Short-Term ‘Help’ Is Doing Long-Term Harm to the Economy, Killing Small Businesses

May 6, 2021 Updated: May 19, 2021

Commentary

The mounting evidence can no longer be ignored. Unsubstantiated and politically motivated COVID-19 lockdown policies and imprudent relief measures are causing serious, lasting damage to the foundations of American economic prosperity.

Having brought the economy to its knees through unwarranted and undependable lockdown measures that forced millions of Americans out of work and businesses across the country to close, the U.S. government is now going out of its way to encourage the workforce’s COVID-19 casualties to stay home—needlessly postponing our economic recovery.

Lockdowns necessitated the need to support the workers affected by them, but now those lockdowns are easing and businesses are trying to get back to normal. Continued stimulus payments may be good politics, but they’re terrible economics. Workers are being disincentivized to work.

The National Federation of Independent Business’s Uncertainty Index (pdf) increased by six points in March, driven largely by a current labor shortage. An astonishing 42 percent of small-business owners reported being unable to fill job openings, according to the survey.

“Owners are frustrated with mounting unfilled job openings as qualified and willing candidates are scarce,” the NFIB report stated.

This labor scarcity appears to be affecting all sectors of the economy. Yet it’s a veritable crisis for small businesses—so much so that small-business owners across the country are going to extreme lengths to attract employees, including offering signing bonuses and significant wage hikes, and even paying people just to show up to job interviews. The restaurant industry is being hit particularly hard, especially major fast-food franchises, which are having to close dining rooms, cut operating hours, and slash employee hours. This is causing those few existing employees on payroll to work extreme hours, and burnout is becoming a problem.

The cause of this severe labor shortage is easily explained. Potential job candidates “are getting enhanced unemployment benefits that are going to last for several months,” noted NFIB Illinois Director Mark Grant. Put simply, the government is paying people to not work, and they’re disincentivizing the work ethic that’s the backbone of America. Unfortunately, America’s workforce is responding to the bad incentives.

“Stimulus and unemployment are killing the workforce,” said one McDonald’s franchisee, who couldn’t reopen his dining room due to the labor shortage crisis. A New York restaurateur echoed that sentiment, blaming the labor shortage on “government assistance where people would rather stay home and pocket their cash.” Another restaurateur put it even more bluntly, saying, “Nobody wants to leave their couch.”

The recent COVID-19 relief package doubles the amount an individual could receive through Sept. 6 and expands the pool of individuals who can receive them. Federal Pandemic Unemployment Compensation now offers $300 per week on top of local benefits. In New York City, for example, where the maximum weekly state benefit is $504, unemployed individuals can now receive up to $804 per week—over $200 more per week than they’d make working eight-hour days at the city’s generous $15 minimum wage.

The situation is truly ridiculous. Bad government lockdown policies did untold economic damage, and now bad government economic “relief” measures—ostensibly designed to stimulate that damaged economy—are in fact making a proper economic recovery much more difficult.

And a proper economic recovery is a recovery for every level of worker in every economic sector. I hope and pray that the economy as a whole will bounce back eventually. Wall Street will continue to grow, and giant corporations will continue to see increased profits. But what about your favorite local bistro? What’s going to happen to that local burger joint you loved as a kid? What does the future hold for that amazing little bar that makes the best cocktail you’ve ever had?

The government should be encouraging people to get back to work, not giving them reasons to avoid doing so. If we don’t reverse course soon, small businesses as we know them could be gone forever, and the common men and women who rely on them—the dishwashers, the waitresses, the bartenders, the cashiers, and the cooks—could be condemned to state dependency for generations.

Papa John Schnatter is the founder and former chairman and CEO of Papa John’s International, Inc.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.