A ‘disaster’ is coming for the economy: Labor Minister Marty Walsh

Secretary of Labor Marty Walsh speaks during a news conference at the White House in Washington, April 2, 2021.

Erin Scott | Reuters

There has been much talk of looming layoffs, and in some recent surveys, as many as half of large employers are considering cutting labor costs as the economy slows. But U.S. Labor Secretary Marty Walsh doesn̵[ads1]7;t see the recent job gains reversing, according to an interview on CNBC’s Work Summit on Tuesday.

“I still think we’re going to see job gains going into the end of this year, early next year. A lot of people are still looking at different jobs,” he told CNBC’s Kayla Tausche at the virtual event. “We saw a lot of movement around this last year. People leaving jobs are getting better jobs, and I’m not convinced yet that we’re moving toward that.”

For the Federal Reserve, some level of higher unemployment is necessary to cool an economy that has been bedeviled by persistent inflation. The unemployment rate, now at 3.5%, declined in the latest monthly nonfarm payrolls report. The Fed is targeting unemployment at 4.4% as a result of its policy and higher interest rates.

“We definitely have to get inflationary pressures down,” Walsh said at the CNBC Work Summit, but he added that the way to do that is not layoffs.

A House survey released on Tuesday found that the 12 largest employers in the nation, including Walmart and Disney, laid off more than 100,000 workers in the last recession during the pandemic.

Walsh said that in a slower economy, the federal government’s infrastructure bill would support job growth in sectors including transportation. “That money is there … if we had a downturn in the economy, those jobs will keep people working through a difficult time.”

In the fight against inflation, Walsh said moving people up the income ladder is a better way to help Americans make ends meet than laying them off.

“I think one way to do that is to create good opportunities for people so they have opportunities to get into the middle class, and not enough people in America are working in these jobs, quite frankly… I think it’s a lot of Americans out there right now who have gone through the last two years, a lot of worry in the pandemic, they were working a job that maybe made minimum wage, maybe they had two or three jobs. Actually, I think the best way to describe what is a middle class job is a job you can work, a job, get paid well, so you don’t have to work two and three jobs to support your family.”

From a political perspective, Walsh expressed disbelief that a higher federal minimum wage remains a contentious issue on Capitol Hill.

“It shocks me that there are members in the building behind me, if you can’t see the building behind me it’s the Capitol, who believe that families can raise their families on $7 plus, on the minimum wage in this country.” he said.

But Walsh conceded that legislation to raise the minimum wage, held up in the Senate, faces an uncertain future ahead of the midterm elections.

Here are some of the other big policy questions the Labor Secretary weighed in on at the CNBC Work Summit.

Lack of immigration reform is a “disaster” in the making

Amid one of the tightest labor markets in history, Walsh said the political parties’ approach to immigration — “having immigration completely tied up” — is among the most consequential mistakes the nation could make in labor policy.

“One party is showing pictures of the border, and meanwhile, if you talk to businesses that support these congressmen, they’re saying we need immigration reform,” Walsh said. “Every place I’ve been in the country and talked to every major business, every small business, every single one of them says we need immigration reform. We need comprehensive immigration reform. They want to create a pathway for citizenship into our country. , and they want to create better pathways for visas in our country.”

The demographics of the American working-age population are troubling, with baby boomer retirements expected to accelerate in the coming years, compounded by a peak in high school graduates by 2025, limiting both the overall size of the next generation labor pool and transfer of knowledge between generations of workers.

“We need a bipartisan solution here,” Walsh said. “I’ll tell you right now if we don’t solve immigration … we’re talking about worrying about recessions, we’re talking about inflation. I think we’re going to have a bigger disaster if we don’t get more workers into society ours, and we do that by immigration.”

Will not say whether Uber and Lyft are in line with new rules for gaming economy

A proposed DoL rule on independent contractors hit the stocks of gig economy companies including Uber and Lyft a few weeks ago. The rulemaking is still under review and seeking public comment, and some Wall Street experts don’t expect it to have a significant impact on rideshare companies.

Walsh would not even say whether they are a target of the regulations.

“We haven’t necessarily said which companies are affected and which businesses are affected. What we’re looking at are people who are employees who work for companies who are being exploited as independent contractors. We want to end that, Walsh said.

A ‘disaster’ is coming for the economy: Labor Minister Marty Walsh

He mentioned some of the jobs likely to be covered, one of which overlaps with the Uber, Lyft and DoorDash business models. “We have a lot of businesses in this country, like dishwashers and delivery drivers in areas like that, where people work for a business that other employees of that business are employees, and they label them as independent contractors. So we’re going to look at this. We’re in the rulemaking process now. We’re taking the comments now, and we’ll see when the comments come in what the final rule looks like.”

Walsh added that the idea of ​​an independent contractor wanting to retain its flexibility doesn’t wash with him. “Flexibility is not an excuse … pay someone as an employee. You can’t use that as an excuse.”

Unionization will finally increase in 2023, 2024

Walsh, a union bookkeeper, said public support for unions should be matched by actual gains in union ranks over the next two years. The latest survey available from the Bureau of Labor Statistics showed that jobs fell by more than 240,000 in 2021, even as U.S. public support for unions has increased and major brands including Apple, Amazon and Starbucks face a growing wave of unionization in stores and in operations such as warehouses, albeit still on the margins as far as the total number of workers they employ.

“I don’t have the number 2022, but 2021 was a unique year,” Walsh said. “The numbers went down in a lot of ways because the corporate unions didn’t organize, number one, and number two, we had a pandemic and a lot of people retired, left the business or they resigned. Those jobs weren’t filled. by companies.. . It’s like 65%, 70% of Americans still view unions favorably … the highest in 50 years. I don’t think you’ll see the benefit of that organizing until probably 2023, 2024.”

Other recent polls have found that public support for unions is higher than support from union members for their own labor organizations.

Biden’s broken promise on childcare

President Biden promised on the campaign trail to do more on child care; promised to include it in the Infrastructure Act; promised to include it in another act after dropping it from the core infrastructure package; and then it was dropped from that backup plan.

Walsh said the government must deliver on that promise for families and workers in the childcare sector.

“Child care is a fundamental necessity to get millions of women back into the workforce full-time,” he said.

The recent Women in the Workplace study by McKinsey and finds that women are still opting out of the workforce in large numbers, a reversal of labor market gains that began during the pandemic.

“Child care has not been addressed by this country or by most states in this country for the last 50 years. The cost is too high for the average family and we can’t keep the workers in these industries. We lost a lot of workers in the child care industry because they pay them minimum wage or slightly above minimum wage,” Walsh said, citing estimates that 100,000 workers left the sector during the pandemic.

“We have to respect them and pay them better wages. Anyone watching today who has kids in childcare, you know, you pay 30%, 40%, 50%, 60% of your salary for childcare,” he said. “Many families have made the decision [that], ‘We don’t want to have two people working, one person might want to stay at home, work part-time and cover the costs’, so that problem has to be solved. It is not just an economic issue. It is a human rights issue in our country to get good childcare, he added.

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