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Work Isn’t Working. What’s Going on in the Labor Market?

The Quick Notes on the Economy column explores God and money in brief — in common terms for the common good.

In the last column, inflation was the top story. It continues to be a top story, but for now we’ll focus on the other mandate of the Federal Reserve and an important component of our economy: labor. The employment kind. 

Over the last few months, workers have reconsidered their values and relationship to work. Lockdowns begun last year, changes in workplace technology, and social tensions have frayed what some call the social contract between employers and employees.

But really, this story has been developing since 1997 when McKinsey consultants argued for the coming “war for talent,” a war that would be waged over the next several decades. This war for talent is a supply shortage of qualified workers to stay productive in the so-called “future of work.” That future arrived slowly after the advent of the internet and then suddenly in 2020. The lockdowns resulting from the pandemic sent workers of all stripes away from their corporate offices to work on the kitchen table alongside screaming children and barking dogs. And according to the latest McKinsey report, Women in the Workplace, women, mothers, and people of color were affected especially negatively. 

Many workers have begun moving away from the big metropolises and stepping down from their high-demand roles. Millions of workers have simply quit. Analysts call this period the “Great Resignation,” a phenomenon expected to accelerate. Others have suggested that this period of tight labor conditions “will likely result in a significant overall economic slowdown, forcing society to lower their quality-of-life standards.”

What now? 

Business leaders have poured millions of dollars to retrain their employees. These so-called “reskilling” initiatives have grown into a full-blown “Reskilling Revolution” in which 10s of millions of employees will be ill-prepared for the requirements of their roles by 2030. In other words, jobs and skills are the talk of the town, and will remain so for years to come.

Ministers and non-profit leaders have heard the call and shoved the importance of work into the center of theological conversation. You see it in Theology of Work projects or in firms like Faith Driven Investor and Praxis Labs, or in the magazine in which you’re reading right now. This is arguably one of the most important conversations to date.

The key economic indicators to pay attention to during this time are the unemployment rate and the quits rate. The former is one you’ve likely heard of: According to the Bureau of Labor Statistics, “the unemployment rate represents the number of unemployed people as a percentage of the labor force (the labor force is the sum of the employed and unemployed).” The latter is, again according to the BLS, “the number of quits during the entire month as a percent of total employment.”

At 3 percent as of September 2021, the quits rate stands at an all-time high, even while the unemployment rate is falling, down near pre-pandemic figures of 4.6 percent. The combination of these figures is odd, according to Harvard University labor economist Larry Katz: “What’s puzzling, relative to the historical data, is the slow movement of people who have been unemployed for a while back into employment, given how many job openings there are.” Even the Director of Global Macro at Fidelity, Jurrien Timmer, has “never seen a labor picture like this.”

All that to say, keep your eyes glued to employees and congregants looking for work. Odds are, they’re reassessing their values and the very nature of what work means.

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