It is unusual for a state to refuse federal funds. It is even rarer to see states refuse it in the name of improving their own economies. Fortunately, several states are now taking action in this regard. Why is this so? Because President Joe Biden’s economic stimulus is causing what is rational for workers to become irrational for the economy as a whole.
The truth is unavoidable at this point: the Biden administration’s stupid decision to extend increased unemployment benefits through the summer is clearly slowing the job market’s recovery. It made sense to compensate workers for government restrictions on their ability to earn a living. However, the long-term extension of generous benefits has flipped all incentives on their heads. For far too many employees, the increased benefit makes it just as profitable not to work as it is to work. And how can you blame anyone for refusing to work if it costs them money? Don’t blame the workers. Do blame the White House that chose to frame their choice for them so irrationally.
And, indeed, how short-sighted it was in retrospect. It’s still May, and the Centers for Disease Control and Prevention has rescinded guidelines that recommended wearing masks in most situations. Despite the fact that the virus’s spread has been halted, the Biden administration has saddled the country with payments for not working that will last until September. That’s three and a half more months of unnecessary, counterproductive payments that are actually preventing the labor market from returning to pre-coronavirus levels.
Biden, for one, is completely unaware of the problem. “You can’t refuse [job offers] and keep receiving unemployment benefits,” he explained. However, everyone is aware that this is a toothless provision in the law. Those on unemployment benefits only need to make a token effort to find work to keep the Biden-bucks coming. And why should they do anything else if they’re getting paid so well?
This is why, having had enough, some states are taking matters into their own hands and cutting off the expanded benefits, even if it means foregoing federal funds. Meanwhile, some of them are even offering bonuses to employees who leave unemployment and find new employment. This is a good idea because incentives are important. When the Biden administration is no longer present to offer them perverse incentives, the labor forces in these states will return to work.
Unemployment benefits are administered by the states. In this case, they are regaining control in order to entice residents who have been given reasons not to work by Biden to return to work. Alabama, Arkansas, Idaho, Iowa, Mississippi, Missouri, Montana, North Dakota, South Carolina, Tennessee, and Wyoming would be wise to follow their lead. All of these states have now set an early end date for the increased unemployment benefits, with some as soon as next month.
At the federal level, Sen. Ben Sasse, a Republican from Nebraska, is proposing legislation that would codify the practice of providing workers with signing bonuses in exchange for accepting new jobs quickly. Biden can remain in denial for as long as he wants. However, as the job markets in these states rapidly recover, he will be in a difficult position to explain why.