Unemployment stipends saving the economy

Posted 5/27/20

As the COVID-19 pandemic and Rhode Island's initial phases of reopening continue, opinions about how to handle the long work of repairing our shattered economy - where the unemployment rate just eclipsed 17 percent in the state, bad enough for

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Unemployment stipends saving the economy


As the COVID-19 pandemic and Rhode Island’s initial phases of reopening continue, opinions about how to handle the long work of repairing our shattered economy – where the unemployment rate just eclipsed 17 percent in the state, bad enough for fourth-worst in the country – and how (and how much) we should assist the millions across the nation who have been laid off, have already begun to clash.

Unfortunately, as with seemingly everything else these days, the loudest opinions on how we should go about repairing the economy are emerging increasingly split down political divides – rather than based on sound research and a collaborative desire to work out this complex problem together.

A recent Wall Street Journal editorial neatly summarized the most problematic, if not egregiously misleading, opinion being taken by many in the financial sector and leaders of various industries hit hardest by the virus. “As states lift their lockdowns, businesses are trying to reopen,” it posits. “But many are struggling to rehire workers because they can't compete with enhanced jobless benefits.”

Their basis for that statement was apparently not based on any tangible research we could find regarding a deluge of employees eligible for re-employment refusing to go back to work, but rather on an economist working paper showing that a majority (68 percent) of laid-off workers are actually making more on unemployment than they were making at the job they got laid off from.

The natural conclusion that the WSJ draw from this fact is that people would obviously prefer to sit around doing nothing while getting paid more money, and so any plans that Congress may have to extend the $600 supplement to traditional unemployment insurance payments (UI) for laid off workers beyond its current expiration date of July 31 – as U.S. Sen. Jack Reed has supported – should be discarded immediately.

Did you hear that, unemployed workers? The gravy train that has so generously allowed you to continue paying your rent or mortgage payments so you don’t lose your home, given you access to medical treatment, allowed you to provide food to your children that are now largely no longer able to access meals at school or simply given you the ability to put gas in the tank – that train makes its last stop on July 31, and you’ll just have to figure out how to deal with that.

To opine that people who have lost their jobs through no fault of their own – through circumstances beyond anybody’s control – are somehow going to “slow” the economy’s recovery because they’d rather collect unemployment than go back to work once it is possible to do so is logically problematic for a few reasons.

First and foremost, that isn’t how collecting unemployment works. An employee who was laid off and begins collecting UI cannot simply say “no, thank you” when their employer offers them their job back and continue collective unemployment benefits. If they do, then they are committing unemployment insurance fraud – and can be criminally charged. There is simply no evidence that people are refusing to work en masse in an effort to continue collecting unemployment rather than go back to work.

Secondly, this opinion that the $600 supplement is somehow damaging to business undermines what various nonpartisan think tanks such as the Brookings Institute and the Economic Policy Institute agree on wholeheartedly – that this admittedly imperfect additional supplement is actually the most functional aspect of the CARES ACT that has kept the ravaged economy limping along through the worst of this crisis.

It’s not a difficult concept to grasp. When millions of people are laid off and have to go on unemployment, it strains all state and federal systems that are not meant to handle such a rapid increase in people needing benefits. But the situation is only exacerbated if those millions of unemployed workers are only making enough in unemployment to simply scrape by and survive. The $600 supplement may boost some people beyond what they were originally making, but it also allows all laid off and furloughed workers to continue participating in the economy in ways they simply cannot do when their only concern is not losing their home and making sure their kids don’t go hungry.

We would suggest that the root of this ill-informed opinion is not an argument put forth in good faith – but simply a damaging tool of division used to pit employers against employees and continue to divert attention from the possibility that, possibly, the fact that so many people can make more money on unemployment than at their actual job is an indication that there may be some deeper issues of pay inequality and wage opportunities in our country than some want to address.

The pandemic has exposed much about our society – good and bad – but this notion that the highly problematic American social safety net could actually become too generous while we’re in the midst of an unprecedented moment of national financial devastation is an opinion that must be challenged. Critics should find more adequate critiques of the CARES ACT, or perhaps look at businesses' unwillingness to explore more inventive alternatives to furloughs and layoffs (such as work sharing), than picking the dubious, low-hanging fruit that people are simply lazy and looking for an easy way to mooch off the government. We can do better.


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Wealth is something that must be created through labor. When no one is doing anything wealth is not being created. The money that is a credit card cash advance that our kids are going to have to pay. Taking wealth from those that produce and giving it to those that don't, for whatever reason, only causes inflation. The actual value of the dollar goes down.

So you may have more paper money yet you can't purchase any more with it.

The only way to solve this is open everything up. This is now a Government mandated recession by forcing businesses closed or reducing their capacity and in turn earnings.

Government should keep in mind they're jobs are not essential, no one's is. We can always go back to being nomadic hunter/gatherers.

Saturday, May 30