Chattanooga, Tennessee halts its recycling pickup due to a shortage in pickup drivers

recycling
  • Residents in Chattanooga, Tennessee, will have to live without a recycling pickup service for now, the city tweeted.
  • Recycling collection will resume once the city can fill 32 open positions for recycling pickup drivers.
  • Competitive rates, employee retention, and ongoing COVID-19 issues are compounding the employee shortage.
  • See more stories on Insider’s business page.

The city government of Chattanooga, Tennessee, will be stopping curbside recycling pickup starting July 30 due to employee shortages.

The recycling collection service will be suspended until the city is able to fill 32 open commercial driver positions, it said Thursday on Twitter. City officials are recommending residents personally deliver their recycling to Chattanooga’s recycling drop-off centers.

“This was a difficult decision,” the city said in the tweet, also citing low employee retention and hiring challengesas factor creating an “untenable” curbside recycling effort. The disparity in competitive rates from private sector recycling pickups adds to the difficulty in finding dedicated employees.

The starting pay for CDL (commercial driver’s license) truck drivers is $29,865 – 118% less than the starting pay for drivers recruited by local pickup companies, according to a presentation the mayor’s office made to the Chattanooga city council earlier this week.

The office also presented data that most qualified job candidates are turning down these vacant municipal positions, some of which have been unfilled for more than two years, because of the pay. The city is then forced to hire less-qualified applicants who require more training and manager supervision worker.

“The impact to recycling due to our driver shortage illustrates one of Chattanooga’s most acute problems,” said City of Chattanooga’s Chief of Staff Brent Goldberg. “Pay for city employees is far below the market rate, a problem our budget will address when we present it to [Chattanooga’s] City Council in August.”

A wave of employee retirements, resignations, and COVID-19 illness may contribute to further public work disruptions, according to city spokesman Ellis Smith.

“In spite of supervisors filling in on a regular basis, garbage and brush pick-up could also be impacted if the driver shortage continues to grow worse,” Smith said.

The tweet also linked to an external top application page where people can apply for one of the open pickup driver positions. Applicants will need to have a commercial driver’s license to apply.

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Now may be the time to ask for a raise because soaring pay is temporary

Fight for 15 minimum wage protests
Days ahead of Andy Puzder’s confirmation hearing for labor secretary. Several of workers in the fight for $15 took their opposition to downtown New Yorks McDonald during the lunchtime rush to demand the fast-food mogul withdraw his nomination or be rejected by the U.S. Senate. The protest in New York is one of more than two-dozen rallies across the country on Monday to declare that Puzder is unfit to serve.

  • Stronger wage growth will likely cool off as the labor shortage fades.
  • Firms hiked wages to attract workers, but school reopenings and unemployment expiring should push people back to work.
  • Ending the pay-growth streak could be critical to avoiding an inflation crisis, Goldman Sachs said.
  • See more stories on Insider’s business page.

Working Americans are enjoying the biggest pay boost in four decades. Experts don’t expect it to last long.

Wage growth over the last three months hit an annualized rate of 6.6%, the strongest since the early 1980s. Job openings sit at record highs, and the number of job listings mentioning signing bonuses doubled in the past year. Businesses are clamoring for labor, and workers are reaping the benefit.

Much of the pay bump is linked to the nationwide labor shortage. While firms looked to quickly rehire, factors ranging from childcare costs to virus fears kept Americans out of the workforce.

Those trends might only boost workers’ bargaining power for a few more months. Hiring will accelerate into the fall as schools reopen, vaccination continues, and enhanced unemployment benefits lapse, Federal Reserve Chair Jerome Powell told lawmakers in a June 22 hearing.

The influx of the supply of new workers is likely to erode the fast pace of wage growth. Pay hikes seen in recent months made for an extraordinary shift for low-wage workers, but they are more a “one-time releveling” than a “permanent shift in workers’ bargaining power,” said Gregory Daco, chief US economist at Oxford Economics.

Democrats seem to see the writing on the wall. While President Joe Biden praised rising wages as a “feature” of the economic recovery, he’s also urged Congress to pass legislation solidifying workers’ right to unionize so that when firms naturally cool their wage hikes, workers can lock in gains made through the spring, Democratic Rep. Andy Levin told Politico.

