WEBVTT - Joelle Gamble Explains the Confusing State of the US Labor Market 0:00:10.119 --> 0:00:14.320 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.400 --> 0:00:18.720 I'm Joe Wisnal and I'm Tracy. Tracy. I'm gonna say 0:00:18.720 --> 0:00:21.919 something and I don't think it's particularly sort of controversial, 0:00:21.920 --> 0:00:25.720 but this is my assessment. No, no, no, this is 0:00:25.760 --> 0:00:29.080 my basic assessment of where we are, like big picture, 0:00:29.240 --> 0:00:31.440 like you know, over two years since the start of 0:00:31.480 --> 0:00:36.360 the pandemic, which is that the labor market has recovered 0:00:36.600 --> 0:00:40.200 far faster than anyone would have expected in March and April. 0:00:41.520 --> 0:00:44.240 And the big issue now, of course, is the sort 0:00:44.280 --> 0:00:49.320 of above trend, significantly above trend, above target inflation. So 0:00:50.200 --> 0:00:53.159 that's not controversial, that's right. I mean, yes, if you 0:00:53.200 --> 0:00:56.320 look at headline unemployment, I think it's a what is 0:00:56.320 --> 0:00:58.720 it three point five or three point six percent? Three 0:00:59.480 --> 0:01:04.000 three point five percent for July. But I think the 0:01:04.120 --> 0:01:07.240 controversy or where there is a lot of disagreement is 0:01:07.319 --> 0:01:10.760 over what that's telling you exactly, because if you look 0:01:10.760 --> 0:01:14.600 at some other indicators of labor market health, things like 0:01:14.760 --> 0:01:18.000 the participation rate, those show a very different picture, very 0:01:18.000 --> 0:01:19.880 different picture. You're totally right. So I'm looking at the 0:01:19.959 --> 0:01:24.160 overall labor force participation rate here on the Bloomberg and 0:01:24.319 --> 0:01:27.280 as the latest reading it's sixty two point one PENT 0:01:28.160 --> 0:01:33.720 pre crisis February sixty three point four. So it is 0:01:33.760 --> 0:01:37.399 clearly like by this measure we have clearly not recovered. 0:01:37.600 --> 0:01:40.200 And of course this was trending down through much of 0:01:40.240 --> 0:01:43.520 the post Great Financial Crisis period, it started picking up, 0:01:43.760 --> 0:01:50.160 started gaining steam in so by this measure we've suffered 0:01:50.280 --> 0:01:54.120 a setback, a real reset perhaps. Yeah. And this is 0:01:54.160 --> 0:01:58.000 where a lot of the tension in dissecting the labor 0:01:58.040 --> 0:02:01.280 market exists right now. This idea that the unemployment rate 0:02:01.360 --> 0:02:04.400 is really really low, but there is also this narrative 0:02:04.640 --> 0:02:06.800 that no one wants to work anymore and that it's 0:02:06.800 --> 0:02:09.120 hard for companies to find the right workers and things 0:02:09.160 --> 0:02:13.519 like that. And even within the labor participation rate, there 0:02:13.520 --> 0:02:18.480 are variations between gender, between race and age and things 0:02:18.520 --> 0:02:22.000 like that. So there's a lot to discuss, right So, 0:02:22.320 --> 0:02:26.280 you know, one other statistic that's important part of the 0:02:26.360 --> 0:02:30.840 story with declining labor for force participation might be retirees. 0:02:30.960 --> 0:02:33.520 You have a lot of old people who maybe after 0:02:33.600 --> 0:02:38.080 the pandemic hit the like retirement, great retirement, etcetera. But 0:02:38.160 --> 0:02:41.200 that can't explain the entire story because even if you 0:02:41.240 --> 0:02:45.120 look at say employment to population for fift year old 0:02:45.200 --> 0:02:48.840 sort of so called prime age workers. Another way of 0:02:48.919 --> 0:02:52.920 measuring sort of labor force participation, that's at eight percent, 0:02:53.639 --> 0:02:58.960 not too bad. But again, prior to the crisis, we're 0:02:59.000 --> 0:03:02.440 at eighty point five percent. And so again, you know, 0:03:02.639 --> 0:03:05.600 these some of these things like say old people retired, 0:03:05.639 --> 0:03:07.960 like they don't seem to explain the full story anyway. 0:03:07.960 --> 0:03:09.640 The bottom line is there still seems to be some 0:03:09.760 --> 0:03:12.239 mystery about like what's going on with labor. Yeah, well, 0:03:12.280 --> 0:03:15.320 the mystery is, you know, if you look at unemployment, 0:03:15.840 --> 0:03:18.280 it all looks great, everyone seems to be working. If 0:03:18.280 --> 0:03:21.960 you look at some other things then, especially anecdotal data 0:03:22.080 --> 0:03:24.919 from companies who say they're having trouble finding workers, then 0:03:25.080 --> 0:03:28.640 it seems like no one's working. You know what, Let's 0:03:28.639 --> 0:03:31.480 talk to someone who is much smarter than us and 0:03:31.480 --> 0:03:34.320 who knows a lot about the labor market data, and 0:03:34.360 --> 0:03:37.240 in fact that's their entire role, their entire job. We're 0:03:37.240 --> 0:03:39.720 gonna be speaking today with Joel Gamble. She is the 0:03:39.800 --> 0:03:42.880 chief economist at the Department of Labor, and she's going 0:03:42.920 --> 0:03:46.200 to clear all of this stuff up for us, hopefully. So, Joel, 0:03:46.480 --> 0:03:53.400 thank you so much for coming on the podcast you're 0:03:53.440 --> 0:03:55.600 going to you're gonna answer all our questions. We're gonna 0:03:55.600 --> 0:03:58.680 walk away from here without a mystery. But in all seriousness, 0:03:58.720 --> 0:04:01.560 you know, I remember, in the wake of the Great 0:04:01.600 --> 0:04:06.000 Financial Crisis, we had also a big drop in labor 0:04:06.040 --> 0:04:10.160 force participation rate, employment, the population ratio, and people said 0:04:10.160 --> 0:04:12.800 things like, oh, this is like a structural change in 0:04:12.840 --> 0:04:15.920 the labor market. Something happened, that's just different, And it 0:04:15.960 --> 0:04:17.479 turned out most of those people are wrong. We just 0:04:17.520 --> 0:04:20.760 needed a stronger economy, and when growth picked up, most 0:04:20.800 --> 0:04:24.000 of the jobs came back, and we actually, uh, you know, 0:04:24.080 --> 0:04:25.919 we did eventually get all the jobs back. It just 0:04:25.960 --> 0:04:28.320 took way too long because growth was so sluggish. Do 0:04:28.360 --> 0:04:32.799 you see evidence of a more structural shift in who's 0:04:32.839 --> 0:04:35.720 working these days post pandemic or is this going to 0:04:35.800 --> 0:04:38.280 be another story where everyone is quick to rush to 0:04:38.440 --> 0:04:41.840 pronounce structural change but really it's just a matter of 0:04:41.839 --> 0:04:45.920 time before full normalization. Well, I think in a very 0:04:46.000 --> 0:04:49.799 online world there's often, you know, a rush to assess 0:04:49.880 --> 0:04:52.360 the state of the labor market. But I see things 0:04:52.400 --> 0:04:56.400 a few ways when there are real through lines that 0:04:56.440 --> 0:04:59.360 are trends, especially when we're talking about the labor force 0:04:59.400 --> 0:05:04.279 participation rate right there's an aging population, for example, you 0:05:04.279 --> 0:05:07.600 know there's gender shifts, particularly with labor force participation rates 0:05:07.640 --> 0:05:10.320 for men, particularly white men, declining over time. That was 0:05:10.400 --> 0:05:13.599 pre pandemic, that was occurring during the recovery from the 0:05:13.640 --> 0:05:16.479 Great Recession um and so there are there are real 0:05:16.600 --> 0:05:19.200 things that are more structural. I would think would also 0:05:19.200 --> 0:05:21.920 include immigration in the way that's affecting overall labor supply 0:05:22.480 --> 0:05:26.039 as a structural change. Those administration is doing all we 0:05:26.080 --> 0:05:29.520 can to increase authorized immigration and fixing some of the 0:05:29.520 --> 0:05:32.120 mistakes that were made by the last administration. But there's 0:05:32.160 --> 0:05:34.600 also some things that may be unique to what we've 0:05:34.640 --> 0:05:38.440 just experienced, which was a huge disruption to the US economy, 0:05:38.680 --> 0:05:41.640 a deep recession, and a really fast recovery. I think 0:05:41.720 --> 0:05:44.440 Claudia Golden actually has a really interesting working paper that 0:05:44.480 --> 0:05:47.000 came out this year that highlights kind of the relationship 0:05:47.040 --> 0:05:50.240 between some of the pre pandemic labor market trends and 0:05:50.560 --> 0:05:53.440 how we assess it today, particularly the fact that, for instance, 0:05:53.680 --> 0:05:56.080 there's a big run up and female labor force participation 0:05:56.240 --> 0:05:59.760 right before the pandemic recession, and that matters for how 0:05:59.839 --> 0:06:03.440 we think about female labor force participation today, and that 0:06:03.520 --> 0:06:05.680 big increase in the run up right before the recession 0:06:05.720 --> 0:06:08.800 was among you know, women with lower levels of education, 0:06:08.920 --> 0:06:12.360 young children, younger women, they're more marginally attached. Those are 0:06:12.400 --> 0:06:14.760 also some of the women whom we could see coming 0:06:14.760 --> 0:06:17.560 back now and that would improve labor force participation. In fact, 0:06:17.680 --> 0:06:21.120 education believe is a big role. For instance, both men 0:06:21.200 --> 0:06:23.920 without college degrees and women without college degrees who are 0:06:23.920 --> 0:06:26.000 in their prime age working years could come back to 0:06:26.080 --> 0:06:29.200 the labor market and you know, improve labor force participation. 