Unemployment

More stories

  • 150 Shares99 Views

    in Economy

    Here Are The 5 Ways to Track the United States' Economic Recovery

    by

    The ebbing of the pandemic has brought price increases, supply bottlenecks and labor shortages. Key indicators will show whether it’s just a stage.This is a strange moment for the U.S. economy.Unemployment is still high, but companies are complaining they can’t find enough workers. Prices are shooting up for some goods and services, but not for others. Supply-chain bottlenecks are making it hard for homebuilders, automakers and other manufacturers to get the materials they need to ramp up production. A variety of indicators that normally move more or less together are right now telling vastly different stories about the state of the economy.Most forecasters, including policymakers at the Federal Reserve, expect the confusion to be short-lived. They see what amounts to a temporary mismatch between supply and demand, brought on by the relatively swift ebbing of the pandemic: Consumers, flush with stimulus cash and ready to re-engage with the world after a year of lockdowns, are eager to spend, but some businesses lack the staff and supplies they need to serve them. Once companies have had a chance to bring on workers and restock shelves — and people have begun to catch up on long-delayed hair appointments and family vacations — economic data should begin to return to normal.But no one knows for sure. It is possible that the pandemic changed the economy in ways that aren’t yet fully understood, or that short-term disruptions could have long-lasting ripple effects. Some prominent economists are publicly fretting that today’s price increases could set the stage for faster inflation down the road. Historical analogues such as the postwar boom of the 1950s or the “stagflation” era of the 1970s provide at best limited insight into the present moment.“We can’t dismiss anything at this point because there’s no precedent for any of this,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, a forecasting firm.On Friday, the Labor Department will release its monthly snapshot of the U.S. labor market. Last month’s report showed much slower job growth than expected, and economists will be watching closely to see whether that disappointment was a fluke. But don’t expect definitive answers. A second month of weak job growth could be a sign of a faltering recovery, or merely an indication that the temporary factors will take more than a couple of months to resolve. A strong report, on the other hand, could signal that talk of a labor shortage was overblown — or that employers have overcome it by bidding up wages, which could fuel inflation.To get a clearer picture, economists will have to look beyond their usual suite of indicators. Here are some things they will be watching.1. PricesChange in consumer prices from a year earlier

    Source: Federal Reserve Bank of San FranciscoBy The New York TimesConsumer prices rose 4.2 percent in April from a year earlier, the biggest jump in more than a decade. But the largest increases were mostly in categories where demand is rebounding after collapsing during the pandemic, like travel and restaurants, or in products plagued by supply-chain disruptions, like new cars. Those pressures should ease in the coming months.What would be more concerning to economists is any sign that price increases are spreading to the rest of the economy. Researchers at the Federal Reserve Bank of San Francisco studied sales patterns from early last year to categorize products and services based on the pandemic’s impact. Their Covid-insensitive inflation index so far shows little sign of runaway inflation beyond pandemic-affected areas.Economists will also be watching other, less pandemic-specific measures that likewise aim to discern the signal of inflation amid the noise of short-term disruptions. The Federal Reserve Bank of Cleveland’s trimmed-mean C.P.I., for example, takes the Labor Department’s well-known Consumer Price Index and strips away its most volatile components.“What we’re looking for is what does underlying inflation look like,” said Ellen Zentner, chief U.S. economist at Morgan Stanley.For those looking for a simpler measure, Ms. Zentner offers a shortcut: Just look at rents. The rental component of C.P.I. (as well as the “owner’s equivalent rent” category, which measures housing costs for homeowners) is the largest single item in the overall price index, and should be less affected by the pandemic than some other categories. If rents start to rise rapidly beyond a few hot markets, overall inflation could follow.2. Inflation ExpectationsConsumer inflation expectations in the short and long term

    Source: University of MichiganBy The New York TimesOne reason economists are so focused on inflation is that it can become a self-fulfilling prophecy: If workers think prices will keep rising, they will demand raises, which will force their employers to raise prices, and so on. As a result, forecasters pay attention not just to actual prices but also to people’s expectations.In the short run, consumers’ inflation expectations are heavily affected by the prices of items purchased frequently. Gasoline prices weigh particularly heavily on consumers’ minds — not only do most Americans have to fill up regularly, but the price of gas is displayed in two-foot-tall numbers at stations across the country. Economists therefore tend to pay more attention to consumers’ longer-run expectations, such as the five-year inflation expectations index from the University of Michigan, which recently hit a seven-year high.Forecasters also pay close attention to the expectations of businesses, investors and other forecasters. Many economists pay particular attention to market-based measures of inflation expectations, because investors have money riding on the outcome. (One such measure, derived from the bond market, is the five-year, five-year forward rate, which forecasts inflation over a five-year period beginning five years in the future.) The Federal Reserve has recently begun publishing a quarterly index of common inflation expectations, which pulls together a variety of measures. It showed that inflation expectations rose in the first quarter of this year, but remain low by historical standards.3. Labor SupplyUnemployed workers per job opening

