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Job Openings Hit Record High as Unemployment Persists

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America’s labor market is a mess and riddled with incongruency.

On the one hand, businesses can’t find workers. Help wanted signs hang in windows across the country. A McDonald’s franchisee in Tampa is offering bonuses just for showing up for an interview.

Meanwhile, unemployment just ticked up to 6.1%.

In what kind of world does this make sense?

Only in a world where the government pays big money for people to stay at home.

WolfStreet summed it up perfectly. We have a “screwed up” labor market.

In the midst of widespread unemployment, there are a record number of job openings. According to the most recent Bureau of Labor Statistics report, job openings jumped to 8.12 million in March (seasonally adjusted). That’s the highest number of available jobs since the BLS began tracking job openings in December of 2000. Compared to March 2019, job openings are up 13%.

Meanwhile, 9.8 million people are officially categorized as unemployed. More than 16 million people still claimed state or federal unemployment compensation. And to call the April non-farm payroll report a disappointment is an understatement of epic proportions. Instead of creating 978,000 new jobs last month, as economists expected, nonfarm payrolls increased by just 266,000. On top of that, the Labor Department revised the March number down from 916,000 to 770,000.

Job openings in the leisure and hospitality sector surged to an all-time high of 1.21 million. That was up 18% from March 2019.

But it’s not just lower-paying service jobs that are going unfilled. Job openings in manufacturing spiked by an all-time record number in March. There were 134,00 jobs opening in that sector in February. The number exploded to a record 706,000 manufacturing job openings in March.

NFIB Small Business Optimism Index has a sub-index tracking “Current Job Openings.” This represents jobs that small businesses “are currently not able to fill.” This index has spiked for three months in a row, also to a historic high.

Incentives Matter

The mainstream media keeps talking about a “labor shortage.” But there is no actual shortage of labor. There are plenty of people out there capable of getting up and going to work. There are 16.2 million Americans on unemployment. What we actually have is a shortage of people willing to work.

When you can get as much money from the government to stay at home playing video games as you can earn at a job, why would you go to work?

Both President Joe Biden and Treasury Secretary Janet Yellen insisted that the enhanced government unemployment benefits are not incentivizing people not to work. In a recent podcast, Peter Schiff said this notion is absurd.

Only government economists could fail to understand this obvious relationship. There is a preference for leisure over work. People would prefer to have leisure than work. The only reason they give up their leisure to work is because they need the money. Because otherwise, they can’t pay their bills. They can’t pay the rent. They can’t put food on the table. So, even though they would prefer leisure, they have to work. Well, if the government says, ‘No, you don’t have to work. You can have the leisure that you prefer and we’ll replace your lost income. In fact, we will actually give you more money to take a vacation than what you would earn if you gave up that vacation and went back to work.’ How can anybody not realize that there is a link here between these lucrative payments not to work and so many people choosing not to work?”

Incentives matter. The government is incentivizing people not to work. People aren’t working. The numbers bear this out.

But Bernie Sanders says government benefits aren’t the problem. He blames businesses. Sanders said we need to keep enhanced unemployment benefits in place and these greedy businesses just need to raise wages. Only a person totally unaware of profit margins in the business world could suggest such a scheme. How is the family diner down the street supposed to compete with Uncle Sam and his money printing press?

In fact, businesses are raising wages. Even though jobs aren’t being created, wages are increasing. Analysts expected hourly wages to remain flat in April, but they were actually up 0.3%. So, we’re seeing upward pressure on wages even though we’re not getting as many new jobs. This makes perfect sense when you consider employers have to compete with enhanced unemployment benefits in order to get people to come back to work.

Some people might smack their hands together and call this great news. The government is forcing employers to pay more. It’s a victory for the little guy! Of course, you and I will and the little guy will eventually pay for these increased wages in the form of higher prices.

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About The Author

Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It's Your Dime interview series.
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