2 ways jobs and pay didn’t make sense before the pandemic that are now ‘unwinding’, according to a top economist

U.S. Federal Reserve Chair Janet Yellen (L) greets Howard University Economics Professor William Spriggs (R), who serves as chief economist to the AFL-CIO, as she arrives to deliver opening remarks at a summit on diversity in the economics profession at the Federal Reserve headquarters in Washington October 30, 2014.
REUTERS/Jonathan Ernst

Right now, a whole lot of jobs are open – and a whole bunch of workers are quitting.
But the labor market being weird is nothing new, according to economist William Spriggs.
The current shifts could be an ‘unwinding’ of more than a decade of declining wages and an aging workforce.
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The labor market is weird right now.
A lot of people remain unemployed, even though the number of job openings is high and businesses are desperate to hire. Americans that do have jobs are quitting at record-breaking rates. In other words, a major reshuffling is going on in the labor market.
As it turns out, a confusing labor market is nothing new, said Dr. William Spriggs, an economics professor at Howard University and chief economist at the AFL-CIO. Spriggs told Insider that low-paying jobs and older people remaining in the workforce were both surprising features of the last 20 years of the American economy. And what seems weird right now is actually just an "unwinding" of these two trends giving way to higher-paying jobs and younger workers.
The labor shortage is actually healing major dysfunctions in the 21st century economy, Spriggs explained.
Low-wage jobs rose and real wages declinedSince the early 2000s, the number of low-wage jobs grew, even as people became more educated. (Brookings’ defines "low-wage" as two-thirds of their area’s median wage, or less.)
A Brookings analysis from 2019 found that 53 million Americans work for low wages – which comes to 44% of workers ages 18 to 64. And it’s not just teenagers; more than half of those low-wage workers fall between the ages of 25 and 50.
"It was very hard to explain how, in the 21st century, we gained so many low-wage jobs," Spriggs said.
Though pay growth picked up in the years preceding the pandemic thanks to states raising minimum wages above the federal level of $7.25 an hour, wages have declined over the past five decades.
Now some of those past patterns are "unwinding," said Spriggs. He attributes some of that to more consistent hours in some sectors, like those benefitting from the rise of online shopping. Workers – especially women, who have had a rockier recovery – are flocking to industries like construction, transportation, and warehousing.
"With this transition going on, the workers who are employed are finding ways to get jobs in the sectors that are expanding and hiring," Spriggs said.
Older workers stuck around longer than expected The other "really strange thing" about the 21st century labor market was that the number of workers over age 50 has been on the upswing, and participation for people under 25 fell. Spriggs pointed out that there was much talk about the 21st century being the "age of the computer."
"I think everybody thought that people over 50 will continue to retire and people under 25, this would be the best cohort ever if you were young, because you will have to backfill all those jobs," he said.

Dr. William Spriggs.
Courtesy of Dr. William Spriggs

Instead, younger workers were unemployed at higher rates than older workers after the Great Recession, and were then hit harder by COVID job losses.
The pandemic might have evened out generational representation as a wave of older workers opted (or were pushed) into retirement over COVID fears, layoffs, and bleak industry outlooks. The Retirement Equity Lab found in an October report that, for the first time in 50 years, workers over 55 were unemployment at higher rates than the younger cohort.
After teen unemployment dropped significantly in May, it leveled out in June, coming in close to pre-pandemic levels. Insider’s Ayelet Sheffey and Madison Hoff reported that some expected teens would step in and fill the labor shortage, but June’s jobs report seemed to disprove that theory. Spriggs agrees that "there’s no evidence of that so far."
The current labor market rollercoaster could create lasting change beyond temporary signing bonuses and other measures employers are using to lure in workers.
"Maybe because of the shift in demand, we finally shift to some of these other jobs that aren’t necessarily higher paying," Spriggs said, but ones with more hours. That’s a potential advantage for workers: "The annual pay is much higher."
Read the original article on Business Insider

Source: https://www.businessinsider.com/are-wages-pay-rising-economy-is-correcting-william-spriggs-2021-7

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