Today, Explained - Take this job and shove it

Episode Date: May 17, 2021

Job growth has slowed, but there are plenty of positions posted. That's got politicians arguing about the cost of benefits. Matt Yglesias explains. Transcript at vox.com/todayexplained. Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Visit connectsontario.ca. A couple of days ago, I got to do something I have not done in a very long time. I went to a restaurant. I went inside a restaurant. We got our bar here, you know, complete with all the lovely plexiglass barriers that we were required to have because of COVID. It was the Mount Airy Taproom in Northwest Philly. But to be completely transparent here, I didn't actually go there. Today, Explained producer and South Philadelphia resident

Miles Bryan sort of brought me there via the miracle of smartphone technology. Got some like brown furniture and some green walls. Are you an Irish bar? It's not an Irish bar. No, it's just we were actually going, just going for a nice earthy kind of feel to the place. That's Rob Pelzinski, the owner. We call him Restaurant Rob. It was so busy the night we spoke that there was only one place we could post up to chat. The creepy stairwell to the basement. Like pretty much every other small business owner,

Rob was hit hard by the pandemic. But now, business is good again. Like, really good. And that's created a whole new problem. Restaurant Rob can't find enough workers. It took me three months of running ads just to get some interviews for a new chef. Because, you know, my chef, who I went into the pandemic with, decided he didn't really want to do it anymore. And he left in May of last year.

So, you know, I knew eventually, you know, eventually we'd get to play real restaurant again. And eventually I was going to need more staff in my kitchen. So, yeah, I finally got a new chef hired about two weeks ago. No sooner did I get him hired that one of my guys who's been with me for a year and a half tells me that he's got a better offer somewhere else making more money. And he's gone this Saturday. So I'm going to be right back to being short-staffed in my kitchen. Is it that you can't find the right people or is it that you can't even find people?

I have really struggled to even find people. I posted a Facebook post that, like, hey, we're trying to expand for the summer, getting ready for an exciting summer, come join a great team, blah, blah, blah, blah, blah, blah. I had like 14 people share that post. I got 1,300 people reached by that post. I had two people actually send in an email saying they were looking for a job. Two out of, you know, cyberspace. What do you think it is? Is it that you're not offering competitive enough wages? Are people scared about COVID? Both it is is it that you're not offering competitive enough wages are people scared about covid both what is it well i mean it's not the wages because frankly no one's even

coming in to find out what i'm offering so i think the past year has really changed the landscape of you know specifically the restaurant industry i think as an industry just you know to generalize i mean this has been a business that kind of sucked the life out of young people you know you you found them young and you kind of put them to work and you got away with paying them not that much money because they'd walk out the door with hundreds of dollars in cash and they they were living like kings they thought it was great like oh man i hang out the bartender slips me a beer at the end of the night like it's this magical like magical, like, you feel like you're living inside a Tom Waits song, you know, when you're 20 years old and you're working in a bar. A piano has been drinking.

My nectar is sweet. But it doesn't offer much more. So when the tips go away, as they did when suddenly we couldn't wait on people, the allure kind of goes away. And the carpet needs a haircut. And the spotlight looks like a prison break. And I think there's kind of a reckoning going on in labor in general, but especially in this business right now where, you know, the old model of, hey entire year of a pandemic where, you know, like my staff and I were here every day through that. Every day you had that weight hanging over you of like, is this the day somebody comes in

and coughs on me and it could kill me? You know, so there's not a lot of hazard pay that's that's going to make that OK. You know, and I mean, I got plenty of friends in the restaurant industry who once they found out they could make a bit more money by just staying home and taking some unemployment insurance with an extra, you know, kick in from the former president or or this new one. They weren't as interested in working their butts off at a restaurant. Is that something you're running up against too? When the economy was, you know, quote unquote, shut down, actually no quotes, the economy was shut down. You know, it was important to keep people, you know, able to live. You know, I don't begrudge anybody the extra 300 bucks or the extra whatever. But now when all the talk has been for months about how we're reopening the economy, reopening the economy, everything's opening back up, things are going back to normal. I mean, I don't know. Maybe they shouldn't be getting extra unemployment money because

people just can't hire people. And at a certain point, it's like, you know, guys, you kind of have to get back to work. Like, I never got to stop working. Yeah, it sounds like you feel like the government had your employees' backs when they most needed it. The government supported your business and many like it with PPP loans during the worst of the initial lockdowns. But now the government still got your employees' backs and, you know, your former employees' backs. But do you feel a little less supported? Do you think you might have to eventually, like, shut down your restaurant? I'll be honest. I don't want to cry too much, like, woe is me, you know, it's terrible.

