CGI Statement: Shortsighted action on jobless benefits ignores shortage of good, safe jobs in Iowa

Unemployment benefits have boosted recovery; decision latest in agenda that harms workers

DES MOINES, Iowa — Common Good Iowa, a nonpartisan policy analysis and advocacy organization, today released the following statement from Executive Director Anne Discher:

This morning Governor Reynolds announced that effective June 12, Iowa will stop participating in federal pandemic-related unemployment programs. It is hard to overstate the shortsightedness and misguided cruelty of this decision.

The 30,000 Iowans relying on the $300 dollar/week bump under the federal Pandemic Emergency Unemployment Compensation (PEUC) program will see their weekly benefit slide back to pre-pandemic levels, replacing only about half of lost wages.

The 9,500 self-employed or misclassified Iowans relying on Pandemic Unemployment Assistance (PUA) benefits, and the 23,500 Iowans receiving extended (beyond 26 weeks) benefits under the PEUC program will lose their weekly benefits entirely.

Governor Reynolds claims that such a move is necessary to “address the state of Iowa’s severe workforce shortage.” Her assertion fundamentally misstates the nature of the problem. We do not have a shortage of workers, but we do have a shortage of safe, living-wage jobs. The evidence for this is clear on several fronts:

• The extra $300/week is not a disincentive to work. Research on the more generous $600 bump shows workers will rarely choose even relatively generous UI benefits (which do not come with health coverage or pension contributions) over a good job.

• The one clear and powerful indicator of a labor shortage is rising wages. When anything is in short supply, its price increases. The fact this this is not happening suggests the problem is not “I can’t find workers.” Rather, it is, “I can’t find workers at the dismal wages I am offering.”

• Workers make choices about entering or leaving the labor market based on a variety of considerations — including the safety of themselves and their families. As the record of Iowa’s Occupational Health and Safety Administration makes clear, the state has largely abdicated this responsibility. This point is underscored by, but not confined to, virus outbreaks in meatpacking operations.

Suspending federal UI benefits is part of this administration’s broader approach to labor policy and labor relations. It follows a year in which Iowa Workforce Development employed shifting rules and administrative burdens to discourage people from applying for unemployment insurance during the pandemic — and then to claw back benefits already paid.

The failure to protect workers from COVID in the workplace is accompanied by blanket immunity for employers. On top of this, lawmakers are expected to pass a bill in the next week that would curtail state UI benefits.

The state of Iowa saves not a dime from this decision. Indeed, we will forgo an infusion of federal money that has propped up personal incomes and state and local tax revenues for more than a year. In the last quarter of 2020, federal dollars accounted for over half of all UI payments made in Iowa.

The only tangible benefit goes to the state’s low-road employers. In the shadow of slashed benefits and regulatory neglect, too many Iowans will be forced to choose unsafe jobs at lousy wages as their best option.

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Common Good Iowa is an Iowa-based, nonpartisan, nonprofit public policy analysis and advocacy organization with offices in Des Moines and Iowa City. Visit our website at www.commongoodiowa.org.