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America’s Severe Labor Shortage
Suddenly America is facing a severe structural labor shortage. We all feel it, whether we’re trying for reservations at a restaurant that has reduced hours, seeking handyman help, or just trying to get somebody to answer the dang phone.
Nurses and teachers are in short supply. Employers report at least two job openings for each job seeker. Beyond personal inconvenience, when workers produce fewer services and goods for dollars to chase, prices go up, and inflation results.
You can partly blame it on Covid. Politicians shut down much of the economy, then shoved trillions of dollars in “Covid relief fund” to those forced not to work.
Unfortunately, the spigot was never fully closed and many Americans found that sleeping-in agreed with them. Europe, Canada, and Japan all rebounded while the US was left with about one million fewer workers.
Adding to the problem, the youth anti-work movement continues to grow. Work is for suckers and victims. Social media outlets praise workers for quitting their jobs. Others are lionized for being “quiet quitters,” idlers who do the least work possible while still collecting a paycheck.
The inspiration for the anti-work cult traces back to the Marxist anti-capitalist movement, a long-time foe of the American work tradition. Their thesis is that capitalist employment is exploitive and, therefore, not working is virtuous.
It coincidentally turns out that, for many Americans, government policy has significantly disincentivized work. Working harder is no longer for them the way to get ahead.
Writing in the Wall Street Journal, Phil Gramm and John Early explain how this effect is commonly underestimated, because of the way income is reported by the federal government. The Census Bureau, inexplicably, does not treat most transfer payments as income.
That’s important because government transfer payments to the bottom 20% of households, income-wise, ballooned by 269% between 1967 and 2017, while the middle 20% realized only a 154% increase in their after-tax income.
The results were staggering. In 2017, the bottom 20% of households had $6,941 in “income,” and only 36% of working-age people actually worked. However, after the transfer payments and taxes are included, as they should be, their total income was $48,806.
The second to the bottom quintile had 85% employment and an average total income of $50,492, actually less than a $2,000 difference from the lowest group. The middle quintile was 92% employed and earned $66,453, but after taxes and transfers, that shrank to 61,350, merely 26% more than the bottom quintile.
But wait, there’s more. Family units are smaller in the lowest quintile than the others. Per capita, the adjusted net income was actually $33,653 in the lowest quintile, $29,497 in the next lowest, and $32,754 in the middle.
Sorry for all the numbers, but they tell an important story. For 60% of Americans, working much harder and even earning more money produced a negligible net benefit. Means-tested government programs were just as lucrative. It’s not hard to understand why the percentage of working-age people in the lowest quintile who were employed fell from 68% in 1967 to 36% in 2017.
Policymakers seem to believe that incentives don’t matter, but they do. People who choose not to work and live off the labor of others earn some understandable resentment, but they’re not acting irrationally under the circumstance. The heart of the problem is their enablers in Big Government who, for their own political purposes, created this perverse system.
It’s often forgotten that in the 1990s, governments established work requirements for many means-tested benefits. “Workfare” was a generational policy success. In spite of hysterical warnings that “children would starve in the streets,” poverty rates dropped as employment increased.
Unfortunately, the advocates for workfare declared victory and move on. But welfare bureaucrats stayed put, patiently reestablishing their vision of welfare without requirements. So now poverty is supported rather than reduced. Arizona was among the states that quietly removed the work requirements for Medicaid and other welfare programs.
Government handouts that replace work erode self-reliance, worker pride, and self-sufficiency. They undermine American values. They threaten our shared prosperity.
Published in General
One more item is the increased minimum wages, whether legislated or advocated. When the lowest skilled, lowest paid employee gets $15 to empty trash cans and push a broom (as is the case where I work), what is the point of going to school, taking on debt, delaying gratification, etc. to start at $19, as is the case for many technical positions in healthcare for new grads? The marginal benefit of $4 doesn’t seem worth the trouble and expense of going to school, even though over the long term there is room for salary growth.
There are other reasons for the labor shortage. For nurses, police officers, firefighters, and other first-responders, you need to factor in the Vaccine Mandates in force in many states, counties, and cities. Thousands have been discharged due to their decision not to take the so-called Covid vaccines. Many of those first responders are fairly young adults, for whom getting infected with the virus has a low probability of injury and confers high immunity upon recovery. Governments everywhere have been forcing their employees to take the jab or lose their jobs. Many lost their jobs. These people are desperate to go back to work, but their employers think that they are better off without all that talent. This issue is causing deaths in the main population, due to understaffing at hospitals, police and fire departments, and even airlines, who discharged pilots and flight attendants.
