“It’s a really unusual situation to have — to have the ratio of vacancies to unemployed be this high,” Federal Reserve chair Jerome Powell told reporters last month.
What gives? The labor market is really complicated, and it’s not always obvious why companies and workers do the things they do. But there’s clearly a disconnect between the jobs that are available, the compensation they offer, and what workers are looking for.
If we look at the big picture, perhaps it’s not surprising that the labor market is taking a while to recover. The pandemic has drastically changed how we live and how companies do business. Some industries have benefited, others have been crushed.
- Many workers are struggling with school and childcare arrangements.
- Jobs in retail and hospitality carry a new level of health risk.
- Some workers have relocated.
- Job seekers may not be willing to resume commuting.
- Millions are afraid of being exposed to the coronavirus.
- Workers may not have the right skills for jobs in new growth industries.
- Unemployment benefits could allow some workers to wait longer for the right job.
These factors help explain why the unemployment rate is still 5.4%, compared to 3.5% in February 2020 before the pandemic arrived. The so-called “real” unemployment rate, which includes people who want to work but aren’t actively looking, is closer to 10%.
Intervention needed: Policymakers will need to find ways to address the crisis if it drags on much longer. The Fed doesn’t have a silver bullet, and the central bank could use more help from Congress.
Powell said some people may be reluctant to work because they fear exposure to the coronavirus, or because they want to protect a vulnerable family member. Others, he said, may be be acting as caretakers for children or elderly relatives.
“All of those factors should wane,” he added. “I think the bottom line on this is people want to work. If you look at where labor force participation can get, people will go back to work unless they retire. Some people will retire. But, generally speaking, Americans want to work; and they’ll find their way into the jobs that they want. It may take some time, though.”
The virus is still a problem for offices
America’s slated post-summer office reopening has been thrown off course by surging coronavirus infections linked to the Delta variant.
What it means: The delays will deal a serious blow to the restaurants, bars, dry cleaners and thousands of other small businesses that depend on city-center foot traffic for survival. It will also pile more pain on airlines, hotels and conference venues, already hard hit by the pandemic.
“There’s no upside to any of this,” Mark Zandi, chief economist at Moody’s Analytics, told my CNN Business colleague Matt Egan. “The question is how serious the economic downside is.”
Some good news: Despite the about-face by corporations, workers are still gearing up to head back into the office eventually. At the same time, university students are preparing for the start of the new academic year.
In London, rental values rose month-on-month in July for the first time since the start of the pandemic, according to Knight Frank. Activity is also picking up around the city’s business districts, with inquiries from agencies that specialize in relocating companies and executives reaching their highest level last month since November 2019, the consultancy said in a report Friday.
“The see-saw of high supply and low demand is tipping back the other way,” commented Tom Bill, Knight Frank’s head of UK residential research. “Demand is coming from multiple sources and rental values are getting stronger as a result.”
Virgin Galactic is selling space trips for $450,000
Price to pay: A flight to space will set you back $450,000 — more than double the price of tickets sold a decade ago, my CNN Business colleague Jackie Wattles reports.
Buyer beware: People who do opt to fork out the cash for a seat may have to wait quite a while for their turn. More than 600 people who purchased tickets for between $200,000 and $250,000 when Virgin Galactic sold its first batch nearly 10 years ago are already on the waiting list for their chance to take a trip to the edge of space.
And about 1,000 more people have put down a $1,000 deposit to secure early access to the latest batch of tickets.
What to expect: SpaceShipTwo will offer customers an hour-long total experience, complete with views of the Earth from a vantage point 50 miles above the planet’s surface.
- US jobs report for July.
- Ecommerce company Bukalapak pulls off Indonesia’s biggest IPO.