The unemployment rate dipped last month to 4.2 percent as more workers returned to the labor force, but our economy is still missing millions of workers. 

A new poll gives us troubling signs that many missing workers don’t plan to return anytime soon or at all.

Labor shortages are driving inflation, supply-chain disruptions, and slowing the economic recovery. The sooner more able-bodied workers return to work, the sooner we may see prices fall and supplies increases.

Poll: Half of the unemployed aren’t really looking for work

The U.S. Chamber of Commerce recently released a new poll of unemployed workers probing why they remain on the sidelines of the labor force. 

Here are some of their findings:

  • More than half (53 percent) of Americans, who lost jobs during the pandemic, are barely looking for a job or aren’t looking at all.  
  • Nearly two out of three (65 percent) don’t expect to be working before the new year.
  • Nearly one in ten (8 percent) never plan to return to work. 
  • Retail and trade, transportation, and utility are the two leading industries for discouraged workers

Retail and transportation are key industries for transporting, stocking, and selling goods. The shortages in these industries are therefore driving prices up. 

So how are these unemployed workers able to make ends meet? Government benefits are a big driver of income:

  • Almost half (48 percent) are using pandemic incentives or stimulus payments
  • 36 percent are on unemployment
  • 29 percent are receiving other forms of government assistance

Government payments are not the only sources of income. They are tapping savings, spousal income, and loans or gifts from other family members and friends. 

Two keys to luring workers back

The number one incentive to lure back workers is a one-time cash bonus. Nearly half of poll respondents (46 percent) say that a $1,000 sign-on bonus would motivate them back to work. 

Sign-on bonuses were popular this summer as companies and organizations of all sizes used them to attract workers. Large employers may be able to afford them, but small businesses may not, putting them at a disadvantage.

If employers can’t afford to offer $1,000, they can still be competitive by offering flexibility. Some 43 percent of unemployed workers say flexible hours would motivate them to take a full-time job. Working from home either full-time or part-time were also popular incentives.

Higher base salary and health benefits, incentives that you might consider top of mind for workers, were ranked fifth and last on the list, respectively.

Public policy matters

The Biden administration is taking credit for a jobs rebound, when credit should be due to the vaccine and the lifting of lockdowns, especially in states that took draconian measures.

Some of the blame for why workers still remain sidelined starts in Washington with rounds of benefits to households including President Biden’s most recent American Rescue Plan, and stops with legislatures and governors, which opted to keep the flow of federal dollars going.

The Wall Street Journal examined how unemployment in red and blue states faired. Not surprisingly, those who didn’t lock down for protracted periods or draw out benefits came out far better than those who did not:

There are about four million “missing” jobs since February 2020 in the 23 states with Democratic governors versus 1.3 million in the 27 with GOP governors even though they have only 15% more population. (State and national data don’t always align.) Incredibly, the missing jobs in California, Illinois and New Jersey exceed all those in the 27 GOP-led states combined.

What explains this startling dichotomy? One obvious culprit is the extent of lockdowns. 

Democratic governors tended to favor extensive lockdowns that were especially hard on small businesses. Population migration has also reduced the demand for services.

Government payments also reduced the incentive to work. Most Republican-led states withdrew expanded pandemic unemployment benefits by early July but they didn’t lapse in Democratic states until Labor Day.

As the left attempts to pass the multi-trillion, House-passed Build Back Better Act, Americans should be aware that more federal spending is likely to keep workers sidelined and inflation high.