When the April jobs report comes out tomorrow from the Bureau of Labor Statistics, I expect another month of strong job growth. Progress on the production and distribution of the vaccine, as well as forthcoming aid to state and local governments and direct assistance to workers and their families, means that the labor market should pick up steam. And that’s much needed, because the U.S. economy is still facing a significant jobs shortfall between 9.1 million and 11.0 million jobs, as I show below.

As of the latest March 2021 data, employment is down 8.4 million jobs from its pre-pandemic level in February 2020. In addition, thousands of jobs would have been added each month over the last year without the pandemic recession.

I consider two plausible counterfactuals for how many jobs may have been created if the recession hadn’t hit, as shown in the figure below. First, we could simply add enough jobs to keep up with population growth. There was a noticeable slowdown in ages 16+ population growth early in the pandemic; however, on average, we still would have needed a minimum of 54,000 jobs a month just to keep up with that growth.

Alternatively, we could count how many jobs may have been added if we took pre-recession growth in payroll employment and extended that forward. Average monthly job growth over the 12 months prior the recession was 202,000. Using these reasonable counterfactuals, we are now short between 9.1 million and 11.0 million jobs since February 2020. When the latest job numbers are released tomorrow, we should not only look at the difference in jobs between now and February 2020, but also what could have been if the economy continued growing over the last year.

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Update: Data released following the publication of this piece show there are signs of short-term worker shortages in isolated sectors, namely leisure and hospitality. There is, however, no evidence of a widespread labor shortage, and the isolated shortages that do exist are not a reason for concern. See this blog post for an updated analysis.)

This op-ed was originally published for The Commons hosted by the Initiative for Policy Dialogue. Read the piece here. 

There are lots of anecdotal reports swirling around about employers who can’t find workers. Just search “worker shortages” online and a seemingly endless list of stories pops up, so it’s easy to assume there’s an alarming lack of people to fill jobs. But a closer look reveals there may be a lot less to this than meets the eye.

First, the backdrop. In good times and bad, there is always a chorus of employers who claim they can’t find the employees they need. Sometimes that chorus is louder, sometimes softer, but it’s always there. One reason is that in a system as large and complex as the U.S. labor market there will always be pockets of bona fide labor shortages at any given time. But a more common reason is employers simply don’t want to raise wages high enough to attract workers. Employers post their too-low wages, can’t find workers to fill jobs at that pay level, and claim they’re facing a labor shortage. Given the ubiquity of this dynamic, I often suggest that whenever anyone says, “I can’t find the workers I need,” she should really add, “at the wages I want to pay.”

Furthermore, a job opening when the labor market is weak often does not mean the same thing as a job opening when the labor market is strong. There is a wide range of “recruitment intensity” that an employer can apply to an open position. For example, if employers are trying hard to fill an opening, they will increase the compensation package and perhaps scale back the required qualifications. Conversely, if employers are not trying very hard, they may offer a meager compensation package and hike up the required qualifications. Perhaps unsurprisingly, research shows that recruitment intensity is cyclical. It tends to be stronger when the labor market is strong, and weaker when the labor market is weak. This means that when a job opening goes unfilled when the labor market is weak, as it is today, employers are even more likely than in normal times to be holding out for an overly qualified candidate at a very cheap price.

This points to the fact that the footprint of a bona fide labor shortage is rising wages. Employers who truly face shortages of suitable, interested workers will respond by bidding up wages to attract those workers, and employers whose workers are being poached will raise wages to retain their workers, and so on. When you don’t see wages growing to reflect that dynamic, you can be fairly certain that labor shortages, though possibly happening in some places, are not a driving feature of the labor market.

And right now, wages are not growing at a rapid pace. While there are issues with measuring wage growth due to the unprecedented job losses of the pandemic, wage series that account for these issues are not showing an increase in wage growth. Unsurprisingly, at a recent press conference, Federal Reserve Chairman Jerome Powell dismissed anecdotal claims of labor market shortages, saying, “We don’t see wages moving up yet. And presumably we would see that in a really tight labor market.”

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In the first 100 days, the Biden-Harris administration has taken a number of promising steps toward crafting an economic policy approach that would boost living standards and security for all U.S. families. But much remains to be done.

In this post, we highlight—in very broad strokes—what is needed to build an economy that generates faster, more sustainable, and more equitably distributed growth. We then identify where the administration has made progress in the first 100 days and where more forceful action is needed.

