“The Fed will be happy”

“The Fed will be happy”

Subtitled: But you won’t be
Sub-subtitled: Hospitality is not the broader job market

Image by StockSnap from Pixabay

In the spring of 2021, I traveled to Pennsylvania to attend a graduation. Driving around the area, I was struck by all the signs in diner and fast-food storefronts seeking workers. As I recall, the signs had a desperate tone, advertising bonuses and high wages to anyone willing to work. I was witnessing in real time a fascinating economic moment: Low-wage workers were in high demand, and that meant they were gaining leverage.

The signs I saw in Pennsylvania were emblematic of what was happening across the economy. Restaurants are a “microcosm” of the Great Resignation, the pattern that took off in 2021 in which workers quit their jobs to seek higher wages and better benefits‚ Nick Bunker, an economist at Indeed’s Hiring Lab, told me. That spring, as freshly vaccinated Americans went out to spend their stimulus checks, they frequented restaurants. Demand for services soared, and so in turn did the demand for service workers. Businesses had to compete for staff. And when workers saw that they could find better wages and conditions elsewhere, many quit their jobs in favor of new ones.


I think we all saw such signs posted in a plethora of articles telling us how tight the job market was, especially for hospitality jobs. At one point, it seemed like anyone who’d been laid-off was being advised to go to Chipotle and everything would be fine. I guess Chipotle was gonna hire the whole country. Lost a $200k Big Tech job? No sweat. Get a $17/hr job and you’ll still make ends meet.


The latest jobs data suggest that workers might be losing some of this power. The economy added about 209,000 jobs in June, according to data from the Bureau of Labor Statistics released last week. It was the 30th consecutive month of job gains, but gains were at their lowest rate since the streak began. “The picture that emerged was a mixed one,” Julia Pollak, the chief economist at ZipRecruiter, told me. “Workers are still in the driver’s seat in many industries, other than tech, but they are losing leverage.” However, she added, the job market is “still more favorable to workers than before the pandemic.”

-The Atlantic, Ibid.

Is it though? (said as Thor)  I warned you that one potential narrative we could see when it becomes impossible to conceal that the 💩 has hit the fan is: Golly gosh. Who could’ve seen this coming? This market is just so gosh darn strange! 

Are workers still in the driver’s seat – apparently other than in tech – and is the job market still more favorable to workers than pre-C*v!d? NOT IN MY EXPERIENCE! All I can speak to is my opinion and my experience in the job market and no, I am not seeing employers bending over backwards for candidates. Even if they pay lip service to “top talent” or “A players” or whatever on social media, naw. Employers are back on their BS of wanting Jesus to turn water into wine for pennies on the dollar. If that hurts your feelings, I’m sorry. I’ve gotta be honest about what I am seeing and not seeing day in and day out.


What’s happening in hospitality, a sector that includes restaurants and bars, tells us a lot about the job market more broadly. That was true in 2021, Bunker told me, and it’s still true now. Looking at the behavior of the hospitality sector in last week’s report, Bunker noted, we can see that “the labor market is moderating but still strong.”

-The Atlantic, Ibid.


Moderating. OK. There are some industries that always seem to have shortages and always seem to have high turnover. In my entire life, I don’t think I’ve heard anything but “nursing shortage.” I can’t ever remember a time of hearing a talking head on the TV say, “We have a glut of nurses now.” IMO, if the labor market is “moderating” in hospitality, which I would label an industry with high turnover, you damn well better believe it’s worse in other sectors. Folks getting hired in fast food does not = the whole economy is doin’ great.


The Fed will be happy to see the job market cooling off, Bunker told me, so we might see fewer interest-rate hikes in the months to come: “Reduced competition for workers is going to reduce wage growth, which is—in the Fed’s view—going to put less pressure on employers to raise prices, so that should bring inflation down.” But after pausing their hikes last month, following 10 consecutive rate hikes, the Fed is still widely expected to raise rates at its meeting at the end of this month.

-The Atlantic, Ibid.


Yeah, The Fed’ll be happy. They haven’t obscured their goal:


The struggle is not understanding what’s happening; the struggle is getting people to LISTEN and absorb the information. We live in an age where people will label anything a conspiracy theory if they don’t like it and/or don’t wanna hear it because it’s not hot air & hopium. 🤷🏻‍♀️ There’s only so much you can do for people in that mindset.


The monthly job-openings report tells us more about the recent past than it does about our current reality. The patterns we saw in last week’s numbers contain new information about a moment that’s already slightly dated. And they raise fresh questions about whether the Great Resignation is over. Bunker, for his part, riffed on Mark Twain, saying that in his opinion, “rumors of the Great Resignation’s demise are greatly exaggerated.” But, he added, in a few months, we may be able to say more definitively whether the heyday of the Great Resignation really is behind us.

-The Atlantic, Ibid.


I disagree. I actually think these MSM outlets are way behind the curve on telling you that The Great Resignation is toast. In a few more months maybe they’ll know? Боже мой, how bad/obvious/undeniable will things be by then?


There’s often a lag between what’s happening in real-time versus what’s being reported to us. I personally do not think real unemployment is less than 4% right now. I also don’t think it will be long before we finally find out “officially” that unemployment is trending upward. Some of these open jobs are not really open jobs that will get filled. Some I am sure are up just for show, some are evergreen requisitions that stay posted all the time, and some are probably legit. What is the exact ratio there? I’m not sure, but I don’t believe 11.4 million jobs are truly open in America right now. I also believe that people who aren’t involved in HR / staffing work will look at statistics like that and get a false sense of security. “Oh, OK. Sounds like there’s still a labor shortage. Sounds like all is still well.” No. Nyet. Nein.



Do you wanna get lulled into a false sense of security or do you wanna get real?

How does a recession or a bear market impact the job market from your perspective?

Great question – and it’s one that needs to be addressed. All of these concepts are intertwined. A recession tells us that there’s an overall decline in activity inside the economy and this includes labor. To put it simply: if people are feeling financially pinched and they start to cut back, they’re usually buying fewer goods and services. That in turn leads companies to not need as many employees, which leads to layoffs and/or hiring freezes. Unemployment then goes up. The really scary thing there is that unemployment historically tends to go up quickly but is slow to abate.



Imma emphasize that line: The really scary thing there is that unemployment historically tends to go up quickly but is slow to abate.

By the time some politician or talking head trots out and tells you, “OK, guys. We’re officially in a recession now. Unemployment is goin’ up and The Great Resignation has finished cuz people are scared,” IT’S TOO LATE TO MEANINGFULLY PREPARE.

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