1
00:00:04,280 --> 00:00:07,080
Speaker 1: On this episode of News World, I wanted to talk

2
00:00:07,120 --> 00:00:10,560
Speaker 1: about the state of our economy, starting with the disappointing

3
00:00:10,600 --> 00:00:14,880
Speaker 1: August jobs report and of course the alarming reports we're

4
00:00:14,880 --> 00:00:18,000
Speaker 1: getting now on inflation and what can we expect for

5
00:00:18,079 --> 00:00:21,680
Speaker 1: the month of September as the federal pandemic on employment

6
00:00:21,720 --> 00:00:26,439
Speaker 1: compensation three hundred dollars weekly payments. I'm really pleased to

7
00:00:26,480 --> 00:00:30,640
Speaker 1: welcome my guest, Michael Farren, research fellow at the Ricadis

8
00:00:30,680 --> 00:00:34,080
Speaker 1: Center at George Mason University. He has a PhD in

9
00:00:34,120 --> 00:00:50,280
Speaker 1: applied economics from the Ohio State University. Michael, welcome. You

10
00:00:50,400 --> 00:00:55,280
Speaker 1: just recently issued a report entitled COVID nineteen Expanded unemployment

11
00:00:55,320 --> 00:01:00,360
Speaker 1: insurance benefits may have discouraged a faster recovery. Could you

12
00:01:00,400 --> 00:01:05,080
Speaker 1: share with us your research? You know what you found, certainly,

13
00:01:05,120 --> 00:01:08,560
Speaker 1: and thanks for having me on. So my research dives

14
00:01:08,640 --> 00:01:12,520
Speaker 1: into the end of federal unemployment insurance benefits. There were

15
00:01:12,560 --> 00:01:18,000
Speaker 1: three separate programs early in about twenty six states versus

16
00:01:18,120 --> 00:01:21,240
Speaker 1: the other twenty four states and District of Columbia that

17
00:01:21,319 --> 00:01:26,960
Speaker 1: maintained participation in the federal expansion to unemployment insurance. Unemployment

18
00:01:27,000 --> 00:01:30,440
Speaker 1: insurance is a state run program, but the federal government

19
00:01:30,480 --> 00:01:34,160
Speaker 1: expanded it during the pandemic, making it much more generous

20
00:01:34,200 --> 00:01:37,280
Speaker 1: to be off of work, and that's mostly what people

21
00:01:37,319 --> 00:01:40,240
Speaker 1: have heard about as the six hundred dollars expanded weekly

22
00:01:40,280 --> 00:01:43,160
Speaker 1: benefit during the first part of the pandemic, or the

23
00:01:43,200 --> 00:01:46,600
Speaker 1: three hundred dollar bonus that was revised later during the

24
00:01:46,640 --> 00:01:49,520
Speaker 1: later stages of the pandemic. All of that went away

25
00:01:50,240 --> 00:01:54,120
Speaker 1: for twenty six states essentially Midsummer end of June beginning

26
00:01:54,160 --> 00:01:57,520
Speaker 1: of July, and then that gave us an opportunity to

27
00:01:57,560 --> 00:02:01,160
Speaker 1: study the difference and employment growth between the states that

28
00:02:01,200 --> 00:02:03,920
Speaker 1: had maintained the federal program and the states that had

29
00:02:04,080 --> 00:02:08,400
Speaker 1: ended the federal program. What we found was that pretty

30
00:02:08,440 --> 00:02:13,400
Speaker 1: much exactly what you would expect based on previous economic research.

31
00:02:13,440 --> 00:02:16,520
Speaker 1: And there's a lot of economic research on out of

32
00:02:16,520 --> 00:02:21,120
Speaker 1: work benefits in general, especially US unemployment insurance programs, but

33
00:02:21,440 --> 00:02:25,360
Speaker 1: other developed countries have similar programs, and the body of

34
00:02:25,400 --> 00:02:30,000
Speaker 1: the research shows very consistent results and that out of

35
00:02:30,040 --> 00:02:34,280
Speaker 1: work programs have a tendency to discourage workers from returning

36
00:02:34,280 --> 00:02:39,840
Speaker 1: to work. So that's not necessarily a bad thing on

37
00:02:39,880 --> 00:02:45,480
Speaker 1: its face, because maybe there's some benefits from not rushing

38
00:02:45,480 --> 00:02:48,359
Speaker 1: back to work and taking the very first job that

39
00:02:48,560 --> 00:02:52,000
Speaker 1: is available both to the worker themselves in their family,

40
00:02:52,280 --> 00:02:55,480
Speaker 1: but also to the broader economy. You don't want some

41
00:02:55,600 --> 00:02:59,959
Speaker 1: highly skilled person working in a lower skilled, lower productivity job.

