The U.S. labor market is officially in free fall.
Nearly 10 million people filed unemployment claims in the last two weeks.
The prospect of UI benefits on par with the national median wage likely doesn't help.
My latest for @NRO — nationalreview.com/2020/04/will-p…
Nearly 10 million people filed unemployment claims in the last two weeks.
The prospect of UI benefits on par with the national median wage likely doesn't help.
My latest for @NRO — nationalreview.com/2020/04/will-p…
More jobs were lost in just the last two weeks than were lost, cumulatively, at the peak of the Great Recession.
Last week, a Fed economist predicted a 32% unemployment rate by the end of the quarter. Now that seems optimistic.
nytimes.com/2020/04/02/bus…
Last week, a Fed economist predicted a 32% unemployment rate by the end of the quarter. Now that seems optimistic.
nytimes.com/2020/04/02/bus…
Complicating matters is the fact that public officials are actively trying to discourage work.
Take the new "Pandemic Unemployment Assistance" program.
Participating states will soon begin paying the unemployed $600 / week (+ 50% of the regular UI benefit) for up to four months
Take the new "Pandemic Unemployment Assistance" program.
Participating states will soon begin paying the unemployed $600 / week (+ 50% of the regular UI benefit) for up to four months
You can't blame @LindseyGrahamSC for thinking $600+ / week UI was a drafting error.
In reality, it was an kludgey compromise driven by the inability of states to easily modify their UI systems—systems run on ancient mainframes with sparsely documented Fortran code. 🤮🤮🤮
In reality, it was an kludgey compromise driven by the inability of states to easily modify their UI systems—systems run on ancient mainframes with sparsely documented Fortran code. 🤮🤮🤮
The 9.9 million person question is whether, in a pandemic, UI benefits that pay better than a full time $15 / hr job should be considered a feature or a bug.
To paraphrase @willwilkinson, the economic crisis is subordinate to the epidemiological crisis.
To paraphrase @willwilkinson, the economic crisis is subordinate to the epidemiological crisis.
And yet there are different ways to ensure the economic security of laid-off and furloughed workers.
In Germany, f ex., short-time work applications are skyrocketing rather than unemployment. Workers stay attached to employers & govt offsets lost wages.
In Germany, f ex., short-time work applications are skyrocketing rather than unemployment. Workers stay attached to employers & govt offsets lost wages.
Graham, @BenSasse and @SenatorTimScott were widely mocked for not understanding how Unemployment Insurance works. You can't quit your job and claim unemployment, so what's the risk?
Only you CAN quit and be eligible under the new rules.
Only you CAN quit and be eligible under the new rules.
You don't even need sufficient work history to qualify for Pandemic Unemployment Assistance.
The only groups explicitly ineligible are people who can telework or already have paid leave.
Applications are based on "self-certification."
labor.ny.gov/ui/pdfs/pandem…
The only groups explicitly ineligible are people who can telework or already have paid leave.
Applications are based on "self-certification."
labor.ny.gov/ui/pdfs/pandem…
As @MaxGhenis has pointed out, no government in history has ever designed an unemployment-insurance program quite like this — one that virtually anyone can qualify for, and with benefits on par with the median weekly earnings of full-time workers.
Will grocery-store employees and hospital administrative staff quit en masse, preferring four months of tax-free paid leave to working under hazardous conditions?
We just don’t know.
Studies of totally different UI programs in vastly different recessions don't tell us much.
We just don’t know.
Studies of totally different UI programs in vastly different recessions don't tell us much.
Even the left seems divided.
Most progressive wonks seem to think the temporary nature of "super UI" means its impact will be minor.
Others are already rejoicing at the coming proletariat revolution.
Most progressive wonks seem to think the temporary nature of "super UI" means its impact will be minor.
Others are already rejoicing at the coming proletariat revolution.
I support "high road" labor market policies. But there's a time & place.
Seniors are terrified to leave home, lest they catch a virus with a 10-15% fatality rate.
They are counting on delivery drivers, grocery stockers, fulfillment center workers, & pharmacy techs showing up.
Seniors are terrified to leave home, lest they catch a virus with a 10-15% fatality rate.
They are counting on delivery drivers, grocery stockers, fulfillment center workers, & pharmacy techs showing up.
And please, don't confuse me for some kind of "unemployment is high because vidya games got too good" supply-sider.
My concern is the labor demand side.
A robust recovery requires maintaining formal relationships between employers & their employees, even if they’re furloughed.
My concern is the labor demand side.
A robust recovery requires maintaining formal relationships between employers & their employees, even if they’re furloughed.
This is the genius behind the SBA's new "Paycheck Protection Program."
Beginning tomorrow, small businesses can essentially get grants to cover 8 weeks of operating costs, so long as they retain their payroll.
Put differently, PPP pays businesses to maintain their labor demand.
Beginning tomorrow, small businesses can essentially get grants to cover 8 weeks of operating costs, so long as they retain their payroll.
Put differently, PPP pays businesses to maintain their labor demand.
Ironically, a program designed by @marcorubio's @SmallBizCmte and advised by @AEI scholars like @MichaelRStrain is closest to the Nordic model.
Bernie says we should be more like Denmark. I agree!!!
That means subsidizing labor demand & payrolls.
nytimes.com/2020/03/28/bus…
Bernie says we should be more like Denmark. I agree!!!
That means subsidizing labor demand & payrolls.
nytimes.com/2020/03/28/bus…
Unfortunately, the Paycheck Protection Program is woefully underfunded.
The CARES Act funded it at $350 billion when it needs at least $1.2 trillion. Realistically, it should be uncapped.
aei.org/research-produ…
The CARES Act funded it at $350 billion when it needs at least $1.2 trillion. Realistically, it should be uncapped.
aei.org/research-produ…
The goal was to put the economy into a “medically induced coma.”
Instead, Pandemic UI is more like putting the economy on mechanical ventilation:
Necessary to keep the economy breathing, perhaps, but a blunt and risky intervention nonetheless.
Instead, Pandemic UI is more like putting the economy on mechanical ventilation:
Necessary to keep the economy breathing, perhaps, but a blunt and risky intervention nonetheless.
Commentary on CARES Act is rife with what @tylercowen calls "mood affiliation."
If you are "pro-worker", big UI benefits are good.
Yet grants to firms to give furloughed workers full pay & benefits is even more "pro-worker," but gets construed as "pro-business" b/c of optics.
If you are "pro-worker", big UI benefits are good.
Yet grants to firms to give furloughed workers full pay & benefits is even more "pro-worker," but gets construed as "pro-business" b/c of optics.
Meanwhile people keep tweeting shit like this at me.
Seriously—There are more & better ways to compensate workers ordered to stay home than tanking the entire US labor market & bankrupting oodles of businesses.
False dichotomies will be the death of us.
Seriously—There are more & better ways to compensate workers ordered to stay home than tanking the entire US labor market & bankrupting oodles of businesses.
False dichotomies will be the death of us.