0:06:29.440 --> 0:06:31.200 That's an addition to like the fact that people die, 0:06:31.240 --> 0:06:34.160 there's excess retirements, all those other stories that we've been 0:06:34.160 --> 0:06:37.400 talking about. So there's a mix of structural trends and 0:06:37.440 --> 0:06:39.520 there are some unique things that are happening right now, 0:06:40.040 --> 0:06:42.520 um that are affecting, you know, the composition of the 0:06:42.600 --> 0:06:45.279 labor force. Could you dive in a little bit more 0:06:45.400 --> 0:06:51.080 into the gender discrepancy in labor force participation because if 0:06:51.120 --> 0:06:54.400 you chart, for instance, the participation rate for prime age 0:06:54.400 --> 0:06:58.000 women versus prime age men, those two lines just go 0:06:58.360 --> 0:07:02.240 in very different directions. So for men, you know, it's 0:07:02.279 --> 0:07:04.160 been trending down for a while. For women, it's been 0:07:04.200 --> 0:07:07.520 trending up right up until COVID hit as you mentioned, 0:07:07.720 --> 0:07:10.840 but it certainly recovered a lot faster than the male 0:07:10.920 --> 0:07:14.880 participation rate. What's going on there? So I think a 0:07:14.920 --> 0:07:17.440 few things are happening, but I think it's important to 0:07:17.480 --> 0:07:22.320 delineate even within gender different populations. Right women are not 0:07:22.360 --> 0:07:24.880 a monolith. Men are not a monolith. And I think 0:07:24.880 --> 0:07:27.360 it's important to do that in part because, you know, 0:07:27.480 --> 0:07:30.560 we think about how the recession affected women and their 0:07:30.640 --> 0:07:33.960 labor force participation rate. You know, the ability to work 0:07:34.000 --> 0:07:37.480 from home likely played a big role. Women with higher 0:07:37.480 --> 0:07:39.880 of levels of education, you know, even if they still 0:07:39.880 --> 0:07:42.600 had caregiving duties, were more like, we're more able to 0:07:42.680 --> 0:07:44.720 keep their jobs. Women who had to go in person 0:07:44.760 --> 0:07:47.080 for work, whether they were mothers or not, were more 0:07:47.120 --> 0:07:49.720 likely to have to you know, lose their job, get 0:07:49.760 --> 0:07:51.920 laid off, etcetera. And so I do think that the 0:07:52.040 --> 0:07:55.000 education plays an important role there. And then in terms 0:07:55.040 --> 0:07:57.160 of you know, the labor force participation rate right now, 0:07:57.240 --> 0:08:00.680 I think this is a very well told story. Worry that, 0:08:01.000 --> 0:08:04.800 you know, for women, the ability to into the workforce 0:08:04.880 --> 0:08:08.600 is affected by a number of factors, including including care 0:08:08.720 --> 0:08:12.680 including you know, workplace safety, including school policies as well, 0:08:12.680 --> 0:08:15.240 and so I think there's there's a pretty complex story there, 0:08:15.240 --> 0:08:18.280 but I would really underline the importance of, you know, 0:08:19.040 --> 0:08:21.400 looking at the nuance within the population of women in 0:08:21.400 --> 0:08:23.280 the U. S. Economy, and we can get into race 0:08:23.320 --> 0:08:27.640 as well. I think that's that's important too. Obviously, even 0:08:27.840 --> 0:08:30.840 last year, there were a lot of schools that were disrupted, 0:08:30.920 --> 0:08:33.720 They that weren't open the entire year. Both of my 0:08:34.160 --> 0:08:37.480 I think at least one of my kids definitely head 0:08:37.520 --> 0:08:40.520 days where they had to stay home due to the 0:08:40.600 --> 0:08:44.160 school being closed due to COVID. Do you see significant 0:08:44.160 --> 0:08:49.640 potential upside gained still for women once we get to 0:08:49.679 --> 0:08:52.920 a place in which the care question to some extent 0:08:53.040 --> 0:08:55.680 is at least no longer uncertain. Maybe not as ideal 0:08:55.720 --> 0:08:57.480 as it would be in the sort of ideal scenario 0:08:57.520 --> 0:09:00.520 of like universal child care, but something or at least 0:09:00.520 --> 0:09:02.640 like the uncertainty of whether you're going to have someone 0:09:02.679 --> 0:09:06.200 watch your kids during the day goes away. I think 0:09:06.200 --> 0:09:10.560 the word uncertainty is key there, because when you have 0:09:10.679 --> 0:09:14.199 certainty about childcare arrangements, for example, or other care arrangements, 0:09:14.200 --> 0:09:16.959 that enables you to plan, That enables you to plan 0:09:17.040 --> 0:09:19.120 either of your having to work from home, you know, 0:09:19.240 --> 0:09:21.200 or it'll enables you to plan to go in person, 0:09:21.800 --> 0:09:24.880 especially as more people feel comfortable going into work or 0:09:24.920 --> 0:09:27.760 more employers feel comfortable asking their workers to come in 0:09:28.160 --> 0:09:30.760 and so you know, there's probably some upside risk there, 0:09:31.160 --> 0:09:33.080 but as you also mentioned, you know there are bigger 0:09:33.120 --> 0:09:53.840 investment needs in that space. So setting women aside, which 0:09:53.880 --> 0:09:56.920 is a terrible phrase, if we focus on the male 0:09:57.000 --> 0:10:00.280 participation rate for a second, I'm still wondering, like, why 0:10:00.360 --> 0:10:03.240 has that been trending down for so long and why 0:10:03.520 --> 0:10:06.040 does it seem to be struggling to recover. What do 0:10:06.080 --> 0:10:08.320 you see there, because I imagine you see a mix 0:10:08.320 --> 0:10:12.120 of the data but also you know, some anecdotes as well. Yes, 0:10:12.200 --> 0:10:14.360 I think I think it's a few things in terms 0:10:14.400 --> 0:10:18.400 of why it's been declining downward. Um, there are some 0:10:18.480 --> 0:10:21.600 structural challenge there in terms of access to opportunity. It 0:10:21.679 --> 0:10:25.199 depends on heavily by race to you know, folks who 0:10:25.200 --> 0:10:29.160 are interacting with the criminal justice system are also you know, 0:10:29.240 --> 0:10:32.240 going to struggle more defined employment to get discouraged to 0:10:32.280 --> 0:10:34.480 end up leaving the labor force. You know, there are 0:10:34.480 --> 0:10:36.440 people who are not in the labor force right so 0:10:36.480 --> 0:10:39.600 they're not participating, But who do actually want a job. 0:10:39.880 --> 0:10:42.320 But I think it's an important distinction and to make 0:10:42.360 --> 0:10:44.760 here that not everyone who wants a job is actively 0:10:44.800 --> 0:10:46.960 looking by the way we measure it in in the 0:10:47.000 --> 0:10:50.920 Bureau of Labor Statistics surveys, so there are challenges there. Um. 0:10:50.960 --> 0:10:52.920 I also think that frankly, you know, this is a 0:10:52.960 --> 0:10:56.440 place where tighter labor markets can help. You know, I 0:10:56.520 --> 0:11:01.080 mentioned women with lower levels of education being mark more market, 0:11:01.120 --> 0:11:03.560 I'm more likely to be marginally attached. That also can 0:11:03.640 --> 0:11:06.120 happen for men, particularly for for black men, And we're 0:11:06.120 --> 0:11:10.280 actually seeing for black men at least a much higher 0:11:10.360 --> 0:11:13.559 level of employee or a much faster employment recovery than 0:11:13.600 --> 0:11:16.880 in the last recovery. So for example, their prime, their 0:11:17.160 --> 0:11:21.680 employments population level has been pretty elevated for for some time. 0:11:22.640 --> 0:11:24.920 Why do you why do you think it's been so 0:11:25.360 --> 0:11:28.000 the trajectory has been so different. I mean this way 0:11:28.160 --> 0:11:30.839 for years, you know, post grade financial crisis, Like we 0:11:30.920 --> 0:11:33.480 talked about this slow recovery and all of these measures, 0:11:33.880 --> 0:11:37.439 and we talked about there's this huge gap between white 0:11:37.520 --> 0:11:41.200 unemployment and black unemployment, and it's still high, but it's 0:11:41.280 --> 0:11:45.120 closed a lot faster than, you know, than anything that 0:11:45.160 --> 0:11:47.920 we've seen post grade financial crisis, and A why do 0:11:47.960 --> 0:11:50.800 you think that is? And B is this something that 0:11:50.840 --> 0:11:53.600 you think we can build on as an economy and 0:11:53.720 --> 0:11:56.280 that some of these gains can be locked in and 0:11:56.320 --> 0:12:00.079 that the benefits of having a job that seemed to 0:12:00.160 --> 0:12:03.920 you know that have lots of positive externalities long term benefits. 