By Talia Reiss
“Socialist government benefits make lazy Americans unwilling to work.” We’ve heard this rhetoric a lot as America grapples with a nationwide shortage of workers, but it is not quite as accurate as some right-wing news outlets would like us to believe. Rather, America’s labor shortage reflects a deep-rooted ethical problem with the way America treats and pays its workers.
Let’s back up. In the first three months of Covid-19, unemployment rates skyrocketed from 3.8% to a whopping 14.4% in April -- the highest on record since World War II. The world came to a screeching halt, leaving Americans scrambling for income as businesses closed their doors indefinitely. The economic downturn incentivized mass layoffs and bankrupted thousands of businesses.
As the world cranks back to life, labor force participation is still strikingly low. Job openings are at a record high with over one million more job openings than there are workers to fill them. Even still, about 7.42 million Americans remain unemployed.
Why won’t Americans return to work? Many Republicans blame America’s social support systems. “The government is using your taxpayer dollars to incentivize laziness,” said Fox News commentator Tomi Lahren. “It is a slippery slope.”
At the start of the pandemic, the American public was forced to rely more heavily upon government support to stay afloat. In March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act authorized payments of $1,200 to all eligible individuals, with an additional $500 for every child under 17. The CARES Act also extended unemployment benefits to individuals who were previously ineligible, providing an additional $600 per week until July 26, 2020. In December 2020, the IRS sent $600 to every eligible adult and child under the Tax Relief Act. In March 2021, the American Rescue Plan provided $1,400 for eligible individuals and an additional $1,400 for every qualifying dependent, regardless of age. It also modified the federal unemployment program to include $300 weekly unemployment checks.
While these government benefits made unemployment more comfortable, research shows they didn’t play a huge role in perpetuating the labor shortage. States that discontinued the $300 weekly stipend early showed only a marginal increase in employment compared to states that continued the program. Even when enhanced unemployment compensation ended nationwide on September 5th, hiring rates did not surge like economists had expected they would. Employers hired just 194,000 workers in September -- far fewer than predicted. Bank of America economists told Reuters that “more generous benefits did not have a strong negative impact on employment.”
The real reason for the labor shortage is unclear, but there are a variety of factors that likely play a large role. Many parents still struggle to find reliable childcare with frequent school closures, leaving them unable to take a job that does not offer paid family leave. Some adults don’t feel safe returning to work, especially at hospitality jobs that require interacting with potentially sick customers.
Most importantly, the pandemic has led people to reevaluate their values and the wage at which taking a particular job becomes worth their time. People want quality work and they want to be paid well, especially since many jobs are riskier and less pleasant in the post-pandemic world. With such a high demand for labor, workers have more power over their working conditions. They no longer “have to take a really sh**y job at suppressed wages because they have no other option,” senior economist Heidi Shierholz told the New Yorker.
Now that workers have more leverage, employers cannot continue to amass wealth by underpaying and overworking their employees if they hope to remain adequately staffed.