October 20, 2021

By David Leonhardt

Good morning. How can so many Americans afford not to work? And will it last?

A job fair in Santa Clara, Calif.Justin Sullivan/Getty Images

'I can be choosy'

A shortage of bus drivers has forced school districts to combine routes. A lack of servers has caused restaurants to reduce hours. And you may have noticed that the checkout lines at supermarkets, drugstores and other retailers have grown.

The labor shortage of 2021 is both conspicuous and perplexing. How is it, after all, that several million people who were working before the pandemic are now getting by without a paycheck?

There is no single answer, but a crucial part of the explanation is that Americans are flush with cash.

(Monday's newsletter detailed how the cash glut is also causing rising inflation and supply-chain problems like backed-up ports.)

Thanks to pandemic stimulus programs during both the Trump and Biden administrations, many families have received multiple checks from the federal government over the past 18 months. Those stimulus programs also increased the size of unemployment benefits. Over the same period, home values and stock prices have risen, too.

As a result, many households have more of a financial cushion than they used to. If anything, the recent increases in savings have been larger at the bottom of the economic spectrum than at the top:

Income quarters based on 2019 household earnings.Source: JPMorgan Chase Institute

With this cushion, some workers — especially those in service industries disrupted by Covid-19 — have decided that they did not like their old jobs enough to return. Others have simply quit their jobs.

A low-wage economy

That should not be entirely surprising. The American economy of the past few decades has not been very kind to workers.

Since the 1980s, incomes for the poor, the working class and much of the middle class have grown slowly, failing to keep up with either economic growth or the incomes of the affluent. Other quality-of-life measures are also flashing red. Life expectancy has grown more slowly in the U.S. than in dozens of other countries. Drug use, alcohol use, chronic pain and suicide have risen among the working class, while marriage and self-reported satisfaction have declined (as these charts show).

"Many, many people are realizing that the way things were prepandemic were not sustainable and not benefiting them," Rachel Eager, 25, who previously worked at an after-school program in New York, told my colleague Ben Casselman.

Eager is now looking for a new job, but she is not in a rush. "My financial situation is OK, and I think that is 99 percent of the reason that I can be choosy about my job prospects," she said. So far, she has not been willing to take another job with low pay, no benefits and little flexibility.

Her attitude is telling. The U.S. does not have a pure labor shortage so much as it has a shortage of workers willing to accept the working conditions that today's economy often demands.

Paul Krugman, the Nobel Prize-winning economist and Times Opinion columnist, has described the trend as "the revolt of the American worker." Betsey Stevenson, a University of Michigan professor, calls it the "take this job and shove it" economy.

There are also labor shortages in some other countries, probably related to their own large pandemic stimulus programs. But the situation seems to be most intense in the U.S.

A turning point?

The big uncertainty is what happens next.

One possibility is that we have entered a new era of tight labor markets. With more Americans choosing not to work — including aging baby boomers — companies would then need to increase pay and improve working conditions to attract employees. Some are already doing so, Ben Casselman notes: Hourly wages in the leisure-and-hospitality sector, for example, have surged this year.

In this scenario, the pandemic would represent a turning point. Almost a half-century of a low-wage economy would end, and incomes would grow more rapidly, as they did from the 1940s until the early '70s.

But I find it hard to believe this is the most likely scenario.

For one thing, the financial cushion of most households still is not large. The median cash savings of the bottom quarter of households (ranked by earnings) has risen by 70 percent over the past two years — but it's still only about $1,000, Fiona Greig of the JPMorgan Chase Institute points out. And the pandemic stimulus programs have mostly ended.

Eventually, more Americans will feel the need to go back to work. When they do, they will find a job market where employers hold a decided power advantage, because of the decline of labor unions and an increase in corporate concentration. The college dropout crisis, leaving many workers struggling to keep up with technological changes, plays a role, too.

President Biden and many other Democrats favor a set of policies intended to put workers on more even footing with their employers. The agenda includes paid family leave, expanded child tax credits, subsidized child care, a crackdown on anti-union activities and a more aggressive approach to corporate consolidation.

But it is unclear how many of those ideas will become law. Congressional Republicans have expressed concerns about some of these same trends but oppose most policy responses. Congressional Democrats have razor-thin margins in Congress and don't yet agree about what laws to pass.

In the meantime, Ben says, the labor market is in a standoff: "Workers are holding out until their savings disappear. Businesses are holding out until their customers disappear."

