Post-COVID, Americans Don’t Want to Return to Lousy Low Wage Jobs

From today’s New York Times:

The hopes for a booming pandemic recovery — growth led by jobs gains in the millions every month — were dealt a blow in recent weeks by a disappointing April jobs report. Perhaps we will see better when results for May are released this week, on Friday. But, for weeks, many in Democratic policy and political circles have been queasy about addressing the connection between federally supplemented unemployment insurance benefits and the slowing pace of re-employment at this stage of the recovery from the pandemic. There is almost certainly a common sense connection: If you were a low-wage worker, why aggressively attempt to go back to work at a lousy, low-paying job, when you can make more money collecting unemployment benefits.

Still, Republican politicians are getting it wrong too. They are citing countless news reports that businesses are struggling to fill certain positions as both a reason to end federal unemployment benefits and as evidence that the extra benefits were too generous in the first place. They worry that the ability of some workers to stay on the sidelines of the labor market, unless employers offer wages that trump jobless benefits, could result in dangerous “wage inflation” — a potential increase in labor costs that, they believe, consumers will pay for in the form of higher priced goods and services.

That argument simply does not hold water either: Over the coming weeks and months as this aid for the jobless phases out, there will be a flood of anxious job seekers pouring into labor markets. Even if a significant share of workers are temporarily avoiding taking low-paying jobs while benefits remain generous, then there is no true “labor shortage,” as many economists and market commentators are calling it.

When Congress passed the CARES Act last May and the American Rescue Plan Act this March, it was hard, even impossible, for policymakers to forecast the demand for labor or the pace of the economic recovery. The pandemic was still stubbornly lurking. The economic (and humanitarian) risk of doing too little far exceeded the risk of being generous. And in spite of some recent comments from Democrats facing political pressure, the entire point of the enhanced unemployment checks, at least originally, was to tide Americans over until it was safe for more people to work again.

Now enhanced benefits are ending every day for the millions of Americans who have benefited from the Pandemic Emergency Unemployment Compensation, or PEUC, program, which extends unemployment insurance for 13 weeks to those who exhausted their conventional state and federal unemployment benefits. All extra federal supplements for the unemployed will end on Sept. 6, including the general $300 weekly benefit, as well as the Pandemic Unemployment Assistance, or PUA, program, which provides aid to those who were self-employed. (Some states are in the process of cutting them early.)

Republican-controlled states, as well as some more politically mixed states, are doing this because they presume there is a macroeconomic upside to millions of workers returning to lower-income jobs. They shouldn’t be so sure.

Read the complete article here.