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    Luring Labor as a Beach Economy Booms

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    REHOBOTH BEACH, Del. — Dogfish Head Craft Brewery is struggling to hire manufacturing workers for its beer factory and staff members for its restaurants in this coastal area, a shortage that has grown so acute that the company has cut dining room hours and is now offering vintage cases of its 120 Minute India Pale Ale as a signing bonus to new hires.The company is using its hefty social media presence “to get the bat signal out” and “entice beverage-loving adults” to join the team, Sam Calagione, the company’s founder, said on a steamy afternoon this month at Dogfish’s brewpub, which was already doing brisk business ahead of vacation season.Economic activity is expected to surge in Delaware and across the country as people who missed 2020 getaways head for vacations and the newly vaccinated spend savings amassed during months at home.Yet as they race to hire before an expected summertime economic boom, employers are voicing a complaint that is echoing all the way to the White House: They cannot find enough workers to fill their open positions and meet the rising customer demand.An April labor market report underscored those concerns. Economists expected companies to hire one million people, but data released on Friday showed that they had added only 266,000, even as vaccines became widely available and state and local economies began springing back to life. Many analysts thought labor shortages might explain the disappointment.Some blame expanded unemployment benefits, which are giving an extra $300 per week through September, for keeping workers at home and hiring at bay. Republican governors in Arkansas, Montana and South Carolina moved last week to end the additional benefits for unemployed workers in their states, citing companies’ labor struggles.President Biden said on Monday that there was no evidence that the benefit was chilling hiring. In remarks at the White House, he said his administration would make clear that any worker who turned down a suitable job offer, with rare exceptions for health concerns related to the coronavirus, would lose access to unemployment benefits. But school closings, child care constraints and incomplete vaccine coverage were playing a larger role in constraining hiring, the president said.He called on companies to step up by helping workers gain access to vaccines and increasing pay. “We also need to recognize that people will come back to work if they’re paid a decent wage,” Mr. Biden said.In tourist spots like Rehoboth Beach, companies face a shortage of seasonal immigrants, a holdover from a ban enacted last year that has since expired. But the behavior of the area’s businesses, from breweries to the boardwalk, suggests that much of the labor shortage also owes to the simple reality that it is not easy for many businesses simultaneously to go from a standstill to an economic sprint — especially when employers are not sure the new boom will last.Many managers are unwilling to raise wages and prices enough to keep up, as they worry that demand will ebb in a few months and leave them with permanently higher payroll costs. They are instead resorting to short-term fixes, like cutting hours, instituting sales quotas and offering signing bonuses to get people in the door.Some employers in the Rehoboth area, which The New York Times visited last year to take the temperature of the labor market, think workers will come flooding back in September, when the more generous unemployment benefits expire.At least 10 people in and around Rehoboth, managers and workers alike, cited expanded payments as a key driver of the labor shortage, though only two of them personally knew someone who was declining to work to claim the benefit.“Some of them are scared of the coronavirus,” said Alan Bergmann, a resident who said he knew six or seven people who were forgoing work. Mr. Bergmann, 37, was unable to successfully claim benefits because the state authorities said he had earned too little in either Delaware or Pennsylvania — where he was living in the months before the pandemic — to qualify.Whether it is unemployment insurance, lack of child care or fear of infection that is keeping people home, the perception that the job market is hot is at odds with overall labor numbers. Nationally, payroll employment was down 8.2 million compared with its prepandemic level, and unemployment remained elevated at 6.1 percent in April. Dogfish Head Craft Brewery is struggling to hire manufacturing workers for its beer factory and staff members for its restaurants.Alyssa Schukar for The New York TimesSam Calagione, center, the founder of Dogfish Head, said he did not want to think about the business the company would forgo if it cannot hire dozens of employees by the peak summer season.Alyssa Schukar for The New York TimesIn Delaware, Wawa gas stations sport huge periwinkle blue signs advertising $500 signing bonuses, plus free “shorti” hoagies each shift for new associates. A local country club is offering referral bonuses and opening up jobs to members’ children and grandchildren. A regional home builder has instituted a cap on the number of houses it can sell each month as everything — open lots, available materials, building crews — comes up short.