The Myth of the “Labor Shortage”

By Sam Murray, Columnist

The current state of labor in the United States is uniquely poised to undergo a rapid sociopolitical transformation regarding how labor’s worth is perceived in society and how workers must be compensated through higher wages and a better standard of living. 

Perhaps counterintuitively, poverty declined in 2020 alongside vast unemployment, largely due to federal unemployment benefits and stimulus checks from COVID-19-related stimulus packages. Yet, American workers face immense difficulty in the transition back to the workplace, both financially and emotionally, whether it be remote or in person. 

Passed in March, the American Rescue Plan extended federal unemployment payments for millions of Americans, but this recently expired on Sept. 9, leaving financial uncertainty for households across the country. The original eviction moratorium, enacted by the CDC in Sept. 2020 to mitigate the spread of COVID-19, initially expired on Aug. 1. After severe backlash, the Biden administration reinstated it, but the debacle concluded with the Supreme Court striking down the CDC’s moratorium. These two major changes to financial and household security greatly stress millions who are at risk of eviction, still unemployed, do not feel safe enough to work or are struggling to find a job that pays the bills.  

Numerous politicians, including Senate Minority Leader Mitch McConnell, local businesses, media outlets and the general public allege that federal unemployment and stimulus payments have created a substantial labor shortage. Employers have numerous job openings, but they claim to face a significant shortage of people willing to work due to income from federal aid payments. 

These employment concerns follow in the wake of the CDC announcing that more Americans have died from COVID-19 than the 1918 flu pandemic, making the current outbreak the deadliest our nation has faced. To date, there have been over 42 million recorded cases of COVID-19 and over 675,000 deaths in the U.S. — truly unfathomable numbers. This is despite the fact that millions of Americans have the luxury of working from home, and we have numerous safe and effective vaccines to prevent severe disease and almost entirely prevent death. Hundreds of thousands of lives were lost before the development of the vaccines and hundreds of thousands of preventable deaths after.

Political leaders frustratingly assert that Americans are choosing to stay on unemployment payments instead of working. However, this is misleading. Americans, in many cases, remain on unemployment payments or decide not to seek certain jobs in the market because employers keep wages low. If government “handouts” provide people better livelihoods than the starvation-level federal minimum wage of $7.25 per hour, good for those individuals making the financially sound decision. We should not blame the worker who accurately weighs the costs and benefits of our labor system. Instead, we should blame the terrible benefits of the low-wage system that our federal government has standardized. 

For many workers, particularly those in the service industry or interacting with the general public, the workplace conditions under COVID-19 generate additional stressors that result from lax safety rules and non-compliant mask-wearers. Not only are these conditions frustrating for workers, but unsafe work environments have placed them at significant risk for contracting COVID-19, especially before vaccinations were widely available. With this poor treatment, low wages are simply not enough for many to return to work, at least not without significant changes. 

An estimated 8.2 million unfilled jobs are left to recover our economy to pre-pandemic employment, and the monthly job totals have been slightly disappointing for the Biden administration. However, if employers want employees, they should raise wages to the market rate that workers need to survive — plain and simple. Some progressive Democrats have acknowledged this, particularly those running for office in 2022. But it is not purely that simple.

An immediate hike to the federal minimum wage to at least $15 per hour is necessary, as well as indexing it to inflation to combat any real-wage decreases from the inevitable decline in the dollar’s purchasing power over time. However, a wage increase on its own will not solve the labor issues our nation is facing. The government must make policy changes to satisfy the labor revelations that Americans have discovered through pandemic-altered work environments, behaviors and attitudes.

The return to the office — whether through a physical transition back to an office building or simply reentering the workforce from unemployment — puts families with children who may have been at home for a year and a half in a difficult situation. More than 41 million workers have children under 18, and most lost coverage during the pandemic. Finding childcare is already difficult and expensive, and returning to in-person work poses risks for young children still not eligible for a COVID-19 vaccine. Before the pandemic, families took a 5% pay cut on average to pay for childcare, but it has worsened since. The Biden administration has taken steps to address this with financial assistance through the American Families Plan. This plan places a cap on families’ out-of-pocket childcare costs, but it needs a more aggressive approach with free universal childcare to meet the needs of American families. 

The cost of living has risen dramatically, and raising the minimum wage only partially puts a Band-Aid on this crisis by trying to keep up with rapidly increasing prices. Even before the pandemic, 47% of Americans said the rising cost of living was the greatest threat to their financial security. 

Housing costs have greatly increased too. The typical home price in the U.S. rose as much as 13.2% last year, with local variances significantly higher or lower. Rent prices are also surging across the nation, particularly in smaller cities — more than compensating for the dip in rents at the pandemic’s onset. This surge destabilizes communities and drives local residents out to the pleasure of landlords, attracting new tenants able to pay the substantially higher rents without question. As well, rising rent prices disproportionately fall on those at the lower end of the financial ladder, whereas rents for the wealthiest Americans’ have fallen. Without any federal intervention, low and middle-income Americans have little hope as rent prices soar and wages stay low. With the eviction moratorium gone and federal unemployment benefits exhausted, it is only a matter of time before a crisis of the unhoused, unemployed and impoverished unfolds.

Additionally, the federal government’s unwillingness to mandate employers pay their workers for leave exacerbates these cost-of-living stressors. Forty OECD nations provide parental leave at a minimum of two months, with most nations far exceeding that. However, the U.S. mandates zero weeks of paid parental leave. Even so, among OECD countries, highly gendered parental leave policies primarily focus on mothers’ time off. For instance, while fathers may have a limited option for leave, only Japan provides near-equal paid leave for both mothers and fathers. 

Currently, a handful of states and the District of Columbia have paid parental leave laws, but a federal mandate is necessary to expand it to all Americans. The Biden administration is proposing 12 weeks of paid leave, covering two-thirds of wages and up to 80% of wages for low-wage workers. Additionally, the plan would offer seven days of paid sick leave, a policy that has attracted much more attention due to the pandemic. While these policies are important, they are not substantial enough to raise a family. Twelve weeks of partial pay is not enough to cover the rising costs of childcare, let alone the hospital bills that can rack up for individuals without health insurance or with exploitative insurance plans. 

Finally, health insurance should no longer be tied to employment. Currently, 160 million Americans have health insurance through an employer. However, a sudden job loss can disrupt health insurance coverage. Without a transition to government-backed healthcare, the uninsured are less likely to receive treatment, an extremely dangerous prospect, especially during a pandemic. 

Many Americans, including 66% of unemployed adults, are seriously considering a change in their careers. This instance of mass unemployment has a significantly negative toll on the mental health of those without jobs. Additionally, widespread unemployment during the pandemic has disproportionately impacted those who are Hispanic, younger and without a bachelor’s degree

Nonetheless, the pandemic has also helped Americans to realize that perhaps life is more than working yourself to death for starvation wages that put workers under emotional and physical stress. Staying at home has helped some workers find time for their families and reprioritize important things in their life. 

As COVID-19 has overwhelmed and disrupted employment across the country, American workers must unionize their workplaces and demand better labor conditions, higher wages, paid leave, rent control, access to healthcare and more to ensure a better quality of life for all. Doing so makes the American workforce and economy healthier, stronger and protected from future crises. We do not have a labor shortage; we have a shortage of jobs that treat workers like people with dignity — we are not machines

Featured Image: “Fight for $15 on 4/15” by Otto Yamamoto is licensed under CC BY-SA 2.0.

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