Is Mitch McConnell right? Have the stimulus checks really caused a labor shortage?
Major events like a global pandemic have a way of highlighting life.
- The average family of four had an extra $422 a month to spend thanks to stimulus checks.
- Among the reasons for the current labor shortage, stimulus checks play a very small role.
Shortly after President Joe Biden was sworn in, a website designed to look like an official government site claimed that an average family of four was about to receive a check for more than $109,000. The site was intended to piss off the troops, to anger Americans enough to support their political candidates. In short, it had nothing to do with reality.
The web is full of such sites, and unless a reader is particularly careful, it’s easy to believe outrageous headlines and soundbites of politicians with an agenda to push. For example, Republican Senator Mitch McConnell said last month that the current labor shortage was the result of stimulus funds sent during the Trump and Biden presidencies.
According to McConnell, “you have a lot of people sitting on the sidelines because, frankly, they’re low on the ground at the moment.”
McConnell thinks that once all those stimulus funds run out, “they’ll start to conclude that it’s better to work than not to work.”
The problem(s) with taking McConnell
They say the easiest way to make a person believe a lie is to repeat it over and over again. Luckily for McConnell, some right-wing news outlets and publications were more than happy to repeat his words, implying that it was stimulus money that caused the current labor shortage.
This belief is certainly more vivid than the truth and much less nuanced.
To test McConnell’s theory, we looked at the average amount of stimulus money received between April 2020 and March 2021. As of this month, the typical American couple earns an average annual salary of around $63,000, c So that’s the number we’ll use to illustrate the point. Now, let’s say the couple have two children, both under the age of 17. Here’s how much would have landed in the family’s bank account at the height of the pandemic:
Relaunch release date
Total amount received by a family of four
Total stimuli received
Source of data: several sources compiled by the author.
McConnell’s statement assumes Americans are still living largely off their stimulus checks — enough to do without jobs. But dividing the total amount received by the 27 months since the first checks were issued, we find that the average American family had $422 more in their pockets each month. It’s hard to imagine a family of four living comfortably on $422 a month, especially if they were among the 30 million people who found themselves unemployed during the pandemic.
Clearly McConnell’s comments were, at best, misguided. So what is causing a labor shortage in the United States?
More jobs than workers available
According to the Chamber of Commerce, there are currently more than 11 million job openings in the United States, but only 6 million unemployed. If every unemployed person took a job, there would still be 5.4 million open jobs.
More jobs than potential employees
Since reopening, businesses have created 3.8 million more jobs than before the pandemic. The problem is that there aren’t enough Americans to fill both the businesses that have reopened and the new jobs that have been created. The fact that 3 million Americans have decided to retire during the pandemic has compounded the problem.
Reasons why some stay seated
Here are some of the reasons Americans say they’ve decided to avoid or postpone re-entering the workforce, according to a survey by the U.S. Chamber of Commerce:
- Retirement: Simply put, the pandemic hit at a time when some, who might not have considered retirement, decided it was time. Between the third quarter of 2019 and the third quarter of 2021, the number of adults aged 55 and over who left the labor force increased from 48.1% to 50.3%.
- Child custody issues: Of the women surveyed, nearly one in three said they had children or family members to take care of. In 2022, the average cost of child care is nearly $14,000. For a mother who does not earn much, going back to work does not make much sense.
- Good jobs are sometimes rare: 28% of men surveyed said their industry continues to suffer or that there aren’t enough high-paying jobs available. Low-paying jobs are plentiful, but it takes time away from finding a job that pays decent wages.
- Health problems : COVID-19 persists. Although many of us would like to believe that the pandemic is behind us, some of those interviewed by the Chamber of Commerce said they were worried about returning to work that would expose them to the virus.
- A desire for change: With months at home to think about their future, some people have decided to go back to school to take training that will allow them to change jobs or move up the corporate ladder. Others have decided to take the plunge and start their own business. In fact, over 4 million new businesses were created in 2020 alone. Since that time, 6 million more have started. Rather than depend on an employer who could fire them at any time, Americans decided to take their future into their own hands.
- New job: Like shuffling a game of cards, Americans are leaving their current jobs for better paying jobs and more money in the bank. In May 2022, 4.4 million people quit their job at one company and went to work for another.
One thing that all major events like COVID-19 have in common is how much of a focus they put on priorities. And for many Americans, that meant no longer accepting the status quo at work.
Alert: The highest cash back card we’ve seen now has 0% introductory APR until almost 2024
If you use the wrong credit or debit card, it could cost you dearly. Our expert loves this top pick, which features an introductory APR of 0% until nearly 2024, an insane payout rate of up to 5%, and all with no annual fee.
In fact, this map is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.
Read our free review