If you pay people more, they will come

The latest jobs report showed healthy growth in hiring. But more importantly, it also showed a rise in wages.

In an encouraging burst of hiring, America’s employers added 850,000 jobs in June, well above the average of the previous three months and a sign that companies may be having an easier time finding enough workers to fill open jobs.

Friday’s report from the Labor Department was the latest evidence that the reopening of the economy is propelling a powerful rebound from the pandemic recession. Restaurant traffic across the country is nearly back to pre-pandemic levels, and more people are shopping, traveling and attending sports and entertainment events. The number of people flying each day has regained about 80% of its pre-COVID-19 levels. And Americans’ confidence in the economic outlook has nearly fully recovered.

The report also suggested that American workers are enjoying an upper hand in the job market as companies, desperate to staff up in a surging economy, dangle higher wages. In June, average hourly pay rose a solid 3.6% compared with a year ago — faster than the pre-pandemic annual pace. In addition, a rising proportion of newly hired workers are gaining full-time work, as the number of part-time workers who would prefer full-time jobs tumbled — a healthy sign.

“That underscores the growing bargaining power of labor,” said Joe Brusuelas, chief economist at RSM, a tax advisory firm. “There’s increasing confidence that they’re going to get better jobs at better wages as the U.S. economy expands.”

This put a damper on a narrative that was being heavily boosted by the elites that the government was too generous with the relief offered to people during the pandemic and that it had caused workers to loll around at home without going out to seek honest toil. That narrative even inspired the Republican governors of some states to refuse the extended unemployment benefits the federal government was offering, thus not only hurting the people denied those benefits but also the general economy since that was that much less money that people had to spend.

As is often the case with narratives that benefit the business class, before this report was released we were regaled with anecdotes of desperate employers saying that they were unable to hire workers and that their businesses were suffering as a result. These employers were mostly in the hospitality sector, notorious for paying low wages. Well, it turns out that there are anecdotes that show that the real problem is that the wages are being offered are too damn low.

The New York Times reported Sunday that Missouri workforce development personnel “said they had seen virtually no uptick in applicants since the governor’s announcement, which ended a $300 weekly supplement to other benefits.”

“And the online job site Indeed found that in states that have abandoned the federal benefits, clicks on job postings were below the national average,” the Times noted.

The Times reported Sunday that hardly anyone showed up at a recent job fair in the St. Louis suburb of Maryland Heights, where the employment opportunities on offer included a $10.30-an-hour position at a home healthcare agency—with no benefits.

An ice rink, concert, and entertainment center was looking for 80 people, paying $10.30 to $11.50 for customer service representatives and $13 for supervisors. But the jobs last just through the busy season, a few months at time, and the schedules, which often begin at 5 am, change from week to week,” the Times noted. “In St. Louis, a single person needs to earn $14 an hour to cover basic expenses at a minimum standard, according to M.I.T.’s living-wage calculator. Add a child, and the needed wage rises just above $30. Two adults working with two children would each have to earn roughly $21 an hour.”

Economists and progressive lawmakers have argued in recent weeks that what Republicans, the U.S. Chamber of Commerce, and others have dubbed a “labor shortage” fueled by supposedly excessive unemployment benefits is in fact a wage shortage caused by businesses refusing to pay their employees adequately.

“There may be areas where some employers are struggling to staff positions, but the likely obstacle is not overly generous UI benefits—instead it is wage offerings that are too low to make these jobs attractive,” David Cooper, a senior economic analyst at the Economic Policy Institute, wrote in a blog post last month.

The anecdotal experiences of some businesses in recent weeks seem to bolster that interpretation. Earlier this month, the Washington Post cited the story of Klavon’s Ice Cream Parlor, a Pittsburgh shop that was struggling to find applicants for open jobs for which it was offering to pay $7.25 an hour plus tips.

“So owner Jacob Hanchar decided to more than double the starting wage to $15 an hour, plus tips, ‘just to see what would happen,'” the Post reported. “The shop was suddenly flooded with applications. More than 1,000 piled in over the course of a week.”

To his credit, Joe Biden says that it is a good thing that employers are trying to lure workers with higher wages.

Joe Biden, in response to the report, was eager to point out the changing power dynamic of the labor market.

“The strength of our economy is helping us flip the script. Instead of workers competing with each other for jobs that are scarce, employers are competing with each other to attract workers,” he said.

When it comes to wages, the capitalist class seem to conveniently forget basic economics that if you can always find employees if you are willing to pay them more.


