SYLVIE DOUGLIS, BYLINE: NPR.
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STACEY VANEK SMITH, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.
ADRIAN MA, HOST:
And I'm Adrian Ma, and it's Jobs Friday.
VANEK SMITH: It's Jobs Friday. Yes, it is. The employment numbers for October are out, and, Adrian, they were good.
VANEK SMITH: The economy added 531,000 jobs in October, which was higher than expected. And the unemployment rate fell from 4.8% to 4.6%.
MA: So is this an air horn moment?
VANEK SMITH: I mean, yeah. Yeah, right? Like, I mean, maybe, like, a not full-volume air horn moment, but, yeah, yeah, an air horn moment.
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VANEK SMITH: Woo-hoo (ph).
MA: Air horn.
VANEK SMITH: Air horn - good to hear it.
MA: Well, almost air horn.
VANEK SMITH: I mean, I know. I feel like such a killjoy. But, you know, the October numbers - they were really, really great, and I don't want to diminish that. But there is still sort of this larger conundrum that's been hanging over the labor market for a long time that is still there, which is that there are, you know, millions and millions of open jobs and millions and millions of unemployed people who are, for some reason, not taking those jobs. And we're just left once again asking this question that's been sort of looming over the economy for years now, which is, why aren't these two coming together?
MA: It sort of reminds you of a romantic comedy, right?
VANEK SMITH: Oh.
MA: You know what I mean?
VANEK SMITH: Yes.
MA: Like, with, like, the two best friends who have an amazing connection. And they're both lonely, and, of course, they're both wildly good looking.
VANEK SMITH: Well, sure.
MA: But somehow they don't realize they're meant to be together. And you're like, when are you two just going to get together already, right? Let's get to the Hollywood ending.
VANEK SMITH: Or, Adrian, maybe this is not a Hollywood movie. It's like one of those complicated French films where everyone ends up, like, devastated and alone and, like, smoking cigarettes and contemplating the absurdity of existence.
MA: Oh, OK. So in other words, is this labor market a Netflix holiday special or a complicated French film?
VANEK SMITH: Today on the show, the labour market love story. Will all of these millions of open jobs and all of these millions of unemployed workers finally find each other and come together in economic bliss, as today's numbers would hint they will?
MA: Or will everyone just end up smoking cigarettes alone and watching the sunset over the Seine?
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VANEK SMITH: So this labor market love story - Netflix holiday special or bleak existential French film? To figure this out, we, of course, have to examine each of our lovelorn parties.
MA: First up, our desperate employers, right? For a long time before, they had it so good, right? Wages have been pretty flat. A lot of workers were, you know, around and excited to take jobs, go to the office, work 40 hours a week.
VANEK SMITH: But these days, workers are a lot harder to come by. And when this first happened, employers did what any proper rom com suitor would - the grand gesture, you know, the bouquet of flowers, the boombox moment. Daniel Zhao is a senior economist at Glassdoor.
DANIEL ZHAO: I think at the beginning of this conversation about labor shortages, we saw many employers, especially smaller employers, rely on these hiring bonuses or entering workers into a lottery for an iPhone or a car, which is - you know, it's interesting. It's cool to see these, like, very buzzy hiring bonuses. But at the same time, those are temporary incentives.
VANEK SMITH: You know, Adrian, flowers are so nice, but they wilt.
MA: Yeah. The workers were not moved. They didn't come back. So Daniel says employers got serious. They committed.
ZHAO: What we've seen over the rest of the year is that employers are actually raising pay as well. And it's a signal that they believe that this is a longer-term structural challenge because if employers believed that this was just going to be a few months and then it will suddenly be easy to hire again, they would just stick to those temporary bonuses. But the fact that you're seeing employers raise wages indicates that they perceive a longer-term structural challenge where it's going to be difficult to hire for many years to come. And that's why they're trying to get ahead of it now.
VANEK SMITH: So employers stepped up. They got serious. They started offering higher salaries, in a lot of cases 15, 20% higher than before. But what about the object of all of this affection? What about the workers?
