After the financial crisis of 2008, the problems in the economy had to do with demand. The housing bubble had burst; consumers were not spending enough to fill the gap; Obama’s stimulus, designed to increase demand, was excessively small and brief.
Instead, in 2021, many of the problems appear to be due to insufficient supply. Goods cannot reach consumers because ports are jammed; a chip shortage has complicated car production; many employers state that they have difficulties finding workers.
Much of this is likely to be transitory, although it is clear that disruptions in the supply chain will continue for a while. But maybe something more fundamental and lasting is taking place in the job market. The long-suffering American workers, who have been underpaid and overworked for years, may have reached their limits.
On those supply chain issues: It’s important to understand that Americans are getting more goods than ever. The problem is that, despite increasing deliveries, the system cannot keep up with demand.
At the beginning of the pandemic, the population made up for the loss of services by buying things. People who could not go out to eat, reformed their kitchens. The one who couldn’t go to the gym bought exercise machines at home. The consequence was a staggering increase in the purchase of all kinds of products. At the beginning of the year, spending on durable goods was 30% above pre-pandemic levels, and it remains very high.
But things will get better. As COVID-19 recedes and life gradually returns to normal, consumers will buy more services and fewer things, reducing pressure on ports, road transport and railways. The labor situation, on the other hand, does seem to be due to a true reduction in supply. Total employment remains five million jobs below the peak level reached before the pandemic. Employment in the leisure and hospitality sector remains more than 9% below. But everything we see indicates a very rigid labor market.
On the one hand, workers are leaving their jobs at unheard-of rates, a sign that they are confident of finding new jobs. On the other hand, employers are not only complaining about a shortage of workers, but are trying to attract them with wage increases. Over the past six months, wages for workers in the leisure and hospitality sectors have registered an annual rate of increase of 18%, and are now well above their pre-pandemic trend.
The job has also emboldened trade unionists, who have been much more willing than usual to go on strike after receiving contract offers they consider inappropriate.
But why are we experiencing what many call the “big resignation”, in which so many workers leave work or demand higher pay and better working conditions to stay? Until recently, conservatives blamed expanded unemployment benefits, claiming they reduced the incentive to take a job. But states that canceled these benefits earlier have not experienced a greater increase in employment than those that did not; And nationwide, the elimination of extended benefits last month does not appear to have changed the employment situation much. Rather, what appears to be happening is that the pandemic led many American workers to rethink their lives and wonder if the horrible job many of them had was worth continuing.
Because the United States is a rich country that treats many of its workers extraordinarily poorly. Wages are often low; Adjusting for inflation, the typical male worker earned about the same in 2019 as his counterpart 40 years earlier. Working hours are long: The United States is a “vacation-free nation” that offers far less free time than other advanced countries. Work is also unstable, and many low-wage workers — and non-white workers in particular — are subject to unpredictable fluctuations in working hours that can wreak havoc on family life.
And it’s not just companies that treat workers badly. A significant number of Americans seem to look down on those who provide services to them. According to a survey conducted not long ago, 62% of restaurant workers say they have received abusive treatment from customers.
Given these facts, it is not surprising that many workers are leaving their jobs. The more difficult question is why now. Many Americans hated their job two years ago, but they weren’t carried away by those feelings. What has changed?
It’s just a guess, but it seems possible that the pandemic has caused some people to reconsider their vital choices. Not everyone can afford to leave a job they hate, but a considerable number of workers seem willing to take the risk of trying something different: retire earlier despite the financial cost, seek a less unpleasant job in a different sector, and so on.
And while this new demanding attitude of empowered workers is making life more difficult for consumers and entrepreneurs, let’s be clear: overall, it’s good. American workers are demanding better treatment, and the country is interested in getting it.
Paul Krugman He is a Nobel Prize in Economics. © The New York Times, 2021. News Clips translation.
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