WHERE ARE THE WORKERS?
As employers struggle to fill jobs, UC Berkeley labor economist explains there’s no easy answer
As California emerges from the business restrictions put in place during the pandemic, employers have said they are struggling to fill jobs, even as millions of people in the U.S. report they are looking for work.
In California, workers in California filed 59,200 initial claims for unemployment during the week that ended July 3, up from an average of 44,800 a week during the two months before the pandemic, according to the U.S. Labor Department.
Recent figures showed the rate of unemployment was 5.9% across the U.S. in June.
So what’s going on? Enrique Lopezlira, who recently joined the UC Berkeley Labor Center as the director of the low-wage work program, sat down with Bay Area News Group to discuss why the so-called “labor shortage” isn’t quite a shortage, and what businesses and government could do to change it.
Lopezlira is a labor economist who has long focused on how economic and labor policy impacts racial and gender equity. He previously was a professor of economics at Grand Canyon University in Arizona and consults for Latinx civil rights organization UnidosUS (formerly the National Council of La Raza), where he was previously the senior policy adviser for economic and employment policy.
This interview has been lightly edited for clarity and length.
Q
There’s a narrative right now about there being a “labor shortage” as we emerge from COVID-19 restrictions. Businesses say they’re desperate for workers, yet our unemployment rates are higher than before the start of the pandemic. What’s happening?
A
I would not characterize it as a labor shortage. It’s complicated because the shock to the economy is not like anything we’ve seen in the recent past, right? You had a large number of workers let go when the economy shut down. It’s much harder to bring those workers back than it is to let go of all those workers. The reason I don’t want to say it’s a labor shortage is when there is an excess demand for workers, you’d expect to see wages increase and as those wages increase, you see workers come back and take those jobs.
Most of the job gains have been in the hospitality and leisure industry, which includes restaurants. You see anecdotal evidence in the news that restaurants can’t find workers. The largest job gains have been in those industries. You also see employers saying, I’ve had to raise my wages, and I got workers. That’s how the market should work.
That said, there are also frictions in the market that will take time to resolve. It doesn’t have much to do with willingness of workers to work. There are still large amounts of workers out of the labor force — most of these are women — (because) schools aren’t fully reopened or are on summer break, or summer camps aren’t fully reopened. So a lot of this has to do with having to take care of someone at home. If it’s not a child, they may also have to take care of an elder relative. There are still some of those frictions in the market that are causing some of these workers to remain on the sidelines. There are also risks to workers here. Some of these jobs don’t offer paid sick leave. Some workers haven’t been vaxxed yet and are still afraid of some risk. It’s a complicated question.
Q
Some say that in order to draw workers back to jobs, the government should cut the extra unemployment benefits, and some states have done that. You don’t believe that will really solve this problem; why?
A
When the CARES Act first passed, there were at least two or three robust studies done looking at, are the higher benefits causing people not going to back to work? They found no statistical evidence of cause and effect there. And the largest job gains have been in low-wage work, where workers are more likely to receive low-wage benefits. As the wages increase, people are coming back to work. So, wages need to increase. I don’t believe unemployment benefits are causing people to not work. I think from a policy perspective, those benefits are still very helpful.
Q
Besides having businesses raise wages, what are the policy fixes to be had here? A Although it’s great that businesses are raising wages, I think overall we’d like to see the quality of jobs improve. The pandemic exposed the precariousness of low-wage workers. These are jobs that have no health care benefits, no paid sick leave or family leave,
and inconsistent scheduling that makes it hard to schedule doctors visits. In order to retain these workers, the job quality needs to improve. In terms of policy, we can strengthen job protections and strengthen unions. Those are policies that are going to help improve the quality of the jobs.
Q
In what ways are we going to see the pandemic affect work long term?
A
I’m not forecasting or predicting, but for me, there are important questions that need to be answered: For instance, will these jobs come back that are gone? It’s not clear that some of these jobs will return. The pandemic exposed this crisis of care. If we don’t solve this, are they going to continue to suffer during the recovery? There are questions about the productivity of future workers in terms of education losses; there is some early evidence of real education losses for students, in college as well as K-12. There is also some evidence of retirement or workers leaving the workforce
permanently. What does that mean for the social safety net or labor market in general? There are a lot of questions that need to be answered.
Q
What brought you into this work, studying economic policy and labor?
A
I wanted to study the economics of labor markets. I’ve always felt that’s where the real impact of policy choices occurs. I’m particularly interested in gender and racial disparities. As a Latino, I have experienced the disparities personally. I’ve seen it with family members as well. In economics, we’re taught how economics works perfectly: People increase pay on merit. But there are labor models where workers have few opportunities for that, even if they are highly productive workers. Because these workers comprise a large portion of the labor market, I wanted to use my training and experience to focus on them.