    Source: Bureau of Labor StatisticsBy The New York TimesRestaurants, hotels and other employers across the country in recent months have complained that they cannot find enough workers, despite an unemployment rate that remains higher than before the pandemic. There is evidence to back them up: Job openings have surged to record levels, but hiring hasn’t kept up. Millions of people who had jobs before the pandemic aren’t even looking for work.Many Republicans say enhanced unemployment benefits are encouraging workers to stay on the sidelines. Democrats mostly blame other factors, such as a lack of child care and health concerns tied to the pandemic itself. Either way, those factors should dissipate as enhanced unemployment benefits end, schools reopen and coronavirus cases fall.But not all workers may come rushing back as the pandemic recedes. Some older workers have probably retired. Other families may have discovered they can get by on one income or on fewer hours. That could allow labor shortages to persist longer than economists expect.The simplest way to track the supply of available workers is the labor force participation rate, which reflects the share of adults either working or actively looking for work. Right now it shows plenty of workers available, although the Labor Department doesn’t provide breakdowns for specific industries.Another approach is to look at the ratio of unemployed workers to job openings, which provides a rough measure of how easy it is for businesses to hire (or, conversely, how hard it is for workers to find jobs). Data from the Labor Department’s Job Openings and Labor Turnover Survey comes out a month after the main employment report, but the career site Indeed releases weekly data on job openings that closely tracks the official figures.Both those approaches have a flaw, however: People who want jobs but aren’t looking for work — whether because they don’t believe jobs are available or because child care or similar responsibilities are keeping them at home temporarily — don’t count as unemployed. Constance L. Hunter, chief economist for the accounting firm KPMG, suggests a way around that problem: the number of involuntary part-time workers. If companies are struggling to find enough workers, they should be offering more hours to anyone who wants them, which should reduce the number of people working part time because they can’t find full-time work.“The data is not necessarily going to be as informative as it would be in a normal recovery,” Ms. Hunter said. “I would not normally tell you coming out of a recession that I’m going to be closely watching involuntary part-time workers as a key indicator, but here we are.”4. WagesPrivate-sector wages and salaries, change from a year earlier

    Source: Bureau of Labor StatisticsBy The New York TimesWage growth remained relatively strong during the pandemic, at least compared with past recessions, when low-wage workers, in particular, lost ground. Many businesses that stayed open during last year’s lockdowns had to raise pay or offer bonuses to retain workers. Now, as the pandemic eases, companies are raising pay again to attract workers.The question is whether the recent wage gains represent a blip or a longer-term shift in the balance of power between employers and employees. Figuring that out will be difficult because the United States lacks a reliable, timely measure of wage growth.The Labor Department releases data on average hourly earnings as part of its monthly jobs report. But those figures have been skewed during the pandemic by the huge flows of workers into and out of the work force, rendering the data nearly useless. Economists are still watching industry-specific data, which should be less distorted. In particular, average hourly earnings for nonsupervisory leisure and hospitality workers should reflect what is happening among low-wage workers.A better bet might be to wait for data from the Employment Cost Index, which is released quarterly. That measure, also from the Labor Department, tries to account for shifts in hiring patterns, so that a rush of hiring in low-wage sectors, for example, doesn’t show up as a decline in average pay. It showed a mild uptick in wage growth in the first quarter, but economists will be paying close attention to the next release, in July.5. Everything ElseThe indicators mentioned above are hardly a comprehensive list. The Producer Price Index provides data on input prices, which often (but not always) flow through to consumer prices. Data on inventories and international trade from the Census Bureau can help track supply-chain bottlenecks. Unit labor costs will show whether increased productivity is helping to offset higher pay. Economists will be watching them all.“During normal times, you can just track a handful of indicators to know how the economy is doing,” said Tara Sinclair, an economist at George Washington University who specializes in economic forecasting. “When big shifts are going on, you’re tracking literally hundreds of indicators.” More

