As businesses have begun to reopen, we have been increasingly harassed by business owners, especially restaurants and similar service-based workplaces, who insist that they face a labor shortage. The argument, according to some, is that unemployment benefits are too generous and discourage work, preventing employers from hiring workers. Fortunately, these stories are refuted by workers, journalists, and analysts armed with a combination of personal experience and hard data. As experts examine the flaws in employers’ arguments, it has become clear that what employers are worried about isn’t a labor shortage at all: it’s a shift in power.
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For years, employers had access to a workforce where workers were so desperate that they accepted any job offer. The combination of a poverty-level minimum wage, historically low unionization rates, job-at-will, misclassification of workers, a degraded safety net, lack of paid vacation or employer-sponsored benefits, and a host of other policies and practices have firmly swung the pay scales towards employers, allowing for widespread exploitation and abuse, especially of 3 in 4 Americans were living paycheck to paycheck even before the pandemic.
The situation is more serious after a job loss. Recently laid-off workers are likely to have almost no safety cushions – more than half of consumers had $3,000 or less in their combined checking and savings accounts in 2019. They also may not have access to unemployment benefits – just 28 percent of eligible unemployed in 2019 actually received benefits. It makes workers desperate for any job, no matter how terrible, that can help them survive. During a recession with mass layoffs, when millions face the same desperation, corporations have all the power to offer dangerous jobs in places like overcrowded meatpacking plants and bustling restaurant kitchens at overqualified candidates with meager compensation, unless the government intervenes.
Unemployment insurance, especially enhanced benefits during the pandemic, gives workers a break. Benefits are not enough to keep people living well – even with the extra $300 a week unemployment benefits will be significantly lower for a modest family budget in every county in the country. Benefits allow workers to be slightly less desperate, easing the pressure to take dangerous jobs — many of which are particularly dangerous during a pandemic — that pay poverty wages. Instead, they can wait a little longer for higher-paying jobs that match their skills, education, experience, and interests.
A dishwasher, Jeremy, told reporter Eion Higgins that “the stimulus and unemployment benefits have definitely helped me be more picky about what jobs I’m going to take since I don’t have to take whatever I can get to cover rent and groceries”. Another, Alan, said: “I have a degree in forestry and as I am currently relatively well off financially I may take longer to find a job in the field I really want to work in. A third, Owen, said: “I left because having time off to think and plan helped me focus my desire to be better paid and better treated…I expect to win at least double and finally to have nights and weekends off. I hope I’ll be treated with a little more dignity, but I know that’s not always the case.
This is very different from saying that unemployment benefits discourage work in general. Unemployment Insurance studies have shown that laid-off workers who receive benefits look for more jobs, receive higher paying offers, and take on roles that better match their level of education. Specifically during the pandemic, several studies have looked at enhanced benefits of $600 and found that they have Small at no effect to use Where job search. It’s hard to see how the current $300 increase would be any different.
Few workers even had access to unemployment insurance initially.
Despite what many companies, commentators and legislators try to claim, the data continues to prove that unemployment insurance is not a barrier to hiring. Although overall employment growth in April was disappointing, the leisure and hospitality sector – where most of the cries of labor shortages from employers are coming from – in fact accelerated job growth with 206,000 new hires in March and 366,000 in April. In total, 430,000 people joined the labor force (meaning they weren’t looking for work before, but are now) but this growth has come entirely from men while women left the labor market on the net in April, suggesting it has more to do with a continued lack of childcare. States with higher unemployment benefit levels, as well as low-wage industries where benefits are more often higher than previous earnings, have actually seen faster job growth, indicating that unemployment insurance is not the cause of the slow hiring.
In fact, few workers even had access to unemployment insurance initially. From April 2020 to January 2021, only 18% of unemployed had received unemployment benefits in the past two weeks at some point. It’s even worse for black (13%) and Asian (11%) workers and those without a college degree (12%), all of whom are overrepresented in low-wage industries like leisure and hospitality. Undocumented immigrants are also totally excluded from unemployment insurance, yet they are 10 percent of restaurant workers across the country and nearly 40% in cities like New York and Los Angeles. We saw the consequences of this at the start of the pandemic when meatpacking plants convinced the government to declare them essential, allowing them to call their employees back to work and leading to major COVID outbreaks among their workforces, which are disproportionately made up of immigrants and people of color, and in communities where plants are located.
Even so, employers have managed to complain quite loudly about the possibility that they’ve lost a shred of power as sympathetic lawmakers rush to accommodate them. From mid-May, in 16 states and more, Republican governors had announced plans to bar all of their residents from receiving their legitimate federal unemployment benefits, citing anecdotes companies struggling to hire at their current salaries as justification. End these benefits before the jobs are there and while millions still losing their jobs each month will take billions of dollars – over $10 billion from nearly 2 million unemployed people here an estimation — of the economy in those states, even if some of those people are cut off from work, and will effectively slow the recovery through lower spending.
If there were a labor shortage, employers have sensible options to make themselves more competitive: they could raise wages to livable levels, many companies successfully lobbying or lobbying their lawmaker friends to support vaccination efforts and fund safe and affordable child care. Instead, some companies rely on half measures, such as offering one-time signing bonuses, specifically because they know they are insignificant compared to what a worker would earn in the long run. with permanently higher salaries. Many others are simply pushing the same narrative to which they have retreated for more than a century – through the New Deal, the Great Society, welfare reform and the Great Recession – by claiming that workers who dare to demand more are lazy and ungrateful. It’s no coincidence that the same people who are crying out for an end to unemployment benefits are also opposing the Wage Rise Act, the PRO Act and other measures that could dramatically improve lives. and building workers’ power.
This power struggle made its way to the office of the president. In a White House monday speech, President Biden said: “Anyone who collects unemployment who is offered a that suits employment must take the job or lose their unemployment benefits. (Emphasis ours.) Now the government must decide who can define the word “suitable”. Companies would like that to mean the pre-COVID status quo: low wages, inconsistent hours, minimal benefits (if any), and limited protections. Workers want this to mean jobs are secure and offer a decent quality of life – including decent wages, manageable hours and facilities for care and quality of life.
The Biden administration has taken positive steps to define good work for federal contractors, set a $15 minimum wage, raise standards and strengthen protections against discrimination. It is vital that the administration continues to support all workers in the face of the overwhelming power of employers. There are many ways to do this: they can push to improve the unemployment insurance system through federalization or establish minimum standards and automatic stabilizers, such as those proposed in the Wyden-Bennet Reform Bill; pass it Wage Increase Act raise the minimum wage to $15 and eliminate under-minimum wages; implement better regulations and enforcement to prevent wage theft, abusive overtime, misclassifications, and OSHA security violations, among other abuses; pass it PRO law ensure that workers can exercise their right to join trade unions; and more.
We cannot continue to give employers all the power in the labor market. President Biden and other lawmakers must make it clear that now is the time to stand with working people and give them a say in their own working conditions and livelihoods.