Many Factors Plague Current Labor Market (and is fallacy of composition part of the problem?)

See This Is Why It’s So Hard to Find a Job Right Now: A ‘deep freeze’ has enveloped the U.S. labor market. A whole bunch of factors are at play by Justin Lahart of The WSJ. Excerpts:

"Uncertainty over tariff policy has made it difficult for many companies to plan ahead" 

"For some—particularly small businesses—tariffs have raised costs, making it more difficult to take on new employees.

"High short-term interest rates are another pressure" 

"Tech companies that hired heavily in the wake of the pandemic are still dealing with an overhang of workers."

"Workers aren’t leaving the jobs they have. The number of jobs people quit in December came to 3.2 million, the Labor Department reported Thursday, well below the 4.5 million hit in March 2022"

"The quits rate, which measures quits as a share of employment, was 2%, well short of the 2.3% it averaged in 2019"

"the overall number of hires employers made in December came to 5.3 million. That put the so-called hires rate—the number of hires employers made as a share of overall employment—at 3.3%. That is a very low number, not only below the level of a few years earlier, when businesses were desperate to bring new workers on, but also well below its level before Covid hit."

"the economy adding the fewest jobs last year, outside of a recession, since 2003"

"People don’t want to quit the jobs they have because the pace of hiring is low, but part of why the pace of hiring is low is that nobody is quitting their jobs."

"There simply aren’t as many people to hire [because of] "President Trump’s crackdown on immigration . . . Coupled with an aging country"

"There was a wave of tech layoff announcements in November 2022, as companies realized that the surge in business they experienced after the pandemic hit wasn’t going to persist. AI wasn’t in the mix."

"people’s employment prospects in jobs that are highly exposed to AI, such as software development, have been hurt" 

The part about "People don’t want to quit the jobs they have because the pace of hiring is low, but part of why the pace of hiring is low is that nobody is quitting their jobs" reminded me of a concept sometimes found in principles of economics books called the fallacy of composition. Here is what I recall as one definition:

Fallacy of composition-The false belief that what is good for the individual is good for the group and vice-versa.

A typical example is when you stand up at a basketball game to get a better view. Yes, you will get a better view. But if everyone does that then no one's view actually improves. Or if you run to your bank to withdraw your money if you think the bank is about to go under you might get your money. But if everyone does that then very few people will get their money. 

So with a slow labor market, an individual worker might say to himself "I will just stay right where I am since if I quit I will have a hard time finding a job." But if all workers think that then no one quits and there are no job openings. Then the labor market remains slow.

Related post:

Student-Loan Forgiveness Raises a Question About College (fallacy of composition) (2022) (This post talks about how it is a good decision for someone to get a college degree to get a better job. But if everyone goes to college we all can't get better jobs)

What if Adam Smith discussed how to be loved and how to be lovely with a romance novelist?

In his book The Theory of Moral Sentiments Adam Smith wrote: 

"Man naturally desires, not only to be loved, but to be lovely; or to be that thing which is the natural and proper object of love. He naturally dreads, not only to be hated, but to be hateful; or to be that thing which is the natural and proper object of hatred. He desires, not only praise, but praiseworthiness; or to be that thing which, though it should be praised by nobody, is, however, the natural and proper object of praise. He dreads, not only blame, but blame-worthiness; or to be that thing which, though it should be blamed by nobody, is, however, the natural and proper object of blame." (TMS III.ii.1)

Here is the prompt I gave Grok:

"Please create a dialogue between Adam Smith and 20th century romance novelist Georgette Heyer where they discuss what a person can do to be loved and lovely."

As I mention below, Adam Smith may have influenced Jane Austen who in turn influenced Georgette Heyer. The idea for this post occurred to me after writing yesterday's post about how AI is now being used by romance novelists. See Romance novelist gets death threats on social media because she uses AI to help her write stories.

Here is their discussion:

