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(CNN)There are countervailing storylines that complicate the pandemic recovery. Millions of Americans remain unemployed while companies big and small are reporting extreme difficulty in finding workers.
That’s prompted a push by Republican governors — 22 so far — to reject the $300-per-week unemployment benefits that were included in the Democrats’ Covid relief bill this past March.
The pandemic benefits run out in September anyway, so these states are turning down money the federal government has already approved, cutting off money earmarked for more nearly 2 million out-of-work Americans.
The idea is that, with the economy reopening thanks to the vaccines, the boosted checks might be keeping workers on the sidelines — and taking them away will essentially force them back into the job market. That would help smaller businesses that are not as well equipped as larger companies to draw workers with higher pay or other perks.
There’s something of a Rorschach test here. You can look at the plight of business owners and think the government should cut support that’s making it hard for them to hire. Or you can look at a person whose wages are normally low enough that $300 per week is enough to keep them out of the labor force and think maybe businesses should raise pay.
I went to Anneken Tappe, the senior writer at CNN Business who covers the US economy, to get her thoughts on the labor shortage and what’s behind it. Our conversation was conducted by email.
Is there a labor shortage?
WHAT MATTERS: Republican governors are rejecting expanded federal unemployment benefits for their citizens because they say there is a labor shortage; restaurants can’t open, goes the storyline, because workers would rather collect unemployment and not work. What’s really happening?
TAPPE: America’s labor market is in a weird spot. On the one hand, some employers just can’t find workers to stem rising demand for goods and services. Meanwhile, millions of people remain unemployed or out of the labor market (which means they aren’t actively looking for work). As of April, America was still down 8.2 million jobs compared to February 2020.
So what gives?
Millions of American workers still need the enhanced unemployment assistance, which provides an additional $300 per week. It is earmarked to end in September. Research from Bank of America recently found that the pandemic-era benefits indeed do keep people from looking for work — but only if people made less than $32,000 per year before, which is less than half the national median income. For these low-income workers, it makes sense not to work but to collect benefits, while for higher-income earners it doesn’t.
But income might only be one part of the puzzle. Workers still have to weigh health risks and care obligations against a return to work.
Who is having trouble finding workers?
WHAT MATTERS: Which industries are hardest hit? And how is
Here’s the truth about the labor shortage
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