America Doesn't Have A Labor Shortage Crisis, We Have A Living Wage Crisis
The truth is the economic status quo was broken pre-pandemic.
May 26, 2021 at 11:23 am
Opinions are the writer’s own and not those of Blavity's.
The highly anticipated U.S. jobs report landed with a thud. Despite the twin boosts of increasing vaccination and re-openings, the numbers underperformed most economist’s expectations. The reasons for the lower-than-expected numbers are still inconclusive. This vacuum of certainty has been filled with the narrative that COVID unemployment benefits are keeping workers out of the job market. You might have seen the social media posts of beleaguered restaurants closing because of staff shortages. Cue the great labor shortage panic of 2021.
Not surprisingly, this idea has been seized upon by Republican leaders to raise the specter of the much-maligned “Welfare Queen,” high on the hog of government largesse and refusing to work. Congressional leaders are now using labor shortage panic to justify proposing legislation to end these benefits.
America does not have a labor shortage crisis, we have a living wage crisis. There is such an intense focus on how many jobs are created, that we miss the larger story of whether workers can afford to live on what they earn. The current Federal minimum wage is $7.25 per hour and has stayed flat for over a decade. If the minimum wage was tracking with productivity gains, it would actually be $22 per hour today. If workers are indeed opting out of the labor market, is it any surprise when they are not being paid their worth?
The cynical logic of cutting unemployment benefits is another example of the divisive logic that there are “makers” and “takers” in society. That only takers deserve government support in a crisis. Isn’t it interesting that when the government looks to incentivize companies, they are supported through tax breaks, loans and subsidies? However, when the government looks to incentivize workers, talk immediately runs punitive and there is a rush to cut all financial support, lest we create a culture of dependency. There never seems to be the same level of outrage at the corporate welfare system, where profits are privatized and losses are socialized.
It is noteworthy that in many states, unemployment benefits are actually less than the minimum wage. Rather than doubling down on divisive narratives of lazy and entitled workers, we need policy priorities that focus on lifting the economy from the bottom and building out the middle class. A start would be reviving the failed effort in Congress to increase the minimum wage to $15 an hour.
Finally, and this is obvious, a more immediate reason for the slow jobs numbers is the pandemic is still ongoing. Even with the numbers of fully vaccinated people rising, there is understandable worry about exposure to the virus on the job. Serious illness, including long-Covid symptoms, can cause job loss in and of itself.
A study by the U.S. Census Bureau found that 4.2 million Americans have opted out of the workforce due to fear of the virus. More disturbing is the significant number of women driven out of the workforce due to the pandemic. According to a Mckinsey analysis, as many as 2 million women (disproportionately women with young children) have left the workforce due to the pandemic — erasing gains that took a generation to achieve. We know that lack of affordable childcare is a major barrier to women’s labor force participation. Passage of the proposed Infrastructure bill, which includes a subsidized child care proposal, is an important step in encouraging women back into the workforce.
The debate about whether the labor squeeze is a long-term trend or a momentary aberration will rage on. Many have seized on low job growth to demonize workers and excoriate the government for creating a culture of dependency. Living wages, safe working conditions and affordable childcare are the way to encourage reluctant workers back into the workforce.
The truth is the economic status quo was broken pre-pandemic. What we need now are transformative policies, not tired old stereotypes.