wage increases, supply chain disruption, survivor bias: Planet Money: The Planet Money indicator: NPR
SYLVIE DOUGLIS, BY LINE: NPR.
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STACEY VANEK SMITH, HOST:
Welcome to the Beigie Awards. I am your host, Stacey Vanek Smith.
ROBERT SMITH, HOST:
And I’m the official sidekick, Robert Smith. And this is our favorite time of year. And I’m not talking about fall in New York with all the leaves changing colors.
VANEK SMITH: No, Robert. Fall colors are stunning in everything, but here at THE INDICATOR we only have eyes for beige.
SMITH: Yeah, that magical bi-quarterly moment where the Beige Book falls.
VANEK SMITH: And we’re celebrating the 12 regional Federal Reserve banks coming together with anecdotes from business owners and CEOs in their regions.
SMITH: And the beige October book was full of intrigue.
VANEK SMITH: It really was. And I’ll be honest, Robert, this one gets a little emotional.
SMITH: I blued our Beige Book, you could say
VANEK SMITH: Yeah, you could. We’re right back with the highlights and finalists for the October Beige Book and of course the winner after a few words from our sponsor.
VANEK SMITH: So, Robert Smith, let’s get right to the point, this very colorful beige book. I mean, we’ve seen it all – wages are skyrocketing, businesses are in desperate need of workers.
SMITH: And in a beauty moment from the Beige Book, the Federal Reserve Bank of St. Louis explained how at least one company is dealing with a labor shortage. Quote, “A large retailer was planning to raffle a car for seasonal workers with good attendance.”
VANEK SMITH: You know, Robert, I would like to point out that I have a great turnout.
SMITH: Yeah, but you work from home. You work at home.
VANEK SMITH: I know. And I show up here every day. Where’s my car?
SMITH: We’re going to work on this.
VANEK SMITH: The San Francisco Fed in another of our favorite moments from the beige book. And I have to say, Robert, they really bring it all the time. I feel like I’m in San Francisco, they haven’t won yet. They’re like the Susan Lucci from Beige Books right now.
SMITH: (Laughs) Well, they go last in the beige book, and that can be a problem for them.
VANEK SMITH: That’s right. We may have to read it backwards next time. San Francisco, we love you. And that line really blew us away, and here it is, I quote, “Wage growth has increased further due to increased competition for talent and workers’ willingness to change jobs, with contact with the banking sector characterizing it as a wage war “. War war – I mean, it’s – it’s Beige Book poetry, Robert. It is the poetry of the Beige Book. And really, we’ve seen wages across the country go up to 15%, 20%.
SMITH: Yeah. And we also saw a lot of waiting in this Beige Book, a lot of plans to return to the office or reopen to business, then thwarted by the delta variant. And, of course, companies waiting for supplies or parts or workers. All of this continued to cause delays throughout the economy.
VANEK SMITH: But the winning entry for the Beige Book? It was really one for the books. It actually struck a very moving chord. This Beige Book entry has spoken a lot about the closure of businesses in this neighborhood. Many entrepreneurs retire early, sell their businesses, or even throw in the towel. And here is the paragraph that landed it – I quote, “A dry cleaner shut down on hopes that demand wouldn’t come back. One bar owner was worried because fewer people were staying between 10pm and closing, a period that previously provided a healthy percentage of its profits. “
SMITH: It was a little heartbreaking, so we decided to give the Beigie to an exquisite dramatic work written by the Federal Reserve Bank of Philadelphia.
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VANEK SMITH: Philadelphia, congratulations.
PAUL FLORA: Yeah, thank you, Stacey. We are honored to be here.
SMITH: This month Paul Flora received the award, which incidentally accepted the very first Beigie award in 2018.
VANEK SMITH: And we spoke with Paul a few weeks ago.
FLORA: I wrote the Beige Book 78 times over a period of about 10 years.
SMITH: Paul says he likes the beige book, but sometimes says he doesn’t get the respect he deserves.
DOUGLIS: This has been criticized and I think it’s wrong – it’s funny – isn’t it? – to call it the approach ask your uncle.
VANEK SMITH: (Laughs) Really, the economics approach to your uncle?