0:12:04.200 --> 0:12:06.680 Is this something from the current environment that you see 0:12:06.720 --> 0:12:10.440 is benefiting the economy for years to come. Yes, So 0:12:11.120 --> 0:12:12.960 there's a lot a lot to unpack there. But I 0:12:12.960 --> 0:12:17.120 think to your observation about the unemployment gaps, that is, 0:12:17.320 --> 0:12:20.160 you know, an important aspect of this recovery, right, the 0:12:20.240 --> 0:12:25.239 gap between black unemployment and white unemployment, or Hispanic unemployment 0:12:25.280 --> 0:12:28.200 and white unemployment, tends to be correlated with the business cycle. 0:12:28.880 --> 0:12:31.920 So when you see a fast recovery, um you see 0:12:32.480 --> 0:12:37.000 a lower ratio of of unemployed persons to vacancies, then 0:12:37.080 --> 0:12:40.559 you are more likely to see better labor market outcomes 0:12:41.040 --> 0:12:45.400 relative to a looser labor market for black and Hispanic workers. 0:12:45.559 --> 0:12:47.800 So that is definitely part of the story. I think 0:12:47.840 --> 0:12:50.880 the nature of the recovery may have particularly helped the 0:12:50.880 --> 0:12:54.120 black men in terms of obtaining a job. So you know, 0:12:54.280 --> 0:12:57.960 there was a big increase in consumption on goods relative 0:12:58.000 --> 0:13:02.720 to services last year, and that has ripple effects along 0:13:02.880 --> 0:13:07.720 supply chains, including through e commerce and transportation and warehousing jobs, 0:13:07.960 --> 0:13:12.840 those kinds of moving jobs, frankly that black men disproportionately hold, 0:13:13.000 --> 0:13:15.839 So that's probably a part of the story there, though 0:13:15.880 --> 0:13:17.840 I will also, of course note that those are not 0:13:17.920 --> 0:13:21.000 always the best quality jobs, and so we do want 0:13:21.040 --> 0:13:23.520 to improve them. The Department has an initiative called the 0:13:23.520 --> 0:13:26.480 Good Jobs Initiative that's really focused on that because we're always, 0:13:26.760 --> 0:13:29.240 you know, so worried in these recoveries about getting jobs, 0:13:29.240 --> 0:13:30.480 and now we're at the point where we at least 0:13:30.520 --> 0:13:32.920 get a chance to think about are these good jobs? 0:13:33.280 --> 0:13:36.120 How can we give people choices um in this labor market? 0:13:36.440 --> 0:13:37.920 So do you think that that's certainly a part of 0:13:37.920 --> 0:13:41.160 it in terms of locking in gains. That is a 0:13:41.280 --> 0:13:44.240 huge policy question and policy priority for us at the 0:13:44.240 --> 0:13:46.520 Department of Labor, in part because we want to make 0:13:46.520 --> 0:13:49.000 sure that workers have rights, they have protections through of 0:13:49.040 --> 0:13:54.360 course enforcement, whether it's discrimination issues, wage theft, etcetera. We 0:13:54.400 --> 0:13:56.600 also want to make sure that workers who want jobs 0:13:56.640 --> 0:14:01.520 have pathways. Sometimes you know, you don't have these clear 0:14:01.559 --> 0:14:04.080 pathways to jobs based off where you live, you know, 0:14:04.120 --> 0:14:07.280 based off of your social network, etcetera. And so you know, 0:14:07.400 --> 0:14:11.080 creating pathways for training, apprenticeships, connections to employers who offer 0:14:11.160 --> 0:14:14.360 good jobs is also really important part of lucking and games. 0:14:14.559 --> 0:14:16.680 And then of course, you know, ensuring that workers do 0:14:16.760 --> 0:14:18.800 have power when they're on the job. This is an 0:14:18.840 --> 0:14:22.840 administration that cares deeply about supporting workers choice to join 0:14:22.880 --> 0:14:25.880 a union if they want to. And Tracy just looking 0:14:26.040 --> 0:14:29.360 at the charge here. You know, in summer, so basically 0:14:29.440 --> 0:14:33.280 like over four years after like the financial crisis started, 0:14:33.320 --> 0:14:36.960 the gap between white and black unemployment was seven points 0:14:36.960 --> 0:14:40.600 six percent. Today is down to two point nine percent. 0:14:40.720 --> 0:14:43.360 So the speed with which this isn't compressed, which often 0:14:43.400 --> 0:14:45.920 happens in a in a business cycle as it goes on, 0:14:46.120 --> 0:14:48.960 is just clearly much faster than anything we saw in 0:14:49.000 --> 0:14:52.600 the past. This kind of leads into another question. So, 0:14:53.120 --> 0:14:58.680 if black men are disproportionately present in industries like warehouse 0:14:58.760 --> 0:15:02.360 or warehousing, aren't transportation and things like that, do you 0:15:02.440 --> 0:15:05.840 worry that those gains won't be sustainable if we do 0:15:06.040 --> 0:15:09.080 see consumers start to pull back. You know, for instance, 0:15:09.080 --> 0:15:11.400 we've seen some of the big box retailers talk about 0:15:11.480 --> 0:15:14.280 having too much inventory at the moment, do some of 0:15:14.320 --> 0:15:18.640 those jobs start to look vulnerable. I mean, I wish 0:15:18.680 --> 0:15:23.080 that this was a new story for black workers, but unfortunately, 0:15:23.640 --> 0:15:26.360 you know, there's a I think a phenomenon that is 0:15:26.720 --> 0:15:29.200 kind of common parlance these days, which is last five, 0:15:29.320 --> 0:15:34.000 last hired, first fired. And so, you know, frankly, black workers, 0:15:34.040 --> 0:15:37.080 black men and black women are often you know, the 0:15:37.160 --> 0:15:40.920 most reliant on the labor markets strength to be able 0:15:40.960 --> 0:15:44.480 to achieve better outcomes, and so you know, yes, I'm 0:15:44.480 --> 0:15:46.880 always worried about, you know, making sure that they have 0:15:47.000 --> 0:15:50.840 pathways to know better jobs, jobs that are sustainable. At 0:15:50.840 --> 0:15:52.960 the same time, we also want to see sustained labor 0:15:53.000 --> 0:15:55.840 market progress. As a department, we're focused on outcomes, So 0:15:56.120 --> 0:15:59.000 wage growth that's sustainable is important here. You know, the 0:15:59.040 --> 0:16:03.160 ability for workers to find trainings and apprenticeships and access 0:16:03.200 --> 0:16:05.520 other jobs if they want to, especially if they're industries 0:16:05.560 --> 0:16:08.800 where job quality isn't great, or industries that are particularly 0:16:08.800 --> 0:16:11.320 susceptible to swings in the business cycle. And you know, 0:16:11.440 --> 0:16:14.040 I think that that's kind of the best way to 0:16:14.120 --> 0:16:17.480 kind of bridge that gap, to not just rely on 0:16:17.880 --> 0:16:20.000 where we are at in the business cycle, but to 0:16:20.080 --> 0:16:24.400 instead make investments in you know, long run growth and 0:16:24.440 --> 0:16:27.120 making sure that the benefits of that growth is shared. 0:16:27.800 --> 0:16:29.600 So I want to get your take. And I on 0:16:29.720 --> 0:16:32.400 a question, and I posed this to Goldman sex as 0:16:32.440 --> 0:16:36.680 chief economist Jan Hatzi is a few weeks ago. But okay, everyone, 0:16:36.840 --> 0:16:40.000 tight labor market, tight labor market. We're companies having a 0:16:40.000 --> 0:16:42.520 hard time hiring. We hear about that all the time, 0:16:43.120 --> 0:16:46.960 and yet wage growth has been negative. And this is 0:16:47.040 --> 0:16:48.600 and this has sort of been the frustration of a 0:16:48.600 --> 0:16:50.680 lot of people that's like, yes, there are jobs out there, 0:16:50.720 --> 0:16:53.800 but wages aren't keeping up with prices. If the labor 0:16:53.840 --> 0:16:58.320 market is really so tight, why aren't workers able to command, 0:16:58.480 --> 0:17:01.160 in your view, strong high enough wages such that they 0:17:01.200 --> 0:17:04.920 can outpace the pace of inflation high end of raises. Sorry, 0:17:07.160 --> 0:17:10.720 So it's absolutely an important question, And first off, I 0:17:10.760 --> 0:17:12.840 would just say it emphasizes why it's so important to 0:17:12.880 --> 0:17:15.679 get inflation down to a reasonable level. We saw that 0:17:15.760 --> 0:17:20.119 in July because real wages increase the zero point flag percent, right, 0:17:20.200 --> 0:17:23.040 because cp I was unchanged at one, which is just 0:17:23.040 --> 0:17:24.800 one measure of inflation, but it was unchanged for the 0:17:24.880 --> 0:17:27.320 month of July UM and so so I think that 0:17:27.320 --> 0:17:30.960 that's a very important piece of the puzzle in part 0:17:31.000 --> 0:17:33.800 because you know, workers can feel when the cost of 0:17:33.840 --> 0:17:36.200 living isn't up to you know, what they would like 0:17:36.280 --> 0:17:39.760 it to be. It's important too, I think, to think 0:17:39.800 --> 0:17:42.760 about some of the mechanisms by which sustained increases happen. 