“I think the gains of workers will be evanescent,” he said. “For it to be durable, they’re going to have to regain the freedom to form unions and bargain collectively.”

Slowing the pay jump keeps inflation at bay

Hitting the brakes on worker pay might be coming at the perfect time. While the pandemic’s threat has largely faded, inflation quickly replaced it as the country’s largest economic risk. The latest data showed prices climbing at the fastest rate since 2008 in May as massive demand slammed up against widespread supply bottlenecks.

Most economists and government officials see the overshoot as transitory and cooling throughout the year. Yet persistently strong wage growth could turn the temporary inflation permanent. After shelter prices, low-wage sectors like restaurants are the second-clearest contributor to wage-based inflation, Goldman Sachs said in a recent note. Prices at such businesses could be “the canary in the coal mine of wage-push inflation” and serve as a “key cyclical wild card” in the bank’s inflation outlook, the team led by Jan Hatzius added.

That dynamic might already be at play. Chipotle, McDonald’s, and Starbucks all raised their starting wages in the last year, putting pressure on competitors to do the same or risk losing workers.

If that trend turns widespread, rising labor costs could keep inflation elevated longer than expected. For every 1 percentage point that low-end wage growth exceeds its trend, core inflation is projected to rise by 5 to 15 basis points, the Goldman economists said. The effect is only “moderate,” they added, but with inflation already trending at decade-highs, an additional push could spark a cycle of higher prices and subsequent wage hikes.

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The economy is getting better, but the rest of 2021 will be far from normal

Job fair Florida
A man hands his resume to an employer at the 25th annual Central Florida Employment Council Job Fair at the Central Florida Fairgrounds.

  • The 2021 economy has been a wild ride with reopenings, people quitting jobs, and firms desperate to hire.
  • Economic data points to improvements in the second half of the year as wages rise and jobs increase.
  • But not for everyone. Unemployment for teenagers and Black and Hispanic workers is still high.
  • See more stories on Insider’s business page.

Halfway through 2021, the June jobs report signals a good step forward, but let’s not call this economy “normal” just yet. Things are still kinda weird.

The US added 850,000 jobs last month, beating estimates and showing a strong acceleration in the labor market’s recovery. It was the largest one-month jump since August and the sixth straight month of gains. After a bumpy six months for the labor market’s recovery, it’s starting to look like smoother sailing.

But it’s still choppy. While the sectors that transitioned to remote work have regained almost all lost jobs, those hit hardest remain far from healed. And while pandemic lockdowns have reversed, businesses will have to rehire in a wholly new environment.

The first strange signs for the economy came in April, when vaccinations were running ahead of schedule and reopening started in earnest. The jobs report that month was expected to show 1 million payrolls added, but it was a paltry quarter of that figure. Job openings sat at record highs, but factors ranging from virus fears to childcare costs kept workers on the sidelines. It was better than fears of a double-dip recession – when jobs unexpectedly dropped in December – but it was decidedly abnormal.

As the country reopens, the post-pandemic labor market is taking shape. It has little in common with the one left behind in early 2020.

An early look at the new job market

Working from home redefined employment, real estate, even culture in 2020. It’s shrinking back from its widespread adoption, but it may be here to stay. Despite many state and local governments reversing their strictest economic restrictions, roughly 14% of Americans still telecommuted in June.

The labor shortage remains an obstacle for businesses looking to hire, and it’s having an effect on workers’ pay. Average earnings climbed again in June. Pay grew the most in the leisure and hospitality sector, suggesting higher pay helped businesses hire more workers.

On the other end of the market, only 10% of job seekers are urgently looking for work, according to hiring giant Indeed. Most are taking a more leisurely approach, citing virus fears and financial cushions. June data reflects that relaxed pace; the number of people actively looking for a job was flat and the unemployment rate edged higher to 5.9%.

And while job growth broadly improved in June, the recovery is still leaving several groups behind. Despite a hiring bonanza for low-wage jobs, unemployment among teenagers rose to 9.9% from 9.6%. Unemployment among Latinos rose 0.1 point to 7.4%, while Black unemployment gained to 9.2% from 9.1%. That compares to the 5.2% unemployment rate seen among whites.

