Paying People Not to Work

 

America is slowing down. You may have noticed the last time you waited in line at the drive-thru of your favorite fast-food hamburger chain. Perhaps it was the length of time you spent on the phone waiting for a representative to book an airfare or to make a service complaint. It’s taking longer these days to do everything.

It isn’t hard to figure out why this situation exists. The U.S. Labor Department tells us there are an all-time record 9.3 million unfilled jobs – but more than 9 million Americans remain unemployed at the same time. How is this possible, you say? Because the government is paying people not to work.

The problem has bipartisan roots. It began during the Trump administration when the Covid pandemic crisis led to overly generous welfare payments for those who lost their jobs due to the pandemic. Congress appropriated an extra $600/week on top of the normal unemployment benefits to get people through the crisis. No one ever explained why the unemployed needed more money than usual during this period of unemployment. The payments were included in a $2.2 trillion stimulus package passed by Congress and signed by President Trump in late March.

These extra benefits ended at the end of July, 2020. But with the lingering effects of the pandemic on the economy, Congress passed another Covid relief bill for $900 billion in December, 2020, and extended extra unemployment benefits of $300 per week for 11 more weeks. Economists warned this would delay the economic recovery – and it did.

Not to be outdone in government handouts, the Biden administration wasted no time after inauguration in pushing for another Covid-relief package, this one called the American Rescue Plan. This was passed without a single Republican vote and cost an additional $1.9 trillion. It provides $300 per week extra unemployment benefits through September 30th.

The impact of this additional money was predictable. Economists Casey B. Mulligan and Stephen Moore accurately predicted the results in The Wall Street Journal. “President Biden’s $1.9 trillion Covid-relief package is being sold as an effort to ‘get America back to work.’ It will do the opposite. We estimate that between five and eight million fewer Americans will be employed over the next six months if the bill passes.” Regular readers of this blog will recognize I discussed this in an earlier post called Covid-19 Relief Bill Kills Jobs.

Four months later we can see they were right. In an effort to undue this misguided government largesse, 25 Republican governors have suspended the $300 per week supplemental unemployment benefits beginning this month. Not a single Democratic governor has followed their lead, despite the record number of unfulfilled jobs.

E.J. Antoni and Casey B. Mulligan, writing in The Wall Street Journal, ask the logical question – Why? Defenders of these payments argue unemployment-insurance cash pay only about $32,000 per year. But Antoni and Mulligan say that’s only a small piece of the welfare pie available to the unemployed. First of all, an unemployed family with two parents can double up on unemployment benefits, receiving an extra $600 per week on top of normal benefits that average $375 per week for each parent. Add in virtually free health insurance with ObamaCare expansions and free premiums for those who stay on their former employer’s plan, food stamps, and $3000 per child payments. Plus, they don’t have to pay payroll taxes.

These authors report the results from a new study for the Committee to Unleash Prosperity:

  • In 21 states and the D.C., households can receive the wage equivalent of $25 per hour in benefits with no one working.
  • In 19 states, benefits are the equivalent of $100,000 per year in salary for a family of four with two unemployed parents.
  • In all but two of the blue states, the $300 supplemental unemployment insurance benefit pus other welfare can pay more than the wage equivalent of a $15 minimum wage.
  • In the blue states that haven’t suspended the $300 bonus, the average annual unemployment insurance benefit for a family of four with two parents out of work is more than $72,000. Median household income in the U.S. is about $68,000.

 

In other words, people are being paid more than the median household income to stay home!

It should be no surprise then, that employers are having difficulty finding people for jobs. This government assistance has gone way beyond any needed assistance due to the pandemic. It’s time these bonus payments ended – for the good of the economy and the nation.

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