With Claims of Mass Workers Shortages and Layoffs in the US, We Must Read Between the Lines
Federal Reserve Board Chairman Jerome Powell speaks at a news conference. He claimed that the US is suffering from a “structural labor shortage.",(AFP/Nicholas Kamm)
The popular narrative about worker shortages and layoffs is aimed at building a cultural consensus against workers and the labour movement, and is based on biased, partial, and contradictory definitions.
In the midst of the economic recovery from the Covid-19 pandemic, in trying to justify the acceleration in global inflation – even before the war in Ukraine – the mainstream media was flooded with news about the so-called ‘Great Resignation’, blaming an apparent shortage of workers for widespread bottlenecks in the production of goods.
Today, the same media is talking about large-scale redundancies and layoffs by corporations. The explanations offered for this apparent trend could lead one to draw conclusions that barely scratch the surface in terms of understanding the true root causes of these issues. This impacts not just the general public but also, most worryingly, policymakers who could be led to implement poorly designed policies that produce negative effects on people, their livelihoods and the wider economy.
Take two examples: in the first, on 14 December 2022, following a board meeting at the US Federal Reserve, its chair, Jerome Powell, said: “It feels like we have a structural labour shortage out there where there are four million fewer people, a little more than four million, who were in the workforce available to work than there’s demand for workforce.” This statement fails to consider that the federal minimum wage in the US, adjusted in real terms for inflation, is the lowest in 66 years.
And here’s another: less than one month after Powell’s statement, in January 2023 Reuters warned: “Big Tech firms and Wall Street titans are leading a string of layoffs across corporate America as companies look to rein in costs to ride out the economic downturn.” The source of the data at the heart of this story is Layoffs.fyi, a website that tracks global tech job losses. However, the story fails to explain that, without any methodological note on how the information is collected, the layoffs mentioned only occurred in 5 per cent of the 2,000 cases that the site refers to.
If inflation is picking up and there are shortages in the supply of goods and services, it is because workers are reluctant to actually work. To explain this, various subjective, personal, and apparently obvious reasons are offered, all of them appealing to common sense and canonical wisdom. As the former US Labor Secretary Robert Reich asserts: “They’re aiming to deal with the ‘labor shortage’ by slowing the economy so much that employers can find all the workers they need without raising wages.”
And when this is not enough, the dismissal of workers serves as a warning with a clear message: “Don’t push for higher wages because you will be fired. Can’t you see what large corporations are doing?”
Dismissal of workers: does the evidence support the assertions?
But is there really a shortage of labour? Is it true that companies can’t find workers? Are we genuinely witnessing mass firings and wholesale job losses? The simple answer is no. All these hypotheses only serve to ‘discipline’ the labour force and suppress wages.