The real reason businesses struggle to hire during the economic recovery has little to do with direct COVID relief and a lot to do with poor wages and working conditions.
LANSING, Mich.—Getting Michigan’s economy back on track after a pandemic takes more than just distributing the vaccine. A large number of businesses outright collapsed, and a large number of Michigan families are facing economic hardships unlike anything seen in recent memory.
To light the spark that reignites the economy, Gov. Gretchen Whitmer wants to use unspent coronavirus relief money to put Michigan on top in the new labor market.
Called the Michigan Economic Jumpstart Plan, the state will increase incentives to raise wages, invest in grants for small businesses, and expand access to childcare. This addresses key factors keeping people out of the labor force, like low wages and a lack of access to care-based services.
“As we continue to take steps to jumpstart our economy, we need to have a real conversation about putting Michigan back to work with better jobs and bigger paychecks,” said Gov. Gretchen Whitmer. “Under the Michigan Economic Jumpstart Plan, we can harness these once-in-a-lifetime economic opportunities and channel it to raise wages, invest in small businesses, and uplift families.”
Michigan has the cash on hand to get it done, too. With more than $20 million in coronavirus aid still on the table, the state is incredibly well-positioned to make dramatic investments in restarting the economic engine of Michigan. Michigan’s unemployment rate at under 5% also beats the national average of just over 6%, further strengthening the state’s position in an economic recovery.
Still, businesses are struggling to engage lower-wage workers, which is where the jumpstart comes in.
In truth, studies have thoroughly debunked the popular myth that coronavirus relief has kept people from rejoining the workforce. A third of Americans on unemployment insurance still can’t cover their bills, and most money from the direct stimulus payments has gone into addressing debt or rebuilding savings. Instead, it’s allowed workers to seek better jobs than what they had before.
It’s also worth noting that a year ago, these low-wage workers were considered “essential” and “heroic” by politicians and the public both, but that heroism hasn’t been repaid with improved working conditions.
Forcing those conditions to be normalized again in the post-pandemic world could have rough implications for an economic recovery desperately needed, as well. As explained by Cornell Law School macroeconomics fellow Daniel Alpert, the most likely outcome to going back to the standard of low-wage work in lousy conditions is a massive contraction of the finances in households nationwide just months into a desperately needed economic recovery. That may be a boon to the majority of large businesses which turned major profits during the pandemic, but not to the overall economy which would see a massive crunch in individual families’ pocketbooks.
Michigan’s plan would help small businesses bolster wages for workers, helping get them back into the labor force and put Michigan in the best possible position for the nation’s long road to post-pandemic economic recovery.
“I look forward to engaging the legislature, local communities, and Michiganders as we continue thinking through the best ways to use the federal funds and state surplus to turbocharge our economy and make a real difference in people’s lives,” Whitmer said.