The United States is in the middle of a labor shortage that matches that of the 2007 financial crisis and the 2000 Tech Bust.
It has become a semi-popular trend on social media for business owners to share pictures of “Help Wanted” signs in their windows stating they are low on workers because no one wants to work.
Even if that is not the experience for most Americans, I am willing to bet that almost anyone can drive around town for a half an hour and find a “Help Wanted” sign or two.
According to the US Bureau of Labor Statistics, the US currently is experiencing one of the slowest employment recovery rates of any major US recession.
The reason for this labor shortage has been hotly contested and one answer that gets thrown around a bit is that many laborers are realizing wages simply aren’t good enough for them to want to or be able to go back.
I believe this a major component, but it simplifies the issue too much and makes it harder to see the full scope of what is both keeping Americans from going back to work and turning them off the idea in the first place.
Since the wage shortage is a valid argument, it is important to start there. The Bureau of Labor Statistics shows that in states with minimum wages higher than $12, state agencies have reported an employee return rate of nearly 70% or higher.
This is contrasted with states that have lower minimum wages reporting anywhere from 30% to 60%. This seems to show an obvious correlation with the fact that the more salary is promised, the more an individual is willing to return to the workforce.
I, however, argue that the wage shortage exposes other concerning trends keeping labor rates from rising to 100%
The first is that it is too problematic to secure childcare.
Since a good selection of industries are raising wages but not seeing an employment rate rise in turn, some economists are turning to look for other explanations.
“As some school districts or childcare centers have trouble re-opening, parents can’t afford to place their kids anywhere else. Forcing them to stay at home,” said economist Bill Wattings.
“The lesser pay from before has already left them at a disadvantage and now they cannot afford to put their children in a safe place while they, the parents, try to gain access to the increased wages,” said Wattings.
This indicates that the wage shortage from before is still a factor, but it has also now created splinter effects that keep Americans from working even now.
“Another major problem is that despite the promise of higher wages, many of these positions are within fields that Americans are taught to look down upon,” said Wattings.
Wattings is referring mainly to the service industry. Jobs that are often depicted as work for teenagers that an adult shouldn’t have.
“From young ages we’re instilled with this idea that if you’re a waiter or waitress or a cashier at a fast-food chain, you’ve failed somehow,” said Wattings. “This means that even though these particular fields are raising their wages, no one wants to join them. And without any other industries following suit, the extra wage is not quite enough incentive.”
So, with factors like childcare in the way as well as social stigmas and a failure to address wage shortages in other areas, a toxic brew is made that both restricts the amount of people who can work as well as those who want to work.
The answer to this issue is too complex to be fully fleshed out in this piece, but Wattings gives some pointers.
“The first and most obvious is to address the wage gap. Pay more across all fields and all positions,” said Wattings.
Paying more in every field offers the chance for every worker despite social stigma to find a place of employment. Increased wages also act as a slave to try to bring solvency to issues like that of childcare causing roadblocks to work.
The easiest step is to address the wage shortage. While it is not the only factor causing a labor shortage, a lot of this problem roots back to that.
For more information on wages, labor rates, and more, visit the Bureau of Labor statistics here: https://www.bls.gov/opub/ted/2021/unemployment-rates-lower-than-national-rate-in-27-states-higher-in-12-states-and-d-c-in-may-2021.htm
