376,000 Americans filed for unemployment benefits last week, down 9,000 from the previous week to yet another new pandemic-era low.
The market was looking for 370,000. Technically, the headline was a “miss,” but at this juncture, market participants are just looking for a continuation of the trend lower. And they continue to get it (figure below).
The four-week moving average is on the verge of breaking below 400,000.
Continuing claims were 3.499 million. That was better than the 3.65 million the market wanted to see.
The drop in initial claims was the eighth in nine weeks (figure below).
I wish I could provide something in the way of “unique” color for this, but the story is all too familiar. Across Pandemic Unemployment Assistance, Pandemic Emergency UC and continuing claims, some 15 million people are receiving assistance. But headline initial claims are well on the way to normalizing. That suggests the labor market is healing, even as getting a “clean” (or “real”) read isn’t possible.
There’s little doubt that pandemic-related programs are a factor in explaining the record gap between vacancies and hires (figure below).
It’s not necessarily a matter of “laziness” or “freeloading.” Rather, it’s a financial decision. Ironically, it’s also a market decision, it’s just that the government has put its finger on the scale in favor of labor instead of capital this time. Remember: Socialism for the rich (in all its various manifestations) is perfectly fine in America. But socialism for the people who need it, well, that’s just… err, socialism.
The bottom line is that employers need to pay up handsomely to entice workers. That situation isn’t entirely attributable to enhanced assistance for the jobless, but it’s a factor.
Of course, some of the lingering angst and drama could be ameliorated if corporate management teams would just accept reality, raise wages materially, pass a portion of the costs along to consumers and just eat the rest via margin compression.
If it’s inevitable, why put it off? And why baby step it? That doesn’t mean you have to pay baristas $100,000 per year to make white chocolate mochas, but it might mean paying them more than you ever would have considered pre-pandemic.
Have you ever laughed to yourself when you think about what the margins probably are on a Starbucks drink? I have. I don’t know how much a “Venti” is now, but I know that the last time I had one some seven (?) years ago, the price seemed absurdly disconnected from the likely cost of “crafting” it.
Oh, and incidentally, Starbucks is apparently seeing so much demand that they’re running out of cups and syrup. “Cake pops, cup stoppers and mocha flavoring are among the items that have run out in places at times,” according to The Wall Street Journal, citing baristas. A spokeswoman for the company told the Journal that “shortages of some items are temporary and vary by store and market.”
If the minimum wage is raised to something near a living wage then the cost of labor in some products and services will go up. Up to this point there isn’t a problem until someone screams inflation. How do you lift up 40% of the population who don’t have $400 saved without some prices going up. ‘The greatest nation’ can’t seem to get its head around that while the ‘socialist’ nations in Europe have.
The other side of that coin is we already have inflation (CPI up 5%) how are those baristas supposed to afford groceries without minimum wage increases. Obviously the supply/demand factors are driving inflation currently but it still impacts lower income consumers more than anyone else the same. Minimum wage going to a living wage has been largely studied and it would not measurably inflate goods and services prices, not anywhere near where things are at now anyway. To H’s point, a barista making 16 bucks an hour could probably crank out 50 or 60 Venti’s during that period. That’s pennies added to the cost for the increase in labor expense. Though those baristas still won’t have health insurance or any other meaningful benefits…
Wow wait maybe should revert to the 1930s and machine gun those lazy bastards who don’t want to work for substandard wages.
The way the National Guard was employed against protestors last year wasn’t far from that happening…
Many entry level jobs offer a “signing bonus” along with still low minimum wages. Presumably, the signing bonus is being offered to partially compensate for the loss of Federal unemployment benefits that would be “lost” if a worker takes a job.
The employers would love to be able to limp through the summer with student hires and then hire more permanent minimum wage workers in September.
Workers know they will eventually have to go back to work. Why not enjoy the summer?
And how many of the baristas are overweight because the groceries they can afford consist too much on potatoes and bread type fillers. As the price of food goes up the vegetables and fruit they need just rises that much farther out of reach.
If people would stop insisting on buying “pretty” produce, I would make a lot more profit.
Thank god the pacific rim wants dried and powdered toms and beans.
Correction: “expensive pretty”