42
00:03:00,680 --> 00:03:05,760
Speaker 1: But the longer that someone remains unemployed because of this

43
00:03:05,880 --> 00:03:10,920
Speaker 1: unemployment insurance program, the more detached from the labor force

44
00:03:10,960 --> 00:03:15,160
Speaker 1: they get, the more stale that their skills get, both

45
00:03:15,160 --> 00:03:18,320
Speaker 1: the skills and their industry, and also their soft skills

46
00:03:18,320 --> 00:03:20,840
Speaker 1: of getting up on time, getting to their job, the

47
00:03:21,000 --> 00:03:24,519
Speaker 1: sort of things that we encourage teenagers to take early

48
00:03:24,639 --> 00:03:27,079
Speaker 1: jobs in order to build those skills. And the longer

49
00:03:27,080 --> 00:03:29,360
Speaker 1: that you're out of the workforce, the faster you lose

50
00:03:29,400 --> 00:03:32,320
Speaker 1: those skills. And so the longer that someone's out of work,

51
00:03:32,919 --> 00:03:35,560
Speaker 1: the lower the chance that they're actually going to return

52
00:03:35,600 --> 00:03:38,160
Speaker 1: to work in the future, or that their job is

53
00:03:38,200 --> 00:03:41,040
Speaker 1: actually going to pay them an equivalent wage, or it

54
00:03:41,120 --> 00:03:43,040
Speaker 1: is going to be a good job for them. So

55
00:03:43,080 --> 00:03:46,800
Speaker 1: there's a balancing act between supporting people when they're out

56
00:03:46,800 --> 00:03:50,240
Speaker 1: of work for no fault of their own, versus encouraging

57
00:03:50,240 --> 00:03:52,520
Speaker 1: them to get back to work as soon as possible.

58
00:03:53,320 --> 00:03:55,960
Speaker 1: From your perspective, if you think of them as two

59
00:03:55,960 --> 00:04:00,480
Speaker 1: different blocks, is the gap between the rapid deduction of

60
00:04:00,560 --> 00:04:05,120
Speaker 1: unemployment benefit block and the maintenance of unemployment benefits. Is

61
00:04:05,120 --> 00:04:09,760
Speaker 1: the gap so big that it's academically contested, I would

62
00:04:09,840 --> 00:04:12,600
Speaker 1: say that the body of the prior research is such

63
00:04:12,640 --> 00:04:17,440
Speaker 1: that the gap should be pretty much uncontested. It's fair

64
00:04:17,480 --> 00:04:20,400
Speaker 1: to say that we're in a very different situation right

65
00:04:20,440 --> 00:04:23,760
Speaker 1: now with regard to the pandemic, but that has changed

66
00:04:23,839 --> 00:04:27,200
Speaker 1: over time. There's a lot of reason to have people

67
00:04:27,279 --> 00:04:29,760
Speaker 1: be out of work in the early stage of the pandemic,

68
00:04:29,760 --> 00:04:32,520
Speaker 1: when we really didn't know what was going on and

69
00:04:32,560 --> 00:04:35,120
Speaker 1: we're fearful that it was going to be even worse

70
00:04:35,200 --> 00:04:38,960
Speaker 1: than it has actually been. But now there's an argument

71
00:04:39,080 --> 00:04:41,320
Speaker 1: to say we need to be getting back to work,

72
00:04:41,600 --> 00:04:44,440
Speaker 1: we need to be restarting the economy. As for our

73
00:04:44,520 --> 00:04:48,279
Speaker 1: particular research, to be quite honest, the data is very muddy,

74
00:04:48,400 --> 00:04:51,000
Speaker 1: and I think that that is the reason why you've

75
00:04:51,040 --> 00:04:56,000
Speaker 1: seen so many contradictory narratives out there in the media

76
00:04:56,040 --> 00:04:59,560
Speaker 1: about this, Because one of the data sets that we

77
00:04:59,720 --> 00:05:04,440
Speaker 1: use that's part of the normal monthly jobs report, shows that, yes,

78
00:05:04,600 --> 00:05:10,360
Speaker 1: there was a specific measurable reduction and growth in the

79
00:05:10,440 --> 00:05:14,960
Speaker 1: states which had remained in the federal programs versus the

80
00:05:15,040 --> 00:05:20,680
Speaker 1: states that left the federal programs early. However, and this

81
00:05:20,720 --> 00:05:24,480
Speaker 1: is the frustrating thing perhaps about economics. I believe it

82
00:05:24,560 --> 00:05:28,760
Speaker 1: was President Harry Truman that said I wish I had

83
00:05:28,800 --> 00:05:34,240
Speaker 1: a one handed economist. So on the other hand, the

84
00:05:34,279 --> 00:05:37,240
Speaker 1: other data set from the monthly jobs report actually didn't

85
00:05:37,279 --> 00:05:39,680
Speaker 1: show this effect at all. It showed that the states

86
00:05:39,760 --> 00:05:44,080
Speaker 1: that had left the expanded program early actually showed reduced employment.

87
00:05:44,400 --> 00:05:48,719
Speaker 1: So there's plenty to argue about for political partisans. Unfortunately,

88
00:05:49,520 --> 00:05:53,200
Speaker 1: I've noticed twice recently. I was up in New Jersey

89
00:05:53,800 --> 00:06:00,320
Speaker 1: and the local drive through the McDonald's type restaurants all

90
00:06:00,320 --> 00:06:04,039
Speaker 1: of them were restricted to drive through because they didn't

91
00:06:04,040 --> 00:06:07,280
Speaker 1: have enough staff to be open. And then I just

92
00:06:07,279 --> 00:06:09,840
Speaker 1: came back from Kansas City, where I stayed at a

93
00:06:09,880 --> 00:06:13,440
Speaker 1: hotel which would only make up your room if you

94
00:06:13,480 --> 00:06:16,680
Speaker 1: called and asked them to because they're just so short

95
00:06:16,720 --> 00:06:19,400
Speaker 1: a staff. I mean, the staff they had was very

96
00:06:19,480 --> 00:06:23,440
Speaker 1: nice and very hospitable, but they clearly were dramatically understaffed.

