Eakinomics: The No More Workers and Stagnation Act

Eakinomics: The No More Workers and Stagnation Act I was having trouble breathing, but it turns out it was not COVID-19. Instead my breath had been taken away by reading the Worker Relief and Security Act, proposed legislation in response to the pandemic. The title is ironic; the bill would destroy work as we know it and offer as “security” a perpetual economic quarantine. This is a disease, not a cure. Here’s the gist of the Act. It would have a series of emergency designations, either because of COVID-19 concerns (“Extreme Social Distancing” periods) or because of high unemployment (“National Unemployment Emergency”). In these periods, the expanded eligibility categories (e.g., self-employed, contractors, etc.) are retained. Further, states are divided into six “tiers” based on unemployment rates (measured as a three-month moving average) ranging from below 5.5 percent (Tier 1) to over 9.5 percent (Tier 6) in increments of 1 percentage point. Based on the tier of the state, workers would be eligible for either more extended unemployment benefits – up to 65 weeks for Tier 6 – or a continued generous federal supplement to state-unemployment benefits. Specifically, the current $600 per week would continue for the duration of the Extreme Social Distancing period. Workers in Tiers 1, 2, and 3 would receive $350 per week for another 13 weeks and $200 per week for the duration of a National Unemployment Emergency. Workers in Tiers 4, 5, and 6 receive $450 per week and $300 per week, respectively, during these periods. Here is the key phrase that occurs throughout the proposed Act: “These will be fully financed by the federal government.” This would be a disaster worse than the pandemic itself. Right now the entire United States is a Tier 6. As a result, the Act would give a $600 federal supplement for 65 weeks (one and one-quarter years). My colleague Isabel Soto estimates that fully 63 percent of all workers would make more on the maximum unemployment benefit than returning to work. That guarantees that the unemployment rate never falls below 9.5 percent, and the entire United States remains in a National Unemployment Emergency well into 2021. Even when the federal supplement falls to $300, nearly half (45 percent) of workers make more on the maximum unemployment benefit than working. There is no appeal to the heart that can justify the absence of economic logic in federal policymaking. Truth in advertising demands that this be renamed the No More Workers and Stagnation Act.