WEBVTT - What’s Really Causing the Labor Shortage 0:00:00.080 --> 0:00:02.160 I was talking to one agriculture company about whether it 0:00:02.200 --> 0:00:06.160 would help to get prisoners to collect the harvest, and 0:00:06.200 --> 0:00:08.320 they said there are a number of problems, including that 0:00:08.960 --> 0:00:10.880 they might not be very good at it. They might, 0:00:11.240 --> 0:00:14.120 you know, you need particular set of skills, especially if 0:00:14.160 --> 0:00:17.560 you're picking soft fruits, for example, and also sometimes the 0:00:17.600 --> 0:00:26.360 prisoners run away, which is another problem. Hello, and welcome 0:00:26.360 --> 0:00:29.319 to Stephanomics, the podcast that brings the global economy to you. 0:00:29.920 --> 0:00:33.960 I'm Stephanie Flanders, and this week we're investigating why employers 0:00:34.000 --> 0:00:37.560 on different sides of the Atlantic are considering extreme solutions 0:00:37.640 --> 0:00:40.839 to their labor shortages. But an economy with millions of 0:00:40.880 --> 0:00:43.879 jobs they can see can still somehow be one in 0:00:43.920 --> 0:00:47.960 which unemployed people struggle to find work. It's all the 0:00:48.000 --> 0:00:51.880 flip side, the human side of the supply chain snarl 0:00:51.960 --> 0:00:54.840 ups we come across so often these days, the post 0:00:54.880 --> 0:00:58.800 COVID economy with demands still gaining pace and inflation and 0:00:58.880 --> 0:01:02.640 wages heading up, but at least four million fewer people 0:01:02.720 --> 0:01:05.679 in work today in the US than before the pandemic. 0:01:06.440 --> 0:01:10.160 Later on, I'll ask Jason Furman, previously President Obama's top 0:01:10.200 --> 0:01:13.360 economic advisor, to help me solve the riddle of the 0:01:13.400 --> 0:01:18.120 missing American worker. I'm also here why agricultural companies in 0:01:18.200 --> 0:01:21.360 Russia are weighing the pros and cons of using prisoners 0:01:21.480 --> 0:01:24.400 to bring in the crops. But first we asked US 0:01:24.440 --> 0:01:27.840 economy reporter Jill Sharp to give us a taste of 0:01:27.880 --> 0:01:40.080 the US jobs market at ground level. Well, I think 0:01:40.080 --> 0:01:43.480 that right now everybody is hiring, but they're only hiring 0:01:43.640 --> 0:01:49.080 for lopaying job. They're hiring for positions as only one 0:01:49.160 --> 0:01:51.960 day a week, two days a week, and people cannot 0:01:52.400 --> 0:01:55.279 make it off of that. That's Precious Briggs, a thirty 0:01:55.320 --> 0:01:57.520 two year old whose stream of working as a Las 0:01:57.640 --> 0:02:00.680 Vegas cocktail server came to a sudden halt last April 0:02:01.080 --> 0:02:06.680 after COVID nineteen shut down America's gambling paradise. After restrictions lifted, 0:02:06.760 --> 0:02:09.600 she expected her former employer to hire her back, but 0:02:09.680 --> 0:02:13.600 the call never came. Today, Precious is among over four 0:02:13.639 --> 0:02:17.080 million Americans who are unemployed were missing from the labor 0:02:17.120 --> 0:02:21.040 market compared to pre pandemic levels. Like many others, she's 0:02:21.160 --> 0:02:24.320 used up her unemployment and pandemic benefits from the government, 0:02:24.720 --> 0:02:28.160 and she's getting by on rental assistance, Medicaid, and support 0:02:28.200 --> 0:02:31.040 from her family. She's hopeful that she'll land a full 0:02:31.080 --> 0:02:35.119 time job as Vegas continues to reopen. I definitely want 0:02:35.120 --> 0:02:37.639 to be in the casino. I love the people and 0:02:37.760 --> 0:02:40.400 I love the atmosphere there, So that's definitely something that 0:02:40.440 --> 0:02:42.080 I love, and that's that. It was a dream of 0:02:42.120 --> 0:02:46.320 mine to leave Little Louisiana, my little town, and come 0:02:46.360 --> 0:02:52.720 here in Tacktail emborsing here. When the pandemic arrived in 0:02:52.760 --> 0:02:56.840 the US last year, millions of American workers abruptly lost 0:02:56.880 --> 0:03:01.000 their jobs. Now, as the economy recovers, a puzzle has 0:03:01.040 --> 0:03:04.799 emerged in the labor market. The country at over ten 0:03:04.840 --> 0:03:07.600 million job openings at the end of August, according to 0:03:07.639 --> 0:03:10.639 federal government data, and that number might have increased over 0:03:10.639 --> 0:03:15.160 the last two months. The job posting website indeed estimates 0:03:15.200 --> 0:03:18.560 there may now be as many as eleven million unfilled openings. 