Are Unemployment Benefits Keeping People From Working? We Will Soon Have an Answer

Published May 14, 2021

The Washington Post

Republicans and businesses have been complaining that workers are not taking available jobs because they can make more on unemployment. As Republican-led states repeal the federal supplemental unemployment benefits program, we will soon know whether this complaint has merit.

Congress adopted the unprecedented supplement of state unemployment benefits in the first covid-19 relief bill in March 2020. That provision gave states the option of giving its unemployed citizens an extra $600 a week on top of the regular state-financed unemployment check. This temporary provision expired on July 31, but as the pandemic continued, it was modified — first by executive order and twice more by law. Current law gives unemployed workers a flat, federally financed $300 a week on top of the state payments. This measure will expire on Sept. 6.

Many Republicans have argued that this payment creates perverse incentives. Their logic was simple: The extra flat benefit plus state-level check meant many low-wage workers could earn as much or nearly as much staying at home than taking a job. The $300 check alone equaled $7.50 an hour for someone working a 40-hour week, more than the federal $7.25 minimum wage. The rest of the payments vary by state and depend on how much people earned before losing their jobs, but even low-wage workers in stingy states could expect to earn at least a significant portion of their pre-unemployment wage in state benefits. If someone can earn $10 to $15 an hour whether they sit at home or go to work, it’s pretty clear what many rational people would choose to do.

Click here to read the rest of the piece on the Washington Post’s website.

Henry Olsen is a Washington Post columnist and a senior fellow at the Ethics and Public Policy Center.

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