Kitchen Table Economics

Why do labor shortages happen?

There’s plenty of unemployed workers in America. But even with millions of people still out of work, some businesses can’t find employees to fill open positions. Why won’t workers take these jobs?

In some instances, unemployed people can make nearly as much—and in some cases even more—money with generous government unemployment benefits than they can in a job. With President Joe Biden adding an extra $300 per week to current levels of unemployment benefits, Americans are realizing they can get paid for doing, well, nothing.

With businesses starting to open up again as the pandemic fades, places like bars and restaurants are going to need to hire new employees to serve crowds of customers excited to return back to normal life. But unfortunately, some would-be restaurant workers have replaced their pre-pandemic jobs with unemployment checks.

Labor shortages like this can have devastating long-term effects on our economy and your wallets. If businesses can’t hire workers, they won’t be able to serve their customers, and eventually, will have to close their doors. Millions of people staying on the unemployment rolls also costs the government big-time money—and they’ll have to pay for these benefits by taking more dollars out of your pocket in taxes.

Americans should be excited to get back to work and open our country again. But unless the government cuts back on providing unemployed workers with generous benefits to sit on their couches, the bars, restaurants, and cafes we love will continue to face a challenging job market.