That's it exactly. The government is the competition for wages. As long as they offer a financial alternative to doing real work, then there will be no incentive to "change jobs" and that may lead to labor shortages.
Take it a step further: if businesses have to raise the wages up to compete with uncle sugar, then it will mean that one in every three people competing for a position in the private sector can not be hired even if they need the slot. Their won’t be enough funds to replace the loss of balance at current levels and by the time they can hit a happy medium with price increases and shopper traffic losses due to raising prices, the second of three will be laid off due to HR expenses alone. And they are now down below what they had for employee numbers to begin with. (And quality service to keep the income coming)
wy69