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Although more jobs are being created every month, the unemployment rate has increased and many wonder why a labor shortage exist. Photo: Getty Images. 
Although more jobs are being created every month, the unemployment rate has increased and many wonder why a labor shortage exist. Photo: Getty Images. 

What is behind America’s labor shortage?

Some believe unemployment benefits are making people reluctant to go back to work, but this doesn’t paint the full picture.

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As more Americans are getting vaccinated, the economy is continuing to open up and more jobs are becoming available. 

During the COVID-19 pandemic, unemployment peaked at 14.8% and this was higher than at any point in the two years of the Great Recession. 

Employers added 266,000 jobs in April, but shockingly, unemployment rose for the first time since April 2020, when lockdowns were still a recent implementation. 

Last month, the national rate stood at 6.1%, but for Latinos it was nearly 2% higher. The figure for Latinos is also nearly double the pre-pandemic average of 4%. 

“More than 57% of Latinos reported losing work or wages as a result of the pandemic, compared to 41% of Whites,” an UnidosUS report stated. 

This is because they are overrepresented in low wage and essential fields based on numbers gathered by the U.S. Bureau of Labor Statistics

In the food preparation and domestic work occupations, Latinos comprise 36.7% and 49.2% of the share of workers respectively. 

Those in food preparation experienced many layoffs due to restaurants closing or offering limited service and domestic workers were not needed as much since many of their employers were able to work from home. 

Both occupations have a median hourly wage that is less than $12, so these workers did not have a comfortable safety net to rest on during the uncertain times. 

This has prompted many Latinos to apply for unemployment benefits, but undocumented immigrants are not eligible for them and could not apply for the first round of federal stimulus checks. 

With many being out of work for months and the economy reopening at a promising pace, it is baffling to see jobs not being filled and the unemployment rate going up.

Republicans across the country have blamed unemployment benefits for people not returning to work. 

They claim that unemployed people feel comfortable receiving government checks and would rather continue with that rather than bothering to apply for open positions. 

Both of North Carolina’s GOP senators have called upon their state’s Democratic governor, Roy Cooper, to cease permitting the continuation of a federal unemployment program for his constituents. 

“Over the last several weeks, we’ve heard from countless small, mid, and large-sized business owners across North Carolina struggling to hire enough workers to reopen this summer. Employers, particularly in hard-hit industries like tourism, service, and hospitality, are finding they can’t compete with excessive federal benefits,” the senators wrote in a joint statement.

Gov. Cooper has sought a compromise with the Republican-controlled legislature by being open to supporting their plan of using those funds to create signing bonuses for those who find a job.  

Twenty-four states have ended a benefits extension that offers jobless Americans a $300 federal bonus given on top of state’s unemployment checks. This was part of the American Rescue Plan that President Joe Biden signed in March, and the program was scheduled to end on Sept. 6. 

The White House cannot force states to continue to disburse these checks, but Biden and the Department of Labor have remained consistent on kicking people off of unemployment insurance if they turn down a suitable job offer. 

Hawaii will start requiring proof of searching for work from unemployment claimants on May 29.

Contrary to the belief of the GOP senators, the federal unemployment assistance is not a major contributor to the current labor shortage. 

There are parents, mainly women, who have not been able to rejoin the workforce because their children might not have access to daycare centers and schools that are open throughout the week at full capacity. 

President Biden plans to have this not be an issue in the future if he can pass his American Families Plan

The plan seeks to provide universal preschool to all three and four year olds in the country. It would also ensure that low and middle income families would pay more than 7% of their income on daycare for children under five. 

More parents would form part of the workforce since they can enroll their children in school earlier, or have the ability to pay for them to be in a daycare. 

Another part of the problem is that people do not want to work for low wages under poor conditions and employers are not doing much to change the situation. 

Robert Reich, former U.S. Secretary of Labor under president Bill Clinton, explained how raising wages would bolster the economy. 

“When there is more money in the pockets of low wage workers they turn around and they buy things… Small businesses do better because people are paid more and they do even better when low wage people are paid more because low wage people spend everything that they receive,” he said. 

With the richest 0.01% Americans being taxed at one-sixth the rate they were in 1953 and many accruing wealth in foreign bank accounts or offshore operations, they are doing less for cash circulation and the economy than the working class. 

The Chair of the Senate Budget Committee, Sen. Bernie Sanders (I-VT), believes that cutting federal benefits at this point while employers are not committing to providing a living wage is irresponsible. 

“What the Republicans are saying by trying to do away with this supplement on top of unemployment is ‘we’re going to starve you back to work. Whether you like it or not,’” he said. “The problem is not a labor shortage. The problem is that all over this country workers are being asked to work for starvation wages.” 

The progressive senator led an effort earlier this year to raise the federal minimum wage to $15, which would have doubled the current standard of $7.25. 

Eight members of the Senate Democratic caucus joined all 50 Republicans in voting against the action in March. 

If wages had kept pace with productivity since the minimum wage was created in 1938, then it would currently surpass $24 an hour, according to the Center for Economic and Policy Research

Certain states and companies, like Rhode Island and Under Armour, have recently announced that they will increase their minimum wage to $15 an hour, but if it were passed on a federal level, more people would have economic mobility and a lesser need to work multiple jobs.

Until parents are provided with universal high-quality childcare and the reasons to return to work outweigh the federal benefits, then many businesses will keep help wanted signs in front of their establishments for months to come.  

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