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    Jerome Powell strikes a hopeful tone but emphasizes the pandemic’s uneven costs.

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    Jerome H. Powell, the Federal Reserve chair, struck a hopeful tone about the United States economy in a speech on Monday — but he emphasized that the economic fallout from the coronavirus pandemic has disproportionately harmed vulnerable communities.“While some countries are still suffering terribly in the grip of Covid-19, the economic outlook here in the United States has clearly brightened,” Mr. Powell said. And in the United States, “lives and livelihoods have been affected in ways that vary from person to person, family to family, and community to community.”Mr. Powell used the remarks to preview an upcoming Fed report that will show how Black and Hispanic workers lost jobs at a greater rate in pandemic lockdowns and how the pandemic pushed mothers out of the labor force and made it harder for people without college degrees to hang onto work.Among the statistics he highlighted from the Survey of Household Economics and Decisionmaking, which he said will be released later this month:About 20 percent of adults in their prime working years without a bachelor’s degree were laid off last year, compared to 12 percent of college-educated workers.More than 20 percent of Black and Hispanic prime-age workers were laid off in 2020, versus 14 percent of white workers.Roughly 22 percent of parents were not working or were working less thanks to child-care and school disruptions.About 36 percent of Black mothers, and 30 percent of and Hispanic mothers, were not working or were working less.“The Fed is focused on these longstanding disparities because they weigh on the productive capacity of our economy,” Mr. Powell said. “We will only reach our full potential when everyone can contribute to, and share in, the benefits of prosperity.”Mr. Powell said that while achieving an equitable economy is the job of many parts of government, the Fed has a role to play with both its economic tools and in its bank supervision and community development work.“Those who have historically been left behind stand the best chance of prospering in a strong economy with plentiful job opportunities,” Mr. Powell said. “We see our robust supervisory approach as critical to addressing racial discrimination, which can limit consumers’ ability to improve their economic circumstances.” More

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    New state unemployment claims fall, a sign that the recovery is growing stronger.

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    Initial jobless claims fell again last week in the latest sign that the economic recovery is strengthening.About 575,000 people filed first-time claims for state unemployment benefits last week, the Labor Department said Thursday, a decrease of 9,000 from the previous week’s revised figure.In addition, 122,000 new claims were filed for Pandemic Unemployment Assistance, a federal program that covers freelancers, part-timers and others who do not routinely qualify for state benefits. Neither figure is seasonally adjusted. “We’re not quite at a full reopening yet,” said Daniel Zhao, senior economist with the career site Glassdoor. “But the light is there at the end of the tunnel.”Although weekly jobless claims remain above levels reached before the pandemic, vaccinations and warmer weather are offering new hope.“The labor market is definitely moving in the right direction,” said AnnElizabeth Konkel, an economist at the online job site Indeed. Still, she cautioned that industries like tourism and hospitality would probably remain depressed until the pandemic was firmly under control. She also stressed that child care obligations might be preventing people ready to return to work from seeking jobs.“We still are in a pandemic — the vaccinations are ramping up but there is that public health factor still,” Ms. Konkel said. “We’re not quite there yet.” More

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    Fed Leaves Interest Rates Unchanged as Economy Begins to Heal

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    The Federal Reserve said the economy had “strengthened” but opted to continue providing support while playing down a rise in inflation.Jerome H. Powell, the Federal Reserve chair, said on Wednesday that the nation would need to show greater progress toward substantial recovery before policies designed to bolster the economy would be lifted.Stefani Reynolds for The New York TimesJerome H. Powell, the Federal Reserve chair, made it clear on Wednesday that his central bank wants to see further healing in the American economy before officials will consider pulling back their support by slowing government-backed bond purchases and lifting interest rates.Mr. Powell spoke at a news conference after the Fed announced that it would leave rates near zero and continue buying bonds at a steady clip, as expected. He painted a picture of an economy bouncing back — helped by vaccines, government spending and the central bank’s own efforts.The Fed’s post-meeting statement also portrayed a sunnier image of the American economy, which is climbing back from a sudden and severe recession caused by state and local lockdowns meant to contain the coronavirus.“Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened,” the policy-setting Federal Open Market Committee said in its release. “The ongoing public health crisis continues to weigh on the economy, and risks to the economic outlook remain.”Yet Fed officials signaled that they were looking for more progress toward their goals of full employment and stable inflation before reconsidering their cheap-money stance. Officials made it clear that they see a recent increase in inflation, which is expected to intensify in the months to come, as likely to be short-lived rather than worrying.And Mr. Powell was careful to avoid sounding as though he and his colleagues knew precisely what the future held. He pointed out, repeatedly, that reopening America’s giant economy from pandemic-era shutdowns was an uncharted project.“It’s going to be a different economy,” Mr. Powell said at one point, noting that some jobs may have disappeared as employers automated. At another, he said that when it came to inflation, “we’re making our way through an unprecedented series of events.”For now, things are looking up. After reaching a low point a year ago, employment is rebounding, consumers are spending and the outlook is increasingly optimistic as vaccines become widespread. Data that will be released on Thursday is expected to show gradual healing in the first three months of the year, which economists think will give way to rapid gains in the second quarter.Mr. Powell pointed out that even the areas hardest hit by the virus have shown improvement, but also that risks remain.“While the level of new cases remains concerning,” he said, “continued vaccinations should allow for a return to more normal economic conditions later this year.”Fed officials have signaled that they will keep interest rates low and bond purchases going at the current $120 billion-per-month pace until the recovery is more complete. The Fed has said it would like to see “substantial” further progress before dialing back government-backed bond buying, a policy meant to make many kinds of borrowing cheap. The hurdle for raising rates is even higher: Officials want the economy to return to full employment and achieve 2 percent inflation, with expectations that inflation will remain higher for some time.“A transitory rise in inflation above 2 percent this year would not meet this standard,” Mr. Powell said of the Fed’s criteria for achieving its average inflation target before raising interest rates. When it comes to bond buying, “the economy is a long way from our goals, and it is likely to take some time for substantial further progress to be achieved.”He later said that “it is not time yet” to talk about scaling back, or “tapering,” bond purchases.Unemployment, which peaked at 14.8 percent last April, has since declined to 6 percent. Retail spending is strong, supported by repeated government stimulus checks. Consumers have amassed a big savings stockpile over months of stay-at-home orders, so there is reason to expect that things could pick up further as the economy fully reopens.Yet there is room for improvement. The jobless rate remains well above its 3.5 percent reading coming into the pandemic, with Black workers and those in lower-paying jobs disproportionately out of work. Some businesses have closed forever, and it remains to be seen how post-pandemic changes in daily patterns will affect others, like corporate offices and the companies that service them.“There’s no playbook here,” said Michelle Meyer, the head of U.S. economics at Bank of America, adding that the Fed needed time to let inflation play out and the labor market heal, and that while the signs were encouraging, central bankers would only “react when they have enough evidence.”The Fed has repeatedly said it wants to see realized improvement in economic data — not just expected healing — before it reduces its support. Based on their March economic projections, most Fed officials are penciling in interest rates near zero through at least 2023.Still, some economists have warned that the government’s enormous spending to heal the economy from coronavirus may overdo it, sending inflation higher. If that happens, it might force the Fed to lift interest rates earlier than expected, and prominent academics have fretted that officials might prove too slow to act, hemmed in by their commitment to patience.Markets have at times shown jitters on signs of potential inflation, concerned that it would cause the Fed to lift rates, which tends to dent stock prices.Inflation Is Starting to Jump More

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    Automatic Aid for the People? How Jobless Benefits Can Fit the Economy.

