October 11, 2021
Mismatch: Disappointing jobs report accompanied by record number of job openings.
Hopes for a strong autumn jobs recovery faded with the disappointing employment report for September. The U.S. Bureau of Labor Statistics reported just 194,000 jobs were added last month.

Total nonfarm payroll employment rose by 194,000 in September, and the unemployment rate fell by 0.4 percentage point to 4.8 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in leisure and hospitality, in professional and business services, in retail trade, and in transportation and warehousing. Employment in public education declined over the month.

Although the report revised upward the estimates for hiring in July and August, adding about 169,000 jobs for the two months combined, there's no question: People are not coming back to work in the numbers required to boost the economy. COVID-19 gets much of the blame, but there seems to be more going on.

The Wall Street Journal reports education hiring was lower than expected, adding that it seems to be indicative of a larger trend.

The reduced hiring at schools is illustrative of a more general problem, however: There is a lot of demand for workers, but many people have remained on the sidelines. Indeed, separate figures from the Labor Department show that, as of the end of July (the most recent data available), there were a seasonally adjusted 460,000 state and local education job openings. That was about twice as many unfilled education jobs as at any point before the pandemic.

The article suggests several COVID-related factors that might come into play: Schools are high contact settings, older teachers may have opted out of the workforce, and women continue to face childcare challenges. But, the reporter notes, these factors apply to other workplaces as well.

A Seattle Times story on the ending of the extended UI benefits finds that while hiring has picked up in some areas, Puget Sound region still struggle to fill job openings.

Before Friday's jobs numbers were released, we cited two surveys finding that corporate CEOs and small business owners both identified the labor shortage as a top business challenge.

The Business Roundtable, a national association of CEOs representing major corporations, reported the results of its Q3 2021 Economic Outlook Survey. A key finding:

When asked to identify the most significant impediments or threats to their company’s U.S. investment, hiring and growth plans over the next year, CEOs cited continued difficulty finding and retaining qualified workers, adverse changes to U.S. corporate tax policy and slow progress in global vaccinations as their main concerns. [Emphasis added.]

NFIB also published last week the results of its monthly jobs survey.

Fifty-one percent (seasonally adjusted) of small business owners reported job openings they could not fill in the current period, up one point from August and a record-high reading for the second consecutive month, according to NFIB’s monthly jobs report. The number of unfilled job openings continues to exceed the 48-year historical average of 22%.

“More and more small business owners are struggling to find workers for their open positions,” said NFIB Chief Economist Bill Dunkelberg. “For most small employers, labor costs are the largest operating outlay and owners will be compelled to pass those costs on to their customers by raising prices.”

There are many reasons employees hesitate to return to the workplace, even as employers are raising wages. The pandemic, childcare, and safety concerns all must be addressed. We're confident that steps are being taken to address the problems, albeit more slowly than anyone would like.
Remote capital: A long-term bet
Remote work expanded dramatically during the pandemic, expanding opportunities for both employers and employees. Now, it seems likely to stick around, transforming the geography of business.

Arnold Kling writes,

One consequence of the pandemic is that our businesses created a lot of what I call “remote capital,” meaning the ability to handle work remotely. The most obvious example is the use of Zoom. But managers had to learn to deal with remote work forces, and workers had to learn how to get things done and learn things when not in the office.

Kling acknowledges that the transition did not come without problems. But adds,

But I think that the winning businesses will be those that can creatively deal with the challenges posed by remote work..

I think that within a few years we will see more remote work than during the pandemic. I would bet on remote capital.

His brief blog post pegged off an interesting article by Joel Kotkin, headlined "Never Going Back." We recommend it. A couple of excepts:

The shift towards dispersed and remote work suggests the beginnings of a new geographical and corporate paradigm. Suburbs and exurbs accounted for more than 90 percent of all new job creation in the last decade, but with the rise of remote work, proximity to the physical workplace has lost more of its advantages. University of Pennsylvania Professor Susan Wachter notes that telework eliminates the choice between long commutes and inordinate housing costs. The areas where remote work is growing most are generally small cities, as well as Sunbelt locales in Florida and South Carolina.

The dispersion of work is not a matter of low-wage workers heading to cheap places to do low-status jobs. In metros over one million such as Raleigh-Cary, Austin, Orlando, Salt Lake City, Nashville, Phoenix, Dallas-Fort Worth, and Charlotte, professional and business-services jobs are growing much faster than they are in San Francisco, Chicago, New York, or Los Angeles.


Workers in families, particularly women, overwhelmingly favor working full or part time from home, notes one recent survey. This is especially true for millennials, once thought wedded to city life but now attracted to work at home, which addresses issues, according to a Conference Board survey, like enhanced “life-work balance.” Working remotely also has clear environmental advantages. With a 50 percent reduction in annual delay hours, lower congestion levels reduced fuel consumption by 51 percent. Greenhouse gas emissions during peak period commutes dropped 50 percent.

It's a provocative argument, but worth considering. As we wrote earlier, vying for remote workers is proving to be a strategy for rural economic development.
State minimum wage will rise to $14.49.
Should it vary by region?
The state minimum wage is set to jump from $13.69 per hour to $14.49 per hour in 2022. The Department of Labor and Industries explains,

State law mandates L&I calculate the minimum wage for the coming year based on the federal Bureau of Labor Statistics’ (BLS) Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). L&I compares the CPI-W from August of the previous year to the index for August of the current year to make the calculation.
The result is the state’s current minimum wage of $13.69 will go up 5.83 percent next year. BLS attributed the increase in the price index to more expensive gas, housing, household furnishings, and food.

The increase prompts the Walla Walla Union-Bulletin editorial board to endorse a regional approach to setting the wage. The editorial says,

We believe the best way to determine wages should be through market forces — supply and demand — and especially allowing it to be set regionally, not at the state level.

Washington’s higher-than-average minimum wage has been mostly positive for employees, resulting in a starting wage being a fair wage.

Yet, the concern is that Washington state’s annual increase in the minimum wage — as mandated by voters with the passage of Initiative 1433 in 2016 — is putting a squeeze on employees and employers, particularly in rural areas and especially during the pandemic.

Make sense?
From the blog