For all the damage COVID has inflicted on the psyche of the American public, it’s striking to see where things are headed now – regarding the economy and the job market. It almost seems, for many Americans, that the virus is long gone; forgotten as something precarious from the past. Of course, this simply isn’t the case; though I don’t think anybody (not President Biden himself) will be able to convince Americans otherwise. Americans, at this point, are resolved on traveling, spending money, and making up for lost time.
And they should be. It’s been a long year.
Regardless, if we are going to see a major increase in demand and travel, how are people paying for it?
From what I see day-to-day, it looks like they don’t want to work. Now, I understand the circumstances: people are fearful to work because they might contract the virus. There is also an issue regarding childcare and limited resources to care for these kids (who may be out of school). And considering summer is on the way, it will only get worse. Finally, one of the most critical aspects is the conundrum of younger folks just not wanting to do the jobs that are of necessity – such as working in dirty jobs or factories that require a clear “blue-collar” mentality. Add all this up and you have a hurricane of disaster for the country and the economy.
Consider this piece in Insider – Business, which breaks down some of the more challenging ordeals facing businesses and the people who run them:
John Motta, a Dunkin’ franchisee who serves as chairman of the Coalition of Franchisee Association, said the math just doesn’t add up for many people deciding between unemployment benefits and working at a fast-food chain.
In Rhode Island, for example, the average weekly unemployment check is $270 from the state, plus $300 in federal benefits – $570 total. In 2020, the median weekly earnings in the the restaurant industry was $582 nationally, according to US Bureau of Labor and Statistics data.
“It’s gotten to a crisis status today,” Motta said.
A McDonald’s franchisee told Insider that he had been unable to open dining rooms because he didn’t have enough workers to staff locations
“Why work when you can get more staying home?” the franchisee said. “Stimulus and unemployment are killing the workforce.”
The inflection point for me is unprecedented here: you can drive through the city/town you live in and see a McDonald’s drive-thru packed to the gills. I wonder this: who’s in line? Does everybody suddenly have an abundance of money?
Once again, consider this:
A federal program that paid $600 a week in unemployment benefits for part of 2020 meant that two-thirds of people collecting benefits made more than they had when they were employed, according to economists at the University of Chicago. While the current $300 in federal benefits is less substantial, it still has the potential to make up for lost wages, especially when combined with enhanced state benefits, business owners said.
Jake Abramson, a chef in Brookline, Massachusetts, told Insider that unemployment benefits paid him roughly $400 more per paycheck than his job after he was laid off in March 2020.
He said he took a significant pay cut when he lost his unemployment benefits several months later because he returned to work to avoid a career setback.
If he was working in another job where he was simply clocking the hours, Abramson said, his calculus would be different.
“I would definitely take the unemployment over that,” Abramson said.
I feel what makes COVID so devastating for the future of this country – especially related to the economy and the job market – is its disproportional havoc to the disenfranchised. In one respect, Democrats pushed to help provide more assistance to these groups, which was an explicit tactic to alleviate the virus’s detriment over these groups. However, seemingly unanticipated, was the fact that here in the U.S., these groups of people are desperately needed to fill service industry jobs.
Perhaps the better approach from the U.S. government would have been to provide more PPE and safer working conditions in these workplaces. If more people would have been comfortable working in safe environments, they might have been more inclined to go back to work. However, we know that many small businesses (and large) do not have the resources – whether it be financial or moral – to make sure the environment is up to par.
Targeted relief could have been set aside for groups of people who would have been ineligible to return to the workplace, based on medical conditions or other limiting factors. Politicians bickered about the requisite for income levels to be under 75K for a stimulus check, but they spent little time evaluating what might occur, should more people choose to be inoculated and the country’s economy able to open faster than perceived.
“I’ve been very involved with COVID-19 public health and economic recovery as a commissioner,” Sawyer said. “People who were working low wage jobs before the pandemic struggled as their places of employment closed. They had to pivot to other work like Amazon.”
Sawyer said that assumptions about why people do not return to the same job or industry as businesses reopen make her bristle, especially when there are accusations of laziness.
“It’s racially and economically coded,” Sawyer said. “Misperceptions and prejudice assumes working class people are just sitting around buying beer with their $1,400 and that’s just not the story.”
Credit Suisse analyst Lauren Silberman told Insider that, while the stimulus is a factor in why it’s difficult for companies to hire, it is not the root cause. Many industries were facing labor shortages before the pandemic.
“People want to work, if they have the opportunity,” Silberman said.
Pre-pandemic, the unemployment rate dropped to less than 3% in some states, a figure that would be typical for a labor shortage. Unemployment is currently 6%, which would historically indicate plenty of people are looking for jobs. But, pandemic-era childcare concerns and fears of catching coronavirus have made returning to work less enticing for some employees.
“I think there’s a fear element,” Silberman said
As I pointed out above, the determination to create safe work environments should have been the focus of federal and state government officials. Within the context of what has become typical in the U.S., erroneous decisions to fix a consequential detriment with money, instead of a calculated process, is a tremendous blunder that will have irreparable significances for years to come.
Don’t be surprised the next time you look to go to a restaurant, retail store, or any business that requires line-level employees to provide service, and you can’t get what you want – or that maybe they won’t even be open. There’s a dark cloud besetting the country right now, and this time it may not be solved by those who hold the power…
- Taylor, Kate. “Some companies are blaming stimulus benefits for their hiring struggles, saying workers can earn more money on unemployment.” Insider – Business. April 21, 2021. https://www.businessinsider.com/stimulus-unemployment-benefits-fuel-hiring-struggles-companies-say-2021-4. Accessed April 26, 2021.