Courtesy of ZeroHedge

There are new concerns that President Biden's $1.9 trillion coronavirus stimulus package is already harming the labor market recovery.

While job openings and postings are increasing, there is an issue with the number of applications as labor participation currently stands at 61.4%, with an unemployment rate of 6.2%. People are not applying for jobs as they should be as they collect stimulus checks and enjoy a work-free lifestyle, all on the backs of taxpayers.

There are many jobs available in manufacturing, trade and transportation, logistics, and the professional sector. But employers have difficulty sourcing workers.

The latest comments from the Federal Reserve Bank of Kansas City provide a chilling insight this month into the labor shortage developing at manufacturing firms across Denver, Oklahoma City, and Omaha:

"Stimulus and increased unemployment money are wrecking the labor pool. Lower-level employees are quitting to make just as much not working."

So, lower-level employees are making more money collecting stimulus checks and other handouts under the Biden administration. This was very similar when former President Trump dished out helicopter money during the early days of the pandemic.

What this creates are more bottlenecks for the supply chain as labor becomes scarce.

"It is very difficult to handle the increased business with supply chain issues across all materials and finding anyone who wants to work. The federal government has incentivized people to stay home and not be productive."

Other employers report:

"Unemployed workers have no incentive to return to work given the COVID bonus payments."

What this means is that entry-level pay will have to increase to get low-level workers off the couch. This will create more cost pressures for companies that will either be absorbed or pass onto the consumer.

The Biden administration effectively destroys the labor market, resulting in significant repercussions for the real economy, such as a labor shortage that could stall the recovery.

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In particular, a McDonald's in Tampa, Florida, offered $50 last week to anyone who would show up to a job interview.

WSJ said labor shortages in the food industry affect nationwide and independent eateries as they can't source enough workers for the front and backend. Some fast-food chains are offering signing bonuses. Chipotle Mexican Grill Inc. is offering free college who work at least 15 hours a week. Taco Bell is giving paid family leave to company store managers. Other operators are boosting pay.

But even with all the perks, a labor crunch affects many businesses in various industries to retain workers as the stimulus money adds a barrier to bring back low-level workers.

JPMorgan recently warned clients of a massive labor shortage in the US.

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However, JPMorgan did not expand on what may be causing this unprecedented schism within the economy – after all, for normalcy to return, people must not only be employed but must want to be employed - it did suggest that the "robust" government stimulus may be keeping workers on the sidelines.

In a letter sent to the White House Friday, WSJ explains Democrats on Capitol Hill are pushing for the Biden administration to make the jobless benefits permanent, the onset to universal basic income.

While politicians on Capitol Hill have cheered about people's QE since the pandemic began, the consequences of paying low-level workers more to sit at home than to work could derail the economic recovery.