The U.S. Doesn't Have a Labor Shortage. It Has an Incentive Shortage.

[Muda69]

https://reason.com/2021/05/19/unemployment-benefits-coronavirus-labor-shortage-american-rescue-plan/

Quote

America has a record 8.1 million job openings.

The media call it a "labor shortage."

But it's not a labor shortage; it's an incentive shortage.

"No one wants to work," says a sign on a restaurant drive-thru speaker in Albuquerque, New Mexico. "Please be patient with the staff that did show up."

I never wanted to work. I got a job because I had to support myself. That was good for me. It forced me out of my comfort zone. It made me a better person.

Had government offered me almost equal money not to work, I never would have applied.

Today, government takes away that incentive.

The American Rescue Plan, passed in March, increased unemployment payments by hundreds of dollars and extended them for up to 73 weeks. Given the cost of commuting, etc., many people find they are better off financially not working.

Denmark once offered workers five years of unemployment. Then they noticed that workers found work after exactly five years. So, Denmark cut the benefit to four years. Then most workers found jobs after four years. Now Denmark, wisely, has cut benefits in half.

Incentives matter.

America's unemployment handouts began during the Great Depression when desperate people really needed help. Still, you could collect for only 16 weeks.

Former President Barack Obama extended unemployment benefits to up to 99 weeks.

"There are no jobs!" people I interviewed waiting in line for benefits in New York City once told me.

But that wasn't true. There were lots of entry-level jobs within walking distance.

My staff visited 79 nearby stores. Forty said they wanted to hire. Twenty-four said they'd hire people with no experience.

People in the unemployment line also said that the government should do more to train them for jobs. But New York already offered "job training" centers, so I sent an intern out to see what they did. The first offered to help her get welfare. A second told her to apply for unemployment. Neither place suggested looking for a job.

When she insisted that she wanted work, not handouts, they directed her to yet another building. There she was told she could not receive help because she didn't have a college degree.

Finally, a fourth office offered her an interview at the sandwich chain Pret a Manger. The boss there told her she'd wasted her time going to the government Jobs Center because she could have gotten that same interview using Craigslist.

Some politicians understand that handouts encourage dependence. Sixteen states are now ending extra unemployment benefits early. Montana and Arizona replaced extra unemployment benefits with a bonus for people who find work.

Even President Joe Biden has noticed the unintended consequences of his party's benefits. "If you're…offered a suitable job, you can't refuse that job and just keep getting unemployment," he said.

Seems more than reasonable. Yet a New York Times headline says, "Some say it presents an undue hardship."

The reporter interviewed a "Mx. San Martin, 27, who uses the pronouns they and them."

Mx. Martin wants to work with pets. They complained that "there simply weren't enough jobs that I would actually want." Restaurant work "is not in my field of interest."

Too bad.

Bad for all of us when people think they're entitled to our tax money if bureaucrats don't get them the exact job they want.

Agreed.  But this is just another step toward the progressive utopia,  aka hell for those of us who value individual freedom and responsibility.

 

[swordfish]

The American Rescue plan also is giving families with kids payments (not a credit on your taxes at the end of the year) but actual payments starting in June.

[DanteEstonia]

7 hours ago, Muda69 said:

https://reason.com/2021/05/19/unemployment-benefits-coronavirus-labor-shortage-american-rescue-plan/

Agreed.  But this is just another step toward the progressive utopia,  aka hell for those of us who value individual freedom and responsibility.

 

Or, maybe the "FrEe mArKeT" should step up what they offer. 

[Muda69]

16 hours ago, swordfish said:

The American Rescue plan also is giving families with kids payments (not a credit on your taxes at the end of the year) but actual payments starting in June.

Yet another slow step to a full UBI, and the ruin of the country.

 

10 hours ago, DanteEstonia said:

Or, maybe the "FrEe mArKeT" should step up what they offer. 

"FrEe mArKeT"  ?

What exactly should the Free Market "offer" Dante?  

[DanteEstonia]

31 minutes ago, Muda69 said:

What exactly should the Free Market "offer" Dante? 

Better pay and "benefits".

[Muda69]

Just now, DanteEstonia said:

Better pay and "benefits".

But what "better pay" and "benefits" really are should be dictated by the state, right Dante?  Or at least a labor union?

 

[DanteEstonia]

1 minute ago, Muda69 said:

But what "better pay" and "benefits" really are should be dictated by the state, right Dante?  Or at least a labor union?

Well, traditionally yes, although now the fREE MarKET now says it makes more sense to stay home. 

[Muda69]

U.S. labor shortage? Unlikely. Here’s why

https://www.epi.org/blog/u-s-labor-shortage-unlikely-heres-why/

Quote

There are lots of anecdotal reports swirling around about employers who can’t find workers. Just search “worker shortages” online and a seemingly endless list of stories pops up, so it’s easy to assume there’s an alarming lack of people to fill jobs. But a closer look reveals there may be a lot less to this than meets the eye.

First, the backdrop. In good times and bad, there is always a chorus of employers who claim they can’t find the employees they need. Sometimes that chorus is louder, sometimes softer, but it’s always there. One reason is that in a system as large and complex as the U.S. labor market there will always be pockets of bona fide labor shortages at any given time. But a more common reason is employers simply don’t want to raise wages high enough to attract workers. Employers post their too-low wages, can’t find workers to fill jobs at that pay level, and claim they’re facing a labor shortage. Given the ubiquity of this dynamic, I often suggest that whenever anyone says, “I can’t find the workers I need,” she should really add, “at the wages I want to pay.”