97
00:06:24,000 --> 00:06:27,279
Speaker 1: Do you find that's true around the country. I have

98
00:06:27,760 --> 00:06:32,640
Speaker 1: definitely experienced those kind of anecdotes myself recently, and from

99
00:06:32,640 --> 00:06:36,280
Speaker 1: everything that I've read media wise, Yes, there definitely seems

100
00:06:36,320 --> 00:06:40,560
Speaker 1: to be a scarcity of workers out there, and that

101
00:06:40,760 --> 00:06:43,559
Speaker 1: was the big argument that we're having in the media

102
00:06:43,600 --> 00:06:47,440
Speaker 1: and politically is whether the federal expansion to unemployment insurance,

103
00:06:48,000 --> 00:06:52,960
Speaker 1: whether maintaining that too long has led to a reduction

104
00:06:53,000 --> 00:06:56,920
Speaker 1: and workers rejoining the workforce in this scarcity of workers. Well,

105
00:06:56,960 --> 00:07:01,359
Speaker 1: the National Federation of Independent Businesses September two reported that

106
00:07:01,800 --> 00:07:05,239
Speaker 1: a record fifty percent of small business owners had job

107
00:07:05,240 --> 00:07:08,760
Speaker 1: openings they could not fill. Now, what's amazing about that

108
00:07:08,920 --> 00:07:13,720
Speaker 1: is to what a stent are unemployment numbers? Because the

109
00:07:13,760 --> 00:07:17,320
Speaker 1: unemployment rate is declined to five point two percent, To

110
00:07:17,400 --> 00:07:20,080
Speaker 1: what a stent is that misleading? Because in fact, the

111
00:07:20,160 --> 00:07:23,880
Speaker 1: workforce itself has shrunk by people who would just have

112
00:07:23,960 --> 00:07:27,320
Speaker 1: dropped down. I think that the unemployment rate is one

113
00:07:27,360 --> 00:07:30,240
Speaker 1: of those things that has actually become a little bit

114
00:07:30,240 --> 00:07:33,920
Speaker 1: more misleading during the pandemic than it would normally because

115
00:07:34,000 --> 00:07:37,280
Speaker 1: you had so many people completely drop out of the

116
00:07:37,360 --> 00:07:40,840
Speaker 1: labor force, and that affects the calculation of the unemployment rate.

117
00:07:41,040 --> 00:07:44,560
Speaker 1: So just a quick background on that. Essentially, there's three

118
00:07:44,600 --> 00:07:48,240
Speaker 1: groups of people broadly in terms of calculating the unemployment rate.

119
00:07:48,280 --> 00:07:51,040
Speaker 1: You have the employed people, you have not in the

120
00:07:51,120 --> 00:07:55,240
Speaker 1: labor force people and you have the unemployed people. In

121
00:07:55,320 --> 00:07:57,840
Speaker 1: order to be counted as unemployed, you have to meet

122
00:07:57,920 --> 00:08:01,720
Speaker 1: three criteria. One, you don't have a job to you're

123
00:08:01,760 --> 00:08:05,520
Speaker 1: currently actively searching for a job, and ways that would

124
00:08:05,560 --> 00:08:09,000
Speaker 1: allow you to be made a job offer. So just

125
00:08:09,080 --> 00:08:12,240
Speaker 1: passively searching LinkedIn for example, isn't going to be enough

126
00:08:12,280 --> 00:08:15,200
Speaker 1: to be counted as unemployed. And then third, you have

127
00:08:15,240 --> 00:08:18,880
Speaker 1: to be available for a job right now. And so

128
00:08:19,360 --> 00:08:21,080
Speaker 1: normally when you have a recession, you have a whole

129
00:08:21,080 --> 00:08:26,440
Speaker 1: bunch of people move from employment to unemployment because unemployment

130
00:08:26,480 --> 00:08:30,440
Speaker 1: insurance requires people to search for work as a condition

131
00:08:30,560 --> 00:08:34,520
Speaker 1: for being unemployment insurance. That requirement was waived during the pandemic.

132
00:08:34,720 --> 00:08:36,480
Speaker 1: So you have a whole bunch of people out of

133
00:08:36,520 --> 00:08:38,960
Speaker 1: the labor force right now, and so you can't really

134
00:08:38,960 --> 00:08:42,240
Speaker 1: trust the unemployment rate to be exactly accurate as it

135
00:08:42,320 --> 00:09:03,160
Speaker 1: was in previous pre pandemic times. You know. Essentially, I

136
00:09:03,360 --> 00:09:07,400
Speaker 1: talked to a business owner who had advertised for a job,

137
00:09:07,960 --> 00:09:11,480
Speaker 1: and he said he got like one hundred inquiries, but

138
00:09:11,760 --> 00:09:13,760
Speaker 1: none of them followed up. But they were able to

139
00:09:13,840 --> 00:09:17,400
Speaker 1: check off that they'd called about a job, so they

140
00:09:17,400 --> 00:09:21,160
Speaker 1: had met their paper requirement to continue to draw unemployment

141
00:09:21,520 --> 00:09:24,520
Speaker 1: and I'm sure that business owners are seeing a lot

142
00:09:24,600 --> 00:09:28,280
Speaker 1: more of that because as of the spring, most states

143
00:09:28,480 --> 00:09:33,160
Speaker 1: reimpose the requirement to be actively searching for work in

144
00:09:33,280 --> 00:09:36,679
Speaker 1: order to be eligible for unemployment insurance. I remember well

145
00:09:36,800 --> 00:09:39,280
Speaker 1: in my early career, I had a desk near the

146
00:09:39,480 --> 00:09:42,720
Speaker 1: lobby at the business that was working at, and every

147
00:09:42,720 --> 00:09:45,040
Speaker 1: week a fellow would come in and just say like,

148
00:09:45,360 --> 00:09:47,880
Speaker 1: do you have any jobs? And the reception is to

149
00:09:47,920 --> 00:09:50,560
Speaker 1: be like, well, would you like a job application? He's like,

150
00:09:50,600 --> 00:09:54,280
Speaker 1: oh no, I just wanted to do the right thing.