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    The pandemic showed the flaws in the American approach to help the unemployed. Alternatives exist.The line outside an unemployment office in Fayetteville, Ark., last April.September Dawn Bottoms for The New York TimesFor years, people who study unemployment benefits have warned that the American system of jobless insurance was too antiquated and clunky to meet the needs of workers in a time of economic crisis.To understand what they were worried about, consider this bizarre timeline since the start of the pandemic:Last spring, when the economic shutdown caused millions to lose their jobs, many state systems were so clogged that people were unable to receive jobless benefits for weeks, sometimes longer.Congress concluded that it would be technologically impossible to calibrate extra benefits to replace every jobless person’s full income, so it took a blunter approach: Lawmakers tacked an extra $600 per week onto unemployment checks. The result, by one estimate, was that 76 percent of recipients made more than they earned when they were working.At the end of July, that $600 supplement expired, falling to zero. But the economy remained in dire condition with jobs nowhere to be found — leaving millions of jobless people in the lurch.Then, early this year, $300 per week was tacked on. It is set to stay there until September, even as Americans are vaccinated on a mass scale and as the economy starts to roar ahead.So while unemployment insurance has fulfilled a vital role of keeping families afloat financially — and preventing overall demand for goods and services from collapsing — the stop-and-start cash sequence has been reflective of neither individual recipients’ lost income nor the state of the labor market.This has been partly the result of U.S. policymakers’ rejection of ideas that many labor market experts support, and that some advanced nations have adopted to varying degrees. These economists have called for investing more in the technological and customer service infrastructure of state unemployment systems, and presetting benefits based on economic conditions. Benefits would adjust automatically to the level of need, thus helping people who are struggling and stabilizing the overall economy without Congress having to do much of anything.“There are a lot of flaws and gaps in the unemployment insurance system that were revealed in Covid but have always been there,” said Chloe East, an economist at the University of Colorado Denver who has studied the system.Such proposals have typically come from left-of-center policy experts. But now, as the economy starts to recover, there’s a twist. In the potential boom-time summer to come, these automatic triggers would probably fulfill conservative policy goals — ensuring that benefits are reduced as the economy recovers, thus increasing incentives to return to work.In some areas, employers are struggling to attract workers.  A roadside banner beckons potential employees outside Channel Control Merchants in Hattiesburg, Miss.Rogelio V. Solis/Associated PressBusinesses around the country are complaining of difficulty finding people to hire. Many employers blame generous unemployment insurance payments that may give some would-be workers incentive to stay home.Some recipients still earn more on unemployment than they do when they’re working, thanks to the $300 supplement. And under current law, those benefits will remain in place until Sept. 6 no matter how much the economy might boom or how abundant jobs turn out to be.In a proposed sweeping overhaul of the system published this month by Arindrajit Dube of the University of Massachusetts Amherst, the duration of jobless benefits would vary based on the unemployment rate. States with a jobless rate under 5 percent would extend benefits for 26 weeks, and those with 10 percent unemployment for 98 weeks. He would also raise benefits by $100 a week when the jobless rate was above 6 percent, and by $200 when it was above 8 percent.Some lawmakers are thinking similarly. Two Democrats, Senators Ron Wyden of Oregon and Michael Bennet of Colorado, proposed legislation this month that would, among many other things, extend benefits when the unemployment rate is at or above 5.5 percent.Similar proposals have failed to advance for a range of reasons. For one, the plans appear expensive in the conventions of budget math. The current practice is to extend benefits in a bill, or a series of them, if the need arises. That appears less expensive than building in money in advance for jobless benefits and automatic triggers based on the economy.Now consider the partisanship that can come into play in limiting the size of recession aid packages. If lawmakers agree to spend only $900 billion on economic help, for example, it’s a disadvantage if some of that is devoted to a theoretical estimate of what jobless benefits might be years in the future.Moreover, lawmakers may like the appearance that they are leaping to citizens’ aid in a crisis or recession — which would be less visible if the aid were increased automatically.In times of economic crisis, like last year, Democrats and Republicans have been able to agree on these policies. But if they were to try to devise a system from scratch, they might turn out to be quite far apart on how generous jobless benefits should be.“I think everyone can agree the optimal system would be calibrated to the economy, but the devil is so much in the details,” said Marc Goldwein, policy director of the Committee for a Responsible Federal Budget. “I suspect the parties are much farther apart on what a permanent trigger should look like than what we should do in the next six months.”Still, the current moment shows there could be harmony between at least some fiscal conservatives and pro-business interests and those on the left who would like to see more expansive benefits.“Even people who would like to see pandemic unemployment insurance gone by now would have wanted people last May and June to be getting checks when millions of people weren’t getting them because the systems couldn’t function,” said Jay Shambaugh, an economist at George Washington University. “One way or another, the system we have now didn’t provide money along the optimal path.”The flip side of a system that can get money out quickly is that it can also be fine-tuned to make sure benefits go away when circumstances justify it. 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    New state unemployment claims fell last week to a new pandemic low.