Relief programs for unemployment and student loans are about to end

There’s reason to believe Americans will take more jobs in the months ahead.

Several states are just starting to end the federal boost to unemployment insurance (UI) ahead of its September expiration. Twenty-six states in total – all but one are Republican-led – are set to end the benefit early in an effort to spur hiring. And jobless claims data suggests the effort is working. Filings for UI fell to a new pandemic-era low last week.

Other government relief programs, including the student-loan freeze, are also set to lapse in the fall. Economists refer to the deadline as a “fiscal cliff” and expect it to drive more Americans into the workforce.

Continued vaccinations, school reopenings, and reskilling should have a similar effect, Federal Reserve Chair Jerome Powell said in a June 16 press conference. Childcare costs and virus fears kept countless Americans at home, unable to find work. As those pressures diminish in the coming months, it’s likely worker supply will more closely match labor demand, Powell said.

“I think it’s clear, and I am confident, that we are on a path to a very strong labor market,” he added. “I would expect that we would see strong job creation building up over the summer and going into the fall.”

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Only 10% of job seekers are rushing back to the workforce, hiring giant Indeed says

Job fair coronavirus florida
  • Just 10% of job seekers are urgently looking for work as firms rush to rehire, according to Indeed.
  • Virus fears and employed spouses were the most common reasons cited for non-urgent job searches.
  • More Americans should return to work as schools reopen and COVID fears fade, economist Nick Bunker said.
  • See more stories on Insider’s business page.

Businesses are jostling to rehire faster than their competitors as demand booms. The vast majority of jobless Americans can’t be bothered.

For several months now, an extraordinary labor shortage has held back the economic recovery, as job openings rocketed to record highs, but hiring has fallen below economist forecasts. More than 9 million Americans remain out of work, but for reasons ranging from enhanced unemployment insurance to childcare costs, they’re in no rush to find jobs.

New data from hiring website Indeed adds to this picture. Just 10% of job seekers were “urgently” looking for work in late May and early June, according to a survey of 5,000 Americans. About 30% said they’re not open to searching for work at all, and over 40% said they’re only “passively” looking for jobs.

INDEED
Source: Indeed Hiring Lab

Some of the disparity comes from many job seekers already working, Nick Bunker, economic research director at the Indeed Hiring Lab, wrote in a blog post. The share of Americans urgently seeking work was twice as large for jobless Americans as it was for employed people. And many more employed Americans were passively looking for work.

The survey also debunked some theories as to what’s keeping Americans from rushing back to work. Among those not urgently seeking jobs, more than 20% cited virus fears as a reason for the holdup. Employed spouses and financial cushions were the second- and third-most cited reasons, respectively.

Less than 10% of respondents said enhanced jobless benefits were a reason for their lax job hunts, according to the survey. That stands in contrast with a top Republican talking point through the spring. GOP lawmakers frequently blamed UI payments for weak job take-up, and Republican governors in 25 states have moved to end the supplement before its September expiration.

To be sure, Indeed’s survey was conducted just before some states began rolling back the federal UI boost. But the data signals other factors played a much larger role in keeping Americans from joining the workforce.

Others are simply waiting for circumstances to improve. Nearly 30% of unemployed workers not searching urgently said they’re waiting for vaccinations to increase before seeking jobs. Another 30% said they’re waiting for more job opportunities, and 13% said they’re waiting for schools to reopen.

Indeed isn’t the only firm finding a wide range of factors keeping Americans from taking jobs. The pandemic fueled disruption throughout the labor market, making rehiring much more difficult than just placing Americans where they previously worked, Julia Pollak, a labor economist at ZipRecruiter, told Insider’s Juliana Kaplan.

“Some workers think their industry will never recover, and retire early. Others take a layoff personally, and opt not to return if they’re recalled,” she said. “That means returning to work requires a lot of new hiring – which is time-consuming.”

The combination of factors suggests job seeking will grow more urgent in the fall, Bunker said. After a months-long gap between business demand and worker interest, the labor market should balance out as the economy heals further.

