Im-Politic: A Labor Shortage Story Short on the Facts

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Bloomberg.com, Boris Johnson, Brexit, editing, European Union, globalism, Im-Politic, Immigration, Joe Mayes, journalism, labor shortages, media bias, Open Borders, truck drivers, truckers, trucking, United Kingdom

Is Bloomberg.com trying to make yours truly look good? It certainly seems that way. Exactly two days after I wrote that American journalism has long been suffering from an editing crisis (and subjecting readers and viewers to a flood of ineptly reported and reasoned articles, posts, and broadcast segments), this news site ran a piece illustrating perfectly two of this so-called profession’s biggest (and intimately related) flaws: pushing narratives largely by ignoring information that provides crucial context.

The lead paragraph tells you all you need to know where Joe Mayes’ September 22 story was going (and where he and his editors believed it should go): “The red lines of Boris Johnson’s Brexit project are starting to crack as voters face growing shortages of food and fuel, as well as a marked rise in living costs.”

As the second paragraph elaborated, “Despite riding to power on a Brexit campaign that pledged to cut immigration from the European Union, the prime minister [Johnson] and his cabinet are now preparing for what would be a significant and politically damaging U-turn: Tapping those same EU workers to plug the labor shortages crippling parts of the U.K. supply chain.” And “the most immediate and pressing concern”? “A major shortage of truck drivers.”

What could be more revealing – and embarrassing for supporters of the United Kingdom’s 2016 decision to leave the European Union (in large part to gain more national control over immigration inflows)? Immigrants from the same EU are now being recognized even by the Leaver-in-Chief as that country’s last hope for staving off starvation, freezing to death this winter, and raging inflation.

No question Brexit was a landmark decision, and no doubt there were plenty of valid reasons to be skeptical (as the close 2016 referendum results indicate). But this Bloomberg piece plainly suggests that the countries that have decided to remain in the EU literally have truckers to spare the British.

Which insinuates that the Brexiteers deserve to have insult added to injury. Except this story line is a crock. As an internet search that took me mere minutes revealed, there’s lots of info out there making clear that truck driver shortages are a global problem – that is, they’re not limited to countries that left the EU. Indeed, this industry website reports that trucking companies in Europe are expecting a 17 percent driver shortfall this year.

Further, the survey it’s based on found that any number of steps could be taken by trucking companies and governments in shortage-afflicted countries to increase driver supply without importing foreigners. Like raising pay. Like lowering the training age to encourage more young people to replace retiring truckers (a big problem in a sector with an aging workforce). Like creating safer parking areas, which would be especially helpful in attacting more women into the business. (They currently make up only two percent of drivers globally, according to the survey.)

In fact, finding such ;material is so easy that it raises the question of whether the main problem (and all the others I’ve spotlighted on RealityChek – e.g., here) doesn’t reflect simply a competence crisis. It also reflects a bias crisis, with the target being any measures or information that clash with longstanding globalist orthodoxies – in this case, Open Borders- friendly policies on the immigration and labor shortage fronts.

(What’s Left of) Our Economy: Blaming Extra Unemployment Benefits for U.S. Labor Shortages Just Got a Lot Harder

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CCP Virus, coronavirus, COVID 19, Employment, Jobs, labor markets, labor shortages, recession, unemployment, unemployment benefits, workers, {What's Left of) Our Economy

If you’ve been following the economic news for the last few months, you know that one of the most heated policy debates that’s broken out concerns the impact of the supplemental federal unemployment claims that America’s jobless became eligible for due to the CCP Virus- and lockdowns-induced recession and its continuing aftermath.

Specifically, opponents of these payments – which will end for all states on September 6 (unless they don’t?) – charge that they’ve needlessly enabled many workers to avoid or delay returning to businesses, and thereby greatly worsened labor shortages reported by so many employers. Supporters insist that they’ve been a minor contributor, and that the shortages stem from many more important factors, like ongoing health concerns or childcare issues or the apparent decision of many Baby Boomers and near-Boomers that the pandemic created a convenient time to retire.

I’ve believed for months that the biggest truth has been “all of the above,” but have been frustrated by the lack of statistics that could at least start providing reasonably convincing answers. And unfortunately, this post’s appearance doesn’t mean that terrific data has been found. But what I’ve gone over in the last few days seems reasonably informative, and what it tells me is that the extra federal benefits haven’t been a significant deal at all in the U.S. jobs picture.

What I did was compare four indicators of employment for the states that announced that they’d stop paying those extra benefits by the end of June (along with Louisiana, which announced a July 31 cutoff) and for the states that have decided to continue them as long as Washington was sending the funds. The indicators are unemployment rates, numbers of people employed, first-time jobless claims filed, and levels of continuing jobless claims. And recent Labor Department reports make possible comparing the unemployment rates between June and July, and both sets of claims numbers between the week ending June 26 and the week ending July 24. So they should provide some information on whether the announcement of imminent cutoffs led the jobless to secure reemployment faster.

These data can’t provide definitive answers for numerous reasons. For example, as this article makes clear, the $300 extra federal benefits on which I concentrated haven’t been the only extra benefits provided during the pandemic, and even six of the “early cutoff” states have continued to provide some combination of the others. In addition, two of the early cutoff states have been under court orders to continue the benefits (Indiana and Maryland), and lawsuits are pending in three others (Ohio, Oklahoma, and Texas.) Moreover, state benefit levels vary tremendously, both in terms of payment amounts and eligibility periods. So depending on where they live, unemployed Americans could have lost various extended benefits and still received benefits from their state governments (for varying timeframes) generous enough to affect their need or desire to return to work.

