America Is About to Find Out the Root Cause of the Labor Shortage

America Is About to Find Out the Root Cause of the Labor Shortage

(UnitedVoice.com) – In January, Republicans warned that extending a federal unemployment benefit could cause harm to a potential economic recovery post-COVID. Over the last few months, governors across the country began easing pandemic restrictions and re-opening their states. Now, all states are returning to some form of normal, and the economy is showing signs of life even as inflation rises quickly and threatens consumer spending power.

While consumer confidence is growing, not all workers are returning to work even though the job market is flush with job openings. Some economists suggest that many people who are still unemployed make more money on the couch than they would working. While no clear proof of cause and effect exists yet, America may be about to get to the root of the issue. Despite rising wages and plentiful jobs, the US Department of Labor reported unemployment levels are stalling after weeks of gradual recovery.

Unemployment Levels Stall

On Thursday, June 24, the Labor Department reported that workers filing for jobless claims the previous week stalled at 411,000. The number was much higher than economist’s projections of 380,000 new claims, and the four-week average rose slightly, reversing an earlier trend. Claims fell for six straight weeks before recent increases.

It’s a trend that continues to worsen. In May, job growth failed to meet expectations as well. Economists predicted 650,000 jobs, but only 559,000 were created. Despite the job growth disappointment, there are oddly still far more jobs available than workers filling them. Economists are looking closely at the numbers as labor shortages continue in many economic sectors. Some blame the $300 per week federal unemployment benefit paid in addition to state benefits for the emerging labor crisis.

Federal Unemployment Benefit Ending Soon

The federal unemployment benefits program will end for the entire country on Labor Day. However, some states aren’t waiting. Nearly half of them, all Republican-led, opted out of the federal unemployment benefit program over the last month. Many of those opt-outs are just kicking in, and it will be weeks before economists can analyze the numbers.

If people return to work after the federal unemployment benefits end, then it will validate what Conservatives said all along: The government hampered economic recovery due to lousy policy initiatives championed by well-intentioned Liberals.

America will know soon after Labor Day when the data is revised. Until then, let’s hope for a complete economic recovery despite the financial challenges ahead.

Don Purdum, Independent Political Analyst

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