Georgette Heyer: Mr. Smith, I must confess your line has haunted me through every manuscript I ever penned: “Man naturally desires, not only to be loved, but to be lovely; or to be that thing which is the natural and proper object of love.” How perfectly it explains why my readers return again and again. They adore the balls, the banter, the grand misunderstandings—but the stories that linger are those in which a character becomes worthy of the love they finally win. Take my Jenny in A Civil Contract—plain, practical, no dazzling beauty like the ethereal Julia she must live beside. Yet it is Jenny’s quiet kindness, her steady good sense, her willingness to love without demanding fireworks, that makes her truly lovely. What, in your philosophy, would you say transforms a merely lovable creature into one who is genuinely lovely? Adam Smith: Miss Heyer, your tales of the ton do my old reflections greater justice than many a sermon. We hunger for love as we hunger for bread, yet counterfeit affection—won by beauty alone, by fortune, or by artful display—leaves the heart restless. True satisfaction comes only when we know ourselves to be the proper object of esteem, even under the gaze of that impartial spectator we each carry within: the imagined fair judge who sees our secret motives without partiality. Loveliness, therefore, is not the flash of a handsome face or the glitter of rank, but the steady light of virtue made habitual—benevolence that springs from genuine sympathy, self-command that curbs vanity or resentment, justice tempered with mercy, and a lively regard for others’ happiness. Your Jenny exemplifies it perfectly: she does not scheme for passion; she builds a life of mutual respect and quiet affection. That is loveliness that endures. Georgette Heyer: (with a wry smile) How gratifying to hear a philosopher approve one’s plain heroine! My readers often sigh for the brooding dukes and sparkling beauties, yet I have always believed the deeper romance lies in character. In Arabella, my little vicar’s daughter wins the Nonpareil not by dazzling him with wit or fortune, but by her warm heart—rescuing stray animals, defending the weak, refusing to play the coquette even when society expects it. She becomes lovely by refusing to be anything less than honest and kind. Is that the “impartial spectator” at work? The inner voice that whispers, “This is beneath you,” when one is tempted to simper or scheme? Adam Smith: Precisely, madam. That spectator is merciless toward affectation. When we act only to secure admiration or a advantageous match, we feel the discord within. But when conduct aligns with what the spectator would approve—when we choose propriety not from fear of scandal but from principle, when we offer sympathy rather than calculation—we grow easy in our own esteem. Your heroines so often begin with spirit or eccentricity; through trials they learn self-command and genuine benevolence. That growth is the very cultivation of loveliness. Georgette Heyer: And vulnerability? My stories are full of moments when the haughty hero or the guarded girl lets the mask slip—confesses a fear, admits a fault, stands plain before the other. In The Grand Sophy, Sophy’s outrageous schemes hide a generous heart; once revealed, she becomes irresistible. Does revealing one’s imperfections diminish loveliness, or enhance it? Adam Smith: When joined to virtue, sincere vulnerability is among the most amiable of qualities. The man or woman who pretends perfection appears cold or proud; the one who owns frailties yet strives to amend them invites true sympathy—the imaginative sharing of feelings that binds hearts forever. Your couples do not fall in love with facades; they fall in love with revealed character. That is why their unions feel secure, not fragile. Georgette Heyer: Redemption, too—I cannot resist it. The rake who learns to value honor, the spoiled beauty who discovers kindness. In These Old Shades, even the formidable Duke of Avon softens through love and duty. You would say we should pursue loveliness first for our own inner harmony, not merely to snare a husband or wife? Adam Smith: Exactly so. To chase love as a prize often yields anxious, conditional bonds. But to desire above all to deserve love—to refine one’s character through daily acts of justice, compassion, and self-mastery—brings tranquillity. Genuine affection then arrives as its natural consequence: sweeter, steadier, founded on mutual worth rather than fleeting passion. Your A Civil Contract shows this beautifully: Adam and Jenny build something lasting not despite the absence of grand romance, but because of the presence of quiet virtue. Georgette Heyer: Then for my readers who close one of my books and wonder how to become more “lovely” themselves—what practical counsel would you offer in this modern age of ours? Adam Smith: Form the habit of consulting that impartial spectator each day. Ask: “Would this action merit sincere approval?” Cultivate the amiable virtues—kindness shown quietly, not for show; good humor that lightens others’ burdens; propriety observed even when no one watches. Restrain envy and pettiness; practice gratitude and candor. Perform small, consistent acts of benevolence. In time, these habits shape the soul into something that naturally draws love—not by demanding it, but by being worthy of it. The very wish to be lovely, as I wrote, is one of the noblest impulses in human nature; it fits us for society and for the truest affections. Georgette Heyer: (laughing softly) Mr. Smith, you have just given me the perfect epigraph for my next novel—had I but one more to write. You remind me why I filled my pages with characters who learn to value honor, kindness, and self-command above all: because the sweetest happily-ever-after is not bestowed upon the merely beautiful or clever, but earned by those who have become genuinely lovely. Thank you. My readers—and my heroines—shall be the better for it. Adam Smith: And I, madam, am delighted to find my old thoughts alive and dancing through your witty Regency salons. May your tales continue to show the world that the heart seeks not only to be loved, but to be worthy of love. Related posts:  Adam Smith said that people want not only to be loved, but to be lovely (but how much does it cost to achieve that?) (2025) Do we exchange gifts because we desire, as Adam Smith said, not only to be loved, but to be lovely? (2025) A ChatGPT story: What if Jane Austen and Adam Smith met to discuss his book The Theory of Moral Sentiments? (2025) (Wikipedia says Georgette Heyer's "Regency romances were inspired by the writings of Jane Austen, whose novels were set in the same era") Pride and Profit: The Intersection of Jane Austen and Adam Smith (2025) Adam Smith's influence on three Jane Austen Novels (2025)