The "Summer of Labor", Latin Lethargy and Sweden's Light Lockdowns
Workers have the upper hand, but not for long; Latin America stagflates; and Sweden provides a case study in COVID-19 response.
IN THIS ISSUE:
- Has Labor Gained Leverage?
- Latin America Is Languishing
- Sweden: Light Lockdown, Heavy Cost
For the past two months, stories of workers gaining the upper hand over employers have filled the news. A record number of Americans quit their jobs last month for better ones, and a bidding battle for talent seems to be underway.
I sensed an opportunity. I saw that my boss was in his office at our headquarters, and for the first time in fifteen months, so was I. So I marched right down to demand a raise, threatening to take my talents elsewhere if he refused. Unfortunately, the market for economists isn’t as tight as it is for restaurant servers; I start at a local bistro next week.
Others seeking vocational advancement have had more success. Salaries and sign on bonuses have been escalating in regions and industries that are short of help. As the anecdotes accumulate, some have suggested that this summer’s hiring frenzy signals the start of a long-term trend towards increased labor leverage. But we are skeptical.
The massive, complicated effort to get people back to work as the pandemic eases was bound to encounter friction. As we wrote in a recent commentary, demand is well out in front of supply in the job market; positions are opening much faster than they can be filled. Data for June show that there are 9.3 million openings in the United States versus about 7.3 million people who have not worked since the pandemic began.
It’s a seller’s market for labor; as a result, aggregate wages have been recovering more rapidly than employment levels have. Turnover is high, making it very difficult for firms to sustain operations.