The Pay Is Generous, the Work Nonexistent

The federal unemployment bonus was a bad idea to begin with. It needs to go—immediately

By E.J. Antoni and Casey B. Mulligan. Excerpt:

"More than a million jobs are waiting to be filled in the construction and manufacturing sectors, but these industries have gained almost no new employees over the past two months. These are high-paying blue-collar jobs.  

When one of us warned on these pages in December of the negative effects of the $300 bonus, critics said the piece exaggerated the financial incentives for not working. Bank of America Global Research issued a highly quoted study finding that unemployment insurance cash benefits typically pay only about $32,000 a year. The California Employment Development estimated benefits of about $31,200 and argued that unemployed workers weren’t staying on the couch.

These analysts are making the same mistake they made after the last recession, except now on a larger scale. Looking only at unemployment-insurance cash, they understate the work vs. welfare trade-off. Washington provides unemployed workers with an array of other subsidies.

A family with two unemployed parents can double up on unemployment benefits, meaning $600 in weekly bonus payments, on top of normal benefits that average about $375 a week for each parent. Add in virtually free health insurance from ObamaCare expansions and free premiums for those who stay on their former employer’s plan, food stamps and $3,000-a-child payments. On top of all that, recipients of government benefits don’t have to pay payroll taxes. People with jobs do.

Here are the results from our new study for the Committee to Unleash Prosperity:

• In 21 states and the District of Columbia, households can receive the wage equivalent of $25 an hour in benefits with no one working.

• In 19 states, benefits are the equivalent of $100,000 a year in salary for a family of four with two unemployed parents.

• In all but two of the blue states, the $300 supplemental unemployment insurance benefit plus other welfare can pay more than the wage equivalent of a $15 minimum wage.

• In the blue states that haven’t suspended the $300 bonus, the average annual unemployment insurance benefit for a family of four with two parents out of work is more than $72,000. Median household income in the U.S. is about $68,000."