By Lambert Strether of Corrente.<\/p>\n
My previous round-up on Covid and \u201cthe economy\u201d focused mainly on macro economic effects like GDP, or the total cost of Long Covid (\u201c17% of pre-COVID US GDP). In this post, I want to dig deeper into Covid and the labor market. First, in what may look like a diversion, I\u2019ll look briefly at the January jobs report from the Bureau of Labor Statistics (BLS). (It\u2019s not reallu a diversion, because I learn by writing, to master these sources I must write about them. And read your commentary, of course. But please, readers, don\u2019t fix on the jobs report! Move on down to the Covid material.) Finally, since I\u2019m dependent now on the horridly crapified Google, I invite readers with sources I\u2019ve missed to add them in comments. The labor market is a big, big topic, and I\u2019m sure I haven\u2019t got my arms around it yet.[1] Again: \u201cThis will in no sense be an exhaustive or even an expert post, but I hope it will serve you to at least create a coherent narrative about where we are, and even, perhaps, what to expect.\u201d<\/p>\n
So first, I\u2019ll look at that jobs report, then at two new large studies on Long Covid and labor market participation. Next, I will consider Long Covid as a mass disabling event. Finally, I\u2019ll look at how changes in the labor market affect other aspects of the economy, like commercial real estate (CRE), and conclude.<\/p>\n
About That Jobs Report<\/p>\n
The BLS report on the \u201cEmployment Situation\u201d (\u201cjobs report\u201d) is one of the most highly anticipated document drops in the world. From trading firm Pepperstone:<\/p>\n
The Employment Situation report, to use its official name, is by far the most important US, and global, economic indicator released every month. While its impact has waned over time, there is no other indicator to which FX, equities, and bonds typically display such a significant and violent reaction.<\/p>\n
And:<\/p>\n
The headline measure of the labour market report is the Change in Nonfarm Employment, often shortened simply to NFP. This gauge measures the absolute month-on-month change in employment, thereby representing the number of jobs added to, or lost from, the economy over the past month.<\/p>\n
Importantly, NFP excludes agricultural workers, employees of non-profit organisations, and serving military personnel, meaning that the data typically accounts for around 80% of the entire US workforce at a given time. To collate the data, the BLS use the aforementioned establishment survey, surveying around 130k businesses on a monthly basis.<\/p>\n
Furthermore, the NFP metric is a seasonally adjusted data point.<\/p>\n
Of this month\u2019s jobs report, the Wall Street Journal wrote:<\/p>\n
The labor market is in robust health\u2014and that\u2019s scrambling rate-cut expectations. This morning\u2019s jobs report showed an acceleration in hiring, with employers adding a far larger-than-expected 353,000 jobs, a big upward revision to December\u2019s payrolls and unemployment holding at an unexpectedly low 3.7%. That sent investors scurrying to adjust bets on when, and how fast, the Federal Reserve might cut rates. Bond yields soared.<\/p>\n
This being an election year, the jobs report is also political. NBC News:<\/p>\n
The White House leaned into the numbers, as President Joe Biden seeks re-election this year. Officials view the data as vindication of Biden\u2019s policies\u2026.<\/p>\n
Or as the Council of Economic Advisors wrote:<\/p>\n
So, while we wouldn\u2019t hang our hat on any one monthly number, this morning\u2019s data clearly reveal the continued strength of the US job market, which is at the heart of both the current recovery and Bidenomics!<\/p>\n
(About as politicized as you can get. Why not just have Karine Jean-Pierre write something up?) As we saw this morning, however, Brad DeLong, with Paul Krugman and others cited, hang their hats on the entire report[2]. But not everyone does. One sore spot is those pesky \u201cadjustments\u201d that Pepperstone wrote of. CNN, \u201cWhat\u2019s with all the revisions?\u201d<\/p>\n
Friday\u2019s whopper of a jobs number was double expectations, and December\u2019s data was one of several months to get heavily revised. Why are economists\u2019 forecasts frequently so wrong?<\/p>\n
It\u2019s nearly impossible to say with certainty how much prices rose or how many people were hired at a given point in time across an entire country\u2019s economy. Finding out how many new hires there were in a given month would involve asking every employer how many people were on their payrolls. That\u2019s why the government and other economic data providers often rely on surveys[3] to make sophisticated estimates.<\/p>\n
The BLS, Census Bureau and other government agencies that conduct surveys that inform economic reports do rigorous work to make the best possible estimates with the information they gather. And more often than not they do a tremendous job at it.<\/p>\n
