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Wednesday, May 19, 2021 Leer en Español

Texas Just Became the Latest State to Opt Out of a Broken Federal Welfare Scheme

The news is heartening for anyone who wants to reward work, not idle dependence.

Composite Image By FEE | Image Credit: WikiMedia Commons

One dysfunctional federal welfare program is contributing to a national labor shortage. Now, we can add Texas to the increasingly long list of states opting out.

The program in question is the federal government’s pandemic expansion of unemployment benefits. At the start of the crisis, Congress expanded benefits to new categories of workers and added a federally financed supplement on top of existing state-level unemployment benefits. This augmentation, in place until September, has perpetuated a system where most unemployed people can earn as much or almost as much by staying home as they can by returning to work. 

As the economy heats up again, this work disincentive is seriously hindering the labor market recovery. The average beneficiary is making the equivalent of $17.13 an hour on benefits.  (That just being the average, many in high-paying states like Massachusetts are earning even more!) This leaves many unemployed Americans no incentive—actually, a disincentive—to go back to work, even for jobs that pay $15 an hour (or more).

The result? 

Employers are reporting shortages of job applicants and millions of job openings remain unfilled across the country, all while tens of millions linger on unemployment benefits. While the Democrat-controlled Congress refuses to roll back this system—or even acknowledge the existence of a problem—some states are taking matters into their own hands.

More than 19 states including Montana, Mississippi, Utah, and now Texas, are moving to decline the federal supplement and restore unemployment payouts in their states to normal levels. Texas Governor Greg Abbott announced his state’s addition to the list on Monday, the largest state to do so thus far.

The governor’s decision comes as Texas is experiencing stubbornly high unemployment despite fully reopening its economy. (Texan employers blame the ultra-generous benefits).

The news out of Texas is heartening for anyone who believes our economy should reward work, not idle dependence. And the development bodes well for economic recovery—at least in these states. For those that choose to remain in a welfare state coma, the future looks less bright.

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