151
00:09:54,320 --> 00:09:56,880
Speaker 1: And the employment office was just down the street, so

152
00:09:56,920 --> 00:09:59,640
Speaker 1: we got kind of a lot of that. That's wild.

153
00:10:00,040 --> 00:10:03,320
Speaker 1: You know. Micro has been a great observer of work

154
00:10:04,160 --> 00:10:07,200
Speaker 1: and has done a series of TV shows on working

155
00:10:07,200 --> 00:10:11,480
Speaker 1: in America. He keeps pointing out that there are remarkable

156
00:10:11,559 --> 00:10:14,720
Speaker 1: number of high paying jobs for skilled workers. And I

157
00:10:14,840 --> 00:10:17,760
Speaker 1: noticed that forty four percent of the openings now are

158
00:10:17,840 --> 00:10:21,360
Speaker 1: for skilled workers and twenty seven percent of unskilled labor.

159
00:10:21,880 --> 00:10:24,599
Speaker 1: Sixty six percent of the job openings and construction or

160
00:10:24,679 --> 00:10:29,080
Speaker 1: for skilled workers, and sixty seven percent of construction firms

161
00:10:29,080 --> 00:10:32,199
Speaker 1: reported few or no qualified applicants. I mean, if you

162
00:10:32,280 --> 00:10:35,160
Speaker 1: wanted to earn a living. There really are some amazing

163
00:10:35,160 --> 00:10:38,600
Speaker 1: opportunities out there, and this economy in a way that

164
00:10:38,760 --> 00:10:41,840
Speaker 1: is not being I think covered very well. There really

165
00:10:41,880 --> 00:10:44,520
Speaker 1: are the way that I have seen it being covered

166
00:10:44,559 --> 00:10:48,120
Speaker 1: as the Jolts report from the BLS Job Openings and

167
00:10:48,200 --> 00:10:52,640
Speaker 1: Labor Turnover Survey just kind of determining how many jobs

168
00:10:52,640 --> 00:10:56,600
Speaker 1: are available per unemployed workers out there and how much

169
00:10:56,600 --> 00:11:00,760
Speaker 1: are people shifting in between jobs the labor turnover and

170
00:11:01,120 --> 00:11:04,760
Speaker 1: that also, like you mentioned the Business Survey previously, the

171
00:11:04,840 --> 00:11:07,439
Speaker 1: JOLT survey is at a record high of there's one

172
00:11:07,480 --> 00:11:12,959
Speaker 1: point four jobs open per worker that is officially unemployed

173
00:11:13,040 --> 00:11:17,600
Speaker 1: right now, Like that's amazing, and the job turnover rate

174
00:11:18,040 --> 00:11:21,080
Speaker 1: is also about the highest that it's ever been, as

175
00:11:21,160 --> 00:11:24,320
Speaker 1: people are really comfortable being able to jump into a

176
00:11:24,360 --> 00:11:27,600
Speaker 1: new job because there's such a demand for workers. The

177
00:11:27,720 --> 00:11:31,600
Speaker 1: thing that those really you know, twenty thousand foot numbers

178
00:11:31,640 --> 00:11:35,080
Speaker 1: don't articulate though, is a difference between skilled work and

179
00:11:35,240 --> 00:11:38,440
Speaker 1: unskilled work. So it may be that most of the

180
00:11:38,440 --> 00:11:40,640
Speaker 1: people that remain out of the labor force right now

181
00:11:40,840 --> 00:11:45,360
Speaker 1: are more in the lesser specific skill industry and so

182
00:11:45,400 --> 00:11:49,360
Speaker 1: there's actually not quite so many jobs available for them

183
00:11:49,400 --> 00:11:51,720
Speaker 1: as there are for highly skilled workers. So this is

184
00:11:51,720 --> 00:11:54,800
Speaker 1: a great opportunity if someone wants to quickly skill up

185
00:11:54,800 --> 00:11:57,160
Speaker 1: into a new profession or just be hired in a

186
00:11:57,200 --> 00:12:00,200
Speaker 1: new profession and skill up into that and be trained

187
00:12:00,240 --> 00:12:02,360
Speaker 1: on the job. I think there's a lot of opportunity

188
00:12:02,360 --> 00:12:04,840
Speaker 1: for workers out there obviously. Yeah. And Rome points out

189
00:12:04,880 --> 00:12:12,120
Speaker 1: that very often people don't sociologically value the cash value

190
00:12:12,120 --> 00:12:14,480
Speaker 1: of some of these jobs. He said this was two

191
00:12:14,559 --> 00:12:17,600
Speaker 1: years ago when we talked, but he said that, for example,

192
00:12:18,080 --> 00:12:21,319
Speaker 1: when we were in the middle of the fracking boom,

193
00:12:21,360 --> 00:12:23,400
Speaker 1: that if you've got to be a really good welder,

194
00:12:23,720 --> 00:12:26,240
Speaker 1: you're in one hundred and sixty thousand dollars a year range.

