A Messed Up Economy: Jobs Edition
Government policies – from shutdowns, to stimulus, to vaccine mandates – in response to the coronavirus pandemic have thrown the US economy completely out of whack. Looking at employment reveals just how messed up the economy has become.
The number of Americans quitting their jobs surged to a record high in August. According to the Labor Department Job Openings and Labor Turnover Survey (JOLTS) report, job quits increased by 242,000 in August, pushing the total to a record 4.3 million. The quits rate surged to an all-time high of 2.9% in August from 2.7% in July.
Meanwhile, job creation has tanked. The Labor Department reported an increase of only 194,000 jobs in September, well below the estimated 500,000. This followed on the heels of another big miss in August.
And yet companies are desperate for workers. There were more than 10 million job vacancies according to the JOLTS report.
Even with this massive number of job openings, employment remains 5 million jobs below the prepandemic level in February 2020.
How does any of this make sense?
Talking heads and government officials are trying desperately to spin this as good news, claiming it is all a sign of a recovering job market. To hear them tell it, this is just another little hiccup as the economy strengthens post-pandemic. You’ll notice a lot of these “little hiccups,” including surging prices and empty store shelves. Spin though they might, it’s difficult to hide the fact that the economy is horribly messed up. Of course, the political class doesn’t want to admit this because then they would have to take responsibility for creating this mess.
The tightening labor market is not good news for those clinging desperately to Jerome Powell’s “inflation is transitory” narrative. Companies will have to raise wages in order to attract workers. As an economist told Reuters, there are help-wanted posters in every shop window on Main Street.
The lack of workers is exacerbating the supply disruptions throughout the nation that is lighting a match to the fire of inflation.”
So, why are so many Americans simply leaving their jobs? According to Reuters, “People are most likely leaving their jobs for fear of contracting COVID-19.” They base this assertion on the fact that quits are highest in the South and Midwest, areas that bore the brunt of the summer coronavirus wave. Reuters noted vaccinations rates are low in the South and Midwest.
This explanation seems implausible to me. I don’t know anybody who is afraid of getting COVID-19 — not afraid enough to quit their job. On the other hand, I know a lot of people who don’t want to get vaccinated. And I know several people who have been forced to leave their jobs because they refused to get jabbed. I’d say it’s more likely that vaccine mandates are driving the exodus from the workforce, not fear of getting coronavirus. Given that the un-vaxxed rate is higher in the areas with the highest number of quits supports my position.
This is yet another example of an economic truth – incentives matter. When you incentivize people to quit their jobs, they’re going to quit their jobs.
Looking at the bigger picture, this is just another piece of a stagflationary puzzle. Reuters even hints at it in its report.
Inflation is way above the Federal Reserve’s flexible 2% target, while gross domestic product growth estimates for the third quarter are mostly below a 3% annualized rate.”
High inflation, low growth. That’s the definition of inflation. This is precisely why Peter Schiff recently declared “stagflation is here.”
If you listen to the mainstream media or government officials, you’d think that the wacky economy just kind of happened. They shrug the craziness off as a temporary situation because we’re recovering from a pandemic. It’s almost as if we should expect this.
I can’t emphasize this enough – what we’re seeing today is a direct result of stupid government policies. In response to a virus, governments literally closed the economy for several months. The Federal Reserve printed trillions of dollars out of thin air. Uncle Sam passed out the money in the form of stimulus checks. Congress made it more lucrative to stay home than work with enhanced unemployment benefits. Now we’re seeing vaccine mandates.
As Frederick Bastiat warned, you have to look at not just the seen – but also the unseen. Politicians focus on the seen – coronavirus. These policies were put in place to help. They were essential, so we were told. But nobody bothered to count the cost. Now the unseen is rearing its ugly head in the form of inflation, broken supply chains, a whacked-out labor market, shortages, a surging trade deficit, rising debt, and the specter of stagflation.
Government broke the economy. Don’t think the problems are just going to go away.