In any case, blame government.
I have got to do an article on quiet quitting. Contrarian that I am, I have the wild notion that employers deserve nothing more than the jobs they pay their workers for.
I actually considered renewing my pharmacy tech license so I could go back to work. Until I found out how low their pay still is, regardless of the fact that they sometimes hold peoples’ lives in their hands. News stories told of pharmacy chains offering higher wages and bonuses, but pharmacy techs are still very low paid. Not worth my effort.
That’s very short term, immediate gratification, thinking. Why should everybody be paid less in order to cajole a small group into education and self-improvement that they probably won’t see through to the end anyway? If that’s how they think they don’t deserve to succeed.
(Wow! Ricochet must really be influencing me…)
Raising minimum wage is a disaster and I wish we could go back or figure out how to run our own hypnosis campaign against American citizens.
We need to start cutting welfare. 10% across the top.
Otherwise, employers are just going to have to knuckle down and wait for eager 14 year olds to be old enough to work. My son is looking forward to turning 15 in two years so he can start working.
My son is ready to quit his job in retail security at Home Depot. The other day a shoplifter punched him in the face and his boss told him not to go to the police about it.
Did he go to the police anyway?
Companies and big corporations spend decades mistreating workers and using them as interchangeable cogs. Oh, yeah, they also conspire with the government to import foreign labor willing to work for less because they are either tied to a visa (we fire you and you go home, so we own you) or they are here illegally.
Now they whine and whine that people aren’t engaged and don’t want to work for them?
I am glad that big companies have a shortage. They are horrible entities that do nothing but abuse their employees and their customers as their business plans. Meanwhile, their rich executives and board members all live among the elites, free of the devastation they are causing to others.
Yes, and we have Democrats supplying the cheap labor, social immobility, and anti-competitive legislation, while Republicans supply the tax cuts and corporate welfare. We don’t have two parties; we have one party with two marketing schemes.
In Canada, households received significantly more than we did in America, so if their nation is not facing this severe labor shortage, the quoted analysis contained in the post doesn’t add up.
My household got around $ 2200 total. For both of us.
In Canada, individuals each received over one thousand a month. For over a year.
Then Biden came out at one point and bragged that he saw to it that people making 100K or so got $ 6,000. So apparently it was more income-based than I thought it was. He also said this amount would allow people to keep paying their mortgages and car payments. (If a person got the money in 2020 but was a time traveler who spent the money in the 1970’s, I guess keeping up with the mortgage and car payments would be a possibility.)
One thing I have noticed in terms of employment at restaurants: many restaurants that are open are in tourist areas where the rents are exorbitant. People with big bucks lease a house, convert it to a B & B and then that seriously inflates the price that the landlords would ask for housing.
So if you are a waiter or waitress or cook, even if you are getting $ 15 an hour, you can’t afford to live in the area. With gas prices sky high, you can’t afford to commute either.
Are their wages higher, wrt purchasing power?
I call BS. I know people that have been looking for jobs for months with no luck. Not even an interview. On the other side I know my company has dozen of jobs being promoted but nobody inside the company is pursuing hiring at this time. They have been out the for half a year for positions. I have heard these jobs are called ghost jobs by the HR folk.
It might be that in Canada, there is less of a housing shortage.
In the US, few talk about the housing shortage. But until there is a united will to see that we once again have a booming industry that builds starter houses so that there is adequate housing for everyone, young people are often deciding to live at home. In many cases they don’t get charged rent by parents. So one of the more powerful incentives to holding a job – that of the need to pay rent – does not exist.
Anyway, I don’t know how the housing scenario is in The Great North. The three or four Canadians I am friends with are all affluent.
Companies are decreasing hiring and Google just laid people off.
The insane policies that give rise to these crippling results are an accident? Fostered by the same folks who have opened our border to everybody? The only question I have is whether we’re that stupid on our own or if its our enemies, those inside and the Chinese?
Education has been captured by our enemies since at least the 1960s.
Have a job interview on Monday. Wish me luck.
I have no proof, but it is my impression/assumption/guess that many companies of all sizes and across all industries are just using covid and the labor shortage as perpetual excuses to provide crappier goods and services. Lower your customers’ expectations and then it becomes a lot easier to meet them.
Grump. (Yes, probably true.)
That is my read. Push for doing more with less and supply less at higher cost. Everything is COVID’s and Ukraine’s fault
Yes. :-)