Unemployment

The COVID-19 Recovery Is Starting. Extending 'Bonus' Unemployment Benefits Will Slow It.

If Congress extends boosted temporary unemployment benefits into early 2021, nearly five out of every six beneficiaries would be earning more money by not working.

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If Congress extends boosted temporary unemployment benefits into early 2021, nearly five out of every six beneficiaries would be earning more money by not working—likely slowing the labor force's recovery from the COVID-19 pandemic.

That's according to the Congressional Budget Office (CBO), which on Thursday sent a letter to Sen. Chuck Grassley (R–Iowa) outlining some of the potential consequences if Congress votes to extend those boosted unemployment benefits through the end of January. As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March, Congress added an additional $600 to unemployment checks above and beyond whatever state-level payments were granted to laid-off workers. That provision is set to expire on July 31, but the House passed a $3.5 trillion stimulus bill last month that would extend those payments for six additional months. The Senate has yet to take it up.

From the start, there have been worries about the economic incentives created by the boosted unemployment payments. Though unemployment benefits vary from state to state, the federal "bonus" meant the average worker could qualify for as much as $900 per week—well over $20 an hour, if you assume a standard 40-hour workweek. Because these payments are delivered via the unemployment insurance system, they are contingent on not holding a job—they are distinct from the $1,200 stimulus checks that were sent to all Americans.

Economists at the conservative Heritage Foundation calculated that workers earning less than $62,000 annually would end up making more money on unemployment.

Paying people not to work might have made sense temporarily because governments were literally telling people it was illegal to go to work. But as the economy transitions into a recovery period, some businesses are reporting that it is difficult to bring workers back or make necessary hires for reopening.

Again, incentives matter. "The additional $600 per week in benefits decreases the incentive to work more for people who expect to have lower earnings than it does for people who expect to have higher earnings because that additional amount is a larger percentage of lower-earning workers' potential earnings," the CBO letter explains.

Friday's announcement that the unemployment rate fell in May to 13.3 percent after peaking at 14.7 percent in April is another factor for lawmakers to consider. The threat of COVID-19 has not passed—more than 100,000 Americans have died from the disease—and returning to full employment or a fully functioning economy is probably not possible in the short-term. Still, the unemployment rate being lower than many experts anticipated seems to be a sign that markets are finding ways to navigate both the horrors of the pandemic and the barriers erected by governments to stop the spread.

Like with the lockdowns themselves, the next phase of the coronavirus safety net requires scalpels, not hammers. Congress could set aside some funding to be used if citywide or statewide lockdowns are necessary in some places due to COVID-19 flare-ups, perhaps. But extending the federal unemployment boost for all workers seems unnecessary and perhaps even counter-productive.

The CBO's analysis makes clear that there are several trade-offs for Congress to consider.

"An extension of the additional benefits would boost the overall demand for goods and services, which would tend to increase output and employment," CBO director Phillip Swagel wrote to Grassley on Thursday. "That extension would also weaken incentives to work as people compared the benefits available during unemployment to their potential earnings, and those weakened incentives would in turn tend to decrease output and employment."

Continuing to put more money in unemployed workers' pockets, in other words, would juice demand in the short-term but would drag the jobs recovery into next year and generally slow the economy. The Heritage Foundation analysis from April projects that the added $600 benefit would reduce the size of the economy by more than $950 billion due to unemployed workers taking longer to return to their jobs.

The merits of the temporary unemployment boost through the end of July are debatable. Extending them into next year would deliberately kneecap any chance of a speedy recovery.

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  1. “nearly five out of every six beneficiaries would be earning more money by not working”
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    2. Where is the honor in going back to work for poverty level wages? Where is the pride in accepting the crappy income offered by businesses that cannot survive by providing livable pay to its most needed front-line employees? Yet continue to pay out humongous bonuses to executives and shareholders.

      Why should the lowest paid third of Americans be coerced into returning to those crappy paying jobs, so the managers and shareholders of those businesses can hoard all the profit.

      Milton Freidman propagated a larcenous trope when he proclaimed that the only responsibility of business in America is to enrich the owner class. That workers are only fodder for the mill of commerce and deserve none of the fruits of American prosperity.

      This view is short-sighted, self-centered and greedy. And the American workplace is far, far from a level playing field. Economic mobility nothing but a lie anymore in America.

      Why should the lowest paid Americans accept poverty level wages so we can get the economy going again?

      1. “Where is the honor in going back to work for poverty level wages? Where is the pride in accepting the crappy income offered by businesses that cannot survive by providing livable pay to its most needed front-line employees?”

        Were you born without a brain, or did it leak out sometime later?
        You want all those people to get that money? Fine. Pay for it yourself or STFU.
        Fuck off, slaver.

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      2. Or is this sarc?

        1. No, I see the pathetic piece of lefty shit WarrenS is, indeed a pathetic piece of lefty shit.
          Fuck off and die, slaver.

      3. Fuck off, you beggar. Get a job.

        -jcr

      4. Milton Freidman propagated a larcenous trope when he proclaimed that the only responsibility of business in America is to enrich the owner class

        So you’re whining that he got something right?

