Generous Jobless Benefits Keep Workers Home

Employers in West Virginia and across the country are having trouble finding people to work.  The economy is heating up, and demand for workers is greater than the supply of those willing to get back into the labor force.

A Huntington Herald-Dispatch story last week illustrated just how difficult it has become for some businesses to find employees.  Jason Webb posted on the sign outside his restaurant—G.D. Ritzy’s in Huntington—this message: “MISSING—JOB SEEKERS. IF FOUND, BRING INSIDE.”

Many potential workers are on the sidelines, either unwilling or unable to get back into the workforce for a variety of reasons, including generous unemployment benefits.  In West Virginia, individuals can receive as much as $724 a week in traditional state unemployment and pandemic relief funds from the federal government.

That is the equivalent of $18 an hour for a 40-hour week. In many cases individuals are making more on unemployment than they did working.  Webb said it is hard for his restaurant to match that.

“I feel like I am competing against enhanced unemployment benefits and the stimulus,” Webb told the Herald-Dispatch.  “It is making it hard to find workers when they can make so much not working.”

There are other reasons why businesses cannot find workers. The Wall Street Journal reported Monday that some fear getting or spreading Covid-19.  Others have issues finding childcare, and “some who are out of work don’t have skills needed for jobs that are available or are unwilling to switch to a new career.”

The simplistic answer is that businesses could pay more to attract employees.  That works, but only up to a point. Labor is already the biggest cost for many businesses, and they cannot remain profitable if there is more money being paid out than is coming in.

Employer costs in their share of Social Security, Medicare and any other benefits add at least another 30 percent to the cost of the wages.  Employers constantly ask themselves whether an individual’s output and productivity will justify the cost.

The Journal reports the conditions may slow the post-pandemic expansion.  “Some businesses are forgoing work, such as not bidding on a project, delivering parts more slowly or keeping a section of the restaurant closed.”

The pandemic has created tremendous hardship on businesses and workers. The government assistance allocated by Congress was a necessary and appropriate response during this unprecedented event.

However, there are also unintended consequences.  West Virginia already has one of the lowest workforce participation rates in the country and now some in the labor pool have even less motivation to go to work.


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