BISMARCK — With "Help wanted" signs hanging in businesses' windows across North Dakota, Gov. Doug Burgum announced earlier this year the state would stop offering federal pandemic unemployment benefits. The Republican governor said the extra cash flowing from Washington gave jobless residents a perverse incentive by paying them more to stay home than they could make at work.
More than two dozen other Republican-led states made the same move to nix the weekly add-on benefits, but severe worker shortages persist throughout the country as the economy claws out of a pandemic hole. Several North Dakota restaurants have shut their doors due to staffing shortfalls since the state discontinued the benefits on June 19, leading to questions about whether Burgum's decision aided businesses in filling low-wage positions.
Job Service North Dakota reported having 18,078 job openings on its website as of Wednesday, Aug. 4, with thousands of vacancies in health care, transportation, sales and food preparation. That figure, a six-year high, is almost unchanged from the June tally of 18,017, though Job Service Director Bryan Klipfel notes the actual number of vacancies is likely higher than the agency's count.
Burgum spokesman Mike Nowatzki said it's too soon to say whether terminating the federal benefits helped employers, but the governor expects "a positive impact on workforce participation in North Dakota."
Klipfel said unemployment claims have come down since June, though he noted it's hard to determine whether that's an effect of ending the federal benefits. Businesses will gain from the policy change because "every little bit helps" when workers are in such short supply, he said.
Landis Larson, president of labor union federation North Dakota AFL-CIO, said cutting off the benefits may have put a few workers back on the job "but not anywhere near what (state leaders) wanted." Burgum's decision took no-strings-attached federal money out of North Dakota's economy since those who received the extra benefits were using the cash to support local businesses, Larson said.
Jeremy Jackson, an economics professor at North Dakota State University, said the logic behind Burgum's decision is sound because "incentives matter" and unemployed residents certainly consider the benefits they can get by staying out of the job market.
A tough nut to crack
Despite their varied views on the issue, the governor's office, the job agency chief, the labor leader and the economist all agree the termination of the unemployment benefits never had the potential to solve the much larger problem of North Dakota's worker shortage.
While the pandemic may have exacerbated the state's labor deficiency, North Dakota businesses have struggled to find enough staff for years, Jackson said.
"Getting rid of these extended unemployment benefits is not a panacea," Jackson said. "There was an existing problem, and the problem is still there, so we shouldn't expect the labor market to all of a sudden have all of the employees available that we need."
Nowatzki noted that ending the unemployment benefits is "an important component in meeting the state’s critical need for workers," but the move alone will not alleviate the labor shortage.
Shifting demographics are partially responsible for North Dakota's longstanding worker shortage, Jackson said. Businesses and public agencies have worked to keep young people around, but many still leave for opportunities out of state, Jackson said.
The oil boom of the last dozen years injected some fresh blood into the labor pool but also pulled workers already living in the state from other sectors, the economist added. One of biggest holes in North Dakota's workforce remains skilled personnel who don't necessarily have a college degree, Jackson said.
Klipfel said the worker shortage has been made more severe by the re-expanding economy. Businesses, especially in retail and food preparation, are fully opening again, and summer construction has created a seasonal need for labor, he said. The agency head noted that many workers, particularly in the Oil Patch, left North Dakota for their home states during the pandemic, and bringing them back has been difficult. Klipfel added that the labor shortage and availability of well-paying jobs is a good problem to have because it shows the state's economy is strong.
Resolving the worker shortage is easier said than done, Larson said. Getting people to move to North Dakota for lower-paying jobs is unrealistic, and rural areas present housing and transportation issues, he said.
Klipfel said he's "really positive" about the prospect of beefing North Dakota's labor pool. Job Service is putting on in-person and virtual job fairs to help fill businesses' immediate needs, he said, but the state also has forward-looking initiatives to retain college graduates, acclimate legal immigrants into the workforce and help those with criminal justice or addiction issues reenter the job market.
Some parents may have realized during the pandemic that their time was better spent at home with the kids than on the job since the cost of child care is so high, Klipfel said. Eliminating the barrier that child care poses for parents choosing not to return to work will be a top priority, he added.
Larson said he would like to see a greater investment in providing child care and recruiting immigrants, but the larger issue is that policy makers put businesses over workers. If North Dakota were seen as worker friendly in addition to business friendly, it would help in fixing the labor shortage, he said.
It may be a hard pill for policy makers to swallow, but "not every problem has a policy resolution," Jackson said. The economist said the market, a product of supply and demand, has a mechanism to naturally resolve the worker shortage.
Right now, the market demands more workers than there are to hire, so the long-run adjustment is businesses offering higher wages to lure prospective workers into the market, Jackson said. Another resolution would be a reduction in demand for labor, which could come via an economic recession or a drop in demand for certain goods and services, like cars and housing, that people are now buying in higher-than-normal rates as the pandemic wanes.
"We have to let the market process achieve its outcome," Jackson said. "Over time, if we continue to have this severe of a labor market shortage, the firms that will be able to continue operating are those that can offer their employees a benefits package that makes them want to work for them."