68% Of Unemployed Workers In The U.S. “Are Eligible For Payments That Are Greater Than Their Lost Earnings”
Can anyone explain how we are going to motivate unemployed workers to go back to work when most of them can actually make more money camped on their sofas watching Netflix? Over the past couple of months, 36.5 million Americans have filed new claims for unemployment benefits, and Congress understandably wanted to do something to address this unprecedented spike in unemployment. But by giving all of these unemployed workers a repeating 600 dollar bonus on top of existing unemployment benefits, Congress has actually created a very powerful incentive for Americans to be unemployed and to stay unemployed for as long as the bonuses last. According to a group of prominent economists at the University of Chicago, 68 percent of those that are currently unemployed can now bring home more money than when they were actually employed…
A new analysis by Peter Ganong, Pascal Noel and Joseph Vavra, economists at the University of Chicago,1 uses government data from 2019 to estimate that 68 percent of unemployed workers who can receive benefits are eligible for payments that are greater than their lost earnings. They also found that the estimated median replacement rate — the share of a worker’s original weekly salary that is being replaced by unemployment benefits — is 134 percent, or more than one-third above their original wage.
Of course you don’t have to be bringing home 100 percent of your former income for there to be an incentive to stay unemployed.
For example, if you had a job that you really hated, you would almost certainly jump at the chance to stay home every day and still make 90 percent of what you formerly earned.
So yes, those that had very high paying jobs will be motivated to get back to work, but everyone else will be highly tempted to ride the gravy train for as long as it lasts.
And the less you made when you were actually working, the more intense that temptation will be.
Just consider what restaurant and hotel workers must be thinking about now. According to CNBC, the average unemployed worker in that industry is now eligible to collect “182% of their previous wages”…