“Demand was always going to pick up faster than supply in a lot of these pandemic-hit parts of the economy,” said Nick Bunker, an economist at Indeed. “There are readjustment costs.”National data hint that it is taking time for workers to reshuffle into new jobs. Openings have been swiftly increasing — a record share of small business owners report having an opening they are trying to fill — and quit rates have rebounded since last year, suggesting that workers have more options.Mr. Bergmann is among those who are benefiting. He said he had a felony on his record, and between that and the coronavirus, he was unable to find work last year. He struggled to survive with no income, cycling in and out of homelessness. Now he works a $16-an-hour job selling shirts on the boardwalk and has been making good money as a handyman for the past three months, enough to rent a room.Brittany Resendes, 18, a server at the Thompson Island Brewing Company in Rehoboth Beach, took unemployment insurance temporarily after being furloughed in March 2020. But she came back to work in June, even though it meant earning less than she would have with the extra $600 top-up available last year.“I was just ready to get back to work,” she said. “I missed it.”She has since been promoted to waitress and is now earning more than she would if she were still at home claiming the $300 expanded benefit. She plans to serve until she leaves for the University of Delaware in August, and then return during school breaks.Scott Kammerer oversees a local hospitality company that includes the brewery where Ms. Resendes works, along with restaurants like Matt’s Fish Camp, Bluecoast and Catch 54. He has been able to staff adequately by offering benefits and taking advantage of the fact that he retained some workers since his restaurants did not close fully or for very long during the pandemic.But he has also bolstered wages. The company’s starting non-tip pay rates have climbed to $12 from $9 two years ago. Mr. Kammerer has not been forced to raise prices to cover increasing costs, because business volume has picked up so much — up 40 percent this year compared with a typical winter — that profits remain solid.Other employers are struggling more. By the end of April, the Peninsula Golf and Country Club usually hired about 100 seasonal workers over the course of three job fairs. This year, after five fairs, it managed to hire only 40. Missing are the 20 or so students from abroad who would usually work on seasonal visas, but the club also cannot get people to come in for interviews.The clubhouse restaurant at the Peninsula Golf and Country Club in Millsboro, Del., sits empty because the company does not have the staff to open it for lunch.Alyssa Schukar for The New York TimesThe club might have to keep the snack shack at its wave pool closed this summer because of the labor shortage.Alyssa Schukar for The New York TimesBesides relaxing hiring rules and offering bonuses for employee referrals, the club is paying 10 percent to 20 percent more, depending on job title. But managers there do not think the wage increases sweeping their region are sustainable, nor do they think pay is what is keeping people from applying.“There’s no labor out there,” said Greg Tobias, the principal for Ocean Atlantic Companies, a business group that includes real estate development and the country club. “It’s not even a question of, are you paying enough money?”The sprawling clubhouse restaurant was empty on a sunny afternoon this month as golfers milled about. The company does not have the staff to open it for lunch. It might have to keep the snack shack at the club’s wave pool closed this summer if it cannot find more workers.Part of the problem, Mr. Tobias said, was that people had left the hospitality industry for the thriving local construction business. Ocean Atlantic’s related building company, Schell Brothers, had sales take off over the past year as people moved toward the beach — either because they were retiring or because the pandemic had prompted them to look for more space. Schell Brothers’s subcontractors could not double the sizes of its work forces overnight, and the company was concerned about running out of finished lots. Builders ran into material shortages.The company first raised prices by 15 percent to 25 percent to try to cool things down, but when the building backlog hit 18 months, it instituted caps to slow the rush of sales.