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Tight Labor Market, More Inflation — It doesn’t take a rocket surgeon to recognize that a tight labor market adds some inflationary fuel to the fire that is slowly but surely eating away at every dollar in your pocket and taxing the poor and middle class.
Apparently, we got fat and happy during the 2020 lockdowns, gorging ourselves on stimmy checks, enhanced unemployment benefits, and a generally calamitous round of government spending.
We were so into the stimmy checks that we decided we were either above returning to work or that our worth had increased.
Today it seems like everywhere is hiring. Go into a coffee shop, a burger joint, or an ice cream place; you’re pretty likely to see a “Help Wanted” sign tacked on the door.
It’s not a joke that finding good help is hard. Finding good help at 2020 prices is damn near impossible. That’s why businesses are raising wages at a pace that is almost pacing inflation.
Think about this: jobs meant for high-schoolers are paying $20 an hour, the 2020 FTE of making 40k with two weeks of time off.
If you have literally any skills at all and you live in an urban area, you can score a $50k/year job working in a grocery store or at a hardware store. We’re talking no degree, no certifications, just a couple of years of experience and some people skills.
As labor became more scarce, employers decided to raise wages. Work-life balance? Quality of Life? Additional benefits? Nah, f*ck that noise; here’s an extra 6 bucks an hour.
It’s a possibility that this strategy may not work out well for the economy. Wages at these levels help embed inflationary pressures deep into our labor market’s DNA.
Job openings are at record highs. And unemployment, even amidst skyrocketing interest rates, is hovering near all-time lows.
How much worse can it get? Well, probably still going to get worse before it gets better.
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