by Gary Alexander
July 13, 2021
Next week, I’m headed to the 14th annual Freedom Fest, this time held in Rapid City, South Dakota, in the shadow of Mount Rushmore – mostly because Las Vegas officials and Nevada politicians could not allow planning for large gatherings in Las Vegas, where the conference had been held since 2002. Last year’s conference was cancelled for that reason, but I’ve been to all previous Freedom Fests as a speaker, panel moderator, panelist, and film judge – or appearing as John Adams in “1776” or King Arthur in “Camelot!”
Freedom Fest will be held July 21-24 in South Dakota Mark & Jo Ann Skousen (as Franklin and friend), and G.A. as John Adams
In the last two months, in my role as film reviewer, I have seen 20 long and short documentaries and 13 dramatic narrative features, all with freedom as an undercurrent. They are competing in the Anthem Film Festival, founded by Jo Ann Skousen, wife of Freedom Fest creator, economist Mark Skousen. I’ve been reviewing Anthem films since only two or three people watched two or three rather marginal films back in 2011 on the 26th floor of Bally’s in Las Vegas. Each year’s films get better. They’re all good this year.
This year’s films will be shown at the elegant Elks Theater, Rapid City, originally an opera house and movie hall built in 1912, then lovingly restored in 1990. In a nutshell, many of these films have filled me with outrage at the crushing of small businesses and marginal workers in normal times but especially in the Year of Covid. These documentaries interviewed a dozen or so business owners at length, including owners of The Schnitzel Haus in Brooklyn, Legacy Medical Transport in southern Ohio, a family that fishes for swordfish off the Santa Barbara coast, a son of Israeli immigrants trying to keep his mother’s vegetarian family restaurant alive, a former diver and her Asian husband running a training gym for young divers and gymnasts, a man sacrificing all to save his father’s iconic business, and many more.
During lockdown, many big box stores stayed open, but not these small mom-and-pop shops with no clout. Big businesses found a way to keep open by sending workers home or pulling political strings.
This dichotomy comes clear in one film, “Corporate Welfare: Where’s the Outrage?” which covers the massive lobbying power of big firms to destroy smaller competitors. It’s one thing to beat small firms by using “economies of scale,” but in all-too-many cases bigger firms use the muscle power of government to squash the small guy. This is also the theme of a film, “Taking Pole Town,” about how GM used its clout to force the destruction of a tight community in Hamtramck to build a plant that is now defunct.
On Freedom Fest’s opening day, July 21, I will attend a panel covering the life of economist Tom Sowell, who just turned 91. How did this orphan black kid in the Jim Crow south, who never finished high school and didn’t graduate from college until age 28, become America’s foremost economist and intellectual? (You can view that film, “Thomas Sowell: Common Sense in a Senseless World” at the Free to Choose website now, and you can also see their “Corporate Welfare” film sometime in August, at the same site.)
Beware a “K-Shaped” Recovery – A Boom for Most, A Bust for Many Others
The likelihood of 7% GDP growth (best since 1984) or even 8% (best since 1951) this year is fantastic, and we should all celebrate that rapid recovery, but there is increasing evidence that this is a “K” shaped recovery with the wealthy reaping stock market and real estate rewards while many small businesses have gone under, destroying their only American Dream, while others are out of work or not able to recover.
This dilemma is symbolized by something Louis Navellier wrote in his latest Special Letter to clients:
“The Biden Administration’s policies are making the rich richer, but they are having a hard time explaining why 6.8 million jobs have disappeared since the pandemic began, despite record economic growth. The truth of the matter is that the pandemic accelerated U.S. productivity and profitability, which is great news for the stock market. Since economic prosperity has not trickled down to folks that do not own a home or have money in the stock market, there is a lot of finger-pointing about being ‘left behind,’ as well as who is responsible for rising homelessness, rising crime in major cities, and higher food, energy and housing prices. Furthermore, inflation is hurting poor people while inflated asset prices help wealthy people. This means a big change is brewing for the mid-term elections, so that a divided government, which Wall Street prefers, is becoming increasingly likely.”
During the pandemic, tens of thousands of small businesses had to lay off millions of employees. Those small businesses and employees have been slow to return. America has 6.8 million fewer jobs than in February 2020 but we have 9.3 million job openings. Shortages are obvious everywhere, as services are often understaffed or substandard. Companies say they can’t find workers. The unemployment bonuses handed out by the federal government help families but destroy incentive. They offer more for staying home than going to work, but there are other impediments: School closings and the high cost of childcare keep many workers at home. Others still worry about catching Covid or don’t like wearing a mask all day.
Others have simply retired, whether age 55 or 75. Older Americans (age 70 and above) have stockpiled a record $35 trillion in assets, representing 27% of all U.S. wealth, up from 20% a decade ago and equal to 157% of GDP – more than twice the proportion 30 years ago (source: The Wall Street Journal, July 2).
When you look at the raw numbers, you have to shake your head – over nine million Americans say they want jobs and can’t find them, while over nine million jobs are open but not filled. Isn’t that a marriage made in heaven? Don’t those data imply nine million people yearning to match their minds and talents?
In a Wall Street Journal survey last week by Jon Hilsenrath and Sarah Chaney Cambon (“Job Openings Are at Record Highs. Why Aren’t Unemployed Americans Filling Them?” July 9, 2021), we see some of the answers: “Several factors are behind the development: Many workers moved during the pandemic and aren’t where jobs are available; many have changed their preferences, for instance pursuing remote work, having discovered the benefits of life with no commute; the economy itself shifted, leading to jobs in industries such as warehousing that aren’t in places where workers live or suit the skills they have; extended unemployment benefits and relief checks, meantime, are giving workers time to be choosy….”
The July 9 Journal article continues: “A recent ZipRecruiter survey found 70% of job seekers who last worked in the leisure and hospitality industry say they are now looking for work in a different industry. In addition, 55% of job applicants want remote jobs. An April survey of U.S. workers who lost jobs in the pandemic, conducted by the Federal Reserve Bank of Dallas, found that 30.9% didn’t want to return to their old jobs, up from 19.8% last July. Economists call the phenomenon slowing the job market recovery ‘mismatch,’ a disconnect between the jobs open and the people looking for work.” In practical terms, drivers and hotel or restaurant workers can’t “tele-work” from home. They must be in person, in the city.
A Journal study of USPS change-of-address data shows that people have generally moved from dense urban cores to suburbs, smaller towns, and rural areas, where jobs are scarcer. The resulting geographic jobs mismatch is exacerbated by the higher cost of housing in coastal areas, which makes relocation costs prohibitive. (I can tell you that home prices in the Pacific Northwest are now ridiculously expensive.)
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
The Peterson Institute adds that the “quit rate” is at an all-time high: “Typically, one of the hallmarks of a hot labor market is that workers have the confidence to quit their jobs knowing that they will be able to find new and better ones—either directly transitioning to those jobs or by taking a brief break between jobs. In April, 2.7 percent of workers quit their jobs, the highest rate in the history of the BLS series.
Michael Hanson, an economist at J.P. Morgan, said, “People are taking their time to find better matches and that is being in part facilitated by the additional support, the unemployment insurance as well as the stimulus checks.” Many people discovered in the pandemic that they like flexible hours and working from home, according to Betsy Mercado, a senior vice president of human resources. From home, “they are trying to figure out what job is going to provide them with the most income and the flexibility they need.”
We might see a sudden rush for jobs when the unemployment checks dry up on Labor Day(!) but not yet.