The Economist - USA (2022-01-22)

20 UnitedStates TheEconomistJanuary22nd 2022

findworkwillonlyincrease.

Thoseretiringearlymayproveharder

tobudge.Had olderAmericans,aged 55

andup,continuedtoworkattheirpre­pan­

demiclevel,thecountrywouldhavenearly

2madditionalworkerstoday.

Onefactorexplainingtheirreluctance

maybethesurgeinpropertypricesand

stocks,accordingtoeconomistsattheFed­

eralReserve’sbranchinStLouis.Thoseon

thecuspofretirementwithamplesavings

maynowfeellessofa needtopunchthe

clock.Theremayalsobea moretroubling

explanation.Older peoplehavebeenhit

harderbycovid,andillhealth,orthethreat

thereof,coulddeterthemfromworking,

saysBetseyStevenson,aneconomistatthe

University ofMichigan. Eitherway, the

longerolderpeoplestayoutofwork,the

harderit willbeforthemtogetbackin.

A decline in immigrantscompounds

that.Foralltheattentiontoillegalborder

crossingsfromMexico,thebiggerstoryis

missingforeignersinAmerica.Thereare

about2mfewerworking­ageimmigrants

thantherewouldhavebeenhadpre­covid

trendscontinued,accordingto Giovanni

PeriandReemZaiouroftheUniversityof

California, Davis. Roughly half would

probablyhavehaduniversitydegrees,so

their absence hurtshigh­skill and low­

skillindustriesalike.

Anendtothepandemicwouldeasethe

backloginAmerica’svisasystem.Butshift­

ingpoliticalwinds—areluctancetoadmit

asmanyimmigrantsasinthepast—may

captheinflows.Anindustrywitha 10%

higher dependence on foreign workers

thananotherindustryin 2019 typicallyhad

a 3%higherrateofunfilledjobsin2021,

calculateMrPeriandMsZaiour.

OnemajorreasonwhytheFedhadbeen

reluctant to raise interest rates, despite

surging inflation, wasits view thatthe

economywasfarfromfullemployment.

Butwithlabour­forceparticipationstaying

stubbornlylow,ithaschangeditstune.

Lastweek,JeromePowell,theFed’schair­

man,saidAmerica’sbesthopeofboosting

theworkforceovertimewouldbetohavea

long, steady recovery.Forthat, itneeds

pricestability;hencetheimperativetorein

ininflation,whichhit7%inDecember,a

four­decadehigh.Mosteconomiststhink

theFedwillraiseratesforthefirsttime

sincethepandemicinMarch,withatleast

twofurtherrateincreasesthisyear.

Thepandemicaddstouncertaintiesbe­

causeofitsimpactonwherepeoplework.

When restaurantsslashed staff,Amazon

andthelikesweptthemup.Onecommon­

lyexpressedhopeisthatasconsumerde­

mand returns to services, away from

goods,pressuresonpriceswillease.That,

though,isfarfromgiven.“Withouta rise

in labour­force participation helping to

meetthedemand,inflationinthesecond

halfof 2022 mightbefuelledbyrisingpric­

esforservices,”warnsMsStevenson.

Still,theoddsarethatthejobmarket

willbea littlecalmerbytheendoftheyear,

thanks to acombinationofslower eco­

nomic growth, a fading pandemic and

more prime­age Americans resuming

work.Buttheextremetightnesstodaywill

haveoffereda glimpseintothefutureas

ageingdepletesthepoolofpotentialwork­

ers.MsWanamakerdescribestheprospect

asa “perpetuallabourshortage”.Gettingby

withlesshelpwillbethenewnormal.n

Gone for good?

United States, labour-force participation rate

January 2018=

Source:BureauofLabourStatistics

Workers aged

102

101

100

99

98

2018 19 20 21

55 and over

25-5

J

ahedmiahnolongerworriesabout

rent. For much of his time at the State

University of New York at New Paltz, the

23­year­old lived on a tight budget. When

he needed textbooks, he asked his broth­

ers for cash. But since October 2020 Mr

Miah has received $500 a month through

a guaranteed­income programme in

Hudson, New York. He puts most of it

towards housing costs, but he can also

now afford to donate to his mosque and

take his nieces and nephews for ice

cream. “I’m not a financial burden on my

family,” he says.

Hudson’s is one of more than 80 such

schemes across America. They provide

direct cash payments in fixed amounts

that people can spend as they choose.

Most are small and of limited duration:

Hudson’s involves just 75 residents for

five years. 

Results from pilots already under way

show that the payments, unsurprisingly,

improve the lives of participants. After

one year recipients in Hudson reported

greater emotional and physical well­

being as well as better relationships.

Critics fear that unconditional cash

transfers may put people off working. So

far, Hudson and a similar experiment in

Stockton, California, have found the

opposite—perhaps because the pay­

ments give people the flexibility to spend

time on training or job applications. The

Centre for Guaranteed Income Research

at the University of Pennsylvania is

assessing several of the programmes,

and hopes to publish more findings later

this year. 

Unlike a universal basic income,

which would give money to everyone,

guaranteed­income programmes gener­

ally target poor people. Hudson’s pilot

selected participants based on factors

such as gender and race. One in Chicago

focuses on former prisoners. 

Scaling up across America would be

hard. Permanent programmes could well

affect the willingness to work. And find­

ing the money for bigger schemes could

prove impossible. Some cities, including

Pittsburgh and Minneapolis, used federal

funds from the American Rescue Plan,

the stimulus bill passed last March, for

their experiments. But most programmes

have relied on charitable gifts. Jack Dor­

sey, who founded Twitter, for example,

contributed $15m to Mayors for a Guaran­

teed Income to help fund pilots.

For now, supporters can celebrate the

positive effects for people such as Mr

Miah. He plans to move to New York City

with his brother and work as a medical

assistant. He will continue to receive the

cash payments for the next four years.

Instead of asking his older sibling for

money to cover books, Mr Miah will help

him pay the mortgage. “We can support

each other,” he smiles. 

Guaranteed-incomeprogrammes

Money, money, money

H UDSON, NEW YORK

The pilot schemes look promising. Scaling them up will be harder