Ohio wisely declines more federal unemployment funds

Logan Kolas Jun 13, 2021

This opinion piece was first published in Crain's Cleveland Business.

The latest round of unemployment insurance funds from Washington threatens to harm the very things it purports to help — workers and the businesses that depend on them. Gov. Mike DeWine is wisely rejecting Washington's handout, hoping to turn "Help Wanted" signs into "Just Hired" success stories.

Ohio has weathered the brunt of the pandemic's economic storm, but now, like many states, it faces a new problem: a labor shortage. At the outset of the pandemic, employers reduced hours, slashed services and furloughed staff in order to survive a diminished clientele. Now, as the economy reopens, businesses across the state have struggled to restaff their operations and keep pace with resurgent consumer demand.

The Chick-fil-A chicken chain at the Cleveland airport operated by Cleveland-based United Concessions Group is one major employer that needs employees to return. Small businesses like The Grainery in Plain City have taken a 1-2 punch from the pandemic and now staff shortages — confirming a National Federation of Independent Business report that 42% of small businesses cannot fill job openings nationwide. The same holds true for manufacturing, with manufacturers in Northeast Ohio reporting disturbing labor shortages. And now, just as travel and vacations seem poised to make a summer comeback, the leisure and hospitality sector warns that even rising wages cannot keep job openings at bay. Ohio's iconic Cedar Point amusement park has greeted frustrated thrill-seekers with long lines and ride closures while it searches for more employees and offers signing bonuses and cash awards for recruiting new hires.

Reopenings mean available jobs
Expanded, temporary unemployment insurance being pumped from Washington has made it harder — and more expensive — for companies of all sizes to reattract workers and reopen their doors. The additional weekly unemployment benefits made some fiscal sense as a stop-gap safety net for the broader economy last year when economists could only guess at the pandemic's effect on employment, foreclosures and household spending until research showed job applications far exceeded job openings.

But not so today. Vaccines are now prevalent. Schools and sports venues have reopened. Restaurants and hotels are taking reservations again. And businesses across industry sectors are itching to fill their staffing vacancies. National job postings now stand at an all-time series high of 9.3 million. Ohio's career counseling center, OhioMeansJobs, reports more than 180,000 available jobs, with more than half of those paying more than $50,000 per year. And with Ohio still down more than 246,000 jobs from March 2020, employment checks — not unemployment benefits — are the way to a fuller recovery.

With businesses across the state and across the country now struggling to rehire the unemployed as the pandemic recedes, taking additional unemployment insurance from Washington only risks troublesome pre-pandemic effects on employment, workers and businesses — unintentionally hurting many that the program claims to help. Expanding unemployment benefits may put some more temporary cash in some pockets, but accepting those benefits carries long-term risk. Research shows that long spells of joblessness reduces the labor skills of the unemployed. Diminished skills make would-be workers less attractive to would-be employers, and ultimately reduce future employment and earnings. A little more money today can mean a lot less money in the long run.

And it's not just the unemployed who will suffer. Washington's extra cash payouts separate businesses from capable employees — which means that businesses will continue to struggle to provide their usual goods and services, and consumers will suffer poorer service and limited availability, and the economy will limp into recovery.

Gov. DeWine is right to decline Washington's misguided generosity. Ohio should prioritize policies and incentives that get Ohioans back to work and its businesses back to business as usual.

Kolas is an economic policy analyst with the Economic Research Center at The Buckeye Institute.