost between the first quarter of 2020 and the first quarter of this year, they found, over four million were in occupations that are bouncing back with a double benefit: Demand for workers is high, and they are launching pads for sometimes higher-paying jobs that are also growing rapidly.For instance, between January and May there were twice as many job postings for construction laborers as the average for the same five months of 2018 and 2019, according to the Brookings analysis. What’s more, painters and carpenters — two occupations that construction workers typically move to — are also awash in offers.At the same time, construction may be drawing workers from other occupations. While many contractors — especially in residential building — are desperate for workers, “trucking seems to be even more desperate,” noted Ken Simonson, chief economist of the Associated General Contractors of America. One reason might be that construction, with its high pay, tends to attract a lot of truckers.“A lot of construction workers have commercial drivers’ licenses,” Mr. Simonson added. “Trucking companies call it poaching. I would call it luring.”Building cleaners are in hot demand. But an unemployed janitor who wants something better can probably get a job as a groundskeeper, a house cleaner or a construction laborer. These are among the five occupations that building cleaners most often move to, according to the Brookings data. And they are booming, too.Something similar is happening in the market for personal care aides and nursing and home health aides, along with practical and vocational nurses, who are much better paid. All are experiencing a jump in job postings.Some two-thirds of the more than four million jobs are in occupations at the lower end of the wage structure, paying less than $17.26 an hour. The job market is booming far less for occupations paying more than $30.“What’s happening right now is not about the wages of college grads going up — it’s about the wages of lifeguards at my pool,” said Betsey Stevenson, a former chief economist at the Labor Department who is now at the University of Michigan. “That closing of the wage differential could persist.”And this might help explain the peculiar nature of the labor market’s rebound from the pandemic, in which high unemployment coexists with complaints of labor shortages.“Undergirding that is the sense that workers at the very bottom have options to work for a better job,” Ms. Stevenson said. “What employers are used to paying won’t really cut it.”More than 3 percent of workers in the private sector quit in April, according to the Labor Department. That is the highest rate since the government started collecting the data two decades ago. The rate eased only slightly in May, to 2.8 percent. And quitting is particularly notable near the least-paid tier of the labor market: 5.3 percent of workers in leisure and hospitality and 4 percent of workers in retail quit in May.A Domino’s pizza outlet in St. Louis was looking for workers last month.Whitney Curtis for The New York TimesPay seems to be responding. Wages of workers with only a high school certificate have been gaining ground on the pay of their peers with more education since the spring of last year.Might this be just a flash in the pan? Heidi Shierholz, who was also a chief economist at the Labor Department during the Obama administration and is now director of policy at the left-leaning Economic Policy Institute, is skeptical that the job market is breaking with its decades-long trend of wage stagnation at the bottom and lavish rewards at the top.“How much of what this captures is just a trampoline effect?” she wondered. “The jobs that come back tend to look like the jobs that were lost.” After the dust settles and the employment holes created by the pandemic in several industries fill up, the deal offered to workers might look much like it did before the pandemic.Ultimately, “we are stuck in a world where labor is very cheap and we don’t expect much from it,” Ms. Stevenson said. “I don’t see this pandemic fundamentally reshaping that.” Ms. Shierholz put it this way: “There has not been any fundamental restructuring of power in the economy.”Some of the more lasting changes brought about by the pandemic could work against low-wage workers. Restaurants, taxi fleets and hotels in big cities are likely to see less business as companies cut back on business travel and people working remotely cut back on downtown lunches and happy hours.More job losses should be expected if fast food joints and other service businesses decide to replace their face-to-face workers with robots and software. Yet there are signs that the country’s low-wage labor force might be in for more lasting raises.Even before the pandemic, wages of less-educated workers were rising at the fastest rate in over a decade, propelled by shrinking unemployment. And after the temporary expansion of unemployment insurance ends, with Covid-19 under control and children back at school, workers may be unwilling to accept the deals they accepted in the past.Jed Kolko, chief economist at the job placement site Indeed, pointed to one bit of evidence: the increase in the reservation wage — the lowest wage that workers will accept to take a job.According to data from the Federal Reserve Bank of New York, the average reservation wage is growing fastest for workers without a college degree, hitting $61,483 in March, 26 percent more than a year earlier. Aside from a dip at the start of the pandemic, it has been rising since November 2017.“That suggests it is a deeper trend,” Mr. Kolko noted. “It’s not just about the recovery.”Other trends could support higher wages at the bottom. The aging of the population, notably, is shrinking the pool of able-bodied workers and increasing demand for care workers, who toil for low pay but are vital to support a growing cohort of older Americans.“There was a work force crisis in the home care industry before Covid,” said Kevin Smith, chief executive of Best of Care in Quincy, Mass., and president of the state industry association. “Covid really laid that bare and exacerbated the crisis.”With more families turning their backs on nursing homes, which were early hotbeds of coronavirus infections, Mr. Smith said, personal care aides and home health aides are in even shorter supply.“The demand for services like ours has never been higher,” he said. “That’s never going back.”And some of the changes brought about by the pandemic might create new transition opportunities that are not yet in the Brookings data. The accelerated shift to online shopping may be a dire development for retail workers, but it will probably fuel demand for warehouse workers and delivery truck drivers.The coronavirus outbreak induced such an unusual recession that any predictions are risky. And yet, as Ms. Escobari of Brookings pointed out, the recovery may provide rare opportunities for those toiling for low wages.“This time, people searching for jobs may have a lot of different options,” she said. “That is not typical.” More

