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June 1, 2022

The Perfect Storm of Unemployment

There are still fewer workers than before COVID, meaning summer attractions are having staffing problems.

Imagine you’re off to a week at your favorite vacation hotspot — you know, the one you’ve learned enough about to know which places are tourist traps and which are the hidden nuggets. It’s Monday evening and you pull up to your favorite local eatery, only to find it’s closed with the sign on the door apologizing for having a lack of staff to open. That’s become a common occurrence already this summer. And although tourist areas seem to be hit harder by this issue, it’s not just limited to the beach.

These staffing issues will eventually eat into the bottom line for thousands of businesses that miss out on customers because they’re cutting hours or taking unplanned days off during their busiest time of the year. A recent Wall Street Journal article gives several examples; living in a tourist area, this writer can provide many more. It’s pointed out in the Journal that, as of April, 4.5 million more people are out of the labor force than in the pre-COVID era of February 2020, and there are a variety of reasons.

Ironically, the 4.5 million outside of the labor force contribute to some of the lowest unemployment rates on record, particularly in rural states and those that opened up more quickly from the COVID restrictions. While some of that 4.5 million is being supplanted by teenagers who have taken advantage by being job-seekers for the first time in a generation, those missing from the workforce are driving an undercurrent of worry from the business community that’s trying to fill a record 11.5 million job openings by providing sign-up bonuses and raising wages to nearly unsustainable levels.

In a recent piece for RealClearPolicy, Stefani E. Buhajla outlined several factors that are slowing down the post-COVID recovery, noting, “What started off as temporary measures to alleviate the pains of the pandemic have instead become a nearly two-year economic reality.” Some of the measures include extended welfare benefits, increased SNAP (food stamp) funding, and state policies in several states that allow those collecting unemployment to continue receiving benefits with as little as one job-seeking activity a week. This lax rule may be the reason employers are being plagued by “ghosting,” a term for failing to show up for scheduled job interviews.

“Never has it been more important to bring commonsense reforms to our safety net programs,” Buhajla writes. “We must establish and enforce work requirements for food stamps and unemployment insurance. This should include accountability measures that verify individuals are truly seeking employment, as well as caps on the duration of benefits for working-age, able-bodied adults.” This policy fix may have to be done at a state level, as the Biden administration shows little interest in taking people off the dole.

Things have certainly changed since the last time Americans felt truly comfortable and free to take a weeklong trip to the beach three years ago: higher gas prices, supply shortages of and higher costs for vacation food staples, and this employment squeeze that’s causing businesses to reduce hours and close on certain days of the week.

Unfortunately, these factors aren’t putting the backyard “staycation” in the rearview mirror quite yet at a time when tourist-dependent businesses need a huge summer.

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