Fuel Prices Influence Employment Decisions
DAYTON — The high cost of going to work has led some displaced Ohio workers to choose not to, instead relying on their weekly unemployment benefits, which can pay more than many of the jobs available to them.
“I’ve been looking for a job for more than a year, and I’ve only had two decent offers. They were both in Cincinnati,” said Lannie Scott, a former administrative assistant from Dayton who lost her job when the landscape company she worked for shut down because of the sour economy. “I would have spent most of my paycheck on gas and actually ended up losing money.”
Scott is among the fraction of unemployed Ohioans receiving maximum benefits, ranging from $387 a week for singles with no dependents to $470 a week for someone with one or two dependents, and $524 for someone with three or more dependents. One economist estimated that 1 percent of all unemployed Ohioans receive the maximum benefit.
But for them, their benefits — which were intended as a temporary safety net for workers who lost their jobs through no fault of their own — often provide more income than the low-wage jobs that have defined most of the growth in employment since the Great Recession ended.
“It’s a conundrum,” said Ann Stevens, a spokeswoman for the Montgomery County Department of Job and Family Services. “I wouldn’t say you should turn down any job because unemployment will eventually run out. But if you have a job making minimum wage and an hourlong commute, you have to ask is it worth your while to invest that time and money.”
Even jobs paying twice the state minimum wage of $7.40 an hour offer little or no monetary incentive to look for work when gas prices and other costs are factored into the equation.
A job paying $15 an hour, or about $2,400 a month, would put an unemployed worker receiving the maximum benefit about $800 ahead of the $1,600 a month he or she receives in unemployment.
But gas prices alone would eat up almost a third of the difference for the average Ohio worker, who has a round-trip commute of about 20 miles, according to the American Community Survey from the Bureau of Labor Statistics.
At current gas prices of about $4 a gallon, a worker with a 20-mile commute, working five days a week and driving a vehicle that gets an average 35 miles per gallon would spend just over $250 on gas each month.
That doesn’t include child care, which can range from $125 to $175 a week or more; coffee breaks and lunches, which can top $100 a month; and laundry and dry cleaning costs, which can vary from as little as $10 to more than $100 a week, according to various industry surveys.
Even if an unemployed worker could replace his or her benefits with a $15-an-hour job, they’d have to find one first. And those jobs have become increasingly scarce.
The economy added 244,000 jobs last month, making it the third consecutive month in which payrolls increased by more than 200,000 jobs, the Labor Department reported. But nearly a quarter of the new jobs created last month were in the retail sector, where the average hourly rate is just over $9.
Still, some economists and politicians argue that if unemployment benefits had not been extended from the traditional 27 weeks to up to 99 weeks in many states, including Ohio, the unemployment rate and government costs for providing unemployment benefits would have been drastically reduced.
Unemployment benefits skyrocketed to a record high $157 billion in 2010, according to the White House Office of Management and Budget. In Ohio, the figure was close to $3 billion.
Ken Mayland, president of ClearView Economics LLC near Cleveland, argues that without the prolonged extensions of unemployment benefits more people would have taken the best available job and perhaps tried to supplement income from a low-wage job with a second job or income from other sources.
It’s hard to say how many beneficiaries are content to rely on their benefits checks rather than actively seeking work — a government requirement for receiving benefits.
But another Cleveland-based economist, George Zeller, says the situation is probably more rare than most people think.
“The number of people who decide to sit on unemployment instead of going to get a job is probably pretty near zero,” Zeller said. “The unemployment benefit levels are so low for most people that the disincentive for unemployment benefits does not exist.”