0:17:43.160 --> 0:17:46.159 One and also to think about the labor market not 0:17:46.320 --> 0:17:49.920 is just like this aggregate you know phenomenon, but actually 0:17:50.480 --> 0:17:52.720 a lot of different sectors industries that interact and that 0:17:52.800 --> 0:17:56.560 have different kind of needs and different standards for their workers. 0:17:56.800 --> 0:17:59.160 So at like a kind of big picture, you know level, 0:17:59.320 --> 0:18:02.840 you know, the mechanisms by which sustained wage increases happen 0:18:02.880 --> 0:18:04.840 in the long run or not just a tight labor market, 0:18:04.920 --> 0:18:08.240 though we're seeing that in this labor market, new workers 0:18:08.280 --> 0:18:10.640 have choice, they get bargaining power and switching jobs it's 0:18:10.640 --> 0:18:12.840 a good way to get a wage increase UM. But 0:18:12.880 --> 0:18:16.840 there's also mechanisms that are important, like you know, having 0:18:16.960 --> 0:18:20.520 bargaining power, whether it's through unions or some other collective 0:18:20.520 --> 0:18:24.440 action mechanism that allows you to negotiate changes in your 0:18:24.440 --> 0:18:27.840 employment contract like cost of living increases UM. So cola 0:18:27.920 --> 0:18:30.800 contract cola clauses and clauses and contracts can help there 0:18:30.960 --> 0:18:33.240 so that's another thing that we're just not seeing quite 0:18:33.240 --> 0:18:36.200 the same level of in part because as the undensity decline, 0:18:36.240 --> 0:18:38.679 the prevalence of cola contract and cola clauses and contracts 0:18:38.720 --> 0:18:41.080 also declined. UM. So there are some of the typical 0:18:41.080 --> 0:18:44.280 mechanisms that may have existed decades ago, um that allow 0:18:44.320 --> 0:18:48.440 workers to have power enough power to negotiate wage increases 0:18:48.480 --> 0:18:51.960 that top inflation mechanically, UM, that just aren't quite there 0:18:52.000 --> 0:18:54.960 in the same way. And then the last piece I 0:18:54.960 --> 0:18:57.080 will say is that I do think this question also 0:18:57.160 --> 0:19:00.360 varies by sector, in part because we're seeing I think 0:19:00.359 --> 0:19:02.600 the New York Fed actually had a publication on this 0:19:03.280 --> 0:19:08.040 where the sectors that are the farthest from full recovery, 0:19:08.160 --> 0:19:12.919 so the farthest below their February employment level, are the 0:19:12.960 --> 0:19:15.959 ones where we're seeing the highest wage growth. Those are 0:19:15.960 --> 0:19:18.879 also the sectors where you know, labor costs are a 0:19:18.960 --> 0:19:22.199 higher share of total firm costs, And so there's a 0:19:22.320 --> 0:19:25.520 different story bisector. It's not just like an aggregate wage 0:19:25.520 --> 0:19:28.119 growth figure that we often see that reported in the news. 0:19:29.040 --> 0:19:32.000 Can you talk a little bit more about how some 0:19:32.160 --> 0:19:36.840 of the videos syncrasies around the pandemic have impacted the 0:19:36.880 --> 0:19:39.600 labor market and whether or not you still see those 0:19:39.640 --> 0:19:42.880 as forces UM affecting the labor market as a whole. 0:19:42.880 --> 0:19:46.399 And I'm thinking specifically of things like the p p P, 0:19:46.800 --> 0:19:51.800 the paycheck Protection program UM, and also of course the 0:19:51.880 --> 0:19:55.159 impact of COVID itself and people who may have to 0:19:55.160 --> 0:19:58.280 stay out of the workforce because they're taking care of 0:19:58.560 --> 0:20:02.080 people who are ill or those who have unfortunately incurred 0:20:02.119 --> 0:20:06.480 things like long COVID. How are those affecting the labor market. 0:20:06.520 --> 0:20:10.280 Is there still a big effect from things like that, 0:20:10.280 --> 0:20:13.280 That's a great question. I think there are a few 0:20:13.280 --> 0:20:14.720 things that I think about when I think about the 0:20:14.760 --> 0:20:18.479 effects of COVID, you know, on the labor market. You know, first, 0:20:18.560 --> 0:20:21.200 I think this will be the subject of maybe one 0:20:21.240 --> 0:20:24.840 thousand research papers in the coming coming years, especially the 0:20:24.880 --> 0:20:28.879 relationship between the federal policy response and the labor market today. 0:20:28.920 --> 0:20:31.720 But we do know righte that strong federal policy response 0:20:31.800 --> 0:20:35.520 kept incomes relatively unchanged or by some measures that improved 0:20:35.520 --> 0:20:38.200 on average, and so that was really important because the 0:20:38.240 --> 0:20:41.200 income can translate into spending, which can translate into job creation. 0:20:41.400 --> 0:20:44.280 On the small business response, this seemed to be particularly 0:20:44.320 --> 0:20:47.160 helpful early on in the labor market recovery, because there's 0:20:47.200 --> 0:20:51.000 been studies that have found that, you know, small business relief, 0:20:51.000 --> 0:20:55.879 particularly PPP, helped increase employment, in particular through increasing the 0:20:55.920 --> 0:20:58.720 percentage of workers who were recalled from layoffs. We also 0:20:58.760 --> 0:21:02.159 know that leofs were a big of unemployment early in 0:21:02.200 --> 0:21:05.600 the pandemic recession. UM so I do think that there's 0:21:05.840 --> 0:21:09.199 some clear things about not just the pandemic but the 0:21:09.240 --> 0:21:12.240 response to the pandemic that have impacted the labor market today. 0:21:12.440 --> 0:21:15.840 Their persistence, I think is is unclear to me at 0:21:15.880 --> 0:21:18.479 this point. But we did just see five thousand new 0:21:18.520 --> 0:21:21.360 jobs at it last month, and so I'm not sure 0:21:21.359 --> 0:21:23.400 if that question will come to a head just yet. 0:21:23.920 --> 0:21:26.200 On some of the other trends that I think are 0:21:26.200 --> 0:21:29.359 really important in the labor market because of the pandemic. No, 0:21:29.720 --> 0:21:32.560 one piece that we haven't talked about yet, I think 0:21:32.680 --> 0:21:36.160 is is productivity. And so you know, I think there's 0:21:36.200 --> 0:21:40.160 been a really healthy debate around what is happening with 0:21:40.520 --> 0:21:43.800 labor market productivity. You know, it's both a statistical phenomenon 0:21:43.840 --> 0:21:47.840 output over hours worked, as well as a real economic phenomenon. 0:21:48.240 --> 0:21:51.080 So you know, our ability to produce more given the 0:21:51.119 --> 0:21:53.959 same inputs, including workers producing more with the same effort 0:21:54.280 --> 0:21:57.119 and on both friends. It's hard to measure this monthly 0:21:57.200 --> 0:21:59.760 or even the quarterly changes that we get because there's 0:21:59.800 --> 0:22:01.960 so much that can swing month a month in terms 0:22:01.960 --> 0:22:04.880 of business investment, in hiring um and yearly data is better, 0:22:04.880 --> 0:22:06.840 so I will caveat with that, but I do think 0:22:06.840 --> 0:22:09.720 that it does raise some some questions and there has 0:22:09.760 --> 0:22:11.720 been some interesting research on that front that I think 0:22:11.760 --> 0:22:15.040 is worth noting. One around, just like the way in 0:22:15.040 --> 0:22:17.480 which the pandemic may be affecting these kind of short 0:22:17.600 --> 0:22:21.040 term prints on productivity that we're getting, so you know, 0:22:21.320 --> 0:22:25.240 there could be uh, it could be possible that, for instance, 0:22:25.280 --> 0:22:28.360 you know, productivity rose above trend in one as businesses 0:22:28.400 --> 0:22:30.800 produced more with fewer workers, and that we're you know, 0:22:30.840 --> 0:22:34.360 now kind of recalibrating where businesses are hiring more workers 0:22:34.600 --> 0:22:38.080 and workers aren't average producing or working fewer hours. So 0:22:38.200 --> 0:22:42.600 output is you know, roughly constant or slightly negative. And 0:22:42.600 --> 0:22:44.800 then there's also you know, something else that could have happened, 0:22:44.800 --> 0:22:48.520 which is frankly that you know, during the pandemic, businesses 0:22:48.520 --> 0:22:51.359 operated with fewer workers because sick workers also affected overall 0:22:51.480 --> 0:22:54.480 from productivity, or frankly, workers were clocking the same number 0:22:54.520 --> 0:22:57.160 of hours but working less because of supply chain disruptions. 