Recent text message from a friend:
[wife] is pissed at government for extending unemployment. Our nanny won’t work until September because she is being paid to not work.
Many of the Americans collecting unemployment checks (often more spending power than what is obtainable from a median job; see nytimes) are happy to work in exchange for untraceable cash that won’t jeopardize their continued revenue stream from Uncle Joe. They’re examples of Homo economicus from Econ 101, in other words. They put some value on leisure time, but it wasn’t such a high value that it kept them from entering the workforce some years ago. If their value of leisure time hasn’t changed, they should be happy to exchange time for cash money that government computer systems won’t see.
The above-cited nanny, however, did not make the working parents the expected offer to continue her efforts in exchange for cash rather than the previous stream of checks followed by a 1099. Instead, she said that she had “enough” to meet her needs and was not interested in work at all (presumably there was some cash price per hour that would have changed her mind, but she didn’t come up with a quote).
The central planners in Washington, D.C. presumably had some idea of how the enhanced/extended unemployment benefits would change the American workforce, but I wonder if there are way more people sitting on the beach than planned due to an overreliance on the Homo economicus assumption and an underestimate of the number of satisficers like our friends’ nanny. If there are a lot of working-age people who aren’t especially materialistic, it might be easier to shrink the American workforce than economists imagine.
Numbers from the Bureau of Labor Statistics (we seem to have reached a “new normal” a year ago):
Related:
- Formal analysis of effects of government-funded 99 weeks of Xbox
- Rethinking 99 weeks of unemployment
- When 99 weeks of unemployment benefits come to an end…
- Book Review: The Redistribution Recession (how welfare programs after the Collapse of 2008 reduced labor force participation)
- Nobody wants to work, tinted window edition (paying high school graduates more than they expected to earn results in them becoming demotivated)
How do extended unemployment benefits help people who voluntarily quit their job? Are we now able to collect unemployment when we quit and not just when we’re laid off?
ND: Yes, I think anyone who claims a COVID-19-related reason can quit and collect unemployment. See https://www.cnbc.com/2020/06/23/can-i-get-unemployment-after-quitting-or-refusing-my-job-heres-what-to-know.html
You could quit because the schools are shut down, for example, and you have to take care of children. You could quit because you believe you’ve been in contact with someone who has COVID-19 or because you think you have “long COVID”.
To those who advocate for UBI, well the Great-COVID giveaway experiment has shown otherwise: Give a man a free fish, he comes back for more, …
How dare the Nannies of the world do what they want and not work for “cash”.
I know several acquaintances who lost jobs and are NOT collecting unemployment who have no plans to go back to their previous (shitty) jobs.
One thing the pandemic did is force lower-income people to improvise and experiment with ways to generate income. Some simply discovered that they fine and are actually happier with less.