Unemployment has hit South Carolina very hard, and it’s a good thing the large temporary federal boost in unemployment insurance is available to help hundreds of thousands of residents get through a difficult time.
But Congress is debating whether to extend the extra $600-a-week payment beyond its expiring date of July 31, maybe until the end of the year. There are good reasons for thinking that may be too much of a good thing and ultimately bad for the state’s economic recovery.
The temporary closure of businesses in an attempt to stop the spread of COVID-19 has shredded the state’s economy. An astounding 486,149 South Carolinians applied for unemployment insurance for the first time in the eight weeks from March 15 through May 9, according to the state Department of Employment and Workforce.
Add in the 71,526 who were already unemployed as of mid-March, according to the federal Bureau of Labor Statistics, and that means more than 550,000 residents are out of work. With 2.4 million workers in the state workforce as of mid-March, that means unemployment has jumped from 3% to 23% in just two months.
Unemployment in the Charleston and Greenville areas is about the state average, while the Columbia area’s burden approaches 19%. But one coastal area, Horry County, has been particularly hard hit, with unemployment there approaching 40%.
It is going to be hard enough to fill several hundred thousand jobs as the economy gradually restarts. It could be even more difficult if workers feel no economic pressure to return to work.
The maximum unemployment benefit at the moment is $926 a week, equating to about $23.15 an hour, but the median wage in the state before the crisis hit was just over $16 an hour. Half of the workforce earned less.
That means a lot of laid-off workers have higher incomes now than they did when employed. Many of these employees want to return to their jobs as soon as they can. But that extra money could be enough to push some people into staying home when they’re already concerned that going back to work is too dangerous without enforceable health and safety standards in place.
The law says you lose your unemployment insurance if you turn down a legitimate job offer, which makes sense. But the last thing the state needs is a crackdown on workers laid off for no fault of their own and on employers reluctant to press too hard for the return of key workers because of legitimate safety concerns.
What the state needs, says Isabel Soto of the American Action Forum, a center-right economic think tank, is to create an incentive that will draw workers back despite the generous unemployment insurance they now enjoy. “The key for South Carolina and other states is creating incentives to go back to work that are competitive with the incentives of the unemployment benefit,” she said.
Georgia Gov. Brian Kemp is using his emergency powers to authorize a temporary change in the state’s unemployment compensation law to give workers an extra incentive to return to the job.
Under the Georgia plan, workers may earn and keep up to $300 a week while still drawing unemployment insurance. The temporary extra income boost is a real incentive to return to work.
The South Carolina Legislature should consider something similar to complement enforceable health standards and a temporary safe harbor from lawsuits for businesses as needed preparations for a strong recovery.
Meanwhile, Congress should think twice before it extends the full extra $600 a week far beyond July 31. Ms. Soto has written that a phased withdrawal of the extra benefit keyed to the pace of the economic recovery would be a better plan. We agree.
— Post and Courier, Charleston