Perspectives on the U.S. Labor Shortage

The commotion over what’s causing changes in America’s workforce has many reasons. While some cite increased unemployment benefits as keeping people from going back to work, others note that raising wages will give people the push they need to get back into the work force. Both arguments could use a deeper look.

For example, Missouri canceled the extra funds being given to unemployment beneficiaries claiming that this would help people return to work. Citing the “thousands of claimants” that are “receiving $620 per week or more,” Missouri lawmakers suppose this will motivate those living on this allegedly generous pay ($29,760 a year) to get jobs. To put this in perspective, working for $15 an hour for 40 hours a week will provide $28,800 a year. That is before taxes. The state of Missouri has a minimum wage of $9.45, which is above the federal $7.25 wage, but only amounts to $18,144 a year, working 40 hours a week.

MIT released a living wage calculator which combines the cost of food, childcare, etc. from the lowest prices amassed, and shows what a person or family would need to make to meet the bare minimum of living standards in a particular area. A living wage for a single person in Missouri without any children is $13.72, or $26,342 a year. With the added pandemic unemployment benefits people are able to reach that minimum, and possibly have enough money left to do something extra such as eat beef. Missouri's argument purports this life of “comfort” eating (as the MIT living wage calculator describes the meal plan as “lower-cost foods,”) and paying rent on time prohibits workers from returning.

These numbers support both points of view: either people are making enough to actually get by and do not want to go back to making less, or they need higher wages to survive without unemployment benefits. The recent jobs report from the Bureau of Labor Statistics states specifically that “notable job gains in leisure and hospitality...were partially offset by employment declines in temporary help services and in couriers and messengers.” The labor report also notes those working part time “for economic reasons,” (defined as “people whose hours were cut due to slack work or business conditions,”) increased by 845,000 from February of 2020 and sits at around 5.2 million people.