Labor market desiderata

Daily Data: A mix of good news, ok news, and not such great news

---

Fresh BLS data is in-bound, so a chartapalooza on the state of labor supply and demand

• job postings says “meh” (and that’s not bad)

• white collar stagnation is back, promotions down

• tech jobs starting to perk up?

• survey returns say “looking better”

• Un-retiring, the Mel Rule triggered, and the closing border

• Lots of creative side-hustles

• Healthcare makes all the jobs, but Utilities is making some too

👉👉👉Reminder to sign up for the Weekly Recap only, if daily emails is too much. Find me on twitter, for more fun. 

Labor market disiderata

There’s a big open question right now as to whether and to what extent we can keep adding people to the workforce, and if not, whether we can we grow some other way.

It’s an open question because (a) we don’t have that many more people to add, and adding working age people is one of the most surefire ways to grow an economy; and (b) it’s unclear what we’d need these people to do, other than provide healthcare and healthcare-adjacent services to a growing market for geriatrics.

It’s also an open question because, up until very recently, we sort of knew that we had jobs to fill (i.e. demand) because it was people to fill them who went missing (i.e. supply).

While the “labor shortage” is really a secular aging + no babies trend, it was made drastically worse by the effects of the pandemic (and stimulus that followed) that both brought immigration to a standstill, while “pulling forward” millions of seniors into early retirement. A gradual shortage became an acute one, and the rush for able-bodied workers manifested as a huge wage bump to lower-skill service workers, which has gradually subsided as new supply (i.e. mostly migrants) has come online.

This is what a secular labor shortage across the aging OECD looks like:

McKinsey

While the headline says “labor markets . . . have been tightening since 2010,” that’s not entirely accurate. Demand actually began piling up in the early aughts, as a cheap money frenzy exceeded any actual growth of working age people.

Anyways, back to the present. The new supply appears to be online, and the “labor shortage” has gone back to normal, instead of pandemanic.

Hence the current “inflection point.”

This is what a secular labor shortage returning to (mostly) normal looks like:

Japan is taking its medicine. Germany too.

If we here in the US keep adding supply (without fresh demand), that’s no-good.

But even if we don’t see a rise in unemployment (because we’ve stopped adding supply), ideally we come up with something other to do than “more healthcare.” Stagnation is definitely better than recession, but it’s still not the best (and given expectations for growth, if stagnation becomes reality, we may get a recession anyway).

Anyways, the point is: Random Walk is very interested in finding evidence that demand for workers is growing (and in what ways).

The best outcome is growing broad-based demand. The middling outcome is that demand is growing, but it’s mostly low-paying healthcare jobs. The worst case is that it’s just not growing.¹

With that set up, let the chartapalooza begin.