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    The Car Market 'Is Insane': Dealers Can't Keep Up With Demand

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    Rick Ricart is expecting nearly 40 Kia Telluride sport utility vehicles to arrive at his family’s dealership near Columbus, Ohio, over the next three weeks. Most will be on his lot for just a few hours.“They’re all sold,” Mr. Ricart said. “Customers have either signed the papers or have a deposit on them. The market is insane right now.”In showrooms across the country, Americans are buying most makes and models almost as fast as they can be made or resold. The frenzy for new and used vehicles is being fed by two related forces: Automakers are struggling to increase production because of a shortage of computer chips caused in large part by the pandemic. And a strong economic recovery, low interest rates, high savings and government stimulus payments have boosted demand.The combination has left dealers and individuals struggling to get their hands on vehicles. Some dealers are calling and emailing former customers offering to buy back cars they sold a year or two earlier because demand for used vehicles is as strong as it is for new cars, if not stronger. Used car prices are up about 45 percent over the past year, according to government data published this week. New car and truck prices are up about 5 percent over the past year.Those price increases have fed a debate in Washington about whether President Biden’s policies, particularly the $1.9 trillion American Rescue Plan he signed in March, are responsible for the sharp rise in inflation. The government said this week that consumer prices across the economy rose 5.4 percent in the last year through June.Republican lawmakers have argued that the March legislation is overheating the economy and are citing the rise in prices to oppose additional government spending. But Biden administration officials have pointed out that temporary supply shortages are largely responsible for the surge in prices of cars and other goods.Government stimulus may have helped some consumers, but it is hard to say how much. Several large forces are at play.The chip shortage, for example, is affecting automakers all over the world and is not directly related to U.S. policies. Industry officials blame limited production capacity for semiconductors and pandemic-related disruptions in supply and demand for the shortage.To make the most of limited chip supplies, General Motors has temporarily done away with certain features in some models, like stop-start systems that automatically turn off engines when cars stop for, say, a traffic light. And the French carmaker Peugeot has replaced digital speedometers with analog ones in some cars.Rental car companies that sold off thousands of cars during the pandemic to survive are now in the market to buy cars and trucks. They want to take advantage of a summer travel boom that has driven up rental rates to several hundred dollars a day in some places.“The industry has had strikes and material shortages before that have left us short of inventory, but I’ve never seen anything like this,” said Mark Scarpelli, the owner of two Chevrolet dealerships near Chicago. “Never, never, never.”His dealerships normally have 600 to 700 cars in stock. Now, he has about 50. Once or twice a week, a truck arrives with five or 10 vehicles. The cars disappear quickly because of customer waiting lists, Mr. Scarpelli said.Industry executives said the last time demand and supply were this out of sync was most likely after the end of World War II, when U.S. auto plants returned to making cars after years of churning out tanks and planes.Dealers said virtually everything was selling, from luxury vehicles and sports cars that cost more than $100,000 to basic used cars that many parents buy for teenagers.Even though the unemployment rate is still higher than before the pandemic, many people have money to spend. Government payments have helped lots of people, but many Americans, kept from vacationing or eating out, saved money. Financing cars is also relatively cheap — at least for people with good credit. Some automakers like Toyota, which has been less affected by the chip shortage than others, are advertising zero-interest loans on some cars.Mr. Ricart’s family businesses include a custom shop that sells high-end, special-edition trucks and sports cars. “We had a $125,000 Shelby pickup, and I