Barry Sternlicht Calls On The Government To Pay People To Go Back To Work
The labor force in the U.S. isn't recovering from the coronavirus pandemic in the way that major employers and economic leaders would have liked, and now they are on the hunt for solutions.
Despite the federal supplemental unemployment benefit program being suspended at the beginning of September, hundreds of thousands of people who either left or lost jobs during the pandemic haven't returned to work, primarily in lower-paying jobs like the service industry. The lack of workers to fill low-paying jobs threatens to cripple the economy, Starwood Capital Group Chairman Barry Sternlicht said in an interview with CNBC on Wednesday.
“The whole service economy is in a crisis, whether it’s a restaurant, a pizzeria, a laundromat, a small shop," Sternlicht told CNBC, adding that small-business owners stand to suffer the most. "Amazon can raise wages, no problem."
With total nonfarm employment rising by only 194,000 jobs in September, as much as 300,000 below some projections, and a pandemic-era low of 293,000 new unemployment claims in the week ending Oct. 9, it has become clear that a surprising number of people are choosing not to re-enter the job market.
In the Bureau of Labor Statistics' August Job Openings and Labor Turnover Survey released on Tuesday, the number of openings on the last day of August stood at 10.4 million, slightly fewer than in July but otherwise more than it has been in years. Also during August, a record 4.3 million people quit their jobs, or 2.9% of the month's total separations, also a record, according to JOLTS data.
Low-paying jobs indeed make up the bulk of the difference between pre-pandemic and post-pandemic employment rates, as high-paying jobs are within 1% of the pre-pandemic rate and lower-paying jobs are at 6.5% less.
If eliminating payments for those without work didn't send more people back into the labor force, then the answer must be to financially incentivize people to get jobs, Sternlicht said. He said that the financial assistance elements of the American Rescue Plan, President Joe Biden's stimulus bill from the spring, are sending a message that people can stay at home and live on "federal programs and state programs."
Workers have been going on strike this month in numbers that haven't been seen in a generation — over 100,000 workers, from John Deere factory employees to Hollywood set crew, have voted to go on strike in the past couple of weeks, The Hill reports. The vast majority of unions that have voted to strike have done so in protest of what they call insufficient wages and/or health benefits.