Enforce Rules To Ease Labor Shortage

By JOHN HOOD

RALEIGH — President Joe Biden wants you to believe that there is no relationship between the extra $300 a week many are receiving in enhanced unemployment-insurance benefits and the shortage of workers now manifest in stores, restaurants, hotels, and other businesses here in North Carolina and across the country.

But doesn’t paying lower-skilled workers more to stay on the sidelines than they could earn on the job make it more likely they’ll remain unemployed? “We don’t see much evidence for that,” the president said May 10 at the White House.

Biden’s claim isn’t quite as ridiculous as it may sound. During the early months of the Great Suppression last year, when Congress jacked up UI benefits by $600 a week, there seems to have been a surprisingly small effect on the jobless rate — even though some two-thirds of recipients were receiving more in UI payments than they’d likely have made by working.

How do we know that? Several scholars have since examined the data closely, exploiting differences in timing and benefit levels across states to test the effects of enhanced benefits on the willingness to work. All other things being equal, you’d expect to find such an effect. But all other things weren’t equal during 2020. So the effect was, at most, modest.

Think about what was happening last year. Lots of businesses were still shut down, or their hours and services were severely curtailed by government edict. Many Americans were afraid to stay in enclosed spaces for long, as consumers or workers. And because most schools were substantially closed to in-person instruction, many parents who might otherwise have taken jobs were forced to care for and supervise the virtual schooling of their children.

Given those adverse conditions, many workers would have stayed home, or failed to find jobs, even if their UI check had been smaller.

Democrats and progressives contend that what was true in 2020 is largely true today. That’s why they reject arguments by Republican lawmakers and governors, conservative economists, the U.S. Chamber of Commerce, and business owners across the country that the $300-a-week supplement needs to end now, not in September.

I’ve talked to managers who say they simply can’t get former or prospective employees to come in, at least at wages consistent with keeping their businesses afloat. My wife recently informed me that a restaurant we’ve frequented for years during beach vacations will be closed for the season because they can’t find enough kitchen and wait staff.

Anecdotes aren’t data, say left-wing activists. They dismiss the idea that the extra UI checks are creating an artificial labor shortage, even though many more businesses are now open and trying to hire, many more Americans are willing to venture out to work or shop, and more schools and day-care centers are open to mind the kids.

President Biden said what he said — but his actions say something else. While refusing to budge Monday on the benefit amount, he pledged to work with state governors to reimpose job-search requirements and enforce the fundamental rule of the program as described by the White House: “Anyone receiving UI who is offered a suitable job must take it or lose their UI benefits.”

As unprecedented and disruptive as the COVID pandemic has been, it didn’t repeal the laws of economics or the realities of human nature. As the labor market has begun to reset towards normal, the disincentive effects of enhanced UI benefits are coming into focus. It’s one reason why the April employment report showed hundreds of thousands fewer Americans getting jobs than expected, and why the March estimates were revised downwards.

North Carolina is among the states already taking steps to tighten the rules and shut off payments to workers who refuse to accept job offers. It’s good news that the Biden administration won’t stand in the way. Our labor-force participation rate is still much lower today than it was in February 2020. It’s time to get folks back to work.

John Hood is a Carolina Journal columnist and author of the forthcoming novel Mountain Folk, a historical fantasy set during the American Revolution (MountainFolkBook.com).

28 COMMENTS

  1. And when the restaurants remain closed because people still arent applying when extended benefits are ended early and the local economies measurably contract because that cash is gone will you blame Biden for that too?

    It’s a labor supply issue that was around even before Covid as people no longer want to work those jobs and other places pay more. With the Boomers retiring in record numbers and so many general industry businesses realizing that $15 an hour is the bare minimum you HAVE to pay in order to get someone that can pass a drug test, wear deodorant, and remember to show up to work on time the low wage employers are simply SOL in this matter until their change their pay & benefit structures to be more competitive.

    Conservative politicians ( and commentators ) that support ending extended UI early will simply have their hands full in July/August in those areas that are opting out. Once that extra level of cash keeping their economies out of the ditch dries up. There isnt enough potential workers out there to use the Government to take away their earned benefits to force them to go to work for the low wage employers to save them. Those people by and large will go to work in the places not really suffering as bad because the wages are better.

    Adapt or Die is the real rule in business no matter how much one political side tries to spin the supply side data to meet their needs.

    • Why should burger flippers with no skills make as much much as truck drivers with 30 years experience and before you say trucker wages will follow suit to maintain the gap. Its not gonna happen. I’m making less after adjusting for inflation than I was 40 years ago and have zero benefits. I don’t eat out at all because I refuse to pay 15 dollars for a fast food meal. Everything has to go up if you raise minimum wage jobs to career level jobs. I remember in the 70s when 5 dollar bread loaves were predicted and every said “no way”!!! I just paid that today at Walmart and it wasn’t even the most expensive.

