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As predicted, extra $600 per week unemployment enhancement skewing labor hiring market

As predicted, extra $600 per week unemployment enhancement skewing labor hiring market

Unemployed people making economically rational decisions raises the ‘tipping point’ for reentering the workforce.

https://abcnews.go.com/

One of the ways that the right explains their ideological differences from the left is that the right is realistic about human nature while the left is, on the one hand, too idealistic in its push for perfect citizens in their utopian fantasy and, on the other, ruthless in its “reeducation” interment and even the mass murder of those who don’t meet their utopian ideals.

There’s a lot of truth to that, and we are seeing it playing out yet again with the incredibly stupid “drafting error” in the last Wuhan coronavirus stimulus package.  The “error” was called out by Republicans at the time because it pays unemployed workers an extra $600 per week in unemployment benefits.

The amount is more than many workers were making at their jobs, and Republicans were concerned it would disincentivize people from working.

Their concerns were widely mocked, belittled, and dismissed by the leftist media and politicians from Nancy Pelosi to Bernie Sanders.  And now, “unexpectedly,” businesses are not able to rehire or retain their employees because the employees are getting more money from taxpayers for not working than they can earn at their job.

Sens. Lindsey Graham, Ben Sasse, Tim Scott, and Rick Scott were among the Republicans who tried—and failed—to get this “drafting error” fixed prior to the bill’s passage.

The Hill reported at the time:

The Senate rejected an attempt by four Republican senators to change boosted unemployment benefits included in a mammoth coronavirus stimulus package.

Senators voted 48-48 on an amendment that would cap unemployment benefits at 100 percent of an individual’s salary before they were laid off. Sixty votes were required for the amendment to pass.

GOP Sens. Ben Sasse (Neb.), Rick Scott (Fla.), Tim Scott (S.C.) and Lindsey Graham (S.C.) pushed for the changes to the coronavirus aid bill over concerns that the agreement struck by Senate Majority Leader Mitch McConnell (R-Ky.), Senate Minority Leader Charles Schumer (D-N.Y.) and Treasury Secretary Steven Mnuchin would “incentivize” individuals not to return to work.

“I plan to support this legislation tonight, but I do want to fix it first,” said Tim Scott. “The goal is simply to keep you whole while you’re unemployed because of COVID-19.”

Sasse added that Congress should be “generous [but] we don’t want this piece of the bill to create an incentive for folks to stop working.”

The GOP senators first raised concerns about the provision earlier Wednesday after they reportedly learned about the details of the increased unemployment benefits during a 92-minute conference call about the forthcoming bill.

The unemployment provision includes four months of bolstered unemployment benefits, including increasing the maximum unemployment benefit by $600 for four months.

But the GOP senators argued that the agreement, which they’ve called a “drafting error,” could prompt individuals who earn less while working compared to the unemployment benefits to quit their jobs or not return to work.

“Something hit me like a ton of bricks. … Under this bill you get $23.15 an hour based on a 40-hour work week not to work,” Graham said from the Senate floor on Wednesday night. “We’ve created Pandora’s box for our economy.”

Fast-forward to this week, and reports reflect that these concerns were not only justifiable but prescient . . . if by “prescient” we mean common sense conclusions rooted in simple logic.

Workers are patiently explaining to the befuddled media and political elite, “I’ll make more on unemployment.”

The federal government is doling out billions of dollars in unemployment benefits to try to entice people out of work to stay home and not go looking for jobs, but getting them back into the labor force when the time is right could be tough.

In a move driven by Democrats, Congress and President Trump last month approved a $600-a-week boost to unemployment checks nationwide, which works out to $15 an hour — exactly the minimum wage Democrats want to impose.

Those checks are so generous that they change the calculus for those who might be looking for work.

. . . . Mr. Farren said the $600-a-week federal Unemployment Insurance (UI) bonus — which comes on top of whatever a worker was already entitled to from the state — raises the “reservation wage,” or tipping point at which they’re willing to leave the home to go to work.

“I would expect that many laid-off workers, whose expected income has increased due to the combination of state unemployment insurance benefits and the federal bonus, would indeed maximize the use of those benefits. It’s only rational, and both economic theory and common sense would suggest the same outcome,” he told The Washington Times.

. . . . That debate is already raging in online forums such as Reddit, where a user posted a meme that he volunteered to be laid off: “Extra $600/week means I’ll make more on unemployment.”

The additional $600/week brings unemployment payments to different rates in different states, but it ranges from about $835/week to $1,395/week.  That’s a great deal of money to an enormous number of American workers, and if it lasts only four months (and isn’t extended!), that’s still four months they will making more not working than they were working.  It’s worth noting, too, that the new unemployment benefits are granted to those who quit their job as a “direct result of COVID-19.”

