On a recent road trip through western North Carolina and North Georgia, I had the opportunity to stop at gas stations, restaurants, hotels, and small businesses. . Each establishment had a sign on the door conveying the same message: need help.
No help wanted. Need help.
Although the labor shortage appears to be most acute in service industries, many types of businesses find themselves short of staff. They find it difficult to serve their customers. And as demand pressures outstrip supply, prices skyrocket.
The problem began in the early months of the COVID-19 crisis, but even amounts of federal (borrowed) money and the easing of pandemic restrictions failed to rectify it. North Carolina’s labor force participation rate was 59.3% in November. Two years ago, in November 2019, this rate was 61.5%.
This seemingly small difference translates into an estimated 70,000 North Carolina residents who, under normal circumstances, would either be employed or actively seeking employment, but are instead on the sidelines. Their reasons vary. Some are young, live with their parents and lack motivation. Some in their 50s and early 60s lost their jobs during COVID shutdowns, despaired of finding comparable positions and decided to take early retirement. Others are still too busy caring for family members to look for a job, or too afraid of the virus to risk re-entering a workplace.
In retrospect, it was a mistake to close schools. The risk of transmission was low. The economic and educational toll of the closure was, alas, enormous. And it was a mistake to expand and expand unemployment insurance benefits so as to delay re-entry into the workforce.
However, these effects are increasingly visible only in the rearview mirror. They cannot fully explain our current situation. Wage rates either. Some jobs that pay $ 15 an hour or more are not filled.
Progressives are prescribing another round of massive federal spending. They argue, for example, that increasing child care subsidies will keep workers coming back. It could help in some cases, but proposals like the now stalled Build Back Better bill could make the problem worse, as they essentially impose an increase in childcare costs for many households (in part by excluding church providers at lower cost of participation).
It would be preferable for policy makers to focus first on removing the structural barriers that separate potential workers from productive employment. For example, some people made the decision during COVID to quit jobs they considered underpaid and unsatisfactory. They want to change careers, maybe even start their own business. But our state’s archaic professional licensing regime stands in their way. We should make it easier for workers to enter new careers, allowing employers and consumers to sort through the education and training required rather than forcing it through regulations and guidance. licensing.
Likewise, some North Carolinians are not working at the moment because technological innovation has eliminated their jobs and created a mismatch between what they can do and what today’s employers have to do. Although community colleges, private companies and other providers are able to retrain them quickly and inexpensively, displaced workers are often unaware of these opportunities. We need a sustained effort from public and private institutions to fill this information gap.
For recent early retirees or those considering the idea, we should change the tax treatment of Social Security so that older workers are not punished if they choose to continue working part time while receiving benefits.
Some policymakers believe North Carolina and the rest of the country will have to get used to much lower labor market participation. “We are not going back to the same economy as in February 2020,” said Fed Chairman Jerome Powell. “The post-pandemic labor market and the economy in general, as well as the maximum level of employment compatible with price stability, evolves over time. “
May be. But if North Carolina’s turnout was permanently reduced by more than two percentage points, the economic consequences will be severe. We can only hope that reducing friction in the labor market can close much of the gap.
John Hood is a member of the board of trustees of the John Locke Foundation and author.