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$300 aid cut praised as job filler; others in Arkansas unsure

by Andrew Moreau | May 11, 2021 at 7:18 a.m.
A restaurant displays a "Now Hiring" sign in this March 4, 2021, file photo. (AP/Elise Amendola)

Economic development officials on Monday applauded the governor's effort to nudge workers back into the labor pool by suspending the $300 weekly supplemental unemployment insurance benefit the federal government has been underwriting.

Gov. Asa Hutchinson announced Friday afternoon that the state would stop passing along the payment on June 26. Supplemental benefits are keeping Arkansans from seeking the more than 40,000 jobs now available in the state, the governor said.

"The $300 federal supplement helped thousands of Arkansans make it through this tough time, so it served a good purpose," Hutchinson said in making the announcement Friday. "Now we need Arkansans back on the job so that we can get our economy back to full speed."

About 50,000 Arkansans today receive the extra federal benefit, which was scheduled to end across the nation on Sept. 4.

Governors in Montana and South Carolina also have announced they would end distribution of the benefit in their states. On Friday, the U.S. Chamber of Commerce called for an end to the benefit.

In a letter to Division of Workforce Services Director Charisse Childers, Hutchinson said the program has served its purpose but is now hindering job growth. "Continuing these programs until the planned expiration date of September 4, 2021, is not necessary and actually interferes with the ability of employers to fill over 40,000 job vacancies in Arkansas," the governor wrote in the directive to end the program.

Businesses across multiple sectors are seeking to hire workers in Central Arkansas, and it is a prime time to enter the job market again, said Jay Chesshir, president and chief executive officer of the Little Rock Regional Chamber of Commerce.

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"Numerous companies in the metro Little Rock area are currently hiring potential new employees at all skill levels," Chesshir said Monday.

"As our economy continues to recover and expand, we want to ensure that all areas of our community and region have access to these positions and the bright financial future that they provide," he added. "With covid-19 vaccinations available to everyone, now is the time to re-enter the workforce to take advantage of the significant number of positions available."

Structurlam Mass Timber Corp. in Conway is working to hire 130 employees for a new manufacturing facility scheduled to open June 1. Workers are hard to find and some applicants cite the federal benefit as a reason for not being ready to return to a job, according to Jamie Stires, human-resources manager at the plant.

"There is definitely an incentive that we're picking up for some people to not go back to work," she said. "With the extra benefit being paid out, they are not willing yet to go to work. When you make just $100 or a couple of hundred dollars within what you were paid at work, the incentive is just not there."

Potential workers are sitting on the sidelines and not actively seeking work and instead relying on the weekly supplemental benefit, according to Arkansas Commerce Secretary Mike Preston.

"We need to get people back into the labor force and back into jobs," Preston added. "The economy is moving at light speed and the only thing really holding us back is available work force."

Charles S. Gascon, a regional economist with the Federal Reserve who conducts research for the area that includes Arkansas, said there are multiple reasons workers are not ready to return to the labor pool or fill open positions.

Generous benefits may be a factor but they're often not the sole reason workers prefer to stay home as the economy begins to recover.

"This is one of many reasons that we hear," he said of the weekly supplemental pay but there's a range of concerns that are keeping potential employees out of the workforce.

In surveying employers, Gascon noted that unemployment benefits are mentioned as a factor for workers not following up with interview requests from those hiring.

"That's one of the very specific things they've attributed to unemployment insurance," Gascon said. "It could also mean that there's just a lot of competition for workers and by the time the employer responded the worker found a job somewhere else."

Gio Bruno, owner of Bruno's Little Italy in downtown Little Rock, also noted there are other issues keeping potential workers at home.

"Every restaurant in town is fighting for people, but I think they may be oversimplifying the reason," Bruno said of the governor's comments. "I have a hard time believing that $300 is going to make that big a difference to someone to keep them out of work."

Restaurant workers have left the industry for more secure work and better hours, Bruno said.

"When the pandemic hit, a lot of service workers left for other industries where they didn't have to be so close to people," he added, noting that some potential hires also have health concerns in being exposed to the coronavirus. "There is still somewhat of a fear element," Bruno said.

Gascon also notes that while there may be thousands of open positions, the jobs may not fit for some workers because of the days or hours they would be required to work. Child care becomes a major issue in those circumstances.

Moreover, the restaurant sector and hospitality industry are still looked at warily by potential workers who may feel employment still has not stabilized because of the pandemic.

"There's still a risk of layoff and they don't know that things are actually better and going full steam yet," Gascon said of hospitality workers.

"People are apprehensive about giving up the stability that they have right now, even if they do want to work, because there is still uncertainty in how viable" the economic turnaround is, he said.

Wage concerns also factor into workers' evaluations, Gascon said, citing the public push to raise the minimum wage to $15 per hour but most companies and industries are committing to that over time, not immediately. Workers, however, are expecting to reach that wage level now.

"That causes some friction in hiring," Gascon said.

Arkansas' civilian labor force declined by 12,775 workers in February and by 3,789 in March.

Labor force participation, Gascon said, is a nationwide problem.

Gascon estimates that of the 8 million U.S. jobs that were lost during the pandemic about half of those -- or 4 million workers -- have not returned to the labor force for various reasons, ranging from retirements to a competitive job market to not being able to find the right position that fits their job needs.

Correcting that problem and getting workers ready to return to open jobs won't get better quickly, according to Gascon. "It's going to take some time to get those people back in the labor market," he said.

Job insecurity and sudden changes in openings and closings does not produce the predictability workers are searching for post-pandemic, Gascon said.

"Unemployment [payments] in those periods of time looks pretty good as a way forward because there's so much volatility, particularly in sectors like leisure and hospitality," he said. "There's a benefit to the stability and predictability that goes along with it."

President Joe Biden said Monday that the White House will "make it clear" that Americans receiving unemployment payments must take a job if offered a "suitable" one or lose their benefits.

The White House said it is directing the Department of Labor to work with states on reimposing work search requirements for Americans collecting unemployment benefits. The Labor Department will soon issue a letter to "reaffirm" the rules of unemployment to ensure that workers, employers and states understand the rules of the program, the White House said.

In remarks in the East Room, Biden said the administration disputes Republican claims that April's jobs data, released Friday, shows that unemployment benefits are too generous and causing workers to stay home rather than rejoin the workforce. The White House did not announce a departure from prior policy on unemployment benefits. Still, the president's remarks suggest that the White House is sensitive to the growing political criticisms over their handling of the issue.

"We're going to make it clear that anyone collecting unemployment who is offered a suitable job must take the job or lose their unemployment," Biden said in remarks in the East Room. "There are a few covid-19 related exceptions. ... But otherwise that's the law."

Information for this article was contributed by Jeff Stein and Matt Viser of The Washington Post.

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