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WJLA: A Wage Shortage in Construction and Landscaping

Economy down 7.6 M jobs: Is it a worker or wage shortage? 

Employers are still struggling to find workers to fill positions despite the U.S. economy adding 559,000 new jobs in May and hitting a new pandemic low of 5.8% unemployment.

The labor force participation rate is down 1.7% from before the pandemic and has been stagnant since June 2020 with just 61.6%. While more people are returning to the payroll, the economy is still down 7.6 million jobs.

Mass vaccinations along with hundreds of billions of dollars in economic stimulus unleashed a torrent of pent-up demand. Consumer spending surged in recent months. Air travel peaked to its highest level in over a year this Memorial Day. Restaurants and bars are reporting sales approaching pre-pandemic levels. Stadiums, concert halls and other entertainment venues are reopening.

The very industries seeing the biggest boom have had the highest job growth in recent months. But they have also been struggling the most to bring back workers. Restaurants and the hospitality sector saw the largest spike in job openings in March, according to the most recent data from the Bureau of Labor Statistics. The entertainment, arts and recreation sector, which includes concert venues, ballparks and museums, also saw a surge of new job openings.

With the U.S. economy projected to grow at 6.9% in 2021, there are concerns that the lack of available workers will create a drag that could jeopardize the recovery.

The lack of available workers is the most significant factor weighing on economic growth across the country, according to the U.S. Chamber of Commerce. In a survey of state and local chambers of commerce, 91% said the lack of workers was holding back their economies. That's twice as many who said COVID-19 were slowing the economy.

There is also a concern that millions of workers are not in a hurry to return to the labor force. In a new poll of unemployed Americans, the Chamber of Commerce found 61% said they did not expect to be back to full-time work until September or later.

"The worker shortage is real—and it’s getting worse by the day," said U.S. Chamber of Commerce President and CEO Suzanne Clark. "American businesses of every size, across every industry, in every state are reporting unprecedented challenges filling open jobs...and it poses an imminent threat to our fragile recovery and America’s great resurgence."

The organization called for an increase in employment-based visas, federal investment in job training programs and expanded access to child care for working parents.

In its Friday statement on the jobs report, the White House Council on Economic Advisers was less alarmist, saying it was "too soon to conclude that labor supply issues are holding back the long-term path of the recovery."

The White House cited other factors affecting people's decisions to return to work, with concerns about contracting and spreading COVID-19 and the unavailability of child care and school disruptions as leading causes.

However, more than COVID-19 concerns, many workers are looking at their post-pandemic options and seeking out positions that pay more than many employers are offering.

With the economy down 7 million jobs from February 2020 and low labor force participation rates, the numbers don't add up to a labor shortage, according to economists and union leaders.

Elise Gould, a senior economist with the Economic Policy Institute, explained that employers are fundamentally having trouble finding the workers they want at the wages they want to pay them. "We’re not seeing the acceleration in wages that suggests they [employers] are trying that hard. And I think if they were, you'd see it in wage growth," she said.

The higher demand for workers pushed up hourly earnings by 0.5% month-over-month and 2% for the year, according to the Bureau of Labor Statistics. That's hardly enough to cover the cost of inflation, which was up 4.2% in April for consumer goods.

Several large employers including McDonald’s, Walmart, Target, Costco, Starbucks and Chipotle have all boosted wages during the pandemic to attract workers, paying at least $15 per hour.

Ernest Ojito, business manager of the Laborers' International Union of North America Local 202R, said that large construction contractors are doing the same: offering higher wages and bonuses, to attract workers. In many cases, it's not enough to meet demand.

"It's not a worker shortage, it's a wage shortage," explained Ojito, who places union workers in construction and landscaping jobs.

Demand for skilled labor has been high throughout the pandemic, with significant shortages in construction. But Ojito said too few contractors are willing to pay workers enough to pull them off the sidelines.

"Major corporations who are saying they can't find people just can't find people at $13-$14 an hour," he noted. "Wages have to come up to match what inflation is, what it costs to live, especially when we're competing against the government and unemployment benefits."

The average unemployment benefits in most states coupled with the $300-per-week boost in federal pandemic benefits pay the equivalent of a $15 per hour full-time job.

"You pay somebody a decent wage, he comes to work, but if someone is incentivized to stay home, if someone is sick or has a preexisting condition with their health...why would they come out if they could make more money at home?" said Ojito. "We’re in a pandemic. It's time to raise wages."

The federal government's enhanced unemployment benefits don't officially run out until Sept. 6 but Republican governors in 25 states have ended the program early in their states in an attempt to address severe worker shortages.