But surveys, by nature, are imperfect.<\/p>\n
In the same way that election polls don\u2019t always predict the candidate who ends up winning, surveys don\u2019t capture the exact true picture.<\/p>\n
Not only was mere data revised this month, but methodology and data structures were revised. From The Hill:<\/p>\n
[The BLS] applied its estimation of new business start-ups compared to business failures, the so-called birth-death model that has long been targeted by critics as subject to manipulation and leaps of faith.<\/p>\n
In addition, BLS updated the North American Industry Classification System, which shifted about one-tenth of workers into different industries, resulting in \u201cmajor revisions\u201d to sectors like retail trade and information and less important changes in industries including manufacturing and financial services. <\/p>\n
[The BLS also] adjusted \u201cthe sample-based payroll jobs numbers based on a census of employment.\u201d As they state in a footnote, the census adjustment resulted in a loss of 266,000 jobs from last year\u2019s March report. <\/p>\n
Finally, when you cross-check other BLS data with the jobs report data \u2014 not to mention the real world \u2014 discrepancies emerge. From alert reader Chris:<\/p>\n
So am I wrong in thinking one way to puncture the claims that it\u2019s \u201cjust vibes\u201d is to begin with the labor participation rate, then show the current population of working age people, and the follow those with the numbers of people with second jobs? Because that data shows there are roughly 209.3 million working age people in the US, but only 130.8 million are employed or actively seeking work, and about 10.5 million of those have two or more jobs. Which means the tiny variations in the unemployment rate we\u2019re seeing are dwarfed by any shifts in the labor participation rate and the number of people with one or more jobs. We\u2019re trumpeting the statistic that shows 7.8 million people are still trying to get jobs when 10.5 million have two or more jobs in a time when fewer people are working overall, but we\u2019re getting more and more people who need jobs. You need to have a stellar 250k+ jobs on the labor survery every month for a year and to cover the gap between those seeking employment and the multiple employed. So why do they keep insisting that these numbers are great when the last time the labor participation rate was this low, it was 1978, when a little less than 50% of women were working? <\/p>\n
Or how about the bizarre contradiction in the data that a family making the median income has more than enough money to afford the median house (assuming they have a 20% downpayment), where the median price of a house is about 420k$, and the median family income is about 95k$, but the places where you\u2019re most likely to earn that median income are also the places where a house costs far more than thecmedian sale price. For example, the median house sale price in California is about 780k$. And that\u2019s before you consider how many people making that median income happen to have 80k$ saved to put towards the downpayment. People can\u2019t afford houses where they live to make enough money to afford a house? This is OK?<\/p>\n
My eyes tell me the situation is awful\u2026<\/p>\n
We \u2014 by which I do not mean the CEA and others of that ilk \u2014 sometimes forget that the labor market is not an abstraction, a statistical artifact. The labor market is actual working class people seeking actual jobs doing actual work at actual locations at particular dates and times for a more-or-less set amount of money, all to reproduce their labor power (\u201cfeed their families\u201d). I\u2019m a lot more comfortable imaginatively entering into the labor market than I am with BLS statistics, whether pure-in-heart, adjusted, or gamed. And if you want to talk about the labor market and Covid, that\u2019s the approach to use, because most Covid data simply is not tracked, and what little there is not integrated by the BLS to the slightest degree. Which is highly unfortunate, since Long Covid is a mass-disabling event that will affect the labor market for years to come. <\/p>\n
And with that, let us move away on from this statistical amuse bouche and enter the world of Covid.<\/p>\n
Long Covid and Labor Market Participation<\/p>\n
In the previous round-up, I cited two studies. One estimated the total impact of the Covid pandemic at $14 trillion; the other estimated the impact of Long Covid at $3.7 trillion[4]. Today we have two additional studies on Long Covid, the first on disablity in the United States, the second on the labor participation rate in the EU. <\/p>\n
1) \u201cLong COVID Disability Burden in US Adults: YLDs and NIH Funding Relative to Other Conditions\u201d (preprint) [medRxiv]. Data from the US Census Bureau\u2019s Household Pulse Survey (HPS) and the Institute for Health Metrics and Evaluation (IHME) \/Global Burden of Disease (GBD) Long COVID Study Group:<\/p>\n
