Where are the workers?
Michael K. McMahan  Yahoos Finance website recently posted an Axios story stating that there was a record 9.3 million open jobs in America in April. This is up from just over 8-million open jobs at the end of March. I suspect there are more jobs available now. Open jobs at this level means the demand for products and services is accelerating. It also means employers are having a hard time finding workers. Columnist Tom Campbell recently wrote, The most common answer is that when people can get $300 per weekly federal unemployment checks on top of state unemployment  they have no incentive to work.  Tom went on to say there is more at play here than generous levels of unemployment compensation, including the availability of affordable childcare, fear of Covid, and insufficient wage levels. (Help Wanted. Not Interested., Tom Campbell, Gaston Gazette, p. A4, June 8, 2021)  I like Tom and enjoy reading his columns. But he is wrong about this, as are many economists and politicians who say the same thing. In my role as a private equity manager, I have the obligation and the opportunity to stay in touch with the small companies in our portfolio and with other companies with whom we do business, including a lot of restaurants. The owners and managers of these businesses will tell you the workers who are missing are primarily young people. The reason these workers are not taking jobs is simple: unemployment benefits are too generous. In North Carolina, as Tom correctly stated, the average unemployment insurance check is $216 per week. Add the weekly federal supplement of $300 and the average unemployed worker receives $516 per week in unemployment benefits. Unemployment checks are not subject to employment taxes, which average about 7% and are deducted from workers paychecks. A former worker can sit at home and receive $12.90 per hour, which is the equivalent of an annual income of $26,832. To net $26,832 they would have to work and earn $28,710 in wages. The operative word here is "work." Not working is a good alternative and one many are choosing. If you think these young former workers are afraid of contracting Covid, drive to a popular bar late one evening. You will see young people are not afraid of contracting the virus. Go to any local daycare center in your community. Most have re-opened. Moms and dads are enrolling and bringing their children to daycare centers as they did before the pandemic. The problem is not availability of daycare. Fast food and full-service restaurants are advertising wages at $15 to $17 per hour. This means a high school graduate or less can earn the equivalent of $31,200 to $35,360 annually. The problem is not low wages. The problem is unemployment benefits are too high. Paying anybody $500 or more per week to refrain from working results in a lot of people declining to work. They are making a mistake. Many businesses are turning to technology to fill jobs they cannot fill with humans. The U.S. is in a productivity boom, according to an article in the Wall Street Journal. (Technology Fills the Gap as Jobs Trail GDP, by Grep Ip, Wall Street Journal, p. A2, June 10, 2020) Investments in software and equipment are soaring as managers seek ways to improve the productivity of those who are willing to work and eliminate the jobs of those who are unwilling to accept employment. This trend will continue and accelerate. If you know a person, young or old, who is sitting at home drawing unemployment benefits when a record number of open jobs are available, encourage them to re-think their decision. The job they plan to take when those benefits end may not be available. Michael K. McMahan is a resident of Gastonia.