A new problem has arisen in the post-coronavirus economy: Employers have trouble finding workers. A recent National Federation of Independent Business (NFIB) study of more than 500 small businesses discovered that 42% of them had job openings that could not be filled. A quarter of restaurant operators say recruitment is their top concern right now. A separate Bureau of Labor Statistics (BLS) report found that roughly 7.4 million jobs were left unfilled by the end of February. The reasons workers might be avoiding these employment opportunities vary, from fear of contracting the coronavirus to caring for children who are attending online classes. But the elephant in the room may be the jobless benefits that have nudged some companies to take the drastic action of paying applicants for interviews.
Floridians Not Lovin’ It?
A Tampa McDonald’s location is promising to pay $50 to anyone willing to show up for an interview. Blake Casper, a franchise owner, told Business Insider that a manager at one of his locations decided to pursue the gimmick to attract more applicants:
“At this point, if we can’t keep our drive-thrus moving, then I’ll pay $50 for an interview. The biggest challenge out there is the federal government and the state government are going to continue with this unemployment, because that is truly creating the incentive to not work right now. And, how do you blame somebody? You can make more money on unemployment — and so, we’ve got to be at least above that.”
Interested? Interviews take place Monday through Friday at 2 p.m. But, so far, people are not taking the bait.
Jobless Benefits v. McDonald’s Wages
As part of the $1.9 trillion American Rescue Plan Act, the federal government approved an additional $300 per week in Federal Pandemic Unemployment Compensation (FPUC) payments to all jobless benefits until Sept. 6, 2021. All regular state unemployment benefits were extended for the same length of time, and Pandemic Unemployment Assistance was expanded to self-employed and gig workers for up to an extra 29 weeks.
In Florida, the maximum unemployment benefit had been $575 per week, or roughly $22 per hour. When this amount expired in March, it was lowered to $275 a week, or approximately $7 an hour.
According to Indeed.com, Florida’s McDonald’s stores pay an average of $8.63 for cooks, $9.21 for team trainers, and $9.29 for cashiers. Full-time workers also receive 401(k) matching, employee discounts, insurance, adoption assistance, and a myriad of other goodies.
It Pays to Stay on the Couch?
University of Chicago economist Casey Mulligan uncovered that when the $600 unemployment check expired, the number of job openings dropped as more Americans returned to the labor force. This had The Wall Street Journal identify another reason for the chronic labor shortage nationwide: “It pays to stay on the couch.”
Indeed, why would someone clock in at a less-than-desirable occupation for a few dollars more than they would receive from the government? These are not lazy individuals, but rather they are looking after their best interests. They might be willing to work, but they prefer to take Uncle Sam’s money and run. It makes sense, too, when they engage in a good old-fashioned cost-benefit analysis as the current situation is all about options. This time could be better consumed studying a new subject, improving their health, or trading the stock market. Of course, this is what happens when politicians and bureaucrats distort labor markets. Today’s crop of jobless compensation comes with no questions asked.
Whether workers are given the pink slip or walk off the job, most of the working-age population can tap these funds. For the labor market and broader economy to recover, these deficit-financed benefits may need to be given the kibosh. But the odds of the program being dismantled are slim since representatives will be a year away from the mid-term elections by the time the payments are scheduled to expire.
A Labor Market Recession
Even before the coronavirus pandemic prompted the mini-Maos to exacerbate their statist endeavors, the U.S. economy had faced a problem that all countries wish they had: Businesses scrambled for workers as a record number of job openings were going unfilled. Now that the United States is on the road to recovery, the same issue is transpiring. However, this time, it is for positions that were around prior to the COVID-19 public health crisis – not new ones. Cash-strapped companies, many that are poised to be slapped with a hefty tax bill in the coming years, will be forced to do one of three things: raise pay, automate, or stagnate. Is this Bidenomics at its finest?
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