When you pay people not to work, guess what? Many people don’t.
WSJ Editorial Board

An economy doesn’t live by demand alone. There is no clearer evidence of that dictum than Friday’s surprising jobs report for April, which undershot the expectations of economists by more than 700,000. Welcome to the supply-side jobs slowdown.

Employers added a net 266,000 jobs in April, while the unemployment rate ticked up 0.1 percentage point to 6.1%. Payrolls for March and February were revised down a combined 78,000, and 48,000 of the new jobs in April were in government, mostly local education as schools reopened.

The Keynesians who now run U.S. policy, at the Treasury and Federal Reserve, have been using their usual demand-side playbook. Bathe the country in government cash, keep interest rates at zero, and the resulting rise in consumer demand will drive everything.

They’ve underestimated the supply-chain constraints that have been screaming across the economy for months—from too few workers to the computer chip shortage and soaring lumber and freight prices. The economy can’t produce enough goods and services fast enough to meet the soaring demand from the easing pandemic and government policies that have shoveled cash to consumers and rewarded Americans for not working.

Employers across the country have been complaining for months that the federal $300 weekly jobless bonus has made it difficult to hire. Most lower-income workers can make more sitting on the couch. It’s notable that half of the new labor market entrants last month were teens, most of whom don’t qualify for jobless benefits because of their short or nonexistent employment histories.

This was all predicted a year ago by these columns and a few others, including Sens. Ben Sasse and Lindsey Graham and economists Casey Mulligan and Steve Moore. But even as the economy was growing fast again, Democrats in March extended the $300 weekly bonus into September even as they ladled out a bonanza of other transfer payments.

Democrats claimed their $1.9 trillion spending bill was needed to jolt the economy, though it was fast recovering as vaccines rolled out and lockdowns eased. Now the White House is spinning the jobs miss after its spending blowout as something it expected.

“I want to remind everybody it was designed to help us over the course of a year, not 60 days,” President Biden said Friday, adding that the small job growth is “a testament to our new strategy of growing this economy from the bottom up and the middle out” and underscores the need for more government stimulus.

He also said there was no “measurable” data that people aren’t looking for jobs because it pays more not to work. He should get out more and ask some small business owners. Treasury Secretary Janet Yellen walked that back some by saying unemployment benefits weren’t a “major factor.” But the Labor Department’s latest Jolts survey showed 7.4 million job openings in February. There are plenty of available jobs but not enough willing workers.

The good news for those who are working is that employers are paying more to attract and keep them. Average hourly earnings last month increased at an 8.4% annual rate and even more for lower-income jobs like retail (16.8%) and leisure and hospitality (19.2%). The risk is that these wage increases will become embedded in expectations and lead to a more general inflation.

The policy lesson is to ease government constraints on supply. That means repealing the federal bonus not to work. And it should mean withdrawing the Biden tax increases that are a frontal attack on investment and supply. There is no need for more Keynesian stimulus, which has become part of the problem.

so Robert, I was one among many who thought unemployment money would be a disincentive to low wage workers from seeking jobs. But I have to rethink that based on a couple of facts that have come to light in recent reports.

It turns out the $600 last year was not a deterrent to people seeking steady employment, much of the cause to stay on the dole was more due to the virus and the disappearance of child care options.

And even though employers are desperately seeking employees, wages have not risen appreciably, which would have seemed to be a no-brainer considering the "free" money to not work as the competition.

Yet despite the poor numbers, the low paying leisure and hospitality industries "had the nations strongest growth last month, adding 331,000 jobs".

Seems many capable of working at higher paying jobs are cooling it, and that shortages in computer chips have greatly affected the automobile industry among other better paying industries from adding workers.

Frank, are you active in the work force and trying to fill positions for the low skilled labor/service jobs?

no.
I have in the past though. Worked for a cabinet/countertop manufacturer and design/sales company. But we always paid at least a little above minimum wage.
I stopped working a little over 2 years ago for personal family issues.

I'm seeing in the present situation that it's intellectually dishonest to simply claim without evidence that the poorest among us want free Obama cheese or DrafterX phones.
And I was falling for that easy old refrain.
Until I saw other stats.

Temp jobs lost 111,000 jobs.
Construction added ZERO jobs last month.
Manufacturing lost 18,000.
Transportation and warehousing cut 74,000 jobs.