“It’s almost like, anticapitalistic practices, but what would happen to our companies or employees if we ran out of finished lots would be worse,” said Preston Schell, the co-founder and chief executive of Ocean Atlantic Companies. While they could have pushed prices as high as demand would allow, they opted not to; it is hard to cut home prices down the road, Mr. Schell said, so it is better to undercharge during what he expects to be a short-term run-up.Building homes in Millsboro, Del. People have left the hospitality industry for the thriving local construction business, said Greg Tobias, the principal for Ocean Atlantic Companies.Alyssa Schukar for The New York TimesSales took off over the past year as people moved toward the beach, either because they were retiring or because the pandemic had prompted them to look for more space. Alyssa Schukar for The New York TimesSuch maneuvering could matter for economic policymakers from the White House to the Fed, as they keep a careful eye on inflation while vaccine-induced optimism and trillions in government spending fuel an economic rebound. If many businesses treat the summer bounce as likely to be short lived, it may keep price gains in check.At Dogfish Head, the solution has been to also temporarily limit what is on offer. The Rehoboth brewpub has cut its lunches, and its sister restaurant next door is closed on Mondays. Mr. Calagione said he did not want to think about the business they would forgo if they cannot hire the dozens of employees needed by the peak summer season.But as it offers cases of its cult-favorite beer and signing bonuses to draw new hires, the company seems less focused on another lever: lasting pay bumps. Steve Cannon, a server at Dogfish Head, can walk to what he regards as his retirement job. He said he was not thinking of switching employers, but several co-workers had left recently for better wages elsewhere.“There’s nobody,” said Mr. Cannon, 57. “So people are going to start throwing money at them.”When asked if it was raising pay, Dogfish Head said it offered competitive wages for the area. 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    April 2021 Jobs Report Shows Slowdown in Hiring

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    U.S. employers added 266,000 jobs in April, the government reported Friday, far below what economists had expected and a dramatic slowdown from March’s rapid hiring pace.The jobless rate rose slightly to 6.1 percent.Economists had forecast an addition of about a million jobs.The increase for March was revised down to 770,000 from 916,000.Still, more opportunities are bubbling up as coronavirus infections ebb, vaccinations spread, restrictions lift and businesses reopen. Job postings on the online job site Indeed are 24 percent higher than they were in February last year.“There’s been a broad-base pickup in demand,” said Nick Bunker, who leads North American economic research at the Indeed Hiring Lab. The supercharged housing market is driving demand for construction workers. There is also an abundance of loading, stocking and other warehousing jobs — a side-effect of the boom in e-commerce.The economy still has a lot of ground to regain before returning to prepandemic levels. Millions of jobs have vanished since February 2020, and the labor force has shrunk.As the economy fitfully recovers, there are divergent accounts of what’s going on in the labor market. Employers, particularly in the restaurant and hospitality industry, have reported scant response to help-wanted ads. Several have blamed what they call overly generous government jobless benefits, including a temporary $300-a-week federal stipend that was part of an emergency pandemic relief program.But the most solid evidence of a real shortage of workers, economists say, is rising wages. And that is not happening in a sustained way.As Jerome H. Powell, the Federal Reserve chair, said at a news conference last week: “We don’t see wages moving up yet. And presumably we would see that in a really tight labor market.”Millions of Americans have said that health concerns and child care responsibilities — with many schools and day care centers not back to normal operations — have prevented them from returning to work. Millions of others who are not actively job hunting are considered on temporary layoff and expect to be hired back by their previous employers once more businesses reopen fully. At the same time, some baby boomers have retired or switched to working part time. More

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    Shopping for Sofas, Hot Tubs or Coffee Makers? Have Patience.

