Uncategorized · May 9, 2021 1

The Cynicism and Cruelty of Safety-Net Slashers

The Cynicism and Cruelty of Safety-Net Slashers

Marty Levine

May 9, 2021

In April, the US economy added only 266,000 new jobs, well below the 1 million that economists had predicted. This news was jumped on as proof that unemployed workers remain out of work because they are being coddled, that government programs make it too easy to stay home. For them, a disrupted economy still struggling to recover, the still ongoing pandemic or the shaky state of childcare and public education systems are just excuses. The villains in their story men and women and “socialist” Democrats who are using them to destroy our nation’s free market economy.

South Carolina Governor  Henry McMaster, in a letter to Biden Administration, spelled this out very clearly . “The labor shortage is being created in large part by the supplemental unemployment payments that the federal government provides claimants on top of their state unemployment benefits. In many instances, these payments are greater than the worker’s previous pay checks. What was intended to be short-term financial assistance for the vulnerable and displaced during the height of the pandemic has turned into a dangerous federal entitlement, incentivizing and paying workers to stay at home rather than encouraging them to return to the workplace.”

This is a position that is both cynical and cruel.

Those attacking workers and those who wish to support them, be it by expanded unemployment benefits or by increasing the minimum wage, are often rabid supporters of the power of the free market to cure all problems. They advocate for us to trust the market’s “silent hand” to fix all problems. For example, showing his belief in the power of the market to solve our educational chalelnges, Governor McMaster in the last few months has directed millions of dollars of COVID Relief funding toward shoring up both private and charter schools, important elements in the market-based approach to education.  

Yet, when it comes to workers, their seems to be little trust in the marketplace. If there are jobs going unfilled, the market, on its own, “knows” how to respond. “If the wage is free to adjust in response to market forces it will move to ‘We’,  {the level} where the demand for labour equals the supply. When the wage is above ‘We’,  more labour will be presented for employment than firms in the industry can profitably hire. It will pay workers to lower their wages to obtain employment in the industry. And when the wage is below ‘We’,  firms will find it profitable to hire more labour than is presenting itself for employment. They will offer a higher wage to obtain additional workers.

Under this framework, the huge bonuses paid out to bankers and traders during the 2007-8 Great Recession were justified. Under this framework, the enormous and fast-growing salaries of corporate executives, even in the face of a growing wealth gap, have been justified. Under this framework, less than living wages have been justified.

Yet at this moment, when workers are thought to be in demand, critics of an effective social safety net have shed their belief in the marketplace’s omniscience. 

That is the cynicism of this moment. That cynicism makes for heated political debate. The cruelty of the argument makes for more human pain and suffering.

The estimated living wage, “the minimum income necessary for a worker to meet their basic needs…{including}…housing, food, healthcare, and other essential needs”, for South Carolina is $47,000. South Carolina’s base level of unemployment benefits was only $326/week, equivalent to an annual salary of $16,952. The extra $300/week that is the maximum amount of emergency support included in the latest round of COVID relief efforts would give an unemployed worker an annual salary of $32,550 (equivalent to a job paying $15.65/hr!  

Arkansas has also moved to take away any additional support to their unemployed residents. With an estimated living wage of $45,000, an unemployed worker receiving the maximum benefit still fell short of that benchmark, receiving the equivalent of $39,052/yr or $18.76/hr. Taking away the additional payment of $300 will reduce that worker to living on just $23,452 ($11.28/hr.)

A third state that is leading the parade to take benefits away from the unemployed is Montana. With expanded benefits, an unemployed worker would be receiving the equivalent of $44,304/ year, close but still short of the state’s estimated living wage of $47,000. Take away that additional benefit and that worker is reduced making do with $552/week ($28,704 or $13.80/hr).

In explaining his decision, Montana Governor Greg Gianfort ignored the market as the solution for businesses in his state needing to hire. As reported by NBC News,he said that “the extra federal unemployment benefits are ‘doing more harm than good,’ echoing comments by some that the extra payments have served as an incentive for people to stay home, collect the money and not seek work.” Not a word about the pain and suffering that his action might cause, just a stick to beat workers back to jobs that do not pay a living wage.

The issues we need to be facing are deeper and more complicated, they are issues that were there well before COVID-19 hit us.

What do we do with an economy that cannot produce enough well-paying jobs? A manager of a Pizza Hut in Arkansas explained to  MSN.com the business challenge he was facing. “He had to cut his staff in half during the height of pandemic and now he’s struggling to find people to work. ‘We’ve even had to close Sundays because we can’t find people to work the weekend. It is hard to convince somebody who is making ends meet even if only barely to start working full time and only make a few hundred dollars more a month.’”

A business model in which labor is the one element that must buffer the costs of other “inputs” is not one we should be looking away from and ignoring. This is a sign of an economy that is failing its society. In a rich nation, it is a sign of something very wrong.

In this moment when so many of the issues that we have chosen to ignore have been forced into the open we cannot afford to just hide our heads in the sand and wait until they go away. Our families, friends and neighbors are among those whose pain we ignore when we choose to look away.

If there is a problem filling lower-paying jobs, let us be willing to recognize the need for more systemic changes. We need to be willing to recognize that workers and businesses have needs and that when they cannot both be met workers are not to blame. We need to recognize that when the economy cannot ensure that basic human needs are met for us all it is a shared problem requiring a collective action. And that when this occurs when wealth is being hoarded, we need to be ready to discuss how to begin to redistribute it.  Not easy discussion, but ones we must have and now.