by Greg Valliere, AGF Management Ltd.
THE LABOR OUTLOOK IS COMPLICATED BY RETIREMENTS: The key labor dynamic isn’t the inability to create more jobs — it’s the astonishingly high number of Americans who are quitting their jobs.
DATA RELEASED YESTERDAY from the Labor Department showed that 4.3 million people quit their jobs in August — about 3% of the workforce. With over 10 million job openings last month, workers can afford to quit for better opportunities and compensation.
WORKERS ARE QUITTING AT A RECORD PACE in several sectors, according to the Labor Department — about 890,000 employees quit in restaurants, bars and hotels in August, 721,000 in retail jobs, 706,000 in professional services and 534,000 in health care and social assistance.
LOTS OF UNKNOWNS: Perhaps the greatest uncertainty is whether the work force will grow now that supplemental unemployment benefits have ended. Last Friday’s disappointing jobs report only reflected the first couple of weeks with no extra benefits; it may take longer than that for workers to return.
BUT WILL THEY RETURN? Impediments include continued fear of Covid (and Covid mandates), mediocre pay and limited opportunities for advancement, a lack of day care, a need for job training, and — crucially — the significant benefits that remain.
STATES STILL HAVE UNEMPLOYMENT BENEFITS, just not the supplemental. And there’s been a big hike in food stamps, this summer’s expansion of the generous child tax credit, state rental assistance, and — for seniors — a huge new Social Security cost of living adjustment (COLA) for 2022, to be announced today.
OUR GUESS IS THAT with these types of benefits, many people who have quit may have the luxury of being picky as they choose a new job. They may stay out of the workforce — or continue to quit — because there’s no urgency to work unless the available jobs are compelling opportunities.
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SPEAKING OF QUITTING: A key House Democrat, Budget Committee Chairman John Yarmuth, announced his retirement yesterday, still another sign that party leaders are fearful of an election blowout next fall. Yarmuth is the fifth Democrat to retire; five others have left to seek other offices.
MORE RETIREMENTS ARE LIKELY as Democrats face the growing likelihood that they will lose control of the House next year. In the meantime, the party faces an increasingly close gubernatorial race in Virginia next month; former Gov. Terry McAuliffe is calling in some of the party’s leaders, including Barack Obama, to help him.
SHOULD THE DEMOCRATS LOSE VIRGINIA, the party will face a full-blown panic, as voters turn against President Biden amid growing restiveness over inflation, Covid policy, crime, immigration, etc. Failure to pass either of the two infrastructure bills — both still bogged down — would lead to speculation about other departures including Nancy Pelosi, who will turn 82 next spring.
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This post was first published at the AGF Perspectives Blog.
