All those studies showing that unemployment aid wasn’t keeping people from looking for work were right. Parents—especially mothers—with children at home were constrained in their work choices.
Business Owners Lied: UI Money Didn't Keep Workers Home
Credit: Photo by Tim Mossholder on Unsplash
October 12, 2021

Many business owners, Republican governors, and plenty of media figures spent the late spring and the summer pushing the idea—let’s just call it a lie up front, shall we?—that increased unemployment benefits were keeping people from looking for work. Never mind all the data showing that the extra $300 a week in unemployment aid was having a negligible effect on job searching. Never mind the businesses that found that by offering increased pay, they could get tons of applicants. The story went that the federal government was giving lazy people enough money to sit home in comfort, so few people were interested in going out and making an honest wage.

Well, the end of federal unemployment programs has punctured another giant hole in that story. 

In dozens of Republican-controlled states, the federal programs—including the additional $300 a week and programs extending benefits for additional weeks and to people like freelancers who usually aren’t eligible for unemployment aid—were cut off early. The federal unemployment aid expansion ended nationally in September. If the theory that people weren’t working because generous aid meant they didn’t need to held any water, the effects would have started being seen in the August jobs report and gone into full effect in the September jobs report. Instead, the August numbers were a disappointment, and so were the September ones.

In September, the labor force shrank for the first time since May, showing that rather than being pushed to apply for jobs by the benefits cliff, a lot of people still chose not to look for work. Even the director of fiscal policy at a conservative think tank admitted to CNN, “If unemployment benefits were the driving force behind labor market dynamics, then you would not have seen that effect.”

It wasn’t the $300 a week, after all. Workers had other reasons. All those studies showing that unemployment aid wasn’t keeping people from looking for work were right. Parents—especially mothers—with children at home were constrained in their work choices. People with health issues that made them especially vulnerable to COVID-19 didn’t feel safe going into workplaces where they wouldn’t be protected. And workers started looking for a better deal—one many employers resisted offering.

The story that business owners—especially restaurant owners—told again and again and again, drawing a steady stream of media coverage, was that workers were lazy and demanding too much. But the reality revealed by the data is that it was the business owners trying to get themselves access to cheap labor, and many U.S. workers aren’t interested in being cheap labor during a deadly pandemic.

A lot of people wanted those benefits cut because they believed it would make it easier to hire at lower wages,” University of Minnesota labor economist Aaron Sojourner told CNN. “But the top line data is not telling us that's what happened.”

Writer Natalie Shure put it bluntly:

The Economic Policy Institute’s Heidi Shierholz pointed to slowing wage growth that came alongside slower job growth as the delta variant took hold of the United States:

Chart showing how wage growth and labor demand have slowed in August-September 2021 as delta variant hit.

In short, Republican politicians and many business owners flat-out lied about what was going on with U.S. workers and the effects of expanded unemployment aid. Now we’re seeing the reality. They story they pushed was false—and we have to talk about who benefited from the story that workers were lazy and government aid was bad for the economy. 

Republished with permission from Daily Kos.

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