But what follows is a pretty good start to the search for answers. And analysts do get one break: The states plus Puerto Rico and the District of Columbia to be examined divide evenly into two groups of 26.

First, the jobless rate comparisons. As widely known, these aren’t perfect measures of the national employment situation because they leave out big categories of distressed workers like those too discouraged to even search for a job, and those employed part-time because they have no other choice. And as suggested above, they shed no light on changes in the numbers of retirees.

Be that as it may, of the 26 cutoff states, between June and July, unemployment rates fell in 19, rose in three, and held steady in four. And of the twenty cutoff states where no litigation was either affecting payment policies or coming down the pike, and excluding tardy Louisiana, jobless rates fell in 16, rose in two, and remained unchanged in two.

How does that compare with the unemployment rates in the non-cutoff states? They fell in 18 of the 26 states between June and July, rose in four, and held steady in four. So I don’t see a big difference there.

Turning to employment levels, of the 26 total cutoff states, from June to July, they rose in 23 and fell in three. Of the twenty facing no litigation issues and, again, also excepting Louisiana, employment levels rose in 19 and fell in one. Those results actually slightly lag the performance of the non-cutoff states, where employment levels rose in 25 of the 26 between June and July.

It’s much the same story for initial jobless claims from the week ending June 26 and the week ending July 24. For the 26 total cutoff states, initial claims between these two weeks rose in six and fell in 20. Of the 20 facing no legal issues, and excepting Louisiana, claims rose in five and fell in 15.

That’s almost identical to the results for the non-cutoff states, where initial claims between those two weeks rose in five states and fell in 21. In fact, a slight edge goes to these states on this score, too.

Finally, for continuing claims, in the 26 total cutoff states, these fell in 21 and rose in five between the weeks in question. And of the 20 with no litigation existing or pending, and excluding tardy Louisiana, continuing claims fell in 15 and rose in five.

In this group of 26, 22 saw continuing claims fall and four saw the rise.

Again, I’m not contending that these numbers are definitive. More detailed analysis accounting for more of the aforementioned differences among states would help a lot. Nor do I doubt that labor shortages have emerged in some parts of the economy. But if there’s proof out there that the extended unemployment benefits had much impact, it hasn’t emerged yet – and let’s hope it emerges before the economy runs aground for an extended period again.  

(What’s Left of) Our Economy: The Latest Data Remain Full of Normalization Puzzles

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Biden, CCP Virus, China, construction, coronavirus, COVID 19, Donald Trump, exports, goods trade, imports, inflation, inflation adjusted wages, labor shortages, leisure and hospitality, lockdowns, manufacturing, metals, non-oil goods trade deficit, non-supervisory workers, private sector, real wages, reopening, retail, services trade, shutdowns, tariffs, Trade, Trade Deficits, transportation, wage inflation, wages, Wuhan virus, {What's Left of) Our Economy

While I was away for a few days last week, two major U.S. government reports came out both giving off conflicting signals on on whether the economy has started to return to normal in critical ways as the CCP Virus subsides and reopening, along with consequent changes in consumer behavior, proceed.

The monthly trade figures (for April) showed a sequential decline, following a record surge, in America’s chronically huge gap between exports and much larger amounts of imports. Moreover the monthly drop took place as economic growth sped along at unusual rates after being shut down by government mandates and consumer caution. So maybe they’re an early sign that a return to immediate pre-virus conditions has begun?

Or is their most important message that these deficits, and especially the import levels, are still hovering near all-time highs in (the most widely followed) pre-inflation terms even though the economy as of the latest (first quarter) numbers is still a bit smaller in (the most widely followed) inflation-adjusted terms than during the last full pre-pandemic quarter (the fourth quarter of 2019)?

Indeed, the deficits are gargantuan even though President Biden has left former President Trump’s substantial tariffs on metals and goods from China practically untouched. 

The monthly inflation numbers (for May) are similarly confusing. They revealed that consumer prices (just one inflation measure published by Washington, but an important one) rose by 4.93 percent in seasonally adjusted terms. That was their fastest annual pace since September, 2008’s 4.95 percent. Surely, as widely claimed (including by the Federal Reserve, which wields so much influence over the economy, this upswing stems from a combination of bottlenecks resulting from (1) the sudden, widespread reopening; (2) the unusually low overall inflation numbers generated a year ago, when the economy was near the depths of its viruts- and shutdown-induced slump; and (3) the immense dose of stimulus injected into the economy by both elected politicians and the unelected Fed.

At the same time, the Fed has told us that its stimulus isn’t ending anytime soon, and although the Biden administration and Congressional Democrats are displaying some cold feet about approving more such levels of economic fuel (e.g., in the form of outlays on infrastructure, and a wide variety of income supports and enhanced unemployment benefits), it’s difficult to imagine that most or even much of this spending will actually be withdrawn even once a post-virus recovery is an indisputable reality.

But the biggest surprise of all: Despite the economy-wide inflation pressures, and by-now-routine claims that employers are dealing with nearly crippling labor shortages, wages overall adjusted for inflation keep going down.

Compounding the confusion over whatever conclusions can legitimately be drawn from these two reports: They cover two different months.

