I was disappointed to see that Gov. Jim Justice plans to cut unemployment insurance benefits on June 19 while the state and nation are still recovering from the COVID-19 pandemic and its economic aftershocks.
Specifically, he plans to end the federal $300 weekly supplement to benefits that were part of the American Rescue Plan, presumably because people receiving the benefit are “scamming the system.”
Under the Rescue Plan, the supplemental benefits would expire on Sept. 6 in any case.
The cuts would impact around 42,000 West Virginians, including 18,000 or so self-employed or contract workers who have lost work due to the pandemic. It would mean a loss to the state’s economy of $12.6 million per week.
When you multiply that by 12, the number of weeks between the state and federal deadlines, that means a loss of over $151 million to West Virginia’s economy. That amounts to losing the equivalent of 3,775 jobs paying $40,000 for a year.
The infusion of pandemic-related boosts to unemployment insurance and the spending they allowed have saved millions of jobs, kept businesses open, boosted GDP (gross domestic product), increased personal income, kept people in their homes and saved countless families from disaster. As of May 15, Federal Pandemic Unemployment Compensation has brought more that $1.2 billion to West Virginia alone.
When the cuts come, unemployment benefits will drop back to their normal level of replacing around 40% of income from the lost job. Losing that much income is tough any time, but at least a delay until September would give the economy more time to recover.
This is another example of a curious double standard in which nobody in power bats an eye over corporate giveaways or tax cuts for the rich that create no jobs or lowering severance taxes on out of state companies, but cows are had when benefits to ordinary people seem too generous.
The snarky writer H.L. Mencken once defined Puritanism as “the haunting fear that someone, somewhere, may be happy.” What we’re dealing with here is the haunting fear that somewhere, somehow a peasant might catch a break. Otherwise, how could the merry race to the bottom for working people continue?
No wonder groups like the U.S. Chamber of Commerce are pushing to end the benefits; they want to pay people as little as possible.
I don’t make a cult of our current economic system, but there is a simple market-based solution to the problem if people are concerned about a labor shortage: it’s the supply and demand thing.
In a market system, when demand for a commodity is higher than the supply the remedy is simple: increase the price. That sends a signal that prompts others to bring more of the commodity to the marketplace, ending the shortage.
Like it or not, in a capitalist economy, labor power is a commodity and a higher price for it means higher wages.
In recent decades, corporate profits as a share of GDP have dramatically increased. So has the income and wealth of the most affluent. So has productivity. The same can’t be said of workers’ wages.
As David Leonhardt recently wrote in the New York Times, “If anything, wages today are historically low. They have been growing slowly for decades for every income group other than the affluent. As a share of gross domestic product, worker compensation is lower than at any point in the second half of the 20th century.”
This is especially true of West Virginia, where median income is nearly the lowest in the nation.
The problem, Leonhardt argues, is that in recent years we’ve come to accept low wages as the norm. Maybe that’s what needs to change.
(This first appeared as an op-ed in the Charleston Gazette-Mail.)