        The purpose of a business is to increase the wealth of its owners. If you want a share of what a business earns, then find something to invest in, or start your own. Duh.

        -jcr

      5. Excellent sarcasm. I’m impressed.

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    2. That sounds somehow racist…….blacks milking ‘bulls’.

  3. The problem is that there are still tens of millions of people who previously had jobs, but now do not because the jobs have been eliminated. What about them? Leaving them in financial ruin would be a drain on the economy also.

    1. Most of those jobs were destroyed by policies you no doubt supported. You should be groveling before all those unemployed millions, begging for their forgiveness.

      1. Sports, conferences, universities, festivals and the like were cancelled before any official lock down. We can debate how many job losses could have been avoided if we were smarter about the lockdowns, but many jobs were going to be lost either way.

        1. Well this is a lie. Corrado had a music concert the night before lockdowns went into effect. Not sure why you have to lie here.

          1. Colorado.

          2. “…Not sure why you have to lie here.”

            Her entire argument is based on lies; lose those, and she’s left with nothing.

      2. This current job market has destroyed me, completely and utterly. I was in a small industry and it has collapsed. My career is dead and I have no hope of ever not living in poverty.

        1. Good. Fuck you.

          1. And somehow conservatives don’t understand why progressives think they are evil.

            1. Remind me, was it conservative states that are still locked down?

            2. We think you’re stupid. You continue supporting the side that shouted lockdowns forever after they destroyed your job. That’s idiocy. Why should I pity you?

          2. Douche bag, Take your ignorant f-wad dickishness somewhere else. You are obviously a pea-brained moron looking to troll anyone who doesn’t share your ignorantly simple-minded view of things. Get an education and then come back.

            1. Lefty piece of shit, print your ‘concern troll’ whine, roll it up and stuff it up your ass.

        2. “This current job market has destroyed me, completely and utterly. I was in a small industry and it has collapsed. My career is dead and I have no hope of ever not living in poverty.”

          So lefty shits who can’t figure out how to earn a living will be reduced to poverty?
          Gee, there IS an upside here!
          Hope you lose your ability to post here; you’re a tiresome piece of lefty shit.

    2. They’re still eligible for unemployment. They just can’t get the extra $600 a week, which adds up to over $31,000 a year.

      1. Regular unemployment is quite low. In my state it caps out at 50% of your earnings, with a max of about $500 per week. Regular unemployment works almost ok during normal times when it is reasonable that people can find a new job within a few months or less. Now, it could take much longer because those jobs are just gone.

        1. oh well bitch welcome to adulthood

          1. Douche bag, Take your ignorant f-wad dickishness somewhere else. You are obviously a pea-brained moron looking to troll anyone who doesn’t share ignorantly simple-minded view of things. Get and education and then come back.

            1. “oh well bitch welcome to adulthood”

              Got a problem with that Warren? Maybe you need to grow up.

        2. Regular unemployment is quite low.

          Then get back to work. We don’t owe you a living.

          -jcr

  4. The solution to this problem is simple. Make the minimum wage . . .

    *checks graph*

    . . . $62,400 a year, or roughly $31.20 an hour. Nothing could be easier!

    1. That seems unreasonable. I believe we should #FightFor$25

  5. Go back to work? Do you want to kill grandma?

  6. It is not coincidence, or a random number, that the progressive left wing totalitarians picked $15.00/hr as the EXTRA benefit for the unemployed. Their intention was to get businesses to pay over $15.00/hr to get workers back. They want the unemployment numbers to look bad through at least the second Tuesday in November, for some reason.

    1. and would you rather vote for someone who promises to pay you more to not work or for one of those meanie Republicans who is cutting off the gravy train?

    2. So another progressive trap that Republicans gave into because they knew the media would blame them for the delay.

  7. Continuing to put more money in unemployed workers’ pockets, in other words, would juice demand in the short-term but would drag the jobs recovery into next year and generally slow the economy.

    In other words, it would accomplish exactly what the Democrats hope to accomplish. It’s really the only hope they have of defeating Trump in November.

    1. Though ironically, it could actually backfire on them. If common folk are seeing that they’re making now than they were before, they might decide to stick with the status quo and vote for the president who signed their newfound largesse into law.

    2. Which is why the bill passed the House and was ridiculed by Senate (R)s.

      The author’s not wrong, but chance of this becoming law is 0%.

  8. Bull, there’s a large number of small , medium and even some large businesses that have or are going to fail. With the restrictions on others many still open may not make it. We shall see.

    1. I wonder if maybe removing the restrictions would help?

      1. How can they leave the restrictions in place without also acknowledging that the protesters are bio-terrorists?
        Something does not compute

  9. The only way we’ll have a truly healthy economy is if we implement Reason.com benefactor Charles Koch’s dream of unlimited, unrestricted immigration.

    #OpenBordersWillFixEverything
    #BillionairesKnowBest

  10. >>potential consequences if Congress votes to extend those boosted unemployment benefits

    zero consequences to members of Congress.

