LEGISLATION WOULD GIVE INCENTIVES TO JOB SEEKERS
“We want as many Pennsylvania workers as possible to be earning paychecks rather than cashing unemployment checks.” — State Rep. Jim Cox
As business owners search for ways to lure people back to work, elected officials in Pennsylvania are weighing a new law that would not only roll back enhanced unemployment benefits, but incentivize job seekers.
Work-search rules are set to resume for benefits recipients on July 18, while the extra $300 a week in COVID relief is scheduled to expire in September.
State Rep. Jim Cox doesn’t believe that’s soon enough.
In May, the Republican representing Berks and Lancaster counties proposed House Bill 508, which would phase out participation in the Federal Pandemic Unemployment Compensation program, and create in its place a Back-To-Work Bonus for workers.
“We want as many Pennsylvania workers as possible to be earning paychecks rather than cashing unemployment checks,” Cox said in a statement.
If the bill passes, former unemployment claimants would be eligible for a $300 bonus for four consecutive weeks of work. Those who remain with the same employer for eight weeks would then be eligible for another $300 bonus.
Cox, who also chairs the House Labor and Industry Committee, argued that while enhanced benefits were necessary for a time, they’ve become the driving force behind the state’s workforce shortage.
“We know the federal unemployment compensation supplemental payments are a huge part of the worker shortage problem because it’s not just happening here in the commonwealth,” Cox said.
“The federal government provided very generous unemployment compensation benefits when the economy was shut down and jobs were hard to find,” he said. “With the economy opening back up and jobs available for workers who want them, those federal unemployment dollars have become a disincentive to work.”
Some uncertainties
It’s unclear if House Bill 508 would have bipartisan or bicameral support — the legislation is co-sponsored by another Republican, Rep. Ryan Mackenzie of Lehigh County — or if Cox’s Democratic counterparts share his perspective.
Rep. Gerald Mullery, a Luzerne County Democrat and
minority chair for the House Labor and Industry Committee, declined to comment on the proposal, unemployment benefits or workforce shortage.
However, during a May 24 committee hearing about the transition from unemployment to work, Mullery grilled acting Department of Labor Secretary Jennifer Berrier about the number of claimants who would see their benefits cut off upon the bill’s passage.
Mullery also suggested during the hearing that there may be other reasons why a person changes or passes on a job, such as pay or benefits packages. Cox was more direct. “We want unemployment compensation to be an effective safety net to catch workers who are falling, but not a hammock to coddle people who don’t want to work for a living,” Cox said in his statement.
Even if the bill passes the House and Senate without bipartisan support, it might be subject to veto when it lands on the desk of Gov. Tom Wolf.
The 2020 plunge
The pandemic’s initial shock to the workforce showed in April 2020’s unemployment reports.
For Berks County, the state Department of Labor & Industry initially had the rate of 17.6%, which was recently revised to 18.4%. The department routinely adjusts its figures on an annual basis.
In southeastern Pennsylvania, outside of Philadelphia, rates that month ranged from 11.9% in Chester County — which normally has one of the lowest in the state — to 15.5% in Delaware County. Montgomery was at 14.1%.
Before the pandemic hit, those rates were all below 5% in February 2020 with Chester at a state-best 3.3%, with Montgomery at 3.6% and Delaware at 4.2%.
Thirteen months later, in the latest data available from May 2021, those numbers dropped significantly: 3.9% in Chester, 4.7% in Montgomery, 5.9% in Delaware and 6.3% in Berks.
Lingering problems
However, a deeper dive into the numbers show a workforce that is still struggling to come back.
The jobless rates are down, but it’s relative to the number of people counted in the workforce. Berks
• Prepandemic: 208,000 employed in a workforce of 218,000.
• April 2020: 169,000 employed in a labor force of 206,000.
• May 2021: 191,400 employed in a labor force of 204,000.
Chester
• Prepandemic: 281,000 employed in a workforce of 291,000.
• April 2020: 237,000 employed in a labor force of 270,000.
