One of the more perplexing questions facing the US Economy today is, Why are there so many help wanted signs?

Today I will address that question, debunk a common misconception, dissect the make-up of the problem, reveal a strange paradox, and finally, point to the obvious solution.

Clearly, Covid Changed Everything

During March and April of 2020, the US economy lost 22 million jobs.

That Spring President Trump signed the Bipartisan CARES Act which significantly changed the nation’s approach to unemployment benefits.

It was extended multiple times but combined the effort sought to accomplish three things.

Expand Coverage

Increase duration

Improve adequacy

For the first time, coverage was expanded to include part-time workers, the self-employed, and gig workers such as your local Uber driver.

Most states provide up to 26 weeks of Unemployment benefits while some offer as few as 12–20 weeks. The Cares Act increased the duration of coverage to 49 weeks.

Even the most generous states offered the unemployed about 40% of lost wages with many being significantly stingier. The Cares Act as signed by Trump added an additional $600 a week to the state benefit. The extension under Biden cut this to $300.

The Benefits Made a Difference

Combined with other stimulus efforts, the preservation of consumer buying power via these unemployment benefits helped prevent the entire economy from free falling into a major recession.

JP Morgan Chase concluded that the benefits not only helped the unemployed but stabilized aggregate demand in the overall economy.

But Were They Too Generous?

In the Spring of last year, various Governors began to question whether the benefits were discouraging workers from accepting available work & thereby hampering the economic recovery that was clearly already underway.

26 states opted out of the program starting in June of 2021.

There have been many studies that looked at the question of whether or not the opt-out states did better than those who did not.

With one partial exception, the overwhelming number of studies agreed that they did not. Among the most authoritative I found was one by the Economic Policy Institute.

The 26 States who cut benefits saw an average 0.9% increase in job growth while those who did not actually gained a 1.6% in the same period.

Those who cut had a decrease of 0.2% in their unemployment rates, while those who did experienced a 0.4% decrease.

This seems to suggest that the benefits were not keeping people from seeking work.

Now, these are average numbers across many different states. Those that cut benefits tended to be in the South and more rural areas as opposed to the more urbanized states that did not cut benefits. Other factors such as a better mix of job opportunities may have also been at play.

During the height of the epidemic there probably were people who were better off due to the benefits than had they taken the first job they could have found in the depressed labor market.

But the evidence suggests that such benefits are not the answer to the current issue of Why There Are So Many Help Wanted Signs.

Besides, the program ended in all states 8 months ago — last September.

Some Sectors Do Better Than Others

The US Chamber of Commerce adds some clarity to the question by looking at which sectors of the economy are most impacted by labor shortages.

They note that the most affected sector, the Leisure and Hospitality group lost 1 million workers in November of last year, yet they hired 1.2 million — the highest hiring rate of all sectors.

The transportation, health care, social assistance, and the accommodation and food sectors have the highest number of current job openings.

Yet with the exception of Accommodations and Food, these have low quit rates.

Labor force participation varies by sector, some have a shortage while others a surplus.

For example, the Chamber reports that Durable Goods Manufacturing, Wholesale and Retail Trade, Education, and Health Services have a Labor Shortage with more job openings than people with the required skills and experience needed to fill them.

Conversely, transportation, construction, and mining have a labor surplus, with more experienced unemployed workers than job openings.

Now to the Strange Paradox

The Civilian Labor Participation Rate measures the percentage of all Americans aged 16 and over who are working.

Covid caused a sharp drop in the participation rate, which has rebounded significantly but not quite to pre covid levels.

Now here is the weird part.

While the overall Labor force participation rate has declined and has been doing so since 2010, when you break it down by age cohort including 16–19 teenagers, 20–64 adult working age, 65–74 Retirement age, and 75+ Elders, the labor force participation rates in each age cohort are at their highest levels in generations.

How can that be?

Today in America we have fewer people aged 16–19 than we used to, and the same is especially true of the primary workforce the 20–64 cohort that makes up the vast bulk of our workforce.

The Baby Boom has aged, and while a greater percentage of their age cohort are still working than ever before, the total American workforce has shrunk significantly.

The answer, Immigration

Every significant period of economic growth in American History from the 1800’s on was bolstered by major influxes of people from overseas.

Today, if we are to remain a dominant player economically in the world and hold our own vs the China of today and the India of tomorrow, we need to dramatically increase our immigration rate.

In my lifetime, in the 1950’s we benefited from not only German scientists like Werner Von Braun but hundreds of thousands of displaced people fleeing the devastation of post-war Europe.

Our GNP growth was also boosted by the baby boom bulge and the entry in previously unknown numbers of women in the workforce in the 1960s, 70s, and beyond.

Today we are in a baby-bust era and need new blood to build the future of America. And as an aside, we also need new faces and paychecks to pay into our Social Security fund.

There is much more to say about the need for immigration, but the answer to the question of why there are so many help wanted signs is at least in part because we have run out of people. Particularly those of working age.

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The above article was previously posted to my Medium account https://enetwal.medium.com/

with the specific article link of https://enetwal.medium.com/why-are-there-so-many-help-wanted-signs-7a5bc2abfced

And was based on a speech I prepared for my Toastmaster Group, Realtors 2512 based in Edina MN

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