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The Irony of Having Labor Day Off

September 7, 2021

As a dad, one of my greatest fears is teaching my kids to feel entitled.   We have three in college and they all understand that once they graduate, they are off the payroll.  Our senior has begun contemplating that first job and we have to remind her that jobs aren’t always fulfilling, especially the first one.  Sometimes it’s just about paying the bills.

Unless you’ve been living under a rock, you’ve heard enhanced unemployment ended this weekend.  This comes at a time when Friday’s job report was a huge miss, with the economy adding “just” 235k jobs vs the forecasted 733k.  There were plenty of articles this weekend highlighting individual stories about how the ending of enhanced unemployment will negatively impact people.

Kathleen Fox says she applies for around three jobs per day, including ones where she would make far less money than in her last full-time position at an advertising agency, all to no avail. If she is unable to find a job after losing her benefits, she faces the prospect of being forced to sell her apartment.1

“The stress of everything has just caused me a lot of emotional distress that I didn’t have before,” she said.

Davison, who had been a turnstile attendant at the Universal Studios Florida theme park, has been using unemployment benefits to help support his parents, with whom he lives and who are unable to work due to medical issues. Though he’s been actively applying for jobs for several weeks, he hasn’t landed anything yet.

Without work or unemployment benefits, he expects to rely on money raised from a GoFundMe page to help make ends meet.2

″[An] extension could have saved families from financial ruin,” Davison said.

April Stokes wants to go back to work.

An optician by trade, Stokes was employed at Henry Ford OptimEyes until the coronavirus struck and school closed for her two young children.

The family has been able to ride out the pandemic thanks to expanded federal unemployment benefits, which provided them with $1,152 every two weeks — much less than Stokes was making before, but enough to survive.3

“The government is not leaving us with any options,” said Stokes

I feel for all of these people.  I do.  I don’t want people to be without jobs.  But I would be embarrassed if any of my kids gave a quote to a news outlet like that.

Sometimes selling assets, even a home, is what we need to do to get by.  Sometimes we need to take jobs that pay less than our last job.  Sometimes we need to pick ourselves up instead of relying on the charity of a GoFundMe page.

No options?! The government has provided 18 months worth of options!

I’d rather celebrate those that do whatever it takes than fret over those that feel entitled to never experiencing a setback.  It’s one of the sharpest recessions in history – some level of pain is unavoidable.

Here are three stories that I think highlight the Labor Day mentality that should be embraced, even if the media portrays them as people we should feel sorry for.

CNN

The Illinois resident has an interview on Tuesday for a chef position that pays $21 an hour — which would be a big cut — and could entail a 45-minute commute depending on traffic. But now that he’s lost his unemployment compensation of $1,060 every two weeks and is holding off on taking Social Security so he can get the full benefit in 2.5 years, he can’t afford to be too choosy.

WSJ

Cameron Abdo said his new job pays him less than previous roles, and he has some concerns about the risk of infection because his employer requires him to report to an office a few days a week. “But having a job is way better than being unemployed,” he said.4

Touchstone

Welfare recipient James Braddock, once back on his feet, actually returned the money he had accepted.  “I believe we live in a great country… great enough to help a man financially when he’s in trouble.  I’m back in the black. And I just thought I should return it.”

OK, that last one is actually from the movie Cinderella Man, but you get the point.  We’ve somehow normalized living off the government.

My wife spent last week on jury duty.  The jurors all had jobs they were required to miss, while the plaintiff and the defendant were unemployed.  What’s wrong with this picture?

The labor force participation rate is at a 45-year low.  Couldn’t this be tied to how comfortable we’ve made the safety net?  If I make the safety net too comfortable for my kids, it won’t be a coincidence if they live at home after college while they search for the perfect job, right?

Source: Bloomberg Finance, LP

And it’s not like employers aren’t trying.  Average hourly wages are up more than 4%.

