While some folks are busy making resolutions, others are making much larger, life-changing decisions. If nothing else, the COVID-19 pandemic has led a lot of people to take a step back and really evaluate their jobs, connections with their families, and where they want to live. The news is constantly talking about job openings and wages, but I think the discussion is much bigger than that. Many of the folks making a change fall into three categories: those who are stepping up, those who are stepping out, and those who are trying something new.
I’m not saying wage isn’t a factor — it is. However, when we look at housing cost as a proportion of wage, I would argue that affordable housing is an even bigger factor than income. Anytime housing expenses exceed 30 percent, you are going to see poverty, homelessness, and people struggling to survive. In Los Angeles, it is not unusual to find households paying 50-80 percent of their income in rent. This makes it tougher for families to weather hardship, health issues, and loss.
There are a number of reasons people have left the workforce: layoffs, health uncertainties, childcare needs, being overworked in understaffed environments, and simply not making enough to live on. According to the Labor Department, almost 40 million workers quit their jobs in 2021, with an average of four million a month in the last six months. Many are simply switching jobs, finding bonuses and higher wage growth outside their current employer. Younger or “prime-age” workers are more flexible in starting over than they were pre-pandemic.
Workers over 55 years old are considered “non-prime age.” They are motivated by health and safety in the age of COVID. Many have been reluctant to return to public-facing jobs where they can catch COVID or have to deal with the politics of mandates and pushback from the public. Another factor for this group has been soaring stock prices and rapid real estate appreciation, creating windfalls that allow them to move to cheaper housing markets while increasing their quality of life. A third factor is time at home, which has led many to start their own small businesses. There has been a flood of folks looking to be their own boss, work from home, and follow up on that business idea they have always considered but didn’t have the guts to pursue.
Childcare cost, having to stay home with Zoom schooling children, and wanting to spend more time with rapidly growing offspring are other factors. Waitlists for childcare are having a dramatic impact on whether workers think it is better to stay in their job with the majority of their wages going to childcare or to quit and be a stay-at-home parent. It may be cheaper to stay home. The Build Back Better bill being argued in Congress is supposed to address the cost of childcare, but who knows whether that will happen and how soon resources can be put in place to create the impact necessary to lower childcare costs.
So, what are the short-term effects? As I mentioned above, employers are beginning to increase wages and offer bonuses and perks to attract workers. Wage elasticity of demand only goes so far in bringing in more workers. Here in San Pedro, there are a number of high-paying restaurants, retail, and hospitality jobs going unfilled due to the COVID risk and public response to restrictions. Life-work balance, flexibility in hours, location, and certainty are also important factors contributing to job satisfaction.
In the long term, San Pedro workers will need to meet the growing demand in the construction trades, leisure and hospitality, nursing and healthcare, professional and business services, manufacturing, and transportation and warehousing. Supporting small businesses and entrepreneurs in San Pedro is part of who we are and helps us keep our money local.
Time will tell how many people will leave the workforce to retire, start small businesses, or get into real estate, only to return to work as employees. I’m confident that workers exploring other work opportunities will lead to a closer connection with family, a better understanding of our values, and a more well-rounded workforce. Couple that with businesses providing a livable wage, more time off, closing the gap between the highest-paid executives and the lowest-paid workers, and most importantly, a real plan to address the cost of housing — then we can return to something more sustainable. spt