As the economy has been growing rapidly and thousands of jobs have gone unfilled, the federal government has been paying New Hampshire to pay people not to work. Gov. Chris Sununu announced on May 18 that New Hampshire will no longer participate in this counterproductive program as of June 19, but instead will begin paying the unemployed to find jobs.
Had an unforeseen catastrophe wiped out employers en masse and permanently erased thousands of jobs, a case could be made for raising and extending aid to the unemployed. But that didn’t happen.
The economy took a serious hit last March and April, but the economy has been recovering, with accompanying job growth, since last May.
New Hampshire now has more than 30,000 job openings, an amount comparable to the number of openings before the pandemic. Instead of a shortage of jobs, the state has a severe shortage of people looking for work.
As we wrote before the governor made his announcement, there appear to be three primary factors contributing to the state’s labor force shortage this spring. One is that thousands of people remain afraid of catching COVID-19. Another is the switch to remote and hybrid schooling, which has caused some parents, particularly mothers, to drop out of the workforce. The other is the additional federal unemployment benefits.
The $300 in additional unemployment benefits (previously $600) was money added to existing unemployment benefits. In addition to receiving this extra federal money, unemployed Granite Staters have had their benefits extended.
Under state law, benefits run out after 26 weeks. To accommodate what was expected to be a prolonged recession, benefits have been extended for more than twice as long as would otherwise be allowed.
The average weekly unemployment benefit in New Hampshire this April was $277. The state’s maximum weekly benefit is $427. The additional $300 a week brings the average benefit to $577 and the maximum to $727.
For a 40-hour work week, those benefits would amount to $14.43 and $18.18 an hour, respectively.
The prolonged job drought for which these benefits were intended never materialized. Instead of providing aid to cover people’s basic living expenses amid a shortage of jobs, the state has been paying thousands of people not to work amid a surplus of jobs.
In addition to ending the state’s participation in this federal pay-people-not-to-work program, Gov. Sununu announced that he would use $10 million in federal relief money to offer unemployed people signing bonuses once they have found a job and kept it.
The state will give people $1,000 for finding a full-time job and holding it for eight weeks, or $500 for a part-time job. People making $25 an hour or more will not be eligible.
Given that this money has to be spent on COVID relief, it makes sense to create incentives to move people from the unemployment rolls to paid work.
The pandemic shrank New Hampshire’s already undersized labor force. A shortage of workers is causing serious problems for employers and threatens to slow the state’s recovery. Using financial incentives to address that problem is a legitimate use of federal COVID relief funds, and one that helps the state as a whole while also helping the unemployed find work.