There are certainly a lot of anecdotal reports right now of employers not being able to find the workers they need, particularly in restaurants. But unemployment is still very elevated—particularly among restaurant workers. What’s going on? 1/
First, remember there is *always* a chorus of employers who claim they can’t find the employees they need. One reason for that is that in a system as large and complex as the U.S. labor market there will always be pockets of bona fide labor shortages at any given time. 2/
But a more common reason is employers simply not wanting to raise wages high enough to attract workers. Employers post their too-low wages, can’t find workers to fill jobs at that pay level, and claim they’re facing a labor shortage. 3/
Given how pervasive this dynamic is, I often suggest that whenever anyone says, “I can’t find the workers I need,” you should add “at the wages I want to pay.” 4/
Further, a job opening when the labor market is weak doesn’t necessarily mean the same thing as a job opening when the labor market is strong. There is a wide range of “recruitment intensity” that an employer can apply to an open position. 5/
If employers are trying hard to fill an opening, they will increase the pay and perhaps scale back the required qualifications. If they’re not trying very hard, they’ll offer low pay and hike up the required qualifications. 6/
Recruitment intensity is cyclical, so when a job opening goes unfilled when unemployment is elevated like it is today, employers are even more likely than normal to be holding out for an overly qualified candidate at a very cheap price. 7/
The footprint of a bona fide labor shortage is *rising wages*. Employers who truly face shortages of workers will respond by bidding up wages to attract those workers, and employers whose workers are being poached will raise wages to retain their workers, and so on. 8/
When you don’t see wages growing to reflect that dynamic, you can be fairly certain that labor shortages, though possibly happening in some places, are not a driving feature of the labor market. And right now, wages are not growing at a rapid pace. 9/
While there are issues with measuring wage growth due to “composition effects” in the pandemic, wage series that account for these issues are not showing an unusually strong increase in wage growth. 10/…
At a recent press conference, Federal Reserve Chairman Jerome Powell dismissed anecdotal claims of labor market shortages, saying, “We don’t see wages moving up yet. And presumably we would see that in a really tight labor market.” 11/
Also, when restaurant owners can't find workers to fill openings at wages that aren’t meaningfully higher than they were before the pandemic—even though the jobs are harder b/c workers now have to deal with anti-maskers and health concerns—that's not a labor shortage. 12/
Further, the labor market added 280,000 jobs in the leisure and hospitality sector in March, the sixth highest percent increase in the last half century, even though average weekly earnings for nonsupervisory workers in that sector equate to annual earnings of just $19,651. 13/
And, while there are certainly fewer job seekers than there would be without COVID—many people are out of the labor market because of Covid-related care responsibilities or health concerns—there are far from enough job openings to provide work for all job seekers. 14/
In the latest data on job openings, there were nearly 40% more unemployment workers than job openings—and more than 80% more unemployed workers than job openings in the leisure and hospitality sector. 15/
One question people raise is whether expanded pandemic unemployment benefits are keeping workers from taking jobs. There was also a lot of fuss about this question a year ago, when workers were getting a $600 additional weekly benefit. 16/
There were several rigorous papers that looked at the impact of the $600, and found extremely limited labor supply effects. If the $600 a week wasn’t keeping people from taking jobs then, it’s hard to imagine that a benefit *half* that large is having that effect now. 17/
Recent history is helpful here. In the aftermath of the Great Recession, counterintuitive reports about employers not being able to find the workers they need captured the public’s imagination over and over again. And (surprise!) it’s happening again here. 19/
After the Great Recession, people claimed there were worker shortages b/c workers didn’t have the right skills for available jobs. We now know that was totally wrong. We got to a 3.5% unemp rate without a massive national training program that accelerated skills attainment. 20/
Thankfully, the “workers don’t have the right skills!” claims have been mostly quiet this time around. But alas, the claims of worker shortages are still deafening. Just remember that like last time, there is likely a LOT less to this than meets the eye. 21/
Excellent additional point here. If employers really couldn't find the workers they need, you'd expect them to be ramping up the hours of the workers they have... 23/ Image
Another key point—tips are down in restaurants, so restaurants must pay higher base wages for workers to get their pre-COVID earnings. This survey found that more than 2/3rds of restaurant workers report tips have dropped at least 50% since COVID. 24/…
Note, some people are saying that because wages at the low end of the labor market haven’t dropped as much in this recession as they did in the great recession, we have a labor shortage now. So much about that is wrong! 25/
For one, in the first 13 months of both recessions, wage growth for the bottom quartile dropped by about half a percentage point on net. 26/ Image
And of course, if there were a shortage, we'd expect wage growth to be *rising*, not just not falling. 27/

