SADOW: Louisiana Needs To Stop Paying People Not To Work

Louisiana needs to join the job stimulation party, and Democrat Gov. John Bel Edwards needs to get with that program – even if forced to by the Legislature.

Over the past few days, state after state has announced ends before their expiration date of expanded Wuhan coronavirus pandemic unemployment payments, backed by economic data demonstrating not only have these long outlived their usefulness, but also have short- and long-term harmful effects. The federal government, whipped into doing so by Democrat Pres. Joe Biden through narrow party-line votes in Congress, in March extended through Sep. 30 $300 per week payments to people not working; states pay only the administrative costs.

Part of the reason, if not the most influential explanation for, why the latest economic numbers show rising wages, rising unemployment, rising inflation, and relatively few jobs created is these extra payments – which on top of existing payments which vary from state to state average $638 a week with the maximum in Louisiana more than doubled to $547 weekly – discourage work. Keep in mind this means in the state  $14.22 an hour for not working.

Besides the national data, plenty of anecdotal evidence exists in Louisiana that employers can’t find people willing to work. So much of that has become communicated to the state chapter of the National Federation of Independent Businesses, a small business interest group, that it has called on the state to follow the lead of others in stopping the additional payouts early.

Other reasons also contribute to the labor shortage, but most also come as a consequence of inferior government policy. Perhaps most prominently, child care may hold back mostly women from entering the labor force, but that’s almost exclusively a product of inane continuing to keep schools closed to in-person learning that more enlightened states have corrected in entirety. While having a higher proportion of students in classrooms due to lesser union presence, Louisiana districts for the summer and henceforth should ditch mandated virtual learning completely.

One bogus reason, sniffed from the political left, is that employers should pay higher wages. Not only does this ignore the fact it’s already happening – payrolls increased 15 percent – but entirely misunderstands how the world really works. Raise the price of labor too high and you can’t stay open – and the price is artificially too high precisely because government is subsidizing idleness, continuing an economic crisis caused all along not by weakness in demand but by government-imposed supply constraints. It’s the same old story: expanding government’s reach to create a problem and then suggest the solution, rather than backtracking, as expanding government more.

A fan of big government and growing transfer payments, Edwards won’t willingly do the right thing. Fortunately, the Legislature has the opportunity to prod him into it, or even go around him. Several bills either in or headed to the House Labor and Industrial Relations Committee would tweak state unemployment payment policy to keep payouts higher or employer/employee contributions to those lower or shift reporting requirements (Edwards did restore job search requirements, which almost half of states have done).

The panel should amend one or more of these bills to mandate dropping extended unemployment payout no later than the end of June. Assuming passage by both chambers, Edwards then is left with signing that into law or vetoing the entire thing, thus triggering things like lower benefits and higher contributions. Perhaps better, resolutions suspending those things with the termination added, wouldn’t go to the governor, bypassing his opposition completely.

If policy-makers truly want to kickstart Louisiana’s inordinately pandemic-vulnerable economy, they’ll remove disincentives to having a reliable labor force by stopping unneeded taxpayer-fueled transfer payments to those not working.

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