195
00:12:26,880 --> 00:12:29,840
Speaker 1: I meanwhile, your brother in law who decided to study

196
00:12:29,880 --> 00:12:33,240
Speaker 1: English literature is in the like seventy thousand dollars range,

197
00:12:33,640 --> 00:12:37,719
Speaker 1: but feels socially superior to the guy who's out here

198
00:12:37,800 --> 00:12:40,800
Speaker 1: on a rig making you know, two and a half

199
00:12:40,880 --> 00:12:44,080
Speaker 1: times as much money. Yeah, and I think that's a

200
00:12:44,120 --> 00:12:47,640
Speaker 1: fundamental flaw of the direction that our culture moved in.

201
00:12:48,040 --> 00:12:52,320
Speaker 1: Education is incredibly valuable, but we put education on a

202
00:12:52,360 --> 00:12:57,320
Speaker 1: pedestal as opposed to artistry, as opposed to mastery, and

203
00:12:57,600 --> 00:13:00,839
Speaker 1: that's something that arguably Germany actually does a bit better

204
00:13:01,280 --> 00:13:04,880
Speaker 1: from what I've heard. If you get a PhD in Germany,

205
00:13:05,120 --> 00:13:07,600
Speaker 1: it's kind of like, yeah, that's nice. But if you

206
00:13:07,679 --> 00:13:10,719
Speaker 1: become a master of your art, if you go through

207
00:13:10,760 --> 00:13:14,760
Speaker 1: the apprenticeship and journeyman stage and you actually become a

208
00:13:14,840 --> 00:13:18,559
Speaker 1: master plumber, a master electrician, master metal worker, that is

209
00:13:18,559 --> 00:13:21,520
Speaker 1: actually written up in the local paper of like, you know,

210
00:13:21,960 --> 00:13:24,920
Speaker 1: local person does good, makes the master level, and it's

211
00:13:24,960 --> 00:13:27,800
Speaker 1: celebrated in a way that many other accomplishments are. And

212
00:13:27,840 --> 00:13:30,160
Speaker 1: I think that's something that we're missing and something that

213
00:13:30,240 --> 00:13:33,120
Speaker 1: Road does a really good job pointing out. And if

214
00:13:33,160 --> 00:13:37,920
Speaker 1: you really think about it, it's terribly important that you

215
00:13:38,080 --> 00:13:42,560
Speaker 1: do have highly skilled people in this situation. Imagine if

216
00:13:42,559 --> 00:13:46,400
Speaker 1: you have a bad plumber working on your house, you

217
00:13:46,400 --> 00:13:49,160
Speaker 1: could make the problem worse rather than better. Yeah. The

218
00:13:49,160 --> 00:13:52,280
Speaker 1: founder of Common Cause used to say, if you value

219
00:13:53,160 --> 00:13:57,199
Speaker 1: bad philosophy because it's a philosopher, and you ignore bad

220
00:13:57,240 --> 00:14:01,520
Speaker 1: plumbing because plumbing doesn't matter, neither your pipes nor your

221
00:14:01,520 --> 00:14:06,120
Speaker 1: philosophy are going to hold water. That yeah, I think

222
00:14:06,120 --> 00:14:25,120
Speaker 1: it's a real problem and distorts the system. You know, historically,

223
00:14:25,160 --> 00:14:27,320
Speaker 1: if you go back to the nineteenth century. We were

224
00:14:27,400 --> 00:14:31,040
Speaker 1: always a high cost labor society, and we always had

225
00:14:31,120 --> 00:14:35,600
Speaker 1: labor shortages, and as a result, we actually automated, although

226
00:14:35,600 --> 00:14:37,800
Speaker 1: we wouldn't have used that term in the nineteenth century,

227
00:14:37,840 --> 00:14:42,320
Speaker 1: but we actually used devices to improve efficiency much faster

228
00:14:42,400 --> 00:14:44,760
Speaker 1: than anybody else in the world. And I wonder to

229
00:14:44,840 --> 00:14:46,920
Speaker 1: what extent that's going to happen now. You look at

230
00:14:47,200 --> 00:14:50,800
Speaker 1: for example, Amazon moving towards robotics and other things that

231
00:14:50,840 --> 00:14:54,280
Speaker 1: are going on, and you also see in a classic

232
00:14:54,320 --> 00:14:56,880
Speaker 1: way that most economists, I think would agree with that

233
00:14:57,000 --> 00:15:00,520
Speaker 1: the minimum wage is rising because of labor shortage, is

234
00:15:00,560 --> 00:15:03,960
Speaker 1: not because of government. So Target went from thirteen to

235
00:15:03,960 --> 00:15:07,920
Speaker 1: fifteen dollars an hour, Hobby Lobby went from fifteen to seventeen.

