Economist Proves Governor Holcomb’s “Worker Shortage” Claims Were a Lie


Economist Michael Hicks: “The claims of a labor shortage in May turned out to be patently false”

ICYMI: Indiana’s workforce ranks 43rd in the nation, thanks to the INGOP’s “work more for less” economy

INDIANAPOLIS – The Indiana Democratic Party, the organization that advocates for the future of Indiana and its families, today criticized Governor Eric Holcomb and the Indiana Republican Party for intentionally misleading Hoosiers into believing the state was under a “worker shortage”. This lie was exposed in a column by economist Michael Hicks, and it debunks Holcomb’s claims about why he tried to prematurely end the state’s participation in the unemployment insurance program and leave many Hoosier families struggling during the COVID-19 pandemic. The Governor’s crusade against this program is another example of the Republican Party governing by a form of extreme partisanship that does nothing but harm the state’s economy and the future of Hoosier families. 

Indiana has a “work more for less” economy, and the responsibility falls on the Indiana Republican Party. As it stands, the state’s workforce ranks 43rd in the nation, and it’s largely due to the state attracting low-wage jobs for Hoosier workers. A recent study found Indiana lost more “good jobs” than it gained, and according to recent data, about 892,000 Hoosiers make under $15.00 an hour. This economic reality can be directly linked back to the state’s “right to work” laws, passed and signed into law by Indiana Republicans. The result: Republicans created a “work more for less” economy and misled Hoosiers to believe it was a “state that works”. 

Indiana Democrats are committed to ending this economic reality for Hoosier workers. It’s why the Indiana Democratic Party has embarked on its statewide American Jobs Plan tour, which includes the effort to pass the Protect the Right to Organize (PRO) Act and dismantle Indiana’s “right to work” laws for good. 

Here are some key points to Economist Michael Hicks’s column below: 

Michael Hicks: Ending the Pandemic UI Was a Rare Mistake by This Administration

. . . it was based on zero evidence of a UI related labor shortage.

“In May, Governor Holcomb’s announced an early end to pandemic unemployment assistance…The mistake was also unusual in that the predictable result was economic damage to those Hoosiers who were most affected by COVID. This was a marked departure from the administration’s more than yearlong focus on the health and wellbeing of those most impacted by the pandemic.” […]

“...the fiasco with pandemic unemployment assistance illuminates the folly of the Division of Workforce Development’s culture of supporting businesses at the expense of taxpayers as a whole.

The pandemic unemployment insurance payments were as close to a ‘free lunch’ for Hoosier taxpayers as anything we’ll ever receive. So, it is puzzling how a provision signed by President Trump and unanimously passed by the Senate would become target of partisan opposition in less than a year. Of course, this is because by April 2021, many businesses complained about a looming labor shortage presumably caused by generous pandemic unemployment payments. But even more mystifying is how anyone could’ve examined labor force data in April or May and concluded there was a labor shortage in Indiana.

By the end of April, Indiana’s economy had stopped growing. Over the first four months of the year, employment nationwide grew by a healthy 1.1 percent, but Indiana’s employment actually dropped by one-tenth of a percent (0.1%). From January through April, the state experienced an employment decline of more than 3,400 workers. This decline was broad-based, leaving Indiana as one of the worst-performing economies in the nation. This alone should’ve been strong evidence that something other than the lack of workers was weighing on the Hoosier economy.

In the days leading up to the May decision to suspend pandemic UI, data was flowing in that didn’t just challenge the notion of a labor shortage, but also absolutely crushed that claim. From the peak of 2021 UI in mid-January through mid-May, the state’s UI system reported that almost 170,000 workers left the system. So, the decision to terminate the pandemic UI payments was made after four months of declining employment, when a whopping 170,000 Hoosier workers had already lost benefits.” […]

This means that just as Indiana announced it had a ‘labor shortage’ and would end the pandemic UI early, the state’s own labor market data made clear there was a ‘labor surplus.’ But there was even more data nationwide that suggested little or no evidence of a labor shortage.” […]

The wholly unvarnished truth of the matter is that when Governor Holcomb announced the end of pandemic UI, there was absolutely no credible evidence from labor markets of a shortage of workers. Sure, there were businesses complaining about the difficulty of finding workers. No doubt many of them did and still do find it difficult to attract workers. However, those claims just cannot outweigh piles of contradictory evidence.

Businesses are taxpayers, and businesses deserve to be heard by elected officials, but when claims by businesses can be easily refuted by the state’s own data, their concerns cannot be taken seriously enough to guide public policy. The culture of state government that values business voices over all other considerations is a bad one for Hoosier taxpayers, and, more importantly, it is bad for business…”

“It is worth noting that in the weeks since the May announcement to end pandemic UI, the very poor justification for that decision has actually deteriorated. Between the January highs and the end of June this year, the UI rolls shed a full 237,000 workers, while Indiana businesses created only 21,300 jobs. Indiana’s economy did a bit better in May and June than over the previous six months. Still, Indiana has grown employment at less than 40 percent the national rate this year.”

The claims of a labor shortage in May turned out to be patently false, and in the month that UI ended, the state’s unemployment rate actually rose.”


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