Turns out, if people can make more money by staying home than going to work, that won’t work out great for the economy. Who would have guessed it?
Oh, right, that’s exactly what critics of the $2.2 trillion CARES Act coronavirus relief effort predicted. In particular, we warned that with a whopping additional $600 a week, the bill's expansion of unemployment benefits would make benefits higher than wages for many workers. In the short-run, lawmakers hoped this would allow more people to stay home to mitigate the spread of the coronavirus. Congress even made it so essentially anyone could quit their job and claim the benefits. But a new report suggests that this is having economic consequences that far outweigh the benefits.
The conservative-leaning Heritage Foundation found that the expansion in unemployment benefits was incentivizing job losses, to the tune of 13.9 million additional unemployment claims that would not have been made without this expansion in place. This means “the additional $600 benefit will increase the number of people who become unemployed and collect unemployment benefits by 90 percent at the peak of the COVID-19 economic slowdown.”
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