But let’s begin with the most important details from the April trade report. The ambiguity embodied in the data begins with the total deficit figure. The record March result was revised up from $74.45 billion to $75.03 billion but April’s $68.90 shortfall for goods and services combined, though the second worst monthly figure ever, was 8.17 percent smaller. That’s the biggest sequential drop since February, 2020 (8.39 percent), when China’s export-heavy economy was still largely closed because of the virus.

The same holds for the goods trade gap. The record March figure was revised up, too, from $91.56 billion to $92.86 billion. But April’s $86.68 billion result represented a 6.65 percent monthly decline, and this falloff was the biggest since the 8.39 percent plunge of January, 2019 – when American businesses were still adjusting both to Trump’s tariffs and anticipated tariffs.

Also still fueling the high U.S. deficits – a worsening of services trade balances. Here, U.S. trade has long been in surplus, but the surpluses keep shrinking because service sectors like travel are still suffering from the pandemic’s arrival and the consequent decimation of travel and othe transportation in particular. In fact, the April figure of $17.78 billion was the lowest since September, 2012’s $18.62 billion.

One key set of trade flows does, however, provide some evidence of Trump tariff effectiveness – U.S. non-oil goods trade, which encompasses those exports and imports whose magnitudes are most heavily influenced by trade policy (because, as known by RealityChek regulars, trade in oil is almost never the subject of any trade policy decisions and services trade liberalization remains at very early stages). In April, the monthly shortfall retreated 4.16 percent from its March record of $90.12 billion to $86.37 billion – which is only the fourth highest such total ever.

The import figures I focused on last month exhibit the same overall patterns: April saw big drops from record levels but the absolute numbers remain distressingly high. March’s initially reported record $274.48 billion in total imports was revised up considerably – to $277.69 billion. April’s total of $273.89 billion represented a 1.37 percent drop, but nonetheless was the second worst such figure on record.

March’s record monthly goods import figure was upgraded, too – from $234.44 billion to $236.52 billion. April’s total of $231.97 billion was a 1.92 percent drop but these purchases also still represented the second highest of alll time.

As for non-oil goods imports, the $215.33 billion April total was 1.98 percent down from an upwardly revised record $219.68 billion, and also the second biggest ever. Biggest drop since last April’s 10.91

Whether normalization is returning in manufacturing is more difficult to tell. Imports in March hit a record $207.59 billion, and did drop by 4.59 percent sequentially to $198.06 billion in April. That decrease, however, was a typical monthly move for manufacturing imports, and the April figure was still the third highest ever.

Incidentally, the April manufacturing deficit of $103.60 billion was 4.64 percent lower than March’s $108.66 billion. The March total was the second highest on record, but April’s figure was only the seventh all-time worst. The record, $110.20 billion, came last October, and it’s notable that the gap has narrowed on net despite the resilience shown during the pandemic period by manufacturing output.

More evidence of the Trump tariffs’ impact comes from the data on goods trade with China – whose products have attracted nearly all of these levies, and that cover hundreds of billions of dollars worth of products. The April figure of $37.59 billion was 6.56 percent lower than its March predecessor – a thoroughly unexceptional sequential decline and monthly level by historical standards. But the monthly dropoff was consideraby greater than the aforementioned 1.98 percent decrease for non-oil goods – the closest global proxy.

As a result of all these inconclusive developments, I’ll be awaiting the May trade report with even more interest than usual.

But despite all the uncertainties I mentioned at the start of this post, those May inflation figures have made me more confident than before in my previous contention that current price surges are anomalies by the extremely low inflation generated by the CCP Virus-battered economy of a year ago, and by the sudden reopening of so much of the economy following the long shutdowns and lockdowns. Even clearer, as I see it: Claims of significant, troubling wage inflation are especially weak.

After all, that 4.93 percent year-on-year May price increase followed a previous May-to-May rise that was just 0.22 percent. That was the feeblest such rise since September, 2015’s 0.13 percent. In addition, May’s month-to-month 0.64 price advance was smaller than April’s 0.77 percent. Two months do not a trend make, but these numbers certainly don’t point to raging inflation fires.

Nor do the wage data. Otherwise after-inflation total private sector wages wouldn’t be down more on-month in May (-0.18 percent) than in April (-0.09 percent). And the same couldn’t be said of constant dollar wages for non-supervisory workers (-0.20 percent in May versus flat in April).

Getting more granular, the price-adjusted wage trends are as bad or worse in construction; trade, transportation and utilities overall; retail trade; and education and health services.

The two big exceptions: the leisure and hospitality workforces that have been so decimated by the virus (and especially the non-supervisory group) and the transportation and warehousing sub-sector of the transportation and utilities industry category that contains a trucking sector unusually strained by the rapid reopening. In both cases, however, (and especially the leisure and hospitality industry), inflation-adjusted wages in absolute terms are well below the national private sector average. If anything, therefore, it seems like some wage inflation for these workers is long overdue.

(What’s Left of) Our Economy: Wage Inflation? Seriously?

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CCP Virus, construction, coronavirus, COVID 19, housing, inflation, inflation-adjusted wages, labor shortages, leisure and hospitality, private sector, real wages, recession, recovery, wage inflation, wages, Wuhan virus, {What's Left of) Our Economy

Reports keep abounding that U.S. businesses can’t find enough workers to match their needs amid an ongoing rapid reopening of the economy from its lockdowns-induced slump, and that companies are therefore being forced to attract employees with ever higher – and even alarmingly higher – pay offers.

