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Thursday, June 17, 2021

Blaming the Victims

 By William Street, Jr

Douglas County Commissioners have sent a letter to the Governor requesting that she reduce unemployment insurance payments to Oregon’s unemployed. Following the lead of about 26 Republican-controlled states, these County Commissioners seek to blame the unemployed for being without work and assert that the length and amount of unemployment payments are enabling the unemployed to be “picky” about what jobs they will accept, especially if the job offered pays less than enhanced unemployment insurance benefits.

For the county commissioners, the path forward is to cut unemployment insurance benefits and force these “lazy” workers to accept a job, any job. Under their reasoning, idled Boeing machinists should give up their recall rights, health insurance, and endanger their pensions and accept work as bartenders, while unemployed bartenders should get hired building airplanes.

This demand by Douglas County commissioners is as misguided as the Republican-controlled states that have already or are about to cut unemployment. Here’s why:

If the duration of the unemployment insurance benefit or the amount of the benefit was a factor in determining an employer’s ability to find workers, then one would expect that the historic increase in the current unemployment benefit amount would produce a historically large number of unemployed collecting benefits.

Yet both in Oregon and nationwide the unemployment rates for those receiving benefits are at or below normal levels. In fact, as the chart above displays, despite historically unprecedented high unemployment in Oregon during the benefit year for COVID-idled workers, the rate of unemployment of those collecting unemployment insurance remains well below normal levels.  The chart also shows that the number of Oregonians unemployed for longer than 15 weeks is also below normal levels for the given unemployment rate.

As of May the unemployment rate composed of those receiving benefits was 2.82%. This number pales in comparison with the decline in the state’s civilian labor force. From a high in May 1998, the labor force participation rate has dropped from 68.9% to 62.4%. This represents a disappearance in excess of 141,000 Oregon workers. Where did they go? Why are they no longer in the labor force? It is possible that many of them are working in some portion of the “gig” economy and thus could escape traditional labor-force participation measures. Possible for some, but unlikely for the majority of Oregonians because of the robustness of the data collection process and efforts specifically targeted at identifying the self-employed.

Another challenge to the “lazy” worker theory behind efforts to cut unemployment insurance benefits is the reality that in Oregon, the greatest job growth over the year has been in lower-wage sectors. If enhanced unemployment benefits were truly a barrier to job growth, then those sectors with the lowest wages should be the sectors with the least job growth, not the most job growth.

From April 2020 to April 2021, the sectors with the highest percentage of hiring in Oregon were the lower-wage Leisure and Hospitality sectors. Employment in these lower-wage sectors grew by 55.6%. That outpaces the higher-wage manufacturing sectors, which grew over the year only by 1.6%. Until a situation arises where jobs paying less than unemployment insurance are shrinking while jobs paying more are growing, it is impossible to defend the concept that unemployment insurance has created a significant financial disincentive to work.

The argument that unemployment insurance is a barrier to job growth fails when we consider the low rates of unemployed people who are actually receiving benefits along with the average lengths of longer-term duration of unemployment. And let’s not forget that employed workers contribute to unemployment insurance funds, along with their employers.


If, as seems to be the case, neither the level of unemployment insurance benefit nor the length of benefit is a primary driver for the claimed labor shortage, what could be?

There are a number of good explanations. One, as already suggested above, is a mismatch between the skills of unemployed workers and the skills sought by employers. As documented by the state’s senior labor market analyst, those who were most heavily displaced by the COVID restrictions were younger, less educated workers from industrial sectors that have fewer technical skill requirements. Given that these sectors were the hardest hit, it would be reasonable to assume that they would be the ones with the greatest hiring needs going forward. These workers are also less likely to have met the qualifications for unemployment insurance edibility at anything but the lowest payment levels.

Likewise, women were more likely to be idled than men. Prior to the pandemic, men were the largest group of workers covered by and receiving unemployment benefits. That was reversed a few months into the pandemic, and now women compose the largest group.

A primary driver for longer-term female unemployment, aside from the social and economic undervaluing of women’s contribution to the economy, is the ongoing lack of infrastructure for working parents. The lack of day care becomes critical when schools are closed. This represents a real obstacle not only in terms of parenting but also in terms of family safety. Hybrid school schedules with days or only afternoons off create havoc in the ability to be at work and at home simultaneously. Unless, of course, you are a remote qualified worker. Remote eligible work tends to offer higher wages and require higher education levels and also tends not to be the classifications where a labor shortage has been widely reported.

There is one other seldom discussed driver for an unemployed worker to refuse a job: If taking the job costs more than being unemployed.

If day-care costs, transportation costs, and food costs, for example, are marginally higher than the gain from wages, it could be impossible for a worker to afford to accept a job. Walmart and other businesses understand this, which is why for years they assisted their low-wage workers file for various social safety-net programs. In other words, a job that is subsidized by public assistance cannot be viewed as real if the public assistance is lowered or eliminated.

What seems clear is that the labor situation in the US today has more to do with the willingness,  rather than the ability, of employers to pay a living wage. Since about 1973, wages have not kept pace with worker productivity increases. This means a sizable surplus, created by workers, resides somewhere….perhaps in unjustified price/earnings ratios of stocks, or inflated CEO pay, or any of a number of speculative investment instruments.

Rather than target those on the bottom of the employment and wealth ladder perhaps it is time to distribute the wealth created by workers back to the workers who created it. It is easier to imagine a situation where living wage jobs have long lines of applicants than it is to believe that 141,000 Oregonians have left the labor market because of enhanced unemployment benefits for which they themselves are not even eligible. Perhaps it’s best to avoid flying in planes built by bartenders or drinking Old Fashioneds concocted by machinists.