At President Biden’s town hall in Cincinnati earlier this week, the owner of a group of restaurants asked what the President was doing to help address the shortage of workers they were facing. Biden correctly noted that there currently was a labor shortage because many businesses were opening up and there was competition for workers.
Then the discussion digressed into the potential impact of government assistance for displaced workers, and whether it was causing some people to forego returning to work. Biden pointed out that those benefits were soon going to end, so even if you assumed for the sake of argument that government benefits were holding people back from working, this would not continue much longer.
Biden also observed that the government had helped restaurants stay afloat by providing direct assistance to them. This particular restaurateur’s company received a total of $7.8 million in “loans” under the Paycheck Protection Program, most of which has already been forgiven. This raises the interesting issue of business owners gladly accepting government largesse when it is paid directly to them, but resenting it when it is given to their workers or potential workers, where it may (or may not) indirectly have an impact on their businesses, when they are ready to re-open.
The larger question, which Biden briefly alluded to, is how much restaurants and other companies are paying their workers such that they may think that collecting unemployment benefits is a better proposition. The complaint that businesses cannot find enough workers may be more of an indictment of the wages they pay than the government assistance they blame. Exacerbating the problem may be the anti-immigrant policies that became a Republican rallying cry, despite the fact that enterprises such as restaurants – and their food supply chains – rely heavily on immigrant labor.
It’s interesting that business owners who decry socialism want the government to do something when the wages and benefits they provide do not attract enough workers for them to operate their establishments at full strength. Under the bedrock principles of capitalism, supply & demand and the operation of market forces, when there is a shortage of workers, businesses should raise wages (and/or improve benefits) to induce more potential workers to enter the labor market, rather than relying on the government to fix the problem.
Business owners apparently have no problem accepting government assistance themselves, but find the assistance provided to workers to be an unfair distortion of the market. When the federal government’s assistance programs for workers expire, we will gain some insight into what, if any, impact they have had on the ability of companies that pay low wages (or don’t offer sufficient benefits) to attract workers. But again, the problem may ultimately lie with the level of wages (or lack of benefits) offered by reopening businesses, not the provision of government assistance to those who became unemployed due to the pandemic.
In the meantime, keep in mind that in America, business owners love to privatize the upside benefits and socialize the downside risks, despite their supposed devotion to “free market capitalism.”