(USA Features) The Democrat-driven effort to bolster unemployment benefits by an extra $600 per week will allow many Americans laid off due to coronavirus-related closures to earn more money than they did when they were working.
And experts say that will make it harder for them to return to the workforce once ‘stay-at-home’ orders are lifted by governors and mayors and businesses that were deemed non-essential to reopen.
The extra money, when combined with existing unemployment benefits, works out to $15 an hour, precisely the minimum wage Democrats have been pushing for.
Michael Farren, a research fellow at the Mercatus Center at George Mason University, said the extra money will entice people to stay at home and not look for work in the short term, which helps social distancing requirements.
But the funds will change the calculus for laid-off workers once those requirements are lifted, he told the Washington Times.
“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 said.
Not everyone agrees that the extra money will serve as a deterrent to looking for work.
Josh Bivens, research director at the Economic Policy Institute, told the Times, “Better [unemployment insurance] means workers can look for better labor market matches and not jump into the first available opening, no matter how poorly-suited it might be for them.
“Over the next couple of months there are clearly going to be far more people interested in working than jobs available, so, any disincentive to job-search caused by the $600 seems not that important to us,” he added.
He also said the extra money will entice employers to raise wages in order to attract workers when they begin hiring again.
Michael McKenna, a former White House official, said Republicans should have seen what the Democrats were doing with the plus-up funding. He said he wondered about a waiter who’d been making $900 a week at his job, but who now, thanks to the federal plus-up pockets more than $1,000 a week to stay home.
Does a person like that go back to work right away, or does that waiter wait until the unemployment runs out? And the answer is, he waits until the unemployment insurance runs out because it makes no sense for him to do otherwise,” said McKenna, who now runs the firm MWR Strategies.
“To assume people are going to come back to work in that circumstance, you’d have to assume they’re idiots.”