In this pop-up episode of She Thinks podcast, IWF’s President, Carrie Lukas, talks with the Wall Street Journal Editorial Board member, Jillian Melchoir about one of the biggest problems facing businesses across the country. It’s not the pandemic or lack of business; it’s the challenge on finding workers to hire when government is paying them so much not to work. Tune in below:
TRANSCRIPT
Beverly Hallberg:
Hey, everyone. It’s Beverly Hallberg. Welcome to a special pop-up episode of She Thinks, your favorite podcast from the Independent Women’s Forum, where we talk with women and sometimes men about the policy issues that impact you and the people you care about most. Enjoy.
Carrie Lukas:
Hi, everybody. Thanks so much for joining me today. My name is Carrie Lukas. I’m President of Independent Women’s Forum, and I’m thrilled that you’re here to listen to our Pop Up Podcast. And I have the pleasure of having with us Jillian Melchior. Jillian is with the Wall Street Journal Editorial Board, but I’m very proud that she was once an IWF fellow and remains a good friend of the organization. So Jillian, thanks so much for being here with me today.
Jillian Melchior:
Oh, thank you so much for having me. Excited to talk about this.
Carrie Lukas:
Yeah, well, I wanted to reach out and talk to you because I saw you had a great piece in the Wall Street Journal the other day, which is talking about an issue that I think a lot of Americans are just now, it’s coming to light, and this is some of the problems that are cropping up that are surrounding COVID unemployment benefits. And before we delve into the situation that we face right now, I’d love to take a step back and have you talk a little bit to people about what it is exactly, what was the thought process a year ago, I guess I’m a little more than that now, a year and a half ago when they first started, Congress first started, making the determination to provide extra almost unemployment bonus payments as COVID was starting and the economy was starting to shut down? Can you give a little background on what the policy was so we have an understanding of what’s happening today?
Jillian Melchior:
Yes, sure. So I’ll take you, unfortunately, back to the dark days of March 2020 when COVID was just starting and we were being told to stay at home and not venture out. And we saw employment just go through the roof here, as these businesses were shutting down and the federal government really wanted to incentivize people to stay at home. And so, in addition to state unemployment benefits as part of its emergency package, Congress passed an additional $600 a week in enhanced unemployment, that’s since gone down to about 300. But I think what we’re starting to see now, I mean, this extra $300 goes through September, and it’s continued to become an incentive for people to stay at home even as the economy is reopening, even as people are getting vaccinated and taking a step back to normality. It’s become something that’s really hindered the jobs market, made it really difficult for employers to find people to hire. And I think that’s impeding our economic recovery at this point.
Carrie Lukas:
Yeah, it is interesting. I saw that there was some statistics floating around the other day talking about how many workers there are who are really better off, it makes economic sense at least in the short run for a lot of people if you can forego the cost of taking a job or commuting to a job and end out basically the same in terms of after tax income. You can hardly fault people for wanting to take advantage of this. But how prevalent, do you have a sense of how many workers there are? What are the types of workers that this is impacting?
Jillian Melchior:
Yeah, absolutely. So I’ll point, first of all, Bank of America’s economist, Joseph Song, looked at these numbers recently and he found that any worker who was earning less than $32,000 a year would basically at this point make more by going on unemployment. So we know that a lot of people in these jobs on the margins are having a really difficult time finding a job that pays more than unemployment pays. Now, businesses are trying to mitigate this. I spoke to many business owners that have offered significant raises are paying well over minimum wage, well over the $15 an hour wage [inaudible 00:04:16] been pushing for a while, but they just can’t find anybody to work.
I mean, I talked to one guy who runs a factory. He’s offering three-day weekends. He’s offering referral bonuses. He’s offering if you stay with them for a certain duration of time, you get an additional benefit, like a bonus payment, and he’s still having just an impossible time. And this is something I’m hearing regardless of industry. As I talked to restaurant owners, daycare owners, manufacturing sector, and also in disparate locations, so this is everywhere from the East Coast where my favorite brunch place can’t open for brunch right now because they can’t find somebody to work the brunch shift, to Middle America. And I think it’s really becoming a problem here.
Carrie Lukas:
Yeah, one thing that I think when we talk about this, I feel like most of us, especially those of us with a public policy lens, tend to talk about things in terms of the economy and the effect on some of these statistics. And then sometimes we bring up the cost of business or thinking about business owners. One thing I found interesting is, when you start breaking down some of the customers and you’re talking about missing out on your favorite brunch spot, and a lot of people I think are desperate to start going out and enjoying restaurants and are frustrated seeing a place as closed, but I know that another industry that’s been hit with this is on the home health care workers. And this means for some folks, IWF just produced a video recently that told the story of a severely disabled man who’s having a lot of trouble.
He used to be able to hire somebody who would come in and make sure that he could get him up and out of bed, because he couldn’t do it on his own and get him out of bed so he could use the restroom at a certain time in the morning and help him get into bed at night. And suddenly people aren’t showing up and he’s having just tremendous quality of life issues. And it really is sad. It’s strange when you think of the challenges and the trickle-down of all the different places. This causes real hardship for a lot of people out there, not just in terms of lost money and things like that, but also in services that we really need to be able to provide people.
