The Prolonged Weirdness Of The "Labor Shortage"

Have you been inside a fast-food restaurant lately? How about your favorite big-box retailer? You may have come across a sign on the door stating one of two things (or in some cases both!). The first is that the location is almost certainly hiring. After all, "now hiring" signs have become about as commonplace as "foreclosure" signs were during the Great Recession of 2008-2009. The other is that the store is either closed or only open for limited hours due to staffing issues.

These signs have become so all-consuming across the country that many online commentators have noted that plenty of these signs read almost exactly the same. The format goes something like this:

"Due to staffing issues, this location will be open for limited hours. Please be patient with the staff that did show up. No one wants to work anymore."

It is no accident that these signs are all showing up at the same time. According to reporting by CNBC.com, there are at least 1 million more job openings than there are people actively looking for work. The competition between employers to hire new employees has become fierce, particularly for jobs that pay low wages.

There have been some one-off stories about some of these employers raising their wages to as much as $15-$17 per hour (though, even these stories are often misleading), but it is still much more common to see fast-food and retail jobs only paying around $10-$12 per hour. Given that fact, and the reality of inflation in everyday essential goods and services, is it really any wonder that many people are turning their nose up at these offerings?

Allow me to take a moment of personal privilege here and speak about my own experience working in a fast-food job when I was all of 15 years old. This was half my life ago, and I was offered a starting wage of $7 per hour. For a high school sophomore living at home with no bills to pay, this sounded like a very respectable offer. It was perfectly reasonable for me at that time, and I was able to save up a few thousand dollars before I went off to college. However, I must remind readers that I had literally zero financial responsibilities or burdens to bare at that time.

Take the $10 per hour that many fast-food restaurants are offering daytime cashiers today, and some simple math tells you that these workers have only seen a $3 per hour increase in pay in the last 15 years (from the $7/hour I made in 2006). $3 per hour over 15 years comes to an insultingly low $0.20 per hour raise per year. Even for someone who is able to get 40 hours per week (which often does not happen in these jobs as employers try to skirt offering any benefits), that worker would only receive an extra $8 per week for their hard work. They gain years of experience, and sacrifice huge amounts of time with their families and loved ones to earn an average of just $8 per week per year. This doesn't even go into the fact that much of the wage increase has only come in the last year or two as employers have gotten increasingly desperate for workers.

Some people have vented their frustrations that more people are not returning to work in these low-wage jobs, and plenty point the finger at boosted unemployment offerings from the Federal government as well as relief checks received by most people during the COVID-19 lockdowns. Some conservative states even opted to cut off the boosted unemployment offerings early in a bid to try to force people back to work in low-wage industries. Despite these efforts, the statistics did not bare out an success for this strategy. States that cut off boosted benefits early saw NO tangible increase in the number of people applying for low-wage jobs. So what then could explain why people are staying out of the workforce even as boosted unemployment benefits expire or are cut off?

1) COVID-19 Is Still A Primary Concern For Many

It is a sorry state of affairs that we have to continue to remind the public repeatedly that COVID-19 is still raging throughout the United States and the rest of the world. The Delta variant in particularly is even more contagious than the original strain of the virus, and hospitals across the country are at or above capacity at this point.

Those who are sick and/or hospitalized because of COVID-19 are obviously not able to return to work at this time, but it goes beyond that as well. There are also plenty of people who have taken time away from their own jobs because they are caring for a loved one who is sick in the hospital with this disease. Many of those people have decided to take a long-term leave of absence from the workforce to do this.

A number of people are still afraid of catching COVID-19 themselves and would rather stay out of the traditional workforce and piece together a living in some other way than re-enter a job that was not paying all that well to begin with.

2) Some Have Gained Financial Stability They Did Not Have Before And Don't Need A Paycheck At This Moment

A segment of the pre-COVID workforce has gained new financial footing and stability that they did not have before, and they may not be as reliant on a paycheck from a low-wage job as they once were. These individuals undoubtedly benefited from the boosted unemployment and COVID-19 relief checks, but they also gained some ground through a suspension of their student loan payments and perhaps their mortgage or rent as well. Many took this extra cash flow and paid down debts and/or boosted their savings to a point where they are not in immediate and pressing need for a low-wage job at this time. They have the flexibility to wait for something better paying to come around.

3) The Pursuit Of Higher Education/Trade Schools And Better Earnings Has Flourished

The extra time that many people had available on their hands has made it easier for them to pursue higher education, trade school opportunities, and other avenues to higher earnings than they were earnings before. As such, it is hardly any surprise that some people have leapt at this opportunity. Those taking the time to do this may hardly have a spare minute available to them, and many will not want to spend any extra time in a low-wage job that doesn't respect them.

Given these three factors, and many more, I would fully expect the so-called labor shortage to persist well beyond the expiration of boosted unemployment benefits and eviction moratoriums. We may all have to get used to not have 24/7 access to our favorite fast-food and retail stores, but that may not be such a bad thing after all.