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More from @hshierholz

12 May
Talk of labor shortages is everywhere. What is really going on? A thread. 1/
Before the April jobs data were released last Friday, the data did not point to widespread labor shortages. But the April data—while still not pointing to *widespread* labor shortages—are indeed flashing shortages in isolated sectors. 2/
Backing up for a second: Remember that the footprint of a labor shortage is very fast wage growth. If an employer can’t attract the workers they need, they will raise wages to poach workers from other employers, who will in turn raise wages to retain their workers, and so on. 3/
Read 24 tweets
7 May
The labor market added 266,000 jobs in April, solid growth but far below expectations. Growth in March was also revised down. Further, we still have 8.2 million fewer jobs than we did before the recession, in February 2020. 1/
And, that 8.2 million is not the total gap in the labor market. Pre-COVID, we were adding about 200,000 jobs a month. At that pace, we would have added 2.8 million jobs in the last 14 months, so the total gap in the labor market right now is around 8.2 + 2.8 = 11 million jobs. 2/
Do today’s data reveal whether there is anything behind anecdotal claims of worker shortages, particularly in restaurants? (As background, here’s my thread explaining why I’m quite skeptical of claims of widespread labor shortages.) 3/
Read 25 tweets
6 May
Last week 599,000 people applied for UI. This included 498,000 who applied for regular state UI (seasonally adjusted) and 101,000 who applied for Pandemic Unemployment Assistance (PUA). 1/
Claims are high but moving in the right direction. The 599,000 who applied for UI last week was a decrease of 112,000 from the prior week. The 4-week moving average of total initial claims decreased by 74,000. 2/
Total initial claims are still three times what they were before COVID. (If you restrict to regular state claims—because we didn’t have PUA pre-COVID—initial claims are 2.5 times where they were before COVID.) 3/
Read 9 tweets
24 Feb
Welp I was just the person testifying at a congressional hearing who had to be told she was on mute.
This is a hearing on the minimum wage and omg before this I had mistakenly let myself believe that the myth that min wage workers are teenagers had been debunked.

PEOPLE. Only ONE IN TEN workers who would benefit from a $15 min wage in 2025 are teenagers.
Wow there is a lot of confusion about the impact of minimum wage increases on prices. The facts: it is true that *some* of the impact of minimum wage increases is passed along in the form of higher prices. 3/
Read 8 tweets
5 Feb
Today is the last #JobsDay with data from the Trump Administration (today’s data are from mid-January). So what does the economy former President Trump handed off to President Biden look like? It’s bleak. 1/
The labor market added just 49,000 jobs in January. And that's likely too rosy—given low seasonal hiring in the pandemic, seasonal adjustments likely made the December numbers look worse than they really were and are making the January numbers look better than they really are. 2/
The average job change of the last three months provides a better sense of current movements, and it was just 29,000. We have 9.9 million fewer jobs than we did before the recession. At *this* pace it would take 29 years to get back to prerecession jobs levels. 3/
Read 23 tweets
4 Feb
Another 1.1 million people applied for UI last week, including 779,000 who applied for regular state UI and 349,000 who applied for Pandemic Unemployment Assistance (PUA). 1/
The 1.1 million who applied for UI last week was a decrease of 88,000 from the prior week, but the four-week moving average of total initial claims ticked up by 51,000. 2/
Last week was the 46th straight week total initial claims were greater than the worst week of the Great Recession (GR). (If you restrict to regular state claims—b/c we didn’t have PUA in the GR—initial claims last week were still greater than the third-worst week of the GR.) 3/
Read 18 tweets

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