236
00:15:08,440 --> 00:15:11,320
Speaker 1: Walmart's minimum wage is still at eleven, but the company

237
00:15:11,440 --> 00:15:13,880
Speaker 1: raised to pay in March for over four hundred and

238
00:15:13,920 --> 00:15:18,200
Speaker 1: twenty five thousand workers to between thirteen and nineteen dollars

239
00:15:18,200 --> 00:15:21,320
Speaker 1: an hour, so that about half the company's employees now

240
00:15:21,640 --> 00:15:24,960
Speaker 1: make fifteen dollars or more. Costco increased its minimum wage

241
00:15:25,000 --> 00:15:27,800
Speaker 1: to sixteen dollars an hour, and over half of the

242
00:15:27,800 --> 00:15:31,480
Speaker 1: company's employees earned twenty five or more. Starbucks gave raises

243
00:15:31,520 --> 00:15:33,800
Speaker 1: to at least ten percent of all its employees and

244
00:15:33,880 --> 00:15:36,640
Speaker 1: added a five percent bump to starting wages. And I've

245
00:15:36,640 --> 00:15:41,240
Speaker 1: seen anecdotally places that would like pay a thousand dollars

246
00:15:41,280 --> 00:15:43,840
Speaker 1: we got a signing bonus for showing up and going

247
00:15:43,880 --> 00:15:48,240
Speaker 1: to work. Absolutely, I've actually heard of signing bonuses just

248
00:15:48,440 --> 00:15:51,840
Speaker 1: for showing up for an interview. If we contact you

249
00:15:51,880 --> 00:15:54,280
Speaker 1: when we say we want to interview, just please show up.

250
00:15:54,320 --> 00:15:56,720
Speaker 1: We'll give you fifty or one hundred dollars just to

251
00:15:56,760 --> 00:15:58,800
Speaker 1: show up, and then if you actually get hired, we'll

252
00:15:58,800 --> 00:16:01,720
Speaker 1: give you another signing bonus as well. So yes, we

253
00:16:01,760 --> 00:16:04,840
Speaker 1: are absolutely going to see more automation. There's an effect

254
00:16:04,920 --> 00:16:08,160
Speaker 1: in economics, since we like to make up fancy words

255
00:16:08,200 --> 00:16:12,640
Speaker 1: describe simple things, that is called hysteresis. And the really

256
00:16:12,640 --> 00:16:15,360
Speaker 1: easy way to understand this is kind of like a ratchet.

257
00:16:15,640 --> 00:16:19,920
Speaker 1: It turns the nut tighter, but it doesn't ever loosen

258
00:16:19,960 --> 00:16:23,680
Speaker 1: the nut. So the minimum wage is an example of

259
00:16:23,720 --> 00:16:29,520
Speaker 1: a policy that causes more hysteresis. It's because once you shift,

260
00:16:29,680 --> 00:16:33,560
Speaker 1: say at McDonald's or at a grocery, to self scan

261
00:16:33,920 --> 00:16:38,360
Speaker 1: checkouts or order kiosks, things like that. What I have

262
00:16:38,480 --> 00:16:41,800
Speaker 1: read recently is that McDonald's is actually shifting to because

263
00:16:41,880 --> 00:16:45,800
Speaker 1: of advancements in technology in voice recognition algorithms, they're actually

264
00:16:45,880 --> 00:16:49,080
Speaker 1: going to be having a robot take your order at

265
00:16:49,080 --> 00:16:51,400
Speaker 1: the drive through, so that you don't aren't even talking

266
00:16:51,440 --> 00:16:53,480
Speaker 1: to a person, You're just speaking the order and is

267
00:16:53,560 --> 00:16:57,840
Speaker 1: taking it down. All of these things reduce the demand

268
00:16:58,360 --> 00:17:02,520
Speaker 1: for labor fundamentally. Now, the demand for labor may grow

269
00:17:02,600 --> 00:17:06,159
Speaker 1: over time as the economy expands, but for each of

270
00:17:06,200 --> 00:17:10,040
Speaker 1: these effects that occurs, the fundamental demand for labor has

271
00:17:10,160 --> 00:17:14,679
Speaker 1: been decreased. And that's one of the problems with programs

272
00:17:14,680 --> 00:17:18,000
Speaker 1: like the minimum wage is that it is a well

273
00:17:18,080 --> 00:17:24,560
Speaker 1: intentioned attempt to artificially create a safety net using business

274
00:17:24,640 --> 00:17:29,879
Speaker 1: regulations rather than using a regulatory approach rather than a

275
00:17:30,000 --> 00:17:32,720
Speaker 1: fiscal approach to creating a social safety net. To get

276
00:17:32,840 --> 00:17:35,680
Speaker 1: a little bit deeper into the weeds. But businesses can

277
00:17:35,760 --> 00:17:38,560
Speaker 1: choose how they respond to that, and what ends up

278
00:17:38,600 --> 00:17:41,600
Speaker 1: happening is with the disappearing jobs, you end up harming

279
00:17:41,600 --> 00:17:45,080
Speaker 1: the exact same people that you're trying to help with

280
00:17:45,119 --> 00:17:48,400
Speaker 1: this policy. To bring this back to unemployment insurance, the

281
00:17:48,400 --> 00:17:50,639
Speaker 1: thing that I'm worried about is that the longer that

282
00:17:50,880 --> 00:17:55,399
Speaker 1: people remain out of work because of the federal expansion

283
00:17:55,520 --> 00:17:59,040
Speaker 1: unemployment insurance. Now it's done now, but to the extent

284
00:17:59,119 --> 00:18:01,320
Speaker 1: that it has caused people to remain out of work longer,

285
00:18:02,000 --> 00:18:05,040
Speaker 1: and that has built up their bank account such that

286
00:18:05,160 --> 00:18:08,520
Speaker 1: with the generosity of the additional funds and extending that

287
00:18:09,119 --> 00:18:11,840
Speaker 1: people that say it to work longer might actually discover

288
00:18:11,920 --> 00:18:13,920
Speaker 1: when they come back to work that the jobs that

