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Tag: Unemployment

Wisconsin is suffering an employment crisis

by | 0710, 20 May 2121 | , | 5 Comments

Here is my column that ran in the Washington County Daily News earlier this week.

Last week I strode into a Cousins sub shop intent upon enjoying a delicious Philly steak sub and a side of cheese curds. Behind the counter was an extremely friendly, if harried, man and woman working like a whirlwind filling orders. I was fourth in line and there were seven other people in the store waiting for their food.

 

As the man called each number and gave a patron their order with a friendly smile, he repeated the same message: “If you know of anyone who is looking for work, please let them know that we are hiring.” As I ordered, he apologized for the long wait and explained that they just could not find people willing to work. They recently held a job fair to which a single person showed up. A fellow customer piped up and said that he ran a shop and was having the same problem. The owners were working 16 hours a day just to keep up.

 

While we all waited for our orders, all the customers were friendly and patient. The conversation turned to the omnipresence of “help wanted” signs and the impact on businesses and their customers all over town. Somebody offered that “it pays more to sit at home and do nothing than to get a job” to universal nods of agreement.

 

After finishing my sub, I turned to wave a thanks on my way out and was reminded to, “tell everyone you know that we are hiring!” It was a moment in time in a simple Wisconsin sub shop, but it is a scene that is being repeated all over the state. According to the National Federation of Independent Businesses, a record 44% of small businesses report having open jobs that they can not fill. This is double the 48-year average and the third consecutive month reporting a record high.

 

Wisconsin’s businesses are trying to bounce back, but unemployment policies implemented during the early days of the pandemic are now impeding their recovery. It is time to end those policies.

 

There are two primary policy culprits that need to be rescinded immediately. The first policy is that the federal government is currently funding an enhancement of $300 per week of unemployment payments. This results in unemployed Wisconsinites receiving as much as $670 per week, or the equivalent of $16.75 per hour, as Wisconsin Manufacturers & Commerce noted in a recent letter to Governor Evers. It is much more than that, however. That is $16.75 per hour without the hassle of commuting to work, buying work clothes, paying taxes, shaving, and actually working. $16.75 an hour for doing nothing is worth more than working for $20 per hour.

 

The second policy is that Gov. Tony Evers has waived the requirement that people receiving unemployment seek work. Recipients are not required to prove to anyone that they are looking for a job. Without the requirement to seek employment, some people receiving unemployment benefits are content to just wait until the gravy train ends.

 

Both policies result in a sizable number of Wisconsinites making the very rational and pragmatic decision to remain on unemployment unless they can find a job that pays substantially more than what they are already receiving for not working. For people who lack the job skills or work ethic to command a higher wage, the unemployment system has become a very comfortable hammock.

The numbers illustrate the problem. An economy is enjoying full employment when anyone who wants a job can have one. Most economists agree that an unemployment rate below 4% or 5% indicates than an economy is in a state of full employment. In prepandemic April of 2019, Wisconsin’s unemployment rate was 3.2%. In April of 2021, the unemployment rate is 3.8%. Wisconsin’s economy has returned to full employment.

 

Yet in April of 2019, there were about 21,000 people receiving unemployment benefits. In April of 2021, there are about 92,000 people receiving unemployment benefits. In an economic state of full employment, Wisconsin has about 70,000 people receiving unemployment payments who would not have been just two years ago. They are being paid to not work.

 

Seventeen states have already announced that they will be ending the $300-per-week federal unemployment enhancements. The enhancements are doing more harm than good. Wisconsin should immediately follow suit and end federal benefits.

 

The suspension of the requirement that people receiving unemployment payments show proof that they are seeking work should also be ended. It is not unreasonable to require that people receiving unemployment benefits actively look for gainful employment. There are plenty of available jobs.

 

There is no longer a crisis of unemployment in the state. There is a crisis of employment. Wisconsin must rescind emergency rules and reinstate normal order for the unemployment system. Returning to normal is no longer a matter for the virus anymore. It is simply a policy choice.

 

Wisconsin is suffering an employment crisis

by | 0707, 18 May 2121 | , | 0 Comments

My column for the Washington County Daily News is online and in print. Below is a portion. Go out and get a copy!

The numbers illustrate the problem. An economy is enjoying full employment when anyone who wants a job can have one. Most economists agree that an unemployment rate below 4% or 5% indicates than an economy is in a state of full employment. In prepandemic April of 2019, Wisconsin’s unemployment rate was 3.2%. In April of 2021, the unemployment rate is 3.8%. Wisconsin’s economy has returned to full employment.

 

Yet in April of 2019, there were about 21,000 people receiving unemployment benefits. In April of 2021, there are about 92,000 people receiving unemployment benefits. In an economic state of full employment, Wisconsin has about 70,000 people receiving unemployment payments who would not have been just two years ago. They are being paid to not work.