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    New claims for unemployment benefits fell last week to the lowest level of the pandemic, the government reported on Thursday, offering fresh evidence of the labor market’s recovery.A total of 566,000 workers filed first-time claims for state benefits during the week that ended April 17, the Labor Department said, a decrease of 57,000 from the previous week’s revised figure. In addition, 133,000 new claims were filed for Pandemic Unemployment Assistance, a federal program that covers freelancers, part-timers and others who do not qualify for state benefits.Neither figure is seasonally adjusted. “The bigger story — even though we’re going to see volatility week to week — is that the labor market continues to heal and labor demand is coming back quite strongly in line with robust growth,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.Warmer weather, more extensive coronavirus vaccination efforts and a stream of government assistance that has enabled consumer spending have all contributed to recent gains.Encumbrances remain. The labor market is weighed down by continuing anxiety about coronavirus infections and the demands of child care when regular school schedules have been disrupted.According to the Census Bureau’s weekly Household Pulse Survey, more than four million people who were unemployed in March said they were not working because they were afraid of catching Covid-19.“It’s important to keep in mind that the trend is going in the right direction,” said Heidi Shierholz, director of policy at the left-leaning Economic Policy Institute, “but we’re still at crisis levels of unemployment claims.”The weekly level of new claims is still near historical highs recorded before the pandemic. And there are roughly 8.4 million fewer jobs than there were in early 2020.The long-term unemployed face particular hurdles. A new report from the California Policy Lab, a research institute based at the University of California, said some states were prematurely ending extended unemployment insurance because of the way they count claims. More

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    Welcome to the YOLO Economy

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    Something strange is happening to the exhausted, type-A millennial workers of America. After a year spent hunched over their MacBooks, enduring back-to-back Zooms in between sourdough loaves and Peloton rides, they are flipping the carefully arranged chessboards of their lives and deciding to risk it all.Some are abandoning cushy and stable jobs to start a new business, turn a side hustle into a full-time gig or finally work on that screenplay. Others are scoffing at their bosses’ return-to-office mandates and threatening to quit unless they’re allowed to work wherever and whenever they want.They are emboldened by rising vaccination rates and a recovering job market. Their bank accounts, fattened by a year of stay-at-home savings and soaring asset prices, have increased their risk appetites. And while some of them are just changing jobs, others are stepping off the career treadmill altogether.If this movement has a rallying cry, it’s “YOLO” — “you only live once,” an acronym popularized by the rapper Drake a decade ago and deployed by cheerful risk-takers ever since. The term is a meme among stock traders on Reddit, who use it when making irresponsible bets that sometimes pay off anyway. (This year’s GameStop trade was the archetypal YOLO.) More broadly, it has come to characterize the attitude that has captured a certain type of bored office worker in recent months.To be clear: The pandemic is not over, and millions of Americans are still grieving the loss of jobs and loved ones. Not everyone can afford to throw caution to the wind. But for a growing number of people with financial cushions and in-demand skills, the dread and anxiety of the past year are giving way to a new kind of professional fearlessness.I started hearing these stories this year when several acquaintances announced that they were quitting prestigious and high-paying jobs to pursue risky passion projects. Since then, a trickle of LinkedIn updates has turned into a torrent. I tweeted about it, and dozens of stories poured into my inboxes, all variations on the same basic theme: The pandemic changed my priorities, and I realized I didn’t have to live like this.Brett Williams, 33, a lawyer in Orlando, Fla., had his YOLO epiphany during a Zoom mediation in February.“I realized I was sitting at my kitchen counter 10 hours a day feeling miserable,” he said. “I just thought: ‘What do I have to lose? We could all die tomorrow.’”So he quit, leaving behind a partner position and a big-firm salary to take a job at a small firm run by his next-door neighbor, and to spend more time with his wife and dog.“I’m still a lawyer,” he said. “But I haven’t been this excited to go to work in a long time.”Olivia Messer, a former reporter for The Daily Beast, also quit in February, after realizing that a year of covering the pandemic had left her exhausted and traumatized.