0:22:57.640 --> 0:22:59.560 And then finally, you know, it could be a compositional 0:22:59.560 --> 0:23:03.640 effect where right now we're seeing you know, stronger employment 0:23:03.640 --> 0:23:07.200 gains in lower productivity sectors like leisure and hospitality. That 0:23:07.240 --> 0:23:09.040 does not, of course mean those workers are not valuable. 0:23:09.080 --> 0:23:12.280 I just mean in macro terms, and so that could 0:23:12.320 --> 0:23:14.760 just be shifting the overall productivity numbers, and I think 0:23:14.800 --> 0:23:16.800 that's important in the short run. But then on the 0:23:16.880 --> 0:23:21.199 long term there are also possibly meaningful changes on the 0:23:21.359 --> 0:23:25.240 kind of you know, productivity as a real economic phenomenon, 0:23:25.240 --> 0:23:27.040 because before I think I was talking about more as 0:23:27.040 --> 0:23:29.280 like a statistical phenomenon, but here as like a real 0:23:29.359 --> 0:23:33.640 economic phenomenon, So things like the effects of work from 0:23:33.680 --> 0:23:36.480 home or automation that might have taken place in workplaces 0:23:36.520 --> 0:23:39.119 due to safety or labor supply concerns. And so I 0:23:39.160 --> 0:23:42.479 think there are some real questions here that are are 0:23:42.560 --> 0:23:46.399 yet to be you know, completely sorted out, but I 0:23:46.400 --> 0:23:48.560 think are really important and a big part of how 0:23:48.600 --> 0:23:51.480 I'm thinking about the labor market, in part because productivity 0:23:51.520 --> 0:23:53.760 is so important for making sure wage growth is sustainable 0:23:53.760 --> 0:23:56.200 for workers. And at the Department of labor. We just 0:23:56.280 --> 0:23:58.480 really want to see workers get paid what they're do. Yeah, 0:23:58.520 --> 0:24:01.080 I mean one thing in their hip been corporate executive 0:24:01.160 --> 0:24:04.560 talking about this on conference calls Neil Data, Renaissance Macro 0:24:04.760 --> 0:24:07.720 has flagged this, Like, I wonder if part of the 0:24:07.760 --> 0:24:10.600 productivity story is like if a bunch of people just 0:24:10.640 --> 0:24:14.919 started jobs relatively recently, Like no one is particularly productive 0:24:14.960 --> 0:24:17.080 in their first month at a new job, and that's 0:24:17.119 --> 0:24:19.520 slightly exaggeration. Not everyone is at their first month, but 0:24:19.600 --> 0:24:23.240 in a period of a lot of labor market churn 0:24:23.440 --> 0:24:25.240 and new hiring, and you mentioned that half a million 0:24:25.320 --> 0:24:27.600 jobs that were created last month, whether we still are 0:24:27.640 --> 0:24:29.399 just in this sort of state of flux in which 0:24:29.600 --> 0:24:32.480 we haven't gotten into sort of people finding their groove 0:24:32.560 --> 0:24:35.720 and businesses operating at a predictable clip again, I mean, 0:24:35.720 --> 0:24:37.880 that seems like a reasonable theory to me, and it's 0:24:38.040 --> 0:24:40.119 kind of plays into the composition piece that I mentioned 0:24:40.119 --> 0:24:42.520 about workers who are coming online and how that affects 0:24:42.520 --> 0:24:45.399 the top line figures. So there's one other thing that 0:24:45.440 --> 0:24:48.520 we haven't really spoken about yet, and that's the wealth effect. 0:24:48.680 --> 0:24:51.040 So this was also, you know, a pet theory of 0:24:51.080 --> 0:24:53.200 the past couple of years. When it comes to explaining 0:24:53.359 --> 0:24:57.440 lower participation rates. The idea that well, you know, maybe 0:24:57.440 --> 0:24:59.760 if you're older, or even if you're not older, but 0:25:00.040 --> 0:25:02.679 say you invested a lot in crypto or something like 0:25:02.720 --> 0:25:05.440 that a year ago, or how to house it right, 0:25:05.920 --> 0:25:09.280 or a stock portfolio or whatever. If you saw a 0:25:09.359 --> 0:25:13.200 lot of gains in those financial assets, you might think, well, 0:25:13.400 --> 0:25:16.719 it's not really worth working anymore. I can sit this 0:25:16.760 --> 0:25:20.080 one out, you know, wait for COVID maybe to blow over, 0:25:20.440 --> 0:25:22.959 and then rejoin the workforce if I want to, or not, 0:25:23.119 --> 0:25:26.040 if I'm financially able to sit it out. How are 0:25:26.040 --> 0:25:29.199 you viewing that kind of wealth effect? Is that a 0:25:29.240 --> 0:25:33.199 tangible thing in your opinion? It certainly makes sense on 0:25:33.240 --> 0:25:35.960 the surface, and I think it's part of what's enabling 0:25:36.200 --> 0:25:40.520 workers to have some choice in the labor market. They 0:25:40.520 --> 0:25:42.720 didn't have to rush back to a job that wasn't 0:25:42.920 --> 0:25:46.560 their ideal job, So there's some increasing worker power that's 0:25:46.560 --> 0:25:50.480 happening there. I am, on the surface, at least skeptical 0:25:50.520 --> 0:25:53.119 of it being a long run challenge, in part because 0:25:53.760 --> 0:25:56.400 you know, savings can run out, especially for workers who 0:25:56.400 --> 0:25:58.199 don't have a lot of wealth, which is frankly a 0:25:58.200 --> 0:26:01.000 lot of workers, and and also in heart, because so 0:26:01.119 --> 0:26:04.680 much about our financial well being as Americans is reliant on, 0:26:05.359 --> 0:26:08.159 you know, our job, not just the check paychecks we 0:26:08.240 --> 0:26:11.879 take home, but also things like health insurance and retirement 0:26:11.880 --> 0:26:14.040 benefits if we are fortunate enough to have a job 0:26:14.119 --> 0:26:16.960 or we have those. And so at a certain point, 0:26:17.240 --> 0:26:19.960 that kind of strategy will not work well for a 0:26:20.000 --> 0:26:24.600 significant chunk of workers, even if it does help workers today, 0:26:25.040 --> 0:26:28.160 I'm on the whole have more bargaining power. So how 0:26:28.240 --> 0:26:31.840 concerned are you that? You know, we do have very 0:26:31.920 --> 0:26:35.600 high inflation still, and the Fed is in tightening mode, 0:26:35.720 --> 0:26:40.960 and the mechanism, more or less people dance around it 0:26:40.960 --> 0:26:43.160 a little bit sometimes, but the mechanism more or less 0:26:43.240 --> 0:26:46.159 to combating inflation through rate hikes is to weaken the 0:26:46.240 --> 0:26:49.560 labor market, weaken wage growth, and hope that that's sort 0:26:49.560 --> 0:26:51.879 of like slowest things down. And maybe there's this hope 0:26:52.240 --> 0:26:54.520 that we can take care of most of it just 0:26:54.520 --> 0:26:57.600 by reducing job openings and relieving some of the pressure there. 0:26:57.600 --> 0:27:00.879 But how concerned are you? A followed like some of 0:27:00.920 --> 0:27:05.080 these gains that we've talked about unwinding as part of 0:27:05.119 --> 0:27:08.840 the anti inflation efforts. So I first must start off 0:27:08.880 --> 0:27:13.840 with an awkward disclaimer, which is I have full respect, 0:27:13.920 --> 0:27:16.639 as this administration does for the FEDS independence on these issues. 0:27:16.640 --> 0:27:19.560 So I will not comment on FED policy. Okay, Um, 0:27:19.800 --> 0:27:23.760 So I think a few things. One, I think this 0:27:23.840 --> 0:27:26.440 is why it's so important to see sustainable wage growth 0:27:26.480 --> 0:27:31.199 in the labor market, to see participation increase and to 0:27:31.240 --> 0:27:33.879 see wage growth, you know, reflecting the values work, the 0:27:33.960 --> 0:27:36.280 value that workers bring to business. Like I want to 0:27:36.320 --> 0:27:38.000 see wage growth, of course, I want to see sustainable 0:27:38.040 --> 0:27:42.439 wage growth. I also, you know, I'm really fascinated by slash. 0:27:42.440 --> 0:27:46.040 I've been following this really important debate in macro economics. 