On Monday, Mississippi Governor Tate Reeves, who can’t resist any opportunity to punish the poor, announced the state will end federal pandemic subsidies for unemployed people in the state in June, ending the $300 per week federal supplements because he believes that the funds have created a disincentive for work.
For weeks now, employers have lamented the scarcity of available workers. The narrative is that people would rather stay home and live on the government dime than take a job that, in many cases, would actually reduce their income. Mississippi’s regular unemployment, which peaks at $235 per week, will continue as long as people can prove they are actively looking for work.
On its surface, it’s a strong argument.
After all, who can justify the notion that “the world owes you a living?” Nothing angers a person more than the idea that someone else is getting something for nothing, although when you ask them what they have done to deserve, say, a homestead exemption, they generally change the subject.
Still people everywhere largely agree that able-bodied adults should work and make their own way. Those who can work, but choose not to, should bear the consequences of that decision.
The problem with that line of reasoning is that it tilts the playing field enormously to one side — the side of the employer.
Consider that an unemployed person relying solely on the state’s unemployment benefits (which, by the way, is among the lowest in the nation), brings home, at the most, $940 per month. That’s $9,580 per year, about 75 percent of the federal poverty rate. With the extra federal money, that person is bringing home about $25,000.
So let’s be clear about one thing: There are people getting rich on the government dime; it’s just not the people getting these enhanced unemployment benefits.
With Reeves’ decision Monday, all the leverage in Mississippi reverts again to the employer since nobody can live long on less than $10,000 per year.
Whatever else may be said of the federal unemployment subsidies, for the first time since World War II it created an environment in which labor had some real broad-scale bargaining power. That’s virtually unheard of in Mississippi, where state opposition to labor unions is palpable, even vicious.
Now, like the sharecroppers of an earlier generation, there are thousands of Mississippians who will be compelled to take jobs where they make just enough to survive, but not enough to escape the reality of being among the working poor.
Much of this is a function of a refusal to raise the minimum wage, which hasn’t seen an increase in 11 years. Adjusted for inflation, today’s federal minimum wage should be about $24 per hour, according to research by The Center for Economic Policy.
So what we are seeing in this shortage of available workers may not be entirely a function of people being content to live off the government. The pandemic that started providing additional funds to the unemployed may also be a catalyst for a major adjustment — call it a course correction — in the relationship between employer and employee.
The argument against raising wages is that it always leads to job cuts and inflation and, therefore, hurts everyone. History supports that, but only to a degree. The negatives are almost always short-lived. The benefits, over time, have far outweighed the costs.
Why? Because costs of running a business are numerous and as those costs go up, business adapts to the new reality. When fuel prices go up, for example, a trucking company doesn’t just throw in the towel. It adjusts and adapts, mindful that not all costs can simply be passed along to the consumer.
Often, they are forced to be innovative to address those higher costs, which isn’t a bad thing.
Why is it, then, that virtually the only cost of doing business that cannot be adapted to or absorbed is the cost of labor? It’s often because it’s the only cost employers have almost total control over.
Federal unemployment subsidies are scheduled to end in September. For people in states where those subsidies aren’t being taken away, the extra money may help them make the ground under their feet a little more secure. It may make their lives a little less precarious. If it does that’s a good and humane use of tax dollars.
In the meantime, employers who are desperate to hire employees have the power to negotiate wages, they just don’t have unlimited power to arbitrarily determine what a fair wage actually is.
Our governor has no issues when people have to compete for jobs.
But when the shoe is on the other foot? Well, it’s time to put a thumb on the scales.
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
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