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    As Americans with disposable income start shopping again, an odd assortment of products like coffee makers, sofas and natural deodorant have become sudden hot properties.The definition of a luxury problem, according to Olivia Kraus, a lawyer in Mount Vernon, N.Y., is the inability to buy something expensive that one can afford.As such, she has lots.In August 2020, Ms. Kraus ordered a generator through an electrician. It came in January 2021, she said.That month, she went to a Jacuzzi dealer, who told her that she was “in luck,” that they had a Jacuzzi unspoken for arriving in January and two similar models arriving in February.No other hot tub would be available until October 2021.She picked one that could be scheduled to arrive in February. It arrived two weeks ago.Apparently, Ms. Kraus said, “the factory in California was seriously slowed down for social distancing.”All over the United States — or at least, all over the parts of it where people have jobs, disposable income and time to spare — shoppers are encountering the same thing: products that are sold out or on back order. That they are “hard to find,” or HTF in online parlance, naturally increases their desirability, sort of like “hard to get” used to be in relationships.The reason some things are unavailable seems straightforward enough. Millions of people who before the pandemic weren’t at home much spent the last year testing the limits of their clothes dryers, dishwashers and stoves, and their living spaces groaned under the unreasonable demands.Top brands like Viking, Bosch and Miele are all in high demand right now.Dyson’s V8 Vacuum cleaner, lauded for its ability to erase pet hair, was nowhere to be found at the packed Home Depot in Chelsea on a recent Sunday (though it’s now back in stock).The Breville Espresso Descalers from Williams-Sonoma has been another elusive item.Marina Zenovich, a documentarian whose films include “Richard Pryor: Omit the Logic” and “Roman Polanski: Wanted and Desired,” picked one out in February.A few weeks later, she opened her computer to a message informing her it would not be coming until late May, citing “temporary delays from our suppliers, vendors and artisans.”At Restoration Hardware in the meatpacking district, a person at the front desk said last week that “most” sofas are still being delivered in 10 to 12 weeks, the normal time frame. But “most” doesn’t include the track arm sofa that Chris Peregrin, the global director of partnerships at the photography agency Magnum, ordered in April.It is due to arrive in early August, thanks to what the person at the front desk said are issues obtaining velvets and Belgian linens. And a salesman at Truemart Fabrics in Chelsea said that it’s just as hard to get silks and cotton prints because there isn’t as much production in the cutting rooms.Break out the tiny violins, right? If you can locate some.Restaurants that offer food to go have a shortage in ketchup packets, the result of both a boom in takeout and the decision by many restaurants not to use bottles of it because of sanitary issues. Never mind that most evidence suggests Covid-19 rarely spreads via contaminated surfaces. Long-battered Heinz stock is on the rise.According to Bloomberg, another toilet paper shortage may be on the way, thanks to drama in the Suez Canal. A global semiconductor shortage has caused spikes in the prices of electronics.Katie Sturino is the founder of Megababe, a four-year-old company that makes cruelty-free beauty products. She worried at the beginning of the pandemic that the stay-at-home economy could claim her business. The opposite happened. Freed from having to go to the office, perhaps, women began to experiment more with newer, more natural deodorants, just as they did with less structured bras. Sales of Rosy Pits, Megababe’s best-known product, soared, Ms. Sturino said.It’s currently still available at Target, but she’s unable to offer sales through her own website.Dr. Lara Devgan, a plastic surgeon on the Upper East Side, has had a similar experience with her line of skin care products — believing at first that they would be unnecessary, and finding instead that they were sold out.“It’s not only that we’ve been looking at unflattering Zoom angles, watching our Botox wear off and our gray hairs grow in,” she said. “It’s that people are wearing much less makeup than they’ve ever worn before, so they’re taking things into their own hands.”And putting ever fancier timepieces on their wrists.Tim RobinsonCondominiums in the recently developed Hudson Yards cleared out in the spring and summer of 2020, but traffic at Watches of Switzerland, at 20 Hudson Yards, skyrocketed, according to the company’s C.E.O., Brian Duffy.By the winter, it was nearly impossible to find Rolex sports models there in stainless steel or solid gold.Some of this, Mr. Duffy said, was the result of production delays. Switzerland was shut down for much of the spring. Areas of Rolex’s factories had to be