What To Make Of Another Jobs Letdown

What To Make Of Another Jobs Letdown

Although it seems unlikely that September's jobs report was bad enough to delay a taper announcement from the Fed at next month's policy meeting, it did underscore a loss of momentum. There are, of course, myriad interpretational difficulties, but another month of lackluster hiring in leisure and hospitality raises questions about the resilience of the services sector, not just in the near-term, but over the longer run as well. I've repeatedly suggested that the pandemic may have forever alter
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9 thoughts on “What To Make Of Another Jobs Letdown

  1. The pandemic has underscored the fact that we are a down-trodden country politically and economically. We have been misguided and mismanaged. I’m concerned that the current pandemic state continues to encourage older folks like myself to retire. I’m also concerned that jobless people have been so discouraged by their relentless lack (before and during the pandemic) that they no longer can imagine actually being useful.

    To your point in an earlier post this morning, this is the worst consequence of long-standing, supply-side serfdom. This is the scariest consequence and the hardest to remedy. This more than anything is the grease that enables the possibility of autocracy in our country.

  2. I fear that we are in the beginning phase of the K-shaped recovery and that the “K” will become even more extreme.
    At the low end, ghost kitchens and ordering on apps/online/screens will remain and those functions, previously performed by humans, are permanently eliminated.
    At the upper end of the K, less is more and prices will be adjusted/accepted to preserve the bottom line.
    I am fully vaccinated and healthy- so I already have 2 year end trips planned, booked and some lunch/dinner reservations made.. I thought I was really early but surprisingly, others had already done the same.
    It might take some time for those who left the workforce with one type of unskilled job (that is no longer as plentiful), to gain the confidence/skill set to apply for a different type of job.
    I love food and support local restaurants from an Egg McMuffin to a cafe where the chef is worthy of a Michelin star. Always fun to ask, “how is business going?”

  3. Confusing, to say the least.

    Consider two economies “A” and “B”
    – in economy “A” 6% of the labor force is unemployed because they can’t find jobs.
    – in economy “B” 6% of the labor force is unemployed because they don’t want / need any of the plentiful jobs on offer.

    Economy “B” seems less worrisome, doesn’t it? Difficult for businesses, sometimes inconvenient for consumers, but the overall misery level must be lower than Economy “A”.

    Still, we don’t like Economy “B”, because as investors we need businesses to do well, so how long is this going to last?
    – Service industry labor shortage is not due to market-driven early retirements, workers in that industry don’t own much stock.
    – Cash reserves, Delta, and leaving the industry are the likely explanations.

    Cash reserves only last so long, Delta is going away, only the industry-leaving represents a quasi-permanent loss of workers.

    I think that time, vaccination/acquired immunity, and higher service industry wages will largely resolve the service industry labor shortage in . . . how large are those cash reserves? Enough to last a few to several more months, maybe?

    The effective entry wage for about 15% of the workforce jumping from $12 to $18 is inflationary, but perhaps in a “good way”? It gets more money to those who need it will spend it. I wonder how much inflation in restaurant meals and hotel rooms really spills over to cause inflation in other categories – these aren’t intermediate goods. The more likely consequence might be some demand destruction.

    Anyway, I’m focused more on initial UE claims and jobs offered.

  4. It seems to be widely accepted that Covid is on the way out. I wonder. In the summer of 2020 most “experts” stated that Covid was on the way out. Ooops. Yes, a new variant emerged, but that was in an environment where lockdowns and social distancing was somewhat in force.

    Now thanks to vaccines and the promise of a new Merck wonder drug, that vigilance is fading away. And thanks to the wonder drug, the vaccine “hesitant” have another excuse not to take the shot.

    That’s in the face of on-the-ground data suggesting that the Covid & Moderna efficacy drop by 50% in just six months. And that Merck remedy? It’s unlikely it will ever be an OTC med or even one distributed to everyone due to nasty side effects.

    Those people reluctant to take hospitality jobs may be a lot smarter than we give them credit for.

    1. Watch Pfizer’s protease inhibitor and Roche/Atea’s nucleoside, ph 3 data in a couple months. Potentially competition for Merck/Ridgeback’s drug.

  5. In the food services sector, I wonder if part of the weak jobs number is related to restaurants simply deciding they are doing just fine with reduced hours. Around my neighborhood, I see restaurants that used to be open 7 days per week, but now are closed Monday and Tuesday. They now need fewer workers. But if I go to my favorite restaurant twice a week no matter what, it doesn’t matter if they are open 5 or 7 days. So maybe some of these establishments, especially independents and family owned, are finding they can earn 95% of their historic revenue incurring 80% of their historic costs. And maybe that’s not so bad. Why does every retailer and restaurant have to be open 7 days/week? Years ago, retailers were closed some days, and had shorter hours, and people still figured out how to buy stuff. So maybe the pandemic has altered not only consumer and worker psychology, but also employer psychology.

    1. That’s would be great news if businesses can figure out how to continue on with reduced hours and staff! But if so, then one result is that such businesses will not have to advertise for new employees, thus their success may not have an effect on the job numbers.

    2. Bingo. I have a few friends that run brew pubs that are operating on reduced hours/days that are generated record revenue this summer despite less staff on hand. Some of this phenomenon out west is the combination of both street and indoor dining, while a buddy out east took over additional square footage of a space that was vacated due to Covid. The other factor for record revenue is price hikes across the menu. None of this new business is being done through food delivery services. And the staff do not seem to mind making the same or more money working 4 daily shifts vs 5 or 6 pre-Covid. So at the moment the food/beverage services industry has changed, and it will be interesting to see what happens if/when street dining is taken away…could that put further pressure on employment in this space?

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