• May 2021: 268,000 employed in a labor force of 278,500. Montgomery
• Prepandemic: 445,000 employed in a labor force of 461,000.
• April 2020: 374,600 employed in a workforce of 436,000.
• May 2021: 421,000 working in a workforce of 441,000. Delaware
• Prepandemic: 290,200 in a labor force of 303,000.
• April 2020: 243,000 employed out of 288,000.
• May 2021: 272,600 working out of 289,000.
Government statisticians do not count those who have no job and are not looking for one.
L&I’s take
So would stopping the extra $300 a week bring more people back into the workforce?
Sarah DeSantis, press secretary for the Department of Labor & Industry, said halting those payments wouldn’t necessarily force many from the ranks of the unemployed. Each worker has his or her own reason for not returning.
Besides personal safety or child care issues, some workers are simply looking for a more lucrative job.
“L&I has not found the additional unemployment benefits or the suspension of work search to be a primary factor in the perceived labor shortage,” she said. “Many Pennsylvanians are still waiting to complete the full vaccination process, or are facing other pandemicrelated factors that prevent them from rejoining the workforce, such as children remote learning from home or a lack of child care.
“Pennsylvanians who are ready to return to the workforce are already being enticed to certain employers or industries by higher wages, signing bonuses and other offerings. As more Pennsylvanians become vaccinated and case counts decrease, more workers will feel comfortable returning to work. This is why it is important for all Pennsylvanians to become vaccinated as soon as they are eligible.”
DeSantis said those extra payments also inject money into the economy.
According to L&I’s workforce data, the economic activity resulting from the federal supplements to and extensions of unemployment benefits has saved or created 81,200 Pennsylvania jobs.
DeSantis said the Federal Pandemic Unemployment Assistance program, which provides individuals who receive unemployment benefits with an additional $300 on top of their weekly payments, injects approximately $250 million into the Pennsylvania economy each week.
“These $300 payments are spent into local economies, supporting small businesses across the state,” DeSantis said. “These payments are also preventing a downward spiral of business closures that would likely occur if the FPUC program is abruptly halted.”
A better job
Another factor, DeSantis said, is that workers have used the pandemic to reevaluate their careers.
“From wages to benefits, workers are reassessing their needs and priorities with respect to employment and are shifting occupations and industries accordingly,” DeSantis said. “Two-thirds of unemployed workers are considering changing occupations, or seeking employment in an industry different from the one in which they were employed before the pandemic.”
This dynamic is compounded in certain highvisibility industries, such as retail and hospitality, which has led to a perceived labor shortage.
“However, evidence suggests that industries with comparably higher wages, strong career pathways and benefits, such as logistics and transportation, have actually gained workers through the pandemic,” DeSantis said. “While some employers are coming to the table with pay increases, nominal hourly wage increases during the pandemic have not outpaced inflation. We are confident that as conditions improve, workers will be enticed to return.”
In a survey it conducted in March, Prudential Financial found that workers are ready to switch employers after the pandemic if working conditions don’t change.
The Pulse of the American Worker survey, which polled 2,000 full-time workers, reported that 87% who were working remotely during the pandemic want to continue to do so at least one day a week. Of those remote workers, 42% said they will look for another job if they are forced to return to the office.
“This signals that a ‘war for talent’ may be looming if companies don’t address workers’ needs,” the report continued. “A significant number of respondents said they switched jobs during the pandemic (20%) or plan to look for a new job when the threat of the pandemic decreases (26%).”
Of those working for a new job, 80% say they are concerned about career growth, compared to 49% of all workers, and 72% are rethinking their skill sets.
Rob Falzon, Prudential vice chairman, said in the report that a looming talent war will be won by companies that affirm their standing as a top destination for both current and future talent. These employers will cultivate cultures that reflect what is most important to workers, such as remote-work options and flexible work arrangements, opportunities for career development and mobility, and comprehensive benefits.
“Leaders must be focused on cultivating thriving cultures of internal mobility, prioritizing continuous learning and delivering robust benefits to support their workers,” Falzon said.