Mitch McConnell has claimed that the US labour shortage is due to people unwilling to work because they are “flush at the moment”.
The Republican Senate Minority Leader was speaking at an event in Paducah, Kentucky on Tuesday when he pitched his theory of why businesses are struggling to hire people.
“You’ve got a whole lot of people sitting on the sidelines because, frankly, they’re flush for the moment,” Mr McConnell said. “What we’ve got to hope is once they run out of money, they’ll start concluding it’s better to work than not to work.”
After several federal rescue packages, many Americans managed to build up some savings during the pandemic. According to Moody’s Analytics, US households gathered an estimated total of $2.6 trillion in extra savings during the pandemic until the end of last year.
The Kentucky Senator rejected President Joe Biden’s stimulus bill that made it through the House and Senate with only Democratic votes in late February and early March 2021.
The Trump administration managed to get two stimulus packages through Congress during the pandemic but Republicans have still blamed the $1,400 direct payments to Americans included in Mr Biden’s American Rescue Plan for increasing inflation and aiding people to avoid working.
Economists have instead said that multiple factors should be factored in to understand the labour shortage, such as people moving away from areas with open jobs, parents not being able to go back to work because of uncertainty created by the pandemic, and that the open positions being advertised could be a bad fit in terms of pay or experience for those looking to switch jobs or reenter the labour market.
This means that there could be other solutions to end the labour shortage than Mr McConnell’s suggestion that people need to run out of savings. Employers could offer better pay as well as more adaptable workplaces.
They could also change their job descriptions and requirements to get more people to apply.
While Mr McConnell is pushing the idea that people are trying to avoid working, the labour market has been getting stronger and stronger, having recovered at least 96 per cent of the jobs lost during the Covid-19 pandemic, according to Insider. The jobs market is on track to fully recover by the end of this month.
The ratio of employment to population in the demographic that includes Americans between the ages of 25 and 54, which is considered to be the top employment age, is now higher than it was in July 2019, well ahead of the pandemic, figures from the St Louis Federal Reserve shows.
According to the Bureau of Labor Statistics and the United States Department of Labor, the unemployment rate is 3.6 per cent. Just before the pandemic hit the US, in February 2020, the unemployment rate was 3.5 per cent. The last time the unemployment rate hit such a low level was in 1969.
Americans have been quitting their jobs at close to record levels over the last year, but the number of open jobs remains high, possibly indicating that employees are leaving for other jobs with better pay, particularly in industries where low pay is common.
