The notion that the food-services industry can’t find workers because they like being on the dole is a gross simplification of complicated economic trends
By JIM SWIFT
After a year of applause—or worse, silence—about “Trump Bucks,” the consensus on the right is that restaurants are in trouble because “Biden Bucks” are bad. The story is that government benefits are now so magnificent that only suckers get jobs. Between the three rounds of stimulus checks and the federally supplemented unemployment insurance, life has been so great that no one wants to work.
And, the story goes, this has put service-sector employers — especially our great, patriotic restaurant owners — in a great deal of trouble because they simply cannot hire people.
The first instance I saw of this narrative was the story of Dale’s Diner in Waterville, Ohio, a suburb of Toledo. It closed in April because its owner said he couldn’t find workers to fill positions.
Most of the reporting on Dale’s Diner was superficial and missed a crucial fact: That the diner’s owner, Bill Anderson, comes from a well-to-do local family, is active in politics, and might not be an entirely reliable narrator.
For instance, in a Toledo Blade article about one of his other restaurants, a bar, we learn that Anderson:
- “Cast doubt on the amount of people who have died of coronavirus in the United States, stating that the virus isn’t more dangerous than similar flu outbreaks.”
- “Expressed a common conspiracy theory that doctors are fraudulently coding deaths as due to coronavirus for financial incentive.”
- “Told The Blade he hopes there are no negative ramifications to any potential investigation into his business (for ignoring mask mandates for employees), and said he hoped any scrutiny over mask usage would be over ‘by Tuesday night or Wednesday morning,’ referencing the presidential election.”
- “Made clear he believes the response to the pandemic has not been guided by science, but instead by animus toward President Trump by U.S. and world leaders.”
Oh. So Anderson is one of those guys. There’s more: Anderson posted the following note in the diner:
TEMPORARILY CLOSED . . .
Due to the inability to hire cooks!
Dale’s Diner WILL REOPEN when the unemployment compensation and weekly government stimulus ends.
DALE’S DINER Had to close its doors after 10 years because we simply could not hire any cooks. Obviously we are NOT closing because of a lack of business. The fact that the state and the federal government is paying so much unemployment compensation to so many people, irrespective of the dire needs of the restaurant industry to employ those people, they have sealed our fate and the fates of so many in our industry. To our loyal customers: it has been Liz’s, mine and our entire staff’s greatest honor and privilege to have served you and gotten to know each of you over the past decade. It is with an extremely heavy heart that we have come to this conclusion but see no other way at this time. When the unemployment and stimulus checks run out, Dale’s Diner will be back.
That was April. Ohio discontinued the bumped-up benefits on June 26 (about 10 weeks before the federal funding expires on Sept. 6). And Dale’s Diner reopened June 22 under new ownership.
THE BIGGER PICTURE
How are we to judge Anderson’s story? Is it only now that the bonus benefits are coming to an end that Dale’s Diner can afford to hire a staff and reopen? Or has something more been going on?
As Brent Orrell, a resident fellow at the American Enterprise Institute, a recent Federal Reserve analysis found “moderate disincentive effects” when the expanded unemployment benefits were $600 per week last year. The Fed study specifically singles out workers in the food-services industry as perhaps being “indifferent” between working and collecting benefits at the $600 level. But the analysis found — as you would intuit — that the disincentive effects fell considerably when the expanded benefits dropped to $300 per week this year.
Now let’s look at the even bigger picture. There have been lots of economic dislocations resulting from the pandemic. Some of them were anticipated — tourism and air travel dropped like a stone. Some of them were not — the price of lumber skyrocketed because, well, no one seems to have realized that the real estate market would explode, but it has, due to a combination of (a) many people looking to relocate and (b) very few people putting their houses on the market.
All of which is to say that most stories are complicated and the story of the service-sector labor market is no exception. Increased unemployment benefits likely had some effect on labor supply for businesses such as Dale’s Diner. But there’s also upward wage pressure due to inflation, as well as other factors. In an April news report about Anderson’s sign, the local ABC station has this quote:
Ohio’s Restaurant Association President John Barker told 13abc: “The problem we’re having right now is restaurants actually need some of their staff to come back, and much of the staff, they’ve been furloughed for months or a year, they’ve moved on to something else.” [Emphasis added.]
MOVING ON TO OTHER JOBS
So the picture that Anderson crassly paints of former restaurant workers on the dole, lazily lolling about on their couches while enjoying unemployment benefits, is undermined by the reality that many of those workers are off looking for — and getting — other jobs. And the complicated labor market economics aren’t limited to the food-service sector, even though much of the discussion is focused there. As the Washington Post noted June 21, nearly 650,000 Americans quit jobs in the retail sector in April — a record — because they want other kinds of work and employers in other industries are finding ways to attract them.
Something similar is happening up the wage ladder in desk jobs, too. People got a taste of working remotely, and many of them liked it. As the Wall Street Journal, looking at the same data, observes: “The percentage of Americans leaving employers for new opportunities is at its highest level in more than two decades.”
In The Atlantic, Derek Thompson notes that this job-quitting could be a trend. Or it could be nothing:
Making predictions is hard, not only because the future is hard to see, but also because the present is hard to grasp. The data on quitting could be an early sign that worker power is ascendant after decades of stagnant pay and gutted labor law. But it could also be a brief statistical fluke amid this summer’s generally spasmodic economy.
Also: When people quit their jobs, they generally don’t qualify for unemployment, unless they meet certain, narrow circumstances. So these people aren’t doing it for the Biden Bucks either.
While some conservatives were so busy looking for the sort of story conservatives like to condemn — about people being lazy because government largesse saps their initiative — they missed the sort of story conservatives usually like to celebrate: about people looking for opportunities, about economic dynamism, about creativity and self-improvement.
The lesson is, as always: Beware of people telling simple stories to explain complex phenomena in ways that—by total coincidence—fit their political priors.
(Jim Swift is a senior editor at The Bulwark. Reprinted from the Bulwark.)