Furthermore, a job opening when the labor market is weak often does not mean the same thing as a job opening when the labor market is strong. There is a wide range of “recruitment intensity” that an employer can apply to an open position. For example, if employers are trying hard to fill an opening, they will increase the compensation package and perhaps scale back the required qualifications. Conversely, if employers are not trying very hard, they may offer a meager compensation package and hike up the required qualifications. Perhaps unsurprisingly, research shows that recruitment intensity is cyclical. It tends to be stronger when the labor market is strong, and weaker when the labor market is weak. This means that when a job opening goes unfilled when the labor market is weak, as it is today, employers are even more likely than in normal times to be holding out for an overly qualified candidate at a very cheap price.

This points to the fact that the footprint of a bona fide labor shortage is rising wages. Employers who truly face shortages of suitable, interested workers will respond by bidding up wages to attract those workers, and employers whose workers are being poached will raise wages to retain their workers, and so on. When you don’t see wages growing to reflect that dynamic, you can be fairly certain that labor shortages, though possibly happening in some places, are not a driving feature of the labor market.

And right now, wages are not growing at a rapid pace. While there are issues with measuring wage growth due to the unprecedented job losses of the pandemic, wage series that account for these issues are not showing an increase in wage growth. Unsurprisingly, at a recent press conference, Federal Reserve Chairman Jerome Powell dismissed anecdotal claims of labor market shortages, saying, “We don’t see wages moving up yet. And presumably we would see that in a really tight labor market.”

Further, when restaurant owners can’t find workers to fill openings at wages that aren’t meaningfully higher than they were before the pandemic—even though the jobs are inherently more stressful and potentially dangerous because workers now have to deal with anti-maskers and ongoing health concerns—that’s not a labor shortage, that’s the market functioning. The wages for a harder, riskier job should be higher.

Another piece of evidence against widespread labor shortages is the fact that the labor market added more than 900,000 jobs in March, the seventh highest percent increase in jobs in the last half century. It is difficult to imagine that labor shortages were creating a large impediment to hiring when hiring was happening at such a scale. Further, despite many anecdotes of restaurants in particular not being able to find workers, the labor market added 280,000 jobs in the leisure and hospitality sector in March, the sixth highest percent increase in the last half century, even though average weekly earnings for nonsupervisory workers in that sector equate to annual earnings of just $19,651. With these kinds of numbers it is difficult to take the claims of widespread shortages very seriously.

And there are far more unemployed people than available jobs in the current labor market. In the latest data on job openings, there were nearly 40% more unemployed workers than job openings overall, and more than 80% more unemployed workers than job openings in the leisure and hospitality sector.

While there are certainly fewer people looking for jobs now than there would be if Covid weren’t a factor—many people are out of the labor market because of Covid-related care responsibilities or health concerns—without enough job openings to even come close to providing work for all job seekers, it again stretches the imagination to suggest that labor shortages are a core dynamic in the labor market.

One question people raise is whether the expanded pandemic unemployment benefits keep workers from taking jobs. Right now, for example, unemployed workers who receive unemployment insurance benefits get not just the (very meager) level of benefits they would get under normal benefits formulas, but an additional $300 a week. That means that some very low-wage workers—like many restaurant workers—may receive more in unemployment benefits than they would at a job. Is this making jobs hard to fill? There was a lot of fuss about this same question a year ago, when workers were getting a $600 additional benefit a week. There were several rigorous papers that looked at this question, and they all found extremely limited labor supply effects of that additional weekly benefit. If the $600 a week wasn’t keeping people from taking jobs then, it’s hard to imagine that a benefit half that large is having that effect now.

I cut my labor-market-monitoring teeth during the Great Recession, and it was a formative experience. In the aftermath of that recession, there were nearly constant tales of employers who couldn’t find workers. The stories at that time about labor shortages in construction, when the unemployment rate in construction was still close to 13%, have a similar feel as claims today of labor shortages in restaurants, considering that the unemployment rate in leisure and hospitality is currently 13%. The Great Recession was caused by the bursting of a giant housing bubble that threw many construction workers out of work, and the Covid recession was caused by a public health crisis that shuttered many restaurants.

In both cases, counterintuitive reports about employers not able to find the workers they need really captured the public’s imagination. But a look under the hood reveals that beyond the anecdotes there is little evidence of a real shortage.

 

2 minutes ago, DanteEstonia said:

Well, traditionally yes, although now the fREE MarKET now says it makes more sense to stay home. 

So are you staying home, suckling off of the government teat?

 

[DanteEstonia]

1 minute ago, Muda69 said:

So are you staying home, suckling off of the government teat?

I worked two jobs in 2020. 

[swordfish]

6 minutes ago, DanteEstonia said:

Well, traditionally yes, although now the fREE MarKET now says it makes more sense to stay home. 

No - The US Government's use of our tax dollars are making the "sense to stay home" not the "free market".  Our "free market" should be free of the US Government influencing participation.

Edited May 20, 2021 by swordfish

[Muda69]

2 minutes ago, DanteEstonia said:

I worked two jobs in 2020. 

How about in 2021?

 

[DanteEstonia]

1 minute ago, swordfish said:

 Our "free market" should be free of the US Government influencing participation.

So no property "rights", then?

[Muda69]

Just now, swordfish said:

Our "free market" should be free of the US Government influencing participation.

Shhh,  you'll just confuse Dante, who believes that people are stupid and need to shepherded by the US Government.  For their own good of course.

 

[DanteEstonia]

2 minutes ago, Muda69 said:

How about in 2021?

I might, for like two weeks. 

[Muda69]

1 minute ago, DanteEstonia said:

I might, for like two weeks. 

So you expect to be unemployed for the majority of 2021?

 

[DanteEstonia]

4 minutes ago, Muda69 said:

So you expect to be unemployed for the majority of 2021?

No, I think I shall only work one job in 2021.