Furman argued that the $300 a week in extra jobless benefits that was also provided by the plan was holding back a jobs recovery in some places. Furman said of the overall package, “It’s definitely too big for the moment. I don’t know any economist that was recommending something the size of what was done.”
Furman aligned with some Republican-run states, including Montana and North Dakota, that have suspended the $300 a week supplemental unemployment insurance, or UI, payments in the aim of spurring hiring.
“If I were in a state with a 3.5% unemployment rate, I’d be thinking seriously about whether paying people more to not work than to work was a good thing to continue doing,” Furman said. While it depends on the location, state of the pandemic, and economic condition, “certainly by June, July, August of this year I don’t think we need the same UI system that we had in January.”
This is from Nancy Cook, “Obama, Biden Economists in Conflict on Inflation Jump, Spending,” Bloomberg, May 12, 2021.
This is what many economists, including Scott Sumner and me, have been saying for months. I think Jason is wrong, though, about these benefits being a good idea in January.
READER COMMENTS
Greg
May 14 2021 at 1:31pm
I’m not typically big on credentialism. But I need to point out that Jared Bernstein is an “economist” with a PhD in social work. He has nowhere near the intellectual clout that Furman has.
Greg
May 14 2021 at 10:04pm
*PhD in social welfare, and a master of social work
Thomas Lee Hutcheson
May 15 2021 at 7:07am
Instead of suspending, why not make it a job finding bonus to actually encourage employment instead of discourage it.
Larger lesson, target relief better: Tie VAT financed UI to a percent of income and make maximum duration a function of the economy.
Justin
May 16 2021 at 3:23pm
Or perhaps instead, transition all non-medical need-based assistance to a single government provided account, which a person can withdraw a fixed amount from once per week. I’d suggest an account size of $93,600, with 156 weeks of $600 withdrawals and a $15,600 account allowing 156 weeks of $100 withdrawals for 3 years for children. This would replace pell grants, unemployment insurance, food stamps, section 8 housing assistance, child tax credits, first time home buyer tax credits, etc.
It provides a lot of flexibility: people can withdraw funds for any reason without even needing to state a reason: car repair, to buy groceries, pay rent, cover a period of unemployment, put a downpayment on a first home, help with tuition, provide some flexibility for time off work to care for someone, etc. Moreover, due to a limited fixed maximum withdrawal amount, people can’t take it out all at once and blow it: it would take a few years to go through it all. If a pandemic hits, people who were prudent (or not insanely unlucky) would have plenty of surplus funds.
However, as it has a fixed budget, people would need to be careful about how they decide to deploy it.
As the unemployment insurance is effectively ‘their money’, most people who could go back to work would likely do so, rather than just blow the rest of their limited amount of resources.
As a backstop for people who have their accounts run dry due to bad luck or mismanagement, or for immigrants who do not have accounts, there could be supervised basic dorm living which provide essential needs and clean accommodations for people who have no other resources. Food would be served buffet style and with the exception of religious needs and allergies, there is no choice of what to eat, no TV in individual dorms, no private bathrooms, no control of the thermostat, lights out at 11PM with no exceptions, etc. Anyone could live in a dorm rent free as long as they like, no questions asked, and they could keep whatever earnings they would make, allowing for them to subsequently transition out of the dorms.
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