(Brad Polumbo, Foundation for Economic Education) A serious labor shortage continues to hold the economy back. In the latest jarring example of its detrimental effects, a California restaurant’s candid apology to customers for slow service just went viral.
A popular restaurant in Sacramento County, Taco Loco, posted a sign warning patrons that service may be slower than usual, CBS 13 Sacramento reports.
“To our loyal customers,” the sign reads. “Sadly, due to government and state handouts no one wants to work anymore. Therefore, we are short staffed. Please be patient with our staff that did choose to come to work today.”
The viral complaint references the availability of ultra-generous unemployment benefits, first put in place by Congress in March 2020 in the name of pandemic relief and extended through September 2021. In dozens of states, unemployed households can earn as much as $25/hour staying home on benefits. In California, an unemployed household can earn the equivalent of $109,000 annually from welfare alone.
Given the blatant work disincentive the government has created, it’s perhaps unsurprising that, according to the US Chamber of Commerce, there are 1.2 unfilled job openings for every unemployed person in the country right now.
It’s not just California restaurants that are struggling. A recent survey of small business owners found that a record-breaking 44 percent had job openings they couldn’t fill, with ultra-generous unemployment benefits no doubt one of the main factors.
These broad statistics are put into clearer terms when viewed through the lens of small examples like Taco Loco. When big government messes up the labor market, it’s the little guy, the small business owner, that suffers.
“Until the government check stops coming out, which is September, we’re going to continue to have labor shortages and that’s going to continue to challenge small business,” economist Barry Broome remarked.
Of course, it’s by no means guaranteed that the federal government will actually allow the benefits to expire in September. The ultra-generous benefits were supposed to be temporary, an emergency short-term measure, but have been extended twice. As Nobel-Prize-winning economist Milton Friedman famously said, “Nothing is so permanent as a temporary government program.”
The bright side is that dozens of conservative-leaning states, such as Texas, have taken the initiative to end the benefits early, rejecting the federal money and restoring sanity to their labor markets. It’s no surprise that these states are faring better on key job metrics than the liberal-leaning states, such as California, which continue the benefits bonanza.
Here’s hoping more states will follow the lead of those wisely rejecting welfare state dysfunction in favor of labor market reinvigoration. In those states that continue down the path of dysfunction, small businesses like Taco Loco—and their customers—will continue to suffer the consequences.
Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Policy Correspondent at the Foundation for Economic Education.