When a public problem is misdescribed, the proposed solutions often turn out to be irrelevant or inhumane.
A current example: the so-called “labor shortage” in the United States.
Jerome Powell, chairman of the Federal Reserve, says the US has a “structural labor shortage” that is unlikely to be resolved anytime soon.
The US Chamber of Commerce states that there are more than 10 million job openings in the US for which employers cannot find workers.
This is the truth: there is no shortage of labor.
However, there is a shortage of jobs that pay enough wages to attract workers to fill the vacancies.
For most Americans, real (inflation-adjusted) wages continue to fall. Wages have risen less than prices.
Those price increases include the costs of food, energy, rent, child care, elder care, and transportation (cars, gas, and public transportation), all big expenses for workers.
Meanwhile, the federal minimum wage continues to plummet. It hasn’t been raised in 13 years, the longest period without a raise in its history. Adjusted for inflation, its real value is the lowest in 66 years.
You don’t have to be a financial wizard to see why some workers might say to hell with that.
Economists offered similar warnings of a “labor shortage” after the financial crisis and recession of 2008-09. But when the economy strengthened and wages rose, the so-called “labor shortage” magically disappeared.
So what is to be done about the difficulty employers are having in finding workers?
Simple. If employers want more workers, they should pay them more.
Jerome Powell and his Fed colleague don’t want to hear this. Its goal is to address the “labor shortage” by slowing down the economy so much that employers can find all the workers they need without raising wages.
Even with inflation slowing, central bankers still believe they need to slow the job market and curb wage gains. “The highest cost, by far, in [the service] it’s work,” Powell said at his last press conference in December. “And we see a very, very strong job market…where wages are very high.”
But the slowdown in the economy will prevent millions of people from getting raises and cause millions more to lose their jobs: disproportionately low-wage workers, women, and people of color.
Meanwhile, Republicans and some corporate economists blame the “labor shortage” on overly generous unemployment benefits. They say the way to get more people to work is to make their lives outside of work less tolerable.
A recent “study” by Casey Mulligan and EJ Antoni claims that “it’s worth not working in Biden’s America” because unemployment and Affordable Care Act benefits are so generous that “many companies can’t get workers back to work for almost three years. after the Covid-19 reached these shores”.
Baloney. Aside from the wealthy who don’t work and their heirs, most of the unemployed are struggling.
Pandemic benefits are over and America’s social safety nets are in tatters, just as they were at the start of the pandemic. Before the pandemic, less than 30% of unemployed Americans qualified for unemployment benefits, which last no more than six months, the least generous of any wealthy nation. Since then, we have done nothing to fix this broken system.
Meanwhile, Affordable Care Act subsidies allow low-income people to afford health insurance. Without these subsidies, many would not receive the health care they need and would face a greater chance of becoming seriously ill and therefore unable to work.
Taken to its logical extreme, the corporate Republican argument might be correct. Remove all safety nets, and at some point, the jobless will suffer so much that they will have to take any job available, at any wage, regardless of what the job demands.
But do this, and we’ll end up with an economy that’s even crueler than today’s economy.
The reason people aren’t working is that work doesn’t pay them enough, given declining real wages and rising costs on which they depend.
Both the Fed solution (slow down the economy so employers can find the workers they need without raising wages) and the Republican corporate solution (cut safety nets so people are so desperate they have to take any job available) they are cruel. They would place enormous burdens on many of the most vulnerable people in our society.
If we want more people to take jobs and want to live in a decent society, the answer is to pay people more.