“Many employers want to ramp up hiring quickly, but a large portion of job seekers are hesitant to start jobs now,” he said. “The further decline of COVID-19, the end of enhanced UI, and the return of school in the fall are factors that could increase the intensity of job searches by the unemployed.”

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One chart shows the 10 industries poised to pay you a higher salary soon, and the 10 that probably won’t, according to Morgan Stanley

Hotel bellboy coronavirus
A bellman waits for residents at the Plaza Residences on Central Park South on April 02, 2020 in New York City

  • The labor shortage is uneven, leaving some industries more likely to raise wages than others.
  • The hotel, restaurants, and leisure sector is most likely to raise pay, Morgan Stanley said Monday.
  • Independent power and renewable electricity businesses are the least likely to hike wages, the bank added.
  • See more stories on Insider’s business page.

Like many aspects of the US recovery, the labor shortage is uneven.

Where some industries were able to quickly shift to telework and retain most employees through the pandemic, others are struggling to rehire. Job openings sit at a record-high 9.3 million, but hiring lagged economist forecasts for two months straight while quits reached all-time highs.

Several businesses have already raised wages in a bid to attract more workers than the competition. Yet certain sectors are still likely to see additional pay hikes as the shortage lingers, Morgan Stanley economists led by Ellen Zentner said in a Monday note.

“Wage pressures to-date have been relatively narrow, but our leading indicators point to labor market tightness in an increasing number of industries, raising the prospect of further wage increases and broadening out of wage pressures,” the team said.

Wage Pressures MS
Chart via Morgan Stanley.

Hotels, restaurants, and leisure businesses came out on top, with real estate management and development following close behind. Commercial services and supplies businesses touted the third-highest wage-risk score. Morgan Stanley homed in on which sectors are most likely to raise wages first by analyzing companies’ earnings-per-employee, estimated margins, and historic wage growth.

The sectors at the greatest risk of wage hikes shared a handful of characteristics. Many were among those hit hardest by the pandemic and related lockdowns. The top 10 sectors mostly consisted of service jobs, likely due to the mass layoffs seen in 2020. Retail businesses also face higher wage risk as consumer demand booms and businesses struggle with supply bottlenecks.

On the other end of the spectrum, producers make up most of the sectors with the softest wage risk. Independent power and renewable electricity businesses sit at the bottom of the list, followed by the oil gas and consumable fuel sector. Water utilities, tobacco, and telecom services businesses were all nearly tied for having the third-lowest wage risk.

Morgan Stanley also expects a larger share of sectors to drive wages higher. While 64% of industries saw above-trend pay growth since March, that share grew to 93% in April and reached 79% in May. A deeper look at industry-specific data shows wage pressures growing in middle- and high-wage industries, marking a departure from trends seen just before the pandemic, the team said.

Still, the elevated rate of wage growth might not be felt in the near term. Most industries’ pay hikes have been dwarfed by stronger inflation through spring. Only 21% of sectors saw pay climb faster than the Consumer Price Index in the three months through May, Morgan Stanley said. For workers to actually benefit from the faster-than-average pay growth, businesses will need to keep raising wages after the anticipated cooling of inflation.

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Biden whispers the quiet part out loud on the labor shortage: ‘Pay them more!’

Biden
President Joe Biden.

  • The solution to attracting workers is to simply “pay them more!” Biden whisper-shouted on Thursday.
  • Massive demand for workers gives Americans a new “bargaining chip” for earning higher pay, he added.
  • The comments come as businesses are hiking wages and offering incentives as they scramble to rehire.
  • See more stories on Insider’s business page.

The solution to the labor shortage is, according to President Joe Biden, as simple as a higher wage.

The president allayed a range of concerns around the economy during a Thursday press conference. Among them is the nationwide labor shortage, which has seen hiring slow despite millions of Americans still being unemployed. The shortage may be delaying a full labor-market recovery, but he told journalists at the White House there’s an easy solution.

“I remember you were asking me … ‘Guess what? Employers can’t find workers.’ I said, ‘Pay them more!'” the president said in his distinctive whisper-shout.

