I don’t think this is the right way to look at it. Or at least, it’s not at all the way I see it.
That first part (the rate would have to go up a lot to force unemployment to go up) isn’t really relevant because the Fed absolutely doesn’t have a goal of forcing unemployment to go up. It’s the opposite - the second part of their dual mandate is maximum sustainable employment. The only reason to believe that they’d crush employment is if they do so indirectly, because they choose to raise rates substantially to achieve their primary goal of stable prices/low inflation.
More generally, I’m not ready to adopt the term labor shortage, and definitely not ready to adopt that term as an obviously bad situation. Right now, the GOP is using that term in a very scary way to suggest that it’s something that needs to be addressed. But the current situation could just as easily be described as worker-friendly - the unemployment rate is exceptionally low and, for the first time in decades, wage growth is better keeping up with productivity growth.
Going back to your original point, I’m not even sure what it means to have a recession in a period with low unemployment and high wage growth, because those seem almost fundamentally incompatible. If a recession does occur, it would almost mechanically have to be accompanied by a drop in employment and wage growth.
Maybe I’m misunderstanding your broader point, but the current situation doesn’t seem weird.
I’ll step back because I think I don’t understand the point you’re making.
The Borgata anecdote seems like a firm very naturally responding to an increased labor cost by reducing their demand for labor. If enough firms do this, it will suppress wage inflation. My only point was that I don’t understand why you view this as a weird situation.
I’m basically saying that having a recession with an extremely tight labor market is a weird situation, at least in the way the vast majority of people think about what recessions are.
Yes, but choosing to forego revenue and possibly/likely short-term profit in order to (hopefully in their eyes) keep the costs of labor lower long-term. Like my point is basically that they were paying those seasonal workers $X per hour, and they could probably have hired someone locally and paid 1.2X or 1.5X or surely 2X and gotten the positions filled while still turning a profit on those rooms they removed from their inventory temporarily.
They decided that letting these rooms sit empty in their busiest season was preferable to giving in to higher labor costs. I’m saying they almost certainly gave up profit.
By not trying to hire those positions, they essentially removed them from the labor market. Which means there could be a lot more unfilled jobs lurking under the surface that aren’t officially vacant jobs, if that makes sense.
In Canada we use the word “pension” when referring to old fashioned pensions that pay a monthly amount for life and also for more common “defined contribution pension plans” like the Americans would call a 401(k). I am talking about our DC pension plan where if the employee puts $1 in we will match it and all the money goes into a trust segregated from corporate assets and each employee has an account with their money in it and they decide how to invest it and the money vests immediately, if they quit the day after we give them their match then the keep it. There is literally no downside to participation other than the opportunity cost of the employee contribution. If they’re just putting that money into a third party retirement savings account with no match then they’re doing themselves a big disservice.
I read that book! It’s a good one, but I don’t think it’s relevant to the current reluctance of millenials to participate in retirement savings plans with an employee match. If I recall correctly Retirement Heist was more about the transition from corporate DB plans to corporate DC plans and how in the 1990s many of those plans had surplus assets that the company kept when they closed the plan.
TBH, I just assumed there would be a little bit more of a catch to it if you exited the company. That’s wild and I don’t get it. I can understand being strapped for cash and not investing. For me it was the combination of a company match and starting to split housing/grocery/transportation costs with my partner that even allowed me to start investing in a 401(k). If there was no match, I probably wouldn’t have invested but that free money is motivating.
In Glorious Socialist Canada the pension law in each province has immediate vesting (I think, there may be some weird thing in Quebec because there’s always a weird thing in Quebec).
I believe the premise is employers shifted from DB (pensions) to DC (401(K)), and in doing do siphoned off all the excess assets. This also shifts investment risk from employer to employee and gives the company a write off at tax time for a good portion of the match.
Yep. Plan providers absolutely fist employees too.
Mine is with Nationwide and the stated expense ratio doesn’t even apply apparently. The actively managed funds show 1%+ and index funds show 0.04% or whatever - and guess what?
When you read the fine print and disclosures there’s really just a flat 0.48% charge regardless of what you choose.
Certainly not now - which is why companies are trying so hard to push people towards lump sum options and the Pension Benefit Guaranty Corpation exists.
They might luck the fuck out with rates spiking but, yes - pension funds were/are absolutely underfunded.
And just wait until insurance companies get more options and ability to sell annuities inside of retirement plans.