You can read his story about the job shortage. It also describes some of the causes of the shortage other than the cash glut, like Covid fears and a dearth of day-care options.

THE LATEST NEWS

Politics

Steve Bannon, a former Trump adviser.Carlos Bernate for The New York Times

The committee investigating the Capitol attack recommended charging Steve Bannon with contempt for defying a subpoena.
Last year Mark Esper, Donald Trump's defense secretary, quashed a plan pushed by a top Trump aide to have U.S. troops seal the southern border.
The Justice Department charged Representative Jeff Fortenberry, a Nebraska Republican, with lying to investigators about campaign donations.
The couple charged with trying to sell U.S. nuclear secrets to another country stewed over money and politics.

The Virus

General Electric and Union Pacific joined the list of large companies with Covid vaccine mandates.
The Supreme Court declined to block Maine's vaccine mandate for health care workers.
A Brazilian congressional panel will recommend charging President Jair Bolsonaro with "crimes against humanity" for his handling of the coronavirus crisis.
John King of CNN announced he had multiple sclerosis and thanked his colleagues for getting vaccinated. Neil Cavuto, a Fox News anchor who is also immunocompromised, tested positive for the virus.

Climate

The large blaze in California generated powerful storm clouds.The New York Times

California's Dixie fire was so intense that it created its own weather. This 3-D model shows the firestorm up close.
Africa's last three mountain glaciers could disappear within two decades.
Vladimir Putin says he is taking climate change seriously, but is he? The Times's Anton Troianovski reports from a Russian island north of Japan, and The Washington Post reports on Russia's methane leaks.

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MORNING READS

Ripe and smooth: This village thinks it has the best olive oil in the world.

Tourists heart N.Y.C.: New York wants its international tourists back — and fast.

Bones: Can skeletons have a racial identity? Forensic researchers aren't so sure.

Advice from Wirecutter: You probably don't need antivirus software.

Lives Lived: David Finn co-founded a powerhouse public-relations firm that jump-started the career of an up-and-coming crooner named Perry Como. Finn also pursued a parallel career as a photographer and sculptor. He died at 100.

ARTS AND IDEAS

Milwaukee Bucks' Giannis Antetokounmpo, left, and Brooklyn Nets' Nicolas Claxton.Morry Gash/Associated Press

The N.B.A. season begins

The N.B.A. returned last night. Here are a few interesting story lines as the season gets underway.

Vaccines: The N.B.A. says 96 percent of players are vaccinated. But a few continue to refuse to get the vaccine, most notably the Brooklyn Nets' Kyrie Irving. The Nets — considered the league's best team, as The Times's Sopan Deb explains — will not let Irving play until he gets the jab.

Old guys: The Los Angeles Lakers, led by LeBron James (in his 19th season), have swapped much of their young talent for aging former stars like Carmelo Anthony (37), Dwight Howard (35) and Russell Westbrook (32). It may work — The Ringer found that old teams were often more successful than young ones.

Fewer fouls: In recent years, some of the N.B.A.'s best shooters have made an art of flailing into defenders on three-point shots, drawing fouls but looking ridiculous. No longer: The league has outlawed these moves. FiveThirtyEight has an explanation.

For more, The Times previews the Eastern and Western conferences. — Tom Wright-Piersanti, a Morning editor

PLAY, WATCH, EAT

What to Cook

Kate Sears for The New York Times

Adding miso to your pasta creates a delicious savory flavor.

What to Watch

"Queens," a musical drama starring Eve and Brandy, follows the members of a '90s rap group who reunite.

What to Listen to

Some of the most striking music on TikTok comes from the British singer PinkPantheress. Read a review of her debut album, "To Hell With It."

Late Night

Trevor Noah talked about "striketober."

Now Time to Play

The pangrams from yesterday's Spelling Bee were effectual and fluctuate. Here is today's puzzle — or you can play online.

Here's today's Mini Crossword, and a clue: Untidy (five letters).

If you're in the mood to play more, find all our games here.

Thanks for spending part of your morning with The Times. See you tomorrow. — David

Correction: Yesterday's newsletter mistakenly included an article about Puerto Rico in the international news section.

P.S. President Richard Nixon's "Saturday Night Massacre" happened 48 years ago today.

Here's today's print front page.

"The Daily" is about Biden's climate plan. On "The Argument," a debate about legalizing drugs.

Claire Moses, Ian Prasad Philbrick, Tom Wright-Piersanti, Ashley Wu and Sanam Yar contributed to The Morning. You can reach the team at themorning@nytimes.com.