Critics of the UI theory of labor supply argue: why is leisure and hospitality growing fast if UI constraint matters given the low wage jobs there? The simple answer is "thats where job cuts are biggest", but I think there is a longer answer to that which is useful...
Hold demand constant, and assume you have three industries: manufacturing, restaurants, and warehouses. Manuf has avg wage of $15, warehouses $12, and restaurants $10...
Now imagine you randomly separate workers from firms, with 1% in manufacturing, 5% in warehouses, and 40% in restaurants. Demand is unchanged. Then you reduce labor supply by paying people a fixed $ amount to not work.
Yes, this will bind most for workers in restaurants, so you might think they regain workers slowest. However, consider the labor demand curve slopes downward. So the more workers you lost initially, the farther up the demand curve you ride.
In other words, a small firm to the minimum number of workers needed to open is huge. The marginal value declines from there. So it could be the case that restaurants now value marginal hires much higher than warehouses value them, even though pre-pandemic wages were lower there
This is because we are farther up the demand curve for restaurants. So what would you see in this case? Rising pay in restaurants, and fast growth there, along with high openings, and weaker growth in the sectors restaurants are pulling workers from.
Anyway this is the same story as "they lost more jobs so they should grow faster", but an explanation for why pay is going up there quickly while job growth is weak in other sectors. They are pulling marginal workers from there. Also consistent with elevated quits

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More from @ModeledBehavior

9 Jun
To extent recession recovery speed limits bind, I don't think its best described as "there are lots & lots of job openings, more than normal, but people can't match to them fast enough". It's more like it takes time for firms to expand and invest and grow and demand to reallocate
Like post Great Recession, it was not the case that there were a ton of businesses who knew demand was rocketing back and they wanted to get payrolls up to where they were but matching slowed them down.
We are not facing a reallocation challenge anywhere near what we do in a normal recovery. Even the part of this that requires new and expanding firms, the vast vast majority will be back in the sectors that just temporarily shrunk.
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14 May
I want to do a quick tweet storm about an interesting new paper out on WFH at an IT services company that found productivity declined.…
Before I dig in, I want to emphasize something really important about some kinds of technological change like remote work and how it will impact productivity in the long-run: it works through selection.
During the pandemic, everyone who could worked remotely. According to Gallup, over half of workers were remote full-time early in the pandemic. But that’s not how all long-run technology adoption works.
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2 May
Crypto people might think that winning is determined by technical factors, things that make it work as a currency and store of value. But the success of doge and NFTs show that fun is really what matters. If you want to invent a crypto and get rich, make it fun/shocking/absurd.
It’s not a serious financial revolution. The whole thing is more like collectibles. I suspect (but maybe I’m wrong), those working in this space can’t see admit the somewhat embarrassing truth that entertainer is the core value prop. So take advantage of that.
Anyway, point is, id like to announce my forthcoming cryptocurrency CageBucks, where the quantity is tied to Nic Cage box office grosses. Image
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27 Apr
I think some people think excessive caution about masking is going to gone down in history as being as important of a story about this period as the virus. They’re super excited they get to be on the right side of a mistake, and have lost all perspective
People are so thirsty to be able to both-sides again you can almost see the drool on their tweets
People who have been operating under the delusion that masks are such a costly inconvenience are not going to be viewed by history as making a symmetric error as the excessively cautious, I promise.
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The biggest change facing much of the country is rapid prime age population loss. If Tucker has a plan to “take that slowly”, let’s hear it. Reducing immigration won’t help
“Slow down, I like my community the way it is” is simply not the status quo when population is falling, vacancies are rising, the tax base is collapsing, and schools & local govt are forced to cut back
There is no policy that attacks Tucker’s main villains -globalization, big tech, and immigration- that will do anything about this trend. His indignation and outrage will simply not help these places even, and indeed especially, if policymakers listen.
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25 Mar
Okay some last thoughts on this... The disconnect between academic macro and econ twitter is not really a criticism of econ twitter. In fact, I have been complaining about it for years. Some tweets.
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