  • 125 Shares159 Views

    in Economy

    Here's One Thing Missing from President Biden's Budget: Booming Growth

    by

    For all the administration’s focus on transformational policies, it’s not forecasting an outburst of economic potential.President Biden’s budget proposal includes billions of dollars for clean energy, education and child care — ideas being sold for their potential to increase America’s economic potential. One thing it does not include: an outright economic boom.In the assumptions that underpin the administration’s budget, economic growth is strong in 2021 and 2022 — but strong enough only to return the economy to its prepandemic trend line, not to surge above the trajectory it was on throughout the 2010s.Then in 2023, the administration expects gross domestic product, the broadest measure of economic activity, to rise at a slower 2 percent rate, then 1.8 percent a year through the mid-2020s. That is lower than the 2.3 percent average annual growth rate experienced from 2010 to 2019.The administration’s outlook is consistent with projections by other forecasters, including at the Congressional Budget Office and in the private sector. But it means that the Biden White House is not — at least not formally — expecting the kind of rip-roaring growth that characterized periods like 1983 to 1989 (with an average annual G.D.P. growth of 4.4 percent) and 1994 to 2000 (4 percent).Those two episodes coincided with much more favorable demographic trends. They also helped propel two presidents to comfortable re-elections.If the new projections were to prove accurate, it would imply two years of strong growth paired with moderate inflation as the nation recovered from the pandemic heading into the 2022 midterm elections, but then comparatively low growth in the run-up to the 2024 election.The sober estimate contrasts with the approach Mr. Biden has taken to selling his agenda publicly. The framing of his signature plans for infrastructure and family support has been that they will enable the economy to become more vibrant and productive.“There’s a broad consensus of economists left, right and center, and they agree what I’m proposing will help create millions of jobs and generate historic economic growth,” Mr. Biden said in an address to Congress in April.It is a striking contrast with the approach taken by the Trump administration — a gap between presidential styles buried on Table S-9 of the two presidents’ budgets. The Trump administration’s final prepandemic budget proposal, published in February 2020, forecast that the economy would grow around 3 percent per year throughout the 2020s.If the Trump projections materialized, by 2030 the economy would be more than 11 percent bigger than what the Biden projections envision. However, the Trump administration persistently underdelivered on growth. G.D.P. rose an average of 2.5 percent in the three nonpandemic years of his presidency. The results are weaker still if you include the contraction of the economy in 2020.A wind farm in Carbon County, Wyo. The Biden administration says investment in clean energy will help America fulfill more of its long-term potential.Benjamin Rasmussen for The New York TimesCasey B. Mulligan, a University of Chicago economist who worked in the Trump White House, said in an email that the reduced growth forecasts were similar to those that career economic staff recommended in the Trump years. “They perennially overestimated Obama-era growth and underestimated Trump nonpandemic growth,” but you couldn’t see it in the published documents in the Trump years “because normally the political appointees such as me have a say in what is published.”The Biden administration has been inclined more broadly to a strategy of underpromising and overdelivering, most notably with the rollout of vaccines.Even before the budget’s official release, its growth projections became a subject of Republican attacks. “The Obama-Biden administration famously accepted slow growth as America’s ‘new normal’ while pursuing policies that sent jobs overseas,” House Republicans on the Ways and Means Committee said in a blog post. “President Biden appears to be lowering the bar even further.”Political volleys aside, it can be easy both to overestimate the ability of government policy to move the dial on overall growth — and to underestimate how much even small gains in productivity can mean when they compound over many years.In the 1980s boom, for example, the labor force was growing much more rapidly than it is now, helped by demographic trends and a rise in women entering work. In the 1990s boom, a surge in productivity resulted in large part from innovations in information technology, unconnected to government spending.“We are a really big economy where really big forces are shaping what happens to G.D.P. growth,” said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution and a former C.B.O. chief economist.Even these moderate projections by the Biden administration imply that its policies will lift growth in economic activity by a few tenths of a percent each year over a decade. This is significant when comparing it with the growth that would be expected by simply looking at demographic factors and historical averages of productivity growth. The forecast is more inherently optimistic about Mr. Biden’s policies — and their potential to increase productivity and the size of the work force — than it might seem at first glance..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-1jiwgt1{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;margin-bottom:1.25rem;}.css-8o2i8v{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-8o2i8v p{margin-bottom:0;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-1rh1sk1{margin:0 auto;overflow:hidden;}.css-1rh1sk1 strong{font-weight:700;}.css-1rh1sk1 em{font-style:italic;}.css-1rh1sk1 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#ccd9e3;text-decoration-color:#ccd9e3;}.css-1rh1sk1 a:visited{color:#333;-webkit-text-decoration-color:#ccc;text-decoration-color:#ccc;}.css-1rh1sk1 a:hover{-webkit-text-decoration:none;text-decoration:none;}“Making the claim that your fiscal policies will boost growth by four-tenths of a point seems optimistic, but I can see how they could get there,” she said.Jason Furman, the Obama administration’s former top economist, said: “I think there’s a problem that people have in their head — more extravagant ideas about what economic policy can do and how quickly it can do it. When you’re talking about productivity enhancement, you’re talking about compounding that becomes a big deal for a long time.”In other words, the difference of a few tenths of a percent of G.D.P. growth might not mean much for a single year, but a gap of that size that persists for many years has a big impact on living standards.Some of the administration’s policies, by design, would focus on the very long-term impact on the nation’s economic potential. For example, additional money for community colleges might actually depress the size of the labor force, and thus G.D.P., in the short run if more adults go back to school. But it would then increase those workers’ productive potential, and thus contribution to growth, for the decades that follow.Conservatives, for their part, view the Biden agenda as likely to restrain growth, particularly once tax increases and new regulatory action go into effect. Mr. Mulligan, the Trump adviser, said he believed the Biden agenda would reduce the nation’s growth path by around 0.8 percentage points a year compared with its Trump-era trajectory. Douglas Holtz-Eakin, president of the American Action Forum, said he thought Mr. Biden’s policies could create faster growth in the short term but slower growth in the long run because of taxes and spending.The Biden White House is more optimistic about what is possible for American workers. After the post-pandemic recovery, it projects a 3.8 percent unemployment rate from 2023 on, which is a bit lower than the levels forecast by the C.B.O. (an average of 4.2 percent from 2023 to 2031) or the Fed (4 percent is the median longer-run unemployment forecast of its leaders). It’s also lower than the 4 percent post-2023 jobless rate included in the Trump budget.The administration is optimistic about the post-pandemic recovery in the job market, projecting a 3.8 percent unemployment rate from 2023 on.Hannah Beier for The New York TimesThis reflects the lessons of 2019, when the jobless rate was consistently below 4 percent without causing excessive inflation or other problems. It’s a welcome sign for anyone who thinks that running a tight labor market — a high-pressure economy, as Treasury Secretary Janet Yellen calls it — is a good thing.Forecasts, on their own, aren’t worth more than the paper on which they are printed. A bold prediction of the boom that’s coming wouldn’t mean much if it didn’t materialize. And the world described in the Biden team’s forecasts is hardly a gloomy one: Low unemployment, low inflation and steady growth is a nice combination, and one that could describe much of the period from 2016 to 2019.The question for Mr. Biden is whether that will be enough to qualify as building back better. More