All of that makes perfect sense except for one critical detail: The official U.S. wage figures show precious few signs of soaring wages whatever. In fact, when you adjust for the inflation that has been recorded in Washington’s statistics, you see that workers’ hourly pay generally keeps falling behind, not racing ahead, of rising prices in the economy.

First let’s look at the pre-inflation figures for the entire economy (except for government, where pay levels mainly reflect politicians’ choices, not economic fundamentals).

When it comes to the entire private sector, hourly earnings in April (the latest figures available, which are still preliminary) grew by 0.33 percent year-on-year. That result, though, is somewhat misleading, since the previous April’s level was artificially high. That month, remember, was the depth of the CCP Virus-induced recession, and companies were largely laying off their least experienced (and cheapest) staffers. So the wage number for retained workers rose (and strongly) simply because their pay levels remained relatively lofty, and they accounted for a much bigger percentage of employment. Therefore, perhaps that misleadingly high April, 2020 figure was the main reason that the 2020-2021 improvement is misleadingly low?

Unfortunately, the data shoot down that hypothesis, too. For example, between “normal” April, 2018 and 2019, economy-wide pre-inflation wages jumped by 3.30 percent. That’s ten times the 2020-2021 increase. And in fact, the April, 2019 to 2020 pay hike was by far the smallest since 2006 (when this particular data series began).

But maybe the biggest wage inflation only began this calendar year – when overall inflationary pressures have arguably become visible?  Between January and April, current dollar hourly wages for the entire U.S. private sector did climb by 0.84 percent, and that advance was more than twice as fast as the April year-on-year change. Moreover, this 2021 wage growth was faster than that for “normal” January-April, 2019 (0.76 percent). Indeed, it was the fastest since 2008, another recessionary year when layoffs heavily concentrated among the least experienced, lowest-paid employees rendered the 0.90 percent result artificially high.

But aside from 2008, the January-April increase wasn’t that much higher than that seen in many recent years. For example, the January-April result for “normal” 2019 was 0.76 percent. For 2018, it was 0.71 percent. Just as important – does anyone think that those years, or any time lately, has been a golden age of wage increases?

There’s another possibility to consider: that strong wage inflation has taken place only among the production and other non-management workers, who both tend to be the lowest-paid and who in principle therefore are likeliest to be kept out of the job market by unusually generous unemployment benefits.

Average hourly earnings before inflation for this group have actually risen much more strongly year-on-year in April than for the overall workforce – by 1.15 percent versus 0.33 percent. And this 2020-2021 result, as with wages for the entire workforce, does seem to have been artificially depressed by the equally artificially high (7.84 percent!) figure for 2019-2020.

But historically, the 2020-21 wage increase not only looks anything but exceptional. It’s positively pitiful – by far the weakest April-April rise on record. Just to compare, from April to April in “normal” 2019 and 2018, current dollar wages for these “blue collar” workers were up 3.46 percent and 2.83 percent, respectively. .

Are the trends much different for January-April periods – which in principle should reveal whether wage inflation has waited till this calendar year to take off? For 2020 so far, pre-inflation blue collar hourly pay has improved by 1.23 percent – more than the 0.84 percent increase for all private sector workers.

That’s much slower than the comparable 5.36 percent jump last year, but we agree that last year was weird. The 2021 results are faster than those of normal 2019 (0.91 percent), but the gap doesn’t seem gargantuan to me. At the same time, current dollar January-April pay increases of one percent or greater for blue collar workers have been experienced five times since 1998, and before then, you need to go back to the late-1980s for a period when they were routine.

So describing the January-April, 2021 results as wage inflation-y could be justified. But that’s a far cry from reasonably concluding that this inflation will have much in the way of legs, since the economy, as widely noted, has never seen this kind of sudden stop-start transition in peacetime.

There’s another set of numbers, though, that needs to be examined to put the wage inflation issue in full perspective – recent wage changes after taking into account inflation across the entire economy. And in these real terms, hourly pay has actually been going down lately.

That’s true for all private sector workers between last April and this past April (down 3.66 percent).

It’s true for these workers between January and April of this year (down 0.88 percent).

It’s true for private sector blue collar workers between last April and this past April (down 3.37 percent).

And it’s true for these workers between January and April of this year (-0.71 percent).

Moreover, the “2020 effect” caused by that year’s artificially high baseline doesn’t seem to account fully for this wage deterioration. It’s definitely been apparent for all private workers (for whom average real wages soared by 7.81 percent between 2019 and 2020), and for private sector blue collar workers (whose inflation-adjusted average hourly pay surged by 7.68 percent).

In addition, since 2006, (when real wages for the whole private sector workforce began to be tracked), these wages have fallen on an April-April basis five other times. But they’ve never fallen by remotely as much as in 2021. And this year, employers are supposed to be desperate for workers. Much the same holds for private sector blue collar workers during this period.

Looking at the January-April periods, the 2021 decrease of 0.88 percent for all private sector workers is the second biggest since 2006 (trailing only 2011’s 0.97 percent). Further, this four-month stretch has only seen one other instance of constant dollar wage decrease (2019’s 0.37 percent). And the 2021 result is all the more strange given the strangely strong and sudden nature of the recovery.

