Workers in America are rethinking who they are and what they want. For the first time in decades, the stars have aligned to give the labor movement a much-needed lift. Will this prove to be a flash in the pan or something more lasting?

 

The share of American workers who claim union membership has been declining for years. There is a myriad of reasons for this decades-long decline. U.S. legislation and the court system has created enormous challenges to forming unions. The transfer of jobs to low-paying countries overseas has also devastated union membership. Labor membership can also be expensive with high monthly dues. In the past thirty years of declining real wages, most workers were grateful to just keep their jobs.  Paying union dues when they had a family to feed was not a high priority.

 

At the same time, the decline of those willing to obtain skills through education or apprenticeship in the U.S. has contributed to a rise in unskilled, service industry jobs. Unfortunately, these jobs suffer from high turnover and minimum wages, and were not a target market of the existing labor union movement.

 

Everything changed with the arrival of COVID-19. The pandemic ushered in massive unemployment, huge safety risks for employed workers in essential sectors, and a wholesale movement towards work-at-home solutions. It was a tiring time for the American worker. And from the ashes a new attitude towards labor was born.

 

Workers employed in "essential industries" who showed up to keep the country running were no longer taken for granted. Nurses, truck drivers, food industry workers and more became the new American heroes. Local media outlets, politicians, and even the White House honored and featured ordinary laborers, who made extraordinary efforts in our time of crisis.      

 

But the pandemic was also the match that forced many Americans to rethink their relationship to work overall. We are, for example, one of the few nations where health care benefits are dependent on your employment. As health care risks and unemployment skyrocketed simultaneously, holes in our private health insurance became readily apparent.

 

"Life is too short" became more than just a quaint slogan. Many Americans, obsessive belief that "work first, ahead of everything else" as life's pre-eminent goal, might need to be re-examined. For others, long-buried work issues such as safety, benefits, wages, and more rose to the surface. Burnt-out workers simply decided to resign or retire rather than remain at their jobs. Others are taking a more aggressive approach to the workplace.

 

Unionization, for many, has been perceived as a viable instrument for change. In 2020, union membership ticked up to 11 percent; about half that gain came from the public sector. It is early days, but through November 2021, union actions have increased. The Department of Labor reports 13 labor strikes so far this year, but they only include strikes that include 1,000 workers or more. As such, they did not report, for example, a seven-month strike here in Massachusetts of 700 nurses at Saint Vincent Hospital in Worcester. Under the surface, labor experts say that well over 225 strikes is a more accurate number if you include smaller company workforce actions.

 

The nation's attention, however, has been focused on several high-profile union actions. Some big companies like Amazon, Starbucks, John Deere and Kellogg's, have been targets of the labor movement.

 

Amazon, the country's number two employer, fought a massive campaign to defeat union organization in Bessemer, Ala., this year. The vote to organize was defeated — a major blow to unions nationwide. But soon after, the National Labor Relations Board determined that the company improperly pressured warehouse staff not to join the union. That was no surprise to union organizers. It is a part of an ongoing trend dating back to the 1970s where companies have engaged in unfair labor practices that were largely supported by labor laws favoring employers over workers. However, times are changing

 

Thanks to the pandemic-induced change in attitude towards workers, positive union sentiment, for example, is at a generational high in the U.S., with 68 percent of Americans supporting unions, according to new data from a Gallup poll. The Biden administration is also supportive of unions as are many in the progressive wing of the Democrat Party. The PRO Act, currently being debated in the U.S. Senate, for example, would make it easier for employees to unionize and establish tougher penalties for employers who illegally attempt to stop their efforts. It would also allow gig workers and contractors to organize alongside traditional employees.  

 

These trends, together with the present labor shortage, has strengthened the hand of labor unions going forward. Amazon workers are slated to vote again in Alabama. Kellogg's workers, on strike since Oct. 5, 2021, are still holding out for better wages after rejecting a five-year, 3 percent offer from the company. In November 2021, John Deere's 10,100 production and maintenance workers won their strike with management and signed a new six-year agreement.  

