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