On the one hand, I agree that if you told me that the reserve army of the jobless would swell by 8.4 million relative to a year year ago, but that wage growth wouldn't fall much, I'd be surprised. 1/x
https://twitter.com/jasonfurman/status/1389578517705199620
But there's a lot more to the story of what's happened over the past year. For one, macro policy has been extraordinarily expansionary - I think very few US workers are concerned they'll be laid-off over the coming year simply because "the economy" will be weak overall. 2/x
This is a huge success! One key part of the huge amount of macro relief/recovery efforts was exactly building a firewall around the face-to-face service sector, to make sure plummeting demand there did not spiral outward. I think it worked. 3/x
If you work outside of face-to-face services, there is little threat that customers will dry up soon and this is highly supportive of continued wage growth in those sectors. 4/x
Why aren't workers in non face-to-face services more threatened by the prospect of being replaced by workers laid-off from face-to-face services employment because of the virus? My guess is that it's largely a function of how segmented these labor markets are. 5/x
Basically, face-to-face service workers have fewer formal education credentials, tend to be younger, and tend to work part-time schedules. 6/x
It hardly seems shocking to me that many in the non face-to-face sector don't think they'll be easily replaced by workers from the face-to-face sector - particularly when the labor market overall is improving rapidly and any such threat will relent soon. 7/x
I think rapid expected improvement is key here - I think the duration of how long the labor market is depressed and future expectations about how long the depressed labor market will persist are key for forecasting what slack will do to wage growth. 8/x
In regards to the workers in sectors directly affected by Covid, I'd note that even in the ATL wage growth tracker, if you look at trends by industry, there is a noticeable recession-induced fall in leisure and hospitality which is barely coming back even in recent months. 9/x
And, in fact, even the 1st quartile wages took a dip as the recession hit. Some of that dip has bounced back, but, not all. All in all, yeah, I'm mildly surprised downward wage pressure isn't even more pronounced than it's been. 10/x
But, there's no serious upward wage pressure at all (ie, shortages), and, if you remember that literally trillions in expansionary fiscal support have been spent and that unemployment has declined far more-rapidly this time around, I'm less surprised. 11/11
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