Baton Rouge Area Chamber: Why Ending Enhanced Unemployment Is The Logical Choice

Press release from the Baton Rouge Area Chamber:

June 14, 2021

The thrust of these talking points is that a combination of three things outside of the enhancement are to blame: low wages for the jobs available, a lack of childcare options, and lingering fear over COVID – but relevant data shows that these theories don’t hold water. In terms of pay, the median advertised wage for open jobs in the Baton Rouge metro area is $22.00 per hour. That means half of all available jobs offer more than that in compensation, which is already significantly higher than the median individual wage in the region and state. In terms of childcare, working parents in the region may actually be better positioned now than they were before the pandemic – data from the state Department of Education shows that there are two more childcare centers in operation now than in February 2020, which equates to increased capacity of 514 more seats. As for the idea that residents are still concerned about COVID, vaccines have been available to all adults for more than two months, with more than 50 sites actively administering doses within five miles of the core of the metro area. The relatively low uptake for the region compared to national rates of inoculation make it clear that the pandemic is no longer a concern to a meaningful part of the regional population.

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So what’s left to blame for the unwillingness to return to work? The enhanced unemployment benefit from the federal government. Federal enhancement was necessary and good when the government mandated the shutdown of the economy, making it impossible for many to earn a living and pay bills. But with all restrictions lifted, that’s no longer the case. In fact, we have many more open jobs than unemployed residents at this point. The enhancement has now distorted the labor market, and gives residents a perverse incentive to avoid returning to work until the enhancement expires in September. As the chart below illustrates, in the current environment, as the demand for more employees continues to rise, the number of people on unemployment remains consistently high.

The good news is that Louisiana is at the precipice of the solution, which half of all states have already adopted – declining the federal enhancement, since the rationale behind it no longer exists. Every state in the Southeast outside of Louisiana has set a date in June or July for the enhancement to sunset, including high-tourism states like Florida, Georgia, and Texas. Enabling businesses to compete with other businesses for talent rather than an enhanced entitlement program with no work requirement is the next big step in right-sizing the regional and state economies. With the stroke of a pen, the governor can make that happen, and BRAC urges him to do so.

This press release was produced by the Baton Rouge Area Chamber. The views expressed here are the author’s own.