T.HE PANDEMIC has produced all sorts of strange economic results. The most recent curiosity is the growing number of complaints in America about labor shortages, even though 8 million fewer people are working today than they were before Covid-19. In early April, Bloomberg reported that Delta Air Lines had canceled 100 flights due to staff shortages. People are so hard to find that a Florida coffee shop turned to robots to greet customers and deliver groceries. A McDonald’s branch pays potential burger flippers $ 50 just to show up for an interview.
The data backs up the anecdotes. The total number of vacancies has been at its highest for at least two decades (see graph), which indicates that companies have many vacancies. Additionally, vacancies result in fewer hires than you would expect given the historical relationship between the two. And even taking into account changes in the composition of the workforce, wage growth was surprisingly robust at around 3%, suggesting that companies are offering larger wage packages to tempt workers. If job shortages persist, it could ultimately boost inflation and jeopardize economic recovery.
There are three possible explanations for the puzzling deficiency: benefits that are too generous; anxious workers; and a redistribution of labor between industries. Start with America’s huge handouts. The latest stimulus checks, released in the spring, totaled up to $ 1,400 per person. Apparently every American knows the friend of a neighbour’s cousin who received a “okay” check and then quit his job to sit on the sofa. A federal allowance for unemployment insurance (user interface), currently $ 300 per week, ensures that four out of ten unemployed people earn more from benefits than in their previous job. Economic research has long shown that more generous benefits provide blunt incentives for job search.
However, that relationship appears to have weakened during the pandemic. The fact that in is increasing user interface The time-limited payments can result in workers unwilling to turn down a job with longer-term rewards. At the beginning of the pandemic the user interface The supplement was even more generous at $ 600, but its summer expiration had “little impact on overall employment,” according to an article published in February by Arindrajit Dube of the University of Massachusetts-Amherst. In those areas where the current $ 300 increase represents a relatively larger income boost, employment growth has not slowed since January when this lift was introduced.
This suggests that the second factor, fear, might be important in explaining the American staff shortage. According to official information, almost 4 million people are not looking for work “because of the coronavirus pandemic”. And think about which industries are facing the greatest labor shortage. Health, leisure, and hospitality jobs have the highest levels of vacancies relative to employment. Many of these involve high levels of personal contact, which makes their employees particularly susceptible to infection (a study from California earlier this year found that chefs are most at risk of dying from Covid-19). In contrast, in industries where it is often easier to keep social distance or to be outside, labor shortages are less of an issue. The number of vacancies per employee in the construction industry is lower today than it was before the pandemic.
The ultimate cause of the labor shortage is the extraordinary redistribution of resources running in the economy. The headline growth in job vacancies means opportunities have increased in some industries – for example, white-collar workers DIY Shops – while others decline, reflecting changing consumer demands. Analysis of The economist From over 400 local areas, there are also wide variations in job migration across regions: the gap between employment growth in the busiest areas and that in struggling areas is twice as large as it was before the pandemic. Workers can take their time to catch up on this creative destruction. For example, a former bartender looking for work in downtown Manhattan may not be able to quickly identify and secure a position as a delivery driver in more distant Westchester.
As vaccinations continue to reduce hospital stays and deaths from Covid-19, and limit the spread of the disease, Americans’ fears of taking high-contact jobs should also ease. However, if the bottlenecks are to be completely resolved and the threat of inflation is to be contained, some unemployed will also have to work in sectors and areas that are new to them. ■
A version of this article was published online on April 27, 2021
This article appeared in the Finance & Economics section of the print edition under the heading “Help Wanted”.