Paying Americans Not to Work

Much of the harm from the coronavirus is unavoidable, but it would be nice if politicians didn’t compound the damage by ignoring the laws of economics. The worst blunder so far on that score is the $600 increase in federal jobless benefits that is already undermining the economic recovery.

On Wednesday we ran an op-ed from Kurt Huffman, whose Portland, Ore., company helps chefs run and staff their restaurants. Because of the coronavirus, he had to lay off 700 people. But some restaurants have adapted with takeout and delivery, so he needs to hire some back.

We’re hearing similar stories from around the country as small business owners look to reopen on a tentative or partial basis. Employees say they’ll take the unemployment check for as long as they can make more money by not working. One internal Trump Administration analysis estimates that this work disincentive applies to millions of Americans.

This does not mean these workers are lazy. Workers are making rational decisions based on the economic incentives the political class has created. And they are acting exactly as many people said was likely.

That includes Republican Senators Lindsey Graham (S.C.), Ben Sasse (Neb.), Tim Scott (S.C.,) and Rick Scott (Fla.), who bravely spoke up when they saw the final language of the relief bill that was negotiated by other GOP Senators. Perhaps because they represent states with thousands of small businesses, they understood the incentive issues better than others who think every American business operates likeExxon and Apple.

The Senators were attacked in the media, and House Speaker Nancy Pelosi called them “cruel.” But they turned out to be right. This means that no matter when governors announce their states’ reopenings, many businesses will still have to wait until July 31—when the extra $600 expires—to be able to afford the workers they need to reopen.

full article here.