Can we solve poverty just by handing out money? What about unemployment?
President Biden and many of the Democrats in Washington, D.C., think so. Their decision to extend the $300 weekly unemployment insurance (UI) bonus is continuing to drive unemployment and make it more difficult for employers to find workers.
That strategy of just handing out cash is failing.
But don’t take my word for it. On May 7, the Bureau of Labor Statistics (BLS) reported an increased unemployment rate of 6.1 percent. And the number of new jobs created, which was predicted to be around one million, came up far short of expectations at fewer than 300,000.
We have a record number of job openings, and half of all small businesses report they can’t get qualified applicants. Right now, there are 7.4 million open jobs, and the government is paying millions of Americans not to take them.
This is a key sign that these workers are content remaining on unemployment. In fact, three million fewer Americans want a job today compared to the same time a year ago.
It is vital that federal lawmakers take steps to end inflated UI benefits in order to fast track economic recovery. Ending the unemployment bonus would fuel a desperately needed American recovery, encourage individuals to reenter the workforce, and aid small businesses desperate for workers.
But it’s not just about jobs. Work is much more than a paycheck. It is the first step on the path to learning the skills, building the relationships, and experiencing the earned success that make the next job and an even higher paycheck within reach.
If your goal is prosperity, work is the only path.
Would we solve someone’s lack of education by giving him or her an unearned diploma? Of course not. That’s because a degree — whether high school, a technical program, or college — shows a grasp of certain knowledge, proof of the focus necessary to persist toward a multi-year goal, and the ability to manage time and competing priorities. That’s why making college free only has a marginal impact on people actually getting more college degrees. It’s not just about money.
As a result of Congress extending an additional $300-per-week cash benefit through September, unemployment and other cash benefits are now equivalent to a nearly $58,000 annual salary — including state UI, the federal UI bonus, child tax credit, Earned Income Tax Credit (EITC), and food stamps — for a family of three. Even if you just consider cash-only benefits, the total still exceeds $3,600 per month. When you pay people more to stay home than to work, they stay home.
The decision by Washington, D.C., Democrats means it now pays more not to work and will continue to do so, at least until this September and possibly a lot longer.
It’s actually worse than it first appears. Historically, unemployment benefits were reserved only for those who were laid off (lost their job through no fault of their own). Not anymore. Given Biden’s executive order, you can now quit or claim your job loss was COVID-related, even if you were fired, and receive unemployment.
The unemployment safety net has been stretched to become a profitable hammock for those choosing not to work. And they can stay in that hammock for up to 18 months under current law.
What’s 18 months from today? Election Day 2022.
September is when that $300 weekly bonus and the federal expansions of unemployment run out. But only if certain senators from West Virginia or Arizona decide to make it so.
These policies undermine the American work ethic. They mean that millions are kept from living the American Dream. Work is the only path to living that dream. Instead, 16 million people are trapped in the nightmare of dependency to an extent never before seen in America.
Americans who are still working and making less than $3,600 per month are being told the value of their work is nothing — because millions are being paid more, in cash benefits alone, to do nothing.
This is not America. This is not the American Dream. Let’s solve poverty and fix unemployment with the only solution that works — work.
Tarren Bragdon is the CEO and founder of the Foundation for Government Accountability where he focuses on advancing reforms that move individuals from welfare to work.