A ‘catastrophe’ is coming for economy: Labor Secretary Marty Walsh

There has been a lot of talk about layoffs, and according to some recent surveys, as many as half of large employers are considering cutting labor costs as the economy slows. But US Department of Labor Secretary Marty Walsh doesn’t see recent job gains reversing, he said in an interview on CNBC’s Work Summit on Tuesday.

“I still think we’re going to have a job gain as we go into late 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’ve seen a lot of movement in this last course of the year. People are leaving jobs, getting better jobs, and I’m not sure yet where we’re headed.”

For the Federal Reserve, some level of high unemployment is necessary to cool down an economy plagued by persistent inflation. Unemployment, in the latest monthly nonfarm payrolls report, is now down to 3.5%. The Fed is targeting unemployment of 4.4% as a result of its policy and higher interest rates.

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

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

Walsh said that in a slowing economy, the federal government’s infrastructure act would support job growth in areas including transportation. “That money is there. … If we have a downturn in the economy, those jobs will keep people working during tough times.”

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

“I think one way to do that is by creating better opportunities for people so they have opportunities to get into the middle class, and there aren’t enough people working in those jobs in America, quite honestly. … I think there’s a lot more. Americans out there right now who have been going through the last two years, a lot of anxiety in the pandemic, they were working jobs that were probably making minimum wage, maybe they had two or three jobs. Really I think that’s the best way to describe it. What a way. A middle-class job is a job you can work, one job, that pays well, so you don’t have to work two and three jobs to support your family.”

From a policy perspective, Walsh expressed disbelief that a higher federal minimum wage is 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 $7-plus on the minimum wage in this country.” he said.

But Walsh acknowledged that legislation to raise the minimum wage, which has been held up in the Senate, has an uncertain future ahead of the midterm elections.

Here are some of the other key policy issues the Labor secretary considered at the CNBC Work Summit.

Amid one of the tightest labor markets in history, Walsh said the political parties’ approach to immigration — “immigration to everyone” — is one of the most consequential mistakes the nation can make in labor policy.

“One party is showing pictures of the border and meanwhile if you talk to the businesses that support those congressmen, they’re saying we need immigration reform,” Walsh said. “Everywhere in the country I’ve gone and 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 to citizenship in our country. , and They want to create better pathways for visas in our country.”

Demographic data on the U.S. working-age population is concerning, with baby boomer retirements expected to accelerate in the coming years, limiting both the total size of the next-generation labor pool and the peak in high school graduates by 2025. Transfer of knowledge between generations of workers.

“We need bipartisan reform here,” Walsh said. “I’ll tell you right now if we don’t solve immigration … we’re talking about worrying about recession, we’re talking about inflation. I think we’re going to have a big disaster if we don’t. In our society. Get more workers and we do that through immigration.”

A proposed DoL rule on independent contractors hit shares of gig economy companies including Uber and Lyft a few weeks ago. The rules are still under review and seeking public comments, and some Wall Street pundits don’t expect them to have a significant impact on rideshare companies.

Walsh also would not say whether they are the target of the rulemaking.

“We haven’t necessarily said which companies are affected by it, and which businesses are affected by it. What we’re looking at are people who are employees who are working for companies who are being taken advantage of as independent contractors. . We want. to end it,” Walsh said.

He mentioned some 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 occupations in this country, in areas like dishwashers and delivery drivers, where people are working for a business that other employees in that business are employees, and they’re labeling them as independent contractors. So we’re looking at this. Going. We’re in the rulemaking process now. We’re taking comments now, and we’ll see what the final rule looks like when the comments come in.”

Walsh added that the idea that independent contractors want to retain their flexibility didn’t wash with them. “Flexibility is not an excuse…pay someone as an employee. You can’t use that as an excuse.”

Walsh, a union-book carrier, said public support for the union 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 shows that labor jobs are expected to decline by more than 240,000 in 2021, even as US public support for unions has grown and big brands including Apple, Amazon and Starbucks face a rising tide of unionization at stores. And in operations like warehouses, even though they are at the margin of the total number of workers employed.

“I don’t have a number for 2022, but 2021 was a unique year,” Walsh said. “The numbers went down in many ways because the companies’ unions weren’t organized, number one and number two, we had the pandemic and a lot of people retired, left their jobs or they retired. Those jobs weren’t backfilled. By the companies. … It’s like 65%, 70% of Americans still look favorably on unions … the most in 50 years. I don’t think you’ll see that planning benefit until probably 2023, 2024.”

Another recent poll found that public support for unions exceeds union member support for their own labor unions.

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 the second act after removing it from the core infrastructure package; And then it was deleted from the back-up plan.

Walsh said the government has to keep that promise to families and workers in the child-care sector.

“Childcare is a basic requirement to get millions of women back into the workforce on a full-time basis,” he said.

A recent Women in the Workplace study by McKinsey and LeanIn.org found that women are still dropping out of the workforce in large numbers, in contrast to the 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 costs are too high for the average family and we can’t keep workers in those industries. We’ve lost a lot of workers. In the childcare industry because they underpaid them. pay wages or slightly above minimum wage,” Walsh said, referring to an estimate that 100,000 workers have left the field during the pandemic.

“We have to respect them and pay them a better wage. If anybody has kids in childcare today, you know, you’re paying 30%, 40%, 50%, 60% of your salary for childcare. “, he said. “Many families have made a decision [that], ‘We don’t want two people working, one person will probably stay at home, work part time and pay those expenses,’ so that problem has to be solved. It is not just an economic issue. Access to good childcare is a human rights issue in our country,” he added.