The Labor Market Is Tight Despite High Unemployment

In the pandemic recession even more parents left the labor force to take care of their children because schools were closed.

Among those who are still looking for work, some are very flexible about what jobs they will take, but others have strong preferences they will follow. People usually become accustomed to certain hours of work, and their families also adjust. So the restaurant cook who normally got off work at 10:00 pm might not want an 9-to-5 shift in another occupation. And many people have found a job that they are comfortable in, even if the pay is generally low. The hotel housekeeper may feel good doing a job that she knows how to do well, with co-workers she has known for years. She may prefer to wait for her old job rather than start another occupation.

These decisions interact with unemployment benefits to alter behavior of some people. The usual benefit structure provides less income for the unemployed than they would earn working. The $600 bonus paid out in the early months of the pandemic put more money in many unemployed people’s pockets than they had been earning. The current $300 bonus and Biden’s proposed $400 weekly bonus similarly erode work incentives, though not as badly as the old bonus.

The decisions that people make about looking for work and selecting jobs don’t always maximize their financial situation, but all of us trade money for other values. Few, if anyone, make all life choices for the greatest income. Many of us could earn more in a different city, or a different occupation, or working different shifts. We make our decisions based on all the other things we want out of life, including family, spirituality, convenience, and personality preferences. Those personality preferences include new experiences or comfortable routines, socialization or isolation, variety or consistency. Understanding how a person relates to a job is an important part of finding a good fit. Workers who do find a job that matches their personality perform better, remain on the job longer and generally find greater satisfaction from their work. Regardless of whether an outsider would say that the unemployed person’s decisions are right or wrong, those decisions must be treated as facts to be dealt with.

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