 

Only last week, workers in Buffalo, N.Y., a city with a pro-union history, voted to form a union at Starbucks. It was one of three Starbucks locations in the city that held a vote (the second branch ended in a tie, while the last voted to reject unionization). The workers in the winning branch want better wages, benefits, and working conditions.

 

Observers are watching these actions carefully, given that there are 8,000 corporate Starbuck locations across the U.S. It is the first successful attempt to unionize an unskilled labor force in the leisure and hospitality sectors. As such, a better, union-negotiated contract could spur more unionization efforts across the country.  Whether these union efforts end with a bang or a whimper, bringing the American worker's condition to the forefront of the American agenda, is an absolute positive in my book.

 

Despite the recent scare caused by Omicron, the new novel coronavirus mutation, retailers are hoping consumers will continue spending in December 2021. I like that bet.

 

The National Retail Federation (NRF) is expecting a record holiday season totaling a take of between $843 billion and $859 billion in revenues throughout November 2021 and December 2021. That would be a record year for retailers such as Target, Walmart and Amazon.

 

Time is running out, however, given that we have less than three weeks to go until Christmas Day.

 

Remember, too, that the shopper began picking up gifts earlier than normal this year due to fears of continued supply chain shortages. Many consumers, fearing that popular gifts may be out of stock, or subject to shipping delays, were shopping for gifts as early as September 2021.  

 

The most recent data indicates that the total number of shoppers, as well as average spending, fell during the extended Thanksgiving weekend compared with sales results during the last two years. During the five-day Thanksgiving weekend, almost 180 million shoppers descended on the nation's retailers, but that is six million less than in 2020, and 10 million less than in 2019.

 

The average spend-per-customer came to $301.27, compared to $311.75 last year, and $361.90 in 2019.Cyber Monday saw a 1.4 percent decline versus last year. The NRF indicated that the price point of shopping carts rose by almost 14 percent on Cyber Monday (19 percent for the holiday season in general), as consumers bought more higher-priced, big-ticket items. However, some of those gains were the result of a higher rate of inflation.

 

Sky-rocketing prices due to inflation may have deterred some shoppers. Price pressures have also been partially responsible for reducing the number and amounts of discounted items offered by retailers this shopping season. Between now and the end of the year, the average discount on many items will fade to no more than 5-10 percent, according to some experts.

 

The disappointing numbers between Black Friday to Cyber Monday could also be the result of poor timing.  Most shoppers woke up to the news that South African medical experts announced a new and, possibly more virulent, coronavirus mutation on Black Friday morning. I know my own family's mood was impacted by the news, and any shopping intentions were immediately curtailed for the rest of the weekend.

 

Since then, the stock markets had plunged, fearing the worst, but then rebounded.  Recent data seems to support that this new strain, Omicron, is no worse than the present Delta mutation and that existing vaccines should be effective against Omicron. This should bolster the consumer's confidence that the U.S. economy will continue to grow, jobs will remain plentiful, and spending for the holiday season can continue unabated.

 

Retailers will tell you that we are in the "December Lull." It refers to the few weeks between Cyber Monday and leading up to Christmas Eve when consumers sit on their hands, feeling somewhat shopped out. That does not mean the consumer is finished shopping, they are just waiting for their second wind.

 

I am guessing that about 50 percent of holiday shopping is in the bag, but that still leaves half of America's gifts to buy. For me, I'll put my faith in the consumer who wants to celebrate a better world by spending — thanks to the safety provided by vaccinations.

 

On Tuesday, Nov. 30, during testimony before the U.S. Senate Banking Committee, Jerome Powell, chairman of the Federal Reserve bank, did an about face on monetary policy. Powell appeared to take on a new mantle, that of the nation's chief inflation fighter, casting aside his former dovish stance towards continued easing of monetary stimulus. Investors are asking "what changed?"

 

"We're now looking at an economy that's very strong and inflationary pressures that are high," Powell said. He went on to say that it might be "appropriate to wrap up our purchases a few months earlier."

 

Powell was referring to the planned tapering of the Fed's monthly purchases of fixed income assets. Since March 2020, the Fed has purchased at least $120 billion in Treasury bonds, and mortgage-backed securities as part of an emergency monetary stimulus program to combat the effects of the pandemic on the economy.

