By Brad Polumbo
With pandemic restrictions finally being wound down around the country, the economy should be roaring back to life. But we’ve seen much more muted job growth than expected, and we have a record-breaking 9.3 million unfilled job openings while millions of Americans languish on unemployment welfare. What’s going on?
Well, a new small business survey reveals two key problems plaguing our economy.
The National Federation of Independent Businesses regularly surveys the thousands of small businesses whose interests it represents. Released this week, its latest polling offers yet more proof that a labor shortage is restraining economic recovery. A record-high 48 percent of business owners said they had jobs they couldn’t fill.
“The labor shortage is holding back growth for small businesses across the country,” NFIB economist Bill Dunkelberg said. “If small business owners could hire more workers to take care of customers, sales would be higher and getting closer to pre-COVID levels.”
The source of this labor shortage, at least in large part, is the continued availability in dozens of states of unemployment welfare benefits that pay more than working a job.
Per Forbes, the average unemployed person can earn the equivalent of $17/hour staying on the welfare rolls under the current “temporary” expanded pandemic benefits (assuming a 40-hour workweek). Thus, many workers are disincentivized to return to work, even for jobs that pay $15/hour!
That small businesses across the country are experiencing an acute labor shortage should be no surprise given such dysfunctional government policy. But it’s a huge issue for our economy.
Meanwhile, surging price inflation is also a key cause for concern.
In the new survey, small businesses report big increases in their supply costs. As a result, roughly 40 percent said they are increasing their prices—the highest response to this question since 1981. The rising prices are a major concern for business owners, and one reason why their optimism on the near future fell in this month’s survey.
“Inflation on Main Street is rampant and small business owners are uncertain about future business conditions,” Dunkelberg added.
Where’s the inflation coming from? It’s complicated, but here’s the short answer: reckless federal money-printing.
“Nearly one-quarter of the money in circulation has been created since January 2020,” FEE economist Peter Jacobsen recently explained. But printing more money doesn’t mean we actually have more stuff, and “if more dollars chase the exact same goods, prices will rise.”
From a labor shortage to inflation, our economic recovery faces some serious roadblocks. While the federal government may have intended to help along our resurgence, both hurdles can ultimately be traced back to failed policies in Washington, DC.
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Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Policy Correspondent at the Foundation for Economic Education.
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