economics

I’ve read dozens of short items online recently saying how desperate employers are to fill a record number of vacant positions. The explanations offered for this are all over the map. (I’ll list some I’ve seen a little later.) The end of the unemployment extensions and the eviction moratorium didn’t seem to push people into the labor force. The number of job openings and the number of people no longer looking for work are both at record highs. So how are all those unemployed people who aren’t looking for jobs paying their rent? What the hell is going on here? I have a little list, based on a broad skim of articles asking the question:

1. Wages. People are standing back from the job market until pay levels improve. Pay at many low-level jobs in restaurants and hospitality has already gone up. It does not appeared to have helped. And the question of how the stand-backers are paying their bills remains unanswered.
2. Covidphobia. Young people are too scared of COVID to get back out into the world. The ones who still have parents may be moving back in with parents to dodge the virus. There may be a little of this going on, but from a height it doesn’t ring true. And it certainly doesn’t account for the numbers.
3. Schools. With schools closed, women have left the job market for lack of daytime childcare. I haven’t found good numbers so far on how many schools are still closed, but I doubt it’s enough to account for the gap between jobs and job seekers. Most of the closings I’ve seen mentioned were for the 2020/2021 school year. We’re now well into 2021/2022.
4. Stupid HR tricks. This is not a new problem. Most people in tech know about the screwy online hoops you have to jump through to even get a return email. Keywords, sheesh. And things like “Must have twenty years’ experience in Kubernetes,” when Kubernetes didn’t even exist until 2014. I don’t know who said it, but it’s truer in HR circles than most others: “An inability to find a 5-pound butterfly does not indicate a butterfly shortage.” Again, none of this is new, and I doubt it has much impact on the current labor shortage.

From ten steps back, I’m tempted to say, “All of the above,” and I might be right. There is, however, something more. This quote, from the website of the Society for Human Resource Management (SHRM) may point to the heart of the problem:

SHRM also polled 1,000 unemployed Americans who were laid off or left their jobs during the pandemic-the majority of whom worked hourly jobs in industries heavily impacted by the health crisis, such as food service and retail. The top reason for remaining unemployed, cited by 42 percent of respondents, was not having received any responses to jobs for which they’ve applied.”

Skills mismatch and berserk credentialism will probably take the blame. But we’re not talking about software engineers here. These are low-level service jobs, most of which probably don’t require any college at all. Earlier today, a post on Nextdoor in my area repeated a suspicion I’ve had for awhile now:

Lots of companies – of course not all, but many – say they are hiring and can’t find people, but are not really hiring. By staying understaffed, their payroll expenses are way down, they can blame ‘lazy workers’ for the poor customer experience, and most of all if they ‘can’t fill’ key positions they dont have to pay back those pandemic bridge loans from the federal government. This is a real issue facing many people – some companies claim to be hiring but really don’t want to fill the positions.”

In other words, companies that lost their cash cushion due to COVID lockdowns and are now in debt to the Feds want to run lean for awhile to get back on their feet. Making noise about not being able to find workers is cover. The intent is to get by with as few employees as possible–temporarily if not permanently.

I see this playing out in supermarkets: At the Fry’s where we shop, I don’t remember when I last saw two or more “people” lanes open. Nearly all the goods are going through the self-checkout kiosks. Now, automation eliminating jobs is not a new problem. Self-checkout kiosks have been with us for years. The COVID disruptions may have pushed some firms to try automation solutions those firms hadn’t before considered.

Not even that is a complete explanation. What we’re seeing may simply be a perfect storm of a lot of smaller things acting together that keeps a worker surplus from becoming employed during record-high demand for workers. I’m still puzzled how people pay their bills while staying out of the job market. I’m watching the topic, and if anything crisp turns up I’ll mention it here.

I’ve been very puzzled by Big Media’s consensus that we simply can’t allow the Big Three to file for bankruptcy. I guess too many people think that “bankruptcy” means sending everybody home, closing the doors forever, and selling off the machines for ten cents on the dollar. There are, of course, forms of bankruptcy that work that way, but that’s not what anybody’s talking about. Chapter 11 bankruptcy is about reorganization with an eye toward continued operation. The reorganized company is forgiven some of its debts and is given more flexibility to remake itself as a profitable operation. That’s what all three of our automakers should be doing, and should have been working in that direction for some time. But GM’s board says that bankruptcy is not an option.

In cruising online articles, I find it peculiar that no one is raising an interesting possibility: Bankruptcy for the Big Three means an end to the UAW as we know it—and the Big Three can no longer operate their plants without the UAW’s help. Chapter 11 would basically allow a judge to tear up an automaker’s union contracts, allowing the firm to cut salaries, lay off as many people as it wants to without union consultation, and nullify work rules. It basically turns a union shop into a union-less shop (not a non-union shop, but a shop in which the union exists without any power) and the unique problem with that is that without UAW cooperation, it’s unclear whether GM, Ford, or Chrysler management know enough about their own SOPs to make the plants work. The UAW, seeing its own inevitable death (or at least irrelevancy) would have no strong motivation to work with reorganized automakers. Whether or not the rank and file would want to keep working, the UAW could shut the American portion of the industry down, in a strike not so much against management as against American society. It would be a weird twist on the goofy Ayn Randian idea of creative people withdrawing from society to punish society for not “appreciating” their self-defined importance. “Give us billions of dollars annually forever or you won’t be able to buy Chevies anymore!” Uhhh, no. It won’t work for the Objectivists, and it won’t work for the UAW.

On the other hand, such a shutdown, as hard as it would be on the workers, could be the only way to force the changes that have to happen: The Big Three would close for perhaps as much as a year, and maybe more, while plants are shuttered, marques retired (do we still need Buick? Or Pontiac?) and the entire process of making autos rebuilt from the ground up, more along the lines of non-union plants operated in the South by overseas companies. There’s a good description of what such a process might be like over at The Deal, and although it goes deeper into the finance than most of us could follow, it’s worth a look. This would not be the end of the world. It needn’t be the end of the UAW, either, but the UAW will have to retool itself every bit as much as management will have to retool the plants.

The other and perhaps more serious problem with the UAW is that GM (as an example) has three times as many retiree members as working members, and retirees have voting rights. In effect, the UAW is no longer a worker’s union but a pension management organization, and this should make us a little uneasy. Keeping the plants running is no longer the overriding concern of UAW membership. The Feds absorbed the pension plans of dying railroads, and this may be one reason we cannot make passenger rail service work over here. (The article is ten years old but worth reading.) There is some danger that a special autoworkers’ retirement system could make it impossible to produce autos profitably here, but I haven’t been able to find enough on this to have a strong opinion.

I guess the whole situation is a lot more complex than anyone has understood prior to now. Taylorism and the century-long one-time labor shortage created by industrialization made trade unionism inevitable, but both of those forces are now history. The Big Three need to be remade along the lines of the Little Five, the foreign-owned “transplant” automakers that seem to be doing quite well in the US. They are not sweatshops, and their people seem to be happy. The UAW may refuse to do this, and management probably doesn’t know how. Without cooperation by both, the task may be impossible, and American automaking may go the way of the railroads, or become impossible except for foreign corporations. It’s a weird, sad business.