A Dozen Reasons To Be Cheerful, Despite Everything

Judging by the headlines, there’s not much to be cheerful about. We are in the middle of a seemingly never-ending pandemic, mental health is deteriorating, political polarization is historically high, the planet is getting warmer, and the spike in inflation dominates the economic news.

But step back a little and the picture becomes less gloomy. In many ways, life in the US is improving. Part of it is because US economic and stock prices’ growth, driven by the tech sector, are, and will continue to be, much stronger than in most other advanced economies. The pie is expanding.

In addition, a very tight labor market and faster wage-growth benefit workers, especially in manual labor and in-person services jobs. The pie is more evenly distributed. And the shift to remote work is allowing millions of Americans to spend less time commuting and to live in larger and better homes.

These trends are likely to continue for years. Here are 12 reasons why life in the US is getting better:

The US is growing faster than most other advanced economies thanks to its tech sector

1.     The tech engine. Since 2017, the US economy has grown significantly faster than most other advanced economies, especially those in Europe. Greater labor productivity and rapid tech sector growth have spurred this. One of the main comparative advantages of the US is in tech, which happens to be one of the fastest growing sectors in the global economy.

2.     Gains in tech companies’ values and stock prices. Tech companies’ owners, stockholders, and workers disproportionately benefit from these gains. In the past five years US households’ financial assets increased by over 50 percent, largely driven by tech company growth. US stock price indices grew much faster in recent years than those in most other countries. Some of the gains will spread beyond stock owners. Tech workers and companies spend a large share of their income on goods and services in the communities in which they live and operate, which will generate jobs and income for all workers.

3.     Tech growth won’t stop. The pandemic has greatly accelerated the shift to online activity and businesses’ and consumers’ digital transformation, which would otherwise have taken years. That leads to faster growth in the global technological demand. It helps that the US dominates the specific tech industries that have been growing rapidly in recent years, such as online shopping and payments, cloud computing services, cyber security, business-related software, social media, online advertisement, and on-demand entertainment content. There’s no sign that this will slow any time soon.

Workers are getting a bigger share of the pie, especially lower-paid workers

4.     Tight labor market is driving wage growth. The share of workers’ compensation in GDP has been growing in recent years, driven by the tightening US labor market and faster wage growth. Underlying it was the baby boomers retiring and a related stagnation in the number of working-aged people. That figure itself declined in 2020 and 2021 – for the first time in US history – and with more baby boomers reaching retirement age it’s not likely to change in the next decade.

5.     Rapid wage growth will continue. US labor shortages during the second half of 2021 were the most severe in recent decades. The reduction in labor supply due to the pandemic drove much of the tightening. Most of the pandemic impact will likely be gone in a year or two, but labor shortages will remain for the rest of the decade. Job growth, especially in in-person services industries, will likely be strong in 2022. By 2023, the unemployment rate will likely reach 3 percent, the lowest in about 70 years. History shows that once unemployment starts declining, it will continue to do so until a few months before the next recession. Therefore, the unemployment rate is likely to remain historically low for the next 5-10 years and a tight labor market will push wages higher.

6.     It’s a workers’ market. Higher wages are not the only way tight labor markets help workers. First, the risk of being laid off is smaller. Second, workers are more likely to switch to better jobs. Third, benefits, other non-monetary job characteristics, and overall job satisfaction tend to improve in tight labor markets.

Wage inequality and poverty are declining

7.     Non-college wages are growing faster. Workers without college degrees have enjoyed tighter labor markets than those with them since 2016. The narrative about slowing growth in the working-age population masks two opposing educational trends: The number of working-age people with a bachelor’s degree increases by about 2 percent annually while the number without bachelor’s degrees, who are willing to work in manual jobs, is shrinking. This is likely to sustain the labor shortage and fast wage growth among manual workers for the next decade. Manual workers’ strong wage growth led to a decline in wage inequality and poverty rates in the past seven years – and will likely continue to for the rest of the decade.

8.     Manual workers can’t work remotely – and will get paid more. Because blue-collar jobs can’t go remote, they will become relatively less attractive. That means that the number of workers entering these professions is likely to shrink and may lead employers to offer higher wages to fill positions.

9.     Greater focus on equity. Corporate America is more focused on equality of opportunity, with business leaders indicating a desire to diversify more. Indeed, US CEOs told The Conference Board in late 2020 that recruiting a more diverse workforce and building a more inclusive culture would be among 2021’s top human capital management issues. That focus may narrow racial wage gaps. The difference between what White and Black workers make started out big and only grew in the 2010s, despite efforts to reduce it. But that trend reversed between 2019 and 2021. More Black workers are finding high-paying jobs, according to The Conference Board research, a possible result of social protests, and a growing commitment of corporate America to racial equity.

Remote work is improving quality of life

10.  Less commuting and bigger homes. At some point in their lives many workers have had to decide whether to live in smaller homes close to their jobs in city centers, partly to reduce commute time, or to live in larger homes farther away. Now they can do both.

11. More geographically distributed high-paying jobs. In the decade or two prior to the pandemic, most high-paying job growth occurred in a handful of coastal cities. As remote work expands, companies are growing operations and hiring high-paid employees elsewhere. This will lead to a more even geographical distribution of US income and wealth.

Jobs are improving

12.  The number of satisfying jobs is increasing. New labor market entrants tend to be more educated than their predecessors and are likely to have more satisfying careers. Between 2000 and 2021, the share of management and professional workers in total employment increased from 34 to 43 percent. The long-run shift from manual services and routine office jobs to more satisfying professional jobs is likely to continue, further raising overall job satisfaction.

COVID-19 spreading faster than ever makes it difficult to see the full half of the glass. But history may judge the 2015-2030 period as one of significant improvement in the quality of life of most Americans, especially when compared with other advanced economies. Perhaps there is something to be cheerful about after all.