BRAC calls for ending federal unemployment boost in Louisiana

Greater Baton Rouge Business Report

The Baton Rouge Area Chamber announced today its board of directors has adopted a policy position calling on state leaders to end the federal unemployment enhancement payments before their planned expiration in September, joining other business groups including the Louisiana Association of Business and Industry, Associated Builders and Contractors and NFIB Louisiana. 

“The federal unemployment enhancement made sense when government mandated business shutdowns that left hundreds of thousands of Louisiana residents without the opportunity to work. Since virtually all COVID restrictions have now been lifted, and there is incredible demand for labor, there’s diminishing justification for continuing a program that disincentivizes residents from seeking employment,” says Andrew Fitzgerald, BRAC’s senior director of business intelligence, in a prepared statement. “The weekly payment, combined with state unemployment assistance, is currently the equivalent of almost $14 per hour, which is nearly median individual income in the state. In other words, one can be in the middle of the pack in terms of earnings by not working.”

While many businesses have anecdotally reported hiring challenges, BRAC says the board action was a data-driven decision based on research showing distortions in the regional and state labor markets. These include the following:

• While there are 24,000 unemployed residents in the Capital Region, there are more than 30,000 job openings, with thousands requiring only a high school degree or GED.

• The state has a similar excess of job openings, with 160,000 openings and only 150,000 unemployed residents.

• Despite COVID-19 business restrictions largely ending in late March and early April, unemployment in the Capital Region remained flat at 5.8% over-the-month, 2% higher than the pre-pandemic rate.

• Both Louisiana and the Baton Rouge metro area have unemployment rates higher than the national average of 5.7%.

• With the federal enhancement, Louisiana residents receive $547 weekly through unemployment, while median individual income in the state is $556 weekly, providing a disincentive to return to a number of jobs in restaurants, bars, retail, and other sectors hit hard by the pandemic.

In particular, when benchmarked against peer Southern states, it is clear that Louisiana is falling behind in terms of residents returning to work, according to BRAC. For example, Alabama is slightly larger than Louisiana in terms of population, yet has 79,300 residents on unemployment while Louisiana has 150,400—nearly twice as many. Nationally, half of all states have moved to end enhanced benefits before the September expiration. Louisiana is the lone holdout in the Gulf South.

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