evacuated during Covid outbreaks over the summer and fall. All the while, the stock market soared, leaving high-earning investors with huge amounts of disposable income.Still, Paul Boutros, the head of Phillips Auction House’s U.S. watches division, doesn’t see the possible end of the pandemic as being likely to change things. “I’ll put it this way,” he said. “If you are a regular person trying to buy your first good watch and you choose a Rolex sport watch, a Patek Phillipe Nautilus or a Royal Oak from Audemars Piguet and want to buy it on the spot — I think those days are over.”Currently, Mr. Boutros is waiting on something else: a $4,329 Bull barbecue grill that he ordered from an online dealer in early April and won’t be arriving until July, at the earliest.And Neal Bascomb, the author of biographies on Henry Ford and Walter Chrysler, has seen the renovation of his Philadelphia home grind to a halt because of a spray foam shortage that’s hobbled scores of construction projects in the area.“It seems like a rather odd thing to stop construction, but there you have it,” he said, going on to note similarities between consumption today and consumption during the Roaring Twenties.Both then and now, he said, there was “a crazy stock market,” “easy access to credit,” “scores of new products,” a growing wealth gap and a charismatic and temperamental industrialist, who not only transformed the car business but also became, as a result, arguably the defining technologist of the era.The position of Henry Ford and the Model A, which arrived in 1927 in a multitude of colors and styles is now held by Elon Musk and the Tesla Model 3, which first arrived in 2013 and comes in a multitude of colors and styles.As such, both economies have been defined by consumers buying lots of things, many of which they arguably cannot afford.Yet substantial shortages across a variety of industries didn’t occur during the 1920s, according to A. Scott Berg, the biographer of Woodrow Wilson and Katharine Hepburn, because there was much less dependence on imports than there is today. “During World War I, the United States became a gigantic machine, manufacturing exponentially more than it ever had and producing more food than it ever had, as we began feeding a starving and war-deprived world,” he wrote in an email.Mr. Bascomb pointed out that the United States back then did not rely heavily on products from other countries. “We didn’t have this global shipping system that required semiconductors from Taiwan,” he said.The problem is not likely to abate in the near future, according to John Pitzer, an analyst at Credit Suisse who specializes in semiconductors. “My best guess is that if the economy starts to reopen in the back half of the year and we start to see things really continue to pick up, the supply issues get worse, not better,” he said.How that ends up affecting the economy is “beyond my pay grade,” he said.But Mr. Bascomb had little doubt. “Inflation,” he said. 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    As Economy Rebounds, Manufacturers Face New Hurdles

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    U.S. factories are humming again. But the recovery’s speed has left many employers scrambling for workers or for parts.Matt Guse would hire a dozen machinists — if only he could find them.The owner of MRS Machining, a maker of precision metal parts in rural Augusta, Wis., Mr. Guse finds business is rebounding so quickly as the pandemic’s effect eases that his 47-worker shop is short-handed.“I’ve turned down a million dollars’ worth of work in the last two weeks,” he said. “Doing that, it’s hard to go to bed at night when you put your head to the pillow. I have open capacity, but I need more people.”After a sharp downturn when the pandemic hit last year, factories are humming again. But the recovery’s speed has left employers scrambling. Despite huge layoffs — manufacturing employment initially dropped by 1.4 million — some companies find themselves desperate for workers.In other cases, shortages of parts like semiconductors and supply chain disruptions have made orders hard to fill and created fresh uncertainty.“It was a lot easier to turn the lights out than to ramp up,” said Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago. “Manufacturers weren’t prepared for a surge of demand in goods. They’ve been caught a bit flat-footed.”The manufacturing recovery signals a turning point, with the Biden administration putting a fresh focus on increasing factory jobs, especially in areas like semiconductors and electric vehicles. That growth will be crucial if the overall economy is to expand rapidly in the months ahead.The Commerce Department reported Monday that orders for durable goods — like cars and appliances — rose half a percentage point in March, prompting Barclays to lift its tracking estimate of economic growth for the first quarter to 1.4 percent, or 5.6 percent at an annualized rate.On Thursday, the government will release its initial reading on economic growth in the first three months of the year, and manufacturing is expected to be among the bright spots. The consensus of analysts polled by Bloomberg is that the report will show gross domestic product expanded by 1.7 percent, up from 1.3 percent.At one point, factory production was down substantially because of the pandemic, but it should return to pre-Covid-19 levels by the third quarter of this year, according to Chad Moutray, chief economist for the National Association of Manufacturers.