FACT: Unemployment Insurance Does Not Prevent People From Entering the Workforce

Money” by elycefeliz is licensed under CC BY-NC-ND 2.0

Your favorite restaurants are understaffed and consequently slower. 

“Help Wanted” signs have become the favored decoration for store windows. 

There are delays in all kinds of goods, from couches to clothing, being delivered. 

Businesses and conservatives have painted these omens as harbingers of a disastrous workforce shortage, caused by increased unemployment insurance. Taking this theory and running with it, Republicans in 25 states prematurely cut off benefits this month that were scheduled to end nationally on September 6.

Information that demonizes unemployment insurance as an enabler of laziness, and the primary factor causing labor shortages is rampant, however, economists could not disagree more with this misleading information.  

In fact, they posit there is no evidence that unemployment insurance disincentivizes workers from rejoining the workforce. Supporting this, according to Louisiana state economist Greg Albrecht, the greatest period of job growth during the pandemic was last year when unemployed workers were receiving an additional $600 in unemployment insurance weekly. 

The Economic Policy Institute commented that “Claims that the federal UI programs are preventing businesses from finding staff are unsubstantiated by the evidence. Multiple empirical studies have found that expanded unemployment benefits have not meaningfully constrained job growth. … The central problem remains a lack of sufficient jobs for everyone that is out of work.” 

You read that right: There is no labor shortage. There’s a job shortage. 

According to the Economic Policy Institute “In April, the country was still down 8.2 million jobs from before the pandemic, and down between 9 and 11 million jobs since then if you factor in the jobs the economy should have added to keep up with growth in the working-age population over the past year.” 

Efforts to get rid of federal unemployment to force workers into an economy that cannot support them right now would not only be disastrous for workers but also the economy as a whole, decreasing consumer spending and compromising our economy’s already shaky recovery. 

Not to mention, the reason the economy was able to rebound so speedily is because of unemployment insurance and stimulus checks. To remove that, especially in Louisiana where our unemployment insurance is the second-lowest in the country, would not only threaten families who can’t cover the basics but would also handicap our state’s economy. 

In a piece for CNN Business Annekan Tappe commented on this, “For people who lost those kinds of jobs, the enhanced unemployment benefits are a lifeline — and a way to keep participating in the recovery. All spending, no matter how it was funded is helping it chug along.” 

One factor that is actually impacting workers re-entering the labor market is a lack of access to childcare. The Center for American Progress found that more than 10% of parents were forced to leave their jobs during the pandemic to care for their children. Meanwhile, the cost for center-based childcare jumped 44%, eliminating it as an option for those not making enough money. These individuals now need high-paying jobs so they can afford childcare, leave their children, and re-enter the workforce. 

Similarly, many unemployed people have shifted their career plans because of the pandemic, seeking better jobs that pay more. The search by employees for better jobs has motivated companies with famously low pay like Amazon and Walmart to raise their wages. 

Companies like these two, who previously exploited workers with low pay and have now raised that pay to almost livable have been shocked that employees didn’t fall at their feet and beg for their jobs back. Jobs like these are out there, but they are not sufficient or capable of meeting the financial requirements of people searching for work. 

The economy is rebounding. Job postings in late May were 26% above pre-pandemic levels, according to Indeed. The number of people seeking unemployment aid has fallen for five straight weeks to its lowest level since the pandemic began, from 20 million at the start of the pandemic to 15 million now. Things are heading in the right direction but the economy still has a long way to go before it fully recovers. 

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