On Tuesday, the governor of Tennessee informed the Department of Labor that his state would opt out of federal programs providing critical aid to workers who’ve lost income due to the COVID-19 pandemic, including those who are unemployed. It would be a uniquely cruel action if it was unique. The leaders of eight other states—Alabama, Arkansas, Iowa, Mississippi, Missouri, Montana, North Dakota, and South Carolina—have done the same thing.
To justify their actions, these governors (all Republicans) say the extra money is limiting the economic recovery in their states.
“These federal entitlements pose a clear and present danger to the health of our State’s businesses and to our economy,” said the governor of South Carolina, Henry McMaster. “It’s time that we end these programs that have incentivized people to stay out of the workforce,” echoed the governor of Missouri, Mike Parson.
These governors, often explicitly, are putting the profits of business owners over the safety of workers, and it’s fair to say that opting out of what, to states, amounts to free money for those workers will be a disaster. Here’s why.
There’s still a dangerous pandemic.
In the past week, there were 17,842 new cases of COVID-19 and 309 deaths in the nine states that are opting out of these programs. That’s a lot of people sick and dying, and proof that despite rising vaccination numbers and the eagerness of these governors to pronounce their states “open for business,” COVID-19 remains a very real danger.
The goal of cutting unemployment insurance is to force workers who lost their jobs during the pandemic to reenter the workforce, risking their lives in the process, before a critical mass of people is even inoculated against COVID-19.
There’s not enough childcare to go back to work.
Receiving benefits during the pandemic has allowed many people to stay at home with their kids, which is a good thing because schools and daycares have been (and many remain) closed for the safety of children and adults. Taking unemployment money away from people won’t magically provide them with childcare that is available and inexpensive enough to justify returning to work.
Businesses won’t be incentivized to pay their workers a fair wage.
The current federal augmentation of unemployment benefits is $300 a week on top of state benefits, which average $387. Considering that working 40 hours a week at the federal minimum wage of $7.25 will get you $290 before taxes, it’s no surprise that workers are choosing to stay home.
Let’s pause for a moment, to reflect on the fact that anyone could ever be expected to survive on $290 a week, particularly if they have a kid to take care of. That might be the federal minimum wage, but it’s not a living wage, and any business that needs to pay its workers that little simply shouldn’t be in business. But instead of closing, these businesses are getting what amounts to a bailout from their governors.
Instead of political favors, a market-based solution would be employers offering higher wages in order to attract job applicants.
Some employers have done that, and have received predictably positive results. But others have not, and instead of offering a market negotiation like higher wages, are waiting on unemployment to run out, banking on an eventual return to the pre-pandemic status quo of being allowed to pay poverty wages.
It’s not just those on traditional unemployment who will be harmed.
The $300 weekly supplement will get the most press, but Huff Post points out that these nine states also chose to pass on separate programs that benefit more than four million long-term jobless and six million gig workers who are depending on long-term benefits and Pandemic Unemployment Assistance, the program that benefits gig workers and others who didn’t lose traditional jobs due to COVID-19.
Practically, this means that gig workers and those who’ve been out of work longer than the 26 weeks usually covered by state unemployment benefits could get exactly no assistance.
“As Republican governors continue their economic sabotage by pulling the rug out from jobless workers, it’s important to note that thousands of workers in these states are not only losing the $300 weekly boost, they are losing every single penny of their income,” Sen. Ron Wyden (D-Ore.) said in a statement Tuesday.
There is hope that because of how these programs were written into the CARES Act that the federal government can continue to pay these workers, but the uncertainty about how they’re going to survive isn’t doing them any favors.
It’s not going to do what conservatives think it will do.
The “labor shortage” isn’t real. The simple fact is that opting out of these programs is not likely to push masses of people back into the workforce. Many of the things that are keeping them at home at the moment—sub-subsistence wages, fear of COVID, needing to take care of the kids—aren’t going to change once federal funds are cut off.
These governors could be working to encourage businesses to raise wages (or raise their state’s minimum wage), implement as many safety standards as possible, and ensure that affordable childcare is available.
That kind of robust strategy might actually make a dent in the unemployment numbers. But instead, they’re pursuing a path that is dismissive of and disrespectful to workers.