“We’re seeing gangbuster levels of orders,” he said. “But the sector has a lot of challenges, like a rise in raw material costs, supply chain disruptions, logistics bottlenecks and worker shortages.”At MRS Machining, Mr. Guse said, spot shortages of items like steel and metal plate are a constant issue. “Quotes for material goods from suppliers are usually good for three to six months,” he said. “Now it’s a matter of hours.”As at many factories, the work pays well, starting at $18 to $20 an hour and rising to around $30. But the most skilled workers, like machinists, remain hard to find, according to Mr. Guse.“We’re getting applicants because people are moving out of Minneapolis and Chicago and looking to live in a more rural environment,” he said.Despite the good news at MRS, rebuilding overall factory employment is a challenge, said Scott Paul, president of the Alliance for American Manufacturing, a policy group representing manufacturers and the United Steelworkers.President Biden is fighting a long-term trend. Nearly 12.3 million Americans work in factories. Two decades ago, that figure stood at just over 17 million.“We feed the companies whose products go into infrastructure,” said Kathie Leonard, the chief executive of Auburn Manufacturing, which makes heat- and fire-resistant fabrics.Yoon Byun for The New York TimesFiberglass fabric before it is processed in a vertical oven, where it will be heated at 1,300 degrees Fahrenheit to caramelize so it won’t smoke when reaching high temperatures.Yoon Byun for The New York TimesAfter the last few economic downturns — the falloff in growth following the Asian financial crisis of the late 1990s; the slump after the attacks of Sept. 11, 2001; and the Great Recession — manufacturing failed to recover the lost jobs.To be sure, the sector has made up a good amount of ground after losing nearly 1.4 million positions in the first months of the pandemic, but employment remains about 515,000 jobs short of where it was in February 2020.Some experts question why policymakers focus so much on production when most Americans work in service industries that have been gaining jobs over the years and offer better growth prospects. But manufacturing is one of the few paths to a middle-class life for the two-thirds of American adults who lack a college degree.The average hourly wage of manufacturing workers is $29.15, while workers in leisure and hospitality, another field that draws people with less education, earn $17.67 an hour.Mr. Paul hopes that Mr. Biden’s plan to revitalize American manufacturing as part of his larger infrastructure effort will bear fruit.“He’s pretty serious about some form of industrial policy,” Mr. Paul said, citing the administration’s call for action in making products like semiconductors and electric vehicles. “It may be possible for Biden to do what no president has since manufacturing began its job decline and reverse the losses.”The administration’s blueprint includes $50 billion in funding for investments in chip manufacturing and research as well as $174 billion in spending to advance electric vehicles.The $2 trillion plan, with its focus on rebuilding roads and bridges as well as the electric grid, could help companies like Auburn Manufacturing of Maine, said its chief executive, Kathie Leonard.“Customers are struggling to meet launch timelines and production targets,” said Christie Wong Barrett, chief executive of MacArthur Corporation, a maker of labels and decals outside Flint, Mich. Brittany Greeson for The New York TimesMacArthur makes labels and decals like those showing tire pressure or indicating vehicle identification numbers. Its business was hard hit a year ago when the pandemic forced auto plants to shut down.Brittany Greeson for The New York Times“We feed the companies whose products go into infrastructure,” said Ms. Leonard, describing the heat- and fire-resistant fabrics Auburn makes at two factories in central Maine, about a half-hour from Portland. “The infrastructure plan holds promise for companies like us.”“You have to work at being an optimist,” she said. “We’re not going to hire 25 people, but maybe five. We need to hire a technical director, fabricators, and we need staff to help with e-commerce.”The semiconductor shortages are a headache for Christie Wong Barrett, chief executive of MacArthur Corporation, a maker of labels and decals outside Flint, Mich. She said orders had been delayed by car companies — her major customers — that couldn’t find enough of the chips they needed to keep cars coming off the assembly lines.