On the surface, the surprise announcement Thursday from the U.S. Centers for Disease Control and Prevention that it would reverse mask mandates and limits on gathering sizes for people vaccinated against COVID-19 looks like great news both for Americans looking for work and for those employed and looking for a pay increase.
News stories across the country have been full of business owners and executives bemoaning their inability to fill open positions in recent weeks.
Restaurants and travel and entertainment companies, in particular, were preparing for a ramp up in business by scrambling to bring in more staff, and the news from the CDC, some said, just gave further impetus to a welcome trend.
Disney CEO: CDC change is ‘big catalyst’
In an interview with Bloomberg television, Bob Chapek, CEO of the Walt Disney Company, said that the CDC announcement would go a long way toward getting the company’s theme park business back to normal and getting the company’s theme park workers back on the job.
“We are really encouraged by what we're seeing in terms of not only current attendance but forward bookings,” he said. “Today, with the CDC guidance in terms of relaxation of a mask requirement, we think it's again going to be a big catalyst for growth and actually being able to put the number of people in our parks that we're more accustomed to. So it's very, very positive. Our future bookings are working really great in Walt Disney World. In fact, they're already back up to fiscal year 2019 levels.”
The announcement came at the same time that Amazon announced that it would be hiring 75,000 people in the U.S. and Canada in the coming months, in some cases offering $1,000 signing bonuses and additional $100 bonuses for workers with proof of their COVID-19 vaccinations.
Chain restaurants like McDonald’s and Chipotle have also begun offering wage increases and hiring bonuses to lure people back into the workforce.
Supply vs. demand
The laws of supply and demand suggest that companies competing for scarce workers will have to pay more to attract the help they need, which is good news for the labor force. However, the impact on wages might not be as pronounced as current levels of employer desperation suggest.
That’s because while the new CDC guidance is likely to boost demand for labor, it could also have the countervailing effect of expanding supply, said Elise Gould, senior economist at the Economic Policy Institute in Washington.
It is important to remember that there are between 9 million and 11 million fewer jobs in the United States now than there would have been if the economy had not been sidelined by the pandemic last year. The workers who held those jobs may have disappeared from the workforce, but they haven’t disappeared.
Essentially, as the danger of being infected by the coronavirus declines, multiple factors contribute to a more willing labor force.
“What is also happening is that schools are opening up — that makes more people able to enter the workforce,” she said. “And more people are getting vaccinated. That means that more people feel safe reentering the workforce.”
A resurgent workforce
Gould and other economists believe that as the country approaches something like pre-pandemic normalcy, many of those workers will move back into actively seeking employment, easing the supply-demand mismatch currently plaguing U.S. firms.
So while there may be some temporary efforts by employers to attract workers, it is by no means certain that a reinvigoration of the economy over the next few months will result in large or lasting gains for the labor force.
“Maybe for a time we're seeing a bit of an increase in wages,” Gould said. “Particularly in leisure and hospitality — you're not seeing it across the economy. If employers have to entice those workers in a tighter economy, they would certainly have to provide better working conditions, better wages and better benefits. But it's hard to see that there's going to be that much pressure.”
She said, “It's hard to imagine a normal labor market when you have such a huge, huge number of unemployed, predominantly lower-wage workers, in these kinds of sectors. Employers will be able to find people to hire as those things are resolved.”
Another contributing factor to a growing workforce is likely to be the decision by governors in more than two dozen states to eliminate the federal unemployment insurance subsidy that has added $300 per week to the benefits that out-of-work Americans are receiving. Although there is no hard evidence the supplement is keeping a large percentage of workers on the sidelines, for a certain percentage of workers on the margins, the difference could be decisive in sending them back to the workforce.
So any workers looking to leverage the current labor shortage for better pay or conditions may be in a position to do so for the time being, but that window is expected to start closing soon.