When it comes to their blue collar counterparts, 2021’s 0.71 percent drop in after-inflation wages between January and April is also the second biggest since 2006 (trailing only the 1.24 percent fall-off suffered, again, in 2011). Pay declines during this period for these workers has been more frequent than for the private sector overall. (They’ve occurred five times all told before 2021.) Again, however, 2021’s has been puzzlingly steep given the economy’s unusually fast recovery this year and all the labor shortage claims that have resulted.

More convincing signs of out-of-the-ordinary wage inflation can be seen in sectors like construction and leisure and hospitality, especially during the first four months of this year. In the former, which has enjoyed strength in residential housing throughout the pandemic period, pre-inflation wages have increased by 1.24 percent. That’s the most since 2006 (again, the earliest data available) – though not outlandishly so. But after accounting for inflation, real construction wages have dropped by 0.49 percent between January and April of this year.

For blue collar construction workers, pre-inflation wages have improved by 1.75 percent during the first four months of 2021 – another post-2006 high. But even though their real wages have dipped during this period by only 0.17 percent, that’s still a dip.

The leisure and hospitality industries are of course coming out of a disastrous pandemic period, and with Americans now flocking to restaurants and bars and resuming travel, it’s not surprising that January-April current dollar hourly pay has risen by 3.71 percent – far and away a post-2006 record. The post-inflation number is up nicely, too (1.98 percent), and also a performance that’s smashed previous records. So this sector so far is telling a stronger wage inflation story.

Non-supervisory blue collar leisure and hospitality workers have fared even better, with pre-inflation wages zooming up by 5.87 percent between January and April of this year, and real hourly pay better by 3.98 percent.

Will these healthy pay hikes continue? That’s a big question for these parts of the economy. But even though wage figures don’t capture the entire compensation picture (in particular, they leave out non-wage benefits and all the signing bonuses employers are reportedly offering to lure workers off the sidelines), with wage and salary income representing more than 80 percent of total employee compensation throughout the economy (including in the public sector), they capture lots of the picture. And the overall message is that, like a famous economist once said about computers being everywhere but in the productivity statistics, wage inflation worth worrying about, and related worker shortage claims, to date are everywhere but in the wage statistics.

(What’s Left of) Our Economy: A Labor Shortage-Spurred Tech Revolution in Construction

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3D manufacturing, 3D printing, Biden, CNBC.com, construction, Diana Olick, Donald Trump, housing, illegal aliens, Immigration, labor shortages, Open Borders, productivity, technology, {What's Left of) Our Economy

As known by RealityChek regulars, there’s abundant evidence that behind most claims of lasting labor shortages by U.S. industries, and the resulting insistence tht more immigration is urgently needed, there’s an industry that’s done almost nothing to improve its productivity. (See, e.g., here.)

In other words, precisely because they’ve been able to rely for so long on an ever expanding supply of cheap labor, these industries have had precious little need to keep costs under control by improving productivity – either by developing labor-saving technologies, or adopting more efficient management practices, or some combination of the two. And the result hurts the entire U.S. economy by retarding progress and knee-capping its best chances of fostering lasting prosperity.

That’s why it was so exciting to read a CNBC.com post yesterday describing the beginnings of a possible productivity-improving technological response to labor shortages (and therefore rising labor costs), by one of the nation’s biggest slacker industries – construction.

Correspondent Diana Olick’s report faithfully presented the residential construction sector’s claim that housing has performed well during the CCP Virus period, but that its potential to keep supporting bady needed growth was endangered by constantly rising costs. And she added that, in addition to building materials becoming ever more expensive, so were workers.

What Olick failed to mention was that housing was a quintessential industry that has long enjoyed the option of compensating by becoming more innovative, but gone down the cheap labor road instead. Indeed, an outsized share of its workforce consists of not only immigrant workers, but illegal aliens. And its labor productivity levels are actually down since 1968 – which is no coincidence.

But the Trump administration’s restrictive immigration policies may finally be forcing home-builders and other construction companies to start using their collective noggins to control costs. As Olick reports, the industry is starting to use 3-D printing technology “in a big way.” According to executives whose companies are using the new technology, it can cut costs by between 10 percent to 40 percent. And one big reason, in Olick’s words, is that “3D-printed homes require very few workers, as the printer does the bulk of the construction.”

Her post also mentions that 3-D-built homes promise to be sturdier and more energy-efficient than their conventional counterparts, and generate less construction waste, too. And business has been so good that one executive told her “The biggest challenge…is we are supply constrained. We have more people asking for us to build houses than we know what to do with now. Every construction system we have is booked up for the next 24 months.”

In fact, from an economy-wide perspective, the biggest, darkest cloud on the horizon is that President Biden’s Open Borders-friendly immigration policies will flood the labor market with low-skill workers again and take the pressure off the construction industry – and other productivity laggards. That result would richly deserve to be called “Build Back Worse.”

Im-Politic: It’s Americans Last for the Courts as Well as Business on Immigration

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Biden, businesses, CCP Virus, coronavirus, COVID 19, guest workers, Im-Politic, immigrants, Immigration, Joe Biden, judges, labor shortages, lockdowns, recession, Reuters, Trump, unemployment, visas, wages, workers, Wuhan virus

So here I was about to give myself a day off from blogging today and spend most of it reading and then watching the big New Year’s Day college football games, but the news just keeps newsing. And I couldn’t forgive myself if I didn’t immediately seize on the opportunity to comment on today’s Reuters report titled “Trump extends immigration bans despite opposition from U.S. business groups.”