These are workers who are not salaried, rarely have benefits, and are working in un- or low-skilled minimum wage-range jobs. This includes industries that already have high turnover like restaurants, convenience and drug stores, fast food, small businesses, grocery stores, warehouses, industrial farms, and the like.

Restaurants, in particular, are sounding the early alarm because the “drafting error” is affecting not only their ability to retain workers but to apply for/receive stimulus money intended for small businesses.

Politico reports:

The new Paycheck Protection Program waives repayment of small business loans if the borrower uses 75 percent of the money to maintain payroll, a measure intended to reduce layoffs. But with the expanded unemployment benefits included in the stimulus bill, some workers can as much as double their weekly checks if they stay unemployed.

The mismatch is particularly acute for restaurants, cafes and small shops — nonessential businesses where pay scales tend to be low that have been put into indefinite hibernation.

. . . . Restaurants represent less than 9 percent of Paycheck Protection loan recipients, but as of March accounted for the majority of layoffs nationwide as the contagion took hold.

“If the intention was to get people back to work, they’re not doing it,” said Tom Colicchio, the renowned restaurateur and “Top Chef” judge, who has been an advocate for small restaurants during the pandemic. “They’re not going to come back to work because unemployment is too attractive.”

The problem is so severe already (and it’s only going to get worse) that businesses who want to stay open during the shutdowns are forced to close their doors.

NPR reports:

Some businesses that want to keep their doors open say it’s hard to do so when employees can make more money by staying home.

“We basically have this situation where it would be a logical choice for a lot of people to be unemployed,” said Sky Marietta, who opened a coffee shop along with her husband, Geoff, last year in Harlan, Ky.

. . . . But even though she had customers, Marietta was reluctantly forced to close the coffee shop just over a week ago. With the federal government now offering $600 a week on top of the state’s unemployment benefits, she said her former employees can make more money staying home than they did on the job.

“We’re very committed to paying a living wage,” Marietta said. “It happens that a living wage in Harlan, Ky., is not exactly the same thing as it is in other parts of the country.”

Some Republican lawmakers warned about this unintended consequence of the relief bill when it was being drafted, noting that $600 a week amounts to $15 an hour, more than twice the federal minimum wage. That’s in addition to state unemployment benefits, which vary widely, from a maximum of $235 per week in Mississippi to $795 per week in Massachusetts.

. . . . “We have these lovely baristas,” Marietta said. “They’re hardworking individuals. But literally this is the best possible pay of their lives they could possibly get, to be unemployed.”

And that is the reality that the left cannot or will not acknowledge. Everyone from Obama to activist journalists likes to say that Americans want to work and contribute to society, and while that is certainly true of a great many, there are and have always been plenty who are content to “get by” on government handouts. Democrats know and exploit this and have been doing so for decades to keep their base dependent on them and their soul-destroying policies.

That is now seeping out to larger segments of the population now that “getting by” is for many “the best possible pay of their lives.”  The blame here does not rest on the people who are making the best, most financially logical decisions for themselves and their families during this crisis.

Because we don’t yet know how far-reaching this problem will become or how much it will affect our economy, supply chain, and workforce, we can’t predict where it will all lead or who will “win” this political power game with American lives and liberty.

Republicans hope this is an emergency measure with a four-month expiration date, while Democrats hope that they are creating new dependents and new voters who will support their efforts to make the changes permanent. After all, that line in the Green New Deal release about taxpayers paying salaries to those who are “unwilling to work” was no mistake.

We’ll have to wait and see how it plays out. And vote according to our own realistic view not only of human nature but of the best course for our country.

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Comments

phase 1 of getting a UBI enacted.
not many believed me when I said this would happen.

buckeyeminuteman | April 22, 2020 at 7:46 am

Well it passed the Senate 96-0 so who is to blame here? It was signed by the White House too. Cry me a damn river, Republicans. When you lie down with dogs, you get fleas.

    Morning Sunshine in reply to buckeyeminuteman. | April 22, 2020 at 8:43 am

    and when I said that I hoped it did not pass, I got a whole lot of downvotes here.

    Republicans didn’t write the provision, the didn’t want the provision, and they fought the Dems for week to get it fixed, but in the end the Dems were more interested in their pet projects, like this trial run for a national $15/hr minimum wage, than just getting relief to people in dire straights due to the shutdowns. And the republicans didn’t have the stomach to call them on their indifference to the human suffering the bill was supposed to address, as opposed the the Dem laundry list of “give us this unrelated thing or we won’t do our jobs”.

notamemberofanyorganizedpolicital | April 22, 2020 at 8:16 am

Time to sue!

