My family’s London cleaning lady has just quit. She didn’t give any notice. She just didn’t show up. When we finally reached her on her cell phone, she explained that she was awfully sorry but this wonderful opportunity has turned up, you know, working as a phlebotomist in hospital. She never saw her future in cleaning other people’s houses anyhow, she enlightened us.
I had to google her new profession. “A phlebotomist is a key member of a healthcare team, taking blood samples from patients and donors,” I read. It is surprising of course that one can graduate from being a key worker in a household to a medical specialist so swiftly, but then this is England, starved of immigrants in general, and of health workers in particular.
We were happy for her, if somewhat desperate how to handle a house remotely now without our phlebotomist. The next thing we hear from London was our gardener, who demanded on the phone, without ado, a 25 per cent pay rise, boosting his hourly charges to twice the official minimum wage. I still harbour the suspicion that his extortionate demands were only a ruse to put the onus of separation on me. What we are experiencing as a family is not inaptitude or bad luck, but a reflexion of the overall state of the UK economy, and with variations the state of affairs globally.
The average hourly earnings of all private employees in the United States, according to the FED St Louis Wage Tracker, have risen from US$28.51, before the pandemic, to US$30.85 in September. This sounds not overly dramatic considering a time period of almost two years and the fact that also high earners contribute to the average. But statements from individual employers indicate a much more critical situation.
McDonald’s franchises report wage inflation of 10 per cent, with salary offers exceeding that. Yet most open positions cannot be filled. Many franchisees therefore decided to downsize dining rooms and to cancel night shifts. Starbucks and Amazon joined the lamentation, as do many smaller businesses. According to CEO Jeff Bezos, wage inflation cost Amazon already US$ two billion per year.
The jumpstart of the economy has triggered a hiring enthusiasm seemingly not shared by the working age population. Advertised vacancies exceed job seekers by a wide margin. Candidates can’t even be bothered to show up at interviews they have agreed to. Economists and conservative politicians in the US have long blamed unemployment benefits for this new idleness – the $600 and later $300 granted additionally to people who have lost their job during lockdown.
This cannot be pivotal, as half of US states have stopped making such payments already in spring while the programme officially ended on Labour Day at the beginning of September. More than 10 million redundant workers in the US – often parttimers, temps or people ‘self-employed’ in the gig economy – have never received any benefits at all, causing protest movements like ‘Unemployed Action’. Yet the hiring problem continues.
Businesses already plagued by supply shortages try to cope as well as they can. They hire ex-convicts, weed smokers, teenagers. They offer extra rest, more pay. The hope for advanced automatisation to replace the jobs which apparently nobody wants. In the meantime, they pass on all extra costs to the willing consumer and compensate shareholders for the lost turnover with ever-higher profit margins.
Businesses already plagued by supply shortages try to cope as well as they can. They hire ex-convicts, weed smokers, teenagers- Andreas Weitzer
Employment statistics published by the US Bureau of Labour Statistics show a net increase of private sector employment of 300,000 up to August, the result of 6.3 million hirings and six million ‘separations’, which usually mean layoffs. In fact, very few people were fired. Many retired early, but 4.3 million just quit – like the waitress heroine in a movie who, long abused by her exploitative boss, one day decides enough is enough, unties her apron and walks out. A growing number of people have come to the conclusion that their life has to yield more than drudgery.
According to a survey commissioned by Personio, a HR software company, 38 per cent of UK employees want another job, citing a worsening life-work balance, a lack of appreciation and a toxic workplace culture as reasons, while employers still believe that pay freezes and benefit reductions during the pandemic have accelerated staff turnover.
As it looks, more pay eagerly offered by employers since the reopening of the economy may not be enough to lure people back to the rat race. On Reddit, a discussion platform, the ‘Anti Work Forum’ has already garnered 900,000 followers, demanding “unemployment for all, not just the rich”. Group members encourage each other to boycott Black Friday, to quit abusive jobs and to feel the lure of freedom. Others scheme strike action on Twitter, like #striketober.
It is not only overworked junior bankers and trainee lawyers who are exhausted by long hours. Those workers we have classified as ‘essential’ during lockdowns, the people driving delivery vans, stacking supermarket shelves, or working on the health front feel overwhelmed too and do not cope easily with the demands heaped on them since the pandemic.
Redundancies, furloughs, dismissals, quarantines, and working from home must have had a massive impact on how we understand our lives. We had perhaps more family time, or suddenly less; we stopped leaving our house, or were the only ones to do so; we started to think about the things we always wanted to do but never dared to; we saw death at close quarters, felt fear and paralysis. Our working life was disrupted, consumption switched off, but to our big surprise, life continued.
Barring revolutions people rarely risk en masse their means of subsistence for the sake of a better, but uncertain future. They do now. Lockdown savings and the hectic scramble for hands must have created a sense of safety which before the pandemic only emanated from regular income. Idling at home has persuaded many to dabble in first-time investments. Aided by free trading apps, they wagered on meme stocks and cryptocurrencies. Some of these young, feisty punters have amassed sizable gains. Their easy wins, like the riches of influencers, makes jobbing look outdated.
There is a risk that both employers and employees are misjudging the future. Businesses are perhaps too confident in their pricing power, and may not show enough flexibility to counter the threat of a looming talent exodus. Employees might overestimate their bargaining power. At a certain stage, buyers will strike, while many jobs will have disappeared beyond retrieval. Shrinking sales in combination with shrinking profit margins may prove that we retail investors too have misjudged the direction of the stock market.
The idea of a ‘new normal’ usually speculates about the way we will do things after the pandemic. But what if the pandemic itself, like climate change, is the new normal, causing disruption for years to come?
The purpose of this column is to broaden readers’ general financial knowledge and it should not be interpreted as presenting investment advice, or advice on the buying and selling of financial products.
andreas.weitzer@timesofmalta.com