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With new incentives to work, Alaska’s economy can start to unfreeze

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In-person events are starting up again. Schools are resuming face-to-face instruction. Families are visiting each other for the first time in a long time, and businesses are moving back to normal operations.

It would appear that we’re emerging from the dark valley of the pandemic and its depressing effects on the economy. By the look of things, one would assume we’re approaching the summit and can see a return to normal on the horizon.

This is all the more so now that the Alaska Department of Labor and Workforce Development announced that the state will no longer accept the Federal Pandemic Unemployment Compensation (a $300 weekly bonus) as of June 12.

Gov. Mike Dunleavy’s decision that Alaska will no longer pay its citizens to stay home is welcome news. According to the Bureau of Labor Statistics (BLS), the number of job openings in the U.S. recently hit a record high of eight million. In a normal year, we’d be celebrating this incredible growth and the opportunities available to workers.

Unfortunately, this record number of open jobs comes at a time when we still have an elevated unemployment rate and businesses across the state are struggling to stay staffed and keep their doors open.

We have Congress to thank for that. The federal unemployment insurance (UI) bonus made it more lucrative for many Americans to not work, leading small businesses to unnecessarily struggle and keeping the Alaskan economy slowly creeping along rather than barreling onward full speed ahead.

But now, there’s much to look forward to on the approaching horizon.

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Alaskans can look forward to economic recovery, thriving businesses and a decrease in unemployment now that the state has put its proverbial foot down and refused to accept the federal UI bonus any longer.

Before, with the federal UI benefit, a family of three in Alaska could earn nearly $3,900 per month in cash-type benefits — that amounts to more than $46,000 per year just to stay at home and not work. Now, there is more incentive for people to go to work and Alaskans will begin to reap the benefits of this positive step towards recovery.

This is especially welcome news for businesses that were, to this point, struggling to keep their doors open due to low staffing. Rain Proof Roofing and La Mex restaurant in Anchorage posted job ad after job ad, only to be met with silence — or dozens of no-shows when it came time to interview. Sadly, this is a problem for businesses all over the country — but now Alaska joins a number of other states as the exception.

In addition to a weekly bonus, the CARES Act and Biden administration guidance allowed workers to receive UI even when they refuse to work, or accept an offer of work when offered their previous job.

Cracking down on inflated UI benefits for those who opt to stay home instead of work will benefit the truly needy of the state. Unsurprisingly, it cost the state of Alaska a lot of money to pay able-bodied workers to stay home instead of work. Alaska’s UI trust fund balance declined by more than 40% since the beginning of the pandemic.

Now the truly needy will have the resources they need and depend on, and the system won’t be overextended with bloated UI bonuses for the able-bodied who simply choose to not work.

The Foundation for Government Accountability thanks Gov. Dunleavy for ending the federal UI bonus that will incentivize work, help businesses thrive again, preserve resources for the truly needy and put the state back on a path of economic recovery.

Alaskans have much to look forward to. These UI benefits might have been well-intentioned, and in the early days of forced lockdowns may have had some merit. But with vaccines readily available and states starting to fully open up, it’s time for Alaska to get back to work.

Joe Horvath is a senior fellow at the Foundation for Government Accountability. He lives in Ellington, Connecticut.

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