Will higher wages bring people to work?
Higher wages may not be enough to lure people back to work, says a Columbus economist who is forecasting strong job growth for Greater Columbus in 2022.
“Workers know that they are in demand and are bargaining for higher wages, better benefits, and better working conditions – in some cases by striking or by voting with their feet,” economist Bill Lafayette, owner of the economic consulting firm Regionomics, said at Wednesday’s Columbus Metropolitan Club luncheon where he released his annual economic forecast for the region.
“Part of the solution is to increase wages, but simply relying on that may be as unproductive as was ending supplemental unemployment,” he said of the extra federal unemployment benefits that the state ended early after businesses complained that the benefits were keeping people from returning to work. “Employers also need to think about benefits and working conditions.”
Lafayette is forecasting that the region will add 30,100 jobs this year, a growth rate of 2.8% that should push the Columbus area above 1.1 million jobs.
Lafayette estimates the region added 23,200 jobs in 2021, a growth rate of 2.2%, but below the U.S. rate for the year. His forecast for this year for Greater Columbus also comes in below the rate of job gains nationally that may be as high as 4%.
For much of the past decade, Greater Columbus has been adding jobs at a faster clip than the U.S. or Ohio.
Lafayette expects the region and the U.S. to recover all the jobs lost during the early days of the pandemic in 2022; the state recovery has been slower.
Lafayette’s calculations show the region’s unemployment rate hit a pandemic low of 3.3% in November, primarily because the region’s labor force has been stuck in neutral for the past 18 months and is about 20,000 workers below where it was before the pandemic hit.
“The number of people unemployed and actively looking for work is down more than a third since February 2020,” he said. “That is 36,700, its lowest point in 20 years – when our region’s economy was much smaller than it is now.”
Lafayette blamed the decline on multiple factors including people retiring early and lack of availability of quality child care.
Wages are also a concern, he said.
“Workers have been getting a smaller share of productivity gains and national income for years,” Lafayette said.
The Ohio Association of Community Action Agencies says a single adult needs to earn $12.09 an hour to cover basic living expenses without assistance. Throw in a small child, and that goes up to $23.69 per hour.
“About five out of every six jobs in central Ohio paid more than $12.09 in 2020, but fewer than half paid more than $23.69,” he said. “Those low-wage jobs often include no benefits and undesirable working conditions. Now those working conditions include the possibility of exposure to COVID for many workers.”
On top of that, the stress to push workers to do more has led many to get burned out and resign, he said. mawilliams@dispatch.com @Bizmarkwilliams