As Brent Orrell noted here yesterday, 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.