Source: Bloomberg Finance, LP

There are more than 10mm job openings right now with an unemployment rate of 5.2%.

Source: Bloomberg Finance, LP

Connecting workers with employers is not a seamless process.  Traditional unemployment benefits last about six months, which is a tacit acknowledgement that finding a new job takes time.  But like that gentleman in the CNN article noted, he began interviewing for jobs just weeks before unemployment ended.  Had it ended 3 months ago, he would have started interviewing then and he might have a job by now.

Keep in mind that today marks the end of enhanced unemployment, not all unemployment.  It marks the end of the $300/week kicker.  That’s $1,200 a month extra.  It used to be $2,400 a month extra.  The kicker has been in place for 18 months, are people just expecting for that to remain in place until they find a fulfilling job that checks all their boxes?

There’s also been a lot of talk about how COVID has given employees the opportunity to examine their career choices, and many are deciding they don’t want to go back to their old jobs.

“This opportunity to take a step back and really think about what you’re doing really changed my mind,” said Mullins, 36. “(It) made me think long-term for the first time.”5

So now we are not only providing unemployment while people need help, we are providing it while they figure out what job will be the most fulfilling?  You want to reconsider your career?  More power to you.  But other than collecting unemployment, what are you going to do about it?  Are you willing to actually put in work towards that goal?  Go back to school?  Become an apprentice?  Network?  Study?  Anything?!

Why should I subsidize your soul-searching?  Self-examination should occur on your dime, not mine.

Obviously, there is the ongoing issue of safety.  Many cite the concerns over COVID.  But why is it ok for grocery and Amazon workers to work to pay their bills, but not you?

This is a very nuanced issue and my feelings are a blunt instrument.  Of course, there are particularly challenging situations, but I’m really speaking to the broader sentiment.  We need to more frequently reward the “at all costs” hustle than the “getting over on the system” mentality.

Connecting workers and employers is not a seamless process.  It takes time.  GDP will likely suffer in the short term.  The economy will grow slower than it would otherwise.  But there are plenty of opportunities and we need to be patient while allowing both sides to connect.

Here’s the good news – it can be taught!  Our socialist Bernie supporting second daughter came home from college over the weekend.  DoorDash was offering a $300 bonus for making 10 deliveries in one day.  Guess what – she suddenly found time to make those deliveries!  In fact, after hitting the target, DoorDash had a very convenient system crash and failed to register her last two deliveries.  She was frustrated, but sucked it up and made two more.  Boom – a old school capitalism $300 kicker!

A prideful tear trickled down my cheek.  Maybe, just maybe, the dots were connecting.  Perhaps Bernie will get one less vote in 2024.  If she can learn, perhaps others can, too.

Labor Day should celebrate those that pull themselves up to an opportunity, rather than those that demand a handout while scrolling through their phone on the couch.

But it should remain a federal holiday because who wants to actually work on Labor Day!?

 

Week Ahead

Pretty light economic data week, but lots of Fed speeches.

Also, Jay Money had a layover in CLT on his way back from Jackson Hole.  He stopped by to personally assure me that I would be on the guest list next year.  We laughed (that some people think this inflation will go up forever), we cried (that some think the Fed will hike next year), and we danced.

Let the record show – Jerome has dance swagger for days.  Great chatting with you Jay!

 


Click to Open: The Pensford Letter PDF


 

Sources

  1. https://www.washingtonpost.com/business/2021/09/05/unemployment-benefits-economy/
  2. https://www.cnbc.com/2021/09/04/end-to-federal-unemployment-benefits-leaves-many-uncertain-and-scared.html
  3. https://www.cnn.com/2021/09/06/politics/pandemic-unemployment-benefits-end/index.html
  4. https://www.wsj.com/articles/august-jobs-report-unemployment-rate-2021-11630624394
  5. https://apnews.com/article/pandemics-coronavirus-pandemic-health-business-434fc29d69d9422b487a4f9c6eaa4249
Pensford