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‘Catastrophe’ looms for economy: Labor Secretary Marty Walsh

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

Erin Scott | Reuters

There has been much talk of impending layoffs and, according to some recent surveys, up to half of large employers plan to cut labor costs as the economy slows. But U.S. Department of Labor Secretary Marty Walsh doesn’t see recent job gains reversing, according to an interview with CNBC’s Labor Summit on Tuesday.

“I still think we’re going to have some job gains at the end of this year, early next year. A lot of people are still looking for different jobs,” he told CNBC’s Kayla Tausche during the virtual event. “We’ve seen a lot of movement over this last course of the year. People are leaving their jobs, getting better jobs, and I’m not convinced yet that we’re heading towards that.”

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

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

A House investigation released Tuesday found that the nation’s 12 largest employers, including Walmart and Disney, laid off more than 100,000 workers during the latest pandemic recession.

Walsh said that in a slower economy, the federal government’s infrastructure act will support job growth in sectors such as transportation. “Those funds are there. … if we had a downturn in the economy, those jobs will keep people working during a tough 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 there’s a way to do that by creating good opportunities for people to have opportunities to get into the middle class, and not enough people in America are working in those jobs, quite honestly. …I think there’s a lot of Americans out there right now who’ve been through the last two years, a lot of worry in the pandemic, they were working in a job maybe minimum wage, maybe they had two or three jobs. Really, I think the best way to describe it’s a middle class job is a job you can do, a job, get paid well, so you don’t have to work two or three jobs to support your family.”

From a political standpoint, 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 think families can raise their families on more than $7, on the minimum wage in this country,” he said.

But Walsh conceded that legislation to raise the minimum wage, which was stalled in the Senate, has an uncertain future ahead of the midterm elections.

Here are some of the other major policy issues the Secretary of Labor 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 — “to get immigration blocked entirely” — is the one of the biggest mistakes the nation can make in labor policy.

“A party shows pictures of the border and meanwhile, if you talk to companies that support these people in Congress, they say we need immigration reform,” Walsh said. “Every place I’ve been in the country and I’ve talked to every big business, every small business, every one of them says we need immigration reform. We need comprehensive immigration reform. They want to create a pathway for citizenship in our country, and they want to create better pathways for visas in our country.”

Demographics of the U.S. working-age population are concerning, with baby boomer retirements set to accelerate in coming years, compounded by a peak among high school graduates by 2025, limiting both the total size of the next generation labor pool and the 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 talk about worrying about recessions, we talk about inflation. I think we’re going to have a bigger disaster if we don’t attract more workers in our society and we do it through immigration.”

I won’t say if Uber and Lyft are in the crosshairs of new gig economy regulations

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

Walsh wouldn’t even say if they’re the target of regulation.

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

He mentioned a few of the jobs that would likely be covered, and one of them overlaps with the Uber, Lyft, and DoorDash business models. “We have a lot of companies in this country, like dishwashers and delivery drivers in areas like that, where people work for a company that other employees of that company are employees, and they label them independent contractors. So we’re going to look at that. We’re in the process of developing the rules now. We’re taking the comments into account 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 flexibility doesn’t sit well with him. “Flexibility is no excuse…pay someone like an employee. You can’t use that as an excuse.”

Unionization will finally win in 2023, 2024

Walsh, a union book hauler, said public support for unions should be matched by real gains in union ranks over the next two years. The most recent survey available from the Bureau of Labor Statistics showed blue-collar jobs fell by more than 240,000 in 2021, even as US public support for unionization grew and big brands like Apple, Amazon and Starbucks face a growing wave of unionization in stores. and in operations like warehouses, although still marginal in terms of the total number of workers they employ.

“I don’t have the 2022 number, but 2021 was a unique year,” Walsh said. “The numbers went down in a lot of ways because the company unions weren’t organizing, number one, and number two, we had a pandemic and a lot of people retired, left their companies or took their jobs. retirement. Those jobs haven’t been replaced by corporations. … It’s like 65%, 70% of Americans still look favorably on unions … highest in 50 years. I don’t think you will see the benefits of this organization before probably 2023, 2024.”

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

Biden’s Broken Child Care Promise

President Biden promised on the campaign trail to do more for child care; promised to include it in the infrastructure law; promised to include it in a second act after removing it from the basic infrastructure package; then it was removed from this back-up plan.

Walsh said the government must deliver on that promise for families and child care workers.

“Childcare is a basic necessity to reintegrate millions of women into the full-time workforce,” he said.

The recent Women in the Workplace study by McKinsey and finds that women continue to withdraw from the workforce in large numbers, a reversal in labor market gains that began during the pandemic.

“Child care has not been addressed by this country or most states in this country for the past 50 years. The cost is too high for the average family and we cannot retain workers in these industries. We’ve lost a lot of workers in child care because they’re paying them minimum wage or a little above minimum wage,” Walsh said, referring to estimates that 100,000 workers left the sector during the pandemic.

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


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