The Labour Shortage Nobody Expected.

July 30, 2021

In this blog I will be discussing the labour shortage in America and will answer the questions:

· What caused the labour shortage?

· Is it really that bad?

In the United States there is a large (entry level) labour shortage, why is that? Bluntly, it is due to socialist government. During the peak of the pandemic, there was a surplus of unemployed people as in the US, the unemployment rate rose to 15% (March 2020) due to the majority of businesses taking heavy losses as they were no longer able to function at full capacity causing many workers to be laid off for the business to survive, however if the losses of a company were so great that they were forced to close all of their workers would end up unemployed. The rate would decrease as more people accepted the status quo and now has dropped to a relatively low 6% (June 2021) however the effects of the pandemic are still being seen in these statistics as this is almost double of the months prior to Corona virus’ effects taking place as the rate initially was 3.5% in December 2019. Having said that, now the US is facing a contradictory issue. The people aren’t finding it difficult to search for work, work is finding it difficult to find people. 42% of small business owners said they had job openings that they could not fill, according to a March survey by the National Federation of Independent Business.

These workplaces are finding it so difficult to find work that more drastic measures are taking place. For example, McDonald’s is raising hourly wages for employees at company-owned locations to $11 to $17 and starting wages for shift managers will be raised to at least $15 to $20 per hour which was, on average increased by 10% for the sake of attracting new workers. This is all due to high unemployment benefits which cause unemployed people to prefer being unemployed as the benefits given to them are more appealing than working at minimum wage for 8 hours a day. This is because the unemployment benefits consist of an “Automatic, additional payments of $300 per week to everyone qualified for unemployment benefits” as stated by the USA government website along with health coverage under “COBRA” and educational help. These benefits exceed the benefits of the work as there are other associated costs attached to receiving work, for example, travel costs. This large unemployment benefit sounds great however it is creating loads more problems than it solves like most other government schemes.

This situation all boils down to whether good unemployment benefits improve society. Seems like a simple answer- yes- because it increases the average wealth of the society. However, it’s another contradictory answer, the increase of unemployment benefits promotes being unproductive to a large percentage of the society as they are being given rewards for being unproductive. This also applies to anybody who is already working at minimum wage. As they could avoid work and get paid by doing nothing which reduces the productivity of the workforce reduce the scale of a country’s economy. Moreover, then national debt in the US has increased drastically due to the pandemic itself and the increased spending of the government puts more strain on the debt which is not good for these perilous times as the pandemic itself cost more than both world wars, combined, cost to the US. Furthermore, small businesses without much financial power are unable to use the money which the large corporations like McDonald’s can leverage, therefore are unable to fully recover from the pandemic. For example, some small cake shops are unable to reopen a second location, they are also forced to decline orders as they are understaffed. This process is occurring across the entire USA.

However, this creates more problems such as prices being increased of everything. The increased wages of workers due to the labour shortage causes a cost to the businesses that employ them, this leads to the services of the businesses to increase as the manufacturing cost has increased. Which increases the cost of living in the country as almost all services including shops will charge a higher premium for their services. Additionally, the unemployment benefit also raises the government’s requirement of taxation thus affecting all the citizens who already have jobs and further putting pressure on small businesses to pay tax on the profits they make to give it to people who sit around all day, making money from “looking” for jobs.

Overall, I believe that the labour shortage benefits people who are looking to be unproductive to society while reaping its benefits however is impacting society as a leech.