Actually, Not Coercing People to Work Is a Good Thing
There's a lot of talk these days about labor shortages and workers unwilling to work because unemployment benefits are too high. Ignore the hand-wringing: it's a very good thing if workers have the freedom to say no to low-paying, dehumanizing jobs.
Many pundits are calling for cuts to unemployment benefits on the theory that they are to blame for lackluster payroll growth. (OLIVIER DOULIERY/AFP via Getty Images)
Last week’s employment situation report showed that employer payrolls increased by 266,000 people on a seasonally adjusted basis. This number was lower than many people expected, and, in response, many pundits began calling for cuts to unemployment benefits on the theory that they are to blame for the lackluster payroll growth.
Weak Support for Conclusion
As I indicated last week, these pundit conclusions don’t actually follow from this data. The question of whether, and by how much, unemployment benefits are reducing the number of people willing to accept work is a question of employment flows, not employment levels.
Net job growth can be lower than expected because fewer out-of-work people are taking jobs or because more in-work people are losing jobs. But only the former may indicate that unemployment benefits are reducing the number of people willing to accept work, and, when we look only at that figure, we see that the number of people who newly found employment actually went up from 6.464 million in March to 6.9 million in April. The lackluster net job growth in April was driven not by people staying on unemployment but rather women leaving their jobs and exiting the labor force altogether.
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