I think we're going to be okay. But my goal is not to be okay. I'm trying to look to the future. I'm trying to build something that my neighborhood is gonna really, I mean, they have already just really taken to us and they've been super supportive, but I wanna repay that support and give them, I wanna give them frankly, like the coolest place to go in this neighborhood, you know, the best outdoor dining space, the cool just hangout, you know, space.

And I'm not going to be able to realize that vision if I can't get more staff, if I can't hire more people. I'm going to struggle when one of my line cooks leaves at the end of this week. It's going to be a struggle for me to replace him. And that's going to throw a major kink into the works of my kitchen. I need people. Desperately. Restaurant Rob Pelzinski of the Mount Airy Taproom in northwest Philadelphia.

He's hiring line cook. Server positions are open if anyone's interested. You can find him on Facebook. In a minute, marketplace Matt Iglesias on the cost of benefits. I'm Sean Ramos for him. It's Today Explained. Thank you. Support for today explained comes from Ramp. Ramp is the corporate card and spend management software designed to help you save time and put money back in your pocket. Ramp says they give finance teams unprecedented control and insight into company spend. Thank you. You can go to ramp.com slash explained ramp.com slash explained R A M P.com slash explained cards issued by Sutton bank member FDIC terms and conditions apply. Bet MGM authorized gaming partner of the NBA, has your back all season long.

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gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. All right, we've heard from restaurant Rob on the state of his personal job market.

He can't find enough good people to offer money at his restaurant right now. And we wanted to know how that gels with what we're seeing across the country. Here to help answer that question is Matthew Iglesias, host of The Weeds podcast, author of the slow, boring newsletter. Matthew, what do you say? I mean, that's something that you hear from a lot of small business owners, especially restaurant owners. There are ones that I know who've said this to me. You also hear from some of the larger sort of chains in the fast food experience that even when they are allowed to sort of open up their indoor dining rooms, oftentimes they've decided this isn't a really good time to staff up.

And we just had some jobs numbers come out that were sort of underwhelming. Is that part of this phenomenon? I mean, it certainly might be. It's hard to say. You know, when you look at the sort of micro numbers in that jobs report, we did add workers to the food service and restaurant industry. We also saw wages go way up in that particular industry. But we had slower hiring overall than we were expecting, several hundred thousand fewer jobs created than were expected, very slow growth in a lot of sectors. And we just we know from talking to people that, you know, there's a lot of job openings that are not being filled at the wages that are on offer. Rob had a couple of reasons for this in his viewpoint, at least. And one of them was

that it can be a better deal for former restaurant workers to just stay at home right now and take unemployment money from the government. Remind us how unemployment money from the government is working right now. Yeah, I mean, there are different ways to sort of say this point, depending on who you want to sound sympathetic to. But the government created an unusually generous unemployment insurance program. You get sort of what you would normally qualify for in your state, plus 300 extra dollars a week. And the idea of that bonus unemployment insurance is that the economy was shutting down because of public health restrictions. So the kind of worries that we would normally have about the intensity of people's job search, Congress wasn't as worried about. What they wanted to do was make sure that people could survive

a prolonged period of time when work might not be available because of the virus. We now do have a situation where that is, whether you think it should be the policy or not, it just isn't the policy of the United States of America anymore that we are trying to shut down the service sector. We're trying to get it reopened, right? Every state is lifting restrictions as vaccines have rolled out. But the UI program that we have was designed really with the shutdown period in mind. So there's a kind of mismatch,

right? So if you want to say this, you sympathize with the small business owner. You say, well, we're paying people so much to stay home, they don't want to take the jobs. You sympathize more with the workers. You say, look, the virus isn't gone. People have problems with their childcare. People have reasons to want to stay home, and UI is making it possible for them to survive while doing it. From an economic point of view, though, those are two ways of saying the same thing, right? Which is that we created a program that's designed to make it so that people can survive comfortably for the next several months. And that's challenging for people who are trying to get their businesses open.

