How to Put Missouri on a Faster Path to Recovery
Hoping to prepare for a busy summer of reopening, several restaurants last week in St. Louis’s Central West End held a job fair in hopes of hiring over 100 workers. Only about a dozen prospective employees showed up. No isolated incident, this flop is emblematic of the disappointing jobs report last Friday, in which job creation nationwide came in over 70% below the heady expectations of Wall Street and other forecasters who were anticipating a blockbuster number that reflected the accelerating reopening of America. Against this backdrop, employers posted a record 8.1 million job openings in the latest data from March, and a record 44% of small businesses in the National Federation of Independent Businesses April survey reported openings they could not fill. Although childcare and schooling disruptions remain ongoing concerns, especially troubling is President Biden’s extension of enhanced unemployment benefits into the fall that are paying nearly half of jobless workers more to remain unemployed than they used to receive on the job and another fifth of workers more than 80% of their previous wages while saving them on commuting and other work expenses. Recognizing that Missouri need not wait for Washington, DC, to correct its mistakes, Governor Parson wisely announced that Missouri would be ending the unemployment benefit enhancements to encourage work and enable small businesses to hire. This action removes a significant headwind to recovery.
As things currently stand, the American Rescue Plan promises jobless workers $300 per week on top of the usual wage replacement rate of just under 50% all the way into September. For most of the workers who are receiving nearly the same or more to remain jobless, it is understandable that they might be reluctant to accept a pay cut just to go back to work. For small businesses struggling to reopen, these unemployment benefits represent anywhere from a short-term headache to an existential threat. Many of them operate on small profit margins and cannot afford to compete with the artificial compensation offered by a federal government with a nearly endless capacity to borrow. Tacitly acknowledging the role of unemployment benefits in the lackluster jobs numbers, President Biden is now exhorting workers that “if you’re receiving unemployment benefits and you’re offered a suitable job, you can’t refuse that job and just keep getting unemployment benefits.” He has also directed the Department of Labor to work with states to reinstate job search requirements, which in their current form are mostly window dressing that cannot effectively monitor or induce search effort. Instead of trying to fill the leaky bucket caused by bad policy, the federal government ought to plug the hole and stop erecting hurdles to small business hiring and reopening.
In Missouri, the economy sports what sounds like a healthy 4.2% unemployment rate, but here, too, many Missourians have exited the labor force, and there are over 114,000 fewer people working relative to back in February 2020. Missouri’s recently announced termination of enhanced unemployment benefits is one positive step toward addressing this jobs shortfall and returning its economy to pre-pandemic strength.
