Worker Shortage Continues as Some States Offer Six Figures to Stay Home: New Report
A new study, “Paying Americans Not to Work,” by economists Dr. Casey Mulligan and Dr. EJ Antoni at the Committee to Unleash Prosperity finds that government payments and free health care benefits can total more than $100,000 annually in Washington, Massachusetts, and New Jersey. The study also finds that people can receive the equivalent of an $80,000 a year in 13 other states.
Of course, if something seems too good to be true, it probably is. These programs come at great costs to both taxpayers and the recipients. They create massive strains on state budgets, crowding out spending for essential public services, and taxpayers must foot the bill. Important infrastructure projects like bridges, dams, and plugging orphaned oil wells can get delayed as states struggle to balance budgets without increasing taxes on constituents amid record levels of inflation.
Recipients of these government benefits can suffer too. They become trapped in a never-ending cycle of dependency, especially when a family can make more money not working than by getting back to work. Benefit cliffs essentially punish people for moving closer to financial independence and stability. People are incentivized to remain economically stagnant when even a small income boost could lead to a loss of benefits and worse financial situation.
These high benefits and benefit cliffs are a major reason the labor force participation is at the lowest point since August 1977. Mulligan and Antoni also find that there are still at least three million fewer Americans working today than before COVID. Additionally, most of the landmark work requirements in the 1996 Welfare Reform Bill have been removed. As a result, workers are slower to get back to work when they lose a job.
High benefits without work requirements are making it very difficult today for employers to find willing workers. Federal data shows that there are nearly 10 million unfilled jobs today in America. Government assistance programs ought to help individuals and families return to self-sufficiency in order to regain independence. However, as this study makes clear, welfare expansion efforts by the federal government and many states are keeping able-bodied adults out of the workforce, making the worker shortage even worse by paying people to stay home.
States can help Americans get back to work through regulatory reforms such as occupational licensing reform. State leaders can also help working Americans keep more of what they earn by joining the flat tax revolution or eliminating income taxes altogether.