289
00:18:13,960 --> 00:18:16,640
Speaker 1: they want to come back to aren't there because they've

290
00:18:16,640 --> 00:18:19,439
Speaker 1: been automated away. Because businesses has finally got sick and

291
00:18:19,480 --> 00:18:21,920
Speaker 1: tired of waiting for workers to come back, and they've

292
00:18:21,960 --> 00:18:25,560
Speaker 1: actually decided like, okay, we're gonna Amazon is now experimenting

293
00:18:25,600 --> 00:18:29,960
Speaker 1: with a completely cashier less grocery store where they have

294
00:18:30,200 --> 00:18:32,280
Speaker 1: just really good cameras all over the place and they

295
00:18:32,320 --> 00:18:34,840
Speaker 1: note which products you put into your cart and you

296
00:18:34,880 --> 00:18:36,639
Speaker 1: can just walk straight out of the store and it

297
00:18:36,680 --> 00:18:39,320
Speaker 1: automatically debits your account. When you look at the whole

298
00:18:39,359 --> 00:18:43,800
Speaker 1: impact of artificial intelligence and massive computational power, I mean,

299
00:18:43,800 --> 00:18:46,120
Speaker 1: we're clearly going to be in a different world. Although

300
00:18:46,560 --> 00:18:50,000
Speaker 1: historically it seems like every time we obso less something,

301
00:18:50,440 --> 00:18:53,560
Speaker 1: people go and find new, more creative jobs. So we

302
00:18:53,680 --> 00:18:57,480
Speaker 1: probably now have more psychiatrists than we have farmers. Arguably

303
00:18:57,880 --> 00:19:01,280
Speaker 1: that's a better thing for us have more and better

304
00:19:01,359 --> 00:19:04,800
Speaker 1: food and healthier lives as a result as well. That's right.

305
00:19:05,240 --> 00:19:10,879
Speaker 1: So I'm curious, how do you generally since the economy

306
00:19:10,920 --> 00:19:14,160
Speaker 1: over the next year or two. My general sense is,

307
00:19:14,400 --> 00:19:20,400
Speaker 1: barring the emergence of spectacular new strain of coronavirus like Delta,

308
00:19:20,640 --> 00:19:23,080
Speaker 1: is that we're going to continue on an upward trend.

309
00:19:23,480 --> 00:19:27,560
Speaker 1: Now that the federal expansion to unemployment insurance is over,

310
00:19:27,960 --> 00:19:30,800
Speaker 1: We're going to see the remaining workers that have stayed

311
00:19:30,800 --> 00:19:34,640
Speaker 1: out of the workforce coming back to employment. Essentially at

312
00:19:34,640 --> 00:19:37,960
Speaker 1: this point for the September Jobs report, which the data

313
00:19:38,000 --> 00:19:41,160
Speaker 1: for the September Jobs report will be collected this week,

314
00:19:41,840 --> 00:19:45,720
Speaker 1: there's no longer any federal unemployment insurance schools are back

315
00:19:45,720 --> 00:19:49,480
Speaker 1: in session more or less, and most in person, so

316
00:19:50,000 --> 00:19:54,399
Speaker 1: most of the rationales and reasoning for workers to remain

317
00:19:54,960 --> 00:19:57,879
Speaker 1: out of work are gone. That doesn't mean that there

318
00:19:57,920 --> 00:20:00,400
Speaker 1: aren't going to be lagged effects. As I said, due

319
00:20:00,400 --> 00:20:04,200
Speaker 1: to the expanded generosity of unemployment insurance programs, people may

320
00:20:04,240 --> 00:20:07,600
Speaker 1: have maintained a bank account that allows them to remain

321
00:20:07,640 --> 00:20:10,800
Speaker 1: out of work. A little bit further rather than immediately

322
00:20:10,800 --> 00:20:12,560
Speaker 1: coming back. But I think you're going to see a

323
00:20:12,600 --> 00:20:15,920
Speaker 1: surge of people returning in the next couple months. And

324
00:20:15,960 --> 00:20:19,760
Speaker 1: I think when we look at, say the January jobs numbers,

325
00:20:20,080 --> 00:20:25,479
Speaker 1: we will see what the actual full return to post

326
00:20:25,560 --> 00:20:29,040
Speaker 1: pandemic is going to be. And that's going to be

327
00:20:29,080 --> 00:20:31,720
Speaker 1: interesting because there's going to be a lot of workers

328
00:20:31,800 --> 00:20:35,880
Speaker 1: who have decided to remain out of work they were

329
00:20:35,880 --> 00:20:38,040
Speaker 1: working before the pandemic. I think we're going to see

330
00:20:38,400 --> 00:20:43,000
Speaker 1: a large one time reduction in the workforce. Some of

331
00:20:43,000 --> 00:20:46,120
Speaker 1: that is going to be due to retirements. There were

332
00:20:46,240 --> 00:20:50,760
Speaker 1: two million more retirements than expected during the first twelve

333
00:20:50,760 --> 00:20:52,919
Speaker 1: months of the pandemic. I think that we're going to

334
00:20:52,960 --> 00:20:56,359
Speaker 1: see some people who have rearranged their lives to have

335
00:20:56,600 --> 00:20:59,680
Speaker 1: more parents stay home with children, and so I think

336
00:20:59,720 --> 00:21:01,600
Speaker 1: that that's going to have an effect as well. And

