There is a big misunderstanding in the media and economics circles in America. The standard reason given for our labor and supply shortage is like this one I saw this morning’s New York Times:
Supply, however, is not back. The pandemic disrupted supply chains for many items, including computer chips, paint, lumber and sneakers. It also disrupted work habits, and not everybody can — or wants to — return immediately to their old jobs.
The taxi and ride-hailing industry is a good example of what happens when rising demand (more travelers) runs up against reduced supply (a shortage of drivers). One rider recently paid $248 for a trip from Midtown Manhattan to Kennedy International Airport, in Queens — almost as much as his plane ticket to California.
In other words, in an attempt to explain the problem, the standard response is anecdotal. Cherry-picking to find reasons that fit prejudices about how our system works is common. What’s lacking is a systems look at how our economy works, starting with what people, who make up our system, really do.
One thing they really did in response to COVID-19, was move from one city to another, and in large numbers. The Washington Post shared this story that encapsulates what happened
For 49 years, Jinky Demarest de Rivera has lived and thrived in dense, vibrant cities. The nonprofit finance director grew up in Manhattan and for the past 16 years has made a home in Oakland, where they live with their wife, Sarah Demarest de Rivera, and dog, Onyx. Now the family is packing everything up for a large house in New York’s rural Hudson River Valley with enough room for chickens.
Two months of sheltering in place in their rented two-bedroom apartment gave the pair some unexpected clarity about what was important to them. And new policies letting them work remotely indefinitely at their respective jobs gave them an opportunity to do something about it. They wanted to be closer to their aging parents on the East Coast, and saw no hope of ever owning in one of the most expensive real estate markets in the country.
In reading the data, it’s estimated that as much as one-third of the American population has moved due to the Pandemic. Prior to that action, migration rates from place-to-place and state-to-state were all but stagnant. And when those people got to their places of new residents, their lifestyles changed. If they had kids to take with them, chances are they are learning in home, as resistance to attending school in person is still high. “More than 5,000 students left Fairfax County Public Schools during the coronavirus pandemic, opting for private school or homeschooling only about 26 percent are returning this coming school year,” reports Fox 5 DC. And that story is common.
Deep within it is this fact: homeschooling of children has become a cultural habit enabled by technology and pushed by COVID-19. Now that it’s a national habit, who’s going to watch the kids if the mother or father is asked to drive to a workplace? Given the wide availability of online jobs, or what we call remote work, there’s less reason to take a job in a retail establishment or a restaurant with a new, at-home work and school infrastructure in place. That’s the reason for all of the standard bricks and mortar jobs going unfilled.
In Oakland, the problem is underscored by this headline: “Oakland schools are reopening, but not all teachers want to go back”, at ABC-7 News. Oakland Unified says close to 58 percent of families with the youngest students said they were returning to in-person learning.Do we expect it to be quite that high? Probably not,” anticipated John Sasaki, Spokesperson for the Oakland Unified School District.
To cope with this new normal, business will have to be readjusted, and that’s where government economic assistance and economic development policies have to change. Right now, the Small Business Administration (SBA) is not thinking about this new future, and looks at business and people from a bricks and mortar lens. Indeed, the PPP Loan program openly discounted independent contractors as not employees, even if they were employed by a startup company for work. While an independent contractor could get a PPP Loan, businesses could not claim them as employees for the PPP Loan – even though a business getting the loan helped keep that independent contractor employed.
Given the giant number of gig workers who and their firms, the slowness or inaction in getting the right level of aide to those businesses meant that the contractors had to find other work. If that was an UBER or LYFT worker, the most likely result was relocation to move in with family somewhere else.
The SBA must establish a program for economic adjustment to the new economy: a system dominated by at-home work at a rate never seen in America, before. Some Americans should be encouraged to start forming their home kitchens to what I would call “satellite kitchens” for food service and delivery to customers, and add to the the real-estate-based franchise-focused model used by food companies like McDonald’s. There are many examples of the at-home businesses the SBA should be encouraged to cause to rise in number.
But, the bottom line is that we’re in a brand new, and still forming, economy, with people settling into their new way of life as this is written. Politicians like Georgia Governor Brian Kemp must stop their old economy focus, and stop listening to supporters who may be business owners who do not see the problem in front of them, even as they’re impacted by it. The bottom line is that people want to and are trying to work from home, because they have to. Many are rightly concerned about where they may be during the next virus, and some are opting to stay at the safest place to be: home.
Stay tuned.