By Leonard Robinson
University of Chicago professor Austan Goolsbee believes that consumers should expect “worse service in affected industries: wait times at restaurants, retail, housing renovations, and the like” as the U.S. grapples with a post-pandemic labor market. Goolsbee, a former economic policy advisor to President Obama, shared this via email with NBC News.
Hourly-wage workers, primarily those in the service, retail, and healthcare sectors, during the earlier days of the pandemic were deemed “essential” as they provided much-needed services to the economy. Consumers and employers alike were expressing their gratitude whether in claps and pot banging at seven in the evening in metropolitan cities across the country, offering tips larger than usual – or as, Wall Street Journal columnist Peggy Noonan calls it, “tipping 20s these days” -, or new paid sick leave policies.
The nation’s largest private employer, Walmart, instituted an emergency leave policy after a Kentucky employee tested positive for the coronavirus in March of last year. For U.S.-based employees, Starbucks offered “catastrophe pay” for up to 14 days to those who were exposed to or contracted the coronavirus. Darden Restaurants, the parent company of Olive Garden, also offered hourly pay to employees forced to call in sick.
Even then-President Trump, during the earlier days of the coronavirus, floated providing additional help to hourly wage workers.
“I think all of that did a lot of great symbolic work on just casting a positive light on this all-too-often invisible workforce,” Eli Wilson, an assistant professor of sociology at the University of New Mexico, said. “At the same time, I think, as a sociologist focused on labor, we’re not still entirely clear about if any of this is going to amount to material change for these workers.”
Eventually, the cheers from apartment buildings from New York City to Newport Beach faded, as did the benefits.
Workers realized that they earned more money from pandemic-infused unemployment checks than they did at their old jobs.
By May, Starbucks had phased out their “catastrophe pay” policy, and Kroger was no longer paying an additional $2 per hour for all store employees.
Recent data from the Labor Department show that first-time weekly jobless claims continue to decline. Still, more than nine million people in the U.S. remain without work even as job listings are higher than before the pandemic.
Low participation rates suggest that workers are either waiting for the end of the pandemic, higher wages, or more opportunities before joining the labor market again.
Some have also credited this to job seekers being discouraged by earlier attempts at job searches in January and February.
“When people lose their jobs, they often engage in a flurry of job search activity, they send off 20 applications, and then they sit back and wait to hear back from employees,” Zillow labor economist Julia Pollock said. “Job seeker confidence has gone down between January and March at exactly the moment that their prospects have improved. It’ll take a while before people notice the labor market has heated up.”
Nevertheless, economists say that one solution to ensure a smooth transition to a post-pandemic economy is by raising wages – albeit with higher costs to consumers.
“The worker shortage will go away because wages will rise,” Cato Institute economic studies director Jeffrey Miron said. “And then consumer prices will follow.”
