I mean, really well below; given the pace of covid-19 vaccinations and declining caseloads, forecasts had been closer to 1 million new jobs. It was, Axios primly noted, “the biggest miss, relative to expectations, in decades.”
The problem isn’t employers, who are raising wages in their efforts to fill a record number of openings. Anecdotally, business owners and managers tell reporters and surveys that they can’t get people to come in for interviews, much less show up for work. This might have something to do with how generous the federal government has made unemployment benefits — so generous that they exceed the value of working for about half of the unemployed.
That was a good thing last year, when we wanted nonessential workers to stay home, rather than going to workplaces where they might spread the virus. Now, however, it threatens to hamper the economic recovery.
Fantastically, many Democrats, including Biden administration officials, claim that paying people to stay home doesn’t make them more likely to do so. Instead, they prefer to attribute the glaring mismatch between labor supply and demand to covid-19 fears or parents pinned to their living rooms for lack of child care.
Yet these things aren’t entirely independent. People who report being afraid to go back to work might do so anyway if the alternative were less pay. More teachers would probably have gone back to full-time, in-person teaching for the same reason, if so many Democratic-run state and local governments hadn’t indulged union panic-mongering long after school employees had the chance to get vaccinated.
Fixing these problems is very much within Democrats’ power; they could turn unemployment benefits into a hiring bonus, or trim back unemployment benefits to replace some, but not all, lost wages. They could announce that schools were reopening full time and that any teachers who didn’t show up would forfeit wages. These steps would narrow, if not close, the gap.
Of course, there are reasons Democrats might be reluctant to pull back on the enhanced benefits. Presumably, one reason wages are growing is that employers have to stretch to compete with unemployment benefits. Thanks to those higher wages, along with reduced consumption opportunities and generous government payments, most households are coming out of the pandemic in better financial shape than they entered it. Savings are at their highest level since World War II, and banks are getting nervous as Americans pay off their credit cards at a record pace.
All that is great news, not just economically but also politically. People like having higher savings and lower debt. Some of them are probably pretty happy about getting paid to stay home. Why would the Biden administration want to mess with something that’s working?
Well, maybe because of the effect all this is having on businesses — you know, the ones struggling to fill their openings. Commentators on the left are fond of suggesting that employers can solve their labor shortage by paying workers more than the enhanced unemployment benefits, which are scheduled to last until September. But many of the businesses most affected by the labor shortages are often those least able to pile on bonuses: They’re the ones that had to lay off staffers because the pandemic decimated their revenue.
Some of those businesses are large corporations with deep pockets and access to capital markets; they’ll struggle through. But many independent business owners and small franchisees have already spent more than a year desperately trying to stay solvent as customers stayed home and governments piled on new safety regulations.
In good news, there’s a vaccine that can make their operations safe again. For hospitality in particular, it couldn’t have come at a better time — many in this industry depend on summer tourism to keep them in the black. They should be regaining some stability with widespread vaccinations; instead, they’re struggling to keep going because the government is still paying workers to stay home.
Even if you’re unmoved by employers’ plight, you should be worried about the long-term consequences. Whatever the happy effects of temporary pandemic measures, it is neither politically nor economically feasible to keep unemployment benefits this high forever. Eventually the money will run out, and workers will have to get jobs. We all have an interest in ensuring that, come September, there are enough viable businesses to provide those jobs to every worker who needs one.