Building an economy that works for everyone requires the following:

• Pursuing a “go-for-growth” approach to macroeconomics that aims for labor markets where jobs are plentiful and employers have to work hard (including offering higher wages) to attract workers, so-called “high-pressure” labor markets.
• Crafting and enforcing fairer rules for markets, particularly through labor market institutions and standards that provide workers a more level playing field when bargaining with employers for better pay and working conditions.
• Constructing deeper and more protective social insurance systems that use a larger public role in providing unemployment benefits, health coverage, and retirement income security— including long-term care for older adults and people with disabilities.
• Undertaking ambitious public investments in both people and physical capital, including physical infrastructure, early child care and education, higher education, and green investments.
• Reforming taxes in a way that helps finance the needed fiscal spending in this program, curbs growing inequality, and discourages the economic “bads” of greenhouse gas emissions and financial speculation.

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Today the Biden-Harris administration issued an executive order requiring federal contractors to pay a minimum wage of $15 per hour. This is very welcome news. We estimate that up to 390,000 low-wage federal contractors will see a raise under this policy, with the average annual pay increase for affected year-round workers being up to $3,100. Roughly half of workers who would see a raise will be women and roughly half will be Black or Hispanic workers.

To arrive at these estimates, we first estimate the state- and industry-specific shares of federal contract employment using FY2020 federal contract obligations from USA Spending and input-output tables from 2019 Bureau of Labor Statistics employment requirements data. We then combined these results with the EPI Minimum Wage Simulation Model, assuming that the state- and industry-specific wage distributions for federal contractors are similar to the state- and industry-specific overall wage distributions. Following this methodology, we project that the policy will raise wages of up to 390,000 federal contractors in 2022. We say “up to” 390,000 to account for the fact that some workers who would otherwise be affected by a $15 minimum wage will already be receiving a higher wage as a result of the Davis-Bacon Act or the Service Contract Act. An extreme lower bound for the number of contract workers affected by this executive order after accounting for these other wage standards is 226,000. (This lower bound is generated by entirely excluding the construction industry and, outside of construction, raising the underlying wage distribution by an industry-specific union wage premium.)

We are thrilled that the administration is increasing the minimum wage for workers on federal contracts to $15 per hour and raising wages for hundreds of thousands of workers, and we encourage the administration to go further to help ensure that the estimated two million total jobs held by federal contract workers are good jobs. This would include steps like ending practices that allow low-road contractors to win bids that are so low they are inconsistent with decent pay and working conditions, and banning federal government contractors from requiring contract workers to sign forced arbitration and class action waivers, which limit the ability of these workers to challenge illegal practices.

Recently released data from the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) show that unemployment insurance (UI) made up an unprecedented share of total wage and salary income1 in 2020—reflecting the immense economic fallout from the pandemic and the large federal response to the crisis.

Importantly, more than 70% of UI dollars during the pandemic have come from emergency federal programs to prop up the inadequate state-run UI systems, revealing the gross inadequacy of existing UI benefits, the scale of the ambitious but temporary federal response, and the resulting obvious need for broad structural reform of the UI system. Key findings are:

• Nationally, UI benefits as a share of total wage and salary income peaked at over 10% in the second quarter of 2020. Before 2020, UI benefits had never been as high as 3% of total wage and salary income.
• At the state level, UI benefits had never exceeded 6% of any state’s wage and salary income before 2020. But in the second quarter of 2020, four states saw UI benefits exceed 20% of state wage and salary income.
• State UI programs could not meet the needed support for an unprecedented number of unemployed workers. Two key pieces of federal legislation helped fill the gap. The Federal Pandemic Unemployment Compensation (FPUC)—mostly the extra $600 in weekly benefits included as part of the CARES Act in March 2020—contributed the most federal dollars in 2020. But the Pandemic Unemployment Assistance (PUA) program (which expanded eligibility to workers traditionally left out of UI benefits) was also hugely important. In 13 states, PUA accounted for more than 45% of total UI dollars received in the fourth quarter of 2020.
• These pandemic-related UI programs greatly equalized the protectiveness of the UI system as a whole across groups. In particular, states with a higher share of Black residents were more reliant on federal assistance to provide UI benefits. But if the pandemic programs fade with no structural reforms, the UI system will revert to being one that sees stingier benefits precisely in those states with higher Black population shares. This disparate racial impact is a key reason why reforms are needed.

