In the last week or so, Gov. Jim Justice has repeatedly talked about implementing a $500 back-to-work bonus, which is supposed to be matched by the employer for a total of $1,000, and suspending the $300-per-week federal unemployment benefit.
We’re of two minds on this particular subject.
On the matter of the back-to-work incentive, we are concerned it isn’t viable for small businesses. It’s a lot to ask a mom-and-pop shop or a locally owned business to cough up a $500 signing bonus for each new employee in addition to the cost of their wages. On the other hand, the incentive is a reasonable expense to ask of national chains and big box stores — even though their multi-millionaire CEOs will tell you otherwise. And it may just prove to be the motivation Justice hopes it will be — or it may not.
We’re also torn about suspending the federal unemployment benefit. There’s reasonable concern the increased benefits are disincentivizing people to work, and, as much as automation has taken over, there are some jobs that still require humans. The usual criticism is that people are making more money on unemployment than they were working, and that’s the problem. We agree that this is a problem, but not for the same reason. They think it an indictment of the government and people on unemployment; we think it an indictment of the businesses.
As much as the unemployment benefits are seen to dissuade people from joining the workforce, they have actually given workers a powerful bargaining tool. Now, people can afford to say, “If you want me to come work for you, then pay me a livable wage.”
Ultimately, the $300 unemployment benefit and the $500 back-to-work incentive are bandaids doing a poor job of trying to fix the same underlying problem: Poverty wages.
We’ve heard the argument a thousand times: If you raise minimum wage, prices will go up.
We have yet to hear someone complain that paying the CEOs more has caused prices to surge, but prices and CEO pay have increased exponentially while most wages stagnate. In 2010, a McDonald’s cheeseburger cost $0.89; minimum wage was $7.25; and McDonald’s CEO took home $9.7 million. In 2019, a McDonald’s cheeseburger cost $1.09; the median McDonald’s employee income was less than $10,000 a year, as most employees are only hired part time; and the CEO made more than $18 million (those last two figures come from a Business Insider report). Top executive pay doubled, but a burger only cost 20 cents more. To put it in perspective, the CEO’s salary could have paid almost 1,300 full-time minimum wage positions for one year, or 625 full-time employees at $15 an hour.
But because this is America and nothing can be permitted to impact the bottom line, yes, prices will go up. That said, we doubt milk will immediately jump to $10 a gallon, as fear-mongers like to claim. But, as mentioned, prices have been steadily increasing for years while wages remain stagnant, leaving more and more people in poverty. Those people, in turn, require more government assistance, which is paid for by our taxes. This often results in tax increases to maintain funding. Paying people a livable wage ultimately helps us all, as it decreases reliance on welfare, Medicaid, SNAP and other government benefits.
Our advice to Gov. Justice, then, would be to hold off on the $500 work incentive and allow the $300 federal unemployment benefit to stand. For the first time, maybe ever, we are seeing “free market” forces benefit workers as the demand for labor outstrips the supply and businesses are forced to the negotiating table in good faith. We should see how this plays out.
Who knows — maybe by the end of this standoff, we’ll see companies offering a livable wage based on states’ cost of living, and we’ll no longer have to fight the “socialist agenda” of a federal $15 minimum wage.