  1. garnetstar says

    This was totally to be expected and has happened after every pandemic in all of history, so I’ve no sympathy for the whiny employers After a pandemic there are, you know, *fewer workers*, because a lot of them died. The fact that we’ve lost 605,000 people is just over a year, and that many more are disabled from COVID, does make a difference!

    After the Black Death in Europe, so few peasants were left to till the fields that lords had to improve their working conditions so much that it started the end of feudalism.

    And then, why go back to a job that sucks? Especially if child care or elder care or care of your newly-disabled family member costs so much that you’ll be losing money by going back to your low-paying job? Perhaps if the government or employers provided free care or support, even the worthless minimum wage might be viable?

    So, boo-hoo to these employers: you might have to make your jobs better, more desirable, as has happened to all other employers in history? Poor little fellas. Here’s hoping that they have to improve their jobs’ pay and working conditions so much that it begins the end of capitalism!

  2. says

    Unfortunately, the US is so good at union busting there was no wave of organizing, after the bosses threw staff overboard when the pandemic hit. Don’t be fooled by the small raises -- capital won bigly.

  3. brucegee1962 says

    @1 garnetstar, I’ve heard the argument the employee shortage is due to the covid worker deaths, but I’m skeptical. By my math, 600,000 deaths over the US 328 million population comes to .18%, which doesn’t seem enough to make a difference. On the one hand, the 600,000 may be low, and as you say there are also many disabled — on the other, many of those who died were retired or near retirement age.
    Anyway, cue up the sky-is-falling inflation talk in 3…2…

  4. consciousness razor says

    By my math, 600,000 deaths over the US 328 million population comes to .18%, which doesn’t seem enough to make a difference.

    You’re apparently talking about the entire population, not the size of the labor force:

    The U.S. labor force reached a high of 164.6 million persons in February 2020

    Also, worldometer currently says 621,378 reported deaths in the US, not 600k (and the total population is closer to 333M by the way). However, older/retired folks are much more likely to die from it, so that and any age-based disparities in unemployment would need to be accounted for as well.

    But of course, this is all kind of beside the point. It’s mostly due to still-alive people who’ve lost their jobs and now need to find another, preferably a less awful one. That’s what many people already wanted, I’m sure, but when you’re pushed into it by the circumstances and have months to think about where your life seems to be headed for the foreseeable future, it’s not quite as hard to make that kind of decision.

  5. Bruce says

    To me, the only logical conclusion is that conservatives never believed in market forces in the first place.

  6. flex says

    #5 Bruce wrote,

    To me, the only logical conclusion is that conservatives never believed in market forces in the first place.

    I would say that conservatives believe in market forces in the same way they believe in the Bible, American Exceptionalism, and their own business acumen. But, as with these other examples, they don’t think about market forces or try to understand how markets work.

  7. Katydid says

    The coverage on this in my area is mostly terrible (of the “lazy people lying around living like kings on $300/week” type), but I caught a quick clip this morning of a man whose high-tech job went away in the pandemic. He’s been helped by the $300/week on unemployment, and points out that if he took a job waiting tables, it wouldn’t come close to providing for his family. In my area, the $7.25/hr minimum wage won’t even support one adult, much less a family.

    Considering all the paycheck deduction money that 40- and 50-somethings have paid into unemployment over their lifetime of work--particularly for high-tech, well-paid jobs--it’d be stupid for someone to take a minimum wage job that won’t let them make ends meet and give up the unemployment money that does, particularly if they have childcare or eldercare needs.

  8. johnson catman says

    In the grocery store on Sunday, I asked the manager on duty about a product that had been out of stock for the last three weeks. Her response caught me a little off-guard. She blamed the lack of product on lazy people who won’t go back to work. I had to bite my tongue to keep from responding that if decent wages were offered, there would be plenty of people seeking the jobs. As much as I would like to be able to freely express that opinion in public, I know it would go over about as well as screaming “Fuck Trump!” in the store.

  9. K says

    Point of fact; if a person’s job calls them back and they don’t do…then they lose their unemployment. So ti’s not lazy people at all.

  10. garnetstar says

    @3, it’s just that the same thing has happened after every other pandemic. Always. Every time.

    And, if Grandma was your child care, and she died, well, as Katydid @7 says, you are actually going to lose money if you go back to work, as you will not be able to replace her on a minimum-wage, or almost any wage, salary.

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