scorecardThe argument that unemployment benefits keep Americans from going back to work isn't just misleading — it's dangerous in a time when we need more support than ever
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The argument that unemployment benefits keep Americans from going back to work isn't just misleading — it's dangerous in a time when we need more support than ever

Annie Fadely   

The argument that unemployment benefits keep Americans from going back to work isn't just misleading — it's dangerous in a time when we need more support than ever
Careers5 min read
Right now we have twin crises.    Anton Petrus/Getty Images
  • Annie Fadely is the senior policy and programs associate at Civic Ventures, a public policy incubator based out of Seattle, and a producer of the "Pitchfork Economics" podcast.
  • In the latest episode of Pitchfork Economics, professor Trevon Logan says that the CARES Act was created with the belief that a robust pandemic response would make the situation better by mid-summer — but that response never appeared.
  • Logan says that, right now, we've only done the bare minimum to alleviate both the public health and economic crises.
  • Instead, we should be using all of our resources to address these problems head on.

As we approach the end of the summer and what neoliberal economists promised for months would be a tremendous V-shaped economic recovery from COVID-19, it's all too obvious that our "recovery" is plateauing. America's original economic response was predicated on finally mounting a robust pandemic response that would alleviate the public health crisis by mid-summer.

That response did not materialize, and the extreme economic dislocation of April, May, and June has not snapped back into place — and now we're headed toward a double dip recession.

In the latest episode of Pitchfork Economics, Professor Trevon Logan says it's time for new solutions that address the reality of our dire economic situation.

"The CARES Act was predicated on this belief that there would be a significant public health response that would encourage businesses to suspend operations to a large scale," he said, "which would allow us from the public health perspective to do contact tracing, to isolate those who had been exposed to the virus, and to bring the new infections down significantly over a series of weeks, or perhaps months.

"The belief was that we would be well past the peak by the end of July. If you look at our economic peers, that is where they are in the pandemic," Logan says. "We are not there."

Logan, a professor of economics and an associate dean in the College of Arts and Sciences at Ohio State University, urges Congress to seriously consider the real cost of doing nothing when more than 30 million Americans are out of work.

CARES temporarily allowed for an extra $600 per week unemployment benefit from the federal government, and extended eligibility for state unemployment benefits. The other week, President Trump signed an executive order that would extend the federal benefit, but bringing it down to $300 per week, with a confusing optional $100 add-on from states. If the order goes into effect, the benefit will run through December 6 — another big bet that our case loads will have markedly improved by then.

There's been plenty of fretting in the unemployment benefit debate about whether or not the recipients of unemployment benefits "deserve" those benefits, or if they're making more money on unemployment than they were making while working.

White House economic advisor Larry Kudlow called it a disincentive: "We're paying people not to work. It's better than their salaries. That might have worked for the first couple of months [but] it will end in late July," he said.

Aside from being unhelpful, those worries are profoundly misguided.

"It's a big conflation of the micro with the macro when we talk about the disincentive to work," Logan said.

If you're earning more unemployed than you were earning employed, he says, then it certainly would appear that that's a disincentive to return to work. But your personal (micro) experience doesn't scale to the macro analysis of the economy, because there are so many jobs missing right now.

"Our current estimates are that there are about five unemployed individuals for every position that is open in the United States," Logan said. "We don't have the number of jobs per the number of unemployed people for us to have these discussions about work disincentives. It is time to stop that, and start dealing with the actual problem."

It's also important to remember that the dollar number someone receives in unemployment every week isn't necessarily a direct comparison to the wages they were receiving while working.

"We're forgetting about the total amount of benefits," Logan said. "Those who are unemployed lose health benefits, and other sorts of things that are really important to workers."

Finally, even if your employer calls you back to work and you want to refuse to continue receiving unemployment benefits — well, too bad. That's not actually the way the unemployment system works.

"You don't have the option to say, 'I don't feel like showing up, even though you're employing me again. I'm going to collect this higher amount of money.' That's not possible in the unemployment system. If you refuse to show up, you stop receiving unemployment benefits," Logan said. "So this is a fundamental misunderstanding of how the unemployment system operates with workers, and it's not consistent with the empirical evidence."

Evidence shows that 70% of unemployment recipients who went back to work in May and June were, in fact, making more on unemployment than their prior wage.

And it's important to remember, as Logan points out, how disparate the health and economic impacts of this virus are. Communities of color, who are disproportionately affected (partly because they're more likely to be in "essential" jobs, and partly because of racial disparities in health care access and outcomes), are even more acutely in need of unemployment assistance.

"I want this to really be something that seeps into our general understanding of this pandemic," he said. "So far, more than 32,000 Black Americans have died of COVID-19. [It's] already 10% of the deaths for Black Americans this year — the third leading cause of death. It is that significant."

Especially when framed that way, it seems like a no-brainer that we would be scrambling to marshal all of our resources to ease as much suffering as possible. But instead, Logan says, our response has been to do nothing beyond the bare minimum that the urgency of the moment made politically impossible to not do. We're now facing twin public health and economic crises, even more acute than they were in the spring, and we're not seeing any action.

"It is going to rain 40 days and 40 nights. And it's very important to understand that even if you can swim, you can't swim forty days and forty nights — you need an ark," Logan said. "We send our representatives to construct these things that will help all of us. We continue to have a rhetoric which praises those who can swim without realizing that even those who are treading water cannot survive the once-in-every-five-hundred-years flood."

It's not too late for the ark to show up, Logan says — but without it, we'll all drown together.