I cannot remember in my lifetime any more consequential event than the Covid-19 Pandemic and all its consequences, in terms of health, economics, and societal repercussions.
The impacts of the Pandemic are still resonating, like aftershocks from a great earthquake, even as the medical emergency abates around the world.
In the United States, which suffered much more medical trauma than any other country, the economic rebound has been problematic. Businesses have reopened and customers have reappeared, but the labor market seems to be short (by some estimates) at least 4 million workers from pre-Pandemic levels.
No matter where you are in America, “Help Wanted” signs are plainly visible, particularly in businesses that traditionally paid low hourly wages. The hospitality industry has been particularly hard hit: hostesses, waiters, servers, cooks, dishwashers, etc. are sought by virtually every restaurant in the country.
Where did all these hospitality workers go? Why? Nobody knows for sure, but everyone has a theory.
A popular Conservative political answer is that the lost workers can make more money on “unemployment” and welfare than by working, so they’re living off the sweat of others. This is unlikely, as the unemployment benefits and impact of Federal stimulus checks ran out quite a while ago and employers are offering more hourly wages than they did before. There is no evidence that the welfare rolls have swelled, and jobs are plentiful.
A more likely scenario includes a combination of things, like folks permanently dropping out of the workforce (retiring), laborers not returning from Mexico because of work disruption, able-bodied workers changing to more dependable and better paying jobs, and some people, having had to work at home during the Pandemic, deciding to quit 9 to 5 jobs and do “gig” work or start their own home businesses.
Of course, we can account for around 250,000 Americans of working age who are no longer in the workforce: they died from Covid-19 during the Pandemic. But that’s only about 6 percent of the “missing” labor force.
The social impact of family members being cooped up at home during the Pandemic was frustrating and irritating for all involved. However, it is possible that this forced intimacy (between spouses, and between parent and child) had some positive impact, like reinforcing the family bond and reevaluating family function and economics. Some working Moms (and perhaps Dads) in a two-income family have decided to spend more time rearing the kids, perhaps home-schooling them (as many had to do during the school shutdowns). It is possible that newly-engineered family dynamics have impacted the workforce in this manner. Besides, those stay-at-home parents can now explore home business opportunities.
When the Pandemic began to wane and the economy regained its swagger, the stock market and home prices began a swift climb. The added equity in the portfolios of many Americans, particularly middle-aged ones, made it possible for them to consider early retirement. (Our youngest son Jeff and wife Carol, in their mid-50’s, are in this group.) Lots of older folks who were still working, but were eligible for Social Security, probably dropped out of the workforce during the business closures and never returned, deciding to put themselves out to pasture and enjoy their well-earned retirements before they croaked of Covid or something else.
It has been said that if every illegal Mexican working in California was to disappear tomorrow, the economy there (the eighth largest in the world) would collapse. That may be an exaggeration, but the dependence on Latin American laborers by American businesses is critical. Politics in recent years has made it more difficult for employers to hire these low-wage workers. And then came the Pandemic and the closed businesses, which forced many of these folks to return home to the farms in Mexico. It is very possible that a significant portion of our labor shortfall right now, particularly in the low-wages hospitality industry, stems from this problem. Many of those workers might want to come back but will have to deal with greedy “coyotes” (human smugglers) to return. And then, with a recession coming on, how long will their new employer stay in business?
One problem that we’ve noticed (my wife Charlie is a bookkeeper and tax preparer) is the impact that government policy has had on individuals who depend on “tips” for their income. To maximize income tax withholding, in the past several years the Feds and State governments enacted tax code requirements that targeted tip income. This reduced the income that these very-low-wage earners could take home, making their jobs (usually hospitality and salon work) marginally viable. When tips were run through the cash registers, some business owners would rake off a portion of the tip income or not honestly report it to their workers, further screwing them. At some point, the overall take home pay for these workers hardly made ends meet. And then, the Pandemic came along, with many of these workers having no income for a very long time. What has probably happened is that these hard-working folks have simply moved on to more economically-viable blue collar jobs, leaving restaurants and salons chronically short-staffed even though they are now advertising higher wages.
