Labor shortages and inflation have economists worried about Biden’s economy

As the economy tries to roar back from COVID-19 shutdowns and associated layoffs, many companies, especially retailers and fast food locations, are facing increasing labor shortages that may begin to cause problems for the economic recovery. 

While some economists don’t think the extension of a federal unemployment boost until September is keeping people out of the labor force, others say the U.S. risks ruining the work ethic of millions by paying them to stay home for several more months.

“The flow of cash into the pockets of many Americans — courtesy of our government — threatens to blow up the U.S. deficit and create a generation of slackers who would rather sit at home watching reality TV than to rejoin the real world where people work to make a living,” Armstrong Williams wrote Thursday an op-ed for The Hill entitled “It’s Time for Americans to Get Back to Work.”

NPR noted that the economy has only regained slightly more than half of the 22 million jobs it lost during the pandemic, but chains like Taco Bell and Dollar Tree are so desperate to hire enough workers that they have cut hours or closed dining rooms because of a lack of staff.

Job postings at pre-pandemic levels

Economic data shows that job postings are back to pre-pandemic levels, but many of the jobs available are low-skill and low pay. It’s entirely possible that someone who had a skilled job before the pandemic could be making more on unemployment with the $300 weekly federal boost than they would at Taco Bell, even if minimum wage was raised to $15 an hour.

And right now, there is no obligation to take a job outside a person’s field of expertise or study. Without an economic necessity, sitting at home has got to be preferrable for many people.

Another factor holding people back is the ongoing risk of getting coronavirus. Although close to half of adult Americans are now partially or fully vaccinated, the messaging about the continuing risk of infection has been garbled at best.

Many people are still fearful of infecting family members, like their kids who can’t yet get vaccinated.

The plight of women

Then there is the problem of millions of (mostly) women with school-aged children who were in the work force, but now feel they need to be at home with their kids as they tackle virtual school.

Business Insider reported that more than six million people were still out of work because their kids were not back to in-person school, and another two million were taking care of an elderly parent or other relative.

Getting kids back to school should drive many of these people back into the work force, but that may not happen until fall because even if schools return in person full time now, summer vacation is just a few weeks away.

Unfortunately, there seems to be no quick solution to these labor woes, and they are likely to make inflation worse by driving up demand for services and goods, at least in the short term.

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