3 signs the labor shortage could end soon – and one major sign that it won’t, according to UBS

Popeyes sign now hiring
The labor shortage is hitting fast food restaurants.

  • UBS Evidence Lab economists said job openings and retirement peaks may signify an end to the labor shortage.
  • Job gains in leisure and hospitality are also promising signs that people are getting back to work.
  • But bottlenecks, which slow economic growth, could prolong the labor shortage, they said.
  • See more stories on Insider’s business page.

The labor shortage is tough on the economic recovery. Consumers are spending and employers want to hire, but jobs can’t get filled fast enough right now.

There’s several signs that suggest the labor shortage will end soon, according to a Thursday note by the UBS Evidence Lab. But there’s one big reason it might not.

UBS’s Andrew Dubinsky, Pablo Villanueva, and Samuel Coffin wrote in a Thursday note that the labor shortage might be ending soon, given the increase in job openings and decline in retirement rates, among other things.

According to UBS, here are the three signs that the labor shortage could be ending:

Job openings keep rising

The indicator that makes “the best case for continued strong job gains is job openings which have continued to increase through the end of May,” the economists wrote.

They also note a drop in quit rates, which could suggest stable hiring rates accompanied by the job gains in May and June. The latter month added 850,000 payrolls, in the clearest sign that the shortage may be easing.

Opening rates continued to climb while hiring was stable
UBS: Opening rates continued to climb while hiring was stable.

Insider previously reported that a factor behind the job openings could be workers holding out for higher wages, and given that a number of companies are beginning to increase wages to get people back to work, more jobs will likely be filled as a result.

Retirements may have peaked

UBS found that retirements may have peaked for those aged 70 and older, which could help explain why participation rates are low.

Labor force participation rates compared with retirement
UBS: Labor force participation rates compared with retirement.

Other factors, like fear of contracting the virus and disruptions to childcare, are temporarily limiting the return to the workforce, the economists wrote, but they are expected to improve in the coming months.

Service jobs added to the high level of job openings

The leisure and hospitality sector made up 40% of the total job gains in June, adding 343,000 payrolls, showing a promising sign for job growth in the service industry.

Depressed services contributed to job gain in May
UBS: Depressed services contributed to job gains in May.

Pay in the sector also jumped 3.6% over the past three months, and the correlation between increased jobs and increased wages is suggesting that higher wages work. For the month of June, wages shot up 7.1% from a year ago, the biggest gain for any sector.

But these promising signs for the end to the labor shortage could be jeopardized by one thing: bottlenecks.

Bottlenecks occur when an industry has to slow its growth because it cannot keep up with demand, and the economists wrote that if bottlenecks don’t fade, the labor shortage will likely persist. Job fillings remain slow from the bottleneck caused by the pandemic recession, but the drop in quit rates, along with wage gains, suggest bottlenecks might be fading, UBS said.

“If bottlenecks fade, openings and listings gains imply job growth trends should remain strong,” it said.

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A second California venue refused to host Matt Gaetz’ and Marjorie Taylor Greene’s ‘America First’ tour

Matt Gaetz and Marjorie Taylor Greene
Matt Gaetz and Marjorie Taylor Greene

  • A convention center in Riverside, California, has refused to host Reps. Marjorie Taylor Greene and Matt Gaetz’ “America First” event.
  • The decision was made by a private company that operates the venue, the Riverside mayor said.
  • A hotel last week said it wouldn’t host the event once it realized that Gaetz and Greene were the featured speakers.
  • See more stories on Insider’s business page.

A convention center in Riverside, California, announced it would not host GOP Reps. Marjorie Taylor Greene and Matt Gaetz after it received backlash in the latest blow to the lawmakers’ “America First” tour.

The event was scheduled to take place Saturday evening at the Riverside Convention Center but was canceled by Raincross Hospitality Corp., the private company that manages and operates the venue, just 24 hours before it was scheduled to take place, according to a press release from the office of Riverside Mayor Patricia Lock Dawson.

“I recognize this was a divisive issue in our community, and I am glad it has been resolved,” Dawson said in the statement. “I commend Raincross Hospitality Corp. for this decision.”

