A friend of mine and I had a conversation recently, and he was lamenting the fact that some folks are making more on unemployment (with the federal bonus) than when they were working, and now that some businesses are allowed to start working, they’re struggling to find people who want to come back to work. It was a good conversation, and I’ve had a chance to muse on it more lately, and I’ve got a few thoughts.
First, I think it’s important to acknowledge that the stimulus package was thrown together VERY rapidly. This wasn’t an effort that was studied and debated for months while economic impacts were analyzed. This was a quick fix to make sure people didn’t starve or become homeless (if at all possible). That means that it was put together with the best intentions in mind, but probably not the best execution.
The $600 that the Federal government is kicking in probably feels like a huge windfall to some people. However, in the interest of expediency the government didn’t ask if that was the right amount of money for every part of the country. In Washington D.C., $600 is a pittance, and probably about equal to most folks Starbuck’s budgets. Here in the upper midwest? That’s a significant bit of income. Plus, the program didn’t take into account States that have generous unemployment benefits versus States where that support is much weaker. In some places people are itching to get back to work because even with that $600 bonus, they’re still struggling tremendously. It’s an artifact of working quickly, not perfectly.
However, there’s another angle to all of this. If there are situations where $600/week is enough to stop people from wanting to work, maybe we need to be asking if we’re actually paying people enough in the first place. If a government handout in a time of crisis is more than people are trying to live off of, then perhaps there’s a deeper issue.
It would be easy to go after business owners and flog them for underpaying their staff. How dare they not pay a living wage? But that attitude is short-sighted. Yes, I agree that we need to pay people a fair wage, and people deserve financial security (and many businesses are terrible to their employees). But, for many small businesses those wages are a reflection of “the market”. That means that they can only pay their workers as much as they’re taking in for money. Who determines what the market rate is? In many, many cases it’s the consumers. It’s us.
We’ve fallen in love with cheaper and cheaper products and demand that we get everything for as low a cost as possible. As a society we’ve decided that we value low cost over everything else, and that means that businesses that try to pay their employees what they’re actually worth, simply can’t. We’ve decided that we’re only going to pay $5000 to have our kitchen redone, when in fact it might cost $7500 to actually pay people to do the job right. Or that a well cooked meal, served to us with no mess in our sink, should never cost more than $50. Or a myriad of other things that we’ve decided need to be cheap.
Is the stimulus perfect? No. Does is cause some new problems? Probably. Should we all be using this time to think about how we’re spending our money, and what the real value of things is? Yes.