WSJ Analysis Shows Why Congress Shouldn’t Keep Subsidizing Extra Unemployment

WSJ Analysis Shows Why Congress Shouldn’t Keep Subsidizing Extra Unemployment

Congress has just 11 days this month after it reconvenes to fund the government and move past partisan gridlock on the latest stalled mega-trillions spending package lawmakers failed to pass in August.

A primary sticking point in the previously failed negotiations was the extension of an extra $600 a week in federal unemployment payouts doled out on top of state unemployment subsidies from the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March, which expired in July.

While Democrats have demanded a six-month extension in their $3 trillion bill that the House passed in May, congressional Republicans have offered a slightly slimmer proposal. The enormous, debt-funded unemployment benefits beefed up just several months ago de-incentivized work and created undue hurdles for businesses to bring back employees. The majority of employees were earning more on the government hand-out than by actually working in order for struggling enterprises to meet a key requirement for assistance under the Paycheck Protection Program (PPP).

On Wednesday, the Wall Street Journal published an article chronicling the financial health of several socioeconomic classes through the pandemic, finding predictably that while the public health crisis has been “devastating for many Americans,” “it has been a boon for others.”

Although with important caveats explained throughout the article, including that only 44 percent of those government forced companies to lay off actually received taxpayer-provided subsidies, the Journal showed that those who received government financial assistance ended up faring far better off than those continuously employed, including essential workers. Thanks to Congress, overall it paid more to sit at home living off other people’s money than to provide value to the world through work.

A study released in late April from the conservative Heritage Foundation offers even more compelling testimony illustrating the powerful incentives that $600 higher unemployment checks provide citizens to rake in money from people who do work rather than pay their own way in life. According to Heritage researchers Drew Gonshorowski and Rachel Greszler, the median full-time American worker earning $48,000 a year reaped in 15 percent more from unemployment than from work.

The chart from their study below shows how the typical American earning less than $62,000 a year took in more on government insurance.

Negotiations fell apart last month after Democrats refused to walk down much from their $3 trillion proposal to meet Republicans’ desire to spend an extra $1 trillion. Part of the failed talks prominently featured Democrats remaining fixated on keeping Americans’ $600 a week coronavirus welfare checks. Republican legislation offered a $200 increase in subsidies from working people to people who aren’t working.

Tristan Justice is the western correspondent for The Federalist. Follow him on Twitter at @JusticeTristan or contact him at [email protected]
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