Despite the best efforts of our friends in the mainstream media to deny it, this is a trend that we’ve been tracking for more than a month now. As the pandemic fades and employers reopen their doors, many are finding it hard to bring back their previous workers or attract new, qualified applicants. It’s been reported in South Carolina and in Massachusetts. Many of the former workers who have been interviewed have admitted that federally enhanced unemployment benefits are simply too good to walk away from, particularly when their old jobs may not be around if another surge in COVID pops up. Now that problem has shown up in Chicago as well, but one economist has come up with a plan. Perhaps Washington should offer cash bonuses to people who are willing to go back to work. Diane Schanzenbach, director of the Institute for Policy Research at Northwestern University, doesn’t think the $300 per week federal enhancement should be terminated. Instead, she has proposed the adoption of a “reemployment bonus.” (CBS Chicago)
Here’s how that could work: the extra $300 a week in unemployment benefits for 17 weeks (which brings us to September 6th when the added benefit expires) would add up to $5,100. What if the government gave you 40 percent of that – or more than $2,000 – if you got a job now? You’d have employment to pay the bills, and a lump sum of cash in hand.
“You get one amount if you worked in July, another if you took a job in August, and it sort of phases out to zero,” explained Schanzenbach, who said a reemployment bonus would not only need to pass Congress, but lawmakers would also need to design it so the example above is merely an example.
Is this really where we’re going to land in dealing with the situation? A problem was created when the federal government rushed to give away a bunch of “free money” without putting any caps on the benefit to prevent it from exceeding what workers were making before Uncle Sam shut down their employers’ businesses. So now we’re going to address the problem by… giving away more free money? You’re telling me we’ve reached the point where we will literally have to bribe people to go back to work. (Insert SMDH emoji here.)
CBS Chicago interviewed a number of employers for the linked report. They included wedding reception planners, restaurant owners, a warehouse manager, and others. All of them told basically the same story. They’ve been sending out letters to their customers apologizing for delays in being able to serve them promptly. Most included variations of the phrase “nobody wants to work anymore.”
Unemployment benefits are intended to help people who are unable to find a job, not unwilling to find a job. I had no problem with the federal government spicing up the state unemployment benefits because it was largely the government’s fault for shutting down the economy in the first place. The failure to anticipate this situation and impose caps on the benefits based on an applicant’s prior income was the first error. Doling out bribes to able-bodied workers who have a job available to them would be the second. But there is a solution available I think.
The states have been issuing all sorts of rules based on daily and weekly infection rates which are rather hard to track accurately. (Particularly when testing rates have been declining.) But one thing we are able to track very well is the unemployment rate and job openings. Rather than cutting off the federal enhancements “cold turkey,” could we not either decrease or eliminate them in any county where there are more than “x” number of unfilled job openings and the unemployment rate has dropped below some reasonable number? (Perhaps six percent.) If we did, you’d probably see a lot more people responding to those help wanted signs and we would be inching our way back toward a complete recovery.
But that’s probably just crazy talk, right? Might as well just throw another trillion dollars on the fire and be done with it.