The refrain has been popular with Biden as businesses rush to attract workers. The president said in May that the accelerating rate of wage growth was a “feature” and “not a bug” of the post-pandemic economy. Increased competition between employers gives Americans more “dignity and respect in the workplace,” he added.

“This is the employees’ bargaining chip now,” he said on Thursday. “[Employers] are going to have to compete and start paying hard-working people a decent wage.”

The president also eased fears that recent bouts of stronger inflation would hinder the recovery. The Consumer Price Index – a popular gauge of broad inflation – rose 0.6% in May, beating the median estimate of a 0.4% gain. The reading marked the fastest rate of price growth since 2009, but Biden assured the overshoot would soon fade.

“The overwhelming consensus is it’s going to pop up a little bit and then come back down,” he said.

The president’s comments were made during a press conference focused on the $1 trillion bipartisan deal for infrastructure spending that Biden had thrown his support behind earlier on Thursday. The plan includes funding for physical infrastructure like roads and bridges, as well as improved broadband access and public transit projects.

The package represents just half of the White House’s economic plan, Biden said during the afternoon press conference. The other portion will focus on improving childcare, education, and clean energy projects. Both proposals will move through Congress “in tandem” and represent Biden’s next steps for building a stronger economy.

“If it turns out that what I’ve done so far – what we’ve done so far – is a mistake, it’s going to show,” the president said. “If that happens, my policies didn’t make a lot of sense. But I’m counting on it not.”

Biden has long advocated a $15 minimum hourly wage, but opposition from Senate Republicans and even some Democrats has kept such legislation from reaching his desk. Still, elements of his $1.9 trillion stimulus package may have achieved a similar effect. The $300-per-week boost to jobless benefits led unemployment insurance to compete with the average wage in every state, Insider’s Andy Kiersz calculated.

Twenty-six states have since announced plans to prematurely end the benefit in hopes of pushing more Americans to find work. Yet early job-search data suggests the move is doing little to spur employment. And some jobless Americans told Insider in May that, after receiving generous UI payments for several months, they don’t plan to return to low-paying jobs.

“These guys are just dumbasses if they actually think that the UI is the problem and not the wage,” Matt Mies, an unemployed 28-year-old, told Insider’s Juliana Kaplan, referring to Republican governors ending the benefit early.

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Americans can look forward to a ‘very strong’ labor market in 2022, Fed’s Powell says

GettyImages 1204924936
Markets want more clarity from Jerome Powell and the Fed

  • The labor market is on track for a healthy rebound in the coming months, Fed Chair Jerome Powell said.
  • One can expect “strong job creation” in the summer and heading into fall, he added.
  • The labor shortage is temporary, and there’s reason to believe worker supply can exceed expectations, Powell said.
  • See more stories on Insider’s business page.

The labor market is far from a complete recovery, but the country should see encouraging progress over the next several months, Federal Reserve Chair Jerome Powell said Wednesday.

Data tracking Americans’ return to work has been somewhat mixed throughout spring. On one hand, the economy is creating jobs at a steady pace. April and May both saw hundreds of thousands of payroll additions, although April was dismal in light of expectations of much bigger gains. Jobless claims are far lower than they were just months ago. And stronger wage growth suggests businesses are paying up to counter the labor shortage.

On the other, recent reports have fallen short of economists’ forecasts. Jobless claims unexpectedly ticked higher last week. And even at May’s more accelerated rate of payroll growth, it would take until July 2022 to fully recover all the jobs lost during the pandemic.

Despite the downside risks, Powell holds an unquestionably positive outlook for the labor market’s rebound. In a Wednesday press conference, the Fed chair said payroll growth should accelerate in the coming months as the pandemic fades further and more Americans rejoin the workforce.

“I think it’s clear, and I am confident, that we are on a path to a very strong labor market,” Powell said. “I would expect that we would see strong job creation building up over the summer and going into the fall.”

Projections from the Federal Open Market Committee support Powell’s sentiment. Policymakers expect the unemployment rate to slide to 4.5% by the end of 2021 from the May reading of 5.8%. The median forecast for 2022 unemployment was revised slightly lower to 3.8% from the March estimate of 3.9%. Officials then expect the rate to match its pre-pandemic low of 3.5% by the end of 2023.