0:27:46.080 --> 0:27:49.600 I'm macro economist, so I will fully fully claim that 0:27:49.600 --> 0:27:54.720 I am just following it around. You know, wow, how 0:27:54.800 --> 0:27:58.560 we might land softly? How we might actually achieve a 0:27:58.600 --> 0:28:03.920 soft landing here? And it really does seem like there 0:28:03.920 --> 0:28:06.280 are a few ways things can go, but it doesn't 0:28:06.280 --> 0:28:11.159 seem completely improbable. Um in part because frankly, as you 0:28:11.200 --> 0:28:14.480 all know, as observers of this debate as well, there's 0:28:14.520 --> 0:28:17.520 a lot of wonky signals out there in terms of 0:28:17.520 --> 0:28:21.600 what's going on in the macroeconomy. We saw three consecutive 0:28:21.600 --> 0:28:24.000 months of job openings decline without major movement and the 0:28:24.040 --> 0:28:27.760 unemployment rate, which again it's it's premature to say there 0:28:27.760 --> 0:28:30.520 we go, mission accomplished. But you know, things could go 0:28:30.560 --> 0:28:32.359 a lot of different ways. We could see a vertical 0:28:32.400 --> 0:28:36.080 fallen job openings, and things might work out the beverage curve, 0:28:36.119 --> 0:28:39.240 which is what I'm referencing unemployment rates to vacancy ratio. 0:28:39.640 --> 0:28:41.840 It could shift back to where it was in prior recoveries, 0:28:41.840 --> 0:28:44.000 and then we might be in a different situation. Um. 0:28:44.040 --> 0:28:46.360 I think this debate is really healthy. I think it's important. 0:28:46.840 --> 0:28:49.120 I don't pretend to have an opinion on it. I'm 0:28:49.160 --> 0:28:52.400 mostly focused on outcomes for workers here. But it does 0:28:52.440 --> 0:28:56.240 seem like, you know, it's really worthwhile to try to 0:28:56.280 --> 0:28:59.040 do all we can to make sure we get cost 0:28:59.080 --> 0:29:01.800 down and try to get on a sustainable path in 0:29:01.880 --> 0:29:04.200 terms of the labor market and the economy overall. It 0:29:04.200 --> 0:29:07.040 doesn't seem like a full serrand. Yeah. I just remembered 0:29:07.040 --> 0:29:09.520 we've actually done a whole episode on shifts in the 0:29:09.560 --> 0:29:12.360 beverage curve, haven't we. Oh yeah, yeah, although that was 0:29:12.440 --> 0:29:15.760 last year. But okay, So on this note though, and 0:29:15.840 --> 0:29:18.960 you know, I take the point that you're not involved 0:29:19.000 --> 0:29:21.080 in this debate specifically but I'm wondering if you could 0:29:21.080 --> 0:29:26.400 talk generally about the impact of online job searches on 0:29:26.800 --> 0:29:30.160 labor market data and statistics, because this is also one 0:29:30.160 --> 0:29:32.840 of the pet theories for why that beverage curve relationship 0:29:32.920 --> 0:29:35.800 might be changing, which is that it's much easier for 0:29:35.840 --> 0:29:39.160 companies to just post a bunch of job openings somewhere 0:29:39.200 --> 0:29:42.600 online and you know, maybe hope and wait that they'll 0:29:42.640 --> 0:29:45.360 get a really good candidate, but they don't have to 0:29:45.400 --> 0:29:50.479 accept anyone. So there's this discussion point that maybe online 0:29:50.560 --> 0:29:54.360 job searches are kind of skewing that data. I think 0:29:54.360 --> 0:29:58.400 that that's a very valid theory. If the cost of 0:29:58.520 --> 0:30:01.960 job postings is go going down, especially due to technology 0:30:02.000 --> 0:30:05.280 like the ability to post online, then you would expect 0:30:05.280 --> 0:30:07.840 employers to, you know, to go fishing a little bit more, 0:30:07.880 --> 0:30:10.320 and even if they're not always interested in catching a fish, 0:30:10.360 --> 0:30:13.520 and so you might see you know, slightly elevated job 0:30:13.560 --> 0:30:17.160 opening I think as the Bureau of Labor statistic defines that, 0:30:17.320 --> 0:30:19.360 you know, they are running a survey by which they're 0:30:19.560 --> 0:30:21.960 during which they're actively asking employers, you know, is this 0:30:22.000 --> 0:30:24.720 an opening that you were actively hiring for now, there's 0:30:24.720 --> 0:30:27.400 probably a lot of room for interpretation there, but you know, 0:30:27.720 --> 0:30:30.560 by the Department of Labor Standards, you know, we're doing 0:30:30.560 --> 0:30:33.680 our best to try to measure job openings for which 0:30:33.720 --> 0:30:37.040 employers are trying to fill a job versus you know, 0:30:37.120 --> 0:30:41.200 this kind of more passive approach to looking for for 0:30:41.240 --> 0:30:45.360 workers that might happen if job openings are less costly. 0:30:45.960 --> 0:30:48.560 I think something else that's really interesting about you know, 0:30:48.640 --> 0:30:51.600 the job openings data is that it may also and 0:30:51.640 --> 0:30:53.920 I think this is bearing out with data, it also 0:30:54.000 --> 0:30:57.680 might just reflect some shift in preferences to So some 0:30:57.760 --> 0:31:01.960 of the highest job opening levels by sector are the 0:31:02.000 --> 0:31:06.600 service sector job openings, so you know, retail, trade, healthcare, 0:31:06.840 --> 0:31:11.040 food services, and accommodations. Especially food services and accommodations was 0:31:11.120 --> 0:31:15.440 kind of skyrocketed right when the recovery began, in part 0:31:15.480 --> 0:31:18.440 probably because there's a high exposure risk to COVID if 0:31:18.440 --> 0:31:21.160 you work those jobs um and lower wages. Those those 0:31:21.200 --> 0:31:23.640 wages are rising really fast, and so you know, some 0:31:23.760 --> 0:31:26.040 of the opening data, again I'd like to emphasize the 0:31:26.040 --> 0:31:28.240 sick told differences because they tell you an additional story 0:31:28.800 --> 0:31:31.200 may also be influenced by where workers are trying to 0:31:31.240 --> 0:31:34.840 actually search for work and filled jobs, especially those lower 0:31:34.840 --> 0:31:38.400 SCIPE workers who may have slightly better opportunity in this 0:31:38.440 --> 0:31:58.239 tightly moment. What's the Inflation Reduction Act going to mean 0:31:58.320 --> 0:32:03.320 for workers? Um, a number of things. I'm like, oh, 0:32:03.360 --> 0:32:07.400 I'd love to talk about that. So, you know, we 0:32:07.400 --> 0:32:11.840 were talking earlier about the real wage growth, and I 0:32:11.840 --> 0:32:15.200 think that the Inflation Reduction Act is really important because 0:32:15.960 --> 0:32:18.520 you know, we're seeing the impact of inflation on real wages, 0:32:18.520 --> 0:32:21.520 and it highlights the broader importance of lowering the cost 0:32:21.600 --> 0:32:25.239 of living overall. Inflation Reduction Act is doing that by 0:32:25.320 --> 0:32:27.680 tackling some of the real cost of living challenges that 0:32:27.680 --> 0:32:30.720 Americans feel now, of course especially at the pump part 0:32:30.720 --> 0:32:33.760 of the grocery store, but they're also long standing challenges, 0:32:33.800 --> 0:32:36.600 so bringing down energy costs, healthcare costs, you know, the 0:32:36.640 --> 0:32:40.360 high costs for prescription drugs, because you know, those are 0:32:40.400 --> 0:32:43.040 all things that workers have to pay for with the 0:32:43.080 --> 0:32:45.840 wages that they are earning. And so when I think 0:32:45.840 --> 0:32:48.080 about the Inflation Reduction Act and I think about, you know, 0:32:48.120 --> 0:32:50.840 improving the cost of living, I think about workers who 0:32:50.880 --> 0:32:53.400 are going to have paychecks that that stretch a little 0:32:53.440 --> 0:32:57.120 farther than they did before. Actually just you know, sort 0:32:57.120 --> 0:32:58.719 of in general, and I know, you know, we were 0:32:58.720 --> 0:33:01.280 talking about the FED. But in your work and in 0:33:01.320 --> 0:33:03.600 your day to day and at the Department of Labor, 0:33:04.120 --> 0:33:08.400 how much are you thinking about essentially, And again, you know, 0:33:09.000 --> 0:33:12.880 the White House just signed something called the Inflation Reduction Act, 0:33:13.160 --> 0:33:15.880 But how much are you thinking generally about this idea 0:33:15.880 --> 0:33:20.960 of of non monetary efforts to reduce inflation, both through 0:33:21.040 --> 0:33:24.520 the law but other through other regulations, finding ways to 0:33:24.800 --> 0:33:28.880 relieve pressures, finding ways to expand the supply side, finding 0:33:28.920 --> 0:33:32.840 ways to bring about productivity so that we have other 0:33:32.960 --> 0:33:36.240 ways of fighting inflation other than just the raid hike 0:33:36.320 --> 0:33:39.600 layoff channel. Well, I frankly think about it as things 0:33:39.600 --> 0:33:43.520 that we should be doing no matter what. To be 0:33:43.600 --> 0:33:47.080 completely honest, you know, we were talking about the labor 0:33:47.080 --> 0:33:50.440 force participation rate, and you know, increasing labor supply is 0:33:50.480 --> 0:33:53.800 important to along one growth of the U. S economy, 0:33:54.040 --> 0:33:58.520 creating new high quality jobs here at home, including in manufacturing, 0:33:58.520 --> 0:34:01.280 which the Inflation Reduction Act would do, clean energy manufacturing 0:34:01.280 --> 0:34:04.200 in particular. It is important for the growth of the economy. 