0:03:19.639 --> 0:03:22.480 But while hiring is picked up just recently with over 0:03:22.480 --> 0:03:26.679 five hundred thousand jobs added in October, millions remain unemployed 0:03:26.800 --> 0:03:29.480 or have left the labor market since the pandemics started. 0:03:30.160 --> 0:03:34.720 Economists and policymakers are all wondering where they've gone. Here's 0:03:34.800 --> 0:03:39.240 Julia Pollock, chief economist at the online Jobs marketplace zip recruiter, 0:03:40.320 --> 0:03:43.440 the labor markets, the matching market where you have to 0:03:43.640 --> 0:03:46.760 choose something and be chosen by it, and where all 0:03:46.800 --> 0:03:48.920 the jobs are very very differential, the works are very 0:03:48.960 --> 0:03:51.680 very different and so having you know the same number 0:03:51.680 --> 0:03:56.280 of job openings and of unemployed or underemployed workers does 0:03:56.360 --> 0:04:00.680 not imply that there will be a very simple direct match. 0:04:01.520 --> 0:04:05.240 For example, while job postings and warehousing and transportation and 0:04:05.360 --> 0:04:09.880 e commerce related companies have exploded, there's been a decline 0:04:09.880 --> 0:04:13.400 in brick and mortar retail postings during the pandemic. Workers 0:04:13.440 --> 0:04:16.159 can't swap out their old job for new one quickly. 0:04:16.480 --> 0:04:19.839 It takes time for people to build up the networks 0:04:19.839 --> 0:04:21.960 down the skills that allow them to move from one 0:04:21.960 --> 0:04:26.520 intitut chunnel. In interviews, out of work Americans described myriad 0:04:26.640 --> 0:04:29.880 challenges preventing them from seeking or winning full time jobs 0:04:30.800 --> 0:04:34.240 like precious. Some say employers are offering fewer hours and 0:04:34.320 --> 0:04:39.000 lower wages. Others are caring for children or elderly family members, 0:04:39.080 --> 0:04:42.560 limiting their ability to work. Many are scared of contracting 0:04:42.560 --> 0:04:46.320 the coronavirus, and some have rethought their careers and opted 0:04:46.320 --> 0:04:50.680 out of traditional employment. Altogether, they're getting by through patchwork 0:04:50.720 --> 0:04:55.040 of help, state jobless benefits, federal and local safety net programs, 0:04:55.360 --> 0:05:02.159 help from family and friends. A lucky few, like Josh 0:05:02.360 --> 0:05:05.839 Organ of Omaha, Nebraska, of ditch their workaday lives for 0:05:05.960 --> 0:05:09.920 riches in cryptocurrency. So it was really hard sitting in 0:05:09.960 --> 0:05:13.040 my office making a few dollars a day or whatever 0:05:13.080 --> 0:05:18.000 it was, and then you know, taking a trade on break, 0:05:18.360 --> 0:05:20.320 on my lunch break and making you know, my whole 0:05:20.400 --> 0:05:24.279 day's age in five minutes. During the pandemic, the thirty 0:05:24.320 --> 0:05:26.840 one year old who used to trade crypto on the side, 0:05:26.960 --> 0:05:30.599 began to feel increasingly frustrated with his day job. He's 0:05:30.640 --> 0:05:33.480 trained as a pediatric nurse and was managing a hospital 0:05:33.480 --> 0:05:37.760 dialysis unit. Last summer, he hired a financial advisor after 0:05:37.839 --> 0:05:41.520 his wife insisted quit his job and jumped full time 0:05:41.560 --> 0:05:45.520 into the fast paced world of crypto. I do remember 0:05:45.640 --> 0:05:49.000 quitting my job and then the next week I made 0:05:49.040 --> 0:05:51.760 like eighty thou dollars on a trade, like in just 0:05:51.839 --> 0:05:53.320 in the first week, And I was like, okay, cool, 0:05:53.440 --> 0:05:56.919 I just made my whole yearly salary at my job 0:05:57.000 --> 0:05:59.640 in a week after quitting crypto. And that was right 0:05:59.680 --> 0:06:03.400 back when the market really started to boom right. Since then, 0:06:03.480 --> 0:06:06.160 he's made more than seven figures and the family has 0:06:06.200 --> 0:06:09.039 been able to purchase a vacation home. He loves the 0:06:09.040 --> 0:06:11.719 flexibility of choosing his own hours and being able to 0:06:11.760 --> 0:06:14.599 care for his newborn. He also has more time for 0:06:14.680 --> 0:06:17.760 exercise and meditation, which he says he ignored for the 0:06:17.760 --> 0:06:20.559 better part of the last decade. Now I'm like starting 0:06:20.600 --> 0:06:22.359 to take care of myself a little bit more too, 0:06:22.400 --> 0:06:25.200 and like trying to be more healthy, um so that 0:06:25.240 --> 0:06:27.840 way I can obviously live longer, just for my family 0:06:27.880 --> 0:06:32.000 and my son. To be sure, many aren't so fortunate, 0:06:32.200 --> 0:06:34.640 and a survey of job seekers that zip Recruiter did 0:06:34.640 --> 0:06:37.680 in September, many people said they're relying on friends and 0:06:37.720 --> 0:06:40.680 family to make ends meet, and more people than ever 0:06:40.839 --> 0:06:44.400 also want a remote job, but those jobs remain concentrated 0:06:44.480 --> 0:06:48.600 in specific industries, so that's another source of the mismatch. 0:06:48.600 --> 0:06:52.200 Wh people are are holding out for remote work opportunities 0:06:52.200 --> 0:06:57.359 which have exploded in business and financial services and insurance 0:06:57.400 --> 0:07:00.920 and tech, but which are non existing in in other 0:07:00.960 --> 0:07:05.440 industries um like. But now people actually have a realistic 0:07:05.480 --> 0:07:09.560 prospect possibly finding a remote job. Those people are are 0:07:10.120 --> 0:07:13.080 waiting out for those jobs in part because the labor 0:07:13.120 --> 0:07:15.800 market is tight. People are also more empowered to be 0:07:15.880 --> 0:07:20.880 picky about respondents in a recent ZIP recruiter survey, so 0:07:20.960 --> 0:07:23.560 they don't feel the financial pressure to accept the first 0:07:23.640 --> 0:07:29.840 job offer they receive. And one final reason Americans are 0:07:29.840 --> 0:07:33.800 staying home their kids. Parents have pointed to the erratic 0:07:33.880 --> 0:07:36.800 nature of school closings and the high cost of childcare 0:07:37.040 --> 0:07:40.840 for their reluctance to re enter the workforce. Zack McGrath 0:07:41.040 --> 0:07:43.040 is a single father of an eleven year old son 0:07:43.120 --> 0:07:45.800 with special needs. He used to work in TV and 0:07:45.840 --> 0:07:49.000 film production before the pandemic and is now looking outside 0:07:49.000 --> 0:07:51.840 the industry because the hours don't give him the flexibility 0:07:51.880 --> 0:07:54.720 to look after a son. If classrooms shut down because 0:07:54.760 --> 0:08:00.280 of COVID cases, the school closing, you know, and even 0:08:00.360 --> 0:08:04.440 just the random four day quarantines are like the sword 0:08:04.480 --> 0:08:09.520 of Damocles. And even if I find this ideal situation, 0:08:09.960 --> 0:08:13.000 you know that it's clearly not out there. That's something 0:08:13.040 --> 0:08:16.720 that no employer is gonna want to deal with. You know, 0:08:16.920 --> 0:08:19.520 just for three days, I can't come in, I can't 0:08:19.560 --> 0:08:28.400 do anything. It's not gonna happen. So in a minute, 0:08:28.480 --> 0:08:30.600 I'm going to talk to the former head of President 0:08:30.600 --> 0:08:34.079 Obama's Council of Economic Advisors, about what's happening to the 0:08:34.200 --> 0:08:38.200 US labor market and just how this great mismatch between 0:08:38.320 --> 0:08:41.160 jobs and workers is going to get resolved, if it 0:08:41.200 --> 0:08:43.480 gets resolved. But first I want to head over the 0:08:43.520 --> 0:08:48.400 Atlantic to tell you about another country also looking for workers, Russia. 0:08:49.000 --> 0:08:52.840 Bloomberg Economy reporter on your Quinn in Moscow is here 0:08:52.840 --> 0:08:56.839 to explain on your thanks for joining Stephanomics. Russia is 0:08:57.160 --> 0:09:01.560 facing a similar problem filling jobs across the economy. But 0:09:01.640 --> 0:09:04.880 I guess in this case it's no mystery where the 0:09:04.880 --> 0:09:08.400 workers have gone, is it. Yeah, that's right, it's definitely so. 0:09:09.320 --> 0:09:12.680 Russia has long had a problem with its aging population 0:09:12.920 --> 0:09:16.160 because of low birth rates during the turmoil in the 0:09:16.240 --> 0:09:19.760 nine nineties after the fall of the Soviet Union UM, 0:09:20.000 --> 0:09:22.800 but now it's got more things that are adding to that. 0:09:22.920 --> 0:09:28.240 So for a long time the UM it relied on 0:09:28.720 --> 0:09:32.480 migrant workers coming from poorer countries that were part of 0:09:32.520 --> 0:09:36.840 the Soviet Union like Uzbekistan, Tajikistan and Kyrgyzstan to fill 0:09:36.880 --> 0:09:40.800 the gap that it couldn't fill with domestic workers. But 0:09:40.920 --> 0:09:43.720 after the pandemic that got a lot more difficult because 0:09:44.120 --> 0:09:46.760 traveling was more difficult and countries closed borders, and a 0:09:46.760 --> 0:09:48.920 lot of those people have gone home. So before the 0:09:48.960 --> 0:09:52.880 pandemic um it was estimated there about four point five 0:09:53.200 --> 0:09:56.320 million migrant workers in Russia, which makes it one of 0:09:56.360 --> 0:09:59.560 the top four destinations for migrant workers in the world. 0:10:00.400 --> 0:10:04.960 But now we think it's about three million people um 0:10:05.000 --> 0:10:08.959 and all that has been made worse by high death 0:10:09.080 --> 0:10:13.240 rates from coronavirus as the government has been reluctant to 0:10:14.040 --> 0:10:20.240 lockdown the economy and vaccine hesitancy has been a big problem. 0:10:20.320 --> 0:10:24.240 How was it manifesting itself? This this shortage of labor? 0:10:24.320 --> 0:10:26.720 Where where do you see that? I know you're often, 0:10:26.760 --> 0:10:30.840 I'm sure talking to businesses across the economy. Yeah, so 0:10:31.080 --> 0:10:35.559 like in some other countries. At first there were big 0:10:35.600 --> 0:10:40.280 shortages in agriculture, but now that's spreading across the economy. 0:10:40.440 --> 0:10:44.880 So retail companies are also struggling to get enough people. 0:10:45.800 --> 0:10:50.000 Another factor is that coreer services are growing really fast, 0:10:50.160 --> 0:10:52.920 and they would have been staffed a lot by migrant 0:10:52.920 --> 0:10:56.000 workers in the past, but because those people aren't around 0:10:56.040 --> 0:11:00.520 anymore than people are shifting to work as carriers and 0:11:00.600 --> 0:11:04.800 leaving gaps in other parts of the economy. So UM. 0:11:04.920 --> 0:11:08.080 For example, X five Group, which is one of Russia's 0:11:08.120 --> 0:11:13.600 biggest retailers, said that high mortality rates are causing problems 0:11:13.679 --> 0:11:18.760 for its labor supply. UM and russ Agar, which is 0:11:18.960 --> 0:11:22.559 one of Russia's biggest agriculture companies, has been increasing wages 0:11:22.640 --> 0:11:25.520 to try and to try and get enough people and 0:11:26.440 --> 0:11:29.480 has had to try and automate some more of its 0:11:29.520 --> 0:11:34.640 work as it struggled to find enough stuff. And obviously 0:11:34.720 --> 0:11:37.000 one of the questions, you know, there's the there's been 0:11:37.040 --> 0:11:40.840 a talk of labor shortages and lots of different countries 0:11:41.160 --> 0:11:45.400 and UM. One of the question marks is about how 0:11:45.480 --> 0:11:47.800 much is going to feed into wages and how much 0:11:47.880 --> 0:11:51.480 that will then feed inflation and make this inflation that 0:11:51.480 --> 0:11:53.280 we're seeing in a lot of countries not so as 0:11:53.320 --> 0:11:57.480 not as temporary as as people were hoping. How is 0:11:57.520 --> 0:12:00.439 that playing out in Russia? Wages go up, is that 0:12:00.520 --> 0:12:04.199 pushing up inflation? Yeah? So, like I said, rus I 0:12:04.280 --> 0:12:09.960 grow say they've raised wages UM up to ten percent. 0:12:10.800 --> 0:12:15.400 In some sectors wags have been increasing more than that, 0:12:15.720 --> 0:12:20.000 and that's definitely feeding into inflation and inflation here is 0:12:20.480 --> 0:12:24.760 UM is a political problem for put into because um, 0:12:25.080 --> 0:12:29.440 it really hits living standards. And at the moment, uh, 0:12:30.040 --> 0:12:32.680 it's how high is it now? At the moment, it's 0:12:32.720 --> 0:12:35.960 at the highest in five years. It's about eight percent, 0:12:36.400 --> 0:12:39.920 which is a way above the Bank of Russia's target. 0:12:40.520 --> 0:12:45.680 And so Bank of Russia has been aggressively hiking rates 0:12:45.760 --> 0:12:49.640 to try and bring inflation down, but so far it 0:12:49.679 --> 0:12:52.880 doesn't seem to be having much of an effect. So 0:12:53.160 --> 0:12:57.679 this isn't just a problem for the economy. It also 0:12:57.760 --> 0:13:02.720 has the potential to slow down growth in Russia and 0:13:03.640 --> 0:13:08.080 even undermine Putin's popularity. Yeah, if you can't get so, 0:13:08.080 --> 0:13:10.320 you've got some you've got inflation and wages going up. 0:13:10.320 --> 0:13:13.760 But also the central bank kind of slamming on the brakes, 0:13:13.760 --> 0:13:17.720 slowing economy exactly. And people remember when there was runaway 0:13:17.800 --> 0:13:21.760 inflation in the nineties and how that hit living standards. 0:13:21.800 --> 0:13:23.360 That means that it's much more of the front of 0:13:23.360 --> 0:13:26.880 people's minds here and consistently and polls people say that 0:13:28.040 --> 0:13:32.679 rising prices are the biggest problem. So one of the 0:13:32.679 --> 0:13:35.080 reasons the story had caught my eye was that there 0:13:35.200 --> 0:13:40.280 was some pretty aggressive tactics that the Russians. Russia being Russia, 0:13:40.920 --> 0:13:44.000 there's been some pretty extreme solutions to this problem that 0:13:44.040 --> 0:13:45.960 they've come up with over the years. And I guess 0:13:45.960 --> 0:13:50.680 and maybe looking to now. Yeah, so earlier this year, 0:13:51.080 --> 0:13:56.760 prisoners were brought in to work on railroad upgrades, UM, 0:13:56.920 --> 0:14:04.480 for for like cold transportation. UM. And that's kind of 0:14:04.520 --> 0:14:08.280 particularly scary here because it brings back echoes of labor 0:14:08.280 --> 0:14:11.200 camps and Soviet times where prisoners had to work in 0:14:11.280 --> 0:14:15.480 mining or forestry or well reconstruction. So for so far 0:14:15.640 --> 0:14:20.080 that's on a pretty small scale, but people are consistently 0:14:20.080 --> 0:14:24.480 talking about how to solve this with getting more prisoners 0:14:24.520 --> 0:14:28.800 to work. UM. In agriculture, they were looking at getting 0:14:28.920 --> 0:14:32.720 students to help with the harvest, and last year prisoners 0:14:32.760 --> 0:14:37.400 also helped with the harvest. And in some regions, UM, 0:14:37.680 --> 0:14:40.400 the government has also looked at bringing in the army 0:14:40.480 --> 0:14:45.200 to work on some construction projects. We've gotta worry when 0:14:45.200 --> 0:14:48.840 people start bringing the army to do anything. And I 0:14:48.840 --> 0:14:50.920 can imagine, Yeah, that's sort of shades of some of 0:14:50.960 --> 0:14:53.680 those sort of false labor camps and everything. Yeah, well 0:14:53.720 --> 0:14:57.240 all of those as well. I think companies aren't necessarily 0:14:57.280 --> 0:14:59.440 that keen on these ideas. Like I remember I was 0:14:59.480 --> 0:15:01.760 talking to one agricultural company about whether it would help 0:15:01.800 --> 0:15:05.520 to get prisoners to um collect the harvest, and they 0:15:05.520 --> 0:15:08.280 said there were a number of problems, including that they 0:15:08.360 --> 0:15:10.640 might not be very good at it. They might, you know, 0:15:10.680 --> 0:15:13.800 you need particular set of skills, especially if you're picking 0:15:13.840 --> 0:15:17.680 soft fruits, for example, and also sometimes prisoners run away, 0:15:17.680 --> 0:15:22.000 which is another problem. Then I can see that. And 0:15:22.040 --> 0:15:25.520 what about I mean the immigrants. Obviously it's part of 0:15:25.520 --> 0:15:28.560 the issue is that they're not coming back from from 0:15:28.560 --> 0:15:31.440 Central Asia in these places where they had previously come 0:15:31.560 --> 0:15:34.640 from to work in Russia. Are there any efforts underway 0:15:34.720 --> 0:15:40.920 to encourage them back. Yeah, so, um, they're looking at 0:15:41.480 --> 0:15:46.200 potentially putting on charter trains that would bring migrant workers 0:15:46.280 --> 0:15:49.720 from Tasha, Kent and Uzbekistan to Russia, which would take 0:15:49.760 --> 0:15:52.640 several days on the train. And there's also recently an 0:15:52.680 --> 0:15:57.240 amnesty which meant that migrants who had previously been expelled 0:15:58.160 --> 0:16:02.200 for various reasons be allowed back in now. But at 0:16:02.200 --> 0:16:05.480 the same time, there's a lot of stories and state 0:16:05.520 --> 0:16:10.920 media about migrant workers and crime, which looks like it's 0:16:10.960 --> 0:16:14.720 pushing the other way, even if the situation now is 0:16:14.800 --> 0:16:18.440 pretty extreme. Well on you, as we said that things 0:16:18.440 --> 0:16:22.800 are often extreme in Russia. But I appreciate you you 0:16:22.960 --> 0:16:25.880 telling us about this, uh, this challenge that Russia is 0:16:25.920 --> 0:16:30.280 facing on your Quinn great, Thanks very much, m H. 0:16:37.600 --> 0:16:40.040 Now we're going to shift the focus back west to 0:16:40.160 --> 0:16:43.240 the US and the labor market conundrum we heard about 0:16:43.280 --> 0:16:46.080 at the start of the program, and I'm delighted to 0:16:46.160 --> 0:16:48.800 have joining as Jason Furman, Professor of the Practice of 0:16:48.840 --> 0:16:51.920 Economic Policy at Harvard University and the Kennedy School of 0:16:51.920 --> 0:16:55.320 Government and a senior researcher at the Peterson Institute in Washington, 0:16:55.560 --> 0:17:00.960 but previously chair of President Obama's Council of Economic Advice US. Jason, 0:17:01.080 --> 0:17:04.760 thank you for joining Stephanomics once again. And the picture 0:17:04.800 --> 0:17:07.639 we had at the start of the program was an economy, 0:17:07.680 --> 0:17:10.840 a US economy in which there were job vacancies everywhere, 0:17:10.880 --> 0:17:14.200 it seemed, but no work for the unemployed. How would 0:17:14.240 --> 0:17:17.760 you characterize it? It's a labor market like none of 0:17:17.840 --> 0:17:20.640 us have ever seen before. Where about you know, six 0:17:20.720 --> 0:17:23.080 or seven million jobs short of where we should be, 0:17:24.000 --> 0:17:28.080 but there's still millions and millions of job openings, and 0:17:28.160 --> 0:17:32.120 so overall the problem looks more like labor supply than 0:17:32.160 --> 0:17:35.600 the problem we're more used to normally, which is labor demand. 0:17:37.440 --> 0:17:39.800 And of course some say this isn't when people talk 0:17:39.840 --> 0:17:46.200 about job shortages, real worker shortages, that it's really it's 0:17:46.200 --> 0:17:49.520 not a shortage of of workers, it's a shortage of 0:17:50.000 --> 0:17:53.040 good jobs that if the wages will hire, people would 0:17:53.080 --> 0:17:55.359 be doing these jobs. Yeah, I mean, you do have 0:17:55.400 --> 0:17:59.800 to ask why two years ago people were doing these 0:18:00.040 --> 0:18:02.840 jobs at a certain wage and now they don't want 0:18:02.840 --> 0:18:05.280 to do those jobs at the same wage, only want 0:18:05.320 --> 0:18:08.080 to do them at a higher wage. The way I 0:18:08.160 --> 0:18:11.639 teach my introductory economics students, we would describe that as 0:18:11.640 --> 0:18:14.160 a shift of the supply curve. To get the same 0:18:14.200 --> 0:18:17.280 amount of labor as before. You can only get there 0:18:17.640 --> 0:18:20.119 if you're doing it at a higher wage than it 0:18:20.280 --> 0:18:22.960 was before. And how do you think that's going to 0:18:23.040 --> 0:18:25.960 play Is he going to just play out in wages 0:18:26.080 --> 0:18:28.720 reaching a higher level or are they going to be 0:18:29.280 --> 0:18:32.800 you know, are there sort of deeper skill mismatches at 0:18:32.800 --> 0:18:36.240 work where the people who are looking for jobs are 0:18:36.280 --> 0:18:39.919 just not the same, just not the right people for 0:18:40.280 --> 0:18:43.239 these many vacancies that are there. Right, So, first of all, 0:18:43.680 --> 0:18:47.480 large dose of humility, as in order. No one predicted 0:18:47.520 --> 0:18:50.680 that the labor markets were gonna look nearly this extreme 0:18:50.760 --> 