Is There a Worker-Shortage? A Closer Look at the July Jobs Report

Does the United States have a general labor shortage? Clearly there are problems in specific locations and occupations. There are shortages at 911 call-centers across the country. The U.S. Postal Service is short of staff. In Los Angeles County where I live, the government legal infrastructure is a mess; there is a shortage of public defenders, interpreters, court reporters, and prosecutors. Despite high pay for some of these jobs, the private sector offers even higher pay. Rural school districts in the far north of my state have what the Los Angeles Times calls an “alarming teacher shortage.” Other states, too, have teacher shortages; it’s a difficult job and it is getting more difficult as the book-banners harass teachers and school officials. And across the country there is a shortage of school bus drivers.

Let’s look at this last “shortage” for a minute. A company called Zum that recruits and manages drivers for the LA Unified School District offers $26 an hour—above average for the region–and at least five hours a day of work. This might seem like a reasonable proposition for someone who needs only part-time work, but not if you are supporting others or if you are alone and don’t want to live in a shack. For a school year of 40 weeks and 5 hours a day you’d earn $26,000. If your rent is $1,300 a month, you’d have about $14,000 for your other bills and paycheck deductions over those nine months. Maybe you should try a different line of work.

Areas with high job vacancies may have specific explanations, including worker burnout, lack of appropriate skills, and lousy compensation, but these do not show that there is a widespread shortage of labor across the economy. The latter idea is being pushed by the U.S. Chamber of Commerce. The Chamber’s writers ask why more workers aren’t getting into the labor force and accepting jobs. According to employer reports, the number of job openings in June stood at 9.6 million. According to the Bureau of Labor Statistics (BLS), the number of people who were not working but were looking for work—the unemployed—numbered 5.8 million in July. Why so few? The CC answer is less immigration, more early retirements, and pandemic-era government benefits that convinced workers that “they no longer need to work.”

The Official Count of the Unemployed Is Just Half the Story

But there are many potential workers standing just outside the official labor force ready to work. The National Jobs For All Network’s (NJFAN) Full Count adds to the official tally people who want a job but are not currently searching. If we add just those 5.2 million people, the pool of unemployed job-wanters reaches 11 million, and the unemployment rate jumps from 3.5% to 8.7%.  

There is usually a large group of people outside the official labor force who want a job and soon take one. In fact, rarely discussed government data show that more people every month move from “not in the labor force” to being “employed” than move from the category of “unemployed” to “employed.” Too technical? The key point is that there are millions of workers ready to take jobs although they are not counted as looking for work and unemployed. 

Why don’t more of them actively search for a job? Probably some aren’t ready to work right away; some haven’t figured out child-care arrangements. Some can’t find jobs with decent pay and benefits. Some may have gotten tired of being jerked around in a job-search process that has become more frustrating, more dishonest, and more dangerous. Some don’t have the right credentials for various jobs. In the areas of retail jobs and accommodations and food services, where specialized skills are not key, there is a rough balance between job openings and hires. In government work, there is a huge gap between job openings of 1,130,000 and new hires at 387,000.

The Job-Search Gauntlet

In a terrific piece of research for Time Magazine, Alana Semuels presents much support for her title: “You’re Not Imagining It—Job Hunting is Getting Worse.” For example, some firms include more company reviewers on their side, and that means more opinions, often from people who are unfamiliar with the process. That makes the hiring process longer.

It is also riskier. Scammers pose as recruiters to steal applicants’ personal information, including bank account numbers. A person who claims to have been applying for ten jobs a day for many months sums it up this way: “You can’t ever be confident it’s a real job reaching out to you.”

And if you are dealing with a real employer, you cannot be sure that you will be treated honestly and with courtesy. In one survey, two-thirds of the applicants were ghosted after a job interview—cut off without explanation–and the ghosting rate for minority candidates was higher. Also, some companies lie about job vacancies. They post ghost jobs that they will never fill or not soon. Why? To get a pool of candidates they might some day use; to show that their company is expanding; and to keep current employees motivated. 

Back to the Chamber of Commerce argument about a general labor shortage. As NJFAN’s Full Count shows, the number of unemployed job-wanters is twice the official count of unemployed workers. It totaled 11 million people in July. If more jobs were more attractive, and if the hiring process were more honest and user-friendly, more people might report that they were actively looking for work, more would find jobs, and employers would show fewer job vacancies.

But there aren’t enough jobs that offer a wage and solid benefits. That is one reason we need government good-job programs. And there is plenty of work to be done. We need a massive effort to respond to climate threats of cataclysmic proportions, not to mention the need for affordable housing and a dozen other things.  We don’t need more unemployment. We don’t need a Federal Reserve-induced recession. The Consumer Price Index increased just one and a half percent over the last six months. Government actions, Federal Reserve policies, and natural economic processes worked to cut inflation rates. A recession is not necessary and would cause pain to millions of people, especially those in groups that are already hurting. Unemployment rates for disabled people have come down, but they are still very high at 6.9%. The unemployment rate for Black people is lower than it has often been, but it is still very high at 5.8% and is almost twice the white rate of 3.1%.  Also, a recession would undercut real wage growth. That is a key aspect of Fed anti-inflation policy. Wages are not exactly surging, but a 2% increase in the real purchasing power of the average hourly wage over the last year is not something we have seen much of in the 21st century. And the Fed wants to call a halt.