Local governments have billions in federal Covid cash and no workers to pay

“State and local governments are struggling to hire and retain workers amid a tight labor market, even as private-sector employment is reaching pre-pandemic levels.

Despite an influx of federal cash they received in response to Covid-19 — much of which remains unspent — and their own booming revenues, governments are having a hard time competing for workers as salaries at private companies rise.

Economists and unions warn that if public-sector employers can’t reverse the trend, it will erode the quality of services like education and slow the overall economic recovery. ”

“Altogether, the public sector has gained back 53 percent of the jobs lost since February 2020, a ZipRecruiter analysis of Bureau of Labor Statistics data found. The private sector has won back 93 percent.”

“Economists cite a historically tight labor market as one driver of the discrepancy. Employers in every industry are struggling to attract and retain talent, which has put upward pressure on pay and perks such as remote work that governments thus far have been unable to match.

There were a record 11.3 million job openings in January, the most recent month for which data is available — about 5 million more than there are employed workers. At the same time, average hourly earnings have surpassed $31 — a more than 5 percent increase from the previous year.

The year-over-year growth rate for hourly private-sector salaries and wages in each of the past four quarters has exceeded that for state and local governments by the largest margin on record, according to a Pew analysis of Labor Department data.

“Really across the board, many governments are often facing intense competition for workers,” Mike Maciag, who studies the government sector at The Pew Charitable Trusts, said. “Slower [public-sector] wage growth is playing a major role in hindering efforts by a lot of governments to fill openings and retain workers.”

Maciag points to a recent report from Arkansas’ Office of Personnel Management that found competing offers from Walmart, McDonald’s, Amazon and the like were impeding that state’s efforts to fill some positions. All paid significantly more than the state for entry-level jobs — despite the fact that the “complexity and responsibility” of the government roles “far exceeded” that of the private-sector ones, according to the report.”

Fed’s Powell pumped trillions into the economy. Now, he may be the party killer.

“The Fed has penciled in three rate hikes this year, and the first could come as soon as March.”

“Adam Ozimek, chief economist at freelancing platform Upwork, said the Fed misjudged how large the inflation spike would be, though he still thinks — as the Fed previously argued — that price increases will eventually start to cool on their own. He said the danger instead is that the Fed will overreact to levels of inflation that ultimately prove temporary, hurting the millions who still haven’t returned to the labor force.
“Inflation is by any measure extremely high, yet labor slack remains significant as well and we are far from full employment,” he said. “The policy challenge is far more complicated than in 2018, when Powell faced uncertainty about labor slack but without the added pressure of high inflation.”

Still, others have praised the Fed’s restraint amid the price spikes, keeping rates low and allowing the job market to heal more quickly. They argue that inflation is significantly being fed by supply chain issues that the central bank isn’t equipped to solve.

Former Fed Chair William McChesney Martin once said the central bank’s job was “to take away the punch bowl just as the party gets going.” But Sahm argued that a few rate increases don’t have to ruin anything.

“Things are getting better,” she said. “We need to pour a little less punch in the punch bowl.””

Entrepreneurship Is on the Rise, Despite COVID-19

“Data from the Kauffman Foundation indicate that the percent of new entrepreneurs who created a business by choice instead of necessity dropped from 86.86 percent in 2019 to 69.75 percent last year. Many people happy to work for somebody else were pushed into starting a business by pandemic-era chaos.

But a lot of those people seem to have discovered that they actually like working for themselves, and that may be causing a cultural shift. At the end of November, The Wall Street Journal reported that at least part of the “Great Resignation” phenomenon of Americans quitting jobs involved people starting businesses.”

Service workers are getting paid more than ever. It’s not enough.

“Employers in almost every industry say they’re struggling to find workers, but the situation is especially severe in the leisure and hospitality sector. While workers in these industries are getting paid more than ever, it still doesn’t seem like enough. Bars, restaurants, and hotels across the country are posting signs advertising open jobs — or asking customers to be patient since they don’t have enough staff. In August, the latest available month for openings and turnover data from the Bureau of Labor Statistics (BLS), there were a near-record 1.7 million open jobs in leisure and hospitality — 10 percent of all jobs in the sector — and a record of nearly a million people quitting.”

“when individual states rescinded their unemployment benefits this summer, it didn’t have a meaningful impact on the worker shortage in many industries, including leisure and hospitality. Data from September, when the benefits were cut on a federal level, show a similar story, suggesting there are reasons beyond financial keeping people from taking these jobs.”

More Americans are taking jobs without employer benefits like health care or paid vacation

“More people are turning to gig work than ever before, but since these jobs usually don’t come with employer benefits, their proliferation could worsen inequality for millions of Americans.

The number of people employed in nontraditional ways in the US rose to a record 51 million this year, an unprecedented 34 percent jump compared to 2020, according to new data from MBO Partners, a company that provides business solutions to the independent workforce and has conducted a long-running study of the group. These types of workers — which include contract workers, people who are self-employed, temporary and on-call workers, and those who get short-term jobs through online apps or marketplaces — are now equivalent to a third of US employment.”

