Labor shortage: Top White House economist says companies need to 'pay a fair wage'

·3 min read

Despite a labor shortage brought about largely by the COVID-19 pandemic, companies can find workers by offering "fair wages," Brian Deese, the top economic adviser to President Joe Biden, told Yahoo Finance on Monday.

Deese, the Director of the National Economic Council, pointed to coronavirus fears and child care obligations amid remote schooling as key reasons why unemployed Americans have stayed on the sidelines. However, employers can overcome these obstacles by providing fair compensation, he added.

"We have to recognize that we are coming out of a truly unique pandemic," Deese says. "At the same time, if businesses pay a fair wage, if they offer benefits, we're confident that they're going to find workers when they need them."

National Economic Council Director Brian Deese talks to reporters on July 02, 2021 about jobs numbers, amid the U.S. labor shortage. (Photo by Chip Somodevilla/Getty Images)
National Economic Council Director Brian Deese talks to reporters on July 02, 2021 about jobs numbers, amid the U.S. labor shortage. (Photo by Chip Somodevilla/Getty Images)

The labor shortage has worsened each consecutive month since December, according to the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS. Job openings reached a record high of 9.2 million in May, JOLTS data this month showed.

In turn, a slew of major companies — including McDonald's (MCD) and Amazon (AMZN) — have raised their wages to woo workers back. "Welcome to the year of wage hikes," a Washington Post headline announced earlier this month.

'A number of issues that people who want to re-enter the workforce have to grapple with'

The glut of job openings provides prospective workers with options, thereby putting pressure on employers to provide competitive pay and benefits in order to win workers back, according to Deese, who joined the Biden administration after serving as the global head of sustainable investing at asset manager BlackRock (BLK).

"We've seen anecdotally a lot of employers who have said, 'You know what? When I've raised my wages, I've seen a lot of people come and raise their hand for that work,'" Deese said.

"We have also seen that we are in a market where there are a lot of job openings, that's a good thing for workers," he added. "They have more options."

The remarks from Deese come as Democrats and Republicans spar over the role played by enhanced federal unemployment benefits in the job shortage. Those benefits, which amount to $300 per week, are set to expire in September. But Republican governors in 25 states ended the benefits early, arguing the move would spur hiring.

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Deese also served under President Barack Obama, holding positions as deputy director of both the National Economic Council and the Office of Management and Budget.

Speaking to Yahoo Finance, Deese acknowledge the immense economic impact of COVID-19, noting that the outbreak has kept many Americans unemployed. The ongoing effort to contain the pandemic will help address the underlying economic effects, he added.

"We have to remember that we are recovering from a historic pandemic, and so there are a number of issues that people who want to reenter the workforce have to grapple with," he says.

"The first is the pandemic and the disease," he adds. "They want to make sure that they feel safe, and as we move forward in vaccinating more of the country, we're seeing more people have that comfort."

"A second is child care and school, particularly for parents of school-aged kids," he adds. "That's why this has been such a focus of the administration, the president, providing the resources to actually get schools open safely, get child care centers open safely."

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