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Andy Puzder: Employers can’t find people to hire. The pandemic bonus is to blame.



The U.S. employment numbers released Thursday prompted headlines about a record-breaking 4.8 million jobs added in June. Yet even more jobs could have been added, if only employers could find people to hire.

The National Federation of Independent Business’ June Jobs Report says that “32 percent of all owners reported job openings they could not fill,” an increase of nine percentage points from May. Fifty-one percent of these small-business owners reported “hiring or trying to hire” in June, but 84 percent of them said they could find few qualified applicants, or none at all.

That is unsettling news, especially given a more sobering Labor Department report for the week ended June 13: The total number of Americans receiving unemployment benefits increased to 31.5 million, from about 30.6 million a week earlier.

The NFIB’s chief economist, William C. Dunkelberg, noted the shortfall of job seekers amid plentiful job openings in May when he wrote that “generous unemployment benefits are making it harder for some firms to recall workers and fill open positions.”

He was right. And congressional Democrats are mistaken, even if well-intentioned, in thinking that prolonging the problem is a good idea.

Recipients under both state unemployment insurance and the Pandemic Unemployment Assistance program (covering those, such as the self-employed, put out of work by the novel coronavirus but not qualifying for traditional aid) are eligible for a federally funded $600 weekly bonus as part of the Cares Act. Virtually anyone in business will tell you that this $600 per week bonus is discouraging work.

For example, many quick-service restaurants are experiencing improved sales in part because they have drive-through windows allowing customers to purchase food with minimal human contact. Their problem is staffing the restaurants. A Southern California restaurant operator with good sales told me recently that finding workers in Orange County is nearly impossible. He noted that some prospective employees have asked whether jobs will still be available in August. The $600 weekly bonus is set to expire at the end of July.

No wonder it’s hard to make new hires. A May working paper from the Becker Friedman Institute at the University of Chicago found that 68 percent of eligible workers can earn more on unemployment benefits than working. A stunning 20 percent of the unemployed doubled — or better — their lost earnings.

It isn’t complicated. If you pay people more to stay home than to work, fewer people will work. That’s understandable: Taking a job becomes unaffordable.

It is also understandable and absolutely appropriate that the government would help people who are unemployed because of the pandemic. But there is an important difference between helping people who are unable to work and providing benefits so generous that they encourage people not to take available jobs.

A government check is certainly welcome during a crisis, but it is a poor substitute for the dignity of a job, the security of an earned paycheck and the opportunity for a better future. Encouraging millions of people today to remain unemployed and dependent on government aid does them no favors in the long run. A recent study by the Well Being Trust and the Robert Graham Center predicts an “epidemic within the pandemic” of “deaths of despair” — from drug and alcohol addiction, and suicides — with unemployment and economic devastation playing a central role.

The study’s No. 1 suggestion for reducing these deaths of despair: “Get people working.”

Unfortunately, Democrats, beyond simply helping people who are unemployed, want to extend the $600 weekly bonus for six months. According to the Congressional Budget Office, that would result in lower employment in the second half of 2020 and in 2021, with more than 80 percent of recipients making more money by being unemployed than by working.

Progressives argue that this extension and associated government spending would boost economic growth. That argument is reminiscent of 2010 when, following passage of an $800 billion stimulus bill, the Obama White House’s rosy gross domestic product forecasts failed to materialize in the years that followed. The dreams of John Maynard Keynes aside, massive government spending has never been the path to sustained economic growth.

The real victims over the past decade have been working-class Americans. In the 7½ post-recession years of the Barack Obama presidency, yearly wage growth never hit 3 percent. It wasn’t until August 2018, with unemployment below 4 percent and employers once again competing for employees, that the United States began a 19-month streak of 3 percent or better wage growth. And then the pandemic hit.

Certainly, we should help those who are out of work, unable to find jobs. But the U.S. economy and workers’ wages will grow only when business owners are once again competing with each other for employees, rather than with government largesse that can make staying home, out of work, a better financial proposition.

Andy Puzder is the former chief executive of CKE Restaurants, a senior fellow at Pepperdine University’s School of Public Policy and the author of “Getting America Back to Work.”


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Posted: July 2, 2020 Thursday 03:54 PM