Unemployment insurance is making a huge difference.
 | | The initial 88 million economic assistance check payments totaling nearly $158 billion were sent by the Treasury Department in April.Chip Somodevilla/Getty Images |
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Today’s column was devoted mainly to pointing out a largely unheralded success story of the pandemic: After a rocky start, expanded unemployment benefits have been doing what they were supposed to do, namely, provide a lifeline to workers who have lost their jobs as a result of the lockdown. |
It’s true that there are many workers — probably millions of them — still not getting the unemployment benefits they’re entitled to because state unemployment offices can’t handle the load. This inability to deal with a crisis, in turn, reflects many years of malign neglect: Some states, like Florida, deliberately made it hard to get benefits, while even blue states have inadequate systems and antiquated hardware. (New Jersey put out an appeal for people who know how to program in COBOL, a 60-year-old language that apparently still runs its computers.) |
Despite all that, however, unemployment benefits have made a huge difference. Outlays for unemployment compensation in April were $46 billion higher than they were in April 2019. That means that they probably made up about half of the wages lost due to coronavirus-related job loss. And outlays in the first 15 days of May were roughly as high as those for all of April, which means that at this point they’re probably covering most of the lost wages. |
This is a big deal. The pandemic is causing a lot of hardship, but much less than you might have expected from Great Depression-level unemployment, and unemployment insurance is the biggest reason for that. |
And this isn’t the first time safety net programs have made a huge difference in difficult times. Unemployment shot up after the 2008 financial crisis, and many families suffered. Yet America didn’t become a nation of soup kitchens and men selling apples on street corners. Why? |
It was mainly because of unemployment insurance and food stamps. In fact, thanks to these programs, poverty barely increased during the Great Recession. (Quick aside: Will we stop using that term for the 2007-9 slump now that the coronavirus has given us an even deeper slump?) |
So safety net programs are a really good thing in times of crisis. If you accept that, however, you also need to reject some popular ideas, especially on the right but also to some extent on the left. |
The right, of course, has always hated the idea of helping the unemployed, warning that such aid will encourage people to be lazy. Yet there’s very little evidence that this is a real problem even when the economy is doing well; and it makes no sense at all to worry about incentives for idleness when we want people to stay home to limit the spread of an infection. |
But let me also point out that this crisis shows what is wrong with an idea popular with some (not all) on the left, that of universal basic income — a check the government sends to everyone, without conditions. Sounds appealing, doesn’t it? |
Yet think of what’s happening now. Roughly one in five American workers are now unemployed, and the government is sending them checks that make up for most of their lost income. That’s a very good thing, and well worth the $80 billion or more that it will probably cost this month. |
But sending monthly checks that big to everyone, regardless of whether they’ve lost a job to Covid-19, would cost on the order of $5 trillion a year — a quarter of G.D.P. That’s just not going to happen. So a universal benefit would, of necessity, be too small for those who can’t work — it wouldn’t be enough to live on. |
What we’re going through now, in other words, shows the virtues of a strong safety net, one that provides generous aid, not to everyone, but to those in need |
How much has unemployment insurance helped? |
Myths about Covid-19 relief. |
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