The federal government’s exorbitant additions to state unemployment benefits, ostensibly passed to help people who were struggling in the wake of the coronavirus lockdowns, have carried enormous economic blowback in their wake. As with virtually every intervention by the government into the economy, this has fallen prey to the law of unintended consequences.
People are simply being paid too much money not to work, and so they are choosing not to work.
And this has afflicted not only traditionally low-paying service sector jobs like those in the restaurant industry, but it has even damaged traditionally working-class-oriented manufacturing jobs like metal casting.
Recently, both the American Foundry Society and the Foundry Association of Michigan teamed up to write a joint letter to Michigan governor Gretchen Whitmer urging her to end the state’s practice of accepting unemployment subsidies and extensions from the federal government.
The metal casting industry is suffering a severe labor shortage right now, and the chief culprit for this is large coronavirus unemployment benefits coming from the federal government.
Michigan’s Foundries Are in Trouble
According to this letter, recently obtained by Breitbart News, job openings at founders in Michigan are “near an all-time high.” However, no one wants to fill these open positions when they know that they can just stay home and earn more money by collecting checks from the government.
The letter, therefore, says to Whitmer, “We, therefore, urge you to join at least 12 other states in ending participation in extended unemployment insurance programs enacted this year. Supplemental assistance adopted during the height of the pandemic in 2020, when there were no vaccines available, was meant to be short-term and temporary.
Today, we hear on a daily basis from metal casters who indicate that these expanded benefits are a key disincentive to work and are keeping able-bodied Americans on the sidelines.”
Metal casting is the third-largest industry in the state of Michigan, normally employing about 36,000 people and contributing about $7.79 billion to Michigan’s economy annually. The fact that this industry has been completely shuttered has dire and woeful consequences for Michigan’s economic future.
But as mentioned, metal casting is far from the only industry experiencing this problem. Everything from the culinary industry to the floral industry has been afflicted.
Of course, this cannot go on. An economy cannot function when people are not out producing goods and services.
These are the real source of wealth. Money created by the government only papers over the damage created by the lockdown policies and creates the illusion that things are fine.
Unless states like Michigan swiftly change course, this illusion will be revealed, and the economic consequences of exposure to reality will be devastating.