One of the byproducts of this movement of low-skilled, low-wage workers up the food chain is that marginally-qualified people now occupy positions that require self=motivation and dedication. It is very common lately to experience bad service from these ex-burger flippers and landscapers. We had two experiences this week (and it’s only Wednesday!): (1) At the finest restaurant in our town, a classy steakhouse, we got poor service and an improperly cooked Prime Rib; and (2) Today, I drove 55 miles up to Hurricane, Utah to pick up my RV, which was being serviced at Freightliner (diesel truck repair). I called in the morning to make sure it would be ready, “Oh, yes, it’s ready!”, I drove for an hour, and then was told when I got there, “It’s not ready and the mechanic has gone to lunch; she’ll be back in an hour and a half.” I was highly annoyed. Also, the part that the mechanic had yet to install was identified as an “air dryer filter”. I asked the French-fry chomping, overweight Service Tech what that was. He called back to the shop and asked, “Is that part for the motorhome Air Conditioning system?” The guy in the shop almost laughed. “No, it is the dryer cartridge for the diesel engine compressed air system!” Holy crap, Freightliner has inexperienced doofuses working at the Service desk who don’t know anything about diesel engines! This out-of-his-league “Service Tech” needs to be sent back to Taco Bell.
Alas, that problem is cropping up everywhere.
You can’t fault the Taco Bell employees for wanting better pay and working conditions. It’s apparently the Year of the Worker, and unions are sniffing blood in the water. Employers are taking notice and upping the ante to shanghai other firms’ workers promising big raises. We noticed the other day a local restaurant that was offering $18 per hour; that’s probably 50 percent higher than pre-Pandemic.
Worldwide industry slowed to a crawl in 2020 and only got back up to steam by the end of 2021. So, there was a shortage of consumer goods. Then, when the Pandemic was easing, there was a pent-up demand for those goods, resulting in… manufacturers, wholesalers and retailers asking more money for those goods… INFLATION.
Adding fuel to the economic fire was the recent invasion of Ukraine by Russia. Ukraine is a major player in the production of wheat and Russia is the world’s number two producer of oil. The politics of this war have driven the prices of wheat and oil skyhigh. And, so, we have even more… INFLATION. Higher energy costs impact every business and household.
With increasing inflation, family income doesn’t go as far as it did twelve or twenty-four months ago, so workers are even more anxious to find higher paying jobs. Hence, lots of job turnover as people are hopscotching around to the tune of the highest bidder.
The Federal Reserve Board is attempting to ameliorate inflation by increasing the cost of money, making business loans, consumer credit, and mortgages more expensive. This seemingly-inflationary tactic is designed to be like a backfire started by the Forest Service to stop a forest wildfire: theoretically, it will cool the overheated economy, there will be less production, less demand, and hopefully the whole situation will calm down. How long this will take is anyone’s guess… if it works.
Not that we need this problem right now, but the long-overdue corrections in the stock and housing price markets appear to be in the works. The Fed’s actions to increase lending costs is chilling enthusiasm by Wall Street speculators and higher interest rates will weed a lot of prospective buyers out of the housing market. Stock prices (therefore I.R.A. equity) and home values will stop rising and may actually drop, blowing up the financial planning dreams of many households.
There will be anger and a responsible party will have to be found. The “usual suspects” will ge those in power, so Joe Biden and the Democrats are in for an ass-whipping during the mid-term elections of 2022.
This kind of bloodletting is normal in American politics. What is different this time is the fact that the Nation is still healing from the disastrous four years of Donald Trump. Not only did he do a poor job as President, but he instilled a mistrust of government and democracy in general.
There exists in our country right now a despair that I have never seen regarding citizen confidence in their leaders. The two political parties are so consumed with finger-pointing and harsh rhetoric that absolutely nothing is getting done to solve any of the Nation’s pressing problems. The most popular politicians out there right now are the ones throwing the most gasoline on the fire.
It is doubtful that any leader will emerge in the next few years to rescue us from this shitstorm.
Is there any way to resurrect Abe Lincoln?