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Why Three Million Americans Are Choosing Not To Work |
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FORECASTS & TRENDS E-LETTER Why Three Million Americans Are Choosing Not To Work IN THIS ISSUE: 1. America Is Paying People Not To Work 2. It Pays Not To Work In Biden’s America 3. Democrat Donors Profit From This System 4. Why So Many Americans Aren’t Working Introduction – America Is Paying People Not To Work There are over 10 million unfilled job openings in the US according to the Labor Department. Employers with job vacancies have struggled all year to fill those slots. Today we’ll discuss one of the biggest reasons this is happening. The federal government and the states offer a wide array of more than two dozen programs that provide cash assistance or in-kind benefits to low-income families. These “safety net” programs are designed to keep families out of poverty. But the expansion of assistance, especially in subsidized health insurance to families with children and no parents working, can mean that many households earn as much or more income from receiving government assistance than the median household does from working. Unemployment insurance benefits are time limited, but for the period when the benefits are provided, returning to work may not pay for many households. In 2020 and 2021, weekly supplemental unemployment benefits were available in various amounts, ranging from $300 to $600. For many of the unemployed, total weekly benefits exceeded take-home pay from working, resulting in millions of additional unemployed. When the $600 weekly supplement was in place, even those earning the median income could receive more from not working. Even with the $300 weekly supplement, when combined with Affordable Care Act (ACA or “ObamaCare”) subsidies, a family of four with both parents not working could receive aid from just these two programs that was the annualized equivalent of $100,000 a year in salary in 19 states. Now, even without the supplements, normal unemployment benefits and expanded ACA subsidies can still provide the annualized equivalent of $100,000 a year in salary in 3 states and the equivalent of at least $20 an hour wage in 16 states. It Pays Not To Work In Biden’s America Most Americans believe in a reliable government safety net in America, so that when people fall on tough times or lose their jobs, their families will not go hungry, lose their homes or suffer deprivation. But most Americans also believe that government assistance should be short-term and aimed at quickly getting people back on their feet, into a job and on the road to being financially self-sufficient and a contributor to our economy. Today’s welfare programs are failing to accomplish that goal. Did you know that families earning half a million dollars a year can receive ObamaCare subsidies? Or that in some states, unemployment insurance benefits can be equivalent to a job with annual pay of $100,000? It is shocking but true, and it might explain why so many businesses can’t get workers back on the job almost three years after COVID-19 hit our shores. Today there are still at least 3 million fewer Americans working than there were in 2019. There are many reasons for the worker shortage, but one is that in many states, welfare pays more than or nearly as much as respectable middle-class jobs. Under Presidents Barack Obama and Biden, many of the highly effective work requirements, which were instituted in the historic 1996 bipartisan welfare reforms, have been eviscerated. Often limits for public benefits have also disappeared while Congress and states have made benefits more generous.
In some states families can earn over six figures annually in unemployment benefits. Many programs, like the Supplemental Nutrition Assistance Program (aka food stamps), are means tested, so that only low-income people qualify for them. But other handouts are not — including unemployment insurance and ObamaCare subsidies. The value of these benefits can be staggering — much higher, in fact, than many blue-collar professions pay. Some recent studies have found the following:
To be clear, unemployment insurance is at least time-limited to six months in most states. But while Americans are receiving those benefits, the financial incentive to jump into the job market is low. In addition, people move in and out of the unemployment system – working just enough months until they again qualify for benefits. These numbers also don’t include the rampant fraud payments that exceed $100 billion a year. This means families that are not technically eligible for food stamps or continued unemployment benefits are still receiving them. Democrat Donors Can Profit From This System It is particularly troubling that these programs, which were purportedly put in place as a safety net for lower-income families, have been expanded to the point that their greatest benefits go to upper-income earners, including households earning half a million dollars in annual incomes in some states. The Biden administration’s expansion of ObamaCare has been a handout to the wealthy donor class of the Democratic Party, while doing nothing to help those who are truly poor. The expansion of the welfare state has created situations where work often doesn’t pay. In many states, working a $20-an-hour job for 40 hours a week would mean a reduction in income compared to two parents receiving their unemployment benefits and healthcare subsidies. Until the unemployment runs out, there is very little incentive to go back to work, especially when the family is receiving more than their blue-collar counterparts who are on the job. If that sounds like an exaggeration, consider that the median household’s annual income and benefits are worth about $93,000. In New Jersey, unemployment benefits and ObamaCare subsidies alone are worth an annualized $122,000 — that’s 30% more for not working in most occupations. But even the median value of annualized state unemployment benefits and ObamaCare subsidies across the country is relatively high at $69,000. That’s more than the income and benefits of the median firefighter, truck driver, machinist or retail associate. This also raises basic fairness questions. Is it fair that, in most states, a family can earn about as much as or even more than a construction worker, a security guard or a dental assistant? In reality, these programs which discourage work are not to the benefit of the families that receive the welfare program assistance. Most studies conclude that work is associated with happiness, more financial security over time and better health with a longer life expectancy. The whole idea of welfare – when many of these programs were started 50 years ago during the Great Society – was to get Americans back into the workforce. President Lyndon B. Johnson famously declared that “the day of the dole are numbered.” In the 1990s, Congress aimed to “end welfare as we know it.” None of these goals has been achieved. In many ways, welfare is more generous than ever. The goal should be to achieve a just and productive society and make America a place that rewards work – not welfare. But over the years the left has adopted a strategy of a “national guaranteed income” for Americans whether they work or not. The result is a record-low labor-force participation rate — meaning fewer Americans working and higher taxes for those who do work.
Conclusions – Why So Many Americans Aren’t Working A key policy question these days that has befuddled federal lawmakers is why so many millions of Americans have not returned to the workplace in the post-Covid era. The US is “missing” more than three million workers of working age that could be working and were working prior to Covid but are not today. There are many factors that could help explain this disappearance of workers from the work force, including continuing fears of Covid, early retirement, “long Covid,” the decision by many not to ever return to work and instead retire early, among others. But several studies show that one factor contributing to the dearth of workers is the generous benefits paid to families without workers. In 14 states, a family of four with two unemployed workers can receive unemployment insurance benefits and ACA subsidies equivalent to a job that pays $80,000 a year in wages and health benefits – or more. In another 10 states, a family can receive the equivalent of a $70,000-a-year job. For these families, work may literally not pay. If states reduced unemployment insurance maximums and provided more targeted benefits, this would reduce unemployment and the duration for which people remain unemployed. Likewise, the federal government should, at a bare minimum, roll back the extension of ACA subsidies in an effort to keep premiums from rising further. But that’s just one opinion. You may agree or disagree. I’ll leave it there for today. HAPPY NEW YEAR EVERYONE! AS ALWAYS, THANKS FOR READING ME!! Best holiday wishes,
Gary D. Halbert SPECIAL ARTICLES How Millions Of Americans Can Afford Not To Work Job Openings Near Record High With 11 Million Vacancies “Long Covid” Responsible For One-Third Of Unfilled Jobs Gary's Between the Lines column:
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