By Paul Best
The labor force participation rate was 62.1% last month, notably lower than the 63.4% mark it was at before the coronavirus pandemic struck the United States in March 2020.
There are numerous reasons that unemployed Americans aren’t entering the workforce, including ongoing fears of COVID-19, disabilities such as “long COVID,” and other care responsibilities. One factor that is contributing to the relatively low labor force participation rate is the combination of unemployment benefits and recently expanded Affordable Care Act (ACA) subsidies, according a new study by the nonprofit Committee to Unleash Prosperity.
In 14 states, unemployment benefits and ACA subsidies for a family of four with two people not working amounts to an annualized equivalent of $80,000 a year in wages and benefits, the study found.
Those benefits come out to over $100,000 in three states – Washington, Massachusetts, and New Jersey.
“A key policy question these days that has befuddled federal lawmakers is why so many millions of Americans have not returned to the workplace in the post-Covid era. The U.S. is ‘missing’ more than three million workers of working age that could be working and were working prior to Covid but are not today,” University of Chicago economics professor Casey Mulligan and Heritage Foundation research fellow EJ Antoni wrote in the study.
“This study shows that one factor contributing to the dearth of workers is the generous benefits paid to families without workers.”
The Inflation Reduction Act, which the Biden administration helped usher through Congress earlier this year, extended subsidies from the American Rescue Plan until 2025.
“The expansion of assistance, especially in subsidized health insurance to families with children and no parents working, can mean that families can earn as much or more income from receiving government assistance than the median household does from working,” the authors wrote.
So, the combination of unemployment benefits and recently expanded Affordable Care Act (ACA) subsidies has become the new welfare for people that don’t want to work.