“I was so drained and depleted that I didn’t feel like I knew how to do my job anymore,” she said. So Ms. Messer, 29, announced her departure and moved from Brooklyn to Sarasota, Fla., near her parents. Since then, she has been doing freelance writing as well as pursuing hobbies like painting and kayaking.She acknowledged that not all people could uproot themselves so easily. But she said the change had been restorative. “I have this renewed creative sense about what my life could look like, and how fulfilling it can be,” she said.If “languishing” is 2021’s dominant emotion, YOLOing may be the year’s defining work force trend. A recent Microsoft survey found that more than 40 percent of workers globally were considering leaving their jobs this year. Blind, an anonymous social network that is popular with tech workers, recently found that 49 percent of its users planned to get a new job this year.“We’ve all had a year to evaluate if the life we’re living is the one we want to be living,” said Christina Wallace, a senior lecturer at Harvard Business School. “Especially for younger people who have been told to work hard, pay off your loans and someday you’ll get to enjoy your life, a lot of them are questioning that equation. What if they want to be happy right now?”Fearful of an exodus, employers are trying to boost morale and prevent burnout. LinkedIn recently gave the majority of its employees a paid week off, while Twitter employees have been given an extra day off per month to recharge under a program called #DayofRest. Credit Suisse gave its junior bankers $20,000 “lifestyle allowances,” while Houlihan Lokey, another Wall Street firm, gave many of its employees all-expenses-paid vacations. Raises and time off may persuade some employees to stay put. But for others, stasis is the problem, and the only solution is radical change.“It feels like we’ve been so locked into careers for the past decade, and this is our opportunity to switch it up,” said Nate Moseley, 29, a buyer at a major clothing retailer.Mr. Moseley recently decided to leave his $130,000-a-year job before June 1 — the date his company is requiring workers to return to the office.He created an Excel spreadsheet called “Late 20s Crisis,” which he filled with potential options for his next move: Take a coding class, start mining Ethereum, join a 2022 political campaign, move to the Caribbean and open a tourism business. He looks at it regularly, he said, adding new pros and cons for each option.“The idea of going right back to the pre-Covid setup sounds so unappealing after this past year,” he said. “If not now, when will I ever do this?”Disillusioned workers with money to spare have always gone soul-searching. And it’s possible that some of these YOLOers will end up back in stable jobs if they spend through their savings, or their new ventures fizzle. But a daredevil spirit seems to be infecting even the kinds of risk-averse overachievers who typically cling to the career ladder.In part, that’s because more people than ever can afford to take a risk these days. Stimulus checks, enhanced unemployment benefits and a stock market boom have given many workers bigger safety nets. Many sectors now face severe labor shortages, meaning that workers in those fields can easily find new jobs if they need them. (Not all of these are high tech; many restaurants and trucking companies, for example, are struggling to fill open jobs.) U.S. job openings rose to a two-year high in February, and economists and business owners expect more turnover in the months ahead, as workers who stayed put during the pandemic start emerging from their bunkers.“Lots of things were on hold during the pandemic,” said Jed Kolko, the chief economist at Indeed.com. “To some extent, we’re seeing a year’s worth of big life changes starting to accelerate now.”In addition to the job-hopping you’d expect during boom times, the pandemic has created many more remote jobs, and expanded the number of companies willing to hire outside of big, coastal cities. That has given workers in remote-friendly industries, such as tech and finance, more leverage to ask for what they want.“Employees have a totally unprecedented ability to negotiate in the next 18 to 48 months,” said Johnathan Nightingale, an author and a co-founder of Raw Signal Group, a management training firm. “If I, as an individual, am dissatisfied with the current state of my employment, I have so many more options than I used to have.”Individual YOLO decisions can be chalked up to many factors: cabin fever, low interest rates, the emergence of new get-rich-quick schemes like NFTs and meme stocks. But many seem related to a deeper, generational disillusionment, and a feeling that the economy is changing in ways that reward the crazy and punish the cautious.Several people in their late 20s and early 30s — mostly those who went to good schools, work in high-prestige industries and would never be classified as “essential workers” — told me that the pandemic had destroyed their faith in the traditional white-collar career path. They had watched their independent-minded peers getting rich by joining start-ups or gambling on cryptocurrencies. Meanwhile, their bosses were drowning them in mundane work, or trying to automate their jobs, and were generally failing to support them during one of the hardest years of their lives.