The piece wasn’t most remarkable for the kind of pro-globalist or Never Trump bias I often cover, or for the headline development. Everyone who’s followed the issue knows that the President has long favored and put into effect many measures aimed at curbing both legal and illegal immigration – and long before the CCP Virus and ensuing lockdowns-type government orders and consumer caution combined to create a genuine U.S. jobs depression.

Nor should anyone be especially struck by the observation that business groups are seeking to reopen American borders to green-card applicants (who will be seeking U.S. employment) and foreign guest workers (who enter the country in response to request from companies claiming labor shortages) even though, as the piece notes, 20 million Americans are currently receiving unemployment benefits.

No, what blew me away about the story were these two sentences:

“In October, a federal judge in California blocked Trump’s ban on foreign guest workers as it applied to hundreds of thousands of U.S. businesses that fought the policy in court.

“The judge found the ban would cause ‘irreparable harm’ to the businesses by interfering with their operations and leading them to lay off employees and close open positions.”

In other words, this judge supported allowing the number of workers overall available to American business to start growing again at a time when enormous numbers of domestic workers nationally have lost their jobs because enormous numbers of the businesses they worked for are being closed (many for good) by the aforementioned shutdown orders and consumer behavior changes.

Yet the judge’s stated reason for admitting these new (foreign) workers at a time when business are shedding enormous numbers of (domestic) workers is that enormous numbers of these same businesses would suffer “irreparable harm” – that is, harm for good – without the foreign workers. (See this post for an exceptionally intelligent discussion of the national business closure numbers, which so far are anything but from definitive.)

Even worse: The business lobbies that have opposed the Trump restrictions are the same groups that for months have condemned what they regard as overly sweeping lockdowns-type mandates for killing off enormous numbers of businesses, and threatening the survival of many others by sharply limiting the amount of customers they serve. And these business organizations insist that companies need more employees? Even though there’s every reason to believe that, at least through the winter, these shutdowns are much likelier to become tighter, not looser?

This isn’t to say that every business in this highly diverse economy during these highly difficult times is facing the same issues or dealing with the same labor market conditions. In fact, there can’t be any reasonable doubt that some companies are experiencing troubles finding the workers they need. Nor can there be any reasonable doubt that pandemic-related travel curbs are complicating their efforts to attract the necessary employees from other parts of the country, even if they raised wages strongly – the response identified by standard economic textbooks for ending labor shortages (even though this wage effect is overwhelmingly ignored by economists who use the same textbooks to support lenient immigration policies).

But how would new foreign workers solve this problem? They’d be subject to the same travel restrictions. And even if employers were willing to pay to bring them safely to their facilities, why couldn’t they extend the same services to any qualified domestic workers they could identify – if they bothered to look for them?

As for other businesses, chances are they favor reopening the immigration sluice gates now during a CCP Virus-induced economic slump for the same reason they favored it in normal times: They simply want to pump up the U.S. labor supply, and thereby drive down the price that labor can command.

Apparent President-elect Joe Biden ran as a champion of American workers. But he’s also taken many strongly pro-Open Borders positions. According to Reuters, although the Trump bans are “presidential proclamations that could be swiftly undone” and Biden has criticized them, the former Vice President “has not yet said whether he would immediately reverse them.”

But if he – not to mention the judge and the business groups – were really concerned about business survival, they’d all focus more on rolling back unjustified lockdown measures and securing more federal aid for struggling enterprises rather than delivering yet another immigration-related slap in the face to an already historically hammered domestic workforce.

(What’s Left of) Our Economy: Tech’s Cheap Labor Quest Just Got More Brazen & Fact-Free

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(What' Left of) Our Economy, Bloomberg.com, CCP Virus, Cheap Labor Lobby, CompTIA, coronavirus, COVID 19, H1B, immigrants, Indeed Hiring Lab, information technology, job openings, Jobs, labor shortages, recession, tech, tech jobs, U.S. Chamber of Commerce, unemployment rate, visas, Wuhan virus

Just went you think that many major U.S. business groups and their members couldn’t get any greedier or out of touch or both, check out this news on the immigration front: Some of the biggest of these organizations, containing most of the country’s most gigantic companies, have just sued the Trump administration seeking to freeze or block visas for immigrant workers in various job categories.

In other words, they’re trying to swell the American workforce with foreign workers at a time when literally tens of millions of Americans who want them can’t find jobs. And adding insult to injury, in the midst of this jobs-pocalypse, these companies are justifying their demands by claiming they face labor shortages. The obvious objective: pump up the national supply of workers, and thereby drive down the price – i.e., wage – these workers can command.

Worse, their contentions that they can’t find the employees they need continue to include the tech sector, even though the U.S. economy’s CCP Virus-induced downturn has been so bad that it’s spurring major job-shedding even in those industries and occupations. (The final word in the previous sentence is meant to remind that many non-tech businesses employ workers with tech specializations.)

According to the one of the major plaintiffs, the U.S. Chamber of Commerce,

“Our lawsuit seeks to overturn these sweeping and unlawful immigration restrictions that are an unequivocal ‘not welcome’ sign to the engineers, executives, IT [information technology] experts, doctors, nurses and other critical workers who help drive the American economy.”