Yet the lowest paying jobs like restaurants and related (that are still desperate to hire even more workers) added 331,000 last month.

Are you finding that it's hard to hire the lowest skilled/lowest paid people?

Yes. A lot of entry level service and retail jobs available in my area. If you want an honest job for honest pay, they are easy to find.

For example, Walmart is almost always hiring in nearly every department and they have great pay and benefits for even the lowest grunt on the totem pole. Unloading delivery trucks (one or two semi trailers/shift) and stocking shelves pays $17/hr. You need to be full time to get insurance but both full time or part time positions gets you sick days, earned paid vacation time, 401k matching, company stock purchase plan. They have free tuition programs to get your GED or HS equivalent, free tuition for select college degrees (ones that that Walmart would be looking for like business, accounting, logistics, IT, pharmacy tech, optical/eye tech...) all the way up to a Masters Degree if you want. Free tuition in select trades like plumbing, electrician, HVAC... There are no strings attached and you are not bound to Walmart in anyway other than you must maintain employment, at least part time, and maintain at least a 2.0 GPA. After that, you can take your degree with you and tell them to kiss your ass.

Not bad if you're willing to do an honest days work doing simple tasks. The problem is the pool of people willing to do that around here is not very deep beyond high school or college kids - the ones that don't have a work history that allows them to collect unemployment or qualify for Drafter Fones and Gubment cheese.

Gubment Cheese is a good band name.

Maybe a bit too cheesy tho.

There are lots of reasons that jobs are not being filled and it is not all due to getting extra unemployment $ - tho I'm sure that is deterring some from going back to work. Those that hold off going back to work may find that the job market isn't going to be too good come September or sooner foe places where subsidies will be reduced or discontinued.

I have been retired for 30 years and I got an unsolicited offer of temporary professional employment last week.

Skilled employment is not going unfilled. With the number of unfilled jobs, unemployment additional benefits should be over. The Biden administration is creating artificial demand. IMHO this is a mistake. All this is doing is ensuring large segments of certain industries will close their doors. Also they are creating a whole new class of welfare recipient. And the beat goes on.

Being paid to not work has impacted my company's ability to hire laborers.
We often hire through a temporary recruitment firm.
Over the past 3 weeks they (multiple firms) have had zero people to offer.

Does everyone think it's because everyone at that work level has a job?
Does anyone?

Cape Cod is booked solid through the summer.
But even if the state allows 100% capacity there will be no help to serve them.

I was recently down in Myrtle Beach.
Things are more open down there, but most pubs had only half capacity.
Because they couldn't find people to work.

I was in Boston last week. Near the hospitals and Northeastern University.
Along one street block, EVERY business had a help wanted sign in the window.
Every. One.

This isn't conjecture or just one man's opinion.

People won't work for their money when they can get it for free.

Let's run through some numbers for Massachusetts.

MA unemployment is about 50% average weekly wage (based on last 6 months of income) up to a max $855/week.

Example #1:
- MA minimum wage = $13.50/hr
- Full time work (40 hrs/week) at minimum wage = 13.50 * 40 = $540/wk before taxes.
- MA unemployment is about 50% your average weekly wage up to a max of $855/wk.
- $540/wk * 0.50 = $270/wk in state unemployment
- Add in the $300/wk from the Fed: $270 + $300 = $570/wk tax free.

So Work full time at minimum wage for $540/week before taxes or collect unemployment for $570/week after taxes?

Example #2:
- Let’s say you can get a job for $17/hr stocking shelves.
- That comes to $680/week before taxes.
- MA unemployment (50% of average weekly pay) would give you $340/week from the state plus $300/week from the Fed = $640 tax free.

So 40 hrs/wk stocking shelves @ $17/hr to get $680/wk (before taxes) or $640/wk tax free to watch Judge Judy.

Example #3:
Let’s say you worked at a job the past 6 months that put you into the bracket for the maximum allowed unemployment benefits of $855/week. Add the $300/week from the Feds and you bring home about $1,155/wk or $46,000/yr tax free to not work.

In this case unless you can find a job that pays $46,000/yr after taxes, it makes more financial sense to not work than it does to work.

In MA, you can still collect full unemployment benefits and work as long as don’t earn more that 33% of your weekly unemployment benefits. If you do, the overage is taken away from your weekly unemployment check.

Using example #1 (work for minimum wage):
Work part time and limit your income to $180/wk (1/3 of your unemployment allotment) and collect your full unemployment of $570/week.