“Riverside is a diverse and inclusive community, so it is heartening to hear that this event will not move forward,” said Riverside Mayor Pro Tem Gaby Plascencia. “I am disappointed we even got to this point, because these speakers are the antithesis of everything Riverside stands for.”

The tour by two of the most polarizing members of Congress aims to attack Democrats and also Republicans who they believe aren’t loyal to former President Donald Trump. Gaetz has also been embroiled in controversy after reports surfaced in late March that the third-term congressman was under investigation for sex trafficking. Gaetz has denied any wrongdoing.

The decision to cancel the event at the Riverside Convention Center followed a decision by a Laguna Hills, California, hotel last week to cancel the “America First” event after it learned that Gaetz and Greene were the featured speakers. The hotel manager said it previously believed the event to be a “gathering,” according to the Orange County Register.

“We just want to stay clear of that,” the hotel manager told the outlet.

Gaetz, a Republican from Florida, and Greene, a Republican from Georgia, plan to go ahead with the event, hosting it at the Anaheim Event Center in Orange County, closer to the initial venue, according to a report from CBS Los Angeles.

Representatives for Gaetz, Greene, the Riverside Convention Center, and the Anaheim Event Center did not immediately return Insider’s request for comment Saturday

“Democrats are the party of hate,” Greene said in a tweet Saturday morning. “They organized to attack, threaten, & harass every venue we booked in CA to hold an America First rally, which celebrates our great country & freedoms. They think their vicious hate will stop me, but I never give up. See you at the rally tonight!”

“The Woketopians are this scared of a dose of #AmericaFirst in California,” Gaetz said in a tweet on Saturday morning. “Rally still happening today!”

The two controversial House Republicans embarked on their “America First” tour earlier this year, Insider previously reported. It began in a conservative Florida retirement community known as The Villages.

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Hospitality workers are returning to their jobs in Northeast states, prompting big unemployment drops – and economists say the region’s high vaccine rate is driving it

waiter restaurant coronavirus
Waiters wear face masks as they serve people sitting in outside seating at the P.J. Clarke’s restaurant at Rockefeller Park in lower Manhattan during the fourth phase of the coronavirus reopening on August 05, 2020 in New York, New York.

  • High vaccination rates in the Northeast are contributing to big unemployment drops, economists told the WSJ.
  • All nine Northeastern states added jobs in the leisure and hospitality industries in May.
  • Rhode Island’s unemployment rate fell by 0.5% – the joint-biggest drop in the US.
  • See more stories on Insider’s business page.

Employment is rebounding in the Northeast – and economists say the region’s high vaccination rates are a major factor.

As more people get their shots, economies in the Northeast, which has some of the highest vaccination rates in the country, are reopening, prompting both customers to flock to restaurants and other businesses and workers to return to jobs, economists told The Wall Street Journal.

Rhode Island’s unemployment rate fell by 0.5% from April to May, per data from the US Bureau of Labor Statistics (BLS). Joint with Delaware, this was the biggest drop in the US. This was followed by four states whose unemployment rates dropped by 0.4% – two of which, Connecticut and New York, were in the Northeast.

Some of the biggest job gains were in the leisure and hospitality industries, where staff work close to customers. In all nine Northeastern states employment in these industries increased from April to May, The Journal reported, citing BLS data. Pennsylvania added nearly 11,000 new jobs in the sector, and New York added around 7,000.

Insider’s Áine Cain reported earlier in June that minimum-wage workers were quitting their jobs in droves because of concerns over the spread of the virus as well as long hours, unruly customers, and low pay.

A huge labor shortage in the US is hitting industries from healthcare to hospitality and ride-hailing apps.

Read more: Recruiters are trying to find career-switchers to staff up junior investment-banking roles as Wall Street’s talent pool gets stretched thin

New York’s unemployment rate is falling faster than the national average – but remains high overall, at 7.8%, compared to a 5.8% average. Connecticut’s sits at 7.7%, and New Jersey’s at 7.2%, the BLS data shows.

