How do you blame a $300 unemployment benefit for labor shortages when there are fewer people drawing weekly benefits now compared to before those benefits existed and when there are literally hundreds more people employed now than before the pandemic?

Hint: You don’t.

This past week, Steuben County restaurateur Dan Caruso landed a spot on a Fox News segment talking about unemployment benefits and how they are allegedly hurting the labor market.

The segment got a share from Republican Sen. Mike Braun who wrote: “Caruso’s in Angola can’t get people to work because Indiana was forced to continue extra federal government money that pays people not to work.”

Rep. Jim Banks — who apparently either didn’t read my column a few weeks ago on this topic or did and simply ignored it in favor of continuing to push this provably thin narrative — also shared it on Facebook, stating, “Great to see Dan Caruso, owner of Caruso’s Restaurant in Angola, on America’s Newsroom discussing the effect of extended UI benefits on Hoosier small businesses.”

That’s all fine and good except for the fact that, once again, the claim is not supported by the data.

So let’s run the numbers for Steuben:

According to the Indiana Department of Workforce Development’s monthly labor force report, in March 2020 (the last month before pandemic effects started showing up), Steuben County had a labor force of 20,220 with 19,712 people employed and 508 people unemployed.

In June 2021, the most recent available, Steuben County’s labor force had grown to 21,124 with 20,435 employed and 689 unemployed.

Fact 1: Steuben County has 723 more people working now than prior to the pandemic.

Now let’s look at unemployment benefits, again according to the Indiana Department of Workforce Development, which manages the state’s unemployment insurance.

For the week ended March 14, 2020 — that last, best week before jobless numbers started shooting up due to the pandemic — Steuben County had 67 continued claims for unemployment insurance.

A continued claim is a filing by a person who was seeking unemployment last week and filed again this week to get another benefit check. It’s a better measure of who is actually getting unemployment checks as compared to initial claims, which simply measures people who filed for unemployment regardless of whether they’re eligible or may end up getting them.

Looking at the week ended July 10, 2021, there were 55 continued claims in Steuben County.

Fact 2: There are 12 fewer people receiving unemployment now than prior to the pandemic, before the extra cash benefit existed.

And how does that compare to the unemployed?

The June labor force reports 689 people seeking work but not having it. The unemployment rolls showed 55 continued claims.

Therefore, we know everyone who is out of work isn’t receiving unemployment benefits. We know most people out of work aren’t receiving unemployment benefits.

A person who is not receiving unemployment insurance gets $0 in benefits and also does not get the extra $300 benefit.

Fact 3: About 11 of 12 jobless workers in Steuben County are not receiving weekly unemployment benefits.

So, to recap.

Steuben County has 723 more people employed now than prior to the pandemic, it has 12 fewer people drawing unemployment than it did prior to the pandemic when the $300 extra benefit didn’t exist and about 92% of jobless workers in Steuben County aren’t getting any unemployment benefits at all.

Those 55 workers drawing unemployment checks account for 0.26% of Steuben County’s total workforce.

In what realm of logic and reason could you look at those details and still try to argue that unemployment benefits are to blame for a company’s inability to hire?

Now, all that being said, although I mock the premise and the Fox News segment and congressmen who continue to forward it like it represents reality, I do sympathize with the challenge faced by Mr. Caruso.

The challenge he’s facing is real, as he described while talking about the impact the labor crunch has on his restaurant:

“Raises labor costs significantly, because there’s fewer people out there who want to come to work today. So if you want to be their employer, you’ve got to pay more to get them and it really impacts your business to a level that is not sustainable as far as labor cost,” Caruso said.

Restaurants, as a business, generally run on thinner profit margins than other types of businesses. Food service has generally been one of the lowest-paid sectors in the economy — Indiana’s minimum wage for tipped employees is $2.13 per hour. According to the U.S. Bureau of Labor Statistics, the category “Food preparation and serving related occupations” had the lowest median wage of all sectors nationally at only $10.43 per hour.

It’s simply supply and demand. When supply gets low and demand is high, prices increase, so it’s only logical that the sector at the bottom of the price ladder is going to get squeezed first and hardest if employees have options and mobility.

Fox News Host Bill Hemmer didn’t ask and Mr. Caruso didn’t offer in the four-minute segment what kind of wages, hours, benefits he was offering to try to win over workers.

Still, I sympathize, because I know the solution probably can’t be as simple as “hike wages,” because wages are just one piece of the greater equation of revenue, expenses and bottom line.

It’s a real problem with no simple answer.

Trying to make a simple answer by scapegoating unemployment benefits — especially when the premise is demonstrably faulty when the data is run — is disingenuous.

With UI rolls as low as they are currently, there’s also not a very good case for keeping the $300 in line either. There is work available and one last nudge to get those few people back into the workforce can’t hurt.

But reality is, even doing so, it’s likely not going to solve Mr. Caruso’s problem or that of other local employers at this point. Even if you shoved all 55 Steuben unemployment recipients back into the market, Caruso’s may still be outmatched by other firms who are also desperate for bodies.

There’s still going to be a labor shortage locally. There are too many jobs and too few people.

There’s no quick and easy fix to that systemic problem.

Steve Garbacz is executive editor of KPC Media Group and editor of The News Sun. He’d like to boost pay for himself and his editors and reporters, too, to keep their jobs more competitive, but also is constrained to work within a company budget. Email him at sgarbacz@kpcmedia.com.

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(1) comment

Robert Sparkman

I suspect the labor shortage in the restaurant field is brought about largely by the fact that some employers are "forcing" a de facto minimum wage to support the Democrat agenda. These employers are companies like Walmart an McDonald's. It is more profitable for people to work for these large corporations, for now, than a smaller restaurant.

But, what's the result of this? Do you think McDonald's is going to hold its prices stable while paying a lot more for labor? No. Eventually they will raise their prices, maybe when more small restaurants go out of business.

Regarding Jim Bank's remarks, maybe he is postulating based on the nation as a whole, rather than the specific, tiny market in Steuben County. Intuitively, I believe that the government can make unemployment attractive by offering these $300 a week extra payments, and this could create a labor shortage. The other thing that creates a labor shortage is the effects of large portions of industry being way behind, and the increased labor it takes to recover from shortages of inventory. The Covid restrictions that the government placed upon workers played some role in this.

Anyways, intuitively Jim Banks' remarks are correct at the macro level. Why offer $300 additional per week unemployment benefits, when there is a labor shortage? Actually this would force wages higher than they need to be, by creating an artificial shortage of workers. And, ultimately this results in inflation, because business owners are going to pass some of the cost to the customer in terms of higher prices.

It could be that the elites of society want it to go in this direction, while they maintain lower prices and take losses, so that ultimately small businesses are forced out of the market. Maybe that is why Walmart and McDonald's are paying decent wages to retirees and high school kids now. I think the de-facto minimum wage is about 12 dollars an hour for Walmart and probably not much lower for McDonald's.

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