  11. So years ago I knew this guy that would work a seasonal job for three months, then be on unemployment for nine. Every year. And I learned he was not the only one. There was a whole subculture that did it. Work that seasonal job because they would lay you off at the end of the season, and thus they would be eligible for unemployment. And they wanted the overtime when they did work, because that bumped up their unemployment dole.

    This new policy of paying people not to work is going to make those freeloaders of yesteryear seem like pikers.

    1. That seasonal work exclusion is supposed to be against Unemployment rules. But it is regularly ignored if the “seasonal” work isn’t well documented.

      I have relatives who were working for a small company that then laid off all its workforce during coronaggedon. They then proceeded to tell all of their staff that they were still expected to work- off the books of course. After all, they were getting big checks from the government- even more than they were earning at their previous job.

      There is all of this collusion between the government, companies and citizens to deprive taxpayers of their money.

      1. coronaggedon

        Totally using this

    2. The “guy” is you isn’t it SQLSRY

    3. In most states you need a minimum number of work weeks to qualify for unemployment. 12 weeks would be too low for to qualify.

      1. It sound like you planned your life around unemployment.

  12. We pay farmers not to grow food, how much of a stretch is it to play people not to work?

    1. Fuck off SQLSRY

    2. You’re right, we shouldn’t pay farmers to not grow food.

    3. “We pay farmers not to grow food, how much of a stretch is it to play people not to work?”

      Lefty “logic”
      We throw money away and can’t afford it there, let’s throw some more we can’t afford here!

  13. According to Penna. UC website, a person who was earning $50K per year is going to get about $480 weekly. Add $600 to that each week and one can see why layaboutism will be encouraged. Back in the olden days, if you turned down a reasonable offer from an employer, your UC was terminated. That should be a feature of any extension, along with actually looking for a job to be eligible.

  14. They’re telling me unless we can figure out a way to limit occupancy to 10 people in a building that normally holds hundreds, I’ll be working from home until January or February. LOL

    1. Pretty sure the people making the rules are completely ignorant of what a ‘margin’ is.
      They assume a restaurant which seated 200 and earned 7% can cut that by half and still exist.

  15. May we survive this by Gods Grace
    Midevibez

  16. We will not die for the Dow. BTW I got to go, my mom says dinner is ready.

  17. Um, what recovery? We’re getting ecstatic over job “gains’ which amount to people getting rehired and previous positions being filled as some businesses reopen. I expect Trump to get all giddy, not Reason.

    If your business was shut down for 3 months, could it survive if all it did was duplicate profit margin prior to Covid? Nah, you’d probably have to downgrade operations to stave off costs. AMC is on the verge disappearing because half capacity means no more profits on giant overpriced popcorn.

    After about 2,3 weeks, we may have to shut down again. After that it’s game over.

    Try to name more than three notable scientists, health officials, basketball players, politicians, Hollywood celebrities and jazz musician speaking out against these protests as a threat to public health. My count in stuck on James Woods and Adam Corolla.

    In a modernized nation where the perils of a large crowd in a pandemic is established science and intuitive for anyone with a internet connection, no one seems to be able to articulate the truth. This is a nation seized by a mob. We digressed to the era where the pope tells Galilleo that the sun revolves around the earth.

    We won’t be “recovering” from this fiasco for a long time.

  18. I don’t know why so many pundits are so ignorant on the rules for UC…sure, you don’t HAVE to return to work, but unless you have a very good and PROVABLE reason, you can kiss your state AND federal UC supplement bye-bye. (Unless your employer doesn’t mind their UC taxes going up unnecessarily and don’t report you for refusing a suitable offer!) Q&A from the DOL website:
    source: https://www.dol.gov/coronavirus/unemployment-insurance

    I was furloughed by my employer, but they have now reopened and asked me to return to my job. Can I remain on unemployment?

    No. As a general matter, individuals receiving regular unemployment compensation must act upon any referral to suitable employment and must accept any offer of suitable employment. Barring unusual circumstances, a request that a furloughed employee return to his or her job very likely constitutes an offer of suitable employment that the employee must accept.

    While eligibility for PUA does not turn on whether an individual is actively seeking work, it does require that the individual be unemployed, partially employed, or unable or unavailable to work due to certain circumstances that are a direct result of COVID-19 or the COVID-19 public health emergency. In the situation outlined here, an employee who had been furloughed because his or her employer has closed the place of employment would potentially be eligible for PUA while the employer remained closed, assuming the closure was a direct result of the COVID-19 public health emergency and other qualifying conditions are satisfied. However, as soon as the business reopens and the employee is recalled for work, as in the example above, eligibility for PUA would cease unless the individual could identify some other qualifying circumstance outlined in the CARES Act.

    1. That’s cute! Or sarcasm.
      If you truly believe the mechanisms and procedures actually prevent a huge number of people from gaming the U/C system, well I just got an amazing deal on the north anchorage of a very profitable bridge, and if you act fast, I’ll let you in on it.

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