President Joe Biden appears to be talking out of both sides of his mouth. Following the abysmal April jobs reading, the president attempted to appease anti-business progressives as well as Americans who understand Econ 101. Despite the mixed messaging emanating from the White House, governors across the nation are winding down their generous jobless benefits to encourage people to return to the labor market in the post-coronavirus economic recovery. But what is really happening in the U.S. economy? Are there not enough jobs, or are people staying on the dole?
Joe Biden Wisdom
Speaking to reporters in the East Room at the White House, Biden announced that unemployed Americans must accept job offers or risk losing their benefits. He noted that the administration would remind states of this directive, adding that the Department of Labor would partner with states to reimplement requirements that individuals receiving unemployment insurance must show they are actively looking for work.
He then followed up these comments by urging businesses to raise their wages to attract workers. The president believes “these companies will provide fair wages and safe work environments,” and doing so will allow them to “find plenty of workers, and we’re all going to come out of this together better than before.”
White House Press Secretary Jen Psaki stated that the administration does not see evidence suggesting that enhanced weekly jobless benefits contribute to a labor supply shortage. The president and his team cited school closures, fear of contracting COVID-19, and child-care constraints were factors in the disappointing job-creation numbers. But while surveys do support this claim, economic principles and data also suggest that the expanded unemployment compensation keeps Americans from taking new jobs.
Indeed, two things can be accurate at the same time – they are not mutually exclusive. But for a president who is trying to appeal to the radical progressives in the Democratic Party, these comments may not sit well with the likes of Reps. Alexandria Ocasio-Cortez (D-NY) or Ilhan Omar (D-MN).
Facts, Data, and Desperation
According to the Bureau of Labor Statistics (BLS), the number of Americans filing for unemployment aid fell to a fresh pandemic low of 473,000 in the week ending May 8. This means that fewer companies are giving their employees pink slips. Additionally, the number of job openings in the U.S. soared 597,000 to 8.123 million in March, a 21-year high. The labor force participation rate (LFPR) rose to 61.7% in April, which remained 1.6% lower than before the COVID-19 public health crisis.
These are the numbers, and then there are real-life examples highlighting the desperation that companies face.
[bookpromo align=”left”] McDonald’s announced that it would be raising hourly wages for company-owned stores by an average of 10% to attract workers. Chipotle is increasing pay in the range of $11 to $18 per hour for both new and current workers. A Dunkin’ franchise in Florida is not only offering a starting wage of $15 per hour, but it is also extending a $50 weekly attendance incentive, $100 sign-on bonus, $100 anniversary bonus, and free coffee and doughnuts.
Large companies can afford these lucrative incentives, but how could a small mom-and-pop coffee, paper, or rug shop?
Meanwhile, for a growing number of states, the employment situation is difficult enough that they are putting out-of-work folks on notice. Florida will be mandating “work search” for unemployment benefits beginning on June 1. Georgia will be cutting its payments to push people back into the workforce. Arizona, Ohio, and more than a dozen others are phasing out the federal unemployment compensation, something that could affect approximately two million people.
The Sept. 6 deadline for receiving the federal bonus payments is fast approaching. Tick tock.
For Shame?
Florida Gov. Ron DeSantis (R) recently made an astute observation that he does not blame his constituents for choosing to collect federally enhanced aid and stay home because they are performing a “rational calculation.” But, as DeSantis asserts, it is important to “incentivize work, not unemployment,” alluding to the Biden administration’s generous compensation. Indeed, Americans who make this choice are weighing their options and doing what is best for themselves or their household. But the government distorts labor markets and the economy by imposing its will with a few hundred dollars more from Uncle Sam. The Democrats might have good intentions, but this goodwill typically breeds unintended consequences.
The far-left of the Democratic Party might not appreciate fundamental economic theory, but as Liberty Nation’s Senior Political Analyst Tim Donner explained in a recent Conservative Five TV episode: “When you subsidize something, you get more of it.” Indeed, subsidize joblessness? Be prepared for joblessness.
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