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When the government expands during an emergency, it rarely entirely recedes when the crisis has passed. The latest example of this timeless principle comes courtesy of lawmakers on Capitol Hill seeking to make “temporary” supercharged pandemic unemployment benefits permanent.
“Democrats on the Hill are pushing President Biden to propose permanently expanding unemployment benefits offered during the pandemic,” Fox News reports. “They are pressing for the changes in federal standards as part of an anti-poverty package Biden is expected to announce next week.”
Here’s the backstory.
Congress passed a “temporary” measure extending unemployment benefits to new categories of people and adding a weekly federal supplement (first $600, now $300) on top of existing state-level benefits. This has meant that many workers can earn more staying on welfare than by returning to work.
The result has been exactly what basic economics would predict: prolonged unemployment and a hiring crisis. A recent survey found that more than 40 percent of small businesses are struggling to fill open jobs. Millions of people are on unemployment benefits while 7.4 million jobs remain open.
Regular checkin to how the labor market is right now... pic.twitter.com/pPq6zbCiah— Dan Nunn (@danyay) April 15, 2021
In a particularly wild example of this glaring national trend, a McDonald’s franchise literally offered $50 for people just to show up to an interview—and still couldn’t get enough applicants!
The government “is truly creating the incentive to not work right now," the franchise owner told Business Insider. “And, how do you blame somebody? You can make more money on unemployment [than from working].”
If this ultra-generous unemployment system—which we were promised would be “temporary”—is kept in perpetuity, you can expect labor market dysfunction to become the new norm.
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