New Jobs Report Shows the Government Gets the Unemployment It’s Paying For

“The economy added 266,000 jobs in April according to today’s report from the Bureau of Labor Statistics (BLS), while the unemployment rate ticked up slightly to 6.1 percent, from 6 percent.

These numbers are well below forecasts from economists who predicted that April would see the addition of around 1 million jobs, and the unemployment rate falling to 5.8 percent. The BLS report notes that we’re still far away from a pre-pandemic labor market, when the jobless rate sat at 3.5 percent.

Despite persistent levels of high joblessness, other metrics show signs of a labor market that’s increasingly tight.”

“job openings and the number of workers quitting their jobs were at record highs and that wages were growing at 2019 levels (when the country’s economy was booming).

Employers, meanwhile, find themselves in increasingly dire straits trying to find new workers.”


“what’s causing this weird mismatch between labor supply and demand?
Furman and Powell cite three possible explanations: continual health concerns about contracting COVID-19 at work encouraging some people to stay home, school closures keeping parents out of the workforce, and generous unemployment benefits.

The $300 weekly unemployment supplement provided as part of the March-passed American Rescue Plan pays some 42 percent of workers more than what they made at their old jobs, according to a University of Chicago analysis.

That $300 supplement will continue until September 2021. Today’s jobs report has business interests calling for ending it now.”

“The consensus among economists is that high unemployment benefits were not producing high unemployment rates earlier in the pandemic, when there were so few jobs available, health concerns were more acute, and there was greater uncertainty about when the economy would improve.

Workers who found themselves in that precarious situation would jump at any employment opportunity they could find, even if it paid less than unemployment benefits, the thinking went.

The situation today is much different.

Vaccinations and falling cases and deaths should ameliorate many of the health concerns people have about returning to work. A wealth of job opportunities also means people receiving unemployment benefits now won’t automatically take whatever work they can find. Instead, they can afford to hold out for higher wages or a job that’s a better fit for them.”

How to fix unemployment insurance, explained by the Senate’s money man

“robust as the response was, the crisis exposed the fragility of the UI system. Technically, America’s process for handling unemployment claims was built on antiquated computer systems (some written in COBOL, a language largely abandoned in the 1980s), and millions of workers endured weeks of delays in getting their benefits.

So a major priority for Congress in 2021 has to be reforming the UI system: improving its functionality and making it more generous.”

Unemployment Is Much Worse Than You Think — Here’s Why.

“discouraged workers aren’t the only problem with the unemployment rate. In fact, these days the headline unemployment rate isn’t just an undercount, it actually paints an alternate reality that masks the degree to which low- and moderate-income people are hurting. As a result, policymakers believe these Americans are better off than they actually are.

There are two additional problems with the way we count people who are unemployed.

First, there’s no accounting for how many hours a part-time worker is working. By the BLS’ traditional definition, a handyman or private nurse who works for a single afternoon each week is counted in the headline national unemployment figure as “employed,” even if they want more work but can’t find it. Our unemployment figures make it look like the person working a handful of hours because that’s the only work they can get is just as “employed” as a full-time CEO. In practice, this means that the unemployment rate actively obscures how many workers are living in poverty in part not because they don’t have a job, but because they can’t get enough hours.

Second, the data doesn’t indicate whether the job a worker is doing pays enough to keep them out of poverty. The assumption implicit in the data is that if you’re “employed,” all should be well, but as the growing movement toward raising the minimum wage attests, it’s increasingly clear that many American workers are employed, often full-time, but still living in poverty.”

“even when the economy was purportedly at its peak before the pandemic, approximately a quarter of Americans looking for full-time work at a livable wage couldn’t find it. And then at the nation’s worst moment in nearly a century, that number jumped, showing that 32.4 percent of the workforce was out of luck.”

“The bottom line for too many Americans and for minorities in particular, is that for a long, long time, the American economy has not been performing as well as the headline unemployment rate suggests. And while that may be news to those living in comfortable neighborhoods and suburbs, it will not surprise those living in more downtrodden corners of many cities, let alone those who are living in places like the largely forgotten city where I grew up, York, Pa. Over the last several decades, as businesses including York Dental or York Air Conditioner have either closed facilities or scaled back, middle-class prosperity has become more of an impossible dream than an American Dream.

Washington, D.C., has failed to respond appropriately because the headline unemployment figures, particularly in good times, have given some policymakers of both parties license to embrace a narrative that in the absence of a crisis like the one we’re enduring today, our economic approach works fairly well.

We need an economic agenda born from the realization that the true unemployment picture is much worse than policymakers realize. A quarter of the workforce, including a disproportionate share of minority communities, can’t land a full-time job with a living wage even when the overall economy appears to be healthy. The window through which we view the economy matters. We’ve been using a broken measuring stick to keep track of our success.”