Increased unemployment benefits are preventing employers from hiring
Last week, KPVI ran a report titled: ‘Some Minnesota businesses report hiring problems, citing enhanced unemployment benefits‘:
With more relaxed restrictions and the promise of warmer months ahead, businesses are struggling to find employees to come back to work, even after raising wages and offering flexible hours.
Some blame generous unemployment benefits.
Atlas Staffing Inc has 241 open jobs on their site for locations across Minnesota, but Minneapolis office manager Alison Barge says it’s “next to impossible” to fill positions right now.
It’s not a skills gap, Barge said. Most of the jobs are entry-level positions, and some employers are even offering a $3/hour incentive, boosting pay to $17 an hour, flexible scheduling, part-time availability, but people just “don’t want to work.”
Some clients are struggling to fill entry-level positions and competing with unemployment benefits, Barge said.
“They’re making more money staying at home on unemployment than they would be making at these $13.25 jobs,” Barge said, which is the minimum wage in Minneapolis.
Atlas Staffing is only filling three to four spots out of 10, every day.
The National Federation of Independent Businesses Small Business (NFIB) reported 42% of owners had job openings that couldn’t be filled, a record high. A net 22% of employers plan to increase employment.
A net 28% of owners reported raising compensation, the highest level in the past 12 months. A net 17% of employers said they plan to raise compensation in the next three months.
The NFIB said owners have difficulty finding qualified workers to fill jobs as they compete with increased unemployment benefits and the pandemic keeping some workers out of the labor force.
“Main Street is doing better as state and local restrictions are eased, but finding qualified labor is a critical issue for small businesses nationwide,” NFIB Chief Economist Bill Dunkelberg said in a statement. “Small business owners are competing with the pandemic and increased unemployment benefits that are keeping some workers out of the labor force. However, owners remain determined to hire workers and grow their business.”
I warned about this back in January:
If unemployment insurance offers people an income comparable to working, many of them will opt not to work. This is especially true if that work could be taken at any moment by government edict.
As more Americans are vaccinated and as more states lift their COVID-19 restrictions, the extraordinary measures put in place to deal with the economic fallout of the pandemic and government responses to it must be wound down. There should be no more stimulus payments and the increases and extensions to unemployment benefits should be phased out. If not, we risk a prolonged period of increased unemployment.
John Phelan is an economist at the Center of the American Experiment.