The GOP Plan to Slash Unemployment Benefits Puts the Whole Economic Recovery at Risk
This is a really well written article.
“Cutting benefits to incentivize people to take jobs that aren’t there is terrible economics, and just cruel,” says economist Heidi Shierholz
As Americans in low-wage sectors like food service have disproportionately been the ones to lose work in this pandemic, the weekly $600 addition has meant that many people are bringing in more money than they once did at their regular jobs. This has allowed legions of people like Nussbaum and Enany’s clients to invest in their financial health: paying off outstanding bills, working down a debt, or putting money into improving a small business that will later reap dividends. This sort of investment, say economists, is a feature, not a bug, of the enhanced unemployment program. Almost all spending right now—whether on short-term needs like rent or food or on longer-term ones like paying off a debt— will help stimulate the pandemic-battered economy."
As the expiration date approaches, Nussbaum says, “everyone is sort of holding their breath.”
Republicans’ argument for ending or reducing the additional $600 payment goes like this: The benefit, which amounts to at least $2400 in additional monthly income, is too generous and therefore discourages workers from reentering the workforce. In their thinking, small businesses are clamoring for workers to return, but their employees would rather sit back and collect unemployment. Senate Majority Leader Mitch McConnell called the $600 benefit akin to paying people “a bonus not to go back to work.”
Many economists, however, point out that there are not enough jobs to go back to. According the Bureau of Labor Statistics, in May there were 3.9 unemployed people per job opening. “Cutting benefits to incentivize people to take jobs that aren’t there is terrible economics, and just cruel,” says Heidi Shierholz, a senior economist at the Economic Policy Institute. “It will cause a huge amount of human suffering.” What’s more, she adds, many people aren’t going back to work not because of unemployment checks, but due to the risk of contracting COVID-19, or because of childcare responsibilities while schools, summer camps, and daycares remain closed. “It doesn’t matter how much you cut their benefits; it’s impossible to incentivize them to take a job because they cannot,” she says. “So if you cut their benefits, you’re only hurting them.”
A number of economic analyses have found no evidence of a connection between enhanced unemployment benefits and people’s likelihood of taking a job. “I lean more and more that UI [unemployment insurance] generosity should be maintained,” former Treasury economist Ernie Tedeschi wrote on Twitter, after doing his own analysis and finding no evidence that the generosity of the benefit is dragging the labor market.
https://www.motherjones.com/politics/2020/07/the-gop-plan-to-slash-unemployment-benefits-puts-the-whole-economic-recovery-at-risk/
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