January 2022, Volume 28, Number 1
Labor, Trucking, Covid
The US added over 199,000 jobs in December 2021, bringing employment to 149 million, about 3.5 million below the 152.5 million employment level of February 2020. The unemployment rate was 3.9 percent. The US added an average 537,000 jobs a month in 2021 or 6.4 million during the year.
Before the pandemic, the unemployment rate was about 3.5 percent. The rate peaked at 14.8 percent in April 2020 as lockdowns led to business closures and layoffs.
A major question is whether the US has returned to full employment with a lower labor force participation rate, 62 percent, as workers retired early and women dropped out of the labor force. The labor force participation rate dropped from 63.3 percent in February 2020.
There was debate about why workers who quit or were laid off during the pandemic did not return to work. Employers cited extended unemployment insurance benefits and government payments that left households with historically high levels of savings, while many workers said that during their lay-offs they re-assessed their lives and now want better jobs, the “great reassessment.”
Job vacancies continued to outnumber job seekers in fall 2021, prompting employers to raise wages and to replace workers with machines and self-service, such as self-checkout registers in stores and tablets that allow diners to order food in restaurants. There were 10.4 million unfilled jobs and 8.4 million jobless workers in August 2021.
Three percent of all US workers, some 4.4 million, and six percent of employees in accommodation and food services, voluntarily quit their jobs in September 2021, a record quit rate. Some 20 million US workers left their jobs between May and September 2021. Quit rates fall in recessions when workers are anxious about finding another job, and were about 1.5 percent in 2008-09.
Minimum wages rose in 21 states and many cities and counties January 1, 2022, including to $15 an hour in California.
Trucking. The ports of Long Beach and Los Angeles handle 40 percent of seaborne imports to the US, and the Biden administration in Fall 2021 persuaded both ports to operate on a 24/7 basis. However, many slots to haul containers from the ports remained unused due to a shortage of truckers.
The median wage of commercial truck drivers in 2020 was $47,130. Truckers are typically paid by the mile they drive, so being forced to wait to load or unload lowers their earnings. About seven percent of commercial truck drivers are women, and 40 percent are minorities. Ex-drivers say that wages are too low to compensate for the waiting hours and time away from home. The American Trucking Association says that there is a shortage of 80,000 truckers that will grow as more truckers retire and turnover rates among new hires approach 90 percent.
Amazon, the second largest private US employer with 1.4 million worldwide employees in Fall 2021, raised its minimum wage to $15 in 2018 and increased wages more in 2021. Worker turnover is over 100 percent in many Amazon warehouses, meaning that two workers must be hired in one year to keep one job slot filled.
Industrial countries are struggling to deal with gig workers, independent contractors who use apps to find customers but are paid by the app’s owner. There are an estimated four million gig workers in the EU, which in December 2021 proposed that app owners treat those who use their apps to provide services as employees who are entitled to the minimum wage and benefits that are financed by payroll taxes. The EU estimated that 28 million people in the EU use apps to find work, and that employee status would initially be limited to those such as Uber drivers who are subject to “algorithmic management.”
Covid. The Biden administration in September 2021 issued mandates that require employees of federal contractors, 17 million healthcare workers, and the 84 million employees of private employers with 100 or more employees to be vaccinated or tested weekly beginning in January 2021, later delayed until February 2021.
Federal judges have blocked some of these vaccination mandates from going into effect, and the US Supreme Court heard arguments in January 2022 over whether these vaccination mandates were lawful. The USSC appeared ready to uphold the healthcare worker mandate for facilities that receive federal funds, but not the mandate of the Occupational Safety and Health Administration for private employers.
Hotels and restaurants reported difficulty finding workers to fill jobs, encouraging them to raise wages, reduce services, and automate. Many raised wages to encourage laid-off employees to return and to attract new workers. Raising wages for low-level employees often required wage increases throughout the wage hierarchy to avoid wage compression.
Many hotels reduced services, such as not cleaning guest rooms every day and shortening restaurant hours. Some hotels are adopting the airline model of piece meal pricing and charging guests who use hotel amenities such as fitness rooms and pools or those who want to check in early or check out late.
Restaurants are automating tasks in the kitchen and the dining room, such as giving diners tablets to order food and using $1,000 a month Servi robots to bring food from kitchens to diners. Many restaurant robots are services; the Flippy that fries food costs $3,000 a month and reduces the risk of workers transmitting food-borne illnesses.
Covid accelerated changes in the labor market and in politics. Democrats often support government mask and vaccine mandates and school closures and stay-at-home orders to highlight the role of government in protecting residents, while Republicans often oppose intrusion on individual rights. Older baby boomers who own their homes and have stocks emerged better off after covid and less reliant on government, while younger Americans whose lives were disrupted by the 2008-09 recession faced a second shock with covid and may expect more government assistance.
Trust in some public institutions eroded with covid, including public health officials unable to develop reliable tests and to find consistent messaging on covid-prevention policies, while the private sector’s rapid development of vaccines won praise. Trust in public experts and intellectuals fell, as experience proved that some of their strong pronouncements were wrong. Voters in 2022 may punish incumbents. Unlike the unifying effect of the 9/11 attacks, covid appears to have deepened US political divisions.
Education became a controversial public institution during covid as school boards, parents, and teachers debated how to remain open amid the omicron surge and how to teach about discrimination, race and gender. Most teachers belong to unions that support Democrats, which led to fighting between Democratic leaders and teachers’ unions in cities such as Chicago, where the teachers’ union insisted on remote learning in January 2022. There are almost 50 million K-12 students, and a return to remote learning could trigger a backlash.
A dozen states have enacted laws that prohibit teaching that one group of people is inherently superior or inferior to another, prompting questions about how to teach about colonialism, imperialism, and social Darwinism. In some states, parents are demanding that particular books not be taught in classes and be removed from libraries. One background issue in many debates is critical race theory, which argues the legacy of white supremacy is still embedded in US society through the founding of the British colonies in North America and in fundamental US laws and institutions.
Inflation. Inflation lifted prices at 6.8 percent in the year to November 2021, the largest increase in three decades. The Biden administration and the Fed assumed that rising prices were a short-term reflection of increased purchases of goods attributed to $1,400 stimulus payments and stay-at-home orders, and that goods-driven inflation would slow as consumers returned to purchasing services such as restaurant meals and hotel stays.
The delta and omicron covid variants in Fall 2021 and Winter 2022 kept consumers at home and purchasing goods, stretching supply-chains and driving up prices. A third of US consumer spending is on goods. Supply-chain problems that ranged from too few truck drivers to just-in-time warehousing systems slowed deliveries, leading to empty shelves in December 2021.
The Biden administration blames the lack of competition in the US economy for rising prices amidst record corporate profits. Some economists have urged the Biden administration to remove the tariffs on Chinese goods imposed by President Trump to reduce prices, but President Biden does not want to remove the Trump tariffs without concessions from China. Republicans blame Democratic spending for fueling inflation.
Between 2000 and 2018 the average annual growth in median household income was 0.3 percent a year. However, the wealth of the 745 US billionaires went from $3 trillion to $5 trillion over this period.