Thanks to supplemental Federal unemployment benefits ending last month, Alaska workers, like those in many other states are finally getting back to work. Republican officials across the country have long claimed that generous unemployment benefits were a disincentive for returning to jobs.
In what has become a national trend, many Alaska business owners have not been able to fill open positions.
In a recent ADN article, Misty Stoddard, an owner at Rain Proof Roofing in Anchorage said she wasn’t getting many applications. Some people have told her they’d prefer to continue collecting unemployment benefits.
Many business owners in the local hospitality industry have similar stories to tell. Trina Johnson, owner of La Mex restaurant in South Anchorage, said she’s had trouble finding workers.
A record-high 48% of small business owners in the U. S. reported unfilled openings in May, according to the National Federation of Independent Business. Alaska’s reliance on the visitor industry has disproportionately affected our state as restaurant owners, tourism related businesses, and their suppliers are experiencing a growing labor shortage as the economy tries to recover.
In many cases, the $300 weekly benefit, which was reduced from the $600 weekly payment authorized under the original CARES Act last March, meant that many unemployed workers were earning the same or more by not working. According to the Center on Budget and Policy Priorities, based on a 40-hour work week, the average unemployed American was getting the equivalent of $17.17 an hour – more than twice the Federal minimum wage. In 21 states, unemployed households could potentially earn the equivalent of $25/hour while not working.
In March 2021, there were 31,841 Alaskans collecting state unemployment benefits, over three times the number collecting unemployment benefits a year earlier. Yet, the Dunleavy administration had been hearing from employers for some time that a growing labor shortage was preventing businesses from fully reopening as pandemic related precautions eased. According to Alaska Commissioner of Labor Tamika Ledbetter, the state’s available-jobs database had more openings than the number of people on unemployment. Based on that information, on May 14, Gov. Dunleavy made the decision to discontinue the Federal supplemental payment beginning in June.
In doing so, Alaska joined 17 other states that announced they planned to end the special Federal benefit. A week later, at least 25 states, including Alaska — all with Republican governors — had announced similar plans. Some states even decided to offer bonuses to employees that returned to work. “In Arizona, we’re going to….encourage people to work…instead of paying people not to work,” Gov. Doug Ducey said announcing Arizona would be offering one-time bonuses to returning workers.
Dunleavy’s action was praised by Republican officials and many private sector business leaders. Some Democratic lawmakers, University of Alaska Anchorage economists and labor unions disputed that the higher unemployment payments discouraged people from work and criticized the cut.
However, evidence has continued to mount since then that ending the benefit has positively affected many states across the country, including Alaska.
Recently released U. S. Labor Department data on unemployment claims reflect welfare rolls expanding in the states where the unemployment bonus remains in place. Conversely, the number of people on welfare is shrinking in the states where the supplement expired.
States that announced an end to enhanced federal unemployment benefits in June saw a 13.8 percent drop in residents receiving benefits from mid-May through June 12, according to an analysis by Jefferies LLC. States announcing an end to the federal unemployment in July saw a 10 percent decline in residents receiving state benefits. Meanwhile, some studies show states that continued the bonus posting increases in initial claims.
In Alaska, total unemployment claims dropped from nearly 30,000 the week before the extra federal benefit ended to just under 26,000 in late June, according to state data. They peaked at more than 66,500 a year ago.
As visitor numbers begin to increase across the state, it is critical that Alaska businesses are able to staff up to meet the demand.
Thanks to Governor Dunleavy, one more impediment to accomplishing that has been removed.