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Vast majority of American workers like their jobs – even as a record number quit them

The narrative of the Great Resignation is that workers hate their jobs and are desperate to quit. The data tells a somewhat different story.

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Surveys suggest job satisfaction is still quite high. Maskot/Getty Images

A record share of American workers are quitting their jobs, thanks in part to a strong economy and a labor shortage.

Does that mean Americans are unhappy with where they work?

The answer would seem to be yes, according to many economists and other observers. That’s the narrative driving the Great Resignation, in which workers are simply fed up with their current jobs and demanding something better.

Survey data I’ve been collecting during the pandemic, along with social survey results from previous years, however, suggests this is far from the whole story. Rather than being motivated simply by dissatisfaction, it appears many of them are simply taking advantage of a strong economy to look around, while for others, the pandemic has prompted them to consider their options.

Are you satisfied?

The General Social Survey, a reputable national survey of American adults, has been asking workers questions about how they feel about the quality of their working life since 2002.

There are actually three key types of questions it asks that help us get at this idea: the level of dissatisfaction with current work, turnover intention and confidence in finding a new job.

Let’s start with dissatisfaction. The question is: “On the whole, how satisfied are you with the work you do – would you say you are very satisfied, moderately satisfied, a little dissatisfied or very dissatisfied?”

In 2002, about 12% of respondents said they were very dissatisfied or a little dissatisfied with their work, a figure that barely changed in subsequent surveys through 2018. In 2021, a tad over 16% said they weren’t satisfied – an increase, but not a big one. And on the flip side, a little over 83% said they were moderately or very satisfied.

This means that by and large the vast majority of Americans – at least according to this survey – express moderate to high satisfaction with their work.

Looking for a change

Turnover intention is another important indicator. The General Social Survey asks:

“Taking everything into consideration, how likely is it you will make a genuine effort to find a new job with another employer within the next year – would you say very likely, somewhat likely or not at all likely?”

My interpretation of a “very likely” response to this question is that it signals an immediate interest in leaving their present job. In 2002, about 19% said they were very likely to try to find a new job soon. Over the years, the share who said this rose and fell a little, but has remained very consistent.

Unfortunately, the survey hasn’t posed the question since 2018, so I partnered with polling company Angus Reid Global to conduct two large national surveys of American workers in November 2020 and November 2021. One of the questions I asked was the one on turnover intentions, though I extended the period of time in which they expected to look for a new job to two years.

As you might expect given the rising quit rate, the share saying they were very likely to hunt for a new position jumped. It rose to 26% in 2020 and to 29% in November 2021.

While it’s likely that my number is a bit elevated just because of the extended time horizon – two years instead of one – the increase is consistent with the Great Resignation narrative that workers are keen to find a better workplace.

But these two figures – job satisfaction and turnover – reveal an interesting paradox: A greater share of people say they are contemplating quitting than express dissatisfaction with their current job. There are several possibilities for why a worker might be happy with their job, yet eyeing a move to another company. Perhaps they’re seeking more status or reconsidering their career, or maybe they’re worried about possible layoffs.

Confidence in the job search

An additional theme in the Great Resignation narrative is that workers feel more confident about finding alternative job prospects – and that’s one reason they have been quitting in droves.

Fortunately, the General Social Survey asks that very question:

“How easy would it be for you to find a job with another employer with approximately the same income and fringe benefits as you now have – not at all easy, somewhat easy or very easy?”

Two years before the COVID-19 pandemic, in 2018, about a quarter of respondents said finding another job would be very easy. I asked the same question in my 2020 and 2021 surveys and found that number had actually decreased to around 22%.

This means that worker confidence or optimism about finding a palatable alternative job has not climbed all that much, making it less likely to be a factor in driving the current wave of resignations.

What’s going on here?

While the data doesn’t show that Americans overwhelmingly love their jobs or anything like that, they do suggest most people like them enough to hold on to them.

Of course, this isn’t the end of the story. The data does show important differences depending on the type of job we’re talking about. For example, workers in the service sector were more dissatisfied with their jobs and much more likely to express an intent to quit than the average respondent.

But all in all, the survey data doesn’t support the common narrative that it’s a “take this job and shove it” economy, in which increasingly unhappy workers are finally sticking it to their managers.

Rather, when you dig down into the data, something different appears: A slice of workers are always considering leaving their jobs – and as the labor market looks brighter, the pent-up impulse to quit kicks in. But the shift in worker sentiment – or at least the way it has been portrayed – seems exaggerated.

