There are few things more American than apple pie, yellow school buses, and believing that people getting government assistance are lazy. But the age-old narrative has become a hot talking point in 2020, especially after the stimulus package passed in late March expanded federal unemployment to provide an extra $600 a week to people who have experienced at least partial job loss.
Apparently, the decadence of a living income that allows Americans to, if needed, stay home during a pandemic had to be curbed — on Monday, Senate Republicans released their next stimulus proposal, the HEALS Act, which slashes federal unemployment to supplement no more than 70% of your previous income. In theory. But because the new federal unemployment is capped at $500, people who live in states with especially stingy unemployment replacement rates may actually get less than 70% of lost wages, depending on what those wages were. Meanwhile, millions of people are at risk of eviction; over 20 million Americans have slight or no confidence in making their next rent payment. In particular, 35% of women have said that they wouldn’t last a month without the extra unemployment.
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Now, a new Yale study is confirming what a lot of people have already known through lived experiences — receiving unemployment doesn’t incentivize people to stop working. In fact, it found that people receiving the unemployment boost became reemployed at around the same rate as those who didn’t receive the $600. The findings are clear: “We find no evidence that more generous benefits disincentivized work either at the onset of the expansion or as firms looked to return to business over time,” the report reads.
The study’s authors note that the dataset they used involves full-time hourly workers, not salaried, and “is not representative of the entire labor market.” But the dataset is targeted to those who are most likely to be accused of being incentivized to stay at home — low-wage workers. According to the study, most workers represented in the data “are in the first and second quintiles of national earnings.”
The study argues that if the extra unemployment influenced employers en masse to lay off employees and influenced employees to stop working, we would have seen a noticeable decrease in “relative employment” (controlling for the number of new COVID-19 cases and degree of state lockdown measures) after the CARES Act passed compared to the week before it passed. We also would have seen a consistent dropoff in relative employment over time since late March. But the data shows “no drop at all after the passage of CARES.” The majority of the employment plummet came in the weeks before the CARES Act was passed.
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The Economic Policy Institute also released data last week showing that 7.5 million people returned to work in May and June despite receiving the supplemental $600 a week. It notes that around 70% of them probably would have made more on unemployment than at their current job. The EPI also makes the crucial point that for many people, there currently aren’t jobs to return to. Jobs, like money, apparently don’t grow on trees.
On top of these findings, the argument on disincentivization doesn’t hold up to scrutiny because, for one thing, unemployment benefits are conditional on returning to work if you get a suitable offer. Say your employer temporarily furloughed you, then called you back to a position where you can safely work from home — you’d lose unemployment if you refused.
Black and Latinx women will suffer the most from the unemployment cut; they have faced the most job loss over the past few months, and the jobs they held were typically low-paying, meaning that the $600 was especially helpful to them. The Yale study’s data shows a pattern of southern states, where there are typically higher levels of poverty than elsewhere in the U.S., seeing some of the biggest increases in unemployment replacement rate.
Despite all the evidence that people do want to return to stable jobs, when the $600 supplement was passed, there was an onslaught of panicked reactions from Republican lawmakers. Senate Majority Leader Mitch McConnell called it a “crazy policy that is paying people more to remain unemployed than they would earn if they went back to work.” Treasury Secretary Steven Mnuchin has said that “it just wouldn’t be fair to use taxpayer dollars to pay more people to sit home than they would working.” Right before the CARES Act passed, Sen. Lindsey Graham (R-SC) remarked in the Senate that the unemployment boost “created Pandora's box for our economy.”
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But the economy hasn’t descended into unsalvageable chaos because of an extra $600 a week. It has, in fact, helped people stay afloat, and had a significant effect on consumer spending. The EPI has found that cutting unemployment may actually result in millions of lost jobs over time. So the endurance of the laziness narrative just points to how America has long viewed social benefits — as undeserved handouts. Public opinion polls have shown that Americans are unusually dismissive of government antipoverty programs compared to other nations. In the late ’70s, Ronald Reagan famously began using the term “welfare queen” — referring to a bi-racial Black woman named Linda Taylor charged with welfare fraud — to perpetuate the idea that welfare queens were a prevalent problem plaguing the nation. This racist stereotype has survived to this day.
If the U.S. had locked down properly, was quicker to introduce mass testing and contact tracing, worn masks instead of assaulting grocery store employees, would we even be debating if the $600 needs to be extended right now, almost 5 months into the pandemic? It was implemented exactly to mitigate how long we would have to be in serious lockdown — pushing people to stay home right now, for a few months, until the virus was contained and we could safely reopen.
Instead of finger-wagging at people who are wondering how they’re going to make ends meet, we could demand that businesses not reopen until they can guarantee certain safety and pay standards for workers, such as PPE, sick leave, hazard pay, and transparency on confirmed cases. And if businesses failed to meet those standards, we could demand they be held accountable, instead of worming their way out of liability lawsuits. We could wonder why it took a pandemic, and being laid off, for some people to make a living wage. And if we’re so concerned about where our tax dollars are going, we could wonder why over 30 million people are currently on unemployment benefits, yet most American CEOS took less than a 10% pay cut as a result of COVID-19 instead of doing more to save jobs at their own companies.
As a country, we’ve spent a lot of energy arguing why it’s okay to force people to choose between the risk of a life-threatening illness and not being able to pay their bills. In the face of historic unemployment levels, with many Americans just one rainy day away from destitution, we’ve allowed the unfounded fear of idleness to become a position worthy of earnest debate.