My only criticism of Texas Governor Greg Abbott’s decision to opt out of the $300-per-week federal unemployment benefits—which is in addition to each state’s regular unemployment benefits—is: What took so long?
Normally, Texas is at the forefront of such efforts to end federal overreach and attempts to ladle out largess. But in this case, Montana took the initial step on May 5, and nearly 20 other states quickly followed: Alabama, Alaska, Arizona, Arkansas, Georgia, Idaho, Iowa, Mississippi, Missouri, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Utah, West Virginia, Wyoming.
And now Texas.
To be sure, there are some differences. Some states are ending the $300-per-week federal unemployment benefits in June and others in July. Those benefits are slated to cease at the end of September, but many Democrats want them extended—perhaps permanently.
The astute reader may have noticed that the states unilaterally ending the federal unemployment benefits are all Republican-led. That’s not a coincidence; it’s rooted in a fundamental philosophical difference.
Generally speaking, conservatives and libertarians believe if you tax something you get less of it; if you subsidize something you get more of it—and the $300-per-week federal benefit is essentially an unemployment subsidy.
The left denies both premises.
Here’s President Joe Biden’s recent response to the claim that generous unemployment benefits are one of the primary reasons for labor shortages seen across the country. “The line has been because of the generous unemployment benefits, that it’s a major factor in labor shortages. Americans want to work. … I think the people claiming Americans won’t work even if they find a good and fair opportunity underestimate the American people.”
That’s a mischaracterization of what is being claimed.
State unemployment benefits vary, but in general, unless someone can command wages of between $32,000 and $36,000, that person is better off staying on the combined state and federal unemployment benefits. Plus, the unemployed individual would likely qualify for taxpayer-subsidized Obamacare.
Sure, many unemployed people want to work. And fortunately, there are businesses across the country pleading—begging—for workers.
But people also know when they are better off financially not working than working—especially if they can't find the specific job or wages they prefer. And the federally enhanced unemployment benefits make that possible for millions of unemployed.
Although the opt-out states are only ending the benefits a few months early—making comparisons difficult—we may see their workforce participation rising, unemployment rate fall, and their economies returning to normal more quickly than those states that don’t.
Even if that happens, don’t expect the results to sway the left’s philosophical stance. There are decades of data to support the conservative view mentioned above, and that has never convinced the left of their error.
May 18, 2021