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Scott Schieman receives funding from Social Science and Humanities Research Council (#435-2020-1125)

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There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it’s only a matter…

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There Goes The Fed's Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it's only a matter of time before the Fed admits it is unable to rsolve the so-called "last mile" of inflation and that as a result, the old inflation target of 2% is no longer viable.

Then one year ago, we correctly said that while everyone was paying attention elsewhere, the inflation target had already been hiked to 2.8%... on the way to even more increases.

And while the Fed still pretends it can one day lower inflation to 2% even as it prepares to cut rates as soon as June, moments ago Goldman published a note from its economics team which had to balls to finally call a spade a spade, and concluded that - as party of the Fed's next big debate, i.e., rethinking the Neutral rate - both the neutral and terminal rate, a polite euphemism for the inflation target, are much higher than conventional wisdom believes, and that as a result Goldman is "penciling in a terminal rate of 3.25-3.5% this cycle, 100bp above the peak reached last cycle."

There is more in the full Goldman note, but below we excerpt the key fragments:

We argued last cycle that the long-run neutral rate was not as low as widely thought, perhaps closer to 3-3.5% in nominal terms than to 2-2.5%. We have also argued this cycle that the short-run neutral rate could be higher still because the fiscal deficit is much larger than usual—in fact, estimates of the elasticity of the neutral rate to the deficit suggest that the wider deficit might boost the short-term neutral rate by 1-1.5%. Fed economists have also offered another reason why the short-term neutral rate might be elevated, namely that broad financial conditions have not tightened commensurately with the rise in the funds rate, limiting transmission to the economy.

Over the coming year, Fed officials are likely to debate whether the neutral rate is still as low as they assumed last cycle and as the dot plot implies....

...Translation: raising the neutral rate estimate is also the first step to admitting that the traditional 2% inflation target is higher than previously expected. And once the Fed officially crosses that particular Rubicon, all bets are off.

... Their thinking is likely to be influenced by distant forward market rates, which have risen 1-2pp since the pre-pandemic years to about 4%; by model-based estimates of neutral, whose earlier real-time values have been revised up by roughly 0.5pp on average to about 3.5% nominal and whose latest values are little changed; and by their perception of how well the economy is performing at the current level of the funds rate.

The bank's conclusion:

We expect Fed officials to raise their estimates of neutral over time both by raising their long-run neutral rate dots somewhat and by concluding that short-run neutral is currently higher than long-run neutral. While we are fairly confident that Fed officials will not be comfortable leaving the funds rate above 5% indefinitely once inflation approaches 2% and that they will not go all the way back to 2.5% purely in the name of normalization, we are quite uncertain about where in between they will ultimately land.

Because the economy is not sensitive enough to small changes in the funds rate to make it glaringly obvious when neutral has been reached, the terminal or equilibrium rate where the FOMC decides to leave the funds rate is partly a matter of the true neutral rate and partly a matter of the perceived neutral rate. For now, we are penciling in a terminal rate of 3.25-3.5% this cycle, 100bps above the peak reached last cycle. This reflects both our view that neutral is higher than Fed officials think and our expectation that their thinking will evolve.

Not that this should come as a surprise: as a reminder, with the US now $35.5 trillion in debt and rising by $1 trillion every 100 days, we are fast approaching the Minsky Moment, which means the US has just a handful of options left: losing the reserve currency status, QEing the deficit and every new dollar in debt, or - the only viable alternative - inflating it all away. The only question we had before is when do "serious" economists make the same admission.

They now have.

And while we have discussed the staggering consequences of raising the inflation target by just 1% from 2% to 3% on everything from markets, to economic growth (instead of doubling every 35 years at 2% inflation target, prices would double every 23 years at 3%), and social cohesion, we will soon rerun the analysis again as the implications are profound. For now all you need to know is that with the US about to implicitly hit the overdrive of dollar devaluation, anything that is non-fiat will be much more preferable over fiat alternatives.

Much more in the full Goldman note available to pro subs in the usual place.

Tyler Durden Tue, 03/19/2024 - 15:45

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Household Net Interest Income Falls As Rates Spike

A Bloomberg article from this morning offered an excellent array of charts detailing the shifts in interest payment flows amid rising rates. The historical…

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A Bloomberg article from this morning offered an excellent array of charts detailing the shifts in interest payment flows amid rising rates. The historical anomaly was both surprising and contradicted our priors.