As a note, my editor kicked this section back because it is a bit confusing. Remember that the number of unemployed people is not the same as the number of unemployed people who are receiving unemployment benefits. There are unemployed people who do not receive benefits. The unemployment people who are receiving unemployment benefits are a subset of the larger unemployed population.

Once Again, DWD Fails Unemployed Wisconsinites

by | 0646, 27 Jan 2121 | | 1 Comment

Here we go again.

Nearly a month after new unemployment benefits were signed into law under the second round of federal coronavirus relief, the state Department of Workforce Development (DWD) still will not share a timeline for when two new sets of benefits will be available to out-of-work Wisconsinites.

 

[…]

 

On Jan. 8, DWD spokesperson Grace Kim said the department was unable to say when PUA and PEUC benefits would be set up, but said DWD was “working on these programs to deploy as quickly as possible.”

Boom! goes the economy

by | 0703, 5 Jun 1818 | , , | 4 Comments

My column for the Washington County Daily News is online. Here you go:

When I was in business school during the previous millennium, I remember sitting in a class listening to a professor drone on about the unemployment rate, wage pressures, labor participation and the notion of full employment. Full employment is when everyone who is willing and able to work is employed. Full employment does not mean that the unemployment rate is 0 percent. An economy is traditionally considered to be at full employment when the unemployment rate is between 4 percent and 6 percent because there will always be a percentage of people transitioning between jobs and times when workers’ skills do not match the jobs available.

By any account, the U.S. and Wisconsin, and especially in West Bend, are in a state of full employment. The most recent employment reports indicate that the U.S. has an unemployment rate of 3.8 percent. Wisconsin is beating the rest of the nation by a full point with an unemployment rate of 2.8 percent. West Bend has an astonishing unemployment rate of 2.3 percent.

On the micro-level, the evidence of hyper-employment is overwhelming. A short walk around West Bend will find a “help wanted” sign at almost every business. Several businesses have large signs advertising starting wages for entrylevel jobs at $10, $15 or more per hour — and those businesses are struggling to find good employees.

At the macro-level, a Bureau of Labor Statistics report says that while 223,000 jobs were created in May, the number of unemployed persons dropped by 6.1 million people. That means that nearly 6 million people entered the national workforce to fill jobs that were already open. This has the labor participation rate — the total number of Americans employed — increasing to 62.7 percent. That still is not as high as it once was, but it is finally steadily increasing after being in steady decline since it peaked in early 2000.

There really is no longer any excuse for every ablebodied adult to get a job. Anyone with a pulse and a modicum of work ethic can, and should, get a job. This is an economic truth that policy makers should bear in mind when debating things like welfare and education.

While high unemployment creates a litany of societal and economic problems, full employment presents a set of problems. They are better problems, but problems nonetheless. First and foremost, American businesses are struggling to attract and keep good employees. In particular, entry-level jobs and skilled jobs are difficult to fill. There are still plenty of lawyers and middle-managers out there, but finding a good roofer or hotel front desk clerk has become a challenge.

The inability to find good workers has undoubtedly retarded our nation’s potential economic growth.

The inability of some businesses to find good workers is partially their own fault. Fearful of the future, too many American businesses have been slow to increase wages to attract workers off of the economic sidelines and into jobs. We are finally seeing some significant wage increases in fits and starts. Some employers and industries are offering substantial wage increases to attract workers.

While overall private sector wages have increased between 2.5 percent and 2.9 percent since last year, wages for construction workers are growing at 3.8 percent — and that does not include the ample amount of overtime pay available to willing workers. Residential construction workers’ wages are growing at an even faster 5 percent. According to the National Federation of Independent Business, 35 percent of small business owners reported increasing wages to attract and retain employees. And some of America’s largest employers like Walmart, Costco, Walgreens, Publix, Tyson Foods and many more have increased wages.

Increasing wages, which always lag in a growing economy, are finally here, but that will drive another economic metric — inflation. As wages increase, the cost of goods and services will increase to pay for them. While rampant inflation destroys economies, moderate inflation in a growing economy is quite healthy. Thanks to sustained economic growth since President Ronald Reagan was in office and the Federal Reserve’s almost irrational fear of inflation for the past decade, Americans have not experienced significant inflation in a generation. Barring more unnatural manipulation by the Federal Reserve, the American economy should expect higher inflation over the next economic cycle as the value of the dollar reconciles with the value of labor.

It was only a few short years ago when President Barack Obama and Governor Jim Doyle were trying to convince us that America’s best economic days were behind us and we needed to adjust to the new normal of a European-style economy. Thankfully, they were wrong. America’s, Wisconsin’s and West Bend’s economies are booming and all of us are seeing the benefits.

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