Jillian Melchior:
Yeah, you’re absolutely right. I mean, one person that I spoke to particularly springs to mind; her name is Christie Phelps. She’s 46 years old in Indiana and she runs a home daycare. This home daycare is her pride and joy. She’s just been a trooper over the last year. She’s got these kids coming in, the school’s been shut down, she’s the one responsible for sitting them down in front of the camera, making sure they’re attending class. When they need help with their homework, she’s the one sitting down and doing that. But basically, right now, she has about 11 pre-K kids, 15 school aged kids, but she only has four staffers and those guys are only part-time. So the entire brunt of this job is falling to her and she’s just desperate to find somebody to help her care for these kids.
She knows that if the daycare has to shut down, these children are really going to miss out. And so she’s offered free training. She’s offered to help them out with certifications. She’s offered to pay them as much as $25 an hour. But here’s what she’s competing against. As she’s looking at it, basically, I’m looking at the statistic right now, and in Indiana, it’s quite a bit of money. If you end up going on unemployment, the maximum weekly benefit at one point was $990. Now, it’s about $690. That’s about 24.75 an hour, 17.25 an hour. It’s a lot of money, and that’s to stay home. That’s to not work. She’s basically offering a job that’s really high wage, but it’s hard to contend with being paid about the same amount of money to do nothing. And so she’s basically in a situation where all of this stress has fallen on her.
She was telling me that she actually has trouble sleeping, that she started going to therapy, because the stress has been so much to her, and that she’s really afraid that if the situation doesn’t change, if these enhanced unemployment benefits don’t go away at some point and change the economics of the situation that she’s going to have to shut down this business that she’s poured so much of her life into. And this is a story I’m hearing from employers across the United States. When I wrote this story, I had a lot of people tweeting at me, well, employers should just raise the wages. And I don’t think that they realize that they’re not competing in many cases with a $15 minimum wage. They’re competing with $20 or a $25 minimum wage and they’re also competing with a job versus no job situation. I mean, which would you rather do, go to work or sit on your couch and watch Netflix?
And it’s really unsustainable. I mean, these aren’t big businesses. In many cases, they’re family-owned businesses. Some of them have been in the family for generations and they’re coming off a year that’s been just extraordinarily punishing. And I think it’s really tragic for them that this is what could end up doing them in. I mean, they’ve survived all of this. They’ve survived the lockdowns, they’ve survived COVID, and now a federal policy that’s really counterproductive is what’s threatening their business.
Carrie Lukas:
Yeah. And it’s funny, because I do think that obviously we all know that the instinct, we all want there to be a safety net to help people who can’t work or who are looking for work and can’t find it to avoid the worst of what unemployment is, but we also know that there is real costs and long-term costs to basically creating these incentives for people to stay home, because long-term unemployment is a drag on future wages and future economic growth. I do worry that by really incentivizing these long-term unemployments, people are missing out on skills and are going to be earning less years down the road. This isn’t good economic news. It’s false kindness to encourage people to make that choice to stay home and watch Netflix instead of doing the not always pleasant, but important work of getting up and having a job and having a job record to live on. So this can be something that cars had lasting damage, I think, in the future.
Jillian Melchior:
Yeah, I think you’re absolutely right on that. I mean, I was really surprised. I was looking at the National Federation of Independent Business. They surveyed small businesses and they found out that 42% of them had jobs they couldn’t fill. Then I looked at the National Restaurant Association, their numbers, they found that one in four restaurants actually say that at this point recruitment and hiring is their top concerns. They’re more worried about that right now than they are even about COVID. And it’s just crazy. I mean, if you look at some of the federal numbers coming out right now, just this last month, how many jobs are open right now? It’s about I believe over eight million. It’s a considerable amount of jobs that are open right now. Yeah, businesses just can’t find these employees.
And I think you’re absolutely right that this isn’t just about the fragile state of our businesses and them trying to survive, it’s also about, who’s going to miss out on that opportunity? Who’s going to miss out on that skillset to become a contributing member of society and a contributing worker? I mean, this is our recovery at stake, basically.
Carrie Lukas:
Yeah. So what are the prospects? You said that the deadline or they’re expected to go with current laws that they’ll be phased out in September. I assume there’s no hope that that’s going to be front-loaded even as most of the country is now really moving rapidly to begin lifting restrictions and allowing businesses to resume. So it seems like this doesn’t make any sense anymore, but is there any chance they’re going to be moved up or do you worry that they might even push the deadline back in September? What are the prospects?
Jillian Melchior:
Well, I think a lot of business owners I’ve talked to are really concerned that this might be extended beyond September, but I think they’re also starting to see a movement at the state level to push back on this perverse incentive to stay at home, to not go out and get a job. So last week you saw in Montana the state announcing that by the end of June they’re not going to accept that enhanced unemployment. They’re doing away with the extra 300 bucks. And since then, you’ve also seen Alabama, Arkansas, Mississippi, South Carolina, all announcing that they’re going to do the same thing. And that’s really because they’ve realized that this is a perverse incentive, that it has come to the point where it’s hindering economic recovery and so they’re not going to do it anymore. So it’ll be fascinating to see what employment looks like in those states that are opting out of enhanced federal unemployment benefits compared to the states that are still accepting them.
Carrie Lukas:
Yeah, that’s absolutely fascinating. It is interesting, federalism at its best. We can see what the consequences are and it’s promising to hear that states are moving in that direction. Well, Jillian, I thank you so much. I so appreciate your great reporting in the Wall Street Journal. I love watching you and I feel like a proud IWF mom, in a way, in being able to help to watch how wonderful all your work is.
Jillian Melchior:
Thank you.
Carrie Lukas:
So thank you for being here with me today, and to everybody listening, thank you so much for joining us. And please be sure to tune in to the next Pop Up episode here at IWF.