Some Northeast states, however, have unemployment rates well below the national average. New Hampshire has the lowest unemployment rate in the US, at 2.5%, followed by Vermont, which is joint with Nebraska at 2.6%, BLS data shows. These are all less than half the national average.

Vermont has the highest vaccination rate in the country, with 73.6% of people having received their first dose by June 27, Centers for Disease Control and Prevention (CDC) data shows. Other Northeast states are among states with the highest vaccination rates, the data shows. New York has the Northeast’s lowest vaccination rate at 59.7% – but this is still well above the national average of 54%.

“The Northeastern region has benefited from a rapid rollout of vaccines,” Daniel Zhao, a senior economist at job-review site Glassdoor, told The Wall Street Journal. “The health situation is improving and economic activity is unlocked, allowing workers to return and consumers to go out and spend.”

Alfonso Flores-Lagunes, an economist at New York’s Syracuse University, told the publication that “people are feeling more comfortable going to restaurants, traveling, and right now in the Northeast, it’s a good time to travel because it’s not as cold.”

Across the US, the labor shortage is causing some businesses to cut operating hours, slash production, and raise prices. The US Chamber of Commerce called the shortage an “emergency” that could hold back the country’s economic recovery.

The leisure and hospitality sector is among the worst hit. Hotels and restaurants have been offering lucrative perks like free higher wages and education benefits, cash bonuses, and even free fitness machines and iPhones to attract new hires.

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Only 4% of laid-off service workers will get their old jobs back, study finds

waitress
  • Workers in leisure, hospitality, and retail have been particularly hard hit during the pandemic.
  • A New York Fed analysis finds only 4% of workers will be rehired by currently closed small businesses.
  • And just 3% of the service businesses currently closed are likely to reopen.
  • See more stories on Insider’s business page.

Throughout the pandemic, service workers have had it tough. The ones that didn’t have to contend with massive layoffs have had to safely navigate customer-facing roles, while their industry has been radically disrupted.

And evidence is showing that the service workers who were laid off stand a slim chance of getting their old jobs back.

A new analysis from the New York Federal Reserve’s Liberty Street Economics looks at data from about 100,000 leisure, retail, and hospitality businesses – mostly small ones – and delves into the ones that have remained closed.

Of businesses active before the pandemic, 35% remain closed. The longer a business stays shuttered, the more likely it is it will never reopen, according to the analysis: For every extra week a business stays closed, the probability of reopening drops by 2%. Most of those businesses have been closed since the pandemic first hit.

Bad news for workers

For people working at those currently shuttered businesses, continued closures may bring bad employment news. The analysis found that just about 4% of workers laid off from those businesses will be rehired by them.

The longer the closure, the lower the chance of rehiring: For every extra week they remain shuttered, the number of workers rehired for reopening drops by 5%. Of course, that all hinges on if their employers do end up reopening. The New York Fed anticipates that just 3% of the closed businesses will reopen, and those that do will hire back 35% of their workers over the course of four weeks.

Service workers have been hard hit throughout the pandemic

To be sure, employment in leisure, hospitality, and retail has seen a major rebound as the economy has reopened.

In March, nonfarm payrolls added 916,000 jobs, and service jobs accounted for a third of those gains. Small businesses are also increasingly reopening, especially as vaccinations around the country ramp up and restrictions are lifted.

One hindrance is the so-called labor shortage, where employers are having trouble filling jobs. That could be for a few reasons, according to Insider’s Ayelet Sheffey, including COVID-19 health concerns and inability to access affordable childcare. A study from advocacy group One Fair Wage found that of the workers who never left service jobs, female workers experienced more harassment and lower tips during the pandemic.

A February McKinsey report separately found that food service jobs are in general decline over the long term, and over half of workers in low-wage jobs will have to find higher-paying positions post-pandemic.

“Last year, we started a relief fund for service workers; 240,000 workers applied for relief,” Saru Jayaraman, the president of One Fair Wage, previously told Insider. “And I can’t tell you the number of women waitresses who wrote to us and said, ‘I can no longer feed my children. The lines are too long at the food banks. I am now resorting to stealing food because I have no choice.'”