10 Key Points:

  1. Historical Anomaly: This is the first time in the last fifty years that a Federal Reserve rate hike cycle has led to a significant drop in household net interest income.
  2. Interest Expense Increase: Since the Fed began raising rates in March 2022, Americans’ annual interest expenses on debts like mortgages and credit cards have surged by nearly $420 billion.
  3. Interest Income Lag: The increase in interest income during the same period was only about $280 billion, resulting in a net decline in household interest income, a departure from past trends.
  4. Consumer Debt Influence: The recent rate hikes impacted household finances more because of a higher proportion of consumer credit, which adjusts more quickly to rate changes, increasing interest costs.
  5. Banks and Savers: Banks have been slow to pass on higher interest rates to depositors, and the prolonged period of low rates before 2022 may have discouraged savers from actively seeking better returns.
  6. Shift in Wealth: There’s been a shift from interest-bearing assets to stocks, with dividends surpassing interest payments as a source of unearned income during the pandemic.
  7. Distributional Discrepancy: Higher interest rates benefit wealthier individuals who own interest-earning assets, whereas lower-income earners face the brunt of increased debt servicing costs, exacerbating economic inequality.
  8. Job Market Impact: Typically, Fed rate hikes affect households through the job market, as businesses cut costs, potentially leading to layoffs or wage suppression, though this hasn’t occurred yet in the current cycle.
  9. Economic Impact: The distribution of interest income and debt servicing means that rate increases transfer money from those more likely to spend (and thus stimulate the economy) to those less likely to increase consumption, potentially dampening economic activity.
  10. No Immediate Relief: Expectations for the Fed to reduce rates have diminished, indicating that high-interest expenses for households may persist.

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One more airline cracks down on lounge crowding in a way you won’t like

Qantas Airways is increasing the price of accessing its network of lounges by as much as 17%.

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Over the last two years, multiple airlines have dealt with crowding in their lounges. While they are designed as a luxury experience for a small subset of travelers, high numbers of people taking a trip post-pandemic as well as the different ways they are able to gain access through status or certain credit cards made it difficult for some airlines to keep up with keeping foods stocked, common areas clean and having enough staff to serve bar drinks at the rate that customers expect them.

In the fall of 2023, Delta Air Lines  (DAL)  caught serious traveler outcry after announcing that it was cracking down on crowding by raising how much one needs to spend for lounge access and limiting the number of times one can enter those lounges.

Related: Competitors pushed Delta to backtrack on its lounge and loyalty program changes

Some airlines saw the outcry with Delta as their chance to reassure customers that they would not raise their fees while others waited for the storm to pass to quietly implement their own increases.

A photograph captures a Qantas Airways lounge in Sydney, Australia.

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This is how much more you'll have to pay for Qantas lounge access

Australia's flagship carrier Qantas Airways  (QUBSF)  is the latest airline to announce that it would raise the cost accessing the 24 lounges across the country as well as the 600 international lounges available at airports across the world through partner airlines.

More Travel:

Unlike other airlines which grant access primarily after reaching frequent flyer status, Qantas also sells it through a membership — starting from April 18, 2024, prices will rise from $600 Australian dollars ($392 USD)  to $699 AUD ($456 USD) for one year, $1,100 ($718 USD) to $1,299 ($848 USD) for two years and $2,000 AUD ($1,304) to lock in the rate for four years.

Those signing up for lounge access for the first time also currently pay a joining fee of $99 AUD ($65 USD) that will rise to $129 AUD ($85 USD).

The airline also allows customers to purchase their membership with Qantas Points they collect through frequent travel; the membership fees are also being raised by the equivalent amount in points in what adds up to as much as 17% — from 308,000 to 399,900 to lock in access for four years.

Airline says hikes will 'cover cost increases passed on from suppliers'

"This is the first time the Qantas Club membership fees have increased in seven years and will help cover cost increases passed on from a range of suppliers over that time," a Qantas spokesperson confirmed to Simple Flying. "This follows a reduction in the membership fees for several years during the pandemic."

The spokesperson said the gains from the increases will go both towards making up for inflation-related costs and keeping existing lounges looking modern by updating features like furniture and décor.

While the price increases also do not apply for those who earned lounge access through frequent flyer status or change what it takes to earn that status, Qantas is also introducing even steeper increases for those renewing a membership or adding additional features such as spouse and partner memberships.

In some cases, the cost of these features will nearly double from what members are paying now.

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