SMITH: Uncle Philly. This is who they were looking for.
VANEK SMITH: Uncle Philly. I mean, what if your uncle was an award winning economist?
SMITH: Exactly. So it makes sense to ask your uncle.
VANEK SMITH: Ask your really smart uncle. But what we liked about the Philadelphia Beige Book entry was that it indicated a change – not necessarily an economic change, but a change in the way we live.
SMITH: Yeah. You know the dry cleaners, obviously a lot of their business was dressing for work, you know, button down shirts, ties, suits, dresses. And honestly, even when we get back to the office, we won’t be wearing these clothes anymore.
VANEK SMITH: No.
SMITH: We’re going to wear T-shirts.
VANEK SMITH: Athleisure all the way. All the way athleisure, yeah.
SMITH: And because we’re not dressed well, we’re probably not going out late for drinks. We will do less.
VANEK SMITH: Yeah. And, I mean, maybe a lot less. So Paul points out that the fact that this bar he spoke to sees less people after 10pm – I mean, obviously, it’s not great for this bar, but it also points to a potentially much bigger economic problem. .
FLORA: Another thing to keep in mind is that all of these trends are underpinned by a potential for survivor bias. So if you see a bar, for example, describing their activity is that, you know, it’s a little less than before, they can’t stay open that late, that suggests that the overall decrease in activity is even bigger because some bars have not reopened.
VANEK SMITH: They didn’t.
SMITH: Because a lot of bars have closed. Those who remain, the survivors, should have more business than usual. The fact that they have less means that the trend of fewer people going to bars is more extreme than it seems.
FLORA: You know, without a doubt, the pandemic has made people change their way of life. Sometimes it’s like a coping mechanism. Sometimes it’s just out of sheer fatigue and sometimes through soul-searching.
VANEK SMITH: I’ve never heard an economist talk about soul searching before. I’m kind of – love it. That’s why I love the beige book, words like introspection keep coming up.
FLORA: It’s nicer than saying we’re all exhausted and tired, but that’s part of it. This, hopefully, we will eventually recover. But introspective people can, you know, some people will, you know, it depends what form it takes. So it’s been – it’s been a very difficult time. And, you know, it’s been hard as an economist to deal with – to cope in a certain way. The…
VANEK SMITH: How’s that?
FLORA: Oh, I need to come back to it or not answer it. It’s just that – I’m going to get too emotional.
SMITH: You know, we think of economists as people who just look at numbers and tables and charts, but throughout the pandemic, Paul was talking with real business owners every week, chronicling the losses they have felt, and not just economic losses, but emotional losses.
VANEK SMITH: Yeah. I mean, they were people all over his area. He had spoken with many of them for years and years. And many of them were losing their businesses, their jobs, their livelihoods – as well as friends and family.
FLORA: It was just totally – you know, I don’t think I’ve worked harder in my life. And…
VANEK SMITH: What kind of hours did you work?
FLORA: What I – whatever the cost. I did not have time to exhaust myself. It came – it comes later (laughs).
VANEK SMITH: Well, all of that hard work earned Paul and his team the October Beigie Award. And it’s given us all a lot to think about, you know, that – a little tangled in the beige.
SMITH: Congratulations to everyone at the Philadelphia Fed for an incredible entry in The Beige Book. And really, we would like to raise a drink to all the Federal Reserve bankers across the country who are working so hard to collect this data.
VANEK SMITH: Stay beige, my friends.
SMITH: Thanks for joining us for the Beigie Awards. And good night very early.
VANEK SMITH: Another trend that we saw a lot in the Beige Book – people were quitting their jobs, a lot of them without having another job in sight. And if that’s you, if you’ve recently quit your job, we’d love to hear your story. Send us a message – [email protected] Or you can tweet us – @theindicator.
This episode of THE INDICATOR was produced by Brittany Cronin, with assistance from Isaac Rodrigues. It was verified by Taylor Washington. Our senior producer is Viet Le. The show is edited by Kate Concannon. And THE INDICATOR is an NPR production.
NPR transcripts are created on time by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative recording of NPR’s programming is the audio recording.