Gov. Doug Ducey is cutting off the $300 a week in extra federal jobless benefits in a bid to help the restaurant and hospitality industry find more people willing to work for what they are paying.
But they will get a one-time $2,000 bonus if they take a full-time job by Sept. 6. And the state is offering some child care assistance and even a semester of community college tuition for those who go back to work.
“In Arizona we’re going to use federal money to encourage people to work … instead of paying people not to work,” the governor said in a video announcement on Thursday.
The move most immediately affects more than 200,000 Arizonans who qualify the extra $300 a week currently appropriated by Congress to help those affected by the Covid.
Ducey’s position, according to press aide C.J. Karamargin, is that there are plenty of jobs out there and little reason for people to be collecting benefits. More to the point, he said that restaurants and hotels are struggling to find workers.
“The hospitality industry in Arizona, a critical part of our economy, was perhaps the hardest hit sector,” Karamargin said.
“They cannot find enough workers for the jobs they have to fill,” he continued. “And this plan is aimed at helping them fill those positions.”
But Karamargin said this extends to other sectors of the economy where employers are having trouble finding workers.
Inherent in that is the governor’s belief that there are those for whom the total benefits — the $240 a week maximum paid by the state plus the extra $300 — provide a disincentive to go out and find a job. That comes out to $13.50 an hour, before taxes are deducted.
By contrast, the state minimum wage is $12.15 an hour; restaurants can pay $3 an hour less if the tips that servers get bring them up to the minimum.
Steve Churci, president of the Arizona Restaurant Association, said there are establishments of all sizes that are “ready to hire new employees and expand their teams.” And he said the situation now is far different than it was last year.
“Millions are vaccinated, we know how to keep patrons and staff safe, and people are ready to eat at restaurants again,” Chucri said. “Restaurants need to ensure they have enough staff to meet the demand but many are struggling to fill positions.”
That, however, still leaves the question of whether the problem is the underlying wages — and whether it would be resolved simply by paying more.
In the restaurant industry, for example, data from the governor’s Office of Economic Opportunity shows that the average salary for fast food and counter workers in Arizona ranges from $12.15 an hour to $13.42. And restaurant cooks earn from $12.44 to $15.38 an hour.
“That’s a fair question,” Chucri told Capitol Media Services. But he said those pre-pandemic numbers no longer reflect what the industry is offering.
“We’re paying far above what we would typically pay,” Churci said.
“We’re seeking dishwashers making $25 an hour,” he said. “McDonald’s is paying $50 just to show up for an interview.”
And yet, he said, restaurants are still having trouble finding workers.
Chucri conceded that some part of the problem the industry is having has nothing to do with people deciding they’d rather collect unemployment benefits.
“You’ve got people that have cared for or are caring for Covid patients, family members, that have to be there,” he said. And there are other reasons.
“Some in the restaurant workforce said, ‘You know what? I don’t want to be this vulnerable in the future if another Covid were to strike or Covid came back strongly, I don’t want to be in the same situation,’ ” Chucri said. “So they’ve gone into health care, they’ve gone into a different profession.”
So in those circumstances, the governor’s decision to cut jobless benefits won’t make a difference.
But Chucri said there are situations where Ducey’s maneuver will matter.
“I know for a fact that some people who are on unemployment would rather sit home and not come back to work because they’re making at or maybe a little below — and in some cases, above — what they were making,” he said.
Anyway, Chucri said, it’s about more than the restaurant industry, saying retailers also are having trouble finding help.
The big carrot in all this is that $2,000 bonus for those who are currently collecting benefits who go back to work by Labor Day. For those who take part-time jobs, the bonus is $1,000.
But they have to work at least eight of the following 10 weeks to qualify.
There also is the promise of a single semester of tuition at the community college along with cash to help those without a high school diploma prepare for their GED exam.
And the state will provide subsidized child care for those who return to work if they are earning $25 an hour or less.
Arizona lawmakers are considering legislation, backed by the business community, to increase that maximum state benefit. That $240 a week is not only the second lowest in the nation — only Mississippi pays less — but has not been raised in 17 years.
But that legislation has stalled amid differences between House and Senate versions, one moving the cap to $320 a week and the other at $300. That leaves the question of whether either version can be enacted before that additional $300 expires on July 10.
And that assumes the governor goes along. Ducey has been chilly to even raising the basic state benefit even though it is not paid through state taxes.
Instead, the payments are financed through a tax that employers pay on the first $7,000 of each worker’s salary. The average cost, according to DES, is $160 a year per employee.
The governor’s announcement also comes as the state’s official seasonally adjusted unemployment rate is 6.7%. While that is down from the peak of 14.2% it hit a year ago, it still is higher than the pre-pandemic figure of 4.7%.
This is actually the second move by the governor in less than two weeks to force people back into the workforce.
Earlier this month the governor rescinded an order he had signed in March 2020 suspending the job-search requirements normally part of the ability of people to collect benefits. That was based on not wanting to force people who were infected with Covid, or were caring for others with the virus, to go out looking even as the pandemic was raging.
Now, effective the week of May 23, anyone wanting to keep unemployment benefits will again have to make contact with potential employers at least four days a week.
And after four weeks, they have to take any job that’s offered, regardless of whether it is in their field or not.
Ducey is hardly the first Republican governor to make the move. At least nine others have already done the same.
But President Joe Biden earlier this week rejected the idea that the enhanced federal benefits are why some people are not going back to work.
“The line has been because of the generous unemployment benefits, that’s a major factor in labor shortages,” the president said at the White House on Monday.
“Americans want to work,” he said. “I think the people claiming Americans won’t work even if they find a good and fair opportunity underestimate the American people.”