Cliff notes version of todays reporters:

Shouldn’t the country stay closed forever?
Posted by: Guy Mohawk at April 21, 2020 06:55 PM (r+sAi)

********
It’s all about voting by mail.
Posted by: redridinghood at April 21, 2020 06:58 PM (wiXsO

This is, in part, starting to become very crystal clear. Now here comes the parade of Hollywood idiots (Hanks and wife), along with notable Party faithfuls like Mooch, pushing for mail-in voting hard. It’s not by accident. All of us know their playbook.

The other part of Shutdown Panic and Economic Ruin for America is to take down Donald Trump. And it’s always icing on the cake when America gets kicked in the teeth.

I’m telling you, once it becomes clear that 15-20 cities (granted, very large cities with huge populations) are holding back the rest of the entire USA, things are gonna change fast, politically.

Ace of Spades

    notamemberofanyorganizedpolicital in reply to notamemberofanyorganizedpolicital. | April 22, 2020 at 8:41 am

    Rut Roh.

    They WILL MISS OUT ON even better pating jobs then!!!!!!!!!

    Colorado Governor Jared Polis is bucking that trend, and will begin the lifting of his state’s lockdown starting this Sunday. It’s only a partial lifting but the early date is significant insofar as Polis is correctly interpreting the ill political winds of keeping the citizenry in suspended animation as their lives and livelihoods whither and die. The days and weeks may have all blended together, but it was only a couple of weeks ago that many on the Left were insisting that America remain in quarantine for upwards of 18 months. In that light, Polis’ move, as well as some of the other recalcitrant dictator wannabes is significant.

    Ace of Spades

      notamemberofanyorganizedpolicital in reply to notamemberofanyorganizedpolicital. | April 22, 2020 at 8:47 am

      Ibid.

      LOTS MORE GOOD READING THERE – THE DEMS HAVE LOST THE SUBURAN MOM VOTE!!!!!!!!!

      Despite how the agitprop media wants to spin it, the bulk of the protests are occurring in blue states, so XiNN’s Jm J Acosta’s pronouncement that Trump is somehow coordinating these citizen protests is risible in the extreme. It may be that most of the protestors are Trump supporters but it’s a fair bet that a sizeable and significant number are Democrats. For these politicians to continue what is in essence the opportunistic and wanton destruction of the economy as a means to defeat Trump at the expense of their own voters is political suicide. They know it and if they don’t, their voters are giving them a lesson that they best heed. Comedic and schadenfreude-ish as it is to see Bill De Bolshevik get utterly destroyed with his Stasi snitch line, it also is highly indic-(no pun)-ative that all is not sweetness and light in the Commie paradise on earth that is New York City.

      Whatever one professes to be politically, human nature does not change. Enlightened self-interest and an innate desire to be productive (welfare queens notwithstanding) as well as the resentment at any encroachment on one’s personal freedom ultimately trump ideological bullshit. Cuomo, Newsom, Whitmer and all the other “resistance” buffoons are going to have to relent. If that does not convince them, then the emptying of state coffers as tax revenues disappear damn well should. Neither Trump nor the rest of America are keen on bailing out state treasuries and pension funds. Not after having the greatest economic boom in history intentionally wiped out in the space of a month.

      Yet California, Oregon, Washington and several other blue states still have not set a date to lift their lockdowns and evidently feel confident enough that they can destroy the lives of their citizens while suffering no political consequences.

I hate to advocate more intrusive controls, but employers should be able to report which employees have had their jobs reinstated, thus disqualifying them for unemployment. Once again, needless meddling generated in order to correct the needless meddling of a government can’t keep its nose out of where it doesn’t belong.

    notamemberofanyorganizedpolicital in reply to windbag. | April 22, 2020 at 9:05 am

    THATS A GREAT AND MORAL IDEA!!!!!!!!!!!!

    buckeyeminuteman in reply to windbag. | April 22, 2020 at 12:02 pm

    You should get one work week to return to work after your job is reinstated. Gives people time to figure out childcare. After that, you’re cut from the dole.

Ok…I keep reading about this extra 600 bucks, no one is gonna go back to work…ect….
But….is anybody actually getting any of that money…????
Not a promise….I mean real spending green…????

My state was overwhelmed with unemployment applications and it crashed the web site. It doesn’t do any good to call the unemployment office because…they won’t answer the phone. I personally know people who still haven’t seen a dime on their regular unemployment not to mention the extra $600…!

    Andy in reply to tgrondo. | April 22, 2020 at 1:29 pm

    My business started in mid 2019 and was just ramping, so income was low on paper for the tax year. In Q1, my sales pipeline was starting to look pretty good. We are sole proprietors w no employees.

    They fucked us over in the determination of benefits. Getting some, but it’s a joke.

    At the same time I’m being fucked because it will take months to build my sales pipeline back up again.

    I’m appealing.

    If this were the 2009 housing crisis, I’d take my lumps. But the governors dropped an atom bomb on the economy for the flu.