said, ‘Who’s going to buy that?’” he recalled. “The next day it was gone. There’s so much free cash in the market. People are paying full price, even for the most expensive vehicles we have.”Buyers often have to take vehicles that don’t meet their specifications, and move fast when they find one close enough.Gary Werle, a retiree in Lake Worth, Fla., recently traded in a 2017 Buick Encore for a 2021 version, drawn by its safety features such as blind-spot monitoring and automatic braking. “I’m 80, and I thought it would be good to have those,” he said.On Memorial Day, his dealer called, and Mr. Werle didn’t hesitate. “I was at a party and left to buy the car,” he said. “I’d heard about the shortages, so I wasn’t sure the car would be there the next day.”Dealers are selling fewer vehicles, but their profits are up a lot. That’s a huge change from the spring of 2020, when most dealerships shut down for roughly two months and they had to lay off workers to survive.“The strong demand from consumers paired with a lack of supply from the manufacturers has created a gusher of profits for dealers,” said Alan Haig, president of Haig Partners, an automotive consultant.Now, dealers typically dictate the price of new or used cars. New cars typically sell for the manufacturer’s suggested retail price or, in some cases, thousands of dollars more for models in very high demand. Haggling over used cars is a distant memory.“There’s not a lot of negotiating that goes on right now on price,” said Wes Lutz, owner of Extreme Dodge in Jackson, Mich.Some customers have balked at paying top dollar for new cars and have opted to make do with older vehicles. That has increased demand for parts and service, one of the most profitable businesses for car dealers. Many dealers have extended repair-shop hours. Mr. Ricart said he had some repair technicians putting in 10- or 12-hour days three or four days in a row before taking a few days off.Of course, the shortage of cars will end, but it isn’t clear when.As Covid-19 cases and deaths rose last spring, automakers shut down plants across North America from late March until mid-May. Since their plants were down and they expected sales to come back slowly, they ordered fewer semiconductors, the tiny brains that control engines, transmissions, touch screens, and many other components of modern cars and trucks.At the same time, consumers confined to their homes began buying laptops, smartphones and game consoles, which increased demand for chips from companies that make those devices. When automakers restarted their plants, fewer chips were available.Many automakers have had to idle plants for a week or two at a time in the first half of 2021. G.M., Ford Motor and others have also resorted to producing vehicles without certain components and holding them at plants until the required parts arrive. At one point, G.M. had about 20,000 nearly complete vehicles awaiting electronic components. It began shipping them in June.Ford has been hit harder than many other automakers because of a fire at one of its suppliers’ factories in Japan. At the end of June, Ford had about 162,000 vehicles at dealer lots, fewer than half the number it had just three months ago and roughly a quarter of the stock its dealers typically hold.This month, Ford is slowing production at several North American plants because of the chip shortage. The company said it planned to focus on completing vehicles.Mr. Ricart recently took a trip on his Harley-Davidson to Louisville, Ky., and got a look at the trucks and S.U.V.s at a Ford plant that are waiting to be finished. He said he had seen “thousands of trucks in fields with temporary fencing around them.”He said he hoped to get some of those trucks soon because Ricart Ford had only about 30 F-150 pickup trucks in stock. “We’re used to selling a couple hundred a month.” More

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    in Economy

    Senate Passes Bill to Bolster Competitiveness With China

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    The wide margin of support reflected a sense of urgency among lawmakers in both parties about shoring up the technological and industrial capacity of the United States to counter Beijing.WASHINGTON — The Senate overwhelmingly passed legislation on Tuesday that would pour nearly a quarter-trillion dollars over the next five years into scientific research and development to bolster competitiveness against China. More

