In a decision that should surprise no one, Florida recently joined more than 20 other states in declaring that it would stop paying unemployed workers an extra $300 a week in federal pandemic benefits. The move would seem less heartless if the state wasn’t already so chintzy with its unemployment payments. Instead, out-of-work Floridians will have to get by on no more than $275 a week, among the lowest state benefits in the nation.
In announcing the decision, Gov. Ron DeSantis fell back on the worn-out soundbite that paying people not to work was contributing to a labor shortage. Businesses are crying out for workers, but the extra $300 a week discourages people from rejoining the labor force, he said. Like so many convenient political chestnuts, that one contains a nugget of truth, but misses most of the economic nuance.
First, not everyone who is out of work gets benefits. In fact, Florida is really good at finding reasons not to pay. Only about 11 percent of unemployed workers in the state received benefits in 2019, second-lowest behind only North Carolina, according to Labor Department data. Second, no one in Florida is getting rich collecting unemployment insurance. The maximum of $575 a week — up to $275 from Florida and $300 from the temporary federal program — equates to a little more than $14 an hour. Not bad, but not everyone gets the maximum, and the benefits don’t last forever, with Florida currently paying a maximum of 19 weeks. Plus, the benefits go directly to people in need, unlike some of the ill-conceived federal stimulus programs that doled out money to too many people whose finances weren’t adversely affected by the pandemic.
Also lost in the political rhetoric: Some of the people on unemployment made a lot more than $14 an hour before getting laid off, sometimes double or triple that amount. It’s illogical to think that $14 an hour will entice that group to lay-about their homes instead of taking jobs that pay the much higher amounts they earned before. Opponents of the extra $300 a week conveniently ignore that flip side to their argument about financial incentives.
Don’t forget that Florida has yet to vanquish the dangerous coronavirus. While the vaccines have helped, COVID-19 is still sickening and killing people — more than 37,000 Floridians have died — which has scared some frontline workers away from rejoining the job market. The pandemic has also put a premium on child and elder care, which has made it hard for some people, especially women, to return to work. Another curious feature of the current “labor shortage”: Wages have not risen rapidly, which is often what happens when workers are hard to find across many industries. “What’s being called a labor shortage is still a health shortage, a wage shortage and a care shortage,” Aaron Sojourner, a labor economist and an associate professor at the Carlson School of Management at the University of Minnesota, told the New York Times’ DealBook.
Yes, unemployment benefits can influence how quickly people get back to work or how intensely they look for jobs. The effects, though, are often minimal, especially in a state like Florida that pays so little in benefits. Economists often spar over the numbers, but a Congressional Research Service report released earlier this month found that increased benefits from April to July of last year reduced employment by 0.2% to 0.4%, but the benefits increased spending by 2% to 2.6%. A study from the University of Chicago and JPMorgan Chase found similar spending increases, while concluding that the negative effects on people searching for jobs “were small.” Those spending increases can help insulate the job market from more damage. In other words, the extra benefits allow unemployed workers to spend more during an economic crisis, and the extra spending keeps other people employed.
Spend your days with Hayes
Subscribe to our free Stephinitely newsletter
You’re all signed up!
Want more of our free, weekly newsletters in your inbox? Let’s get started.Explore all your options
What will happen when Florida gives up the extra $300 a week? It’s too soon to know, but spending could take a hit, at least in the short term. A drop in spending could end up being more of a drag on the job market than keeping the benefits in place.
One thing for certain, ending the extra $300 weekly payments won’t magically fill all the available jobs. Florida has more than 460,000 job openings, according to the Department of Economic Opportunity, but fewer than 150,000 people are receiving unemployment benefits.
The labor market is complex, and the effects of unemployment benefits are hard to boil down to soundbites, whether it’s conservatives complaining about “paying people not to work” or liberals overly simplifying the issue by shaming businesses with a mantra of “just pay workers more.” Either bromide might feel good depending on your political leanings, but they do little to explain what’s really happening.
Editorials are the institutional voice of the Tampa Bay Times. The members of the Editorial Board are Editor of Editorials Graham Brink, Sherri Day, Sebastian Dortch, John Hill, Jim Verhulst and Chairman and CEO Paul Tash. Follow @TBTimes_Opinion on Twitter for more opinion news.