  • 175 Shares199 Views

    in Economy

    How It Looks to Live in N.Y.C. During a Pandemic on $100 a Week

    by

    Ms. Galán’s home is small, but happy. Christopher, 11, Mia, 7, and Ian, 1, get along. The older children help keep the space tidy. The youngest has kept them giggling during the long year they’ve spent together indoors. Before the pandemic, Ms. Galán worked at a dry cleaner in the Bronx, earning about $350 per […] More

  • 63 Shares129 Views

    in Economy

    Unemployment claims fell last week.

    by

    New claims for unemployment benefits fell last week, the government reported on Thursday, as the labor market slowly recovers from the staggering losses wreaked by the coronavirus pandemic.About 487,000 workers filed first-time claims for state benefits during the week that ended May 8, the Labor Department said, a decrease from 514,000 the week before. In addition, about 104,000 new claims were filed for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits.Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 473,000.After more than a year of being whipsawed by the pandemic, the economy has been showing new life. Restrictions are lifting, businesses are reopening and job listings are on the upswing. But hiring in April was weaker than expected.Some employers, particularly in the restaurant and hospitality sectors, have complained of having trouble finding workers. The U.S. Chamber of Commerce and several Republican governors have asserted that a temporary $300-a-week federal unemployment supplement has made workers reluctant to return to the job.The U.S. Labor Department said that as of Wednesday, six states — Iowa, Mississippi, Missouri, Montana, North Dakota and South Carolina — had notified the department that they were terminating federal pandemic-related unemployment benefits next month.The unemployment rates in those states in March, the latest month for which data is available, ranged from 3.7 percent in Iowa to 6.3 percent in Mississippi.Several other states with Republican governors, including Tennessee, Arkansas, Alabama, Wyoming and Idaho, have said they also plan to withdraw from the federal program. Tennessee and Alabama are among the states that offer the lowest maximum benefit to qualified individuals each week.But economists are skeptical that jobless benefits are playing anything more than a bit part in the pace of the job market’s recovery.“There is tremendous churn in this labor market,” said Gregory Daco, chief U.S. economist at Oxford Economics. “There are still major supply constraints and unemployment benefits are not the most important one. The virus is.”Many workers have children at home who are not attending school in person. Others are wary of returning to jobs that require face-to-face encounters. Covid-19 infections have decreased since September but there are still 38,000 new cases being reported each day and 600 Covid-related deaths. Less than half the population is fully vaccinated.There is halting progress from employers as well, as businesses continually update their assessment of costs and customer demand. “The hiring pattern isn’t going to be smooth,” Mr. Daco said. “Businesses hire and then reassess. They need to find the right balance, it’s a trial and error process more than anything.”Federal jobless benefits are due to expire in September. Prematurely halting them is “detrimental to the economy,” Mr. Daco said. “You’re voluntarily hurting certain vulnerable tranches of the population.”Nationwide, the unemployment rate was 6.1 percent, and there are 8.2 million fewer jobs than in February 2020. More

  • 88 Shares99 Views

    in Economy

    In Reversal, Retirements Increased During the Pandemic

    by

    Job losses, rather than rising asset values, seem to be the main cause in upending a decades-long trend in the U.S.After decades in which it decreased, the retirement rate rose during the pandemic, according to the latest government data. This makes retirement one exception to the many ways that the pandemic accelerated pre-existing trends, such as toward suburbanization and online shopping.In the year since the pandemic started — the 12 months ending in March 2021 — 17.0 percent of Americans aged 55 to 64 were retired, up from 16.8 percent in the two previous years. But this is still a lower percentage than in earlier decades.

    The retirement rate rose more for people 65 to 74: It was 65.6 percent in the year up to March 2021, versus 64.0 percent in the year before the pandemic. That brought the rate back up almost to its level in 2011, though still below its 2001 level.

    What can explain this trend during the pandemic? Job losses and business closings could have prompted some older workers to retire earlier than they’d expected, a pattern seen in previous recessions. Another factor: Older workers were more at risk than younger ones from the coronavirus. At the same time, home prices and stock market values rose, putting some owners of such assets in a better position financially to retire.The statistics on retirement come from the monthly Current Population Survey, which is also the source of the unemployment rate and other key labor market measures. The survey does not explore why people retired. But the patterns of who retired, and when, can help tease out whether the increase during the pandemic was more about voluntary retirement because of rising wealth or involuntary retirement stemming from lost jobs or businesses.

    People with college degrees were both less likely to lose their jobs in the recession and more likely to own assets whose value appreciated. The retirement rate rose during the pandemic for those 65 to 74, regardless of education level. But for those 55 to 64, the rate rose only for those without a college degree. In contrast, the retirement rate fell for 55- to 64-year-olds with a college degree — exactly the group whose retirement rate would have increased if rising asset values had been a key factor in prompting early retirements.The timing of retirement during the pandemic further suggests that job losses, rather than rising asset values, explain more of the increase in retirement. Retirement rates were higher during the pandemic than before it, but they didn’t rise during the pandemic year. The rate for the first six months of the pandemic — April 2020 to September 2020 — was about the same as from October 2020 to March 2021.The seasonally adjusted retirement rate averaged 17.0 percent for 55- to 64-year-olds and 65.6 percent for 65- to 74-year-olds in both halves of the year.