“Customers are struggling to meet launch timelines and production targets,” she said. “Orders are either reduced in volume or delayed. It trickles down to different suppliers, and we’re just getting a haircut across the board.”MacArthur’s business had already been damaged when auto plants closed a year ago amid the pandemic lockdowns, cutting off demand for labels and decals like those showing tire pressure or indicating vehicle identification numbers.Ms. Barrett was able to pivot and supply products for medical customers, averting all but a handful of layoffs for her work force of 50. She remains optimistic, despite the current logistical backups.“It’s a horrible disruption right now, but I’m anticipating a strong recovery,” she said. “We never made major cuts, and as automotive production starts to recover more, I expect to hire several more people in the coming months.” More

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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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    Amid Shortfalls, Biden Signs Executive Order to Bolster Critical Supply Chains

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesRisk Near YouVaccine RolloutNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyAmid Shortfalls, Biden Signs Executive Order to Bolster Critical Supply ChainsThe order is intended to help insulate the economy from future shortages of critical imported components by making the United States less reliant on foreign supplies.President Biden on Wednesday signed an executive order requiring his administration to review critical supply chains with the aim of bolstering American manufacturing.Credit…Doug Mills/The New York TimesJim Tankersley and Feb. 24, 2021Updated 7:28 p.m. ETWASHINGTON — Automakers have been forced to halt production because of a lack of computer chips. Health care workers battling the coronavirus pandemic had to make do without masks as the United States waited on supplies from China. And pharmaceutical executives worried that supplies of critical drugs could dry up if countries tried to stockpile key ingredients and block exports.Deep disruptions in the global movement of critical goods during the pandemic prompted President Biden on Wednesday to take steps toward reducing the country’s dependence on foreign materials. He issued an executive order requiring his administration to review critical supply chains with the aim of bolstering American manufacturing of semiconductors, pharmaceuticals and other cutting-edge technologies.In remarks at the White House, the president cast the move as an important step toward creating well-paying jobs and making the economy more resilient in the face of geopolitical threats, pandemics and climate change.“This is about making sure the United States can meet every challenge we face in the new era,” he said.But the effort, which has bipartisan support, will do little to immediately resolve global shortages, including in semiconductors — a key component in cars and electronic devices. A lack of those components has forced several major American auto plants to close or scale back production and sent the administration scrambling to appeal to allies like Taiwan for emergency supplies.Administration officials said the order would not offer a quick fix but would start an effort to insulate the American economy from future shortages of critical imported components.Mr. Biden discussed the issue in the Oval Office on Wednesday afternoon with nearly a dozen Republican and Democratic members of Congress. Senator Chuck Schumer, Democrat of New York and the majority leader, called for the crafting and passage of a bill this spring to address supply chain vulnerabilities.“Right now, semiconductor manufacturing is a dangerous weak spot in our economy and in our national security,” Mr. Schumer said. “Our auto industry is facing significant chip shortages. This is a technology the United States created; we ought to be leading the world in it. The same goes for building-out of 5G, the next generation telecommunications network. There is bipartisan interest on both these issues.”Republicans emerged from the White House meeting optimistic that such efforts could soon move forward. Representative Michael McCaul, Republican of Texas, said he was pleased to see that the White House made the issue a top priority and that the president was receptive. “His words were, ‘Look, I’m all in,’” he said.Mr. McCaul said that much of the conversation revolved around legislation that Congress had passed last year to incentivize the chips industry — but which still needs funding for research grants and a refundable investment tax credit — as well as the current chips shortage and possible looming job losses in the auto industry.“China is looking at investing $1 trillion in their digital economy,” Mr. McCaul said. “If we’re going to be competitive, we have to incentivize these companies to manufacture these advanced chips in the United States.”Mr. Biden called the meeting one of the best of his presidency so far. “It was like the old days,” he said. “People were actually on the same page.”A global semiconductor shortage has led to production delays for American automakers.Credit…Mohamed Sadek for The New York TimesThe president ordered yearlong reviews of six sectors and a 100-day review of four classes of products where American manufacturers rely on imports: semiconductors, high-capacity batteries, pharmaceuticals and their active ingredients, and critical minerals and strategic materials, like rare earths.The Coronavirus Outbreak More