      • The question you should be asking is why are you spending long hours driving a truck for no benefits when you could make more flipping burgers? Its your employers job to keep providing incentives for you to stay, not the burger flippers job to be payed less so your employer doesn’t have to pay you more. If your job and skills are so important, you are worth more.

        • My 18 year old daughter is making $800 a week. More than a 25 year old teacher with debt. 75 % of what a new nurse makes. Prices going up. Their dollar is worth less. Why take the stress. People making 30 – 80 are the ones taking the hit. Their wages won’t increase

      • So you have 30 years experience driving a truck with no benefits why is that and whose fault is it, certainly not anyone else but you

    • Everyone is asking to raise the wages, and that would be wonderful in a wonderful world, but we don’t live in a wonderful world.

      If you raise wages across the board, who do you think will end up paying for that raise in the end? You and I! The big companies raise their wages thats great, in turn they also raise the cost of their products, and services to make up for that raise they now have to pay out, not so great. Ultimately you and I end up paying for that raise, in the products and services we purchase. Not only will the workers get a raise though, those executives will want a raise too, now we the people are paying twice the amount for that same product or service. So by giving this “raise” to lower income people it makes all of us pay more in the end. There is a nasty word for this, and it’s called inflation.

      There is a plain and simple rule in life, if you want to make more money, find a better job! Don’t make inflation go even higher!

      • “If you raise wages across the board, who do you think will end up paying for that raise in the end? You and I!”

        So you’re arguing that you and I are entitled to lower prices at the expense of vast numbers of other Americans working at unacceptably low wages.

        I think Southerners said something similar about the cotton economy.

  2. I have been on my own as an emancipated teen since 16 years of age. I’ve been a single mother of 4 children sometimes working 2 jobs to make ends meet. Always foodservice. I’ve worked in non air conditioned non ventilated kitchens reaching 105+degrees. Lousy pay to top it off. People were angry when they couldn’t go out to eat. Raise prices. Treat foodservice employees like human beings. Pay them living wages. Stop being so greedy. You need people.

  3. My wife recently informed me that a restaurant we’ve frequented for years during beach vacations will be closed for the season because they can’t find enough kitchen and wait staff. …Well why don’t you and your wife go work for them.

  4. Raise the minimum or keep the increased unemployment benefits. Both do the same thing. Create upward wage pressure. Which we are long overdue for.

  5. The common capitalistic argument was that employers would raise raises in an effort to compete against others for talent and employees ……. But for some reason they can’t raise rates to compete with a measly 300 bucks a week….. smh … I don’t think there’s a labor shortage at all …. It’s just another far right conspiracy theory….

    • A measly 300 bucks is over 7 an hour. Each hour is equivalent to over 14000 dollars a year. When is it the employer’s responsibility to PAY a living wage, it is up to the employee to EARN the living wage. Employees you want to make more need to make themselves more valuable with education and experience. I never went to college but I was able to go from 7 bucks an hour in ’89 to 25 an hour in ’03 by hard work and dedication.

  6. I suspect the staffing shortage at your beach vacation restaurant has more to do with guest worker visas being suspended during the pandemic than unemployment insurance (https://www.wsj.com/articles/ban-on-new-foreign-workers-left-u-s-jobs-unfilled-even-in-covid-downturn-11613409911). Americans don’t want those jobs.

    The executive order expired March 31st and they’re accepting applications now. Who knows if that’s enough time for restaurants in vacation towns to staff up though.

  7. Hey I recently went to a wendy’s Restaurant to pickup a salad for my wife and decided to order a cheese burger meal deal when I finally got to the drive up window it was 25 dollars I asked why the 3 girls laughed at me I said it’s gonna be funny when all of you’re jobs are terminated when people stop going to these fastfood crap holes because why would anyone pay 15 bucks for a cheeseburger meal deal wake up America I mean woke AMERICA you’re all a big Joke

    • Lol. A lot of those fast food places are mostly worked by teenagers and college kids. Why would they care if they lose their job? They still live off their parents.

