The common perception amid the mammoth job loss in COVID times was that people would grab the opportunities once they come back.
As the joblessness continued during the pandemic times, the government brought in stimulus checks and unemployment benefits to ease the suffering of the masses.
But now, when the jobs are back, the labor shortage is troubling the government.
Republicans believe that unemployment benefits are urging people not to seek jobs. This is brewing Republican governors in red states to stop unemployment benefits.
Alabama, Alaska, Arizona, and Arkansas are some of the 26 states that stopped participation in the federal unemployment benefits, proclaiming that it is causing a labor shortage in the country.
For instance, according to reports, the country is seeing a gigantic 9.3 million job openings but yet to find suitable employees.
But the truth is that the labor shortage is due to relocation and frictional unemployment and is likely to continue in the near future.
Many people have started small businesses during the pandemic and prefer to self-employ instead of going back to their jobs.
Republicans Going Hard against Unemployed People for Political Gains
The opening of 9.3 million jobs is a historical event where employers are struggling to find relevant workers.
The states are even incentivizing workers to get back to work.
This is an alarming situation, as the upcoming Biden infrastructure plan is promising to create a further job boom immediately. And the construction industry is one of the most impacted by this shortage already.
With this labor shortage, the infrastructure plan is bound to suffer. However, the need is to address the issue correctly.
Republican states are politicizing the issue and are trying to be at a crossroads with the federal government.
Closing the unemployment benefits will burden the truly unemployed people. This can push them under the poverty line.
Republicans claim that the unemployment benefits are exceeding the average wages of workers. However, this is true only in three states, including Montana, Wyoming, and North Dakota.
The Republicans claim that snatching the unemployment benefits would bring people back to work. However, according to surveys, only six percent of individuals are expected to get a job after these benefits stopping.
Relocation, Frictional Unemployment, and Less Supply: The Primary Reason for the Labor Shortage
Relocation is the primary reason for the increasing labor shortage in the United States amid the COVID recovery.
According to Pew Research, a significant number of Americans moved or knew someone who relocated as the COVID crisis unfolded.
Most of them moved as they discontinued their studies and failed to afford the housing which they were doing initially.
This is the major cause of increasing labor shortages as people left their jobs while relocating.
Similarly, supply and demand are another reason for this increasing shortage. And unsurprisingly, it is yet to stay for a significant amount of time.
The age paradigm has more people in the retiring age bracket, resulting in the job vacuum that the upcoming generation is failing to fill.
This is not a problem only for the United States. China, the second-largest economy in the world, is facing the same crisis, for example.
The country embraced a controversial one-child policy until 2016 when the government allowed couples to have two children.
Recently the Chinese government allowed couples to have a third child as the country faces a chronic labor shortage.
The same scenario is applicable in most of the post-industrialized nations, where the death rate is high compared to the birth rate.
Frictional unemployment is also one of the contributing factors to this labor shortage. While almost 3.5 million new startups were launched in 2019, almost 4.4 million were started in 2020.
This 24 percent boom in economic activity helped people drift away from their jobs, mostly on a permanent basis.
Not only this, but the increasing economic activity in the form of startups also created job openings which are further adding up the labor shortage numbers.
This boom in “COVID entrepreneurs” is a significant transition in the United States economic infrastructure where less unemployment is adding to the worries of the government.
Then comes the ill employment practices in some sectors, which forces people to leave their jobs and change career path most of the time.
For instance, the rise in sexual harassment of tipped workers in the restaurant industry is forcing people to leave the field. No wonders why the same industry is facing more labor shortages than others.
Easing visa laws can help the United States to avert this upcoming danger. Republicans, however, can play immigration politics if Democrats go this line.
The local population boom is not possible in the short run, and if the US does not ease immigration laws, the economy can nosedive in upcoming times.