How to ease the labor shortage by fixing the social safety net

The United States is in the enviable position of having a labor force crunch: Too few workers chasing too many jobs. There is no shortage of speculation among economists about solutions to this labor shortfall. But one factor that could help, and is too often ignored, is the ways our nation’s current safety-net system prevents people from entering the labor market.

First, let’s consider the context we’re in. The U.S. unemployment rate has settled below 4 percent for over two years, the longest stretch since the 1960s. Even so, our labor force participation rate continues to lag, caused in part by an aging population, declining birth rates, and aftereffects of the pandemic.

In January 2000, the labor force participation rate was 67.3 percent. Today, it’s 62.8 percent. That might not sound like much on paper, but consider that it means 1.7 million Americans are still missing from the labor force compared to right before the pandemic alone. These are able-bodied, prime-age workers—defined as ages 25 to 54—and they are still on the economic sidelines. 

What’s worse, the labor force participation rate is expected to decline even further to around 60.4 percent by 2032, according to estimates from the U.S. Department of Labor. On the flip side, consider that by 2023, 41 million Americans relied on food stamps to make ends meet and nearly 90 million Americans were enrolled in Medicaid.

These are the numbers and statistics, but they represent real human beings who are being left behind. One way to bring more individuals back into the labor market is by implementing badly needed reforms to our nation’s social safety net.

Toward that end, Sen. Mitt Romney (R-Utah), made a significant stride Feb. 28 by introducing a bill in the Senate that would give states the freedom to explore safety-net reform strategies similar to the successful “One Door” model in Utah. Rep. Burgess Owens (R-Utah) has already introduced a “One Door to Work” bill in the House. That measure passed out of the House Committee on Education and the Workforce in December.

The One Door to Work Act would give states the flexibility to implement Utah’s consolidation of federal workforce development and social safety-net programs into a single state entity. The end goal is to help work-capable recipients reintegrate more quickly into the workforce, empowering them to achieve the independence, stability and purpose that are crucial to human well-being.

The sad truth is that our current social safety net is a complicated maze. Recipients must navigate multiple disconnected programs, requirements and caseworkers. No matter how much welfare exists to help, this design makes poverty more difficult to overcome. Every hour someone spends navigating the system is an hour not pursuing a way out.

Without a doubt, we need a well-functioning social safety net. But it needs to be just that—a net to catch people—and not a way of life, not a system that creates generational poverty. As Mauricio Miller, a poverty fighter in the Bay Area, has said, we’ve made poverty tolerable when we should make it escapable.

It’s easy to miss the truth, however, that a paycheck is only part of the equation when it comes to work—though undoubtedly an important one. Work is also a source of pride, purpose and belonging. Research at the Georgia Center for Opportunity has revealed that people see many non-financial rewards from work, including better mental health, reduced rates of substance abuse, better family relationships and lower crime rates.

The bottom line is that we can better address the suffering of poverty, unemployment, and community fragmentation by creating a more humane system that rewards work. Given the fact that most safety-net recipients want to work, why don’t we have a system that makes the process of reentering the workforce as easy as possible? Why is navigating the system so challenging that work becomes an afterthought?

The bills championed by Romney and Owens are an important first step, and we urge Congress to quickly approve the measures so that state governments can focus on creating a social safety net that helps rather than hurts.

Randy Hicks is president and CEO of the Georgia Center for Opportunity.