Republicans in Congress seem intent on ending the federal Pandemic Unemployment Compensation (PUC) program in response to employer complaints that the additional $600 per week makes the pay offered by lower wage jobs uncompetitive. This is an expensive program — about $250 billion for four months — and it creates a serious incentive problem. (There are ways to begin unwinding the work disincentive via mechanisms that promote skill development and work without punishing at-risk workers.) But there’s a broader social and economic context that should frame these concerns.
As I’ve noted before, it makes little sense to attack a policy, adopted by an overwhelming bipartisan majority, for being successful. The intent of these benefits was to encourage workers to step back from their jobs as a means of reducing the spread of the coronavirus. Whatever success we’ve had reining in the virus and protecting our health system is in large part due to stay-at-home orders combined with PUC and other payments that have helped sustain workers economically while keeping them at home. On the business side of the ledger, we’ve also adopted a range of policies designed to stabilize firms who have been forced to reduce or freeze their operations. This includes the Paycheck Protection Program ($669 billion to date) and over $4 trillion in other Federal Reserve stimulus, liquidity, and business loan programs. As a society, we’ve gone all-in to lighten each other’s loads and make the best of one of the worst imaginable situations.
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