“The past year has been telling for how companies really value their work forces,” said Latesha Byrd, a career coach in Charlotte, N.C. “It has become challenging to continue to work for companies who operate business as usual, without taking into account how our lives have changed overnight.”Ms. Byrd, who primarily coaches women of color in fields like tech, finance and media, said that in addition to suffering from pandemic-related burnout, many minority employees felt disillusioned with their employers’ shallow commitments to racial justice.“Diversity, equity and inclusion are extremely important now,” she said. “Employees want to know, ‘Is this company going to support me?’”Not every burned-out worker will quit, of course. For some, an extended vacation or a more flexible workweek might quell their wanderlust. And some workers might find that returning to an office helps restore balance in their lives.But for many of those who can afford it, adventure is in the air.One executive at a major tech company, who spoke on the condition of anonymity because she was not authorized to talk to the media, said she and her husband had both been discussing quitting their jobs in recent weeks. The pandemic, she said, had taught them that they’d been playing it too safe with their life choices, and missing out on valuable family time.The executive then sent me a quote from the Buddha about impermanence, and the value of realizing that nothing lasts forever. Or, to put it in slightly earthier terms: YOLO. More

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    Covid-19 Pushes India’s Middle Class Toward Poverty

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    The pandemic sent 32 million people in India from the middle class last year. Now a second wave is threatening the dreams of millions more looking for a better life.NOIDA, India — Ashish Anand had dreams of becoming a fashion designer. A former flight attendant, he borrowed from relatives and poured his $5,000 life savings into opening a clothing shop on the outskirts of Delhi selling custom-designed suits, shirts and pants.The shop, called the Right Fit, opened in February 2020, just weeks before the coronavirus struck India. Prime Minister Narendra Modi abruptly enacted one of the world’s toughest nationwide lockdowns to stop it. Unable to pay the rent, Mr. Anand closed the Right Fit two months later.Now Mr. Anand, his wife and his two children are among millions of people in India in danger of sliding out of the middle class and into poverty. They depend on handouts from his aging in-laws. Khichdi, or watery lentils cooked with rice, has replaced eggs and chicken at the dinner table. Sometimes, he said, the children go to bed hungry.“I have nothing left in my pocket,” said Mr. Anand, 38. “How can I not give food to my children?”Now a second wave of Covid-19 has struck India, and the middle class dreams of tens of millions of people face even greater peril. Already, about 32 million people in India were driven into poverty by the pandemic last year, according to the Pew Research Center, accounting for a majority of the 54 million who slipped out of the middle class worldwide.The pandemic is undoing decades of progress for a country that in fits and starts has brought hundreds of millions of people out of poverty. Already, deep structural problems and the sometimes impetuous nature of many of Mr. Modi’s policies had been hindering growth. A shrinking middle class would deal lasting damage.“It’s very bad news in every possible way,” said Jayati Ghosh, a development economist and professor at the University of Massachusetts Amherst. “It has set back our growth trajectory hugely and created much greater inequality.”The second wave presents difficult choices for India and Mr. Modi. India on Friday reported more than 216,000 new infections, another record. Lockdowns are back in some states. With work scarce, migrant workers are packing into trains and buses home as they did last year. The country’s vaccination campaign has been slow, though the government has picked up the pace.Yet Mr. Modi appears unwilling to repeat last year’s draconian lockdown, which left more than 100 million Indians jobless and which many economists blame for worsening the pandemic’s problems. His government has also been reluctant to increase spending substantially like the United States and some other places, instead releasing a budget that would raise spending on infrastructure and in other areas but that also emphasizes cutting debt.Anil G. Kumar lives in Palam, one of the many neighborhoods in Delhi that have been hurt by the pandemic.Smita Sharma for The New York TimesThe Modi government has defended its handling of the pandemic, saying vaccinations are making progress and that signs point to an economic resurgence. Economists are forecasting a rebound in the coming year, though the sudden rise in infections and India’s slow vaccination rate — less than 9 percent of the population has been inoculated — could undermine those predictions.The heady growth forecasts