It seems all too common today: You’re going to your favorite restaurant, and you discover that there is an hour long wait, just to be seated. Once you get inside, you notice that there are only two servers for this extremely busy restaurant. And it takes twenty minutes just to get your drink orders.
Photo by @shawnanggg on Unsplash
Major fast-food chains that are famous for being open 24/7 are closing early due to being short staffed. And wait times when calling major banks or institutions has also increased.
On the news you might have heard about a labor shortage.
What’s going on?
“No one wants to work!”
You might have heard this being repeated, especially during 2020. During the pandemic, unemployment benefits were increased to keep the economy running. These benefits led some people to have a higher income than when they were working full time!
As a result of this, many pointed to unemployment as a culprit. People were being paid to not work, which was driving a labor shortage.
However, the pandemic unemployment benefits have ended, and the labor shortage has continued. This points to unemployment playing a smaller role in this current phenomenon than many expected.
Laws of Supply and Demand
Many people don’t realize that this labor shortage actually started before the pandemic, but Covid compounded it to a whole new level.
We are experiencing what happens when the supply of jobs is high, and the demand remains the same. After the Great Recession when so many people lost jobs, companies clawed their way back to growth. And succeeded.
Aside from movements to raise the minimum wage, employers have been finding it more and more important to draw top talent with competitive wages.
And then Covid happened.
When the Pandemic hit, the first thing to occur was many people were furloughed. And the only people to be kept on were deemed “Essential Workers.” This kept the economy functioning.
Except many of those Essential Workers were making little better than minimum wage, and were suddenly exposed to much higher risk than everyone who had been furloughed.
Many people began leaving these jobs in search of work that would compensate for that higher risk, and the higher demands to stop the spread of a deadly disease.
Even if job turnover had remained the same as during normal times, the increased risks led many to stay home. For many, having those front-line jobs meant putting loved ones with weakened immune systems at a greater risk of exposure.
This led to an even lower supply of workers for the same amount of demand.
Time off: Blessing and a curse
For many, becoming quarantined and furloughed was an incredibly stressful and frustrating time. Life felt so uncertain. And still, for many it led to time to develop skills that had laid dormant for years.
According to the Census Bureau, during the year 2020 a whopping 4.4 million new businesses were created in the US.
People decided that they would use their free time to level up.
Some of those business owners might need to return to their other employment to cover costs, but many discovered that they could make ends meet by doing what they loved.
Those people did not return to the workforce, lowering supply even more.
An important thing to consider, too, is that due to the economic recovery from the pandemic, inflation has vastly increased. The current inflation rate while writing this is 5.4%, with many predicting it will go up even more by the end of the year.
This higher inflation means every day goods are getting more and more expensive at a very fast rate.
From the perspective of employees, salaries and wages that previously met their expenses are suddenly outstripped. And if another employer would pay more for the same service, then it becomes an easier decision to leave for new work.
We really are living in a truly unique era in American history. For many, this is leading to greater frustrations as wait times for common activities like restaurants and theme parks have increased. However, this is also a time of opportunity.
The new businesses that were created during the pandemic have led to shortages in labor, and they could also lead to the solution. One of those new businesses might innovate some new technology that will completely change the way we do business.
The demand for labor could lead to a reduction in the wealth gap that has caused problems for such a long time in our country.
And in it, there’s opportunities for you to leverage your own unique skills and mindset for a higher salary.
If you want to learn how to master your mindset and increase your income, click here to register for a FREE Bronze Account. A licensed financial advisor will reach out to schedule a career coaching session.