Something is wrong with the economy. According to the Labor Department, businesses posted a record-high 10.9 million job openings in July. But despite this unprecedented number of open positions, the economy added only 235,000 net new jobs in August, nearly half a million fewer than economists had expected.
How can there be so many job openings yet so few people willing to take those jobs?
It’s not that employers aren’t raising wages; they are. Average hourly earnings rose at a 6.9% annual rate in August. These gains were concentrated where they are needed most, in the low-skill jobs companies are having the hardest time finding willing workers for.
Part of the problem in filling vacancies might be that inflation is rising faster than pay, which means a decline in real wages. Thanks in large part to President Joe Biden’s spending spree, the economy is suffering from inflation rates not seen in more than a decade. Work is simply less enticing when inflation eats away at your paycheck.
Work is even less appealing when the government is offering historically high benefits to the unemployed. Since March 2020, people who don’t work have been given a weekly bonus check, first $600 and later $300, from the federal government, which is to say from current and future taxpayers. While that program finally expired this month, Biden has also boosted food stamp benefits by 25%.
There has never been a more lucrative time to be idle than today. No wonder 8.7 million people remain unemployed despite those record 10.9 million job openings.
The simple solution to this problem would be for the government to do nothing. Just let the unemployment bonus expire, and unemployed people will naturally find their way back into a job. It’s how the market works.
But this is not what Biden wants to do. In addition to his unilateral boost to food stamp benefits, a policy that will make it harder for employers to fill jobs, the president is also pushing for another $3.5 trillion in government spending on top of the $1.9 trillion bill passed in March and the $1 trillion infrastructure bill he hopes to sign by the end of this month. With inflation already growing faster than wages, the last thing the economy needs is another $3.5 trillion in deficit-funded spending.
The economy was recovering strongly from the COVID pandemic long before Biden took office. Unemployment peaked at 14.8% in April 2020, but thanks to President Donald Trump’s Operation Warp Speed and the record-fast creation of effective vaccines, joblessness had already fallen to 6.2% when Biden was sworn in.
Biden’s “leadership” on both spending and COVID has, if anything, made the recovery weaker. His stimulus plan has discouraged a return to work, and his decision to halt distribution of the Johnson & Johnson vaccine significantly slowed what had been fast-growing vaccination rates.
Probably the best thing Biden could do for the economy is take a nap until 2024. He looks like he needs it. The country certainly does.
