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All States Should End Federal Unemployment Bonus Benefits

July 6, 2021

Inevitably, this federal benefit has disincentivized millions of people from reentering the workforce — despite the fact that many business owners are desperate for workers, with many raising wages in an attempt to incentivize job applications.

Back in March 2020, in response to the pandemic, Congress passed the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act. Included in this relief package was a federally subsidized additional unemployment benefit, known as the Federal Pandemic Unemployment Compensation program. The program automatically provided an additional $300 per week in unemployment for people, on top of state-based unemployment benefits.

Unfortunately, this misguided program has created scenarios in which people actually make more money while unemployed than they were while employed before the pandemic.

Inevitably, this federal benefit has disincentivized millions of people from reentering the workforce — despite the fact that many business owners are desperate for workers, with many raising wages in an attempt to incentivize job applications.

However, there generally does not seem to be much eagerness to get back to work for many people. After all, if one is making more while unemployed than he or she normally would on the clock, why would one want to look for a job to receive a pay cut?

An analysis by economists at the University of Chicago estimated that 68% of unemployed workers who are eligible for the federal bonus unemployment benefits are receiving payments greater than their earnings before the pandemic. Making matters worse, this disincentive could not come at a more inopportune time. COVID-19 cases are waning, and restrictions are being lifted. Businesses are reopening throughout America, albeit with skeleton staffs. At this point, we should be amid a hiring frenzy.

Alas, as any trip around any town demonstrates, many people are still blatantly abusing these additional benefits. "Help Wanted" signs are ubiquitous from Portland, Maine, to Portland, Oregon.

This overzealous federal unemployment compensation has created a choking hazard in the labor market that could asphyxiate the entire economy. What’s more, the torrent of COVID-19 "relief spending," all $6 trillion and counting, has led to inflation rates unseen since the Carter administration. Thankfully, many governors and state lawmakers have recognized the harmful nature of this program. Several states have announced plans to end the benefits ahead of the tentative Sept. 6 expiration date.

Maryland is the latest state to jump on to this commonsense bandwagon. The Old Line State now joins Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wyoming.

All of these states, with the exception of Maryland, are Republican trifectas — meaning that both state houses (except for Nebraska, which has a unicameral legislative chamber) and the governor’s office are held by Republicans. Unsurprisingly, red states were in the vanguard when it came to stopping paying people to stay home and watch Netflix. Hopefully, this will eventually expand to all 50 states.

Unfortunately, many far-left states are already calling for more federal benefits.

A growing concern among many is that continuing to extend and provide these federal benefits is an attempt by many in the Democratic Party to get people used to a universal basic income. UBIs have been proposed by many left-wing radicals, such as Rep. Alexandria Ocasio-Cortez, a New York Democrat. UBIs would have the same, if not worse, effects of the federal unemployment bonus benefits. Generally, UBIs disincentivize employment, promote dependence on Uncle Sam, and give the federal government even more power than it currently wields.

It is absolutely paramount that lawmakers and the public fight back against this to preserve the values of capitalism that have made our country so great — not to mention that having a job is a source of dignity and personal fulfillment.

Lawmakers and governors throughout the nation should understand the enormous socioeconomic harms associated with disincentivizing employment on a massive scale. Ending these federal bonus unemployment benefits should be a no-brainer.

[Originally posted on Washington Examiner]

Article Tags
Government & Politics
Author
Samantha Fillmore is a State Government Relations Manager for The Heartland Institute.
sfillmore@heartland.org @GRHeartland