Julie Hyman, Myles Udland, and Brian Sozzi break down the driving factors of the disappointing job reports.
MYLES UDLAND: But let's begin our discussion here by looking at the Yahoo Finance Morning Brief. Sam Ro taking the lead over the weekend, as he does, writing about that May or that April jobs report that was a disappointment. 266,000 jobs created last month. Wall Street economists were looking for a million jobs to be added back to the economy. So certainly some questions now about the state of the recovery, the unemployment rate actually ticking up by a tenth. But Sam making the very important point in terms of how you think about this recovery versus the way we all learned to discuss the last recovery.
The one thing we know there is not a short supply, we know is not a problem, is demand. Companies want to hire workers and they cannot find the workers that they want to hire. Now there are many conversations to be had around if they just paid more, maybe they could get those workers. Certainly the management class in general is going to be more quick to blame enhanced unemployment benefits as creating disincentives to work.
But maybe those are the folks who want to pay $8.25 an hour, but if they paid $12, they might be able to get someone in the door, just as an example, right. This is all, we're in the heat of the anecdata cycle as it relates to figuring out where the labor market is exactly at. But Julie, I thought this post from Sam was important, because the main issue after the financial crisis is that there were too many people looking for too few jobs.
The old meme in that crisis was you had doctorates working at Starbucks for $10 bucks an hour when they had thought they'd go into the workforce and easily pull down some kind of six figure salary. That is the exact opposite of the situation today. It creates economic pressures, but they are very, very different ones than what we all learned to talk through during the last cycle.
JULIE HYMAN: You know, and speaking of anecdata, we've talked to a lot of executives here on the show. We've been asking a lot of them about labor shortages, and the way they talk about this labor shortage, I think is also illustrative. Let's listen to what some of them had to say.
DAVID DENO: Our retention levels are very high, our turnover rates are very low. So as our sales have come back and even gone beyond what we expected, we had a very high level of staffing in our restaurants.
JOSE CIL: There's a focus on hiring, there's a focus on creating a great environment in the restaurants so that we can retain talent and we retain our folks to be able to serve guests in the restaurants. It's a continuous and ongoing responsibility and obligation, and we're focused intently on it, and our franchisees are as well.
JOHN ZIMMER: And having such strong demand with riders wanting to get back out there is a good problem to have. But you're right, we're doing a lot to incentivize drivers to get back out on the road.
MIKE GEORGE: We're finding a lot of competition for talented team members. So I wouldn't read too much into this report. I think we're in a good growth mode for the industry.
JULIE HYMAN: So I think one of the themes that came out of those comments, retention, incentives, how we're treating our employees. And as I alluded to higher up in the show, I think there's this discussion now around a reassessment of work, how workers are valuing themselves now that they've seen that there are alternatives out there.
And I also would point to sort of the cultural difference, for example, between the United States and Europe when it comes to work. In a society there that has a much broader social safety net, you traditionally, even when you're not in a recessionary environment, you traditionally see much higher unemployment rates because people there are choosier about the jobs that they are willing to take.
Now will that kind of thing take hold here, that kind of cultural change take hold even after the supplemental unemployment benefits go away? Well, we'll just have to wait and see. But when you have all of these companies talk about raising wages, offering other types of perks to make these places better places to work, I think if you are a labor economist or a labor unionist, for example, this is not a bad transition to be making in this work environment.
BRIAN SOZZI: No, and Julie and Myles, you're right. You have to weigh your choices right now. I think if you're an employee, now is a good time to be an employee if you are, in fact, I think searching for work. And I'm going to use the Chipotle example this morning as an example. They're out, Chipotle, raising wages to $15 an hour. But on the very top of this press release, it says after 3 and 1/2 years, you can become a restaurateur. And that's Chipotle's management program, where essentially you're running a number of restaurants and you're making potentially over $100,000. So in addition to coming into a Chipotle today potentially making $15 or more per hour, you have a clear line of sight to be making over $100,000 a year in a couple of years.
Also managing a pretty large workforce of people and perhaps maybe even someday, going to Chipotle's headquarters and becoming an executive at the company. Now I'm not so sure if you have that same line of sight working at McDonald's. You're flipping a burger and McDonald's offers you offers you $15 an hour to work in California, I don't know if you see yourself running multiple McDonald's or going to McDonald's headquarters at some point and running the company or some form of division. So very different lines of sight depending on the job.
JULIE HYMAN: Well, something else I want to point out. You know, not everybody is going to want that, right, not everyone wants the executive track. I think something though that hourly workers do want, is consistency. And that's been something that's been really challenging to get, whether you're talking about fast food or big chain retail for example. You have consistently heard over the years complaints about getting consistent hours, both enough hours and consistency of timing of those hours, particularly for people who have children and have to worry about child care.
And so you wonder if coming out of this crisis, if workers will have any more power when it comes to demanding those kinds of changes as well. Not just a path to management, for example, but even something as simple as knowing what your schedule's going to be every week so that you can arrange for proper babysitting. I mean, that kind of stuff is really important as well. We'll see if there's going to be a change.
MYLES UDLAND: And you know, we talked and heard about every trend this side of the universe having gotten pulled forward by the pandemic. And there was some of that movement on the labor front to increase benefits, to give employees not only more pay, but the consistency, the general sense of purpose that I think we're talking around here. That was a big second half of the 2010's story, that labor was finally exerting a little bit of leverage over capital.
And so to see this tension come back this quickly on the other side of the pandemic I think, is maybe a pull forward of what, of where certainly a number of people saw the economy heading as we got into the 2020s if there wasn't a pandemic. And so again, perhaps not a total surprise that this is the tension, the clear number one first tension within the labor market as we move through the beginning of the next economic cycle.