Sunday, April 25, 2021

Why Joblessness is the New "In" Occupation

Wall Street Journal editor Jillian Kay Melchior sets the scene on why business owners are finding it so difficult to find workers:

 The National Federation of Independent Business surveyed more than 500 small businesses and reported last week that 42% of them had job openings they couldn’t fill. “As long as we’ve been conducting the survey, it’s never been that high,” says Holly Wade, executive director of NFIB’s research center. Some 7.4 million jobs were open at the end of February, according to an April 6 report by the Bureau of Labor Statistics.

Some workers still fear they’ll contract Covid if they return to the workplace, and some parents are unable to take on full-time work because their children’s schools remain shut. But there’s another reason for the acute labor shortage: It pays to stay on the couch.

As Covid spread and the nation locked down last spring, Congress approved enhanced weekly benefits of $600, in addition to the usual state-administered unemployment payments, through July 2020. A working paper by the National Bureau of Economic Research found that 76% of those eligible for the $600 bonus could be given at least as much for being jobless as they’d earn by working. Lawmakers have since trimmed the enhanced unemployment benefits to $300 a week and extended them through September 2021. University of Chicago economist Peter Ganong says that even with the supplemental benefit halved to $300, “42% of workers are making more than their pre-unemployment wage.” And these analyses don’t count food stamps, rental assistance and other government help that may be available to the unemployed, or the stimulus payments that have gone to the employed and jobless alike.

In Indiana, the enhanced unemployment has meant that the jobless collected a maximum weekly benefit of $990, and now get up to $690—the equivalent of $24.75 an hour and $17.25, respectively. (The first $10,200 in unemployment compensation is exempt from federal income tax under this year’s Covid relief law.) Ms. Phelps is struggling to compete with what the government offers: “It’s making people terribly lazy. It’s making people not want to be part of the workforce. And that’s not good when the unemployment numbers are where they are”—3.9% in Indiana and 6% nationwide in March...

As vaccination rates rise, demand for goods and services is soaring, but there’s an enthusiasm gap between consumers and workers. The National Restaurant Association’s most recent survey found that 1 in 4 restaurant operators listed recruitment as their top concern, ranking it higher than Covid...

 The BLS reports that some 3.4 million Americans quit their jobs in February. Under last year’s Covid-relief legislation, workers who leave voluntarily are still eligible for federal enhanced unemployment, University of Chicago economist Casey Mulligan notes...

Mr. Mulligan says that with unemployment benefits so high, joblessness “becomes a new occupation—it’s not that different than having an army, except these people’s jobs are to sit at home rather than go to a foreign theater.” He analyzed the BLS data on job openings and labor turnover and noticed that when the $600 unemployment benefit expired, the number of job openings dropped as more Americans returned to work. Ending lockdowns is the first step toward economic recovery, but ending lavish jobless benefits is the next critical move.


1 comment:

  1. The jobs don't pay enough to cover rent and groceries.