President Joe Biden defended his economic record on Monday when US employment data revealed a couple of puzzling facts: Millions remain unemployed after losing their jobs in the pandemic, but companies say they can’t find enough people to hire.
The inability of companies to attract new workers has sparked a polarizing debate about possible causes, with Republicans and some business figures saying that overly generous unemployment benefits are discouraging people from getting a job.
The main culprit, they say, is the Biden administration’s extension of a $ 300-a-week surcharge on unemployment insurance. In states that pay the most, combined benefits can be as high as $ 600 per week, the equivalent of nearly $ 16 per hour. That’s more than double the federal minimum challenge.
The unexpected struggle to find workers threatens to derail what many economists and businessmen hoped would be a strong economic recovery.
Speaking at the White House, Biden said his economic plan was “working” despite last month’s slowdown in job creation, in which companies hired 266,000 new employees, far less than the 1 million economists expected. He insisted that there was “not much evidence” that the extension of unemployment insurance as part of his stimulus plan discouraged work.
“We need to stay focused on the real problems before us: defeating this pandemic and creating jobs,” he said.
Entrepreneurs say the labor shortage is real in sectors like food service, transportation and construction.
The franchise owners of the 7-Eleven convenience store chain begged the company not to force them to return to 24-hour operations because they couldn’t find anyone to work night shifts. Managers at a understaffed McDonald’s in Texas posted a sign on their self-service menu asking for patience because “no one wants to work anymore,” which made the restaurant famous on TikTok.
Breakfast cereal maker Post Holdings said the worker shortage has caused severe production delays. On Monday, Donnie King, COO of Tyson Foods, the largest meat processor in the US, said that “it has been taking us about six days to do the five-day job due to turnover and absenteeism. “in its pork plants, which were among the worst affected in the first months of the pandemic.
The National Federation of Independent Business, a group of small businesses, said 42 percent of small business owners say they can’t fill positions. Among them is Matt Glassman, owner of the Greyhound Bar & Grill in Los Angeles.
Two weeks before the reopening, Glassman scheduled 15 interviews to hire kitchen staff. But a dozen candidates did not show up, he said. Of the three who did, one was “completely wrong for the job” and another quit on the first day, leaving him with only one hire.
“We’ve done traditional things, we’ve done Craigslist, we’ve done [hiring website] Poached, culinary agencies, I tried Instagram, I tried to talk to my staff, I tried to walk up and down the street, ”Glassman said. “It has not been successful.”
The increased risks of working in person during the Covid crisis have caused many low-wage workers to reconsider whether their jobs are worth it, say labor activists and economists. For those with children, persistent closures of some schools and other daycare centers have made it even more difficult to return to work.
“The idea that I need to go back to work and potentially put my family at risk and earn a third [the tips] What I was making before is just a decision that I probably wouldn’t make if it were my staff, ”Glassman said.
Others say unemployment benefits have discouraged potential hires. Among the Permian Basin oil fields in West Texas, “there are a lot of people hiring and the oil and gas activity is picking up and they are ready to hire,” said Wesley Burnett, chief economic officer for the US Chamber of Commerce. town. from Odessa. “But the federal program they put in place has set everyone back a little bit in terms of wanting to stay home instead of going to work.”
Henry McMaster, the Republican governor of South Carolina, ordered his state to stop paying additional federal benefits at the end of June, two months before Washington plans to stop funding them.
“What was intended to be short-term financial assistance for the vulnerable and displaced during the height of the pandemic has become a dangerous federal right, incentivizing and paying workers to stay home rather than encourage them to return home. workplace “, McMaster. saying.
Liberal groups say there is a simple way to attract more workers: pay more.
“Employers are now saying, ‘well, we can’t find people to fill these jobs,’ but what they really should be saying is that ‘we can’t find people to fill these jobs with the salaries that we offer,'” said Melissa Boteach of the National Liberal Center for Women’s Law “And then, you see that when you have a demand for labor you should be increasing wages to increase supply.”
Data from the US Department of Labor suggests that some employers have started to do just that. Hospitality and leisure companies increased salaries in April, although profits are still below the pre-Covid trend.
Others go further. About launched its own $ 250 million “stimulus” program to attract new drivers. The company said it had 22 percent fewer drivers than this time last year, even as passenger demand had grown, pushing up fares.
Fabio Sandri, CEO of the poultry processor Pilgrim’s Pride, told analysts that his company spent $ 40 million to increase wages in the first quarter of the year. He also said they kept investing in automation to depend less on workers.
Many economists hope the labor shortage will disappear and forecast that as Covid cases decline, schools reopen and additional unemployment benefits expire in September, undecided workers will return.
But some may never return to the work they were doing before the pandemic. Glassman said many of his staff had fled California.
Additional reporting by Derek Brower