 

Last month, the Fed, after months and months of preparing the market for a purchase reduction, finally announced they planned to reduce purchases by $15 billion per month until the purchase program ends sometime next summer. Investors, having taken that on board, were suddenly told this week that the timetable may be accelerated.

 

For weeks, central banks have been struggling with rising prices throughout the global economy. Several nations have already taken steps to rein in inflation by raising interest rates. Here in the U.S., the annual inflation reached its' highest level in 30 years two months ago. As inflation continues to climb and spread throughout the economy, the pressure for the Fed to do something has mounted.

 

Inflation, like almost everything else in this nation, has become a political football. Republicans have used the fear of inflation to scuttle the administration's Build Back Better spending proposal. At the same time, Democrats have argued that pulling back support for the economy until unemployment returns to its pre-pandemic levels would be a mistake. As it stands, the nation has recovered about 75 percent of the jobs lost, but there are still millions of Americans that have yet to return to the labor force.

 

The fly in the employment ointment continues to be the coronavirus. Each new variant of the virus delays further gains in labor force participation. Over the Thanksgiving weekend, for example, another variant called Omicron, presented itself with the first case discovered in California. Depending upon the outcome of this new threat, the risk to inflation could rise as supply chain problems worsen throughout global economies.

 

At this point, however, inflation is increasing its hold on more and more areas of the economy, regardless of the supply chains problems. "I think the risk of higher inflation has increased," Chairman Powell said, adding that he fears inflation will persist "well into next year."

 

Powell's testimony before Congress was his first public appearance since President Biden nominated him for a second term. As I mentioned, inflation has become a political problem, especially for the president. Was it an accident that Powell's stance on inflation altered just a week after his nomination?

 

No one knows what the two men discussed during their meetings, but it doesn't take a rocket scientist to imagine that the issue of inflation came up. Some think that Fed vice chairman, Lael Brainard, lost out for the top spot because she was perceived to be a little less hawkish on inflation.

 

Whether political or not, Jerome Powell's decision to tighten monetary policy in the months ahead, while the coronavirus continues to be a serious issue, heightens the risk to investors in the future. 

 

Consumers are making up for last year's subdued Thanksgiving holiday. Air travel has jumped. Traffic on the roads is expected to be heavy. Grocery stores are crowded, and families are getting back together again all over the country. Hurrah!

 

As most readers know, last year's holiday was a bit of a dud largely because of the pandemic. Fewer people travelled. Instead, many of us decided to play it safe. Across the nation, family members decided to remain home, avoid the possibility of contagion, and postpone celebrating together until this year. That was a smart decision. In the meantime, the coronavirus cases have declined, vaccinations rates have risen, and America has reopened its borders to vaccinated foreign travelers

 

For tourists and other visitors, New York City, Las Vegas, and Disney World top the list of favored holiday destinations during Thanksgiving week, according to Trivago, a leading global accommodation search platform. On the domestic front, Triple A is predicting that 53.4 million people plan to travel during the holiday (myself included). That is up 80 percent from last year. This uptick in travel is likely to cause some chaos on the roads, rails, and airports, but nothing out of the ordinary for one of the most traveled holidays of the year.

 

Inflation and supply chain issues, however, are presenting a variety of obstacles for consumers.  Higher gasoline prices are raising the cost of travel. The average price at the pump is around $3.40 a gallon for this week, which is the highest price in seven years. The supply chain shortages in the semiconductor sector have hurt new vehicle production overall, which has led to a scarcity of rental cars. Car rentals prices (if you can find one) are through the roof.

 

Thanksgiving dinner will also be more expensive, according to the American Farm Bureau Federation.  A dinner for 10 people is pegged at $53.31, which is a 14 percent increase from last year. That sounds awful high, but last year prices were depressed. The average total cost of that same dinner in 2020 was $46.90. That was a $2.01 decrease from 2019, and the lowest price tag for a Turkey Day dinner since 2010.