Long COVID represents a mass disabling event of significant public health concern. Long COVID is associated with a 21% loss of health \u2013 comparable to traumatic brain injury or complete hearing loss. Among US adults, 5.3% reported having Long COVID in October 2023 and 1-in-4 with Long COVID consistently report significant activity limitations from its symptoms. Across the 12-month sample of n=757,580 US adults, 1.5% (n= 10,401) met our case definition of disabling Long COVID. Their estimated frequency of the population equates to 3,801,986 adults with long term symptoms after COVID that significantly limits daily activity. <\/p>\n
(I would tend to equate disabled with being out of the labor market entirely.) 3,801,986 is a lot, especially considering that we\u2019ll keep adding to the total, if current trends continue.<\/p>\n
2) \u201cLong COVID: A Tentative Assessment of Its Impact on Labour Market Participation & Potential Economic Effects in the EU\u201d (PDF) [The European Commission]. <\/p>\n
To the best of our knowledge, so far, no study has explicitly addressed the impact of long COVID on the EU<\/p>\n
labour market. The present paper provides a tentative assessment using available estimates from surveys,<\/p>\n
to have been significant contributors. There has also been an increase in people reporting disability or longterm illness, people inactive due to illness or disability and in part-time work due to illness or disability. The timing and distribution of these observations (with women being more severely affected) could mean that long COVID is a contributing factor. Overall, the health impact of long COVID warrants careful monitoring.<\/p>\n
2.9% * ~450 million (the EU population in 2022) = 13,050,000 people. That\u2019s a lot, comparable to the 16 million (Brookings) to 19 million (CDC) with Long Covid in the United States.<\/p>\n
Now let\u2019s turn to the market itself, looking at issues beyond disability.<\/p>\n
Quantity v. Quality in the Labor Market<\/p>\n
Covid as a \u201cmass disabling event\u201d was coined by WaPo editor Francis Steadman in 2022 (and super-wierdly framed as an issue of identity politics for the newly disabled). The central issue is that reinfection increases Long Covid risk, and so the size of the disabled mass will keep increasing over time (given the Biden Administration\u2019s maleficent policy of mass infection without mitigation). From the Sloan-Kettering Institute:<\/p>\n
A May 26, 2023 op-ed in the Boston Globe by Wes Ely, MD, MPH \u2014 an ICU physician and the Chair of the Department of Medicine at Vanderbilt University Medical Center \u2014 discussed the risks humanity is taking with being repeatedly infected with COVID-19, describing what he sees as playing \u201cdisability roulette\u201d and that the COVID-19 pandemic has shifted from an emergent infection with significant morbidity and mortality to an \u201congoing mass disability event\u201d.<\/p>\n
While society yawns, impatient to move on from the COVID-19 pandemic, Americans still play disability roulette. About 1 in 10 of the 110,000 people who catch COVID this week in the United States, many for a second or third time, will be left lastingly ill. Even some vaccinated people; even some young, previously healthy people, after only mild cases.<\/p>\n
No longer a mass death event, COVID-19 is an ongoing mass disability event. Every seven days, 25,000 more people join the 10 million in our country suffering memory loss, heart problems, dizziness, extreme fatigue, and more owing to the virus. Globally an estimated 65 million people have this new chronic health condition.<\/p>\n<\/p>\n
From the University of Nebraska Medical Center:<\/p>\n
Since it\u2019s been estimated that over 80% of Americans have been infected with COVID-19 at least once, concern about reinfection is valid. Indeed, a person can get COVID-19 once, twice, three times or more.<\/p>\n
A new study analyzed medical records from the Department of Veterans Affairs of nearly 41,000 people who suffered COVID-19 reinfection. For those who had COVID-19 two times or more, the data appeared to show two times increased risk of long COVID and chronic fatigue.<\/p>\n
This handy chart from Sloan Kettering gives a visual represenation of the odds of getting Long Covid with repeated infections:<\/p>\n
![\"\"](\"https:\/\/www.nakedcapitalism.com\/wp-content\/uploads\/2024\/02\/sloan-kettering_lc.png\")
<\/p>\n
Covid as a mass-disabling event will affect both the quantity and the quality of the labor force. First, quantity. In Germany:<\/p>\n
In 2023, sick leave in Germany once again exceeded the record level of 2022, pushing the German economy into recession. This is reported by the \u201cRheinische Post\u201d with reference to a study by the Association of Research-Based Pharmaceutical Companies (VFA): \u201cSignificant work absences led to considerable production losses \u2013 without the above-average sick days, the German economy would have grown by almost 0.5 percent,\u201d according to the study, which has not yet been published. As it was, however, the economy shrank by 0.3 percent. \u201cIf sick leave had not been so high again, an additional 26 billion euros would have been generated in 2023. Instead of a mild recession, there would have been an increase of just under half a percent in 2023,\u201d write authors Claus Michelsen and Simon Junker, according to the report.<\/p>\n
