Gov. Larry Hogan has joined a large group of mostly Republican governors in announcing that he will discontinue enhanced federal pandemic unemployment benefits in July rather than continue participating in the program until it expires in September.
For more than a year, since the coronavirus pandemic began, the federal government has been supplementing state unemployment benefits with an additional $300 a week. Since the maximum benefit in Maryland is $430 a week, the additional money was a big boost.
Millions of Americans had been thrown out of work through no fault of their own, and the aid was desperately needed. Jobs were scarce, and the prospect of finding work was dim. But Hogan argues that times have changed, and Maryland must change with them.
“While these federal programs provided important temporary relief, vaccines and jobs are now in good supply,” Hogan said. “And we have a critical problem where businesses across our state are trying to hire more people, but many are facing severe worker shortages.”
Democratic leaders, unsurprisingly, disagreed. Eric Luedtke, the Democratic majority leader in the House of Delegates, told the Baltimore Sun: ”I don’t think we have a labor shortage. We have a low-wage labor shortage. There are plenty of workers if you pay a decent wage.”
The most recent numbers from the U.S. Department of Labor do show the number of jobs growing in Maryland, but the state unemployment rate at the end of April, the last month for which we have a report, was 6.2 percent, the same as it had been for the two previous months. The question is: Are some of those people unemployed by choice?
A good synopsis of the dispute was provided by Rick Weldon, CEO of the Frederick County Chamber of Commerce.
“Republicans say it’s because we’re paying elevated, enhanced unemployment benefits. And the Democrats all say it’s because wage rates are too low,” Weldon told News-Post reporter Erika Riley. “The truth is both of those things are probably part of the problem.”
Any employer who is not offering to pay $700 a week will have a hard time attracting applicants if they are collecting that much in unemployment benefits. But for many businesses, paying that high a wage will not work economically.
A business cannot simply decide to charge its customers a higher price so it can pay higher wages. If it loses customers because prices get too high, the owner will not have the money to pay higher wages.
In addition to cutting the benefits, Hogan also announced that the state would require unemployment benefit recipients to again demonstrate they are actively looking for work to keep receiving assistance. That rule was suspended during the pandemic, when it was unsafe for applicants to go to employers.
Taken together, the job search requirement and the loss of enhanced benefits will certainly encourage, or perhaps more accurately compel, many back into the job market. We know the transition will not come without hardship for many who have been cushioned by the enhanced benefits; no shift of this magnitude can protect everyone. But people who are working now cannot keep subsidizing $700-a-week payments indefinitely, either. At least jobseekers should find employers willing to pay slightly better wages, with pay and incentives rising rapidly around the country. And the influx of workers should help the economy grow.
Of course, for many who lost jobs during the pandemic, the biggest obstacle to returning to work has been not having access to decent child care. The pandemic has made starkly clear how essential our system of schools and child care centers are in making it possible for parents to participate fully in the job market.
So here’s our challenge for the governor: We understand that enhanced benefits can’t continue forever. But let’s seize the moment to put some of that money being saved toward shoring up our state’s scattershot child care network. We’ve seen how vital child care is to our economy, now let’s build an economy that works for families by investing in work-supportive child care for all.