Unemployment Benefits Are Not Creating A Worker Shortage

According to the government's labor cost index, hotel wages may have risen slightly faster than average this year, although state minimum wage laws may have played a role. (Photo by MediaNews Group / Reading Eagle via Getty Images via Getty Images)
As the US economy recovers from the downturn caused by COVID, some employers say they are having a hard time finding workers. GOP lawmakers like Rep. David Rouzer (N.C.) blame the safety net.
"That's what happens if you extend unemployment benefits for too long and add a $ 1,400 stimulus payment," Rouzer said on Twitter last week, posting a photo of a Hardee that said it was closed due to staff shortages. "Especially when employers need employees to fully open up again, only a few can be found."
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It's a dubious argument. Republicans said the same thing last year when Congress passed a major relief bill that added $ 600 a week to state unemployment benefits for four months.
Democrats "will make it impossible for small businesses to shut down for the next four months," said Sen. Lindsey Graham (R-S.C.).
"This bill creates an incentive for people to be unemployed for the next four months," said Senator Rick Scott (R-Fla.).
Senator Ben Sasse (R-Neb.) Said the benefits would "hit this nation even harder in the coming months by inadvertently increasing unemployment".
At that time, millions of workers were losing their jobs every week and no one knew how bad things were going to get. A few weeks after the initial lockdowns, companies began recalling workers, millions returned to work despite the added benefits, and the unemployment rate fell. A number of academic studies found that the added benefits didn't stop people from going back to work.
At $ 300 a week, the federal surcharge is half what it was last year, but criticism is twice as fierce, even though the previous doomsday did not work out.
"People are paid more not to work than to work," Senator Bill Cassidy (R-La.) Told HuffPost, referring to the additional federal benefits. "Economists talk about it, but anecdotally it's clear."
It is true that for some workers the benefits are more than the previous wages. It's just that the extra money didn't seem to have held the workers back.
The unemployment complaint fits in with a broader Republican argument that Democrats under President Joe Biden want to destroy American work ethic with their proposals for new parenting benefits and affordable childcare.
"Think about what the Democrats did," tweeted Rep. Kevin McCarthy, R-Calif., Republican leader of the House, over the weekend. "They demonized work to make Americans dependent on a big government."
While some employers are currently struggling to hire new employees for one reason or another, economists say generous unemployment benefits are not the cause.
If the demand for labor exceeded supply, the price for labor would rise. But as Federal Reserve chairman Jerome Powell said last week, overall wage growth has not increased. "We're not seeing any rising wages yet, and we'd probably see that in a really tight job market," Powell said at a press conference. "And we may start to see that."
Currently, unemployment remains high at 6% versus 3.5% before the pandemic, and in March 2021 there were 4 million more unemployed than in February 2020. These data reflect people trying to find work, not those who have withdrawn from the workforce for a number of reasons, such as lack of childcare. However, some business owners still say that there are no willing workers.
Chef Andrew Gruel, owner of the Slapfish restaurant franchise, stated on Twitter last week that there are no staff available in California. Gruel said his restaurants were selling for $ 21 an hour but couldn't find buyers. The main reason? "They make enough unemployment and would rather not work."
William Spriggs won't buy this. Spriggs, chief economist for the AFL-CIO trade union federation, said it "goes without saying" that millions of people are trying to find work. Just because an employer hasn't found them yet - at the wages the employer is willing to pay - doesn't mean the workers aren't out there.
Spriggs said the normal recruitment networks that employers rely on have been blown up by the pandemic. Some employers who got unsuccessful government loans were able to keep their workers on payroll, but many companies simply let them go during the lockdown. A year later, many of these workers took on other jobs, moved on, or even died.
"They usually recruit through networks - friends and relatives of people they've already hired," Spriggs said. "And the problem, when we decided to solve this problem by separating people from their employer, is that we broke those networks."
Workers understand that unemployment benefits don't last forever, Spriggs noted. The federal benefits expire in autumn.
He also said employers may not be willing to pay the "clearing wage" - the wage required to attract workers to all work available, especially at a time when many jobs are becoming more difficult and stressful due to the pandemic are. "Then they are shocked when they try to expand and find out, 'I have to raise my wages," Spriggs said.
(HuffPost tried to ask the Hardee's restaurant in Rouzer's tweet how much it had raised its starting salary to attract new workers, but no one answered the phone there.)
For his part, Powell acknowledged that some employers may have difficulty finding people to work for them. He said workers could protect themselves from viruses or face other barriers to returning to work. In other words, there is still a plague.
"An important factor would be that schools are not yet open. So there are people who are at home and taking care of their children who would like to be back in work but cannot yet," he said.
After the great recession, many employers complained that despite high unemployment they could not find workers, leading some commentators to proclaim a lack of skills among American workers. (The federal government did not increase the weekly unemployment benefit at this point.)
"But we've seen the labor supply show up in general," recalls Powell. "In other words, if you were worried about running out of workers, we apparently never would have, you know?"
The loudest complaints about a labor shortage now seem to come from restaurants as more people resume their pre-pandemic eating habits thanks to widespread vaccination.
The National Restaurant Association, an industry lobby group, says a variety of factors, not just benefits, contribute to hiring difficulties. “With fewer employees, the continued incentives, occupational safety concerns, the need for nurses to stay at home, and much more competition from other industries for workers, operators are returning to pre-pandemic recruiting techniques for hiring to undertake. Hudson Riehle of the association said in a statement.
According to the government's labor cost index, hotel wages may have risen slightly faster than average this year, although state minimum wage laws may have played a role. In general, restaurant work doesn't pay off very well. In 2020, the median wage for servers was $ 11, compared to more than $ 20 in all professions.
Many restaurant jobs are also very different than they used to be, with more outdoor seating, for example, as well as masks and new cleaning protocols. Not to mention new disease risks. Some restaurant workers recently told Eater that they are ready to work - they just want pay that reflects the dangers.
It is difficult to reconcile the notion of a shortage of employees in the hospitality industry with the strong employment growth in the industry, said Heidi Shierholz, former chief economist in the labor ministry, now at the Economic Policy Institute. In March, 176,000 jobs were created in restaurants and bars, the largest increase in any branch.
"I'm sure the labor supply is lower than without COVID, but that doesn't mean there is a labor shortage," said Shierholz.
Cary Christiansen, of Topsfield, Massachusetts, was a college softball coach before the pandemic. She said the job hasn't come back yet, but the summer league will start in June. She has also applied for another position as a dispatcher and is waiting for feedback.
Meanwhile, 55-year-old Christiansen said that thanks to unemployment benefits, she and her husband were able to pay their mortgage and make car payments, but other bills, including health insurance, were not paid. She has expanded her garden and started raising chickens, but has yet to find a job and could end up in the restaurant business again, which she has not done since 1986.
"If that other job doesn't work in the local community, I'll just go back to the bartender," she said.
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This article originally appeared on HuffPost and has been updated.

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