In this case you bring home $750/wk by working 13 hrs/wk at minimum wage for a total annual income of about $39,000/yr while your taxable income is $9,360/yr (currently in MA, unemployment is non-taxable).

When it’s time to file taxes, your taxable income is so low you’d get any taxes you paid all back anyway.

We haven't even factored in other low income benefits like qualifying for SNAP (food stamps), free state offered health insurance plans, heating assistance, rent assistance...

Can you explain to me the financial incentive for getting an entry level job again?

In Oregon I believe part of the problem is our governor shutting things down so much. I think for many starting and stopping work and dealing with our understaffed unemployment office is a factor as well.

It’s an issue here too. I’m thinking it’s just a timing thing that will resolve. Purring house renovation on hold too for similar but different reasons.

What timing are you speaking of?

The problem locally has been since mid Q3 (or there abouts).
Maybe not noticed in many industries, since the shutdown required fewer employees. But for jobs like mine who never shut down, we are unable to get anyone new who wants to work.
And we're not on an island. It's the same throughout most industries that I sell into.

I don't disagree that the generous unemployment benefits kill the incentive to work for anyone with a predisposition to being lazy and possessing the low pride found in some people.
But I won't go so far as to paint an entire class of citizens in economic struggle with the same brush.

Again, the lowest paying jobs just hired 331,000. At the same time over 150,000 women left the work force...left it. Did not get let go. Quit.
It's too easy and harmful to blame the lowest class for their own problems, though everyone knows of some people that fit that designation.

If child care was affordable, more would seek employment and less women would have left the work force, but we'd still be dealing with a drastic loss of child care options...pandemic related...regardless of the cost per child.

Just tossing numbers here, nothing official, but using Bucky's numbers (roughly) of someone who could make close to $600 a week but would have to pay half that to day care...laziness isn't the deciding factor. Going deeper into danger (loss of housing, food insecurity etc.) would be the prime factors it seems to me.

And Walmart has historically been a creator of "working poor" by purposely keeping people at weekly hours below qualifying for benefits while allowing them to earn just little enough for the rest of us having to supplement their food budget and health insurance. I'll take your word for the newly magnanimous policy on their part. It's about time.

This is just far more complicated of an issue than calling the poor lazy, and it's more complicated now than just over a year ago.
I believe it will work out to what we consider more "normal", but a few months may not be enough time.

I agree that this will work itself out by the end of the year, a few months after federal benefits expire.

In Orlando, a lot of people aren't going back to work because they have lost their jobs (think Disney and Universal) which have not come back yet as the attractions aren't even close to fully open again and as tourism, our number one industry, is still way bellow pre-pandemic levels.

Target is offering $13/hour minimum to start. McDonalds around the block from me has a big sign looking for employees. Jobs start at $11/hour plus a signing and retention bonuses.

Employment and economic markets were crushed into disarray when Covid hit. Stimulus money just jerked them in another direction. Then even more stimulus as time has passed jerked them in another direction. Once federal payments stop, the markets will re-adjust and reach "normal", which hopefully will be at a pre-pandemic employment level.

Our society is far from "normal" yet and the economy will not work itself back into balance until after that occurs. Give it to the end of the year to see where we really are at...

Yes, computer chip shortages are wreaking havoc with production- and the auto industry is closing plants and laying people off by the 10's of thousands right now. I bet that will take over a year to recover from the shortage and it's impact on almost everything electronic manufactured in the U.S. today.

I think the word you’re looking for is “Democrat”.

Thanks... I damn near **** myself laughing.

I think you left out the economic factor. Laziness is one thing. Right now it's economically more favorable for some people to not get a job.

$39k per year to only work 13 hrs/week at $13.50/hr with a taxable income of about $9,500/yr (meaning you won't really pay any income tax). Only $9,500/year in real income puts you in a bracket to collect food stamps, fuel assistance, rent assistance and free state health care coverage.

Having pride to do an honest day's work and a feeling of accomplishment... that and $3.85 will get you a small coffee at Starbucks. The one's who are laughing are those watching the people go to work all day while they eat bon bons in their jammies waiting for Wednesday's direct deposit of their unemployment checks.

When the government subsidies dry up, then what? Are they going to go say "Well that was fun, now it's time for me to get back in the game" or are they going to scream for the politicians to cough up another round of free money?