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Rising remote work is upping job inequality in European capitals and ‘scarring’ some sectors, says OECD report

Paris
The expansion of remote working has led to labor inequalities in major European capitals.

  • An report by the OECD and Indeed warned that remote working may aggravate labor inequality. 
  • Analyzing job postings for major European capitals, experts said the service sector may be scarred.
  • The percentage of remote job postings is increasing but the job market has still not recovered.
  • Visit the Business section of Insider for more stories.

Remote working options have allowed many companies to keep going during the COVID-19 pandemic, with some companies even thriving as a result. However, this hasn’t been possible in all sectors with retail, hospitality, and healthcare among the most affected.

The expansion of remote working has led to labor inequalities in major European capitals including London, Paris, Madrid, and Berlin. Unemployment in the UK hit its highest level in five years last month and job offers have been harder to come by in all the cities and their countries. Meanwhile, remote jobs have thrived.

Sundar Pichai
Google plans to try and accommodate remote working indefinitely.

This is one of the major findings published in a report on remote working in European capitals, co-authored by OECD economist Lukas Kleine-Rueschkamp and the Indeed job portal’s chief research economist for the MENA area Pawel Adrjan.

Using data from the Indeed portal, they said: “Labour markets in these cities are being pulled apart in early 2021, with postings for higher-paid jobs performing better than those for lower-paid service jobs.”

Remote working as a factor of inequality

“The move to remote work is greater and more persistent in these cities than in other places and may be long-lasting,” the report said.

A survey conducted in January by the National Association for Business Economics (NABE) found that just one in 10 companies expected their employees to return to the office after the pandemic.

Major companies have recently extended their remote working policies, with Google planning to try and accommodate remote working indefinitely.

“Cities such as London have already experienced population declines,” Kleine-Rueschkamp and Adrjan added. They said that although it was unlikely that living in a major European capital would not have its perks after the pandemic, “the trends COVID-19 has initiated might weaken their appeal.”

Remote working does appear to be much more prevalent in major cities than in the rest of the country. Remote work increased 7.3% higher in Berlin than in the rest of Germany, and 5.4% more in Madrid than the rest of Spain.

london street
The report warned of the consequences of further decline in European capitals.

Paris and London had smaller disparities but they were still notable. Remote working growth was 4% higher in Paris than in the whole of France, and 2.4% higher in London than the rest of the UK.

Remote job offers previously constituted 5% of the overall workforce in Madrid in 2020 but stood at 15.7% a year later. In the rest of Spain, the rate has increased from 4% to 10.4%.

The report attributes this phenomenon to the fact that “postings in occupations suitable for working at home, like tech, finance, law, and marketing, are most prevalent in big cities.” In comparison, the service sector is heavily affected by remote working and could be “scarred for a long time,” especially in London and Paris.

Fewer jobs available than before the pandemic

The OECD report revealed that job markets in European capitals had been seriously hit by the pandemic. London was the worst affected, with 41% fewer vacancies at the end of January 2021 compared to February 2020.

Paris and Madrid both had around 25% fewer vacancies than before the pandemic, while Berlin had 8% fewer. Paris was the only instance where the capital was worse affected than the rest of the country.

The report warned of the consequences of further decline in European capitals, as their economic growth tended to outstrip the rest of the country. In the years prior to the pandemic, “GDP per capita jumped more than 12% in these cities, almost 3 percentage points faster than national growth.”

At the height of the pandemic-related job market contractions, however, capitals were affected more than the rest of the country.

Job openings in London were 57% lower than before the pandemic, 48% lower in Madrid, 42% lower in Paris, and 26% lower in Berlin. The report noted that “for much of 2020, job openings in these cities were between five and 15 percentage points lower” than the rest of the country.

The report said large cities would “a difficult adjustment period for some urban workers,” adding that “the pandemic’s labor market effects may be temporary for some sectors, but, for others, they may last.”

Policymakers should support displaced workers and those at risk of redundancy by offering comprehensive skills development strategies tailored to local conditions,” the researchers concluded.

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