Indiana governor cut unemployment benefits as residents refuse to apply for low-paying jobs
INDIANAPOLIS – Angela Linker lost her low-wage job at the start of the pandemic, relied on unemployment benefits as she looked after her daughter and grandson and now is reconsidering her work options.
After eight years at a job that didn't pay enough for her to afford child care without government assistance, the Fort Wayne, Indiana, woman isready for something better.
Many workers, like Linker, were forced to the sidelines during the pandemic and are reconsidering what kind of job they want to do, potentially driving a temporary worker shortage in low-wage jobs throughout Indiana and the country.
Linker, 45, had hoped enhanced federal benefits would last until September, when her children are back at school. But Indiana Gov. Eric Holcomb followed the lead of other Republican-led states and announced this week that Indiana will stop participating in the federal unemployment program June 19, a move that is intended to fill jobs across Indiana.
"I seriously have to budget big time," Linker said.
As customers return and business restrictions loosen, some managers are having trouble filling jobs. While workers and their advocates say businesses need to raise pay and benefits to fill jobs, Holcomb and business owners are banking the cut in federal benefits and the requirement to search for work while receiving unemployment to drive workers back.
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“Eliminating these pandemic programs will not be a silver bullet for employers to find employees, but we currently have about 116,000 available jobs in the state that need filled now,” Holcomb said in a statement.
It's a big gamble to turn down hundreds of millions in federal aid in hopes that the decision will drive people back to work. Economists are skeptical of the move because there are so many reasons people may be waiting to return to work, including retiring early, choosing to take care of kids and family or just, as is the case with Linker, reconsidering careers.
"This whole idea that all that's going on people are sitting at home and collecting UI instead of working kind of misses the story," said Kyle Anderson, an economist at Indiana University's Kelley School of Business.
The fact that workers are taking time to think about what kind of jobs they want after a pandemic should not be a surprise, he said.
Holcomb should have waited to see if other states saw workers come back after cutting benefits before making the decision, said Michael Hicks, an economist at Ball State University in Muncie, Indiana.
Many of the new jobs created are in low-wage industries and the data has yet to show a significant and sustained spike in hiring, he said.
Businesses can't find enough staff
Even as the vaccinations and lower infection rates drive optimism for a rebound in the economy, some business owners say they've had trouble hiring. Many recognize that people may not be returning to work for a myriad of reasons, including child care, health concerns, changing careers, retiring early or prioritizing family over work as the result of a deadly pandemic that forced everyone to rethink their lives.
Slippery Noodle Inn has kept parts of its space closed because there isn't enough staff. The restaurant is getting less than five applications a month, compared to at least 10 before the pandemic, said Sara Etherington, the office manager at Slippery Noodle.
"A lot of our staff got different jobs during COVID-19, most of them found jobs with benefits," she said. "That's the big downfall with the service industry. They don't offer insurance and benefits along those lines."
Others didn't come back because of health concerns, including one person who's caring for someone who's at high-risk of getting seriously sick with COVID-19.
Plus, working in the service industry can be grueling, especially during the pandemic when people are either mad at the safety requirements or mad that the requirements are not enforced strictly. Businesses have been shut down or overwhelmed with customers during large events with limited staff.
"Even with the vaccinations, the service industry is getting dumped on," she said. "We're under the microscope."
Patrick Tamm, the president of Indiana Restaurant and Lodging Association, said the hiring troubles aren't just in the retail industry. He's hearing the same stories from manufacturing, agriculture, auto manufacturing and small businesses.
"We have job fairs (and) no one shows," he said.
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But the shortage isn't bad, said Anderson, the Indiana University economist.
"A lot of folks are looking at this as a negative thing. Businesses can't hire," he said." But what it really means to an economist is that the shortage just means the price is just too low. What it means is businesses are going to have to pay higher wages and that's not a bad thing."
Linker hopes to get a higher paying job at a school in the fall.
But she has thought about going to work a job at a retail place like Walmart to get by in the meantime, but then she'd have to be subject to changing schedules that make it impossible to plan for child care.
Child care has been especially hard as schools send kids home if they've been exposed to COVID-19 or are sick and the summer break is fast approaching.
She had hoped to have unemployment through the summer, before school starts up again and infection rates will be low enough that her kids won't be sent home.
But she won't have that time to figure it out.
"The government wants us to figure it out no matter what," she said. "If I didn't have kids, I wouldn't care. I'd find a different job."
Feeling forced to change careers
The push by some states to end extended unemployment benefits is impacting another class of worker that's still struggling during the pandemic.
Jonathan Brigden, 37, is a self-employed carpenter and he says he can't find work in Hobart, a steel town in northwest Indiana outside Chicago.
He's among about 120,000 Indiana residents who have been on a program that makes self-employed workers eligible for unemployment benefits.
That program is ending soon, and Brigden says there's no work to be found where he lives. He said the price of lumber has been driving up the cost of doing business higher than his customers can afford.
He had hoped to wait out this pandemic-driven market supply shortage. Now, he's going to have to find a new career.
"I shouldn't be forced to retrain for a new job," he said.
He chose to start his own business building decks because he likes picking his own hours. The flexibility allows him to be there for his daughter when he needs to be.
Like others, he had hoped he return to his job when the economy settles down, customers return and businesses can operate normally.
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He wants to stay in carpentry, but he also worries that he'll have a hard time finding a job when the benefits end. He hasn't had experience working for a company in more than a decade.
"I'm just really stressed out," he said. "I don't know what I'm going to do."
Some businesses are paying more
Some businesses are paying more for workers and finding success.
Businesses looking to fill spots are offering bonuses and incentives to compete for workers.
It's hard to tell if the trouble filling low-wage jobs is a temporary phenomenon or a long-term shift in the labor market.
If it's long-term and the number of people working is consistently smaller, then businesses will have to offer up more pay and benefits and may also have to shift to automation, Ball State's Hicks said. There may be fewer jobs, but those jobs will be higher quality.
But the decision to work is not just about money, it's about people's priorities in life shifting away from work.
"Fact is no (Indiana resident) with extended family has not been touched by this virus or passed away," he said. "In times like that, one would value work and leisure differently. It would be shocking if it didn't change the way people thought about work and family. It would be stunning."
Follow Binghui Huang on Twitter @Binghuihuang.