    This time pattern of the rise in retirement coincides with the economic shutdown, business closures and job losses starting in March 2020. But one measure of asset prices — the S&P 500 — fell as the pandemic began; remained below its prepandemic peak until August; and was consistently above its prepandemic peak starting only in November. If higher asset prices, not job losses and business closings, were the main driver of pandemic retirement, the retirement rate should have increased as the pandemic wore on and as stock values rose.The rise in retirement during the pandemic is small relative to the longer-term decline in retirement rates. Increasing life expectancy, less physically demanding jobs, and a rise in the minimum age to collect full Social Security benefits have all contributed to longer work lives and later retirements over the past 20 years.Of course, the overall aging of the population has meant that a growing share of adults is retired, especially since the early 2010s, when the oldest baby boomers turned 65. All the data in this analysis are focused on specific age groups and adjust for the changing age distribution even within these groups.Even though the retirement rate increased during the pandemic, it won’t necessarily rise further. It’s worth emphasizing that the retirement rate rose around the start of the pandemic but did not continue to do so. After the initial spike in joblessness at the start of the pandemic, the share of those 55 to 64 who were out of work but not retired fell rapidly without a further rise in retirement.Now, employers are once again eager to hire. Though older workers face discrimination in hiring, the years before the pandemic showed that a tight labor market can lure some retirees back to work.Jed Kolko is the chief economist at Indeed.com. You can follow him on Twitter at @JedKolko. More

