Economy / Labor Force

Prioritizing Our Private Sector

As we near the end of the month, we are nearing the expiration of the Pandemic Unemployment Assistance (PUA) program. This program issues a $600 weekly benefit for Americans that typically do not qualify for unemployment insurance. Those eligible include the individuals who are self-employed, part-time employees and others who do not have qualifying work history. Many are worried that this expiration of unemployment insurance will raise our unemployment rate even higher. However, many are concerned that an extension of unemployment benefits will hinder the recovery of our economy by incentivizing Americans to stay home. More specifically, this extension may have the greatest impact on our private sector. Although most of America seems to revolve around the public sector and government-owned franchises, the private sector is crucial as it upholds our infrastructure and provides goods and services that are fundamental to a stable economy.

Prior to the pandemic, small businesses suffered a lack of funding. Now that the pandemic is occurring, it has heightened this financial stress. Small businesses are struggling to keep their business open, provide sufficient pay for their workers and hire new skilled workers. In addition, small business owners are concerned that their businesses will be forced to shut down; thus keeping their employees out of jobs. A report conducted by Steven J. Davis of University of Chicago estimated that 42% of the jobs lost will not return. This 42% accounts for the millions of Americans who have applied for unemployment insurance since the end of March. The unemployment claims are expected to increase as the pandemic persists and the recession remains in its beginning stages. 

For the small businesses that are staying afloat, the business owners are facing the problem of rehiring old workers and finding new skilled workers. On July 16th, 2020 at the Putting America Back to Work hearing, witness and Vice President of GKM Motors Auto Parts, Kelly Moore expressed her concern of hiring new employees. She cited research that found 22% of U.S. small business employers lowered the minimum qualification for their most high-skilled positions. Also, 24% of employers lowered their qualifications for the lowest skilled jobs. By lowering the standards of employees, small business owners will have to implement training workshops to up-skill their employees. Although training workshops will prepare the new hires for the job, Moore exclaims that the pandemic makes it more difficult to prioritize these workshops over production of services. 

Kelly Moore is not the only entrepreneur enduring this hardship. The skills gap, mass dislocation of workers and demand for new skills has affected industries across the entire nation. This problem has deep roots but there are solutions to consider. For a short-term solution to get Americans back to work, Congress can include a “back-to-work bonus” in their next stimulus package. Senator Kevin Brady proposed a bonus by turning the bi-weekly unemployment benefit amount of $1,200 into a back-to-work bonus. As for a long term solution to combat the skills gap, our federal government should be focusing on re-skilling and up-skilling Americans in community colleges, investing in on-the-job training, and apprenticeships. There needs to be an effort to not only provide relief for the small businesses currently struggling, but long term solutions to keep our private sector secure.