At Least for a While, It Pays Better to Be Unemployed

Mish

In many states workers can do better collecting unemployment than being employed.

Please consider the Coronavirus Unemployment Calculator to determine when and where it's better not to work.

Under the CARES Act, Americans laid off due to the coronavirus receive an additional $600 a week for the next four months, ending July 31st or upon employment. In addition, the unemployment window has been increased in each state by 13 weeks.

Massachusetts generous unemployment policies combined with the stimulus means all workers making under $73,996 would receive more a week unemployed than they do from working.

Many of these salaries outstrip the state's median income, meaning the majority of workers would receive more from an unemployment check than a paycheck.

The stimulus package made significant changes to state unemployment. For the next four months, the unemployed will receive an additional $2,400 a month. Similarly, the added 13 weeks provides people longer to find a job in a new hostile job market.

The new package does mean a good chunk of the workforce are now receiving paychecks smaller than they would on unemployment. This includes workers in essential businesses, including hospitals and super markets, who are putting themselves in harm's way to keep society running.

This is ridiculous of course. The next stimulus measure needs to cap the benefit at some percentage below what people were making. 

Instead, the next package aims to increase the amounts and pay illegal immigrants as well.

For discussion, please see House Bill Will Give Direct Payments To Illegal Immigrants.

Mish

Comments (46)
No. 1-19
Lance Manly
Lance Manly

The trillions being printed by the fed to push up the stock market and save companies that went into deep debt to buy back their own shares is pretty ridiculous too.

QTPie
QTPie

Obviously this is completely ridiculous.

I understand people need help but I do wonder what possessed the government to decide that $2,600 a month (the 2,400 a month in the article is incorrect as there are actually more than exactly 4 weeks in a month) on top of existing state benefits is the magic number? Tack on state benefits and you’re looking at around $4,000 per month in most states. This is at a time when most folks also have greatly reduced childcare and commuting expenses, and on top of it all they’re getting the $1,200 stimulus payment.

Seems like the $600/week figure was simply pulled out of the politicians’ rear end. It’s a backdoor attempt at UBI I guess.

Max1m
Max1m

I’d love to get your insight as to how a population that doesn’t pay taxes (illegal immigrants) can possibly get their hands on a stimulus check that requires you to have a social security number. Please make my day.

Rusty Nail
Rusty Nail

I thought the reason they did this was to increase compliance with stay at home orders, to fight the spread of a deadly disease. The $600 bonus is temporary, yes? It seems like this article was not thought through.

Montana33
Montana33

You are usually so informed Mish so you should already know that it’s impossible to implement the complicated solution that you suggest. State systems are antiquated and understaffed and if the Federal amount is variable by person then it would take the rest of they year to implement which defeats the point. It has to be a fixed amount. So you are hopefully not going to argue that everyone should get less because a few States have higher benefits?

Montana33
Montana33

And many on your site are poorly informed because it’s a fact that most illegal immigrants DO pay taxes. Employers are required to file i9 forms and withhold taxes. It’s fine if you want to argue they should get no benefits for the taxes they pay, but don’t tell lies. There are probably more US citizens who don’t pay their taxes than there are illegal immigrants who don’t.

Montana33
Montana33

Trillions are being spent on Corporations and you complain about the fractional amount spent to help hard working and mostly lower income Americans who want to work but got caught in this pandemic. You should take this post down.

Jdog1
Jdog1

Why is it so hard for the people in charge to assess the moral hazard of their decisions? I suppose it is because they do not understand morality to begin with.
If you reward people to do the wrong thing, they will do the wrong thing.

AWC
AWC

Looks like the free money toothpaste is now out of the tube,,,,it’s gonna be amusing watching them try and put it back in.

Mish
Mish

Editor

Where the Flying F did I say the word "taxes"?

I said, specifically "The next stimulus measure needs to cap the benefit at some percentage below what people were making. "

And illegals work in many states, if not all of thm.

They pay taxes - so what?

Meanwhile, there are minimum wage care workers in nursing homes, etc. putting their lives on the line.

It's idiotic and so are the idiotic comments asking me to take the post down.

Show me where I said taxes. then think. then apologize for idiotic remarks.

Mish
Mish

Editor

What about this is not perfectly clear ....

The new package does mean a good chunk of the workforce are now receiving paychecks smaller than they would on unemployment. This includes workers in essential businesses, including hospitals and super markets, who are putting themselves in harm's way to keep society running.

Carl_R
Carl_R

The important thing to remember is that this was not a mistake. Ben Sasse protested that there was a "serious drafting error" and that people could make much more being unemployed than working. He was told "It is not an error. That was what we intended."

When it will get interesting is that, while many businesses are down, there are some that are up. They will not be able to hire. When people are making $26/hour on unemployment (figuring that being unemployed is a 40 hour a week job), and when people don't have to seek work to remain eligible for unemploymentt, no business will have any chance of hiring new employees unless they pay a lot more than that, which most businesses can't do. Thus, there are businesses that may want to increase in size, but will be unable to, or may want to replace an employee who retires or dies, but will be unable to.

Snow_Dog
Snow_Dog

“At Least for a While, It Pays Better to Be Unemployed”

Actually, it’s a great headline for the thread. I’m waiting for the companion piece that goes with it:

“At Least for a While, Keeping Money in a ZIRP Account Pays Better than Spending It Immediately”

Jdog1
Jdog1

It really makes you stop and think if these policies are not being implemented with full knowledge and planning of the harm they will do....

Jdog1
Jdog1

You can support American Citizen workers, or illegal aliens, but not both. They have opposing vested interests....

Blurtman
Blurtman

Somehow it is important to keep money in peoples' pockets so they can continue to buy cheap shit made in China. At the very least, could the money be restricted to being spent on made in the USA stuff, which would include food, medical services, transportation, etc.

Morn
Morn

I can't complain about this on a personal level. Laid off service-industry worker and I've went from making just over six-figures to now maxing out UC benefits in PA without a clue when we'll get back to having customers through the door. It's nice to have at least a few months of making what still qualifies as a middle-class income before it drops to under $30k/year and be able to adjust. I've got enough stashed away and low enough living expenses to weather the storm for a year or two (or more if I really go on a budget), but in the meantime I'm sharpening my coding and Excel skills just in case a career change needs to happen. Anything extra above living expenses is going right into savings (nowhere else to spend money these days anyway). At best, the extra benefits allow me to buy a steak at the grocery store when I want to over the chicken. Anyone who's taking this money and just blowing it is a damn fool.

I get the perverse macro-economic issues this creates, but to be honest with all the money they're tossing around it doesn't bother me the working and middle classes are getting a bone here even if it creates some intra-class resentment. I'd rather they solve that by giving it to everyone (working or not) versus not having the extra benefits at all. They can take it out of the corporate bailout slush fund.

Carl_R
Carl_R

Apparently there is a problem where businesses on PPP recall employees, and the employees refuse to return, since they make so much more on unemployment. Mnuchin reminded those businesses to report the employee to the state unemployment boards. Employees who refuse to return to work when recalled are no longer eligible for unemployment.


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