Elyssa Duncan
Community Specialist
Community Specialist
Are low wages causing labor shortages?
Last updated: July 1, 2022
Elyssa Duncan
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Are low wages causing labor shortages?
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Recently, there’s been a lot of media buzz about the “labor shortage” that employers have been facing. With the economy beginning to open back up and consumers looking to spend their money at places beyond online retailers, businesses are having a hard time hiring to meet this increased demand, despite the 9.8 million unemployed Americans actively seeking work. So what’s causing the hesitation of unemployed workers from returning to work?

What could be potentially causing the labor shortage?

Lack of childcare, the desire to work from home, fear of returning to work during the #Coronavirus pandemic, and poor working conditions are all commonly mentioned as reasons people are not returning to work. However, when talking with our community, one of the most prevalent reasons Jobcase members are hesitant about returning to work is the lack of sustainable wages.

”Companies have the expectation that you should work for pennies in low level positions and other organizations are reluctant to hire someone with many years of experience and skills, because they want a cheap labor pool and are less likely to hire someone who commands the rightful compensation...People want to work for a living wage and not have to struggle while working, it's not enough anymore to just be satisfied with having a job.”
- Nathaniel Ford, Jobcase member

Even many employed American workers face difficulties because of the low wages offered in many hourly job listings. Many jobs, including food services, warehouses, package delivery, and other lower-paying professions, expose people to potential health hazards and exhausting working conditions that have workers questioning whether or not the pay is worth the possible repercussions.

Some workers face the challenging situation of having to take care of personal at-home obligations - like taking care of family members - while working jobs away from home, often at wages that are inadequate to pay for out-of-home care.

Is higher pay a possible solution to the labor shortage?

Though there may be plenty of employers offering work, many offer low wages for jobs that potential workers consider risky, especially if they are not vaccinated against COVID-19. Even before the pandemic, lower-wage jobs were facing a labor shortage as employers were struggling to hire enough people to fill the available positions.

When we asked our Jobcase members, if they would rather a $2 per hour raise or a one-time $5,000 bonus, over half responded they would rather a raise, showing us that long term financial stability is a top priority.

”2.00/hour raise because you’ll make more money in the long run.”
- Amy Bruno, Jobcase member


”Take the $2.00 per hr. The bonus would be taxed at a higher rate so the net pay would be less.”
- Lisa Parker, Jobcase member


”Actually, you would take the $2.00 per hour raise as it is permanent versus the one-time bonus is exactly as it states, one-time and not permanent.”
- James Waters, Jobcase member

People looking for work are more easily accessing opportunities to find jobs at giant corporations like Amazon, Target, Kroger, Starbucks, and Costco who are willing to pay at least $15 per hour. If other employers want to keep up, they will have to improve their pay, benefits, and culture to continue attracting talent and combat hiring difficulties.

Looking for a high paying job? 

What companies are saying about the lack of workers

From restaurants to construction companies and technology companies, 42% of small business owners state they have various job openings that they can not fill.

Some employers blame the extended jobless benefits, claiming it disincentivizes people from returning to work, but it seems the situation is more complicated than that. Even though more and more states are taking steps to end the $300 extended benefit, will that make people return to work?

Some economists agree that a more probable reason for this shortage is employers simply don’t want to raise wages high enough to attract the necessary workers or offer the benefits needed for individuals to return to work confidently.


What do you believe will help solve the labor shortages in the U.S.? Share your thoughts in the comments below!

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Elyssa Duncan
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Michelle Horsley

Absolutely Yes

Absolutely Yes

28w
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sheila langilotti

I was let go after 14 months at an extremely stressful job. Others b4 me never stayed THATlong. Right after the vaccine came out I was let loose the job was split to 2 PT positions. For less pay. Vaccine plays into it because it was a home for 12 dev. Delayed adults. Covid scared alot of nurses Theywouldn't work in that setting. Until vaccinated. All the adults vaccinated too. So there i went out the door. N most was horrible

I was let go after 14 months at an extremely stressful job. Others b4 me never stayed THATlong. Right after the vaccine came out I was let loose the job was split to 2 PT positions. For less pay. Vaccine plays into it because it was a home for 12 dev. Delayed adults. Covid scared alot of nurses Theywouldn't work in that setting. Until vaccinated. All the adults vaccinated too. So there i went out the door. N most was horrible

50w
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1
Sonia Phillips

Everyone who has children under the age of 5 needs Affordable childcare and be able to make a decent wage to pay the childcare feed their family and pay the rest of their bills such as rent/mortgage utilities cable phone etc. If your working at $10 an hour and a babysitters wage is $10-15 an hour there is nothing left to pay the rest of the bills the average rent in Florida is $1800 to over $3000 a month depending on the size of the house and the area plus reasonable healthcare

Everyone who has children under the age of 5 needs Affordable childcare and be able to make a decent wage to pay the childcare feed their family and pay the rest of their bills such as rent/mortgage utilities cable phone etc. If your working at $10 an hour and a babysitters wage is $10-15 an hour there is nothing left to pay the rest of the bills the average rent in Florida is $1800 to over $3000 a month depending on the size of the house and the area plus reasonable healthcare

1y
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B Lim

Hello, I was laid-off from an high tech 6 figure position as Senior Product Engineer with over 20 years experience. The salary and benefits was great and I could not complaint about the hours as we had an open protocol where you came into the building as needed. Most of us would work from home. That was great until last year when corporate decided to let go some people then a lot of people. Looking at the job market I can see why we were let go. We were among high paid tech workers and the salaries with new companies are much lower. With inflation just around the corner I can see salaries will go lower. That is one major contributor to the job shortage because new companies do not want to pay for highly skilled people.

Hello, I was laid-off from an high tech 6 figure position as Senior Product Engineer with over 20 years experience. The salary and benefits was great and I could not complaint about the hours as we had an open protocol where you came into the building as needed. Most of us would work from home. That was great until last year when corporate decided to let go some people then a lot of people. Looking at the job market I can see why we were let go. We were among high paid tech workers and the salaries with new companies are much lower. With inflation just around the corner I can see salaries will go lower. That is one major contributor to the job shortage because new companies do not want to pay for highly skilled people.

1y
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1
Cynthia A

I was laid off from a high stress-high pressure-6-figure senior director position 3 yrs shy of when I expected to retire. I am interested in working but without the pressure and stress of my previous position and need only enough of a paycheck for some spending money. Here’s what I have been frustrated by: 1). employers are suspicious of older people who are looking to scale back. 2). I am not “young and impressionable”. 3) I don’t have to work but I’d like to. However, with the tax burdens increasing, it’s not worth it.

I was laid off from a high stress-high pressure-6-figure senior director position 3 yrs shy of when I expected to retire. I am interested in working but without the pressure and stress of my previous position and need only enough of a paycheck for some spending money. Here’s what I have been frustrated by: 1). employers are suspicious of older people who are looking to scale back. 2). I am not “young and impressionable”. 3) I don’t have to work but I’d like to. However, with the tax burdens increasing, it’s not worth it.

1y
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2
Denise Allen

The extra $300 with unemployment cannot cover all my bills. I'd rather have a good paying job. I continue to apply at several companies and I'm not even getting an interview. I've had my resume updated, a bachelor's degree and many years of experience. The problem I'm seeing, is these jobs don't want to pay higher wages. I continue to see senior level positions offering to pay people anywhere between 40,000 to $50000 a year. They have CEO qualifications for the position, but offering entry level salary. What happens when a person was making 70 to $80000 a year, how are they expected to survive and cover all of their bills with such a low ball salary offering? Before a salary can even be considered, an interview and job offer has to be on the table. That part just isn't happening. Is it age discrimination, being over qualified or a cheap paying company???

The extra $300 with unemployment cannot cover all my bills. I'd rather have a good paying job. I continue to apply at several companies and I'm not even getting an interview. I've had my resume updated, a bachelor's degree and many years of experience. The problem I'm seeing, is these jobs don't want to pay higher wages. I continue to see senior level positions offering to pay people anywhere between 40,000 to $50000 a year. They have CEO qualifications for the position, but offering entry level salary. What happens when a person was making 70 to $80000 a year, how are they expected to survive and cover all of their bills with such a low ball salary offering? Before a salary can even be considered, an interview and job offer has to be on the table. That part just isn't happening. Is it age discrimination, being over qualified or a cheap paying company???

1y
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3
Ron R

The law of supply and demand also applies to labor the labor force. Everyone has a price and if you meet that then people will work for you. If you pay cheap and someone else will pay more then you lose your employee. If there are not enough jobs then people will fight for that job and you'll be able to pick the best ones. Unemployment compensation is limited so you can't rely on it as a job substitute, unless you're at the bottom of the job pool. Like a doctor or engineer will actually not take a job for an unemployment insurance.

The law of supply and demand also applies to labor the labor force. Everyone has a price and if you meet that then people will work for you. If you pay cheap and someone else will pay more then you lose your employee. If there are not enough jobs then people will fight for that job and you'll be able to pick the best ones. Unemployment compensation is limited so you can't rely on it as a job substitute, unless you're at the bottom of the job pool. Like a doctor or engineer will actually not take a job for an unemployment insurance.

1y
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1
ronald lewis

It's the higher unemployment checks that are causing people not want to work, you know this is true!!!

It's the higher unemployment checks that are causing people not want to work, you know this is true!!!

1y
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Steven Wood

Employers and the UIA needs to "be careful what you wish for." More states are requiring that people provide proof that they are looking for work, mostly due to employers complaining that no one is applying for positions (generally the employers who offer low wages & part time positions.) As long as the additional $300 unemployment assistance is in play, employers who provide lower wages are going to continue to have a hard time finding workers. With more states now requiring people to prove that they are looking for work, employers are now going to be wasting more time going through resumes of people who knowingly apply for positions that they are not qualified for. They are also likely to apply for jobs at companies that they know are not hiring. Unless employers are willing to provide wages close to what is represented in this unemployment, they're essentially forcing people to take a pay cut by "blackmailing" them by threatening to notify the UIA that they were offered a job but refused it. How good of an employee do you think that the employer will get as a result of blackmail? As long as that additional $300 is in play, employers who offer wages that are substantially less than this UIA payment will continue to face labor shortages.

Employers and the UIA needs to "be careful what you wish for." More states are requiring that people provide proof that they are looking for work, mostly due to employers complaining that no one is applying for positions (generally the employers who offer low wages & part time positions.) As long as the additional $300 unemployment assistance is in play, employers who provide lower wages are going to continue to have a hard time finding workers. With more states now requiring people to prove that they are looking for work, employers are now going to be wasting more time going through resumes of people who knowingly apply for positions that they are not qualified for. They are also likely to apply for jobs at companies that they know are not hiring. Unless employers are willing to provide wages close to what is represented in this unemployment, they're essentially forcing people to take a pay cut by "blackmailing" them by threatening to notify the UIA that they were offered a job but refused it. How good of an employee do you think that the employer will get as a result of blackmail? As long as that additional $300 is in play, employers who offer wages that are substantially less than this UIA payment will continue to face labor shortages.

1y
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