Stimulus Update: Is Mitch McConnell Right? Did Stimulus Checks Really Lead to a Labor Shortage?

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  • The average family of four had an extra $422 per month to spend thanks to stimulus checks.
  • Among the reasons for the current labor shortage, stimulus checks play a very small role.

Major events like a global pandemic have a way of bringing life into focus.

Shortly after President Joe Biden was sworn into office, a website designed to look like an official government site claimed that the average family of four was about to be sent a check for more than $109,000. The site was meant to rile up the troops, to make Americans angry enough to support their political candidates. In short, it had nothing to do with reality.

The web is full of such sites, and unless a reader is especially careful, its easy to believe outrageous headlines and sound bites from politicians with an agenda to push. For example, Republican Senator Mitch McConnell said last month that the current labor shortage is a result of stimulus money sent during both the Trump and Biden presidencies.

According to McConnell, "You've got a whole lot of people sitting on the sidelines because, frankly, they're flush for the moment."

McConnell believes that once all those stimulus funds run dry, "they'll start concluding it's better to work than not to work."

The problem(s) with McConnell's take

It's said that the easiest way to make a person believe a lie is to repeat it over and over. Fortunately for McConnell, certain news channels and right-wing publications have been more than happy to repeat his comments, leading to the belief that it was stimulus funds that caused the current labor shortage.

This belief is certainly snappier than the truth, and far less nuanced.

The numbers

To test McConnell's theory, we looked at the average amount of stimulus funds received between April 2020 and March 2021. As of this month, the typical American couple earns an average annual salary of around $63,000, so that's the number we'll use to illustrate the point. Now, let's say the couple has two children, both under the age of 17. Here's how much would have landed in the family's bank account during the height of the pandemic:

Stimulus Release Date Total Amount Received by Family of Four
April 2020 $3,400
December 2020 $2,400
March 2021 $5,600
Total Stimulus Received $11,400
Data source: Multiple sources compiled by author.

McConnell's statement assumes that Americans are still living large on their stimulus checks -- flush enough to go without a job. But dividing the total amount received by the 27 months since the first checks were issued, we see that the average American family had an extra $422 in their pockets each month. It's difficult to imagine a family of four living comfortably on $422 per month, particularly if they were one of the 30 million who found themselves unemployed during the pandemic.

Realistic answers

It's clear that McConnell's comments were, at best, misguided. So, what is causing a labor shortage in the U.S.?

More jobs than available workers

According to the Chamber of Commerce, there are currently more than 11 million job openings in the U.S., but only 6 million unemployed workers. If every single unemployed person took a job, there would still be 5.4 million jobs open.

More jobs than potential employees

Since reopening, businesses have added 3.8 million more jobs than existed pre-pandemic. The problem is that there aren't enough Americans to fill both the businesses that have reopened and the new jobs that have been created. Compounding the issue is the fact that 3 million Americans decided to retire during the pandemic.

Reasons some are sitting it out

Here are some of the reasons Americans say they've decided to avoid or postpone re-entering the job market, according to a U.S. Chamber of Commerce survey:

  • Retirement: Simply put, the pandemic hit at a time when some who might not have considered retirement decided it was time. Between the third quarter of 2019 and the third quarter of 2021, the number of adults 55 and older who left the labor force grew from 48.1% to 50.3%.
  • Childcare issues: Of the women surveyed, nearly 1 in 3 indicated that they had children or family members who needed to be cared for. In 2022, the average cost of childcare for one child is nearly $14,000. For a mother who does not earn much, going back to work makes little sense.
  • Good jobs are sometimes scarce: 28% of men surveyed said that their industry continues to suffer or there are not enough well-paying jobs available. Low-paying jobs are plentiful, but that takes away from their time to find a job offering a living wage.
  • Health concerns: COVID-19 lingers. As much as many of us would like to believe that the pandemic is behind us, some of the people surveyed by the Chamber of Commerce said they were concerned about going back into a job that would expose them to the virus.
  • A desire for change: With months at home to consider their futures, some people decided to go back to school for training that would allow them to change professions or allow them to rise in the ranks of their company. Others decided to take the plunge and start their own businesses. In fact, more than 4 million new businesses were started in 2020 alone. Since that time, 6 million more have started. Rather than depend on an employer that could sack them at a moment's notice, Americans decided to take the future into their own hands.
  • New jobs: Like shuffling a deck of cards, Americans are leaving their current positions for better-paying jobs and more money in the bank. In May 2022, 4.4 million people quit their jobs at one company and went to work for another.

One thing all major events like COVID-19 have in common is how much clearer they bring priorities into focus. And for many Americans, that meant no longer accepting the status quo at work.

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