Restaurant Rob says he's been struggling to compete with unemployment benefits. It sounds like he'd offer higher wages if he could even find people to offer them to. Are we seeing other small and big businesses jack up wages as a response? Yeah, I mean, you see very clearly that wages in the restaurant sector have gone up a lot over the past couple months. Chipotle says it's increasing its wages to an average of $15 an hour by the end of June. McDonald's announcing this morning it's raising hourly wages at its company-owned locations as it looks to bring on 10,000 workers over the next three months at just over 650 stores. Tonight, restaurants like 54th Street Grill and Bar are upping the ante,

offering a $500 sign-on bonus. You know, I saw a drive-thru at McDonald's in Pennsylvania where they say, well, we're offering $11.50, plus you get paid time off after a year. And from the standpoint of a McDonald's in rural central Pennsylvania, that's a very generous compensation package. Now, in terms of like, you know, you're a progressive person, you're like, what are people owed by society? You may say that's really not so great. But again, relative to what's been happening, wages are up. We just saw Amazon say that they are taking their entry level wage up from $15 an hour to $17 an hour. So companies that are really flush, you know, are reinvesting that money into the

workforce. But what we're seeing is an unusual situation where wages are going up, even though the unemployment rate is high, right? There's not in absolute terms, nobody to hire. There are lots of unemployed workers. They're just not filling the jobs. Right. I mean, I saw this quote in an article about the labor shortage where a former restaurant worker who has hesitated to go back to work despite getting offers said something like, unemployment benefits have been like collective bargaining. They made a union out of all of us. Has the labor shortage and the pandemic been ultimately a good thing for U.S. workers? Like McDonald's is offering paid time off after a year. Amazon's raising wages. Do workers now have more leverage than they used to? I mean, it has had some real benefits. And I think that a sustainable economy of full employment will have really big benefits for workers, right? If you have low unemployment for a period of years, you're going to see workers have leverage like never before. You're going to see wages go up.

You're going to see working conditions improve. My concern about this would be that it's a little bit artificial. We're talking about a program that expires at the beginning of September so that we're seeing some people sort of reaping gains. Like, for example, if you're a teenager, right, if you're not eligible for unemployment insurance, but you have some free time on your hands, this is a great time to go find a job compared to how it normally is for people without work experience. But, you know, if you stay out of the labor force, you know, for whatever reason, and wage rates go up, but companies then can't hire as many people at the new higher wage, maybe the bottom is going to fall out in September, right? Maybe prices are going to go up, and then people aren't going to be able to buy complementary goods, right? So if you can't hire people to do an extra shift at the lumber mill, then construction

has to shut down in new home building, then rents go up, right? You can have different kinds of problems. So I think that we're seeing a situation that has some real upside for some people, but it's not the same thing as a sustainable foundation for prosperity, which is hopefully what we'll get to next year. And so because these unemployment benefits will expire in September, surely Democrats and Republicans have been talking about how to get people back to work. Do they have similar plans, different plans? What? A lot of Republican governors now are saying they're going to opt out of this program. Well, it's time for Tennessee to get back to work.

That's coming straight from Governor Bill Lee, who announced today the state will opt out of several federal unemployment benefits by July. Arkansas's Governor Asa Hutchinson has just directed the Division of Workforce Services to end the state of Arkansas's participation in the federal supplemental. About 28,000 Utahns will be impacted by the governor's decision to cut off federal pandemic... It's a joint state-federal program. You can just turn down the federal dollars, cut people off of the extra money,

try to sort of coerce them back into the workplace. I see why they are doing that. I think it's understandable and that there is some evidence in the data to support them. At the same time, it seems pretty cruel to me, right, to decide, OK, well, my solution to economic woes is I'm going to take away a lifeline to low income families. It doesn't seem very humane to me. And so Democrats are resisting that kind of move.

