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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2022 Annual Theme: Stakeholder Capitalism
Market-Based Solutions to Vital Economic Issues



Employment growth has remained exceptionally strong this year, and September is expected to be another healthy month. Join us for the Kenan Institute’s virtual press briefing at 9 a.m. EDT this Friday, Oct. 7, as we discuss the Bureau of Labor Statistics’ fresh employment report and how it may affect the Federal Reserve’s aggressive reaction to inflation.

A last-minute deal averted a rail strike last week, but it highlights how staffing shortages in the industry as well as in education, hospitality and healthcare are pushing workers to push back, writes The Washington Post. Jobs with long hours and rigid schedules that lack competitive pay and benefits are proving the most difficult to fill, Director of Research Paige Ouimet said. “Running your workers like this – asking them to do 20, 30 percent more because you’re short staffed – it’s very much a short-term strategy,” Ouimet said. “You’re going to keep losing people.”

COVID-19 first caused chaos in our labor markets with the lockdowns of 2020, which sent unemployment rates soaring to all-time highs. It has continued to disrupt labor markets into 2022 as worries about health risks have kept workers at home, exasperating labor shortages. Looking forward, as we learn to live with COVID, we will also have to adapt to the effects of long COVID, when symptoms such as fatigue, difficulty breathing and “brain fog” appear after COVID. In this commentary, I attempt to assess the risk to our labor markets from long COVID.

Labor force participation rose in July and again in August, providing the Federal Reserve a victory in its efforts to boost participation rates closer to pre-pandemic levels, Barron’s reports. Rising prices may be sending some people back to the job market, Chief Economist Gerald Cohen told the publication. “There are help wanted signs everywhere and so you can get to the point where [people] are saying, look there are opportunities out there and let me go take advantage of them,” he said.

Kenan Institute Executive Director Greg Brown discussed the Federal Reserve’s next move after the Sept. 2 employment report showed slowing but still strong job growth. Brown predicted that the Fed, to protect its reputation as an inflation fighter, would more likely overshoot than come up short in using higher interest rates to tamp down rising prices. He also answered questions from the media on how the global nature of inflation limits the Fed’s effectiveness as well as what can be expected for local and North Carolina labor markets.

The Fed is threading a shrinking needle in its attempts to engineer a soft landing for the U.S. economy. Join Professor Greg Brown for a briefing built on the latest employment data and financial market signals, followed by his answers to questions from the audience.

Small-business owners say they’re just beginning to recover from the sudden blow that hobbled many of them during the early 2020 pandemic restrictions. Now mixed economic messages have them wondering what to do next, according to a Washington Post story. “There is so much that’s up in the air, and uncertainty affects small businesses much more so than it does larger ones,” said institute Director of Research Paige Ouimet.

Last month our home state of North Carolina was named “America’s Top State for Business” by CNBC (see the full ranking here). It wasn’t long after when some commentators pointed out that Oxfam had recently ranked N.C. as the worst state for workers. The extreme juxtaposition of rankings made me wonder if this was a coincidence or if there are systematic factors that make states good for businesses and bad for workers. Perhaps “right-to-work” laws, lax worker protection regulation or regional wage differences attract businesses looking to take advantage of areas with weak labor bargaining power. This in turn leads to business growth and thus job migration to states that are less desirable for individual workers. At the end of the day, economic planning should have the best interest of residents in mind when crafting business policy, so it seems worth unpacking what drives the rankings.

July employment numbers suggest that the economy isn’t heading into recession but instead is accelerating as the third quarter begins, Chief Economist Gerald Cohen said during the institute’s monthly economic briefing Aug. 5. “It’s still post-COVID recovery, but … we’ve surpassed the pre-COVID levels by 32,000,” Cohen said, as reported by the Triangle Business Journal.

The U.S. economy added 528,000 jobs in July, an unexpectedly strong number that Kenan Institute Chief Economist Gerald Cohen discussed during the Kenan Institute’s economic briefing Aug. 5. Cohen also answered questions from the media about the shifting balance of power between employers and employees, the labor force shortage and what the news means for North Carolina businesses.

Three institute-associated experts provided analysis for the July 30 edition of WRAL-TV’s “On the Record” news program. In a segment on dwindling child care options in the Raleigh area, Director of Research Paige Ouimet talked about how child care access affects the ability of women to work.

Employment numbers have remained strong recently even as other economic indicators have faltered. We’ll discuss whether the trend continues when the Kenan Institute’s economic briefing returns at 9 a.m. EDT this Friday, Aug. 5, after the Bureau of Labor Statistics releases its monthly jobs report.