It’s Called A Job Market (Gwen Moritz Editor’s Note)

(Editor’s Note: This column was written before Gov. Asa Hutchinson announced on May 6 that the state would opt out of the $300 per week federal unemployment supplement after June 26.)

If you spend enough time reading social media — Facebook remains my drug of choice — you might start believing that the federal government has single-handedly created an employment crisis by paying people who were formerly willing to work 40 hours a week so much that they are now too lazy to leave their recliners.

One Arkansas business executive emailed me the other day to bemoan the labor shortage that launched a thousand Facebook memes. He allowed that it is “hard to blame people who draw up to $1,000 a week who just don’t want to go back to work until it ends.”

Huh?

No one in Arkansas is getting $1,000 a week in unemployment benefits these days, and the folks who were getting that much for a few months last year had been laid off from jobs paying nigh unto $50,000. Those weren’t the folks who were most likely to become unemployed because of the pandemic, and they aren’t the folks that businesses are having trouble hiring back.

The federal supplement to state unemployment income was $600 a week for 17 weeks last year. That really was a windfall for low-income employees, and actually replaced 100% of lost wages for Arkansans who had lost jobs paying as much as $55,000 a year. (The formula is actually more complicated, but so is the question of why some businesses are having a hard time hiring workers.)

That supplement ended in July, and the maximum in our state was $451 a week until a new congressional appropriation in January included a federal supplement of $300 a week. The most anyone is pulling down now is $751 a week, and then only those who were earning approximately $47,000 in the months before their jobs were casualties of the pandemic. Others are receiving as little as $381 a week — $300 from the federal government plus the state minimum of $81.

Look, I don’t know how many jobs are empty strictly because formerly willing workers are content to wait until only the worst jobs are left unfilled because they are being paid more to stay home. I’m sure the number is not zero, but I’m also sure that overly generous unemployment benefits aren’t the reason that some businesses have been unable to hire back exactly the same people they laid off at exactly the same wages.

The Wall Street Journal last week included generous unemployment benefits in a list of reasons for hiring frustrations, including continuing fear of COVID-19 and businesses reopening before schools and day cares.

This pandemic has shaken up the job market in ways that were predictable and in ways that are surprising. As of March, there were 26,100 fewer nonfarm workers employed in Arkansas than there were a year earlier, a contraction of about 2%. (Of those, 1,400 dropped out of the workforce in March alone, even as more than 900,000 jobs were created nationally.)

But as Michael R. Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock, noted on his Arkansas Economist blog, some industry sectors are actually employing more people than they did before the pandemic: “Construction, Manufacturing, Retail Trade and Financial Services all have higher employment levels than in March 2020,” he wrote.

The economic pain of the pandemic has not been spread evenly. Lower-income workers were the most likely to be laid off, but they also had more of their lost wages replaced through unemployment benefits and stimulus checks. For that, landlords, utility companies and retailers can be grateful.

Some industries boomed — residential real estate is absolutely nuts — while hotels, casinos and dine-in restaurants are only now starting to come back to life. Because economics can be cruel as well as dismal, the industries that were hurt hardest and longest are now faced with reconstituting a workforce after other employers have already had their pick.

With so many companies hiring at the same time, the best workers have options. The unemployment rate is not as low as it was before the pandemic, but it got to that point gradually rather than in a spasm of desperate hiring. And there’s a new competitor in the mix, nationally and in Arkansas: Amazon.

We all know what happens when demand exceeds supply. According to the WSJ, “Workers could stand to benefit from a temporary reduced supply of labor. They could command promotions and better wages, which they then could spend in their communities, boosting economic output. They might also be able to negotiate more flexible schedules or other perks.”

But there was upward pressure on wages before the pandemic, too, when unemployment was the lowest most of us had ever experienced. They don’t call it a job market for nothing.

Gwen Moritz is the editor of Arkansas Business.