Post-COVID, Americans Don’t Want to Return to Lousy Low Wage Jobs

From today’s New York Times:

The hopes for a booming pandemic recovery — growth led by jobs gains in the millions every month — were dealt a blow in recent weeks by a disappointing April jobs report. Perhaps we will see better when results for May are released this week, on Friday. But, for weeks, many in Democratic policy and political circles have been queasy about addressing the connection between federally supplemented unemployment insurance benefits and the slowing pace of re-employment at this stage of the recovery from the pandemic. There is almost certainly a common sense connection: If you were a low-wage worker, why aggressively attempt to go back to work at a lousy, low-paying job, when you can make more money collecting unemployment benefits.

Still, Republican politicians are getting it wrong too. They are citing countless news reports that businesses are struggling to fill certain positions as both a reason to end federal unemployment benefits and as evidence that the extra benefits were too generous in the first place. They worry that the ability of some workers to stay on the sidelines of the labor market, unless employers offer wages that trump jobless benefits, could result in dangerous “wage inflation” — a potential increase in labor costs that, they believe, consumers will pay for in the form of higher priced goods and services.

That argument simply does not hold water either: Over the coming weeks and months as this aid for the jobless phases out, there will be a flood of anxious job seekers pouring into labor markets. Even if a significant share of workers are temporarily avoiding taking low-paying jobs while benefits remain generous, then there is no true “labor shortage,” as many economists and market commentators are calling it.

When Congress passed the CARES Act last May and the American Rescue Plan Act this March, it was hard, even impossible, for policymakers to forecast the demand for labor or the pace of the economic recovery. The pandemic was still stubbornly lurking. The economic (and humanitarian) risk of doing too little far exceeded the risk of being generous. And in spite of some recent comments from Democrats facing political pressure, the entire point of the enhanced unemployment checks, at least originally, was to tide Americans over until it was safe for more people to work again.

Now enhanced benefits are ending every day for the millions of Americans who have benefited from the Pandemic Emergency Unemployment Compensation, or PEUC, program, which extends unemployment insurance for 13 weeks to those who exhausted their conventional state and federal unemployment benefits. All extra federal supplements for the unemployed will end on Sept. 6, including the general $300 weekly benefit, as well as the Pandemic Unemployment Assistance, or PUA, program, which provides aid to those who were self-employed. (Some states are in the process of cutting them early.)

Republican-controlled states, as well as some more politically mixed states, are doing this because they presume there is a macroeconomic upside to millions of workers returning to lower-income jobs. They shouldn’t be so sure.

Read the complete article here.

People Want 3 Things from Work, But Most Firms Are Built Around Only One

From today’s Harvard Business Review:

Strike up a conversation about work values, and it won’t be long before someone brings up a pyramid — a famous psychologist’s best-known theory. Abraham Maslow’s big idea was that we all have a hierarchy of needs: once our basic physiological and safety needs are fulfilled, we seek love and belongingness, then self-esteem and prestige, and finally self-actualization. But that pyramid was built more than half a century ago, and psychologists have recently concluded that it’s in need of renovation.

When you review the evidence from the past few decades of social science, it’s hard to argue with Maslow’s starting point. If your basic needs aren’t met, it’s hard to focus on anything else. If you have a job that doesn’t pay enough, and you’re up all night worrying about survival, chances are you won’t spend much time dwelling on self-actualization.

But Maslow built his pyramid at the dawn of the human relations movement, when so many workplaces in the manufacturing economy didn’t have basic physiological and safety needs covered. Today more companies are operating in knowledge and service economies. They’re not just fulfilling basic needs; they’re aiming to fulfill every need, providing conveniences like meals and gyms, and competing to be the best places to work (from 1984 through 2011, those that won outperformed their peers on stock returns by 2.3% to 3.8% per year). In those environments, survival isn’t in question.

And once you get past that layer of the pyramid, the rest of it falls apart. People don’t need to be loved before they strive for prestige and achievement. And they don’t wait for those needs to be fulfilled before pursuing personal growth and self-expression.

If Maslow were designing his pyramid from scratch today to explain what motivates people at work, beyond the basics, what would it look like? That’s a question we set out to answer at Facebook, in collaboration with our people analytics team.

We survey our workforce twice a year, asking what employees value most. After examining hundreds of thousands of answers over and over again, we identified three big buckets of motivators: career, community, and cause.

Career is about work: having a job that provides autonomy, allows you to use your strengths, and promotes your learning and development. It’s at the heart of intrinsic motivation.

Community is about people: feeling respected, cared about, and recognized by others. It drives our sense of connection and belongingness.

Cause is about purpose: feeling that you make a meaningful impact, identifying with the organization’s mission, and believing that it does some good in the world. It’s a source of pride.

These three buckets make up what’s called the psychological contract – the unwritten expectations and obligations between employees and employers. When that contract is fulfilled, people bring their whole selves to work. But when it’s breached, people become less satisfied and committed. They contribute less. They perform worse.

Read the complete article here.