Yes, we must infer the increased sick leave was caused by the Covid pandemic; the causes of sick leave weren\u2019t in scope for the study. Not so in the UK:<\/p>\n
As per Long Covid Support\u2019s briefing ahead of tomorrows meeting, Covid-19 continues to have a profound effect on chronic disability in the UK which could be addressed with prevention, treatment, and workplace flexibility: Almost 2M people in the UK had long covid (ONS, 2023)\u2026. Over half of patients with Long Covid reduced their paid work hours, including 17% no longer in paid work. NHS trusts in England lost more than 1.8M working days to Long Covid absences March 2020-Sept 2021. <\/p>\n
Covid as a mass disabling event also affects the quality of the work force. In our previous post, we gave several examples of cognitive dysfunction, especially executive function. Studies like those come out so often they\u2019re almost a genre. Here are a few new ones:<\/p>\n
1) \u201cAttentional impairment and altered brain activity in healthcare workers after mild COVID-19\u201d [Brain Imaging and Behavior]: <\/p>\n
As a core component of cognitive and behavioral processes, attentional function plays a key role in basic and higher functions and has a large impact on daily life and work\u2026. As a high-risk group, healthcare workers (HCWs) are continuously exposed to SARS-COV-2 infection and its consequences during clinical work. Faced with the complex social environment and high workload of pandemic prevention, we believe that even in HCWs with mild SARS-COV-2 infection, impairment of attentional function persists and affects later clinical work. Therefore, we recruited HCWs with mild SARS-COV-2 infection to explore in-depth, attentional network impairments, using ANT, to understand the changes in patients\u2019 levels of attentional function impairments comprehensively\u2026. Our study found varying degrees of reduced efficiency in both the attentional orienting and executive control networks in the patient group. The corresponding neuropsychological background test results also indicated the presence of impairments in general attention and executive function.\u201d <\/p>\n
Hence, an HCW who\u2019s had mild Covid is more likely to mix up your pills or misread your chart. Or, extrapolating, forget to bolt on the door to an aircraft. And for the patients\u2013<\/p>\n
2) \u201cFactors associated with cognitive impairment in patients with persisting sequelae of Covid-19\u201d [The American Journal of Medicine]:<\/p>\n
Patients with PASC [Long Covid] are almost 4 times more likely to evidence cognitive dysfunction compared to normal controls. Forty-four percent of patients with PASC demonstrated cognitive deficits about 7 months from infection. <\/p>\n
Hence, truck drivers running red lights, carpenters no long being able to sketch plans, aircraft controllers losing track of their airplanes, and so on.<\/p>\n
\u201cHence\u201d is doing a lot of work in both places. Perhaps we could wait a decade or so for NIH to blow another billion dollars on a useless study. Or we could make reasonable inferences. Remember: Covid is a mass-disabling event. So those two studies affect the entire population, of which those who enter the labor market are a part.<\/p>\n
Effect of Changes in the Labor Market<\/p>\n
Here\u2019s one[5] knock-on effect of changes that Covid brought about in worker behavior.<\/p>\n
1) Commercial Real Estate (CRE). Workers, in the aggregate, changed their preferred location to work. From the Boston Fed, \u201cLease Expirations and CRE Property Performance\u201c:<\/p>\n
The pandemic-induced shift to remote work appears to have led to a large and persistent decline in the demand for office space, especially in central business districts (CBDs). On the other hand, the deterioration in commercial real estate (CRE) loan performance has been relatively modest to date, as long-term leases have shielded commercial-property owners from the effects of diminished demand for space to a fair degree. To shed light on how these properties will perform in the longer term as more leases expire, this paper analyzes how lease expirations have affected property performance historically and investigates how these patterns have changed so far for leases that have expired since the COVID-19 outbreak.<\/p>\n
Conclusion<\/p>\n
Speaking of the imagination, there\u2019s historical precedent for pandemic-driven labor market upheavals:<\/p>\n
A pandemic kills off a chunk of the population, especially the more vulnerable working class. The labor force depletes. The labor of the remaining people who are willing to work is suddenly worth higher wages. People in power pre-pandemic want to deny that labor is suddenly worth more than it was before.<\/p>\n