    30k people will die this year because of car accidents (Wikipedia). We should quarantine the country forever so NO ONE ELSE DIES of an activity that wouldn’t be necessary if people just worked from home.

      notamemberofanyorganizedpolicital in reply to Andy. | April 22, 2020 at 1:57 pm

      The DEMS dropped an Atomic Bomb to swat a house fly.

      Andy…
      A good friend of mine had just opened a bar, (last summer)
      He had a good location and was starting to get a good clientele.
      Now he’s really screwed ! The state closed him down, he didn’t serve food so a drive up/carry out food is not an option, he applied for the small business loan BS but couldn’t even get an answer…

      The states may partially open up the economy but who knows when the bars will be allowed to reopen..???

        Andy in reply to tgrondo. | April 23, 2020 at 1:10 am

        That 600/week probably won’t even cover the lease on a bar. Presuming he isn’t screwed by the review process.

        The W2 workers here get 700 a week PLUS the 600 for the disaster cash. Sort of backwards that the poor sucker holding the lease gets the short end of the stick.

Entirely predictable.

Perennial headline: “People behave predictably. Experts shocked!”

I had fb friends railing about these complaints before it passed: people won’t stay home! They want to work!

Yeah, right.

It also assumes that people who “aren’t working” aren’t working. Here in L.A., that’s often not true at all. A huge number of people here have main or side jobs where they can be paid in cash and never report the income. Trainers, light construction, writers, tutors, nannies, etc. often make more money than they ever claim.

swillingmartinis | April 22, 2020 at 11:28 am

I’m furloughed from my job and my unemployment check is about twice what my work income was. I still have to file every week for the benefit. One of the questions I have to answer is if I refused a job offer. As soon as I answer “yes” my unemployment is history… especially when my former employer calls me back to my old job.

    amatuerwrangler in reply to swillingmartinis. | April 22, 2020 at 1:21 pm

    On the other hand, I am retired. I have no job to be shut out of and my retirement benefit is not impacted at this point. (Yes stocks are down, but not enough to create a short-term change in payouts.)

    I bring this up to show what’s wrong with a lot of this. I am scheduled to receive one of those $1200 bonus checks, as is Mrs Wrangler, who is also retired. We have not been severely impacted other than being restricted to the home and yard (7+ acres) and having to wear a mask when out and stand in line to get into Costco or Trader Joe’s or Winco. Why do they feel they should send me money, money taken from someone else?

    Yes, I’ll take it. It will go into the bank or get spent on restocking the local food bank, or other things like that.

Here are some more questions for everybody….

But the GOP senators argued that the agreement, which they’ve called a “drafting error,” could prompt individuals who earn less while working compared to the unemployment benefits to quit their jobs or not return to work.

If you QUIT your job you don’t get unemployment do ya…?
Is it different now ? Don’t you have to be laid off to qualify for benefits…???

To get unemployment aren’t you required to also look for job?

    BobM in reply to tgrondo. | April 22, 2020 at 10:09 pm

    Working at a pizza place, the insider / shift runner on this AM kept on going out to her car “to take a break”. Not a big problem, all of the three drivers working lunch also know how to work the inside, make the food items, etc.. Then around 3 or so we notice she’s still on her latest “break” and her car isn’t in the parking lot anymore. No notice where she went, what’s going on. She’s still on the clock, but by 4 we figure better call the boss because she’s Still not back and not answering her phone. I’m pretty sure she expects to be fired.

    At this point (10pm) Ima betting she’s not coming back.
    Why work hard for $14/hr when you can watch Netflix for $15/hr?

    Andy in reply to tgrondo. | April 23, 2020 at 1:24 am

    So the contractors at MSFT are required to take 6 month break every 18 months. During that time they collect unemployment and they satisfy the job hunt requirement by applying for FTE positions that they won’t get hired for.

    So MSFT avoids getting sued for co-employment while leaching off of the state’s UI fund. This is one of the reasons I hate the PPP fund because it’s a bailout for the UI funds which have been serially drained by big businesses trying to avoid paying benefits to contractors. Many of the contractors rotate in these positions for longer periods than the FTEs stay on. MSFT isn’t the only abuser of this in Washington state, but they are the biggest. I complained to one of the state senators about this in around 2010 and was told MSFT had too much influence to even attempt addressing the issue.

    Later I worked there as an FTE and at one point I used to be one of the PMs who reviewed the vendor contracts as to whether they met “outsourced” guidelines to avoid that 6 month break…. I will laugh big time WHEN they get sued for co-employment (AGAIN). I quit for a reason. and yes- I dare them to come at me for posting this… I can lawyer up too.

      Andy in reply to Andy. | April 23, 2020 at 1:26 am

      For clarification- when I complained to the state, it was a 90 day break for contractors. It was later extended to 6 months a few years later.

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