Hi. I’m Alan Beaulieu from ITR Economics. And if you’re a first-time listener, welcome to our TrendsTalk where we try and talk about subjects that are of interest to today’s business leaders. And we meet a lot of business leaders, we talk to a lot of people. And then one theme that is constant throughout the known universe, or so it seems, is that of labor. Man, what a hot topic. Everybody wants to know, “Where can I find labor?” And, “Allen, how long is this going to last?”
Well, let’s talk a little bit about the labor in detail. Then, we’ll talk a little bit about how long it’s going to last. I just recently read a headline from the New York Times that said that the US added 235,000 jobs in August, and this was a sharp and unexpected slow-down in hiring, and a sign of the Delta variant, an economic threat. I was like, “Oh, my God. It must be terrible. Must be truly terrible.”
So, of course, we do what we do here at ITR. We dig into the numbers so we could find what the reality is. And the reality is, when you use not seasonally adjusted numbers, and the source is the same, Bureau of Labor Statistics, we added 312,000 jobs from July and August. Now, that lacks context. So, let’s put it in context.
The context is, that’s an increase of 0.21 from July. So August came in 0.21 higher than July. And that, again, lacks context. In context, that’s well within the range, historically, comfortably normal, a little less than median, but comfortably normal. Now, it is below the post-Great-Recession increase of 0.31, but that may be splitting hairs. And it’s definitely below the five-year average of 0.43, where in the strong recovery of recent years, where we were adding lots of jobs, but there again, it’s not like it was nearly as dismal in August as we’d probably like to believe.
Now the BLS has a report. And the report said that we added jobs in the professional sector and in transportation and in warehouse. And there’s nothing abnormal there. In fact, what they mentioned was that we lost jobs in retail. So, obviously we dug into that.
And the retail jobs that we lost were around 65,000 jobs from July to August. Now, that is steep. It’s certainly not something that we would like to see on a regular basis. It was steeper than normal. But given the variant, it certainly is to be understood. But, I mean no disrespect, but that hardly translates to a threat to the economy. It’s not like those of us in manufacturing, warehousing, professional services said, “Oh, my gosh, I better not hire. I don’t want to hire people.” It was just the opposite. Everybody wants to hire. And the reality is, it was a sector that suffered. So let’s put it in context.
Job openings, 11.664 million people never hired in this country. The labor participation rate was 61.2%. That’s very low, much lower than the post-Great-Recession average, and even greater, sections use Delta, greater difference between that and the pre-Great- Recession average.
Folks are over 16, qualified, looking for jobs, but not going to work. Could it be fear of COVID. Absolutely. Could it be the need to stay home with children. Absolutely. Could it be other things? Absolutely. The reality is, the economy is strong and demanding jobs, and you, the employer, are not sitting back on your heels. You’re not sitting down going, “Whoa. Let’s wait and see what COVID does.” You’re out there looking for labor. You’re making this thing work. You’re making it go, go, go. You’re doing the things that you need to do. You’re changing the culture. You’re changing the message. You’re changing the incentives. You’re changing who you are. You reached out to people in different places. You’re doing the job.
And how long will this pressure last? This pressure is going to last for years. We’re not going to find 11.664 million people to just walk in from anywhere, and all of a sudden start to work. Your HR department, your outside experts, your internal management team, you’re all going to be working hard for years to come to make sure that you have enough people to help your company grow and go.
Now, here’s another thing that most of you are already thinking of. Let me just affirm that what you’re thinking, need to automate. Labor productivity is a must-do must-have. Deal with the pressure of today. That pressure you’re feeling, the one like somebody is squeezing you. You got to deal with that. I understand it. But you also have to think longer term, from busier in ’22 and busy in ’23 and in ’24 and in ’25. “What are my longer-term needs?” And get in the queue to get those labor productivity enhancements into your firm. You will win. You will have to change, but you will win. And you will find yourself profitable, successful, and ahead of your competition, who said, “I just don’t know what to do.” Let them believe the headline, and you can believe what’s actually going on. You keep it up, you’re doing a great job. I’m Alan Beaulieu, this is ITR Economics TrendsTalk. Thanks for being with me today.