By M.D. Kittle
MADISON — Some relief is finally coming to Wisconsin businesses reeling from a worker shortage crisis — no thanks to Gov. Tony Evers.
Enhanced federal unemployment insurance payments expired on Labor Day, providing a push to many of the 9 million jobless Americans who claimed the $300 weekly bonus benefits to get back into the job market.
Businesses could use the help. Employers across the country have been forced to cut hours and production, and some have shut down because they can’t find enough people to fill positions. The worker shortage has been exacerbated by the pandemic-related subsidies that raised combined state and federal unemployment benefits to a level where some unemployed were making more staying home than going to work.
Evers could have ended the tax-free federal payments months ago. The Democrat refused. The Republican-led Legislature passed a bill to stop the bonus. Evers vetoed it. Then every Democrat in the Assembly voted to sustain the veto.
Noah Williams, founding Director of the Center for Research On the Wisconsin Economy (CROWE) at the University of Wisconsin-Madison, said ending the subsidy was the “easiest policy lever” Evers had at his disposal to ease the worker shortage.
More than half of the states — through legislative or executive action — did. Evers claimed he didn’t see any evidence that doing so would help.
He was wrong.
Williams’ analysis shows ending enhanced benefits had a “positive impact on the labor market.”
“Across all indicators I find that the terminating states experienced improved labor market outcomes relative to the rest of the U.S.. Employment growth accelerated by more in these states in both the household and payroll surveys, and the labor force grew more rapidly,” the economics professor wrote in a recent report.
Now that the federal unemployment provision has expired, Williams tells Empower Wisconsin he expects to see a “modest boost” in the labor market, particularly in the hardest-hit leisure and hospitality sector. In short, without the extra cash, jobless Wisconsinites who stood on the sidelines will be back out applying for jobs.
CROWE’s data supports similar findings.
A report this summer by Morning Consult found nearly 2 million people would return to the U.S. workforce when the benefits come to an end. The Federal Reserve Bank of San Francisco said one in seven workers turned down a job offer due to the extra benefits. A Wisconsin Manufacturers & Commerce Employer Survey this summer showed nearly nine in 10 businesses struggling to hire.
The “Help Wanted” and “Now Hiring” signs are everywhere. Evers and his apologists said ending the unemployment bonus wouldn’t do much to solve the worker shortage. But it would have done something, economic experts and critics of the federal subsidies assert. Evers refused to do the one thing he could do that would have delivered at least some immediate relief, data show.
Liberals blamed businesses, insisting their refusal to pay higher, “liveable” wages kept workers on the sidelines. The facts undercut those assertions.
The first quarter of 2021 were the best three months for wage growth in 20 years, according to the U.S. Bureau of Labor Statistics. Wages and salaries increased by 3 percent for private industry workers for the 12-month period ending in 2021, and 2.7% for civilian workers, according to BLS. Want ads across Wisconsin have been offering $12 an hour and up, and often signing bonuses and other incentives, to entry-level, unskilled workers. Beginning wages in many cases are pushing past $15 an hour, the minimum, so-called liveable wage Big Labor and liberal politicians have called for.
But employers still couldn’t compete with combined unemployment benefits approaching $17 an hour, 40 percent of which was tax-free.
“Wages have increased probably more on the lower end because there is more competition and demand for these workers,” Williams said, adding that compensation is increasing in part because of competition with taxpayer-funded benefits.
“That’s not true competition,” the economist said.