0:18:53.560 at this point in time. I certainly didn't, and so 0:18:53.680 --> 0:18:55.280 I'm not going to tell you I know for sure 0:18:55.320 --> 0:18:57.639 what it's going to look like. UM a year or 0:18:57.680 --> 0:19:01.480 two from now. UM, if forced to my best guess, 0:19:01.840 --> 0:19:06.240 I think there are enough temporary factors that explain where 0:19:06.280 --> 0:19:10.400 we are now related to COVID, coming out of COVID 0:19:10.760 --> 0:19:13.680 and in the United States, the policy response to COVID 0:19:14.080 --> 0:19:17.600 that I think we'll get of the way back to 0:19:17.680 --> 0:19:21.240 where we were. Um, it just may take a year 0:19:21.320 --> 0:19:24.320 or two to get there, But you know, there's a 0:19:24.400 --> 0:19:26.040 risk to that and a risk that this is a 0:19:26.040 --> 0:19:29.880 more permanent change. And I guess one of the ways 0:19:29.920 --> 0:19:32.280 that we get from here to there would be wages 0:19:32.640 --> 0:19:36.360 going up and then inflation going up, potentially staying up. 0:19:36.760 --> 0:19:40.080 You know, we had another round of pretty eye popping 0:19:40.400 --> 0:19:43.040 US inflation numbers this week. Do you think that is 0:19:43.080 --> 0:19:45.080 going to play a part that we will see more 0:19:45.200 --> 0:19:50.600 during enduring inflation driven by wages another place where humility 0:19:50.680 --> 0:19:54.480 is in order. UM, we haven't seen wage price spirals 0:19:54.520 --> 0:19:57.840 for a very long time. If there's anything that could 0:19:57.840 --> 0:20:01.240 bring a wage price spiral back, it is what we've 0:20:01.280 --> 0:20:07.960 seen with extremely high inflation this past year, and um, 0:20:08.000 --> 0:20:10.960 you know the way that's affecting workers and labor markets 0:20:11.000 --> 0:20:15.120 and businesses. So I think that's a distinct upward risk 0:20:15.600 --> 0:20:19.399 for inflation at this point in time. I guess we 0:20:19.400 --> 0:20:22.520 should have a little pause just to sort of reflect 0:20:22.600 --> 0:20:27.120 on on those latest inflation numbers, just to put them 0:20:27.119 --> 0:20:29.479 in put it in perspective for us, just what happened 0:20:29.520 --> 0:20:32.920 one month, let alone what's happened on the twelve month horizon. Yeah, 0:20:33.359 --> 0:20:36.320 so in October the cp I went up zero point 0:20:36.400 --> 0:20:39.919 nine percent. A bunch of that was gasoline more expensive, 0:20:40.000 --> 0:20:43.679 that's something global. But you strip out the vaulatile components, 0:20:43.720 --> 0:20:46.960 the core cp I was up zero point six um. 0:20:47.000 --> 0:20:50.680 And that's a real blow to the transitory stories which 0:20:50.720 --> 0:20:53.960 had been pointing out the slowing. Of course c p 0:20:54.119 --> 0:20:58.639 I projecting more slowing, of course c p I. So 0:20:58.680 --> 0:21:02.360 I think this report, broadly speaking, says, buckle your seat belts. 0:21:02.640 --> 0:21:08.359 You know, this isn't slowing down dramatically anytime soon. And 0:21:08.400 --> 0:21:10.560 as you suggest, I mean that's even after taking out 0:21:10.640 --> 0:21:12.400 quite a few things. I mean, sometimes when people talk 0:21:12.440 --> 0:21:14.960 about the core and taking out the volatile things, you know, 0:21:15.440 --> 0:21:17.399 for some people that's taking out all the things they 0:21:17.440 --> 0:21:21.240 actually want to buy on a given day. Oh yeah. Oh. Politically, 0:21:22.240 --> 0:21:24.880 what matters actually is almost the opposite of core. It's 0:21:24.920 --> 0:21:29.320 what's happening to food prices and gasoline prices. UM. Core 0:21:29.400 --> 0:21:32.840 is a good construct analytically because it gives you a 0:21:32.880 --> 0:21:35.600 better prediction of where inflation will be a year from now. 0:21:35.880 --> 0:21:39.360 But to understand what people have experienced over the last year, Um, 0:21:39.359 --> 0:21:44.159 they've experienced prices up six point two percent, and and 0:21:44.240 --> 0:21:47.760 they hate that. And I know we're going to you're 0:21:47.760 --> 0:21:51.479 gonna start talking about humility again. But when you have 0:21:51.640 --> 0:21:54.000 you know, you're sitting