0:34:04.240 --> 0:34:06.760 I mean, it also is important for bringing down the 0:34:06.840 --> 0:34:10.440 cost of energy. It's also important for growing the economy 0:34:10.480 --> 0:34:13.799 because you know, if we have a bigger pie, and 0:34:13.840 --> 0:34:16.399 we you know, to grow that pie in a way 0:34:16.440 --> 0:34:18.239 that is shared, so workers have more powers, so they 0:34:18.280 --> 0:34:20.239 get a bigger piece of that pie. You know, that 0:34:20.320 --> 0:34:23.880 has the bonus of both, you know, growing use economy, 0:34:23.920 --> 0:34:27.560 increasing productivity. Everyone benefits from higher living standards um and 0:34:27.600 --> 0:34:30.080 you know, American workers have again, like I was saying before, 0:34:30.120 --> 0:34:32.480 paychecks that stretch a little bit farther, or they get 0:34:32.480 --> 0:34:33.920 a chance to get a job in a sector that 0:34:33.880 --> 0:34:36.680 they could not work in before. I'm taking home a 0:34:36.680 --> 0:34:39.680 bigger paycheck that comes with you know, strong worker protections 0:34:39.760 --> 0:34:42.480 and maybe retirement benefits, healthcare, all the things that a 0:34:42.480 --> 0:34:45.360 lot of workers need. I have a basic question, or 0:34:45.360 --> 0:34:48.400 maybe it's a weird question, but what's the impact of 0:34:48.760 --> 0:34:53.200 inflation on labor force participation? Because I could see I 0:34:53.239 --> 0:34:57.160 could kind of see a way to argue it both ways, 0:34:57.239 --> 0:34:59.520 which is, you know, on the one hand, if the 0:34:59.520 --> 0:35:01.239 cost of live thing is going up and you can 0:35:01.280 --> 0:35:04.720 no longer afford, for instance, food or to pay your rent, 0:35:05.040 --> 0:35:07.480 then that would force you back into the labor market. 0:35:07.640 --> 0:35:09.919 But on the other hand, you know, you could also 0:35:09.960 --> 0:35:13.320 imagine a subset of workers who think, well, if prices 0:35:13.360 --> 0:35:16.080 are going up, and everything is unaffordable, then what's the 0:35:16.120 --> 0:35:19.160 point of taking on, for instance, a part time job 0:35:19.280 --> 0:35:20.920 or something that's not really going to be able to 0:35:20.960 --> 0:35:25.440 help me offset those So how are you viewing that relationship? 0:35:26.360 --> 0:35:30.520 I think it's a really interesting question. My first thought 0:35:30.560 --> 0:35:35.960 was to look to frankly, consumer expectations for inflation. We 0:35:36.000 --> 0:35:38.760 just saw that there was a fairly big drop between 0:35:38.840 --> 0:35:41.640 June and July and in the short and long run expectations. 0:35:41.680 --> 0:35:43.560 Because I imagine that that might give you a sign 0:35:43.600 --> 0:35:45.480 as to whether or not that's playing a big role 0:35:45.480 --> 0:35:47.400 in your decision making. But again this is off the 0:35:47.400 --> 0:35:50.759 cuff hypothesis, so so that that's one thing. But at 0:35:50.800 --> 0:35:54.160 the same time, if you have an urgent need to 0:35:55.320 --> 0:35:59.120 feed your family, you know, pay your bills. I imagine, 0:35:59.120 --> 0:36:02.840 even if your paycheck wasn't stretching as far, the choices 0:36:03.080 --> 0:36:06.640 probably to try to earn a wage there. Of course, 0:36:06.719 --> 0:36:09.399 you know other reasons which lay before participation might be 0:36:09.960 --> 0:36:12.520 lower for some workers, like I mentioned earlier, you know 0:36:12.880 --> 0:36:17.400 care uh, you know, lack of access opportunities or discrimination. 0:36:18.000 --> 0:36:20.640 You know, the opiates places prices has even played a 0:36:20.640 --> 0:36:24.279 big role in in the declining rate of participation for 0:36:24.280 --> 0:36:26.880 for white men like there are other bigger structural factors 0:36:26.920 --> 0:36:31.120 that play a role, but that individual decision feels it 0:36:31.160 --> 0:36:33.120 feels it feels like it leans more on the side 0:36:33.160 --> 0:36:35.560 of if there's a job on the table, I might 0:36:35.560 --> 0:36:38.280 take it. Then then that can you talk a little 0:36:38.280 --> 0:36:41.920 bit more about immigration? And we know that over the 0:36:42.000 --> 0:36:45.520 last few years, starting with the last administration, there has 0:36:45.560 --> 0:36:49.040 been this very big drop overall in immigration. How do 0:36:49.080 --> 0:36:51.680 you see that. Is this something that's going to affect 0:36:51.680 --> 0:36:53.520 the economy in the long run or when you look 0:36:53.560 --> 0:36:58.279 at data right now, whether it's productivity data, wage data, 0:36:58.280 --> 0:37:00.719 are there areas in which this is clear showing up 0:37:00.840 --> 0:37:03.680 right now the effects of that. I think the effects 0:37:03.719 --> 0:37:07.279 of immigration are definitely showing up in the labor market 0:37:07.360 --> 0:37:10.600 data today. Um, there are individuals who have measured this. 0:37:11.200 --> 0:37:12.879 I wish I could remember the papers off the top 0:37:12.960 --> 0:37:15.560 but of my of my head. But you know, the 0:37:15.600 --> 0:37:19.800 gaps can be fairly significant, you know, hundreds of thousands. 0:37:20.160 --> 0:37:21.719 I think even there was an estimate that was showing 0:37:21.960 --> 0:37:24.080 last year that there were two million missing immigrants in 0:37:24.080 --> 0:37:26.640 the US economy. Obviously, not all of those immigrants would 0:37:26.640 --> 0:37:29.560 be participating in the labor more labor market, but a 0:37:29.640 --> 0:37:32.880 sizable share would and so you know, that does affect 0:37:32.880 --> 0:37:36.200 overall supply of labor. Like we're actually also seeing that 0:37:36.239 --> 0:37:38.719 even for you workers who are born outside of the 0:37:38.760 --> 0:37:41.319 U S who are working in the US today, you know, 0:37:41.600 --> 0:37:45.920 they are also taking advantage of you know, this bargaining 0:37:45.960 --> 0:37:49.680 power and are switching to sectors that may seem maybe 0:37:49.760 --> 0:37:52.840 higher quality, which I thought was interesting because often the 0:37:52.920 --> 0:37:55.120 thought is, will just bring in a bunch of immigrants, 0:37:55.160 --> 0:37:57.760 they'll slut the labor market and take all these terrible jobs. 0:37:58.719 --> 0:38:01.440 But we're born, were present in the US also have choice, 0:38:01.480 --> 0:38:04.040 and so we're saying when there is opportunities for workers 0:38:04.080 --> 0:38:06.200 to have choice, they also, you know, we'll choose better 0:38:06.239 --> 0:38:09.239 quality jobs. So I think that that's that's important on 0:38:09.320 --> 0:38:12.160 the you know, solutions front. I think obviously the policies 0:38:12.160 --> 0:38:14.520 of the last administration played a big role, and frintly, 0:38:14.560 --> 0:38:19.399 the pandemic hamperedly the federal government's ability to process you know, 0:38:19.280 --> 0:38:21.480 you know, legal immigrants into the US, and so at 0:38:21.560 --> 0:38:23.200 least where I set from what I've seen, the administration 0:38:23.239 --> 0:38:25.560 is doing all it can to kind of fix you 0:38:25.600 --> 0:38:28.160 know a lot of those challenges, including just the undermining 0:38:28.200 --> 0:38:31.560 of our ability to actually make the immigration system work 0:38:31.640 --> 0:38:33.920 for people who are doing their best to navigate it. 0:38:34.680 --> 0:38:38.000 So I just have one last question here, and it 0:38:38.080 --> 0:38:41.279 just goes back to the last nonfarm pay payrolls report. 0:38:41.360 --> 0:38:44.000 We got five hundred and twenty eight thousand new jobs. 0:38:44.360 --> 0:38:47.600 That was well ahead of expectations. And not only that, 0:38:47.760 --> 0:38:50.879 adding a half a million people to the workforce does 0:38:51.000 --> 0:38:54.640 not exactly feel like something that should or is supposed 0:38:54.680 --> 0:38:57.200 to happen in the labor market as tight as this one, 0:38:57.280 --> 0:39:00.560 Like if really employers are like really scrape bing and 0:39:00.640 --> 0:39:02.680 like there's you know, everyone who wants a job in 0:39:02.880 --> 0:39:06.360 theory can find one, and employers to say, oh, we 0:39:06.400 --> 0:39:08.839 can't find workers, Like it's hard to imagine. How how 0:39:08.840 --> 0:39:11.640 do you add another half a million jobs in that environment? 