337
00:21:01,920 --> 00:21:04,800
Speaker 1: that's one of those things that we shouldn't necessarily say

338
00:21:04,800 --> 00:21:07,600
Speaker 1: that we have to return to the exact pre pandemic

339
00:21:07,640 --> 00:21:11,560
Speaker 1: economy that we had, because there are values to retirement,

340
00:21:11,600 --> 00:21:15,320
Speaker 1: there are values to workers prior workers staying home and

341
00:21:15,359 --> 00:21:19,000
Speaker 1: helping raise children, and so we might actually be most

342
00:21:19,040 --> 00:21:22,399
Speaker 1: of the way quote unquote recovered right now when you

343
00:21:22,480 --> 00:21:25,239
Speaker 1: account for those kind of effects, but we won't know

344
00:21:25,520 --> 00:21:28,320
Speaker 1: until another six months or so. That's great, that's really

345
00:21:28,320 --> 00:21:31,320
Speaker 1: really helpful. Do you worry much about the inflation numbers.

346
00:21:31,920 --> 00:21:34,399
Speaker 1: I worry about it in a guarded way. I was

347
00:21:34,440 --> 00:21:39,560
Speaker 1: just reading that the cost of living adjustment for Social Security,

348
00:21:39,760 --> 00:21:43,439
Speaker 1: based on recent Social Security Trustees report, is estimated to

349
00:21:43,440 --> 00:21:46,680
Speaker 1: be six percent for next year, and that's four times

350
00:21:46,760 --> 00:21:51,120
Speaker 1: higher than the cost of living adjustment for this past year.

351
00:21:51,600 --> 00:21:55,440
Speaker 1: So I'm worried if the government continues pumping money into

352
00:21:55,440 --> 00:21:57,879
Speaker 1: the economy. I think that if we can get a

353
00:21:57,920 --> 00:22:01,119
Speaker 1: handle on that, these price increases will be kind of

354
00:22:01,119 --> 00:22:05,280
Speaker 1: a one time thing, and it may change kind of

355
00:22:05,280 --> 00:22:07,640
Speaker 1: like the level a little bit, but then we'll continue

356
00:22:07,680 --> 00:22:10,520
Speaker 1: to grow at a relatively slower rate. I have to say, though,

357
00:22:10,520 --> 00:22:12,960
Speaker 1: I'm not a macroeconomist, so you're not getting a perfect

358
00:22:12,960 --> 00:22:14,840
Speaker 1: answer for me. I have to be humble about that.

359
00:22:14,840 --> 00:22:19,960
Speaker 1: That's all right. Everybody's opinion counts. If only everybody's opinion

360
00:22:20,040 --> 00:22:23,080
Speaker 1: could be actually right. I know. I think it was

361
00:22:23,160 --> 00:22:25,560
Speaker 1: Reagan who once said if we could lay all the

362
00:22:25,560 --> 00:22:29,320
Speaker 1: economists in the country well head to tell, that would

363
00:22:29,320 --> 00:22:34,840
Speaker 1: be a good thing. I know a lot of people

364
00:22:34,880 --> 00:22:37,520
Speaker 1: who would agree with you. Yeah, Michael Wison, thank you

365
00:22:38,119 --> 00:22:40,440
Speaker 1: for joining us today. We're going to have a link

366
00:22:40,480 --> 00:22:44,520
Speaker 1: to your research and report COVID nineteen expanded unemployment insurance

367
00:22:44,560 --> 00:22:47,840
Speaker 1: benefits may have discouraged your past to recovery. That'll be

368
00:22:47,880 --> 00:22:50,320
Speaker 1: on our show page at Newtsworld dot com. And I

369
00:22:50,359 --> 00:22:53,000
Speaker 1: hope that sometime in the future we can revisit the

370
00:22:53,040 --> 00:22:56,680
Speaker 1: economy with you. And you've been very, very helpful. Thank you, sir.

371
00:22:56,760 --> 00:23:03,399
Speaker 1: I'd love that. Thank you to my guest Michael Farren.

372
00:23:03,760 --> 00:23:06,600
Speaker 1: You can learn more about the August jobs report on

373
00:23:06,720 --> 00:23:10,800
Speaker 1: our showpage at newtsworld dot com. Newtsworld is produced by

374
00:23:10,800 --> 00:23:15,479
Speaker 1: Gingwish three sixty and iHeartMedia. Our executive producer is Debbie Myers,

375
00:23:15,800 --> 00:23:20,040
Speaker 1: our producer is Garnsey Sloan, and our researcher is Rachel Peterson.

376
00:23:20,560 --> 00:23:23,640
Speaker 1: The artwork for the show was created by Steve Penley.

377
00:23:24,160 --> 00:23:27,439
Speaker 1: Special thanks to the team at Gingridge three sixty. If

378
00:23:27,520 --> 00:23:30,200
Speaker 1: you've been enjoying Newtsworld, I hope you'll go to Apple

379
00:23:30,240 --> 00:23:33,760
Speaker 1: Podcast and both rate us with five stars and give

380
00:23:33,840 --> 00:23:36,679
Speaker 1: us a review so others can learn what it's all about.

381
00:23:37,240 --> 00:23:39,840
Speaker 1: Right now, listeners of news World consign up for my

382
00:23:39,920 --> 00:23:44,080
Speaker 1: three free weekly columns at gingwish three sixty dot com

383
00:23:44,080 --> 00:23:47,880
Speaker 1: slash newsletter. I'm newt Gingrich. This is newtwork.