feel far away for Nikita Jagad, who was out of work for over eight months. Ms. Jagad, a 49-year-old resident of Mumbai, stopped going out with her friends, eating at restaurants and even taking bus rides, unless the trip was for a job interview. Sometimes, she said, she shut herself inside her bathroom so her 71-year-old mother wouldn’t hear her crying.Last week, Ms. Jagad got a new job as a manager at a company that provides housekeeping services for airlines. It pays less than $400 a month, roughly half her previous salary. It could also be short-lived: the state of Maharashtra, home to Mumbai, announced lockdown-like measures this week to stop the spreading second wave.If she loses her new job, Ms. Jagad is still the only support for her mother. “If something happens to her,” she said, “I don’t have the money to even admit her in the hospital.”India’s middle class may not be as wealthy as its peers in the United States and elsewhere, but it makes up an increasingly potent economic force. While definitions vary, Pew Research defines middle-class and upper-middle-class households as living on about $10 to $50 a day. The kind of income could give an Indian family an apartment in a nice neighborhood, a car or a scooter, and the opportunities to send their children to a private school.Roughly 66 million people in India meet that definition, compared with about 99 million just before the pandemic last year, according to Pew research estimates. These increasingly affluent Indian families have drawn foreign companies like Walmart, Amazon, Facebook, Nissan and others to invest heavily in a country of aspirational consumers.A collage of vacation photographs in Ashish Anand’s apartment in Noida, a reminder of the good times the family once had.Smita Sharma for The New York TimesAnil G. Kumar, a civil engineer, was one of them. Around this time last year, he and his family were about to buy a two-bedroom apartment. But when last year’s lockdown hit, Mr. Kumar’s employer, a construction chemicals manufacturer, slashed his salary by half.“Everything turned turtle within a few hours,” he said. Three months later, his job had been eliminated.Now Mr. Kumar spends his days in his home in a working-class neighborhood in the western part of Delhi, searching for jobs on LinkedIn and taking care of his son.The family’s middle-class life is now under threat. They survive on the $470-a-month salary Mr. Kumar’s wife draws from a private university. Instead of holding a big celebration for their son’s 10th birthday at a restaurant, which would have cost nearly $70, they ordered a cake and a new outfit for about one-fifth the cost. Mr. Kumar also canceled his Amazon Prime subscription, which he hadn’t used in a while.“Every day you can’t sit on the laptop,” he said. “At times, you feel depressed.”India’s middle class is central to more than the economy. It fits into India’s broader ambitions to rival China, which has grown faster and more consistently, as a regional superpower.To get there, the Indian government may need to address the people the coronavirus has left behind. Household incomes and overall consumption have weakened, even though the sales of some goods have increased recently because of pent-up demand. Many of the hardest hit come from India’s merchant class, the shopkeepers, stall operators or other small entrepreneurs who often live off the books of a major company.“India is not even discussing poverty or inequality or lack of employment or fall in incomes and consumption,” said Mahesh Vyas, the chief executive of the Center for Monitoring of the Indian Economy. “This needs to change first and foremost,” he said.Mr. Kumar with his 10-year-old son, Akshay, in the Palam neighborhood in Delhi, India. Mr. Kumar lost his job as a civil engineer during last year’s lockdown.Smita Sharma for The New York TimesMost Indians are “tired” and “discouraged” by the lack of jobs, said Mr. Vyas, especially low-skilled workers.“Unless this problem is addressed,” he said, “this will be a millstone that will hold back India’s sustained growth.”Mr. Anand, the prospective fashion designer, who lives in the industrial hub of Noida in the southeastern Delhi area, found himself at wit’s end during last year’s lockdown. The family fell behind on the rent. Two months into the lockdown, he collapsed in what he described as a panic attack.“We did not want to live,” said his wife, Akanksha Chadda, 33, a former operations manager at a luxury retail store who also hasn’t been able to find a job. She sat facing a photograph taken three years ago of her son and daughter sitting on a giant turtle at an amusement park. “I didn’t know if I would wake up the next morning or not.”The days when they could afford muesli for breakfast and pizza for dinner are gone, said Mr. Anand. On good days, they get some vegetables and banana for the kids.In January, Ms. Chadda sold their 8-year-old son’s bicycle to buy milk, lentils and vegetables. He cried for a solid evening. But she felt she had little choice. She had already sold her jewelry the month before.“When you don’t see a ray of hope,” she said, “you lose it.” 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