May 12, 2021
A small group of state governors have announced that their states may abandon the supplemental unemployment program way before its September expiration. The number of Republican governors making the announcement is now up to eight states: Tennessee, Iowa, North Dakota, Mississippi, Alabama, Arkansas, South Carolina, and Montana. Much of this hoopla was triggered by a jobs report that indicated companies were still seeking workers and fewer jobs were being created and filled than economists had expected. The red-state tactic was to claim the $300 supplemental benefits were too rich and workers were having a holiday on the extra dime. President Biden has said, poppycock to that, indicating that there is no data to support their claim. Other commentators are questioning whether virus fear or low wages on offer are the problem.
I listened to Arkansas Governor Asa Hutchinson try to make the case for stopping benefits on NPR. In a nutshell, his argument was basically, “it’s the right thing to do.” He claimed businesses of all sizes were hounding him to end the supplement, and he avoided questions about virus and wages. His arguments were ideological and individualistic. When asked why the state’s vaccination rate was so low, he ignored the question and said the shots were available and people, essentially, needed to get off their butts and go get them. Businesses and the state government had no responsibilities there in his telling. On wages, he tried to parry that even high paid jobs were not being filled.
Weirdly, Hutchinson and Arkansas might have been the only state on this list who could have made a different case, because the minimum wage is now $11 per hour in Arkansas. The rest of this states in this holler fest all stick firmly with the frozen federal minimum wage of $7.25 per hour, other than Montana paying the princely sum of $8.75 per hour now.
If we look at these states and their average weekly unemployment payment plus the supplement compared to the minimum wage rate in the states, it’s not a good look:
STATE AVG WK UI +$300 BIDEN PAY WK MIN WAGE DIFF +/-
Alabama $249.76 $549.76 $290 -$259.76
Arkansas $219.86 $519.86 $440 -$ 79.86
Iowa $327.79 $627.79 $290 -$337.79
Mississippi $192.03 $492.03 $290 -$202.03
Montana $341.37 $641.37 $350 -$291.37
North Dakota $406.57 $706.57 $290 -$416.57
South Carolina $246.60 $546.60 $290 -$256.60
Tennessee $269.06 $569.06 $290 -$279.06
Remember that where the average weekly unemployment is higher, it is based on the amount workers were paying into the insurance system along with their employers. The state is just the processing body on unemployment insurance. In Montana and North Dakota, mining and the oil fields ups the numbers. Nonetheless almost anyway you flip the coin a worker would make between $800 and more than $1600 per month more than they would make, if they took a job at the state’s minimum wage in the service industry. Hutchinson is probably embarrassed that Arkansas voters overwhelming passed an initiative several years ago raising the minimum wage to I’m sure what he believes is the atmospheric level at $11 per hour, but his argument falls away on any level other than ideology, since even with the Biden $300 bump, workers would only make about an extra $320 in a month. That’s not nothing, but it’s a long way from the case he wants to make. For the rest of these states, other than Montana, perhaps they are paying the price for joining Congress in freezing the minimum wage for the last dozen years.
Two things might be going on here. First, all of these governors are hedging their bets. Most are glad to get the press now as anti-Biden, but they aren’t ending the benefits until the end of June almost six weeks from now. Secondly, workers can add. The job has to be way more than minimum wage for most to want to leave unemployment. The right thing for them to do in their calculation is likely to make more money now until they find something with an appropriate wage, and until then, just maybe the pandemic has brought us the first national unemployed workers’ strike we’ve seen in the United States.
Check out Len Mizzoni’s new single “I Can’t Breathe,” courtesy of KABF radio: