The Labor Market
By 
It seems that the labor market is stabilizing as attacks on inflation start to have an impact. Now, we can debate whether this is a good thing. We can also debate whether the pandemic led to any structural changes that will help workers in the long term–probably not in my view. What I want to point out here is the almost gleeful joy this Politico article shows in the taming of those unruly workers.
As recently as March, there were a record two jobs for every American seeking one. Some 4.5 million workers quit that month, and layoffs were at their lowest level since the government began keeping records.
That golden age for workers — when wage growth exploded and employees arguably held more leverage over their bosses than at any time since the heyday of organized labor — appears to be fading fast.
Uh, I’m not sure the last two years were “a golden age for workers.”
Even after adding an expectations-busting 528,000 jobs in July, the labor market is showing signs of returning to pre-pandemic conditions as the Federal Reserve barrels ahead with its efforts to slow the economy and kill inflation. More workers are filing for jobless insurance claims, fewer of them are quitting, and more employers are curbing hiring. “We’ve been in this unprecedented situation where workers have really, really strong bargaining power,” Curtis DuBay, chief economist for the U.S. Chamber of Commerce, said. Now, “the data is starting to turn.”
While the overall economy remains strong, the pendulum is swinging back to when employers had the upper hand, especially in the wake of the Great Recession.
Well that’s just dandy. Finally, employers have the power back, the way God and Adam Smith intended. A strong economy with weak workers? Beltway gold! Maybe I’m overstating the joy of the article’s tone, but there is a perhaps subconscious default in our media that worker power is a real problem that needs taming and you can see that come through in articles analyzing the labor market. And at the very least, the article closest by noting the tiny mild problems we face:
The disparity between the big picture and the much-celebrated topline numbers has some economists concerned. Robust monthly jobs reports are likely to spur the Fed on in its rate-hike campaign. Yet the labor market lacks some of the safety rails that would mitigate the cooling already underway.
Among them: a robust child-care infrastructure, which would allow more women to fully participate in the workforce. There were some 88,000 fewer child care workers in July than there were pre-pandemic, which amounts to about 8 percent of the workforce (and thus, 8 percent fewer child care slots). Yet congressional Democrats recently carved billions of dollars of investment in the industry out of their reconciliation package, all but removing the possibility of large-scale federal help.
More women who were unemployed in June dropped out of the labor force in July than found jobs. At the same time, 6.13 million workers were not working at the beginning of the month because they were caring for a child not in school or daycare.
“How weak are we going into whatever is coming, that we didn’t at least try to get these things [like child care] set up?” the RAND Corp.’s Kathryn Edwards said. “You’d be hard-pressed to find a labor economist who would tell you, ‘Oh, no, we’re much better off heading into the next recession without it.’”
Gee, that seems like something to do something about.