It\u2019s the story of the American labor market in 2021 \u2014 and the onset of the \u201cBlack Death,\u201d or bubonic plague, in 14th-century Europe.<\/p>\n
With over 38 million people leaving their jobs in 2021, the coronavirus pandemic has spawned what some are calling the Great Resignation. Research shows that people want to pursue more fulfilling careers, even without other jobs lined up. Workers seem tired of low-paying, dangerous professions, and want to avoid increased exposure to the pandemic. <\/p>\n
And they definitely want more pay.<\/p>\n
More bleakly, swaths of the workforce are simply also dying off: line cooks, warehouse employees, and agricultural workers were especially at high risk of death in 2020, according to a study from the University of California, San Francisco. <\/p>\n
A new book by English historian Dan Jones makes clear that labor shortages have long followed pandemics, with social unrest not far behind. His \u201cPowers and Thrones,\u201d which looks at roughly 1,000 years of medieval history, includes a discussion of the Wat Tyler rebellion, which he argues was really the working class leveraging its power as a result of the labor shortage that followed the Black Death, or bubonic plague.<\/p>\n
It wasn\u2019t just an English phenomenon, either. Thousands of people died in the rebellions that took place throughout Europe during that age, but something else happened \u2014 the economy changed forever.<\/p>\n
When a pandemic arrived on this scene, the continent eventually lost roughly one in every two people. This was a human tragedy, but it also put labor at a premium. Wages soared as landowners struggled to make sure their crops didn\u2019t die from a lack of harvesters. The sudden decline in the population also meant a decline in land rental prices. Land became dirt cheap, and landlords were desperate for tenants. <\/p>\n
More than 800,000 people have died from COVID in the US over 2020 and 2021, and a similar thing is happening on a much smaller scale. Bureau of Labor Statistics data shows that 3 million people are currently missing from the American workforce, while wages have increased significantly for the first time in decades, and set to go even higher in 2022. <\/p>\n
According to Jones, the same kind of shift in worker power 600 years ago caused wealthy landowners to panic. They petitioned their rulers to help save them from financial ruin. <\/p>\n
In England, King Edward III enacted legislation that made it illegal for workers to claim wages above pre-pandemic rates: the Ordinance and Statute of Labourers. Workers were prescribed wage ceilings depending on their industry, such as masonry or mowing. The ordinance also made it a legal requirement for every able-bodied person under 60 years old to work.<\/p>\n
Under the next king, Richard II, these ordinances, along with a slew of new, higher taxes finally triggered what is known as the Peasants\u2019 Revolt, the first great popular rebellion in English history.<\/p>\n
Of course, there wasn\u2019t any such thing as \u201cLong Black Death\u201d back in the day; people were either dead, or not. I find it hard to imagine organizing a popular rebellion with a mass of disabled people. Nevertheless\u2026.<\/p>\n
NOTES<\/p>\n
[1] I have toyed with the slogan that \u201cThe only market is the labor market,\u201d because, surely, all markets depend on the jobs that human beings do?<\/p>\n
[2] From this morning\u2019s Links, container import volumes are up too. So something\u2019s going on out there\u2026. <\/p>\n
[3] Also from CNN: \u201cThe rate at which people are getting recruited for surveys that are used in many of BLS\u2019 monthly reports including employment, Consumer Price Index and Job Openings and Labor Turnover are down sharply from before the pandemic.\u201d Curiously parallel to the problems that election pollsters are having. <\/p>\n
[4] In the previous round-up, I did not cite to this article from Nature, though I should have:<\/p>\n
The oncoming burden of long COVID faced by patients, health-care providers, governments and economies is so large as to be unfathomable, which is possibly why minimal high-level planning is currently allocated to it. If 10% of acute infections lead to persistent symptoms, it could be predicted that ~400 million individuals globally are in need of support for long COVID. <\/p>\n
[5] I wanted to look at productivity and consumption, too, but dang. My sources weren\u2019t good enough. It shouldn\u2019t be hard to show, however, that cognitive dysfunction will have effects on productivity, quality of work, customer satisfaction, and so forth. As for consumption, surely at some point some significant fraction of the population will latch on to the idea that closed, crowded, close-contact spaces are dangerous? Maybe next time.<\/p>\n
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