  • 88 Shares169 Views

    in Economy

    Luring Labor as a Beach Economy Booms

    by

    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. More

  • 113 Shares169 Views

    in Economy

    Biden Defends Unemployment Benefits, Provided Workers Accept Job Offers

    by

    The president’s comments and a raft of policy announcements were a pushback to Republican criticism of his economic plan after a disappointing jobs report on Friday.WASHINGTON — President Biden ordered the Labor Department on Monday to ensure that unemployed Americans cannot draw enhanced federal jobless benefits if they turn down a suitable job offer, even as he rejected claims by Republicans that his weekly unemployment bonus is undermining efforts to get millions of Americans back to work.Stung from a weekend of criticism over a disappointing April jobs report, Mr. Biden struck a defiant tone, seeking to make clear that he expects workers to return to jobs if they are available, while defending his signature economic policy effort thus far and blaming corporate America, in part, for not doing more to entice people to go back to work.The president told reporters at the White House that child care constraints, school closures and fears of contracting the coronavirus had hindered job creation last month, and he challenged companies to help workers gain access to vaccines and to raise their pay.“The last Congress, before I became president, gave businesses over $1.4 trillion in Covid relief,” Mr. Biden said. “Congress may have approved that money, but let’s be clear: The money came from the American people, and it went from the American people to American businesses, many of them big businesses, to help them get through this pandemic and keep their doors open.”He added, “My expectation is that, as our economy comes back, these companies will provide fair wages and safe work environments.” He said that if they did, “they’ll find plenty of workers, and we’re all going to come out of this together better than before.”Mr. Biden also promised more relief was working its way into the economy through measures created by the $1.9 trillion “American Rescue Plan” that the president signed into law in March. That includes help for child care providers and aid for state and local governments that Treasury Department officials began to make available on Monday.His defense of the stimulus funds and his administration’s handling of the economy comes as Mr. Biden is trying to win support for even more federal spending, including a $2.3 trillion jobs proposal centered on physical infrastructure.Republicans have already criticized Mr. Biden for the disappointing jobs numbers and have suggested he is wreaking havoc with the economic recovery. In particular, they blamed a provision in his rescue plan that extended a $300-per-week federal supplement for unemployed Americans. They say those benefits are depressing hiring by discouraging Americans from returning to work.An aide to Senator Mitch McConnell of Kentucky, the Republican leader, emailed reporters on Monday, accusing Mr. Biden of placing “handcuffs” on the recovery by extending the jobless benefits.Senator Ben Sasse, Republican of Nebraska, said on Monday that Mr. Biden was “all over the place” on the issue.“He wants to go after folks who are gaming the system, but he’s denying the reality that his policies are making the situation worse, so he’s trying to make struggling businesses the boogeymen,” Mr. Sasse said in a news release. “Here’s the deal: Bad federal policy is making unemployment pay more than work, and millions of jobs aren’t getting filled.”Mr. Biden said on Monday that his administration would make clear that any worker who turned down a suitable job offer, with rare exceptions for health fears related to the virus, would lose access to unemployment benefits.To ensure those rules are being followed, the Labor Department will work with states to reinstate work search requirements. Those rules, which require that anyone collecting unemployment benefits provide proof that they are actively searching for work, were suspended during the pandemic.Twenty-nine states have already reinstated them, and the Labor Department will “work with the remaining states, as health and safety conditions allow, to put in place appropriate work search requirements as the economy continues to rebound, vaccinations increase, and the pandemic is brought under control,” White House officials said in a fact sheet.The president also pointed to new guidance issued Monday by the Treasury Department that will help state, local and tribal governments gain access to more than $350 billion in relief funds made available by the American Rescue Plan. He said that money would help speed hiring and economic growth.