Cutting extra unemployment benefits in Iowa was a matter of incentives, not laziness

Late one evening, I texted my father a picture of some gorgeous cinnamon rolls I’d brought back from a French bakery in Des Moines, where I’d gone on business that day, and told him I’d keep them for the next time he and my mother stopped by. The following morning, I woke up to his phone call. He wanted to know if it was a good time to come over and fix a leaky valve in my guest bathroom toilet that I’d mentioned to him earlier.

What Dad didn’t know was that I’d already made room in my schedule that day for him to fix the valve. For about a year, I’ve been training him Pavlovian style to associate doing handyman’s work in my home with receiving some sort of treat. Having inherited his insatiable sweet tooth and snacking habits, I knew that Dad’s mouth would start watering upon seeing the picture of the cinnamon rolls, and he’d look for a reason to come by. My plan worked perfectly, right down to the strategically timed sending of the photo.

What can I say? Incentives work. They are perhaps the most robust driver of human behavior. A weekly allowance can drive a 7-year-old to make her bed every morning. An M&M can motivate a two-year-old to use the toilet when potty training is underway. A cash bonus can motivate an employee to perform at top level, and a date with a pretty girl can motivate a stinky teenager to hop in the shower and run a comb through his hair.

If we were offered a way to keep our income without going to work, wouldn’t any of us jump at the chance?

While incentives are powerful drivers of action, they can also be drivers of inaction. I’ve been thinking about that a lot over the last week after reading an analysis from a recent poll in which 13 percent of respondents cited generous unemployment benefits as a direct reason for rejecting a job offer during the pandemic.

In his analysis, John Leer, Chief Economist at market research firm Morning Consult, states that of the 5,000 American adults polled in late June, “just under a third” of unemployment beneficiaries turned down job offers during the pandemic. Of those who rejected an offer, 45 percent “cited the generosity of [unemployment insurance] benefits as a major reason” for turning down work.

During the week before the survey was conducted, 14.1 million adults in the U.S. received unemployment benefits. That equates to about 1.8 million Americans saying “no thanks” to gainful employment in lieu of weekly payments.

Critics of pandemic-related jobless benefits blame the hesitancy to find work on the fact that some can make more money on unemployment than they were before COVID-19 put them out of a job. They’re not necessarily wrong. Researchers at the University of Chicago found last summer that with the $600 weekly CARES Act supplement, 76 percent of workers who qualified for regular unemployment were eligible for a sum that exceeded their previous wages. The $600 supplement is long gone, but with the March 2021 passage of the American Rescue Plan and its weekly $300 supplement, some Americans are still able to make more on unemployment than from their previous wages.

Correct or not, though, those critics do a disservice to attribute the reluctance to return to work on laziness or lack of will. Humans are intrinsically inclined to avoid effort or toil whenever possible. We labor at our jobs not because we want to exert ourselves, but because our livelihoods depend on the compensation those jobs provide. If we were offered a way to keep our income without going to work, wouldn’t any of us jump at the chance? Surely. If policies are passed which incentivize staying home over finding a new job, we shouldn’t be appalled when people do just that.

But the fact that it’s possible to collect those generous benefits for an extended period doesn’t mean it’s right. And if 13 percent of our unemployed workforce is turning down work in order to continue receiving those payments, perhaps it is time to review where the incentives lie and make some adjustments.

Many employers have already begun instituting hiring incentives. A Wall Street Journal piece points out that almost 1 in 5 advertisements on job search website ZipRecruiter offer a signing bonus. In March of this year, it was 1 in 50. According to ZipRecruiter labor economist Julia Pollak, Iowa is among the states with the highest number of openings with sign-on bonuses.

The state is also doing its part to ensure that Iowans aren’t incentivized to stay home. In May, Gov. Kim Reynolds announced that as of June 12, Iowa would discontinue its participation in the Federal Pandemic Unemployment Compensation program, thus ending the extra $300 a week tacked on. Of course, this was met with the usual chorus of gasps from the governor’s political opposition, whose aggregate response was basically “Kim Reynolds hates poor people.”

Unemployment Insurance was not designed, however, to address the complex issues of poverty such as long-term housing and food insecurity. It is solely to replace a portion of income lost due to discontinued employment while searching for new work. We know that the shutdowns from COVID-19 caused a need for a longer term for benefits last year. But businesses are reopening, and vaccinations are available to anyone who wants them. If we rely on pandemic-related benefits to tackle long-standing, preexisting issues, we’ll be bound to our COVID-19 policies forever.

None of this is to say that returning to work will be easy. We’ve been through a lot in the last 16 months. But life itself is a series of trials and tribulations from which we must progress. The first date after a breakup. The first steps after removing the cast from a broken leg. That terrifying first day back from maternity leave for an apprehensive new mother. Each time, we somehow manage to move forward.

Happily, the same poll that concluded that 1.8 million Americans turned down work also predicts that the same number will jump back into the workforce as unemployment benefits expire nationwide. Some just need an extra push. America is going back to work, and we’re about to find that the risk will be far exceeded by the reward.

Althea Cole is Gazette editorial fellow. Comments: althea.cole@thegazette.com