Indeed, the plaintiffs insist that these kinds of workers are currently so scarce in the United States that if the restrictions remain in place, they’ll need to secure them by investing more in their foreign operations.

These shortage claims, whether involving labor or skills, are anything but new, and have been bogus even in good economic times – as proved in devastating detail by this recent Bloomberg.com analysis of the tech sector’s longstanding drive to import more workers under the H1B visa program. Thus you should be Laughing Out Loud at the notion that the human assets companies need simply don’t exist in the 50 states during American economy’s worst stretch since the Great Depression of the 1930s.

But the shortage-mongers (who I like to call collectively the Cheap Labor Lobby, since) aren’t only fighting common sense, or even simply a U.S. President’s broad authority to control foreign entry into the country. They’re fighting the data.

For example, CompTIA, which describes itself as “the world’s leading tech association,” reports that information technology “occupations in all sectors of the [U.S.] economy declined by an estimated 134,000 jobs” between June and July. And although the organization judges that such employment is up by more than 203,000 since the CCP Virus broke out in America, the 4.4 percent tech unemployment rate it cites – however much lower than the economy -wide jobless rate – is still much higher than the 1.3 percent it estimated in July, 2019.

In addition, the widely followed consulting firm Indeed Hiring Lab has found that between mid-May and late July, “tech job postings have trended below overall job postings” in the United States, and as the graph below shows, the gap is getting much wider. Also clear: Since mid-May, these tech job postings have been stagnant at this very low level.    

The information technology sector of course has long been one of the U.S. economy’s biggest bright spots, so far be it for this tech dinosaur to offer it advice. But I still can’t help but wonder how much better it could do if it didn’t spend so much time spreading misinformation about the country’s labor markets.

Glad I Didn’t Say That! A Mixed Media Message on U.S. Farm Labor Shortages

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agriculture, automation, farm workers, Glad I Didn't Say That!, illegal aliens, Immigration, Jobs, labor shortages, Mainstream Media, robots

“With fewer undocumented workers to hire, U.S. farmers are fueling a surge in the number of legal guest workers”

– The Washington Post, February 21, 2019

 

“One February afternoon, they work about an acre apart on a farm the size of 454 football fields: dozens of pickers collecting produce the way people have for centuries — and a robot that engineers say could replace most of them as soon as next year.”

– The Washington Post, February 17, 2019

 

(Sources: “With fewer undocumented workers to hire, U.S. farmers are fueling a surve in the number of legal guest workers,” by Kevin Sieff and Annie Gowen, The Washington Post, February 21, 2019, https://www.washingtonpost.com/world/the_americas/with-fewer-undocumented-workers-to-hire-us-farmers-are-fueling-a-surge-in-the-number-of-legal-guest-workers/2019/02/21/2b066876-1e5f-11e9-a759-2b8541bbbe20_story.html?utm_term=.225cc2cc55fe; and “Farmworker vs Robot,” by Danielle Paquette, The Washington Post, February 17, 2019, https://www.washingtonpost.com/news/national/wp/2019/02/17/feature/inside-the-race-to-replace-farmworkers-with-robots/?utm_term=.24166019b5dc)

(What’s Left of) Our Economy: “Tariff Victim” US Industries Remain Full of Job Openings

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business, China, durable goods, employers, job openings, Jobs, JOLTS, labor shortages, manufacturing, metals tariffs, metals-using industries, private sector, quits, tariffs, Trade, Trump, workers, {What's Left of) Our Economy

If today’s government data on U.S. jobs openings don’t prompt loud mea culpas and apologies from the tariff-alarmists in the Mainstream Media and elsewhere in America’s globalization cheerleading establishment, I don’t know what will.

Recall that Americans have been swamped in recent months with reports that President Trump’s trade curbs have already been decimating American manufacturing.  And since they have been in place the longest, his metals tariffs (on most steel and aluminum imports) have been treated as prime examples, with metals-using industries being the prime victims.

But the new figures on job openings in major sectors of the economy (contained in the latest monthly release of the “JOLTS” numbers – the “job openings and labor turnover series”) are simply the latest statistics thoroughly debunking these claims.

Here are the results for job openings from April (because the metals tariffs began to be imposed in late March) through September (the most recent month covered by the JOLTS reports):

private sector:     +2.30 percent

manufacturing:   +7.08 percent

durable goods:   +7.47 percent

As has been the case with so much other data, the durable goods super-sector of manufacturing – the portion of industry containing the biggest metals-using industries – outperformed the rest of manufacturing and the entire economy in the number of employment opportunities it claimed were available.

And although the number of job openings in durable goods dipped from August to September (whose figures are still preliminary), they fell much less than in the rest of the economy.

private sector:     -2.85 percent

manufacturing     -4.72 percent

durable goods     -0.66 percent

Moreover, the 302,000 durable goods jobs openings reported preliminarily in September were the second largest number on record (going back to late 2000). The all-time high? August’s 304,000.

Some critics maintain that employers have incentives to exaggerate their claims of job vacancies. The motives cited include reinforcing contentions of “skills gaps” and other forms of labor shortages; rationalizing the persistence of high unemployment rates or sluggish wage growth; and pushing government or schools to take on worker training responsibilities (and expenses) that employers are loathe to assume. It’s also easy to see how exaggerated job openings claims can be used to bolster arguments for more immigration – which of course is also a tempting strategy for keeping wages down by increasing labor supply relative to demand.

