With millions more vacant positions than job applicants, a severe labor shortage continues to hamper the economy. Millions of individuals continue to be unemployed, and the labor force participation rate is much lower than it was before the pandemic. Why are there so many unemployed potential employees when there are open positions?
According to a recent research, the astonishingly inflated welfare state of America provides one answer. Conservative economists Stephen Moore, E.J. Antoni, and Casey Mulligan of the Committee to Unleash Prosperity examined what social benefits, such as unemployment and healthcare subsidies, a typical four-person family with two nonworking adults could get nationwide.
They discovered that, as a result of various government initiatives, this typical family may make the equivalent of more than $100,000 per year in three states—Washington, New Jersey, and Massachusetts—without having to work.
In 14 states, however, the benefits are at least as high as an annual income of $80,000. According to the survey, welfare is more lucrative in these states than the average work of a secondary school teacher or electrician. In 24 states, receiving welfare pays more than what a firefighter, truck driver, or machinist would typically make.
Does that seem like a system that rewards the proper behaviors?
The labor shortage is probably caused by a variety of issues, but this has to be one of them. People react to incentives, which is the most fundamental lesson in economics. And when opportunities arise to earn above-average earnings without working, many individuals will select those over slaving away to make a pitiful living. Lower employment, slower economic growth, and a lack of dignity for individuals who have been encouraged out of work are the unavoidable consequences.
You are not required to believe me.
Why so many millions of Americans have not returned to the workforce in the post-Covid period is a crucial policy concern at the moment that has baffled federal politicians, write the study’s authors. More than three million workers in the United States who are of working age and who could be employed but do not do so because of Covid. This study demonstrates that the high benefits given to families who are not employed are one element in the lack of workers.
The lesson here is obvious. We must change our social expenditure programs to once again reward labor instead of welfare if we want our economy to fully recover from the COVID-19 pandemic and take off.
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