Powell also downplayed concerns that a shortage of workers would permanently drag on the recovery. The previous economic expansion showed that labor supply can exceed expectations as the unemployment rate sits at historic lows, the Fed chair said. There’s no reason to think that dynamic won’t repeat itself, he added.

In the near term, Powell sees a handful of trends keeping Americans from returning to work. Childcare costs, COVID-19 fears, and enhanced unemployment benefits are likely dragging on labor-force participation, the central banker said, echoing comments from other Fed officials and lawmakers.

Another major hurdle could come from a simple skills mismatch, he added. Americans who could return to their previous jobs have largely done so already, Powell said. With those easy gains out of the way, a significant portion of payroll growth will have to come from Americans finding new work.

“This is a question of people finding a new job, and that’s just a process that takes longer. There may be something of a speed limit on it,” Powell said. “There’s just a lot that goes into the function of finding a job.”

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The 5 sectors struggling the most with hiring and what it says about the reopening US economy

Warehouse New York coronavirus
  • A labor shortage is slowing the US economic rebound, but its effects aren’t evenly spread.
  • While job openings have skyrocketed, some sectors are seeing little take-up as people return to work.
  • Detailed below are the five industries having the hardest time hiring through the economic reopening.
  • See more stories on Insider’s business page.

Various signs point to a historic labor shortage in the US economy. But not all sectors are experiencing the same pain.

What began as a strong recovery for the labor market hit a major snag in the spring: Americans weren’t rushing back to the workforce. Hiring slowed sharply in April and missed expectations again in May. Wage growth soared through both months as employers looked to attract workers. Both job openings and quits hit all-time highs in April.

Alleged causes of the worker shortage are abundant. Democrats see expensive childcare and COVID-19 fears as holding Americans back from seeking work. Republicans have blamed the shortfall on President Joe Biden’s stimulus plans, specifically the federal government’s $300-per-week boost to unemployment insurance.

But while lawmakers paint the shortage as an issue plaguing the broad economy, some sectors are having far harder times at hiring compared to their pre-pandemic trends. Data published in last week’s Job Openings and Labor Turnover Survey report reveals where companies are struggling the most to rehire.

1. State and local governments

Virginia state capitol

The $1.9 trillion stimulus package passed in March included $350 billion for state, local, and tribal governments, but the sector is still having a rough go of hiring as the US reopens.

While the federal government can — and almost always does — run an annual budget deficit, states need to balance their budgets. This typically leads to layoffs during recessions, since weaker tax revenues place new pressure on states’ budgets. The lack of sufficient aid for state and local governments led to intense and prolonged economic pain in the years after the financial crisis.

Congress aimed to avoid such an issue in the current recovery, but aid hasn’t yet helped hiring. And when state and local government education jobs are excluded, the sector’s openings are seeing very little uptake.

2. Educational services

teacher

The education sector has also seen unusual tightness during recent months. The industry faced intense pressure at the start of the pandemic amid a shift to remote learning. Schools and universities are now set to return to at least partial in-person teaching in the fall, but efforts to rehire are coming up short.

The pipeline for teachers, which make up a large share of hires in the sector, is also drying up. Teacher-training enrollment dropped by 33% over the past decade, according to an August report from the Center for American Progress. With the new school year a few months away, hiring needs are likely to intensify further.

3. Transportation, warehousing, and utilities

amazon employee

Giants like Amazon and Walmart saw activity surge throughout the pandemic as more Americans shopped from home. With millions returning to work, the businesses are raising wages amid efforts to boost their headcounts.

But while the industry went on a hiring spree throughout the pandemic, new reports show intense burnout dragging on employment. Amazon, for example, holds an annual turnover rate of 150%, The New York Times reported on Tuesday.

While the company doesn’t represent the entire industry, it’s on its way to becoming the biggest employer in the US. And other reports of burnout among delivery drivers and warehouse employees suggest the turnover is pervasive.

4. Manufacturing (non-durable products)

poultry plant

Manufacturers of non-durable goods — those that are consumed relatively quickly — face short- and long-term hiring pressures.

