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COVID & Unemployment

How extending unemployment benefits leads to a stronger recovery

Kai Ryssdal and Andie Corban Dec 10, 2020
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People lined up for unemployment applications in Hialeah, Florida, in April. Joe Raedle/Getty Images
COVID & Unemployment

How extending unemployment benefits leads to a stronger recovery

Kai Ryssdal and Andie Corban Dec 10, 2020
Heard on:
People lined up for unemployment applications in Hialeah, Florida, in April. Joe Raedle/Getty Images
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Another 853,000 people filed for state unemployment benefits last week, marking the highest number of claims since September. More than 400,000 people also applied for Pandemic Unemployment Assistance, a federal program that will expire Dec. 26.

A second program expiring in a few weeks extends unemployment benefits for 13 weeks. Alix Gould-Werth is the director of family economic security policy at the Washington Center for Equitable Growth. She spoke with “Marketplace” host Kai Ryssdal about why an extension of unemployment benefits often leads to better jobs for workers. The following is an edited transcript of their conversation.

Kai Ryssdal: So explain to us, would you, why extending unemployment benefits actually means that people who are without employment right now might wind up with a better job?

Alix Gould-Werth: Yeah, so this is a question that policy wonks in the unemployment insurance community has been thinking about for, like, a really long time. So there’s this team at Georgetown that got access to the right data to answer this question. The bottom line is that when workers can use unemployment benefits to meet their basic needs while they’re out of work, they’re able to take the time they need to find the right job for them rather than taking the first thing that comes along. This helps workers find jobs that pay more, and it helps employers find workers with the skills that meet their needs. And we call that a good job match.

Ryssdal: Which all makes sense, but the ethos of unemployment in this country, at least on a surface level is — both for society and and also for the individual is — man, I got to get off unemployment soon, because I got to get a job ’cause holy cow, I need a job, right?

Gould-Werth: Exactly. Yeah. The entire research literature around unemployment insurance is really characterized by this idea that the longer it’s taking me to find a job, the worse it is. This study is really exciting, because the research team is turning that idea on its head, and it’s challenging this logic. It’s saying, what if taking longer isn’t actually bad? What if it’s good?

Ryssdal: Talk to me about the mechanics. How is it better?

Gould-Werth: Sure. So when I have the money that I need to put food on the table, to keep my lights on, to pay the rent, it means that I can take the time I need to find a job that is the right match for my skills and my needs. And so then when I get matched with that job, I take it. So it takes a little bit longer. But then I end up with a job that generally pays higher wages and takes advantage of the skills I have to offer. And if I’m passing off a job that is not a good fit for me, it leaves that job open for a worker who is the right fit. And that’s creating a chain reaction that spreads throughout the economy.

Ryssdal: And then is the flip side that if you take the job that isn’t right, not only will you be not happy and maybe not make as much money as you might ordinarily, but you might eventually leave that job? And then the spiral continues. And then you get to what Jay Powell talks about all the time, which is this lasting damage thing.

Gould-Werth: Exactly right. So we see scarring effects of unemployment that lasts throughout workers careers, where they see lower wages 10, 20 years into the future, because they’re matching with those wrong jobs.

Ryssdal: So as we wait for Congress to decide what it’s going to do, are we in that zone already, where people are taking jobs that maybe aren’t the right fit? Have we missed the boat as it were?

Gould-Werth: I absolutely do not think we have missed the boat. So the Pandemic Emergency Unemployment Compensation is expiring the day after Christmas. And if we let it expire, we’re going to immediately cut 2 million unemployed workers off from any income from unemployment benefits, shorten their time on benefits for millions more. And that’s going to start this spiral of families hungry, rent unpaid, workers taking bad job matches. But right now, Congress is in the middle of negotiations. They have a chance to extend those pandemic emergency benefits, so that workers can wait for a job that’s right for them. Not only for their skills and their wages, but also a job that is safe and is a match for their health needs and the health needs of their families.

COVID-19 Economy FAQs

Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?

This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.

Could waiving patents increase the global supply of COVID-19 vaccines?

India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy continues reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

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