But even if such exaggeration is rife, why would it be so much more important in durable goods manufacturing than in the rest of the economy? Further, why would employers have any reason to overstate the number of vacancies they’re trying to fill if they believed that their businesses were being swamped by steep, tariffs-led costs increases, or were about to? Wouldn’t they be trying to shed payroll instead? As a result, it’s hard to escape the conclusion that the JOLTS openings numbers simply add to the evidence that, despite the claims of actual or impending tariffs-mageddon, metals-using industries continue to be faring just fine.

Interestingly, workers in durable goods sectors don’t appear to share this optimism fully, according to the JOLTS data. For the figures also measure the numbers of employees voluntarily leaving their jobs – a clear sign of confidence that lots of new opportunities are available. Here are are the April-through-September results:

private sector:     +8.53 percent

manufacturing:    -2.94 percent

durable goods:     -9.48 percent

Clearly, durable goods workers have been displaying less confidence about reemployment opportunities than their counterparts in the rest of manufacturing, and much less than private sector workers overall. And these results are mirrored in the August-to-September numbers:

private sector:     -1.26 percent

manufacturing:    -6.60 percent

durable goods:   -11.76 percent

Nonetheless, in absolute terms, all these quits levels – even for durable goods – remain pretty high by recent standards. And for durables, they’re somewhat volatile, possibly because the absolute numbers have always been on the small side. Indeed, durable goods quits increased by 6.19 percent month-to-month as recently as July. And the August-to-September drop-off was the biggest sequential decline in percentage terms since the 15.70 percent monthly nosedive in August, 2017 – after which the numbers of quits steadily recovered.

As always, these trends could change (or, with the quits rate) intensify. It’s also possible that the President’s more sweeping tariffs on imports from China will be game-changers. (The first round dates only from early July, and the second, much larger round, went into effect in mid-September.) For now, however, the only real news about the economic effect of these levies is that they’ve showed no signs of slowing the recovery’s current momentum. Accept no substitutes.

(What’s Left of) Our Economy: Industries Claiming Labor Shortages are Productivity as Well as Wage Laggards

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compensation, Labor Department, labor productivity, labor shortages, productivity, restaurants, trucking, wages, {What's Left of) Our Economy

The labor shortage claims from American businesses keep filling the media (even though wages, which are supposed to rise sharply in such circumstances, are improving only sluggishly). So it was more than a little interesting to look over the latest statistics on labor productivity released by the Department of Labor.

After all, companies and industries really facing dire labor shortages, and unwilling or unable to raise wages, are supposed to boost their productivity (generally by introducing labor-saving devices and practices). But the new Labor Department numbers show that they’re doing surprisingly little on this front, either.

Let’s examine two sectors of the economy that say with special vigor that they’re running out of workers: trucking and restaurants.

According to a typical account (from yesterday’s Washington Post), American trucking companies are facing “an extraordinary labor shortage” and their CEOs (including industry veterans) are saying things like “I’ve never seen it like this, ever….It doesn’t matter what the load even pays. There are just not drivers.”

The sector does appear to be raising pay. But not until the last two years have its overall employment costs been rising faster than those for the private sector overall – and the latter’s increases have hardly impressed. These data cover the entire transportation and warehousing sector, but after shooting up from a 2.1 percent annual pre-inflation pace to four percent (between the fourth quarters of 2011 and 2012), total compensation advances slowed to 2.3 percent annually during the next two years, and then to 2.2 percent in 2015 before accelerating.

Moreover, trucking industry productivity growth hasn’t been world-beating, either. The Labor Department reported last week that its overall gain in labor productivity (the narrower of two productivity growth measures tracked by Labor, but the one whose data is more up to date) in 2017 was 0.8 percent. A comparable figure for services industries in general isn’t available, but the Department does track labor productivity for non-farm businesses and for manufacturing.

Since labor productivity productivity for the former increased by 1.3 percent in 2017 and only 0.4 percent in manufacturing, it seems safe to conclude that services sector labor productivity grew by more than 1.3 percent – and therefore much more than trucking’s 0.8 percent. Nor does this picture change much going back to 2013.

Further, a remarkably similar pattern emerges upon examining the restaurant business. Labor shortages are widely claimed and reported, along with examples of the industry starting to improve compensation practices. New technologies are also apparently being tried to improve efficiency in the sector. But according to the data, these responses to the purported shortage of workers have been belated at best.

For example, as with trucking, annual total compensation gains in the accommodation and food services sectors (no restaurant-specific numbers are available) trailed those for the overall private sector for several years until 2016. And their owners and lobbyists have been making labor shortage claims for at least that long.

Data for restaurants (and bars) specifically are available for their labor productivity, and their performance here is only roughly comparable to the dreary results for non-manufacturing non-farm businesses.

Industries like trucking and restaurants may indeed not be able to choose their employees from as many applicants as they would like, or from numbers to which they’ve become accustomed. But if they haven’t been doing anything special, at least until recently either to hike pay, improve productivity, or both, then several explanations are possible. Maybe they’re waiting for another wave of wage-depressing legal and illegal immigrants to save their days without the need to fatten paychecks of invest in new plant and equipment. Maybe they’re don’t know how to improve productivity in particular, in which case, their businesses simply may not be viable, or they’re simply lousy managers.

But unless the Labor Department figures are completely off-base, one explanation we can rule out completely is that, as groups, they’re utterly desperate for workers.