Have you noticed all the signs hastily posted on the doors of all sorts of business establishments practically begging for workers ? Which makes the June 8 announcement by the Bureau of Labor Statistics that there are currently 9.3 million job openings in the U.S. so puzzling. Unfilled jobs are of all shapes and sizes, not just in lodging/food services/retail, but also in general service industries and manufacturing. This imbalance of supply and demand is tempering the nation’s post-COVID economic recovery, and flaming the embers of wage- induced inflation as employers are forced to “pay up” for labor and pass those costs along to consumers in the form of higher prices. So what’s going on ?
Adam Smith in 1776 penned the Economic Man concept, which suggests that rational people will always behave in a way that maximizes the utility, or usefulness, of their monetary outflows and sacrifices. In other words, we generally act in our best economic interests. So, picture this scenario. You are unemployed, perhaps as a function of the 2020-2021 COVID experience, and your former employer gives you a ring inviting you back to work at a pay rate/hours/work conditions similar to your past experience. In the meantime, you have been receiving the benefits of the combined federal/state unemployment benefits available in your state, plus an enhanced federal benefit of $300 per week provided by the American Rescue Plan. So in many cases, I can sit at home and earn more, sometimes significantly more than my boss is willing to pay me to return to my old job (and more than any new boss). Adam Smith would suggest that most people in that situation would simply stay at home, which in turn bleeds the economy of needed workers.
In other words, our federal government is enticing workers to stay at home by paying them for the privilege. As a taxpayer, and a student of Adam Smith, I’m scratching my head. These extended programs are slated to expire in early September, but many states, even two with Proglibocrat governors, have signed into law an early end to this twisting of economic common sense. Incent folks to work, not to sit. And just to preclude reader responses pointing to my heartless cruelty, I am an advocate of employer-funded unemployment insurance, and recognize the need for many with disabilities and situations requiring extended assistance.
Stupid federal policy, in place to insure dependence on government, is making unemployment pay more than work. Who makes it more lucrative for people to sit and get paid, rather than seeking employment ? You know who ! WHAT THE HECK !
Thanks so much to the 81 million of you that put this crowd into power in November !
