Bosses lie about ‘labor shortage’ to keep wages low

A job is required in order to have housing, food and transportation. Everyone needs a job at a living wage to survive. It’s a basic human right.

The May unemployment report wasn’t much better than the April disaster.  

Business news site CNBC summed it up: “Job creation disappointed again in May, with nonfarm payrolls up what normally would be considered a solid 559,000 but still short of lofty expectations, the Labor Department reported Friday. … May’s letdown came after April sharply undershot expectations.” 

The “jobs gap” remains more than 9 million down from pre-pandemic levels. “We are now short between 9.1 million and 11.0 million jobs since February 2020,” said Elise Gould of the Economic Policy Institute. At the rate of about 550,000 new jobs a month, the number of jobs won’t reach the level of February 2020 until the end of the year in 2022. That’s not a booming economy.

Unemployment plagues capitalism and has been a constant since the beginning of wage labor. Prior to the capitalist era, structural unemployment on a mass scale never existed, other than that caused by natural disasters.

While the current high level of unemployment — 23.1% according to the Ludwig Institute’s True Rate of Unemployment — is in part the result of the pandemic response, the underlying reason remains the same: to protect profits.

The reserve army of labor

As Karl Marx detailed in “Capital,” capitalism constantly produces a pool of unemployed workers. Capitalists refer to this as “surplus population” or “the unemployables.” Marx called this a “reserve army of labor.”

Marx said that in the drive to increase profits, capitalists try to reduce their costs by increasing productivity through the replacement of labor with machinery and new technology. This, in turn, creates an artificial surplus population of the unemployed.

This “reserve army of labor” influences wage rates. The larger the unemployed workforce grows, the more this forces down wages. On the other hand, if there is low unemployment and plenty of jobs available, this tends to raise the average level of wages, as workers are able to change jobs easily to get better pay.

In recent years, part of the reserve army of labor in the U.S. has been identified as “the precariat.” That is the growing number of temporary, contract and part-time workers (part of the proletariat) with precarious status. 

Precarious workers are part-time or full-time in temporary jobs, but don’t earn enough to live on. The Bureau of Labor Statistics does not count them as unemployed, but they do not receive a living wage.

Labor shortage?

In the media there have been claims that the depressing monthly employment reports are caused by a so-called “labor shortage.” This is political propaganda attacking unemployed workers, blaming the unemployed for the lack of available jobs. It’s being used to cut the meager federal supplemental unemployment benefits of $300 per week for those who lost their jobs because of the pandemic.

Twenty-five states are ending the $300 federal supplement and also the Pandemic Unemployment Assistance (PUA) for the self-employed and gig workers.

The PUA is a program that should never be cut, but rather should become a permanent program. A growing number of businesses like Uber and Lyft now call their workforce “independent contractors.” These workers are not covered by traditional unemployment insurance. They are covered by the PUA, which is actually paying benefits to more jobless workers than the regular state unemployment programs.

As for so-called labor shortages, there is only one measure of a labor shortage — wages. In a real labor shortage, wages start rising. Capitalists who face a shortage of qualified workers respond by offering higher wages and/or benefits, while capitalists who risk losing workers will raise wages to retain workers. 

But wages are not rising and, for some, are now lower than they were before the pandemic. If wages aren’t rising, it is certain that there is no labor shortage.

This was even admitted by Federal Reserve Chairman Jerome Powell, who dismissed claims of labor shortages, saying, “We don’t see wages moving up yet. And presumably we would see that in a really tight labor market.”

For the mass of unemployed — and a quarter of the workforce is without a full-time, living-wage job, according to the Ludwig Institute — the jobs are gone; there is no returning to the old job. New jobs won’t be the same. Most may require new skills along with new transportation needs, housing locations, childcare requirements, etc.

Even with restaurant jobs, where “tipped” workers often get sub-minimum-wage pay, the jobs are changed. While pay hasn’t gone up, these jobs are now more stressful and potentially dangerous as workers have to deal with anti-maskers and ongoing health concerns. The wages for a harder, riskier job should be higher.

In the “leisure and hospitality” sector, average weekly earnings have not gone up, remaining at a level of about $19,651 per year for full-time employment. 

Far more unemployed than jobs available

There are far more unemployed people than available jobs. 

In the latest data on job openings, there were nearly 40% more unemployed workers than job openings overall, and more than 80% more unemployed workers than job openings in “leisure and hospitality.”

For low-income workers with a job, pay has not been rising over the past year, but the consumer inflation rate has been steadily rising. In April, the consumer inflation rate reached 4.2%. 

That’s a backhanded cut in wages, so that workers are really getting paid less than they were a year ago. 

Food, housing, jobs

Most significant has been the continuous inflationary rise of food prices, actually double the overall rate of inflation in 2020. For the unemployed and low-wage workers, more than a third of their income is being spent on food, leaving most of them short of funds for housing or transportation.

This is the crisis for jobless workers. What is going to happen when the federal eviction moratorium ends on June 30? More than 10 million tenants are behind on their rent and face eviction once this moratorium is dropped. 

A job is required in order to have housing, food and transportation. Everyone needs a job at a living wage to survive. It’s a basic human right.

The right to a job is even backed up by federal law. The 1946 Employment Act and the 1978 Full Employment and Balanced Growth Act legally obligate the president and Congress to use all available means to achieve full employment.

Also adopted in 1946, the United Nations Charter on Human Rights declares, “Everyone has the right to work … and to protection against unemployment,” as well as the right to housing, education and health care.

Now more than ever, the government should be made to enforce these laws.