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It has been my honor, privilege, and joy to lead the Economic Policy Institute for the last three and a half years. For me, EPI has been a vibrant intellectual community for more than 30 years. I wandered in the door as an inexperienced trade economist in the 1990s, consumed and distributed EPI’s excellent research during the 20 years I was at the AFL-CIO, and then became president of EPI in 2018.

During my tenure, with the invaluable partnership of Vice President John Schmitt, EPI has grown its staff, expanded its work, strengthened its voice and impact, forged new partnerships, deepened its state policy work via the EARN network, and sharpened its focus on racial justice through expansion of the Program on Race, Ethnicity, and the Economy, as well as throughout our work.

So it is with a heavy heart that I announce that I will be leaving EPI on May 7. I have accepted a job in the Biden/Harris administration. It is not easy to leave an organization like EPI—and the extraordinarily brilliant, insightful, and delightful staff—but I believe there is a short window that provides an opportunity for me to contribute to work I care deeply about.

I have complete, unshakable confidence in EPI, its staff, and its work. I know how valuable, timely, and thoughtful that work has been and will continue to be—especially now. EPI is well positioned to shape and inform the bold, ambitious policy agenda laid out by the new administration and Congress.

EPI’s wonderful board of directors, led by Board Chairman Richard Trumka and the executive committee, will organize a national search for the next president, who will have the good fortune to lead this stellar organization on to do the Research that builds Worker Power so we can achieve Justice. For the duration of the search, John Schmitt has generously and graciously agreed to step in as interim president. With his deep experience, John will ensure a smooth and successful transition.

I know EPI will continue to advance its mission to strengthen workers’ voice and power at the workplace and beyond and to make the world fairer and more humane. I will be eternally grateful that I had the opportunity to work alongside EPI’s amazing staff, and I look forward to staying connected in this next chapter for me and for EPI.

(On May 10, Thea Lee joined the U.S. Department of Labor as Deputy Undersecretary of Labor to lead International Labor Affairs Bureau.)

In all of the coverage about how Amazon and its relentless anti-union campaign defeated the union organizing drive at its fulfillment center in Bessemer, Alabama, one key feature of Amazon’s campaign deserves highlighting—namely, Amazon’s countless tactics to try and delay the vote and dilute the union’s support by adding thousands of workers to the bargaining unit who hadn’t previously been involved in the organizing drive. This common tactic, which is straight out of the standard union avoidance playbook, unquestionably played a significant role in defeating the organizing drive. Yet the tactic is perfectly legal under our current labor law. The Protecting the Right to Organize (PRO) Act would put a stop to this tactic and put voting decisions back in the hands of workers and the National Labor Relations Board (NLRB).

First, some background. When workers want to form a union, they typically gather signatures on a petition or cards indicating their support for union representation. If workers and their union gather signatures from at least 30% of the group—known as the “bargaining unit”—the NLRB will process a petition for a representation election. The NLRB will hold a hearing on the petition and issue a decision setting an election date, the voting bloc, the method of voting (mail ballot or in person), and other details.

When employers are notified of an election petition, their first play when they want to defeat an organizing drive is to stall the election and give themselves time to campaign against the union, as Amazon did in Bessemer. A common employer tactic—and one employed by Amazon—is to use the NLRB hearing to argue that the voting bloc should be different from the group described by workers in their election petition. Typically, employers will argue that the voting bloc/bargaining unit should be larger than the one sought by workers, because employers know they can dilute the union’s support by adding workers who haven’t previously been involved in the organizing drive.

Employers slow down the process by asking for a hearing on the proposed bargaining unit, which can take weeks or even months. In the meantime, the employer holds mandatory meetings where workers are required to listen to anti-union speeches by the company. Employers hire professional “union avoidance” consultants, who are paid thousands of dollars a day to script and run anti-union campaigns. The longer the employer can delay, the longer the employer can run its campaign. Meanwhile, the union has no similar access to the facility to talk with workers about the benefits of organizing.

This is precisely what Amazon did in Bessemer. The Retail, Wholesale and Department Store Workers Union (RWDSU) filed a petition with the NLRB on November 20, 2020, seeking an election to represent a unit of 1,500 full-time and part-time workers at the Bessemer fulfillment center. The petition excluded temporary and seasonal employees from the bargaining unit, which is typical, because these short-term employees do not have the same permanent attachment to the job as regular employees. If Amazon had not intervened, an election would likely have been held among the 1,500-person voting bloc in late December.

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