American states are breaking records for their lowest unemployment rates in history, and the American economy is booming. U.S. workers are also now “mostly happy” with their employment.
Straight Arrow News contributor Larry Lindsey cautions that part of this success is due to a phenomenon called “labor hoarding,” where companies retained as much labor and talent as possible. Lindsey contends that this hoarding process will soon unravel into a “dehoarding” process, where more and more workers will be let go.
There’s no question that COVID really messed up the U.S. labor market. A lot of people did not want to go to work. Some places managed to have part-time working at home, or sometimes even full-time working at home. But that’s for your typical office worker. For much of the economy, people had to physically show up, and workers were hard to get. So employers really needed to get warm bodies. And by the way, the best warm body to have was one who was already working for you, so you didn’t have to attract someone new.
But firms tend to lay off the bottom 5% to 10% of their workforces every year as a matter of course, just to keep the quality of their workers up. They weren’t doing this. Layoffs hit lows, since data has been collected, as a share of the working population. So we ended up doing something that was best called “labor hoarding.” They were holding in people they normally wouldn’t, just to cover any emergency that might happen.
Well, who can do this? Generally, it’s people with more casual employees. [You] can’t really hoard professional workers. You may try, and you may try it even in the skilled trades, but the typical hoarded worker was part-time, they had much more casual employment, and low-wage. Well, the classic industry where this is true, where there was lots of labor hoarding, was in the leisure and hospitality industry.
