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.

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 unionization rates, 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 towards employers, allowing for pervasive exploitation and abuse, particularly for nearly 3 in 4 Americans living paycheck to paycheck to even before paycheck the pandemic.

The situation is more dire after a job loss. Newly laid off workers will have almost no safety cushion – more than half of consumers had $ 3,000 or less in their combined checking and savings accounts in 2019. They also may not have access to unemployment benefits – only 28% 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. The benefits aren’t enough for people to live tall – even with the extra $ 300 a week, unemployment benefits will be woefully insufficient for a modest family budget in every county across 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 for. rent and shopping. Another, Alan, said, “I have a forestry degree 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 would expect to do so. minus double that and finally having 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 seek employment more, receive better-paying offers and take on roles that better match their level of education. Specifically during the pandemic, several studies looked at the enhanced $ 600 benefits and found that they had little or no effect on 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 claim, 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. A total of 430,000 people have joined the labor force (meaning they weren’t looking for work before, but are now), but this growth came entirely from men while women actually left the labor force over the net in April, suggesting that more has to be done. 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 any given time. 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 completely excluded from unemployment insurance, but they make up 10% of restaurant workers nationwide and almost 40% in cities like New York and Los Angeles. We saw the consequences of this at the start of the pandemic when meat packing plants convinced the government to declare them essential, allowing them to recall their employees to work and leading to large outbreaks of COVID among their workforce, made up of disproportionately immigrants and people of color, and in the communities where the factories are located.

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 counting, Republican governors had announced plans to bar all their residents from receiving their legitimate federal unemployment benefits, citing anecdotes from companies struggling to hire at their current wages as justification. . Ending these benefits before the jobs are there and while millions of people still lose their jobs every month, it will take billions of dollars – over $ 10 billion to nearly 2 million unemployed by one estimate – economy of these states, even if some of them excluded people find work and will actually slow the recovery by reducing their spending.

When there is a labor shortage, employers have common sense options to make themselves more competitive: they could raise wages to acceptable levels, as many companies have succeeded, or pressure their fellow lawmakers to that they 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 speech at the White House on Monday, President Biden said: “Anyone who collects unemployment is offered that suits the job must accept the job or lose its unemployment benefits. (Emphasis added.) Now the government must decide to whom to attribute the definition of “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 ways 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 reform bill. -Bennet; pass the Wage Rise Act to raise 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; adopt the PRO law to ensure that workers can exercise their right to form 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.

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