Use coronavirus unemployment stimulus to encourage Americans to return to work

With $600-a-week supplement, some employers are having a hard time hiring back fearful workers making more staying home. The answer lies between ending it and extending it: Our view

Use coronavirus unemployment stimulus to encourage Americans to return to work

At the risk of stating the obvious, the biggest economic problem brought on by the coronavirus pandemic is the staggering loss of jobs. The May unemployment rate, likely to be about 20% when it is reported on Friday, a level not seen since the 1930s. The generous assistance programs that Congress approved, including a $600 weekly bonus in jobless benefits, made sense.

But within the gloomy numbers is a surprising data point: Some employers are having a hard time hiring back workers who are actually making more by staying home. Between their regular unemployment checks and the weekly $600 supplement, 63% of those collecting benefits are getting more than they would be if they returned to work.

If going back to work means getting less money, being potentially exposed to COVID-19 and, in some cases, leaving children at home, is there any wonder that people would say "thanks, but no thanks" to a job offer?

#StayHome, now #OpenSafely

When the goal was to encourage people to stay home, throwing lots of money at the unemployed was a sound policy, particularly because 27 million also likely have lost their employer-provided health coverage. But now, as states are testing the waters of reopening businesses and institutions, something more transitional is in order.

Simply stopping the $600 payments after July 31, when they are set to expire, is not the answer. The economy won’t be anywhere close to normal by then, even with the rapid relaxation of social distancing.

In San Francisco in May 2020.

Nor will this approach work with some sort of sop thrown in to make it sound better. One concept being considered by some Republicans is a payroll tax holiday, a horrible idea that treats Social Security as a slush fund to be raided whenever there’s a tough economic patch.

On the other hand, a Democratic plan to simply extend the $600 bonus through next January would continue the disincentive to stay unemployed.

'Return to work' bonus

The best approach would be to leverage the unemployment supplement as an incentive to go back to work. Sen. Rob Portman, R-Ohio, has proposed giving people $450 a week that they would collect on top of their wages. He calls it a “return to work” bonus. It could also be seen as allowing people to keep three-quarters of their unemployment bonus when they go back to work.

As structured now, however, Portman's proposal is a non-starter. The return-to-work bonus would go into effect on passage, but it would expire on July 31 along with the original $600 unemployment benefit. Given that the measure would probably take a few weeks to get through Congress, it would barely be in effect for a month.

More sensible would be a measure that goes beyond then but starts to taper off, with both the $450 work bonus and the $600 no-work bonus being reduced each month, perhaps reaching zero by the end of the year. Numbers can be adjusted up or down depending on the course of the coronavirus and the state of the economy.

Amid the uncertainty, the right course goes between cushioning the fall that millions of Americans have experienced and encouraging them to get back up when they can.

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