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BRAC supports ending federal unemployment enhancements to incentivize return to work

Published: Jun. 3, 2021 at 11:28 AM CDT|Updated: Jun. 3, 2021 at 10:22 PM CDT
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BATON ROUGE (La.)- The Baton Rouge Area Chamber (BRAC) announced today its Board of Directors has adopted a policy position calling on state leaders to end the federal unemployment enhancement payments before their planned expiration in September.

“Things are back to normal. So, it’s time for us to start acting like it in terms of entitlements,” Andrew Fitzgerald, BRAC’s senior director of business intelligence.

According to a study done by BRAC, there are 24,000 unemployed residents in the Capital Region compared to more than 30,000 job openings, with thousands requiring no experience and only a high school degree or GED.

While many businesses have anecdotally reported hiring challenges to BRAC, the board action was mainly a data-driven decision based on research showing distortions in the regional and state labor markets. These include the following:

  • While there are 24,000 unemployed residents in the Capital Region, there are more than 30,000 job openings, with thousands requiring no experience and only a high school degree or GED;
  • The state has a similar excess of job openings, with 160,000 openings and only 150,000 unemployed residents. The majority of these openings require no education above a high school degree and little to no experience;
  • Despite COVID business restrictions largely ending in late March and early April, unemployment in the Capital Region remained flat at 5.8% over-the-month, a full 2.0% higher than the pre-pandemic rate;
  • Both Louisiana and the Baton Rouge metro area have unemployment rates higher than the national average of 5.7%;
  • With the federal enhancement, Louisiana residents receive $547 weekly through unemployment, while median individual income in the state is $556 weekly, providing a disincentive to return to a number of jobs in restaurants, bars, retail, and other sectors hit hard by the pandemic.

Research also revealed that both Louisiana and the Baton Rouge metro area have unemployment rates higher than the national average of 5.7%.

“The data really supported what we heard from investors that there are really a large group of unemployed people that are qualified for available jobs but are not actually returning to work,” said Fitzgerald.

However, one group says now is still too soon.

“We strongly urge the Governor not to listen to BRAC and to keep unemployment benefits going until it’s conclusion,” said Davante Lewis from the Louisiana Budget Project.

April 2021 Unemployment:

  • Alabama 3.6%
  • Missouri 4.1%
  • Georgia 4.3%
  • Arkansas 4.4%
  • Kentucky 4.7%
  • Florida 4.8%
  • Tennessee 5.0%
  • South Carolina 5.0%
  • Baton Rouge 5.8%
  • Mississippi 6.2%
  • Louisiana 6.6%
  • Texas 6.7%

The weekly payment, combined with state unemployment assistance, is currently the equivalent of almost $14 per hour, which is nearly the median individual income in the state.

Lewis said the quality of the job market doesn’t match up with the quantity.

“The challenge is that our workforce has never met the needs of people. We are not paying people what they are worth. $7.25 in America and in Louisiana is not enough money to put people in an economic stability standpoint,” said Lewis.

Lewis said there needs to be a huge overhaul before the state thinks about taking away those benefits.

“If we really want to have a conversation about how we get people into jobs, we need employers to actually offer benefits that are worthy for people to have those jobs,” said Lewis.

Gov. John Bel Edwards said he hasn’t made a decision on what he’ll do next.

“I don’t want to prematurely cut off these enhanced benefits for people who don’t have jobs,” said Edwards

Edwards said they’ll do their own independent research and will make a move based on what they find out.

“We have retained the services of an economist, Jim Richardson, who is preparing a study to determine for the state of Louisiana, given our particular situation here, is that a wise thing to do or not,” said Edwards.

Edwards said he hopes to make a decision over the next couple of weeks once that independent study is complete.

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