in sitting at Harvard at least 0:21:54.000 --> 0:21:56.720 some of the time, and you know, with your with 0:21:56.840 --> 0:21:59.840 that more academic kind of long term perspective, I just 0:22:00.080 --> 0:22:03.119 under what you were thinking now about the legacy of 0:22:03.359 --> 0:22:05.800 COVID for the for the labor market. I mean, when 0:22:05.800 --> 0:22:07.480 a lot of people lose their jobs, and it was 0:22:07.520 --> 0:22:10.679 a really a lot of unprecedented number of people in 0:22:10.720 --> 0:22:13.680 a short time last year, we tend to worry about 0:22:13.760 --> 0:22:17.440 not just the immediate loss of output that they aren't 0:22:17.480 --> 0:22:19.600 able to produce because they're not in work, but the 0:22:19.800 --> 0:22:22.160 know how that they've built up in those jobs which 0:22:22.240 --> 0:22:25.720 might be lost forever might affect their human capital and 0:22:25.760 --> 0:22:28.920 the human capital of the country. UM. We had hoped 0:22:28.920 --> 0:22:31.000 that that would not be such a factor this time, 0:22:31.080 --> 0:22:34.960 because not least because it was a relatively brief crisis, 0:22:35.040 --> 0:22:38.840 but also a lot of the most affected sectors were 0:22:38.880 --> 0:22:42.040 places where there weren't a lot of specific skills to 0:22:42.119 --> 0:22:44.960 be lost. UM, what do you what do you think 0:22:45.000 --> 0:22:48.840 one year on about the sort of human capital cost 0:22:49.000 --> 0:22:51.680 of that enormous spike in unemployment we had last year. 0:22:52.240 --> 0:22:55.719 I think it's likely meaningful. There's been a lot of 0:22:55.800 --> 0:23:00.360 long term unemployment. People really do lose skills, they lose 0:23:00.400 --> 0:23:03.479 out on the training they were getting on the job, 0:23:04.200 --> 0:23:07.720 they get dislocated in a certain way. All the evidence 0:23:07.720 --> 0:23:10.200 we've had from the past is that can have long 0:23:10.320 --> 0:23:15.960 term impacts on sustainable unemployment rates, on wages, and on 0:23:16.119 --> 0:23:20.639 productivity in the economy. That's compounded by the fact that 0:23:20.640 --> 0:23:23.840 we've had low business investment for the last year and 0:23:23.840 --> 0:23:26.479 a half and some of the steps you'll need to 0:23:26.520 --> 0:23:30.400 take to harden against COVID. It's possible that work from 0:23:30.440 --> 0:23:35.040 home and you know, doing teleconferences rather than flying places 0:23:35.400 --> 0:23:39.440 will make up for all of that, But I would 0:23:39.440 --> 0:23:42.199 go with the evidence we have from the past, and 0:23:42.200 --> 0:23:46.280 the evidence we have from the past says experience here 0:23:46.320 --> 0:23:49.520 is quite negative. There's a bit of hope. Um, I 0:23:49.560 --> 0:23:52.440 hope that hope triumphs over experience, but I wouldn't I 0:23:52.480 --> 0:23:55.240 wouldn't count on it. But it's interesting. This was something 0:23:55.280 --> 0:23:59.080 that that I had thought about for some papers that 0:23:59.080 --> 0:24:01.480 we've put together for for the New Economy Forum that 0:24:01.520 --> 0:24:05.240 Bloomberg's holding in Singapore next week. At this sense of 0:24:05.280 --> 0:24:08.800 this idea of whether what the long term impact on 0:24:08.840 --> 0:24:11.960 productivity and output might be of this crisis, and whether 0:24:12.000 --> 0:24:14.680 it might be different from other recessions. As you say, 0:24:14.920 --> 0:24:17.560 you know, the lesson usually is recessions always cause some 0:24:17.640 --> 0:24:22.160 permanent damage, especially to human capital, but also the investment 0:24:22.240 --> 0:24:25.119 base of the country. But you do have you know, 0:24:25.160 --> 0:24:29.760 the International Monetary Fund and some other important forecasters now 0:24:29.840 --> 0:24:32.840 suggesting some kind of COVID dividend for at least some 0:24:32.960 --> 0:24:36.639 of the advanced economies, including the US that actually whether 0:24:36.720 --> 0:24:41.000 it's the infrastructure investments by the US administration post COVID, 0:24:41.640 --> 0:24:44.840 or some of the productivity changes that you talked about 0:24:44.880 --> 0:24:49.000