The latest jobs report showed healthy growth in hiring. But more importantly, it also showed a rise in wages.
In an encouraging burst of hiring, America’s employers added 850,000 jobs in June, well above the average of the previous three months and a sign that companies may be having an easier time finding enough workers to fill open jobs.
Friday’s report from the Labor Department was the latest evidence that the reopening of the economy is propelling a powerful rebound from the pandemic recession. Restaurant traffic across the country is nearly back to pre-pandemic levels, and more people are shopping, traveling and attending sports and entertainment events. The number of people flying each day has regained about 80% of its pre-COVID-19 levels. And Americans’ confidence in the economic outlook has nearly fully recovered.
The report also suggested that American workers are enjoying an upper hand in the job market as companies, desperate to staff up in a surging economy, dangle higher wages. In June, average hourly pay rose a solid 3.6% compared with a year ago — faster than the pre-pandemic annual pace. In addition, a rising proportion of newly hired workers are gaining full-time work, as the number of part-time workers who would prefer full-time jobs tumbled — a healthy sign.
“That underscores the growing bargaining power of labor,” said Joe Brusuelas, chief economist at RSM, a tax advisory firm. “There’s increasing confidence that they’re going to get better jobs at better wages as the U.S. economy expands.”
This put a damper on a narrative that was being heavily boosted by the elites that the government was too generous with the relief offered to people during the pandemic and that it had caused workers to loll around at home without going out to seek honest toil. That narrative even inspired the Republican governors of some states to refuse the extended unemployment benefits the federal government was offering, thus not only hurting the people denied those benefits but also the general economy since that was that much less money that people had to spend.
As is often the case with narratives that benefit the business class, before this report was released we were regaled with anecdotes of desperate employers saying that they were unable to hire workers and that their businesses were suffering as a result. These employers were mostly in the hospitality sector, notorious for paying low wages. Well, it turns out that there are anecdotes that show that the real problem is that the wages are being offered are too damn low.
The New York Times reported Sunday that Missouri workforce development personnel “said they had seen virtually no uptick in applicants since the governor’s announcement, which ended a $300 weekly supplement to other benefits.”
“And the online job site Indeed found that in states that have abandoned the federal benefits, clicks on job postings were below the national average,” the Times noted.
The Times reported Sunday that hardly anyone showed up at a recent job fair in the St. Louis suburb of Maryland Heights, where the employment opportunities on offer included a $10.30-an-hour position at a home healthcare agency—with no benefits.
An ice rink, concert, and entertainment center was looking for 80 people, paying $10.30 to $11.50 for customer service representatives and $13 for supervisors. But the jobs last just through the busy season, a few months at time, and the schedules, which often begin at 5 am, change from week to week,” the Times noted. “In St. Louis, a single person needs to earn $14 an hour to cover basic expenses at a minimum standard, according to M.I.T.’s living-wage calculator. Add a child, and the needed wage rises just above $30. Two adults working with two children would each have to earn roughly $21 an hour.”
Economists and progressive lawmakers have argued in recent weeks that what Republicans, the U.S. Chamber of Commerce, and others have dubbed a “labor shortage” fueled by supposedly excessive unemployment benefits is in fact a wage shortage caused by businesses refusing to pay their employees adequately.
“There may be areas where some employers are struggling to staff positions, but the likely obstacle is not overly generous UI benefits—instead it is wage offerings that are too low to make these jobs attractive,” David Cooper, a senior economic analyst at the Economic Policy Institute, wrote in a blog post last month.
The anecdotal experiences of some businesses in recent weeks seem to bolster that interpretation. Earlier this month, the Washington Post cited the story of Klavon’s Ice Cream Parlor, a Pittsburgh shop that was struggling to find applicants for open jobs for which it was offering to pay $7.25 an hour plus tips.
“So owner Jacob Hanchar decided to more than double the starting wage to $15 an hour, plus tips, ‘just to see what would happen,'” the Post reported. “The shop was suddenly flooded with applications. More than 1,000 piled in over the course of a week.”
To his credit, Joe Biden says that it is a good thing that employers are trying to lure workers with higher wages.
Joe Biden, in response to the report, was eager to point out the changing power dynamic of the labor market.
“The strength of our economy is helping us flip the script. Instead of workers competing with each other for jobs that are scarce, employers are competing with each other to attract workers,” he said.
When it comes to wages, the capitalist class seem to conveniently forget basic economics that if you can always find employees if you are willing to pay them more.