Pandemic Economics – Free Market or Government Overreach?

We find ourselves in interesting times. The reason I’m writing this is that I think that the vaccination debate has inadverdently joined itself with the general debate for workers in the U.S. The sentiment is the same among both groups, but the impetus is very different. Let me explain.

The general movement to pressure working conditions and wages has clearly fomented a public audience. In this last year, the U.S. has had a sort of proto-general strike, detailed here. Most notably this excerpt:

Last Friday’s jobs report showed the number of job openings at a record high. The share of people working or actively looking for work (the labor force participation rate) has dropped to 61.6%. Participation for people in their prime working years, defined as 25 to 54 years old, is also down. Over the past year, job openings have increased 62%. Yet overall hiring has actually declined.

Source

A full general strike means that all workers of a number of staple sectors decide to strike simultaneously in order to produce change in their wages or working conditions. A passive strike, on the other hand, reveals itself only through labor force statistics, the symptoms of which are evident above. The labor force participation rate we are experiencing has not been at this level since 1978 – the period in which we experienced a mass transition of women into the workforce. Like then, we are experiencing a secular shift in the way people choose to interact with the economy.

We see a clear spike downward in 2020 in LFPR, but this is not the movement I mention. The rebound, and general level following does not match an expanding economy on the rebound. Instead, we have a general trend of apprehension toward participation in the labor market. This is a notable development in the historical development of the U.S. labor market.

We can point to retirements, and the general trend of baby-boomers, but they no longer make up the majority of U.S. workers. Instead, we should attune our eye to the sectors which make us for the majority of loss in LFPR: service sector, hospitality, customer service – in other words, positions which can’t work remotely and require a physical presence to perform their tasks.

What workers are discovering is that there is an unrealized premium for human-based interaction jobs which cannot be automated, and that workers have borne the brunt of capital gains in those firms. The Covid pandemic has brought those gains to the fore, and made laborers realize that the economic models which support these businesses have in fact always favored the person, rather than the firm. As a result, there has been an “awakening” by laborers which, by their intermediate position between customer and firm, have acknowledged that unrealized financial gain, and have opted to consolidate labor support for higher wages.

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