Data from FRED, Federal Reserve of St. Louis

In August 2020, I wrote about the perhaps obvious fact that the economic issue of the early pandemic was a job shortage. This problem has mostly disappeared—there are now more openings than unemployed people and there have been for months.

The larger problem was that it wasn’t safe to work or patronize businesses. Unfortunately, that problem hasn’t disappeared.

Workplace risks from COVID-19 have improved in some ways: there’s no longer a shortage of masks; vaccines that, when boosted, reduce long-term symptoms and greatly reduce hospitalization and death are available; and doctors know a lot more about treating severe cases.

But we have to balance that against the areas where safety has stagnated or worsened: The latest variants are extremely contagious, masks are no longer required or widely used, few workplaces have improved filtration, and emergency sick leave requirements have lapsed. Meanwhile, not that many people are working from home—about 7.4 percent in the latest jobs report. Because of this mixed bag, it’s difficult to ascertain the level of risk. Deaths are lower than this time last year. Hospitalizations are higher in June and about the same year to date as last year. Cases are much higher, even if you don’t adjust for the fact that many tests are done at home and not reported. These figures suggest that most people are at lower risk of the worst outcome but may be at a similar risk of hospitalization and a higher risk from long COVID¹.

Deaths (Source: COVID Act Now)

Hospital Admissions (Source: COVID Act Now)

Having so many openings is generally to workers’ benefit. Most basically, workers have more bargaining power since their labor is in demand. Workers may have raised their standards and explored a wider range of options. Seeing so much upheaval may have more workers reconsidering their current position, as Arindrajit Dube hypothesized; previous research (full) has found that workers don’t always accurately estimate their opportunities.³ The improved market might provide its own protection. Workers shouldn’t be forced to leave their job in order to avoid a high risk of COVID infection, but at least that option exists.

Not all of this shortage is for good reasons. Some workers died due to COVID or other preventable causes. Another troubling reason may be due to workers with Long COVID. The Brookings Institute estimates that 1.1 million people left the workforce entirely due to Long COVID, and 0.5 million have reduced hours.

The unemployment rate is actually not quite at its historic low. U3 is at 3.6, whereas the historical low over the same time period is 3.5.⁴ The reason the ratio is low is that there are so many jobs. (To put it in more mathy terms, both the numerator and the denominator are relatively big.)

To reiterate from a previous post,

U-4 adds workers who’ve given up looking but still want jobs, and U-5 adds still more workers who want to be part of the labor force but can’t for reasons other than being discouraged (maybe they’re taking a class).

Given the sheer number of people who lost jobs during the early stages of the pandemic, it’s a little surprising U-4 and U-5 aren’t higher. Part of it is a lot of jobs have come back recently. It could also be that some people gave up on work altogether, perhaps by retiring early.

In addition to the persistent risk of COVID, there are also storm clouds on the horizon, as Jeanna Smialek and Ben Casselman write for the New York Times:

Pay gains have been falling behind inflation for months. Credit card balances, which fell early in the pandemic, are rising toward a record high. Subprime borrowers — those with weak credit scores — are increasingly falling behind on payments on car loans in particular, credit bureau data show. Measures of hunger are rising, even with unemployment still low and the overall economy still strong.

In short, we have a surging economy marred by the unnecessary risks forced upon workers by an indifferent administration and an ever-exploitative owning class.

Further Reading

• “The Full Banana of the Labor Market” explores the relationship between unemployment and job openings, the Beveridge curve, which resembles a banana.
• Joey Politano writes in a Twitter thread about the room to grow.