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    Global Chip Shortage Challenges Biden’s Hope for Manufacturing Revival

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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 storyGlobal Chip Shortage Challenges Biden’s Hope for Manufacturing RevivalA global shortage of a key component for cars and electronics has shuttered American factories and set off fierce competition to secure supplies.The shortage of a vital component for automobiles, phones, refrigerators and other electronic devices is posing an early challenge to the Biden administration’s promise to revive a manufacturing sector depressed by the coronavirus pandemic.Credit…Thomas Samson/Agence France-Presse — Getty ImagesFeb. 18, 2021, 4:11 p.m. ETWASHINGTON — President Biden came into office with plans to help the economy recover from the coronavirus pandemic and spur a domestic manufacturing revival for goods such as automobiles and semiconductors.But one month into his presidency, a global chip shortage has shuttered auto factories in the United States, slowed shipments of consumer electronics and called into question the security of American supply chains.The shortage of a vital component for automobiles, phones, refrigerators and other electronic devices is posing an early challenge to the administration’s promise to revive a manufacturing sector depressed by the pandemic. And it has spurred an effort by the administration to reach out to U.S. embassies and foreign governments to try to alleviate the shortage, even as the White House acknowledges that there are most likely few solutions to the supply crunch in the short term.The White House plans to issue an executive order soon that will take steps to address these kinds of vulnerabilities in critical supply chains over the longer term, an administration spokesperson said on Thursday. The order will begin a review of domestic manufacturing and supply chains for critical materials — including rare earths, medical supplies and semiconductors — with a particular focus on reducing dependencies on unreliable or unfriendly foreign actors.In the meantime, administration officials have begun looking for ways to ease the immediate shortage. Jake Sullivan, the national security adviser, and Brian Deese, the director of the National Economic Council, have been involved in efforts to increase chip availability; Sameera Fazili, the deputy director of the National Economic Council, and Peter Harrell, a senior director at the National Security Council, are leading the focus on supply chains, the White House spokesperson said.The United States has also tried to leverage its ties with Taiwan, one of the world’s largest chip manufacturers, to make sure American customers are not disadvantaged. In a letter sent on Wednesday, Mr. Deese thanked Wang Mei-Hua, the Taiwanese minister of economic affairs, for her “personal attention and support in resolving the current shortages faced by American automobile manufacturers.”Over the past year, the Trump administration tried to strengthen ties with the Taiwanese government and manufacturers like Taiwan Semiconductor Manufacturing Company to counter China’s growing influence over the chip market.The Biden administration is also meeting with auto companies and suppliers to identify bottlenecks and to urge them to work together to address the shortage. But the White House has acknowledged that its options to alleviate any shortfall are likely to be limited, given the fierce global competition for semiconductors. Many chip makers are already running near maximum capacity, and it will take at least several months to further ramp up production, analysts say.The shortage has been particularly disruptive for auto manufacturers because the production of vehicles relies on dozens of computer chips for electronic components that control engines, transmissions, entertainment systems, brakes and other systems. Both General Motors and Ford have estimated that the shortage will lower their operating profit by at least $1 billion this year.G.M. has halted production at one plant in the United States, one in Canada and another in Mexico until at least mid-March. At a fourth plant, the company has decided to produce vehicles without the electronics that are in short supply. When components become available, G.M. will install them and then ship the vehicles to dealers.The Coronavirus Outbreak More