Unemployment benefits do not create a labor shortage, they empower workers
As businesses began to reopen, we have been subjected to more and more bribes from business owners, especially service-oriented restaurants and similar workplaces, who insist that ‘they are facing a labor shortage. The argument, some argue, is that unemployment benefits are too generous and discourage work, preventing employers from hiring workers. Fortunately, these stories are refuted by workers, journalists, and analysts armed with a combination of personal experience and hard data. However, as expert after expert dissects the flaws in employers’ arguments, it has become clear that what worries employers is not a labor shortage at all: it is a transfer of power.
Get Talk Poverty delivered to your inbox
For years, employers have had access to a workforce where workers were so desperate they would take any job offer. The combination of a poverty minimum wage, historically low union density, unlimited employment, poor classification of workers, a battered safety net, lack of paid time off or employer-sponsored benefits and a host of other policies and practices scales to employers, allowing for pervasive exploitation and abuse, especially for 3 out of 4 Americans living paycheck to paycheck even before the pandemic.
The situation is more dire after a job loss. Newly laid-off workers are likely to have almost no safety cushion – more than half of consumers $ 3,000 or less in their combined checking and savings accounts in 2019. They may also not have access to unemployment benefits. 28 percent of eligible unemployed in 2019 actually received benefits. This makes workers desperate for any job, no matter how terrible, that can help them get by. During a recession with mass layoffs, as millions of people face the same desperation, companies have all the power to offer dangerous jobs in places like overcrowded meat packing plants and bustling restaurant kitchens in overqualified candidates with meager compensation, unless the government intervenes.
Unemployment insurance, especially improved benefits during the pandemic, gives workers leeway. Benefits are not enough for people to live tall – even with the extra $ 300 per week, unemployment benefits will be woefully insufficient for a modest family budget. every county in the country. Benefits simply allow workers to be slightly less desperate, easing the pressure to take dangerous jobs – many of which are particularly dangerous during a pandemic – that pay poverty wages. Instead, they can hold out a little longer for higher paying jobs that match their skills, education, experience and interests.
A dishwasher, Jeremy, told reporter Eion Higgins that “the stimulus and unemployment benefits have certainly helped me to be more picky about the jobs I will take because I don’t have to take anything to pay the rent and the groceries.” Another, Alan, said: “I have a degree in forestry and being relatively financially secure now, I can take longer to find a job in the field I really want to work in.” A third, Owen, said: “I left because having some free time to think and plan helped focus my desire to be better paid and better treated… I expect to do so. minus the double and finally have nights and weekends off. I hope I’ll be treated with a little more dignity, but I know that’s not always the case.
It is very different from saying that unemployment benefits discourage work in general. Unemployment insurance studies have shown that laid-off workers who receive benefits look for jobs harder, receive better paid offersand assume roles that better match their level of education. Specifically during the pandemic, several studies looked at the enhanced benefits of $ 600 and found that they had little at no effect at employment or job search. It’s hard to see how the current $ 300 hike would be any different.
Few workers even had access to unemployment insurance initially.
Despite what many companies, commentators and lawmakers try to argue, the data continues to prove that UI does not stand in the way of hiring. While overall employment growth in April was disappointing, the leisure and hospitality sector – where most of the employers’ cries of labor shortages come from – in fact accelerated employment growth with 206,000 hires in March and 366,000 in April. In total, 430,000 people joined the workforce (meaning they weren’t looking for work before but are now), but this growth has come entirely from men while women left the workforce on the net in April, which suggests it has more to do with a continued lack of child care. States with higher unemployment benefit levels, as well as low-wage sectors where benefits are more often higher than previous incomes, have in fact seen faster job growth, indicating that unemployment insurance is not the cause of the slowness in hiring.
In fact, few workers even had access to unemployment insurance initially. From April 2020 to January 2021, only 18% of the unemployed had received unemployment benefits in the past two weeks at some point. It’s even worse for black (13%) and Asian (11%) workers and those without a college degree (12%), all of whom are overrepresented in low-wage industries like recreation and hospitality. Undocumented immigrants are also totally excluded from unemployment insurance, but they are 10 percent of restaurant workers nationwide and nearly 40 percent in cities like New York and Los Angeles. We saw the consequences of this early in the pandemic when meat packing plants convinced the government to declare them essential, allowing them to recall their employees to work and leading to major outbreaks of COVID among their workforce, disproportionately made up of immigrants and people of color, and in communities where the plants are localized.
Even so, employers have managed to complain quite loudly that they may have lost a hint of power as sympathetic lawmakers are rushing to accommodate them. In mid-May, in 16 states and countingRepublican governors had announced their intention to bar all their residents from receiving their legitimate federal unemployment benefits, citing anecdotes companies that are struggling to hire at their current salary as a justification. End these benefits before the jobs are there and during millions still losing their jobs each month will take billions of dollars – more than 10 billion dollars from the nearly 2 million unemployed in an estimation – outside the economy of these states, even if some of these excluded people find work, and will effectively slow down the recovery thanks to reduced spending.
If there was a labor shortage, employers have common sense options to make themselves more competitive: they could raise wages to acceptable levels because many companies have been successful or are lobbying their fellow lawmakers to support immunization efforts and fund safe and affordable child care. Instead, some companies rely on half-measures, such as offering one-time signing bonuses, precisely because they know these are insignificant compared to what a worker would earn in the long run. with higher wages all the time. Many others are simply continuing the same rhetoric they have relied on for over a century – through the New Deal, the Great Society, welfare reform and the Great Recession – by claiming that workers who dare to demand more are lazy and ungrateful. It is no coincidence that the same people who are now crying to end unemployment benefits are also opposing the wage increase law, the PRO law and other measures that could improve materially. life and empower workers.
This power struggle has made its way to the president’s office. In a white house Monday speech, President Biden said: “Anyone who collects unemployment who is offered a that suits the job must accept the job or lose its unemployment benefits. (Emphasis added.) The government must now decide who should define “suitable”. Businesses would like this to mean the pre-COVID status quo: low wages, inconsistent hours, minimal benefits (if any), and limited protections. Workers want this to mean that jobs are secure and offer a decent quality of life – including decent wages, manageable hours, and accommodations for caregiving and quality of life.
The Biden administration has taken positive steps to define a good job for federal contractors, set a minimum wage of $ 15, raise standards and strengthen anti-discrimination protections. It is vital that the administration continues to support all workers in the face of overwhelming management power. There is no shortage of means to do this: they can lobby to improve the unemployment insurance system through federalization or the establishment of minimum standards and automatic stabilizers, such as those proposed in the Wyden-Bennet reform bill; pass it Increase the wage law increase the minimum wage to $ 15 and eliminate wages below the minimum; implement better regulations and enforcement to prevent pay theft, overtime abuse, misclassification, and OSHA safety violations, among other abuses; pass it PRO Law ensure that workers can exercise their right to organize into trade unions; and more.
We cannot continue to give employers all the power in the labor market. President Biden and other lawmakers must make it clear that now is the time to stand with workers and give them a say in their own working conditions and livelihoods.