analyticsbox | Dec 01, 2021
There are 'Help Wanted' Signs Everywhere,
Why?
The mysteries of the pandemic rage on. There was a healthy balance of workers before the pandemic, with a low unemployment rate. Not so today. Worker shortages seem to be everywhere (10.4 million jobs are unfilled). Imbalance in supply and demand keep goods and services out of our homes and away from our businesses. When there is less product available than is demanded, there is a shortage. Prices rise.
So, why is this occurring? Looking at the overall labor participation rate reveals a lot:
There are 'Help Wanted' Signs Everywhere,
Why?
The mysteries of the pandemic rage on. There was a healthy balance of workers before the pandemic, with a low unemployment rate. Not so today. Worker shortages seem to be everywhere (10.4 million jobs are unfilled). Imbalance in supply and demand keep goods and services out of our homes and away from our businesses. When there is less product available than is demanded, there is a shortage. Prices rise.
So, why is this occurring? Looking at the overall labor participation rate reveals a lot:
Since the pandemic started, the participation has dropped among women, men and total. This represents 4-6 million workers have left the workforce. Why? Jobs are plentiful. Wages have increased. There is high demand for labor.
Research indicates causes include:
Additional unemployment compensation made being unemployed attractive. Why work when savings carried over from the unemployment benefits of the federal government and states can be consumed and saved? (See The Facts No Spin #3 which explains this). This federal benefit program ended in September, but the carryover effect remains. Many states ended this in June and increased employment followed over time. This may resolve itself in due course.
Expansion in government payments to wider groups has generated high liquidity among the working population, allowing them to take their time before going back to work.
Increased regular welfare and other social payments from the pandemic have reduced the incentive for employment. Incentives matter! For example, food stamps have increased significantly and the work requirement has been suspended. Child tax credits are larger and now paid monthly in cash regardless of tax liability. Again, there is no work requirement. Obamacare subsidies have been expanded in amount and eligibility. Medicaid has been expanded. This is a simplified summary of the many disincentives to work, and an eye opening detailed analysis of this can be found here.
Pandemic fears continue to discourage some from returning.
Having to deal with school age children has impacted some.
Societal and generational attitudes are having an effect.
The aging population is having an effect.
THE BOTTOM LINE
There are many factors that contribute to the labor shortage. Supply and demand for labor is like any other market and will balance out in time if there are no outside influences affecting it. However, it seems clear that the government policies which provide funds and not requiring work are interfering with this market and will continue to do so until they expire or are changed.
UNDERSTAND ECONOMICS, THEN VOTE SMART.