Policy Makers Can't Agree on Causes of Shortage of Workers
By Eric Morath
Policy makers on Sunday debated the root cause of a growing
shortage of workers that threatens to restrain the pace of economic
growth while the U.S. emerges from the Covid-19 pandemic.
Many Republicans say enhanced and extended unemployment benefits
are discouraging Americans from seeking work, especially in
low-wage jobs where the aid often pays more than they earned at
previous jobs. The Biden administration and Democrats say other
factors, including lack of access to child care and shortages of
computer chips, are holding back more robust job growth.
U.S. employers added a seasonally adjusted 266,000 jobs in
April, the Labor Department said Friday. The figure was a sharp
slowdown from March and well below the one million jobs economists
expected to be created. A separate report showed there were 7.4
million unfilled jobs in the U.S.
Neel Kashkari, president of the Federal Reserve Bank of
Minneapolis, said labor supply is a factor holding back better
overall growth, at least temporarily.
"There is some truth to the unemployment benefits, maybe, being
a disincentive," he said in a CBS interview that aired Sunday. "I
see that in the data and I see that in anecdotes as we talk to
Under relief bills passed by Congress, those receiving jobless
benefits get an additional $300 a week on top of regular state
benefits, which average $318 a week, according to the Labor
Department. That means the average unemployment recipient earns
better than the equivalent of working full time at $15 an hour.
Those enhanced benefits are available until September, for a
maximum of nearly 18 months -- about three times longer than most
states typically allow.
Mr. Kashkari said that child-care shortages, schools with
limited capacity and fear of the virus, even among those who are
vaccinated, also weigh on people seeking jobs. Mr. Kashkari, who
previously worked in the George W. Bush administration, said he
recently flew in a plane, but is still hesitant to dine inside a
restaurant even after being vaccinated against Covid-19.
Congress and the Federal Reserve have acted aggressively to
position the economy for a fast recovery, Mr. Kashkari said, which
helped inform optimistic economic projections. But the recovery
also depends on "how we are all feeling and the confidence that
ultimately we need to have to fully restore the economy," he
Mr. Kashkari said he expects stronger job growth in the second
half of the year, when virus fears subside, schools fully open and
extended unemployment benefits are scheduled to expire.
Commerce Secretary Gina Raimondo said the Biden administration
is monitoring the effect unemployment benefits are having on
Americans' willingness to work, but added, "There's nothing in the
data which would suggest that that's the reason people are out of
The U.S. still has about 8 million fewer jobs than before the
pandemic took hold last year, and the number of job seekers rose in
April from March, the Labor Department said. Friday's data also
showed that wages and average hours worked a week rose last month,
which could suggest companies are needing to pay more to find
employees and asking current staff to do more.
"The number one reason now that people aren't going back to work
is...fear," Ms. Raimondo said in a CBS interview that aired Sunday,
adding that child care and a shortage of suppliers, particularly
semiconductors, are also limitations. Auto makers shed 27,000 jobs
in April when several factories were idled due to chip
Increasing domestic chip production and expanding access to
child care are goals of President Biden's recent spending
proposals, Ms. Raimondo said. However, those initiatives would
likely take years to be implemented and depend on bills getting
passed by Congress.
The commerce secretary also said that the labor market varies
across the country, and added it is appropriate for governors to
adjust policies. Republican governors in South Carolina, Montana
and Arkansas have ended the $300 enhanced payments paid for by the
While Utah hasn't taken that step, Republican Gov. Spencer Cox
said benefits need to be restrained to return workers to the job.
Utah's unemployment rate was 2.9% in March, tied for the lowest in
the U.S., according to the Labor Department.
"The biggest problem we have right now in the state of Utah are
finding workers for the jobs that are available," he said in a CNN
interview that aired Sunday. He said he had heard from workers that
the benefits were a disincentive. "It is a terrible jobs
report...But that's what happens when we pay people not to
Write to Eric Morath at firstname.lastname@example.org
(END) Dow Jones Newswires
May 09, 2021 14:54 ET (18:54 GMT)
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