As the US reopens, a wave of pent-up demand has left factories on the back foot. Shortages of key materials formed massive bottlenecks, and order backlogs hit multiple record highs through the spring.

Economists believe that, as spending cools, such shortages will fade and factories can better service demand. But the industry is also staring down a massive skills gap. Decades of steering Americans toward top universities and away from trade schools evaporated the industry’s hiring pool. A May study from Deloitte and the Manufacturing Institute found that, unless the trend is countered, manufacturers could leave as many as 2.1 million jobs unfilled.

“There’s a perception problem,” Carolyn Lee, executive director of The Manufacturing Institute, told Insider last month. “People don’t know that there are jobs that are desirable, that there are jobs that have family-supporting wages, and that there are jobs that are stable.”

5. Arts, entertainment, and recreation

Closed Broadway coronavirus.

Theaters, recreation centers, and other entertainment venues were among the businesses hit hardest by pandemic restrictions. Reopening has given the industry a new lease on life, with concert tours now resuming and venues allowed to open with some limitations.

Yet the country is still far from putting the pandemic behind it. Only about 49% of Americans are covered by COVID-19 vaccines, according to Bloomberg data. And while daily case counts plummeted in recent months, the country is still adding nearly 11,000 cases each day.

Hiring in arts, entertainment, and recreation bounced back as lockdown measures were reversed. Yet lingering COVID-19 fears and the inability to fully reopen are likely weighing on the sector.

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Having a job right now means longer hours and slow pay growth

restaurant worker New York City NYC
A restaurant worker wears a protective face mask and gloves in midtown as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on August 13, 2020 in New York City.

  • While new hires are benefitting from rising pay and new incentives, employed Americans face worsening conditions.
  • The average workweek rose through the spring, and wage growth for the employed weakened.
  • The trends come as quits sit at record highs, suggesting Americans are leaving jobs to benefit from the labor shortage.
  • See more stories on Insider’s business page.

Americans waiting to rejoin the workforce have a lot going for them. Businesses rushing to rehire are raising wages and throwing in other incentives ranging from signing bonuses to free iPhones.

It’s another story for employed Americans. By some measures, their work lives are actually worsening.

The sudden reopening of the US economy placed the labor market in a unique spot. After years of strained job supply and an abundance of workers, the formula flipped. Employers were suddenly struggling to hire, and workers were in short supply.

The so-called labor shortage has led businesses to step up their efforts to attract workers. Average hourly earnings ballooned for two months straight as employers boosted pay, particularly for new hires. But for those already employed, data shows a decline in conditions.

For one, average weekly hours have crept higher through the spring. Work hours dipped slightly to 34.3 in May, landing just below 20-year highs. The latest reading compares to a pandemic-era low of 33.4 hours. Some of the uptick is likely due to part-time workers converting to full-time, but the trend could also suggest employed Americans are working more as the country rebounds.

Wage Growth Tracker
Source: The Federal Reserve Bank of Atlanta.

Those additional hours are also yielding less in return. Wage growth for already-employed Americans has been on the decline through the year, most recently falling to an unweighted three-month moving average of 3% from 3.2% in May. By comparison, the average rose as high as 3.9% in late 2019.

The growing workweeks and slowing pay growth come amid a major shakeup in the US labor force. Quits rose to a record high in April, according to JOLTS data published last week. At the same time, payroll growth slowed sharply and job openings leaped to a record high. Taken together, the data signals a broad rethink of how Americans work and what they demand as compensation.

A Monday report from the Federal Reserve Bank of New York shed new light on the unusual labor-market situation. The mean perceived probability of losing one’s job fell to 12.6% in May, the lowest level since the Fed’s survey began in 2013.

Yet the mean perceived probability of finding a job after losing work rose to 54% from 49.8%, according to the report, the largest one-month gain on record and the gauge’s highest level since February 2020. The gain suggests Americans are the most confident in their chances of finding work since the pandemic recession began.

With quits at record highs and incentives for new hires growing more attractive, workers could be switching jobs to take advantage of the labor shortage and extraordinary demand from employers.

