Labor Rising
The global recovery is "red-hot," Morgan Stanley declared, in the course of reminding market participants how right they were last year, when the bank (loudly) championed the "V-shaped" narrative and predicted the return of inflation.
"12 months on, deep skepticism has given way to broad agreement," the bank's Chetan Ahya said.
I suppose that's true, but there's nothing in the way of agreement when it comes to whether the "red-hot" nature of the recovery is a good thing or a bad thing. Forced
If I was looking for a restaurant job, I would take one where the “rich people” eat. Looks like we might be headed to a two-tier restaurant industry.
A two-tiered everything society — for quite a while now. Personally, the upper tier is quieter and more pleasant. My favorite restaurants all have lots of nice art, tablecloths, great food, and great service. A couple of my regular waiters have business cards. Same with the best stores. Even this blog is in the upper tier and the only one I pay for because I always learn something.
Lucky One – you also get to interact with nice people here — like ME!
The loss of “free day care” at the schools is certainly an equally important factor.
It’s not always rational to pay significant after-tax money for private daycare to allow you to take a minimum wage job. You don’t need an advanced degree in econometrics to figure that one out.
I think it’s a lot of factors outside of just better unemployment benefits. You mention the obvious in schools being virtual (although that is normalizing quickly) changing the economics of minimum wage jobs. But just as the pandemic has forced a rethink by junior investment bankers of their 18 hour days, why wouldn’t it also force a rethink by restaurant industry personnel for instance? The job is worse now than it was 18 months ago and certainly more dangerous. It makes perfect sense to expect a “premium” to go back to these new conditions.
This is yet another reality of work that just doesn’t register with the investor class … among all the other costs (monetary and otherwise) you must consider when you are raising a family anywhere below the top 10% of income earners
Obvious opportunity for the fiscal policy goal of “an inclusive growth environment”: daycare costs should be tax deductible as it is an expense to raise income.
After a deflationary shock, an overheat for a time is good. Let the lower wage employers raise wages- I would pay more for their goods if I knew it was going into workers’ pockets. I respect Larry Summers for his intelligence but I think he is flat out wrong lately. The economy needs nominal gdp growth north of 4% preferably 5% to really recover. In my view nominal growth is a better way of looking at what is happening- it takes all the argument out of measuring inflation- right now that is incredibly difficult- try constructing a stable market basket right now to measure. Given the shocks that have taken place, a large grain of salt is necessary when looking at all the statistics- good and bad. Also, I will not be surprised to see layoffs hit white collar workers at large companies- especially in challenged industries. Until the recovery is self sustaining my view is the Fed is right to keep the pedal to the metal. The economy is in a large restructuring. It is hazardous to draw too many conclusions.
I agree. I also think that when OMG INFLATION!!!!!!! hits the front page of mainstream publications, it is time to fade that trade.
I know one person who is using the unemployment defund an education. This person is also scanning for good-paying jobs but says very few are truly available. So if the education is going to give this person more money in the end who is more rational? I would contend we are all better off if people use this time to improve their employment prospects.
When you have a person scanning the good-paying jobs and finding very few truly available … are you also saying that for a truly good-paying job very few are really qualified to hold it?
A question for you folks:
Do you think that the desire/need for more adequate compensation will also impact the Wall Street darlings that rely on “independent contractors” for their supply of workers?
Retention rates were already becoming an issue at Uber & Lyft before Covid hit. It’s hard to think why that will change, unless fares are cranked up, perhaps significantly.
And what about the retention rates for “hosts” at ABNB? Might it be even trickier for their model because the company owns no rooms? They rely on individuals for their supply. What happens to all of the very optimistic revenue growth estimates if the supply of rooms does not follow demand higher? (As AMD recently learned, demand is great unless you cannot meet it.) Will “hosts” decide that the compensation is not worth the hassle?
Perhaps “asset-lite” models will remain “profit-lite” for much longer than the optimists assume?