The lazy-worker test has arrived

If you believe Republican governors, some 11 million jobless Americans will now be racing to fill the many job openings businesses say they can’t fill. That’s on top of 3.5 million idle workers who were supposed to start clamoring for jobs during the last couple of months.

Nearly 15 million Americans have now lost federal jobless benefits that Congress initially established in the CARES Act of 2020. Several follow-on coronavirus relief bills extended those benefits, including the American Relief Plan, which Congress passed this past March. Most of those benefits expired on Sept. 6, including an extra $300 per week in traditional jobless aid and other amounts for gig workers and others who don’t have a regular employer. The Sept. 6 expiration affects 11.3 million Americans, according to Oxford Economics.

[Did you lose federal jobless benefits recently? We’d like to hear how it has affected you.]

Republican governors in 25 states ended those federal benefits early during the summer, claiming they were hurting businesses by paying people more to stay home than to work. That took roughly two months’ of federal benefits away from another 3.5 million Americans or so.

The math suggests the disincentive to work could be legitimate. The average state unemployment payout is about $400 per week, or $1,700 per month. Add another $1,200 in monthly federal aid, and the two combined might equal nearly $3,000 in monthly income. That’s equivalent to roughly $19 per hour (for a 40-hour-per-week job). So somebody who could only find work paying less than that might be better off taking the benefits instead.

That simple accounting leaves out many other factors, however, such as the fact that all jobless aid ends and most workers will need a job eventually. Many potential workers still worry about getting COVID-19 on the job. Some working parents still have their hands full with kids doing remote or hybrid schooling. Some older workers have retired early instead of hassling with the workplace in the time of COVID.

Several studies found that only a fraction of unemployed workers—probably no more than 15%—would rather accept benefits than work for a living. In July, Yahoo Finance interviewed a variety of workers in Republican states who lost federal aid early, and found a much more common problem was that people couldn’t find work in their field that paid enough to cover their bills. Some could have taken lower-paying, lesser-skilled jobs in other fields, but they viewed that as a career setback that might keep them from getting ahead indefinitely.

Lazy-worker theory

Employment trends in the GOP states that cut off benefits now show that the lazy-worker theory is mostly misguided. There’s been no notable boost in hiring or employment in those states, compared with states that continued the benefits. The early cutoff may even have hurt those states a little, because they gave up federal money that boosted incomes and would have cost them nothing.

Congress has made no move to extend jobless benefits again. The Biden administration hasn’t asked for an extension, and polls show Americans generally think it’s time for supplemental jobless benefits to end. That removes one variable from a puzzling labor market in which joblessness remains high even though employers struggle to fill existing openings.

Muhlenberg, PA - August 26: A help wanted sign that reads
Muhlenberg, PA - August 26: A help wanted sign that reads "Now Hiring!" in the window of the PetSmart location along 5th Street Highway in Muhlenberg Twp. Thursday morning August 26, 2021. (Photo by Ben Hasty/MediaNews Group/Reading Eagle via Getty Images) (MediaNews Group/Reading Eagle via Getty Images via Getty Images)

The latest data shows a record-high 10 million jobs available in the US economy. Half of small businesses say they have jobs they can’t fill, the largest portion on record. Yet 8.4 million Americans are out of work and millions more qualified for federal jobless aid because they lost gig work or income in ways that don’t officially count as “unemployed” in the fairly narrow way the Labor Dept. defines it.

Shouldn’t all those unemployed people be filling all those open jobs? It might seem like it, except there are many mismatches in the labor market. The open jobs aren’t always where the job seekers are. The open jobs require qualifications the unemployed don’t have. Some posted jobs are probably employers fishing for overqualified workers they can get for cheap. Some employers simply can't or won't raise pay: While some big companies say they’re boosting wages, other data shows no notable jump in pay for workers both staying in their current jobs and moving to new ones.

Job-market trends for the next few months will begin to clarify whether federal jobless aid was too generous or should have ended sooner. If hiring jumps and employers finally fill some of those 10 million open jobs, that will be good news, but it may lead to tighter benefits the next time around. It seems more likely we’ll continue to have a stutter-step recovery with big job gains in some months, and disappointment in others. If lazy workers are a problem, they're probably not the biggest one.

Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.

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