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Thursday, February 2, 2023

Never-ending ‘pandemic’ perks fueling labor shortage

Darrell Cronk, chief investment officer for Wealth & Investment Management, discusses earnings season and the expectations for major retailers as the companies are set to report this week. 

When COVID-19 hit the U.S. more than two and a half years ago, the lockdowns that followed brought devastation to businesses and individuals alike, sparking waves of government programs aimed at providing relief to help Americans weather the pandemic.

But some experts say the generous perks doled out by the federal government to help resulted in the labor shortages crushing businesses to this day and that the seemingly never-ending benefits are only making the problem worse.

joe biden

US President Joe Biden delivers remarks regarding student loan debt forgiveness in the Roosevelt Room of the White House on Wednesday, Aug. 24, 2022.  (Demetrius Freeman/The Washington Post via Getty Images / Getty Images)

The latest big-ticket "pandemic" spending spree came last week when President Biden used the COVID-19 emergency to justify his controversial student loan handout that is expected to cost taxpayers somewhere in the area of $500 billion.

The president's executive action extends the pandemic-era student loan payment pause through the end of the year. It allows some borrowers to skip out on the bill forever, allowing many people to be more choosy about whether or not they have to return to an already-tight labor market.

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The National Federation of Independent Business's latest jobs report found that 64% of business owners tried to hire workers last month, but a staggering 91% found hardly any qualified applicants to fill their open positions.

labor shortage

A woman exits a shop displaying a sign announcing reduced store hours due to a staff shortage, on July 29, 2022 in Arlington, Virginia.  (Photo by OLIVIER DOULIERY/AFP via Getty Images / Getty Images)

Rachel Greszler, senior research fellow at The Heritage Foundation, told FOX Business' Hillary Vaughn, "Lots of factors are playing into this, including the original $600/week bonus [unemployement insurance] benefits that lasted nearly 18 months, other welfare-without-work increases, bad baseline policies on education and job training, and student loan payment moratorium that’s been a windfall of about $400/month, increased addiction and other mental health issues brought on by easy cash and isolation, and learning loss that’s left young people less prepared for the labor market."

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All these extra benefits have contributed to more would-be workers staying home because they can afford to do so, adding to a lack of labor for companies struggling to remain open. 

student debt

Melissa Byrne of We, The 45 Million, joins student loan borrowers at a rally in front of The White House to celebrate President Biden cancelling student debt and to begin the fight to cancel any remaining debt on Aug. 25, 2022 in Washington, DC.  (Paul Morigi/Getty Images for We the 45m / Getty Images)

According to the U.S. Chamber of Commerce, Americans have saved a collective $4 trillion in savings since early 2020. With more money in the bank and further benefits on the way, going to work becomes less attractive.

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"It's all about the government just giving people stuff," says Freedomworks chief economist Steve Moore. "I mean, it's all about the government playing Santa Claus… more and more free stuff from government as if it's somehow manna from heaven."

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