What I think would be interesting is to say, you know, can we keep giving people these financial supports but not create the situation where they lose their money if they go back to work? Because that's a little bit perverse. Is anyone proposing that? So, yeah, Ben Sasse has a bill that he's introduced to the United States Senate that would take the money and sort of give people a $3,000 bonus if they go back to work. We don't want to create these perverse incentives where people have to choose between doing beneficial things for their neighbor and their community and putting bread on the table. We've also seen a couple of governors in Montana and Doug Ducey in Arizona. They are sort of taking away unemployment insurance benefits, but they are also taking

some of the federal money from the American Rescue Plan, and they're using it to provide people with back-to-work bonuses to try to do this in a little bit of a more humane way. Rather than paying people not to work, we'll be offering a one-time bonus of $2,000 to any eligible Arizonan who returns to the workforce and gets a job. Another thing that you could do is just tell people, look, we're going to just treat this as a weird situation. You can just keep your UI benefits whether or not you're unemployed, right? So you'll get your benefits through September no matter what happens, but go get a job if you want to. Wow.

And that would leave people better off than they are right now. It would address small business owners' biggest concern about being able to find workers. It would be a little bit, quote unquote, wasteful. You know, you'd be spending some money that's maybe unnecessary. I think it's a lot more humane, but you would need some kind of new legislation. Is there potential for people to game either of those plans and to try and like get a job, get a bonus, quit the job? Can the government police this? Would they have to?

You would have to police it to some extent. I mean, I think the other way you can game the current situation, which, you know, I don't want to like blow the whistle on anyone, but I have heard stories of people who are working for cash while continuing to collect unemployment insurance. Sure. I don't want to be like too hard on anyone. It's a natural consequence of how the program is structured. Yeah. We've had people working off the books, you know, for different reasons for years in America. You know, there's no totally foolproof system. But the point is, I think we created this generous unemployment insurance program for a reason. It was a hedge against sort of public health catastrophe this September. Congress didn't know at the time they were writing the rescue plan whether they would be successful in increasing the pace of vaccinations. But they were right.

And so the Biden administration likes to brag about their successes on the pace of vaccinations. But they were, right? And so the Biden administration likes to brag about their successes on the public health front. And I think rightly so. But it follows from that, that this kind of economic policy that was designed to be a rescue for a country whose economy was shut down is just not super appropriate to the situation that we're facing this May. At the same time, you know, I would say to Republicans who are freaking out, we are talking about a program that expires in September. So it's like, how, like, how bad can it be? You know, this is a big, we cover the news. This is a thing that is happening in the news right now. I don't think we're going to look back 50 years from now and be like, oh, Chipotle was closed six weeks longer than it needed to be and say like, oh, that's the tragedy of the COVID era.

Well, speaking of looking back at all of this, I mean, have we learned something from this massive experiment of giving people tons of money? You know, the former president got on board with it. The current president got on board with it even further. What's the takeaway? I mean, we were much more successful than I think most of us thought was possible at avoiding severe economic hardship during this pandemic. We had hardship, obviously, but it was mostly related to the virus itself. Some people fell through the cracks, but by and large, you know, incomes were sustained. We're now coming out of the pandemic. We're talking about maybe nobody wants to come work at a Chick-fil-A when, you know, I thought 14 months ago we might be talking about,

you know, widespread poverty, huge spike in hunger. And we've avoided those kind of economic worst cases. And now we're dealing with the problems that we do have, which are real. But can the bar staff up now or is it going to wait until the fall is a pretty good problem to have compared to where we thought we might have been. so matt iglesias you can find his newsletter slow boring at slow boring.com you can find his newsletter Slow Boring at slowboring.com. You can find the Weeds podcasts wherever you listen to this one. Come here If you Come here Well I will be you