The latest Labor Department statistics show an all-time record 9.3 million unfilled jobs, even though more than nine million Americans remain unemployed. Alarm bells should be ringing in Washington.
Twenty-five Republican governors have wisely suspended the $300-a-week supplemental unemployment benefits starting this month. But 25 mostly blue-state governors will let the bonus run into September, even with jobs plentiful in nearly every state. Why?
The Biden team and Democrats in Congress were warned repeatedly that the March “stimulus” bill would shrink employment by five million to six million because of the rewards for not working. Three months later the evidence is clear: The stimulus bill stimulated unemployment, not employment.
More than a million jobs are waiting to be filled in the construction and manufacturing sectors, but these industries have gained almost no new employees over the past two months. These are high-paying blue-collar jobs.
When one of us warned on these pages in December of the negative effects of the $300 bonus, critics said the piece exaggerated the financial incentives for not working. Bank of America Global Research issued a highly quoted study finding that unemployment insurance cash benefits typically pay only about $32,000 a year. The California Employment Development estimated benefits of about $31,200 and argued that unemployed workers weren’t staying on the couch.
These analysts are making the same mistake they made after the last recession, except now on a larger scale. Looking only at unemployment-insurance cash, they understate the work vs. welfare trade-off. Washington provides unemployed workers with an array of other subsidies.
A family with two unemployed parents can double up on unemployment benefits, meaning $600 in weekly bonus payments, on top of normal benefits that average about $375 a week for each parent. Add in virtually free health insurance from ObamaCare expansions and free premiums for those who stay on their former employer’s plan, food stamps and $3,000-a-child payments. On top of all that, recipients of government benefits don’t have to pay payroll taxes. People with jobs do.
Here are the results from our new study for the Committee to Unleash Prosperity:
- In 21 states and the District of Columbia, households can receive the wage equivalent of $25 an hour in benefits with no one working.
- In 19 states, benefits are the equivalent of $100,000 a year in salary for a family of four with two unemployed parents.
- In all but two of the blue states, the $300 supplemental unemployment insurance benefit plus other welfare can pay more than the wage equivalent of a $15 minimum wage.
- In the blue states that haven’t suspended the $300 bonus, the average annual unemployment insurance benefit for a family of four with two parents out of work is more than $72,000. Median household income in the U.S. is about $68,000.
To get Americans back to work Congress and President Biden should immediately rescind the $300-a-week supplemental benefit. With the economy getting back to normal, work requirements for all other aid programs should be reinstated. This would restore fairness in the unemployment-insurance system and significantly contribute to the long-term economic health of people who have now been absent from the workforce for as long as 15 months.