Coronavirus unemployment expansion could become disincentive to go back to work: Experts

(USA Features) A number of economists are coming to view the dramatic expansion of unemployment benefits contained in the recently-passed $2.2 trillion coronavirus relief measure as counterproductive.

In particular, experts believe that the expansion will become a disincentive for Americans to return to work, even as several corporations are expanding now and hiring despite mandatory business closures tied to COVID-19.

“Overly generous unemployment insurance benefits, combined with the risks inherent in going out to work right now, really do produce a disincentive to reenter employment,” the Cato Institute’s Ryan Bourne told the Washington Examiner.

“That harms our near-term adjustment to the crisis, not just the pathway to normality once lockdowns are relaxed,” he added.

“Companies such as Amazon, CVS, supermarkets, and other delivery firms are actively hiring thousands of workers right now in light of increased demand,” the economist noted further, the Examiner reported. “An unemployment insurance system that’s undergirded by more generous support than previous market wages reduces the willing supply of workers for these firms.”

The news site also reported that some newly unemployed workers are actually seeing large pay raises thanks to coronavirus relief, meaning they are making more receiving unemployment benefits than they earning in take-home pay.

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“My last paycheck for Hobby Lobby for two weeks was about $1,000,” one former Hobby Lobby staffer told The Dispatch. “And I’m looking at the stimulus plus unemployment, all this. And it’s almost $1,000 a week if my calculations are right. So, I’m getting a pay raise by being unemployed, if everything comes through like I expect it to.”

The New York Department of Labor, meanwhile, notes that a worker who normally earns $36,000 a year, is now eligible for weekly unemployment benefits of $946.

That works out to about $49,000 a year, or a $13,000-per-year raise.

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Of course, the benefits contained in the coronavirus relief bill only last for four months. But what if Congress attempts to increase benefits, thereby prolonging them — as Democrats are already contemplating?

That would mean the economic recovery would take longer, most likely, as more workers stayed out of the workforce to collect unemployment benefits, economists say.

But we’re not at that point just yet, say others.

“The structuring of unemployment insurance in the [coronavirus relief bill] definitely isn’t ideal, but it also probably isn’t too big of a concern in the immediate term,” the R Street Institute’s Jonathan Bydlak told the Examiner.

“I don’t think we’ll see many workers changing their preference for work based on benefits that they expect to be temporary, which makes us unlikely to see a long-term deterrent to work,” he concluded. “Of course, we should look out for and oppose any effort to extend this aid past the point of immediate crisis.”

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