Page 12 - BusinessWest April 28, 2021

Editorial
LWhen Stimulus Backfires
et’s start by saying there is no debating that most of the Not all of this is the result of the unemployment payments con- economic-stimulus programs created by local, state, and tained in the federal stimulus package. Indeed, many employers federal governments have been extremely effective in were struggling to find adequate supplies of help before anyone
helping businesses of all sizes and moving the economy for- had to think about hanging a mask from the rear-view mirror of
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ward 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 sim- ply not be here. Other programs have benefited healthcare provid- ers, 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 unin- tended 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 ingre- dients 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-improve- ment 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.
Opinion
ITime Is of the Essence
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 prob- lem; 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 bene- fits 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 Sep- tember, 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 stimu- lus 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. v
t seems like it came out of nowhere. can certainly least afford it, including those And, in many respects, it did. employers who were able to retain their full
Indeed, the bill has come due on the workforce during the pandemic. skyrocketing amounts of unemployment Already, stories are circulating about
demic economic recovery.
We urge every business owner in this
region to join these efforts and make sure a loud, crystal-clear voice is heard on this. And we urge the Legislature to take this step, and any others it can take, to keep the massive unemployment bill now coming due from further devastating the business community — and the state’s economy.
The Department of Unemployment Assistance has announced that the quar- terly payments that were due April 30, which would include the new rate calcula- tion, have been deferred until June 30. This is a good first step. State leaders now need to use this time to take the steps necessary to dedicate a portion of the federal COVID- 19 relief aid Massachusetts is receiving to replenish the UI Trust Fund. They need
to do the right thing for the businesses in the state, and those same businesses can help themselves by reminding them of this responsibility.
Every for-profit business in this region has skin in this game — and it’s a game they can’t afford to lose. v
benefits being paid out in this state. And unless something happens, and quickly, small businesses that are already facing innumerable challenges brought on by COVID-19 will be hit with another that might just be too much to take.
We’re talking what’s known as the unem- ployment insurance (UI) solvency fund assessment, the other, often-overlooked component of the overall assessment hand- ed down to employers to cover the state’s unemployment costs — only, it won’t be overlooked any longer.
That’s because, due to a statutory increase in the formula used to calcu-
late an employers’ experience rating, the annual UI solvency fund assessment rate has jumped from 0.58% to a whopping 9.23% for 2021. This represents a staggering 1,591% increase in just one year, which will cost business owners thousands of dollars in additional expenses at a time when they
companies being hit with massive increases in their assessment, hikes that could even- tually stifle growth and hiring and perhaps lead to layoffs and other types of cutbacks.
With these types of impacts looming, the local business community is marshaling its forces and lobbying legislative leaders to take needed steps to ward off what could be catastrophic effects from these UI solvency fund assessments.
Letters now being circulated ask the Commonwealth to follow the lead of Mary- land and other states by dedicating a por- tion of the federal COVID-19 relief aid Massachusetts is receiving through the American Rescue Plan Act or other avail- able and relevant federal funds to replenish the Unemployment Insurance Trust Fund. Doing so will remove the financial burden from employers who are already struggling to survive, which in turn will help protect jobs and contribute to a strong post-pan-
12 APRIL 28, 2021
OPINION
BusinessWest