Tight U.S. Labor Market Has Kept Lid on Layoffs

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Workers who get sick with Covid-19 have put pressure on employers trying to get back to work during the Omicron surge

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Continuing claims, which provide an estimate of the number of people receiving benefits, have also fallen in the past to levels seen before the pandemic.

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The Omicron version has pushed Covid-19 cases and hospitalizations in the US to record highs, with economists predicting the wave could lead to a short-term slowing of economic growth.

People out of work for fear of getting sick or getting sick have disrupted air travel, entertainment and other sectors of the economy, while schools have temporarily moved to distance learning.

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“We’re talking about absenteeism at a level where some businesses can’t operate – if you want to call absenteeism the new lockdown,” said Rubeela Farooqui, chief US economist at High Frequency Economics.

Ms Farooqui said absenteeism—staff not working unexpectedly—due to Covid-19 poses a particular challenge to small businesses that may not be able to afford missed shifts, Ms Farooqui said. He said that this could also lead to layoffs in those small firms.

“If you look at your Corner Pizza store, which already struggled with capacity constraints during Omicron, that’s where the risk lies,” Ms. Farooqui said.

Ms Farooqui said the pandemic’s impact on the overall economy has evolved over time, with each case wave lessening the impact. This is because businesses are striving to remain in operation despite the continuing challenges of the pandemic, Ms Farooqui said.

Tracy Wallace, owner of Peacock Wine Bar in Gilbert, Ariz., said she still doesn’t know what time her business will be busy since reopening in September 2020. She said that her only choice during the pandemic is to keep her business open. as much as possible.

“I had to quit watching and thinking about it because it was giving me a lot of anxiety and I could never plan anything.” Mrs Wallace said, referring to the pandemic. “I just had to keep going because otherwise I’d just get stuck and get nowhere.”

The tight labor market has left businesses short of adequate workers at a time when consumer demand has been high. Workers are living on the edge of the labor market and leaving jobs at record levels, pressuring employers to raise wages and increase benefits to attract workers.

Higher wages are a factor in rising inflation, which rose in 2021 at its fastest annual pace since 1982.

“The price-wage movement has already started. Wages have to increase, otherwise you can’t keep your employees, and when you raise your wages, sooner or later you have to raise prices,” said Sung Won Sohn, a professor of finance and economics at Loyola Marymount University in Los Angeles. .

Write Brian Mena [email protected] . Feather

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