Crapo highlights recent initiatives to boost employment and combat fraud
To say the April jobs report was disappointing is an understatement. Economists predicted the U.S. economy would add nearly 1 million new jobs, yet only one quarter of those jobs materialized--just 266,000. What happened? Our nation is on the mend; the economy is recovering; millions are being vaccinated; and many businesses are reopening. However, some businesses have said that enhanced unemployment benefits are outcompeting small businesses in the fight for a willing and able workforce. The bedrock of our economy--our workers--are earning more from the Government by staying at home, rather than in gainful employment; depriving our small businesses and communities of their pre-pandemic prosperity. We are hearing too many stories from business owners that initiatives of their own are not enough to entice their former employees back to their place of work, because benefits from the federal government pay more.
A Florida McDonald’s paying applicants $50 just to interview for a job is still having trouble staffing up, according to a news report. Blake Casper, who owns 60 McDonald’s in the Tampa area, blames unemployment benefits for softening the motivation to work at low-paying jobs.
Restaurateurs say many former employees are choosing not to re-enter the workforce at a time when they can make nearly as much or more by collecting unemployment benefits.
In New York City, where the minimum wage is $15 an hour, residents can now earn up to $804 a week on unemployment, or the equivalent of $20 an hour for a 40-hour work week. That’s because the Federal Pandemic Unemployment Compensation offers $300 a week on top of the state’s maximum weekly benefit of $504.
Alex Adams, Administrator of the Idaho Division of Financial Management, recently testified about the original enhanced unemployment benefits’ effect on Idaho, saying, “To put that in context for Idaho, based on our standard base unemployment rate and the extra $600, it led to individuals making upwards of $54,000 a year, making more on unemployment than they would if they returned to the workforce in the state of Idaho.”
This is an expensive and unsustainable program that must end if we want our economy to fully recover from the COVID-19 pandemic. Most of the people accepting unemployment benefits are likely eager to return to the workforce. But, it is hard to reconcile going back to work only to make slightly more than what they receive on unemployment, or in some cases, less. States are beginning to reject the enhanced federal unemployment payments, with some states—like Idaho—going so far as to offer financial incentives for those on unemployment benefits to return to work.
In April, Senator Risch and I introduced the “Back to Work Bonus Act.” The bill counteracts enhanced federal unemployment benefits that discourage workers from returning to jobs by providing a one-time back-to-work bonus for those who are able to safely do so. We introduced this legislation based on Idaho’s experience and success with a similar program. Governor Little’s leadership has strengthened Idaho’s economy, giving small businesses the workforce they require to grow. The federal government should follow suit. You can read about the bill HERE, or in a recent opinion piece HERE.
Combatting Fraud in Unemployment Programs
With the expansion of federal unemployment assistance, we have also seen a huge surge in fraud in the unemployment program. For example, California’s unemployment agency has reportedly lost nearly $32 billion to fraud since the pandemic began in 2020. ID.me, a company that works directly with 22 states to verify the identity of unemployment claimants, notes that the total amount of fraud could be between $200 and $300 billion. A recent Forbes article noted the Federal Trade Commission received a 3000 percent increase in consumer complaints alleging identity fraud to apply for government benefits.
House Ways and Means Ranking Member Kevin Brady (R-Texas) and I sent a letter to U.S. Department of Labor Secretary Marty Walsh urging him to work with Congress to combat this widespread fraud at American taxpayers’ expense. You can read that letter HERE.
Given the major surge in fraud that has occurred in unemployment programs nationwide since the passage of the CARES Act in 2020 and subsequent legislation, a bill aimed at preventing and detecting fraud is warranted and timely. Representative Brady and I have also introduced the Combatting COVID Unemployment Fraud Act of 2021, legislation to prevent fraud in COVID unemployment programs, recover fraudulently paid benefits, and provide relief for taxpayers and victims of unemployment fraud. You can read more about that bill HERE.
Our economy is dependent on a resilient and robust workforce, and Americans want to return to normalcy and get back to work. Before the pandemic, a combination of reduced regulatory burden and pro-growth policies helped to create one of the strongest economies in decades. It is time to focus on proposals that will help to fully reopen the economy, get people back to work, and return our economy to the strength and broad-based growth enjoyed prior to the pandemic.