More on the $600 add-on to unemployment benefits

Our labor-secretary-in-exile weighs in.

Andy Puzder, who was Donald Trump’s initial nominee for labor secretary (click here to read why he withdrew), and who ever since has presented himself on cable news and op-ed pages as a sort of labor-secretary-in-exile, published an op-ed yesterday in the Washington Post urging Congress not to extend its Covid-driven $600 weekly addition to unemployment benefits past its expiration date at the end of this month.

Puzder cited as Exhibit A in his argument a report by the National Federation of Independent Businesses that said in June “32 percent of all owners reported job openings they could not fill.”

Let’s unpack that, as the kids say.

The first thing to note is that only 51 percent of all owners surveyed reported trying to hire anybody in June. That means nearly half did not try. The reason, of course, is that we are in the middle of a pandemic that is getting worse. Going to work was, and remains, a life-threatening proposition. Business owners know that, and workers know that, too. That’s going to have some impact on the labor market! Puzder doesn’t consider this.

Thirty-two percent of small business owners “reported job openings they could not fill” (which means 68 percent either weren’t hiring at all or were able to fill all their vacancies just fine during the month of June). That’s a nine-point increase over May. But click over to the full NFIB report and you’ll find a chart (reprinted below) that provides the bigger picture, which is that the Covid lockdown has made hiring people easier than it’s been since 2016. That’s not too surprising when you remember that unemployment, though falling, remains above 11 percent.

The economic recovery that began in 2009 gradually tightened up the labor market, and as recently as six or seven months ago the percentage of small business owners who “reported job openings they could not fill” was not 32 percent, but nearly 40 percent. A $600 sweetener to unemployment benefits during a deadly pandemic isn’t nearly so great a threat to small-business hiring as a tight labor market.

If the $600 add-on to unemployment benefits presented as formidable an obstacle as Puzder would have you believe, then you would have seen more small business owners increasing wages. Going back to work during a pandemic—that’s gotta be worth something, right? But take a look at this:

The proportion of small-business owners who raised wages in June (14 percent) was unchanged from May. The proportion who said they’re going to raise wages (13 percent) was up a mere three percentage points. As recently as six or seven months ago, the proportion of employers who raised wages was more than 35 percent, and the proportion who planned to raise wages (most of them probably didn’t because of Covid) was nearly 25 percent. (And I should point out that, compared to earlier recoveries, wage growth during the decade-long recovery that just ended was comparatively sluggish.)

The paucity of small-business employers who raised wages in May and June jibes with a survey conducted by the left-leaning Economic Policy Institute in mid-June that found fewer than one-third of all front-line workers who continued interacting with the public through the pandemic received hazard pay.

“It isn’t complicated,” Puzder writes in his op-ed. “If you pay people more to stay home than to work, fewer people will work. That’s understandable: Taking a job becomes unaffordable.”

But if Puzder is so bent out of shape that people aren’t paid enough to work, why doesn’t he support raising the minimum wage? He opposed raising it to $10.10 when President Barack Obama proposed that, much less the $15 proposed by Democrats and labor unions today.

“The U.S. economy and workers’ wages will grow,” Puzder concludes, “only when business owners are once again competing with each other for employees, rather than with government largesse that can make staying home, out of work, a better financial proposition.” But even if we grant—which I don’t—that “government largesse” and not fear of contracting Covid is what’s keeping people from going back to work, the data cited above show that a $600 hike in unemployment benefits, or Covid, or whatever other reason you might care to cite, is a less formidable competitor for labor than other business owners were mere months ago.

It’s ridiculous to suggest that “government largesse” is what’s holding back economic growth. The U.S. economy won’t grow significantly until a pandemic that Puzder can barely bring himself to acknowledge is finally brought under control. We are a very long way right from that right now.

Update, July 7: I talked about all this today on the Rick Ungar Show (radio).