“Demand is high, and supply is low.”
Demand is high for almost everything these days, but one thing is impacting the economy unlike anything else and that’s labor. There is an enormous labor shortage nation-wide, and enterprises are beginning to feel the effects. Just this past week, a popular local Reno breakfast location altered its highest demanded hours because, “We [squeeze in] simply cannot keep our kitchen teams staffed, and as a result, we are on the verge of operational collapse.” This was the loudest of the recent operational casualties, but companies everywhere are adjusting their operations in response to the staff shortages. I recently spoke with the Director of Planning and Analysis at a local Casino, and he shared that the only impediment on record-breaking revenue is their lack of staff.
COVID Grants, forgivable PPP Loans, and stimulus checks have significantly impacted the economy, but are these the reason for the incredible number of vacant jobs, or could it be the increased pent-up demand from customers being under “house arrest” for the past year? Nevertheless, where are the record-breaking customers finding their funds for demand?
It’s hard to miss the signing bonus advertisements around your town, from $1,000 to free meals daily. The perks for employment are getting more and more exciting for anyone looking, yet people are still not taking jobs. According to the bureau of labor statistics unemployment was 3.5% pre-covid in February 2020, and it is currently 5.9% as of June 2021. Approximately 9.5M Americans are currently unemployed, and the numbers are barely changing month-to-month.
To give you an idea of unemployment relative to a financial crisis, in 2009 unemployment was at 9.3%; however, this high unemployment rate was due to the opposite direction of supply and demand – demand for labor was low, and supply of employees was high, I know this firsthand because this is when I graduated with my undergraduate degree.
Could the high unemployment rates be because of a lot of time to evaluate life decisions, such as jobs? It makes me wonder what the marriage / divorce statistics will be for 2020 and 2021.
Regardless, enjoy your independence today and enjoy the free market that was realized on this day in 1776.