Unemployment rates remain high even though businesses across the country are severely understaffed. Companies and their workers have been forced to make drastic changes due to the coronavirus pandemic, and some may prove to be permanent.
In this video from “The 5” on Motley Fool Live, recorded September 23, Fool.com contributors Brian Withers, Toby Bordelon and Demitri Kalogeropoulos share their thoughts on where workers are going.
Brian Withers: Unemployment, they published the jobless claims today – moving on to the second news item – and jobless claims have increased a bit. I just wanted to share this slide from the St. Louis Fed. I love the Fred site. [laughs] It’s such an amazing site. This serves as economic data, so it’s fredstlouisfed.org and you can get all kinds of different data here. These are the jobless claims, the initial weekly jobless claims. You can see in the ’70s,’ 80s, it was in the 200,000, 300,000, and obviously during the coronavirus things kinda popped up. Let’s zoom in here. [laughs] Crazy, isn’t it? 2010 to 2020, just a gradual downward drop in initial jobless claims week after week, then this huge increase during the coronavirus, then it steadily decreases. But if you look at the number, last week I mean it was 351,000, and if you look at the end of December here, where we’re talking about 200,000 weekly jobless claims. We are still a little above the pre-coronavirus figures and what is a little crazy is the world upside down, the number of job offers is just huge. There’s a lot going on here, so companies are struggling to fill positions as well. What is your take on what is happening with the job market today? We’ll start with this question first. Demitri.
Demitri Kalogeropoulos: Yeah, that’s kind of a scary graphic. Thanks for the reminder. It kind of reminded me of how in the days when the market was going down, I think 10% in a day at the time, you kind of understand why – you have 5 million new jobs lost in a week.
Kalogeropoulos: It’s incredible. Yeah, I’ll give you an example today just from my area here. I went to my mailbox this morning, I live in North Florida, just south of Jacksonville, and I had a note in my mailbox saying the city is shutting down recycling services indefinitely because that she couldn’t have enough staff to do it anymore and they had to reschedule a few times and they finally gave up, and they don’t know when they’re going to start over when they told us to keep our little blue bins just in case that would happen. But that’s an example of what you’re talking about. Like you said, obviously there’s a whole bunch of factors here, but the kind of one that comes to mind is kind of this one, I guess it’s called shifting the priorities of pandemic, just a lot of people making those decisions, voluntarily decisions just change or move.
One number that jumped out at me, I was also playing on this website, I love this website too, you can spend hours on this site. But the 2.7% number of workers in July, which is the most recent data available to us, quit their jobs, such as voluntarily leaving their jobs, which is pretty close to a record, that number has increased in the over the past two months. . It sounds like a telltale story, and you look at some of the industries that are sort of raised that way, it’s voluntary separations or things like food services and hotels of course. Areas that maybe have longer hours or maybe physically demanding work, like my example of municipal services. Then professional services are also important, and I think I attribute that to some of those people who maybe work in a large metropolitan area and have to sort of commute and don’t want to be tied to the office and that commute. A lot of people have quit their jobs and just aren’t willing to go back, it’s harder, I guess, to go back to those industries. People have developed a taste for remote working and avoiding long commutes, and in some cases have left urban areas. I guess that’s one of the reasons the job market looks so strange right now.
Withers: Yeah, Demitri. I’ve seen polls that not only said that there had been a bunch of people quitting, if you ask people who have jobs today, there’s 30% or 40%, there’s a large percentage of them who would leave if, for example, the company forced them to return to the office five days a week or they found a better job that allowed them more flexibility. Granted, the coronavirus has kind of made us all step back a bit and assess, is this work really what I want to do, day to day, isn’t it? Toby, what’s your take on all of this?
Toby Bordelon: Yeah, I think there’s a lot going on here, right? I mean, one thing Demitri said about 2.7% of people who quit their jobs, I think that was the number there, that kinda plays into that, right? I mean, even in environments where we have what we call full employment, there are still unemployed people for precisely that reason, right? People lose their jobs or they quit their jobs and they’re in between jobs, but they’re going to get another one, right? There’s always a little bit of flexibility in that, and there’s always going to be a number of unemployed people transitioning from one place to another and you’re never going to get to zero, and that’s not healthy, n ‘ is this not ? Economists will tell you that if unemployment gets too low, it’s actually bad for the economy.
One thing we are seeing here is that we have all heard about the labor shortage. I think most people are pretty convinced that if they want to get the job, they can get it or the people who are currently employed. If someone says I don’t want this job, they will quit. We’re not in a situation where you necessarily line up another job first. You’d say, “Well, I went out, I’m going to get another job. It will stress, it will increase this type of unemployment between the job search and you are going to potentially see it in the tick-up that we saw this time. It doesn’t necessarily mean that something is wrong. It just means we’re in a different scenario.
I think a lot of what’s going on, too, follows Demitri’s point about shifting priorities. People are simply leaving the workforce. You think about what happened during the pandemic – schools have closed, forcing some parents to quit their jobs. Some people lost their jobs during the pandemic and were forced to stay at home. I think a lot of people could probably go back now if they wanted to, but they don’t and it’s definitely by choice. They are reassessing their priorities. People have said that one or the other of the high unemployment payments was a factor. Maybe it does, but I think a lot of it is also about re-evaluating priorities and people deciding, I just don’t need to work right now. I think this is especially true when you think of old dual income households with young children. A person might say, you know what? We are trying this because I lost my job. I was forced to stay home or had to stay home with the kids who were in school, and it’s just better for our family if we have someone at home. So let’s keep doing this. There is no reason for us both to work.
Or maybe they work part time from home, but that’s not counted. You don’t see that. You always think about the job to fill because they don’t take all of it. I have a part-time job and it’s good. I think there are a lot of them. I think another factor you want to think about is that it’s just different jobs and maybe more jobs now. We have seen a surge in corporate share prices over the past year. This is because the business is booming. They hire people. We’re talking about all of these companies that we’ve researched thoroughly, Brian. Oh, we’re hiring X number of people. At least I guess we’re trying the implication there. But not all of these companies existed ten years ago. Not all of these industries even existed, and it takes a while to get by in terms of recycling people, for people to be aware of what is out there. Sometimes we hear owners complaining and small businesses like me can’t hire people, people don’t want to work. Maybe they don’t want to work for you at what you’re trying to pay for. [laughs] But drive through any random city in this country and you will see work being done somewhere. The people are there, they drive their cars. They do things. There are so many factors that I don’t think you would choose one, but it’s definitely a change. It’s definitely a transition we’re seeing right now.