  8. It just chaps my hide to remember not so long ago when college kids and single Moms COULD actually make a go of it as waitstaff or short order cooks. Now, the tips they work for (almost every state has exemptions from paying even the paltry minimum wage if you receive tips) are all combined for the shift, then management takes a cut to throw at the “back of house” workers- the cooks, busboys & dishwashers who were all about to walk out- and divies out the rest back to the waitstaff as PART OF THEIR PAYCHECK! This accomplishes 2 things; 1) it completely evaporates the incentive to BE A GOOD WAIT PERSON, as a good tip for your good service will only be thrown into the pot with the rest, and 2) management gets the entire waitstaff to pay the back house without pitching in a nickel. The American worker- skilled or unskilled- are (were?)the most productive workforce in the world- bar none. Since 1972, the average American fulltime worker has had a mean increase in wages of 9%, while American worker’s productivity increased by over 76%!!! And adding insult to injury, Big Business rewarded their work ethic by starting the big exodus to offshore and overseas jobs, because “American workers just want too much!” ‘Two income homes’ were unheard of in the mid-1900’s. By 1985 in became ‘the norm’. The Banks- which caused the “Financial Crisis” of 2008, then set out to repossess millions of out of work homeowners domiciles, and fed the burgeoning homelessness problem, while these same citizens were deprived of the healthcare their previous employers had provided. But that stock market keeps on ticking! What kind of disconnect has happened right before our eyes? Corporatocracy does not give one hoot about anyone in this country, as long as we keep buying the cheapest goods produced in China from the local Walmart. Mammon.

  9. Well Ronald Reagan said He was going to make the US a service country. Got rid of a whole bunch of good union jobs busted the air traffic controllers union. Changed laws to bust all unions strength. And guess what? Here We are. Congrats Republicans! It sure helped. The wealthy have pulled sharply upward and the working have fallen sharply down.

  10. This article implies that lower skilled employees deserve nothing better than being underpaid, treated like sh*t, and oppressed. That’s just a small step above slavery.

  11. Hello I disagree, as a semi-retired person I was working full-time making $13 an hour at driving a little shuttle bus when I got laid off because of covid in March of last year. Unable to find any work because everything was closed down I saw an employment which took 6 weeks to begin and then I began receiving $600 a week $300 from the federal 300 from the state. That was actually 80 to $90 more a week and I was making at my previous job so what is the incentive to go back to work for less money? I only Drew unemployment for 2 months and then I did find a similar job to what I had and went back to work. But speaking to friends and neighbors especially as you say in low skilled jobs they’re perfectly content to stay at home watch TV and collect $600 a week.

  12. Only one problem with this recycled argument: It is illegal in most states to turn down an offer of employment while receiving UI. So either understaffed businesses are not calling back workers or former employees are breaking the law en mass or someone is screwing the truth.

  13. The problem is everybody depends to much on technolgy (facebook,messenger,amazon etc)
    The internet is the problem people depend on it for everything How many people remember phone books dictionaries encyclopedias calculaters type writers telephones pen and paper notebooks family night families communcated in person dinner was at a certain time familys talked no school shootings kids had chores kids played outside does every see what the internet has done kids are terrible they are rude talk back to parents the society is getting ruined by facebook People do not know how to do anything by there selves I hate internet its all out dated ask google about a hood for a 95 jeep and you will get all kinds of stuff and its dated back 10 years any question you ask the answer is from 2020 Why is that with all this technology the internet information is not updated if it woukd be brought up to date and keep it update For all you idiots thst talk about unemployment you do not no nithing
    How did all the people get unemployed
    Because the employer let them go because they could not afford there million dollar home when business got slow so they get rid of the peolpe that makes them money to affod pricate schools for there kids Why didnt all these employers take pay cuts cancel memverships to country clubs sell there jets Hell no get rid of the people that make them rich and put them onthe streets Now employers are blaming unemployment That is so stupid
    The employers do not care about employees
    Employees are the backbone ofany company without employees there isno business Look at walmart employees get maybe 10$ an hour but the executives salary is 250,000 pkus stocks how does walmart able to pay them 6 figures because ofthe person workibg therebutt offdealing with publuc and barely getting by for 10$ and hour Tell me what is wrong with the world today i have made my point Bottomline is the employers do not want to give upthere expensive lifestyle to pay the people thst makes it possible for themto drive mercedes Employerz are the reason not workers

  14. The article relies on logic, which we all know is based on assumptions. How do low wage employers actually know ( not assume and reason) that they can’t hire qualified people because they make more on UI? Did they call up former employees and talk to really find out why? The author of the article sites no surveys of those on unemployment as to why they won’t take a low wage low skill job. Let’s get facts, not opinion

  15. My mother in law, worked 26yrs as cool in small little cow town reasturant in TN. 20 yrs ago got 7 an HR. When she retired due to health last year she made 7.50 hr. At 72yrs old. Shameful

    I was kitchen manager I know. Ruthless owners made average 6 to 8 grand a day. Had 25 employees but only 9 on actual patrol, rest under table at 7.15hr still. All adults over 25.youngest person, owner is a republican loving, (ex county sheriff deputy,)owns 4 other business.
    When they got shutdown, 6 days later, burned down. Also most roach infested place ever seen., People call health dept, I’ve seen owner actually pay money for bribes.
    This is where you all expect the lower class to work. Not me, not anymore. It feels like I’ve been robbed,. So it’s other people turn to feel it. And it’s great.

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