As millions of job openings go unfilled, nearly half of all states are cutting off the federal government’s extra $300 a week in unemployment benefits.
As millions of job openings go unfilled, nearly half of all states are cutting off the federal government’s extra $300 a week in unemployment benefits.
O n March 5, eight Senate Democrats joined all 50 Senate Republicans to reject an amendment that would raise the federal minimum wage to $15 an hour over the next few years. The $15 minimum wage would kill jobs in many places in the country, the eight Senate Democrats reasoned, and there was data to back them up: According to a report from the Congressional Budget Office, raising the minimum wage to $15 an hour would likely mean 1 million fewer American jobs in the year 2025.
Yet at the very same time that those eight Senate Democrats opposed raising the minimum wage to $15 by 2025, they voted to extend until September of 2021 a $300-per-week unemployment bonus on top of normal unemployment benefits, which average $318 a week. Divide $618 by a standard 40-hour workweek, and the government is effectively paying the average unemployed American $15.45 to not work at a time when vaccinations have effectively brought the pandemic to an end.
Opponents of extending the unemployment bonus say that the United States is now experiencing the very predictable results of a government policy that allows many Americans to make more money by remaining unemployed than from working.
The April jobs report, released on May 7, found that the economy only gained 266,000 jobs that month — far short of economists’ forecasts that America would gain 1 million jobs as it rebounded from the pandemic. According to the Bureau of Labor Statistics, there were 7.4 million job openings at the end of February, and the number has continued to grow.
“People are pro-work, but they’re also rational, and they’re not going to take a pay cut to go take a job,” Nebraska GOP senator Ben Sasse tells National Review. “So a lot of people would like to be going back to work, but they have this perverse choice between doing the thing that’s best for their family in the short-term and doing the thing that’s the right way to contribute to society in the long-term.”
The weekend after the dismal jobs report was released, Sasse introduced the “National Signing Bonus Act,” a bill that would convert the federal unemployment bonus into a bonus for any American who starts a new job. The signing bonus would equal 101 percent of what the unemployed individual would have received from the enhanced federal unemployment benefits.
No Senate Democrats have publicly endorsed the signing-bonus act, but the idea of cutting off the enhanced unemployment benefits has taken off in the states. When the poor jobs report was released on May 7, just two states, South Carolina and Montana, had already announced they were converting the $300-a-week unemployment bonus into a signing bonus.
Now, nearly half of all states in the country have announced they will cut off the extra $300-a-week unemployment benefit. The 23 states cutting off the unemployment bonus all have Republican governors and legislatures.
Within the Democratic Party, the debate over enhanced unemployment benefits has not focused on whether the benefit should be cut off early but whether it should be extended again in September. The poor jobs report released earlier this month makes an extension seem unlikely. “I’ll never vote for another extension as long as I know that with the vaccines, there’s not an excuse for no one to be vaccinated,” West Virginia Democratic senator Joe Manchin told Politico. “I understand there’s millions of jobs in America that we can’t fill right now.”
Some Democrats have pushed back on the notion that the extra $300 a week in unemployment benefits is depressing employment numbers. President Biden noted earlier this month that unemployment benefits only go to those who are actively looking for a job. “If you’re receiving unemployment benefits and you’re offered a suitable job, you can’t refuse that job and just keep getting unemployment benefits,” he said.
Sasse argues that in the real world, the official policy will do little to stop anyone from taking unemployment benefits that pay more than — or close to — what a job pays. The only way someone would get in trouble for continuing to take unemployment benefits, Sasse says, is if an unemployed person declines a job offer and then the would-be employer “decides to spend their time to going to track down a bureaucrat at, let’s say, a local unemployment insurance office and tattle on the worker who declined the job. It just doesn’t happen.”
Some supporters of the continued unemployment bonus point to studies suggesting the extra $600 per week Congress provided at the start of the pandemic didn’t have a big impact on depressing employment numbers, but Sasse contends that, whatever one thought of the policy at the time, circumstances are now very different. “At the beginning of the pandemic, there were just lots and lots and lots of jobs that were just evaporating because of the lockdowns. That’s not the situation we face right now, as is evident by the fact that you’ve got 7.4 million people trying to hire,” he says.
“Washington created an incentive here that disincentivizes work,” Sasse adds. “The problem here is the policy failure.”