The weekly jobless claims and monthly U.S. jobs report get all of the attention when people want to know the condition of the job market. A lesser known indicator is something called the Job Openings and Labor Turnover Survey, referred to as JOLTS by economic insiders.
The recent April jobs report was disappointing. Wall Street experts predicted around 1 million new jobs would be created. Instead, only about one quarter of that amount was added.
However, Tuesday’s JOLTS report brought in some much-needed good news. The number of new jobs posted rose to 8.1 million—nearly 600,000 more than March. This means, according to the federal government, that there are now millions of new open jobs available.
The discouraging and lackluster number of jobs added in April, juxtaposed with the newly added over 8 million jobs, shows that there must be more to the picture. Theoretically, if there are 9.8 million people out of work, as reported by the Department of Labor, the gap should’ve come near to closing. There would only be about 1 million people without jobs, but this wasn’t the case.
There’s a bit of mystery and controversy over why we have this labor shortage. Many small businesses, such as restaurants, complain that they can’t find workers and jobs aren’t being filled—putting pressure on the owners and staff.
Like everything else lately, we devolve into petty political squabbling. Republicans say that the reason for a labor shortage is that the extra $300 coming from the federal government, on top of the state’s unemployment payments and various stimulus checks, have caused people to collect money and stay at home. It’s a disincentive to work, they claim.
They’re not pointing a finger accusing people of being lazy, but rather it’s a rational decision. Why should someone go to a menial, back-breaking job in an Amazon warehouse, schlepping heavy boxes, when they could possibly make more money by staying at home? Restaurant workers would prefer to collect unemployment checks than have to worry about catching and spreading Covid-19, while also dealing with customers who refuse to wear masks or make nasty comments to the wait staff who wear one.
Many people complain that businesses are refusing to pay fair and livable wages. They feel that we’re still in a pandemic and there are health risks. There’s also a feeling of frustration when a boss only offers a small hourly wage, while they see uber-wealthy people like Amazon’s Jeff Bezos buying mega yachts.
Some states are starting to look into making changes. The Associated Press reported that Georgia Governor Brian Kemp announced plans “to require people receiving unemployment benefits to resume searching for work.” Kemp also stated, “Georgia’s labor commissioner now says he’s considering cutting federal benefits to workers in an effort to push them back into the workforce.”
President Joe Biden, the architect of the $1.9 trillion rescue package, which included the extra $300, claimed that the supplement isn’t to blame for the labor shortage. Interestingly, Biden, an ardent supporter of workers, asked the Labor Department to consider enacting rules which would require people who are receiving unemployment benefits to search for a job and accept one if offered. Biden said, “Anyone collecting unemployment, who is offered a suitable job must take the job or lose their unemployment benefits.”
It’s fair to believe that many people are opting out of the job market, as they are concerned for their health and safety. Working mothers have had an exceptionally hard time. As many public schools closed and students were sent home, they were faced with a difficult choice. Mothers were forced to choose between their jobs and taking care of the kids and helping them with online video classes.
The Wall Street Journal wrote about a positive aspect emanating from the labor shortage. “The good news for those who are working is that employers are paying more to attract and keep them. Average hourly earnings last month increased at an 8.4% annual rate and even more for lower-income jobs, like retail (16.8%) and leisure and hospitality (19.2%).”
Of course, there’s always a catch. When wages increase across the board, we run the risk of causing more inflation, which harms low-wage workers in the long run, as they lose purchasing power and their pay won’t go too far.
