Biggest Problem for the U.S. economy — An Acute Labor Shortage
Author: Greg Valliere
January 12, 2023
THE REFRAIN WE HEAR across the country is that the labor shortage is still acute, but there’s a disconnect. As President Biden touts the benefits of new spending on jobs, he overlooks the obvious problem: there aren’t enough workers to fill jobs in manufacturing, hospitality, food service, retail, health care, etc.
AN OBVIOUS SOLUTION to this problem would be an immigration reform bill that would increase quotas for legal aliens — that option would be good for companies and workers — but any progress on this front is lost in the heated rhetoric over illegal immigration at the Texas border.
WE HAVE A VERY CYNICAL VIEW that neither party really wants immigration reform. With no movement, the Democrats can claim that Republicans are heartless, while the GOP can point to Biden’s incoherent immigration policies and the threat of higher crime. Both sides have their talking points.
IN THE MEANTIME, millions of jobs go unfilled. We were struck by a piece earlier this month on the Reuters web site titled “Biden’s Climate Agenda Has a Problem: Not Enough Workers.”
U.S. CLEAN ENERGY COMPANIES are scrambling to find workers in the wake of enactment of the poorly named Inflation Reduction Act, which provides $370 billion in solar, wind, and electric vehicle subsidies. Like much of the tidal wave of spending in the past three years, much of the money hasn’t been spent.
THE RENEWABLE ENERGY INDUSTRY says this legislation could provide up to 500,000 new jobs a year for the rest of this decade, but companies are grasping at straws — offering sign-up bonuses, high salaries and generous benefits. Some firms are even buying competitors just to get their workers.
THE WORKER SHORTAGE is particularly acute in electric vehicle and battery production, and solar panel and home efficiency installations, the Reuters article said.
THE LACK OF WORKERS, AND A HIGH QUIT RATE, has finally persuaded many analysts that a recession is not imminent — not with unemployment at 3.5%. Because much of the stimulus money hasn’t been spent yet, the economy could continue to grow modestly for at least the first half of this year, until aggressive Fed tightening eventually softens the economy in the second half.
FOR THE POLITICIANS who demand the creation of good jobs, they will not utter the obvious: the country is awash in good jobs that are unfilled. These politicians should talk with business owners in their congressional districts.
BUSINESSS OWNERS would happily train new workers but they can’t find many; they would welcome an infusion of foreign labor. That’s not likely to happen, so companies will have to boost compensation — that’s the real inflation threat, not commodity prices, which are expected to show continued moderation in this morning’s CPI data.
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