How Texas Can Start Solving Its Labor Shortage
That’s how long I waited in line at a local fast-casual restaurant a few weeks ago. There were only five people in front of me, yet the restaurant had only two people on staff, and the man at the register was newly hired and still learning the ropes. He apologized profusely, and none of us were upset, because we completely understood his predicament. This is the reality of our state’s labor shortage.
Everyone I’ve talked to in recent months – family, friends, fellow church members, you name it – has a similar story. A long wait in line. A delay picking up an order. A general inability to schedule deliveries like we used to. And the situation is getting worse. With just over a million job openings statewide, an increase of more than 100,000 in a single month, it seems like we’re dealing with a new normal.
But we don’t have to.
Our elected leaders in Austin could easily start ending this labor shortage. They simply need to pass a common-sense reform to our state’s unemployment insurance program, which currently pays far too many people to stay on the economy’s sidelines. This reform is pro-work, pro-taxpayer, and a total no-brainer, as other states have discovered.
Currently, any Texan who loses their job can get taxpayer-funded unemployment payments for 26 weeks, which is equal to half a year. That might make sense when the jobs are hard to find and laid-off workers need extra support. But it’s a real head-scratcher when jobs are plentiful, like they are right now. As a state, we should try to get our fellow Texans back into work as quickly as possible, especially when “for hire” signs are everywhere.
What would a better system look like? It would link the length of unemployment payments to the unemployment rate. When the economy is booming and unemployment is lower than 5.5%, laid-off workers would only get taxpayer support for a maximum of 12 weeks, giving them more reason to get back in the workforce as quickly as possible. That shouldn’t be hard, since that’s when jobs are easiest to find.
By contrast, when the economy is struggling and unemployment is at 9% or higher, workers could get up to 20 weeks of support. That extra time and taxpayer help reflect the fact that jobs are harder to come by when times are tough. Texans want to help those in need, especially when the chips are down.
This reform would make an immediate impact. Right now, Texas has an unemployment rate of just 3.8% and open jobs a plenty. By encouraging people to get off unemployment insurance, we could get tens of thousands of Texans back into jobs much faster, making the labor shortage much less painful.
Other states have tried this system with great success, from Florida to North Carolina to Oklahoma. On average, they’ve seen laid-off workers find jobs 34% faster. What’s more, these states have saved taxpayers huge sums of money, with as much as a 71% decrease in unemployment insurance spending, while lowering taxes on the small businesses that fund the program by up to 59%.
Add it all up, and states that reform unemployment indexing are much better prepared to weather the inevitable economic storms. And they’re prepared to bounce back much faster when the storm passes.
The good news is that this common-sense policy is already under consideration in Austin. Bills have been introduced in the House and Senate,with hearings starting as soon as this week. It can’t pass soon enough. The restaurant I went to a few weeks ago needs a lot more help, and it’s not alone. And Texans want to bring back the days when a thirty-five-minute wait was unimaginable.
Victoria Eardley, a resident of North Dallas, is marketing director at the Foundation for Government Accountability.