New Year, Same Disincentives to Work
With the most recent round of COVID ‘relief,’ 2021 is already becoming more déjà vu than ‘new year, better life’ for our country.
Of course, it’s wishful thinking to assume that midnight on January 1 would’ve reversed all the suffering and loss of the previous year, but by renewing the weekly unemployment insurance (UI) boost at the $300 level, Congress is helping to prolong it.
Last year, when the initial Coronavirus Aid, Relief, and Economic Security (CARES) Act introduced a $600 weekly unemployment boost, what was intended to be a stopgap to help people during lockdowns became a way for millions of people — nearly 70 percent of recipients — to receive more money for staying home than they could by going back to work.
It’s no surprise that when these individuals were offered their original jobs back, they turned them down in order to continue to receive the inflated unemployment benefits. This, combined with ineligible, out-of-state claims and people registering under others’ names, caused a tidal wave of fraud.
We lost more than 140,000 small businesses last year, with more still closing every day into the new year. Two-thirds of small business owners reported they were worried their employees wouldn’t return. Thanks to the CARES Act, the lockdowns, and the dramatic increase of people on unemployment, states’ net unemployment trust funds have plummeted since January of last year and nearly half are in the red.
More should be done to encourage and reward work in 2021, not discourage it and undermine the recovery.
When the UI boost at the $600 level expired last July, our country immediately saw an improved economy. By early September, more than 3.8 million workers had gone back to work. By October, the unemployment rate had been nearly cut in half, and businesses had created and restored more jobs in four months than were created in five years after the Great Recession. This new $300 boost threatens to derail our economic comeback, kill hundreds of thousands of small businesses for good, and add insult to injury for the American worker.
According to polling from the Foundation for Government Accountability (FGA), the American people support worker independence over government dependency. In fact, only about 35 percent of American voters supported bringing the bonus back at all, even if the amount were reduced. Interestingly, there is more support for a $25 UI bonus, the level provided during the 2009 Great Recession, than there is for the $300 UI bonus.
An unemployment boost of any amount is nothing more than a Band-Aid on the festering wounds that remain from the lockdowns. It gives poorly run states cover while they lockdown their own people and small businesses as they hope with hands out for a federal bailout to solve their long-standing budget issues.
Leaders in Washington should resist every temptation and every call to bail out states and keep Americans dependent. Ultimately, this economy is powered by the ingenuity and hard work of entrepreneurs and small businesses and workers.
We often hear the phrase “we’re in this together.” If that is true, then stop separating talented people from opportunities to actually earn a living. Stop paying people more not to work. The best relief is a reopened economy unleashed from oppressive government regulations and supersized unemployment bonuses.
Tarren Bragdon is the chief executive officer at the Foundation for Government Accountability.