“With this funding, communities hit hard by Covid-19 will able to return to a semblance of normalcy,” the Treasury secretary, Janet L. Yellen, said in a statement on Monday on the relief funds.Erin Scott for The New York TimesThe details of how the Treasury Department will disburse those funds, which can be spent on pandemic-related costs, have been eagerly awaited by states, cities, territories and tribal governments that are expected to receive money. But several Republican-led states and the Biden administration are in a legal confrontation over whether states can cut taxes after taking relief money and using it to solidify their budgets.A fact sheet accompanying the announcement about the distribution on Monday made clear that the relief money could not be used to subsidize tax cuts directly or indirectly, which could discourage some states from accepting funds.“The American Rescue Plan ensures that funds needed to provide vital services and support public employees, small businesses and families struggling to make it through the pandemic are not used to fund reductions in net tax revenue,” the Treasury Department said. “If the funds provided have been used to offset tax cuts, the amount used for this purpose must be paid back to the Treasury.”The Treasury Department also issued detailed guidance to states explaining how it would determine if the money was being used properly and in which cases the relief funds could be recouped. If a state does cut taxes, it will have to demonstrate to the Treasury Department that it offset that lost revenue with spending cuts or another source of revenue that does not include the fiscal recovery funds. If the state cannot do that, the department can claw back that amount of money.“This process ensures fiscal recovery funds are used in a manner consistent with the statute’s defined eligible uses and the offset provision’s limitation on these eligible uses, while avoiding undue interference with state and territory decisions regarding tax and spending policies,” the guidance said.Treasury and White House officials made clear that they would scrutinize how the funds were being used to ensure that state budgets were not being gamed to violate the intent of the law. A new recovery office at the Treasury Department will coordinate with states to help determine if their policies are in line with conditions set forth in the law.The relief money also cannot be paid into state pension funds to reduce unfunded liabilities.A White House official would not comment on whether initiatives like Montana’s return-to-work bonuses could be funded using relief money. States and cities are being given broad discretion on how they can use the money, which is intended to replace public sector revenue that was lost during the pandemic; to provide extra pay for essential workers; and to be invested in sewer, water and broadband infrastructure.The Treasury Department’s directive is unlikely to put the legal fight over whether states can cut taxes to rest. Mark Brnovich, the attorney general of Arizona, which is suing the Biden administration, said that Treasury Secretary Janet L. Yellen’s guidance failed to clarify the matter.“Arizona should not be put in a position of losing billions of dollars because the federal government wants to commandeer states’ tax policies,” Mr. Brnovich said.The allocation of the funds is also likely to be a contentious matter as the money starts to flow. Some states have complained that states that managed the pandemic well are essentially being penalized because the formula for awarding aid is based on state unemployment rates.The Treasury Department said on Monday that the states that were hardest hit economically by the pandemic would also get their money faster.Local governments will generally receive half of the money this month and the rest next year. But states that currently have a net increase in unemployment of more than two percentage points since February 2020 will get the funds in a lump sum right away.Officials also said Monday that the administration would issue new guidelines meant to speed money from the recovery act to help child care centers reopen, and that the Labor Department would highlight a program that allows some unemployed workers to accept offers of part-time jobs without losing access to the federally supplemented benefits.Mr. Biden said that the efforts would help the economy recover — and that the rebound from recession remained on track.“Let’s be clear: Our economic plan is working,” he said. But he said recovery would not always prove to be easy or even. “Some months will exceed expectations,” he said, “others will fall short.” More

  • 150 Shares199 Views

    in Economy

    Biden Administration Will Begin Disbursing $350 Billion in State and Local Aid

    by

    States and cities are being given broad discretion on how they can use the money, which is intended to replace public sector revenue, provide extra pay for essential workers, and invest in sewer, water and broadband.The Biden administration will begin sending $350 billion in aid to state and local governments this month, a significant step in its effort to shore up segments of the economy that have been hardest hit by the pandemic, White House and Treasury officials said on Monday. More