Paying people not to work
Many businesses struggling to fill openings
When the government pays people not to work, no one should be surprised if some folks accept the offer — even when jobs are available. Nevada’s unemployment rate as of February was 8.3 percent. That’s tied with New Mexico for the fifth highest in the country. In February 2020, 1.54 million Nevadans were employed. This February, just 1.42 million had jobs. That’s 120,000 people who were working last year but now aren’t employed in the state.
You’d might expect that jobs would be scarce during the COVID scare and that any opening would generate ample applicants. You’d be wrong.
As the Review-journal’s Subrina Hudson recently reported, some businesses are having a hard time finding workers. Jon Basso, owner of Heart Attack Grill in downtown
Las Vegas, said hiring new employees was a “nightmare.” Potential applicants just aren’t showing up.
His experience isn’t isolated. A Small Business Survey by Nevada State Bank found more than 70 percent of responding companies said it was tough to “recruit quality job candidates in the Nevada market.”
There are likely a number of factors at play. Certainly, some people are now prioritizing jobs that allow remote work. Others may be concerned about contracting the coronavirus while working a customer service or retail job.
But don’t overlook the role of expanded unemployment benefits.
The so-called American Rescue Plan increased unemployment payments by $300 a week through September. On average, out-of-work individuals received $324 a week in state benefits, according to a CNBC report. That’s around 38 percent of how much they made when they were working. Throw in the federal supplement, and unemployment insurance now replaces 74 percent of income, on average. For unskilled and lower-wage workers, it’s even more.
Nevada pays above the national average. The state’s maximum weekly unemployment benefit is $469. Toss in the additional $300 from Washington, and a jobless worker in the Silver State could take home $769 a week, the equivalent of a $40,000 annual salary. That’s more than many recipients were earning before the pandemic.
The bill also eliminated federal taxes on the first $10,200 of unemployment benefits received in 2020.
Unemployment insurance is intended to help people get by until they find another job. Yet the higher payments are making it more attractive for potential job-seekers to remain on the sidelines. This is an obstacle to a healthy private-sector recovery and helps explain why some business owners are having a hard time finding people interested in their open positions.
People respond to incentives. Unemployment insurance should be a safety net, not a landing zone.
The views expressed above are those of the Las Vegas Review-journal. All other opinions expressed on the Opinion and Commentary pages are those of the individual artist or author indicated.