There’s A Wage Shortage, Not A Worker Shortage

As the pandemic recedes and America gradually returns to a semblance of normalcy, discussions about a supposed worker shortage are rampant. Many believe that no one wants to work because unemployment benefits are too generous. Critics, often reflecting a certain elitism, assume that the average worker is simply lazy—preferring to lounge at home instead of seeking employment.

States like Montana and South Carolina have opted out of extended federal unemployment benefits, citing a so-called “unprecedented labor shortage.” South Carolina Governor Henry McMaster claims that the availability of unemployment assistance has led to a “dangerous entitlement,” as many recipients reportedly receive more than their previous paychecks. In the week ending June 26, 2021, over 108,000 South Carolinians were receiving an average of $230 in unemployment benefits—hardly enough for a decent meal for four.

Meanwhile, companies are scrambling to attract workers by raising wages and offering incentives. For instance, Sheetz has increased its pay by $2, and White Castle has boosted starting wages from $11.50 to $15.00. According to Ben Ayers, a senior economist at Nationwide Insurance, if employers raise wages, they will attract workers back into the labor force.

The prevailing narrative is that enhanced unemployment benefits have created a disincentive to work. However, data from the United Electrical, Radio & Machine Workers of America shows that new unemployment claims are comparable to those during the Great Recession. Wages in the leisure and hospitality sectors have increased by about 17.6% in the last six months, indicating that there’s no shortage of willing workers—just a shortage of fair wages.

For example, Klavon’s Ice Cream in Pittsburgh raised their wages to $15 an hour and was inundated with applications. The Economic Policy Institute asserts that the real issue lies in employers offering insufficient wages. As they struggle to fill positions, they often claim a labor shortage, when in reality, they are simply not willing to pay what the job is worth.

The narrative of a worker shortage exposes a deeper issue: many individuals are no longer willing to accept poverty-level wages. Workers in sectors like hospitality are facing increased risks and stress, and many of the businesses complaining of labor shortages are still trying to pay pre-pandemic wages. It’s a difficult situation—those in the hospitality industry are often dealing with health risks and a lack of childcare options, while also facing the reality that their income is largely dependent on tips from services that have changed drastically.

In March, the leisure and hospitality sector did add 280,000 jobs. However, with average annual pay in these sectors hovering around $19,651, it’s clear that many cannot afford to live on such wages.

Ultimately, there is no worker shortage—only a wage shortage. If employers were willing to pay fair wages, they would find the workers they need. The reality is that many employers are reluctant to invest in their workforce. Until they are ready to pay a competitive wage, they will continue to struggle with staffing.

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In summary, the supposed worker shortage is largely a misnomer. The real issue is that workers are unwilling to accept low wages, and employers must adjust their pay structures to attract the talent they need.

Keyphrase: Wage Shortage

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