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    in Economy

    Biden Administration Moves to Unkink Supply Chain Bottlenecks

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    A swath of recommendations calls for more investments, new supply chains and less reliance on other countries for crucial goods.WASHINGTON — The Biden administration on Tuesday planned to issue a swath of actions and recommendations meant to address supply chain disruptions caused by the coronavirus pandemic and decrease reliance on other countries for crucial goods by increasing domestic production capacity. More

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    Workers Are Gaining Leverage Over Employers Right Before Our Eyes

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    “Employers are becoming much more cognizant that yes, it’s about money, but also about quality of life.”The relationship between American businesses and their employees is undergoing a profound shift: For the first time in a generation, workers are gaining the upper hand.The change is broader than the pandemic-related signing bonuses at fast-food places. Up and down the wage scale, companies are becoming more willing to pay a little more, to train workers, to take chances on people without traditional qualifications, and to show greater flexibility in where and how people work.The erosion of employer power began during the low-unemployment years leading up to the pandemic and, given demographic trends, could persist for years.March had a record number of open positions, according to federal data that goes back to 2000, and workers were voluntarily leaving their jobs at a rate that matches its historical high. Burning Glass Technologies, a firm that analyzes millions of job listings a day, found that the share of postings that say “no experience necessary” is up two-thirds over 2019 levels, while the share of those promising a starting bonus has doubled.People are demanding more money to take a new job. The “reservation wage,” as economists call the minimum compensation workers would require, was 19 percent higher for those without a college degree in March than in November 2019, a jump of nearly $10,000 a year, according to a survey by the Federal Reserve Bank of New York.Employers are feeling it: A survey of human resources executives from large companies conducted in April by the Conference Board, a research group, found that 49 percent of organizations with a mostly blue-collar work force found it hard to retain workers, up from 30 percent before the pandemic.“Companies are going to have to work harder to attract and retain talent,” said Karen Fichuk, who as chief executive of the giant staffing company Randstad North America closely tracks supply and demand for labor. “We think it’s a bit of a historic moment for the American labor force.”This recalibration between worker and employer partly reflects a strange moment in the economy. It’s reopening, but many would-be workers are not ready to return to the job.Yet in key respects, the shift builds on changes already underway in the tight labor market preceding the pandemic, when the unemployment rate was 4 percent or lower for two straight years.That follows decades in which union power declined, unemployment was frequently high and employers made an art out of shifting work toward contract and gig arrangements that favored their interests over those of their employees. It would take years of change to undo those cumulative effects.But the demographic picture is not becoming any more favorable for employers eager to fill positions. Population growth for Americans between ages 20 and 64 turned negative last year for the first time in the nation’s history. The Congressional Budget Office projects that the potential labor force will grow a mere 0.3 to 0.4 percent annually for the remainder of the 2020s; the size of the work force rose an average of 0.8 percent a year from 2000 to 2020.An important question for the overall economy is whether employers will be able to create conditions attractive enough to coax back in some of the millions of working-age adults not currently part of the labor force. Depending on your view of the causes, the end of expanded pandemic-era jobless benefits might have an effect too. Some businesses may need to raise prices or retool how they operate; others may be forced to close entirely.Higher wages are part of the story. The jobs report issued on Friday showed that average hourly earnings for nonmanagerial workers were 1.3 percent higher in May than two months earlier. Other than in a brief period of statistical distortions early in the pandemic, that is the strongest two-month gain since 1983.But wages alone aren’t enough, and firms seem to be finding it in their own best interest to seek out workers across all strata of society, to the benefit of people who have missed out on opportunity in the last few decades.