Opinion

When Stimulus Backfires

Editorial

 

Let’s start by saying there is no debating that most of the economic-stimulus programs created by local, state, and federal governments have been extremely effective in helping businesses of all sizes and moving the economy forward at a time of extreme — as in extreme — duress.

Indeed, programs like the Paycheck Protection Plan initiative have provided an absolutely vital lifeline, without which many small businesses in this region and across the country would simply not be here. Other programs have benefited healthcare providers, specific sectors of the economy, and municipalities.

That said, some stimulus has actually backfired on business and the economy, and that’s especially true when it comes to federal unemployment benefits — checks that were designed to help those who lost their jobs to the pandemic, but have had serious unintended consequences in the form of people who are simply staying out of the job market because they can make more money by not working and are making the no-brainer decision to do so.

This is not a news flash; it has been going on for roughly a year now. What is a news flash — sort of — is the extent to which these unemployment benefits are stifling the economy just as the ingredients are there for it to start really taking off again.

Indeed, as the story on page 6 relates in great detail, businesses across a number of sectors are struggling mightily to find the help they need. And for some, the inability to find this help could threaten their ability to expand and take on work that could come their way.

Stories abound about pool-installation companies already booked solid for this season and simply unable to take on any more projects, even though they are there for the taking; home-improvement companies having to turn down lucrative projects because they just don’t have the workers; and restaurant owners looking ahead to better times with a mix of anticipation and dread, with the latter involving great uncertainty about whether they will have enough bodies to handle the surge in volume they hope — and believe — is coming.

Not all of this is the result of the unemployment payments contained in the federal stimulus package. Indeed, many employers were struggling to find adequate supplies of help before anyone had to think about hanging a mask from the rear-view mirror of their car. But these benefits have made the situation exponentially worse.

And it’s not just the benefits, especially the additional $300 per week contained in the stimulus package, that are causing the problem; it’s the inability, or the unwillingness, of state unemployment divisions to enforce the simple rules that pertain to unemployment benefits.

Unemployment was designed to help those who have lost their job and cannot secure another one. Those who receive these benefits are expected to maintain a vigilant pursuit of new employment opportunities, and accept one when a proper fit is found.

These days, that is simply not happening. People are staying on unemployment because, well … why wouldn’t they? Especially when they could earn as much, if not more, by not working.

Many employers are already counting down the days until September, when these benefits expire, thinking matters might then return to normal. This is wishful thinking — this Congress may well extend the benefits again, given the way things are going — and not where their energies should be placed.

Instead, business leaders should be lobbying those in power — both in Washington and Boston — to do something about this problem now, before things get worse and before the recovery from COVID becomes further stalled.

As we said at the top, most of the federal, state, and local stimulus has done what is was designed to do — help people hurt by COVID weather the storm. The unemployment benefits were designed to do the same, but the unintended consequences have now greatly overshadowed the good that’s been done.

This is a case of stimulus gone awry, and something has to be done.

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