0:39:11.800 --> 0:39:14.919 What does that tell you? What does that change any 0:39:14.960 --> 0:39:17.360 of your assumptions about the state of the labor market 0:39:17.400 --> 0:39:20.120 that is recently is July, this is still an economy 0:39:20.160 --> 0:39:24.520 that's just adding that many workers per month. My biggest 0:39:24.560 --> 0:39:27.120 question is always what's the trend line going to be? 0:39:27.520 --> 0:39:29.839 And excuse this very wonking answer, but I love three 0:39:29.840 --> 0:39:33.719 month averages for this reason. Um So one I think 0:39:33.719 --> 0:39:35.400 it's important to watch to see if this continues or 0:39:35.400 --> 0:39:39.000 if this was a temporary uptick, because prior to July, 0:39:39.640 --> 0:39:41.600 you know, we were seeing slightly lower figures that were 0:39:41.640 --> 0:39:44.600 trending trending lower than they were before. So that's you know, 0:39:44.640 --> 0:39:46.920 out the gate. First reaction is is this going to stick? 0:39:47.000 --> 0:39:48.719 Is this the start of a new trend? That doesn't 0:39:48.719 --> 0:39:51.399 seem likely to me, but we will see very very soon. 0:39:51.520 --> 0:39:53.160 And then and then the second thing is, you know, 0:39:54.160 --> 0:39:56.160 so a question you asked earlier, it's a sign that 0:39:56.200 --> 0:40:00.279 Americans do want to work. It seems like, you know, 0:40:00.360 --> 0:40:03.920 every time we have a recovery, you know, the employer 0:40:04.000 --> 0:40:06.960 side story kind of dominates the headlines, which is the 0:40:07.000 --> 0:40:08.919 idea that Americans don't want to work, but they want 0:40:09.800 --> 0:40:12.000 good quality jobs in sectors where they're not at risk 0:40:12.040 --> 0:40:15.160 of contracting a deadly virus. They want to make enough 0:40:15.200 --> 0:40:17.960 money to pay the bills, especially in an environment where 0:40:18.400 --> 0:40:20.960 you know, inslation can be eating away at what they're 0:40:21.040 --> 0:40:24.160 what they're taking home, um and and that's that's kind 0:40:24.160 --> 0:40:26.680 of what I what I see in that data in July. 0:40:27.480 --> 0:40:30.760 Joel Gamble, thank you so much for coming out odd lots. 0:40:30.960 --> 0:40:33.200 You know, the labor markets obviously such a big and 0:40:33.239 --> 0:40:36.440 sprowling topic. But that was really helpful in terms of 0:40:36.600 --> 0:40:39.200 sort of understanding where we're at right now. So appreciate 0:40:39.239 --> 0:40:41.640 you coming up. So glad to have been here. Yeah, 0:40:41.760 --> 0:40:43.919 that was fun. Thank you so much, Thanks so much. Sure, 0:40:44.360 --> 0:41:01.920 thank you, true Basy. I found that to be very useful, 0:41:02.040 --> 0:41:04.360 all kinds of interesting things. You know. One of the 0:41:04.440 --> 0:41:07.440 things that we haven't talked about that much is this 0:41:07.520 --> 0:41:11.399 productivity question, and I find that I think Joel will 0:41:11.400 --> 0:41:13.359 talk about that. Maybe we talked a little bit about 0:41:13.400 --> 0:41:16.480 that with Yon, but I'm not really sure. But uh, 0:41:16.800 --> 0:41:18.520 I do feel like that's one of the big sort 0:41:18.520 --> 0:41:22.880 of mysteries questions, key determinants like where we go from here. 0:41:23.719 --> 0:41:26.080 And I also like the way she sort of distinguished 0:41:26.120 --> 0:41:30.160 between productivity as the sort of statistical artifact, which is like, yeah, 0:41:30.200 --> 0:41:31.839 you can look at GDP and you can look at 0:41:31.840 --> 0:41:34.120 ours work and come up with some math that say 0:41:34.400 --> 0:41:37.960 workers with this productive. But then also productivity is this 0:41:38.040 --> 0:41:41.000 sort of true deep economic phenomenon of we're going to 0:41:41.160 --> 0:41:44.359 have higher pay and a more robust economy. We need, 0:41:44.600 --> 0:41:47.600 you know, we need productive workplaces. Well, I'm also getting 0:41:47.600 --> 0:41:51.800 flashbacks to actually the old Jannatsis argument about productivity just 0:41:51.920 --> 0:41:55.239 not being you know, measured accurately in a modern economy 0:41:55.320 --> 0:41:58.959 where there's a lot more emphasis on software and things 0:41:59.000 --> 0:42:01.600 like that. That whole versation was a really good reminder 0:42:01.640 --> 0:42:06.440 that the labor force is not a monolith, as Joel mentioned, 0:42:06.440 --> 0:42:08.440 and there are of course these different groups within it, 0:42:08.480 --> 0:42:11.040 all of which may be reacting in different ways to 0:42:11.080 --> 0:42:13.120 the past two years. And then of course she made 0:42:13.120 --> 0:42:15.839 the point also, you know, in addition to demographics, it's 0:42:15.880 --> 0:42:19.239 also about industry type. And I thought her point about 0:42:19.560 --> 0:42:22.840 the proportion of black men in transportation and warehousing and 0:42:22.880 --> 0:42:26.040 things like that, and the relationship with the overall business 0:42:26.040 --> 0:42:30.600 cycle those kind of being the first hired, first fired, 0:42:31.239 --> 0:42:34.080 that was really interesting to me and a good reminder. Yeah, 0:42:34.160 --> 0:42:36.880 we'll have to see what happens, because again, look, it 0:42:37.000 --> 0:42:41.359 is really encouraging that the spread between black and white 0:42:41.400 --> 0:42:46.280 unemployment is much narrower and compressed much faster in this recovery. 0:42:46.320 --> 0:42:48.839 On the other hand, you know, as she pointed out, 0:42:49.120 --> 0:42:52.240 there's questions and as you just mentioned about last hired, 0:42:52.719 --> 0:42:55.239 first fired, there's a quality of those jobs. Okay, we 0:42:55.280 --> 0:42:59.560 saw this huge explosion in demand for warehouse labor, huge 0:42:59.640 --> 0:43:03.920 explore in demand for transportation, labor, huge explosion in demand 0:43:04.040 --> 0:43:07.799 for food service and lodging things like that, not high 0:43:07.840 --> 0:43:11.240 volume jobs, that's not necessarily high paying jobs, not necessarily 0:43:11.239 --> 0:43:13.680 the most stable jobs. So I'll have to see and 0:43:13.719 --> 0:43:16.480 of course throw into the mix of FED that is 0:43:16.800 --> 0:43:19.760 clearly trying to slow down the labor market, and whether 0:43:19.840 --> 0:43:23.080 these gains will hold persistent, have positive carry over for 0:43:23.080 --> 0:43:26.080 the future I think remains a question mark. Yeah. So, okay, 0:43:26.120 --> 0:43:29.239 So we've come out of the Labor Market Mystery podcast 0:43:29.320 --> 0:43:32.800 with more questions, or at least more things to watch, 0:43:33.080 --> 0:43:35.840 more things to watch. So yeah, we we answered a 0:43:35.880 --> 0:43:38.600 bunch of questions and now we have a went to question. Yeah, alright, 0:43:38.800 --> 0:43:40.680 shall we leave it there? Let's leave it there. This 0:43:40.719 --> 0:43:43.440 has been another episode of the All Thoughts podcast. I'm 0:43:43.480 --> 0:43:46.120 Tracy Alloway. You can follow me on Twitter at Tracy 0:43:46.160 --> 0:43:49.040 Alloway and I'm Joe Wisn'tal. You can follow me on 0:43:49.080 --> 0:43:52.640 Twitter at the Stalwart. Follow our guest Joel Gamble, She's 0:43:52.719 --> 0:43:57.440 at Joel Underscore Gamble. Follow our producer Carmen Rodriguez at 0:43:57.520 --> 0:44:00.680 Carmen Armand and check out all of our podcasts at 0:44:00.680 --> 0:44:05.440 Bloomberg under the handle at Podcasts so, Joe, we have 0:44:05.520 --> 0:44:07.880 something pretty exciting coming up. That's right. We're going to 0:44:07.960 --> 0:44:11.120 be doing a live episode of the podcast and listeners 0:44:11.120 --> 0:44:13.319 are invited to join. Yep. We are going to be 0:44:13.360 --> 0:44:17.040 playing host to Perry Maryland and Sultan Posar. The two 0:44:17.040 --> 0:44:19.600 of them are going to be debating the future of 0:44:19.640 --> 0:44:23.040 the dollar. It's on September six at three pm at 0:44:23.040 --> 0:44:25.520 Bloomberg h Q and if you want to come, Tracy, 0:44:25.600 --> 0:44:28.399 how can people sign up? It is totally free. All 0:44:28.480 --> 0:44:30.120 you have to do is make sure you r s 0:44:30.200 --> 0:44:33.120 v P in advance. Please send an email to add 0:44:33.200 --> 0:44:36.160 Bots at Bloomberg dot net. Thanks for listening.