MA: Bonuses, higher salaries, flexible work situations. Through it all, workers have been playing hard to get but, like, really, really hard to get, as in they vanished. So 7 million people have dropped out of the workforce since COVID started.
VANEK SMITH: What happened? Where do they go? Do we know?
ZHAO: We kind of know. I think we have some some evidence, right?
VANEK SMITH: There are clues.
ZHAO: Yes, yes.
VANEK SMITH: OK, excellent. What are some of our clues?
Daniel says one thing we know for sure is that a lot of people retired. It's estimated that about a million and a half more people have retired since 2019 than would have retired if COVID hadn't happened. But, of course, that doesn't even come close to explaining where 7 million people went.
MA: Nick Bunker is an economist at the Indeed Hiring Lab, and he says he thinks a big chunk of the 7 million people are not gone forever. He thinks the so-called great resignation is not really a resignation at all.
NICK BUNKER: You know this term the great resignation that people tend to be using?
VANEK SMITH: Yes.
BUNKER: Like, that is evocative in the sense of, like, I'm resigned, or, I'm, like, resigning from work. I don't think that's actually what's happening in the labor market right now.
VANEK SMITH: Nick points to a few important clues about where workers have gone. Indeed has been gathering data for months, asking people why they're not working.
BUNKER: One is COVID. You know, we are winding down from a recent surge in cases.
MA: The delta variant. Nick says this really hammered the economy and scared a lot of would-be job seekers.
BUNKER: COVID fears was the second biggest factor in October.
VANEK SMITH: And the biggest factor in October...
BUNKER: The No. 1 reason in October was care responsibilities - so, like, having to care for someone at home.
VANEK SMITH: So that's, like, family care and child care.
MA: So child care and fears about COVID are two main reasons why people are staying out of the workforce.
VANEK SMITH: And there's another reason, which is money. So right now people have a little more savings and a little less debt than they did before the pandemic. And Nick says Indeed's research has found that one of the main reasons people say they're not looking for work right now is that they have a, quote, "financial cushion." Also, there are a lot of open jobs right now, so maybe people do not feel like they have to jump at the first offer they get. So, you know, they're still playing hard to get.
MA: Hard to get for now. Nick says most of these factors keeping workers away are temporary. As the delta variant dies down, schools reopen, offices reopen and savings get spent, Nick thinks workers, like every good rom com star, will take a minute but eventually come around.
VANEK SMITH: It's like the great hesitation rather than the great resignation, maybe.
ZHAO: That's actually a really good way, I think, of putting it. Like, what we're seeing right now is the fallout from really extraordinary times.
VANEK SMITH: And Nick thinks soon the obstacles that have been keeping our lovebirds apart will go away and the labor market will get its happy ending.
MA: But Daniel Zhao of Glassdoor is not so sure. He says some of the workers who are hesitating to come back to work will probably come back, but a lot probably won't come back. And Daniel points out that once people leave the labor force, it can be hard to return.
ZHAO: That means that the workforce is going to be smaller, and so we are going to have to reach this new normal.
VANEK SMITH: Daniel thinks this could be a long courtship - you know, employers, like, putting in the time, figuring out what workers really need and what they want right now, tailoring incentives and work situations to fit those needs.
ZHAO: So it might improve slowly. But if it's improving slowly because employers are having to try to attract more workers off the sidelines, that's a very slow process. They're going to result in more of a trickle of people back into the labor force.
VANEK SMITH: So, Adrian, a trickle, you know, not the big lightning strike, running down the street, running across the field of flowers, Hollywood ending that maybe everybody's been craving.
MA: Yeah, but also not the bleak French ennui ending, either.
VANEK SMITH: Yeah. I mean, maybe this labor market love story ends with, you know, everybody staying friends and just, like, getting a dog or something.
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VANEK SMITH: This episode of THE INDICATOR was produced by our senior producer Viet Le with help from Gilly Moon. It was fact-checked by Taylor Washington. The show is edited by Kate Concannon, and THE INDICATOR is a production of NPR.
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