A Good Worker Is Hard to Find

A pedestrian walks past a Now Hiring sign outside a Lamps Plus store in San Francisco on June 3.


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Justin Sullivan / Getty Images

Wide distribution of vaccines and the end of government lockdowns should lead to rapid job creation. However, the U.S. labor market achieved its second consecutive disappointing result in May, according to the Labor Department report on Friday. This is what happens when the government pays Americans not to work.

Employers created 559,000 net new jobs per month, which sounds great until you find out in May that 1.5 million fewer workers said they couldn’t work because their employer closed or lost business due to the pandemic. Most of these workers should have found new jobs, but they didn’t.

The civilian labor force fell by 53,000 in May and the number of employed men over 20 years of age by 8,000. The participation rate fell to 61.6%, while the unemployment rate fell from 6.1% to 5.8%.

All of this confirms that it is becoming increasingly difficult for employers to find willing workers. Weekly initial jobless claims are falling, falling below 400,000 this week for the first time since the early days of the pandemic. But the ongoing claims have decreased only a little since March.

What gives? Occam’s razor-sharp statement is that in March the Biden administration and Congress exhausted another mountain of American money – no work required. The extra $ 300 a week in increased unemployment benefits is a problem as millions of Americans can make more money if they stay on the couch. In contrast to wages and salaries, this unemployment benefit is not subject to wage tax.

This is on top of regular unemployment benefits, as well as new or expanded cash payments like the tax credit of $ 3,000 per child, additional ObamaCare grants, and checks of $ 1,400 for individuals. Again, no work is required.

In a new study, economists Casey Mulligan, EJ Antoni, and Steve Moore estimate that qualifying households in 21 states can earn a maximum hourly wage of $ 25 an hour in cash without working. In 19 states, the maximum benefit for a family of four with two unemployed parents is the equivalent of $ 100,000 per year. Not working is a rational economic decision.

The Democrats were warned that this would happen but continued to make payments anyway. We suspect they were trying to force employers to raise wages to compete with the government – a de facto higher minimum wage. And wages are rising: 24% annually since March in the leisure and hospitality industry. This is good for workers, but it puts a strain on small businesses that are still struggling to recover from the pandemic. Some just can’t afford to pay more.

It’s also worth noting that, in practice, a universal basic income is likely to work that way. The threshold wages or salaries for workers, especially young and unskilled workers, would increase significantly. Add to this commuting and other costs, lost free time, and more people are choosing not to work. That means fewer opportunities for advancement on the income ladder and more dependence on the state. Progressives likely intended this too.

The good news is that so far 25 states have announced that they will stop accepting the $ 300 increase in unemployment benefits this month or next. No Democrat-run state has done this, but none other than President Biden said Friday he would be comfortable if the Labor Day non-work subsidy ended as planned. It’s long gone

Wonderland: By paying people not to work, the Biden Democrats will harm US work ethic for a generation. Images: Getty Images / iStockphoto

Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Published in the print edition on June 5, 2021.

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