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The Chamber of Commerce just sounded the alarm on America’s labor crisis – and it’s blaming a lack of qualified workers for a historically stark shortfall

Now Hiring sign
A customer walks by a now hiring sign at a BevMo store on April 02, 2021 in Larkspur, California.

  • A shortage of qualified workers is hindering the labor market’s recovery, the Chamber of Commerce said.
  • Sectoral shifts in worker demand drove a gap between Americans’ skillsets and job openings.
  • Training programs, childcare support, and an expansion of work visas can counter the mismatch, the Chamber said.
  • See more stories on Insider’s business page.

The US economy hasn’t faced a labor shortage quite like this one.

By several measures, the economy is on the mend. Consumer spending has bounced back, more than half of Americans are fully vaccinated, and the strictest lockdown measures have been reversed. But as businesses look to rehire after months of slowed activity, they’re finding it hard to fill openings.

The labor shortage now represents “the most critical and widespread challenge” to US businesses, the US Chamber of Commerce said in a Tuesday report. Only 1.4 available workers exist for each US job opening, according to government data. That’s just half the 20-year average, and the ratio is still falling. In sectors hit hardest by the virus, such as education and government, job openings fully exceed available workers.

Worker availability ratio
Source: US Chamber of Commerce

Economists and politicians have pegged the shortfall to a number of factors, ranging from virus fears to enhanced unemployment insurance. The right-leaning Chamber on Tuesday highlighted the country’s massive skills gap as fueling the shortage.

“We must arm workers with the skills they need, we must remove barriers that are keeping too many Americans on the sidelines, and we must recruit the very best from around the world to help fill high-demand jobs,” Chamber CEO and President Suzanne Clark said.

The organization announced a new initiative on Tuesday aimed at addressing the shortage of qualified workers and difficulties in developing skills. The Chamber is calling for a doubling of the cap on employment visas, federal investment in job-training programs, and an expansion of childcare access for working parents.

A separate survey by The Conference Board echoed the Chamber’s remarks. About 80% of organizations hiring industry and manual service workers said it was either “somewhat difficult” or “very difficult” to find qualified employees, up from 74% before the health crisis. The share of firms saying it’s “very difficult” to find workers grew to 25% from 4%.

The Chamber’s call to action comes as the country forms a wholly new economy. Experts have warned that the post-pandemic economy won’t mirror that seen in late 2019. Millions of Americans will struggle to find work as their jobs are permanently erased, Federal Reserve Chair Jerome Powell said in April. Meanwhile, openings will shift to other industries as the country settles into a new normal.

The mismatch between displaced workers’ skills and new job openings is among the biggest challenges facing the US labor market, economists at Fitch Ratings said last week. The rapid change in worker demand by sector “can lead to lasting increases in unemployment” if Americans aren’t able to quickly pivot, the team said in a note.

Underscoring the mismatch is the decision by GOP governors in 25 states to prematurely end participation in federal unemployment benefits. Those governors have cited increased benefits as a reason that workers are opting not to come back, causing a labor squeeze. But workers say that’s not the full story.

Dina Jones, 54, lives in Texas. Her state’s governor, Greg Abbott, announced that Texas will pull out of all federal benefits effective June 26. Prior to the pandemic, Jones had worked in the airline industry for 27 years.

“I made a really good living, and to go out and take a $12, $15 job is – I’m very skilled,” Jones told Insider. She said she used to manage over 100 employees. She added: “I just don’t understand what’s happening out here in the world that I can’t get a job.”

Early signals suggest low-wage workers will have a harder time pivoting than most. A February report from McKinsey found that low-wage sectors – those hit disproportionately hard by the pandemic – will see permanently weaker labor demand as the country recovers. More than half of the workers displaced from such industries will need to develop new skills and find higher-paying jobs to stay employed after the pandemic ends, the firm said.

“Almost all growth in labor demand will occur in high-wage jobs,” the report added.

As for Jones, who will lose all of her unemployment benefits come June, it stings to hear her governor say that there are plenty of jobs out there.

“The jobs that are out there aren’t the jobs that I used to have, that I’m skilled for, she said. “And that’s the part that hurts.”

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