Remember when foolish Flu Manchu lockdowns forced millions of people out of work? And remember how the federal government kept extending unemployment benefits?
Weirdly, paying people not to work results in people not working. Who knew?
It’s bad enough when politicians enact witless economic policies with huge price tags, but it’s even worse when those policies destroy American lives and livelihoods. New research shows that this will be the pandemic-era legacy of the politicians that forcibly closed businesses, made people stay home, then incentivized millions of out-of-work Americans to give up the opportunity to get their lives back on track.
It’s now clear that half the states kept destructive policies in place even after their devastating effects were known. What should have been a temporary bridge to keep people afloat while America tackled COVID-19 became a nightmare of dependence and depression.
In March of 2020, the federal government began paying weekly “bonuses” known as supplemental insurance to people on unemployment. That meant many people received more money from unemployment insurance than they did while working. It was even expanded to include those who hadn’t paid into the program.
By the fall, the country began emerging from the pandemic, vaccines became available, and business started to open again and look for workers. The speed of American resilience was something to behold. But the government refused to make the transition with the rest of the country and kept paying people to stay home.
Eliminating people’s jobs and paying them to be unemployed was robbing millions of Americans of the dignity that comes with finding purpose and achieving self-sufficiency. It destroyed lives, driving dependency on government, contributing to drug and alcohol addiction, and exacerbating isolation and depression.
These effects of the program were blatantly obvious through the spring of 2021 but that didn’t stop the Biden Administration and Congress from extending the benefits through September. By the summer of 2021, the nation had nearly 11 million unfilled jobs, a spike from just under 7.2 million at the beginning of the year.
That’s why 26 states decided to terminate the unemployment bonuses early instead of letting them expire in September 2021. At the time, some in the media portrayed the move as cruel, ripping critical funds away from those struggling during the pandemic.
But new research from the Texas Public Policy Foundation shows that the states that ended the benefits early had superior job growth, ending the soul-crushing dependency inflicted upon millions by the misguided policy. By the end of 2021, only Texas and three other states that ended the bonuses early had regained all the jobs that they lost during the pandemic.
In the states that continued paying the unemployment bonuses through September 2021, job growth was anemic. Roughly 3 million more people stayed on unemployment in states that maintained the increase in benefits versus the states that ended the program early.
More from Vance Ginn:
2/ Findings of enhanced UI:
“half the states kept destructive policies in place even after their devastating effects were known. What should have been a temporary bridge to keep people afloat while America tackled COVID-19 became a nightmare of dependence and depression.” pic.twitter.com/EbylQJyCgF
— Vance Ginn (@VanceGinn) March 13, 2022
4/ “In the states that continued paying the unemployment bonuses through September 2021, job growth was anemic. Roughly 3 MILLION more people stayed on unemployment in states that maintained the increase in benefits versus the states that ended the program early.” pic.twitter.com/BGzaP7aLCu
— Vance Ginn (@VanceGinn) March 13, 2022
Those results explain why the socialist pipedream of “Universal Basic Income” would be disasterous for all involved. It would balloon the deficit, create moral hazard and encourage welfare dependency among work-eligible citizens, suppress the economy, and knock some of the most vulnerable Americans off the skill ladder to success, all for the sake of robbing Peter to pay Paul.
Basic economic incentives and human nature don’t change just because the Democratic Party finds them inconvenient.
Tags: coronavirus, Economics, Texas, Texas Public Policy Foundation, unemployment, Universal Basic Income, Vance Ginn
UBI creates more of a morale hazard than a moral hazard, but I can see how it could lead to some recipients gaming the system – earning income under the table while collecting full UBI – but in general, like so many socialist schemes, it disincentivizes personal initiative and discourages success.
I’m sympathetic to the conclusion, but what effort was made to control for differences between the two groups of states? Might those opting to extend benefits have had underlying economic conditions restricting job growth? I’m not saying I think that’s so, but you’ve got to address that to be able to draw conclusions.
Never was an economist, but I’ve known all my life that if you pay someone to sit on their duff then you can’t be surprised when they do.
How glittery do your credentials have to be for you to not know this intuitively?
But these are facts and fewer things bother democrats less than facts.
I was working for United Airlines in Houston when I got laid off in February 2020. I had a consulting gig and four books under contract, so I decided to concentrate on that, instead of applying for unemployment. Got criticized by a bunch of my friends for not taking the free money.
But . . . at the end of 2020, my bank balance was higher than it had been at the start of the year. Writing books was a lot more fun than going into the office each day, and I kept picking up short-term tech writing gigs. 2021 was even better. Made more money that year contracting than I had at any time previously in my career. (Except for one year when I got a severance package paying 55-weeks pay and picked up a new job four weeks later paying the same as my old job – so I collected two years pay in one year.)
All the friends who took the “free money” did a lot worse than I did because new job offers usually paid less than unemployment, so they were afraid to take them – and by the time employment ran out they were pegged as long-term unemployed. My income the first few months after getting laid off was lower than unemployment, but it kept growing over the year.
Oh yeah, I discovered being my own boss was good for my stress levels and I lost 45 pounds during 2020.
“It would balloon the deficit, create moral hazard and encourage welfare dependency among work-eligible citizens, suppress the economy, and knock some of the most vulnerable Americans off the skill ladder to success, all for the sake of robbing Peter to pay Paul.”
“But how else are we supposed to get Paul to vote for us?” — Democrats, probably