 

Supply shortages have also cropped up on the grocery shelves. Canned jellied cranberry sauce, produced by Ocean Spray, a cooperative of more than 700 farms, may not be easy to find this year. It seems that there is a can shortage that has forced the cooperative to switch can sizes. The disruption created a scarcity of the Thanksgiving staple just in time for the holiday. Supplies of cold storage frozen turkeys are also at their lowest level ever. Prices for items such as pie crusts, dinner rolls, veggie trays, and fresh cranberries have seen double-digit increases. The good news, however, is that stuffing mix, for some reason, suffered a 19 percent price decline.   

 

Consumer data indicates that shoppers also hit the grocery stores somewhat earlier this year to get ahead of rising prices and worries that there might be product shortages. Shoppers have also been switching to lower price brands and are visiting multiple retailers in search of lower prices. Count me as guilty of all the above.

 

As a side note, I will be visiting with family for the holiday and staying over into the weekend. As a result, I won't be posting my usual Friday market column this week. To all my readers, have a Happy Thanksgiving.

 

The U.S. labor shortage is hitting the public education sector hard. Yes, COVID-19 and its mutations have had a lot to do with the lack of teachers, but the problem predates the pandemic. In just the last two months, 65,000 public education employees left the industry.

 

Across the United States, in October 2021, there were 575,000 fewer state and local education employees than in February 2020, according to the latest employment report of the Bureau of Labor Statistics. The pandemic, in some ways, was simply the straw that broke this camel's back.

 

Stagnant wages, or worse, falling wages, have beset the teaching industry for years. In 2018, for example, the wage gap between teachers and a comparably educated U.S. workforce was roughly 21 percent. Twenty-five years ago, that same wage gap was only 6 percent, but beginning to grow. And while most teachers, like everyone else, have enjoyed yearly wage gains of about 0.7 percent, that is less than half the average annual gains for the rest of the civilian workforce.

 

The pay issue extends beyond the teachers, however. Support staff and school bus drivers have had the same issues. In today's strapped labor market, public education support workers have a choice.  Why continue to file school records, answer phones, or maneuver a bus load of kids when private sector offices and trucking companies are paying far more (with benefits) for that labor?

 

As you might imagine, fear of COVID-19 and continued stress brought on by the pandemic provided the impetus many teachers needed to make the decision to retire, or simply quit. Some hoped that as the pandemic waned, teachers and support staff would return, but that has not been the case. As a result, schools are making do where they can.

 

Some schools are continuing and extending their efforts to provide virtual learning. Others are shortening teaching hours, or in some cases, simply closing for a day or two per week. A school administrator's worst nightmare today is finding substitutes for a teacher on holiday, sick, or who enters quarantine after testing positive for the coronavirus. Those who might be willing to fill in as a teaching substitute are opting instead for different jobs. That is because temporary teaching wages are so low that cooking burgers at fast food restaurants pays more.

 

Unfortunately, the present demand for teachers is far outstripping the supply.  Less and less college and university students are willing to embark on a teaching career. Many would face decades of repaying student loan debts on skimpy salaries with little or no prospects of ever making ends meet.

 

The public school labor shortage is worse, depending upon geographic location, grades, and subject matter. High schools and middle schools have always been harder to staff than elementary schools. STEM areas (science, math, special education and foreign languages) have always been chronically understaffed and have become more so since COVID-19. The Southern, Southwestern, and Western U.S. have historically struggled with teacher shortages. It is also the case when comparing urban and rural schools, versus easier to staff suburban schools.  

 

Those teachers who have maintained their careers and jobs over the last year or two have had to contend with an overwhelming amount of responsibility during the pandemic. Overworked and stressed, many teachers are in burnout mode with few avenues to reduce their immediate symptoms. And while my heart goes out to this beleaguered group of workers, the impact of this shortage has severe ramifications for the future of education in America.

 

As most readers know, the U.S. continues to slip in educational rankings when compared to the developed world. It is most apparent in science and math. However, we are still perceived as having the best all-around educational system in the world. In order to remain at the top, we need good teachers — well-paid, well-educated people — who are proud and fulfilled in their chosen careers. As a first step, raising wages would seem to me to be a no-brainer.