Rachel Greszler, a research fellow in Heritage's Grover M. Hermann Center, testified Wednesday before the Joint Economic Committee at a hearing titled, “Help Wanted: A Stronger Labor Market for Robust Growth.” Today’s labor market is unlike anything America has ever experienced, and government policies have made it so that work simply isn’t worthwhile for many people, leading to the massive labor shortage that businesses currently experience.
Greszler has spent years working on retirement and labor policies like Social Security, disability insurance, pensions, and worker compensation, and offered insight on the detriment that the pandemic unemployment payments had on the labor market as well as the future impact of Democrats proposed welfare benefits that discourage work.
“Today’s labor market is…certainly not what anyone predicted at the start of the pandemic. Wages are rising and there’s been a giant leap forward in family friendly policies and workplace flexibility. And yet employers are struggling with this severe labor shortage.
“That’s contributed to shortages of goods and services, longer waits, and higher costs. The solution to increasing employment is two-fold—it needs to pay to work, and it can’t pay to not work. The problem today is the latter—government policies have made it so that it simply isn’t worth it to work for some people.
“Eighteen months of unemployment benefits that paid most people more to be unemployed than to work contributed to this drag on employment. States that ended those benefits early have experienced much faster recoveries and an estimate shows that had the states who didn’t end the benefits early otherwise done so, they would have gained 800,000 more jobs in July and August alone. There’s been massive expansions in Obamacare subsidies, food stamps, and other welfare benefits have made it possible for some individuals and families to be better off not working.
“This massive $3.5 trillion reconciliation bill would double down on employment losses by creating “welfare without work” programs, discourage people from taking jobs and at the same time, raise taxes and micromanage employers so that they’re less likely to create jobs. The Texas Public Policy Foundation estimated the bill would reduce employment by 5.3 million while Casey Mulligan estimated it would lead to 8.7 million jobs.
“Command-economy tactics and cradle-to-grave welfare programs won’t help Americans thrive because individuals, families, and employers are far better than politicians at making decisions that impact their everyday lives and those around them… Politicians can help empower Americans to succeed by allowing them to keep more of their earnings, by reducing regulations, by allowing more flexible job opportunities and more accommodating benefit options, by expanding educational choices, and by focusing on helping people get off of welfare, instead of anchoring them to it.”
During her testimony, Greszler explained the many issues with the paid family leave program proposed by Democrats:
“Across the board, we want to be helping people who are in need, and we want to be helping them in a way that lifts them up, and absolutely people should have access to paid family leave, childcare is very important. But if the goal is to help the people in need, then why is there a proposal that’s going to use most of the money for paid family leave to pay employers who are already providing it, to keep providing it? That’s not going to help small businesses, because that’s going to let employers otherwise further increase their wages. And if we care about childcare, why do we have a plan that’s going to give a couple in D.C. that makes $340,000 a year, $30,000 worth of childcare subsidies. That’s not helping anybody enter into the labor force.”
Greszler recently released a report that examines the Biden administration’s efforts to expand the welfare state in a way that would hurt American families and undermine workers.