Where Have All the Workers Gone?
At the very beginning of the year, I took an informal poll among several business owners and managers and asked one, simple question: If there is one thing you absolutely must accomplish this year in your business, what would that be?
The answer was almost universal: we must hire more people.
The problem is that very few are applying. Many businesses firms have some online method of applying for employment. But no one is doing so. Most of them will still take an application the old-fashioned way-walk in, fill out and push for an interview. And many companies are willing to do interviews on the spot. But guess what? It is crickets. No one is coming in.
The latest jobs report is abysmal, to say the least. U.S. employers added just 199,000 jobs in December, down substantially from Novembers weaker than expected 249,000. The “experts” predicted an add of 400,000 in December. The shortfall is embarrassing for those “experts” and it just shines further light on the growing problem of people not showing up to even try to get the jobs available.
Some, of course, are quick to blame low wages for the lack of interest. Wages have been artificially increased in a number of U.S. cities and states. Minimums in states such as California, Washington, Oregon, Arizona, Colorado, and New York range from $12.55 to $15 per hour. Others like Texas, Oklahoma, Kansas, Kentucky, and Pennsylvania have no state mandated minimums. They follow the federal minimum of $7.25 per hour.
Absolutely no one in any of the latter mentioned states is hiring anyone right now for the federally mandated minimum wage. Here in Texas, according to data from Zip Recruiter, as of Jan 1, 2022, the average annual pay for hourly rate jobs in Texas is $38,554 a year, or approximately $18.54 an hour. Most businesses I have spoken with in the Wichita Falls area are starting between $10 an $15 per hour, depending on industry, experience, previous skills training, etc..,. Bottom line right now, more than ever, the more you know, the more you can do, the more you’re worth.
So for all intents and purposes, the minimum wage argument is a moot point. Where is everyone? Where are the workers? Why can’t great companies both large and small not attract people with starting wages more than double the federal minimum?
Let us take a look at some data shared by the Wall Street Journal at the end of 2021:
- New Labor Department data shows that there are now 500,000 more unincorporated, self-employed workers than there were at the start of the pandemic: 9.44 million.
- The number of new applications for federal tax ID numbers jumped 56 percent between 2019 and 2021; two-thirds of those were for businesses expected to employ only the company founder
- The percentage of workers in the U.S. who consider themselves self-employed rose from 5.4 percent in February 2020, just before the pandemic, to 5.9 percent now.
- In September 2019, the online marketplace Etsy had 2.6 million active sellers; as of the same time this year, the number was 7.5 million.
In the “old days” (2019 and before) we would have looked at the abysmal job reports of the last several months and thought this all must be because people are just lazy. But the data we’re seeing now paints a much different picture.
It goes without saying that Covid-19 has played a major role. Many have been living in in a near state of terror thanks to the government and the media nonstop fear mongering campaign. Both government and the media immediately politicized the pandemic for their own gain and have reaped huge rewards, unquestionably. So, yes, there are some who have stayed out of the workforce over fear of becoming infected. But how are they paying their bills?
Keep in mind, the federal government padded unemployment benefits for months, to the tune of an additional $300 per week on top of their state benefits. Also, the feds sent out billions in stimulus payments to millions of Americans. No doubt, some folks have hoarded some of this cash from unemployment and stimulus money, mainly because they felt compelled to cocoon in their homes and not travel, dine out or even shop outside the home. Amazon, Wal-Mart and other big box retailers were all BIG winners with people getting those bare necessities delivered to their doorstep.
Restaurants have clearly been the biggest losers in this dumpster fire. Many were forced to close or dramatically alter how they did business. Many service workers in the restaurant business were laid off and have never returned. You cannot find a restaurant of any size right now that is not struggling to find help. The unconstitutional forced closure of some of these businesses led to their failures, wiping out thousands of entrepreneurs who had spent their lifetimes building their brand, only to have it yanked from beneath them. The restaurant industry, I predict, will never be the same again, not really.
To add fuel to this fire, I predict congressional democrats will push for another round of stimulus payments this year, in a futile attempt to salvage any votes they can for the mid-terms. And if they cannot get it done, they’ll pressure the President to do something via executive order. Remember, even President Trump issued four executive orders on Covid relief, even though the “power of the purse,” constitutionally speaking, belongs to the House of Representatives.
The unemployment situation can and will be corrected in time. Not everyone who’s not working for someone else is running their own business, but we have more entrepreneurs than ever. Not every entrepreneur will succeed. At some point, everyone needs to make a living somehow. Technology has made working from home easier than ever, and many will find themselves in a work-from-home model for a long time to come. Some tried and true ‘old school’ business models may disappear as this all continues to evolve. The days of the large, heavily-staffed, family-style sit down restaurants, for example, may be over.
But wages for hourly workers are going to remain well above the federal minimum wage. The days of politicians having that arrow in the quiver is done. But if inflation continues to climb, your buying power will not be what you expect to be. We will cover that aspect next time.