Declining savings may force workers off the sidelines
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Illustration: Shoshana Gordon/Axios
The era of excess savings, one of several factors behind the U.S. labor shortage, may be coming to an end.
Driving the news: In a comprehensive study of the worker drought, labor market analytics firm Emsi Burning Glass found the decline in extra cash is a possible impetus for getting workers off the sidelines.
- With only 6.5 million unemployed, the firm estimated that “even if every unemployed person got a job today, a shortfall of well over 4 million workers would remain.”
Why it matters: As of February, there were over 11 million unfilled U.S. jobs, even with COVID-19 in broad retreat and skyrocketing inflation forcing consumers to pinch pennies.
- Consumers have become inured to soaring prices by effectively shopping their way through it, especially by tapping personal credit.
- But Thursday’s data, which showed a drop in inflation-adjusted consumer spending, suggests those pillars of strength are starting to erode.
Falling excess savings, accumulated from various sources during the pandemic and estimated at nearly $3 trillion, is seen luring reluctant workers back into the fray.
What they’re saying: “When looking at personal savings, it shot up last year, but has been working its way back down to equilibrium.” Ron Hetrick, Senior Economist at Emsi Burning Glass said on LinkedIn recently.
- “We are watching those savings rates, as well as credit card debt, to see that eventually people will hit their cap, which is a good sign because it may mean that some people are getting ready to come back to work.”
Our thought bubble: Machines are slowly encroaching on the turf of low-skilled workers.
- The worker crunch is economically unsustainable, and it's feeding a rise of the robots that suggests those jobs might not be available when workers opt back into the labor force.
