Ending Federal Aid Is Gaslight Politics and a Timing Disaster

John Bel Edwards” by Thomas Hawk is licensed under CC BY-NC 2.0

The Associated Press reported that Louisiana Governor John Bel Edwards has made a deal with Republican lawmakers to end federal pandemic unemployment aid early this Saturday, July 31st. The original expiration date was September 6th. The decision makes John Bel Edwards the first Democratic governor to end jobless benefits early and join the two dozen Republican-led states that have also ended federal aid prematurely. This change will affect over 200,000 people at a time when the COVID-19 Delta variant is ravaging Louisiana communities.

Let me be clear about that last part – the governor announced that Louisiana has the fastest COVID-19 growth rate in the country. Monday, the state reported 6,109 new COVID cases, its largest single-day increase since the start of the pandemic. The new delta variant is now the most common strain in the state of Louisiana and is much more contagious than the original strain. Square that with the fact that Louisiana has one of the lowest rates of full vaccination amongst residents – 36% state-wide, as of Monday.

According to the Louisiana Workforce Commission, about 194,500 Louisiana residents will have their unemployment aid cut entirely. An additional 47,000 will have their aid more than halved. It’s incredibly unclear what avenues will be available to those severely affected by the incoming surge of the delta variant, especially when massive amounts of infected workers are inevitably asked to not return to work or if businesses have to shut down temporarily.

The governor’s compromise with Republican lawmakers is to end the aid five weeks early in exchange for a permanent raise in state unemployment benefits by $28 a week come January. An increase in Louisiana’s rock-bottom unemployment benefits has been long necessary, but the caveat sours the deal. It appears obvious that the governor has bought the conservative argument that the employment shortage derives from a lack of incentive to work with high unemployment benefits, which is totally baseless. This logic wrongfully frames approximately 9.5 million unemployed Americans as lazy and uninspired. They are anything but.

This logic gaslights unemployed Americans and will implicitly lead to many deaths by depriving people of necessary benefits and driving them into hazardous working conditions. Yale’s Tobin Center for Economic Policy released a slam dunk economic report this month that shows that – if anything – state’s with higher unemployment benefits had lower unemployment and higher work return rates. There is no equally robust economic report – to my knowledge – that says otherwise.

Additionally, I’d contend that there isn’t a true labor shortage to justify this. The phrase “labor shortage” amidst unemployment should be re-read as “inability to hire at a certain wage.” My past works on Metro Service Group’s so-called labor shortage should make this clear. The root cause of these shortages is a refusal pay adequate wages as the economy dictates. True labor shortages are economic indications of a misplacement of wages, but there is no accompanying raising of wages currently. This is especially true in the hospitality and leisure industries that pay notoriously low wages despite decades of inflation.

Federal Reserve Chairman Jerome Powell agrees. When asked about labor shortages, he dismissed it saying, “We don’t see wages moving up yet. And presumably we would see that in a really tight labor market.” The fact of the matter is that working these jobs during a pandemic is fundamentally more dangerous and they deserve to be paid more and it’s the private sectors fault if they can’t recognize that.

There hasn’t been a time in recent history when working class Americans have had more bargaining power over their wages and that’s not a bad thing. Especially with House Speaker Nancy Pelosi joining the fight against student debt forgiveness, working class Americans, especially young ones, are increasingly unwilling to accept underpaying jobs amidst a massive public health crisis. People are tired of being dispossessed from this nation’s obvious amount of wealth.

Most economists view these labor shortages as temporary with the best route to resolution being getting vaccination rates up, so that people are not scared to work. Additionally, the state’s planned overreliance on tourism and oil industry jobs is a much better explanation for shortages than unemployment benefits as a whole.

If the governor wants to incentivize people to go back to work, he should be prioritizing a robust pro-vaccination campaign and proposing an inflation-adjusted $15 Louisiana minimum wage. Louisiana doesn’t even have a state minimum wage and the State Legislature dropped the ball on Senate Bill 49 and Senate Bill 7. The federal minimum wage is well below the minimum cost of living in Orleans Parish and other major metropolitan areas that host the majority of hospitality and tourism jobs – it’s time to get with the program.

I think the governor would find that forcing business’ to compete amongst fair wages would not only reduce unemployment, but could mill out artificially sustained, seedy companies and increase purchasing power. It might also help remind the state that he is, indeed, a real-life registered Democrat.

Government and independent surveys have consistently shown that the primary reasons for people not returning to the work place is fear of COVID, childcare, vocational training, and career transitions. The first reason is perfectly logical, the second is societally necessary, and the last two imply a future form of employment that is economically more beneficial. Some business owners might be struggling, but that’s not a good reason to punish everyone else in the middle of a public health crisis, especially when they’ve done nothing wrong.

Edwards said he wants to find a “reasonable balance,” but cutting nearly 200,000 folks off of unemployment benefits entirely at the crest of a massive surge of COVID does not seem reasonable, nor balanced.

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