Unemployment Benefits Should Depend on the Pandemic

In recent weeks many members of Congress have been arguing against extending the $600 weekly supplement to unemployment insurance benefits that was put into the original pandemic relief package. Some members of Congress have even argued for extra payments to encourage unemployed workers to return to work.

These proposals miss the logic that led Congress to originally put the supplements in place on a near unanimous vote. The Congress members who want to end the supplements and provide return-to-work bonuses quite explicitly are arguing that we want people to return to work.

However, the whole point of the $600 weekly supplement was to make it possible for people to not work. The idea was to give workers enough money to keep them more or less whole during a period in which they are not getting a paycheck. We wanted people to be able to stay at home rather than go to work in order to limit the spread of the pandemic.

This was a sensible policy. The shutdown of most businesses slowed the spread of the coronavirus in the United States, just as it did in other countries. It would make sense to reverse this policy and encourage people to go to work, if the pandemic were under control. Unfortunately, this is not the case in large parts of the country.

In the areas that had the strictest and longest shutdowns, like Michigan, Illinois and New York, the pace of the spread did slow sharply. At its peak in early April, Michigan was reporting more than 1,600 new cases a day. In recent days, the figure has been just more than 200. Illinois hit a peak of almost 3,000 cases a day in mid-May. It’s now around 500 a day. In early April, New York was seeing over 10,000 cases a day. In recent days it has had close to 500 new cases a day.

In these and other states, governors made the tough call to force businesses to close. These decisions faced opposition both from people within the state and from President Donald Trump. But they paid off in sharply lower infection rates.

While these states can safely reopen, with rules on face mask wearing, social distancing and other measures to prevent a resurgence of the pandemic, the same is not true of states that imposed less stringent lockdowns and reopened businesses earlier. In these states the pandemic is more out of control than ever.

For example, Texas is now seeing more than 6,500 cases a day. At its worst point in April or May, it had just over 1,600 cases a day. Florida now has over 5,000 cases a day compared to a peak in early April of just over 1,200. Arizona has now has almost 2,800 cases a day compared to a May peak of less than 400. Adjusted for the relative size of their populations, the growth of infections in Arizona today is not much lower than it was in New York at its peak in early April.

Given that many states have far higher infection rates now than they did during the periods of the lockdown, how can it make sense to say that we want people to go to work now, risking their own health and the health of those around them?

If Congress felt that the spread of the pandemic warranted people staying home when it passed the initial pandemic relief package, then it should follow that it still wants people to stay home in the areas where the pandemic is continuing to spread out of control.

This suggests that we would want the continuation of supplemental benefits to depend on the success in controlling the pandemic. In states where the pandemic has been largely contained, it makes sense to at least scale back the supplement. (There are still economic considerations, which may warrant an expanded benefit.) However, in states where the pandemic is still out of control, the supplements are needed more than ever.

The positive test rate should provide a simple measure, which is difficult to game, of the extent to which the pandemic is under control. For example, we can say that if the positive rate is less than 4 percent, we can scale back the supplement, but otherwise it remains at its current level.

The basic point here is a simple one. If the pandemic is out of control, we should be encouraging people to stay home, not to return to work.

This column first appeared in the Bozeman Chronicle.

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Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

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