“I’ve been doing this a long time and have never felt more excited and more optimistic about the level of creative investment on this issue,” said Bertina Ceccarelli, chief executive of NPower, a nonprofit aimed at helping military veterans and disadvantaged young adults start tech industry careers. “It’s an explosive moment right now.”In effect, an entire generation of managers that came of age in an era of abundant workers is being forced to learn how to operate amid labor scarcity. That means different things for different companies and workers — and often involves strategies more elaborate than simply paying a signing bonus or a higher hourly wage.At the high end of the labor market, that can mean workers are more emboldened to leave a job if employers are insufficiently flexible on issues like working from home.It also means companies thinking more expansively about who is qualified for a job in the first place. That is evident, for example, in the way Alex Lorick, a former South Florida nightclub bouncer, was able to become a mainframe technician at I.B.M.Mr. Lorick often worked a shift called “devil’s nine to five” — 9 p.m. to 5 a.m. — made all the more brutal when it was interspersed with day shifts. The hours were tough, but the pay was better than in his previous jobs, one at a retirement home and another serving food at a dog track. Yet it was a far cry from the type of work he had dreamed about in high school, when he liked computers and imagined making video games for a living.As a young adult, he took online classes in web development and programming languages, but encountered a Catch-22 many job seekers know well: Nobody wanted to hire a tech worker without experience, which meant he couldn’t get enough experience to be hired. College wasn’t for him. Hence the devil’s nine to five.Until late last year, that is. After months on unemployment during the pandemic, he heard from I.B.M., where he had once applied and been rejected for a tech job. It invited him to apply to an apprenticeship program that would pay him to be trained as a mainframe technician. Now 24, he completed his training this month and is beginning hands-on work in what he hopes is the start of a long career.“This is a way more stable paycheck, and more consistent hours,” Mr. Lorick said. “But the most important thing is that I feel like I’m on a path that makes sense and where I have the opportunity to grow.”Before Adquena Faine began an I.B.M. apprenticeship to become a cloud storage engineer, she was driving for ride-hailing services to support herself and her daughter, dealing with the erratic income and sore back that came with it.“I really hate driving now,” she said. “I could feel the car vibrating even when I wasn’t in the car.”She had attended but not completed college, and served in the Air Force, but the information technology industry was new to her.“They were confident they could teach me what I needed to know,” she said. “It was intense, but I didn’t want to let myself down or my baby girl down.”The hiring of Ms. Faine and Mr. Lorick was part of a deliberate effort by I.B.M. to rethink how it hires and what counts as a qualification for a given job.The apprenticeship program began in 2017, and thousands of people have moved through that and similar programs. Executives concluded that the qualifications for many jobs were unnecessarily demanding. Postings might require applicants to have a bachelor’s degree, for example, in jobs that a six-month training course would adequately prepare a person for.“By creating your own dumb barriers, you’re actually making your job in the search for talent harder,” said Obed Louissaint, I.B.M.’s senior vice president for transformation and culture. In working with managers across the company on training initiatives like the one under which Mr. Lorick was hired, “it’s about making managers more accountable for mentoring, developing and building talent versus buying talent.”“I think something fundamental is changing, and it’s been happening for a while, but now it’s accelerating,” Mr. Louissaint said.Efforts like the one at I.B.M. are, to some degree, a rediscovery in the value of investing in workers.“I do think companies need to relearn some things,” said Byron Auguste, chief executive of Opportunity at Work, an organization devoted to encouraging job opportunities for people from all backgrounds. “A lot of companies, after the recessions in 2001 and 2008, dismantled their onboarding and training infrastructure and said that’s a cost we can’t afford.“But it turns out, you actually do need to develop your own workers and can’t just depend on hiring.”Any job involves much more than a paycheck. Some good jobs don’t pay much, and some bad jobs pay a lot. Ultimately, every position is a bundle of things: a salary, yes, but also a benefits package; a work environment that may or may not be pleasant; opportunities to advance (or not); flexible hours (or not).Statistics agencies collect pretty good data on the aspects of jobs that are quantifiable, especially salary and benefits, and not such great data on other dimensions of what makes a job good or bad. But it is clear, as the labor market tightens, that people routinely favor those less quantifiable advantages.That has become vividly apparent in the restaurant industry, which is facing extreme labor shortages.“Traditionally in restaurants, it was: ‘Hey, this is the job. If you want these hours, great; if not, we’ll find somebody else,’” said Christopher Floyd, owner of the hospitality industry recruitment firm Capital Restaurant Resources in Washington. “Now employers have to say, ‘You have the qualities we’re looking for; maybe we can work out a more flexible schedule that works for you.’ Employers are becoming much more cognizant that yes, it’s about money, but also about quality of life.”Whether it’s a bigger paycheck, more manageable hours, or a training opportunity offered to a person with few formal credentials, the benefits of a tight labor market and shifting leverage can take many forms.What they have in common — no matter how long this shift toward workers lasts, or how powerful a force it turns out to be — is that it puts the employee in the position that matters most: the driver’s seat. More