Columbus, OH – In a new policy memo, Policy Solutions for the Pandemic: Declining Extra Unemployment Benefits Will Help Get Ohio Back to Work (see full text below or download a PDF), The Buckeye Institute calls on Ohio to decline Washington’s extra unemployment benefit and work instead to reduce labor shortages and get Ohioans back to work.  

“With job openings at an all-time high, Ohio policymakers should avoid a weakened recovery and reject Washington’s expanded unemployment benefits,” said Logan Kolas, an economic policy analyst with The Buckeye Institute’s Economic Research Center. “Businesses should compete with each other for workers—not with over-sized handouts from Washington.”

The Buckeye Institute’s recommendation comes as the DeWine administration is considering whether Ohio should “withdraw from the federal pandemic unemployment benefits program.” Ohio should withdraw from the program and “decline Congress’s misguided generosity and prioritize policies and incentives that get Ohioans back in the labor force.” 

Ohio has adopted many of Buckeye’s policy recommendations to boost the state’s health care system and support Ohio’s workers, small businesses, and economy including:

• Increasing telehealth access and monitoring;
• Extending universal recognition of out-of-state medical licenses to nurses;
• Permitting pharmacists to test for COVID-19;
• Enlisting medical and nursing students to support doctors and nurses fighting COVID-19;
• Eliminating unnecessary budget commitments;
• Instituting a hiring freeze in state government;
• Allowing establishments with an existing liquor permit to sell and deliver alcohol on carryout menus;
• Expanding broadband access to underserved areas of Ohio; and 
• Providing responsible businesses, schools, and workers with critical liability protections from COVID-19 lawsuits.

Since the earliest days of the pandemic, The Buckeye Institute has outlined immediate actions Ohio policymakers can take to fight and recover from the pandemic. The recommendations focus on policies to boost Ohio’s health care system and support Ohio’s workers, small businesses, and the economy. The Buckeye Institute’s recommendations can be found at: www.BuckeyeInstitute.org/PolicySolutionsforthePandemic.

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Policy Solutions for the Pandemic
Declining Extra Unemployment Benefits Will Help Get Ohio Back to Work

By Logan Kolas
May 13, 2020

The Buckeye Institute’s Recommendation

If Washington won’t withdraw the American Rescue Plan’s expanded unemployment supplement to states, Ohio should decline the additional federal money and work instead to reduce labor shortages and get Ohioans back to work.  

Background

Many factors have raised unemployment rates across the country since the start of the pandemic. COVID-19 made households less willing to spend, reducing consumer demand. School closures forced families—especially women—to forgo work, reducing household income. And Washington offered $300 per week in extra unemployment benefits, reducing incentives to work. 

The April jobs report significantly underperformed optimistic expectations, with the country adding just 266,000 jobs in April instead of the anticipated one million. Furthermore, March’s job gains were revised down more than 140,000 jobs to only a 770,000 gain. The labor market is not moving in the right direction, but enhanced unemployment benefits from Washington are not the right answer. 

Early in the pandemic, extra unemployment benefits made more sense than they do today. At that time, job applications outstripped available jobs, so reducing applications did not significantly affect hiring. Research generally had shown then that unemployment benefits were not causing a significant decline in job creation. 

But circumstances have changed. Job postings recently hit an all-time high of 8.1 million as industry now struggles to find workers. Job openings in the hard-hit leisure and hospitality sector dramatically increased over the past month and wages have begun to rise to compete with Washington’s largesse. According to the National Federation of Independent Business 42 percent of small businesses cannot fill job openings. And Google job search activity fell 15 percent in March—and that was before the American Rescue Plan expanded unemployment benefits.

Ohio’s economy and unemployment rates are outperforming much of country, but the state is still down more than 243,000 jobs compared to March 2020. As the economy improves and vaccines become more available, unemployment insurance will likely revert to having its pre-pandemic perverse effect on employment. So instead of accepting more federal unemployment assistance, Ohio should decline Congress’s misguided generosity and prioritize policies and incentives that get Ohioans back in the labor force. States from Alabama to Idaho have already done so, and Ohio should follow suit.

Conclusion

Expanded unemployment insurance drives a wedge between businesses and productive workers. As the pandemic recedes and Ohio’s economy reopens, state lawmakers should avoid a weakened recovery and reject Washington’s expanded unemployment benefits. Businesses should compete with each other for workers—not with over-sized handouts from Washington.

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